Case: Morningside Community Organization v. Sabree

On July 13, 2016, several Detroit homeowners and a coalition of neighborhood associations from throughout the city filed this class-action lawsuit against the Wayne County Treasurer alleging Fair Housing Act (FHA) and due process violations. The plaintiffs alleged that homeowners in Detroit were being charged unlawfully assessed taxes because the city of Detroit did not reduce the property assessments when the value of their properties declined before and after the 2008 recession. The plaintiffs argued that the city’s unlawful taxes and subsequent foreclosures constituted illegal discrimination and had an adverse disparate impact on African Americans, both in violation of FHA. Additionally, the plaintiffs argued that the City of Detroit failed to provide the state’s poverty tax exemption, which reduces a qualified homeowners tax burden, in violation of their due process rights. Represented by private counsel as well as the ACLU of Michigan and the NAACP Legal and Educational Defense Fund, the plaintiffs requested that the court grant a preliminary and final order preventing future foreclosures and the sales of “owner-occupied” homes in the city of Detroit until the lawful taxes were assessed. They also requested the court create a process for qualified homeowners to obtain the poverty exemption.

Because this is a state court case, we do not have access to all of the court documents. However, based on the docket, it is clear that a motion to dismiss was filed by the defendant on August 1, 2016, which Judge Colombo denied on September 2, 2016. Additionally, the plaintiffs moved for injunctive relief on August 12, 2016 to halt the auctions of the foreclosed homes, but this motion was also denied by Judge Colombo on September 2, 2016. Ultimately, the trial court granted summary disposition in favor of the defendants, holding that the court lacked subject-matter jurisdiction because the Michigan Tax Tribunal (MTT) had exclusive jurisdiction over claims involving discriminatory assessment practices. Reasoning for the trial court’s decision can be found in the Court of Appeals opinion. 2017 WL 4182985.

On January 5, 2017, the plaintiffs filed an application for leave to appeal the trial court decision, which the Court of Appeals granted on March 13. The Court of Appeals affirmed the trial court's decision on September 21, 2017. It held that the plaintiffs’ claim, while phrased as a constitutional question regarding the foreclosures, was ultimately a challenge to the validity of the property tax assessment, which was a question within MTT's exclusive jurisdiction. Therefore the Court of Appeals did not have jurisdiction. 2017 WL 4182985.

The plaintiffs filed an application for leave to appeal the Court of Appeals’ judgment but the Michigan Supreme Court denied this leave for appeal on January 24, 2018 on lack of jurisdiction grounds. On July 3, 2018, Judge Colombo entered an order of dismissal because the parties came to a stipulation and settlement agreement. The plaintiffs agreed to dismiss their second amended complaint in return for the city of Detroit's stipulations. The city agreed to make changes to its poverty tax exemption program, including new notification requirements like automatic mailings and new website information. The city also agreed to remove application requirements like references and deadlines. Finally, the city agreed to exercise its right of first refusal to purchase properties of low income home owners who were affected by the 2008 financial crisis. The city agreed to exercise its right in good faith, but there are no specific requirements in the settlement agreement. The settled terms concerning the poverty tax exemption application expire in five years, and the terms concerning the city's agreement to purchase properties expires in eight years. The case is over.