Federal judge rules on lawsuit over property tax appeals in Detroit

Christine Ferretti
The Detroit News

Detroit — A federal judge has dismissed a class-action lawsuit against the city, Wayne County and state officials that argued Detroit property owners were "illegally" prevented from appealing property tax assessments.

U.S. District Court Judge Nancy Edmunds on Friday granted a request from the defendants to dismiss the case and its claims of due-process rights violations, saying the federal court lacks jurisdiction since "there is a state remedy that is plain, speedy, and efficient." 

Detroit Assessor Alvin Horhn, in a statement, said the case never had merit. 

"We’re pleased that the judge recognized how quickly the city provided a simple and efficient solution to make sure every homeowner that wanted to appeal their assessment had the time they needed to do it," Horhn said. "In fact, Detroit has the most robust process in Michigan for homeowners to appeal their assessment if they feel they are inaccurate.”

Bernadette Atuahene, a professor at the Chicago-Kent College of Law, chants with protestors during a press conference at the Coleman A. Young Municipal Center, in Detroit on Feb. 13, 2020, to announce a class-action lawsuit against the city for the overassessment of home values for thousands of homeowners.

Rami Naji Fakhouri of the Chicago law firm Goldman Ismail Tomaselli Brennan & Baum LLP, which filed the lawsuit last year, said in an email Monday that his clients disagree with the court's decision and plan to appeal it. 

"In fact, the City admitted in court filings that it mailed more than 263,000 assessment notices to Detroit homeowners just four days before the printed appeal deadline in 2017," he wrote. "Detroiters deserve their day in court, and we look forward to continuing the effort to hold Defendants accountable for their due-process violations in the U.S. Court of Appeals for the Sixth Circuit."

Activists, experts and city officials gathered in February 2020 to announce the lawsuit and urged reforms to compensate tens of thousands of overtaxed Detroit homeowners. 

The lawsuit said all homeowners in Detroit were mailed their tax assessments in 2017 too late to have a reasonable chance to file a tax appeal. The failure to timely mail tax notices, the lawsuit claimed, violated homeowners' constitutional rights.

The class action represented owner-occupants who got “deficient” property tax notices in 2017 and sought to allow residents to appeal their 2017 assessments and recover damages. They also wanted the county to halt foreclosures of any properties that did not get proper notice to appeal.

In 2017, the city completed an $8.4 million citywide property reappraisal. The effort was ordered by the state after a Detroit News investigation in 2013 highlighted overassessment problems. 

Officials, at the time, admitted the notices did go out late but that the window to appeal was extended by two weeks so homeowners had the same amount of time to file. 

The lawsuit also alleged "unjust enrichment" by Wayne County, which has oversight of Detroit's property assessments. A spokesman for the county could not be immediately reached late Friday. 

In 2016, the ACLU of Michigan and the NAACP Legal Defense and Education Fund sued the Wayne County Treasurer to stop the tax auction, noting the city's inflated tax assessments. Those claims were thrown out when a Wayne County Circuit judge ruled the Michigan Tax Tribunal had oversight, not the court.

The Detroit News published an investigation in January 2020 that found City Hall overtaxed homeowners by at least $600 million between 2010 and 2016 after officials failed to accurately bring down property values in the years following the recession.

Detroit Mayor Mike Duggan has acknowledged past overassessments but said he cleaned up the practice and lowered values after he took office in 2014.