EAST ST. LOUIS - Plaintiffs who claim counties took properties from delinquent taxpayers without compensating them should sue those who bought the properties through the counties, treasurers of St. Clair and Madison counties argue at U.S. district court.
They moved to dismiss a constitutional complaint on Jan. 21, claiming plaintiffs failed to name buyers of real estate taxes as necessary parties.
St. Clair County counsel Thomas Ysursa wrote, “If plaintiffs have brought valid claims to recoup equity unjustly taken from them, then it is the tax buyers who benefitted.”
Madison County counsel Michael Schag wrote, “The tax buyers are necessary to the tax collection process that forms the basis for plaintiffs’ complaint and they are similarly necessary to the adjudication of plaintiffs’ complaint related to that process.”
That argument failed in Chicago last October when District Judge Sara Ellis denied a motion to dismiss a similar complaint.
“Plaintiffs only seek just compensation for their alleged constitutional violations, attorneys’ fees and declaratory relief in this suit," she wrote.
“They do not seek to recover anything from the tax buyers such as the return of their former properties.”
Ysursa noted that Ellis’s order does not bind the judge on the Southern Illinois case, Chief District Judge Nancy Rosenstengel.
Illinois law provides that upon delinquency a judge can authorize a treasurer to offer delinquent taxes for sale.
A treasurer conducts an annual auction parcel by parcel, where bidders offer interest rates they would charge in exchange for an agreement to pay the taxes.
The low bidder wins and extinguishes the county’s lien by paying all taxes, interest and costs.
The county clerk issues a tax sale certificate and the tax buyer notifies the property owner.
After a second notice the tax buyer can seek an order for the clerk to issue a tax deed.
Daniel Suhr of National Center for Justice and Liberty in Chicago challenged the law last April for Top Metal Buyers of East St. Louis and seven individuals.
Suhr notified Illinois Attorney General Kwame Raoul that he raised questions under a takings clause in the Fifth Amendment and a prohibition of excessive fines in the Eighth Amendment.
He claimed a tax buyer paid $44,089.58 for taxes on the Top Metal Buyers property at 1101 Cleveland Avenue and the value was more than $100,000.
Among the individual plaintiffs he claimed Shelly Branson of Cahokia Heights owed $14,145 on a home at 221 Pittsburg Drive in East Saint Louis and the value was $76,756.
He amended the complaint in August by adding five plaintiffs and naming Madison, Henry and McDonough counties as defendants.
Ysursa argued in his motion to dismiss that St. Clair County wasn’t responsible for the law.
He claimed the General Assembly provided a mechanism for plaintiffs to collect compensation through indemnity funds that counties must have.
He claimed plaintiffs had due process even if they didn’t take full advantage of their rights.
“Plaintiffs do not allege that there is no statutory mechanism in Illinois but that they just do not like it," he wrote.-
Schag argued for Madison County that the district court lacked jurisdiction because, “only the Supreme Court of the United States has appellate authority over the decisions of state courts.”
He asserted tort immunity for local governments and claimed a statute of limitations ran out.
Sangamon and McDonough counties moved to dismiss on Jan. 22.
Ellis’s order in the Chicago case addressed the issues Rosenstengel must address.
Ellis found passing the buck to tax buyers was a red herring, “because the Fifth Amendment does not care whether the government or a private party receives the windfall.”
She found what mattered was that the windfall came out of the original owner’s pocket.
“Nothing in the Fifth Amendment requires property taken for public use to remain in the government’s hands," she wrote.
She found indemnity funds do not substitute for just compensation.
She found they limit the amount a petitioner may recover and impose an evidentiary burden above an arbitrary amount of $99,000.
“The Supreme Court has long and consistently held that compensation must be a full and perfect equivalent for the property taken,” she wrote.
“Simply because there is legislative support for a fine does not mean that it cannot be punitive nor excessive.”
She found forfeiture of property is a penalty that has absolutely no correlation to any damages sustained by society or to the cost of enforcing the law.
She found a loss of all equity was likely grossly disproportionate to the gravity of the offense.
“It depends entirely on the value of the properties plaintiffs once owned and bears little relation to the amount of property taxes they failed to pay to the municipal governments,” she wrote.