Wayne County faces class-action lawsuit, accused of keeping foreclosure sale profits
(CBS DETROIT) - A class-action lawsuit against the Wayne County Treasurer's Office alleges the county is not properly refunding some residents who lost their homes because of unpaid taxes.
"Wayne County needs to be transparent. Wayne County knows every single victim who they took this money from," said David Shea of the Shea Law Group.
Shea is representing a client in a class action lawsuit against the county for failing to refund some homeowners.
"You have the counties that are going in and looking at unpaid taxes and foreclosing on properties, selling off those properties and making a massive windfall," Shea said.
Shea said this legal fight began in 2014 when his firm represented a client who lost his investment property in Oakland County for less than $10 in unpaid taxes.
"$8.41 deficiency, and Oakland County foreclosed on a $60,000 property and sold it for $25,000 and pocketed all the money. The only thing they were entitled to was their $8.41, but they took all the rest of Mr. Rafaeli's money," Shea said. "Our team took that all the way up to the Supreme Court. The Supreme Court said that the government can't take your money, that that is government theft."
Shea said Oakland County changed its course and refunded money to tax-foreclosed homeowners after it faced a lawsuit from Rafaeli. The case that made it all the way to the State Supreme Court is referred to as Rafaeli v. Oakland County.
Meanwhile, Shea said Wayne County has refused to comply with the same decision even after a federal lawsuit as well as a civil class action suit.
"We've done a FOIA request; others have attempted; they will not produce the information," Shea said.
A spokesperson for Wayne County Executive Warren Evans responded with this statement:
"Unfortunately, many rightful claimants remain stuck in drawn-out litigation, caught in the middle of these lawyers' pursuit of profit.
Shortly after the Michigan Supreme Court's decision in Rafaeli v. Oakland County, class action attorneys targeted Wayne County and other Michigan counties seeking to profit off former tax-foreclosed property owners. These attorneys settled with Oakland County in 2022, taking over $13 million of a $38 million settlement while property owners received only $12 million. Some of these lawyers have since been sanctioned for ethical violations and dishonesty.
Meanwhile, the Michigan Legislature passed Public Acts 255 and 256 in 2020, offering a fairer process for property owners to claim surplus proceeds. Currently, the United States Sixth Circuit is considering Wayne County's appeal of class certification in the Bowlers v. Wayne County case, which is set to be argued on October 30th. The class is represented by the same class action counsel who have been sanctioned and reprimanded. Wayne County has requested an expedited decision, so interest holders have time to make claims for proceeds before the March 31, 2025 deadline.
Upon the Rafaeli v. Oakland County ruling, the Wayne County Treasurer's Office set aside millions of non-general fund dollars to pay for the claims. In the weeks to come, Wayne County and the Wayne County Treasurer will provide additional outreach to the public to make sure that people are aware of the claims process to claim what they may be rightfully entitled, which will be through the Wayne County Circuit Court."