Marc and Tia Pung were in the middle of remodeling their home in Isabella County, Michigan, when they lost the house to the government. They had torn down walls and put in new flooring to make the house—Marc’s childhood home—even more comfortable for themselves and their toddler son. That’s how safe they felt there, how certain they were they’d be there for a while.
They knew about the ongoing legal drama with the County, of course, but most of the time it was humming in the background at a low buzz. Marc’s great-uncle Mike—the executor of Marc’s dad’s estate—was fighting with the County over a disputed $1,600 supplemental property tax. It seemed like the kind of common-sense dispute that would eventually get resolved—a matter of paperwork and a small amount of money.
Until it wasn’t.
The Pung family is here today, and they are devastated by the loss of this family home.
Attorney Phil Ellison at the Supreme Court
“[We were] thinking that there’s not a chance in hell that they can actually take this house for this reason,” Tia said. “Well, naively, ignorantly, we were wrong.”
“I felt like it was the Twilight Zone,” said Marc. He grew up in that house with his sister and their late parents. “I know everything about the house,” he said. His memories of his dad are within those walls. So is his memory of bringing home his son as a newborn. He thought they’d have more time there—that his son would be able to build memories of his own in the house. Losing it was a shock. “This is really happening,” he said.
Pacific Legal Foundation now represents the Pung family at the U.S. Supreme Court. Our co-counsel, Phil Ellison, argued the case before the Court on Wednesday, February 25.
“The Pung family is here today, and they are devastated by the loss of this family home,” Phil told the justices in his closing statement. When the government behaves the way Isabella County did toward the Pungs, “you’re no longer a debt collector. You’re now a confiscatory government, and you’re responsible under the Takings Clause.”
The Nightmare Begins
The backstory of this case is complicated, but crucial to understand. It’s the story of injustice by bureaucratic minutiae.
Marc Pung was 19 years old when his father, Scott, died. Uncle Mike—who has always been the head of the Pung family—became administrator of Scott’s estate. Scott’s widow (Marc’s stepmother) continued to live in the house until she passed away in 2008. Marc, then 23 years old, moved back in.
Michigan, like most states, treats a house differently if it’s someone’s “true and fixed” home. A home gets tax advantages that a summer house or lake house don’t. That’s to prevent residents from being driven out of their homes by property taxes—which is ironic, given what ended up happening to the Pungs.
Long before he died, Marc’s father successfully secured a “Principal Residence Exemption” from a small supplementary property tax. It’s not the kind of exemption you need to apply for every year. As long as the exempted homeowner or their beneficiaries continue to live in the home as their principal residence, the exemption stands. Again, the purpose of the exemption is to prevent a family from being forced out of their “true” home. In the years since Marc’s father died, the house remained a true home for his beneficiaries—first Marc’s stepmother, then Marc.
But County Tax Assessor Patricia DePriest didn’t see it that way. She claimed the family should have submitted additional paperwork to continue the exemption after Scott died. In 2010, DePriest retroactively denied the exemption on the house for the years 2007, 2008, and 2009.
Meaning that now, on paper, the Pungs owed additional property taxes.
A Long Battle
Uncle Mike called DePriest immediately after receiving her letter. The conversation was fruitless. “All she wanted to do was argue,” he recalls.
Mike went to the Michigan Tax Tribunal. In a years-long process, the Tribunal’s Administrative Law Judge (ALJ) rejected DePriest’s reading of the law multiple times. But DePriest was relentless. After the ALJ reversed her denials for 2007-2009, DePriest denied the exemptions for 2010 and 2011. At a hearing, Mike’s lawyer pressed her:
Q: You had been told by the administrative law judge that the estate was entitled to the principal residence exemption.
A: And it is, you have to have someone come forward for—in the law to get it.
Q: That’s not what the administrative law judge—
A: I don’t care what he says; the law says that you do.
The County appealed the ALJ’s ruling on the 2007-2011 exemptions to the Michigan Court of Appeals. While the court was in the middle of reviewing the 2007-2011 exemptions, DePriest denied the 2012 exemption as well.
Her denial came after the 2012 tax bill was already sent to Uncle Mike. Mike wrote a check for the amount listed on the bill and went to drop it off with the County, where he was told the amount was short: According to DePriest, the family also owed the supplemental tax—about $1,600.
They sat right beside us [in court] and never said, We’re stealing your house for 2012 while you’re sitting here spending money defending ’10 and ’11.
Mike Pung
Never mind that the Tax Tribunal had already ruled against the County for the years 2007 to 2011. Or that the Court of Appeals was actively reviewing the case. Or that the house was clearly the principal residence of Marc Pung. The County wanted its extra $1,600 in its 2012 tax collection.
Mike didn’t write a new check. He paid the amount of property tax his family legally owed on the home—the amount that was on the mailed bill.
And for that, the County reported the property delinquent and began foreclosure proceedings.
A Shocking Taking
“I still quite do not understand it,” Tia said. Tia sells real estate; she knows what she’s talking about when it comes to houses and property taxes. “It was a $1,600 difference in a non-homestead tax rate and a regular tax rate,” she emphasized. “The taxes had been paid, never missed a payment, never late. And when that $1,600 wasn’t paid, they filed for foreclosure.”
Despite the active lawsuit, the County never mentioned the foreclosure to Mike or his lawyer. “They sat right beside us [in court] and never said, We’re stealing your house for 2012 while you’re sitting here spending money defending ’10 and ’11,” Mike said. The County never bothered to tell the Michigan Court of Appeals either.
In February 2015, the Court of Appeals affirmed that the Pung property was entitled to the exemption. It was a hard-won victory for the Pungs—but it didn’t matter at that point. Ten days later, the County had already foreclosed on the nearly $200,000 home over the Pungs’ property tax “debt”—which, with interest and fees, was now about $2,200.
Marc and Tia were forced to move out, and the County sold the home at auction for the shockingly low price of $76,000.
“They put the house up for auction,” Tia said. “They don’t advertise these auctions. They don’t show pictures of the property. They don’t show that it has granite, and it was just all remodeled and we left it in pristine condition.”
There’s no dispute about the home’s true value: The County’s own tax assessment pegged the value of the property at $194,400. The person who bought it at auction sold it a year later for $195,000.
The County’s low auction price on the home was more than a cruel twist of the knife. It opened a new legal battle.
A New Precedent
In 2020, after the Pungs lost their home, Pacific Legal Foundation won the Rafaeli v. Oakland County case at the Michigan Supreme Court. Uri Rafaeli accidentally underpaid his property taxes by $8.41. Over that tiny “debt,” the County foreclosed on Uri’s property, sold it, and pocketed the sale price without giving Uri a cent.
Pacific Legal Foundation has led a national charge against home equity theft like this. The government is allowed to take your home to collect unpaid taxes, but the Fifth Amendment’s Takings Clause requires them to return the surplus value as just compensation. So does the Michigan Constitution.
The Michigan Supreme Court agreed and ruled for Uri in a precedent-setting victory that— halfway across the state, and unbeknownst to PLF at the time—breathed new life into the Pung case.
Armed with the Rafaeli ruling, Mike took Isabella County to federal district court, raising Fifth Amendment Takings and Eighth Amendment Excessive Fines claims. The court sidestepped the Eighth Amendment claims but, thanks to the Rafaeli precedent, could not ignore the unconstitutional takings argument. The County was ordered to return $73,766.07 (the auction sale price minus the tax debt, penalties, and fees) to the Pungs as just compensation.
It was a victory. But was it really “just compensation”? The Pung family had lost a nearly $200,000 home—Marc Pung’s childhood home, the place where he was raising his family—over a $1,600 tax they were legally exempt from. Shouldn’t the family be entitled to the fair market value of the home, minus the debt?
Just Compensation
The Fifth Amendment’s Takings Clause says private property cannot be taken for public use “without just compensation.” If the government thinks it is in the public’s best interest to seize a person’s home to expand a road, it can. But, as the Supreme Court explained in 1923, a property owner must be put in “as good a position pecuniarily as he would have been if his property had not been taken.” If a home is seized to build a road, the Constitution requires the government to pay fair market value, as of the date of the take, for the property.
Tax collection is a form of “public use.” If a person fails to pay their property taxes, the government is allowed to seize property—like a home—to satisfy the debt. But the government must adhere to the Takings Clause.
The idea of just compensation dates back to a fascinating 1606 British case that is cited in the Pung Supreme Court brief: the Saltpetre case. Saltpetre is a naturally forming chemical compound that gives gunpowder its explosive properties. It develops slowly over time where animal waste, decaying organic material, and moisture have time to build nitrates.
Britain was in a state of perpetual defense at the beginning of the 17th century. The King needed gunpowder, so he needed saltpetre. To find it, he sent men into private homes and barns.
These routine searches for saltpetre created problems for property owners. The saltpetre men would show up unannounced and begin tearing up floorboards in homes, prying into the floors of barns and stables, scraping the insides of masonry walls, and digging into cellars, vaults, and soil.
No respect was paid to the property being searched. Wherever the saltpetre men went, disorder and destruction followed. Floors were left uneven, homes were left structurally unsound, and holes in walls created drafts. Eventually, the people grew tired of being forced to grin and bear these intrusive and unpredictable takings.
The Court of King’s Bench was forced to address the problem. Chief Justice of Common Pleas Edward Coke held that the King’s men could continue taking saltpetre from private homes—but the government’s necessity could not justify destruction of a home. The government must “leave the inheritance of the Subject in so good Plight as they found it.”
Today, the government can collect property taxes. But it cannot, for king or country, destroy a family’s home in the course of tax collection without making the family whole.
The Pung home was worth $194,400, a figure no one disputes. To satisfy the Constitution’s just compensation requirement, the County owes the Pungs $192,158.07. Instead, the court awarded only $73,766.07, leaving $118,392.00 in uncompensated equity that effectively vanished at auction.
Looking for Justice
In 2023, while the Pungs were fighting in district court for compensation, PLF won Tyler v. Hennepin County at the Supreme Court. In a unanimous opinion, the justices affirmed that home equity theft violates the Fifth Amendment.
That victory set the stage for this new chapter: Last fall, the Court agreed to hear the Pung case. PLF attorneys joined the case as co-counsel; we were in the Supreme Court on February 25 with the Pungs, who flew in from Michigan to watch the argument.
The Court addressed two questions: (1) Is what happened to the Pungs an unconstitutional taking in violation of the Fifth Amendment? and (2) Is it an excessive fine in violation of the Eighth Amendment?
A majority of the Court sidestepped declined to address the excessive fine question in the Tyler case but may now revisit it. If Isabella County foreclosed on the Pung home in part to punish them for not paying the supplemental tax, then the $118,000 in equity stolen from them was a fine—and it’s hard to dispute that $118,000 is an excessive fine for a $2,200 debt.
“We are standing up for private property rights and what’s right based on principle,” Tia said. “I mean, it’s disgusting to think that you can own a house free and clear and somebody can take your entire life.”
She told Fox News recently that the loss of their home had a deep impact on their family. “It took away the feeling of stability, peace of mind, and certainly our trust in local government.” But she’s been encouraged by how many people have stood in support of her family. “Somebody has to stand up for what’s right,” she said, “and we’re praying that we will win.”
The Supreme Court will issue its decision before Independence Day.
