Fighting to End Unconstitutional Equity Theft

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Supreme Court ruling will impact state laws and case of Worcester homeowner

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On May 26, 2023, the United States Supreme Court in Tyler v. Hennepin County struck down Minnesota’s tax foreclosure scheme. The Court ruled that a Minnesota homeowner who lost her home to a tax foreclosure was entitled to the surplus from the home’s sale. The unanimous ruling has put the spotlight on laws in several states that allow municipalities to sell tax liens to private parties, which then foreclose on properties, pay back taxes and fees, and then retain most or all of the remaining equity.

The Supreme Court’s ruling is expected to impact a Massachusetts case filed in U.S. Bankruptcy Court in which homeowner Carmen Rodriguez sued the City of Worcester and a tax lien buyer, Tallage Davis, LLC, seeking to invalidate a state statute that allows municipalities to confiscate people’s homes — including all the equity built up over many years — when they fall behind on their real estate taxes.  Ms. Rodriguez was represented by the Pioneer Public Interest Law Center, Morgan, Lewis & Bockius LLP and Greater Boston Legal Services.

“The Court sent a clear message, ruling unanimously that any surplus beyond the tax debt should be returned to the homeowner,” said Frank Bailey, president of Pioneer Public Interest Law Center, which filed an amicus brief in Tyler v. Hennepin County.

In the Court’s opinion, Chief Justice John Roberts wrote: The principle that a government may not take more from a taxpayer than she owes can trace its origins at least as far back as Runnymeade in 1215, where King John swore in the Magna Carta that when his sheriff or bailiff came to collect any debts owed him from a dead man, they could remove property ‘until the debt which is evident shall be fully paid to us; and the residue shall be left to the executors to fulfil the will of the deceased.'”

In the U.S. Supreme Court case, Geraldine Tyler, an elderly Minnesota woman, lost her home under that state’s statute, which tracks the Massachusetts law.  Like Ms. Rodriguez, Tyler argued that statutes such as these violate state and federal constitutional provisions that prohibit the taking of property without just compensation and the charging of unreasonable fines.  The Court found that Minnesota violated the U.S. Constitution when it took the entire value of her home for the taxes.

Defending Immigrant Entrepreneurs and the American Dream

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Read the Amicus Brief

On March 13, 2023, Pioneer Public Interest Law Center (PPILC) filed an amicus brief in the case of Norvella Hill-Junious v. UTP Realty, LLC. The brief was in support of Uyen Phan, a Vietnamese immigrant who took her savings from operating a nail salon in Randolph and in late 2016 purchased the small commercial building in which her business is located. In February 2017, a murder took place in the parking lot of the City Limits Saloon, another business in the plaza. The decedent’s mother sued Uyen and UTP Realty, alleging that the murder was foreseeable and that owners of commercial real estate have a duty to implement measures to prevent such foreseeable crimes on the premises.

PPILC’s brief brought to the SJC’s attention the negative public policy implications of the appellant’s proposal to extend premises liability in this manner. Such a rule would unfairly impact immigrant entrepreneurs, who are often unsophisticated buyers of commercial real estate in crime-ridden neighborhoods. Imposing a duty to conduct “criminal background checks” on commercial properties would increase the cost of buying and would likely raise premises liability insurance rates in high-crime areas, thus depressing commercial real estate values and sales in these neighborhoods.

In August 2023, the SJC upheld the Superior Court’s grant of summary judgment for the defendants, finding that such an act was not foreseeable. The SJC determined that the plaintiff offered no precedent to support her claim that commercial landowners have a duty to inquire about any history of criminal activity on their properties.

Safeguarding Tax Concessions for Urban Redevelopment

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Read the slip opinion, Reagan vs. Commissioner of Revenue

On March 10, 2023, the Massachusetts Supreme Judicial Court reversed a decision of the state’s Appellate Tax Board, finding that a tax concession granted to the developers of urban redevelopment projects extends to the capital gains realized from the sale of those projects. The SJC had transferred the case on its own initiative from the Appeals Court. Pioneer Public Interest Law Center — then known as PioneerLegal — had submitted an amicus brief in the case.

Since the 1950s, Massachusetts has encouraged redevelopment of dilapidated properties under Chapter 121A of the state laws, which provides incentives for private investment. James J. Reagan, Jr. was the owner of three limited partnership interests — St. James Company, Blackstone Company, and Kenmore Abbey Limited Partnership — that invested more than $45 million over the last 40-plus years to transform abandoned or vacant properties in Boston into housing for the elderly and individuals with disabilities.

When Reagan and his wife, Irene M. Reagan, filed their 2012 state tax return, they took the position that the capital gains they had realized from the sales of the projects were exempt from tax because they were “on account of” those projects—in keeping with the language of Chapter 121A. The Reagans appealed their notice of assessment in July 2020. The SJC ruling found that the increased value of the properties was causally related to the project, and that extending the tax exemption to a capital gain from the sale of a Chapter 121A project is “buttressed by the statute as a whole.”

Defending Free Speech Against Unconstitutional ‘Civility Codes’

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Barron v. Kolenda et al.

In the fall of 2022, Pioneer Public Interest Law Center (PPILC), then known as Pioneer Legal, filed an amicus brief in the case of Barron v. Kolenda et al., pertaining to free speech rights at a public meeting in Southborough, Massachusetts. The brief  urged the Massachusetts Supreme Judicial Court to hold that “civility codes” meant to govern the public’s participation at town meetings constitute viewpoint discrimination and, therefore, violate the sacrosanct right to free political expression enshrined in Articles 16 and 19 of the state’s Constitution. In a landmark decision on March 7, 2023, the SJC did just that. The scholarly opinion sent shock waves through municipal government circles and received national attention.

Exercising her Article 19 rights is just what appellant Louise Barron was attempting to do during the public comment portion of a Southborough town meeting when she was abruptly silenced and threatened with expulsion by town officials who claimed that her criticism of their repeated violations of the Open Meeting Law violated Southborough’s civility code. PPILC is delighted that our high court has made it absolutely clear that our democratic form of government was founded upon — and still depends upon — our right to freely criticize our leaders, and to seek redress of our grievances, without fear of retribution or unreasonable governmental restraints.

Keeping State Taxation Powers Within the Law

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U.S. Auto Parts Network, Inc. v. Commissioner of Revenue

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In December 2022, the Massachusetts Supreme Judicial Court ruled in favor of U.S. Auto Parts Network, Inc., in a case that involving taxation of online sales. Pioneer Public Interest Law Center — then known as PioneerLegal — had submitted an amicus brief in the case.

In 2018, in the Wayfair case, the U.S. Supreme Court ruled that a state could, consistent with the Commerce Clause, require a company that engages in online retail sales to file a sales tax return and to collect the tax, provided the company has a “substantial nexus” with the state, even if it has no physical presence in the state. The Court  left it to the states to define “substantial nexus.” The Massachusetts Department of Revenue (DOR) then sent a tax bill to U.S. Auto Parts, an out-of-state retailer, for a period before the Wayfair decision.

Pioneer’s amicus brief argued that the application of Wayfair retroactively was impermissible, and the state’s SJC agreed. Importantly, the ruling in this case will apply in other instances where the DOR seeks to expand tax liabilities retroactively, an invidious technique that has been seen in other contexts.

Securing Religious Liberty Rights in Maine

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Pioneer Law’s role in winning the Carson v. Makin case at the Supreme Court

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On June 21, 2022, the U.S. Supreme Court ruled in Carson v. Makin that a Maine school tuition law that excluded religious schools was unconstitutional. Pioneer Public Interest Law Center, then known as PioneerLegal, had filed an amicus curiae brief urging the Court to strike down the Maine law.

In the Court’s 2020 ruling in Espinoza v. Montana Department of Revenue, Chief Justice John Roberts wrote that “A state need not subsidize private education.  But once a state decides to do so, it cannot disqualify some private schools solely because they are religious.”

For over a century, until the early 1980s, religiously affiliated schools were included in the Maine school tuitioning program, under which communities that don’t have their own schools can either contract with a school or allow parents to use the per-pupil spending allotment to attend the public or private school of their choice. The Maine state legislature, driven by the Senate chair of the education committee, re-codified the program in 1982 to prohibit parents and students from using the law to access religious schools, as was originally intended in 1873.

Pioneer Institute Executive Director Jim Stergios noted that Maine law allowed parents to access the public or private education that best suits their children except if the school was religiously affiliated — a practice that, in light of the Espinoza decision, was clearly counter to the Constitution.

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PioneerLegal is a non-partisan, public interest law firm that defends and promotes educational options, accountable government and economic opportunity across the Northeast. PioneerLegal achieves its mission through legal research, amicus briefs, and litigation.

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