The nation's highest court Wednesday grappled with the case of an elderly Minneapolis woman whose condo was seized and sold by Hennepin County for unpaid taxes — and whether she's entitled to any money from that sale.
Minnesota is among a minority of states that allow the government to sell a property forfeited because of unpaid taxes and keep all the proceeds, even if they exceed what was owed.
That's what happened to Geraldine Tyler in 2015 when she owed $15,000 in taxes, interest and fees on her Minneapolis condo dating back at least five years.
Hennepin County sold the condo for $40,000. Tyler, now 94, has the backing of a national legal group that not only wants her to get the other $25,000, but seeks to change the way such government seizures work. On Wednesday, the U.S. Supreme Court heard oral arguments in the case.
In discussions that featured historical detours ranging from the feudal laws of the 13th century to the Magna Carta to the founding of America, a trio of lawyers and the justices tussled over the fairness and legality of the practice, which is related to at least two other cases before the court and is being closely watched by property rights advocates.
Among the primary questions in the case is whether what happened to Tyler violates the Fifth Amendment's prohibition on the government taking property "without just compensation." It's not an issue that seems to clearly fall on one side or the other of the court's ideological divide or the current political divide.
Tyler's cause has been taken up by a conservative nonprofit and has found an ally in the Biden administration, with the Justice Department supporting a key argument made by her attorney.
Tyler bought her condo in 1999. After she moved into an apartment in 2010 and stopped paying taxes on the condo, the county took steps to try to collect payment.
According to the county, Tyler walked away.
"Geraldine Tyler states she did not live at the property anymore and wanted nothing to do with it," Neal Katyal, a former acting U.S. solicitor general and pro bono counsel for Hennepin County, told the justices. "The reason, we think, is that there was no equity in the home."
She could have sold the home and used that money to pay her taxes, refinanced her mortgage or worked out a payment plan, Katyal argued.
The county seized the condo is 2015 and sold it a year later. The years between when she moved out and when it was sold saw a rise in real estate values as the market emerged from the Great Recession.
"Hennepin County works very hard to help anyone who wants to avoid forfeiture," the county said Wednesday in a statement, emphasizing that its forfeiture program — when all costs are considered — "does not manage to break even."
Her lawyer, Pacific Legal Foundation senior attorney Christina Martin, argued that none of that matters because the government has a right only to the money it was owed. Other types of property, such as seized cars or boats, are handled that way, she said.
Through her attorney, Tyler declined to comment.
The original tax debt, before fines and interest, was $2,300, a fraction of the value of the condo when Hennepin County sold it — a disproportion that seemed to draw sympathy from several justices.
"Are there any limits to that?" Justice Elena Kagan asked Katyal in a line of questioning echoed by Justice Neil Gorsuch. "I mean, $5,000 tax debt, $5 million house, take the house, don't give back the rest?"
Katyal essentially said yes, that is allowable, noting that the Supreme Court in 1956 upheld New York City's decision to keep the $7,000 it received for selling a property seized over a $65 water bill.
The history of how the court has viewed such cases — or whether it has addressed the precise questions at all — could play a role.
Katyal argued that practices like Minnesota's have existed since the nation was founded and that it's up to each state how to handle real estate forfeitures — a federalist argument against the Supreme Court's involvement.
"He was speaking to some of the conservatives," said Steve Wells, who heads the appellate practice at Minneapolis-based Dorsey & Whitney and filed a brief in the case related to the law at the country's inception on behalf of a professor at Notre Dame Law School.
But it was Justice Sonia Sotomayor who gave the most full-throated defense of what she said was the founders' acceptance of a system like Minnesota's. "You're throwing a bomb into 240-50 years of history," she told Erica Ross, an attorney for the Justice Department, which essentially sided with Tyler.
Wells, who has argued cases before the Supreme Court, said he couldn't determinehow a majority of justices were leaning from Wednesday's arguments.
"The justices a lot of times will tell you what they're thinking in how they ask their questions, and there just wasn't that today," he said. "There were a lot of searching questions. They were probing."
The questions before the court are focused on when a government seizes property for unpaid taxes, not when a property is condemned for eminent domain to, say, build a highway.
Practically speaking, a Supreme Court ruling against Hennepin County could upend the way property tax seizures are conducted in about a dozen states, including Minnesota. However, several justices wondered aloud if there were ways they could rule that might not have such sweeping effects.
The court is expected to rule in June.
The Associated Press contributed to this report.