Supreme Court Says Government Not Liable to Pay Owner Fair Market Value in Tax Foreclosure Sale and more...

Supreme Court Says Government Not Liable to Pay Owner Fair Market Value in Tax Foreclosure Sale

In a 9-0 opinion (with a couple of concurring opinions), the U.S. Supreme Court held that a government that forecloses and sells property for delinquent property taxes is not responsible to pay the owner the difference between the sale price and the hypothetical fair market value of the property. Pung v. Isabella County.

Three years ago, the Supreme Court held that a government that forecloses and sells property for delinquent property taxes may be liable to return to the owner any surplus proceeds from tax foreclosure sales (i.e., the difference between the sales price and the taxpayer's debt). Tyler v. Hennepin County, 598 U. S. 631 (2023).

In today's case, the question before the Supreme Court went a step further - what if the sale price falls below the property's hypothetical fair market value, would the government be responsible for paying the difference to the owner as "just compensation" under the Fifth Amendment's Takings Clause? Yesterday, the Supreme Court said no, holding that the proper baseline for determining compensation under the Takings Clause is the price obtained in the tax sale so long as the sale was fairly conducted. The Court also held that the Eighth Amendment Excessive Fines Clause does not require the government to return the difference between the sale price and fair market value of the property that was sold. In this case, the Court held that the county was obligated to pay the surplus proceeds to the owner, but was not liable to pay more than what the county sold the property for at its tax sale auction. The opinion concluded with the following:

The Pung family lost its property because it failed to pay its taxes. The Fifth Amendment protects the family’s right to surplus proceeds from the tax sale, not compensation for the property’s fair market value. The Eighth Amendment offers no greater protections.

So, when a government forecloses and sells property for delinquent taxes, (1) it must return any surplus proceeds from the sale (the difference between the sale price and the taxpayer's debt) but (2) is not required to pay more than what the government sold the property for even if the fair market value of the property exceeds the sale price.

Citizen Was Not Entitled to Litigation Costs in Lawsuit Against PAC

A citizen filed two appeals with the Public Access Counselor of the Attorney General's office (PAC) claiming a public body violated the Open Meetings Act (OMA). After the PAC had still not issued a decision two years later, the citizen sued the PAC claiming it violated the OMA by not resolving his appeals within 60 days as provided by section 3.5 of the OMA. Within a week of being served with the lawsuit, the PAC issued non-binding determinations resolving the two appeals and finding the public body in violation of OMA. The citizen filed a motion to voluntarily dismiss one of his claims seeking a court order mandating the PAPACC to respond, acknowledging that claim was now "moot." However, the citizen also filed a motion seeking litigation costs from the PAC under section 3 of the OMA. The trial court denied his request and he appealed to the Illinois Appellate Court.

On appeal, the Illinois Appellate Court examined the OMA and determined that the PAC was not a proper defendant to a lawsuit to enforce the OMA under section 3 of the OMA. The Court interpreted the enforcement provision to apply to public body defendants and their alleged violations of the OMA, and not to the PAC's compliance with the statutory deadlines to respond to appeals, because the PAC is not a "party" under the enforcement statute when a citizen files an appeal of a public body's decision or actions with the PAC. As a result, the Court held that the citizen was not entitled to recover his litigation costs against the PAC for its violation of the statutory deadline required by section 3.5(e) of the OMA. Pal v. Office of the Public Access Counselor.

School Board Violated First Amendment in Restricting Critical Public Comment

Although this case was decided by a different federal circuit court of appeals than the Seventh Circuit that governs Illinois, it is illustrative of how courts view restrictions on public comment at government meetings. Boddy v. Grech (6th Cir. June 10, 2026).

A school board in Xenia, Ohio held a public meeting where public comment was permitted under its public comment policy. While one of the speakers was expressing her views regarding the school district's alleged teaching of critical race theory, the school board president threatened to turn off the speaker's microphone and then grabbed the microphone and recessed the meeting. The speaker sued, claiming the school district violated her First Amendmnet rights. The school district defended the board president's actions, stating that the reason the speaker was silenced was because she violated rules of decorum by inciting and riling up the audience, by using terms such as "cowardice" and "failing" to describe the board and the school district,and by calling people "names" and spreading "baseless accusations."

The district court rejected the speaker's request for a preliminary injunction against the school district, finding that although the speaker's criticism of the board was subject to some First Amendment protection, some of her speech was an "ad hominem" attack that was not protected by the First Amendment. The speaker appealed to the Sixth Circuit Court of Appeals.

On appeal, the Sixth Circuit reversed the district court's ruling and ordered the district court to grant the speaker a preliminary injunction against the board.

First, the Court determined that the speaker's use of "failing" and "cowardice" did not qualify as "fighting words" under the First Amendment. Instead, the speaker was simply criticizing the board and the superintendent for their policy decisions, while maintaining a calm demeanor and tone, which is protected by the First Amendment. The Court further stated that even if her words were "offensive," the First Amendment protects that type of speech and a contrary position would allow the government to ban the express of unpopular views, which would be unconstitutional viewpoint discrimination under the First Amendment. The Court further noted that the [f]reedom to criticize public officials and expose their wrongdoing is at the core of First Amendment values.”

Second, the Court rejected the school district's argument that restricting the speaker's speech was necessary to maintain decorum, finding that the real justification for shutting the speaker down was because she shared viewpoints critical of the board.

Finally, the Court agreed with the speaker that the board's actions in shutting down her speech constituted a "heckler's veto," because the board appeared to be taking action based on the crowd's reactions to the speaker's public comments - i.e., silencing the speaker in an attempt to address a disruptive or unruly crowd.

In sum, the Sixth Circuit found that the speaker was entitled to a preliminary injunction to stop the school board from enforcing its policy against her at future meetings.

County Not Liable for Former Coroner's Actions in Keeping Skull

The Seventh Circuit Court of Appeals recently ruled in favor of a county in a civil rights lawsuit involving the former county coroner's keeping of a family member's skull as a trophy. Betts v. Boone County.

In 1977, a high school student was kidnapped, raped, and murdered and then dumped in a field within the county. As part of the investigation, the county coroner examined the body, and returned the remains to the family, except for the skull, which the coroner kept.

In 2022, the current county coroner contacted the family to inform them that the former coroner had kept at least three skulls, one of which was their family member's. After the family exhumed the casket to place the skull with her remains, they filed a civil rights lawsuit against the county, arguing that the coroner's actions unconstitutionally retained their property in violation of their due process rights. The district court dismissed the case, determining that the family did not show that the former coroner's actions established an official county policy, as required to hold the county liable for its employee's actions.

On appeal, the Seventh Circuit analyzed the legal standard for holding a government liable for civil rights claims for its employees' actions, which requires a person to show that the deprivation of a constitutional right was caused by a municipal policy or custom. Here, the Seventh Circuit held that because state law requires coroners to return all remains to the next of kin, the former coroner did not implement an “official policy” of the county when he kept the skull. Instead, he violated the law. Since the family members could not establish that the county was liable for its former employee's actions, the district court properly dismissed their case.

In the Zone: Appellate Court Upholds Dismissal of Lawsuit Against County Regarding Denial of Solar Facilities

In January 2023, the Illinois General Assembly enacted Public Act 102-1123 (the Act) which, among other things, amended the Counties Code to codify new standards and procedures for the development of “commercial solar energy facilities” in counties across Illinois. Notable provisions of the Act include the following:

A restriction that counties may not adopt zoning regulations that “disallow, permanently ortemporarily,” commercial solar energy facilities in agricultural or industrial districts,
Guidelines regarding maximum setbacks, fencing requirements, height, vegetative screening, etc.,
A provision allowing counties to adopt standards for solar facilities, so long as county requirements are not “more restrictive” than those specified in the Act,
A requirement that counties hold public hearings prior to making decisions to approve or deny solar facilities, and
A provision stating that requests for siting approval or special use permits “shall be approved” if a request complies with the Counties Code, the local county zoning ordinance, and relevant state and federal statutes and regulations.

In 2024, two solar development companies submitted separate applications to a county seeking to develop commercial solar energy facilities within the county. Over the following several months, the developers appeared before the county zoning board of appeals and the zoning committee, which held public hearings and recommended that the county board deny the proposed project under the county’s unified development ordinance (UDO). Both projects were ultimately denied by the county board, and each developer filed a lawsuit requesting (1) a writ of mandamus to compel the county to issue their requested permits, and (2) a declaration that their project applications should be approved. The developers claimed their applications complied with the Act and all provisions of the UDO, and therefore the county was obligated to approve their application and issue all necessary permits for their projects. The county moved to dismiss both cases, arguing that the Act did not give the developers an absolute right to the permits requested.

The trial court ruled in the county's favor, dismissing both cases. The court determined that mandamus was not available because the county could not be compelled to exercise its discretionary zoning authority to issue siting approval or special use permits for the facilities. Furthermore, the court found that the developer’s claim for declaratory judgment was insufficiently plead, and gave the developers an opportunity to replead their complaint. Instead, both developers appealed the trial court’s decision, and the cases were consolidated before the Fourth District Appellate Court.

On appeal, the Appellate Court upheld the decision of the trial court, determining that mandamus was not available given the discretion vested in the county to make local zoning decisions (particularly decisions to grant or deny applications for special use permits). Tate Road Solar 1, LLC, et al. v. County of Winnebago. The Court found the Act did not prohibit the county from exercising discretion in determining whether to issue permits. Instead, by allowing counties to regulate commercial solar energy facilities as “special uses,” the Illinois General Assembly plainly intended that counties maintain some discretion over approval and siting for these land uses. The Court also determined that counties were permitted to apply their traditional, subjective standards used when making local zoning decisions. Additionally, because the Act requires a public hearing before a permit can be issued, the Court found that the county would need to exercise discretion in accepting testimony and evidence, and then weighing various standards to determine whether a permit should be issued. While the Act codified certain limitations on local authority to regulate solar facilities, the Court determined the General Assembly did not eliminate counties’ traditional discretion to make local zoning decisions. Therefore, mandamus was not an appropriate remedy to force the county to approve the developer’s applications and issue permits for the facilities.

As to the developers’ claims for declaratory judgment, the Court found that because the developers did not have a “clear right” to the permits, there was no actual controversy the developers could plead to seek a declaration that their permits be issued. In sum, the Appellate Court upheld the trial court’s decision dismissing the developers’ lawsuits for failing to state a proper claim for mandamus or declaratory relief.

Post Authored by Erin Monforti, Ancel Glink

Municipal Minute