Palakurthi v. Wayne County, Michigan et al

Filing 30

OPINION AND ORDER DENYING DEFENDANT'S 26 MOTION FOR RECONSIDERATION Signed by District Judge Linda V. Parker. (AFla)

Case 2:21-cv-10707-LVP-RSW ECF No. 30, PageID.651 Filed 01/17/23 Page 1 of 7

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
NAGESH PALAKURTHI,
Plaintiff,
v.

Civil Case No. 21-10707
Honorable Linda V. Parker

WAYNE COUNTY 1
Defendant.
__________________________/
OPINION AND ORDER DENYING DEFENDANT’S MOTION FOR
RECONSIDERATION (ECF NO. 26)
This action arises out of a property tax foreclosure of a home in Wayne
County, Michigan. On March 30, 2021, Plaintiff Nagesh Palakurthi initiated this
lawsuit against Defendants Wayne County and Wayne County Treasurer Eric
Sabree. (ECF No. 1.) Plaintiff is a former real property owner who alleges that
Defendants violated several of his constitutional rights under the Fifth, Eighth, and
Fourteenth Amendments of the United States and Michigan Constitutions and state
law in connection with the tax foreclosure process. The matter is presently before
the Court on Defendant’s motion for reconsideration (ECF No. 26) of this Court’s
decision denying the motion to dismiss. (ECF No. 22.). Plaintiff has filed a

In the Court’s March 28, 2022 Order on Defendant’s motion, Wayne County
Treasure Eric Sabree was dismissed as a party to this lawsuit in both his individual
and official capacities. Thus, the only remaining Defendant is Wayne County.
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response to the motion. (ECF No. 29.) For the reasons that follow, the Court is
denying the motion.
Applicable Standard
Eastern District of Michigan Local Rule 7.1(h) governs motions for
reconsideration. As currently written, the rule provides as follows with respect to
non-final orders such as the decision on Defendant’s motion to dismiss:
(2) Non-Final Orders. Motions for reconsideration of nonfinal orders are disfavored. They must be filed within 14
days after entry of the order and may be brought only upon
the following grounds:
(A) The court made a mistake, correcting the mistake
changes the outcome of the prior decision, and the mistake
was based on the record and law before the court at the
time of its prior decision;
(B) An intervening change in controlling law warrants a
different outcome; or
(C) New facts warrant a different outcome and the new
facts could not have been discovered with reasonable
diligence before the prior decision.
E.D. Mich. L.R. 7.1(h)(2). “A motion for reconsideration is not intended as a
means to allow a losing party simply to rehash rejected arguments or to introduce
new arguments.” Southfield Educ. Ass’n v. Bd. of Educ. of Southfield Pub. Schs.,
319 F. Supp. 3d 898, 901 (E.D. Mich. 2018).

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Analysis
Defendant Wayne County identifies six reasons for reconsideration of the
Court’s motion to dismiss decision. First, Defendant asserts the following:
(1) Rafaeli is silent as to retroactivity and silent as to any
discussion of its implementation;
(2) Plaintiff Palakurthi’s claims are barred by res judicata
and collateral estoppel;
(3) even if Rafaeli applied retroactively, it does so at most
on a limited basis, and Plaintiff Palakurthi’s claims are
untimely and barred by the applicable two-year statute
of limitations;
(ECF No. 26 at Pg ID 472 (naming Rafaeli, LLC v. Oakland Cnty, 952 N.W.2d 434
(Mich. 2020).) The arguments proffered here were previously presented before the
Court and addressed in the Court’s March 28, 2022 decision. (ECF No. 22.) As
stated above, motions for reconsideration are not a vehicle “to rehash rejected
arguments[.]” See Southfield Educ. Ass’n, 319 F. Supp. 3d at 901. As such, the
Court will not re-address these claims.
In the fourth claimed error in the Court’s ruling, Defendant asserts that
Count VIII regarding the alleged violation of the Fourteenth Amendment Equal
Protection clause should be dismissed because “it is pled only against Treasurer
Sabree and the claims against Treasurer Sabree have been dismissed with prejudice
and he is no longer a party to this action[.]” (ECF No. 26 at Pg ID 472.)
Defendant also notes that “[i]t appears the Court inadvertently omitted Count VIII
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from its list of dismissed counts in the March 28, 2022 Order.” However, the
Court did not “inadvertently” omit Count VIII, as it was pled against all
Defendants. Despite the typo stating, “(AGAINST ALL DEFENDANT SABRE)”
under Count VIII, it is obvious based on a thorough reading of the Amended
Complaint that Plaintiff intended to include all Defendants. For example, in
paragraph 103, Plaintiff begins the sentence with the following: “Defendants have
promulgated rules . . . .” (ECF No. 10 at Pg ID 159, ¶ 103 (emphasis added).) In
the immediately following paragraph, Plaintiff begins the sentence with:
“Defendant Treasurer has granted such relief on a case-by-case basis . . . .” (Id. ¶
103 (emphasis added).) As Plaintiff notes in his response brief, and the Court
agrees, Count VIII is alleged against all Defendants, and as such, will not be
dismissed.
Next, Defendant asserts that all of Plaintiff’s claims regarding lost equity
should be dismissed because “[t]his Court, in Bowles, rejected plaintiffs’ assertion
that the property interest at issue was ‘lost equity’ rather than the ‘surplus
proceeds’ interest described in Rafaeli.” (ECF No. 26 at Pg ID 475 (referring to
Bowles, et al. v. Sabree, et al., No. 20-cv-12838 (E.D. Mich. 2020).) Defendant is
correct that this Court previously rejected the argument of “lost equity” in lieu of
using the Rafaeli standard of lost surplus proceeds. See Bowles, et al. v. Sabree, et
al., No. 20-cv-12838, ECF No. 47 (E.D. Mich.). However, this district also
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determined that differences in property interests, surplus or market value, or in the
present case, equity, are limited to damages and thus the real question when
determining dismissal is whether a complaint “contain[s] either direct or inferential
allegations respecting all the material elements to sustain a recovery under some
viable legal theory.” Arkona, LLC v. Cnty. of Cheboygan, No. 19-CV-12372, 2021
WL 148006, at *8 n.6 (E.D. Mich. Jan. 15, 2021). Here, Plaintiff does assert that
he is owed the equity from the sale of his home but defines ‘equity’ as “the amount
by which a property’s value exceeds its tax delinquency.” (Amend. Compl. ECF
No. 10 at Pg ID 144, ¶ 12.) Thus, Plaintiff is in fact seeking surplus proceeds and
the Court will not dismiss claims that rely on this definition. Again, this Court
reiterates that arguments “raised for the first time in a motion for reconsideration at
the district court generally [are] forfeited.” Southfield Educ. Ass’n v., 319 F. Supp.
3d at 902 (quoting United States v. Huntington Nat’l Bank, 574 F.3d 329, 331–32
(6th Cir. 2009)). In other words, even if Plaintiff did assert the incorrect standard
for the relief sought, the Court would not remedy such error in a motion for
reconsideration.
Finally, Defendant alleges that the Court did not conduct an “accurate
reading” of the motion to dismiss when deciding not to address Counts VI, VII,
and VIII because Defendant failed to argue for dismissal of the claims on the
merits. In support of this assertion, Defendants direct the Court to Section V of the
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motion—which cites to Defendant’s inaccurate interpretation of the state court’s
holding in Rafaeli—and concludes that “[b]ecause Rafaeli’s interpretation of the
Michigan statute rejected a federal constitutional violation, alleged violations of
the U.S. Constitution and federal constitutional rights should be dismissed.”2 (ECF
No. 8 at Pg ID 95.) To the extent that Defendant is making an argument on the
merits, it merely pointed to Rafaeli but failed to flesh out its arguments, which is
necessary for the Court to properly address them. See L.A. Ins. Agency
Franchising, LLC v. Montes, No. CV 14-14432, 2016 WL 4467697, at *3 (E.D.
Mich. Aug. 24, 2016) (concluding that “[o]nce . . . the details on the issues
discussed [in the briefs] have been fleshed out, the Court will be in a better
position to consider and rule on the merits of those issues.”); see also Francis v.
This Court does not reach the conclusion that the Michigan Supreme Court in
Rafaeli “rejected” a federal constitutional violation. There, the court merely
explained its’ rationale for focusing the ruling exclusively under the Michigan
Constitution by stating the following:

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[W]e are unmoved by caselaw from other states that have
addressed the disposition of surplus proceeds. Some courts
that have confronted the issue whether a cognizable
takings claim can be made for the surplus proceeds have
only addressed the issue in the context of the federal
Takings Clause. Unlike those courts, however, our holding
speaks to Michigan’s Takings Clause, which this Court
has, on occasion, interpreted as offering broader protection
to property owners.
Rafaeli, LLC, 952 N.W.2d at 462.
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Saul, 558 F. Supp. 3d 527, 537 (E.D. Mich. 2021) (quoting McPherson v. Kelsey,
125 F.3d 989, 995-96 (6th Cir. 1997)) (“It is not sufficient for a party to mention a
possible argument in the most skeletal way, leaving the court to ... put flesh on its
bones.”).
Conclusion
For the reasons stated, the Court finds no mistake in its motion to dismiss
decision that, when corrected, changes the outcome of that decision. See E.D.
Mich. L.R. 7.1(h)(2).
Accordingly,
IT IS ORDERED that Defendant’s motion for reconsideration (ECF No.
26) is DENIED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE

Dated: January 17, 2023

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