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### STATE OF MICHIGAN

COURT OF APPEALS

___________________________________________

In re PETITION OF TUSCOLA COUNTY
TREASURER FOR FORECLOSURE.

TUSCOLA COUNTY TREASURER,

Petitioner-Appellant/CrossAppellee, FOR PUBLICATION October 10, 2016

9:05 a.m.

v No. 328847
Tuscola Circuit Court JENNIFER A. DUPUIS, LC No. 14-028294-CZ

Respondent-Appellee/CrossAppellant.

Before: J ANSEN , P.J., and M URPHY and R IORDAN , JJ.

P ER C URIAM

.

Petitioner appeals as of right the order granting respondent c onditional relief from an earlier judgment of foreclosure of her property. Respondent cr oss-appeals that s ame order on the basis that MCL 211.78k(5)(g) is unconstitutional. We reverse a nd vacate.

I. FACTS AND PROCEDURAL HISTORY

This case arises from the foreclosure of respondent’s property , which is located in Arbela Township. The property became delinquent on property taxes for 2011 and 2012. On January 23, 2014, petitioner granted respond ent a financial hardship de ferral, which required respondent to pay the 2011 taxes by June 1, 2014, and to pay $300 per mont h for the 2012 taxes. However, respondent did not pay the 2011 or 2012 taxes pursuant to the f inancial hardship deferral.

On May 14, 2014, petitioner filed a petition of foreclosure fo r properties with unpaid property taxes for 2012 and prior years, and respondent’s prope rty was incorporated in the petition. Respondent was provided with notice regarding a Janu ary 21, 2015 show-cause hearing and a February 2, 2015 foreclosure hearing. Respondent does no t argue that she did not receive
these notices. Petitioner als o filed with the court proof of p ublication and proof of personal visits to the property.-2- On February 2, 2015, following a hearing, the circuit court en tered a final judgment of foreclosure on the property. The judgment ordered that fee sim ple title would vest on March 31, 2015, and respondent would lose all rights of redemption, unles s the delinquent taxes were paid before that date. The order further provided:

This judgment is a final order with respect to the property af fected by this Judgment and except as provided in MCL 211.78k(7) shall not be modified, stayed, or held invalid after March 31, 2015 unless there is a contested case concerning a parcel in which event this final judgment, with re spect to the parcel involved in the contested case, shall not be modified, stayed, or held invalid 21 days after the entr y of the judgment in the contested case.

Another notice was sent to respondent, informing her that she h ad to pay the delinquent taxes by March 31, 2015, in order to redeem the property. Respondent do es not challenge whether she received the notice. Respondent did not pay the delinquent tax es by March 31, 2015. The auction on the property was scheduled for August 26, 2015.

On August 3, 2015, respondent filed a motion to conditionally set aside the judgment of foreclosure pursuant to MCR 2.612(C)(1)(f). Respondent explain ed in an affidavit included with the motion that the foreclosure was the result of past hard tim es and a misunderstanding with township officials. Specifically, respondent stated that she f ell on hard times after her husband broke his back and that a township board member told her that s he needed to pay the delinquent taxes by May 2015. According to respondent, she submitted $6,0 00 to petitioner in early May 2015, but petitioner returned the money to her by mail about a month later. Respondent stated
that she had all the funds needed to pay the entire tax deficie ncy in full, including penalties, costs, and expenses, and she had f inally located an attorney wh o could help her.

Petitioner responded on August 6, 2015, contending that the ci rcuit court lacked jurisdiction because the judgment of foreclosure was entered, t he redemption period expired, and respondent was not claiming a denial of due process. Petitione r further argued that, even if the court had jurisdiction, it should not grant relief under MCR 2. 612(C)(1)(f) because respondent’s position “is solely the result of her actions and inactions.” During a hearing on August 10, 2015, the circuit court granted res pondent’s motion, stating that it had “equitable jurisdiction,” and that granting the motion is “the appropriate thing to do.” The cour t explained that it “may be wrong” on the jurisdictional issue, but the court preferred to err on the side of doing the appropriate thing. The court then entered a n order granting respondent con ditional relief from the judgment of foreclosure, which directed pet itioner to convey the propert y back to respondent conditioned on respondent’s payment of all de linquent taxes, interest, pena lties, and fees by August 20, 2015. Respondent paid the taxes, interest, penalties, and fees within the time frame, and no auction
occurred.

II. STANDARD OF REVIEW

We review de novo the question whether the circuit court had j urisdiction to enter the order granting conditional relief. In re Petition by Wayne Co Treasurer , 265 Mich App 285, 290; 698 NW2d 879 (2005). The issue whether a statute is uncon stitutional because it violates the separation of powers doctrine is a question of law, which w e review de novo. See Phillips v-3- Mirac, Inc , 470 Mich 415, 422; 685 NW2d 174 (2004); Okrie v Michigan , 306 Mich App 445, 453; 857 NW2d 254 (2014).

III. JURISDICTION

Petitioner contends that the circuit court did not have jurisd iction to enter the order granting respondent conditional re lief from the judgment of for eclosure. We agree.

“Jurisdiction is a court’s power to act and its authority to h ear and decide a case.” Riverview v Sibley Limestone , 270 Mich App 627, 636; 716 NW2d 615 (2006). “[A] court must take notice when it lacks jurisdiction regardless of whether th e parties raised the issue.” In re Complaint of Knox , 255 Mich App 454, 457; 660 NW2d 777 (2003). A circuit court’ s subjectmatter jurisdiction is conf erred by statute as follows:

Circuit courts have original jurisdiction to hear and determin e all civil claims and remedies, except where exclusive jurisdiction is giv en in the constitution or by statute to some other court or where the cir cuit courts are denied jurisdiction by the constitu tion or statute s of this sta te. [MCL 600.605.]

“Thus, circuit courts are presume d to have subject-matter juris diction unless jurisdiction is expressly prohibited or given to another court by constitution or statute.” Wayne Co Treasurer

, 265 Mich App at 291.

At issue in this case is the circuit court’s ability to condit ionally set aside a judgment of foreclosure entered pursuant to the General Property Tax Act (G PTA), MCL 211.1 et seq . MCL 211.78k(5) provides, in part:

The circuit court shall enter fi nal judgment on a petition for foreclosure filed under [MCL 211.78h] at any time after the hearing under t his section but not later than the March 30 immediately succeeding the hearing with the judgment effective on the March 31 immediately succeeding the hearing fo r uncontested cases or 10 days after the conclusion of the hearing for contes ted cases. All redemption rights to the propert y expire on the March 31 immedi ately succeeding the entry of a judgment foreclos ing the property under this sec tion, or in a contested case 21 days after the entry of a judgment foreclosin g the property
under this section. The circuit co urt’s judgment shall specify all of the following:

* * *

(b) That fee simple title to pr operty foreclosed by the judgm ent will vest absolutely in the foreclosing governmental unit, except as othe rwise provided in subdivisions (c) and (e), [1] without any further rights of redemption, if all forfeited

1 MCL 211.78k(5)(c) and (e) provide exceptions that do not apply in the instant case. See MCL 211.78k(5)(c) and (e).-4- delinquent taxes, interest, penalties, and fees are not paid on or before the March 31 immediately succeeding the entry of a judgment foreclosing t he property under this section, or in a contested case within 21 days of the entr y of a judgment foreclosing the property under this section.

* * *

(g) A judgment entered under this section is a final order wit h respect to the property affected by the judgm ent and except as provided in subsection (7) shall not be modified, stayed, or held invalid after the March 31 immediately succeeding the entry of a judgment foreclosing the property und er this section, or for contested cases 21 days after the entry of a judgment forec losing the property
under this section.

MCL 211.78k(6) provides, in part:

Except as otherwise provided in subsection (5)(c) and (e), fee simple title to property set forth in a petition for foreclosure filed under [MCL 211.78h] on which forfeited delinquent taxes, interest, penalties, and fees are not paid on or before the March 31 immediately succeeding the entry of a judgm ent foreclosing the property under this section, or in a contested case within 21 days of the entry of a judgment foreclosing the property under this section, shall vest absolutely in the foreclosing governmental unit, and th e foreclosing governmental unit shall have absolute title to the property . . . . The foreclosing governmental unit’s title is not subject to any recorded or unrecorded lien and shall not be stayed or held invalid except as provided in s ubsection (7) or (9). [Emphasis added.]

MCL 211.78k(7) adds that “[t]he for eclosing governmental unit o r a person claiming to have a property interest under [MCL 211.7 8i] in property foreclosed un der this section may appeal the
circuit court’s order or the cir cuit court’s judgment foreclosi ng property to the court of appeals,” and clarifies that “[t]he circu it court’s judgment foreclosing property shall be stayed until the court of appeals has reversed, m odified, or affirmed that judgm ent.”

MCR 2.612(C)(1), the court rule under which the circuit court granted conditional relief, provides, in relevant part:

On motion and on just terms, the court may relieve a party or the legal representative of a party from a final judgment, order, or proc eeding on the following grounds:

* * *

(f) Any other reason justifyi ng relief from the operation of the judgment.

In In re Petition by Wayne Co Treasurer , 478 Mich 1, 5; 732 NW2d 458 (2007), our Supreme Court addressed constitu tional concerns related to MCL 211.78k(6) after a church did not receive notice of a pending foreclosure because the county treasurer failed to comply with the notice provisions of the GPTA. The county treasurer sent n otice to a previous owner and-5- failed to post a notice on the property. Id . A judgment of foreclosure was entered and the property was sold to third parties after the redemption period expired. Id . When the church learned of the foreclosure, it filed a motion for relief from t he judgment of foreclosure, which the circuit court granted. Id . This Court denied the third p arties’ delayed application for leave to appeal, and our Supreme Court then granted their application fo r leave. Id . Our Supreme Court considered whether MCL 211.78k(6) deprives the circuit court of jurisdiction to alter the judgment of foreclosure under MCR 2.612(C) when a property owne r does not redeem the property within the allotted time frame or appeal the foreclosu re judgment. Id . at 5, 8.

The Court noted that MCL 211.78k(6) reflects a “legislative ef fort to provide finality to foreclosure judgments and to quickly return property to the tax rolls.” Wayne Co Treasurer , 478 Mich at 4. The Court explained:

If a property owner does not redeem the property or appeal the judgment of foreclosure within 21 days, then MCL 211.78k(6) deprives the ci rcuit court of jurisdiction to alter the judg ment of foreclosure. MCL 211.78k (6) vests absolute

title in the foreclosing governmental unit, and if the taxpayer does not redeem the property or avail itself of the appeal process in subsection 7, then title “ shall not be stayed or held invalid . . . .” This language reflects a cl ear effort to limit the jurisdiction of courts so that judgments of foreclosure may not be modified other than through the limited procedures provided in the GPTA. The only possible remedy for such a property owner would be an action for monetar y damages based on a claim that the prope rty owner did not receive any no tice. In the majority of cases, this regime provides an appropriate procedur e for foreclosing property because the statute req uires notices that are consiste nt with minimum due process standards. [ Id . at 8 (citation omitted).]

Our Supreme Court then addressed the situation in which the sta tutory scheme deprives a property owner of his or her property without due process, hold ing that, to the extent that MCL 211.78k limits the circuit court’s jurisdiction to modify judgm ents of foreclosure when property owners are denied due process , it is unconstitutional. Id . at 8-11. The Court explained that

the plain language of the [MCL 211.78k] simply does not permit a construction that renders the statute constitutional because the statute’s j urisdictional limitation encompasses all foreclosures, including those where there has b een a failure to satisfy minimum due process requirements, as well as those situ ations in which constitutional notice is provi ded, but the property owner does not receive actual
notice. In cases where the forec losing governmental unit compl ies with the GPTA notice provisions, MCL 211.78k is not problematic. Indeed , MCL 211.78 l provides in such cases a damages remedy that is not constitutio nally required. However, in cases where the forecl osing entity fails to provide constitutionally adequate notice, MCL 211.78k permits a property owner to be deprived of the property without due process of law. Because the Legislature c annot create a statutory regime that allows for constitutional violations with no recourse, that portion of the statute purporting to limit the circuit court’s jurisdiction to modify judgments of foreclosure is unconstitutional and unenforceable as applied to property owners who are denied due process. [ Id . at 10-11.]-6- Thus, the Court concluded that MCL 211.78k was unconstitutional to the extent that it permitted entry of a judgment of foreclosure without constitutionally ade quate notice, and in situations in which the government did not p rovide constitutionally adequate notice, the circuit court has jurisdiction to modify the judgment of foreclosure. Id . at 10-11. However, in situations in which the property owner receives adequate due process, the circuit c ourt does not have jurisdiction to modify or vacate its judgment of foreclosure. See id . at 10 (noting that “[i]n cases where the foreclosing governmental unit complies with the GPTA notice pro visions, MCL 211.78k is not problematic”).

Although it is true that MCR 2.612(C)(1)(f) authorizes a circu it court to relieve a party from a final judgment when such relief is justified, the circui t court in the instant case could not use that authority to modify the February 2, 2015 judgment of f oreclosure because it lacked jurisdiction pursuant to the e xpress prohibition in MCL 211.78k (6) limiting “the jurisdiction of courts so that judgments of foreclosure may not be modified oth er than through the limited procedures provided in the GPTA.” Wayne Co Treasurer , 478 Mich at 8. Here, respondent did not appeal the judgment of foreclosure to this Court as provide d in MCL 211.78k(7) or pay the delinquent taxes, interest, penalties, and fees on or before th e March 31, 2015 redemption deadline. As a result, the circuit court’s jurisdiction to mod ify the February 2, 2015 judgment of foreclosure was extinguished. I ndeed, the circuit court’s entr y of the motion for relief from the judgment of foreclosure appears to be the exact situation the s tatutory scheme was designed to prohibit. The goal of MCL 211.78k(6) is to provide finality, a nd setting aside the judgment of foreclosure months after the judgment was entered because the r espondent obtained the necessary funds is contrary to t he reasoning underlying the sta tute. See id . at 4.

Further, the judicially-created due-process exception in Wayne Co Treasurer is inapplicable because respondent has never argued that petitione r failed to provide her with constitutionally adequate notic e of the foreclosure proceeding or that she was otherwise deprived of due process. Contrary to the situation in Wayne Co Treasurer , respondent was provided with notice of the foreclosure proceedings, and she failed to partic ipate or pursue any available remedies under the GPTA to protect her interest. Accordingly, because there was no due-process violation, the circuit court did not have jurisdiction to modif y the judgment of foreclosure pursuant to the due-p rocess exception from Wayne Co Treasurer

.

IV. SEPARATION OF POWERS

Respondent contends on cross-ap peal that MCL 211.78k(5)(g) is unconstitutional because it violates the separ ation of powers doctrine. We disa gree.

“Statutes are presumed to be constitutional, and we have a dut y to construe a statute as ‘constitutional unless its uncons titutionality is clearly appar ent.’ ” Zdrojewski v Murphy , 254 Mich App 50, 74-75; 657 NW2d 721 (2002) (citation omitted). Th e party contending that the
statute is unconstitutional has the burden to establish that th e law is invalid. Id . at 75.

The Separation of Powers Clause of the Michigan Constitution p rovides that “[t]he powers of government are divided i nto three branches: legislati ve, executive and judicial. No person exercising powers of one branch shall exercise powers pr operly belonging to another branch except as expressly provided in this constitution.” Con st 1963, art 3, § 2. The Michigan-7- Constitution further provides that “[t]he supreme court shall b y general rules establish, modify, amend and simplify the practice a nd procedure in all courts of this state.” Const 1963, art 6, § 5.

While the Michigan Supreme Cour t “retains the authority and d uty to prescribe general rules that ‘establish, modify, amend, and simplify the practice and procedure in all courts of this state,’ ” issues of “ ‘substantive law are left to the Legislature.’ ” People v Jones , 497 Mich 155, 165; 860 NW2d 112 (2014) (citations omitted). Thus, our Suprem e Court may not enact “ ‘court rules that establish, abrogate, or modify the substantive law.’ ” Id . (citation omitted). See also McDougall v Schanz , 461 Mich 15, 30-31; 597 NW2d 148 (1999) (“ ‘[I]f a particular court rule contravenes a legislatively decl ared principle of public policy , having as its basis something other than court administration . . . the [court] rule should y ield.’ ”) (citation omitted; second alteration in original). Additionally, “the Supreme Court’s ru le-making power is constitutionally supreme in matters of practice and procedure only when the conflicting statute embodying putative procedural rules reflects no legislative policy consid eration other than judicial dispatch of litigation.” In re Gordon Estate , 222 Mich App 148, 153; 564 NW2d 497 (1997). “In other words, if the statutes in question are grounded on policy consi derations other than regulating the procedural operations of the judiciary, they do not impermissib ly infringe the Supreme Court’s rulemaking authority.” Zdrojewski , 254 Mich App at 82.

Respondent argues that MCL 211.78k(5)(g) infringes on our Supr eme Court’s constitutional rule-making aut hority over practice and procedur e. We first note that although respondent only raises the issue with regard to MCL 211.78k(5)( g), respondent’s argument also encompasses MCL 211.78k(6), which establishes that fee simple t itle to the property vests in the foreclosing governmental unit if the respondent does not redeem the property and clarifies that the title may not be stayed or held invalid, with limited excep tions. MCL 211.78k( 5)(g) provides that the judgment of foreclosure must state that it is a final order and that it cannot be modified, stayed, or held invalid after the redemption period expires. O ur Supreme Court clarified in Wayne Co Treasurer that MCL 211.78k(6) deprives the ci rcuit court of jurisdiction to modify or invalidate the judgment of foreclosure. Wayne Co Treasurer , 478 Mich at 8. Therefore, we conclude that respondent’s argument also encompasses MCL 211.78 k(6).

We disagree with respondent’s contention that a statute divest ing the circuit court of jurisdiction to modify or invalidate a judgment of foreclosure following the redemption period violates the separation of power s doctrine. We first note that our Supreme Court already addressed the issue of the constitutionality of MCL 211.78k(6) in the context of a due-process challenge when it determined that MCL 211.78k(6) divests the ci rcuit court of jurisdiction to modify or invalidate the judgmen t of foreclosure except in a si tuation in which the respondent contends that she was deprived of due process. Wayne Co Treasurer , 478 Mich at 8-11. The Court clarified that, in situations in which the respondent was denied due process, the circuit court may modify its judgment of foreclosure. Id . at 10-11. Thus, the Court carved out a limited exception permitting the circuit court to exercise jurisdiction if the respondent was denied due process. However, our Supreme Court did not address the exact issue raised in this appeal, namely, whether the statutory sch eme violates the separation of powers doctrine.

We conclude that the limitation on the circuit court’s jurisdi ction as outlined in MCL 211.78k(5)(g) and (6) does not violate the separation of powers doctrine. Responde nt argues that the statutory scheme is an attempt by the Legislature to contro l the practices and procedures that-8- our Supreme Court has established regarding entry of a final ju dgment, with MCR 2.612(C)(1)(f) being the rule of practice and procedure that is relevant here. Respondent argues that because the statutory scheme conflicts with MCR 2.612(C)(1)(f), which a llows for relief from judgment for any reason justifying relief, the statute is unconstitution al, the court rule controls, and the circuit court was freely able to use MCR 2.612(C)(1)(f) to gran t conditional relief.

We disagree with respondent because the statutory provisions a t issue constitute substantive law. MCL 211.78k(5)(g ) and (6) provide that the co urt may not alter the judgment of foreclosure if the owner does not redeem the property and requi re the judgment of foreclosure to
reflect that the circuit court may not modify, stay, or invalid ate the judgment of foreclosure after the redemption period has expi red. See MCL 211.78k(5)(g) and ( 6). As the Michigan Supreme Court noted, MCL 211.78k(6) reflect s a legislative effort to pr ovide finality to foreclosure judgments and to return property to the tax rolls in a swift ma nner. Wayne Co Treasurer , 478 Mich at 4. The Court further explained that MCL 211.78k(6) ref lects “a clear effort to limit the jurisdiction of courts so that judgments of foreclosure may not be modified other than through the limited procedures provided in the GPTA.” Id . at 8. The same reasoning applies to MCL 211.78k(5)(g), which requires that the circuit court state in t he judgment of foreclosure that the judgment cannot be modified, stayed, or held invalid following expiration of the redemption period. Thus, MCL 211.78k(5)(g) and (6) demonstrate a clear le gislative policy reflecting considerations other than judici al dispatch of litigation. See Estate of Gordon , 222 Mich App at

153. Accordingly, we conclude that MCL 211.78k(5)(g) and (6) do not violate the separation of powers doctrine. For the reas ons discussed, the circuit court lacked jurisdiction to enter the order granting conditional relief fro m the judgment of foreclosure. 2

Reversed and vacated.

/s/ Kathleen Jansen /s/ William B. Murphy
/s/ Michael J. Riordan

2 Because we conclude that the circuit court lacked jurisdiction to enter the order granting conditional relief, we need not address the issue whether the c ircuit court properly granted
conditional relief under MCR 2.612(C)(1)(f).