Legal Docket: Just—or just sold?

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MARY REICHARD, HOST: It’s The World and Everything in It for this 2nd day of March, 2026. We’re so glad you’ve joined us today. Good morning! I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. It’s time for Legal Docket.

Three cases at the Supreme Court last week.

The biggest one asks: What happens when the government seizes your home for back taxes and sells it for less than it’s worth? The court is deciding if the Constitution forces the government to pay you the actual market value. It’s a Fifth Amendment question arising from the “takings clause.” It requires private property not be taken without just compensation. The question is what is just.

Interesting questions.

But before we get to the, two quicker disputes also involving confiscated property by the Castro-Cuba regime.

REICHARD: Right, after Fidel Castro’s communist revolution in 1960, Cuba confiscated a long-term contract giving a company called Havana Docks the right to operate part of the Havana cruise port—what’s known as a concession.

The U.S. government later certified that loss at more than $9 million.

Decades went by. Then in 2019, the U-S began allowing lawsuits under a federal law known as Title III. It lets Americans sue companies that “traffic in” confiscated property.

So Havana Docks sued cruise lines that used the port long after the communist takeover.

EICHER: But there’s a serious wrinkle in the timeline:

The concession had a built-in expiration date. It would have ended in 2004. But lawsuits under the Title III law did not become possible until a decade and a half later.

So the justices wrestled with this question:

If the property right would have expired anyway, does the right to sue survive beyond it?

Justice Elena Kagan pressed that very point:

KAGAN: Once the concession expired, I mean, you no longer have a property interest. You’re just like that bystander that I was telling you about which is like you know there was property that was confiscated all over Cuba but that doesn’t mean that I have a right to be here in court.

REICHARD: If Havana Docks wins, lawsuits over Cuban property could stretch decades beyond the life of the original ownership rights.

If it loses, claims may end when the property interest itself does.

EICHER: A second Cuba case raises a different problem under that same federal law.

Exxon’s predecessors owned oil refineries and around one-hundred service stations in Cuba pre-communism. Those assets were confiscated in the revolution as well.

The certified claim now totals tens of millions of dollars — and with interest, Exxon says the figure exceeds a billion.

So Exxon sued a Cuban state-owned conglomerate under that same Title III law.

REICHARD: But the defendants invoked a different federal statute known as the Foreign Sovereign Immunities Act.

FSIA generally shields foreign governments and their entities from being sued in U.S. courts.

So the question here becomes:

Did Congress clearly override sovereign immunity when it allowed these Cuba lawsuits to go forward?

Justice Kagan sounded skeptical:

KAGAN: But a cause of action doesn’t abrogate immunity. It just doesn’t. There are causes of action all over the place that rely on the FSIA as providing the jurisdictional rules

If sovereign immunity controls, many of these Cuba lawsuits could be blocked outright.

If Title III overrides it, the cases can proceed — and foreign state-owned companies could face major liability in U.S. courts.

EICHER: Now the case we mentioned at the top.

It begins with a $22-hundred dollar tax bill.

A home worth about $200-thousand.

And a foreclosure sale of that home at less than half that value—just $76,000.

REICHARD: Here’s the constitutional question:

When the government takes property to collect a debt, is it enough to run an auction — or must it pay what the property was actually worth?

That’s the fight.

The county says the family had notice for years—and chances to stop the foreclosure.

The Pung family says it didn’t even owe the tax in the first place.

The dispute began with a Michigan property tax benefit known as the Principal Residence Exemption — a rule that reduces taxes on a homeowner’s primary residence.

EICHER: A county assessor denied that exemption.

The state tax tribunal overturned the denial.

But the assessor denied it again.

Before the family could fully unwind the dispute, the county foreclosed over that $2,200 bill.

And the house sold at auction for $76,000.

REICHARD: The Constitution says that when the government takes private property, it must provide “just compensation.”

The county argues that a fair public auction satisfies that requirement. The price is what the market produced.

The family argues that wiping out nearly $100,000 in equity cannot be “just compensation,” even if the auction followed proper procedures.

Justice Sonia Sotomayor captured that tension:

SOTOMAYOR: They’re fighting over a $2,400 tax debt that at least two courts said wasn’t owed, and yet they plowed ahead and got a price half the amount of the value of the property?.... At some point, doesn’t the Constitution have something to say under the rubric of what ‘just compensation’ is?

So what counts as “just compensation” here—what the auction brought in, or what the home was actually worth?

The family’s lawyer, Phil Ellison:

ELLISON: The property interest here is the value of the equity that was taken.....

P 35: Ultimately -- is that there is a piece of property that has been uncontested by the government to be worth, you know, approximately $200,000.

EICHER: How can it be constitutional, he argued, for the government to erase $100,000 in equity?

Justice Neil Gorsuch asked what seemed an obvious question to the family’s lawyer Ellison:

GORSUCH: I'm just curious, why -- why would the county pursue a $2200 debt that their own ALJ said wasn't owed to this extreme?

ELLISON: We can't figure that answer out. We don't believe it's due. And the reality is is, by the time the tax assessor actually informed Mr. Pung that the price was actually --that she had put the PRE credit --had taken it away, denied it once again, the time --the very limited 35-day window in which a Michigan taxpayer can activate the process of the tribunal, to go back again --

GORSUCH: After he's already won.

ELLISON: Had already gone.

For the county’s side, lawyer Matthew Nelson argued that a fair public auction does reflect market value. After all, the auction process is lawful, so the price… is just the price.

After all, the owners had years of notice to make things right. A foreclosure is a forced sale as a result of the homeowner’s actions.

Nothing in the Constitution says the government has to act as a real estate agent to maximize returns.

REICHARD: Justice Samuel Alito wondered why the family didn’t just borrow the amount to pay the tax. It had more than enough equity to get a loan.

Ellison for the family noted the family wanted to keep the house. And he floated the notion that the government could just have seized some personal property to resolve the debt, not an entire home.

ELLISON: In this case with a tax debt of about $2200 bucks It could have been the Peloton bike that was in the house.

ALITO: You think a Peloton bike today is worth $2000? (laughter) If you go on Facebook Marketplace and you try to sell a Peloton bike today for $2,000, I don't think you're going to be very successful. How are they going to know that he has a Peloton bike?

ELLISON: Traditionally -- joking aside, traditionally, there are a lot -- there are a lot of different options. There's bank accounts, there's personal property, the vehicle

EICHER: The kidding aside, the underlying question was serious: how far does the government have to go to collect a small debt without wiping out a family’s home?

That created a scenario of how messy a proportional debt collection might be.

And then Justice Amy Coney Barrett put it this way—

BARRETT: …frankly, reading the briefs, it sounds to me like the tax assessor was like Inspector Javert, but it was even worse because Jean Valjean hadn't stolen the bread. I mean, you didn't even – (Laughter.) -- you didn't even owe the tax, and it's this small tax and -- and the big -- you know, the big loss of the family home and --and of the money. So it -- it does seem that there's some unfairness there. But I'm struggling to see how it fits into the takings framework. Can you tell me of a case that we have that treats the foreclosure of a house as a taking?

Justice Sotomayor was even more pointed in her questioning:

SOTOMAYOR: Give me a holding from a court in our 250-year history where we have said that the measure of damages on a tax foreclosure is fair market value, not the auction price.

ELLISON: There has not been that specific holding in this court’s history, but there has been a history of like, parallel circumstances…

REICHARD: Yikes, that’s the doctrinal chokehold, no precedent on point, which is why the County emphasizes it. Yes, foreclosure is a blunt way of clearing longstanding debts. That’s just reality.

But the family turns that 180 degrees and says if the government chooses a system that destroys equity, the Constitution must step in. And if the county takes in more property than needed to pay the bill, it must make the property owner whole.

EICHER: Lawyer Ellison for the family closed this way: if the government is going to act like a confiscatory entity:

ELLISON: …. you're responsible under the Takings Clause.

REICHARD: If the family prevails here, counties will have to come up with a closer market value or else pay the difference.

If the county wins, it will let states continue a practice that some call “home equity theft” by using “fair process” as a shield for unfair prices.

And that’s this week’s Legal Docket.

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