Bidding Process Statutorily Mandated Property Going to the Highest Bidder
In Arenac Property I, LLC v. Stawowy, Michigan Court of Appeals, No. 303766, April 24, 2012, a limited liability companie should be permitted to amend their complaint in a case where the companies alleged that the county treasurer's conduct wrongfully or fraudulently deprived the companies of their ability to participate in a public auction to sell off various properties for unpaid local Michigan property taxes. The companies had a legitimate expectancy that they would be able to bid at the auction and that their bid would be evaluated fairly and openly.
In this case, the companies timely submitted a bid on a bundle of foreclosed properties. Although the properties went to auction, they were not sold because the county treasurer determined that there were no qualified bidders. Moreover, the properties were not pulled from the auction. Thereafter, several of the parcels were unbundled and individually transferred to the respective local municipalities in which the parcels were located. The remaining parcels ultimately remained with the county and under the county treasurer's control.
The Michigan Court of Appeals noted that a bidding process was statutorily mandated, with the property going to the highest bidder. By declaring that there were no qualified bidders, the county treasurer ensured that a competitive bid process could not take place and effectively subverted the tax foreclosure statutory requirements. The court held that the companies' complaint alleged facts that the county treasurer conspired to prevent them from engaging and participating in a public auction. Therefore, the companies should be permitted to amend their complaint especially when there may be evidence of a violation of the public trust by the county treasurer's intentional interference with the auction process.