Michigan Tax Foreclosure Lawsuit, Sixth Circuit Revives Denise Thompson’s Fight Over the $23,500 Allegan County Kept

A Michigan homeowner who owed about $3,000 in property taxes, and whose home was sold with $23,500 in proceeds kept by Allegan County, has another chance to pursue her federal claim. On October 5, 2026, the U.S. Court of Appeals for the Sixth Circuit vacated the dismissal of her lawsuit and sent the case back to the district court, according to reports of the opinion.

The ruling does not order Allegan County to pay Denise Thompson $23,500. It deals only with whether her claims were filed too late. It is also not a settlement, and there is no claim form or deadline.

Michigan Tax Foreclosure Lawsuit: Quick Facts

Detail	Information
Homeowner discussed	Denise Thompson
Other plaintiffs	Gary Day and Josette Day
Defendants	Allegan County, Michigan, and Sally L. Brooks
District court case	Cunningham et al. v. Allegan County, et al., No. 1:24-cv-00472, U.S. District Court, Western District of Michigan (Judge Paul L. Maloney)
Appeal	Sixth Circuit No. 26-1060, as reported
Sixth Circuit decision	October 5, 2026
Thompson’s tax debt	About $3,000
Proceeds Allegan County kept	$23,500
Foreclosures	2013 to 2014
Claims	42 U.S.C. § 1983; Fifth Amendment Takings Clause
Result	Dismissal vacated; case sent back to the district court
Settlement, claim form or deadline	None

Why Did Denise Thompson Lose Her Home Over a $3,000 Tax Debt?

Under Michigan’s former tax-foreclosure system, counties could sell foreclosed property and keep the surplus above the tax debt. According to the Sixth Circuit’s account, as reported, Allegan County foreclosed on Thompson’s home over about $3,000 in taxes, sold it and kept all $23,500 of the proceeds. Gary and Josette Day had similar foreclosures in 2013 and 2014.

Their legal theory is that a government cannot take property to satisfy a tax debt and then keep the value above what was owed.

How Did the Wayside Church Class Action Affect Denise Thompson’s Claim?

Thompson and the Days had been unnamed members of the plaintiff class in Wayside Church v. County of Van Buren, a class action filed in December 2014 over Michigan counties keeping surplus tax-foreclosure proceeds. It was dismissed in 2015 and reopened in 2019. The Sixth Circuit affirmed approval of a contested settlement in that case in October 2025. Thompson and the Days opted out of the settlement in July 2023 to pursue their own claims, and they filed individual suits against Allegan County in March 2024. The defendants removed the case to federal court on May 6, 2024.

Limitation periods can be paused, or tolled, while a class action is pending, and that is the heart of this case.

Why Did the District Court Dismiss Denise Thompson’s Lawsuit?

The district court dismissed the federal claims as filed too late. The plaintiffs argued that Wayside had been pending for about 8.5 of the roughly 11 years involved, which would leave less than three years running if it counted as tolling.

What Did the Sixth Circuit Decide in the Thompson Appeal?

As reported, the Sixth Circuit found problems with the district court’s analysis:

1. The roughly 3.5 years between Wayside‘s dismissal and its reopening did not necessarily restart the limitations clock. Under Michigan Court Rule 3.501(F), a later court order can mean the period is treated as continuously tolled from the start of the class action.
2. Michigan law, not federal law, controls the tolling question for these § 1983 claims unless it conflicts with federal policy.

Why Could Allegan County’s Notice Still Decide the Case?

The court did not declare the claims timely. Michigan law limits class-action tolling where a defendant lacked notice of the claims and the general identity of the potential plaintiffs. The Sixth Circuit sent the case back so the parties can build a record on whether Allegan County had that notice. That question could decide whether the claims go forward.

Does the Sixth Circuit Ruling Give Denise Thompson Her $23,500?

No. The ruling was procedural. Thompson must still get past the timing issue and then prove her claim.

Is the Denise Thompson Case a Class Action or Settlement?

No. It is an individual action. Thompson and the Days left the Wayside class to bring their own claims, and the October ruling creates no settlement fund or claims program. For how real settlement claims work, see How To Claim A Lawsuit Settlement?

How Did Michigan Tax Foreclosure Surplus Become a Constitutional Issue?

In Rafaeli, LLC v. Oakland County, 952 N.W.2d 434 (Mich. 2020), the Michigan Supreme Court addressed the state’s tax-foreclosure system. In Tyler v. Hennepin County (2023), the U.S. Supreme Court held that a Minnesota homeowner plausibly alleged a Takings Clause violation after the county sold her condominium for $40,000 over a tax debt of about $15,000 and kept the roughly $25,000 surplus.

For a related class settlement, see Clackamas County $2.47M Foreclosure Settlement, Former Property Owners Can Claim Surplus Proceeds By May 25, 2026.

What Happens Next in Denise Thompson’s Allegan County Lawsuit?

The case returns to the Western District of Michigan. The court will apply the Sixth Circuit’s instructions on Michigan tolling and the notice question. It could conclude the claims are timely and let them proceed, or, after applying the correct standard, find them still time-barred. The ruling does not predetermine either result.

What Should Michigan Homeowners Do If They Lost Property to Tax Foreclosure?

This ruling does not give every former owner a right to payment. Michigan has since adopted a statutory process for surplus proceeds (MCL 211.78t), and deadlines and remedies depend on when the foreclosure happened and what claim is brought. Owners who think a county kept surplus should keep their records and speak with a licensed Michigan attorney:

• foreclosure notices and the foreclosure judgment
• auction or sale records and the final sale price
• tax statements showing taxes, interest and penalties owed
• proof of ownership at the time of foreclosure

Denise Thompson’s Allegan County Case Key Dates

Date	Event
2013 to 2014	Allegan County forecloses on the Thompson and Day properties
December 2014	Wayside Church v. County of Van Buren class action filed
2015	Wayside dismissed
2019	Wayside reopened
July 2023	Thompson and the Days opt out of the Wayside settlement
March 2024	Individual suits filed in Allegan County Circuit Court
May 6, 2024	Case removed to the Western District of Michigan (No. 1:24-cv-00472)
October 2025	Sixth Circuit affirms approval of the Wayside settlement
October 5, 2026	Sixth Circuit vacates the dismissal and remands

Frequently Asked Questions About the Denise Thompson Allegan County Tax Foreclosure Case

How much did Denise Thompson owe in property taxes?

About $3,000, according to the Sixth Circuit’s account as reported.

How much did Allegan County keep after selling Thompson’s home?

$23,500.

Did Denise Thompson win $23,500?

No. The Sixth Circuit vacated the dismissal and remanded the case.

What is the case number?

District court: No. 1:24-cv-00472 (W.D. Mich.). Appeal: No. 26-1060, as reported.

What did the Sixth Circuit decide?

That the district court used the wrong approach to the timing question, that Michigan tolling law controls, and that Allegan County’s notice of the earlier class action must be examined on remand.

Is this a new Michigan tax foreclosure settlement?

No. There is no new settlement, fund or claim form.

Was Thompson part of an earlier class action?

Yes. She was an unnamed class member in Wayside Church v. County of Van Buren and opted out of its settlement in July 2023.

What happens next?

The district court will reconsider the timing issues, including whether Allegan County had sufficient notice.

Bottom Line on Denise Thompson’s $23,500 Michigan Tax Foreclosure Case

Denise Thompson owed about $3,000 in taxes, and Allegan County kept $23,500 from the sale of her home. On October 5, 2026, the Sixth Circuit revived her federal claim by vacating the dismissal, but the ruling is not a payout or a settlement. The case now returns to the Western District of Michigan to decide whether Allegan County had enough notice of the earlier class action for the claims to be timely.

Sources

• U.S. District Court, Western District of Michigan, Cunningham et al. v. Allegan County, et al., No. 1:24-cv-00472, docket (via Justia Dockets)
• U.S. Court of Appeals for the Sixth Circuit, opinion of October 5, 2026, No. 26-1060, as reported
• U.S. Supreme Court, Tyler v. Hennepin County, No. 22-166 (2023)

This article is for general information only and is not legal advice. AllAboutLawyer.com is not a law firm. Court rulings and deadlines can change.

Researched and written by Israr Ahmad, legal content researcher and founder of AllAboutLawyer.com. All facts verified against the Western District of Michigan docket for Case No. 1:24-cv-00472, with the Sixth Circuit’s October 5, 2026 opinion described as reported, as of October 7, 2026. Last Updated: October 7, 2026.