(TRENTON, N.J.) – The Liberty Justice Center has filed an amicus brief in the Supreme Court of New Jersey in Johnson v. City of East Orange, urging the Court to protect homeowners’ constitutional property rights. The brief argues that the City of East Orange violated the Takings Clause by keeping surplus equity from a foreclosure—and that the City cannot avoid liability on a technicality.
The case involves Lynette Johnson, a New Jersey homeowner whose property was taken through tax foreclosure. After taking the property, the City of East Orange kept tens of thousands of dollars in extra value from the home as surplus equity. This was money above and beyond what Ms. Johnson owed in unpaid taxes and related costs.
Today, courts recognize that the government violates the Constitution when it takes more than it is owed and keeps the extra value. Despite this, East Orange argues that Ms. Johnson should not be allowed to recover her surplus equity because she did not raise that claim during her foreclosure case years ago.
The Liberty Justice Center’s amicus brief explains why that argument is unfair and wrong. Before the U.S. Supreme Court’s decision in Tyler v. Hennepin County in 2023, property owners in New Jersey had no meaningful opportunity to raise this kind of defense during tax foreclosure proceedings. Under the precedent in place when Ms. Johnson’s case was decided, courts would not have allowed such a defense.
The brief also challenges the City’s warning that allowing Ms. Johnson’s case to move forward would create major financial problems for municipalities across New Jersey. Based on a review of New Jersey foreclosure cases, there is no “tsunami” of similar claims waiting to flood the courts.
“Municipalities should not be allowed to invoke imaginary fiscal crises to avoid returning equity in property they were never entitled to keep,” said Jesse Leon, Litigation Fellow at the Liberty Justice Center. “There is no looming deluge of claims, only a property owner seeking compensation that East Orange owes under the Fifth Amendment.”
The Liberty Justice Center is asking the New Jersey Supreme Court to affirm the lower court’s ruling. The brief also urges the Court to make clear that cities cannot keep money that belongs to homeowners simply because the law took time to catch up with the constitutional violation.
The Liberty Justice Center’s amicus brief in Johnson v. City of East Orange can be found here.
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