GREENFIELD — A federal judge has denied the city’s motion to dismiss a case involving two residents who sued the city for taking the excess value of their foreclosed properties over a tax debt, a practice the U.S. Supreme Court ruled was unconstitutional last year.

Plaintiffs Stephen Woodbridge and Roberta Browning filed suit against Greenfield in September alleging that the city violated their rights under the Takings Clause of the Fifth and Eighth Amendments to the Constitution by taking their properties to recover unpaid taxes without compensating them for approximately $289,000 in combined excess value the city collected at resale.

In 2021, Greenfield sold one of Woodbridge’s two parcels of foreclosed land, located at 87 Stone Ridge Lane, for $270,000 and kept the second parcel, which was valued at $50,200 in 2023. The city foreclosed on the parcels because Woodbridge owed a total of $5,761 in taxes.

The city sold Browning’s property, valued at $109,900, for $34,000 in 2020 after Browning owed the city $1,578 in delinquent taxes. Neither Browning nor Woodbridge received any of the excess value the city attained from either sale.

“As noted, the combined amount of taxes owed on the Woodbridge Property was under $6,000. Woodbridge Parcel 2 itself was worth over $49,000 and therefore, sale of that property alone would have more than paid off the tax debt on both properties. Nonetheless, the City chose to foreclose on both properties and doing so, has realized an enormous windfall,” U.S. District Court Judge Timothy Hillman wrote in a footnote to his court order.

The city’s attorney, Jesse W. Belcher-Timme, filed a motion to dismiss in October on the grounds that the city has not taken independent action to deprive the plaintiffs of their property, but rather, followed the state’s statutory scheme for tax takings.

“I think the plaintiffs … have oversimplified their analysis here,” Belcher-Timme told Hillman during a motion to dismiss hearing last fall. He said the question is actually whether the statutory scheme — or laws established by the Legislature — in Massachusetts is constitutional.

In Hillman’s order denying the city’s motion to dismiss, which was filed on May 29, the judge wrote that a significant factor in the case centers around whether the plaintiffs had access to a legal procedure with which they could claim the excess funds under state law.

Hillman’s decision came only days after the state Senate unanimously passed an amendment to the state’s annual spending plan that would prohibit municipalities and private companies from taking the entire equity of a home in the event of a tax lien foreclosure, a practice some critics refer to as “home equity theft.”

The Senate’s decision aimed to bring Massachusetts’ home equity laws in line with the results of last year’s Tyler v. Hennepin County, Minn. case, in which the Supreme Court ruled that the practice was unconstitutional.

“While the statutory scheme may have permitted the City to proceed against both properties, its choice to take advantage thereof to line its coffers to this extent serves as a stark example why this statutory scheme is subject to constitutional challenge in multiple cases throughout the Commonwealth,” Tillman stated in his order.

In an interview Monday, attorney Michael Aleo, who represents Woodridge and Browning, referred to the judge’s ruling as a “big win” for not only his clients, but homeowners across Massachusetts.

“It makes it clear that cities can not take people’s property without just compensation,” Aleo said. “The litigation will continue and we will fight to get the plaintiffs the justice they deserve.”

Anthony Cammalleri can be reached at acammalleri@recorder.com or 413-930-4429.