Opinion
No. 344414
03-19-2019
DORSEY SCHOOL OF BUSINESS, INC, Petitioner-Appellant, v. CHARTER TOWNSHIP OF SAGINAW and MICHIGAN STATE TAX COMMISSION, Respondents-Appellees.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Tax Tribunal
LC No. 18-000018-TT Before: STEPHENS, P.J., and GLEICHER and BOONSTRA, JJ. PER CURIAM.
Petitioner appeals by right the final opinion and judgment of the Michigan Tax Tribunal (the Tribunal) insofar as it granted summary disposition in favor of respondent Charter Township of Saginaw (the Township) under MCR 2.116(I)(1). We affirm.
I. PERTINENT FACTS AND PROCEDURAL HISTORY
Petitioner is a for-profit educational institution subject to the taxing authority of the Township. Before 2017, petitioner never applied for or received the "educational institution" personal property tax exemption provided for in MCL 211.9(1)(a), and paid assessed personal property taxes to the Township. In 2017, the Michigan Supreme Court issued its decision in SBC Health Midwest, Inc v City of Kentwood, 500 Mich 65, 73; 894 NW2d 535 (2017), holding that MCL 211.9(1)(a) could not properly be read to limit its tax exemption to nonprofit educational institutions. Later that year, petitioner filed a petition with the State Tax Commission (STC) seeking a retroactive application of the exemption for the tax years 2015, 2016, 2017 under MCL 211.154. After a hearing, the STC dismissed the petition for lack of jurisdiction, holding that the issue of petitioner's tax-exempt status fell within the jurisdiction of the Tribunal. The STC denied petitioner's appeal.
MCL 211.154 allows the STC to correct the assessed value of taxable property for the current tax year and two immediately preceding tax years if the assessment is "based upon incorrect reporting or omission." See MCL 211.154(1); see also Superior Hotels, LLC v Mackinaw Twp, 282 Mich App 621, 633; 765 NW2d 31 (2009).
Petitioner then filed a petition with the Tribunal, requesting that the Tribunal overturn the STC's decision that it lacked jurisdiction over the original petition, and also requesting that the Tribunal, in the exercise of its original jurisdiction, conclude that petitioner was entitled to relief under MCL 211.53a because "the failure to treat Petitioner as entitled to an exemption for its personal [property] pursuant to MCL 211.9(1)(a)" resulted from a mutual mistake of fact. Petitioner sought a refund of the 2015, 2016, and 2017 personal taxes property taxes it had paid, as well as the portion of the 2014 property taxes it had paid in 2015. The petition named the STC as a respondent.
MCL 211.53a permits a taxpayer to recover excess taxes paid due to a "clerical error or mutual mistake of fact made by the assessing officer and the taxpayer" if the suit is filed within three years of the date of the payment.
The STC moved the Tribunal for summary disposition and to dismiss it as a co-respondent. The Tribunal denied the STC's motion for summary disposition, but granted its motion to dismiss it from the case. The Tribunal also granted summary disposition in favor of the Township under MCR 2.116(I)(1) (opposing party entitled to judgment as a matter of law), holding that (1) the STC did not err by dismissing the original petition, because petitioner had failed to state a claim on which relief could be granted under MCL 211.154, and (2) petitioner had not demonstrated that there was a genuine issue of material fact concerning a "mutual mistake of fact" under MCL 211.53a. Specifically, the Tribunal held that MCL 211.154 did not permit the STC to reclassify petitioner's personal property, which it had reported as taxable property on its personal property statements, as tax-exempt. The Tribunal further held that the mistake alleged by petitioner was neither mutual nor one of fact; rather, it held that petitioner's mistake was a mistake of law concerning the legal status of the property it had listed as taxable. The Tribunal therefore granted summary disposition in favor of the Township under MCR 2.116(I)(1) and dismissed the petition.
This appeal followed.
II. STANDARD OF REVIEW
While this Court is bound by the Tax Tribunal's factual determinations and may properly consider only questions of law under this section, a Tax Tribunal decision that is not supported by competent, material, and substantial evidence on the whole record is an "error of law" within the meaning of Const 1963, art 6, § 28. Oldenburg v Dryden Twp, 198 Mich App 696, 698; 499 NW2d 416 (1993); Kern v Pontiac Twp, 93 Mich App 612, 620; 287 NW2d 603 (1979). Substantial evidence must be more than a scintilla of the evidence, although it
may be substantially less than a preponderance of the evidence. Jones & Laughlin Steel Corp v City of Warren, 193 Mich App 348, 352-353; 483 NW2d 416 (1992). "Substantial" means evidence that a reasonable mind would accept as sufficient to support the conclusion. Kotmar, Ltd v Liquor Control Comm, 207 Mich App 687, 689; 525 NW2d 921 (1994). [Great Lakes Div of Nat'l Steel Corp v Ecorse, 227 Mich App 366, 388-389; 576 NW2d 667 (1998).]
We review de novo issues of statutory interpretation. Makowski v Governor, 317 Mich App 434, 441; 894 NW2d 753 (2016). We review a lower court's grant of summary disposition de novo. Sobiecki v Dep't of Corrections, 271 Mich App 139, 141; 721 NW2d 229 (2006).
III. ANALYSIS
Petitioner argues that the Tribunal erred by granting summary disposition in favor of the Township on its claims under MCL 211.154 and 211.53a. We disagree.
"Under MCR 2.116(I)(1), the trial court is affirmatively required to 'render judgment without delay' when 'the pleadings show that a party is entitled to judgment as a matter of law.' " Sobiecki, 271 Mich App at 141.
MCL 211.154(1) provides that the STC may correct the assessed value of taxable property for previous years if the property has been "incorrectly reported or omitted" for the current tax year or any of the two immediately preceding tax years. See Superior Hotels, LLC v Mackinaw Twp, 282 Mich App 621, 633; 765 NW2d 31 (2009). This Court has noted that the error must be "based upon incorrect reporting or omission." Id.
MCL 211.53a provides:
Any taxpayer who is assessed and pays taxes in excess of the correct and lawful amount due because of a clerical error or mutual mistake of fact made by the assessing officer and the taxpayer may recover the excess so paid, without interest, if suit is commenced within 3 years from the date of payment, notwithstanding that the payment was not made under protest.
MCL 211.9(1)(a) exempts the "personal property of . . . educational institutions incorporated under the laws of this state" from taxation.
Here, petitioner submitted tax documents to the Township listing its personal property as taxable property, rather than exempt property, for the tax years in question. Petitioner argued before the STC and the Tribunal, and argues on appeal, that this submission was an incorrect report or omission under MCL 211.154(1), or a mutual mistake of fact under MCL 211.53a. We disagree with both of those characterizations.
Regarding MCL 211.154, the Tribunal noted that petitioner chiefly relied on this Court's decision in Detroit v Norman Allan & Co, 107 Mich App 186; 309 NW2d 198 (1981), abrogated by statute as recognized by Superior Hotels, 282 Mich App at 642, in support of its contention that the STC possesses the authority to retroactively apply an exemption to property that was listed as taxable by a taxpayer and accepted as taxable by the taxing entity, and that Norman Allan's reasoning was undermined by our Legislature's amendment of MCL 211.154 in 1982, as we noted in Superior Hotels, 282 Mich App at 642. We agree that Norman Allan does not aid petitioner. In Norman Allan, we merely held that the then-existing version of MCL 211.154 granted the STC the authority to correct the assessed value of property "if it has been incorrectly reported as exempt but is thought to be . . . taxable property." Norman Allan, 107 Mich App at 192. Our holding was based on the since-eliminated language of MCL 211.154 that provided that "[i]f it appears to the commission that no reason in fact or in law exists which would justify an exemption of such property from taxation for those 2 years, it shall immediately place the total aggregate assessment value for the omitted years on the then current assessment roll." Id. at 192. This language was eliminated by subsequent amendment to MCL 211.154. See 1982 PA 539; see also Superior Hotels, 282 Mich App at 642 ("1982 PA 539 eliminated entirely the language emphasized and relied on by the Norman Allan Court . . . .).
Petitioner argues not only that the holding of Norman Allan applies, but that it should be applied in reverse, i.e. that the holding of Norman Allan also grants the STC the authority to correct the assessed value of property incorrectly reported as taxable but that is thought to be exempt. The validity of that argument would be questionable even if Norman Allan was still good law on this point, given that issues of statutory interpretation involving entitlement to tax exemption must be "narrowly construed" to avoid upsetting "the desirable balance achieved by equal taxation." See Wexford Med Group v Cadillac, 474 Mich 192, 204; 713 NW2d 734 (2006). But in any event, Norman Allan is no longer good law on the point asserted by petitioner.
Norman Allan is, in any event, not binding on this Court. MCR 7.215(J)(1).
Our Supreme Court's analysis in Ann Arbor v STC, 393 Mich 52; 223 NW2d 1 (1974), is inapplicable for the same reasons. In Ann Arbor, our Supreme Court held, under the previous version of MCL 211.154, that the STC should have held a hearing before dismissing the petitioner's claim that property owned by certain nonprofit corporations was incorrectly listed as exempt from taxation. Id.at 53-54. The version of MCL 211.154(1) existing at the time, as discussed above, explicitly gave the STC the authority to determine whether taxable property had been incorrectly reported as exempt, and to correct the error. Id. Norman Allan, 107 Mich App at 192. Further, there was no argument in Ann Arbor concerning the STC's authority; rather, the Court merely concluded that the STC should have held a hearing on disputed factual issues before issuing a legal decision on the petition. Ann Arbor, 393 Mich at 55. Like Norman Allan, Ann Arbor does not aid petitioner's argument.
We agree with the Tribunal that our decision in Superior Hotels does not grant the STC the authority to revisit previous tax years in order to reclassify property as exempt that had been reported as taxable. Nor does the plain language of MCL 211.154(1) so provide; rather, the statute merely permits the STC to correct an "assessment value" that results in "an assessment change. Superior Hotels, 282 Mich App at 630; see also Nickola v MIC Gen Ins Co, 500 Mich 115, 125; 894 NW2d 552 (2017) (stating that courts will not read into a statute "a mandate that the Legislature has not seen fit to incorporate.") (quotation marks and citation omitted). The Tribunal correctly affirmed the STC's dismissal of petitioner's claims under MCL 211.154.
Regarding MCL 211.53a, petitioner argues that its reporting of its property as taxable, and the Township's acceptance of the same, was a "mutual mistake of fact," citing our Supreme Court's decision in Ford Motor Co v Woodhaven, 475 Mich 425; 716 NW2d 247 (2006). In Ford Motor Co, our Supreme Court defined a "mutual mistake of fact" under MCL 211.53a as "an erroneous belief, which is shared and relied on by both parties, about a material fact that affects the substance of the transaction." Id. at 442. Our Supreme Court in Ford Motor Co found such a mutual mistake of fact in Ford's mistaken reporting of its personal property to three taxing entities. Id. at 443. In reporting its personal property to two of the entities, the petitioner (Ford) mistakenly reported the same property twice and was subjected to double taxation. See id. at 432, 436. In reporting its personal property to the third, Ford later discovered that "certain assets it listed were classified incorrectly," and were "not taxable personal property, retired, or idle." Id. at 437.
Petitioner essentially relies on our Supreme Court's statement regarding Ford's mistaken report of non-taxable personal property as taxable for the proposition that such an incorrect reporting is a mutual mistake of fact. In other words, petitioner asserts that, before our Supreme Court's opinion in SBC Health, petitioner and the Township were mutually mistaken that the personal property at issue was taxable, and that this was mistake was a factual one. We disagree. We assume for the purposes of the argument, without deciding, that the personal property at issue was actually entitled to be exempt from taxation.
We agree with the Tribunal that the mistake, if any, was one of law. Our Supreme Court, in Briggs Tax Serv, LLC v Detroit Public Sch, 485 Mich 69; 780 NW2d 753 (2010), clarified the distinction between mistakes of law and mistakes of fact under MCL 211.53a. The Briggs Court held that "a mistake about the validity of a tax constitutes a mistake of law," id. at 83, and noted that in Ford Motor Co the mistake was that "Ford's property statements overstated the amount of its taxable property, including reporting the same property twice. As this mistake concerned a numeric value, it was inherently a factual mistake." Id. at 83-84. Here, petitioner asserts that it believed, based on its reading of MCL 211.9(1)(a), and the state of the existing caselaw, that it was not entitled to a personal property exemption because it was a for-profit institution. See, e.g., Wexford, 474 Mich at 221 (holding that the a taxpayer must be a nonprofit institution to qualify as a "charitable institution" for the exemption found MCL 211.9(1)(a)). Petitioner further argues that this belief was mistaken, as revealed by SBC Health, 500 Mich at 541 (noting that Wexford was distinguishable because it involved a charitable institution, not an educational institution, and upholding this Court's reversal of the Tribunal's denial of the exemption to a for-profit institution).
This mistaken belief, however, was "a mistake about the validity of [the] tax" imposed on petitioner's property. Briggs, 485 Mich at 83. Unlike Ford, petitioner did not make a factual error in its reporting of personal property; rather, as the Tribunal noted, petitioner was (at least arguably) mistaken about the "legal status" of the property at issue. To hold otherwise would be to dramatically expand Ford Motor Co based merely on our Supreme Court's observation that Ford, among numerous other errors, also reported property that was "not taxable personal property." Ford Motor Co, 475 Mich at 437. We decline to read Ford Motor Co so expansively.
We note that our Supreme Court did not state that the property was tax-exempt. --------
Further, we see no evidence that any mistaken belief was "mutual." Id. at 442. In Ford Motor Co, our Supreme Court found mutuality where a tax assessor "simply relies on a taxpayer's personal property statement and subsequently calculates the assessment on the basis of that information alone" because the assessor in those cases has "effectively adopt[ed] the personal property statement as his own belief of what the taxpayer owns." Id. at 446. This finding was based on the assessor's "statutory responsibility" under the General Property Tax Act to "ascertain what personal property is in his jurisdiction and assess it accordingly." Id. By contrast, a taxpayer has the burden of showing entitlement to an exemption. Power v Dep't of Treasury, 301 Mich App 226, 233; 835 NW2d 622 (2013). In our judgment, the assessor for the Township did not possess an independent duty to determine what exemptions, if any, petitioner was entitled to in the absence of petitioner claiming those exemptions. Therefore the Township did not in any sense "adopt" the mistaken belief of petitioner. Rather, because petitioner did not assert its right to the exemption, the Township was not required to form any belief at all about whether the petitioner's personal property listed on its tax documents was exempt from taxation. There was, accordingly, no "erroneous belief . . . shared and relied on by both parties," even if the mistake at issue was one of fact. Ford Motor Co, 475 Mich at 442.
Accordingly, the Tribunal correctly granted summary disposition in favor of the Township under MCR 2.116(I)(1). Sobiecki, 271 Mich App at 141.
Affirmed.
/s/ Cynthia Diane Stephens
/s/ Elizabeth L. Gleicher
/s/ Mark T. Boonstra