Kemper v. Twp. of Leelanau

JAMES S. KEMPER III, TRUSTEE, Petitioner-Appellant, v. TOWNSHIP OF LEELANAU, Respondent-Appellee.

JAMES S. KEMPER, Petitioner-Appellant, v. TOWNSHIP OF LEELANAU, Respondent-Appellee.

Nos. 355735, 356449

Court of Appeals of Michigan

October 14, 2021

UNPUBLISHED

Tax Tribunal LC Nos. 20-003471-TT, 20-002750-TT

Before: James Robert Redford, P.J., and Kirsten Frank Kelly and Anica Letica, JJ.

PER CURIAM.

In these consolidated appeals, ^[1] petitioner challenges the Michigan Tax Tribunal's (the Tribunal's) decisions regarding his principal residence exemption (PRE) and his PRE affidavit. In Docket No. 355735, petitioner appeals as of right the Tribunal's order of dismissal that dismissed petitioner's appeal because it was not filed within 35 days of the denial of his PRE. In Docket No. 356449 petitioner appeals as of right the Tribunal's final opinion and judgment that denied petitioner's appeal for a PRE for tax year 2020. We affirm.

I. BACKGROUND FACTS

This case involves the denial of petitioner's claimed PRE for the four parcels of land that make up petitioner's home in Omena, Michigan. Respondent is the taxing authority for the area. Petitioner bought the property in 2004, and in 2008, applied for and was granted a PRE for the property. Also in 2008, petitioner married Linda C. Welch. Although petitioner and Welch lived together at the Omena property Welch retained her home in Barrington, Illinois, and claimed the Illinois equivalent of a PRE.^[2] Petitioner and Welch also filed joint tax returns in Michigan. Respondent conducted an audit of petitioner's claimed PRE and discovered the exemption that Welch claimed. On February 25, 2020, the Leelanau County Treasurer denied petitioner's PRE for tax years 2017 through 2020.

On April 30, 2020, Welch sent a letter to the Cook County Assessor's Office rescinding her homeowner exemption for the Illinois property. On May 14, 2020, petitioner submitted a PRE affidavit to respondent. The affidavit indicated that neither petitioner nor Welch claimed a similar exemption in another state. On June 11, 2020, the Cook County Assessor's Office mailed a notice of intent to record lien regarding Welch's Illinois property, which required Welch to pay for the exemptions that she rescinded.

In July 2020, petitioner filed a petition with the July Board of Review, pursuant to MCL 211.7cc(19), to restore his PRE for tax years 2017 through 2019. The July Board took no action because the Board lacked the authority to hear the appeal.

In Docket No. 355735, petitioner filed a petition with the Tribunal, challenging the denial of his PRE. Petitioner stated that he appealed the PRE denial to the July Board of Review pursuant to MCL 211.7cc(19) because the PRE for tax years 2017 through 2019 had been removed from the tax roll when the exemption was denied. Although the assessor believed that the July Board did not have jurisdiction to hear the appeal because the PRE was on the tax roll for the prior years, petitioner asserted that the Guidelines for the Michigan Principal Residence Exemption (PRE Guidelines)^[3] provided that an exemption was removed from the tax rolls on the date of the denial. This was supported by MCL 211.7cc(10), which similarly directs a local assessor to remove a denied exemption from the tax roll. Petitioner concluded that "[i]t is clear that the denial had the effect of removing, immediately and retroactively, the exemption from the tax roll." Petitioner requested the Tribunal restore his PRE for tax years 2017 through 2019.

Respondent filed an answer to the petition and asserted that the Tribunal did not have jurisdiction to hear the petition. Respondent asserted that it had not issued a denial because the initial PRE denial was issued by the Leelanau County Treasurer. Similarly, the July Board did not issue a denial because the Board only has jurisdiction over exemptions that were not on the tax roll, and petitioner's PRE was on the tax roll. Respondent also noted that the Tribunal had dismissed petitioner's first appeal of the PRE denial as untimely.^[4] Respondent requested dismissal of the petition on the basis that the Tribunal lacked jurisdiction.

The Tribunal entered an order of dismissal, concluding that it did not have authority to hear the appeal because it was not filed within 35 days of the issuance of the PRE denial. Although petitioner framed the issue as appealing the July Board's July 21, 2020 denial, "the denial was actually issued by [respondent] on February 25, 2020, and that [p]etitioner was attempting to have the exemption restored by the July 2020 Board of Review." Further, a Board of Review only has authority to grant or deny requests for exemptions that were not on the tax roll. Because petitioner's PRE was on the tax roll for 2017 through 2019, the Board did not have authority to hear petitioner's appeal. Therefore, the Tribunal dismissed the case.

In Docket No. 356449, petitioner field a petition with the Tribunal challenging the denial of his PRE affidavit. Petitioner argued that because Welch rescinded her Illinois exemption, petitioner was entitled to the PRE because "[a]t the time of his submission of the 2020 PRE Affidavit[, petitioner] met all of the requirements of the Act." Respondent answered and argued that petitioner had already appealed the denial to the Tribunal, which dismissed the case. Instead of appealing the dismissal, petitioner filed a new PRE affidavit. The affidavit was never approved or denied because respondent did not have jurisdiction to alter the denial of another entity, i.e., Leelanau County. Further, the Tribunal already disposed of the issue of the initial PRE denial. Accordingly, respondent argued that the Tribunal did not have jurisdiction over the case.

The administrative law judge (ALJ) held a hearing and issued a proposed opinion and judgment. The ALJ found that Welch's Illinois exemption was rescinded on June 11, 2020. Petitioner was not entitled to the PRE because on the date the affidavit was filed, May 14, 2020, Welch's Illinois exemption was still effective. Further, the July Board did not have authority to hear petitioner's appeal because "the properties' PRE for the 2017, 2018, 2019, and 2020 tax years 'was' on the tax roll and 'is' no longer on the tax roll for those tax years" due to the February 25, 2020 PRE denial. Petitioner filed exceptions to the ALJ's proposed opinion and judgment concerning the effective date of Welch's rescission and that petitioner could appeal to the Board of Review.

The Tribunal issued a final opinion and judgment and determined that the ALJ's proposed judgment was correct and petitioner's exception regarding the timing and effect of Welch's rescission was legally incorrect. The Tribunal held that under Marie De Lamielleure Trust v Treasury Dep't, 305 Mich.App. 282; 853 N.W.2d 708 (2014), "[a] rescission of an exemption claim is effective at the time the claim is removed from the tax roll, not at the time the removal of the claim is filed by the claimant."

Further, the Tribunal noted that, at the time of the hearing before the ALJ, petitioner had not yet filed an income tax return for 2020. "As such, it was not known whether the disqualifying factor shall be present for tax year 2020." If petitioner were to file a joint tax return, the denial of the PRE was appropriate under De Lamielleure. And if the Tribunal overturned the PRE denial and petitioner were to file a joint tax return for 2020, "[r]espondent would have no power to issue a second denial for that tax year following the Tribunal's order." Finally, the Tribunal agreed with the ALJ that if petitioner would have filed the PRE affidavit between June 11, 2020 and June 30, 2020, the Board of Review would have had the authority to hear the appeal. Although petitioner argued that he already attempted to raise the issue before the July Board, "the Tribunal notes that [the appeal to the Tribunal involved in Docket No. 355735] does not involve the 2020 tax year and is not on point." Therefore, the Tribunal held that petitioner was not entitled to the PRE for 2020. These appeals followed.

II. STANDARD OF REVIEW

"Absent fraud, our review of [the Tribunal's] decisions is limited to determining whether the [Tribunal] erred in applying the law or adopted a wrong legal principle." VanderWerp v Plainfield Charter Twp, 278 Mich.App. 624, 627; 752 N.W.2d 479 (2008). "An 'error of law' occurs . . . if the Tax Tribunal's decision is not supported by competent, material, and substantial evidence on the whole record." Forest Hills Co-operative v Ann Arbor, 305 Mich.App. 572, 586; 854 N.W.2d 172 (2014). "If there is no factual dispute and fraud is not alleged, appellate review is limited to whether the Tax Tribunal made an error of law or adopted a wrong legal principle." Id. at 586-587. "This Court reviews de novo whether the Tax Tribunal erred as a matter of law when interpreting and applying statutes." New Covert Generating Co, LLC v Covert, __ Mich.App. __, __; __ N.W.2d __ (2020) (Docket Nos. 348720; 348721); slip op at 8.

It is well established that the primary goal of statutory construction is to ascertain and give effect to the intent of the Legislature. The words used by the Legislature in writing a statute provide us with the most reliable evidence of the Legislature's intent. If the statutory language is clear and unambiguous, this Court must apply the statute as written, and no further judicial construction is necessary or permitted. Moreover, statutes exempting persons or property from taxation must be narrowly construed in favor of the taxing authority. [Stirling v Leelanau, __ Mich.App. __, __; __ N.W.2d __ (2021) (Docket No. 353117); slip op at 3 (quotation marks and citations omitted).]

III. DOCKET NO. 355735

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