Michigan Cases June 08, 2023: Doerr v. Dep't of Treasury

Case Description

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UNPUBLISHED

Tax Tribunal LC No. 20-004152-TT

Before: O'BRIEN, P.J., and MURRAY and LETICA, JJ.

PER CURIAM

Petitioner appeals as of right a final opinion and judgment of the Michigan Tax Tribunal (MTT), which affirmed respondent's denial of a principal residence exemption (PRE) for the subject property (the Lakeside property) for tax years 2017, 2018, and 2019. We affirm.

I. BACKGROUND

Petitioner owns two residential properties in Kalamazoo, Michigan-the Lakeside property which is the subject of this dispute, and another property which we will refer to as the Old Colony property. Petitioner previously had a PRE for the Old Colony property, but he rescinded that PRE in 2017 following his purchase of the Lakeside property in September 2016.

Petitioner requested a PRE for the Lakeside property for 2017, 2018, and 2019. Respondent denied the PRE, however, finding that the Lakeside property was not petitioner's principal residence. Following this denial, the MTT held an informal conference, and the referee recommended that the PRE for the Lakeside property be denied. The referee's recommendation was adopted by the director of the Bureau of Tax Policy in a decision and order of determination.

Petitioner appealed to the Small Claims Division of the MTT. In response, and in support of its position that petitioner was not entitled to a PRE for the Lakeside property, respondent submitted petitioner's voter registration, driver's license, and vehicle registration records, all of which listed petitioner's address as the Old Colony property. In support of his position that he was entitled to a PRE for the Lakeside property, petitioner submitted various postmarked envelopes and billing statements for utilities, ambulance service, and taxes that were addressed to the

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Lakeside property, a 2020 notice of assessment, a 2020 winter property tax statement, and a notice of forfeiture.

The MTT originally scheduled a telephone hearing for February 19, 2021, but, upon petitioner's request, the MTT rescheduled the hearing for May 6, 2021. On the day of the rescheduled hearing, petitioner submitted additional evidence of invoices for ambulance service, a letter from Consumers Energy stating that petitioner had utilities for the Lakeside property in his name beginning on September 9, 2016, and an unnotarized "Affidavit of Residence," in which petitioner's "next door neighbor" averred that petitioner and petitioner's wife resided at the Lakeside property since September 2016.

Following the hearing, the MTT entered a final opinion and judgment in which it held that petitioner was not entitled to a PRE for the Lakeside property for the 2017, 2018, and 2019 tax years. In its summary of the evidence, the MTT did not include any of the documentary evidence that petitioner submitted on the date of the hearing, nor did the MTT reference that evidence at any point in its final opinion and judgment. Petitioner now appeals as of right.

II. STANDARD OF REVIEW

This Court is limited in its review of a Tax Tribunal's decision. Campbell v Dep't of Treasury , 509 Mich. 230, 237; 984 N.W.2d 13 (2022). "If fraud is not alleged, the MTT's decision is reviewed for misapplication of the law or adoption of a wrong principle." Smith v Twp of Forester , 323 Mich.App. 146, 149; 913 N.W.2d 662 (2018) (quotation marks and citation omitted). We will not disturb the tribunal's factual findings as long as they are supported by competent, material, and substantial evidence on the whole record. Benedict v Dep't of Treasury , 236 Mich.App. 559, 563; 601 N.W.2d 151 (1999).

Additionally, we review questions of law de novo. Foster v Van Buren Co , 332 Mich.App. 273, 280; 956 N.W.2d 554 (2020). This Court's primary goal in interpreting a statute is to ascertain and give effect to the intent of the Legislature as discerned from the plain meaning of the language in the statute. Id . at 280-281.

III. ANALYSIS

Petitioner argues that the MTT erred by concluding that petitioner did not occupy the Lakeside property for the relevant tax years because it failed to properly justify its conclusion, and because it failed to consider an affidavit from petitioner's neighbor. Petitioner alternatively argues that if the MTT properly concluded that petitioner did not occupy the Lakeside property, it should have concluded that petitioner occupied the Old Colony property and granted a PRE for the Old Colony property for the relevant tax years. We disagree.

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Michigan's PRE is governed by MCL 211.7cc and MCL 211.7dd. Foster , 332 Mich.App. at 281. The Legislature has declared that "[a] principal residence is exempt from the tax levied by a local school district for school operating purposes to the extent provided under . . . the revised school code . . . if an owner of that principal residence claims an exemption as provided in this section." MCL 211.7cc(1). "In order to receive the exemption, a taxpayer must file an affidavit claiming the exemption." Estate of Schubert v Dep't of Treasury , 322 Mich.App. 439, 448; 912 N.W.2d 569 (2017).

A person claiming a PRE "must establish that he or she owned and occupied the property as a principal residence for each year that the exemption is claimed." Id . at 451 (emphasis added). In this case, there is no dispute that petitioner owned the Lakeside property-the issue is whether petitioner occupied the property as his principal residence for tax years 2017, 2018, and 2019. While neither MCL 211.7cc nor MCL 211.7dd defines the term "occupy," this Court explained in Estate of Schubert , 322 Mich.App. at 450, that "a person must dwell either permanently or continuously at a property to 'occupy' the property."

A petitioner bears the burden of proving his occupancy of a property as a principal residence. Id . at 454. A petitioner can meet this burden by presenting "evidence in the form of testimony or documentary evidence." Id . "[D]ocumentary evidence relevant to whether a person occupies the property as his or her principal residence can include utility bills, driver's licenses, tax documents, other documents showing the petitioner's address, and voter registration cards," but "[n]o single document is conclusive." Id . at 454-455.

Petitioner first argues that the MTT erred by not sufficiently justifying its conclusions and instead making mere conclusory statements. According to petitioner, the final opinion and judgment "broadly concludes that the [r]espondent's evidence is 'more persuasive' and that the [p]etitioner's evidence was 'unpersuasive.'" A simple review of the MTT's opinion makes clear that petitioner's characterization of that opinion is inaccurate. The MTT did not find respondent's evidence "more persuasive"; it concluded that petitioner's evidence was "not more persuasive than Respondent's" evidence, which is the relevant inquiry because petitioner bears the burden of proving that he is entitled to the PRE. See Estate of Schubert , 322 Mich.App. at 454. The MTT went on to explain in detail how it arrived at its conclusion. It noted that respondent submitted documentary evidence showing that "Petitioner did not identify the subject property as his residence on his driver's license, vehicle registration, or voter's registration for the tax years at issue," and that petitioner failed to refute both this evidence and respondent's reason for denying petitioner's PRE. The MTT then addressed the evidence that petitioner relied on in support of his argument that he was entitled to a PRE for the Lakeside property for the 2017, 2018, and 2019 tax years. It found that petitioner's billing statements for 2018 and 2019 were not conclusive; petitioner had failed to present any documentary evidence for 2017; and petitioner had failed to present any documentation like "tax returns, voter[] registration, driver's license, vehicle

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registration." The MTT then surmised that petitioner needed to establish that he occupied the subject property to be entitled to a PRE, and that "Petitioner has not met his burden of proof in this exemption appeal." The MTT only needed to justify its conclusions enough to facilitate meaningful appellate review, see New Covert Generating Co, LLC v Twp of Covert , 334 Mich.App. 24, 74; 964 N.W.2d 378 (2020), which it clearly did.

Petitioner also argues that the MTT erred by failing to consider an affidavit from petitioner's neighbor as evidence. We find no reversible error in this regard, however, because the affidavit in question was not notarized. "[A] document that is not notarized is not a 'valid affidavit.'" Detroit Leasing Co v City of Detroit , 269 Mich.App. 233, 236; 713 N.W.2d 269 (2005). See also Wood v Bediako , 272 Mich.App. 558, 562-563; 727 N.W.2d 654 (2006) ("To constitute a valid affidavit, a document must be (1) a written or printed declaration or statement of facts, (2) made voluntarily, and (3) confirmed by the oath or affirmation of the party making it, taken before a person having authority to administer such oath or affirmation.") (Quotation marks and citation omitted.) A statement that is not notarized does "not affirmatively show that the witness[], if sworn as [a] witness[], could testify competently to the facts stated in the statement[]." Tate v Botsford Gen Hosp , 472 Mich. 904, 904; 696 N.W.2d 684 (2005). In arguing for a different result, petitioner contends that the MTT "must acknowledge and consider" the unnotarized affidavit and explain why it "is not evidence that Petitioner resided in the Lakeside Drive Property since 2016." Yet petitioner has not provided any authority in support of his position that the MTT was required to consider the unnotarized affidavit as substantive evidence. "A party may not merely announce a position and leave it to this Court to discover and rationalize the basis for the party's claim." Conlin v Scio Twp , 262 Mich.App. 379, 384; 686 N.W.2d 16 (2004). Accordingly, we find no reversible error in the MTT's refusal to consider the unnotarized affidavit.

Lastly, petitioner argues that if the MTT properly denied petitioner's PRE for the Lakeside property, it should have granted petitioner a PRE for the Old Colony property. Petitioner contends that the MTT had authority to do so under MCL 205.732(b), which grants the MTT the power to "[o]rder[] the payment or refund of taxes in a matter over which it may acquire jurisdiction." According to petitioner, the MTT "may acquire jurisdiction over the Petitioner's PRE claim," regardless "of whether or not it relates to the Lakeside Drive or Old Colony Property."

We reject petitioner's argument because it is completely removed from the requirements for receiving a PRE. To be entitled to a PRE, the owner of the residence must claim a PRE for that residence as provided in MCL 211.7cc, see MCL 211.7cc(1), which includes, among other things, filing an affidavit for the relevant tax year as provided in MCL 211.7cc(2), see Estate of Schubert , 322 Mich.App. at 448. As noted by the MTT, "[t]he grant of an exemption is a privilege and not a right." Petitioner's failure to follow the procedure in MCL 211.7cc for receiving a PRE for the Old Colony property precluded the MTT from granting petitioner the privilege of a PRE

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for that property. Accordingly, we find no error in the MTT's denial of petitioner's alternative request for relief.

In a footnote, petitioner contends that "this Court does have jurisdiction and should address due process issues within the Tribunal's proceedings," and he identifies these "due process issues" as "including the failures within the Tribunal's hearing process to note and address evidence presented, along with the improper framing of the alternate relief requested by Petitioner as one of 'equity[.]' " Petitioner, however, provides no explanation for how either of these alleged defects in the proceedings before the MTT amounts to a due process violation. Without further elaboration, we are unable to substantively address petitioner's due process argument, regardless of whether we have jurisdiction to do so. Accordingly, we conclude that petitioner has abandoned any due process argument on appeal. See Cheesman v Williams , 311 Mich.App. 147, 161; 874 N.W.2d 385 (2015) (explaining that an appellant must sufficiently present an issue on appeal before this Court will address it).

Affirmed.

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Christopher M. Murray, J., (concurring).

The limited review this Court employs in its review of a final opinion and judgment of the Michigan Tax Tribunal (MTT), Campbell v Dep't of Treasury , 509 Mich. 230, 237; 984 N.W.2d 13 (2022), requires the conclusion that the MTT decision be affirmed. As explained in the majority opinion, the MTT relied upon the address contained on petitioner's voter registration, vehicle registration and driver's license, all of which contained the prior home's address. Reliance on these documents was completely permissible, see Estate of Schubert v Dep't of Treasury , 322 Mich.App. 439, 448; 912 N.W.2d 569 (2017), and the MTT was authorized to find those documents more persuasive than the evidence submitted by petitioner. This standard of review compels my vote to affirm. Nevertheless, I write separately to point out the absurdity of the MTT's decision, and how it appears to have resulted from a robotic acceptance of some evidence, and with blinders on as to the evidence establishing the reality of petitioner's situation. As I see it, there was persuasive evidence that petitioner occupied the Lakeshore property for tax years 2018 and 2019.

The law provides that "[a] principal residence is exempt from the tax levied by a local school district for school operating purposes to the extent provided under . . . the revised school code . . . if an owner of that principal residence claims an exemption as provided in this section." MCL 211.7cc(1). "In order to receive the exemption, a taxpayer must file an affidavit claiming the exemption." Estate of Schubert , 322 Mich.App. at 448. A person claiming a PRE "must establish that he or she owned and occupied the property as a principal residence for each year that the exemption is claimed." Id . at 451 (emphasis added). While neither MCL 211.7cc nor MCL 211.7dd defines the term "occupy," this Court explained in Estate of Schubert , 322 Mich.App. at 450,

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that "a person must dwell either permanently or continuously at a property to 'occupy' the property."

As the majority notes, there is no dispute that petitioner owned the Lakeside property; the only question is whether he proved that he occupied the Lakeshore house during the relevant tax years. But from the evidence petitioner submitted that the MTT found unpersuasive, it is clear that petitioner and his late wife (who passed away while the appeal was pending) purchased the ranchstyle house to down-size from the two-story home in which they had previously lived, principally for medical reasons. And, the Lakeshore home was just .4 miles from the prior property.

"[D]ocumentary evidence relevant to whether a person occupies the property as his or her principal residence can include utility bills, driver's licenses, tax documents, other documents showing the petitioner's address, and voter registration cards," but "[n]o single document is conclusive." Id . at 454-455. The evidence submitted by petitioner, at least as far as can be gleaned from any existing record, were utility bills, tax bills, ambulance bills, a statement from a neighbor indicating that petitioner lived year-round at the Lakeshore property, and a position statement from petitioner's son, who has a power of attorney, outlining the circumstances of petitioner's move. This evidence was sufficient to show that petitioner occupied the Lakeshore property in 2018 and 2019. In fact, much more than the evidence relied upon by the MTT, the evidence petitioner submitted shows what petitioner was actually doing during 2018 and 2019-living at the Lakeshore property. Utility bills show that the Lakeshore property was receiving services so that petitioner and his wife could reside there, while ambulance bills showed that petitioner occupied the property when he needed medical assistance. Similarly, the Christmas cards sent to petitioner and his wife show that petitioner (and/or his wife) told people that their new mailing address was at the Lakeshore property. Also relevant was that petitioner immediately changed his PRE when he purchased the Lakeshore property, averring to the government that it was his principal residence. Most importantly, petitioner's son's letter outlined exactly why petitioner moved to the new location, and why petitioner did not change government documents like his voter registration and license.

In concluding otherwise, the MTT focused exclusively on the fact that "Petitioner did not identify the subject property as his residence on his driver's license, vehicle registration, or voter's registration for the tax years at issue." In focusing only on the voter ID and driver's license and car registration, the MTT placed form over substance, and reflected blind allegiance to certain forms of evidence-"utility bills, driver's licenses, tax documents, other documents showing the petitioner's address, and voter registration cards,"-but failed to recognize that "[n]o single document is conclusive." Estate of Schubert , 322 Mich.App. at 454. Certainly, it was true that petitioner had not changed his driver's license or voter registration information, but as petitioner's

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son explained, petitioner was stuck in his ways and was reluctant to make these and other changes when he only moved less than a half mile away. In other words, although the address contained on these government documents may be relevant in many cases, here their relevance was greatly diminished in establishing where petitioner actually resided during the relevant periods. The MTT's error was in its complete failure to consider the context of petitioner's situation, and which property he physically occupied , which after all is the controlling statutory question. In my view, petitioner met his burden to prove that he occupied the Lakeshore property in 2018 and 2019. However, because there was evidence supporting the MTT's decision, and we are not permitted to substitute our judgment for that of the tribunal, I reluctantly concur.

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Anica Letica, J., (dissenting).

I respectfully dissent. I would remand to the Michigan Tax Tribunal (Tribunal) while retaining jurisdiction to address two points: (1) whether petitioner's photographs from the interior of the Lakeside address along with videos from both addresses were presented for its consideration below, and (2) whether respondent conceded during the hearing that petitioner's evidence was sufficient to meet his burden of proof to claim the principal residency exemption (PRE). The videos and photographs purportedly would have shown that the Old Colony address was vacant and the Lakeside address was occupied during the relevant timeframes. And, a concession that the proofs were sufficient to demonstrate entitlement to the PRE prevents a formulistic reliance on outdated documentation that does not reflect the reality of the circumstances.

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I also share Judge Murray's concerns regarding how this matter was handled for all of the reasons he recounts. Indeed, the Tribunal reached its conclusion by opting to exclude petitioner's untimely filed evidence after petitioner exercised his right to be represented by an attorney. The Tribunal also relied upon voter registration records that did not reflect that petitioner had voted during the tax years at issue and pointed to petitioner's failure to update his driver's license and use his one-story Lakeside address on his vehicle registration at a home less than 4/10ths of a mile from the two-story Old Colony home petitioner had lived in for thirty years. Yet, when petitioner's representative inquired about the possibility of reinstating the PRE for the Old Colony address, the Department purportedly responded that petitioner could not prove that he lived at that location either despite its reliance on these documents, leading one to wonder whether respondent's position was that petitioner actually lived at a third address he used-a P.O. Box. The warning for other homeowners claiming a PRE while owning two homes is plain-the failure to update a voter registration, driver's license, or vehicle registration, even though no document is conclusive, may result in the homeowner's testimony and proofs being rejected, even if they are compelling, and the PRE being denied.

Although a voter registration, driver's license, or vehicle registration may reflect a residential address, it is not necessarily so. See MCL 257.315(1) (providing that a person may submit a mailing address different than the residential address for purposes of the driver's license). The fact that the Department may rely on specific evidence does not reflect the value of that evidence under the specific circumstances of a given case. Consequently, I would remand and retain jurisdiction without limiting the Tribunal's discretion to reconsider the totality of the evidence, particularly in light of the petitioner's claimed submissions and their attendant value.