S. Abraham & Sons, Inc. v. DEPT. OF TREASURY
| Decision Date | 05 March 2004 |
| Docket Number | Docket No. 241158.,Docket No. 241156,Docket No. 241157,Docket No. 241155,Docket No. 241154 |
| Citation | 260 Mich. App. 1,677 N.W.2d 31 |
| Parties | S. ABRAHAM & SONS, INC., Plaintiff-Appellee, v. DEPARTMENT OF TREASURY, Defendant-Appellant. Gitzen Company, Plaintiff-Appellee, v. Department of Treasury, Defendant-Appellant. Motor City Tobacco and Candy Company, Plaintiff-Appellee, v. Department Of Treasury, Defendant-Appellant. Eby-Brown Company, Plaintiff-Appellee, v. Department Of Treasury, Defendant-Appellant. Richmond Master Distributors, Plaintiff-Appellee, v. Department Of Treasury, Defendant-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Howard & Howard Attorneys, P.C. (by Michelle L. Halloran, Michael J. Brown, and Gina M. Torielli), Lansing, for S. Abraham & Sons, Inc.
Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Roland Hwang and Glenn R. White, Assistant Attorneys General, for the defendant.
Before: SMOLENSKI, P.J., and MURPHY and WILDER, JJ.
In these consolidated cases, defendant Department of Treasury appeals by right the trial court's decisions to grant tax refunds to plaintiffs S. Abraham & Sons, Inc. (Abraham), Gitzen Company, Motor City Tobacco and Candy Company (Motor City), Eby-Brown Company (Eby-Brown), and Richmond Master Distributors, as well as the trial court's decision to award plaintiffs attorney fees and costs as a contempt sanction. We affirm in part and reverse in part.
In 1999, plaintiffs, wholesalers of tobacco products as defined by the Tobacco Products Tax Act (TPTA), MCL 205.421 et seq., jointly filed a complaint against defendant in the Court of Claims,1 alleging that, during various periods ranging from 1994 to 1998, they prepaid tobacco-products taxes to defendant that included taxes on sales to customers who failed to pay plaintiffs for their purchases. After allegedly reasonable collection efforts failed, plaintiffs timely requested refunds from defendant in 1998 and 1999 for the taxes they paid on these uncollectible accounts. Defendant denied plaintiffs' refund requests. In count I of their complaint, plaintiffs alleged that defendant unlawfully and erroneously interpreted the TPTA and that plaintiffs were entitled to refunds for overpaid taxes, together with interest, costs, and attorney fees.2 Defendant successfully moved for misjoinder, and plaintiffs then filed separate but virtually identical complaints.
Thereafter, the parties filed cross-motions for summary disposition. In the Abraham action, the Court of Claims, Michael G. Harrison, J., concluded that a bad-debt deduction is available to Abraham under the TPTA, denied defendant's motion for summary disposition, and granted Abraham's motion for summary disposition. Additionally, the trial court remanded the case to defendant "for a determination of the refund, if any, to be awarded to the [p]laintiff under MCL 205.427(6)...." The trial court did not retain jurisdiction.
Defendant claimed an appeal of right from the trial court's decision in the Abraham suit. This Court dismissed defendant's appeal on May 3, 2000, asserting a lack of jurisdiction "because no determination has yet been made regarding the amount of the refund that the plaintiff is to receive." Defendant did not request leave to appeal the trial court's decision to this Court.
On August 16, 2000, the trial court heard plaintiffs' and defendant's motions for summary disposition in the four remaining cases. Defendant repeated the arguments raised in its motion in the Abraham suit and also argued that because the statute on which the trial court primarily relied in granting summary disposition to Abraham, MCL 205.427a, did not take effect until December 1997, plaintiffs' claims before the effective date of MCL 205.427a should be denied. As in the Abraham case, the trial court concluded that a bad-debt deduction is available under the TPTA and remanded to defendant for a determination of the refund, if any, to be awarded to plaintiffs. The trial court did not address defendant's arguments about the relevance of the effective date of MCL 205.427a.
Pursuant to the remand orders, defendant's Commissioner of Revenue issued a Decision and Order of Determination in each case, denying plaintiffs' refund requests and reserving defendant's right to appeal the trial court's orders. In part, the decisions stated:
It appearing that the recommendation [from the Administrator, Customer Contact Division,] is supported by authority and reasoned opinion, and the same is accordingly accepted;
* * *
Pursuant to § 27(6), MCL 405.427(6)..., an abatement or refund of the tax may be made by the Department for causes the Department considers expedient. The Department in review of this matter does not consider uncollectible accounts as such a cause for abatement or refund.
The March 1, 2000 Opinion and March 21, 2000 Order [of the trial court] notwithstanding, the Department is of the position that the [TPTA] does not provide for a bad debt deduction or refund of tobacco taxes paid by a licensee in the event that a tobacco retailer's account becomes uncollectible. The amount of refund tabulated above [specific to each case] is not recommended to be paid, subject to the rights of the Department to appeal of any Final Order or Order directing payment.
On the same day the decisions were issued, defendant's Customer Contact Division Administrator wrote letters to plaintiffs' counsel denying each of the refund requests. Thereafter, plaintiffs each filed a "Verified Complaint and Appeal" in the Court of Claims. In count I of the virtually identical complaints, plaintiffs claimed an appeal from defendant's decision to deny their refund requests, as permitted by MCL 205.22. Plaintiffs alleged that defendant's denial of the refund requests in May 2001 directly contravened the prior orders of the Court of Claims. In count II, plaintiffs asserted that defendant's Decision and Order of Determination in each case "blatantly thwarts" the prior orders of the Court of Claims and requested that defendant be held in contempt for disregarding the prior orders.
Subsequently, defendant moved for summary disposition pursuant to MCR 2.116(C)(8) and (C)(10) and to strike or dismiss count II of plaintiffs' complaints pursuant to MCR 2.115(B). Defendant once again asserted that plaintiffs bear the responsibility for the tobacco products tax and that the TPTA does not contain an express or implied bad-debt deduction. In requesting that count II of plaintiffs' complaints be stricken, defendant also asserted that because the trial court had not ordered defendant to actually pay plaintiffs a tobacco tax refund, defendant had complied with Judge Harrison's orders and plaintiffs' claim of contempt was vexatious and unwarranted. Plaintiffs opposed both motions and requested summary disposition in its favor pursuant to MCR 2.116(I)(2).
The Court of Claims, Thomas L. Brown, J., denied defendant's motion for summary disposition and granted plaintiffs' request for summary disposition pursuant to MCR 2.116(I)(2).3 Plaintiffs requested that the trial court hold an evidentiary hearing to determine the refund amount due each plaintiff in light of defendant's decision on remand. Defendant and the trial court agreed on this procedure. The trial court held defendant's motion to strike in abeyance.4
In February 2002, the trial court received testimony concerning the amount of plaintiffs' refund requests. The trial court rejected defendant's arguments that Eby-Brown lacked sufficient documentation to support its refund request and also concluded that Motor City made reasonable efforts to collect the debt owed by R & J Distributors (R & J).
On April 2, 2002, plaintiffs filed a "Motion to Award Costs and Fees to Plaintiff Based on Defendant's Contempt of Court,"5 which the trial court heard on April 16, 2002. Defendant opposed the motion, contending that plaintiffs had failed to produce evidence of indirect contempt and that the record did not support a finding of direct contempt. The trial court granted plaintiffs' motion, stating in part:
Well, the [c]ourt agrees with the [p]laintiff[s] that the [d]efendant's machinations in this matter to cause the [p]laintiffs economic detriment by way of attorneys fees, costs on filing unnecessary motions, so on, so forth, and the failure to follow Judge Harrison's orders. I could probably go through here and go to great, make great effort to perhaps reduce Mr. Brown's request, but since the [d]efendant's going to appeal the whole thing, the whole kit and caboodle, I am going to grant his request and we will let the parties justify them on appeal.
The trial court awarded plaintiffs costs and attorney fees from the time of filing their initial complaints. This appeal followed.
This Court reviews questions of statutory interpretation de novo. People v. Schaub, 254 Mich.App. 110, 114-115, 656 N.W.2d 824 (2002). Our main goal when interpreting a statute is to give effect to the Legislature's intent, as expressed in the language of the statute itself. STC, Inc. v. Dep't of Treasury, 257 Mich.App. 528, 533, 669 N.W.2d 594 (2003). If the statutory language is unambiguous, judicial construction is neither permitted nor required. Id. However, if reasonable minds could differ with respect to the language's meaning, the language is ambiguous, and judicial construction is necessary. In re MCI, 460 Mich. 396, 411, 596 N.W.2d 164 (1999). "Where ambiguity exists ... this Court seeks to effectuate the Legislature's intent through a reasonable construction, considering the purpose of the statute and the object sought to be accomplished." Macomb Co. Prosecutor v. Murphy, 464 Mich. 149, 158, 627 N.W.2d 247 (2001), citing Frankenmuth Mut. Ins. Co. v. Marlette Homes, Inc., 456 Mich. 511, 515, 573 N.W.2d 611 (1998).
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