Ford Motor Company v. City of Woodhaven

• Decision Date: 28 June 2006
• Docket Number: COA No. 4.,Docket No. 127422.,Docket No. 127424.,Docket No. 127423.
• Citation: 475 Mich. 425,716 N.W.2d 247
• Parties: FORD MOTOR COMPANY, Petitioner-Appellant, v. CITY OF WOODHAVEN, and County of Wayne, Respondents-Appellees. Ford Motor Company, Petitioner-Appellant, v. City of Sterling Heights, Respondent-Appellee. Ford Motor Company, Petitioner-Appellant, v. Township of Bruce.
• Court: Michigan Supreme Court

716 N.W.2d 247

475 Mich. 425

FORD MOTOR COMPANY, Petitioner-Appellant, v. CITY OF WOODHAVEN, and County of Wayne, Respondents-Appellees.

Ford Motor Company, Petitioner-Appellant, v. City of Sterling Heights, Respondent-Appellee.

Ford Motor Company, Petitioner-Appellant, v. Township of Bruce.

Docket No. 127422.

Docket No. 127423.

Docket No. 127424.

COA No. 4.

Supreme Court of Michigan.

Argued March 9, 2006.

Decided June 28, 2006.

COPYRIGHT MATERIAL OMITTED

Honigman Miller Schwartz and Cohn L.L.P. (by John D. Pirich, Jeffrey A. Hyman, Michael B. Shapiro, and Daniel L. Stanley), Lansing, for the petitioner.

Johnson & McPherson, P.L.C. (by Dale T. McPherson), Grosse Pointe Farms, for the city of Woodhaven.

Adem E. Elder and Richard G. Stanley, Detroit, for Wayne County.

O'Reilly Rancilio P.C. (by Robert Charles Davis and Ralph Colasuonno), Sterling Heights, for the city of Sterling Heights.

Seibert and Dloski, P.L.L.C. (by Lawrence W. Dloski), Mt. Clemens, for Bruce Township.

James P. Hallan, Lansing, for Michigan Retailers Association.

MICHAEL F. CAVANAGH, J.

These cases call on this Court to interpret the meaning and applicability of the phrase "mutual mistake of fact" as it is used in MCL 211.53a. In each of these cases, petitioner Ford Motor Company (Ford) filed a personal property statement with the appropriate taxing jurisdiction, the respective respondents. But Ford misreported some of the information in its personal property statements. Because respondents' assessors accepted and relied on Ford's personal property statements as accurate when calculating Ford's tax liability, respondents issued tax bills for amounts in excess of what would have been due had the statements been accurate. Ford paid the taxes, but it later sought refunds under MCL 211.53a when it discovered the errors, claiming the excessive taxes were paid because of a mutual mistake of fact.

We hold that Ford has stated valid claims of mutual mistake of fact that were intended to be remedied under MCL 211.53a. In these cases, Ford and respondents shared and relied on an erroneous belief about a material fact that affected the substance of the transactions. Our conclusion is consistent with the Legislature's intent and the peculiar meaning the term "mutual mistake of fact" has acquired in our law. In dismissing Ford's petitions, the Michigan Tax Tribunal (MTT) adopted a wrong principle and misapplied the law by failing to give the proper meaning to the legal term "mutual mistake of fact." Further, we hold that the MTT abused its discretion when it failed to allow Ford to amend its petition against respondent Bruce Township. Therefore, we reverse the judgments of the MTT and the Court of Appeals, and we remand these cases to the MTT for further proceedings consistent with this opinion.

I. Facts and Procedural History

In each of these cases, Ford filed a personal property statement with the appropriate taxing jurisdiction, the respective respondents. But Ford mistakenly reported some of the information in its personal property statements and, therefore, overstated the quantity of taxable property it owned. Because respondents' assessors accepted and relied on Ford's personal property statements as accurate when calculating Ford's tax liability, respondents issued excessive tax bills. Without any party realizing that the tax bills were excessive, Ford paid the amounts due and respondents accepted Ford's payments.

Ford eventually discovered the errors in its personal property statements. Ford then filed three separate petitions with the MTT—one against the city of Romeo (which should have been filed against Bruce Township), one against the city of Sterling Heights, and one against the city of Woodhaven and Wayne County. In each petition, Ford argued that it paid excessive taxes because of a mutual mistake of fact and, thus, was entitled to a refund under MCL 211.53a. 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.

Even though Ford filed three separate petitions, our analysis of the issue presented in these cases is the same. But because each petition was treated separately by the MTT and the Court of Appeals, we will detail each petition's relevant history.

A. Bruce Township

After learning that it double reported certain assets, Ford filed a petition with the MTT against the city of Romeo.¹ Specifically, Ford claimed in this petition that it was entitled to a refund from Romeo under MCL 211.53a because a mutual mistake of fact occurred regarding the taxability of Ford's personal property. After considering the matter, the MTT sua sponte issued an order dismissing Ford's petition. The MTT concluded that it lacked subject-matter jurisdiction under MCL 205.735 because Ford did not protest the assessments to the Romeo Board of Review.² Further, the MTT held that the assessments at issue were not the result of a mutual mistake of fact because the assessments were solely the result of Ford's failure to prepare accurate statements. Accordingly, the MTT reasoned that it did not have subject-matter jurisdiction under MCL 211.53a because there was no mutuality of mistake. In support of this conclusion, the MTT relied on its opinion in Gen. Products Delaware Corp. v. Leoni Twp., 2001 WL 432245 (Docket No. 249550) (March 8, 2001), and on the Court of Appeals majority opinion in Wolverine Steel Co. v. Detroit, 45 Mich.App. 671, 207 N.W.2d 194 (1973). Finally, the MTT opined that Ford should have sought relief from the Michigan State Tax Commission under MCL 211.154.

Ford appealed to the Court of Appeals, but Romeo moved to dismiss the appeal because it was not the taxing jurisdiction that assessed Ford's personal property. While not addressing the merits of the petition, the Court of Appeals denied Romeo's motion, reversed the MTT order, and remanded the matter to the MTT to address the issue of the necessary joinder or substitution of the parties. Ford Motor Co. v. Romeo, unpublished order of the Court of Appeals, entered September 13, 2002 (Docket No. 240649). Ford then filed a motion with the MTT to amend its petition to substitute Bruce Township for Romeo, as well as to make minor corrections. Ford's proposed amended petition again maintained that under MCL 211.53a, it was entitled to a refund because its personal property was reported and assessed twice, which Ford claimed was a mutual mistake of fact. Further, Ford argued that the MTT had jurisdiction to hear the case under MCL 205.731(b).³

The MTT granted Ford's motion to substitute Bruce Township for Romeo. But the MTT denied Ford's motion for leave to file an amended petition and dismissed the petition on the ground that Ford had still failed to invoke the MTT's subject-matter jurisdiction. Once again, the MTT held that because there was not a mutual mistake of fact, it lacked jurisdiction under MCL 211.53a. Further, the MTT concluded that it lacked subject-matter jurisdiction because the proposed amended petition covered two parcels of property; therefore, the proposed petition violated the MTT's rule of procedure, 1999 A.C., R. 205.1240, which prohibits a petition from covering more than one parcel.⁴ Ford appealed to the Court of Appeals.

In a split, published decision, the Court of Appeals affirmed the MTT's order. 264 Mich.App. 1, 689 N.W.2d 764 (2004). First, the Court of Appeals majority opined that the MTT had subject-matter jurisdiction over Ford's petition because the MTT is vested with the power and authority to adjudicate tax refund cases, citing In re AMB, 248 Mich.App. 144, 166-167, 640 N.W.2d 262 (2001). But the Court of Appeals majority agreed with the MTT that Ford was not entitled to relief under MCL 211.53a because there was not a mutual mistake of fact.

In this regard, the Court of Appeals referenced the history surrounding MCL 211.53a, as well as Black's Law Dictionary (7th ed.), and opined that MCL 211.53a "requires that both the assessing officer and the taxpayer have the same erroneous belief regarding the same material fact, which belief directly caused both the excess assessment and excess payment of taxes." Bruce Twp., supra at 9, 689 N.W.2d 764. Notably, the Court of Appeals majority preferred its definition of "mutual mistake of fact" to that articulated by the MTT in Gen. Products Delaware Corp., supra, because the majority believed that the MTT's characterization was "more complicated than necessary." Id. at 11, 689 N.W.2d 764.⁵ Proceeding under its own understanding of MCL 211.53a, the Court of Appeals majority then concluded that Bruce Township and Ford were not operating under the same mistake of fact. According to the majority, the mistake was not mutual because Ford's mistake concerned its erroneous belief that certain assets were taxable, whereas Bruce Township's erroneous belief was that Ford's personal property statement was accurate. Moreover, the Court of Appeals majority reasoned that there was no mutual mistake of fact giving rise to a remedy under MCL 211.53a because the excessive tax was a direct result of Ford's sole mistake. Additionally, the majority rejected the proposition that the treatment of the phrase "mutual mistake" in contract law cases was applicable to property tax cases.

Therefore, the Court of Appeals majority held that the MTT properly concluded that Ford was not entitled to a refund under MCL 211.53a because there was no mutual mistake of fact. Moreover, the majority reasoned that the MTT properly denied Ford's motion to amend its petition because the amendment would have been futile in light of the MTT's conclusion that relief could not be granted under MCL 211.53a. Accordingly,...