Gardner v. Dep't of Treasury
| Decision Date | 09 September 2014 |
| Docket Number | 315684,Docket Nos. 315531,317171. |
| Citation | 858 N.W.2d 76,306 Mich.App. 546 |
| Parties | GARDNER v. DEPARTMENT OF TREASURY Ngo v. Department of Treasury Maselli v. Department of Treasury. |
| Court | Court of Appeal of Michigan — District of US |
1–800–LAW–FIRM, PLLC, Southfield (by Joshua T. Shillair), for James and Susan Gardner, Liem and Alecia Ngo, and John and Jennifer Maselli.
Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, B. Eric Restuccia, Deputy Solicitor General, and Matthew B. Hodges, Assistant Attorney General, for the Department of Treasury.
Before: CAVANAGH, P.J., and OWENS and STEPHENS, JJ.
In these consolidated appeals, the Department of Treasury (respondent) appeals as of right judgments of the Michigan Tax Tribunal (Tax Tribunal) awarding refunds of the transfer tax that each petitioner paid pursuant to the State Real Estate Transfer Tax Act (SRETTA) when they sold their homes, on the ground that the conveyances were exempt under MCL 207.526(u). We reverse.
The facts are not disputed. All of the petitioners were entitled to the principal residence exemption under MCL 211.7cc. And at the time each petitioner sold their home, the state equalized value (SEV) was less than the SEV at the time of their purchase. In particular, petitioners James and Susan Gardner purchased their home in 2008 when the SEV was $464,300, but sold it for $875,000 when the SEV was $374,800. Petitioners Liem and Alecia Ngo purchased their home in 2007 when the SEV was $321,180, but sold it for $464,000 when the SEV was $219,860. Petitioners John and Jennifer Maselli purchased their home in 2004 when the SEV was $303,370, but sold it for $470,000 when the SEV was $198,530.
Upon the sale of their homes, each petitioner paid the transfer tax under SRETTA, MCL 207.523, and then requested a refund from respondent under MCL 207.526(u), which provides that certain written instruments and transfers of property are exempt from the transfer tax, including:
A written instrument conveying an interest in property for which an exemption is claimed under section 7cc of the general property tax act, 1893 PA 206, MCL 211.7cc, if the state equalized valuation of that property is equal to or lesser than the state equalized valuation on the date of purchase or on the date of acquisition by the seller or transferor for that same interest in property. If after an exemption is claimed under this subsection, the sale or transfer of property is found by the treasurer to be at a value other than the true cash value, then a penalty equal to 20% of the tax shall be assessed in addition to the tax due under this act to the seller or transferor. [MCL 207.526(u).]
Respondent denied each petitioner's request for a refund of the transfer tax, concluding that they were not entitled to the exemption because each property sold for more than its “true cash value.” Respondent interpreted the penalty clause phrase “true cash value” as meaning two times the SEV, consistent with the annual property tax assessment process. Thereafter, each petitioner appealed in the Tax Tribunal.
In each appeal, the Tax Tribunal held that the first sentence of MCL 207.526(u) is unambiguous and sets forth two elements that must be met to qualify for the transfer tax exemption: (1) a principal residence exemption was claimed regarding the subject property under MCL 211.7cc, and (2) at the time the subject property was conveyed, the SEV was less than or equal to the SEV on the date the property was acquired. However, the Tax Tribunal opined, when the first sentence of the statute is read in conjunction with the second sentence—the penalty clause—the statute becomes ambiguous because the penalty clause would only allow an exemption when the value or sale price of the property is the same as its true cash value, which constituted an absurdity that was unintended by the Legislature. In reaching this conclusion, the Tax Tribunal rejected respondent's argument that true cash value means two times the SEV, noting that MCL 211.27(1) defines “true cash value” as “the usual selling price” and “the price that could be obtained for the property at private sale....” Further, the Tax Tribunal held that respondent failed to carry its burden of proving that the penalty provision applied and, therefore, each petitioner was entitled to a refund of the transfer tax. Respondent appealed in each case, and the appeals were consolidated. Gardner v. Dep't of Treasury, unpublished order of the Court of Appeals, entered December 10, 2013 (Docket Nos. 315531, 315684, and 317171).
Respondent argues that the Tax Tribunal erred when it determined that each conveyance was exempt from transfer tax because, according to respondent, petitioners sold their properties for more than the true cash value of each property. We agree.
When the facts are not in dispute and there is no claim of fraud, decisions of the Tax Tribunal are reviewed to determine whether the tribunal made an error of law or adopted a wrong legal principle. Mich. Props., LLC v. Meridian Twp., 491 Mich. 518, 527–528, 817 N.W.2d 548 (2012). We review de novo issues of statutory interpretation. McAuley v. Gen. Motors Corp., 457 Mich. 513, 518, 578 N.W.2d 282 (1998).
Generally, SRETTA imposes a tax upon written instruments when the instrument is recorded. MCL 207.523(1). However, MCL 207.526 sets forth several exemptions and provides, in relevant part:
The foremost rule of statutory interpretation “is to discern and give effect to the intent of the Legislature.” Whitman v. City of Burton, 493 Mich. 303, 311, 831 N.W.2d 223 (2013). Each word or phrase of a statute is given its commonly accepted meaning, unless a word or phrase is expressly defined, and then courts must apply it in accordance with that definition. McAuley, 457 Mich. at 518, 578 N.W.2d 282. Unambiguous language is given the intent clearly expressed and the statute is enforced as written. Sun Valley Foods Co. v. Ward, 460 Mich. 230, 236, 596 N.W.2d 119 (1999). Judicial construction of unambiguous language is not permitted.Id. Interpretation strives to give effect to every phrase, clause, and word in a statute. Id. at 237, 596 N.W.2d 119. “To discern the true intent of the Legislature, the statutes must be read together, and no one section should be taken in isolation.” Apsey v. Mem. Hosp., 477 Mich. 120, 132 n. 8, 730 N.W.2d 695 (2007).
The parties agree with the Tax Tribunal that the first sentence of MCL 207.526(u) imposes two requirements for the exemption to apply: (1) a principal residence exemption was claimed regarding the subject property under MCL 211.7cc, and (2) at the time the subject property was conveyed, the SEV was less than or equal to the SEV on the date the property was acquired. The dispute regards the statute's second sentence, the penalty clause.
Respondent argues that the Tax Tribunal failed to accord the proper and distinct meanings to the word “value” and the phrase “true cash value” used in the penalty clause. The word “value” is defined in SRETTA as “the current or fair market worth in terms of legal monetary exchange at the time of the transfer.” MCL 207.522(g). However, respondent argues, Respondent further argues that the statute's use of the phrase “other than” means “greater than” with respect to the true cash value because that construction allows for a transfer tax exemption in a declining market.
To the contrary, petitioners argue, the General Property Tax Act (GPTA) defines “true cash value” as the usual selling price or price that could be expected at a private sale of the property. MCL 211.27(1). And “true cash value,” according to petitioners, is synonymous with “fair market value.” See CAF Investment Co. v. State Tax Comm., 392 Mich. 442, 450, 221 N.W.2d 588 (1974). Further, SRETTA and the GPTA must be read in pari materia because they both relate to the same subject, taxation, and SRETTA specifically refers to the GPTA and its terms. Accordingly, petitioners argue, to establish that the penalty clause was applicable here, respondent was required to prove that petitioners' properties were sold for a value other than fair market value, i.e., the price that a willing buyer and a willing seller would arrive at through arm's-length negotiation. Because respondent failed to provide any such evidence, the Tax Tribunal properly found that the penalty clause did not apply and petitioners were entitled to a refund of the transfer tax they paid.
There is some merit to both parties' arguments on appeal. We agree with respondent that the Tax Tribunal erred as a matter of law by concluding that MCL 207.526(u) is ambiguous when its two sentences are considered together. Although the Tax Tribunal's interpretation of a state statute is entitled to respectful consideration, the tribunal's interpretation is not controlling and cannot...
To continue reading
Request your trial
-
Gardner v. Dep't of Treasury, Docket Nos. 150293
...for exactly double the SEV at the time of the sale. To illustrate this logic, we turn to the specific dollar values involved in the Gardner case. As previously indicated, the Gardners paid $950,000 to acquire their principal residence in 2008 when the property's SEV was $464,300. Two years ......