Henderson v. Dep't of Treasury

• Decision Date: 25 September 2014
• Docket Number: Docket No. 312859.
• Citation: 307 Mich.App. 1,858 N.W.2d 733
• Parties: HENDERSON v. DEPARTMENT OF TREASURY.
• Court: Court of Appeal of Michigan — District of US

307 Mich.App. 1

858 N.W.2d 733

HENDERSON

v.DEPARTMENT OF TREASURY.

Docket No. 312859.

Court of Appeals of Michigan.

Submitted Feb. 11, 2014, at Lansing.

Decided Sept. 25, 2014, at 9:00 a.m.

Miller, Canfield, Paddock & Stone, PLC (by Jack Van Coevering, Gregory A. Nowak, Detroit, and Colleen M. Healy, Grand Rapids), for Paul A. Henderson.

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, and Nate Gambill, Assistant Attorney General, for the Department of Treasury.

Before SHAPIRO, P.J., and MARKEY and STEPHENS, JJ.

Opinion

STEPHENS, J.

Petitioner, a resident of the state of Florida, appeals by right the final opinion and judgment of the Michigan Tax Tribunal (MTT) granting respondent summary disposition and holding petitioner responsible for taxes under Michigan's former Single Business Tax Act, former MCL 208.1 et seq.¹ For the reasons set forth in this opinion, we affirm.

I. BACKGROUND

A bill for taxes due, also referred to as the notice of intent to assess (the Notice), was issued by respondent to petitioner on October 18, 2011. The Notice alleged that petitioner was liable under the act for taxes in the amount of $72,286.39² pursuant to MCL 205.27a(5) as a corporate officer of Jefferson Beach Properties, LLC. Liability was for the tax period ending December 2007. Petitioner challenged the Notice in the MTT.

The petition alleged respondent did not make a preliminary determination that petitioner was the individual responsible for paying the taxes and that the tax liability was subject to a bankruptcy plan and ultimately discharged by the United States Bankruptcy Court for the Southern District of Florida on August 3, 2011.³ Respondent moved for summary disposition before the MTT on the basis of its authority to assess tax liability against corporate officers under MCL 205.27a(5) and the bankruptcy court's decree, which excluded the tax liability from discharge. A hearing referee granted summary disposition in favor of respondent in a proposed opinion and order. Petitioner filed exceptions, but the MTT affirmed and adopted the referee's proposed opinion and order. Before the proposed order had been affirmed, however, petitioner had served respondent with discovery. Respondent, in turn, moved for immediate consideration and to hold discovery in abeyance until the MTT's final order was issued. The MTT denied the motion for immediate consideration, but granted the motion for an abeyance, closing all discovery until the final opinion was issued.

The MTT issued its final opinion and judgment on August 24, 2012. It affirmed the proposed order, holding that the referee properly analyzed state and federal law to determine that Michigan's single business tax (SBT) was a nondischargeable excise tax under 11 U.S.C. § 507(a)(8)(E). Petitioner moved for reconsideration of the MTT's opinion on two occasions and was denied both times. At no point did petitioner file a motion to amend his petition. In none of the papers filed with the MTT after his initial petition did petitioner contend there was a material question of fact regarding whether he was a responsible corporate officer and that, regardless of the characterization of the SBT, summary disposition was, therefore, inappropriate.

II. PETITIONER'S RIGHT TO AMEND HIS PLEADINGS

Petitioner argues the MTT denied him the right to amend his pleadings and incorrectly applied MCR 2.116(I)(5). We find no support for this argument in the record. Our standard of review is clear. “Where fraud is not claimed, this Court reviews the tribunal's decision for misapplication of the law or adoption of a wrong principle.” Wexford Med. Group v. Cadillac, 474 Mich. 192, 201, 713 N.W.2d 734 (2006). Our decision is equally clear because petitioner never moved to amend his petition. Petitioner cites the following portion of the MTT's order granting respondent's motion for abeyance as support:

Petitioner has had an opportunity to amend his pleadings and Petitioner has currently failed to timely exercise that “right” or demonstrate why he should be entitled to an extended opportunity to exercise that “right.”

Respondent's motion for abeyance came after the referee's proposed order. That order granted summary disposition to respondent and rejected petitioner's claim that his tax liability was discharged by the Florida bankruptcy court. The referee's proposed order stated that the viability of an amendment of petitioner's pleading at that point was poor because, as a matter of law, petitioner had stated no other claim and no amendment could change the fact that the SBT was nondischargeable by law. The referee was expressing the futility of amendment at that point. See Tierney v. Univ. of Mich. Regents, 257 Mich.App. 681, 687–688, 669 N.W.2d 575 (2003).⁴ Still, the proposed order advised petitioner of his right to amend under MCR 2.116(I)(5), under which a party against whom judgment is entered under MCR 2.116(C)(8) “shall [be] give[n] ... an opportunity to amend [his or her] pleadings as provided by MCR 2.118, unless the evidence then before the court shows that amendment would not be justified.” The referee did not preclude the filing of a motion to amend. After the referee released his proposed order, respondent moved to hold in abeyance petitioner's first set of interrogatories and requests for production of documents. The motion did not mention amendment of the pleadings. Petitioner, however, referred to the issue of his “right to amend the petition” in his response to respondent's motion for abeyance. The MTT addressed this issue in its order granting respondent's motion for abeyance:

3. Although MCR 2.116(I)(5) does require the Tribunal to provide the parties with an opportunity to amend their pleadings, Petitioner has not filed any motion to amend or amended pleadings since the filing of Respondent's January 11, 2012, Motion for Summary Disposition, the Tribunal's April 17, 2012, Proposed Order granting that Motion and the filing of Petitioner's May 7, 2012, exceptions to that Order. In that regard, Petitioner has had an opportunity to amend his pleadings and Petitioner has currently failed to timely exercise that “right” or demonstrate why he should be entitled to an extended opportunity to exercise that “right.”

While that order might have implied to petitioner that he was precluded from subsequently filing a motion to amend, the MTT clarified that order later when it addressed petitioner's motion for reconsideration:

Furthermore, the Tribunal finds that the August 3, 2012 Order does not stand for the proposition that Petitioner cannot amend his pleadings, but rather, that Petitioner has failed to demonstrate that an amendment would be justified.

The MTT correctly applied MCR 2.116(I)(5). MCR 2.116(I)(5) only states that the court shall provide the opportunity for amendments. The rule does not refer to a limitations period. However, MCR 2.116(I)(5) does refer to the amendment procedure in MCR 2.118 which provides that “[a] party may amend a pleading once as a matter of course within 14 days after being served with a responsive pleading....” MCR 2.118(A)(1). Respondent filed its answer to petitioner's petition on December 8, 2012. Approximately nine months later, when the MTT issued its order granting abeyance, petitioner had still not filed an amendment. While MCR 2.116(I)(5) mandates “the court shall give the parties an opportunity to amend,” according to MCR 2.118(A)(2), after 14 days the right becomes discretionary:

Except as provided in subrule (A)(1), a party may amend a pleading only by leave of the court or by written consent of the adverse party. Leave shall be freely given when justice so requires. [Emphasis added.] ^[5]

There was no error in the MTT's application of MCR 2.116(I)(5) to the facts of this case.

III. PETITIONER'S RIGHT TO DISCOVERY

Petitioner next argues he was promised a later opportunity to conduct discovery by the MTT, but did not receive it. We find no merit in this argument. In order to properly preserve an issue for appeal, it must be “raised before, and addressed and decided by, the trial court.” Hines v. Volkswagen of America, Inc., 265 Mich.App. 432, 443, 695 N.W.2d 84 (2005). Petitioner's motion for reconsideration after the MTT ordered that discovery be closed only addressed the issue of petitioner's right to amend the pleadings. The discovery issue was abandoned. It was not addressed by the MTT and is, therefore, not preserved for appellate review. However, this Court “may review an unpreserved issue if it presents a question of law and all the facts necessary for its resolution are before the Court.” Macatawa Bank v. Wipperfurth, 294 Mich.App. 617, 619, 822 N.W.2d 237 (2011). Sufficient facts are present here to discuss and decide the issues.

“We review a trial court's decision to grant or deny discovery for abuse of discretion.” Baker v. Oakwood Hosp. Corp., 239 Mich.App. 461, 478, 608 N.W.2d 823 (2000). “An abuse of discretion standard is equally applicable with respect to discovery rulings by the MTT.” Wayne Co. v. Mich. State Tax Comm., 261 Mich.App. 174, 195, 682 N.W.2d 100 (2004). Petitioner relies on the following language from the MTT's August 3, 2012 order granting respondent's motion for abeyance in support of his position:

[T]he Tribunal assigned the case to the above-noted Tribunal member for review and entry of a final order adopting or modifying the Proposed Order or an order vacating the Proposed Order and scheduling the case for hearing, which would include an opportunity for conducting discovery. [Emphasis added.]

Petitioner's reliance on this language is misplaced. It is clear that the MTT did not indicate that an opportunity for conducting discovery would be afforded if the MTT decided to adopt or modify the proposed order. To adopt or modify the proposed order would substantially mean to affirm it, while vacating the order would be the opposite. The word “or” separates the two possibilities. Se...