Meadows v. City Of Kentwood

• Decision Date: 12 January 2010
• Docket Number: Docket No. 286978.
• Citation: 783 N.W.2d 133,287 Mich.App. 136
• Parties: PARIS MEADOWS, LLCv.CITY OF KENTWOOD.
• Court: Court of Appeal of Michigan — District of US

287 Mich.App. 136

783 N.W.2d 133

PARIS MEADOWS, LLCv.CITY OF KENTWOOD.

Docket No. 286978.

Court of Appeals of Michigan.

Submitted Dec. 2, 2009, at Grand Rapids.

Decided Jan. 12, 2010, at 9:10 a.m.

Charron & Hanisch, P.L.C., Grand Rapids (by David W. Charron and Heidi L. Hohendorf), for petitioner.

Law, Weathers & Richardson, P.C. (by Jessica L. Wood, Grand Rapids, and Jeffrey T. Gray), for respondent.

Before: MARKEY, P.J., and BANDSTRA and MURRAY, JJ.

MURRAY, J.

I. INTRODUCTION

Petitioner, Paris Meadows, L.L.C., appeals as of right a July 23, 2008, judgment entered by the Michigan Tax Tribunal that granted the city of Kentwood's motion for summary disposition and denied Paris Meadows' motion for summary disposition. The central question on appeal is whether the city can tax the common element of Paris Meadows' condominium development independent of the condominium units. We hold that it cannot, and therefore reverse the decision of the Tax Tribunal and remand for further proceedings.

II. FACTS AND PROCEEDINGS

Paris Meadows developed a residential 24-unit condominium project, and recorded a master deed for the project on December 29, 2005, in Kent County. The disputed property is designated as a “convertible area” on the subdivision plan, and is defined in the master deed as part of the “general common elements” of the condominium project. The general common elements include “[t]he land (including air space) described in Section 2.1 [setting forth the legal description of the condominium project] of this Master Deed (except for any land which is part of a Condominium Unit and any portion designated in Exhibit B as a Limited Common Element).” ¹ Paris Meadows, as the developer, reserved the right to contract or expand “all or any portion of the lands described from time to time in Section 2.1 [except for units that are sold or subject to a binding purchase agreement] by an amendment or series of amendments to the Master Deed ... without the consent of any Co-owner, mortgagee, or other person” before six years from the date the master deed was recorded. Paris Meadows similarly reserved the right to convert, within those six years, “any General Common Element into one or more additional Condominium Units and/or into Limited Common Element(s) appurtenant to one or more Units, by an amendment ... without the consent of any Co-owner, mortgagee, or other person.” Although Paris Meadows reserved these development rights, the co-owners were granted exclusive rights to their individual units, the appurtenant limited common elements, and have an undivided interest in, “and an inseparable right to share with other Co-owners, the General Common Elements of the Project as described in this Master Deed.”

This dispute originated in March 2007, when the city sent Paris Meadows a notice of assessment regarding Paris Meadows' property. The city assessed the disputed property at $240,500, and indicated a taxable value of $240,500. Paris Meadows asserted that the disputed property was not subject to separate taxation against it because the property consisted solely of the general common element area of the condominium project, and no condominium units were established on the property.

Paris Meadows petitioned for review of the assessment to the city of Kentwood Board of Review, arguing that the general common elements of the project were not subject to taxation under MCL 559.231 of the Michigan Condominium Act (MCA), MCL 559.101 et seq. The Board of Review denied Paris Meadows' appeal and sustained the assessed and taxable value of $240,500. Paris Meadows appealed that decision to the Tax Tribunal's small claims division, where it moved for summary disposition, again arguing that the disputed property consisted only of the “general common element, and not a condominium unit, pursuant to the Michigan Condominium Act.”

In its response to Paris Meadows' motion for summary disposition, and in its own motion for summary disposition, the city argued-relying on Richmond Street, LLC v. City of Walker, 16 MTTR 571, 2008 WL 5083015 (Docket No. 337980, June 23, 2008),-that the disputed property consisted of a “convertible area,” not a general common element, to which Paris Meadows had the exclusive right (for six years) to develop with additional condominium units, and noted that utilities and streets were already constructed before the master deed was recorded. The city also argued that Paris Meadows may be treated as the owner of the property and taxed as the owner, as Paris Meadows has control over the property and is the agent of the co-owners under the master deed.

The Tax Tribunal denied Paris Meadows' motion for summary disposition, and granted the city's motion for summary disposition. In doing so, the Tax Tribunal noted that because the master deed provided that the developer reserved the right to contract, convert, or expand the condominium project (including the disputed area) for six years after the master deed was filed, under its earlier decision in Bay Harbor Yacht Club v. City of Petoskey, 16 MTTR 339, 2006 WL 3170332 (Docket No. 298777, May 2, 2006), the disputed property was not a “true” common element until after the six years ran because the common element was not inseparable from the individual condominium units. Thus, the Tax Tribunal upheld the assessment on Paris Meadows for the common element.

III. ANALYSIS

This Court reviews de novo the Tax Tribunal's decision to grant or deny a motion for summary disposition under MCR 2.116(C)(10). Signature Villas, LLC v. City of Ann Arbor, 269 Mich.App. 694, 698, 714 N.W.2d 392 (2006). This Court must view the affidavits, pleadings, and other documentary evidence in the light most favorable to Paris Meadows, and decide whether Paris Meadows has raised a genuine issue of material fact. Id. at 698-699, 714 N.W.2d 392; MCR 2.116(C)(10). The central dispute in this case involves the proper interpretation and application of statutory language, which is a question of law that this Court reviews de novo. Signature Villas, supra at 699, 714 N.W.2d 392. “The primary goal of statutory interpretation is to give effect to the intent of the Legislature.” In re MCI Telecom. Complaint, 460 Mich. 396, 411, 596 N.W.2d 164 (1999). This Court begins by reviewing the text of the statute at issue; if the language is unambiguous, it is presumed that the Legislature intended the meaning plainly expressed, and judicial construction of the statute is not permitted. Id. Nothing may be read into a clear statute “that is not within the manifest intent of the Legislature as derived from the words of the statute itself.” Roberts v. Mecosta Co. Gen. Hosp., 466 Mich. 57, 63, 642 N.W.2d 663 (2002).

The tribunal's factual findings are to be affirmed if supported by competent, material, and substantial evidence. Meadowlanes Ltd. Dividend Housing Ass'n v. City of Holland, 437 Mich. 473, 482, 473 N.W.2d 636 (1991). Because we are reviewing a decision of a state agency, we give

“respectful consideration” and [must have] “cogent reasons” for overruling an agency's interpretation. Furthermore, when the law is “doubtful or obscure,” the agency's interpretation is an aid for discerning the Legislatures intent. However, the agency's interpretation is not binding on the courts, and it cannot conflict with the Legislatures intent as expressed in the language of the statute at issue. [ In re Complaint of Rovas Against SBC Michigan, 482 Mich. 90, 103, 754 N.W.2d 259 (2008).]

Finally, we must recall that “the authority to impose a tax must be expressly authorized by law; it will not be inferred.” Michigan Bell Tel. Co. v. Dep't of Treasury, 445 Mich. 470, 477, 518 N.W.2d 808 (1994) (citations omitted).

As noted, the critical issue is whether the convertible property, designated as a common element, can be separately valued and assessed for taxation purposes where the condominium project developer retains the right to convert, contract, or otherwise develop the convertible property for six years. Several statutory definitions of key terms must be considered. Under the MCA, recording a master deed that complies with the MCA establishes the condominium project. MCL 559.172(1). A “condominium project” under the MCA is “a plan or project consisting of not less than 2 condominium units established in conformance with this act.” MCL 559.104(1). The MCA defines “condominium unit” as “that portion of the condominium project designed and intended for separate ownership and use, as described in the master deed, regardless of whether it is intended for residential, office, industrial, business, recreational, use as a time-share unit, or any other type of use.” MCL 559.104(3). A “co-owner” is defined as “a person, firm, corporation, partnership association, trust, or other legal entity or any combination of those entities, who owns a condominium unit within the condominium project.” MCL 559.106(1). Pursuant to MCL 559.165, the co-owners are required to comply with the terms of the master deed and the association bylaws.

Importantly, “common elements” are defined as “the portions of the condominium project other than the condominium units.” MCL 559.103(7). The “convertible area” is designated as “a unit or a portion of the common elements of the condominium project referred to in the condominium documents within which additional condominium units or general or limited common elements may be created in accordance with this act.” MCL 559.105(3).² In addition, the MCA provides that when a condominium project is established, “each condominium unit, together with and inseparable from its appurtenant share of the common elements, shall be a sole property subject to ownership, mortgaging, taxation, possession, sale, and all types of juridical acts, inter vivos or causa mortis independent of the other condominium units.” MCL 559.161. “Each co-owner has an exclusive right to his condominium unit and has such rights to share with other co-owners...