Workers' Comp. Agency Dir. v. MacDonald's Indus. Prods., Inc.

• Decision Date: 27 March 2014
• Docket Number: Docket No. 311184.
• Citation: 853 N.W.2d 467,305 Mich.App. 460
• Parties: WORKERS' COMPENSATION AGENCY DIRECTOR v. MacDONALD'S INDUSTRIAL PRODUCTS, INC (On Reconsideration).
• Court: Court of Appeal of Michigan — District of US

305 Mich.App. 460

853 N.W.2d 467

WORKERS' COMPENSATION AGENCY DIRECTOR

v.MacDONALD'S INDUSTRIAL PRODUCTS, INC (On Reconsideration).

Docket No. 311184.

Court of Appeals of Michigan.

Submitted Oct. 9, 2013, at Lansing.

Decided March 27, 2014.

Approved for publication May 29, 2014, at 9:00 a.m.

Allan Falk, PC, Okemos (by Allan Falk ), for Thomas E. Woods.

Bloom Sluggett Morgan, PC (by Crystal L. Morgan ), for the city of Kentwood.

Varnum LLP (by Marla Schwaller Carew, Troy) for Kent County.

Before: SERVITTO, P.J., and WHITBECK and OWENS, JJ.

Opinion

PER CURIAM.

Thomas E. Woods, receiver of defendant MacDonald's Industrial Products, Inc., appeals as of right the circuit court's order denying in part Woods's motion to recover property taxes that Woods paid to intervening appellees, the city of Kentwood (Kentwood) and Kent County. We affirm.

I. FACTS

A. EXEMPTION CERTIFICATES

MacDonald's was an automotive parts supplier. In 1999, the State Tax Commission (the Commission) issued MacDonald's an industrial facilities exemption certificate for its facility located on 44th Street in Kentwood. In pertinent part, the certificate exempted MacDonald's from certain real and personal property taxes from December 30, 1999, to December 30, 2007, and permitted it to instead pay a lower tax known as the industrial facilities tax.¹ The Commission conditioned the exemption certificate on MacDonald's creating and retaining jobs at its 44th Street property, and the certificate was subject to revocation if the jobs were not created or maintained. In 2004, the Commission issued MacDonald's a second certificate, under substantially similar conditions, that was to run from December 31, 2004, to December 30, 2005.

MacDonald's ceased operations in 2006. In October 2006, Kentwood requested that the Commission revoke the exemption certificates. In a letter dated December 1, 2006, the Department of Treasury notified MacDonald's that the Commission had revoked its certificates at a meeting held on November 29, 2006, and that if MacDonald's did not request a hearing on the matter, the Commission would issue an order revoking its certificates, effective December 30, 2006. MacDonald's did not request a hearing, and the Commission issued an order on February 5, 2007, informing MacDonald's that its certificates had been revoked, effective December 30, 2006.

B. SALE OF THE PROPERTIES

On August 22, 2007, at the request of the Workers' Compensation Agency, the circuit court appointed Woods as receiver of MacDonald's business and property. In March 2008, Woods sought permission to sell MacDonald's property on Oak Industrial Drive in Grand Rapids. The circuit court granted him permission to sell the property free and clear of mortgages, liens, and other encumbrances, but required him to pay “all outstanding property tax liabilities.” Woods sold the property and paid the property's unpaid property taxes, interest, and penalties out of the proceeds of the sale.

In March 2011, Woods sought permission to sell MacDonald's 44th Street property. The circuit court's order permitted him to sell the property free and clear of mortgages, liens, and other encumbrances, but required him to pay the property's “real property taxes” and escrow “[s]tatutory interest, fees and penalties.” Woods sold the property in compliance with the order.

C. MOTION TO RECOVER ASSETS

On October 10, 2011, Woods moved to recover assets of the receivership and distribute proceeds. In parts pertinent to this appeal, Woods asserted that (1) Kentwood and Kent County had impermissibly included interest and penalties in the tax liens and (2) the Commission had improperly revoked MacDonald's exemption certificates. The circuit court denied Woods's motion in part, concluding that (1) Woods was not entitled to reimbursement because the tax liens in 2006 and summer 2007 included the interest and penalties and were perfected before he possessed the property and (2) the Commission could retroactively revoke the exemption certificates.

II. THE TAX LIENS

A. STANDARD OF REVIEW

This Court reviews de novo questions of law, including questions involving the statutory priority of payments involved in a receivership.² We review de novo questions of statutory interpretation.³ We review for clear error a circuit court's factual findings and review de novo its legal conclusions.⁴

B. LEGAL STANDARDS

MCL 211.44(3) authorizes localities to add late penalty charges, administration fees, and interest to uncollected taxes. MCL 211.40 provides that unpaid taxes become liens:

The amounts assessed for state, county, village, or township taxes on any interest in real property shall become a lien on the real property on December 1, on a day provided for by the charter of a city or village, or on the day provided for in [MCL 211.40a ]. The lien for those amounts, and for all interest and charges on those amounts, shall continue until paid.

Concerning summer taxes, MCL 211.44a similarly provides that “[t]axes authorized to be collected shall become a lien against the property on which assessed” on July 1.⁵

C. PENALTIES AND INTEREST

Woods contends that the first sentence in the portion of MCL 211.40 quoted above creates a lien for property taxes but does not create a lien for penalties and interest and that the second sentence quoted does not actually create any liens but merely provides that liens on interest and charges will continue until paid. We cannot adopt Woods's reading of this statute.

When interpreting a statute, our goal is to give effect to the intent of the Legislature.⁶ The language of the statute is the primary indication of the Legislature's intent.⁷ If the language of the statute is unambiguous, we must enforce it as written.⁸ This Court reads the provisions of statutes “reasonably and in context.”⁹ We will not expand the scope of a tax law through forced construction, and we construe doubtful tax laws in favor of the taxpayer.¹⁰

As already stated, the plain language of MCL 211.40 provides that

[t]he amounts assessed for state, county, village, or township taxes on any interest in real property shall become a lien on the real property on December 1, on a day provided for by the charter of a city or village, or on the day provided for in [MCL 211.40a ]. The lien for those amounts, and for all interest and charges on those amounts, shall continue until paid.^{[ 11 ]}

Considering the provisions of this statute reasonably and in context, we conclude that the lien that the statute creates in the first sentence quoted includes the amounts, interest, and charges in the lien that it mentions “shall continue” in the second sentence. Woods's proposed interpretation of the statute—that the Legislature meant to continue a lien for interest and charges that it had not actually created —is not reasonable. Reading the sentences together, the only reasonable interpretation is that the Legislature meant to indicate that interest and charges are included, along with amounts assessed, in the lien that it created. We conclude that the plain meaning of MCL 211.40 is that the amount assessed, including interest and charges, is part of the lien against a property on which taxes remain unpaid.

D. 2006 AND 2007 TAX LIENS BEFORE WOODS'S APPOINTMENT

Woods contends that the circuit court erred when it required him to pay taxes that were assessed in 2006 and 2007, before the circuit court appointed him as the receiver for MacDonald's. We disagree.

We conclude that Woods took the property subject to the liens. In In re Dissolution of Ever Krisp Food Products Co., the Michigan Supreme Court held that in a receivership, “a receiver takes property subject to prior and existing liens....”¹² Unpaid property taxes automatically become liens on the real property on the first of December, for winter taxes, and the first of July, for summer taxes.¹³

The 2006 and summer 2007 tax liens attached to the property before Woods's appointment as receiver. Because these liens were created before Woods's appointment and they continued to exist when he took the property, Woods took the property subject to the liens. We conclude that the circuit court properly determined that Woods took the 44th Street property subject to the 2006 and summer 2007 tax liens.

Woods also contends that the Michigan Supreme Court modified its prior decision in Ever Krisp with its holding in In re Rite–Way Tool & Manufacturing Co.¹⁴ We disagree.

In Rite–Way Tool, the receiver operated the business for three years before the trial court authorized him to liquidate the business's assets.¹⁵ During that time, the trial court's order required the receiver to pay the business's taxes.¹⁶ The city of Detroit attempted to argue that the taxes were an “ ‘expense of administration’ ” of the receivership, which had first priority of distribution under the trial court's order.¹⁷

The Michigan Supreme Court held that the taxes were administration expenses of the receivership because the taxes were assessed while the receiver was conducting the business.¹⁸ The Court distinguished its prior decision in Ever Krisp on the basis that, in Ever Krisp, the taxes were assessed against the owner of the property before the receiver was appointed.¹⁹

Rite–Way Tool involved a case in which the state assessed the tax against the receivership.²⁰ But Ever Krisp involved a case in which the state assessed the taxes against the owner of the property, before the trial court appointed the receiver.²¹ The Court in Rite–Way Toolspecifically referred to its prior decision in Ever Krisp and determined that Ever Krisp was “not controlling of decision in the case at bar because there is a controlling factual difference....”²² Thus, the Court did not modify its holding in Ever Krisp. Rather, the Court distinguished that decision. We conclude that the Michigan Supreme Court's decision in Rite–Way Tool did not modify its holding in Ever Krisp.

Woods also contends that Rite–Way Tool —not Ever Krisp —applies to the facts in this case, and thus the trial...