West St Joseph Property LLC v. Delta Township

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to

revision until final publication in the Michigan Appeals Reports.

STATE OF MICHIGAN

COURT OF APPEALS

WEST ST. JOSEPH PROPERTY, LLC, FOR PUBLICATION

August 26, 2021

Petitioner-Appellant, 9:05 a.m.

v No. 354205

Tax Tribunal

DELTA TOWNSHIP, LC No. 19-000837-TT

Respondent-Appellee.

Before: RONAYNE KRAUSE, P.J., and BECKERING and BOONSTRA, JJ.

BOONSTRA, J.

Petitioner appeals by right the July 6, 2020 final order and judgment of the Michigan Tax

Tribunal (the Tribunal) denying petitioner’s motion for summary disposition and granting

respondent’s motion for summary disposition. We affirm.

I. PERTINENT FACTS AND PROCEDURAL HISTORY

In October, 2019, the parties stipulated to the following undisputed facts underlying

this case:

1. On December 31, 2018, the subject property (the “Property”), whose taxation

is at issue in this case, had an address of 4125 W. St. Joseph, Delta Township,

Eaton County, Michigan, Tax Parcel Number 23-040-061-500-520-00, and an

office building with 33,000 usable square feet. The Property’s 2019 state

equalized value is $1,208,700—and its 2019 taxable value is $1,208,700.

2. The Property is the subject of an agreement (the “Agreement”) between

Petitioner West St. Joseph Property LLC and the State of Michigan (the

“State”). Petitioner executed the Agreement on February 7, 2018, and the State

executed the Agreement on March 7 and March 16, 2018. The Agreement is

attached to the Stipulation as Exhibit A.

3. On September 25, 2018, Petitioner sought property tax exemption for the

Property by filing an application (the “Application”) with Respondent’s

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Assessor. The Application is attached hereto as Exhibit B. Included as part of

the Application were a deed conveying legal title to Petitioner and the

Agreement.

4. On or about November 14, 2018, representatives of Petitioner met with

Respondent’s representatives, including Respondent’s Assessor, to discuss the

Application.

5. On December 13, 2018, Petitioner received Respondent’s notice that

Respondent’s Assessor had denied Petitioner’s exemption request for the

Property.

6. The parties agree that valuation of the Property is not at issue and the only issue

in this case is whether the property at issue is exempt or taxable under the

General Property Tax Act (the “Act”). The Tribunal should resolve this case

by deciding whether on December 31, 2018, the Property was exempt.

7. Among Petitioner’s contentions are that: (i) on December 31, 2018, the Property

was “(p)ublic property belonging to the state,” which would make the Property

exempt under Act section 7l (“section 7l”), MCL 211.7l, and (ii) the Agreement

constituted a transfer of ownership under MCL 211.27a(6)(g). Respondent

contends that the Property is taxable because Petitioner, not the State, held legal

title to the Property on December 31, 2018.

8. No specific Tribunal rule exists for summary disposition motions. Therefore,

under Tribunal Rule 215, R 792.10215, MCR 2.116(C)(10) applies to this case.

The 2018 lease agreement (the lease) provides that the State of Michigan (the State), as

lessee, would pay petitioner, as lessor, a total of $10,815,888 over 20 years from 2018 to 2038;

then, in 2038, the State would have the option to purchase the property at issue (the property) for

one dollar. Section 2.12 of the lease provides that “[t]he Lessor or Lessor’s agent may enter the

Leased premises with reasonable advance notice for the purpose of conducting repairs, preventive

maintenance, or providing replacements, as requested under Article III.” Sections 5.8 (regarding

“Rent adjustment for real property taxes”), 5.9 (regarding “Real property tax exemptions”), and

5.10 (regarding “Real property tax assessment appeals”) were marked “deleted, not applicable.”

Similarly, despite appearing in the lease’s table of contents, sections 6.13 (regarding “Transfer of

title free and clear”) and 6.18 (regarding “Real Property Tax Adjustment”) were omitted from the

body of the lease. On petitioner’s application for the property tax exemption, petitioner listed

itself, not the State, as the property’s owner. Sections 11.1 to 11.4 of the lease provided for terms

under which either party could cancel the lease. Section 6.3 refers to “if” the State were to exercise

its option to purchase, indicating that the State was not obligated to exercise that option.

On May 6, 2019, petitioner filed a petition with the Tribunal requesting that the Tribunal

reduce the property’s taxable value to zero. Petitioner argued that the lease constituted a transfer

of ownership to the State under MCL 211.27a(6)(g), and that the property was therefore exempt

from property taxes under MCL 211.7l. The parties stipulated to a proposed scheduling order

requiring that dispositive motions, briefs in support, and other supporting materials be filed on or

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before December 6, 2019, and that proposed findings of facts and conclusions of law be filed on

or before December 20, 2019. The Tribunal entered an order stating in relevant part that the

underlying issue in the case was a question of law, and directing the parties to file dispositive

motions and briefs to resolve the issue, to be served on the other party by December 20, 2019. The

order permitted each party to file and serve a response brief by January 13, 2020. It did not provide

for the filing of reply briefs.

On December 19, 2019, the parties filed cross-motions for summary disposition under

MCR 2.116(C)(10). Petitioner argued that the lease constituted a transfer of ownership under

MCL 211.27a. It further argued that the State alone occupied and used the property, and that

because the lease had a one-dollar purchase option, the property was public property belonging to

the State and was exempt from taxation under MCL 211.7l. Petitioner accompanied its motion

with the affidavit of Ronnie J. Boji, the owner of petitioner and the president of Boji Group, a real

estate development and management company. Boji stated in his affidavit that petitioner had made

substantial changes to the property to satisfy the State’s needs, and that since August 8, 2018, the

State alone had occupied the property and used it for state government purposes. Respondent

argued that “transfer of ownership” was a term of art defined by MCL 211.27a that did not apply

to leases or to the Section 7l property tax exemption. Respondent also argued that a lease did not

change the ownership status of the property and that Section 27a was inapplicable to Section 7l.

The parties each filed a response to the other’s motion on January 13, 2019. On January 22,

2020, petitioner filed a motion for leave to file a reply to respondent’s response brief, arguing that

respondent had raised new arguments to which petitioner should be permitted to respond.

On March 17, 2020, the administrative law judge (ALJ) presiding over the case issued a

proposed order and judgment denying petitioner’s motion for summary disposition, granting

respondent’s motion for summary disposition, denying petitioner’s motion for leave to file reply

brief, and determining that the property was not entitled to an exemption under MCL 211.7l for

the 2019 tax year. After consulting dictionary definitions, the ALJ concluded that the term

“belonging to” equated to ownership by way of legal title, and that the property therefore did not

“belong to” the State.

In April 2020, petitioner filed with the Tribunal a motion for reconsideration of the denial

of its motion for leave to file a reply brief. The Tribunal denied the motion.

In July 2020, the Tribunal entered a final opinion and judgment denying petitioner’s motion

for summary disposition and granting respondent’s motion for summary disposition. The Tribunal

adopted the ALJ’s construction of the phrase “belonging to” in MCL 211.7l and concluded that

the property did not belong to the State and that petitioner therefore was not entitled to a property

tax exemption for the 2019 tax year.

This appeal followed.

II. SUMMARY DISPOSITION

Petitioner argues that the Tribunal erred by granting respondent’s motion for summary

disposition and denying petitioner’s motion. We disagree.

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Absent a claim of fraud, this Court reviews decisions from the Tax Tribunal for the

misapplication of law or the adoption of a wrong legal principle. We deem the

tribunal’s factual findings conclusive if they are supported by competent, material,

and substantial evidence on the whole record. This Court reviews de novo the

tribunal’s interpretation of a tax statute. . . . Though this Court will generally defer

to the Tax Tribunal’s interpretation of a statute that it is delegated to administer,

that deference will not extend to cases in which the tribunal makes a legal error.

Thus, agency interpretations are entitled to respectful consideration but cannot

control in the face of contradictory statutory text. [SBC Health Midwest, Inc v City

of Kentwood, 500 Mich 65, 71; 894 NW2d 535 (2017) (quotation marks and

citations omitted).]

We review de novo a trial court’s grant or denial of summary disposition. See Washington v Sinai

Hosp of Greater Detroit, 478 Mich 412, 417; 733 NW2d 755 (2007). Tax exemption statutes are

to be strictly construed in favor of the taxing authority. See Mich United Conservation Clubs v

Lansing Twp, 423 Mich 661, 664-665; 378 NW2d 737 (1985).

The General Property Tax Act (GPTA), MCL 211.1 et seq., governs real property subject

to ad valorem taxation. At issue in this case is the interpretation of MCL 211.7l, which provides:

Public property belonging to the state, except licensed homestead lands,

part-paid lands held under certificates, and lands purchased at tax sales, and still

held by the state is exempt from taxation under this act. This exemption shall not

apply to lands acquired after July 19, 1966, unless a deed or other memorandum of

conveyance is recorded in the county where the lands are located before December

31 of the year of acquisition, or the local assessing officer is notified by registered

mail of the acquisition before December 31 of the year of acquisition.

“If the language of [a] statute is unambiguous, the Legislature must have intended the

meaning clearly expressed, and the statute must be enforced as written.” US Fidelity & Guaranty

Co v Mich Catastrophic Claims Ass’n, 484 Mich 1, 13; 795 NW2d 101 (2009) (quotation marks

and citation omitted; alteration in original). “Statutory provisions must be read in the context of

the entire act, giving every word its plain and ordinary meaning.” Driver v Naini, 490 Mich 239,

247; 802 NW2d 311 (2011). “This Court must consider both the plain meaning of the critical word

or phrase as well as its placement and purpose in the statutory scheme.” US Fidelity, 484 Mich at

13 (quotation marks and citation omitted). “When the Legislature uses different words, the words

are generally intended to connote different meanings. Simply put, the use of different terms within

similar statutes generally implies that different meanings were intended. If the Legislature had

intended the same meaning in both statutory provisions, it would have used the same word.” Id.

at 15 (quotation marks and citations omitted.)

Petitioner argues that the property qualified for the exemption because the lease constituted

a “transfer of ownership” under the GPTA, because the State was the “equitable” owner of the

property under the lease, and because the State possessed and occupied the property and used it

for a public purpose. We disagree.

First, MCL 18.1222 provides that

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[p]roperty acquired for the state or a state agency through an installment lease

agreement is public property and shall be considered exempt for purposes of the

general property tax act, Act No. 206 of the Public Acts of 1893, being sections

211.1 to 211.157 of the Michigan Compiled Laws, if the state as lessee under the

installment lease agreement is required to pay any taxes or reimburse the lessor

for any payments the lessor has made. [Emphasis added.]

Under the plain language of MCL 18.1222, property thus may be deemed “public property”

that is exempt under the GPTA, without regard to whether it “belongs to” the State, if certain

conditions are met. Specifically, the provision is satisfied “if the state as lessee under [an]

installment lease agreement” is required either to “pay any taxes” or to “reimburse the lessor for

any payments the lessor has made.” Neither of those conditions is satisfied by the lease in this

case. The lease neither requires the State to pay any taxes on the property nor requires that the

State reimburse petitioner for any tax payments. Consequently, the property is not exempt from

taxation by virtue of MCL 18.1222.

Although petitioner argues that MCL 211.7l and MCL 18.1222 are “alternative paths to tax

exemption,” MCL 18.1222 expressly states that it applies to the entirety of the GPTA, including

MCL 211.7l. This means that because MCL 18.1222 does not itself provide a path to exemption,

petitioner must still satisfy all requirements for exemption under MCL 211.7l. Therefore, even if

the property were deemed to be public property, petitioner must still demonstrate that it constitutes

property “belonging to” the State.

Petitioner argues that the property “belongs to” the State by virtue of the lease, because the

lease constituted a “transfer of ownership” under MCL 211.27a(6)(g). We disagree. The GPTA

defines “transfer of ownership” in MCL 211.27a(6)(g), as follows:

As used in this act, “transfer of ownership” means the conveyance of title to or a

present interest in property, including the beneficial use of the property, the value

of which is substantially equal to the value of the fee interest. Transfer of ownership

of property includes, but is not limited to, the following:

* * *

(g) A conveyance by lease if the total duration of the lease, including the initial

term and all options for renewal, is more than 35 years or the lease grants the lessee

a bargain purchase option. As used in this subdivision, “bargain purchase option”

means the right to purchase the property at the termination of the lease for not more

than 80% of the property's projected true cash value at the termination of the lease.

After December 31, 1994, the taxable value of property conveyed by a lease with a

total duration of more than 35 years or with a bargain purchase option shall be

adjusted under subsection (3) for the calendar year following the year in which the

lease is entered into. This subdivision does not apply to personal property except

buildings described in section 14(6) and personal property described in section 8(h),

(i), and (j). This subdivision does not apply to that portion of the property not

subject to the leasehold interest conveyed. [Emphasis added; footnotes omitted.]

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MCL 211.27a(6)(g) thus provides a definition of the phrase “transfer of ownership” that is

applicable when that phrase is “used in this act.” That is, the unambiguous meaning of

MCL 211.27a(6)(g), see US Fidelity, 484 Mich at 13, is simply that its definition of the phrase

“transfer of ownership” is to be applied when that phrase itself is used in the GPTA. In other

words, MCL 211.27a(6)(g), as a definitional term, only applies when the phrase “transfer of

ownership” is used in the GPTA, as it indeed is used in several GPTA exemptions. See, e.g.,

MCL 211.7o, MCL 211.7cc, and MCL 211.7kk. The term does not, however, appear in

MCL 211.7l; accordingly, MCL 211.27a(6)(g) is not dispositive of our analysis of that exemption.

Even supposing that the evidence might conceivably show that a “transfer of ownership” under

MCL 211.27a(6)(g) was in progress, there was no evidence presented that any such transfer had

been completed; accordingly petitioner would remain obligated to produce evidence establishing

that the property actually and presently “belong[s] to” the State.

The phrase “belonging to the state” in MCL 211.7l is not defined in the GPTA or by prior

caselaw. The Michigan Supreme Court has recognized that, in order to accord undefined statutory

terms their plain and ordinary meanings, “[a] court may consult dictionary definitions when terms

are not expressly defined by a statute.” Oakland Co Bd of Co Rd Comm’rs v Mich Prop & Cas

Guaranty Ass’n, 456 Mich 590, 604; 575 NW2d 751 (1998).1 The Tribunal consulted a dictionary

in interpreting the statutory language at issue, and concluded that “the phrase ‘belonging to’ in

MCL 211.7l was intended to indicate that property ‘owned’ by the State was entitled to the

exemption” and that the exemption did not apply to the property in this case. We find no error of

law in the Tribunal’s interpretation. SBC Health Midwest, Inc, 500 Mich at 71. Had the

Legislature intended the phrase “belonging to” to include broader situations, such as leasehold

agreements or installment purchase contracts, the Legislature could have used specific language

to do so. For example, the Legislature stated, in part, in MCL 211.7m: “Property owned by, or

being acquired pursuant to, an installment purchase agreement by a county, township, city,

village, or school district used for public purposes . . . is exempt from taxation under this act.”

[Emphasis added.] Similarly, the Legislature stated in MCL 211.7z(1): “Property which is leased,

loaned, or otherwise made available to a school district, community college, or other state

supported educational institution . . . is exempt from taxation under this act.” [Emphasis added.]

“The omission of a provision in one part of a statute that is included in another should be construed

as intentional . . . .” Polkton Charter Twp v Pellegrom, 265 Mich App 88, 103; 693 NW2d 170

(2005).

Moreover, petitioner’s proposed definition of “belonging to the state” as encompassing

equitable ownership via a lease agreement would render MCL 18.1222 superfluous. That is, if

equitable ownership via a lease agreement is sufficient to satisfy the “belonging to” requirement

of MCL 211.7l—even if the lease does not require that the State pay taxes or reimburse the lessor

for its tax payment—then the conditions set forth in MCL 18.1222 would have no meaning. We

1

Petitioner argues that the Tribunal should not have consulted a dictionary in its analysis, because

the phrase is not defined in the statute, there is no universal definition of the phrase, and the

dictionaries did not contemplate the context of the entire statute. However, this ambiguity is

precisely why the Tribunal’s consultation of a dictionary was appropriate. Oakland Co Bd of Co

Rd Comm’rs, 456 Mich at 604.

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avoid statutory construction that would render any part of the statute surplusage or nugatory. See

Apsey v Mem Hosp, 477 Mich 120, 127; 730 NW2d 695 (2007). We additionally note that even if

we were to accept that the phrase “belonging to” encompassed equitable ownership, the facts that

the purchase option in the lease is not binding, that the State is not obligated to pay taxes, and that

petitioner otherwise held itself out as the owner tend to show that the State was not an equitable

owner.

Further, MCL 211.7l also provides that “[t]his exemption shall not apply to lands acquired

after July 19, 1966, unless a deed or other memorandum of conveyance is recorded in the county

where the lands are located before December 31 of the year of acquisition, or the local assessing

officer is notified by registered mail of the acquisition before December 31 of the year of

acquisition.” MCL 211.7l (emphasis added). This language suggests that a present transfer of

legal ownership to the State, along with a recorded conveyance (or other prescribed notice

provided to the taxing authority), is required in order for the exemption to apply. It is undisputed

that petitioner did not file such a deed or memorandum of conveyance or inform the local assessing

officer by registered mail of any acquisition of the property by the State. Strictly construed in

favor of the taxing authority, Mich United Conservation Clubs, 423 Mich at 664-665, the property

does not meet all of the requirements of MCL 211.7l and petitioner is therefore not entitled to the

exemption.2

The Tribunal correctly granted respondent’s motion for summary disposition, and

dismissed petitioner’s motion, because petitioner did not establish that the property was “public

property belonging to the state” under MCL 211.7l. See Washington, 478 Mich at 417.

III. DENIAL OF PETITIONER’S MOTIONS FOR LEAVE TO FILE A REPLY BRIEF AND

FOR RECONSIDERATION

Petitioner argues that the Tribunal erred by denying petitioner’s motion for leave to file a

reply brief, and further erred by denying its motion for reconsideration to correct this supposed

error. We disagree. We review for an abuse of discretion a trial court’s decision whether to allow

a brief that is not in compliance with the court’s scheduling order. See Kemerko Clawson, LLC v

RxIV Inc, 269 Mich App 347, 349; 711 NW2d 801 (2005) (noting that a trial court has discretion

under the court rules to set deadlines through scheduling orders and to decline to consider motions

filed outside of those deadlines). We also review for an abuse of discretion a trial court’s decision

regarding a motion for reconsideration. Sherry v E Suburban Football League, 292 Mich App 23,

31; 807 NW2d 859, 863 (2011). “An abuse of discretion occurs when the decision results in an

outcome falling outside the range of principled outcomes.” Id. (quotation marks and citation

omitted).

Petitioner argues that respondent raised new arguments in its brief filed in response to

petitioner’s motion for summary disposition, and that petitioner therefore should have been

permitted to respond to those arguments by way of a reply brief. We disagree with petitioner’s

2

We note that, if the State had been made responsible for the payment or reimbursement of

property taxes under the lease, the property would have qualified for exemption under

MCL 18.1222.

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characterization of respondent’s brief as raising new arguments. To the contrary, it is clear from

the language of respondent’s brief that respondent was simply addressing petitioner’s arguments

with respect to cases that it had cited in its motion for summary disposition, in which petitioner

argued that the other cited Tribunal cases were dispositive notwithstanding certain factual

differences. In its response brief, respondent responded to petitioner’s arguments by citing to

specific provisions of the lease as distinguishing this case from the other Tribunal cases cited by

petitioner. This did not constitute a new argument requiring that the Tribunal afford petitioner a

further opportunity to file a reply brief. Accordingly, the Tribunal did not abuse its discretion by

denying petitioner’s motion for leave to file a reply brief or by denying petitioner’s motion for

reconsideration. Frischman, 363 Mich at 628-629; Sherry, 292 Mich App at 31.

Affirmed.

/s/ Mark T. Boonstra

/s/ Amy Ronayne Krause

/s/ Jane M. Beckering

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