SOUTH DAVISON COMMUNITY CENTER INC V TWP OF DAVISON
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STATE OF MICHIGAN
COURT OF APPEALS
SOUTH DAVISON COMMUNITY CENTER,
INC.,
UNPUBLISHED
October 25, 2002
Petitioner-Appellant,
v
No. 232346
Michigan Tax Tribunal
LC No. 00-266268
TOWNSHIP OF DAVISON,
Respondent-Appellee.
Before: Smolenski, P.J., and Talbot and Wilder, JJ.
PER CURIAM.
Petitioner appeals as of right the Michigan Tax Tribunal’s judgment affirming
respondent’s property tax assessment. We reverse and remand.
This appeal arose from the tribunal’s decision that petitioner’s property was not entitled
to a property tax exemption for charitable use under MCL 211.7o. The property at issue is a onestory building in Davison Township, which petitioner used for community purposes. Petitioner
initially filed an application for exemption from tax as an exempt educational institution, which
the township board denied. Thereafter, petitioner filed a petition with the small claims division
of the tax tribunal, seeking exemption as an educational or charitable institution. The tribunal
held, based largely on respondent’s evidence, that petitioner did not meet the definition of a
charitable institution, and, therefore, was subject to property tax.
Absent fraud, we review decisions of the Tax Tribunal to determine if it erred in applying
the law or adopted wrong legal principles. Georgetown Place Co-op v City of Taylor, 226 Mich
App 33, 43; 572 NW2d 232 (1997). The tribunal’s factual findings are conclusive unless they
are not “supported by competent, material, and substantial evidence.” Id. Further, we review the
tribunal’s enforcement of its own rules for an abuse of discretion. Perry v Vernon Twp, 158
Mich App 388, 392; 404 NW2d 755 (1987).
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Petitioner first argues that it was error to admit respondent’s evidence because respondent
failed to set forth in its answer the facts upon which it relied in defense of petitioner’s petition.
1999 AC, R 205.13321 requires, in pertinent part,
(1) . . . The answer shall set forth the facts upon which the respondent relies in
defense of the matter.
***
(3) The respondent shall serve the petitioner with a copy of the answer and
supporting documentation filed with the tribunal.
Respondent’s answer simply stated, “I feel the assessed values are correct and leave petitioner to
its proofs.”
We agree with petitioner’s contention that respondent’s answer was not sufficient under
TTR 205.1332 because respondent relied on facts it presented at the hearing in defense of
petitioner’s petition, which it did not include in its answer. The purpose of an answer is to
provide notice to the plaintiff or petitioner to enable the party to adequately prepare its case.2
Although it is not necessary in every case to plead in detail every possible defense theory or
every element of a petitioner’s claim that the respondent believes the petitioner will be unable to
substantiate, the respondent “must plead something more specific than ‘I deny I’m liable.’”
Stanke v State Farm Mut Auto Ins Co, 200 Mich App 307, 316-318; 503 NW2d 758 (1993).
Likewise, “[a] denial that merely states that the pleader ‘neither admits nor denies the allegations
of paragraph___, but leaves plaintiff to its proof’ is insufficient.” Id. at 316, quoting 1 Martin,
Dean & Webster, Michigan Court Rules Practice (1992 Supp), p 43.
Respondent’s answer did not specifically deny that petitioner was a charitable or
educational organization, explain why the assessment was correct, or address why petitioner’s
claim was untrue. Had respondent stated in its answer why the assessed values were correct,
petitioner would have been able to adequately prepare its case. Yet, respondent did not even
generally deny petitioner’s claims in its answer, but rather stated that it left petitioner to its
proofs, which indicated an intention not to present contradicting evidence.
However, while the tribunal’s small claims division’s rule mandates that a respondent
state the facts on which it relies in defense of the petition in its answer, the rule does not describe
1
Hereinafter the tax tribunal rules will be cited as TTR, as authorized by 1999 AC, R
205.111(1).
2
The terms of TRR 205.1332 do not specify its purpose. However, as indicated by the terms of
its companion rule, TRR 205.1245, which applies in cases before the entire tribunal as opposed
to those in the small claims division, the purpose of pleading facts in the answer is to provide
notice to the petitioner and the tribunal of the nature of the defense. A similar purpose underlies
Michigan’s court rules governing responsive pleadings. “[T]he primary function of a pleading in
Michigan is to give notice of the nature of the claim or defense sufficient to permit the opposite
party to take a responsive position.” Stanke v State Farm Mut Auto Ins Co, 200 Mich App 307,
317; 503 NW2d 758 (1993).
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when, or if, undisclosed evidence should be excluded from the hearing. TTR 205.1332.3 The
tribunal’s rules provide that if an applicable tribunal rule does not exist, the Michigan Court
Rules shall govern. TTR 205.1111(4). The Michigan Court Rules provide that an error or defect
is harmless and not grounds for disturbing a judgment unless it appears to be inconsistent with
substantial justice. MCR 2.613(A). Therefore, we will not disturb the tribunal’s order in the
absence of a showing of prejudice. Georgetown, supra at 51; Kern v Pontiac Twp, 93 Mich App
612, 623; 287 NW2d 603 (1979).
Respondent’s answer would not have been prejudicial to petitioner had the tribunal’s
decision not been based on the evidence respondent presented in support of its defense.
However, it is evident that the tribunal specifically relied on respondent’s testimony and
evidence, which contained facts that respondent failed to disclose in its answer in violation of
TTR 205.1332. In its motion for rehearing, which the tribunal denied, petitioner submitted
evidence that directly contradicted a portion of respondent’s evidence and the tribunal’s
conclusion. Had petitioner been aware before the hearing of respondent’s evidence in defense of
the petition, it could have presented this rebuttal evidence at the hearing. We find that petitioner
was prejudiced by respondent’s answer because it did not give sufficient notice of the nature of
respondent’s defense to permit petitioner to take a responsive position.4
Petitioner next argues that it was error to admit respondent’s documentary evidence
because petitioner did not receive it until after the hearing, which violated the time requirement
in TRR 205.1342. TRR 205.1342 provides in pertinent part:
(2) A copy of the valuation disclosure or other written evidence to be
offered in support of a party’s contentions as to the subject property’s value shall
be filed with the tribunal and served upon the opposing party not less than 14 days
before the date of the scheduled hearing. Failure to comply with this subrule may
result in the exclusion of evidence at the time of the hearing because the opposing
party may have been denied the opportunity to adequately consider and evaluate
the evidence before the date of the scheduled hearing.
The hearing was held on July 19, 2000. Respondent did not serve petitioner with the
documentary evidence until July 31, 2000. Thus, respondent failed to provide the evidence in a
timely manner in accordance with TRR 205.1342(2).
3
In contrast, companion rule TTR 205.1245, which governs answers for cases in front of the
entire tribunal, and MCR 2.111(F)(2), which governs answers in Michigan courts, both provide
that a defense is waived if not properly pleaded.
4
Unlike in Georgetown, supra, where this Court failed to find prejudice, in this case, there is no
indication in the record that petitioner vigorously cross-examined respondent’s representative or
that the tribunal provided a post-hearing mechanism to allow petitioner to challenge respondent’s
undisclosed evidence. Georgetown, supra at 51. Similarly, in Kern, supra, the Court found that
the petitioner was not prejudiced where it vigorously cross-examined the respondent, and the
petitioner did not allege, nor could the Court discern, prejudice. Kern, supra at 623.
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This rule gives the tribunal discretion to exclude untimely evidence where “the opposing
party may have been denied the opportunity to adequately consider and evaluate the evidence
before the date of the scheduled hearing.” TRR 205.1342. Clearly, petitioner did not have an
opportunity to evaluate the evidence prior to the hearing because it did not receive the evidence
until after the hearing; thus, the tribunal improperly admitted the evidence.
However, reversal is not required where the petitioner was not prejudiced by the
evidence’s admission. Georgetown, supra at 51; Kern, supra at 623. The tribunal found that
petitioner was not a charitable institution because the property had been vacant for two years
prior to the tax year at issue, was in a decrepit state and not suitable for use by the community,
and had been advertised as a for pay parking lot. At the hearing, respondent presented a copy of
petitioner’s income and expense statements, a notice of an ordinance violation and the related
complaint for operating a parking lot on the property, and a letter from respondent’s building
inspector.
The admission of petitioner’s income and expense statements was not prejudicial because
the statements were generated by petitioner, who also presented them to the tribunal, nor was the
letter from respondent’s building inspector insofar as the inspector discussed the condition of the
building because petitioner admitted that the building was in disrepair.
However, we believe that petitioner was prejudiced regarding the admission of the letter
to the extent it discussed the building’s vacancy, and also by the admission of the notice of
ordinance violation. Petitioner had contrary rebuttal evidence, but not having been presented
with this documentary evidence before the hearing, petitioner was unable to present it at the
hearing. Petitioner obtained affidavits which indicated that the building had not been vacant for
two years, nor was the property used as a fee-based parking lot. Because petitioner was
prejudiced by the admission of this evidence, reversal of the tribunal’s decision is required.5
Georgetown, supra at 51; Kern, supra at 623.
Last, petitioner argues that the tribunal erred in failing to award petitioner attorney fees
resulting from the adjournment of the first scheduled hearing. The hearing was initially
scheduled for April 5, 2000. Due to a medical emergency, respondent’s representative was
unable to attend the hearing, but petitioner’s attorney was present. The tribunal adjourned the
hearing until July 19, 2000. As a result, petitioner sought costs pursuant to TRR 205.1145. The
tribunal awarded petitioner $181.33, $25.00 for the motion fee and $156.33 in mileage.
However, the tribunal did not award attorney fees, concluding that petitioner failed to provide
legal support for such an award.
TRR 205.1145 provides:
5
Given our resolution of these issues, we need not address petitioner’s alternative arguments
concerning whether the tribunal’s factual findings, determined by considering the undisclosed
evidence, were supported by competent, material and substantial evidence, and whether the
tribunal erred in applying the law in concluding that petitioner’s activities do not meet the
definition of a charitable institution.
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(1) The tribunal may, upon motion . . . allow a prevailing party in a
decision or order to request costs.
This rule does not specifically include recovery of attorney fees and the tax tribunal rules do not
define costs. We note that even if we were to consider “costs” to include attorney fees, TRR
205.1145 would not provide a legal basis for such an award because it only applies to a
“prevailing party.”6
We recognize that, therefore, the costs which were awarded to petitioner should not have
been given pursuant to this rule. However, MCR 2.503(D)(2) gives a court discretion to award
costs when granting an adjournment. Because there are no tribunal rules which address the
award of costs before a final judgment, the Michigan Court Rules govern. TRR 205.1111(4).
Thus, there was a basis upon which the tribunal could award costs to petitioner.
In regards to attorney fees, MCR 2.503(D)(2) also only authorizes costs. Generally, the
express mention of one thing in a statute implies the exclusion of other similar things.7 Bradley v
Saranac Community Schools Bd of Ed, 455 Mich 285, 298; 565 NW2d 650 (1997). We believe
that had MCR 2.503(D) intended to allow recovery of attorney fees, it would have specifically so
stated, as other court rules do. See, e.g., MCR 2.114(E); MCR 2.118(A)(3); MCR 2.119(E)(4);
MCR 2.223(B)(1); MCR 2.225(B); MCR 2.313(B)(2), and MCR 2.401(G).
On appeal, petitioner specifically argues that MCR 2.119(E)(4) provides legal support for
an award of reasonable attorney fees. However, this court rule allows attorney fees to be
awarded if the moving party fails to appear at a contested motion hearing. It is inapplicable to
the present case because petitioner was the moving party in regards to the hearing to be held and
was present. We conclude that the tribunal was correct in denying petitioner’s request for
attorney fees because there was no legal basis upon which to award it.
In conclusion, we hold that petitioner was prejudiced by respondent’s failure to file a
sufficient answer to enable petitioner to adequately respond and by the tribunal’s improper
admission of certain pieces of documentary evidence offered by respondent. Therefore, we
reverse the tribunal’s decision and remand for further proceedings consistent with this opinion.
On remand, if the tribunal can reissue its opinion and judgment setting forth its reasoning,
without considering the inadmissible documentary evidence and without conducting a new
6
The United States Supreme Court recently defined a “prevailing party” as one who has received
a favorable judgment on the merits of his claim or an enforceable consent judgment; either of
which create the necessary “material alternation of the parties’ legal relationship.” Buckhannon
Bd & Care Home, Inc v West Virginia Dep’t of Health & Human Resources, 532 US 598, 603604; 149 L Ed 2d 855; 121 S Ct 1835 (2001). In this case, petitioner was not a “prevailing party”
because the tribunal merely excused respondent’s representative’s failure to appear and
rescheduled the hearing. There was no change in the parties’ legal relationship.
7
The rules of statutory construction also apply to court rules. Rafferty v Markovitz, 461 Mich
265, 270; 602 NW2d 367 (1999).
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hearing, it may do so. Kern, supra at 625. If it cannot, the tribunal should conduct a new
hearing.
Reversed and remanded. We do not retain jurisdiction.
/s/ Michael R. Smolenski
/s/ Michael J. Talbot
/s/ Kurtis T. Wilder
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