ZANTOP INTL AIRLINES INC V DEPT OF TREASURY
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STATE OF MICHIGAN
COURT OF APPEALS
ZANTOP INTERNATIONAL AIRLINES, INC.,
UNPUBLISHED
August 3, 2004
Petitioner-Appellee/CrossAppellant,
v
No. 249548
Tax Tribunal
LC No. 00-117375
DEPARTMENT OF TREASURY,
Respondent-Appellant/CrossAppellee.
Before: Bandstra, P.J., and Fitzgerald and Hoekstra, JJ.
PER CURIAM.
Respondent appeals, and petitioner cross-appeals, from an order of the Tax Tribunal
granting partial summary disposition in favor of petitioner and partial summary disposition in
favor of respondent regarding petitioner’s use tax liability. We affirm.
The Tax Tribunal decided the case based solely on stipulated facts; therefore, purely legal
issues are raised on appeal. Petitioner, Zantop International Airlines, Inc., is a Michigan
corporation operating a fleet of aircraft in an airfreight delivery business, and is headquartered in
Ypsilanti, Michigan. Petitioner also operates an aircraft repair and maintenance facility in
Macon, Georgia. In 1988, pursuant to an audit, respondent imposed Michigan use tax liability
on petitioner for the period from April 1, 1983, through March 31, 1986 in the principal amount
of $623,346.41, and the interest amount of $198,989.11, for a total alleged liability of
$822,335.52. Of this assessment, petitioner disputed $612,388.65.1 Petitioner brought suit
against respondent, alleging: (1) audit errors; (2) non-taxable use; (3) lack of taxable moment;
(4) an equal protection challenge; and (5) 42 USC 1983 violations.
1
$33,115.93 of the disputed amount pertains to parts delivered to Macon, Georgia. $12,622.08
pertains to actual purchases of aircraft, rather than parts for aircraft repair. $566,650.64 pertains
to aircraft parts for repair delivered to Ypsilanti for installation.
-1-
Respondent moved for partial summary disposition pursuant to MCR 2.116(C)(7) and
(8). Respondent argued that summary disposition as to counts 2, 3, and 4 was appropriate
pursuant to MCR 2.116(C)(7), because those counts contained legal issues which had previously
been litigated, and were therefore barred because of prior judgment. Respondent argued that
summary disposition as to count 5 was appropriate pursuant to MCR 2.116(C)(8) because where
it had already been determined that no constitutional violations had occurred as alleged in counts
2, 3, and 4, count 5 failed to state a claim upon which relief could be granted. Petitioner moved
for partial summary disposition pursuant to MCR 2.116(C)(10), alleging that regardless of
whether audit errors occurred as it had alleged in count 1 of its complaint, no genuine issue of
material fact existed because MCL 205.94k(1) exempted it from the use tax.
The Tax Tribunal granted partial summary disposition in favor of respondent on the basis
that counts 2, 3, and 4 of petitioner’s complaint were barred by res judicata and collateral
estoppel. Additionally, the Tax Tribunal determined that count 5 of petitioner’s complaint failed
to state a claim upon which relief could be granted. The Tax Tribunal granted partial summary
disposition in favor of petitioner on the basis that aside from $12,622.08 of the assessment,
because MCL 205.94k(1)(a) contains specific language exempting from the use tax aircraft parts
installed on certain aircraft before December 31, 1996, the plain language of the statute precludes
any use tax liability attributable to petitioner arising from the installation of these parts.
On appeal, respondent argues that the Tax Tribunal’s holding was erroneous, because
neither the statutory amendment containing this provision nor its legislative history explicitly
state that the change is “retroactive,” and because MCL 205.94k did not become effective until
February 27, 1992, after the end of the tax period in dispute.
We review de novo decisions on motions for summary disposition. Spiek v Dep’t of
Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998). Additionally, we review de novo
the interpretation and application of a statute as a question of law. Eggleston v Bio-Medical
Applications of Detroit, Inc, 468 Mich 29, 32; 658 NW2d 139 (2003).
Our primary task in construing a statute is to discern and give effect to the intent of the
Legislature. Sun Valley Foods Co v Ward, 460 Mich 230, 236; 596 NW2d 119 (1999). “If the
language of the statute is unambiguous, the Legislature must have intended the meaning clearly
expressed, and the statute must be enforced as written. No further judicial construction is
required or permitted.” Id. MCL 205.94k provides in pertinent part:
(1) The tax levied under this act does not apply to parts and materials, excluding
shop equipment or fuel, affixed to or to be affixed to an aircraft owned or used by
a domestic air carrier that is any of the following:
(a) An aircraft for use solely in the transport of air cargo or a combination
of air cargo and passengers that has a maximum certificated takeoff
weight of at least 12,500 pounds for taxes levied before January 1, 1997
and at least 6,000 pounds for taxes levied after December 31, 1996.
-2-
Because the language of MCL 205.94k(1)(a) is plain and unambiguous, it must be applied as
written.2 Given the plain statutory reference to the use tax not applying to liability that otherwise
would have accrued before December 31, 1996, any further explicit reference to “retroactivity”
would have been unnecessary and redundant. As to respondent’s argument that MCL 205.94k
did not come into effect until February 27, 1992, the law that governs is the law as it was written
at the time the case was decided, not the law as it was written at the time the events in
controversy occurred. See Franks v White Pine Copper Div, 422 Mich 636, 651; 375 NW2d 715
(1985).3 The Tax Tribunal did not err in granting partial summary disposition to petitioner on
this issue.
In its cross-appeal, petitioner argues that as applied to it, the Michigan use tax violates
the Commerce Clause of the United States Constitution, US Const, art I, § 8.4 However,
Michigan follows a broad application of res judicata which bars claims actually litigated in a
prior action. Sprague v Buhagiar, 213 Mich App 310, 313-314; 539 NW2d 587 (1995). Further,
“[c]ollateral estoppel precludes relitigation of an issue in a subsequent, different cause of action
between the same parties when the prior proceeding culminated in a valid final judgment, and the
issue was actually and necessarily litigated.” Hawkins v Murphy, 222 Mich App 664, 671-672;
565 NW2d 674 (1997). Because petitioner’s argument was previously presented to the Tax
Tribunal in another case between petitioner and respondent, and was rejected, petitioner’s
position is thus barred under the principles of res judicata and collateral estoppel.5
2
During the period at issue, all of petitioner’s aircraft were used in air cargo transport, and had a
maximum certificated takeoff weight of at least 12,500 pounds.
3
Although the Legislature explicitly overruled the holding in Franks as to the proper method for
coordinating worker’s compensation benefits with other benefits, it did so in a manner that
buttressed rather than undermined our Supreme Court’s holding regarding application of the law
as it exists when a case is decided, not as it was during an earlier period in which the fact pattern
emerged. The Legislature set out a different method for coordinating benefits than the one our
Supreme Court found applicable in Franks, and, in language similar to that used in MCL
205.94k, applied the new rule to “personal injuries occurring before March 31, 1982,” well
before the 1987 date of the amendment’s passage.
4
The Tax Tribunal’s ruling left in place $12,622.08 of petitioner’s use tax assessment for the
relevant period. The portion of the assessment that was affirmed was the portion attributable to
the purchase of aircraft rather than the installation of aircraft parts.
5
The Tax Tribunal’s decision rejecting this argument was affirmed by this Court. See Michigan
Court of Claims, File No. 91-13365-CM; Zantop Int’l Airlines, Inc v Dep’t of Treasury,
unpublished opinion per curiam of the Court of Appeals, issued April 24, 2001 (Docket No.
217513). Petitioner sought leave to appeal to the Michigan Supreme Court, which was denied.
Zantop Int’l Airlines, Inc v Dep’t of Treasury, unpublished order of the Supreme Court, entered
November 30, 2001 (Docket No. 119238). Finally, petitioner applied for a writ of certiorari to
the United States Supreme Court, which was also denied. Zantop Int’l Airlines, Inc v Michigan
Dep’t of Treasury, Revenue Div, order of the United States Supreme Court, entered May 13,
2002 (Docket No. 01-1284).
-3-
Finally, petitioner argues that no use tax can be assessed on parts installed on petitioner’s
aircrafts that were in the State of Georgia when the installation took place. Respondent agrees
with petitioner on this issue, and the Tax Tribunal did not find petitioner liable for use tax on any
parts installed in Georgia. Therefore, given our affirmance of the Tax Tribunal’s decision, this
issue is moot.
We affirm.
/s/ Richard A. Bandstra
/s/ E. Thomas Fitzgerald
/s/ Joel P. Hoekstra
-4-
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