Court Opinion

ID: 4420348
Source: CourtListenerOpinion
Date Created: 2019-07-26 09:05:49.821144+00
Date Added: 2024-06-11T14:51:32.679925
License: Public Domain

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

RICO ZENTI,                                                          FOR PUBLICATION
                                                                     July 25, 2019
                Petitioner-Appellee,                                 9:10 a.m.

v                                                                    No. 344615
                                                                     Tax Tribunal
CITY OF MARQUETTE,                                                   LC No. 17-003615-TT

                Respondent-Appellant.

Before: TUKEL, P.J., and SERVITTO and RIORDAN, JJ.

TUKEL, P.J.

        Respondent, the City of Marquette, appeals as of right the final opinion and judgment of
the Tax Tribunal. In its opinion, the Tax Tribunal held that the conveyance by five siblings, as
joint tenants with rights of survivorship, to themselves, as tenants in common, was not a “transfer
of property” under the General Property Tax Act (GPTA), MCL 211.1a et seq. For the reasons
provided below, we affirm.

                                        I. BACKGROUND

        The facts of this case are simple and uncontested. On April 25, 1996, Rose Mary Zenti,
the owner of the property at issue in this case, executed a quitclaim deed, which conveyed title to
herself and her children (Peter J. Zenti, Kathleen Fudjack, Marilyn Siegel, Christine
Emmendorfer, and petitioner, Rico Zenti, collectively “the children”), as joint tenants with full
rights of survivorship. Rose Mary passed away on December 7, 2015, thereby leaving the
children as the sole joint tenants with full rights of survivorship, and thus her one-sixth interest
passed by operation of law to the children. On January 13, 2016, the children executed a
quitclaim deed that conveyed the property to themselves, as tenants in common.

       On February 23, 2017, the children received a notice of assessment from respondent.
The notice identified the new assessments for the taxable value, assessed value, and state
equalized value for the property:

                                                -1-
                                                                        Change From
                                      2016               2017
                                                                         Prior Year
       Taxable Value                $126,450          $246,000            $119,550
       Assessed Value               $226,700          $246,000              $19,300
        State Equalized Value       $226,700          $246,000              $19,300

The notice further provided that there was a transfer of ownership of the property in 2016.

       On May 22, 2017, petitioner filed a petition with the Michigan Tax Tribunal Small
Claims Division. Petitioner challenged the “Uncapping of Taxable Value,” arguing that the
property had been “inappropriately uncapped by the city Assessor.”1 Petitioner maintained that,
given that he and the other grantees were children of Rose Mary, the transfer of her interest after
her death was exempt under MCL 211.27a(7)(d) and (7)(u). Moreover, petitioner contended that
the January 2016 conveyance was not a “transfer of ownership” but instead merely was “a
change in the type of ownership estate held by each of the” children.

        The Tax Tribunal initially ruled that the 2016 transfer was not exempted and thus the
property’s assessments were properly uncapped. The tribunal rejected petitioner’s contention
that the January 2016 conveyance was not a transfer of ownership. The tribunal examined the
definition for a “transfer of ownership” and ruled that petitioner, by transferring his right of
survivorship and terminating the joint tenancy, gave up a present interest. Accordingly, this was
a conveyance and, because the conveyance occurred via a deed, it was a transfer of ownership.

        The tribunal further held that the January 2016 transfer of ownership was not exempted
under MCL 211.27a(7)(i) because when the joint tenancy was terminated, none of the people
involved in the joint tenancy (i.e., the children) was an original owner of the property before the
joint tenancy was created; the only person who met that criterion was Rose Mary, and she
already had passed away and was not involved in the January 2016 transfer.2 The tribunal also

1
  The 1994 passing of Proposal A amended “article 9, § 3 of the Michigan Constitution to limit
the annual increase in property tax assessments.” Klooster v City of Charlevoix, 488 Mich. 289,
296; 795 NW2d 578 (2011). As explained herein, there normally is a “cap” on how much a
property’s assessments can be increased. But “[a]fter certain ‘transfers of ownership’ occur, . . .
property becomes uncapped and thus subject to reassessment based on actual property value.”
Id. at 297, quoting MCL 211.27a(3) (original brackets omitted).
2
  MCL 211.27a(7)(i) exempts from the definition of a transfer of ownership instances in which,
among other requirements, the transfer terminates a joint tenancy between two or more people
and “at least 1 of the persons was an original owner of the property before the joint tenancy was
initially created.”

                                                -2-
rejected petitioner’s argument that the transfer was exempted under MCL 211.27a(7)(u).3
Although the transferees were all brothers and sisters, the tribunal noted that “[t]he transfer
was . . . from themselves to themselves” and held that the exemption did not allow for a transfer
to oneself, as was the case here.

        Petitioner then filed a motion for reconsideration, which the Tax Tribunal granted. The
Tax Tribunal ruled that it had erred when it found that the January 2016 transfer was not exempt
under MCL 211.27a(7)(u). The tribunal ruled that under the definition of “transfer of
ownership” in MCL 211.27a(6), the January 2016 transfer did “not constitute a conveyance of
title to or a present interest in the property equal to the value of the fee interest” because
petitioner and his siblings merely had given up the joint tenancy’s right of survivorship.

                                  II. STANDARD OF REVIEW

       “This Court’s authority to review a decision of the Tax Tribunal is very limited.” Mich
Milk Producers Ass’n v Dep’t of Treasury, 242 Mich. App. 486, 490-491; 618 NW2d 917 (2000).
“In the absence of fraud, review of a decision by the Tax Tribunal is limited to determining
whether the tribunal erred in applying the law or adopted a wrong principle; its factual findings
are conclusive if supported by competent, material, and substantial evidence on the whole
record.” Klooster, 488 Mich. at 295 (quotation marks and citation omitted).

        If this Court’s “review requires the interpretation and application of a statute, that review
is de novo.” Power v Dep’t of Treasury, 301 Mich. App. 226, 230; 835 NW2d 662 (2013).
However, “[t]his Court will generally defer to the Tax Tribunal’s interpretation of a statute that it
is charged with administering and enforcing.” Twentieth Century Fox Home Entertainment, Inc
v Dep’t of Treasury, 270 Mich. App. 539, 541; 716 NW2d 598 (2006) (quotation marks and
citation omitted; alteration in original).

                                          III. ANALYSIS

         The sole issue on appeal is whether the Tax Tribunal erred in finding that the January
2016 quitclaim deed, in which the children of Rose Mary, as joint tenants with full rights of
survivorship, deeded the property to themselves as tenants in common, effected a “transfer of
ownership” under the GPTA. We hold that it did not. Because a “transfer” is the threshold issue
for all of respondent’s arguments, its position on appeal fails.

        “The purpose of Proposal A was to limit tax increases on property as long as it remains
owned by the same party, even though the actual market value of the property may have risen at
a greater rate.” Klooster, 488 Mich. at 296.

3
  For residential property that is not used for any commercial purpose following the conveyance,
MCL 211.27a(7)(u) exempts from the definition of a transfer of ownership instances in which
“the transferee is the transferor’s or the transferor’s spouse’s mother, father, brother, sister, son,
daughter, adopted son, adopted daughter, grandson, or granddaughter.”

                                                 -3-
               Proposal A places a cap on the taxable value of a property so that, based
       on the previous year’s taxable value, any yearly increase in taxable value is
       limited to either the rate of inflation or 5 percent, whichever is less. That cap on
       taxable value applies only to the current owner of the property, and the property’s
       taxable value is uncapped when the property is transferred. The uncapped taxable
       value for the year after the transfer sets a new baseline value that is subject to a
       new cap. The GPTA is the enabling legislation that carries out the edicts of
       Proposal A. [Mich Props, LLC v Meridian Twp, 491 Mich. 518, 529; 817 NW2d
       548 (2012).]

“MCL 211.27a(2) and (3) provide the statutory framework to implement the capping and
uncapping mechanisms required by Proposal A.” Id. MCL 211.27a(2) establishes that the
taxable value for each year after 1995 is the lesser of the formula found in MCL 211.27(a)(2)(a)
or the current equalized value, whichever is less. MCL 211.27a(2); Mich Props, 491 Mich. at
530-531. But “MCL 211.27a(3) sets forth an exception to the MCL 211.27a(2) calculation.”
Mich Props, 491 Mich. at 531. MCL 211(a)(3) states the following:

              Upon a transfer of ownership of property after 1994, the property’s taxable
       value for the calendar year following the year of transfer is the property’s state
       equalized valuation for the calendar year following the transfer.

“Accordingly, once the property is transferred, its taxable value is no longer predicated on the
previous year’s taxable value; rather, it is ‘uncapped.’ ” Mich Props, 491 Mich. at 531.

        Thus, in order to be able to invoke the uncapped computation of taxable value, there must
have been a “transfer of ownership.” MCL 211.27a(3). And MCL 211.27a(6) defines “transfer
of ownership” as “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.” The statute then goes on to explain that such a transfer of ownership can occur through
various means, including through “[a] conveyance by a deed.” MCL 211.27a(6)(a).4

       In ruling on petitioner’s motion for reconsideration, the Tax Tribunal held that the
January 2016 quitclaim deed did not effect a transfer of ownership. The tribunal stated:

       Though the five children gave up their rights to survivorship under the joint
       tenancy, this does not constitute a conveyance of title to or a present interest in the
       property equal to the value of the fee interest . . . .

4
  However, MCL 211.27a(7) lists numerous exceptions, identifying certain transfers that are not
to be considered as “transfer[s] of ownership.”

                                                -4-
The tribunal noted that its previous decision was erroneous because it had “rel[ied] on a
definition [of “transfer of ownership”] outside of that contained in the statutory language.”5 The
tribunal’s subsequent ruling on the motion for reconsideration was correct.

        Our starting point is the statutory definition of “transfer of ownership” contained in
211.27a(6), which defines “transfer of ownership” as “the conveyance of title to or a present
interest in property . . . .” But because the term “the conveyance of title to or a present interest in
property . . . .” is not further defined by statute, we may consult dictionary definitions. Koontz v
Ameritech Servs, Inc, 466 Mich. 304, 312; 645 NW2d 34 (2002); see also MCL 8.3a.
“Conveyance” means “[t]he voluntary transfer of a right or of property.” Black’s Law
Dictionary (11th ed); see also Klooster, 488 Mich. at 304. And “transfer” means “[t]o convey or
remove from one place or one person to another; to pass or hand over from one to another, esp.
to change over the possession or control of.” Black’s Law Dictionary (11th ed). Thus, when the
various provisions are read together, “the conveyance of title to or a present interest in property”
was required to have been from one person or group to “another” person or group. Here,
however, the grantors and grantees of the January 2016 deed were identical; there was no
conveyance or transfer to “another,” as the same parties were owners at the end of the transaction
as had been owners at the beginning. Further, each grantor held an undivided one-fifth interest
in the property both before and after the execution of the deed, so not only were no new parties
involved, but the extent of each party’s interest remained the same. Accordingly, each grantor
effectively conveyed to himself or herself without any other change in interests. Even if one
considers the change in rights of survivorship which resulted from the transaction to have
involved an interest in property “the value of which is substantially equal to the value of the fee
interest,” MCL 211.27a(6), that interest nevertheless involved no conveyance “to another,” and
thus fails to meet the statutory definition of “transfer of ownership.”6 Because that threshold
definition is not met, there is no basis for uncapping the valuation. Therefore, we hold that the
Tax Tribunal properly concluded that the deed at issue did not effect a conveyance that met the
statutory definition of “transfer of ownership” under MCL 211.27a(6).

5
  While the Tax Tribunal also cited the statutory exception MCL 211.27a(7)(u) in its opinion, it
is clear that the true basis of the tribunal’s decision was that the transfer did not meet the
statutory definition of “transfer of ownership” under MCL 211.27a(6). Because we agree that
the deed here did not effect a “transfer of ownership” under that statutory definition, we need not
address the exception contained in MCL 211.27a(7)(u).
6
  We note that our opinion is limited to this type of scenario and not the situation in which the
grantors and grantees are the same but they change the proportion of what each person owns.
For example, if two grantors who own equal 50% interests in the property convey to themselves
such that one person now owns a 75% interest in the property while the other person now owns a
25% interest, in that case, then one grantor can be said to have transferred part of his property
interest to the other, i.e., to “another.”

                                                 -5-
Affirmed.

                  /s/ Jonathan Tukel
                  /s/ Deborah A. Servitto
                  /s/ Michael J. Riordan

            -6-