Court Opinion

ID: 6115838
Source: CourtListenerOpinion
Date Created: 2022-02-03 16:08:06.679793+00
Date Added: 2024-06-11T08:21:56.370223
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

KAREN ELLSWORTH and PETER ELLSWORTH,                                       UNPUBLISHED
                                                                           January 27, 2022
                  Petitioners-Appellants,

v                                                                          No. 355835
                                                                           Tax Tribunal
DEPARTMENT OF TREASURY,                                                    LC No. 20-000046-TT

                  Respondent-Appellee.

Before: O’BRIEN, P.J., and STEPHENS and LETICA, JJ.

PER CURIAM.

       Petitioners appeal as of right the order of the Michigan Tax Tribunal (MTT) upholding
respondent’s denial of a principal residence exemption (PRE) for petitioners’ property for tax years
2016 through 2019. Petitioners argue that the MTT erred by concluding that Karen Ellsworth had
not occupied the subject property as her principal address. We affirm.

                      I. RELEVANT FACTS AND PROCEDURAL HISTORY

       This case concerns petitioners’ request for a PRE for a parcel located on South Shore Drive
in Crystal Lake Township, Michigan (the South Shore Drive property). Petitioners jointly owned
two homes in Michigan: the South Shore Drive property and a property in Okemos, Michigan.
According to Karen Ellsworth,1 Peter Ellsworth lived in the Okemos property and spent weekends,
holidays, and some vacations at the South Shore Drive property. Karen lived at the South Shore
Drive property year-round since 2005, including during tax years 2016 through 2019, and
considered it to be her principal residence. In May 2019, respondent sent petitioners a notice that
a PRE was denied for tax years 2016 through 2019 because petitioners had not occupied the South
Shore Drive property as their principal residence.

       Petitioners appealed the denial to respondent, which held an informal conference and
upheld the denial of the PRE. Petitioners subsequently appealed to the MTT, arguing that Karen

1
    The Ellsworths are referred to by their first names in this opinion.

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had occupied the South Shore Drive property as her principal residence. Petitioners presented
evidence that included Karen’s affidavit, the affidavits of her neighbors and their daughter, medical
correspondence, Social Security correspondence, income tax returns, cell phone records, and bank
records. Respondent presented evidence that included petitioners’ driver’s license, voter
registration, and motor vehicle registration information. The MTT considered the evidence
submitted by both of the parties and found that neither Karen nor Peter had established the South
Shore Drive property as their principal residence. It upheld the denial of a PRE for tax years 2016
through 2019. This appeal followed.

                                          II. ANALYSIS

       Petitioners argue that the MTT erred by concluding that Karen had not occupied the South
Shore Drive property as her principal residence.2 We disagree.

       We review MTT decisions to determine whether the MTT made an error of law or applied
the wrong legal principle, unless there is a claim of fraud. Stirling v Leelanau Co, ___ Mich App
___, ___; ___ NW2d ___ (2021) (Docket No. 353117); slip op at 2. Tax exemptions are “narrowly
construed in favor of the taxing authority.” Estate of Schubert v Dep’t of Treasury, 322 Mich App
439, 447-448; 912 NW2d 569 (2017) (quotation marks and citation omitted). “[T]he petitioner
has the burden to prove, by a preponderance of the evidence, that he or she is entitled to the
requested exemption.” Spranger v City of Warren, 308 Mich App 477, 479; 865 NW2d 52 (2014).
This Court reviews de novo the “MTT’s interpretation and application of statutes.” Stirling, ___
Mich App at ___; slip op at 2.

        “When the Tribunal’s findings of fact are supported by competent, material, and substantial
evidence on the whole record, those findings are conclusive.” Estate of Schubert, 322 Mich App
at 447. Substantial evidence is “more than a scintilla of evidence, although it may be substantially
less than a preponderance of the evidence.” Drew v Cass Co, 299 Mich App 495, 499; 830 NW2d
832 (2013) (quotation marks and citation omitted). We have also stated that “substantial” means
“evidence that a reasonable mind would accept as sufficient to support the conclusion.” Great
Lakes Div of Nat’l Steel Corp v Ecorse, 227 Mich App 379, 389; 576 NW2d 667 (1998).

        Michigan’s PRE is governed by MCL 211.7cc and MCL 211.7dd. MCL 211.7cc(1)3
provides in relevant part: “A principal residence is exempt from the tax levied by a local school
district for school operating purposes . . . if an owner of that principal residence claims an
exemption as provided in this section.” A person claiming a PRE “must establish that he or she
owned and occupied the property as a principal residence for each year that the exemption is
claimed.” Estate of Schubert, 322 Mich App at 451.

2
  Petitioners admit that Peter did not occupy the South Shore Drive property as his principal
residence.
3
 MCL 211.7cc was amended, effective June 24, 2020, by 2020 PA 96. However, MCL 211.7cc(1)
was unaffected.

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         MCL 211.7dd(c) provides, in relevant part: “ ‘Principal residence’ means the 1 place where
an owner of the property has his or her true, fixed, and permanent home to which, whenever absent,
he or she intends to return and that shall continue as a principal residence until another principal
residence is established.” The term “occupy” is not defined by MCL 211.7cc or MCL 211.7dd,
and this Court has used Merriam-Webster’s Collegiate Dictionary to define that term: “Merriam-
Webster’s Collegiate Dictionary (11th ed.) defines ‘occupy,’ in relevant part, as ‘to reside in as an
owner or tenant.’ In turn, ‘reside’ is defined as ‘to dwell permanently or continuously: occupy a
place as one’s legal domicile.’ ” Estate of Schubert, 322 Mich App at 449-450 (citations omitted).
“[A] person must dwell either permanently or continuously at a property to ‘occupy’ the property.”
Id. at 450. An owner may present evidence of occupancy as a principal residence through
documentary evidence or testimony. Id. at 454. The documentary evidence could include “utility
bills, driver’s licenses, tax documents, other documents showing the petitioner’s address, and voter
registration cards.” Id. at 454-455. This Court has recognized that “[n]o single document is
conclusive.” Id. at 455.

        Petitioners argue that the MTT adopted a wrong legal principle when it determined that
Karen’s “legal intent” was to establish the Okemos property as her principal residence because the
statutes governing the PRE do not require “legal intent.” Although MCL 211.7dd(c) does not use
the exact phrase “legal intent,” it provides, in relevant part, “ ‘Principal residence’ means the 1
place where an owner of the property has his or her true, fixed, and permanent home to which,
whenever absent, he or she intends to return . . . .” (Emphasis added.) Further, the MTT stated
that Karen’s use of the Okemos property for purposes of her driver’s license and voting registration
“demonstrate[d] a legal intent to return to the Okemos, MI property as her principal residence and
not the property at issue.” (Emphasis added.) The MTT did not err by considering Karen’s intent
to return to the Okemos property because her intent to return to the South Shore Drive property
was a requirement for her to establish it as her principal residence. See MCL 211.7dd(c).

        Petitioners also argue that the MTT legally erred by treating Karen’s driver’s license and
voter registration evidence as conclusive, contrary to Drew, 299 Mich App at 501. The MTT did
not conclude that Karen was not entitled to a PRE merely because she used the Okemos address
for purposes of her driver’s license and voter registration. It stated that the totality of the
substantial evidence demonstrated that Karen had never occupied the South Shore Drive property
as her principal residence. The MTT noted the legal effect of using an address on a driver’s license
or voter registration, and that Karen also renewed her driver’s license with the Okemos address
and voted using that address after she filed the PRE claim. In addition, the MTT also specifically
referenced the holding in Drew that such evidence was not conclusive.

        Petitioners also argue that the MTT placed too much emphasis on Karen’s driver’s license
and voter registration information, instead of evidence that they provided to show that Karen lived
in the South Shore Drive property for the majority of tax years 2016 through 2019. First, showing
that a person lived at a property for a majority of the year does not mean that they are entitled to a
PRE. Petitioners cite Rentschler v Melrose Twp, 322 Mich App 113, 123; 910 NW2d 711 (2017),
for the proposition that “the property that the taxpayer uses a majority of the time during the year
ordinarily will be considered the taxpayer’s principal residence.” (Quotation marks, citation, and
emphasis omitted.) However, that was not a holding of this Court; rather, the Rentschler Court
was citing the federal guidelines’ definition of a principal residence provided in 26 CFR 1.121-
1(b) (2017). Rentschler, 322 Mich App at 123. Further, the Court was considering whether renting

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a home for more than 14 days disqualified the homeowner from a PRE, not whether the petitioner
had occupied the subject property as his principal residence. Id. Second, petitioners merely
challenge the weight of the evidence, and the MTT had the discretion to determine the weight of
the evidence. See Estate of Schubert, 322 Mich App at 456. Further, this Court “may not second-
guess the [Tribunal’s] discretionary decisions regarding the weight to assign to the evidence.” Id.
(alteration in original; quotation marks and citation omitted). In this case, respondent provided
copies of Karen’s driver’s license registration, voter registration, and vehicle registration
information, which showed that she used the Okemos property as her address. The MTT’s decision
was supported by competent, material, and substantial evidence. See id. at 458-459. Because the
MTT’s finding was supported by competent, material, and substantial evidence, it is conclusive.
Id. at 447.

         Petitioners also argue that the definition of a residence for election law purposes is different
from the definition of a principal residence. Petitioners are correct that “residence” for the
purposes of a driver’s license or voter registration is defined differently from “principal residence”
in MCL 211.7dd(c).4 However, petitioners’ argument only challenges the weight of the evidence
in light of the different definitions, and the MTT had the discretion to determine the weight of the
evidence of Karen’s driver’s license and voter registration information. See Estate of Schubert,
322 Mich App at 456.

        In sum, the MTT considered significant evidence from both petitioners and respondent.
The MTT meticulously summarized that evidence, analyzed the effect of the evidence on the
question at issue in the case, and engaged in a concerted effort to weigh the evidence. After doing
so, the MTT concluded the evidence presented by respondent was entitled to greater weight, citing
the potential legal penalties for voting in the wrong district or improperly registering one’s car at
the incorrect address.5 While not determinative of the issue, such was substantial evidence that

4
  For the purposes of a driver’s license, “ ‘Residence address’ means the place that is the settled
home or domicile at which a person legally resides as defined in section 11 of the Michigan
election law, 1954 PA 116, MCL 168.11.” MCL 257.50a. MCL 168.11(1) provides:

                “Residence”, as used in this act, for registration and voting purposes means
        that place at which a person habitually sleeps, keeps his or her personal effects, and
        has a regular place of lodging. If a person has more than 1 residence, or if a person
        has a residence separate from that of his or her spouse, that place at which the
        person resides the greater part of the time shall be his or her official residence for
        the purposes of this act. This section does not affect existing judicial interpretation
        of the term residence.
5
  We believe it is important to note that we do not read the MTT’s decision as a direct holding that
an individual cannot occupy one space as a principal residence and vote in a different district.
Instead, we affirm the MTT’s conclusion that, in this case, the location at which Karen was
registered to vote and actually voted was highly probative of the fact that her Okemos property
was “the 1 place where [she had] her true, fixed, and permanent home to which, whenever absent,
[] she intend[ed] to return . . . .” MCL 211.7dd(c).

                                                  -4-
Karen, in this case, occupied the Okemos home as her principal residence. MCL 211.7dd(c).
Because the finding was made on the basis of substantial evidence after the MTT exercised its
discretion to weigh the evidence as it saw fit, we must, and now do, affirm. Estate of Schubert,
322 Mich App at 447; Drew, 299 Mich App at 499.

       Affirmed.

                                                           /s/ Colleen A. O’Brien
                                                           /s/ Cynthia Diane Stephens
                                                           /s/ Anica Letica

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