                         STATE OF MICHIGAN

                           COURT OF APPEALS



COVENTRY HEALTH CARE INC.,                                         UNPUBLISHED
                                                                   October 16, 2014
              Plaintiff-Appellant,

v                                                                  No. 317389
                                                                   Court of Claims
DEPARTMENT OF TREASURY and THE                                     LC No. 12-000084-MT
REVENUE DIVISION OF THE DEPARTMENT
OF TREASURY,

              Defendants-Appellees.


Before: SAAD, P.J., and O’CONNELL and MURRAY, JJ.

PER CURIAM.

       Plaintiff appeals the Court of Claims’ grant of summary disposition to defendant1
pursuant to MCR 2.116(C)(4). For the reasons stated below, we affirm.

                         I. FACTS AND PROCEDURAL HISTORY

        On March 30, 2012, defendant Department of Treasury (“the Department”) sent a notice
of additional tax due to plaintiff Coventry Health Care (“Coventry”), which informed Coventry
of adjustments to its 2009 Michigan Business Tax return. The changes resulted in an amount
due of $721,198: $556,433 in taxes, $139,108 in penalty, and $25,657 in interest. The notice
further provided:

       If we do not receive a response from you within 30 days of the Notice Dates
       above, or the due due [sic] date of the return, the account will be referred to
       Michigan Department of Treasury, Collection Division, and a Notice of Intent to
       Assess for the amount due will be issued. . . . Additional penalty and interest may
       also be due.




1
  Because the departments are the same entity, we use the singular “the Department” throughout
the opinion.


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         If you have any questions, you may contact the Michigan Department of Treasury
         at the address or phone number shown above. [Emphasis in original.]

        The Department eventually levied additional penalties and interest on Coventry, which
raised the amount it owed to $746,952.07. Coventry did not pay the Department until June 28,
2012—90 days after the March 30, 2012 notice—when it sent two checks, totaling $721,198, via
certified mail to the Department as payment under protest.2 On that same date, Coventry also
filed a complaint disputing the Department’s subsequent adjustments to its tax bill, which raised
the total amount owed to $746,952.07. Because Coventry’s substantive legal arguments were
similar to those presented in Int’l Business Machines Corp v Dep’t of Treasury,3 which was then
pending before our Court, the parties agreed to hold this case in abeyance in July 2012.

        In January 2013, the Department asked the court to remove the case from abeyance and
grant it summary disposition. It alleged that the Court of Claims lacked jurisdiction over
Coventry’s appeal under MCL 205.22(2), because Coventry made only a partial payment of the
tax it owed before filing its appeal. Though Coventry paid the full amount specified in the
March 2012 notice ($721,198) it did not pay the full amount of tax owed as of June 28, 2012
($746,952.07), which included penalties and interest that accrued after March 30, 2012.4
Coventry responded by asserting that it was entitled to rely on the amount specified in the March
2012 notice, and that MCL 205.22 did not require it to pay any additional penalties or interest
before it could bring an appeal. Any holding to the contrary, Coventry argued, made payment as
a prerequisite of an appeal a practical impossibility because, the moment a payment was issued,
interest would continue to accrue and make the payment less than the total amount owed.

        After a motion hearing, the Court of Claims concluded that MCL 205.22(2) requires a
party to pay the full amount of “the tax, including any applicable penalties and interest, under


2
    MCL 205.22 provides, in relevant part:
         (1) A taxpayer aggrieved by an assessment, decision, or order of the department
         may appeal the contested portion of the assessment, decision, or order to the tax
         tribunal within 35 days, or to the court of claims within 90 days after the
         assessment, decision, or order. The uncontested portion of an assessment, order,
         or decision shall be paid as a prerequisite to appeal. . . .

         (2) . . . In an appeal to the court of claims, the appellant shall first pay the tax,
         including any applicable penalties and interest, under protest and claim a refund
         as part of the appeal.
3
 Unpublished opinion per curiam of the Court of Appeals, issued November 20, 2012 (Docket
No. 306618), rev 496 Mich 642 (2014).
4
  The Department originally alleged that Coventry’s payment was not timely because it was not
received until July 9, 2012. However, it waived this issue at oral argument and expressly
conceded that it considers mailed payments made as of the date postmarked. Accordingly, we
need not address Coventry’s claims regarding the timeliness of the payment.


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protest” before initiating an appeal. It based its ruling on: (1) the plain language of the statute;
(2) Michigan case law that interpreted MCL 205.22(1) to mandate that “[a] partial payment does
not satisfy the statute”5; and (3) the fact that the March 2012 notice informed Coventry of the
accrual of additional penalty and interest. The court accordingly granted the Department’s
motion for summary disposition under MCR 2.116(C)(4) and dismissed the case for lack of
jurisdiction.

                                  II. STANDARD OF REVIEW

         We review de novo whether a trial court properly granted a motion for summary
disposition based on MCR 2.116(C)(4). Harris v Vernier, 242 Mich App 306, 309; 617 NW2d
764 (2000). Issues of statutory interpretation are also reviewed de novo. Fradco, Inc v Dep’t of
Treasury, 495 Mich 104, 112; 845 NW2d 81 (2014). “When interpreting a statute, courts must
ascertain the legislative intent that may reasonably be inferred from the words expressed in the
statute. This requires courts to consider the plain meaning of the critical word or phrase as well
as its placement and purpose in the statutory scheme.” Id. (internal citations and quotation marks
omitted).

                                         III. ANALYSIS

         MCL 205.22(2) governs appeals of levied taxes to the Court of Claims, and mandates
that:

         (2) In an appeal to the court of claims, the appellant shall first pay the tax,
         including any applicable penalties and interest, under protest and claim a refund
         as part of the appeal. [Emphasis added.]

        Accordingly, before a taxpayer appeals the amount of tax he owes to the Court of Claims,
he must pay the tax he owes to the Department, including “any applicable penalties and
interest.”6 If the taxpayer does not pay this full amount, the Court of Claims will not have
jurisdiction over his appeal.

        Here, on the date it chose to appeal the amount of taxes owed, Coventry owed
$746,952.07. Yet Coventry paid the Department only $721,198 before initiating this lawsuit in
the Court of Claims. It therefore did not “pay the tax, including any applicable penalties and
interest” before it brought its appeal. The Court of Claims thus correctly held that it did not have
jurisdiction over Coventry’s suit under MCL 205.22.7


5
    Toaz v Dep’t of Treasury, 280 Mich App 457, 462; 760 NW2d 325 (2008).
6
 See Robinson v City of Detroit, 462 Mich 439, 461–462; 613 NW2d 307 (2000) (discussing the
importance of the distinction of using the article “the” rather than “a”).
7
 We note that our adherence to the plain meaning of MCL 205.22(2) conforms with our Court’s
equally sensible approach to the interpretation of MCL 205.22(1), which governs appeals to the
Tax Tribunal. See Toaz, 280 Mich App at 462:


                                                -3-
         Coventry’s arguments that it should not have to pay the full amount of tax before
initiating suit completely disregard the plain language of MCL 205.22(2) and accordingly lack
merit. The fact is that Coventry ignored the Department’s March 2012 notice, which expressly
told Coventry that additional penalties and interest could be added to the tax. The Department
further invited Coventry to contact it with any questions about the amount owed. Coventry then
waited 90 days before taking any action—time during which any sensible party would have
expected interest to accrue. It is obvious, then, that Coventry should not have relied on the
amount specified in the March 2012 notice as an accurate calculation of the precise amount of
tax it owed in June 2012.

        Moreover, the corollary assertion of Coventry’s claim—that, under MCL 205.22(2)’s
plain meaning, no party could ever invoke the jurisdiction of the Court of Claims, because the
moment that a party issued a check to pay the tax, it would not be a “full payment” due to the
accrual of interest and possible penalties—is both hyperbolic and nonsensical. Tax is calculated
on a per diem basis, and, as noted, the Department accepts mailed payments as made on the date
they are postmarked. Accordingly, to comply with MCL 205.22(2), a taxpayer simply needs to
determine the additional interest accrued from the date of the notice to the date of payment. As
the Court of Claims noted, the Department provides multiple ways to assist taxpayers in making
these calculations, including: (1) direct contact with the Department (again, expressly mentioned
in the March 2012 notice); (2) a website interest calculator; and (3) publication of interest rates.

        Coventry did not use these tools to calculate the precise amount of tax that it owed in
June 2012, and thus submitted less money than it actually owed before initiating this appeal,
contravening the mandates of MCL 205.22(2). Coventry cannot now demand that our Court
ignore MCL 205.22(2) and give it special treatment, when its own failure to follow clear
statutory rules placed it in the unenviable situation in which it finds itself today.8

       The Court of Claims thus correctly held that it lacked jurisdiction over plaintiff’s appeal,
and properly granted defendant summary disposition pursuant to MCR 2.116(C)(4).


       Examined in context, the statutory phrase “uncontested portion of an assessment,
       order, or decision shall be paid as a prerequisite to appeal” is susceptible to only
       one reasonable interpretation. An aggrieved taxpayer must actually discharge the
       uncontested tax debt, by full payment, before appealing the contested portion of
       the tax assessment.
8
  Coventry also makes the unconvincing assertion that requiring it to pay additional amounts of
tax not included on the March 2012 notice violates its right to due process. Again, the notice
expressly informed Coventry that additional penalties and interest could accrue, which precludes
Coventry’s supposed reliance on the notice for the amount of tax it owed. Coventry also had the
means and the ability to determine the amount due, whether using a calculator on the
Department’s website or the interest rate publications, or contacting the Department directly.
Because the record reveals Coventry received notice of both (1) the assessment, and (2) the
potential for additional penalties and interest in the event it did not respond within 30 days,
Coventry has not shown that its due process rights were violated.


                                                -4-
Affirmed.



                  /s/ Henry William Saad
                  /s/ Peter D. O’Connell
                  /s/ Christopher M. Murray




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