            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



GARY GALBRAITH and LISA A. GALBRAITH,                              UNPUBLISHED
                                                                   October 10, 2019
               Petitioners-Appellants,

v                                                                  No. 345347
                                                                   Michigan Tax Tribunal
DEPARTMENT OF TREASURY,                                            LC No. 17-004900-TT

               Respondent-Appellee.


Before: REDFORD, P.J., and JANSEN and LETICA, JJ.

PER CURIAM.

        Petitioners Gary Galbraith and Lisa A. Galbraith appeal as of right the Michigan Tax
Tribunal’s (MTT’s) final opinion and judgment upholding respondent Department of Treasury’s
denial of petitioners’ request for a principal residence exemption (PRE) rebate for tax years 1996
through 2013. On appeal, petitioners argue that they presented evidence proving that they
claimed the PRE in 1995 and equitable estoppel should prevent respondent from denying receipt
of their request for the PRE. We affirm.

                                         I. BACKGROUND

        Petitioners purchased a single-family home and believed that they had received PRE
status for the property in 1996 based on the filing of a property transfer affidavit with the city
shortly after the sale. Petitioners owned the home and used it as their principal residence from
December 1995 forward. In 2017, petitioners realized that they had unwittingly paid non-
homestead taxes on their home for over 20 years.

        Petitioners then filed a PRE affidavit with the city of Sterling Heights, indicating that
they had owned and occupied the property as of December 22, 1995. The city’s local board of
review granted the PRE for the 2014 tax year onward. However, the city had no record that
petitioners had claimed the exemption, through affidavit or otherwise, when they purchased the
home in 1995, and, thus, denied a rebate for the 1996 through 2013 tax years.

       Petitioners then submitted to respondent a form requesting the PRE for the tax period
based on a “qualified error” pertaining to the correct taxable status of the property, namely that


                                               -1-
the “[t]axpayer filed a timely [PRE] affidavit . . . and qualified for a [PRE] but the assessor failed
to grant the exemption.” Respondent denied the request.

        Petitioners appealed respondent’s denial by filing a petition in the MTT. Petitioners
provided their December 22, 1995 property transfer affidavit, which was timestamped as
received by the city on January 19, 1996. Petitioners also provided a December 22, 1995
Homestead Exemption Update (HEU) form, which was divided into four sections: (1) Property
Information, (2) Seller Information, (3) Buyer Information, and (4) Local Governments. At the
top, the HEU form read: “Filing [of the form] is voluntary.” Under the “Seller Information”
section, the form indicated that “[b]y completing this portion of the form, the seller rescinds any
exemption currently in place for the property . . .” This section was completed and included the
sellers’ signatures dated December 22, 1995. The “Buyer Information” section of the form,
which petitioners completed and signed on the same date, provided that “[b]y completing this
portion of the form, the buyer may claim an exemption for the property . . . . No other affidavit
is needed.” “Local Governments” section read:

         Was an exemption in place for this property before the transfer? □ Yes         □ No

         If no, what is the first year you will post this exemption to the tax rolls?

This section of the form was not completed and the HEU form, unlike the property transfer
affidavit, was not timestamped.

         Following a hearing, the referee filed a proposed opinion and judgment upholding the
denial of the PRE rebate. In doing so, the referee determined there was no evidence that
petitioners had filed for a PRE as the HEU form did not show, through a timestamp or otherwise,
that it was filed with the city.

        Petitioners filed exceptions to the referee’s proposed opinion and judgment. Petitioners
argued that the referee had failed to consider an inference arising from the fact that the sellers’
exempt status was rescinded1 consistent with the HEU form. According to petitioners, this was
evidence that the city had timely received the HEU form and simply failed to record their PRE.
Moreover, given the passage of time, petitioners suggested that it was not surprising that the
city’s records did not contain the HEU form, adding that the city had likely lost or misplaced it.
Thus, there was a qualified error, entitling them to a rebate.

        The city thereafter sent petitioners a letter, explaining that their file for petitioners’
property was temporarily missing. In scanning the file to add it to the digital property record, the
city “most likely misfiled” it afterward. The city noted that the database it used before 2003 only
had PRE information for 2002. The city added that it would do its best to locate the missing file
amongst the 40,000 files in its office and offered two suggestions: (1) petitioners should check
their closing packet as “many people retain copies of their exemption forms with their closing



1
    The record reveals that this occurred sometime before 2005.


                                                   -2-
papers” or (2) petitioners should check with respondent “[a]s all PRE[]s and Rescissions are
sent” there.

        In the interim, the MTT rejected petitioners’ exceptions and adopted the referee’s
proposed opinion and judgment as its final opinion and judgment. The MTT found that proof of
ownership and occupancy and the “presumptive HEU filing” was insufficient to satisfy
petitioners’ burden of proving that the HEU form was timely filed with the city.

         Petitioners moved for reconsideration, raising the same argument regarding the relevancy
of the HEU form and asserting that it was fundamentally unfair to allow the city to assert that
their file was missing and that petitioners had failed to meet their burden. Petitioners also argued
that respondent should be estopped from asserting that they had failed to meet their burden when
their failure was attributable to their inability to access their file.

       The MTT denied petitioners’ motion for reconsideration. Regarding the missing file, the
MTT determined that “[a]lthough it is unfortunate that the city cannot locate [p]etitioners’
records, the [MTT] lacks powers of equity to consider the fairness of a circumstance when
determining whether a party has met its burden of proof.”

       Petitioners appeal by right.

                                 II. STANDARD OF REVIEW

        “Absent an allegation of fraud, this Court’s review of a tax tribunal decision is limited to
determining whether the tribunal committed an error of law or applied the wrong legal
principles.” Eastbrook Homes, Inc v Dep’t of Treasury, 296 Mich App 336, 343; 820 NW2d 242
(2012) (quotation marks omitted). “[W]e must affirm the [MTT]’s findings of fact if competent,
material, and substantial evidence on the record supports them.” Pontiac Country Club v
Waterford Twp, 299 Mich App 427, 439; 830 NW2d 785 (2013). “Substantial evidence must be
more than a scintilla of evidence, although it may be substantially less than a preponderance of
the evidence.” Jones & Laughlin Steel Corp v Warren, 193 Mich App 348, 352-353; 483 NW2d
416 (1992).

       The proper interpretation and application of a statute is a question of law that we review
de novo. Vanderwerp v Plainfield Charter Twp, 278 Mich App 624, 627; 752 NW2d 479
(2008). “The primary goal of statutory interpretation is to give effect to the intent of the
Legislature.” Briggs Tax Serv, LLC v Detroit Pub Sch, 485 Mich 69, 76; 780 NW2d 753 (2010).
The best indicator of the Legislature’s intent is the statute’s language, which, if clear and
unambiguous, we must apply as written. Ford Motor Co v City of Woodhaven, 475 Mich 425,
438-439; 716 NW2d 247 (2006). With regard to tax exemption statutes, we narrowly construe
such provisions and do not extend exemptions by implications. Vanderwerp, 278 Mich App at
627-628.




                                                -3-
                                         III. ANALYSIS

        “Michigan’s [PRE], also known as the ‘homestead exemption,’ is governed by §§ 7cc
and 7dd of the General Property Tax Act, MCL 211.7cc and MCL 211.7dd.” Estate of Schubert
v Dep’t of Treasury, 322 Mich App 439, 448; 912 NW2d 569 (2017) (quotation marks omitted).
Under MCL 211.7cc(1), “[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.” MCL 211.7cc(1). In turn, MCL 211.7cc(2) sets forth the
requirements for claiming the PRE, and provides:

       [A]n owner of property may claim 1 exemption under this section by filing an
       affidavit . . . . The affidavit shall state that the property is owned and occupied as
       a principal residence by that owner of the property on the date that the affidavit is
       signed and shall state that the owner has not claimed a substantially similar
       exemption, deduction, or credit on property in another state. . . . If an owner of
       property filed an affidavit for an exemption under this section before January 1,
       2004, that affidavit shall be considered the affidavit required under this subsection
       for a principal residence exemption and that exemption shall remain in effect until
       rescinded as provided in this section. [2]

Upon receipt of such an affidavit per subsection (2), and if the claim is not denied, the local
assessor must exempt the property owner from collection of the tax. MCL 211.7cc(4).3

       In the event a (PRE) is not put on the tax roll, MCL 211.7cc(20) governs the process for
obtaining relief. That subsection provides in relevant part:

       An owner who owned and occupied a principal residence within the time period
       prescribed in subsection (2) . . . for which the exemption was not on the tax roll as
       a result of a qualified error on the part of the local tax collecting unit may file a
       request for the exemption for those tax years with the department of treasury. The
       request for the exemption shall be in a form prescribed by the department of
       treasury and shall include all documentation the department of treasury considers
       necessary to consider the request and to correct any affected official records if a
       qualified error on the part of the local tax collecting unit is recognized and an
       exemption is granted. [Emphasis added.]




2
  The parties do not dispute that the HEU form sufficed as a PRE affidavit for purposes of
claiming the exemption in 1995.
3
  Under MCL 211.7cc(6), the assessor may deny a claim for the exemption if the assessor
believes “that the property for which an exemption is claimed is not the principal residence of the
owner claiming the exemption . . . .”


                                                -4-
MCL 211.7cc(34)(d) provides that “qualified error” should be construed as that term is “defined
in section 53b.” In turn, MCL 211.53b(8) defines “qualified error” to mean one or more of the
following:

       (a) A clerical error relative to the correct assessment figures, the rate of taxation,
       or the mathematical computation relating to the assessing of taxes.

       (b) A mutual mistake of fact.

                                               * * *

       (f) An error regarding the correct taxable status of the real property being
       assessed.

                                  A. THE BURDEN OF PROOF

        Petitioners argue that a qualified error occurred because the city failed to record
petitioners’ PRE in 1996. The MTT rejected this theory, finding that petitioners failed to meet
their burden of proving that they were entitled to the exemption because petitioners did not
provide any evidence showing that they had claimed the exemption upon the home’s purchase in
1995.

        As an initial matter, the MTT was correct in assigning the burden of proof to petitioners.
To claim the exemption under MCL 211.7cc(2), a taxpayer must file an affidavit with the local
taxing unit averring that the taxpayer owns and occupies the property as his or her principal
residence. Under this subsection, it is unequivocally the taxpayer’s duty to claim and prove
entitlement to the exemption. See Hardenbergh v Dep’t of Treasury, 323 Mich App 515, 524;
917 NW2d 765 (2018). Upon receipt of such an affidavit, the local tax assessor, absent the
denial of the exemption based upon belief that the property is not the owner’s principal
residence, must then exempt the property from the collection of tax. MCL 211.7cc(4) and (6). If
the PRE is not then duly recorded on the tax rolls, a taxpayer may obtain relief under subsection
(20) by showing that the taxpayer did, in fact, own and occupy the residence for the period at
issue and also that they did not receive the exemption “as a result of a qualified error on the part
of the local tax collecting unit.” MCL 211.7cc(20) (emphasis added).

        To determine what factual elements a taxpayer must prove to establish a qualified error
for purposes of the exemption, we turn to the text of subsection (20). The first phrase of the first
sentence requires that the petitioner be an “owner who owned and occupied the principal
residence[.]” Petitioners indisputably met these eligibility requirements. The following portion
of the clause contains a causation component; it specifies that the eligible owner’s PRE was not
placed on the tax roll “as a result of a qualified error on the part of the local tax collecting
unit[.]” Significantly, the term “qualified error,” which is the cause of the failure, is modified by
the phrase “on the part of the local tax collecting unit.” It follows that, to obtain relief, the
qualified error must be an error of the local tax collecting unit, not an error because of the
taxpayer’s dereliction of duty—for example, by failing to file a PRE affidavit. And, as a matter
of logic, if a taxpayer cannot show that he or she fulfilled his or her statutory obligations to claim


                                                 -5-
the exemption, then the taxpayer cannot establish that the exemption was not on the tax roll
because of the taxing unit’s error.

       Stated otherwise, the relief allowed under MCL 211.7cc(20) is predicated on the
taxpayer’s compliance with the statutory obligations imposed under MCL 211.7cc(2). Reading
subsection (2) and subsection (20) together, an appeal of a failure to place a PRE on the tax rolls
based on a “qualified error” first requires proof that the taxpayer elected the exemption by filing
an affidavit per subsection (2) and was otherwise eligible to receive the exemption before
consideration of whether a “qualified error” occurred under section 53b.

               B. PETITIONERS ARE NOT ENTITLED TO CLAIM THE PRE

       Turning to petitioners’ case, we find no error, as substantial evidence supports the MTT’s
finding that petitioners failed to provide any evidence that they submitted a form claiming the
exemption in 1995. Accordingly, petitioners cannot claim qualified error.

        Specifically, the record here demonstrates that petitioners submitted a property transfer
affidavit, which was timestamped as having been received by the city, as well as the HEU form.
The property transfer affidavit contained no statement indicating that petitioners were claiming
the exemption. The HEU form reflected petitioners’ election of the exemption. It states, “[b]y
completing this portion of the form, the buyer may claim an exemption for the property
identified in item 2 above. No other affidavit is needed.” But petitioners provided no evidence
that the HEU form was ever submitted to the city. First, unlike the property transfer affidavit the
HEU was not timestamped. Second, the section of the form to be completed by the local
government [the city] had not been completed. Third, the city was unable to produce a copy of
the document from its records. Without evidence that they, or anyone else, submitted this form
to the city, petitioners could not demonstrate that the failure to include the exemption on the tax
rolls was the result of an error on the part of the local tax collecting unit.

        Petitioners’ assertion that a logical inference arises from the prior owner’s rescission of
the PRE such that the local taxing unit must have received the HEU form, on which both
petitioners claimed the exemption and the prior owners rescinded it, is unavailing. While the
city may have rescinded the exemption because it received the HEU form, it is equally plausible
that it rescinded the exemption because it recorded the deed or received the property transfer
affidavit. Because petitioners have not proffered any evidence to show that it is more likely than
not that the city received the HEU form, the supposed circumstantial evidence they rely on is
nothing more than mere conjecture. See Skinner v Square D Co, 445 Mich 153, 164-168; 516
NW2d 475 (1994) (stating that evidence indicating a mere possibility is speculation). Such
speculation is not substantial evidence that petitioners claimed the PRE in 1995 when they
purchased the home. Thus, the MTT did not err by rejecting this evidence.

        Because petitioners failed to provide any evidence that they complied with MCL
211.7cc(2) by properly claiming the exemption in 1995, the MTT did not err in upholding the
denial of the PRE for the tax period at issue.




                                                -6-
                                  C. EQUITABLE ESTOPPEL

         Petitioners generally assert that the MTT should have applied equitable principles to
estop respondent from denying the city’s receipt of the HEU form, given that the city lost or
misplaced petitioners’ file. In support, petitioners cite the elements necessary to establish
equitable estoppel. This argument undoubtedly sounds in equity. Accordingly, the MTT did not
err in determining that it lacked the authority to consider petitioners’ equity argument. See
Federal-Mogul Corp v Dep’t of Treasury, 161 Mich App 346, 359; 411 NW2d 169 (1987) (“The
[MTT] does not have powers of equity.”). Moreover, we decline to exercise our powers of
equity here. First, respondent is not the city. And, even if the city’s alleged failure could be
attributed to respondent, there is no indication that it induced petitioners to believe facts that
would prejudice them. See Conagra, Inc v Farmers State Bank, 237 Mich App 109, 141; 602
NW2d 390 (1999) (“Equitable estoppel may arise where (1) a party, by representations,
admissions, or silence intentionally or negligently induces another party to believe facts, (2) the
other party justifiably relies and acts on that belief, and (3) the other party is prejudiced if the
first party is allowed to deny the existence of those facts.”).

       Affirmed.



                                                             /s/ James Robert Redford
                                                             /s/ Kathleen Jansen
                                                             /s/ Anica Letica




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