                           STATE OF MICHIGAN

                            COURT OF APPEALS



JD NORMAN INDUSTRIES,                                                 UNPUBLISHED
                                                                      June 23, 2015
               Petitioner-Appellant,

v                                                                     No. 321314
                                                                      Tax Tribunal
CITY OF LESLIE,                                                       LC No. 00-436350

               Respondent-Appellee.


Before: RIORDAN, P.J., and DONOFRIO and BECKERING, JJ.

PER CURIAM.

        Petitioner, JD Norman Industries, appeals as of right the 2012 tax assessment for
personal, industrial property that it purchased in its asset purchase of Len Industries, Inc. (Len
Industries), in November 2011. We affirm.

                                 I. FACTUAL BACKGROUND

        At issue in this tax appeal is the true cash and taxable value of parcel 33-17-14-90-900-
220 (parcel 220), which is personal, industrial property. Petitioner purchased this equipment
during its asset purchase of Len Industries in November 2011. The parties dispute the value of
this personal property. While respondent assessed the true cash value of the personalty as
$6,219,900 and the taxable value as $3,109,950—based on the historic cost of the property
minus depreciation—petitioner disputed these calculations. Petitioner claimed that the value of
the property should be calculated based on the price it paid when it purchased the personalty
from Len Industries. As laid out in the asset purchase agreement, the amount of the total
equipment purchased was $6,632,250. Petitioner concluded that of the $6,632,250, the value of
the relevant personal, industrial property subject to tax in the city of Leslie was $1,672,000.

       Respondent, however, contended that petitioner’s argument was flawed for several
reasons. It argued that the sale price may be relevant in terms of the value of the business; that
price was not relevant in terms of the value of the property for tax purposes. Respondent
proposed that its methodology of using the historic value of the personal property, less
depreciation, was the most reliable indicator of its value.

         Petitioner initiated this action, first in the small claims division and then in front of the
entire tribunal. At the hearing, petitioner’s first witness, Teresa DeBaeke—a former employee of
Len Industries and a current employee of petitioner—testified that Len Industries retained

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Conway McKenzie to locate a purchaser in 2008. She conceded that Len Industries was losing
money, and that it was struggling due to the financial situation of the automotive industry. She
also testified about an appraisal that valued the orderly liquidation value of the personal property
at $6,632,250.1 She testified that of that value, $1,672,000 represented the value of the property
subject to tax for the city of Leslie.

        Gary Wilhite, the director of finance for petitioner, testified that in buying Len Industries,
petitioner was buying a business. He detailed the many factors petitioner looked at before
entering into the asset purchase, such as earning capacity, client mix, location, and management
skill. When asked if there was a limit petitioner was willing to pay for the assets, Wilhite
responded, “Well, I think our offer was our offer. We weren’t willing to pay anything higher
than that, and certainly through negotiation there may have been some issues that came up. That
was the number that we came up with that we were willing to pay.”

        Charles Zemla, the assessor for the city of Leslie and expert in the assessment of personal
property, testified on behalf of respondent. He testified that he relied on historic cost minus
depreciation, to value the property. He used depreciation techniques and state tax commission
multipliers through BS&A software. Zemla testified that no additional depreciation was taken
into account, such as the condition of the automotive industry.

       The tribunal concluded that petitioner did not meet its burden of proof in establishing that
respondent’s assessed value of the property was in error. The tribunal determined, after an
independent assessment, that respondent correctly assessed that the true cash value of the
property was $6,219,900 and the taxable value was $3,109,950. Petitioner now appeals.

                                     II. STANDARD OF REVIEW

        Two issues are now raised on appeal. First is an appraisal petitioner wanted to enter into
evidence, which it claimed substantiated its valuation of the personal property. Second is
petitioner’s contention that the tribunal erred in its assessment of the true cash value of the
personal property. In support of its contention, petitioner offers a valuation of its purchase of
Len Industries.

        “A proceeding before the tribunal is original and independent and is considered de novo.”
MCL 205.735a(2). This Court’s review of a final decision of the tribunal is limited. Detroit
Lions, Inc v City of Dearborn, 302 Mich App 676, 691; 840 NW2d 168 (2013). “Unless fraud is
alleged, an appellate court reviews the decision for a misapplication of the law or adoption of a
wrong principle.” Podmajersky v Dep’t of Treasury, 302 Mich App 153, 162; 838 NW2d 195
(2013) (quotation marks and citation omitted). “This Court may review the tribunal’s rulings
regarding evidentiary issues if they involve errors of law.” Georgetown Place Co-op v City of
Taylor, 226 Mich App 33, 239; 572 NW2d 232 (1997). The appellant bears the burden of proof
in an appeal from the tribunal. Podmajersky, 302 Mich App at 162. “The MTT’s factual



1
    As will be discussed infra, the trial court did not admit the appraisal at the hearing.


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findings are conclusive if they are supported by competent, substantial, and material evidence on
the whole record.” Detroit Lions, Inc, 302 Mich App at 691.

                                          III. APPRAISAL

       Petitioner has failed to demonstrate that reversal is warranted based on the tribunal’s
decision not to admit petitioner’s appraisal into evidence.

       GoIndustry DoveBid Valuations, Inc. (Go-Dove) conducted an appraisal for petitioner in
September 2011, in anticipation of petitioner’s asset purchase of Len Industries. Go-Dove
concluded that the machinery and equipment of Len Industries had a forced liquidation value of
$4,916,950, and an orderly liquidation value of $6,632,250. The trial court excluded the
appraisal because it found that petitioner failed to provide the proper foundation, as the authors
of the appraisal were not present to testify. The court also found that the appraisal was not
relevant in determining the true cash value of the property. Petitioner argues that the appraisal is
relevant and the tribunal should have admitted it.

         “To ensure that a petitioner is afforded due process, hearings in the Tax Tribunal are
conducted in accordance with the provisions of Chapter 4 of the Administrative Procedures Act,
M.C.L. § 24.271 et seq. . . .” Georgetown Place Co-op, 226 Mich App at 51-52. Thus, the
parties are afforded the opportunity to present evidence and arguments regarding issues of fact,
cross-examine witness, and submit rebuttal evidence. Id. at 52. To that end, while “the tribunal
may admit and give probative effect to evidence of a type commonly relied upon by reasonably
prudent men in the conduct of their affairs” the “rules of evidence must be followed as far as
practicable[.]” Id.; MCL 205.746.

        Petitioner claims that it did not offer the appraisal for the truth of the matter asserted, i.e.,
as proof of the true value of the equipment. Rather, it claims the appraisal was offered for a non-
hearsay purpose, namely, “to corroborate the facts used by Gary Wilhite in making a purchase
offer for the assets of Len Industries.” Petitioner explains that the appraisal set forth the
complete description of the equipment and corroborated pertinent facts in the private sale
transaction.2

        However, significant evidence was adduced regarding the purchase of the property,
including the factors petitioner relied on in making the offer. Wilhite testified that petitioner
relied on the 12-month trailing earnings statement to determine what type of income the business
could generate, the client mix, the location, and the management skill of Len Industries. The
asset purchase agreement was admitted into evidence, and it not only detailed the purchase price,
but also included a working capital statement. Moreover, an exhibit was admitted at the hearing
and is a schedule of the personal equipment in the asset purchase, with the values derived from
the appraisal. Likewise, another exhibit admitted summarized the equipment subject to tax by


2
  To the extent that in its reply brief, petitioner attempts to assert a different purpose for
admission, it has abandoned that argument. Blazer Foods, Inc v Rest Properties, Inc, 259 Mich
App 241, 252; 673 NW2d 805 (2003).


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the city of Leslie. Based on this exhibit, DeBaeke testified that $1,672,000 of the assets were
subject to tax in the city of Leslie.

       Thus, petitioner proffered significant evidence regarding the factors it relied on in making
the purchase and in formulating its proposed offer, as well as the appraised value of the property.
Thus, the Go-Dove appraisal was repetitious of Wilhite’s testimony, DeBaeke’s testimony, as
well as exhibits admitted at trial. As such, the tribunal did not err in excluding it. See MCL
205.746 (“Irrelevant, immaterial, or unduly repetitious evidence may be excluded.”).

        Petitioner, however, insists that the information in the appraisal was not repetitious or
cumulative, as the degree of detail in the appraisal was contained in no other exhibit. Petitioner
asserts that, unfairly, it was prevented from eliciting information regarding specific equipment
described in the appraisal, which effectively prevented it from demonstrating the depressed value
of the machinery and equipment. Petitioner now claims that the basis for admitting the appraisal
was to corroborate Wilhite’s testimony. If so, petitioner was free to ask Wilhite specific,
detailed questions about the equipment at issue. See MRE 602 (a party may elicit testimony
from any witness with personal knowledge). In fact, if Wilhite was unaware of the detailed
nature of the equipment, then petitioner’s professed basis for admission of the appraisal—to
corroborate Wilhite’s testimony—is disingenuous.

       Therefore, petitioner has not demonstrated error requiring reversal in the tribunal’s
decision to exclude the appraisal.

                                      IV. TRUE CASH VALUE

       Next, petitioner contends the tribunal erred in assessing the true cash value of the
property. The tribunal did not err in assessing the true cash value of the property at $6,219,900
and the taxable value at $3,109,950.3

        “Like real property, tangible personal property must be taxed on the basis of its true cash
value.” Detroit Lions, Inc, 302 Mich App at 702. The petitioner bears the burden of proof in
establishing the true cash value of personal property. Id. “The burden of proof encompasses
both the burden of persuasion, which never shifts during the course of the hearing, and the



3
  In its reply brief, petitioner asserts, for the first time, several factual errors in the tribunal ruling,
such as the conflation of the orderly liquidation value and the forced liquidation value, the
identification of $6,672,000 as the purchase price, and the tribunal’s reference to the “bank
appraisal.” However, “[r]eply briefs must be confined to rebuttal of the arguments in the
appellee’s . . . brief[.]” MCR 7.212(G). These arguments were not raised in petitioner’s initial
brief, nor addressed in respondent’s appellate brief. “Reply briefs may contain only rebuttal
argument, and raising an issue for the first time in a reply brief is not sufficient to present the
issue for appeal.” Blazer Foods, Inc, 259 Mich App at 252. See also Kinder Morgan Michigan,
LLC v City of Jackson, 277 Mich App 159, 174; 744 NW2d 184 (2007). Thus, they are not
properly before this Court.


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burden of going forward with evidence, which may shift to the opposing party.” Forest Hills
Co-operative, 305 Mich App at 588. The tribunal must apply its expertise to the facts of each
case to make and independent determination of the true cash value of the property at issue.
Detroit Lions, Inc, 302 Mich App at 702.

        MCL 211.27(1) defines “true cash value” as “the usual selling price at the place where
the property to which the term is applied is at the time of assessment, being the price that could
be obtained for the property at private sale, and not at auction sale . . . ., or at forced sale.” “In
general, true cash value is synonymous with fair market value.” Forest Hills Co-operative, 305
Mich App at 587. Although the tribunal should consider different approaches in determining the
true cash value of the property, “correlating, reconciling, and weighing the values derived under
various approaches, the tribunal’s duty is to determine an approach that most accurately reflects
the value of the property.” Id. The tribunal is free to reject both parties’ valuation theories. Id.
Though the tribunal may not automatically accept a respondent’s assessment, it “may adopt the
assessed valuation on the tax rolls as its independent finding of true cash value when competent
and substantive evidence supports doing so, as long as it does not afford the original assessment
presumptive validity.” Id. at 587-588 (quotation marks and citation omitted).

        Petitioner’s primary contention is that the tribunal erred in declining to consider the
valuation by the parties in the recent sale of the property, which occurred when petitioner
purchased all of the assets of Len Industries. “The rule in Michigan, as in many other states, is
that the selling price of a particular piece of property is not conclusive as evidence of the value of
that piece of property.” Antisdale v City of Galesburg, 420 Mich 265, 278; 362 NW2d 632
(1984). See also Professional Plaza, LLC v Detroit, 250 Mich App 473, 476; 647 NW2d 529,
530-31 (2002) (“Evidence of the selling price of property” may be “relevant in determining the
taxable value of property.”). As the Court in Antisdale explained:

               The Legislature has commanded that property be assessed as its ‘usual
       selling price’. The most obvious deficiency in using the sales price of a piece of
       property as conclusive evidence of its value is that the ultimate sale price of the
       property, as a result of many factors, personal to the parties or otherwise, might
       not be its ‘usual’ price. The market approach to value has the capacity to cure this
       deficiency because evidence of the sales prices of a number of comparable
       properties, if sufficiently similar, supports the conclusion that factors extrinsic to
       the properties have not entered into the value placed on the properties by the
       parties. Nevertheless, if it can be shown that the sale price each of the
       comparable properties has been determined by a flawed method the result of the
       market approach to valuation will also be flawed. [420 Mich at 278-279.]

Pursuant to MCL 211.27(6), “[T]he purchase price paid in a transfer of property is not the
presumptive true cash value of the property transferred.” “Purchase price” is defined as “the
total consideration agreed to in an arms-length transaction and not at a forced sale paid by the
purchaser of the property[.]” MCL 211.27(6).

       Petitioner, however, raises several arguments why the tribunal should have considered
the sale. Petitioner characterizes the sale of Len Industries as an arm’s length transaction
between two sophisticated parties. See MCL 211.27(1) and (6). Petitioner further highlights the

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fact that Len Industries hired Conway McKenzie in 2008 and that over a three-year period, it
sifted through seven or eight different offers before entering into the asset purchase agreement
with petitioner in 2011. Petitioner relies on this information to bolster its claim that this was a
typical arms-length sale, and the tribunal should have considered it when determining the true
cash value of the personal property.

        Petitioner’s argument rests on a flawed premise, namely, that a purchase price is
necessarily determinative of the true cash value of personal property. While the purchase price
may be evidence of true cash value if it is an arms-length transaction, it is not determinative of
true cash value. Antisdale, 420 Mich at 278. Significantly, the sale of the personal property in
this case occurred in the context of the asset purchase of Len Industries. As Wilhite testified,
petitioner was not buying individual assets, but was buying a business. Thus, the personal
property sale must be evaluated in context of the sale of the entire business, as the tribunal
recognized.

        Further, petitioner ignores evidence that Len Industries was a struggling business, which
impacts whether the resulting asset purchase price was representative of the true cash value of
the personal property. DeBaeke admitted that the economic conditions in 2008 were difficult,
and that Len Industries was “absolutely” losing money in 2008, 2009, and 2010. In fact, on
appeal, petitioner concedes that Len Industries, an automotive supplier, was affected by the
“financial meltdown of the automotive industry” due to the “much publicized bankruptcies of
General Motors and Chrysler. Even petitioner’s appraisal assesses the personal property in terms
of orderly liquidation value and forced liquidation value. Petitioner provided no evidence of, nor
supporting authority for, a conclusion that such terms are synonymous with true cash value. In
fact, these terms appear indicative of a forced sale, and MCL 211.27 specifically precludes
consideration of private sales that occur as a forced sale. The tribunal found that “the definition
of liquidation value is entirely different than market value,” and petitioner fails to demonstrate
any error in that finding.

        Thus, petitioner has not established that the tribunal erred in finding that the asset
purchase of Len Industries was not representative of the true cash value of the personal property.
MCL 211.27(1). Nevertheless, citing to Jones & Laughlin Steel Corp v City of Warren, 193
Mich App 348, 353-354; 483 NW2d 416 (1992), petitioner contends that the tribunal erred
because it conclusively rejected evidence of the sale, which is an error of law. In Jones, we held
that “the tribunal correctly noted that the sale price of a particular piece of property does not
control its determination of the value of that property,” but that “the tribunal’s opinion that the
evidence ‘has little or no bearing’ on the property’s earlier value suggests that the evidence was
rejected out of hand. Such cursory rejection would be erroneous.” Id. at 354 (emphasis in
original). We recognized that aspects of the sale, such as the passage of time, are relevant in
terms of weight and credibility, not admissibility. Id.; Samonek v Norvell Tp, 208 Mich App 80,
85-86; 527 NW2d 24 (1994).

        The tribunal’s ruling comported with Jones. The tribunal recognized that “the sale price
of personal property is not necessarily synonymous with market value.” In other words, the
tribunal recognized that while the sale price may, under circumstances, be indicative of true cash
value, that is not always the case. See Antisdale, 420 Mich at 278. The tribunal concluded that
the reasons underlying the asset purchase agreement in this case did not support petitioner’s

                                                -6-
contentions regarding the market value of the personal property at issue. In other words, the
tribunal found that petitioner’s evidence “regarding the sale of the personal property does not rise
to the level of comparative sales analysis that would result in the indication of market value” and
that petitioner’s “purchase price was not applied to the market for this valuation appeal.” The
tribunal concluded, “Therefore, Petitioner’s sale price of the subject’s personal property is given
no weight and credibility in the independent determination of value for the subject parcels.” The
tribunal did not dismiss out of hand the sales price of the personal property. Instead, the tribunal
considered the sale, the deficiencies in petitioner’s evidence, and ultimately concluded that the
sales price was not indicative of value. Jones, 193 Mich App at 354; Samonek, 208 Mich App at
85-86. We will not disturb the tribunal’s findings regarding the credibility of the evidence.
Detroit Lions, Inc, 302 Mich App at 703.

        Alternatively, petitioner contends that respondent’s evaluation was flawed, as was the
tribunal’s opinion, because both failed to account for the economic conditions at the time of the
tax assessment of the personal property. Petitioner contends, “The value of the equipment based
on the existing use of the equipment in the automotive industry was decreased as a result of the
bankruptcies and present economic condition in the automotive industry.” Petitioner asserts that
Zemla, the city’s assessor, gave no consideration to the fact that Chrysler and General Motors
filed for bankruptcy and Zemla had no information on whether this was a distressed sale.

        In effect, petitioner is arguing that the tribunal should have presumptively concluded that
because the automotive industry collapsed in 2008, the equipment and machinery sold and
assessed for the 2012 tax year was necessarily depressed. Yet, petitioner highlights no testimony
at the hearing regarding how the “financial meltdown” of the automotive industry actually
affected the value of the personal property.4 Nor has petitioner highlighted evidence in its
exhibits that the condition of the automotive industry severely affected the value of personal
property. See, e.g., Mich Admin Code, R 792.10237(1) (a party’s valuation disclosure should
contain “the party’s value conclusions and data, valuation methodology, analysis, or
reasoning.”). See also Derderian, 263 Mich App at 388. Instead, plaintiff relies on vague and
conclusory statements that the circumstances of the automotive industry in 2008 necessarily
affected the value of the personal property as of 2012, with no supporting evidence. As such,
petitioner has not demonstrated error in the tribunal’s finding that petitioner failed to meet its
burden of proof. Forest Hills Co-operative, 305 Mich App at 588.5




4
  “ ‘Facts stated must be supported by specific page references to the transcript, the pleadings, or
other document or paper filed with the trial court.’ MCR 7.212(C)(7). We will not search the
record for factual support for [petitioner’s] claims.” Derderian v Genesys Health Care Sys, 263
Mich App 364, 388; 689 NW2d 145 (2004).
5
 Petitioner relies on Safran Printing Co v City of Detroit, Wayne Co, 88 Mich App 376, 382;
276 NW2d 602 (1979). However, in that case, it was “undisputed that the property [was]
obsolete, inefficient, and could not be sold as” for its existing use. Petitioner highlights no such
evidence in the instant case.


                                                -7-
         Lastly, the tribunal properly reached an independent determination of the true cash value
of the property. Forest Hills Co-operative, 305 Mich App at 587. The tribunal stated that it had
sufficient evidence and testimony to “arrive at an independent determination of value for the
subject personal property.” The tribunal found that “based upon independent review of the
valuation evidence, that Respondent’s record card evidence is reliable and supports the current
assessed and taxable values.” The tribunal did not adopt a wrong principle or misapply the law,
and its findings were supported with competent, substantial, and material evidence on the whole
record. Forest Hills Co-operative, 305 Mich App at 588; Podmajersky, 302 Mich App at 162;
Detroit Lions, Inc, 302 Mich App at 691, 704-705.

                                       V. CONCLUSION

        We find no error warranting reversal in the tribunal’s decision to exclude the appraisal.
Nor do we find any error in the tribunal’s assessment of the true cash value and taxable value of
the personal property. We affirm.




                                                            /s/ Michael J. Riordan
                                                            /s/ Pat M. Donofrio
                                                            /s/ Jane M. Beckering




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