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K & W Wholesale, LLC v. Department of Treasury

Court of Appeals of Michigan

February 7, 2017

K & W WHOLESALE, LLC, and VISNA MATI, Plaintiffs-Appellants,
v.
DEPARTMENT OF TREASURY and KEVIN CLINTON, Defendants-Appellees.

         Macomb Circuit Court LC No. 2014-004213-AA

          Before: Gadola, P.J., and Wilder and Meter, JJ.

          Meter, J.

         Plaintiffs K & W Wholesale, LLC, and Visna Mati appeal as of right an order granting defendants' motion for reconsideration and their motion for summary disposition in this case involving the interpretation of the Tobacco Products Tax Act (TPTA), MCL 205.421 et seq. We affirm.

         On August 18, 2014, the Michigan State Police, acting on behalf of defendant Department of Transportation ("the Department"), conducted an inspection of plaintiffs' facility in Sterling Heights. After observing various purported violations of the TPTA, the officers seized 47 cases of tobacco from plaintiffs. On September 11, 2014, a referee at the Department conducted an informal conference concerning whether the Department legally seized plaintiffs' tobacco and whether the tobacco should be forfeited to the state. The Department argued, in part, that plaintiffs violated MCL 205.426(6) by possessing tobacco shipping cases that failed to identify the first purchaser of the tobacco. The Department argued that the officers properly seized the tobacco and that it should be forfeited. Plaintiffs argued that they purchased the tobacco from a licensed wholesaler, that they had invoices to prove that the purchases were made legally, and that the product should be returned to them.

         Following the hearing, the referee issued an informal conference recommendation. The referee concluded that the Department properly seized the tobacco. The referee reasoned that, on the date of the seizure, plaintiffs possessed cases of tobacco with labels that did not bear the name of the first purchaser of the tobacco. The referee noted that possession of tobacco without proper identification of the first purchaser was sufficient in itself to violate the TPTA and was grounds for seizure and forfeiture.

         On September 22, 2014, defendant Kevin Clinton, on behalf of the Department, adopted the referee's recommendation in a Decision and Order of Determination ("the Order"). The Order stated that if plaintiffs disagreed with the decision, they could file a written appeal in the circuit court of the county where the seizure occurred. The Order stated that the appeal "must be commenced in circuit court within 20 days of this decision in accordance with . . . MCL 205.429." Defendants submitted evidence that a copy of the Order was received at the address of K & W Wholesale on September 24, 2014.

         On October 30, 2014, plaintiffs filed a complaint in the circuit court, attempting to appeal the Order. In the complaint, plaintiffs argued that they were not able to file an appeal with the circuit court within 20 days of the Order because their attorney had not been timely served with a copy of it. Plaintiffs also argued that any deficiency in the labeling of the tobacco created only a presumption of a violation under the TPTA, which they adequately rebutted. Plaintiffs requested that the court vacate the Order.

         On December 1, 2014, defendants moved for summary disposition under MCR 2.116(C)(4) (lack of subject-matter jurisdiction) and (7) (violation of the statute of limitations). Defendants argued that the court lacked subject-matter jurisdiction because the 20-day limitations period had run. In response to plaintiffs' argument that their attorney had not been served with a copy of the Order, defendants argued that they complied with the TPTA by notifying the person claiming an interest in the seized property. The circuit court initially denied defendants' motion for summary disposition in a ruling dated February 5, 2015, stating that defendants had "failed to provide the [c]ourt with substantively admissible evidence to demonstrate that [plaintiffs] were served with the decision that is the subject of this appeal." Defendants filed a motion for reconsideration, arguing that the trial court erred in finding no proper proof of service. Defendants argued that counsel for plaintiffs had admitted in his response to defendants' motion for summary disposition that plaintiffs received a copy of the Order on September 29, 2014. Defendants also pointed out that they had presented a United States Postal Service (USPS) tracking document showing delivery to plaintiffs' address on September 24, 2014. Finally, defendant attached to their motion for reconsideration an actual certified mail receipt showing service at plaintiffs' address on September 24, 2014.

         On April 6, 2015, the trial court, relying on the certified mail receipt, granted defendants' motion for reconsideration and their motion for summary disposition. Plaintiffs now take issue with this decision.

         "This Court reviews decisions on motions for summary disposition de novo." Durcon Co v Detroit Edison Co, 250 Mich.App. 553, 556; 655 N.W.2d 304 (2002). "When viewing a motion under MCR 2.116(C)(4), this Court must determine whether the pleadings demonstrate that the defendant was entitled to judgment as a matter of law, or whether the affidavits and other proofs show that there was no genuine issue of material fact." Weishuhn v Catholic Diocese of Lansing, 279 Mich.App. 150, 155; 756 N.W.2d 483 (2008) (citation and quotation marks omitted). "Summary disposition under MCR 2.116(C)(7) is appropriate when the undisputed facts establish that the plaintiff's claim is barred under the applicable statute of limitations." Kincaid v Caldwell, 300 Mich.App. 513, 522; 834 N.W.2d 122 (2013). "[A] party moving for summary disposition under MCR 2.116(C)(7) may support the motion with affidavits, depositions, admissions, or other admissible documentary evidence, which the reviewing court must consider." Id.

         This Court reviews for an abuse of discretion a trial court's decision regarding a motion for reconsideration. Churchman v Rickerson, 240 Mich.App. 223, 233; 611 N.W.2d 333 (2000). In addition, "[i]ssues of statutory interpretation are reviewed de novo." City of Riverview v Sibley Limestone, 270 Mich.App. 627, 630; 716 N.W.2d 615 (2006).

         The TPTA "is at its heart a revenue statute, designed to assure that tobacco taxes levied in support of Michigan schools are not evaded." People v Beydoun, 283 Mich.App. 314, 327; 770 N.W.2d 54 (2009) (citation and quotation marks omitted). If a person possesses tobacco in a manner that violates the TPTA, the tobacco "may be seized and confiscated" by the Department. MCL 205.429(1). After the tobacco has been seized, the person who conducted the seizure must serve an inventory statement of the seized property upon the person from whom it was taken. MCL 205.429(3). Within 10 days of receiving the inventory statement, the person from whom the property was seized may demand a hearing before the state treasurer to determine "whether the property was lawfully subject to seizure and forfeiture." Id.

         The Department is then required to hold a hearing within 15 days of the demand. Id. If, after the hearing, the Department determines that the property was lawfully seized and is subject to forfeiture, the person from whom the property was seized, or any person with an interest in the property, may file an appeal in the circuit court of the county in which the property was seized. MCL 205.429(3) & (4). The statute states that the suit "shall be commenced within 20 days after notice of the ...


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