MESC v Bennett Fuel Co – 2.15

MESC v Bennett Fuel Co
Digest no. 2.15

Section 18(d)(2)

Cite as: MESC v Bennett Fuel Co, unpublished per curiam opinion of the Court of Appeals of Michigan, issued May 30, 1995 (Docket No. 160028).

Appeal pending: No
Claimant: N/A
Employer: Bennett Fuel Company
Docket no.: L85-02360-RM1-2068
Date of decision: May 30, 1995

View/download the full decision

COURT OF APPEALS HOLDING: Good cause for late protest of contribution rate established by showing that delay in filing an appeal was due to the misconduct of employer’s bookkeeper.

FACTS: In 1984 MESC raised employer’s contribution rate from 1% to 10% because of a missing quarterly report for the 2nd quarter of 1983. Notice of the increased tax rate was mailed on April 10, 1984. Employer did not protest within 30 days. Failure to observe time limit to protest of contribution rate was due to dereliction of duty on the part of employer’s bookkeeper–he had secreted a number of employer’s business documents in his car, destroyed others. When the misconduct was discovered, employer fired the bookkeeper, filed the missing quarterly report and requested redetermination of its contribution rate.

DECISION: Employer is entitled to present evidence on merits of its case for redetermination of the contribution rate.

RATIONALE: Unemployment Agency Administrative Rule 270 provides that “good cause” is defined to include situations where “an interested party has newly discovered material facts which through no fault of its own were not available at the time of the determination.” Gross misconduct of employer’s bookkeeper prevented employer from filing a timely appeal of the 10% contribution rate. This amounted to “good cause” for the delay.

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

Pioneer Cabinetry, Inc v MESC – 2.17

Pioneer Cabinetry, Inc v MESC
Digest no. 2.17

Section 41(2)

Cite as: Pioneer Cabinetry, Inc v MESC, unpublished per curiam opinion of the Court of Appeals of Michigan, issued September 27, 1994 (Docket No. 145657).

Appeal pending: No
Claimant: N/A
Employer: Pioneer Cabinetry, Inc.
Docket no.: L88-08050-2003
Date of decision: September 27, 1994

View/download the full decision

COURT OF APPEALS HOLDING: Although cash should in some instances be treated as an asset, only those assets in a business’ possession at the time of transfer are to be included in computing the total assets of the business.

FACTS: Employer is a manufacturer and wholesaler of kitchen cabinets. In 1986, employer purchased (under a single purchase agreement), assets from Flint Floors, Paradise Industries and Flint Floor Finishers (FFI) for $144,900. As a result, employer’s contribution rate was set at 10%, because it had a acquired more that 75% of FFI’s total assets. Employer contends it did not acquire 75% of FFI’s assets because FFI retained $47,000 in cash after the sale. Another $64,000 in assets were sold to employer which could not be identified as coming from one of the three companies whose assets the employer acquired.

DECISION: Employer is a successor in that it acquired more than 75% of its predecessor’s total assets.

RATIONALE: Employer produced no evidence that FFI had $47,000 in cash at the time of the business transfer. Therefore, such alleged cash assets were properly excluded from the computation of FFI’s total assets. As to the $64,000 in unidentified assets – they were listed as sold to employer. If any were attributed to FFI they would only serve to increase the percentage of assets transferred from FFI to employer.

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

Peter McCreedy Trucking Co v MESC – 2.11

Peter McCreedy Trucking Co v MESC
Digest no. 2.11

Sections 15, 18

Cite asPeter McCreedy Trucking Co v MESC, unpublished memorandum of the Court of Appeals of Michigan, issued August 26, 1994 (Docket No. 156798).

Appeal pending: No
Claimant: N/A
Employer: Peter McCreedy Trucking Company
Docket no.: L90-11810-RO1-2187
Date of decision: August 26, 1994

View/download the full decision

COURT OF APPEALS HOLDING: Circuit Court applied incorrect legal standard when it decided that maximum tax rate could not be imposed pursuant to Section 18(d)(2) unless MESC found that employer’s failure to file quarterly reports was “willful” pursuant to Section 15 of the Act.

FACTS: Employer failed to file required quarterly reports for the years 1986, 1988 and 1989. The reports were not filed within 30 days of notice of contribution rate as required for recomputation of the rate. The employer’s contribution rate was increased by the MESC pursuant to Section 18(d)(2). There was no evidence of misfeasance or malfeasance by the employer.

DECISION: Employer not entitled to redetermination of its contribution rate.

RATIONALE: Section 18 is a definitional section applicable to all employers. Section 15 is primarily a penalty section which sets forth alternative remedies available to the MESC when the employer’s contribution remains unpaid. The sections have different purposes and both are to be applied as written.

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

MESC v Regis Associates – 2.16

MESC v Regis Associates
Digest no. 2.16

Section 18(d)(2)

Cite as: MESC v Regis Assoc, unpublished memorandum of the Court of Appeals of Michigan, issued May 27, 1994 (Docket No. 162000).

Appeal pending: No
Claimant: N/A
Employer: Regis Associates
Docket no.: L90-08433-2113
Date of decision: May 27, 1994

View/download the full decision

COURT OF APPEALS HOLDING: Where employer’s agent advised it to file a late quarterly report and it nonetheless failed to do so, this was negligence on employer’s part and it did not establish good cause for late protest of its contribution rate.

FACTS: Employer filed an untimely protest of its contribution rate. Employer claimed its agent was negligent for failing to timely file a quarterly report. However, the agent advised employer to file the late quarterly report within the 30 day extension period provided in Section 18(d)(2) but the employer failed to follow this advice.

DECISION: No good cause shown, contribution rate determination became final.

RATIONALE: “Had plaintiff filed the report when advised to do so by its agent, no protest would have been necessary under Section 18(d)(2) of the MESA.”

Editor’s Note: This case was decided one year before the court of Appeals decision in Bennett Fuel, see Digest 2.15. The Regispanel of the Court of Appeals expressly distinguished Bennett Fuel, which had been decided by the Kent Circuit Court and was then pending at the Court of Appeals, on the basis the Bennett Fuel employer did not receive the rate determination in question because of an employee’s wrongful action.

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

Contemporary Life Services v MESC – 2.12

Contemporary Life Services v MESC
Digest no. 2.12

Sections 13a, 32a, 41

Cite asContemporary Life Services v MESC, unpublished per curiam Court of Appeals of Michigan, issued May 24, 1994 (Docket No. 151027).

Appeal pending: No
Claimant: N/A
Employer: Contemporary Life Services
Docket no.: L89-07129-2075
Date of decision: May 24, 1994.

View/download the full decision

COURT OF APPEALS HOLDING: Where employer requested reclassification from contributing to reimbursing status more than one year after notice of determination of status was mailed, the one year limitation bars retroactive reconsideration of employer’s status.

FACTS: Employer was classified as a contributing employer for failure to answer question 7 on form MESC 1010 even though elsewhere on that form the employer attested it was a tax exempt entity under 26 USC 501(a). The instructions for question 7 specifically stated failure to answer would result in classification as a contributing employer. Determination of contributing employer status was mailed on January 31, 1986. Thereafter, employer failed to file quarterly reports and received notice of this lapse on March 8, 1989. Employer requested reclassification on March 16, 1989. Employer had accumulated arrearages of unpaid unemployment payroll taxes between 1985 and 1989. Employer argued one year time limit should be tolled until March 8, 1989, or that the time limit should be extended on equitable grounds.

DECISION: Employer’s request for redetermination time barred under Section 32a.

RATIONALE: The March 16, 1989 letter was not filed within a year of the January 31, 1986 determination. Also, the employer was not entitled to equitable relief since it set the chain of events in motion by failing to properly complete form MESC 1010. Employer should have known when it received quarterly report forms that something was amiss. Employer is presumed to know the law as it relates to the operation of its business.

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

MESC v NL Industries (USA), Inc – 2.09

MESC v NL Industries (USA), Inc
Digest no. 2.09

Sections 21, 32a

Cite asMESC v NL Industries (USA), Inc, unpublished opinion of the Oakland County Circuit Court, issued January 5, 1994 (Docket No. 93-459745-AE).

Appeal pending: No
Claimant: N/A
Employer: NL Industries (USA), Inc.
Docket no.: L90-10851-2103
Date of decision: January 5, 1994

View/download the full decision

CIRCUIT COURT HOLDING: Where the MESC fails to issue rate determinations and, instead assigns temporary rates by means of quarterly contribution reports, for a period of years, those so-called temporary rates become final if the employer is not notified of a contribution rate within six months of the computation date (June 30).

FACTS: In 1985, MESC issued determination of successorship. No rate determination was issued, but employer’s quarterly contribution reports showed rate of 2.7%. Sometimes a “T” appeared before the rate. Employer paid the 2.7% rate until October 27, 1989, at which time the MESC issued rate determinations covering 1985-89 of 9.1%, 8.7%, 7.8%, 7.3% and 6.6%. MESC’s position was that the quarterly reports were not rate determinations and not subject to the finality provisions of Section 32a(2). Further, the statute and Administrative Rules do not provide for temporary rates and therefore, the rates shown on the quarterly contribution statements could not become final rates under Section 21(a).

DECISION: Decision of MES Board of Review affirmed. (Later MESC appeal to Court of Appeals withdrawn.)

RATIONALE: Under Section 21(a), employers are entitled to notification of contribution rate no later than six months after the computation date. This notification is mandatory, not discretionary. The computation date under Section 18(a) is June 30 of each year. Therefore, employers must be notified of rate by December 31 of each year. Otherwise the finality provisions of Section 32a(2) apply. A statement of a rate such as that on the quarterly contribution report is a “statement” of a rate determination pursuant to Section 21(a).

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

Bruce & Roberts, Inc v MESC – 2.14

Bruce & Roberts, Inc v MESC
Digest no. 2.14

Section 41

Cite as: Bruce & Roberts, Inc v MESC, unpublished opinion of the Genesee County Circuit Court, issued April 21, 1993 (Docket No. 92-1202-AE).

Appeal pending: No
Claimant: N/A
Employer: Bruce & Roberts, Inc.
Docket no..: L91-15659-2150
Date of decision: April 21, 1993

View/download the full decision

CIRCUIT COURT HOLDING: The Chapter 7 bankruptcy trustee was an employing unit pursuant to Section 40 and, therefore, by definition an “employer subject to this Act” under Section 41(2)(a). Therefore, employer Bruce & Roberts Inc. is a successor, having acquired 75% or more of Balderstone assets by means of bankruptcy.

FACTS: On October 18, 1985, employer sold the business (Sherman’s Lounge) to Balderstone for $160,000. On June 21, 1988, Balderstone filed for Chapter 11 Bankruptcy and for Chapter 7 on March 22, 1989. Employer re-acquired all the equipment and fixtures they sold in 1985 through foreclosure. Also, they purchased the liquor license and inventory from the Chapter 7 bankruptcy trustee. They reopened as Bruce & Robert’s, Inc. on January 2, 1990. They were assigned 10% rate as successor employer, having acquired more than 75% of Balderstone’s assets. Employer asserted it was not a successor and entitled to new employer tax rate of 2.7%.

DECISION: Employer is a successor to Balderstone and the 10% contribution rate was properly assessed.

RATIONALE: Employer acquired through foreclosure everything it had previously conveyed to Balderstone. Repossession after default has been found to be an acquisition even in the absence of a title transfer. The acquisition of assets from a debtor through bankruptcy proceedings also results in an acquisition for purposes of Section 41(2), based on the definitions in the Act of “employer” and “employing unit.”

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

R F Molitoris, DDS v MESC – 2.13

R F Molitoris, DDS v MESC
Digest no. 2.13

Sections 11(g), 18(d)32a

Cite asR F Molitoris, DDS v MESC, unpublished opinion of the Macomb County Circuit Court, issued January 21, 1993 (Docket No. 92-3446-AE).

Appeal pending: No
Claimant: Wanda Forbes
Employer: R.F. Molitoris, D.D.S.
Docket no.: L90-06544-2224
Date of decision: January 21, 1993

View/download the full decision

CIRCUIT COURT HOLDING: An interstate claimant’s entitlement to benefits is determined by the state in which the claim is made. The Agency is not precluded from redetermining an erroneous contribution rate if such redetermination is made within one year of the issuance of the initial rate.

FACTS: Claimant Wanda Forbes worked for involved employer and another Michigan employer in 1981 before moving to Nevada where she worked, then filed a combined wage claim for benefits, in September 1982. The Michigan employers provided information but this employer was not notified of charges to its account until 1985. Employer challenged charges and an adjustment of $898 was made for 1986. Employer requested redetermination of rate in 1989 which was denied as untimely. Agency subsequently discovered employer had received $898 credit for years 1987 through 1990 in error. Nevertheless, the Agency only recalculated the 1990 rate because redetermination of others was time barred under Section 32a.

DECISION: Redetermination of 1990 rate affirmed.

RATIONALE: Employer lacked standing to challenge award of benefits because under MESA Section 11(g), which conforms with 26 USC 3304, her entitlement to benefits was controlled by laws of Nevada (paying state). Agency had the authority to redetermine employer’s 1990 contribution rate within one year of its issuance. Erroneous rates for 1987 through 1989 could not be redetermined because of the one year time limit.

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

Trumble’s Rent-L-Center, Inc v MESC – 2.18

Trumble’s Rent-L-Center v MESC
Digest no. 2.18

Sections 18(d), 21

Cite as: Trumble’s Rent-L-Center v MESC, 197 Mich App 229 (1992).

Appeal pending: No
Claimant: N/A
Employer: Trumble’s Rent-L-Center, Inc.
Docket no.: L88-14843-1985
Date of decision: December 7, 1992

View/download the full decision

COURT OF APPEALS HOLDING: Where employer submitted a missing quarterly report more than 30 days after the issuance of a rate determination, mere submission of the report did not amount to a request for an extension of time under Section 21(a).

FACTS: Employer failed to file a quarterly report for quarter ending September 30, 1985. MESC issued Notice of Contribution Rate on March 23, 1987 assessing 10% rate because of the missing report. The notice stated that if the missing report was provided within 30 days, the rate would be recomputed. The notice further stated that the rate determination would be final if not appealed within thirty days and that an additional thirty days would be granted upon written request. The employer filed the missing report on May 5, 1987-more than thirty days after mailing of the March 23, 1987 Notice. The employer contends that sending the report operated as a request for redetermination as it was submitted within the allowable extension period.

DECISION: The March 23, 1987 rate determination became final thirty days after it was mailed.

RATIONALE: Words or phrases in the statute are accorded their plain and ordinary meaning, unless otherwise defined. Filing a report is not equivalent to mailing a written request. Therefore, it cannot be found that a request for an extension of time was made. “The burden is not on the agency to discern the intent of its correspondents.”

Digest Author: Board of Review (original digest here)
Digest Updated: 7/99

MESC v ASC, Inc – 2.06

MESC v ASC, Inc
Digest no. 2.06

Section 22(d)(3), formerly 22(e)(3)

Cite asMESC v ASC, Inc, unpublished opinion of the Court of Appeals of Michigan, issued August 7, 1991 (Docket No. 119777).

Appeal pending: No
Claimant: N/A
Employer: ASC, Inc.
Docket no.: L82 22133 1825
Date of decision: August 7, 1991

View/download the full decision

COURT OF APPEALS HOLDING: Where a vertical merger takes place involving multiple corporate entities related as parent – subsidiary, the merger transactions occur in sequence, not simultaneously.

FACTS: Prior to June 1982, Wisco Corporation was a wholly owned subsidiary of Ultra International, Inc. In turn, Ultra was a wholly owned subsidiary of American Sunroof Corp. Heinz Prechter was the sole stockholder of Sunroof, and he was the sole director of all 3 corporations. At the time Wisco’s contribution rate was 7.8% and Sunroof’s rate was 5.5%. Without applying statutory limit provisions, both corporations would have had a rate of 9%. For economic reasons Sunroof dissolved both Wisco and Ultra into their parent corporations. The business name of Sunroof was changed to ASC, Inc. On June 23, 1981, Prechter signed 3 separate resolutions dissolving the 3 corporations into their parent business effective June 30, 1982. MESC notified ASC, Inc. that it was a successor of the other businesses and assigned a 9% contribution rate for 1982 pursuant to Section 22(e)(3) because it treated the transfer as “simultaneous”.

DECISION: The mergers in this case were not “simultaneous”, and Section 22(e)(3) is not applicable. The rate assigned to ASC is the same as Sunroof’s – 5.5%.

RATIONALE: “We agree with the Board of Review and the circuit court that it was legally impossible for the transfer in this case to have occurred concurrently. If the assets of a subsidiary corporation are to be transferred to the parent corporation the subsidiary and parent may not both dissolve at the same time. The parent must remain in existence in order to accept the subsidiary’s assets. Only after a subsidiary has dissolved and the parent has accepted its assets may that parent dissolve and transfer both its assets and its former subsidiary’s assets to another corporation.”

Digest Author: Board of Review (original digest here)
Digest Updated: 12/91