CTC Acquisition CO, LLC v. State of Michigan – 2.23

CTC Acquisition CO, LLC v. State of Michigan
Digest No. 2.23

Section 421.22, Section 421.41

Cite as: CTC Acquisition CO, LLC v State of Michigan, unpublished opinion of the Kent County Circuit Court, issued November 10, 2008 (Docket No. 2008-06293-AE).

Appeal pending: No
Claimant: N/A
Employer: CTC Acquisition Co., LLC
Docket no.: No. 2008-06293-AE
Date of decision: November 10, 2008

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HOLDING: CTC is a “new employer” under the statute and a 2.7% rate must be applied.

FACTS:  Case stems from CTC Acquisitions Co’s purchase of most of Grand Rapids Controls, Inc’s (GRC) assets. GRC was a spring and cable manufacturer solely owned by Linda Southwick. Sale occurred in April 2004. CTC stopped the spring manufacturing but continued the cable production line. Production staff was retained, management was not. CTC reported the acquisition to the UIA for the determination of the appropriate contribution rate. The company was renamed GRC, LLC. Under the statute (MCL 421.22), a “new employer” is assigned 2.7% contribution (2.7% of its payroll to the UIA). A new employer is an acquisition under 75%. When a business acquires more than 75% of another business, then it is considered a “transfer of business” and the former employer’s contribution rate is transferred. In August 2004 UIA determined GRC, LLC to be a new employer because it has acquired less than 75% of GRC, Inc’s assets. However in June 2005 the UIA reversed its determination because it found that more than 75% of the assets were purchased and assigned a 10.3% contribution rate. UIA determined that the leasehold improvements (valued at $1.3 million) were not GRC, Inc assets.

DECISION: Board of Review’s decision is reversed. The decision reversed was the decision of the agency to recalculate Appellant-Employer’s contribution rate and increase the rate from 2.7% to 10.3%.

RATIONALE: UIA is permitted to reconsider and redetermine an employer’s contribution rate. MCL 421.32(a). However, if the reconsideration occurs within 30 days of the original intent, the rate may only be reconsidered for good cause.As a matter of law, the leasehold improvements were GRC, Inc’s assets and should have been included in the calculation.

Question 1: Is remand required for a determination of whether the agency had good cause to reconsider CTC’s contribution rate because the rate was not reconsidered within 30 days of the original determination?

  • Based on this decision is it not necessary to remand for a determination of whether the agency has good cause to reconsider the rate determination more than 30 days after the original determination.

Question 2: Did the Board err in not considering GRC, Inc’s leasehold improvements in the asset calculation? The improvements were properly written off and they were assets.

  • Court believes that the focus must be on what the seller’s total assets were and what percentage of those assets was transferred to a particular acquiring business. Not the total percentage of what was transferred.
  • CTC is a new employer and must be assessed under the 2.7% rate.

Digest author: Katrien Wilmots, Michigan Law, Class of 2017
Digest updated: 3/27/2016

Elliott’s Amusements, LLC v. Garrison – 17.23

Elliott’s Amusements, LLC v. Garrison
Digest No. 17.23

Section 421.44

Cite as: Elliott’s Amusements, LLC v Garrison, unpublished opinion of the Ingham County Circuit Court, issued October 1, 2007 (Docket No. 07-251-AE).

Appeal pending: No
Claimant: Ronald L. Garrison
Employer: Elliott’s Amusements, LLC
Date of decision: October 1, 2007

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HOLDING: Certain per diem payments made by the employer to the claimant were remuneration when not for the “convenience of the employer” and the claimant had the ability to choose how to spend the money.

FACTS: The ALJ decided that per diem amounts the employer paid to the claimant were remuneration under Section 44(1). The Board of Review affirmed and incorporated the ALJ’s decision. As the Board explained, the claimant worked six months per year for the employer, while also living in the employer’s trailer and paying rent and food money. The claimant received a per diem payment from the employer, plus reimbursements for some expenses. Citing Seligman v MESC, 164 Mich App 507 (1988) as controlling, the Board endorsed the ALJ’s view that the per diem payments amounted to wages because the employer did not require the claimant to live at the work site, the lodging was not free, and the claimant’s use of the per diem payments were not controlled by the employer.  The claimant choice to use the employer-provided lodging was based on his own convenience, distinguishing his situation from the mandatory on-site lodging provided for the “convenience of the employer” in Seligman.

DECISION: The court upheld the determination that certain per diem payments made by the employer to the claimant were remuneration.

RATIONALE: Per diem payments for on-site lodging and food are considered remuneration if the employer did not control the claimant’s use of the per diem monies and the claimant could have spent the money in other ways.

Digest author: Austin L. Webbert, Michigan Law, Class of 2017
Digest updated: 10/25/2017

 

MESC v Monkman Construction – 2.20

MESC v Monkman Construction
Digest no. 2.20

Sections 18(d)(2), 32a

Cite as: MESC v Monkman Constr, unpublished per curiam Court of Appeals, issued May 7, 1996 (Docket No. 176053).

Appeal pending: No
Claimant: N/A
Employer: Monkman Construction
Docket no.: L92-02019-2287
Date of decision: May 7, 1996

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COURT OF APPEALS HOLDING: Where employer failed to request redetermination of its tax rate for more than one year after issuance of rate determination, reconsideration was time barred and Referee properly dismissed case for lack of jurisdiction.

FACTS: Employer’s contribution rate was set at 10 percent and a determination to that effect was issued on February 14, 1990. Employer failed to submit a quarterly report for 1989. The 30 day protest period ended March 16, 1990. Employer submitted the missing report on March 27, 1990, but did not request redetermination of its rate until November 19, 1991, more than a year after the determination was issued.

DECISION: Redetermination of tax rate denied due to lack of jurisdiction.

RATIONALE: Section 32a(2) bars appeals filed more than one year after prior decision or determination. Statutory time restrictions on seeking review of unemployment tax assessments are jurisdictional. As a result, the “good cause” analysis was inapposite.

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

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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

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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

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

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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

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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

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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