MESC v Park Lane Management – 2.22

MESC v Park Lane Management
Digest no. 2.22

Section 22

Cite as: MESC v Park Lane Mgt, unpublished opinion of the Court of Appeals of Michigan, issued September 28, 1999 (Docket No. 210592).

Appeal pending: No
Claimant: N/A
Employer: Park Lane Management
Docket no.: N/A
Date of decision: September 28, 1999

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COURT OF APPEALS HOLDING: The doctrines of res judicata, and collateral estoppel may preclude relitigation of MESC administrative decisions that are adjudicatory in nature. The defendant’s failure to timely appeal the MESC determination of successorship rendered that determination res judicata, to any subsequent challenges.

FACTS: Defendant provided information to the MESC, from which the MESC was able to determine that defendant acquired 100% of its predecessor’s Michigan assets. The MESC ruled that defendant was subject to the 10% unemployment tax rate. The MESC sent a notice of successorship determination to the defendant, which had 30 days to appeal. The defendant failed to timely appeal. Plaintiff sent revised 10% yearly rate notices to defendant’s correct address. Defendant’s witness denied seeing the notices but admitted that a secretary opened the mail and sent any tax-related documents to a firm that prepared defendant’s taxes.

DECISION: Plaintiff was entitled to collect $23,698.02 in disputed unemployment insurance taxes.

RATIONALE: Plaintiff relied on the “mailbox rule” to prove that defendant received the notice of successorship and yearly tax notices. “[P]roper addressing and mailing of a letter creates a [rebuttable] legal presumption it was received.” Stacey v Sankovich, 19 Mich App 688 (1969) . Plaintiff’s regularly conducted business included the mailing of 200,000 rate determinations and payment notices a year. In this matter, although direct proof that the notices were mailed to defendant was impractical due to the large volume of mailing plaintiff generated, “evidence of the settled custom and usage of the sender in the regular and systematic transaction of its business may be sufficient to give rise to a presumption of receipt by the addressee. ” Insurance Placements v Utica Mutual Ins, 917 SW2d 592, 595 (1996). Plaintiff presented sufficient evidence to give rise to the common-law presumption that defendant received the mailed notices, which defendant failed to rebut.

Digest Author: Board of Review (original digest here)
Digest Updated: 11/04

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

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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

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

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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

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

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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

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

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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

Ha-Marque Fabricators, Inc v MESC – 2.04

Ha-Marque Fabricators, Inc v MESC
Digest no. 2.04

Section 19, Section 22(d)(3), formerly 22(e)(3)

Cite asHa-Marque Fabricators, Inc v MESC, 178 Mich App 470 (1989); lv den 435 Mich 877 (1990).

Appeal pending: No
Claimant: N/A
Employer: Ha-Marque Fabricators, Inc.
Docket no.: L82 18210 1893
Date of decision: July 17, 1989

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COURT OF APPEALS HOLDING: A weighted average of the tax rate of the employer’s two predecessors which were merged into it must be used to determine the employer’s tax rate under Section 19 and 22(e)(3).

FACTS: The employer, based in Illinois, acquired two Michigan subsidiaries and merged them into its operation during a corporate reorganization and then filed a registration report to determine liability with the MESC. MESC assigned a 9% tax rate for 1982. The MESC based its calculations on legislative amendments to the rate calculation provision. The legislature failed to amend Section 22(e)(3) to conform to the other amendments. MESC interpreted the law to require that in mergers the employer should be assigned a total of the former employer’s rates.

DECISION: Employer’s tax rate must be determined by a weighted average of the merged former employer’s rates pursuant to Section 22(e)(3) and 19(a)(6) of the Act.

RATIONALE: “Although in this appeal, the MESC interprets Section 22(e)(3) to mandate a calculation of the employer’s contribution rate based on the balances in the employer’s experience account, we do not believe that the legislature intended such a construction. While we give respectful consideration to the MESC’s interpretation of the statute, we are not bound by it and we decline to follow it here.”

“We believe that the circuit court judge correctly interpreted Section 22(e)(3) as requiring that a weighted average approach be applied to determine Ha-Marque’s contribution rate … .”

Digest Author: Board of Review (original digest here)
Digest Updated: 6/91