Earlier this year, the Michigan Court of Appeals agreed with the Circuit Court for Oakland County that two companies, Disney1 and Dine Brands2, were not required to turn over unclaimed property to the state for transactions that were incurred outside the statute of limitations period. The two cases with similar fact patterns claimed that the unclaimed property audits of prior years took more than eight years to complete and resulted in assessments reaching beyond the 10-year statute of limitations. The consolidated cases are on appeal to the Michigan Supreme Court currently pending review.
The Supreme Court had instructed an appellate panel of three judges to consider the main issue in the cases, assuming that the examination is a “proceeding” under the statute at issue. Michigan statute 567.250(2) states that “an action or proceeding shall not be commenced by the administrator with respect to any duty of a holder under this act more than 10 years…after the duty arose.” On remand, the panel was asked to consider “assuming that an examination is a ‘proceeding’ for purposes of MCL 567.250(2): (1) whether the commencement of the examination tolled the statute of limitations in MCL 567.250(2); and (2) whether the Treasurer must still file a lawsuit within the applicable time frame to avoid the lawsuit being time-barred.”
With input from the panel on these questions, the Court of Appeals issued a revised opinion on November 9, 2023, concluding that the state is not barred from enforcing these actions because the examination was commenced within the statute of limitations, resulting in the first question becoming irrelevant. In response to the second question raised, the Court determined that MCL 567.251a allows the state to issue a final decision when a holder has failed to deliver unclaimed property, which can subsequently be challenged by the holder under MCL 567.251a(1). This was a surprising development considering the prior holder-friendly statute of limitations decision in favor of Disney and Dine Brands.
As the Supreme Court has retained jurisdiction upon remand to the Court of Appeals, the final verdict on these cases has not yet been issued. The resolution of these Michigan cases may also impact other states with similar statutes. If you have any questions or need further assistance with your unclaimed property audit or internal review process, please contact our Ryan unclaimed property professionals.
1 The Walt Disney Co. v. Rachael Eubanks, Case number 360291, 2023 WL 324594, Michigan Court of Appeals (January 19, 2023).
2 Dine Brands Global Inc. v. Rachael Eubanks, Case number 360293, 2023 WL 324426, Michigan Court of Appeals (January 19, 2023).
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