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Court overturns city clerk's termination and reinstates arbitrator's decision; City claimed dishonesty but arbitrator disagreed

Jennifer L. French was employed as the city clerk for the City of Holland and one of her duties involved supervising the accuracy and integrity of the city's voting registrations.  French and her husband lived in Douglas with their two kids, but bought a waterfront home on Lake Macatawa in Holland in the name of his corporation.  They began renovations.  He, owner of Stro-men's, Inc.,  attempted to claim the Holland home as his "true, fixed and permanent abode," but his request for a "Homestead Exemption Affidavit" was rejected. 

Undaunted, French then changed her drivers license address and voting registration to the waterfront property, the corporation deeded it to her, and she filed for an exemption, claiming that the Holland home was her "true, fixed and permanent abode," while her husband claimed that status for the home in Douglas.  If granted a PRE, or "Homestead Exemption," French would save $8,000.00 a year in property taxes on the waterfront home.  Only problem was that the water and electric bills demonstrated quite conclusively that the sparsely decorated, partially renovated home was not lived in.

The City contested French's PRE request, but not until after French's supervisor asked her "where she lived" and she replied "Saugatuck Township" not "Holland."  Ultimately the Michigan Tax Tribunal rejected her tax status claim and the City fired her,  reasoning that if she falsified her own claim for favorable tax status, she wasn't an appropriate person to be monitoring the City's records.  She contested her firing, arguing that the City lacked "just cause" to terminate her, and an arbitrator agreed. Although he was bound by the decision of the Tax Tribunal that French wasn't a resident, he concluded that she hadn't been dishonest in making the request.

The City appealed the arbitration and the Circuit Judge overturned it, concluding that the Tax Tribunal decision decided the issues and that the arbitrator had inappropriately failed to honor the tribunal's prior judgment.  A second arbitration was conducted, and this time the City won, so French appealed.   The local judge upheld this arbitration in the City's favor and French appealed to the Court of Appeals.  It reversed in a 2:1 decision. 

The two-judge majority concluded that while the Tax Tribunal did conclusively decide the residency issue, the original arbitrator's decision that the Tribunal did not establish dishonesty was a new fact that the arbitrator was free to consider.  It therefore ruled that the original arbitration overturning the termination would be binding on the parties, not the subsequent arbitration.  Sometimes pigs get fat and hogs don't get slaughtered.


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