Board of Trustees of the City of Pontiac v. City of Pontiac

Order Michigan Supreme Court
Lansing, Michigan

May 18, 2016 Robert P. Young, Jr.,
Chief Justice

151717 Stephen J. Markman
Brian K. Zahra
Bridget M. McCormack
David F. Viviano
Richard H. Bernstein
BOARD OF TRUSTEES OF THE CITY OF Joan L. Larsen,
PONTIAC POLICE AND FIRE RETIREE Justices
PREFUNDED GROUP HEALTH &
INSURANCE TRUST,
Plaintiff-Appellee,
v SC: 151717
COA: 316418
Oakland CC: 2012-128625-CZ
CITY OF PONTIAC,
Defendant-Appellant.

_________________________________________/

On April 6, 2016, the Court heard oral argument on the application for leave to
appeal the March 17, 2015 judgment of the Court of Appeals. On order of the Court, the
application is again considered. MCR 7.305(H)(1). The Court of Appeals erred in its
reading of Executive Order 225 (EO 225). Contrary to the Court of Appeals conclusion,
EO 225 by its plain language expresses the intent of the emergency manager to
extinguish the defendant’s 2011-2012 fiscal year contribution. Although that
contribution accrued on June 30, 2012, the defendant had not yet paid the obligation
when EO 225 went into effect. EO 225 clearly states that, as of August 1, 2012, the
defendant no longer has an obligation “to continue to make contributions” under Article
III of the Trust Agreement. It does not differentiate between already accrued, but unpaid
obligations and future obligations, and thus by its terms applies to both. Accordingly, the
Court of Appeals erred by concluding that the emergency manager did not intend to
extinguish the defendant’s 2011-2012 fiscal year contribution. Nonetheless, although the
Court of Appeals determined that the emergency manager could retroactively extinguish
the 2011-2012 fiscal year contribution through his authority under 2011 PA 14, it did not
specifically address whether EO 225 was a permissible retroactive modification of the
plaintiff’s accrued right to the contribution. See LaFontaine Saline, Inc v Chrysler
Group, LLC, 496 Mich 26 (2014). We therefore REVERSE that part of the Court of
Appeals judgment which interprets EO 225, VACATE that part of the Court of Appeals
judgment which discusses the plaintiff’s breach of contract claim, and REMAND this
case to the Court of Appeals for it to consider: (1) whether the retroactivity analysis
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stated in LaFontaine applies to EO 225; (2) if so, whether the extinguishment of the
defendant’s accrued, but unpaid, 2011-2012 fiscal year contribution by EO 225 is
permissible under LaFontaine; and (3) if LaFontaine does not apply, the appropriate
method for determining whether EO 225 constitutes a permissible retroactive
modification of the 2011-2012 fiscal year contribution.

We do not retain jurisdiction.

I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
May 18, 2016
p0511
Clerk