Pontiac Police & Fire Retiree Prefunded Group Health & Insurance Trust Board of Trustees v. City of Pontiac No 2 , 309 Mich. App. 611 ( 2015 )

STATE OF MICHIGAN
COURT OF APPEALS
BOARD OF TRUSTEES OF THE CITY OF FOR PUBLICATION
PONTIAC POLICE & FIRE RETIREE March 17, 2015
PREFUNDED GROUP HEALTH & 9:10 a.m.
INSURANCE TRUST,
Plaintiff-Appellant,
v No. 316680
Oakland Circuit Court
CITY OF PONTIAC, LC No. 2012-127682-CZ
Defendant-Appellee.
Before: MARKEY, P.J., and OWENS and FORT HOOD, JJ.
PER CURIAM.
Plaintiff Board of Trustees of the City of Pontiac Police and Fire Retiree Prefunded
Group Health and Insurance Plan (board of trustees or trustees) appeals by right Oakland Circuit
Judge Shalina D. Kumar’s order granting defendant’s motion for summary disposition pursuant
to MCR 2.116(C)(5) (lack of standing), (C)(8) (failure to state a claim), and (C)(10) (no genuine
issue of material fact). We affirm.
I. FACTS AND PROCEEDINGS
The Board of Trustees of the City of Pontiac Police and Fire Retirement System
(retirement system trustees) and plaintiff trustees filed a complaint in circuit court asserting that
defendant funded the City of Pontiac Police and Fire Retirement System, which provided
retirement benefits to retired police and fire employees. Plaintiffs also asserted that defendant
funded the City of Pontiac Police and Fire Retiree Prefunded Group Health and Insurance Plan
(the trust), a tax-exempt voluntary employees’ beneficiary association, 26 USC 501(c)(9), which
provided health, optical, dental, and life-insurance benefits to police and fire employees who
retired on or after August 22, 1996. The trust’s board of trustees is comprised of five members:
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the city’s mayor, the city’s finance director, and a firefighter, a police officer, and a fifth trustee
who the other trustees would select and who could participate in the trust.1
During the fiscal year ending June 30, 2012, the city’s emergency manager (EM), Louis
Schimmel, entered into termination collective bargaining agreements (CBAs) with the various
police and firefighter unions. The EM acted pursuant to the authority of § 19(1)(k) of 2011 PA
4, MCL 141.1519(1)(k).2 The city also contracted to receive police services from Oakland
County effective August 1, 2011, and fire services from Waterford Township, effective February
1, 2012. As of April 24, 2012, the CBAs outlining benefits funded by the trust included the
Police Supervisors Contract Termination Agreement, the Police Non-Command Contract
Termination Agreement, the Fire Contract Termination Agreement, the Police Supervisors
Collective Bargaining Agreement, the Police Non-Command Collective Bargaining Agreement,
and the Fire Collective Bargaining Agreement. On April 25, 2012, the city’s EM issued
Executive Orders 206 and 207, which modified the healthcare benefits set forth in the various
CBAs. The executive orders were identical, with Executive Order 206 applying to fire retirees
and Executive Order 207 applying to police retirees. Executive Orders 206 and 207 took effect
on July 1, 2012, and modified retirees’ healthcare benefits by requiring pre-Medicare-aged
retirees to enroll in a Humana PPO-08 Plan, limiting Medicare-aged retirees to a Medicare
Advantage Plan G, eliminating defendant’s reimbursement of retirees’ Medicare Part B
premium, and requiring pre-Medicare-aged retirees to pay the amount above the “hard cap” of
2011 PA 152 or pay 20 percent of annual rates, whichever is greater.
On August 29, 2012, a stipulated order of the dismissal was entered as to the claim of the
retirement system trustees because of Executive Order 224, which memorialized a settlement.
On the same day, a stipulated order was entered authorizing plaintiff board of trustees3 to file an
amended complaint alleging that the city improperly reduced retiree healthcare benefits through
Executive Orders 206 and 207. Count I alleged a violation of Const 1963, art 9, § 24; Count II
alleged that through Executive Order 225 the city improperly sought to amend the trust by
1
The pertinent provisions of the trust are set forth in the related case of Pontiac Police & Fire
Retiree Prefunded Group Health & Ins Plan Trustees v City of Pontiac, ___ Mich App ___; ___
NW2d ___ (Docket No. 316418, ___ __, 2015) (Trustees I), involving Executive Order 225 and
the city’s actuarially required contribution to the trust for the fiscal year ending June 30, 2012.
2
2011 PA 4 was “suspended” on August 8, 2012, by the State Board of Canvassers’ certification
of the sufficiency of the referendum petitions regarding the act filed on February 29, 2012. The
State Board of Canvassers’ certification on November 26, 2012, of the fall general election
results disapproving 2011 PA 4 had the effect of repealing the act and reviving the Local
Government Fiscal Responsibility Act, 1990 PA 72, MCL 141.1201 et seq. We decide in
Trustees I, Part III (A), that the actions of the EM that were authorized by PA 4 remain valid
after the suspension and repeal of that act.
3
Hereafter, referred to as the singular plaintiff, board of trustees, or simply, the trustees.
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eliminating its obligation to financially contribute to the trust,4 and Count III alleged a breach of
contract claim. Plaintiff sought a declaratory ruling, an injunction, and monetary damages.
On February 13, 2013, the city moved for summary disposition pursuant to MCR
2.116(C)(5), (C)(8), and (C)(10). In its supporting brief the city argued that plaintiff trustees
lacked standing to sue for a certain level of healthcare benefits as it was not responsible for the
level of retirees’ healthcare benefits. Rather, the city argued, the board of trustees was only
responsible for ensuring compliance with the Internal Revenue Code, managing and investing
trust funds, and providing health, optical, dental, and life-insurance benefits to police and fire
employees who retired on or after August 22, 1996, as required by the various CBAs. The city
also argued that Count I was meritless because of our Supreme Court’s holding in Studier v
Michigan Pub Sch Employees Retirement Bd, 472 Mich. 642; 698 NW2d 350 (2005), that
healthcare benefits are not protected by Const 1963, art 9, § 24, and that Count III was meritless
because the emergency manager had the authority under 2011 PA 4 to unilaterally modify
collective bargaining agreements.
On May 22, 2013, the trial court entered its opinion and order granting defendant’s
motion for summary disposition. The trial court first concluded that the trustees had standing:
Pursuant to the language of the Trust Agreement, Plaintiff is responsible
for ensuring the Trust’s compliance with the Internal Revenue Code, as well as
investing, managing, and controlling the Trust’s assets. In addition, Plaintiff has
the “right and duty to enforce . . . the performance of all obligations provided in
th[e] Trust.” As Plaintiff is the entity responsible for the Trust’s assets and
required to enforce each obligation set forth in the Trust, Plaintiff has standing to
bring the instant lawsuit.
The trial court then concluded that Count I was meritless because healthcare benefits are not
protected by Const 1963, art 9, § 24. The trial court also concluded that Count III was meritless
because the emergency manager validly amended the various CBAs pursuant to the authority
granted by 2011 PA 4.
II. STANDARD OF REVIEW
Although the trial court did not identify under which subrule it granted summary
disposition, we review the trial court’s decision under the standard applicable to MCR
2.116(C)(10) “because the trial court’s consideration went beyond the parties’ pleadings.”
Kosmalski v St John’s Lutheran Church, 261 Mich. App. 56, 59; 680 NW2d 50 (2004). We
review de novo a trial court’s decision regarding a motion for summary disposition under MCR
2.116(C)(10), which tests the factual sufficiency of a claim. Corley v Detroit Bd of Ed, 470
Mich. 274, 277-278; 681 NW2d 342 (2004). In deciding the motion, the trial court must view the
substantively admissible evidence submitted up to the time of the motion in a light most
4
On April 29, 2013, the parties stipulated to dismissal of plaintiff’s claims to the extent they
challenged Executive Order 225, which is the subject of Trustees I, supra.
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favorable to the party opposing the motion. Maiden v Rozwood, 461 Mich. 109, 121; 597 NW2d
817 (1999). Summary disposition may be granted if there is no genuine issue of any material
fact, and the moving party is entitled to judgment as a matter of law. West v Gen Motors Corp,
469 Mich. 177, 183; 665 NW2d 468 (2003). “A genuine issue of material fact exists when the
record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon
which reasonable minds might differ.” Id.
III. ANALYSIS
A. STANDING
The city first argues that plaintiff board of trustees lacks standing to maintain the instant
action. In particular, the city notes that the trustees have specific and limited duties under the
trust agreement. The trust agreement limits the duties of the board of trustees to carrying out the
purposes of the trust, maintaining the trust’s tax exempt status under the Internal Revenue Code,
and investing, managing, and controlling the trust’s assets. While the purpose of the trust is to
provide group insurance benefits for police and firefighter retirees, the nature and extent of those
benefits is determined by the pertinent CBAs between the city and the various police and
firefighter unions. The city also argues that nothing in the trust agreement establishes that the
board of trustees has any role in determining the extent of the benefits accorded the retirees, and
the trustees are expressly “bound by the terms of [the] Trust Agreement and any applicable
Collective Bargaining Agreements between the City and the collective bargaining associations . .
. .” Consequently, the city argues, the board of trustees has no more interest in the level of
retiree health insurance benefits than any other citizen, and under the doctrine of standing, the
board of trustees is not a proper party to assert the claims made in this lawsuit.
Initially, we must decide if the city’s standing argument is properly before the Court. An
appellee who has taken no cross appeal may nevertheless argue that a judgment in its favor be
affirmed for reasons that were rejected by the lower court. Middlebrooks v Wayne Co, 446 Mich.
151, 166 n 41; 521 NW2d 774 (1994). But the city did not raise the issue of standing in its
answer to the original complaint or in its answer to the amended complaint. This Court has
viewed a claim that a plaintiff lacks standing as a motion under MCR 2.116(C)(5), i.e., that the
plaintiff lacks the legal capacity to sue. See Glen Lake-Crystal River Watershed Riparians v
Glen Lake Ass’n, 264 Mich. App. 523, 528; 695 NW2d 508 (2004). Further, to preserve a motion
under subrule (C)(5), a party must raise the issue in its “first responsive pleading or in a motion
filed prior to that pleading.” Id., citing MCR 2.116(D)(2). Here, the city did not do so; it raised
the issue in its motion for summary disposition that was filed after it had filed its answer to
plaintiff’s amended complaint. While the Court in Glen Lake found that the defendant in that
case had waived the issue of standing by not timely raising it,5 we conclude that in this case the
issue has been properly preserved for our review.
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The Court also noted that the defendant “affirmatively acquiesced to [the] plaintiffs’ right to
sue by entering into a stipulation agreeing to the entry of a modified lake level order . . . .” Glen
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MCR 2.116(D)(2) provides that a motion for summary disposition based in the “grounds
listed in subrule (C)(5), (6), and (7) must be raised in a party’s responsive pleading, unless the
grounds are stated in a motion filed under this rule prior to the party’s first responsive pleading.”
But the trial court has the discretion to allow such a motion even if it were not timely. “It is
within the trial court’s discretion to allow a motion filed under this subsection to be considered if
the motion is filed after such period.” MCR 2.116(D)(4). Here, the city raised the issue of
standing in its motion for summary disposition; plaintiff responded to the issue, and the trial
court ruled. Thus, under traditional rules of appellate preservation, the issue has been properly
preserved. See Gen Motors Corp v Dep’t of Treas, 290 Mich. App. 355, 386; 803 NW2d 698
(2010) (an issue is preserved for appellate review when it is raised before and decided by the trial
court).
Additionally, the city essentially argues that the board of trustees is not the real party in
interest, MCR 2.201(B), to assert claims of injury flowing from modification of the pertinent
CBAs that determine retiree insurance benefits. Our Supreme Court has held that the defense
that a plaintiff is not the real party in interest “is not the same as the legal-capacity-to-sue
defense.” Leite v Dow Chemical Co, 439 Mich. 920, 478 NW2d 892 (1992). A motion for
summary disposition asserting as its basis the doctrine of standing invokes a prudential doctrine
that “focuses on whether a litigant ‘is a proper party to request adjudication of a particular issue
and not whether the issue itself is justiciable.’ ” Lansing Sch Ed Ass’n v Lansing Bd of Ed, 487
Mich. 349, 355; 792 NW2d 686 (2010) (citation omitted). “A motion based on such a defense
would be within MCR 2.116(C)(8) or MCR 2.116(C)(10), depending on the pleadings or other
circumstances of the particular case.” Leite, 439 Mich. at 920. A motion for summary
disposition based on subrule (C)(8) or (C)(10) “may be raised at any time.” MCR 2.116(D)(4).
Therefore, we conclude that the city timely raised the issues of standing and whether plaintiff is
the real party in interest, so they are properly presented for our review.
The issue of standing presents a question of law that is reviewed de novo on appeal.
Barclae v Zarb, 300 Mich. App. 455, 467; 834 NW2d 100 (2013). Likewise, the related issue of
whether a plaintiff is the real party in interest is also a question of law that we review de novo.
In re Beatrice Rottenberg Living Trust, 300 Mich. App. 339, 354; 833 NW2d 384 (2013).
MCR 2.201(B) provides that “[a]n action must be prosecuted in the name of the real party
in interest . . . .” The real party in interest is a party who is vested with a right of action in a
given claim, although the beneficial interest may be with another. In re Beatrice Rottenberg
Living Trust, 300 Mich. App. at 356; Barclae, 300 Mich. App. at 483. In general, standing requires
a party to have a sufficient interest in the outcome of litigation to ensure vigorous advocacy and
“in an individual or representative capacity some real interest in the cause of action, or a legal or
equitable right, title, or interest in the subject matter of the controversy.” Bowie v Arder, 441
Mich. 23, 42; 490 NW2d 568 (1992) (citation omitted); see also Lansing Sch Ed Ass’n, 487 Mich.
at 355-356. Both the doctrine of standing and the included real-party-in-interest rule are
prudential limitations on a litigant’s ability to raise the legal rights of another. Lansing Sch Ed
Ass’n, 487 Mich. at 355-356; In re Beatrice Rottenberg Living Trust, 300 Mich. App. at 355.
Lake, 264 Mich. App. at 529. The Court, therefore, applied the rule: “A party cannot stipulate a
matter and then argue on appeal that the resultant action was error.” Id. (citation omitted).
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Further, “a litigant has standing whenever there is a legal cause of action.” Lansing Sch Ed
Ass’n, 487 Mich. at 372. But a plaintiff must assert his own legal rights and cannot rest his claim
to relief on the rights or interests of third parties. Barclae, 300 Mich. App. at 483. The real party
in interest is one who is vested with the right of action as to a particular claim, or stated
otherwise, is the party who under the substantive law in question owns the claim asserted. In re
Beatrice Rottenberg Living Trust, 300 Mich. App. at 356 (citations omitted).
First, we agree with the trial court that the board of trustees has standing to enforce the
terms of the trust agreement. The trust agreement specifically accords the trustees “the right and
duty to enforce payment of all contributions provided for in the Collective Bargaining
Agreement and the performance of all obligations provided in this Trust.” Art V, § 4. Also, the
trustees “may compel and enforce payments of contributions, in any manner they deem proper.”
Art III, § 2. And, in general, the board of trustees has a duty to “enforce any claims of the trust .
. . and to marshal and collect outstanding trust property.” In re Beatrice Rottenberg Living Trust,
300 Mich. App. at 356. Thus, under the terms of the trust agreement, the trustees have a right of
action to compel payment of contributions that are specified in the agreement. But this part of
the lawsuit, which involves Executive Order 225, was dismissed. Plaintiff’s remaining claims
attempt to assert the right of third parties, police and firefighter retirees. The retirees’ rights to
assert lifetime, unchanging healthcare benefits must, if they exist, be based in contract. See, e.g.,
M & G Polymers USA, LLC v Tacket, ___ US ___; ___ S Ct ___; ___ L Ed 2d ___ (Docket No.
13-1010, January 26, 2015), 2015 WL 303218; see also Allied Chemical & Alkali Workers of
America v Pittsburgh Plate Glass Co, 404 U.S. 157, 181 n 20; 92 S. Ct. 383; 30 L. Ed. 2d 341
(1971). As the retirees’ rights to healthcare benefits flow from the pertinent CBAs, they are
governed by ordinary contract principles. M & G Polymers, 2015 WL 303218, *6.
“A party asserting a breach of contract must establish by a preponderance of the evidence
that (1) there was a contract (2) which the other party breached (3) thereby resulting in damages
to the party claiming breach.” Miller-Davis Co v Ahrens Const Co, 495 Mich. 161, 178; 848
NW2d 95 (2014) (emphasis added). Here, the board of trustees asserts no damages to itself as
the governing corporate entity of the trust as a result of modifications to the CBAs that affect
retiree benefits. Rather, the board attempts to assert the rights of the retirees. The board of
trustees is neither a party to the CBAs, an assignee of a party to the contracts, or a third-party
beneficiary of the CBAs. Simply stated, the board of trustees is not vested with, nor does the
board own, a cause of action with respect to the city’s alleged breach of contract regarding
retiree benefits provided in the pertinent CBAs. Just as trust beneficiaries may not enforce rights
owned by the trust, the trust through its board of trustees may not enforce contract rights of the
beneficiaries who are determined outside the terms of the trust. See In re Beatrice Rottenberg
Living Trust, 300 Mich. App. at 356-357 (holding that the beneficiary of a trust was not the real
party in interest regarding rights owned by the trust). Consequently, the board of trustees is not
the real party in interest to assert breach of contract claims regarding the CBAs. Id.; MCR
2.201(B). The board of trustees lacked standing because it was not the proper party to assert the
breach of contract claims that the retirees might have regarding modification of the pertinent
CBAs affecting the retirees’ benefits. Lansing Sch Ed Ass’n, 487 Mich. at 355-356.
The board of trustees presented two arguments below regarding standing that we find
without merit. First, the board suggests it has standing under MCR 2.605 because it sought
declaratory relief. See Lansing Sch Ed Ass’n, 487 Mich. at 372 (holding “whenever a litigant
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meets the requirements of MCR 2.605, it is sufficient to establish standing to seek a declaratory
judgment”). MCR 2.605(A)(1) provides: “In a case of actual controversy within its jurisdiction,
a Michigan court of record may declare the rights and other legal relations of an interested party
seeking a declaratory judgment, whether or not other relief is or could be sought or granted.”
The declaratory judgment rule, however, “incorporates the doctrines of standing, ripeness, and
mootness.” UAW v Central Mich Univ Trustees, 295 Mich. App. 486, 495; 815 NW2d 132
(2012). Also, the essential requirement of an action for declaratory relief is an “actual
controversy.” Lansing Sch Ed Ass’n, 487 Mich. at 372 n 20. The Court explained in Shavers v
Attorney General, 402 Mich. 554, 688; 267 NW2d 72 (1978):
The existence of an “actual controversy” is a condition precedent to
invocation of declaratory relief. In general, “actual controversy” exists where a
declaratory judgment or decree is necessary to guide a plaintiff’s future conduct
in order to preserve his legal rights. [Emphasis added; see also Associated
Builders & Contractors v Dir of Consumer & Indus Servs, 472 Mich. 117, 126;
693 NW2d 374 (2005), overruled in part on other grounds Lansing Sch Ed Ass’n,
487 Mich. at 371 n 18.]
Here, there is no “actual controversy” between the board of trustees and the city vis-à-vis
insurance benefits provided to police and firefighter retirees. The modifications to the CBAs
affecting the retiree benefits do not affect the legal rights of the board of trustees or the trust
itself. The board of trustees does not need guidance regarding its future conduct in administering
the trust, and the board’s legal rights are not jeopardized by any changes in the retirees’ benefits
resulting from modification of the pertinent CBAs. Consequently, there is no “actual
controversy” between the board of trustees and the city, i.e., an adverse interest necessitating the
sharpening of the issues. Lansing Sch Ed Ass’n, 487 Mich. at 372 n 20, citing Associated
Builders & Contractors, 472 Mich. at 126, quoting Shavers, 402 Mich. at 589. In short, plaintiff
does not have standing under MCR 2.605 because the modified CBAs do not affect the trustees’
legal rights.
The board of trustees also argued below that it had standing in this case because three of
its members are also beneficiaries of the trust. This argument is without merit.
“It is not disputed that, under Michigan law, an organization has standing to advocate for
the interests of its members if the members themselves have a sufficient interest.” Lansing Sch
Ed Ass’n, 487 Mich. at 373 n 21, citing Trout Unlimited, Muskegon-White River Chapter v White
Cloud, 195 Mich. App. 343, 348; 489 NW2d 188 (1992). In the cited case, the plaintiff was a
“nonprofit corporation dedicated to preserving and improving cold-water fishing resources” that
alleged that a dam was improperly rebuilt after being destroyed by heavy rains and resulting
flooding. Id. at 345-346. The trial court ruled the plaintiff lacked standing. This Court opined
that “[a] nonprofit corporation has standing to advocate interests of its members where the
members themselves have a sufficient stake or have sufficiently adverse and real interests in the
matter being litigated.” Id. 348. This principle does not apply to the instant case because the
board of trustees is not a nonprofit group comprised of members sharing a common interest or
who assert through their group association a common injury. Rather, the board of trustees is a
corporate body charged with the limited and specified duties to administer the trust assets in a
fiduciary manner to provide benefits that are specified in the pertinent CBAs. The board of
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trustees must act as a whole on the majority vote of its members.6 The individual trustees do not
necessarily share the same interests, nor may they as trustees, assert in the name of the board
their own individual personal interests. See In re Beatrice Rottenberg Living Trust, 300 Mich
App at 356-357. Consequently, the board of trustees does not gain standing because one or more
of the individual trustees has a claim of injury in his individual capacity.
For all the foregoing reasons, we conclude that the board of trustees is not the real party
in interest and does not have standing to assert claims regarding modifications of the CBAs
affecting the nature and extent of police and firefighter retiree benefits. Because this Court will
affirm a trial court’s decision if it reaches the correct result, albiet for the wrong reason, Burise v
Pontiac, 282 Mich. App. 646, 652 n 3; 766 NW2d 311 (2009), we affirm the trial court’s grant of
summary disposition to the extent that plaintiff claims that Executive Orders 206 and 207
improperly modified the pertinent CBAs regarding police and firefighter retiree benefits. But
because we agree with the trial court that the board of trustees has standing to enforce the terms
of the trust agreement itself, we briefly address the merits of plaintiff’s claims.
B. CONSTITUTIONAL CLAIM
Plaintiff alleges Executive Orders 206 and 207 violate Const 1963, art 9, § 24, which
reads as follows:
The accrued financial benefits of each pension plan and retirement system
of the state and its political subdivisions shall be a contractual obligation thereof
which shall not be diminished or impaired thereby.
Financial benefits arising on account of service rendered in each fiscal
year shall be funded during that year and such funding shall not be used for
financing unfunded accrued liabilities.
“These two clauses unambiguously prohibit the state and its political subdivisions from
diminishing or impairing ‘accrued financial benefits,’ and require them to fund ‘accrued
financial benefits’ during the fiscal year for which corresponding services are rendered.”
Studier, 472 Mich. at 649. But the Court also held that “health care benefits are not ‘accrued
financial benefits’ and, thus, are not protected by Const 1963, art 9, § 24.” Id. at 670.
Plaintiff trustees do not dispute the holding of Studier. Instead they argue that the instant
case is distinguishable because Article II of the trust reads in relevant part: “The grantor intends
the benefits provided by this Trust to be considered a benefit guaranteed by Article 9, Section 24
of the State of Michigan Constitution.” Therefore, the trustees argue, the plain language of the
trust elevates otherwise unprotected health-care benefits to the protection of Const 1963, art 9, §
24. While not clearly stated, it appears the trustees rely on the first clause of Const 1963, art 9, §
24.
6
“All decisions shall be made by at least three (3) affirmative votes.” Art IV, § 10.
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The trial court correctly dismissed this claim. As explained by the Court in Studier, the
threshold question regarding whether the terms of Const 1963, art 9, § 24 apply is whether
“accrued financial benefits” are at issue. Studier, 472 Mich. at 653-654. “Health care benefits,
however, are not benefits of this sort.” Id. at 654. The parties to a contract cannot elevate its
provisions to the protection of a constitutional provision which plainly does not apply. Id. at
658-659. At best, this claim is one for breach of contract, not a constitutional violation. And, for
the reasons already discussed above, and will be below, plaintiff’s breach of contract claim fails.
C. BREACH OF CONTRACT
Plaintiff’s breach of contract argument has two prongs. First, plaintiff argues that
Executive Orders 206 and 207 breached the trust instrument itself, which states that covered
retirees will be provided health care benefits as stated in the various CBAs between the city and
police and firefighter unions. Second, plaintiff argues that the last CBAs, the termination
agreements, either explicitly provided for retiree health care benefits or incorporated the
provisions of earlier CBAs regarding retiree benefits. Both of these arguments fail.
As plaintiff recognizes, the source of the retirees’ benefits is not the trust agreement itself
but rather the various CBAs that provide for certain benefits. See Pontiac Police & Fire Retiree
Prefunded Group Health & Ins Plan Trustees v City of Pontiac, ___ Mich App ___; ___ NW2d
___ (Docket No. 316418, ___ __, 2015) (Trustees I), Part III (D). And, as we have discussed,
the trust agreement itself is unaffected by Executive Orders 206 and 207; consequently,
modification of the retirees’ benefits could not possibly result in a breach of the trust agreement
itself. After complying with the conditions specified in 2011 PA 4, the emergency manager
could “reject, modify, or terminate” one or more of the terms and conditions of an existing CBA,
which in this case is the source of police and firefighter retiree health care benefits. MCL
141.1519(1)(k). Trustees I, supra. Even assuming that Executive Orders 206 and 207 affected
the trust agreement, we note the new provisions of the orders operated prospectively only,
becoming effective on July 1. 2012. So, there has been no breach of contract because there is no
contention that the city breached the terms of the trust instrument with respect to providing
benefits to the retirees. The allegation is only that collective bargaining agreements have been
amended altering the nature and extent of retiree benefits under the CBAs. As we decided
above, plaintiff lacks standing to assert a breach of contract with respect to the CBAs. Plaintiff’s
contract claims also fail.
We affirm. No taxable costs are awarded to either party, a public question being
involved pursuant to MCR 7.219.
/s/ Jane E. Markey
/s/ Donald S. Owens
/s/ Karen M. Fort Hood
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