Richard MacEy v. Archdiocese of Detroit Priests' Pension Plan Inc ( 2015 )

STATE OF MICHIGAN
COURT OF APPEALS
RICHARD MACEY, GERARD BECHARD, and UNPUBLISHED
CHARLES MORRIS, March 17, 2015
Plaintiffs-Appellants,
v No. 318617
Wayne Circuit Court
ARCHDIOCESE OF DETROIT PRIESTS’ LC No. 11-006623-CZ
PENSION PLAN, INC, PATRICK CASEY,
CLAY CPREK, JOSEPH FROMM, ROBERT J
MCCLORY, LAWRENCE JACKSON, RONALD
JOZWIAK, ROBERT MONTICELLO, DANIEL
OLIVER, CATHERINE O’MALLEY, FRANCIS
REISS, CLIFFORD RUSKOWSKI, THOMAS J
STUART, and ALLEN H VIGNERON,
Defendants-Appellees.
Before: BOONSTRA, P.J., and SAWYER and O’CONNELL, JJ.
PER CURIAM.
In this action seeking an equitable accounting, plaintiffs appeal by right an order of the
trial court granting defendants’ motion for summary disposition and denying plaintiffs’ motions
for summary disposition. We affirm.
I. PERTINENT FACTS AND PROCEDURAL HISTORY
In 1984, the Archdiocese of Detroit (“AOD”) decided to provide its priests with pension
benefits upon their retirement. In 1994, defendant Archdiocese of Detroit Priests’ Pension Plan,
Inc. was incorporated. Its purpose is to “to receive contributions, and to invest and accumulate
funds for the purpose of providing pensions to diocesan priests of the Archdiocese of Detroit.”
The priests’ pension plan (the “Plan”), is currently governed by a document (the “Pension
Document”) last amended in 2012. Under the terms of the Pension Document, the
administration and management of the Plan is vested in a pension board (the “Board”)1. The
1
The individual defendants are members of the Board.
-1-
Board’s decisions are final, with the exception of the amount of benefits provided, which is
subject to approval of the Archbishop. The Plan is funded by annual assessments paid by
parishes (based on the number of priests employed) and returns on the Plan’s investments.
Currently, retired priests receive a defined monthly pension benefit, as well as health
insurance, automobile insurance, and an allowance for professional expenses. Plaintiffs, priests
of various parishes within the AOD who have yet to retire, allege that in 2009 they began to fear
that their future pension benefits were at risk, because the AOD announced that the Plan was
“critically underfunded.” Plaintiffs, through their attorneys, sent a letter to the AOD demanding
detailed financial records regarding the Plan’s assets. After the AOD refused to supply those
records, plaintiffs filed this action. Alleging that the Plan was mismanaged and underfunded,
plaintiffs sought equitable relief from the trial court in the form of an accounting. Through
discovery, defendants provided plaintiffs with over six years of annual financial reports prepared
by Plante Moran and Gabriel Roeder Smith & Company. These reports detailed the Plan’s net
assets and expected future liabilities to both retired and active priests. The reports also
calculated the amounts required to fund future benefits.
Despite being provided with this information, plaintiffs, in a series of motions for
summary disposition, argued that an accounting was necessary to discover the cause of what they
believed was a history of underfunding the Plan. They requested that the trial court order that an
accounting be completed by court-appointed forensic accountants and actuaries, at the expense
of the AOD. Defendants responded to the motions and filed their own motion for summary
disposition. The trial court granted defendants’ motion for summary disposition and denied
plaintiffs’ motions, finding that the Plan was not underfunded and that plaintiffs had, in essence,
been provided an accounting through discovery. Plaintiffs now appeal.
II. EQUITABLE ACCOUNTING
Plaintiffs first argue that they are entitled to an equitable accounting, and accordingly,
that the trial court erred by granting defendants’ motion for summary disposition. We disagree.
We review de novo a trial court’s decision on a motion for summary disposition. Maiden v
Rozwood, 461 Mich. 109, 118; 597 NW2d 817 (1999). “We hear and consider equity cases de
novo on the record on appeal.” Tkachik v Mandeville, 487 Mich. 38, 44-45; 790 NW2d 260
(2010). “The granting of equitable relief is ordinarily a matter of grace, and whether a court of
equity will exercise its jurisdiction, and the propriety of affording equitable relief, rests in the
sound discretion of the court, to be exercised according to the circumstances and exigencies of
each particular case.” Id. at 45 (brackets, quotation marks, and citation omitted).
An accounting is an equitable remedy under the common law. Basinger v Provident Life
& Accident Ins Co, 67 Mich. App. 1, 6; 239 NW2d 735 (1976). The purpose of ordering an
accounting is to determine the amount due to a party. Id. In cases filed at law, such a
determination generally is left to the jury. Id. But the equitable remedy of an accounting
developed in courts of equity because it was “evident that many cases arise in which the
determination of what is justly due to a plaintiff necessarily involves long and difficult
inquiries—for instance, it may be necessary to review a series of transactions extending over
many years. For such an investigation a jury is clearly incompetent.” Id. at 6-7 (quotation marks
and citation omitted). “Thus, in situations where an aggrieved party was unsure of the amount he
-2-
was entitled to recover, he often sought the concurrent jurisdiction of a chancery court by
bringing a bill of accounting alleging equitable cognizance on the basis, among other things, that
the accounts involved were greatly complicated.” Id. at 7.
While plaintiffs describe this action as one seeking an equitable accounting, in actuality it
is not. There is no dispute regarding what amount is owed to plaintiffs, which at this point they
acknowledge is nothing. Plaintiffs have not retired, and accordingly, have no right to receipt of
pension or other retirement benefits of any sort at this time. Further, assuming that plaintiffs do
retire, the amounts to which they will become entitled will, at the appropriate time(s), be
determined by the Board and approved by the Archbishop in accordance with the Pension
Document and thus presumably will not require difficult or complex calculation.
It thus appears that plaintiffs do not seek to discover an amount to which they believe
they are currently entitled. Rather, they seem to believe that an accounting will help discover
why the Plan is allegedly underfunded. An action for an accounting is not designed for such a
purpose, and in fact does no such thing; it is simply a remedy aimed in appropriate circumstances
at discovering the amount owed to a claimant or claimants. Basinger, 67 Mich. App. at 6-7.
Further, “discovery is not itself a ground for equitable interference.” Austin v Socony Vacuum
Oil Co, 291 Mich. 513, 520; 289 N.W. 235 (1939).
Moreover, as the trial court recognized, if there was any question regarding the financial
state of the Plan or how its assets are invested, these questions have been answered through
discovery. “An accounting is unnecessary where discovery is sufficient to determine the
amounts at issue.” Boyd v Nelson Credit Centers, Inc, 132 Mich. App. 774, 779; 348 NW2d 25
(1984). Defendants have provided plaintiffs with detailed financial reports for the years 2007
through 2013, prepared by two independent professional accounting firms, which provide
information regarding the assets, liabilities, and investments of the Fund. An accounting is
unnecessary where there are “no items of which the complainant is not fully informed . . . .”
Laubengayer v Rohde, 167 Mich. 605, 611; 133 N.W. 535 (1911).
But despite being provided with these reports, plaintiffs maintain that they need a
“forensic accounting,” completed under judicial supervision, to protect their future retirement
benefits. Thus, it appears that what plaintiffs seek is not an equitable accounting, but rather a
judicially-imposed investigation into the reasons behind whatever management decisions have
been made with regard to the Plan’s assets. Moreover, plaintiffs’ desires go even farther, as they
state in their appellate brief that they believe an accounting is only “an ideal first step to
understanding and solving such chronic underfunding.” (Emphasis added). Further, when
discussing a different issue raised in their appellate brief, plaintiffs request the appointment of a
“[f]orensic [a]ccountant and [i]ndependent [a]ctuary . . . to test the Pension Plan for defects and
to remedy its indisputably underfunded nature . . . .” (Emphasis added). These statements
indicate that plaintiffs actually seek not an accounting, but judicial investigation and oversight of
the financial management of the Plan through court-appointed accountants and actuaries.
Plaintiffs provide no authority, and we are unaware of any, that would allow for such an
-3-
extraordinary remedy.2 Further, it is clear from the Pension Document that the authority to
manage the Plan’s finances is vested in the Board. According to the Pension Document, the
Board’s decisions in such matters are “final, binding and conclusive upon each Participant,
Retired Participant, former Participant and every other person or party interested and concerned.”
Plaintiffs simply have no right, whether at law or in equity, to control the financial management
of the Plan.
Further, even if plaintiffs were only seeking an accounting, they cannot establish a right
to that remedy. “ ‘To sustain a bill for an accounting there must be mutual demands, a series of
transactions on one side, and payments on the other. Where all the items are on one side, there
can be no accounting.’ ” Boyd, 132 Mich. App. at 779, quoting Laubengayer, 167 Mich. at 611.
There are no mutual demands or transactions between the parties here, at least as it relates to the
Plan’s assets, that would require an accounting to untangle. Rather, plaintiffs’ action sought an
equitable accounting to discover information regarding the Plan’s management and assets.
Again, “discovery is not itself a ground for equitable interference.” Austin, 291 Mich. at 520.
The authorities cited by plaintiffs do not compel a different result. Plaintiffs first assert
that the Plan is severely underfunded, causing them to fear future nonpayment. Relying on cases
holding that an accounting is proper to untangle complicated financial transactions, plaintiffs
argue that their fears warrant an accounting. In Blodgett v Foster, 114 Mich. 688; 72 N.W. 1000
(1897), the first case cited by plaintiffs, an accounting was found appropriate because the parties’
underlying contract dispute was based on a series of complicated transactions between the parties
spanning many years. Id. at 692-696. The second case cited by plaintiffs is Second Mich Co-Op
Housing Ass’n v First Mich Co-Op Housing Ass’n, 358 Mich. 252; 99 NW2d 665 (1959). In that
case, a dispute arose over a large sum of money allegedly commingled between the two
corporations that were parties to the action. Id. at 253-255. An accounting was deemed proper
there to untangle the “complicated dealings between these 2 corporations . . . .” Id. at 256. The
types of complicated dealings that warranted an accounting in plaintiffs’ cited authorities are
those that occur between two parties to an action, and which result in an actual dispute over who
is entitled to funds. See Second Housing Co-Op Housing Ass’n, 358 Mich. at 252-256; Blodgett,
114 Mich. at 692-696. There are no such complicated transactions between the parties here, nor
is there any present dispute regarding money owed to one party by the other. Accordingly, these
2
Relying on a statement made by Justice Boyle in Musselman v Governor (On Rehearing), 450
Mich. 574, 585; 545 NW2d 346 (1996) (Opinion of BOYLE, J.), plaintiffs argue that this Court
has the authority to supervise the Plan “to secure gradual payment of such unfunded liabilities.”
Plaintiffs ignore at least two key facts about Justice Boyle’s statement: (1) it did not garner the
support of a majority of the Court, and accordingly, lacks precedential value, Spectrum Health
Hosp v Farm Bureau Mut Ins Co of Mich, 492 Mich. 503, 535; 821 NW2d 117 (2012); and (2)
even apart from its non-binding nature, Justice Boyle’s statement was specifically limited to “the
issue of prefunding requirements for the Michigan Public School Employees Retirement
System[,]” which the Court had previously “found a constitutional obligation to prefund . . . [,]”
Musselman, 450 Mich. at 563 (Opinion of BOYLE, J.).
-4-
cases do not support a determination that the trial court erred in granting summary disposition to
defendants in the instant case.
Plaintiffs next argue that their allegations of mismanagement of the Plan’s assets warrant
an accounting. Even assuming that the Plan has been mismanaged, the cases cited by plaintiffs
offer no support for ordering an accounting. The first case they cite, Lewis v Poel, 376 Mich.
167, 169-170; 136 NW2d 7 (1965), held only that a claim, one element of which sought an
accounting, was not barred by the doctrine of laches. The Court expressly declined to decide
whether a properly supported “motion for summary judgment should be granted as against this
bill.” Id. at 169. While the remaining cases cited by plaintiffs involved what could be generally
characterized as mismanagement, all are distinguishable in that they involved a present dispute
over entitlement to the property that was allegedly mismanaged. See L’Hommedieu v Smith, 351
Mich. 223; 88 NW2d 510 (1958) (a complaint which alleged that the defendant, a city treasurer,
had impermissibly withheld funds from paychecks issued to a number of police and fire
department members alleged facts sufficient to warrant an accounting); Cass Co v Shattuck, 288
Mich. 555; 285 N.W. 454 (1939) (an accounting was proper where the defendant, a sheriff, failed
to pay various fees and monies to the county treasurer which were collected by the sheriff on the
county’s behalf); Grigg v Hanna, 283 Mich. 443; 278 N.W. 125 (1938) (ordering an accounting in
a dispute over trust funds fraudulently appropriated by a party); Murray v Keeley Institute of
West Mich, 190 Mich. 295; 157 N.W. 87 (1916) (affirming a trial court’s judgment after an
accounting to discover the value of claims arising out of the plaintiff’s ownership interest in
various companies); Bondy v Davis, 40 Mich. App. 153; 198 NW2d 418 (1972) (an accounting
was the proper remedy to settle the partnership interests of the parties where the plaintiff alleged
the defendant had appropriated partnership funds for his own use). Again, plaintiffs have no
present right to any of the Plan’s assets, and accordingly, have presented no proper basis for a
court to order an accounting.
Plaintiffs additionally argue that an accounting is appropriate because the Plan would be
deemed “critically underfunded” under the Employee Retirement Income Security Act
(“ERISA”), 29 USC 1001 et seq., which would then trigger imposition of federal supervision and
a rehabilitation plan. However, plaintiffs also repeatedly acknowledge that ERISA has no
application here because the Plan is exempt from ERISA’s mandates. In that regard, plaintiffs
are correct; ERISA excludes from its coverage plans established and maintained by tax-exempt
churches or associations of churches, unless the church or association makes an election to be so
covered under 26 USC 410(d). 29 USC 1003(b)(2); 29 USC 1002(33); see also Scheuneman v
Gen Motors Corp, 243 Mich. App. 210, 214; 622 NW2d 525 (2000). Here, neither the AOD nor
the Board made any such election. Because ERISA admittedly does not apply, plaintiffs’
ERISA-based argument in no way demonstrates that an accounting is required in this instance.
III. MOTION TO COMPEL PRODUCTION OF DOCUMENTS
Plaintiffs next argue that the trial court erred when it refused to issue an order compelling
defendants to comply with several of plaintiffs’ requests for production of documents. We
disagree. We review for an abuse of discretion a trial court’s order on a motion to compel
discovery. Cabrera v Ekema, 265 Mich. App. 402, 406; 695 NW2d 78 (2005).
-5-
The trial court principally denied plaintiffs’ motion to compel production of documents
because discovery was closed at the time plaintiffs requested these documents. On appeal,
plaintiffs do not dispute the basis for the trial court’s ruling. This Court therefore need not even
consider granting the relief plaintiffs seek. Derderian v Genesys Health Care Sys, 263 Mich
App 364, 381; 689 NW2d 145 (2004). Further, a trial court does not abuse its discretion by
refusing to compel discovery after discovery has closed. See Chastain v Gen Motors Corp, 254
Mich. App. 576, 593-594; 657 NW2d 804 (2002). Plaintiffs’ argument is without merit.
Further, even apart from the fact that discovery was closed, we find no error in the trial
court’s denial of plaintiffs’ discovery motion. Plaintiffs assert that the trial court erred in
denying the requests, which were for a variety of documents reflecting the financial state and
management decisions of the Plan, because those documents would be relevant to the instant
action. It is true that, as a general matter, “[p]arties are permitted to obtain discovery regarding
any matter, not privileged, that is relevant to the subject matter of the lawsuit, whether it relates
to the claim or defense of the party seeking discovery or to the claim or defense of another
party.” Cabrera, 265 Mich. App. at 407. “However, a trial court should also protect the interests
of the party opposing discovery so as not to subject that party to excessive, abusive, or irrelevant
discovery requests.” Id. As discussed above, plaintiffs were in fact provided with financial
reports, reports that detailed the assets of the Plan and how those assets were invested; further,
plaintiffs are not entitled to the relief they seek. Accordingly, plaintiffs’ discovery requests were
irrelevant or cumulative, and it was not an abuse of discretion for the trial court to deny those
requests. Cabrera, 265 Mich. App. at 407.
Affirmed.3
/s/ Mark T. Boonstra
/s/ David H. Sawyer
/s/ Peter D. O’Connell
3
Plaintiffs also argue that their requested remedy does not run afoul of the First Amendment’s
Establishment Clause. However, having determined that plaintiffs are not entitled to the remedy
they seek, it is unnecessary to determine whether ordering such a remedy would violate the First
Amendment. “[T]here exists a general presumption by this Court that we will not reach
constitutional issues that are not necessary to resolve a case.” Booth Newspapers, Inc v Univ of
Mich Bd of Regents, 444 Mich. 211, 235; 507 NW2d 422 (1993). Accordingly, we decline to
address this issue. In light of our resolution of this case, we also need not address plaintiffs’
anticipatory arguments that their claims are not barred by lack of standing or the running of the
statute of limitations, which in any event were not decided by the trial court in the first instance.
Gen Motors Corp v Dep’t of Treasury, 290 Mich. App. 355, 387; 803 NW2d 698 (2010).
-6-