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

STATE OF MICHIGAN
COURT OF APPEALS
BOARD OF TRUSTEES OF THE CITY OF FOR PUBLICATION
PONTIAC POLICE AND FIRE RETIREE October 25, 2016
PREFUNDED GROUP HEALTH AND 9:05 a.m.
INSURANCE TRUST,
Plaintiff-Appellant,
v No. 316418
Oakland Circuit Court
CITY OF PONTIAC, LC No. 2012-128625-CZ
Defendant-Appellee.
ON REMAND
Before: MARKEY, P.J., and OWENS and FORD HOOD, JJ.
PER CURIAM.
This case returns to this Court on remand from our Supreme Court to consider whether
the City of Pontiac, acting through its Emergency Manager (EM), may retroactively eliminate its
accrued contract obligation to make its annual contribution to the City of Pontiac Police and Fire
Retiree Prefunded Group Health and Insurance Trust for the fiscal year ending June 30, 2012. In
our prior opinion, we held that the EM’s Executive Order (EO) 225, issued August 1, 2012,
which purported to amend the trust pursuant to § 19(1)(k) of 2011 PA 4, “did not retroactively
eliminate the city’s obligation to contribute to the trust for the fiscal year ending June 30, 2012;
consequently, we reverse[d] and remand[ed] for further proceedings.” Pontiac Police & Fire
Retiree Prefunded Group Health & Ins Trust Bd of Trustees v City of Pontiac, 309 Mich. App.
590, 592; 873 NW2d 121 (2015) (City of Pontiac I), rev’d in part, vacated in part, & remanded
by 499 Mich. 921; 878 NW2d 477 (2016) (City of Pontiac II). After considering the questions
our Supreme Court posed in its remand order, we again conclude that EO 225 may not be applied
retroactively to extinguish defendant’s accrued but unpaid 2011-2012 fiscal year contribution to
the trust. We therefore reverse the trial court’s order granting summary disposition to defendant
with respect to plaintiff’s breach of contract claim and remand for further proceedings.
I. PERTINENT FACTS AND PROCEEDINGS
The amount that defendant was actuarially determined to owe the trust for the fiscal year
ending June 30, 2012, was $3,473,923.28. Id. at 594. As explained in this panel’s prior opinion:
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The trust was established in 1996 as a tax-exempt voluntary employees’
beneficiary association (VEBA), 26 USC 501(c)(9), to hold the contributions of
police and firefighter employees and those of the city pursuant to collective
bargaining agreements (CBAs) between the city and the various unions of the
city’s police officers and firefighters. The trust held and invested these
contributions to provide health, optical, dental, and life-insurance benefits to
police and firefighters who retired on or after August 22, 1996, as required by the
various CBAs. At issue is the efficacy of Executive Order 225 issued on August
1, 2012, pursuant to § 19(1)(k) of 2011 PA 4, MCL 141.1519(1)(k), by the city’s
emergency manager (EM), Louis H. Schimmel, which purported to amend the
trust to remove the city’s annual obligation to contribute to the trust agreement
“as determined by the Trustees through actuarial evaluations.” The trial court
accepted defendant’s argument that the city’s EM properly modified the city’s
obligation to contribute to the trust for the fiscal year ending June 30, 2012, by
modifying the existing CBAs between the city and police and firefighter unions.
The trial court also ruled that plaintiff’s claim under Const 1963, art 9, § 24, was
without merit under Studier v Mich Pub Sch Employees’ Retirement Bd, 472 Mich.
642; 698 NW2d 350 (2005). [City of Pontiac I, 309 Mich. App. at 592-593.]
Although the trust agreement did not directly say when defendant’s required contribution
was due, the parties agreed that the actuarially required contribution for the fiscal year ending
June 30, 2012, was due on or before June 30, 2012. Id. at 597. “On August 1, 2012, the city’s
EM issued Executive Order (EO) 225, which purported to amend the trust pursuant to § 19(1)(k)
of 2011 PA 4, to terminate the city’s annual actuarially required contribution to the trust for the
fiscal year ending June 30, 2012.” Id. In particular, EO 225 stated, in relevant part:
Article III of the Trust Agreement, Section 1, subsections (a) and (b) are
amended to remove Article III obligations of the City to continue to make
contributions to the Trust as determined by the Trustees through actuarial
evaluations.
The Order shall have immediate effect. [EO 225, quoted in City of
Pontiac I, 309 Mich. App. at 597-598.]
Plaintiff filed this action alleging that defendant’s failure to make the actuarially required
contribution to the trust comprised a violation of Const 1963, art 9, § 24, a violation of an
ordinance, and a breach of contract. City of Pontiac I, 309 Mich. App. at 599-600. On March 6,
2013, defendant moved for summary disposition, arguing that there was no violation of Const
1963, art 9, § 24 because our Supreme Court held in Studier that this provision does not apply to
healthcare benefits, that there was no ordinance violation because 2011 PA 4 authorized the EM
to amend ordinances, and that there was no breach of contract because 2011 PA 4 authorized the
EM to modify a CBA. Id. at 600. The trial court granted summary disposition to defendant in
accordance with defendant’s arguments. Id.
On appeal, we reversed on the ground that EO 225 as written had not retroactively
eliminated defendant’s obligation to contribute to the trust for the fiscal year ending June 30,
2012. City of Pontiac I, 309 Mich. App. at 608-610. We initially determined that the suspension
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and repeal by referendum of 2011 PA 4 after the EM’s issuance of EO 225 did not affect the
validity of the EM’s actions. Id. at 602-603. And, we upheld the trial court’s dismissal of
plaintiff’s claim under Const 1963, art 9, § 24, in light of the holding in Studier that healthcare
benefits are not accrued financial benefits protected by that constitutional provision. Id. at 603-
605. We also found without merit plaintiff’s ordinance violation claim because a city ordinance
governing the trust or healthcare benefits for retired police officers and firefighters was not
identified. Id. at 605-606.
With respect to plaintiff’s breach of contract claim, we discussed that defendant’s
contractual obligation to fund the trust arose from the pertinent CBAs, and not the trust
agreement itself. City of Pontiac I, 309 Mich. App. at 607. We concluded, based on the parties’
submissions, that defendant’s actuarially required contribution to the trust was past due on July
1, 2012, and that, without modification of the pertinent CBAs, defendant’s obligation to fund the
trust was breached on that date. Id. at 597, 607. We reasoned that the EM had the authority
under 2011 PA 4 to retroactively amend the CBAs with respect to defendant’s obligation to
contribute to the trust. Id. at 607-608. We noted that
after complying with the conditions specified in 2011 PA 4, the EM could “reject,
modify, or terminate 1 or more terms and conditions of an existing collective
bargaining agreement.” MCL 141.1519(1)(k). Because the parties to a collective
bargaining agreement could apply its modified terms retroactively, we conclude
that the EM also could do so under § 19(1)(k). [City of Pontiac I, 309 Mich. App.
at 607 (citation omitted).]
But, we went on to find that EO 225 did not, in fact, eliminate defendant’s actuarially required
contribution to the trust for the fiscal year ending June 30, 2012. Id. at 608-609. We reasoned
that EO 225 removed defendant’s obligation to continue to make contributions to the trust, and
considering that EO 225 was given immediate effect upon its adoption on August 1, 2012, we
determined that EO 225 applied to defendant’s present or future obligations, not to defendant’s
accrued but unpaid contributions to the trust for the fiscal year ending June 30, 2012. Id. at 609.
We found support for our reading of EO 225 in the written communications between the EM and
the State Treasurer preceding the issuance of EO 225. Id. at 609-610.
Defendant applied for leave to appeal in our Supreme Court, which held oral argument on
the application. On May 18, 2016, our Supreme Court reversed in part and vacated in part this
Court’s opinion and remanded the case to this Court. City of Pontiac II, 499 Mich. 921. Our
Supreme Court’s order states, in relevant part:
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.
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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 [sic], 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[; 852 NW2d 78] (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 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. [City of
Pontiac II, 499 Mich. at 921.]
On remand, this Court allowed the parties to file supplemental briefs. Bd of Trustees of
the City of Pontiac v City of Pontiac, unpublished order of the Court of Appeals, entered June 24,
2016 (Docket No. 316418). We now consider the three questions presented by our Supreme
Court in its remand order.
II. ANALYSIS
(1) DOES THE RETROACTIVITY ANALYSIS OF LAFONTAINE APPLY TO EO 225?
In LaFontaine, our Supreme Court articulated the following principles to consider when
deciding whether legislation may permissibly be applied retroactively:
Retroactive application of legislation presents problems of unfairness
because it can deprive citizens of legitimate expectations and upset settled
transactions. We have therefore required that the Legislature make its intentions
clear when it seeks to pass a law with retroactive effect. In determining whether a
law has retroactive effect, we keep four principles in mind. First, we consider
whether there is specific language providing for retroactive application. Second,
in some situations, a statute is not regarded as operating retroactively merely
because it relates to an antecedent event. Third, in determining retroactivity, we
must keep in mind that retroactive laws impair vested rights acquired under
existing laws or create new obligations or duties with respect to transactions or
considerations already past. Finally, a remedial or procedural act not affecting
vested rights may be given retroactive effect where the injury or claim is
antecedent to the enactment of the statute. [LaFontaine, 496 Mich. at 38-39
(quotation marks, ellipsis, and citations omitted); see also In re Certified
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Questions, 416 Mich. 558, 570-571; 331 NW2d 456 (1982) (stating the same four
principles).]
We have not located any case law stating whether the principles set forth in Certified
Questions and LaFontaine for determining whether a statute may be applied retroactively should
also be used in considering whether an emergency manager’s executive order may be give
retroactive effect. Nevertheless, we conclude that it is appropriate to apply the Certified
Questions and LaFontaine principles concerning when legislation may permissibly be given
retroactive effect to an emergency manager’s executive order. The determination of whether
legislation applies retroactively is primarily a question of statutory interpretation. See
LaFontaine, 496 Mich. at 34 (“questions of statutory interpretation [are reviewed] de novo,
including questions regarding retroactivity of amendments”); Frank W Lynch & Co v Flex
Technologies, Inc, 463 Mich. 578, 583; 624 NW2d 180 (2001) (“In determining whether a statute
should be applied retroactively or prospectively only, the primary and overriding rule is that
legislative intent governs. All other rules of construction and operation are subservient to this
principle.”) (quotation marks and citation omitted). Executive orders are generally subject to the
same rules of interpretation as statutes. See Soap & Detergent Ass’n v Natural Resources
Comm, 415 Mich. 728, 756-757; 330 NW2d 346 (1982); Aguirre v Dep’t of Corrections, 307
Mich. App. 315, 320-321; 859 NW2d 267 (2014). Because the determination of retroactivity is
primarily a matter of interpretation and because executive orders are interpreted similarly to
statutes, we believe the principles enunciated in LaFontaine used to determine whether a statute
may permissibly be given retroactive effect should also be used in determining whether an
executive order applies retroactively. We therefore answer our Supreme Court’s first question in
the affirmative. The retroactivity analysis set forth in LaFontaine applies to EO 225.1
(2) UNDER LAFONTAINE, MAY DEFENDANT BY 225 EXTINGUISH ITS ACCRUED BUT
UNPAID 2011-2012 FISCAL YEAR TRUST CONTRIBUTION?
Having determined that the LaFontaine analysis is applicable to EO 225, we now analyze
whether the extinguishment of defendant’s accrued but unpaid 2011-2012 fiscal year
contribution to the trust is permissible under LaFontaine.2 The first principle to consider is
“whether there is specific language providing for retroactive application.” LaFontaine, 496
1
This conclusion is supported by the fact that the United States Supreme Court has stated “that
congressional enactments and administrative rules will not be construed to have retroactive
effect unless their language requires this result.” Landgraf v USI Film Prod, 511 U.S. 244, 272;
114 S. Ct. 1483; 128 L. Ed. 2d 229 (1994) (emphasis added; quotation marks and citation omitted).
2
The issue here is not whether the EM had authority under 2011 PA 4 to modify collective
bargaining agreements; there is no question that the EM had such authority. See City of Pontiac
I, 309 Mich. App. at 607 (“[u]nder 2011 PA 4, the EM could modify collective bargaining
agreements, and, hence, could modify the city’s obligation to contribute to the trust”). Rather,
the question presented is whether the particular executive order issued in this case, EO 225,
comprised a permissible retroactive modification of defendant’s contractual obligation to
contribute to the trust under the retroactivity analysis set forth in LaFontaine.
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Mich at 38. In the statutory context, legislative silence regarding retroactivity undermines any
argument that a statutory provision was intended to apply retroactively. Id. at 39-40. “Statutes
are presumed to apply prospectively unless the Legislature clearly manifests the intent for
retroactive application.” Johnson v Pastoriza, 491 Mich. 417, 429; 818 NW2d 279 (2012).3
“The Legislature’s expression of an intent to have a statute apply retroactively must be clear,
direct, and unequivocal as appears from the context of the statute itself.” Davis v State
Employees’ Retirement Bd, 272 Mich. App. 151, 155-156; 725 NW2d 56 (2006).
In its order remanding the case to this Court, our Supreme Court stated that “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.” City of Pontiac II, 499 Mich. at
921. But because EO 225 “does not differentiate between already accrued, but unpaid
obligations and future obligations, [it] thus by its terms applies to both.” Id. Thus, our Supreme
Court held that this Court “erred by concluding that the emergency manager did not intend to
extinguish the defendant’s 2011-2012 fiscal year contribution.” Id. The law of the case doctrine
binds this Court on remand to follow a decision of our Supreme Court regarding a particular
issue in the same case. People v Herrera, 204 Mich. App. 333, 340; 514 NW2d 543 (1994). This
Court is therefore bound by our Supreme Court’s determination that EO 225 by its terms applies
to both accrued but unpaid obligations and future obligations and that the EM intended to
extinguish defendant’s 2011-2012 fiscal year contribution.
But our Supreme Court did not determine whether EO 225 satisfies the first principle set
forth in LaFontaine, i.e., “whether there is specific language providing for retroactive
application.” LaFontaine, 496 Mich. at 38. Indeed, the Supreme Court’s decision to remand the
case to this Court to conduct an analysis under LaFontaine strongly suggests that the Supreme
Court did not mean to resolve that issue. The fact that, as our Supreme Court determined, EO
225 “does not differentiate between already accrued, but unpaid obligations and future
obligations, and thus by its terms applies to both[,]” City of Pontiac II, 499 Mich. at 921, does not
answer the question whether EO 225 expresses with the requisite degree of clarity the intent that
EO 225 would have a retroactive effect. See Davis, 272 Mich. App. at 155-156 (requiring a clear,
direct, and unequivocal expression of intent to have a statute apply retroactively); id. at 167
(explaining that the United States Supreme Court has “emphasized that to give legislation
retroactive effect, Congress is required to ‘so indicate in the language of the statute in a manner
that is so clear and positive as to leave no room to doubt that such was the intention of the
legislature’ ”), quoting Landgraf v USI Film Prod, 511 U.S. 244, 272; 114 S. Ct. 1483; 128 L. Ed. 2d
3
This presumption against retroactive legislation is premised on enduring legal principles
“ ‘deeply rooted in our jurisprudence, and embodies a legal doctrine centuries older than our
Republic. Elementary considerations of fairness dictate that individuals should have an
opportunity to know what the law is and to conform their conduct accordingly; settled
expectations should not be lightly disrupted.’ ” Davis v State Employees’ Retirement Bd, 272
Mich. App. 151, 166; 725 NW2d 56 (2006), quoting Landgraf, 511 U.S. at 265.
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229 (1994).4 See also Frank W Lynch & Co, 463 Mich. at 587, (expressing agreement “with the
Landgraf Court that ‘a requirement that [the Legislature] make its intention clear helps ensure
that the Legislature itself has determined that the benefits of retroactivity outweigh the potential
for disruption or unfairness.’ ”), quoting Landgraf, 511 U.S. at 268.5
Our Supreme Court reasoned that EO 225 by its terms applies to both future obligations
and accrued but unpaid obligations, given that EO 225 does not differentiate between those
obligations. Although such an inference arises from the lack of differentiation between the two
types of obligations, EO 225 does not clearly, directly, and unequivocally state that it is intended
to apply retroactively to unpaid but accrued obligations. We conclude that the text of the order
does not acknowledge with the required clarity the existence of accrued but unpaid obligations or
state directly that such obligations were being retroactively removed. See LaFontaine, 496 Mich.
at 40 (noting that the Legislature had previously used specific retroactivity language when
amending the relevant statute and that the Legislature’s silence regarding retroactivity in the
amendment at issue undermined any claim that the amendment was intended to apply
retroactively); Frank W Lynch & Co, 463 Mich. at 584 (noting the absence of express language
regarding retroactivity and the fact that the Legislature knows how to clearly state its intention
that a statute apply retroactively). Also, EO 225 was given immediate effect, but this does not
clearly express an intention that it is to apply retroactively. See LaFontaine, 496 Mich. at 40
(noting the fact that “the Legislature provided for the law to take immediate effect upon its filing
date . . . only confirms its textual prospectivity”); Johnson, 491 Mich. at 430 (noting that giving
legislation “immediate effect” does not “at all suggest” that the legislation applies retroactively).
We therefore conclude that the first principle stated in LaFontaine, “whether there is specific
language providing for retroactive application,” indicates that EO 225 should apply prospectively
only because it lacks “clear, direct, and unequivocal” language providing for its retroactive
application. Davis, 272 Mich. App. at 155-156.
The second principle under LaFontaine is that “in some situations, a statute is not
regarded as operating retroactively merely because it relates to an antecedent event.”
LaFontaine, 496 Mich. at 38-39. This principle “relate[s] to measuring the amount of entitlement
4
This Court in Davis noted that due process interests of fair notice and repose should be
considered when deciding whether a statute should be applied retroactively. Davis, 272 Mich
App at 158 n 3, citing Landgraf, 511 U.S. at 266. See also LaFontaine, 496 Mich. at 38 (noting
that problems of unfairness arise from the retroactive application of legislation and citing
Downriver Plaza Group v Southgate, 444 Mich. 656, 666; 513 NW2d 807 (1994), which
addressed a due process issue concerning the retroactivity of legislation that might “ ‘deprive
citizens of legitimate expectations and upset settled transactions.’ ”) (citation omitted).
5
Although these cases address the obligation of a legislative body to express with sufficient
clarity the intent to apply a provision retroactively, we have already concluded that the same
requirement should apply equally to the author of an executive order given that executive orders
are interpreted like statutes. See Soap & Detergent Ass’n, 415 Mich. at 756-757; Aguirre, 307
Mich. App. at 320-321. Also, applying executive orders retroactively can present problems of
unfairness similar to applying legislation retroactively. See LaFontaine, 496 Mich. at 38.
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provided by a subsequent statute in part by services rendered pursuant to a prior statute.” Id. at
38 n 25, quoting Certified Questions, 416 Mich. at 571. We believe this principle is inapplicable
under the facts and circumstances of this case.
The third principle identified in LaFontaine is that “in determining retroactivity, we must
keep in mind that retroactive laws impair vested rights acquired under existing laws or create
new obligations or duties with respect to transactions or considerations already past.”
LaFontaine, 496 Mich. at 39, citing Certified Questions, 416 Mich. at 571. “A statute may not be
applied retroactively if it abrogates or impairs vested rights, creates new obligations, or attaches
new disabilities concerning transactions or considerations occurring in the past.” Davis, 272
Mich. App. at 158. When all the facts become operative and are known, a cause of action accrues
and it becomes a vested right. Certified Questions, 416 Mich. at 573; see also Doe v Dep’t of
Corrections (On Remand), 249 Mich. App. 49, 61-62; 641 NW2d 269 (2001) (“A cause of action
becomes a vested right when it accrues and all the facts become operative and known.”). “In
general, a cause of action for breach of contract accrues when the breach occurs, i.e., when the
promisor fails to perform under the contract.” Tenneco Inc v Amerisure Mut Ins Co, 281 Mich
App 429, 458; 761 NW2d 846 (2008) (quotation marks and citation omitted).
In this case, “[t]here is no dispute that Article III, § 1 of the trust obligates defendant to
pay annual contributions to the trust that are determined to be ‘actuarially necessary’ to fund the
future healthcare benefits of the pertinent retirees as required by the applicable [CBAs].” City of
Pontiac I, 309 Mich. App. at 606. Further, the parties agree that defendant’s actuarially required
contribution to the trust for the fiscal year of 2011-2012 was due on or before June 30, 2012. Id.
Defendant had not paid that obligation when EO 225 went into effect on August 1, 2012. City of
Pontiac II, 499 Mich. at 921. Hence, as of July 1, 2012, defendant was in breach of its
contractual obligation to make its annual contribution to the trust for the fiscal year of 2011-
2012. Plaintiff’s cause of action for breach of contract therefore accrued, and all of the facts
became operative and known, on July 1, 2012, when defendant failed to perform under the
contract. Tenneco Inc, 281 Mich. App. at 458. This accrued cause of action comprised a vested
right as of that date. Doe, 249 Mich. App. at 61-62. Retroactive application of EO 225 would
impair or abolish this vested right by eliminating defendant’s contractual obligation that forms
the basis for plaintiff’s breach of contract claim. By impairing or abolishing an existing cause of
action, EO 225 falls within the general proscription on retroactive provisions identified in the
third LaFontaine principle. See Certified Questions, 416 Mich. at 573; Doe, 249 Mich. App. at 62.
The fourth LaFontaine principle is that “a remedial or procedural act not affecting vested
rights may be given retroactive effect where the injury or claim is antecedent to the enactment of
the statute.” LaFontaine, 496 Mich. at 39, citing Certified Questions, 416 Mich. at 571. As
discussed, retroactive application of EO 225 would impair or abolish plaintiff’s accrued cause of
action for breach of contract. Hence, even if EO 225 could be deemed remedial or procedural,
the fourth LaFontaine principle does not support retroactive application of EO 225 given that a
vested right would be affected. Our “Supreme Court has held that a statute significantly
affecting a party’s substantive rights should not be applied retroactively merely because it can
also be characterized in a sense as ‘remedial.’ ” Doe, 249 Mich. App. at 62, citing Frank W Lynch
& Co, 463 Mich. at 585. In the context of retroactivity analysis under LaFontaine and Certified
Questions, characterization of a statute as “remedial” “should only be employed to describe
legislation that does not affect substantive rights.” Frank W Lynch & Co, 463 Mich. at 585. In
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this case, because EO 225 affects substantive rights, it cannot operate retroactively under the
fourth LaFontaine principle. See Doe, 249 Mich. App. at 62-63.
Accordingly, we conclude that the retroactive application of EO 225 to extinguish
defendant’s accrued but unpaid contribution to the trust for the 2011-2012 fiscal year is
impermissible under LaFontaine. EO 225 does not contain “clear, direct, and unequivocal”
language providing for its retroactive application, Davis, 272 Mich. App. at 155-156, and its
retroactive application would impair or abolish plaintiff’s accrued cause of action for breach of
contract, a vested right. Doe, 249 Mich. App. at 61-62. The trial court therefore erred in granting
summary disposition in favor of defendant with respect to plaintiff’s breach of contract claim.
(3) IF LAFONTAINE DOES NOT APPLY, WHAT IS THE PROPER METHOD TO
DETERMINE WHETHER EO 225 MAY BE APPLIED RETROACTIVELY?
Our Supreme Court’s remand order further directed this Court to consider whether, “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.” City of
Pontiac II, 499 Mich. at 921. As the Court’s language reflects, it is only necessary for this Court
to consider an alternative analytical framework if the LaFontaine analysis does not apply.
Having concluded that LaFontaine does apply, it is unnecessary to address what method for
assessing the permissibility of retroactive effect would otherwise apply to this situation.
Finally, we note that plaintiff’s supplemental brief on remand raises additional issues that
are beyond the scope of our Supreme Court’s remand order. “[W]hen an appellate court gives
clear instructions in its remand order, it is improper for a lower court to exceed the scope of the
order.” K & K Constr, Inc v Dep’t of Environmental Quality, 267 Mich. App. 523, 544; 705
NW2d 365 (2005). Accordingly, we decline to address plaintiff’s arguments concerning
additional issues.
In summation, we hold that the retroactivity analysis in LaFontaine applies to EO 225
and that the purported extinguishment of defendant’s accrued but unpaid 2011-2012 fiscal year
contribution is impermissible under LaFontaine. We therefore reverse the trial court’s order
granting summary disposition to defendant with respect to plaintiff’s breach of contract claim
and remand for further proceedings. We do not retain jurisdiction. No taxable costs are awarded
to either party because a public question is involved. MCR 7.219.
/s/ Jane E. Markey
/s/ Donald S. Owens
/s/ Karen M. Fort Hood
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