County of Ingham v. Mi County Road Commission Self-Insurance Pool, 942 N.W.2d 85

Background

The Michigan County Road Commission Self-Insurance Pool (the Pool) was created by a Declaration of Trust (1984) and county road commissions joined under inter-local agreements; members paid annual premiums and historically received pro rata refunds of surplus funds.
In 2012 statutory amendments allowed county boards to dissolve appointed road commissions and assume their powers; Ingham, Jackson, and Calhoun Counties dissolved their road commissions and the counties succeeded to those entities’ interests.
Ingham and Calhoun signed withdrawal agreements with the Pool effective in 2012; Jackson did not sign a withdrawal agreement. The Pool refunded a pro rata unused premium for a partial year but denied refunds of surplus equity tied to prior-year contributions when membership ended.
The counties sued seeking refunds of surplus premiums attributable to their former road commissions; the trial court granted summary disposition to the Pool. The Court of Appeals held the counties were successors in interest and that Jackson (which did not execute a withdrawal) remained eligible for refunds; the Supreme Court remanded to consider whether the Pool’s governing documents permitted denying refunds.
On remand the Court of Appeals examined the Declaration of Trust, By-Laws, Inter-Local Agreements, a 1990 board-adopted withdrawal policy (July 19, 1990 correspondence), and a separately circulated unsigned Refund Overview, deciding which documents were binding and whether the Pool could lawfully refuse refunds.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are the counties successors in interest to their dissolved road commissions?	Counties: yes, counties succeeded the road commissions and thus the rights to refunds.	Pool: counties are not successors and cannot claim former road commission rights.	Held (law of the case): Counties are successors in interest; Jackson did not withdraw.
Do the Pool’s governing documents bind parties and permit refusal of surplus refunds?	Counties: governing documents must be read to allow successors to receive surplus refunds.	Pool: Declaration, inter-local agreements, and bylaws let Pool treat withdrawing members less favorably and deny refunds.	Held: Declaration, bylaws, inter-local agreements, and the 1990 board withdrawal policy are part of the parties’ agreement; the unsigned/undated Refund Overview is not binding.
Is the Pool’s 1990 withdrawal policy (forfeiture of dividends after withdrawal) enforceable?	Counties: policy is unenforceable as contrary to public policy and statutory purpose (MCL 124.5(6)).	Pool: policy validly adopted and permits forfeiture upon withdrawal.	Held: Policy unenforceable as against public policy (it penalizes lawful dissolution and undermines statutory purposes) and therefore cannot bar refunds.
What remedy applies given the unenforceable withdrawal policy?	Counties: void the forfeiture and allow refunds to successors.	Pool: seek to enforce policy; if invalid severability unclear.	Held: Unenforceable portions severed (not void ab initio); counties, as successors, are entitled to refunds of surplus equity to which the former road commissions would have been entitled.

Key Cases Cited

Co of Ingham v Mich Co Rd Comm Self-Ins Pool, 321 Mich. App. 574 (Court of Appeals 2017) (earlier appellate decision finding counties successors and addressing withdrawal effect)
Co of Ingham v Mich Co Rd Comm Self-Ins Pool, 503 Mich. 917 (Michigan Supreme Court 2018) (remand order directing consideration of governing documents)
Innovation Ventures v Liquid Mfg, 499 Mich. 491 (2016) (contract interpretation: unambiguous written terms control)
Bennett v Bennett, 197 Mich. App. 497 (1992) (law-of-the-case doctrine explained)
Allard v Allard, 318 Mich. App. 583 (2017) (contracts violating statute or public policy are unenforceable)
Epps v 4 Quarters Restoration LLC, 498 Mich. 518 (2015) (discussion of void vs. voidable contract and remedy selection)