Pontiac Police & Fire Retiree Prefunded Group Health & Insurance Trust Board of Trustees v. City of Pontiac No 2
309 Mich. App. 611
| Mich. Ct. App. | 2015Background
- The City funded a retiree health-insurance trust for police and fire retirees; the trust is governed by a five-member board of trustees and provides benefits specified in collective bargaining agreements (CBAs).
- In 2011–2012 the City’s emergency manager (EM) modified CBAs by issuing Executive Orders 206 and 207 (effective July 1, 2012) that reduced retiree health benefits and made other cost-shifting changes.
- The Board of Trustees sued the City, alleging (1) violation of Const 1963, art 9, § 24 (protection of accrued financial benefits), (2) improper amendment/elimination of trust obligations, and (3) breach of contract; it sought declaratory relief, an injunction, and damages.
- The City moved for summary disposition arguing the trustees lacked standing to assert retirees’ CBA-based benefits, Studier controls that healthcare is not protected by art 9 § 24, and the EM had authority under 2011 PA 4 to modify CBAs.
- The trial court held the trustees had standing to enforce the trust instrument but not to assert retirees’ contract rights; it dismissed the constitutional and breach claims. The court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / real party in interest to challenge CBA modifications | Trustees can sue to protect retiree benefits and seek declaratory relief under MCR 2.605; three trustees are retirees too | Trustees’ duties are limited by the trust agreement; trustees are not parties, assignees, or third‑party beneficiaries of CBAs and thus lack standing to assert retirees’ contract rights | Trustees have standing to enforce the trust instrument but lack standing / are not the real party in interest to assert retirees’ CBA‑based breach claims |
| Applicability of Const 1963, art 9, § 24 to retiree health benefits | Trust language declares its benefits protected by art 9 § 24, so health benefits are constitutionally protected | Studier holds health care benefits are not “accrued financial benefits”; parties cannot contractually elevate nonprotected benefits into constitutional protection | Art 9 § 24 does not protect retiree healthcare; the constitutional claim fails |
| Breach of trust instrument by Executive Orders 206/207 | Orders altered benefits the trust must provide, breaching the trust agreement | The trust merely implements benefits specified by CBAs; EM had statutory authority to modify CBAs under 2011 PA 4; orders operated prospectively | No breach of the trust instrument; trustees lack standing to assert CBA breach claims; contract claims fail |
| Scope of relief (declaratory/damages/injunction) | Trustees sought declaratory relief and injury to trust interests | No actual controversy affecting trustees’ legal rights; remedies for retirees lie with retirees enforcing CBAs | Declaratory relief unavailable to trustees for CBA changes; no damages or injunction granted to trustees |
Key Cases Cited
- Studier v. Michigan Pub. Sch. Employees Ret. Bd., 472 Mich. 642; 698 N.W.2d 350 (Mich. 2005) (healthcare benefits are not “accrued financial benefits” protected by art. 9 § 24)
- Lansing Sch. Ed. Ass’n v. Lansing Bd. of Ed., 487 Mich. 349; 792 N.W.2d 686 (Mich. 2010) (standing and declaratory-judgment principles; MCR 2.605 requires an actual controversy)
- Miller-Davis Co. v. Ahrens Const. Co., 495 Mich. 161; 848 N.W.2d 95 (Mich. 2014) (elements required to prove breach of contract)
- In re Beatrice Rottenberg Living Trust, 300 Mich. App. 339; 833 N.W.2d 384 (Mich. Ct. App. 2013) (real party in interest and trustee/beneficiary enforcement principles)
- Barclae v. Zarb, 300 Mich. App. 455; 834 N.W.2d 100 (Mich. Ct. App. 2013) (standing is a question of law reviewed de novo)
- Glen Lake-Crystal River Watershed Riparians v. Glen Lake Ass’n, 264 Mich. App. 523; 695 N.W.2d 508 (Mich. Ct. App. 2005) (procedural rules on raising lack-of-standing defenses)