Pontiac Police & Fire Retiree Prefunded Group Health & Insurance Trust Board of Trustees v. City of Pontiac
317 Mich. App. 570
| Mich. Ct. App. | 2016Background
- The City of Pontiac’s actuarially required contribution to a VEBA trust for FY 2011–2012 was $3,473,923.28 and was due on or before June 30, 2012; the city had not paid it by July 1, 2012.
- On August 1, 2012, the Emergency Manager (EM) issued Executive Order 225 (EO 225) purporting to amend the trust to remove the city’s obligation “to continue to make contributions,” and EO 225 took immediate effect.
- Plaintiff (the trust board) sued, alleging breach of contract, an ordinance violation, and a violation of Const 1963, art 9, § 24; the trial court granted summary disposition for the City.
- This Court (City of Pontiac I) initially held EO 225 did not retroactively eliminate the accrued FY 2011–2012 obligation and reversed on the breach claim; the Michigan Supreme Court reversed in part, holding EO 225’s plain language applied to accrued-but-unpaid obligations and remanded for a LaFontaine retroactivity analysis (City of Pontiac II).
- On remand this Court held (1) the LaFontaine retroactivity framework applies to executive orders, and (2) under LaFontaine EO 225 may not be given retroactive effect to extinguish the City’s accrued, vested breach-of-contract claim because EO 225 lacks clear, direct, and unequivocal retroactive language and would impair vested rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LaFontaine retroactivity analysis applies to an EM executive order | LaFontaine principles should govern retroactivity of EO 225 | EO 225 should be evaluated differently or more deferentially | Held: LaFontaine (and Certified Questions) applies to executive orders; interpretive rules for statutes apply to EOs |
| Whether EO 225 extinguished the City’s accrued but unpaid FY 2011–2012 contribution | EO 225 cannot retroactively eliminate an already-accrued, vested breach claim | EO 225’s plain language extinguishes both accrued and future obligations | Held: EO 225 does not permissibly apply retroactively under LaFontaine; extinguishment of vested claim is impermissible |
| Whether EO 225 contains sufficiently clear retroactive language | EO 225 lacks clear, direct, unequivocal retroactive wording | EO 225’s failure to differentiate accrual status still shows intent to extinguish obligations | Held: Lacks the requisite clarity for retroactivity; immediate effect alone is insufficient |
| Whether an alternative retroactivity test is needed | If LaFontaine did not apply, another framework might determine permissibility | EM action authority under PA 4 suffices to modify CBAs retroactively | Held: No need to consider alternatives because LaFontaine governs and forecloses retroactive extinguishment |
Key Cases Cited
- LaFontaine Saline, Inc. v. Chrysler Group, LLC, 496 Mich 26 (addresses when statutory amendments may be retroactive)
- In re Certified Questions, 416 Mich 558 (retroactivity principles for legislation)
- Studier v. Michigan Public School Employees’ Retirement Bd., 472 Mich 642 (healthcare benefits not protected as accrued financial benefits under Const art 9 § 24)
- Landgraf v. USI Film Prods., 511 US 244 (federal standard requiring clear congressional intent for retroactivity)
- Frank W. Lynch & Co. v. Flex Technologies, Inc., 463 Mich 578 (presumption against retroactivity; need for clear legislative intent)
- Doe v. Department of Corrections (On Remand), 249 Mich App 49 (vested rights and retroactivity limits)
- Tenneco Inc. v. Amerisure Mut. Ins. Co., 281 Mich App 429 (when breach of contract accrues)
- Pontiac Police & Fire Retiree Prefunded Group Health & Ins. Trust Bd. of Trustees v. City of Pontiac (City of Pontiac I), 309 Mich App 590 (prior Court of Appeals opinion)
- Pontiac Police & Fire Retiree Prefunded Group Health & Ins. Trust Bd. of Trustees v. City of Pontiac (City of Pontiac II), 499 Mich 921 (Michigan Supreme Court remand order)