Rita Kendzierski v. County of MacOmb
329576
| Mich. Ct. App. | Apr 18, 2017Background
- Plaintiffs are a class of Macomb County retirees covered by various collective bargaining agreements (CBAs) who challenge the County’s unilateral changes to retiree healthcare benefits.
- Plaintiffs moved for summary disposition and sought a permanent injunction; the County moved for summary disposition as well. The trial court found benefits vested but nonetheless allowed the County to modify the benefits and granted summary disposition for the County.
- The issue turns on CBA interpretation: whether retiree healthcare was a vested, lifetime benefit and, if so, whether the County could unilaterally modify it.
- The CBAs at issue were silent on explicit duration of retiree health benefits but contained provisions (survivor coverage, Medicare-enrollment rules, suspension/restart for other-employer coverage) suggesting coverage beyond CBA terms.
- Plaintiffs introduced a 2014 County bond proposal and other evidence (including HR statements) stating the County historically provided and “provides retiree health benefits…for their lifetimes,” which the court found unrefuted.
- The Court of Appeals reviewed contract interpretation de novo and concluded the CBAs contained a latent ambiguity resolved by extrinsic evidence showing the County’s intent to provide vested lifetime benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether retiree healthcare benefits vested as lifetime benefits | Benefits are vested because CBAs plus extrinsic evidence show intent to provide lifetime coverage | CBAs don’t expressly vest benefits for life; county can treat benefits as continuing only during CBA terms | Vested: Court holds extrinsic evidence (bond proposal, historical practice) establishes vested lifetime benefits |
| Whether CBAs are ambiguous on duration of benefits | CBAs are ambiguous (latent ambiguity) and extrinsic evidence should be considered | CBAs are unambiguous and don’t create lifetime promises | Ambiguity: Court finds latent ambiguity and permits extrinsic evidence to show intent to vest benefits |
| Whether the County could unilaterally modify vested retiree healthcare | County may not unilaterally alter vested retirement benefits without retirees’ consent | County argues it could reasonably modify scope/level of benefits (reasonableness standard) | Unilateral modification impermissible: Court rejects a mere reasonableness test and holds vested benefits cannot be altered without consent; summary disposition for plaintiffs required |
| Proper remedy at summary disposition stage | Plaintiffs seek summary disposition and a permanent injunction preventing unilateral changes | County sought summary disposition in its favor | Court reverses trial court’s grant to County, directs entry of summary disposition for plaintiffs and issuance of permanent injunction consistent with opinion |
Key Cases Cited
- Harper Woods Retirees Ass’n v. Harper Woods, 312 Mich. App. 500 (Mich. Ct. App.) (vested retirement rights may not be altered without retiree consent)
- Arbuckle v. Gen. Motors, LLC, 499 Mich. 521 (Mich.) (courts should not infer lifetime vesting from silence; apply ordinary contract principles)
- Shay v. Aldrich, 487 Mich. 648 (Mich.) (latent ambiguity doctrine and admissibility of extrinsic evidence)
- Kyocera Corp. v. Hemlock Semiconductor, LLC, 313 Mich. App. 437 (Mich. Ct. App.) (contract interpretation focuses on parties’ intent and plain meaning)
- Reese v. CNH America, LLC, 694 F.3d 681 (6th Cir.) (discusses reasonableness standard but does not permit unilateral alteration absent intent in the CBA)