COUNTY OF INGHAM, COUNTY OF JACKSON, and COUNTY OF CALHOUN, Plaintiffs-Appellants, v MICHIGAN COUNTY ROAD COMMISSION SELF-INSURANCE POOL, Defendant-Appellee.
No. 334077
STATE OF MICHIGAN COURT OF APPEALS
October 10, 2017
FOR PUBLICATION 9:05 a.m. Ingham Circuit Court LC No. 15-000432-NZ
Before: TALBOT, C.J., and O’CONNELL and O’BRIEN, JJ.
Plaintiffs, Ingham County, Jackson County, and Calhoun County (collectively, “the counties“), appeal as of right the trial court’s order granting summary disposition in favor of defendant, Michigan County Road Commission Self-Insurance Pool (“Pool“), under
I. FACTUAL AND PROCEDURAL BACKGROUND
A Declaration of Trust created the Pool in April 1984. The Pool’s bylaws limit membership to county road commissions located in the State of Michigan and require each member to sign an inter-local agreement. The appointed road commissions for Ingham County, Jackson County, and Calhoun County joined the Pool soon after its formation.
Members of the Pool made annual premium contributions to cover the payment of claims and the Pool’s operating and administrative expenses. The Pool’s bylaws and the inter-local agreements permitted the refund of surplus funds more than one year after payment of a member’s premium contribution. The counties alleged that the Pool had a longstanding practice of refunding excess contributions to members out of unused reserves in proportion to premiums paid, typically calculated and refunded several years later.
In February 2012, the Legislature amended
Ingham County adopted the dissolution resolution on April 24, 2012, effective June 1, 2012. About two weeks before adopting the resolution, Ingham County paid its contribution to the Pool for the fiscal year beginning April 1, 2012, apparently with the understanding that the Pool intended to amend its rules to permit the county successors to the dissolved road commissions to participate in the Pool. Ingham County maintained that it only learned later in May that the Pool would not allow the county to remain a member of the Pool. On May 31, 2012, the Ingham County road commission signed two agreements, one to withdraw from the Pool and one to cancel insurance through the Pool, effective June 1, 2012.
Calhoun County signed a similar withdrawal agreement, effective November 1, 2012. It appears
At Ingham County’s request, the Pool agreed to refund the unused pro-rata portion of the former road commission’s annual contribution for the 2012-2013 fiscal year. The Pool declined, however, to refund surplus equity flowing from prior year contributions because of the road commission’s withdrawal from membership.
The counties brought a four-count complaint. The counties alleged that they were eligible for ten years’ worth of refunds because the Pool was still refunding contributions from 2002 premiums. The Pool refused to issue these refunds to the counties. Consequently, the counties maintained, the Pool’s refusal reflected unconstitutional lending under
The counties filed a partial motion for summary disposition as to liability under
II. STANDARD OF REVIEW
This Court reviews de novo a trial court’s decision to grant or deny a motion for summary disposition. Village of Dimondale v Grable, 240 Mich App 553, 563; 618 NW2d 23 (2000). We also review de novo legal questions, In re Jude, 228 Mich App 667, 670; 578 NW2d 704 (1998), including issues of statutory interpretation, Slater v Ann Arbor Public Schools Bd of Ed, 250 Mich App 419, 426; 648 NW2d 205 (2002), and contract interpretation, Rossow v Brentwood Farms Dev, Inc, 251 Mich App 652, 658; 651 NW2d 458 (2002).
Summary disposition under
Summary disposition is proper if there is no genuine issue of material fact.
Finally, a trial court properly grants summary disposition to the opposing party under
III. ANALYSIS
A. SUCCESSORS IN INTEREST
When the Boards of Commissioners of Ingham County, Jackson County, and Calhoun County dissolved their counties’ road commissions pursuant to
We disagree with the trial court. Reading
The Pool argues that the counties are not successors in interest to their dissolved road commissions because the statute provides for the transfer of only the “powers, duties, and functions” of the former road commissions but not their property rights or interests. The Pool contends that because the counties have only the powers expressly authorized by statute, the dissolved road commissions’ property rights and interests did not transfer to the counties.
Counties derive their authority from the Michigan Constitution and state statutes. Mich Muni Liability and Prop Pool v Muskegon Co Bd of Co Rd Comm’rs, 235 Mich App 183, 190; 597 NW2d 187 (1999). Local governments have only those powers expressly conferred by the state Constitution or by statute and implicit authority to implement their express powers. Id. at 190-191.
Pertinent to the Pool’s argument, road commissions have the authority to hold title or an interest in land and to sell or convey land that is not part of or necessary “for a public street, highway, or park.”
The counties further disagree with the Pool’s narrow reading of the statute because it would constitutionally impair contracts for road construction and maintenance that involved the former road commissions. See
We agree. Whenever possible, courts must interpret a statute to avoid the conclusion that it is unconstitutional or raises doubts about its constitutionality. People v Nyx, 479 Mich 112, 124; 734 NW2d 548 (2007). Similarly, courts must read statutes as a whole. Robinson v City of Lansing, 486 Mich 1, 15; 782 NW2d 171 (2010). A statute that substantially impairs a contractual relationship is unconstitutional unless the statutory impairment serves a “legitimate public purpose” and was implemented in a manner “reasonably related to the public purpose.” Health Care Ass’n Workers Compensation Fund v Director of the Bureau of Worker’s Compensation, Dep’t of Consumer and Indus Servs, 265 Mich App 236, 241; 694 NW2d 761 (2005). The Pool’s narrow reading of “powers, duties, and functions” would result in the unconstitutional impairment of the former road commissions’ contracts, rendering the statutory provisions permitting dissolution of the road commissions unconstitutional. We avoid this result by interpreting the statutory provisions more comprehensively. Thus, we conclude that the counties became the successors in interest to their former road commissions when they exercised their statutory right to dissolve the road commissions. As successors in interest, the counties took on all statutory rights and responsibilities given to road commissions.
B. POOL MEMBERSHIP
The parties dispute whether the counties could be members of the Pool for the purpose of determining whether they are eligible for surplus refunds of prior year contributions. The Pool contends that its bylaws only permit road commissions to be members, so the counties are not qualified for membership. This Court construes bylaws using the same rules applied to contract interpretation. Tuscany Gove Ass’n v Peraino, 311 Mich App 389, 393; 875 NW2d 234 (2015). We begin with the plain language of the bylaws and apply it if it is clear and unambiguous. Rossow, 251 Mich App at 658.
The Pool’s bylaws limit membership to county road commissions, but the bylaws do not define a county road commission. Instead, the bylaws refer to the statutory authority of county road commissions. Because we concluded that the counties were successors in interest to their dissolved road commissions as a matter of statutory interpretation, we likewise conclude that the successor counties are eligible for Pool membership by virtue of the statutory reference to county road commissions in the Pool’s bylaws.
Next, the Pool argues that the counties are not entitled to refunds even if deemed successors in interest because they withdrew from the Pool. We examine the language of the withdrawal agreements to determine their scope. See Rossow, 251 Mich App at 658.
First, the record contains no evidence that the Jackson County road commission signed a withdrawal agreement, and the Pool agrees that it did not. Thus, the Jackson County road commission did not withdraw from the Pool. Likewise, Jackson County’s dissolution of its road commission did not automatically result in withdrawal from the Pool. Rather, Jackson County succeeded its dissolved road commission, so Jackson County is eligible for refunds from prior year contributions that its road commission made.
Ingham County’s and Calhoun County’s road commissions each signed an agreement to withdraw from the Pool. These withdrawal agreements began by stating that the counties dissolved their road commissions pursuant to statute. The agreements made withdrawal from the Pool effective from the date of dissolution of the road commissions. Further, the agreements contained a provision limiting their scope to withdrawal of membership without affecting “any other terms or conditions” of the Declaration of Trust, the inter-local agreement, or the bylaws. The Pool also agreed to administer claims arising from events occurring before the date of dissolution of the road commissions. Accordingly, reading the withdrawal agreements as a whole and in light of the limitation on their scope, the withdrawal agreements did not alter eligibility for the refund of surplus premiums from prior year contributions. Having determined that the counties are successors in interest to their former road commissions, we conclude that the counties are entitled to refunds of surplus premiums reflecting their former road commissions’ prior year contributions through the date listed in each withdrawal agreement.
In conclusion, the trial court erred by granting summary disposition in favor of the Pool because the counties are successors in interest to their dissolved road commissions. As successors in interest, the counties are eligible for membership in the Pool. Additionally, Jackson County did not sign a withdrawal agreement, and the withdrawal agreements that Ingham County and Jackson County signed did not affect their entitlement to refunds. Thus, the counties are entitled to receive refunds of surplus premiums from prior year contributions made by the former road commissions.2
We reverse and remand. We do not retain jurisdiction.
/s/ Peter D. O’Connell
/s/ Michael J. Talbot
/s/ Colleen A. O’Brien