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154745 - Pontiac Bd of Trustees Police & Fire RPG v City of Pontiac

Board of Trustees of the City of Pontiac Police and Fire Retiree Prefunded Group Health and Insurance Trust,
 
Ronald S. Lederman
 
Plaintiff-Appellee,
 
v
(Appeal from Ct of Appeals)
 
 
(Oakland – O’Brien, D.)
 
City of Pontiac,
 
Stephen J. Hitchcock
 
Defendant-Appellant.
 

Summary

Plaintiff Board of Trustees of the City of Pontiac Police and Fire Retiree Prefunded Group Health and Insurance Trust (the Trust) was organized to pay the healthcare benefits of Pontiac fire and police department retirees who retired on or after August 22, 1996. Under the terms of the trust agreement, defendant City of Pontiac was required to make annual contributions to the trust fund in an amount necessary to provide health plan benefits. In 2012, Pontiac came under the control of an Emergency Manager (EM), and did not make its $3.47M contribution to the trust fund for fiscal year (FY) 2011-2012. Instead, the EM issued Executive Order No. 225 (EO 225), which amended the trust agreement to remove the city’s obligation “to continue to make contributions” to the trust fund. The Trust sued, but the trial court granted summary disposition to the city and dismissed the case, finding that the EM had properly modified the city’s obligation to contribute to the trust fund for FY 2011-2012 and that the Trust’s constitutional claim was without merit. The Court of Appeals, in a published opinion, agreed that the Trust’s challenges to the EM’s authority lacked merit, but reversed, holding that the language of the EO—“to continue to make contributions”—did not encompass the already accrued contribution for FY 2011-2012. The Supreme Court, in a peremptory order, reversed the part of the Court of Appeals decision that interpreted EO 225, vacated the part that discussed the Trust’s breach of contract claim, and remanded the case to the Court of Appeals to consider certain questions. On remand, the Court of Appeals, in a second published decision, held: (1) the retroactivity analysis in LaFontaine Saline, Inc v Chrysler Group, LLC, 496 Mich 26 (2014), applies to EO 225; (2) the retroactive application of EO 225 to extinguish the city’s accrued but unpaid contribution to the trust for FY 2011-2012 was impermissible under LaFontaine; and (3) it was unnecessary to address otherwise applicable methods of assessing retroactivity. The case returned to the Supreme Court, which has directed oral argument on the city’s application for leave to appeal to address: (1) whether the Court of Appeals correctly concluded that the principles of LaFontaine apply to the analysis of EO 225; and that (2) the retroactive application of EO 225 to extinguish the city’s accrued but unpaid contribution to the trust for the FY 2011-2012 was impermissible under LaFontaine; and (3) if not, whether EO 225 constitutes an impermissible retroactive modification of the FY 2011-2012 contribution under Const 1963, art 9, § 24.