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Kendzierski v. Macomb County

Court of Appeals of Michigan

April 18, 2017

MACOMB COUNTY, Defendant-Appellee/Cross-Appellant.

         Macomb Circuit Court LC No. 2010-001380-CK

          Before: Fort Hood, P.J., and Jansen and Hoekstra, JJ.

          Jansen, J.

         In this class action, plaintiffs, acting as class representatives, appeal as of right the trial court's opinion and order denying their motion for summary disposition and request for a permanent injunction with regard to defendant's unilateral modification of retiree healthcare benefits. On cross-appeal, defendant challenges the same order, asserting that the trial court's finding that plaintiffs' healthcare retirement benefits were vested or comprised an entitlement to lifetime benefits constituted error. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

         This case presents the issue whether defendant was permitted to make unilateral changes to retiree healthcare benefits outlined in several collective bargaining agreements (CBAs). Plaintiffs represent a class of retirees covered under various CBAs with defendant. The parties dispute (1) whether plaintiffs have a vested right to lifetime healthcare benefits, and (2) if so, whether defendant was permitted to make unilateral changes to the healthcare benefits. The trial court concluded that plaintiffs have a vested right to lifetime healthcare benefits. However, the court then concluded that defendant could reasonably modify the scope and level of the benefits. The court, therefore, granted summary disposition in favor of defendant.


         Plaintiffs moved for summary disposition pursuant to MCR 2.116(C)(10). Defendant moved for summary disposition under MCR 2.116(C)(7), (8), and (10). We review de novo a trial court's ruling on a motion for summary disposition. Stephens v Worden Ins Agency, LLC, 307 Mich.App. 220, 227; 859 N.W.2d 723 (2014). Because the trial court clearly relied on documents outside of the pleadings, including the CBAs, deposition testimony, and other documentation submitted by the parties, we conclude that summary disposition was granted to defendant under MCR 2.116(C)(10). See Cuddington v United Health Servs, Inc, 298 Mich.App. 264, 270; 826 N.W.2d 519 (2012) ("The trial court did not indicate whether it granted defendant's motion pursuant to MCR 2.116(C)(8) or (10); however, because the trial court considered documentary evidence beyond the pleadings, we construe the motion as having been granted pursuant to MCR 2.116(C)(10).").

A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. In reviewing a grant of summary disposition under MCR 2.116(C)(10), this Court considers the pleadings, admissions, and other evidence submitted by the parties in the light most favorable to the nonmoving party. Summary disposition is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. [Williams v Enjoi Transp Solutions, 307 Mich.App. 182, 185; 858 N.W.2d 530 (2014) (citations omitted).]

         In addition, "A written contract's interpretation is also reviewed de novo." Reicher v SET Enterprises, Inc, 283 Mich.App. 657, 664; 770 N.W.2d 902 (2009).

We enforce contracts according to their terms, as a corollary to the parties['] liberty to enter into a contract. We examine contractual language and give the words their plain and ordinary meanings. An unambiguous contractual provision reflects the parties['] intent as a matter of law, and [i]f the language of the contract is unambiguous, we construe and enforce the contract as written. Courts may not create ambiguity when contract language is clear. Rather, this Court must honor the parties' contract, and not rewrite it. [Id. at 664-665 (citations and quotation marks omitted; third alteration in original).]


         Defendant argues that the trial court improperly concluded that plaintiffs are entitled to lifetime healthcare benefits. We disagree.

         To determine whether plaintiffs' right to healthcare benefits had vested, we first examine the CBA language at issue in the context of accepted principles of contract interpretation. "Under established contract principles, vested retirement rights may not be altered without the [retiree]'s consent." Harper Woods Retirees Ass'n v Harper Woods, 312 Mich.App. 500, 511; 879 N.W.2d 897 (2015) (citation and quotation marks omitted; alteration in original). Our Supreme Court in Arbuckle v Gen Motors, LLC, 499 Mich. 521, 539; 885 N.W.2d 232 (2016), recently observed that "a union may represent and bargain for already-retired employees, but only with respect to nonvested benefits. By contrast, when an employer explicitly obligates itself to provide vested benefits, that promise is rendered forever unalterable without the retiree's consent."

         To determine whether the right to the healthcare benefits vested, a plaintiff must establish that "(1) he or she had a contractual right to the claimed benefit that was to continue after the agreement's expiration, and (2) the right was included in his or her respective contract at the time of retirement." Harper Woods, 312 Mich.App. at 511. Before the United States Supreme Court issued its opinion in M & G Polymers USA, LLC v Tackett, 574 U.S. __; 135 S.Ct. 926; 190 L.Ed.2d 809 (2015), a presumption existed in the United States Court of Appeals for the Sixth Circuit that retiree benefits outlined in a CBA are vested lifetime benefits. Harper Woods Retirees Ass'n, 312 Mich.App. at 511-512. In Tackett, the United States Supreme Court concluded that this presumption was inconsistent with the traditional rules of contract law. Tackett, 574 U.S. at __; 135 S.Ct. at 937; 190 L.Ed.2d at 821. The Court indicated that ordinarily, a contractual obligation ceases when the CBA terminates. Id. at __; 135 S.Ct. at 937; 190 L.Ed.2d at 820. "[W]hen a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life." Id. at __; 135 ...

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