County of Ingham v. Michigan County Road Commission Self-Insurance Pool

          Ingham Circuit Court LC No. 15-000432-NZ

          Before: O'Brien, P.J., and Gleicher and Stephens, JJ.

          ON REMAND

          PER CURIAM.

         This case returns to this Court on remand from the Michigan Supreme Court. Co of Ingham v Mich. Co Rd Comm Self-Ins Pool, 503 Mich. 917 (2018) (Co of Ingham II). For the reasons explained in this opinion, we continue to hold that plaintiffs-Ingham County, Jackson County, and Calhoun County (collectively, the counties)-are entitled to refunds of their surplus premiums from prior-year contributions made by the counties' former road commissions to defendant, Michigan County Road Commission Self-Insurance Pool (the Pool).

         I. BACKGROUND

         The facts of this case were outlined in this Court's previous opinion as follows:

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 MCL 224.6 to permit transfer of "the powers, duties, and functions that are otherwise provided by law for an appointed board of county road commissioners . . . to the county board of commissioners by resolution as allowed under . . . MCL 46.11." MCL 224.6(7), as amended by 2012 PA 14. At the same time, the Legislature amended MCL 46.11 to give a county board of commissioners the authority to pass a resolution dissolving an appointed road commission and transferring the road commission's "powers, duties, and functions" to the county board of commissioners. MCL 46.11(s), as amended by 2012 PA 15. Pursuant to these amendments, the Ingham County, Jackson County, and Calhoun County Boards of Commissioners adopted resolutions to dissolve their county road commissions and take over their roles.

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 30 and 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 on October 23, 2012, effective November 1, 2012. It appears that Jackson County did not sign a withdrawal agreement.

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 in the Pool. [Co of Ingham v Mich. Co Rd Comm Self-Ins Pool, 321 Mich.App. 574, 577-578; 909 N.W.2d 533 (2017) (Co of Ingham I).]

         The counties brought suit against the Pool, alleging that they were eligible for 10 years' worth of refunds because the Pool was still refunding contributions from 2002 premiums. The parties filed cross-motions for summary disposition, and the trial court granted summary disposition to the Pool and rejected the counties' claims. The trial court reasoned that the counties were not entitled to refunds possibly owed to their former road commissions because the counties were not successors in interest to their former road commissions.

         On appeal, this Court disagreed and held that the counties were successors in interest to their former road commissions. Id. at 580-584. This Court then addressed "whether the counties could be members of the Pool and thereby be eligible for surplus refunds of prior-year contributions," and concluded "that the successor counties are eligible for Pool membership . . . ." Id. at 584.

         This Court lastly addressed whether the counties were entitled to refunds because, even though they were successors in interest, they withdrew from the Pool. Id. The Court first acknowledged that Jackson County was situated differently from the other counties because it did not sign a withdrawal agreement with the Pool. Id. at 585. This Court concluded that without a withdrawal agreement, Jackson County "did not withdraw from the Pool." Id. This Court also concluded that Jackson County's "dissolution of its road commission did not automatically result in withdrawal from the Pool." Id. This Court then held that, because Jackson County (1) did not withdraw from the Pool and (2) "succeeded its dissolved road commission," it was "eligible for refunds from prior-year contributions made by its road commission." Id.

         Turning to the other counties that did sign withdrawal agreements with the Pool, this Court looked to the language of the withdrawal agreements to determine their scopes. After reviewing the agreements' relevant language, this Court concluded:

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. [Id.]

         The Pool appealed this Court's decision, and our Supreme Court issued the following order:

Pursuant to MCR 7.305(H)(1), in lieu of granting leave to appeal, we REMAND this case to the Court of Appeals for consideration of the issue raised by the defendant but not addressed by that court during its initial review of this case: Whether, even if the plaintiff counties are successors in interest to their road commissions, the defendant Michigan County Road Commission Self-Insurance Pool nevertheless may, in accordance with its governing documents, decline to issue to the counties refunds of surplus premiums from prior-year contributions. In addressing this question, the Court of Appeals shall consider, among other things, the following documents: the Declaration of Trust, By-Laws, Inter-Local Agreements, MCRCSIP Refund Overview, and the July 19, 1990 memorandum to the Pool members. The court shall address whether these documents are binding on the parties, and, if so, what effect they have on the plaintiffs' entitlement to refunds. [Co of Ingham II, 503 Mich. at 917.]

         II. STANDARD OF REVIEW

         A trial court's decision on summary disposition is reviewed de novo. Heaton v Benton Constr Co, 286 Mich.App. 528, 531; 780 N.W.2d 618 (2009). Because the trial court considered evidence outside the pleadings, we treat the trial court's grant of summary disposition as having been under MCR 2.116(C)(10). See Sisk-Rathburn v Farm Bureau Gen Ins Co of Mich, 279 Mich.App. 425, 427; 760 N.W.2d 878 (2008).

A motion under MCR 2.116(C)(10) tests the factual support of a plaintiff's claim. Summary disposition is appropriate under MCR 2.116(C)(10) if there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. In reviewing a motion under MCR 2.116(C)(10), this Court considers the pleadings, admissions, affidavits, and other relevant documentary evidence of record in the light most favorable to the nonmoving party to determine whether any genuine issue of material fact exists to warrant a trial. A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ. [Zaher v Miotke, 300 Mich.App. 132, 139-140; 832 N.W.2d 266 (2013) (quotations marks and citations omitted).]

         "Only the substantively admissible evidence actually proffered may be considered." 1300 LaFayette East Coop, Inc v Savoy, 284 Mich.App. 522, 525; 773 N.W.2d 57 (2009) (quotation marks and citation omitted).

         III. ANALYSIS

         On remand, we are tasked with deciding a single question: "Whether, even if the plaintiff counties are successors in interest to their road commissions, [the Pool] nevertheless may, in accordance with its governing documents, decline to issue to the counties refunds of surplus premiums from prior-year contributions." Co of Ingham II, 503 Mich. at 917. While this directive is relatively straightforward, the parties argue over to what extent, if any, this Court can disregard its earlier opinion. We address this dispute before turning to our task on remand.

         A.. LAW-OF-THE-CASE DOCTRINE

         As explained by this Court,

Under the doctrine of the law of the case, if an appellate court has passed on a legal question and remanded the case for further proceedings, the legal question will not be differently determined in a subsequent appeal in the same case where the facts remain materially the same. The primary purpose of the law-of-the-case doctrine is to maintain consistency and avoid reconsideration of matters once decided during the course of a single continuing lawsuit. [Bennett v Bennett, 197 Mich.App. 497, 499-500; 496 N.W.2d 353 (1992) (citation omitted).]

         The Pool contends that we are not bound by the law-of-the-case doctrine because that doctrine is discretionary. The Pool is correct that courts have some discretion when applying the law-of-the-case doctrine under certain circumstances. See, e.g., Locricchio v Evening News Ass'n, 438 Mich. 84, 109-110; 476 N.W.2d 112 (1991) (explaining that there are instances where "the law of the case doctrine must yield to a competing doctrine"); People v Spinks, 206 Mich.App. 488, 491; 522 N.W.2d 875 (1994) (refusing to apply the law-of-the-case doctrine because there had been an intervening change in the law); People v Phillips, 227 Mich.App. 28, 34; 575 N.W.2d 784 (1997) ("[W]e decline to apply a doctrine designed for judicial convenience in fairly administering the obligation to do justice so as to work an injustice."). Yet the Pool's only argument for not applying the law-of-the-case doctrine is that, according to the Pool, our previous decision was wrong. As this Court has explained, such a reason is not sufficient to justify ignoring the law-of-the-case doctrine:

[W]e do not believe that a conclusion that the prior decision was erroneous is sufficient by itself to justify ignoring the law-of-the-case doctrine. To do so would vitiate that doctrine because it would allow this Court to ignore a prior decision in a case merely because one panel concluded that the earlier panel had wrongly decided the matter. It would, therefore, reopen every case to relitigation of every issue previously decided in hopes that a subsequent panel of the Court would decide the issue differently than did the prior panel. Clearly, the law-of-the-case doctrine has no usefulness if it is only applied when a panel of this Court agrees with the decision reached by a prior panel. [Bennett, 197 Mich.App. at 500.]

         We therefore conclude that, to the extent that our Supreme Court's remand order left intact this Court's earlier legal conclusions, we are bound by those conclusions under the doctrine of the law of the case. This includes this Court's previous holdings that the counties are successors in interest to their former road commissions and that Jackson County did not withdraw from the Pool.

         B. DOCUMENTS TO CONSIDER ON REMAND

         Our Supreme Court directed us to consider, among other things, five documents on remand: the Declaration of Trust, By-Laws, Inter-Local Agreements, MCRCSIP Refund Overview, and the July 19, 1990 memorandum to the Pool members. Co of Ingham II, 503 Mich. at 917.

         1. DECLARATION OF TRUST

         The Declaration of Trust created the Pool in 1984. As relevant here, the Declaration of Trust provides:

         ARTICLE VI

         POWERS AND DUTIES OF THE BOARD OF DIRECTORS

* * *

SECTION 9. Use of Funds. The Board of Directors shall set aside from the premiums collected during each fiscal year a reasonable sum for the operating expenses or administrative expenses of the Trust for that year. All remaining funds coming into its possession or under its control with respect to that fiscal year of the Trust shall be set aside and shall be used only for the following purposes:

* * *

(f) Distribution among the members during that fiscal year in such manner as the Members and the Board of Directors shall deem to be equitable, of any excess monies remaining after payment of claims and claims expenses and after provision has been made for open claims and outstanding reserves and a reserve for claims incurred but not reported; provided, however, that no such distributions shall be made earlier than twelve (12) months after the end of each Trust Year; and provided further, that undistributed funds from previous Trust Years may be distributed at any time if not required for loss funding and if approved for distribution by the Board of Directors. The Board ...