The Michigan Supreme Court will hear oral arguments on a case out of Pontiac on Wednesday, Jan. 10.
The court will hear arguments on the city of Pontiac’s application to leave to appeal a decision made in ongoing litigation between the Board of Trustees of the City of Pontiac Police and Fire Retiree Prefunded Group Health and Insurance Trust and the city.
In 1996, the trust was organized to pay the healthcare benefits of Pontiac fire and police department retirees, requiring the city to make annual contributions to the trust fund to sustain it.
But in 2012, Pontiac’s emergency manager at the time issued an executive order to amend the trust agreement to remove the city’s obligation to contribute. Approximately $3.4 million was to be paid to the trust that year, but the contribution was never made.
The trust sued the city, but the case was dismissed by the trial court, stating that the emergency manager had properly modified the agreement and that the trust’s claim was without merit.
The Court of Appeals agreed with that decision, but also stated that the language of the emergency manager’s agreement didn’t cover the $3.4 million already owed for the fiscal year 2011/2012. Following that, the Michigan Supreme Court reversed parts of the Court of Appeals decision. The part that interpreted the emergency manager’s order as well as vacating the part which discussed the trust’s breach of contract claim.
In a second published decision, the Court of Appeals held that precedent set by the case LaFontaine Saline Inc. V Chrysler Group LLC in 2014 applied to the Pontiac case. In the 2014 instance, the Michigan Supreme Court found that applying the amendments retroactively to such types of agreements would “alter the parties’ existing contract rights.” Meaning the emergency managers order was “impermissible under LaFontaine,” according to court documents.
On Wednesday, the court will hear arguments to appeal that decision, addressing:
• If the Court of Appeals correctly concluded that the principles of the LaFontaine case apply to the emergency manager’s order
• If the retroactive application of the order to extinguish the city’s accrued, but unpaid, contribution to the trust was impermissible
• If the order was permitted, whether or not it constitutes as impermissible retroactive modification under under Michigan’s constitution.
A livestream of all the court’s oral arguments can be found here on the day of the hearing.
From The Oakland Press