Opinion

Allen Park Retirees Association Inc v. City of Allen Park

Court: Michigan Court of Appeals
Filed: May 18, 2023
Status: Published
Cited by: 0 cases
Authority: More cited than 23.3%

The opinion

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to

revision until final publication in the Michigan Appeals Reports.

STATE OF MICHIGAN

COURT OF APPEALS

ALLEN PARK RETIREES ASSOCIATION, INC. FOR PUBLICATION

and JANICE K. PILLAR, Personal Representative of May 18, 2023

the ESTATE OF RUSSELL PILLAR, 9:00 a.m.

Plaintiffs-Appellees,

v No. 357955

Wayne Circuit Court

CITY OF ALLEN PARK, LC No. 14-003826-CZ

Defendant-Appellant,

and

JOYCE A. PARKER,

Defendant.

DALE COVERT, and all others similarly situated,

Plaintiff-Appellee,

v No. 357956

Wayne Circuit Court

CITY OF ALLEN PARK, LC No. 18-004458-CK

Defendant-Appellant.

Before: RICK, P.J., and O’BRIEN and PATEL, JJ.

PATEL, J.

Collective-bargaining agreements (CBAs) are creatures of contract and the language of the

contract controls when discerning the scope and terms of benefits therein. Our Supreme Court

reiterated this well-established principle in Kendzierski v Macomb Co, 503 Mich 296; 931 NW2d

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604 (2019), in the context of interpreting whether the various CBAs in that case conferred lifetime

vested medical benefits to retirees. After closely examining the language of the contracts, the

Court held that none of the CBAs conferred lifetime vested benefits because the language of the

CBAs did not so state; instead, the Court held that the unambiguous terms outlined in the CBAs

expired at the end of the CBAs’ durational clauses, and did not extend any further.

In contrast, the CBAs at issue in these consolidated cases contain explicit language

conferring medical benefits to retirees beyond the durational terms of the CBAs. We hold that the

plain language of these contracts controls, in keeping with the principles outlined in Kendzierski.

We affirm.

I. FACTS AND PROCEEDINGS

These consolidated cases arise from modifications to retiree healthcare benefits under

CBAs. The plaintiffs in LC No. 14-003826-CZ (COA Docket No. 357955) are Allen Park Retirees

Association, Inc (“APRA”)1 and Janice K. Pillar, as personal representative of the estate of Russell

Pillar (collectively, the Pillar plaintiffs).2 LC No. 18-004458-CK (COA Docket No. 357956) is a

class action brought by Dale Covert as the representative plaintiff (collectively, the Covert

plaintiffs). At the time these actions were filed, Pillar and Covert were retired city employees who

were formerly represented by various labor unions.

Pillar was a command officer employed by the Allen Park Police Department and a

member of the Allen Park Police Lieutenants and Sergeants Association collective-bargaining unit.

He retired from employment in July 1993. At the time of his retirement, Pillar’s employment was

governed by a CBA in effect for the period of July 1, 1991 to June 30, 1994. That CBA provided

for retiree healthcare benefits. The CBA provided for specific coverages, though those coverages

varied somewhat depending on the age at retirement and date of hire. The CBA also provided that

the city “reserves the right to change any and/or all insurance company(ies) and/or plan(s),

providing the replacement program is equal to or better than the program available from the present

company, subject to the mutual agreement of the City and the Union.”

Covert is a now-retired deputy police chief who was employed by the city’s police

department. Covert’s appointment to deputy police chief was ratified through a professional

services contract, which incorporated by reference certain provisions of a CBA.

The CBAs in effect when Pillar and Covert retired provided for healthcare benefits for

retirees and their dependents, with premiums to be paid by the city. The operative language of the

applicable CBAs is not disputed.

APRA is a nonprofit corporation whose membership is comprised of pensioners of the city of

Allen Park, their beneficiary spouses, and qualified dependents.

Russell Pillar died after this action was filed and has been substituted by Janice Pillar, as personal

representative of his estate.

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The applicable CBA in the Pillar case is the 1991-1994 CBA, which provided in pertinent

part:

Retired employees who were hired after 12/1/91 shall be covered by an HMO plan

with the same coverage as the Blue Cross/Blue Shield plan, cost sustained by the

City, until the retired employee reaches age 65 or is eligible for Medi-Care, (sic)

when the City will supplement with a “65 Plan.” Should an employee, either active

or retired, become deceased, said employee’s spouse and eligible dependents under

the plan shall continue to be covered, provided said spouse remains unmarried.

Covert’s professional service contract was tied to the 2003 to 2008 CBA, which provided

in relevant part:

Retiree Health Insurance Retired Employees, and surviving, and non-married

spouses, and eligible dependents, shall continue to be covered by this plan, with the

full cost sustained by the City, until the retired Employees and surviving non-

married spouses reach age 65 or are eligible for medicare (sic). Upon reaching

eligibility for Medicare, the Retiree and/or the surviving non-married spouse shall

apply for Medicare benefits. Upon application and approval of Medicare benefits,

the retiree and/or surviving non-married spouse shall have the above listed Blue

Cross/Blue Shield benefits (Section 22.2) reduced to cover that portion not covered

by Medicare. This also covers individuals on HMO programs.

Both CBAs required employees to enroll in Medicare at age 65, after which the city would provide

supplemental healthcare insurance.

After plaintiffs’ retirement, the state of Michigan placed the city into receivership, and an

emergency manager was appointed. Joyce Parker was appointed as emergency manager (EM) for

the city pursuant to the Local Financial Stability and Choice Act, MCL 141.1541 et seq. In 2013,

Parker issued Order No. 2013 — 015 (“Order 15”), which modified the retiree healthcare program

by shifting the cost of deductibles and copays to the retirees, but did not shift premium costs.

These modifications were continued by the city after Parker’s authority as EM ended in 2017.

The Pillar plaintiffs challenged these modifications in an action filed in 2014. In 2017, the

trial court dismissed the Pillar plaintiffs’ claims against Parker, holding that the claims were moot

because Order 15 was intended to be temporary and Parker was no longer an EM. The court also

granted the city’s motion for summary disposition. The Pillar plaintiffs appealed, and this Court

agreed that the claims against Parker were moot because she was no longer EM. Allen Park

Retirees Ass’n, Inc v City of Allen Park, 329 Mich App 430, 434-435; 942 NW2d 618 (2019)

(“APRA I”). This Court stated that “any continuing modifications of the retiree healthcare benefits

is the product of city action, not that of the EM.” Id. at 443.

In support of their challenge to the city’s continuation of the modifications, the Pillar

plaintiffs relied on this Court’s decisions in Harper Woods Retirees Ass’n v City of Harper Woods,

312 Mich App 500; 879 NW2d 897 (2015), and Kendzierski v Macomb Co, 329 Mich App 430;

942 NW2d 618 (2017), rev’d 503 Mich 296 (2019). However, just a few weeks after the oral

argument before this Court in APRA I, our Supreme Court reversed Kendzierski, holding that the

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retiree-benefit provisions in the at-issue CBAs expired when the CBAs expired because there was

no language in the CBAs extending retirement benefits beyond the duration of the CBAs.

Kendzierski, 503 Mich at 325. This Court remanded the Pillar plaintiffs’ claims to the trial court

for further consideration in light of our Supreme Court’s decision in Kendzierski. APRA I, 329

Mich App at 443, 446. In so doing, this Court directed:

On remand, the trial court shall not consider the effect of Order 15 because it is no

longer in effect. That is, any rights that plaintiffs might have under the CBA, as

well as any rights that the city might have to alter those rights, have returned to the

status that would exist as if Order 15 had never been entered. [Id. at 446.]

The Covert plaintiffs’ class claims are substantively identical to the breach-of-contract

claims raised by the Pillar plaintiffs.3 The city also moved for summary disposition, arguing that

even though it was no longer under the governance of an EM, Order 15 was still in effect and

authorized the healthcare modifications. The trial court denied the city’s motion for summary

disposition, reasoning that healthcare benefits were a vested right and were required to be restored

after the EM’s authority ended. But this decision was made before our Supreme Court decided

Kendzierski and before this Court decided APRA I. The city filed an application for leave to appeal,

which this Court granted.4 This Court ultimately affirmed the trial court’s order, relying on APRA

I, stating “[u]nder [APRA I], this Court has already concluded that Order 15 was temporary, and

therefore, has no continued applicability to plaintiff’s health care benefits” and that “ ‘any

continuing modification of the retiree health care benefit is the product of city action, not that of

the [EM].’ ” Covert v City of Allen Park, unpublished per curiam opinion of the Court of Appeals,

issued June 25, 2020 (Docket No. 348728), p 4, quoting APRA I, 329 Mich App at 443. Therefore,

this Court affirmed the trial court’s denial of the city’s motion for summary disposition.

On remand, the Pillar plaintiffs’ and the Covert plaintiffs’ cases were consolidated.

Plaintiffs moved for partial summary disposition of their breach-of-CBA claims under MCR

2.116(C)(9), (10), and (I)(1). In response, the city argued that it was entitled to summary

disposition under MCR 2.116(I)(2) because our Supreme Court’s decision in Kendzierski, 503

Mich 296, precluded plaintiffs’ actions. The trial court granted plaintiffs’ motions for partial

summary disposition. The city moved for reconsideration, which was denied. The city filed

applications for leave to appeal in each case, which this Court granted and consolidated the

appeals.5

The trial court granted Covert’s motion for class certification.

Dale Covert v City of Allen Park, unpublished order of the Court of Appeals, entered June 26,

2019 (Docket No. 348728).

Allen Park Retirees Association, Inc v City of Allen Park, unpublished order of the Court of

Appeals, entered September 29, 2021 (Docket No. 357955); Dale Covert v City of Allen Park,

unpublished order of the Court of Appeals, entered September 29, 2021 (Docket No. 357956).

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II. APPLICATION OF KENDZIERSKI

The city argues that, pursuant to our Supreme Court’s decision in Kendzierski, plaintiffs

are not entitled to vested medical benefits outside the duration of the CBAs. We disagree.

A. STANDARD OF REVIEW

“Interpretation of a collective-bargaining agreement, like interpretation of any other

contract, is . . . a question of law . . . subject to review de novo.” Arbuckle v Gen Motors LLC,

499 Mich 521, 531; 885 NW2d 232 (2016). The trial court’s decision on a motion for summary

disposition is also reviewed de novo. El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159;

934 NW2d 665 (2019).

Plaintiffs moved for partial summary disposition under MCR 2.116(C)(9) and (10). “When

deciding a motion under MCR 2.116(C)(9), which tests the sufficiency of a defendant’s pleadings,

the trial court must accept as true all well-pleaded allegations and properly grants summary

disposition where a defendant fails to plead a valid defense to a claim.” Capital Area Dist Library

v Mich Open Carry, Inc, 298 Mich App 220, 227; 826 NW2d 736 (2012) (quotation marks and

citation omitted). “Summary disposition under MCR 2.116(C)(9) is proper when the defendant’s

pleadings are so clearly untenable that as a matter of law no factual development could possibly

deny the plaintiff’s right to recovery.” Id. (citation omitted). Motions for summary disposition

under MCR 2.116(C)(10) test the factual sufficiency of a claim. El-Khalil, 504 Mich at 160. The

trial court “must consider all evidence submitted by the parties in the light most favorable to the

party opposing the motion.” The motion “may only be granted when there is no genuine issue of

material fact.” Id. “If, after careful review of the evidence, it appears to the trial court that there

is no genuine issue of material fact and the opposing party is entitled to judgment as a matter of

law, then summary disposition is properly granted under MCR 2.116(I)(2).” Lockwood v Twp of

Ellington, 323 Mich App 392, 401; 917 NW2d 413 (2018).

B. LEGAL ANALYSIS

CBAs are contracts and “contract principles apply to CBAs just as they do with regard to

any other contract.” Kendzierski, 503 Mich at 296. “[T]he main goal in the interpretation of

contracts is to honor the intent of the parties.” Mahnick v Bell Co, 256 Mich App 154, 158-159;

662 NW2d 830 (2003). This is done by giving the plain and unambiguous words of a contract

their plain and ordinary meaning. Hastings Mut Ins Co v Safety King, Inc, 286 Mich App 287,

292; 778 NW2d 275 (2009); Reicher v SET Enterprises, Inc, 283 Mich App 657, 664; 770 NW2d

902 (2009). The words and phrases of the contract cannot be read in isolation, but “must be

construed in context and read in light of the contract as a whole.” Auto Owners Ins Co v Seils, 310

Mich App 132, 148; 871 NW2d 530 (2015) (citations omitted). “If the contract, although inartfully

worded or clumsily arranged, fairly admits of but one interpretation, it is not ambiguous.” Wells

Fargo Bank, NA v Cherryland Mall Ltd Partnership (On Remand), 300 Mich App 361, 386; 835

NW2d 593 (2013) (quotation marks and citations omitted).

The issue in Kendzierski was whether the terms of the CBAs in that case conferred lifetime

vested medical benefits to retirees. The pertinent facts in Kendzierski were summarized by our

Supreme Court as follows:

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This is a class action brought on behalf of approximately 1600 unionized Macomb

County employee retirees who worked for defendant under various CBAs dating

back to 1989. Plaintiffs claim that in 2009 and 2010 defendant breached these

agreements by reducing and altering their healthcare benefits; plaintiffs now seek

both monetary damages and injunctive relief. It is undisputed that each CBA

contained an express three-year durational provision and that none of the CBAs

contained a provision expressly granting a vested right to lifetime and unalterable

retirement healthcare benefits. The trial court granted defendant’s motion for

summary disposition, concluding that while plaintiffs are entitled to lifetime

healthcare benefits under the agreements, defendant is permitted to make

reasonable modifications to those benefits. The Court of Appeals affirmed in part

and reversed in part, concluding that while plaintiffs are entitled to lifetime

healthcare benefits, those benefits cannot be modified absent plaintiffs’ consent.

[Kendzierski, 503 Mich at 302 (emphasis added and citation omitted).]

The clause in the CBAs concerning retiree medical benefits in Kendzierski provided:

Retirees: The Employer will provide fully paid Blue Cross/Blue Shield Hospital-

Medical coverage to the employee and the employee’s spouse, after eight (8) years

of service with the Employer, for the employee who leaves employment because of

retirement and is eligible for and receives benefits under the Macomb County

Employees’ Retirement Ordinance . . . . [Id. at 303.]

This clause does not contain language that specifies how long the retiree medical benefits are

provided for. Absent language stating that the benefits were conferred for a defined period of time,

our Supreme Court held that this clause in the CBA “did not grant plaintiffs a vested right to

lifetime and unalterable benefits.” Kendzierski, 503 Mich at 301.

The plaintiffs relied on two additional provisions in the CBAs—one concerning benefits

conferred to surviving spouses and one directing retired employees and their spouses to enroll in

Medicare upon reaching age 65—to argue that the contracts were ambiguous as to whether retiree

medical benefits vested beyond the durational clause of the CBAs. They argued that each of these

provisions manifested intent to have lifetime vested retiree benefits. The majority disagreed. The

Court concluded instead that the surviving-spouse provision “only speaks to the disposition of

retiree benefits upon the death of the retiree, which could occur within the three-year duration of

the CBAs.” Id. at 318-319. Similarly, the Medicare enrollment did not establish that benefits

would last past the expiration of the CBA; instead, that clause addressed the cessation of benefits

if the retiree reached age 65 within the duration of the CBA. Id. at 321. Applying established

rules of contract interpretation, the Court explained:

It is undisputed that none of the CBAs at issue specifies that defendant committed

itself to provide lifetime and unalterable healthcare benefits. It is also undisputed

that the CBAs contain three-year durational provisions. Therefore, the CBAs

guarantee benefits only until the agreements expire and no longer. In other words,

because the CBAs do not specify an alternative ending date for healthcare benefits,

their general durational clauses control. [Id. at 315.]

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The Court held that the trial court erred by considering extrinsic evidence because the

CBAs were not ambiguous. Id. at 316. The Court emphasized that the parties “easily could have

said” in the CBAs that retiree healthcare benefits were vested for life. Id. at 325. Absent such

language, “the only reasonable interpretation of the CBAs is that the contractual right to healthcare

benefits expired when the CBAs expired.” Id. Therefore, the Court concluded that “the contractual

obligations provided therein expired when the CBAs expired.” Id. at 326.

Unlike the CBAs in Kendzierski, the CBAs at issue in this appeal do contain provisions

that expressly grant retirees vested medical benefits beyond the duration of the CBAs. To reiterate,

the applicable CBA in the Pillar case provides in relevant part:

Retired employees who were hired after 12/1/91 shall be covered by an HMO plan

with the same coverage as the Blue Cross/Blue Shield plan, cost sustained by the

City, until the retired employee reaches age 65 or is eligible for Medi-Care, (sic)

when the City will supplement with a “65 Plan.” Should an employee, either

active or retired, become deceased, said employee’s spouse and eligible dependents

under the plan shall continue to be covered, provided said spouse remains

unmarried. (Emphasis added.)

Similarly, the CBA in the Covert case provides in relevant part: