46th Circuit Trial Ct. v. CRAWFORD CTY.

Decision Date05 July 2005
Docket NumberDocket No. 254180,Docket No. 257234.,Docket No. 256129,Docket No. 254182,Docket No. 254181,Docket No. 254179
Citation702 N.W.2d 588,266 Mich. App. 150
Parties46TH CIRCUIT TRIAL COURT, Plaintiff/Counter-Defendant/Third-Party-Plaintiff-Appellee, v. CRAWFORD COUNTY and Crawford County Board of Commissioners, Defendants/Counter-Plaintiffs/Third-Party-Plaintiffs-Appellants, Kalkaska County, Third-Party-Plaintiff/Counter-Defendant-Appellant, and Otsego County, Third-Party-Defendant-Appellee. Crawford County and Kalkaska County, Plaintiffs-Appellants, v. Otsego County, Defendant-Appellee. 46th Circuit Trial Court, Plaintiff/Counter-Defendant/Third-Party-Plaintiff-Appellee, v. Crawford County and Crawford County Board of Commissioners, Defendants/Counter-Plaintiffs/Third-Party-Plaintiffs, Kalkaska County, Third-Party-Plaintiff/Counter-Defendant, Otsego County, Third-Party-Defendant-Appellee, and Cohl Stoker Toskey & McGlinchey PC, Appellant. Crawford County and Kalkaska County, Plaintiffs, v. Otsego County, Defendant-Appellee, and Chol Stoker Toskey & McGlinchey PC, Appellants. 46th Circuit Trial Court, Plaintiff-Appellee, v. Crawford County, Defendant-Appellant, Crawford County Board of Commissioners, Defendant/Counter-Plaintiff/Third-Party-Plaintiff-Appellant, Kalkaska County, Third-Party-Plaintiff/Counter-Defendant-Appellant, and Otsego County, Third-Party-Defendant-Appellee.
CourtCourt of Appeal of Michigan — District of US

Kienbaum Opperwall Hardy & Pelton, P.L.C. (by Thomas G. Kienbaum, Noel D. Massie, and Patricia J. Boyle, of counsel), Birmingham, Birmingham, for the 46th Circuit Trial Court.

Allan Falk, P.C. (by Allan Falk), and Cohl, Stoker, Toskey & McGlinchey, P.C. (by Bonnie G. Toskey), Okemos, Lansing, for Crawford County, Kalkaska County, and the Crawford County Board of Commissioners.

Johnson, Rosati, LaBarge, Aseltyne & Field, P.C. (by Christopher J. Johnson and Marcelyn A. Stepanski), Farmington Hills, for Otsego County.

Before: ZAHRA, P.J., and NEFF and COOPER, JJ.

COOPER, J.

Kalkaska County, Crawford County, and the Crawford County Board of Commissioners (the Counties) appeal as of right in these consolidated appeals from various orders and the judgment entered by Judge Dennis Kolenda (the lower court) in the litigation pursued by the 46th Circuit Trial Court (the Trial Court) seeking adequate funding. The Counties also appeal from various orders entered in the related suit filed by the Counties against Otsego County, the control unit for the Trial Court. We affirm.

I. Facts and Procedural Background

These consolidated cases arise out of a funding dispute between the Trial Court and two of its funding units—the Counties. A detailed narrative of much of the history of this case is provided in 46th Circuit Trial Court v. Crawford Co,1 an opinion issued by this Court following an interlocutory appeal. In that appeal, this Court affirmed the lower court's award of attorney fees to the Trial Court based the Trial Court's inherent power to seek adequate funding. While that appeal was pending, however, this case proceeded in the lower court.

The 46th Circuit Trial Court was created by order of the Michigan Supreme Court as an experiment in consolidating the various levels of trial courts into one, unified trial court system.2 The 46th Circuit Trial Court was the only multi-county experimental court created and included Otsego, Crawford, and Kalkaska counties. During the early stages of unification, the Trial Court concluded that all employees, regardless of the county in which they physically worked, should earn equal pay and receive equal benefits. Wages needed to be redetermined, as many positions had been eradicated and others had taken on consolidated functions. Consequently, in the summer of 2000, Chief Judge Alton Davis asked the employees to make cost-saving concessions to serve as a bargaining chip in securing the funding units' approval of a retiree healthcare plan and an improved pension plan. The employees agreed to phase out longevity pay and dedicate a portion of all future wage increases to fund the retiree benefits package. Employees also agreed to accept a cost-saving health care insurance plan that offered less coverage and had a higher prescription co-pay. Following the funding units' passage of resolutions approving these plans, the Trial Court implemented the employee concessions at substantial savings to the Trial Court and its funding units.

During the August 29, 2000 meeting, at which the Crawford County Board of Commissioners passed resolutions approving the plans, the commissioners voiced their concerns about becoming financially responsible for potential future unfunded liability and over the low figure represented as the annual retiree payment cap.3 Judge Davis promised to put a "failsafe" provision in writing to outline the method of handling any unfunded liabilities. Despite these concerns, the Board passed the following resolutions at the conclusion of the meeting:

MOTION by Hanson, seconded by Beardslee, to authorize the County [to] pay 24% of $50,000 ($12,000) for the year 2000 and that payment will increase at 4% per year until 2017, and at that time will pay an estimated $94,649 and that the Blue Cross/Blue Shield medical supplement payment per individual would be capped at [sic] the year 2000 at $4,087.00 [and] would increase at 4% per year until 2017 for an employee to be eligible for $7,654.00 per year.
MOTION by Wieland, seconded by Hanson, to request the [Trial] Court [to] not implement the MERS B-4 upgrade at this time, but recognize the change in the 2001/2002 budget cycle.

Later that day, Judge Davis learned that the correct figure for the annual retiree payment was over $5,000, and immediately informed the Crawford County Board of Commissioners of his error.4

Following this meeting, the Trial Court created a comprehensive contract outlining the retiree benefits package to serve as an informative guide for the Trial Court and its employees. The contract also included the promised memorialization of the "fail-safe" provision. Kalkaska and Otsego counties immediately signed the contract, but Crawford County refused. The Crawford County Board of Commissioners consulted with its auditor and labor counsel after approving the retiree benefits package and was advised that its approval was unwise. Crawford County was in the middle of a budget crisis and had been forced to cut many county services. As a result, the Board claimed that it had not approved the pension plan and was induced to approve the retiree healthcare plan by the Trial Court's misrepresentation of cost. This led to Crawford County's refusal in FY 2001, 2002, and 2003 to appropriate the full amount of their 24% of the Trial Court's requested operating budget.5 Although Kalkaska County initially approved of the retiree benefits package and fully funded the Trial Court, it soon followed suit by rescinding its earlier resolutions and cutting appropriations.

Following lengthy negotiations with its funding units, the Trial Court filed suit against the Counties, seeking the enforcement of the contract to implement the retiree benefits package and adequate funding based on the constitutional theory of inherent powers. The Counties filed a counterclaim for declaratory judgment regarding their duty to fund the Trial Court and defended against the contract claims based on fraud. Otsego County was brought into the litigation by the Counties, which also filed a separate suit against it. The Counties asserted that Otsego County, as the Trial Court's control unit, had violated the Uniform Budgeting and Accounting Act (UBAA)6 by disbursing funds to the Trial Court in excess of appropriations. The Counties also raised a fraud claim against Otsego County. The Counties' fraud defense and all claims against Otsego County were dismissed before a trial on the merits began. Following a six-day trial in the summer of 2003, the lower court ruled in favor of the Trial Court on both its contract and constitutional theories in pursuit of funding.7

II. Contract Claims

The lower court determined that the resolutions passed by the funding units created an explicit contract with the Trial Court to implement the retiree benefits package. Even if the parties had not formed a contract, the lower court determined that one could be implied. On appeal, the Counties contend that the lower court improperly interpreted the Crawford Board's resolution regarding the retiree healthcare plan as a valid acceptance, rather than a counteroffer. The Counties also contend that the Crawford Board's resolution regarding the pension plan was not an approval of the plan, but showed the Board's intent to table all discussion until the following year. We disagree.

The lower court correctly determined that Crawford County approved the retiree benefits package and formed a valid contract with the Trial Court for its implementation. Issues of contract interpretation are questions of law that we review de novo.8 Issues regarding the formation of a valid contract are all questions of fact,9 which we review for clear error.10 The interpretation of a county resolution, like the interpretation of a statute, is a question of law, which we review de novo.11

We reject the Counties' contention that the resolutions passed by the Crawford County Board of Commissioners did not amount to a valid acceptance of an offer to implement the retiree benefits package. "`Decisions regarding the legitimacy of an offer and acceptance revolve around the particular facts pertaining to a specific transaction....'"12 "`[A]n acceptance sufficient to create a contract arises where the individual to whom an offer is extended manifests an intent to be bound by the offer, ... through voluntarily undertaking some unequivocal act sufficient for that purpose.'"13 The acceptance must be unambiguous and strictly conform to the essential...

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