46th Circuit v. Crawford County

Decision Date28 July 2006
Docket NumberCOA No. 3.,Docket No. 128878.
Citation719 N.W.2d 553,476 Mich. 131
Parties46TH CIRCUIT TRIAL COURT, Plaintiff, Counter-Defendant, Third-Party Plaintiff-Appellee, v. COUNTY OF CRAWFORD and Crawford County Board of Commissioners, Defendants, Counter-Plaintiffs, Third-Party Plaintiffs-Appellants, and County of Kalkaska, Intervening Defendant, Counter-Plaintiff, Third-Party Plaintiff-Appellant and County of Otsego, Third-Party Defendant.
CourtMichigan Supreme Court

Kienbaum Opperwall Hardy & Pelton, P.L.C. (by Thomas G. Kienbaum, Noel D. Massie) (Patricia J. Boyle, of counsel), Birmingham, for the plaintiff.

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

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

Foster, Swift, Collins & Smith, P.C. (by Webb A. Smith), Lansing, for amicus curiae Michigan Association of Counties and Michigan Townships Association.

MARKMAN, J.

We granted leave to appeal to consider this funding dispute between the 46th Circuit Trial Court (hereafter the Trial Court) and two of its three county funding units. This case involves a conflict between the legislative branch's exercise of the "legislative power" to appropriate and to tax, and the judicial branch's inherent power to compel sufficient appropriations to allow the judiciary to carry out its essential judicial functions. Specifically, the Trial Court seeks to compel the defendant counties to appropriate funding for the enhanced pension and retiree health care plans it deems necessary to recruit and retain adequate staff to allow it to carry out its essential judicial functions. The circuit judge found in favor of the Trial Court, holding that the benefits were "reasonable and necessary" to the court's ability to perform its constitutional responsibilities and that the counties created for themselves a contractual obligation to appropriate funds for the enhanced pension and retiree health care plans. The Court of Appeals affirmed. Because we conclude that such benefits were not "reasonable and necessary" to the "serviceability" of the court, and because we conclude that the defendant counties were not contractually obligated to appropriate funds for the enhanced benefits plan sought by the Trial Court, we reverse the judgment of the Court of Appeals and remand this case to the circuit judge for entry of a judgment in favor of defendants.

I. FACTS AND PROCEDURAL HISTORY

The Trial Court's predecessor, the 46th Circuit Court, was the circuit court servicing Otsego, Crawford, and Kalkaska counties. Pursuant to Administrative Order No. 1996-9, 451 Mich. civ, the 46th Circuit Court, along with the district and probate courts within these counties,1 became part of a demonstration project designed to evaluate the feasibility of consolidating various court functions into a single entity known as the 46th Circuit Trial Court.2 The chief judge of the 46th Circuit Court was appointed the Trial Court's chief judge (hereafter Chief Judge), and Otsego County was designated as the Trial Court's control unit.

In order to facilitate this consolidation, the Trial Court began a large-scale administrative reorganization for the purpose of standardizing wages, benefits, and personnel policies. During this reorganization in the summer of 2000, the Chief Judge requested that his employees switch to a less-favorable prescription drug and health insurance plan and that they relinquish longevity pay. In return for this concession, the Chief Judge agreed to seek an enhanced employee pension plan and a new retiree health care plan funded by the counties. The Chief Judge presented his enhanced benefits plan, first, to the Tri-County Committee, a nonbinding committee that consisted of individuals representing each county, and subsequently to each county's board of commissioners. The boards of commissioners for Otsego and Kalkaska counties passed resolutions agreeing to implement the enhanced benefits plan. On August 29, 2000, the Crawford County Board of Commissioners passed the following resolution:

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 not implement the MERS [Municipal Employees' Retirement System] B-4 upgrade at this time, but recognize the change in the 2001/2002 budget cycle.

That same afternoon, the Chief Judge informed the Chairwoman of the Crawford board that there had been an error in calculating the annual premium for the first year of the retiree health care plan and that the $4,087 figure was too low. The Chief Judge and the Chairwoman of the board subsequently agreed that the sum of $5,763 should be substituted as the correct first-year premium. However, the Crawford board never amended the resolution to reflect this new figure.

Following the vote in Crawford County, the Chief Judge prepared a contract memorializing the agreement. Although the contract was signed by representatives from Kalkaska and Otsego counties, Crawford County refused to sign the contract because of the board's concern regarding the prospect of a sizeable unfunded liability.3 Shortly thereafter, on December 4, 2000, the Chief Judge implemented both the enhanced benefits plan and the employee concessions by order. Initially, Crawford County alone refused to appropriate its share of the costs of the enhanced benefits plan for fiscal years 2001-2003. However, approximately one year after the implementation order was entered, the Kalkaska County Board of Commissioners rescinded its resolution approving the enhanced benefits plan primarily on the basis of the concerns raised by Crawford County.4 Otsego County proceeded to fund the entire cost of the enhanced benefits plan without reimbursement from the other funding units.

After unsuccessful attempts to settle the dispute, the Chief Judge communicated the notice required by Administrative Order No. 1998-5 § III(1), 459 Mich. clxxvi, of the Trial Court's intention to sue Crawford County. After the required 30-day waiting period expired, the Trial Court brought this action to compel funding, claiming both that Crawford County was contractually obligated to fund the enhanced benefits and that it had failed to provide sufficient funds to allow the court to operate. Specifically, the Trial Court argued that, absent the enhanced benefits, the morale of its employees would decline, leading to lower productivity and, as a result, the court would be unable to function. The Trial Court further argued that it could not generate sufficient savings in its budget to pay for the enhanced benefits and that any staff cuts would prevent the court from operating at a serviceable level. Crawford County denied the allegations and asserted in a counterclaim that the Trial Court had exceeded its authority when it implemented the enhanced pension and retiree health care plans and that the Trial Court had fraudulently misrepresented the costs of the latter. Kalkaska County moved to intervene on behalf of Crawford County. In a separate action, Crawford and Kalkaska counties sued Otsego County, claiming that Otsego County had improperly implemented the enhanced pension and retiree health care plans and had colluded with the Trial Court to withhold information about the cost of the pension increase. The cases were consolidated and the State Court Administrator assigned a circuit judge from outside the affected counties to preside over these cases.

The circuit judge eventually found that the Trial Court's requested budget, specifically the requested appropriation for the enhanced benefits plan, was "reasonable and necessary" to the court's ability to perform its essential functions. The requested appropriation was "reasonable" because it was not "excessive" and was "comparable to what other courts spend on like activities." The requested appropriation was also "necessary" because it had been "convincingly" proved that loss of the benefits plan would destroy employee morale to the point where the court could no longer function. The circuit judge also found that the August 29, 2000, resolution created an explicit contract with the Trial Court to implement the enhanced benefits plan. In a published opinion, 266 Mich. App. 150, 702 N.W.2d 588 (2005), the Court of Appeals affirmed.5

This Court granted the defendant counties' application for leave to appeal, limited to the questions: (1) whether the appropriations sought for the enhanced benefits plan were "reasonable and necessary to achieve the court's constitutional and statutory responsibilities"; (2) whether the defendant counties were contractually obligated to fund the enhanced benefits plan at the level requested by the Trial Court; and (3) whether there was evidence to support the conclusion that the level of funding offered by the counties was insufficient to allow the court to fulfill its essential functions. 474 Mich. 986, 707 N.W.2d 591 (2005).6

II. STANDARD OF REVIEW

Whether county funding of local court operations satisfies constitutional requirements presents a constitutional question that this Court reviews de novo. De-Rose v. DeRose, 469 Mich. 320, 326, 666 N.W.2d 636 (2003). We review for clear error the factual findings underlying the circuit judge's determination of whether the requested appropriation was "reasonable and necessary." MCR 2.613(...

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