Allen Park Retirees Ass'n v. City of Allen Park
| Decision Date | 18 May 2023 |
| Docket Number | 357955,357956 |
| Parties | ALLEN PARK RETIREES ASSOCIATION, INC. and JANICE K. PILLAR, Personal Representative of the ESTATE OF RUSSELL PILLAR, Plaintiffs-Appellees, v. CITY OF ALLEN PARK, Defendant-Appellant, and JOYCE A. PARKER, Defendant. DALE COVERT, and all others similarly situated, Plaintiff-Appellee, v. CITY OF ALLEN PARK, Defendant-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Wayne Circuit Court LC Nos. 14-003826-CZ, 18-004458-CK.
Before: RICK, P.J., and O'BRIEN and PATEL, JJ.
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 N.W.2d 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.
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.
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 nonmarried 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 N.W.2d 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 N.W.2d 897 (2015), and Kendzierski v Macomb Co, 329 Mich.App. 430; 942 N.W.2d 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 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 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.
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