Kendzierski ex rel. Situated v. Macomb Cnty.

Decision Date18 April 2017
Docket NumberNo. 329576.,329576.
Citation901 N.W.2d 111,319 Mich.App. 278
Parties Rita KENDZIERSKI, Bonnie Haines, Greg Dennis, Louise Bertolini, John Barker, James Cowan, Vincent Powierski, Robert Stanley, Alan Moroschan, and Gaer Guerber, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs–Appellants/Cross–Appellees, v. MACOMB COUNTY, Defendant–Appellee/Cross–Appellant.
CourtCourt of Appeal of Michigan — District of US

Legghio & Israel, PC (by Christopher P. Legghio ), for plaintiffs.

Kitch Drutchas Wagner Valitutti & Sherbrook (by Susan Healy Zitterman and Karen B. Berkery ) for defendant.

Before: Fort Hood, P.J., and Jansen and Hoekstra, JJ.

Jansen, J.

In this class action, plaintiffs, acting as class representatives, appeal as of right the trial court's opinion and order denying their motion for summary disposition and request for a permanent injunction with regard to defendant's unilateral modification of retiree healthcare benefits. On cross-appeal, defendant challenges the same order, asserting that the trial court's conclusion that plaintiffs' healthcare retirement benefits were vested or comprised an entitlement to lifetime benefits constituted error. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

This case presents the issue whether defendant was permitted to make unilateral changes to retiree healthcare benefits outlined in several collective bargaining agreements (CBAs). Plaintiffs represent a class of retirees covered under various CBAs with defendant. The parties dispute (1) whether plaintiffs have a vested right to lifetime healthcare benefits, and (2) if so, whether defendant was permitted to make unilateral changes to the healthcare benefits. The trial court concluded that plaintiffs have a vested right to lifetime healthcare benefits. However, the court then concluded that defendant could reasonably modify the scope and level of the benefits. The court, therefore, granted summary disposition in favor of defendant.

I. STANDARD OF REVIEW

Plaintiffs moved for summary disposition pursuant to MCR 2.116(C)(10). Defendant moved for summary disposition under MCR 2.116(C)(7), (8), and (10). We review de novo a trial court's ruling on a motion for summary disposition. Stephens v. Worden Ins. Agency, LLC , 307 Mich.App. 220, 227, 859 N.W.2d 723 (2014). Because the trial court clearly relied on documents outside of the pleadings, including the CBAs, deposition testimony, and other documentation submitted by the parties, we conclude that summary disposition was granted to defendant under MCR 2.116(C)(10). See Cuddington v. United Health Servs., Inc. , 298 Mich.App. 264, 270, 826 N.W.2d 519 (2012) ("The trial court did not indicate whether it granted defendant's motion pursuant to MCR 2.116(C)(8) or (10) ; however, because the trial court considered documentary evidence beyond the pleadings, we construe the motion as having been granted pursuant to MCR 2.116(C)(10).").

A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. In reviewing a grant of summary disposition under MCR 2.116(C)(10), this Court considers the pleadings, admissions, and other evidence submitted by the parties in the light most favorable to the nonmoving party. Summary disposition is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. [ Williams v. Enjoi Transp. Solutions , 307 Mich.App. 182, 185, 858 N.W.2d 530 (2014) (citations omitted).]

In addition, "[a] written contract's interpretation is also reviewed de novo." Reicher v. SET Enterprises, Inc. , 283 Mich.App. 657, 664, 770 N.W.2d 902 (2009).

We enforce contracts according to their terms, as a corollary to the parties['] liberty to enter into a contract. We examine contractual language and give the words their plain and ordinary meanings. An unambiguous contractual provision reflects the parties['] intent as a matter of law, and [i]f the language of the contract is unambiguous, we construe and enforce the contract as written. Courts may not create ambiguity when contract language is clear. Rather, this Court must honor the parties' contract, and not rewrite it. [ Id. at 664–665, 770 N.W.2d 902 (citations and quotation marks omitted; third alteration in original).]
II. VESTED BENEFITS

Defendant argues that the trial court improperly concluded that plaintiffs are entitled to lifetime healthcare benefits. We disagree.

To determine whether plaintiffs' right to healthcare benefits had vested, we first examine the CBA language at issue in the context of accepted principles of contract interpretation. "Under established contract principles, vested retirement rights may not be altered without the [retiree]'s consent." Harper Woods Retirees Ass'n v. Harper Woods , 312 Mich.App. 500, 511, 879 N.W.2d 897 (2015) (citation and quotation marks omitted; alteration in original). Our Supreme Court in Arbuckle v. Gen. Motors LLC , 499 Mich. 521, 539, 885 N.W.2d 232 (2016), recently observed that "a union may represent and bargain for already-retired employees, but only with respect to non vested benefits. By contrast, when an employer explicitly obligates itself to provide vested benefits, that promise is rendered forever unalterable without the retiree's consent." (Citation omitted.)

To determine whether the right to the healthcare benefits has vested, a plaintiff must establish that "(1) he or she had a contractual right to the claimed benefit that was to continue after the agreement's expiration, and (2) the right was included in his or her respective contract at the time of retirement." Harper Woods , 312 Mich.App. at 511, 879 N.W.2d 897. Before the United States Supreme Court issued its opinion in M & G Polymers USA, LLC v. Tackett , 574 U.S. ––––, 135 S.Ct. 926, 190 L.Ed.2d 809 (2015), a presumption existed in the United States Court of Appeals for the Sixth Circuit that retiree benefits outlined in a CBA are vested lifetime benefits. Harper Woods Retirees Ass'n , 312 Mich.App. at 511–512, 879 N.W.2d 897. In Tackett , the United States Supreme Court concluded that this presumption was inconsistent with the traditional rules of contract law. Tackett , 574 U.S. at ––––, 135 S.Ct. at 937, 190 L.Ed.2d at 821. The Court indicated that ordinarily, a contractual obligation ceases when the CBA terminates. Id . at ––––, 135 S.Ct. at 937, 190 L.Ed.2d at 820. "[W]hen a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life." Id . at ––––, 135 S.Ct. at 937, 190 L.Ed.2d at 820. However, the Court clarified that its holding did not preclude a conclusion that the parties intended for the lifetime benefits to vest, so long as ordinary contract principles were used to reach that conclusion. Id . at ––––, 135 S.Ct. at 937, 190 L.Ed.2d at 820.

Our Supreme Court expanded upon this idea in Arbuckle :

Indeed, basic principles of contract interpretation instruct that courts should not construe ambiguous writings to create lifetime promises and, absent a contrary intent, that contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement. For when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life. [ Arbuckle , 499 Mich. at 540, 885 N.W.2d 232 (citations and quotation marks omitted).]

Accordingly, we examine the traditional rules of contract interpretation to determine whether plaintiffs had the right to lifetime healthcare benefits. As explained in Arbuckle :

Interpretation of a collective-bargaining agreement, like interpretation of any other contract, is ... a question of law also subject to review de novo. A reviewing court interprets a collective-bargaining agreement according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy. [ Id . at 531–532, 885 N.W.2d 232 (citations and quotation marks omitted).]

This Court has recently recognized:

This Court's main goal in the interpretation of contracts is to honor the intent of the parties. The words used in the contract are the best evidence [of] the parties' intent. When contract language is clear, unambiguous, and has a definite meaning, courts do not have the ability to write a different contract for the parties, or to consider extrinsic testimony to determine the parties' intent. [ Kyocera Corp. v. Hemlock Semiconductor, LLC , 313 Mich.App. 437, 446, 886 N.W.2d 445 (2015) (citations and quotation marks omitted).]

However, when a contract contains a latent ambiguity, then extrinsic evidence may be admitted to establish the meaning of the contract. Shay v. Aldrich , 487 Mich. 648, 667, 790 N.W.2d 629 (2010). Our Supreme Court has described a latent ambiguity as follows:

A latent ambiguity ... is one that does not readily appear in the language of a document, but instead arises from a collateral matter when the document's terms are applied or executed. Because the detection of a latent ambiguity requires a consideration of factors outside the instrument itself, extrinsic evidence is obviously admissible to prove the existence of the ambiguity, as well as to resolve any ambiguity proven to exist. [ Id . at 668, 790 N.W.2d 629 (citation and quotation marks omitted).]

Our Supreme Court has further explained that

[a] latent ambiguity exists when the language in a contract appears to be clear and intelligible and suggests a single meaning, but other facts create the necessity for interpretation or a choice among two or more possible meanings. To verify the existence of a latent ambiguity, a court must examine the extrinsic evidence presented and determine if in fact that evidence supports an argument that the contract language at issue, under the circumstances of its formation, is susceptible to more than one
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    • May 30, 2019
    ...entitled to lifetime healthcare benefits, those benefits cannot be modified absent plaintiffs' consent. Kendzierski v. Macomb Co. , 319 Mich. App. 278, 286-289, 901 N.W.2d 111 (2017). We ordered and heard oral argument on whether to grant defendant’s application for leave to appeal. Kendzie......
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