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151717 - Bd of Trustees of the City of Pontiac v City of Pontiac

Board of Trustees of the City of Pontiac Police & Fire Retiree Prefunded Group Health & Insurance Trust,
Ronald S. Lederman
(Appeal from Ct of Appeals)
(Oakland – O’Brien, D.)
City of Pontiac,
Stephen Jay Hitchcock


Plaintiff Pontiac Police & Fire Retiree Prefunded Group Health & Insurance Trust was organized to pay healthcare benefits for retirees from the Pontiac fire and police departments.  The trust agreement required the defendant City of Pontiac to make annual contributions to the trust.  This case concerns Pontiac’s contribution to the trust for the fiscal year July 1, 2011 to June 30, 2012 in the amount of $3,473,923.  Pontiac, which was in financial straits and operating under an emergency manager, did not make the payment by June 30, 2012.  Rather, the emergency manager issued Executive Order No. 225 (EO 225) that amended the trust agreement to remove Pontiac’s obligation “to continue to make contributions” to the trust.  The plaintiff trust promptly sued.  The circuit court granted summary disposition to Pontiac and dismissed the case.  In a published per curiam opinion, the Court of Appeals reversed, holding that the language of the EO did not change Pontiac’s obligation to contribute to the trust for the 2011-2012 fiscal year.  Pontiac appealed to the Supreme Court, arguing that the Court of Appeals misinterpreted EO 225 and did so based on an argument that the plaintiff trust never advanced.  On September 30, 2015, the Supreme Court ordered oral argument on the application, to address the meaning and applicability of the language “to continue to make contributions” in EO 225.