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STATE OF MICHIGAN
COURT OF APPEALS


JOSEPH PALAZZOLA, Plaintiff-Appellant, v CITY OF FRASER CONSOLIDATED RETIREMENT SYSTEM and BOARD OF THE CITY OF FRASER CONSOLIDATED RETIREMENT SYSTEM, Defendants-Appellees.

UNPUBLISHED August 8, 2006

No. 257715 Macomb Circuit Court LC No. 2003-003503-CK

Before: Owens, P.J., and Kelly and Fort Hood, JJ. PER CURIAM. Plaintiff brought this action against defendants City of Fraser Consolidated Retirement System (the "System") and its governing board (the "Board"), claiming that defendants improperly determined the amount of his late retirement benefit under the city's retirement plan. The trial court granted defendants' motion for summary disposition pursuant to MCR 2.116(C)(10). Plaintiff appeals as of right. We affirm. Plaintiff brought this action against defendants after they resolved an ambiguity in the contract governing plaintiff's retirement benefits in a manner that resulted in plaintiff receiving a lesser benefit than he believed he was entitled. The ambiguity arose from the inclusion of a sample calculation demonstrating how to calculate a participant's late retirement benefit. The sample calculation used an annualized expression of the participant's Final Average Compensation ("FAC"), multiplied by a percentage based on the length of time the participant worked beyond his normal retirement date. This product was then multiplied by the number of months the participant worked following his normal retirement date. This sample calculation for the late retirement benefit was inconsistent with a sample calculation showing how to determine a participant's normal retirement benefit, which used a formula that used an annualized FAC, multiplied by the applicable percentage, the product of which was then multiplied by the number of years the participant worked. Before plaintiff retired, Thomas Van Damme, a Board member and the plan trustee discovered the inconsistency and asked the Board members to correct the problem by replacing the page that showed the incorrect sample calculation. When plaintiff retired, he maintained that his late retirement benefit should be calculated according to the original sample calculation. Defendants maintained that the original sample -1-


calculation was contrary to the plan's language, and that the Board properly exercised its authority to interpret the plan by replacing the page. Plaintiff filed the instant action, asserting claims for breach of contract, breach of fiduciary duty, mandamus, and declaratory relief.1 All of these claims were predicated on the theory that the plan was ambiguous, but that a trier of fact was required to resolve the ambiguity and interpret the plan. Defendants moved for summary disposition under MCR 2.116(C)(10), submitting that there was no genuine issue of fact that the Board had the discretion to interpret the plan, and that its interpretation was not arbitrary or capricious. The trial court agreed and granted the motion. We review de novo a trial court's resolution of a motion for summary disposition. Veenstra v Washtenaw Country Club, 466 Mich 155, 159; 645 NW2d 643 (2002). A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Kraft v Detroit Entertainment, LLC, 261 Mich App 534, 539; 683 NW2d 200 (2004). Summary disposition should be granted if there is no genuine issue of any material fact and the moving party is entitled to judgment as a matter of law. Id. at 540; MCR 2.116(C)(10) and (G)(4). As a preliminary matter, we agree with defendants that the Board's decision resolving the ambiguity arising from the conflicting plan language and sample calculations is subject to an arbitrary and capricious standard of review because

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Michigan Law