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Plaintiffs' Brief in Opposition to the State's Second Motion for Summary Disposition

STATE OF MICHIGAN

IN THE COURT OF CLAIMS

______________________________________________________________________________

THOMAS R. OKRIE, et al.,

Plaintiffs,

Court of Claims No. 13-93-MK

v                                                       HON. Deborah A. Servitto

STATE OF MICHIGAN,

GOVERNOR RICK SNYDER,

MICHIGAN DEPARTMENT

OF TECHNOLOGY, MANAGEMENT

AND BUDGET, OFFICE OF

RETIREMENT SERVICES,

STATE EMPLOYEES RETIREMENT

SYSTEM, MICHIGAN PUBLIC

SCHOOL EMPLOYEES RETIREMENT

SYSTEM, and MICHIGAN DEPARTMENT

OF TREASURY,

Defendants.

______________________________________________________________________

Gary P. Supanich (P45547)

LAW OFFICE OF GARY P. SUPANICH

Attorney for Plaintiffs

117 North First Street, Suite 111

Ann Arbor, MI 48104

(734) 276-656

www.michigan-appeal-attorney.com

Patrick M. Fitzgerald (P69964)

Joshua Booth (P53947)

Margaret Nelson (P30342)

MICHIGAN DEPARTMENT OF ATTORNEY GENERAL

State Operations Division

Attorneys for Defendants

P.O. Box 30754

Lansing, MI 48909

(517) 373-1162

_____________________________________________________________________

PLAINTIFFS' BRIEF IN OPPOSITION TO DEFENDANTS' MOTION FOR SUMMARY DISPOSITION

PROOF OF SERVICE

TABLE OF CONTENTS

STATEMENT OF FACTS..................................... 1

ARGUMENT......................................................... 5

I. COURT OF APPEALS JUDGE SERVITTO IS NOT AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE ON THE COURT OF CLAIMS........ 5

II. ASSUMING ARGUENDO THAT COURT OF APPEALS JUDGE SERVITTO WERE AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE OF THE COURT OF CLAIMS, PLAINTIFFS' RIGHTS TO NOTICE AND OPPORTUNITY TO BE HEARD UNDER THE DUE PROCESS CLAUSE OF THE STATE AND FEDERAL CONSTITUTIONS, 1963 CONST, ART 1, § 17 AND US CONST, AM XIV, RESPECTIVELY, HAVE BEEN VIOLATED BY THIS COURT'S DECISION NOT TO RE-NOTICE THEIR MOTION FOR A HEARING, WHICH WAS SCHEDULED TO BE HEARD ON DECEMBER 13, 2013 AT 9;00 A.M. BY JUDGE ROSEMARIE E. AQUILINA IN INGHAM CIRCUIT COURT BEFORE THIS HEARING WAS CANCELED BY COURT OF APPEALS JUDGE TALBOT, ACTING AS CHIEF OF THE COURT OF CLAIMS........................................................ 6

III. ASSUMING ARGUENDO THAT COURT OF APPEALS JUDGE SERVITTO WERE AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE OF THE COURT OF CLAIMS AND THIS COURT'S DECISION NOT TO RE-NOTICE PLAINTIFFS' MOTION FOR A HEARING DID NOT VIOLATE DUE PROCESS, THIS COURT SHOULD DENY DEFENDANTS' MOTION FOR SUMMARY DISPOSITION AND GRANT PLAINTIFFS' MOTION FOR SUMMARY DISPOSITION.......................... 7

IV. ASSUMING ARGUENDO THAT COURT OF APPEALS JUDGE SERVITTO WERE AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE OF THE COURT OF CLAIMS, THAT HER DECISION NOT TO RE-NOTICE PLAINTIFFS' MOTION FOR A HEARING DID NOT VIOLATE DUE PROCESS, AND THAT DEFENDANTS' MOTION FOR SUMMARY DISPOSITION WERE GRANTED, PLAINTIFFS REQUEST THAT THIS COURT GRANT THEIR MOTION TO AMEND THEIR VERIFIED CLASS ACTION COMPLAINT TO ALLEGE BREACH OF INVESTMENT CONTRACTS REGARDING THE PURCHASE OF SERVICE CREDIT AND THE MICHIGAN INVESTMENT PLAN (MIP) AND GRANT THEIR MOTION FOR CLASS CERTIFICATION............................. 8

CONCLUSION AND RELIEF............................ 10

STATEMENT OF FACTS

On October 9, 2013, Plaintiffs filed an Amended Verified Class Action Complaint with the Court of Claims in the Ingham Circuit Court, Judge Rosemarie E. Aquilina presiding, adding claims for breach of a traditional employment contract and unjust enrichment under state law, and for violations of the Contract Clause, the Takings Clause, and substantive and procedural Due Process Clauses under the state and federal constitution. Thereafter, on November 1, 2013, Plaintiffs filed a Motion for Summary Disposition and Brief in Support of their motion as to these added claims, and noticed this motion for a hearing before Judge Aquilina in her courtroom in Ingham Circuit Court on December 13, 2013 at 9 a.m. On November 6, 2013, Defendants likewise filed a Motion for Summary Disposition and Brief in Support of their motion as to these claims, and noticed this motion for a hearing before Judge Aquilina in her courtroom in Ingham Circuit Court on December 13, 2013 at 9 a.m. However, on November 13, 2013, Governor Snyder, a party defendant in this matter, signed into law 2013 PA 164 ("the Act") transferring the Court of Claims from the Ingham Circuit Court to the Court of Appeals. On November 14, 2013, Court of Appeals Judge Talbot, acting as Chief Judge of the Court of Claims, issued an order staying the proceedings in cases pending in the Court of Claims as of November 13, 2013. At no time did Plaintiffs' counsel receive written or oral notice of this or any other related action from the Court of Claims.

On December 13, 2013, the date of the scheduled hearing on the parties' cross-motions for summary disposition, Plaintiffs filed a Petition Challenging the Constitutionality of 2013 PA 164 in the Court of Appeals, as required by the Act. Among the relief sought was a request that this Court stay the proceedings in the present case and all pending cases until this Court resolves the constitutional challenges to 2013 PA 164. At that point, Plaintiffs' counsel still had not received written or oral notice from the Court of Claims about the status of the pending case.

On January 21, 2013, 2014, upon learning - for the first time - in a phone conversation with Mr. Gerald Zimmer, Chief Clerk of the Court of Appeals, acting as the Chief Clerk of the Court of Claims, that Court of Appeals Judge Servitto had been assigned to act as a Court of Claims judge in this case, Plaintiffs filed a Motion to Stay the Proceedings in this Court on January 21, 2014, pending the Court of Appeals' determination of the constitutionality of 2013 PA 164 transferring the jurisdiction of the Court of Claims from the 30th Circuit Court to the Court of Appeals. In support of their motion, Plaintiffs attached a copy of the Petition filed in this Court showing that 2013 PA 164 as unconstitutional in violation of the separation of powers doctrine under the state constitution and the due process clauses under the state and federal constitutions.

Subsequently, for the very first time since 2013 PA 164 went into effect, Plaintiffs' counsel received on February 10, 2014 a written communication from the Court of Claims, when Court of Appeals Judge Servitto, acting as a judge of the Court of Claims, enclosed in a Court of Appeals' envelope, her Opinion and Order denying Plaintiffs' Motion for Reconsideration timely filed on November 25, 2013 seeking reconsideration of Judge Aquilina's November 5, 2013 order granting Defendants' Motion for Summary Disposition and denying Plaintiffs' Motion for Summary Disposition regarding their claims for promissory estoppel and equitable relief, and dismissing Plaintiffs' Motion for Class Certification as to these claims.

Thereafter, on February 25, 2014, Court of Appeals Judge Servitto, acting as a judge of the Court of Claims, denied the motion to stay, inexplicably stating that "no constitutional challenge has been raised in the case at bar" and that "[t]o delay this case would be contrary to the interests of justice and could potentially halt all the matters pending in the Court of Claims for several months," even though that is precisely what Court of Appeals Judge Talbot did when, acting as the Chief Judge of the Court of Claims, stayed the proceedings in all pending cases, including this one, for 30 days dating from his November 13, 2013 order. In reality, this case had been stayed for nearly 90 days in violation of Plaintiffs' rights to due process under law .

On March 11, 2014, Plaintiffs filed a Motion to Stay the Proceedings in this matter, along with a Brief in Support, with the Court of Appeals, which Plaintiffs have attached here as Exhibit 1, again claiming that Court of Appeals Judge Servitto has no legal authority to act as a judge of the Court of Claims, rendering all her rulings in the capacity of a judge of a legislatively-created court of limited jurisdiction constitutionally invalid and without effect and thus further delaying this case, if the Court of Appeals declares 2013 PA 164 unconstitutional as violative of the separation of powers doctrine under the state constitution and the due process clauses under the state and federal constitutions.

Just before 5:00 p.m. on Thursday, March 13, 2014, Plaintiffs' counsel received in the mail at his office an envelope from Judge Servitto of the Court of Appeals, which was time-stamped March 12, 2014 and which contained a letter on Court of Claims' stationary, stating that Defendants filed a second motion for summary disposition on November 6, 2013, but that there was no record of an answer filed by Plaintiffs, and that Defendants had yet to respond to Plaintiffs' Second Amended Verified Class Action Complaint. The letter fails to mention that Plaintiffs also filed a second motion for summary disposition in this matter on November 1, 2013, and that these cross-motions were noticed for a hearing on December 13, 2013, which was canceled and never rescheduled. The letter then informs Plaintiffs' counsel that Plaintiffs Motion to file a Second Amended Verified Class Action Complaint and Defendants' Motion for Summary Disposition will be decided on March 25, 2014, without oral argument, despite the fact that the parties' cross-motions for summary disposition were previously noticed for a hearing that was canceled. The letter further states that Plaintiffs' answer to Defendants' Motion for Summary Disposition must be received by Tuesday, March 18, 2014.

In response, Plaintiffs respectfully request that Court of Appeals Judge Servitto recognize that she lacks constitutional authority to act as a judge of the Court of Claims in this matter, and that even assuming arguendo that she does have authority to act as a Court of Claims judge, the abrupt nature of her letter, ignoring that Plaintiffs have a pending Motion for Summary Disposition, directing Plaintiffs to file an answer with virtual no notice and then cancelling oral argument on Defendants' Motion for Summary Disposition and Plaintiffs' Motion to Amend their Verified Class Action Complaint violates due process under the state and federal constitutions. Finally, in the event that Court of Appeals Judge Servitto proceeds forward in this matter, Plaintiffs ask that Defendants' Motion for Summary Disposition be denied, and that Plaintiffs' Motion for Summary Disposition be granted, and that Plaintiffs be allowed to amend their complaint to add two claims for breach of investment contracts regarding the purchase of service credit and the Michigan Investment Plan (MIP) and that this Court grant their Motion for Class Certification.

ARGUMENT

I. COURT OF APPEALS JUDGE SERVITTO IS NOT AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE ON THE COURT OF CLAIMS.

Plaintiffs filed a Motion to Stay the Proceedings in this matter with this Court on January 21, 2014, attaching the Petition filed in the Court of Appeals on December 13, 2013, challenging the constitutionality of 2013 PA 164 transferring the Court of Claims to the Court of Appeals. On February 25, 2014, this Court denied their Motion on the ground that Plaintiffs' did not raise the constitutionality of 2013 PA 164 in their Motion to Stay, even though it is specifically referenced in the Motion to Stay and the Petition was attached. In any case, it is specifically provided in the Act that any such constitutional challenges be presented in the Court of Appeals as an original action. Plaintiffs now formally challenge the jurisdiction of this Court to act in this case. In support, Plaintiffs attach their Motion to Stay the Proceedings in this matter and their Brief in Support of the Motion, which was filed with the Court of Appeals on March 11, 2014. (EX. 1). Plaintiffs again request that this Court not to rule in this matter pending the determination of the Court of Appeals regarding the constitutionality of the Act.

II. ASSUMING ARGUENDO THAT COURT OF APPEALS JUDGE SERVITTO WERE AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE OF THE COURT OF CLAIMS, PLAINTIFFS' RIGHTS TO NOTICE AND OPPORTUNITY TO BE HEARD UNDER THE DUE PROCESS CLAUSE OF THE STATE AND FEDERAL CONSTITUTIONS, 1963 CONST, ART 1, § 17 AND US CONST, AM XIV, RESPECTIVELY, HAVE BEEN VIOLATED BY THIS COURT'S DECISION NOT TO RE-NOTICE THEIR MOTION FOR A HEARING, WHICH WAS SCHEDULED TO BE HEARD ON DECEMBER 13, 2013 AT 9;00 A.M. BY JUDGE ROSEMARIE E. AQUILINA IN INGHAM CIRCUIT COURT BEFORE THIS HEARING WAS CANCELED BY COURT OF APPEALS JUDGE TALBOT, ACTING AS CHIEF OF THE COURT OF CLAIMS.

On November 1, 2013, Plaintiffs filed a Motion for Summary Disposition regarding the claims added in their Amended Verified Complaint filed on October 9, 2013. Defendants filed a Motion for Summary Disposition as to these claims on November 6, 2013. The parties' cross motions for summary disposition were noticed for a hearing on December 13, 2013 before Judge Aquilina in Ingham Circuit Court.

Under the Michigan Court Rules, Plaintiffs are entitled to have this Court re-notice the hearing on the parties' cross-motions for summary disposition. MCR 2.119(E) provides in pertinent part:

(1) Contested motions should be noticed for hearing at the time designated by the court for the hearing of motions. A motion will be heard on the day for which it is noticed, unless the court otherwise directs. If a motion cannot be heard on the day it is noticed, the court may schedule a new hearing date or the moving party may renotice the hearing.

* * *

(3) A court may, in its discretion, dispense with or limit oral arguments on motions, and may require the parties to file briefs in support of and in opposition to a motion.

Here, Plaintiffs are entitled under MCR 2.119(E)(1) to renotice the hearing on their Motion for Summary Disposition originally scheduled for December 13, 2013. To announce without any prior written or oral notice that this Court would dispense with oral argument on Plaintiffs' Motion to file a Second Amended Verified Complaint and Defendants' Motion for Summary Disposition, already noticed for a hearing on December 13, 2013, constitutes a clear abuse of discretion in violation of the Due Process Clause under the state and federal constitutions. An abuse of discretion occurs when a decision falls outside the range of reasonable and principled outcomes. Maldonado v Ford Motor Co, 476 Mich 372, 388 (2006). To dispense with oral argument in view of the public nature of this matter, which implicates the application of 2011 PA 38, is unprincipled, not to mention an affront to the notion of the rule of law in a constitutional democracy. Plaintiffs are entitled to re-notice their hearing on their Motion for Summary Disposition.

III. ASSUMING ARGUENDO THAT COURT OF APPEALS JUDGE SERVITTO WERE AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE OF THE COURT OF CLAIMS AND THIS COURT'S DECISION NOT TO RE-NOTICE PLAINTIFFS' MOTION FOR A HEARING DID NOT VIOLATE DUE PROCESS, THIS COURT SHOULD DENY DEFENDANTS' MOTION FOR SUMMARY DISPOSITION AND GRANT PLAINTIFFS' MOTION FOR SUMMARY DISPOSITION.

Plaintiffs incorporate by reference (if that should be necessary) the arguments presented in the Brief in Support of Plaintiffs' Motion for Summary Disposition pursuant to MCR 2.116(C)(10) and MCR 2.116(I)(1) as to their claims for breach of employment contract and unjust enrichment under state law, and for violations of the Contract Clause, the Takings Clause, and substantive and procedural Due Process Clauses under the state and federal constitution, which was filed in the Court of Claims on November 1, 2013. Based upon these arguments, this Court should deny Defendants' Motion for Summary Disposition and grant Plaintiffs' Motion for Summary Disposition as to these added claims.

IV. ASSUMING ARGUENDO THAT COURT OF APPEALS JUDGE SERVITTO WERE AUTHORIZED UNDER THE MICHIGAN CONSTITUTION TO ACT AS A JUDGE OF THE COURT OF CLAIMS, THAT HER DECISION NOT TO RE-NOTICE PLAINTIFFS' MOTION FOR A HEARING DID NOT VIOLATE DUE PROCESS, AND THAT DEFENDANTS' MOTION FOR SUMMARY DISPOSITION WERE GRANTED, PLAINTIFFS REQUEST THAT THIS COURT GRANT THEIR MOTION TO AMEND THEIR VERIFIED CLASS ACTION COMPLAINT TO ALLEGE BREACH OF INVESTMENT CONTRACTS REGARDING THE PURCHASE OF SERVICE CREDIT AND THE MICHIGAN INVESTMENT PLAN (MIP) AND GRANT THEIR MOTION FOR CLASS CERTIFICATION.

Complaints may be amended once as a matter of course within fourteen days after the plaintiff is served with a responsive pleading. MCR 2.118(A)(1); In the Matter of the Dissolution of F Yeager & Culvert Co, 150 Mich App 386, 397 (1986). Because Defendants have yet to file a responsive pleading, Plaintiffs may amend the Verified Class Action Complaint at any time. Amendment is generally a matter of right, rather than grace, and should be denied only for particularized reasons. Ben P Fyke & Sons v Gunter Co, 390 Mich 649, 656, 659 (1973).

Further, a grant of summary disposition for the defendant does not preclude amendment of the complaint. Formall, Inc v Community Nat'l Bank, 166 Mich App 772, 783 (1988). Indeed, when deciding a motion for summary disposition, a court must give the parties an opportunity to amend unless amendment would be futile. Weymers v Khara, 454 Mich 639, 658 (1997); Yudashkin v Holden, 247 Mich App 642, 651 (2001). An amendment would be futile it if merely restated the allegations already made or added allegations that failed to state a claim. Id.

Here, Plaintiffs seek to amend their Verified Class Action Complaint to allege two claims involving breach of investment contracts, which are separate and apart from the claims previously alleged. Specifically, these claims involve individual investment decisions in which retired state and public school employees used their own money to purchase service credit toward a tax-exempt pension, or, as in the case of retired public school employees, they used their own money when entering into MIP contract with the State of Michigan, which guaranteed an annual escalator clause of 3% on their pensions upon retirement. In both instances, the portion of the pensions reflecting service credit purchased by retired state and public school employees and the MIP escalator clause are tax-exempt, pursuant to these investment contracts. Accordingly, this Court should grant Plaintiffs' Motion to file a Second Amended Verified Class Action Complaint and grant their Motion for Class Certification.

CONCLUSION AND RELIEF

Plaintiffs respectfully request that this Court stay the proceedings in this matter pending the determination of the Court of Appeals of their Petition challenging the constitutionality of 2013 PA 164. Alternatively, Plaintiffs request that this Court re-notice the hearing on the parties' cross-motions for summary disposition, which were previously noticed for a hearing on December 13, 2013. Plaintiffs are entitled to an opportunity to be heard under the Due Process Clause of the state and federal constitutions. In the event that this Court rules on Defendants' Motion for Summary Disposition, Plaintiffs request that this Court deny it but grant Plaintiffs' Motion for Summary Disposition as to the claims alleged in their Amended Verified Class Action Complaint. Finally, in the event that this Court grants Defendants' Motion for Summary Disposition and denies Plaintiffs' Motion for Summary Disposition, Plaintiffs request that this Court grant their Motion to file a Second Amended Verified Class Action Complaint alleging breach of investment contracts regarding the purchase of service credit and the Michigan Investment Plan (MIP) and their Amended Motion for Class Certification. Plaintiffs also reaffirm their request for attorney fees and costs in this matter.

Respectfully Submitted,

LAW OFFICE OF GARY P. SUPANICH

__________________________

Gary P. Supanich (P45547)

Attorney for Plaintiffs

117 North First St., Suite 111

Ann Arbor, MI 48104

(734) 276-6561

Dated: March 14, 2014

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