Court Opinion

ID: 6320554
Source: CourtListenerOpinion
Date Created: 2022-03-07 08:07:01.521328+00
Date Added: 2024-06-11T09:02:31.027713
License: Public Domain

Michigan Supreme Court
                                                                                          Lansing, Michigan
                                                             Chief Justice:               Justices:

Syllabus                                                      Bridget M. McCormack        Brian K. Zahra
                                                                                          David F. Viviano
                                                                                          Richard H. Bernstein
                                                                                          Elizabeth T. Clement
                                                                                          Megan K. Cavanagh
                                                                                          Elizabeth M. Welch

This syllabus constitutes no part of the opinion of the Court but has been                Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader.                  Kathryn L. Loomis

                 COUNTY OF INGHAM v MICHIGAN COUNTY ROAD COMMISSION
                                SELF-INSURANCE POOL

           Docket No. 160186. Argued on application for leave to appeal October 7, 2021. Decided
      December 21, 2021.

              Ingham County, Jackson County, and Calhoun County (collectively, the Counties) filed an
      action in the Ingham Circuit Court alleging that they had a right to receive a decade’s worth of
      surplus contributions (surplus equity) made to the Michigan County Road Commission Self-
      Insurance Pool (the Pool). The parties filed cross-motions for summary disposition, and the court,
      Rosemarie E. Aquilina, J., granted summary disposition to the Pool and rejected the Counties’
      claims. On appeal, the Court of Appeals, TALBOT, C.J., and O’CONNELL and O’BRIEN, JJ.,
      reversed, holding that the Counties were successors in interest to their dissolved road commissions.
      321 Mich App 574 (2017) (Ingham Co I). Additionally, the Court of Appeals held that because
      Jackson County had not signed a withdrawal agreement with the Pool, Jackson County had not
      withdrawn from the Pool and was entitled, as a successor in interest, to receive equity distributions
      from prior-year contributions made by its former road commission. The Pool sought leave to
      appeal in the Supreme Court, and the Supreme Court, in lieu of granting leave, remanded the case
      to the Court of Appeals. The Supreme Court directed the Court of Appeals to address on remand
      whether the Pool was permitted to decline to issue refunds of surplus premiums to the Counties of
      contributions from previous years even if the Counties were successors in interest to their former
      road commissions. 503 Mich 917 (2018). On remand, the Court of Appeals, O’BRIEN, P.J., and
      GLEICHER and STEPHENS, JJ., affirmed its previous decision. 329 Mich App 295 (2019) (Ingham
      Co II). After reviewing the Pool’s founding document (the Declaration of Trust), the Pool’s By-
      Laws, and the Inter-Local Agreements executed between the Pool and each of the Counties’ road
      commissions when they joined the Pool, the Court of Appeals concluded that the Pool’s
      withdrawal policy was clear: a withdrawing member forfeits any and all rights to dividends,
      credits, and/or interest that is or will become payable after the effective date of the member’s
      withdrawal from the Pool. However, the Court of Appeals reasoned that Jackson County had not
      withdrawn from the Pool because the Jackson County Road Commission had never executed the
      Pool’s withdrawal agreement. The Court of Appeals further determined that Jackson County was
      in the position of a “county road commission” for purposes of determining the Counties’ eligibility
      for membership under the By-Laws, and that membership in the Pool had been transferred from
      Jackson County’s former road commission to the county itself. Regarding Ingham and Calhoun
      Counties, the Court of Appeals recognized that they had withdrawn from the Pool, but the Court
determined that excluding the Counties from sharing in distributions of surplus equity was
unenforceable as against public policy, citing MCL 124.5(6) of the intergovernmental contracts
act, MCL 124.1 et seq. The Court further stated that when a road commission withdraws from the
Pool because it was dissolved, excluding a county from any surplus distribution would penalize
the county for exercising its right to dissolve its road commission. The Supreme Court ordered
and heard oral argument on whether to grant the Pool’s application for leave to appeal or take other
action. 506 Mich 913 (2020).

     In an opinion by Chief Justice MCCORMACK, joined by Justices ZAHRA, VIVIANO,
CLEMENT, CAVANAGH, and WELCH, the Supreme Court, in lieu of granting leave to appeal, held:

        The Counties did not have a contractual right to distributions of surplus equity under the
Declaration of Trust, Inter-Local Agreements, or the Pool’s By-Laws. Further, Michigan’s public
policy did not require the Pool to include its former members in distributions of surplus equity.

        1. The Declaration of Trust permitted the Pool to distribute surplus equity to county road
commissions who were members of the Pool during the fiscal year in which the funds came into
the Pool’s possession. Although the Counties interpreted this permissive language as obligating
the Pool to make distributions, the Declaration of Trust, the Pool’s By-Laws, and the Inter-Local
Agreements did not mandate the terms of any such distributions. Rather, the Declaration of Trust
provided that the Pool was permitted to treat members who withdrew from the Pool differently
and less favorably than members who continued in the Pool. This “differently and less favorably”
language was also referred to in the By-Laws and the Inter-Local Agreements, which provided
that distributions of surplus equity would be the responsibility of the Pool, as stated in the Pool’s
founding documents. Because the road commissions of Ingham and Calhoun Counties withdrew
from the Pool, their agreements with the Pool allowed the Pool to treat them differently and less
favorably than continuing members, including by excluding them from any surplus-equity
distributions. Although Jackson County did not execute a withdrawal agreement with the Pool,
under the Pool’s By-Laws, only county road commissions were permitted to be members of the
Pool, and the By-Laws did not provide any mechanism for transferring membership when a
member’s successor lacked eligibility under the By-Laws. Therefore, the dissolution of the
Jackson County Road Commission did not transfer the road commission’s membership to the
county itself. Although the By-Laws did not define the term “county road commissions,” it does
not follow that because the dissolved road commissions’ powers, duties, and functions were
transferred to the Counties, the Counties were therefore eligible for Pool membership. Notably,
before the 2012 amendment of the County Road Law, the law provided that every county with a
county road system had to have a board of county road commissioners, i.e., a county road
commission. Therefore, even if the By-Laws’ use of the term “county road commission” was
ambiguous, the law when the By-Laws were drafted, adopted, and last revised made clear that the
only reasonable interpretation of “county road commission” was a county road commission.
Under a straightforward reading of the By-Laws, a county that has dissolved its road commission
would not be eligible for membership in the Pool. Accordingly, despite the fact that Jackson
County did not formally withdraw from the Pool, none of the Counties had a contractual right to
share in any distributions made after the effective date of the dissolution of their respective road
commissions. Further, whether the Counties were successors in interest to the road commissions
was not relevant to determining whether they were entitled to relief. A successor in interest does
not acquire greater rights than its predecessor. The Inter-Local Agreements did not provide the
dissolved road commissions (and by extension, did not provide the Counties) with the right to
share in any distribution of surplus equity.

        2. According to the Counties, public policy required the Pool to include them in any
distributions of surplus equity. Generally, competent persons are afforded the utmost liberty of
contracting, and when their agreements are voluntarily and fairly made, they shall be held valid
and enforceable in the courts. However, when there are definite indications in the law of some
contrary public policy, the contract provision must yield to public policy. First, contrary to the
Counties’ argument, excluding the Counties from distributions of surplus equity was not counter
to MCL 124.5(6). The statute provides that insurance protection is essential to the proper
functioning of municipal corporations and that proper risk management requires spreading risk to
minimize fluctuation in insurance needs. But excluding the Counties from surplus distributions
would not deny the Counties essential insurance coverage, nor would it concentrate risk in the
Counties. The dissolution of the Counties’ road commissions and corresponding end in Pool
membership did not prevent the Counties from seeking coverage from the Pool for incidents that
occurred while the dissolved road commissions were members. Rather, under the withdrawal
policy, the Counties simply would not receive payments that their road commissions might have
received, had they not been dissolved, if the Pool had operated at a surplus during the relevant time
periods. Further, this result did not penalize the Counties for dissolving their road commissions.
The Counties’ dissolution of their road commissions brought about the end of the commissions’
memberships in the Pool, but the result was no different than if the road commissions had
withdrawn from the Pool, as allowed by the Inter-Local Agreements, without dissolving. In this
way, the Counties were treated the same as any other former member. The Counties also argued
that public policy required the Pool to include them in distributions of surplus equity on the basis
of legislation in the context of worker’s compensation insurance. MCL 500.2016(1) restricts a
self-insurance group from conditioning a refund of surplus equity on a member’s continued
participation in the group, but this restriction only applies in the context of worker’s compensation
insurance. The statute identifies this practice as an unfair method of competition and as an unfair
or deceptive practice in the “business of insurance.” But under MCL 124.6 of the
intergovernmental contracts act, the Pool was not an insurance company or insurer, and its
provision and administration of group self-insurance did not constitute “doing an insurance
business” under the statute. Because the Pool was neither a workers’ compensation insurer nor in
the insurance business, MCL 500.2016 is not a “definite indication in the law” prohibiting the
Pool’s exclusion of former members from surplus distributions.

       Reversed and remanded.

       Justice VIVIANO, concurring, agreed in full with the majority opinion but wrote separately
because he questioned whether the Legislature had anticipated or desired the result reached by the
Court. When the Pool was formed, the law required every county in Michigan with a county road
system to have a county road commission, but the 2012 amendment of the law allowed county
boards of commissioners to dissolve their county road commissions and assume their road
commissions’ powers, duties, and functions. However, the Legislature did not also address
whether counties which had road commissions that had entered into self-insurance pools limiting
membership to county road commissions would have any right to continued membership in the
pool or to receive any distributions of surplus equity from the pool to which the road commissions
would have otherwise been entitled. It was concerning that by exercising their statutory right to
dissolve their road commissions, the Counties lost entitlement to funds they had contributed to the
Pool but which were not used (i.e., the surplus equity). Because these overpayments were
ultimately made by the taxpayers of the Counties, Justice VIVIANO questioned whether the
Legislature intended for such punitive actions to be taken against counties who had exercised their
statutory right to dissolve their road commissions.

       Justice BERNSTEIN, dissenting, would have affirmed the Court of Appeals because he
believed it had reached the right result for the right reasons.
                                                                           Michigan Supreme Court
                                                                                 Lansing, Michigan
                                                  Chief Justice:                 Justices:

OPINION                                            Bridget M. McCormack          Brian K. Zahra
                                                                                 David F. Viviano
                                                                                 Richard H. Bernstein
                                                                                 Elizabeth T. Clement
                                                                                 Megan K. Cavanagh
                                                                                 Elizabeth M. Welch

                                                               FILED December 21, 2021

                            STATE OF MICHIGAN

                                   SUPREME COURT

  COUNTY OF INGHAM, COUNTY OF
  JACKSON, and COUNTY OF CALHOUN,

               Plaintiffs-Appellees,

  v                                                                No. 160186

  MICHIGAN COUNTY ROAD
  COMMISSION SELF-INSURANCE POOL,

               Defendant-Appellant.

 BEFORE THE ENTIRE BENCH

 MCCORMACK, C.J.
       The counties of Ingham, Jackson, and Calhoun (the Counties), the plaintiffs,

 dissolved their county road commissions. Those commissions had been members of the

 Michigan County Road Commission Self-Insurance Pool (the Pool), the defendant. The

 Counties sued the Pool, asserting that they have a right to receive a decade’s worth of

 surplus equity (i.e., whatever money remains in a fiscal year after the payment of claims
and operating expenses). The Counties believe they are the successors in interest to their

dissolved road commissions and, as such, are entitled to the surplus equity that the

commissions might have received had they not been dissolved and withdrawn from the

Pool. Jackson County makes one other argument: because its road commission never

formally withdrew from the Pool, the county says it has a right to receive surplus equity on

the same terms as any current member.

       The Pool disagrees. It says that the Counties have no right to receive surplus equity

because the documents governing the Pool’s operations and its contracts with its various

members provide the Pool with discretion in distributing surplus equity. This includes the

power to exclude former members should a distribution be made.

       The Court of Appeals sided with the Counties. The panel held that the Counties are

the successors in interest to their dissolved road commissions and, as a matter of public

policy, the Counties have a right to receive surplus equity for fiscal years in which their

road commissions were members of the Pool. The Court of Appeals also determined that

the dissolution of the Jackson County Road Commission did not disqualify Jackson County

from membership in the Pool, and therefore, the county may receive surplus equity

regardless of any public-policy considerations.

       We reverse. We agree with the Pool that the Counties do not have a contractual

right to receive surplus equity and that such an arrangement is not contrary to public policy.

And for Jackson County, we hold that the dissolution of its county road commission did

not transfer membership in the Pool from the road commission to the county itself, so the

Pool may therefore exclude Jackson County from postdissolution distributions.

                                              2
       We reverse the judgment of the Court of Appeals and remand to that Court for

consideration of the Counties’ remaining arguments.

                      I. FACTS AND PROCEDURAL HISTORY

       In 1982, the Legislature amended the intergovernmental contracts between

municipal corporations act, MCL 124.1 et seq., to permit “any 2 or more municipal

corporations,[1] by intergovernmental contract, [to] form a group self-insurance pool to

provide for joint or cooperative action relative to their financial and administrative

resources for the purpose of providing to the participating municipal corporations risk

management and coverage for pool members and employees of pool members[.]” MCL

124.5(1), as added by 1982 PA 138.

       Soon after, in April 1984, several county road commissions created the Pool.

Formed as a trust, the Pool’s founding document (the Declaration of Trust) explains that

the purpose of the Pool is “to provide for joint and cooperative action relative to Members’

financial and administrative resources for the purpose of providing to participating

Members risk management and [insurance] coverage for pool Members . . . .”

       To do that, the Declaration of Trust provides that a member of the Pool “shall

promptly pay all premiums and assessments as required by the Board of Directors” and

limits how the Pool can spend these funds. For any given fiscal year, the Pool must set

aside a “reasonable sum” for operational and administrative expenses. Any remaining

funds “shall be used only” for certain expenditures, including the payment of claims and

1
 As used in the intergovernmental contracts act, the term “municipal corporation” includes
“a county, charter county, [or] county road commission.” MCL 124.1(a).

                                             3
judgments. Among these permitted uses is the following language, found at Article VI,

Section 9 of the Declaration of Trust:

              Distribution among the members during that fiscal year [in which the
       premiums were collected by the Pool] in such manner as the Members and
       the Board of Directors shall deem to be equitable, of any excess monies
       remaining after payment of claims and claims expenses and after provision
       has been made for open claims and outstanding reserves and a reserve for
       claims incurred but not reported; provided, however, that no such
       distributions shall be made earlier than twelve (12) months after the end of
       each Trust Year; and provided further, that undistributed funds from previous
       Trust Years may be distributed at any time if not required for loss funding
       and if approved for distribution by the Board of Directors. The Board of
       Directors may treat members who withdraw from future Trust Years
       differently and less favorably than they treat members who continue in
       the Trust for future years. [Emphasis added.]

The Declaration of Trust further provides, at Section 6 of Article X, that

       [t]here will be no disbursement out of this Trust for any fiscal year by way
       of dividends or distribution of accumulated reserve to Members until (a) after
       provision has been made for all known obligations and (b) the Board of
       Directors shall deem the distribution to be proper.

       The Counties’ road commissions joined the Pool in 1984 or 1985. At that time,

each of their road commissions executed an “Inter-Local Agreement” with the Pool. These

agreements provided that “[t]he responsibility of the Pool with regard to . . . disposing of

surpluses . . . shall be as set forth in the Trust creating the Pool, the Pool By-Laws, rules,

regulations, coverage agreements and Inter-Local Agreements entered into between the

Pool and participating county road commissions.”           The agreements also contained

language like that found in the Declaration of Trust at Section 9 of Article VI, describing

how the Pool can use its funds.

                                              4
      In February 2012, about 30 years after the Pool was established, the Legislature

amended the County Road Law, MCL 224.1 et seq., and the county boards of

commissioners act, MCL 46.1 et seq. See 2012 PA 14 and 2012 PA 15. These amendments

allowed county boards of commissioners to dissolve their road commissions and thereby

“transfer[]” the “powers, duties, and functions” of the dissolved road commission to the

county’s board of commissioners. MCL 224.6(7), as amended by 2012 PA 14. The

changes marked a break from the requirement, first established in 1909, that almost every

county in Michigan having a county road system (including these plaintiffs) must also have

a “board of county road commissioners” (that is, a county road commission). See MCL

224.6, as enacted by 1909 PA 283.

      Following these amendments, the boards of commissioners of each of the Counties

adopted resolutions that dissolved their appointed county road commissions.

      The board of commissioners for Ingham County adopted its resolution in April 2012

dissolving the Ingham County Road Commission effective June 1, 2012. On May 31,

2012, one day before the resolution’s effective date, the Pool and the Ingham County Road

Commission entered into an “Agreement In Recognition Of Termination From Michigan

County Road Commission Self-Insurance Pool.” This withdrawal agreement provided that

“[b]y operation of the action taken by the Ingham County Board of Commissioners,” i.e.,

the dissolution resolution, “the Commission’s membership in [the Pool] shall be and is

hereby terminated concurrent with the termination of the Ingham County Road

Commission as of 12:01 a.m. on June 1, 2012 . . . .” The agreement also provided that the

Pool would keep servicing any claims (pending or future) that “occur or arise from

incidents or events occurring prior in time to June 1, 2012.” The agreement provided for

                                            5
a “contribution adjustment” of the road commission’s annual contribution for the current

(2012-2013) fiscal year, but it did not provide for any refund of any surplus equity flowing

from prior-year contributions.

       The board of commissioners for Calhoun County adopted its own dissolution

resolution in September 2012. About a week before the resolution’s effective date of

November 1, 2012, the Pool and the Calhoun County Road Commission entered into a

withdrawal agreement similar to that entered into by the Ingham County Road Commission

and the Pool.

       The board of commissioners for Jackson County adopted its dissolution resolution

in early January 2013, with an effective date of January 16, 2013. The Counties allege that

before the resolution became effective, the Pool provided Jackson County with a proposed

withdrawal agreement. This document stated that, as of January 16, 2013, the Jackson

County Road Commission “is dissolved and by operation of law cannot and is not eligible

to be a Member of the [Pool] as provided in the applicable By-Laws and the Inter-Local

Agreement that govern membership in the [Pool].” The parties agree that the Jackson

County Road Commission did not execute this proposed withdrawal agreement, and the

parties have not identified any other agreement reached between the Pool and Jackson

County concerning the dissolution of the Jackson County Road Commission and the

county’s status as a member of the Pool.

       The Counties sued in 2015. The complaint stated four claims: (1) that the Pool’s

refusal to refund the dissolved road commissions’ “aliquod [sic] shares” amounted to

unconstitutional lending in violation of Const 1963, art 9, § 18; (2) extortion;

(3) conversion or embezzlement in violation of MCL 600.2919a; and (4) breach of

                                             6
contract. The complaint alleged that the Pool “had a longstanding pattern and practice of

refunding unused premiums to Members, based on unused reserves remaining at the

actuarial closing of a fiscal year, usually many years later.” The complaint then alleged

that the Pool had refused the Counties’ demand that it pay to the respective county boards

of commissioners “their aliquod [sic] share of any surplus then held by or improperly

distributed to the remaining Members of the [Pool] for actuarial years going back to 2002

and recognized by [the Pool] as being funds in excess of reserve requirements” that the

Pool must maintain under the intergovernmental contracts act, see MCL 124.7a.

          The circuit court granted summary disposition in favor of the Pool. The court found

that the Pool hadn’t engaged in unconstitutional lending because “neither Plaintiffs nor

[their]     former    road    commission[s]        loaned   their   credit   to   Defendant[;

rather,] . . . Plaintiffs[’] former road commissions made contributions to Defendant to

obtain insurance coverage—which constituted a fair exchange of value for value[.]” The

Counties’ claims of extortion were summarily dismissed for lack of factual support. There

was no conversion or embezzlement because the money at issue was the property of the

Pool. And, finally, the court determined that the Counties did not have a contractual right

to receive surplus equity because such distributions are in the Pool’s discretion and former

members may be excluded from any such distributions.

          The Court of Appeals reversed the circuit court in Ingham Co v Mich Co Rd Comm

Self-Ins Pool, 321 Mich App 574; 909 NW2d 533 (2017) (Ingham Co I). The panel

departed from the circuit court’s claim-by-claim analysis and instead framed the case as

implicating two questions: whether the Counties are the “successors in interest” of their

dissolved road commissions, and whether the Counties could be members of the Pool so

                                               7
as to be eligible to receive distributions of surplus equity. See Ingham Co I, 321 Mich App

at 580-585. The panel answered “yes” to both questions; it reasoned that when MCL 224.6

is read “as a whole,” it compels the conclusion that “when a county dissolves its road

commission, the county board of commissioners becomes the successor in interest to the

former road commission.” Id. at 581-582. The Court of Appeals acknowledged that the

Pool’s By-Laws limit membership in the Pool to “county road commissions.” Id. at 584.

Although this membership criteria would seem to exclude the Counties, the panel noted

that the By-Laws do not define “county road commission” but do refer to “the statutory

authority of county road commissions.” Id.

       The panel continued: “[b]ecause we conclude that the counties were successors in

interest to their dissolved road commissions as a matter of statutory interpretation, we

likewise conclude that the successor counties are eligible for Pool membership by virtue

of the statutory reference to county road commissions in the Pool’s bylaws.” Id. The panel

then concluded, with no reference to the Declaration of Trust, By-Laws, or Inter-Local

Agreements and without identifying any specific cause of action pleaded by the Counties,

that the Counties are “entitled to receive refunds of surplus premiums from prior-year

contributions made by the former road commissions.” Id. at 586.

       In response to the Pool’s application for leave in this Court, we remanded the case

to the Court of Appeals to consider arguments that the Pool had raised in that Court but

were never addressed. We directed the Court of Appeals to consider

       [w]hether, even if the plaintiff counties are successors in interest to their road
       commissions, the [Pool] nevertheless may, in accordance with its governing
       documents, decline to issue to the counties refunds of surplus premiums from
       prior-year contributions. [Ingham Co v Mich Co Rd Comm Self-Ins Pool,
       503 Mich 917 (2018).]

                                               8
       On remand, the Court of Appeals again held that the Counties are entitled to refunds

of surplus premiums from prior-year contributions. Ingham Co v Mich Co Rd Comm Self-

Ins Pool (On Remand), 329 Mich App 295; 942 NW2d 85 (2019) (Ingham Co II). The

panel reviewed the Declaration of Trust, the Pool’s By-Laws, the Inter-Local Agreements,

and a memorandum outlining the Pool’s policy for returning surplus equity to its members.

This memorandum, dated July 19, 1990, provides, in relevant part, “A withdrawing

member forfeits any and all rights to dividend, credits and/or accumulated interest that is

to be paid or shall become payable after the effective date of the Member’s withdrawal

from the Pool.”

       The panel recognized that these documents did not favor the Counties’ position in

this litigation: “the [Pool’s] withdrawal policy is clear—‘[a] withdrawing member forfeits

any and all rights to dividend, credits, and/or accumulated interest that is to be paid or shall

become payable after the effective date of the Member’s withdrawal from the Pool.’ ”

Ingham Co II, 329 Mich App at 317 (emphasis omitted). Yet the Court of Appeals gave

two reasons for affirming its previous decision.

       For Jackson County, the Court of Appeals reasoned that the county was not a

“withdrawing” member because the Jackson County Road Commission never executed the

Pool’s proposed withdrawal agreement. Id. at 316. The Court of Appeals also indicated

that because Jackson County was (per the Court’s opinion in Ingham Co I) in the position

of a “county road commission” for purposes of determining the Counties’ eligibility for

membership under the By-Laws, membership in the Pool had been transferred from

Jackson County’s dissolved road commission to the county itself. Id. at 316-317.

                                               9
       As for Ingham and Calhoun Counties, the panel explained that these counties had

withdrawn from the Pool (as evidenced by the withdrawal agreements). Id. at 317. But it

determined that excluding the Counties from sharing in distributions of surplus equity is

“unenforceable as against public policy.” Id. at 321.

       In support of this public-policy holding, the Court of Appeals cited MCL 124.5(6),

which contains the Legislature’s findings and statement of purpose about the 1982

amendment of the intergovernmental contracts act. In the statute, the Legislature declared

that “insurance protection is essential to the proper functioning of municipal corporations”

and that municipal self-insurance pools, like the defendant, further a governmental interest

because they provide an alternative to standard carriers. MCL 124.5(6), as added by 1982

PA 138. Addressing this language, the Court of Appeals stated that permitting the Pool to

exclude the Counties from any distribution would “directly undermine the public purposes

that the Pool is required to serve under MCL 124.5(6)” because it would allow the Pool’s

remaining members to retain the portion of any surplus that might otherwise be paid to the

Counties. Id. at 319-320. This result, the panel concluded, would “undercut[] the basic

principles of predictability and stability that the Legislature intended such self-insurance

pools to promote.” Id. at 320. The Court of Appeals also reasoned that, in the context of

a member road commission leaving the Pool because of the commission’s dissolution,

excluding the Counties from any surplus distribution would “penalize the counties for

exercising their rights to dissolve their road commissions.” Id. at 319.

       As for remedy, the panel concluded that the Pool’s “withdrawal policy” (of

excluding former members from distributions) could be “severed” because it was not

central to the parties’ agreement and because applying a more drastic remedy, such as

                                            10
declaring the parties’ contractual relationship void ab initio, “would do greater damage to

the policies set forth in MCL 124.5(6), effectively upending the entire Pool.” Id. at 321-

323.

       We ordered oral argument on the Pool’s application for leave to appeal and

instructed the parties to address three issues:

       (1) whether the Court of Appeals properly held that the plaintiff Counties are
       successors in interest to their respective road commissions, which were
       dissolved pursuant to MCL 46.1 et seq., and MCL 224.1 et seq.; (2) whether
       the Court of Appeals properly held that plaintiff Jackson County was a
       member of defendant Michigan County Road Commission Self-Insurance
       Pool (Pool) despite having dissolved its road commission; and (3) whether
       the Court of Appeals properly held that the plaintiff Counties are entitled to
       refunds of surplus premiums paid to the Pool because the forfeiture
       provisions in the defendant Pool’s governing documents, which comprise the
       parties’ binding contractual agreement, are unenforceable as against public
       policy and must be severed, and whether this issue was properly preserved
       by the plaintiff Counties. [Ingham Co v Mich Co Rd Comm Self-Ins Pool,
       506 Mich 913 (2020).]

                             II. STANDARD OF REVIEW

       A trial court’s decision to grant or deny summary disposition is subject to de novo

review, as are “questions involving the proper interpretation of a contract or the legal effect

of a contractual clause.” Rory v Continental Ins Co, 473 Mich 457, 464; 703 NW2d 23

(2005). Similarly, a lower court’s determination of the public policy of this state is a

question of law that we review de novo. See Bronner v Detroit, 507 Mich ___, ___; ___

NW2d ___ (2021) (Docket No. 160242); slip op at 4 (“Whether a contract is invalid on

[public policy] grounds is a question of law subject to de novo review.”). When we review

a question de novo, we review the issue independently, without deference to the lower

court. Millar v Constr Code Auth, 501 Mich 233, 237; 912 NW2d 521 (2018).

                                              11
                                     III. ANALYSIS

   A. THE COUNTIES DO NOT HAVE A CONTRACTUAL RIGHT TO RECEIVE
                         SURPLUS EQUITY

       The parties’ agreements answer the question of whether the Counties have a right

to share in any distribution of surplus equity after their respective withdrawals from the

Pool (or in Jackson County, after the dissolution of its road commission).

       “Absent an ambiguity or internal inconsistency, contractual interpretation begins

and ends with the actual words of a written agreement. When interpreting a contract, our

primary obligation is to give effect to the parties’ intention at the time they entered into the

contract. To do so, we examine the language of the contract according to its plain and

ordinary meaning.” Innovation Ventures v Liquid Mfg, 499 Mich 491, 507; 885 NW2d

861 (2016) (cleaned up).

       Here, the Inter-Local Agreements are the written contracts between the Pool and its

members. But as the Court of Appeals explained in Ingham Co II, those agreements refer

to and incorporate the Declaration of Trust and the By-Laws. See Ingham Co II, 329 Mich

App at 313-314. Thus, we look at all of these documents to determine the parties’ rights

and obligations. Id.; see also Whittlesey v Herbrand Co, 217 Mich 625, 627; 187 NW 279

(1922) (“Where one writing refers to another, the intention of the parties is to be gathered

from the two instruments taken together.”) (quotation marks and citation omitted). As

explained below, these documents support the Pool’s position that former members do not

have a right to share in any distribution of surplus equity.

       Section 9 of Article VI of the Declaration of Trust permits the Pool to distribute

“excess monies” to those county road commissions who were members of the Pool during

                                              12
the fiscal year in which the funds came into the Pool’s possession. The Counties interpret

this permissive language as obligating the Pool to make distributions, given that Section 9

of Article VI is an exhaustive list of the ways the Pool can use funds received in a given

fiscal year and there will be years in which returning excess funds is the only expenditure

the Pool is allowed to make. But even if this permissive use-of-funds language can be

interpreted as imposing an affirmative obligation, the Declaration of Trust, the By-Laws,

and the Inter-Local Agreements do not mandate the terms of any such distribution. Rather,

the Declaration of Trust states that the Pool “may treat members who withdraw from future

Trust Years differently and less favorably than they treat members who continue in the

Trust for future years.”

       This “differently and less favorably” language is also found in the Inter-Local

Agreements. Those agreements state that “[t]he responsibility of the Pool with regard

to . . . disposing of surpluses . . . shall be as set forth in the Trust creating the Pool, the Pool

By-Laws, rules, regulations, coverage agreements and Inter-Local Agreements entered into

between the Pool and participating county road commissions.” There’s more, too: the 1990

policy memorandum about the manner of distributions states that a member who withdraws

from the Pool “forfeits” any right to receive future distributions.

       Here, the county road commissions for Ingham and Calhoun Counties withdrew

from the Pool before the effective date of the resolutions dissolving those commissions.

As withdrawing members, those road commissions’ agreements with the Pool allowed the

Pool to treat them “differently and less favorably than [the Pool] treat[s] members who

continue in the Trust for future years.”          Such unfavorable treatment might include

exclusion from surplus-equity distributions altogether. The Counties have not identified

                                                13
any contractual language limiting the Pool’s discretion or otherwise barring the Pool from

treating a withdrawing member less favorably (i.e., by declining to refund surplus-equity

distributions to that withdrawing member).

      The analysis is different for Jackson County, which did not execute a withdrawal

agreement with the Pool. In Ingham Co I, 321 Mich App at 585, the Court of Appeals held

that Jackson County, as the successor in interest to its dissolved county road commission,

may share in distributions because “Jackson County’s dissolution of its road commission

did not automatically result in withdrawal from the Pool.” In essence, the Court of Appeals

determined that upon dissolution of the Jackson County Road Commission, the road

commission’s membership in the Pool passed without interruption from the commission to

the county itself. Thus, Jackson County remained (and apparently still remains, under the

Court of Appeals’ logic) a member of the Pool and could not be subject to any different

and less favorable treatment. Id. at 584-586.

       To reach that result, the Court of Appeals observed that while the By-Laws limit

membership in the Pool to “county road commissions,” the By-Laws do not define this

term. Id. at 584. The only interpretive clue identified by the panel was the By-Laws’

reference to the “statutory authority of county road commissions.” Id. Because the former

road commissions’ “powers, duties, and functions” were transferred to the Counties upon

their respective dissolutions, the Court of Appeals reasoned that the reference in the By-

Laws to the road commissions’ statutory authority compelled the conclusion that “the

successor counties are eligible for Pool membership.” Id. at 583-584.

       We disagree. The By-Laws state in relevant part: “The Pool shall be comprised of

county road commissions of the State of Michigan which are authorized and approved

                                             14
under Section 1 of Act 138, PA 1982, as amended . . . , to enter into an agreement to pool

their loss exposures and which have executed the Pool Trust Agreement.” This statutory

authority cited by the By-Laws, Public Act 138 of 1982, is the public act that allowed

“municipal corporations” to form group self-insurance pools. See MCL 124.5(1), as added

by 1982 PA 138. This reference does not support the Court of Appeals’ interpretation of

the By-Laws as permitting membership by a county that has dissolved its county road

commission. Rather, the language merely reinforces that county road commissions have

been granted, by statute, the power to enter into contracts for group self-insurance. That

the By-Laws broadly refer to this authority when describing the Pool’s membership does

not suggest that any “municipal corporation” is eligible for membership. And though the

term “county road commission” is not defined in the By-Laws, its meaning is sufficiently

clear—it refers to a “board of county road commissioners” as described in MCL 224.6.

      This meaning is especially plain given the history of the County Road Law. Recall

that before the enactment of 2012 PA 14, the County Road Law provided (with limited

exceptions not applicable here) that every county with a county road system must also have

a “board of county road commissioners” (i.e., a county road commission), an entity apart

from the county’s board of commissioners. See MCL 224.6, as enacted by 1909 PA 283.

Thus, even if the By-Laws’ use of the term “county road commission” can be characterized

as unclear today, when the By-Laws were drafted, adopted, and last revised, the only

reasonable interpretation of “county road commission” was a county road commission.

See Innovation Ventures, 499 Mich at 507 (“When interpreting a contract, our primary

obligation is to give effect to the parties’ intention at the time they entered into the

contract.”) (emphasis added; quotation marks and citation omitted).

                                           15
      A review of the Counties’ allegations solidifies our understanding of the By-Laws.

The Declaration of Trust permits amendment of the By-Laws by two-thirds votes of both

the Pool’s board of directors and its members. The Counties’ complaint alleges that at the

Pool’s annual meeting in July 2012, its members considered a board-approved resolution

that would have amended the By-Laws to allow “counties that have assumed the powers

and duties provided by law to county road commissions” to become members of the Pool.

According to the complaint, this resolution was offered at a time when the Pool’s

membership was considering the effects of then-recent changes to the County Road Law

and the county board of commissioners act (i.e., the changes that allowed counties to

dissolve their county road commissions). Had the Pool and its members understood the

By-Laws’ reference to a “county road commission” as including a county that had

dissolved its road commission, no such change would be necessary. The resolution was

rejected by vote of the members, leaving intact the requirement that a member of the Pool

be a “county road commission.” The board of commissioners for Jackson County resolved

to dissolve the Jackson County Road Commission about six months later.

      In short, the Court of Appeals’ determination that the By-Laws allow for

membership in the Pool by a county that has dissolved its county road commission

contradicts the plain language of the By-Laws as that language would have been

understood when the By-Laws were adopted and last revised.            And the Counties

acknowledge that, as late as July 2012, the Pool’s membership considered and rejected a

proposed amendment that would have specifically allowed for membership in the Pool by

counties that have dissolved their county road commissions. We agree with the Pool that,

                                           16
under a straightforward reading of the By-Laws, Jackson County is not eligible for

membership because it is not a “county road commission.”

      The lack of a formal withdrawal by the Jackson County Road Commission is

immaterial. The Declaration of Trust, the By-Laws, and the Inter-Local Agreements do

not provide any mechanism for transfer of membership when a member’s successor lacks

eligibility under the By-Laws. Nor do these documents contemplate the “dissolution” of a

member. Rather, the Declaration of Trust, the By-Laws, and the Inter-Local Agreements

provide only two ways in which a member road commission might leave the Pool:

withdrawal by the member, or termination by “two-thirds vote of the Members present at

an annual or special meeting of the Members.” These documents do not provide the former

member with a contractual right to receive future distributions in either situation

(withdrawal or termination). Therefore, absent a change in the By-Laws that would allow

membership in the Pool by a county that has dissolved its road commission, we see no

reason for a different result where a member road commission has been dissolved.

       We therefore conclude that the dissolution of the Jackson County Road Commission

did not transfer the road commission’s membership to the county itself. Accordingly,

Jackson County, like Ingham and Calhoun Counties, does not have a contractual right to

share in any distributions made after the effective date of the dissolution of its road

commission.

       Whether the Counties are “successors in interest” is not relevant to our decision that

the Counties are not entitled to relief. A successor in interest acquires no greater rights

than its predecessor. Upon their dissolution, the “powers, duties, and functions” of the

Counties’ road commissions were transferred to the Counties themselves. Had those

                                             17
dissolved commissions had a right to receive future distributions of surplus equity, the

Counties might be well-positioned to assert such a right. Likewise, the Counties may be

able to seek insurance coverage from the Pool for claims arising from incidents that

occurred when their now-dissolved road commissions were members. For today, however,

we simply conclude that, even if the Pool experiences a surplus for any fiscal year between

2002 and 2012 and makes distributions accordingly, the Inter-Local Agreements did not

provide the dissolved county road commissions (and by extension, do not provide the

Counties) with the right to share in any such distribution. The circuit court correctly

rejected the Counties’ argument to the contrary.

            B. THE POOL’S WITHDRAWAL POLICY IS PERMISSIBLE

       Finally, we hold that the public policy of this state does not require the Pool to

include its former members when distributing surplus equity.

       In general, “competent persons shall have the utmost liberty of contracting,” and

“their agreements voluntarily and fairly made shall be held valid and enforced in the

courts.” Bronner, 507 Mich at ___; slip op at 4 (cleaned up). But “where there are definite

indications in the law of some contrary public policy, the contract provision must yield to

public policy.” Id. at ___; slip op at 5 (cleaned up). Such “definite indications” may be

found in “our state and federal constitutions, our statutes, and the common law.” Terrien

v Zwit, 467 Mich 56, 66-68; 648 NW2d 602 (2002).

       The Counties advance three reasons why public policy requires the Pool to include

them in any distributions of surplus equity. First, the Counties argue that their exclusion

contradicts the findings-and-purpose language found in MCL 124.5(6). Second, the

                                            18
Counties assert that 2012 PA 14 and 2012 PA 15 provide counties with the right to dissolve

their county road commissions, see MCL 46.11(s) and MCL 224.6, and exclusion amounts

to penalizing the Counties for exercising this right. Third, the Counties observe that the

Legislature has, in the context of worker’s compensation insurance, specifically prohibited

an insurer (including a self-insurance group) from conditioning the receipt of any dividend

(e.g., surplus equity) on the insured “renew[ing] or maintain[ing] worker’s compensation

insurance with the insurer beyond the current policy’s expiration date or requiring a

member [of a self-insurance group] to continue participation with . . . [the] group.” MCL

500.2016(1)(a).   In making this claim, the Counties generally endorse the Court of

Appeals’ reasoning. See Ingham Co II, 329 Mich App at 317-321.

       We disagree. The Legislature has made clear that “insurance protection is essential

to the proper functioning of municipal corporations,” and “proper risk management

requires spreading risk to minimize fluctuation in insurance needs.” MCL 124.5(6). But

excluding the Counties from surplus distributions does not deny the Counties the

“essential” insurance coverage that the Pool provides to its members, nor does it

concentrate the risk in the Counties themselves. As explained, we do not suggest that the

dissolution of their county road commissions and the corresponding end in membership in

the Pool prevents the Counties from seeking coverage from the Pool for incidents that

occurred while the dissolved commissions were members. The Pool’s withdrawal policy

simply means the Counties will not receive payments that the dissolved commissions might

have received (had their membership in the Pool not ended) if the Pool operates at a

surplus—an outcome that was never guaranteed.

                                            19
       While the Counties may have believed that the Pool would amend its By-Laws or

change its withdrawal policy to the Counties’ benefit, those changes never happened.

Unlike the Court of Appeals, we see no reason why the Counties’ expectation of a different

result should be a relevant consideration in assessing whether the withdrawal policy is

contrary to public policy. See Ingham Co II, 329 Mich App at 320 (describing the

“withdrawal policy” as “affording the remaining members of the Pool a comparatively

small windfall . . . while imposing a large, unexpected forfeiture on the three withdrawing

counties”) (emphasis added). The doctrine of promissory estoppel already provides a

remedy for parties who reasonably rely on a “clear and definite” promise. See, e.g., State

Bank of Standish v Curry, 442 Mich 76; 500 NW2d 104 (1993). The Counties have not

alleged promissory estoppel, and we see no reason why an otherwise valid arrangement

between the parties is contrary to public policy because the Counties hoped that the

arrangement would change.

       We disagree with the Court of Appeals’ characterization of the withdrawal policy

as a “penalty.” See Ingham Co II, 329 Mich App at 319 (“To permit the Pool to enforce

the withdrawal policy against the counties would be to permit the Pool to penalize the

counties for exercising their rights to dissolve their road commissions under MCL 46.11(s)

and MCL 224.6(7).”). The dissolution of the Counties’ road commissions may have

brought about the end of the road commissions’ memberships, but the result here is no

different than had those road commissions withdrawn from the Pool (as the Inter-Local

Agreements allowed) and endured. That is, the Counties are being treated the same as any

other former member. And describing that result as a “penalty” overlooks the reciprocal

obligations that come with membership in the Pool. There is no guarantee that a surplus

                                            20
will occur. Should a deficiency arise instead, the documents forming the Pool’s contract

with its member-commissions permit the Pool to assess those members. That is, members

may be required to contribute additional funds to cover the shortfall.

       Nor are we persuaded that MCL 500.2016 helps the Counties. While the statute

does restrict a self-insurance group from conditioning a refund of surplus equity on a

member’s continued participation in the group, this restriction only applies in the context

of worker’s compensation insurance. See MCL 500.2016(1) (“[T]he following practices

as applied to worker’s compensation insurance including worker’s compensation coverage

provided through a self-insurer’s group are defined as unfair methods of competition and

unfair and deceptive acts or practices in the business of insurance . . . .”) (emphasis added).

The Court of Appeals found it “telling” that the Legislature has classified this as an “unfair

and deceptive” business practice when done by an insurer. Ingham Co II, 329 Mich App

at 320, discussing MCL 500.2016; see also MCL 500.2003(1) (“A person shall not engage

in a trade practice that is defined or described in this chapter or is determined under this

chapter to be an unfair method of competition or an unfair or deceptive act or practice in

the business of insurance.”). But the intergovernmental contracts act provides that the Pool

“is not an insurance company or insurer under the laws of this state,” and its “development,

administration, and provision of group self-insurance . . . does not constitute doing an

insurance business.” MCL 124.6. Because the Pool is not a workers’ compensation

insurer, nor even in the insurance business, we decline to read MCL 500.2016 as a “definite

indication in the law” prohibiting the withdrawal policy. Terrien, 467 Mich at 66-68.

                                              21
                                 IV. CONCLUSION

       The Counties’ position is that they should have the benefit of continuing

membership in the Pool (to share in distributions if a surplus occurs) but none of the risks

(another contribution or assessment for a deficiency). The Counties do not, however, have

any such right as a matter of contract. Nor have the Counties identified any “definite

indications in the law” that would compel such a result as a matter of public policy.

Terrien, 467 Mich at 66-68.      We conclude, therefore, that the Pool’s limitation of

membership to “county road commissions” and its chosen method of distributing surplus

equity reflect the documents forming the parties’ agreement and are not contrary to the

public policy of this state.

       In their claim of appeal from the circuit court’s order, the Counties argued that the

circuit court erred by dismissing the Counties’ claims of unconstitutional lending,

extortion, and conversion. The Court of Appeals did not address these arguments in

Ingham Co I. We reverse the Court of Appeals’ judgment that the Pool’s withdrawal policy

is contrary to public policy and that Jackson County became a member of the Pool upon

the dissolution of its county road commission, and we remand to that Court for

consideration of those arguments raised by the Counties but not addressed in Ingham Co I.

We do not retain jurisdiction.

                                                        Bridget M. McCormack
                                                        Brian K. Zahra
                                                        David F. Viviano
                                                        Elizabeth T. Clement
                                                        Megan K. Cavanagh
                                                        Elizabeth M. Welch

                                            22
                            STATE OF MICHIGAN

                                   SUPREME COURT

 COUNTY OF INGHAM, COUNTY OF
 JACKSON, and COUNTY OF CALHOUN,

               Plaintiffs-Appellees,

 v                                                            No. 160186

 MICHIGAN COUNTY ROAD
 COMMISSION SELF-INSURANCE POOL,

               Defendant-Appellant.

VIVIANO, J. (concurring).
       I concur in full with the majority but write separately because I question whether

the result reached today was one the Legislature anticipated or desired. Defendant, the

Michigan County Road Commission Self-Insurance Pool, is, as its name suggests, a self-

insurance pool that was formed by agreement of its member county road commissions.

Those road commissions are local governmental entities that could enter into such an

arrangement by virtue of MCL 124.5(a), which expressly authorizes these pools. As the

majority explains, at the time the Pool was created and its terms agreed upon, “every county

in Michigan [with] a county road system” was required to have a “ ‘board of county road

commissioners’ (that is, a county road commission).” Ante at 5. Thus, the terms of the

Pool naturally provided for a membership comprised of county road commissions.

       In 2012, the Legislature for the first time allowed county boards of commissioners

to dissolve their county road commissions and assume the road commissions’ “powers,

duties, and functions.” See 2012 PA 14 and 2012 PA 15. But the Legislature did not
address whether those counties, like plaintiffs here—which had road commissions that had

entered into self-insurance pools limiting membership to county road commissions—

would have any right to continue membership in the pool or to receive any distributions of

surplus equity from the pool to which the road commissions would have otherwise been

entitled. Because plaintiffs no longer have separate road commissions and, in two cases,

have withdrawn from the Pool, I agree with the majority that plaintiffs here no longer

qualify under the Pool agreement for membership or distributions of surplus equity.

Perhaps most concerning, by exercising their statutory right to dissolve their road

commissions, these counties thus lost entitlement to funds they contributed to the Pool but

which were not used, i.e., the surplus equity.

       This may seem like a technical matter involving complex insurance arrangements

between municipal corporations. But the funds plaintiffs have lost out on represent

overpayments made, ultimately, by the taxpayers of those counties. They are the real losers

today. It is not clear to me that the Legislature in 2012 would have wanted to allow such

punitive actions to be taken against counties for exercising their statutory right to dissolve

their road commissions. As a court, we cannot fill this possible gap in the 2012 legislation,

and therefore, I agree with the majority’s analysis and the result it reaches. See People v

Pinkney, 501 Mich 259, 286; 912 NW2d 535 (2018). The Legislature, however, may wish

to reexamine this issue in light of the Court’s opinion today.

                                                         David F. Viviano

                                              2
                              STATE OF MICHIGAN

                                   SUPREME COURT

 COUNTY OF INGHAM, COUNTY OF
 JACKSON, and COUNTY OF CALHOUN,

               Plaintiffs-Appellees,

 v                                                             No. 160186

 MICHIGAN COUNTY ROAD
 COMMISSION SELF-INSURANCE POOL,

               Defendant-Appellant.

BERNSTEIN, J. (dissenting).
       I would affirm for the reasons stated in the Court of Appeals opinion, as I believe

the Court of Appeals reached the right result for the right reasons.

                                                         Richard H. Bernstein