Court Opinion

ID: 3214251
Source: CourtListenerOpinion
Date Created: 2016-06-17 14:09:36.974856+00
Date Added: 2024-06-11T14:27:28.543221
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

THOMAS R. OKRIE and ALL OTHERS                                      UNPUBLISHED
SIMILARLY SITUATED,                                                 June 16, 2016

               Plaintiff-Appellant,

v                                                                   No. 326607
                                                                    Court of Claims
STATE OF MICHIGAN, GOVERNOR,                                        LC No. 13-000093-MK
DEPARTMENT OF TECHNOLOGY
MANAGEMENT AND BUDGET, OFFICE OF
RETIREMENT SERVICES, STATE
EMPLOYEES RETIREMENT SYSTEM,
MICHIGAN PUBLIC SCHOOL EMPLOYEES
RETIREMENT SYSTEM, and DEPARTMENT
OF TREASURY,

               Defendants-Appellees.

Before: SAWYER, P.J., and HOEKSTRA and WILDER, JJ.

PER CURIAM.

        Plaintiff appeals as of right the Court of Claims’s order (1) granting defendants’ motion
for summary disposition under MCR 2.116(C)(8) and (C)(10) regarding all eight counts of
plaintiff’s first amended complaint, (2) denying plaintiff’s cross-motion for summary disposition,
(3) denying plaintiff’s motion to file a second amended complaint, and (4) denying, as moot,
plaintiff’s motion for class certification. We affirm.

                                I. FACTUAL BACKGROUND

        Plaintiff, who was born in 1946, served for 33 years as a health and social studies teacher
in the Troy School District. According to plaintiff, he regularly consulted the Michigan Public
School Employees Retirement System’s (MPSERS) guideline booklets that were published by
defendant Office of Retirement Services (ORS). These booklets all contained the statement that
“Pensions paid by MPSERS are exempt from Michigan state income tax and Michigan city tax.”
However, the booklets also contained the following disclaimer:

       Remember, this book is a summary of the main features of the plan and not a
       complete description. The operation of the plan is controlled by the Michigan

                                                -1-
       Public School Employees Retirement Act (Public Act 300 of 1980, as amended).
       If the provisions of the Act conflict with this summary, the Act controls.

During the pertinent timeframe, a guideline booklet from the State Employees’ Retirement
System (SERS) stated, “Pensions paid by the State Employees’ Retirement System are exempt
from the Michigan state and city income tax,” while also indicating that the ORS “will process
your retirement application and pay your pension under the provisions of the State Employees’
Retirement Act, 1943 P.A. 240, as amended.”

        Plaintiff claims that he relied on the statements in such guideline booklets when deciding
whether and when to retire. He believed that the statements constituted a promise that his
pension income would remain tax exempt throughout his retirement. Additionally, plaintiff
alleges that he purchased 4.698 year of service credit to increase the value of his pension and that
he entered into the Michigan Investment Plan (MIP), under which he contributed regular portions
of his salary in exchange for a yearly increase on his best three years of service in his pension
plan.

         Plaintiff submitted the necessary paperwork to MPSERS to begin his retirement in July
2000. As part of the process, plaintiff filled out an “Income Tax Information” form that stated
his pension income would be exempt from state and local tax. After retiring, plaintiff received
his first remittance. No state tax was withheld. Plaintiff continued to receive such remittances—
without state income tax being withheld—for 11 years. But the tax treatment changed with the
entry into force of 2011 PA 38 and related legislation that removed the tax-exempt status of
plaintiff’s pension benefits.

        The history of 2011 PA 38 and related legislation is chronicled by In re Request for
Advisory Opinion Regarding Constitutionality of 2011 PA 38, 490 Mich. 295; 806 NW2d 683
(2011) (Advisory Opinion), in which our Supreme Court noted that “[b]efore the enactment of
2011 PA 38, public-pension benefits were completely deductible . . . and all taxpayers were
entitled to a personal exemption of $2,500 (subject to annual inflation adjustments).” Id. at 305-
306. However, after the effective date of 2011 PA 38:

       [O]nly those taxpayers whose total household resources are less than $75,000 for
       a single return or $150,000 for a joint return are entitled to the entire personal
       exemption . . . while those taxpayers whose total household resources are between
       $75,000 and $100,000 for a single return or $150,000 and $200,000 for a joint
       return are entitled to a portion of this personal exemption, and those taxpayers
       whose total household resources exceed $100,000 for a single return or $200,000
       for a joint return are not entitled to any portion of the personal exemption.

       In addition, while 2011 PA 38 does not affect the available pension deductions of
       those people born before 1946, it does affect the pension deductions of those
       people born in 1946 and thereafter. MCL 206.30(9). For those people born on or
       after January 1, 1946 and not after December 31, 1952, public and private
       pensions are subject to the same deductions up to $20,000 for a single return and
       $40,000 for a joint return. MCL 206.30(9)(b). And, upon reaching the age of 67,
       although the pension deductions are no longer available, a general deduction is

                                                -2-
       available for those people up to $20,000 for a single return and $40,000 for a joint
       return as long as the taxpayer’s total household resources do not exceed $75,000
       for a single return or $150,000 for a joint return. [Id. at 306-307.]

         Plaintiff filed his original complaint in this action on behalf of himself and all other
Michigan public school teacher retirees and State employee retirees who were born after 1945
and had begun receiving pension benefits from their retirement plan prior to the effective date of
2011 PA 38. Plaintiff’s complaint contained two counts, one for promissory estoppel and one
for equitable relief. The parties filed competing motions for summary disposition. But prior to
the trial court ruling on those motions, plaintiff filed an amended complaint that added counts for
unjust enrichment, breach of contract under traditional contract principles, violation of the
Contract Clauses of the Michigan and United States Constitutions, violation of the Takings
Clause of the Michigan and United States Constitutions, violation of substantive due process,
and violation of procedural due process. Plaintiff also filed a second motion for summary
disposition with respect to his first amended complaint. Shortly thereafter, the trial court granted
defendant’s first motion for summary disposition on the counts in plaintiff’s original complaint.
Defendants then filed their second motion for summary disposition, in which they sought
dismissal of all counts in plaintiff’s amended complaint.

        Subsequently, plaintiff filed a motion seeking to file a second amended complaint to add
counts for breach of a purchase of service credit contract and for breach of the Michigan
Investment Plan contract. Defendants responded by filing a motion opposing plaintiff’s request
to file a second amended complaint, along with a motion for summary disposition regarding
plaintiff’s first amended complaint. Plaintiff also filed a motion seeking class certification.

       Ultimately, the Court of Claims entered an order granting defendants’ motion for
summary disposition and denying plaintiff’s motions. With regard to the parties’ cross-motions
for summary disposition, the Court of Claims reasoned,

               Woven within plaintiff’s legal theories is a common thread. Plaintiff
       views the former exemption from state and city income tax as an inseparable part
       of the financial value of the defined benefit plan to which he is entitled. Just as an
       employer may not reduce the amount of the pension benefit, plaintiff argues, the
       state may not change the tax treatment of the pension benefit so as to effectively
       reduce its value. . . . Many find persuasive the approach in Herrick v Lindley, 59
       Ohio St 2d 22, 27; 391 NE2d 729 (1979), where the court explained that “there is
       a definite legal distinction between reducing the rate of a pension and levying a
       tax upon the income received from that pension.” This is the view adopted by the
       Michigan Supreme Court in [Advisory Opinion].1. . . . In the present ruling, th[e]
       Court [of Claims] will again follow the approach of the Supreme Court in
       recognizing that pension income is distinct from tax treatment of the income.
                                              * * *
       Statements that pensions “are exempt,” whether made in statutes or retirement
       advisory materials, do not make or imply any promises regarding future tax
       treatment.
       1
         An advisory opinion by the Supreme Court is not precedentially binding in the
       same sense as a decision of the Court after a hearing on the merits, but it may be

                                                -3-
       persuasive authority. AFT Michigan v Michigan, 303 Mich. App. 651, ___;
       ___NW2d ___ (2014); slip op at 14 n 4. [Citations omitted.]

On that basis, the Court of Claims ruled that summary disposition in favor of defendants was
appropriate regarding each of the claims asserted in plaintiff’s amended complaint. Under
essentially the same rationale, the Court of Claims held that the new claims plaintiff sought to
assert by amending his complaint were also fatally flawed:

               Plaintiff seeks to add two new counts. Proposed Count IX is for “Breach
       of an Investment Contract Regarding the Purchase of Service Credit.” In this
       count, plaintiff alleges that he and similarly situated employees purchased service
       credit to increase the value of the pension benefit “premised upon the State’s
       reciprocal promise that the investment returns would be free from state and local
       income taxation.” Plaintiff alleges that the state breached the contracts by
       subjecting the investment returns of the service credit to state and local income
       taxation. Proposed Count X alleges that plaintiff and similarly situated employees
       made investment decisions to enter into an investment contract with [MIP] “based
       upon the condition that the yearly increase in their pensions was exempt from
       state and local income taxation in retirement.”

               Plaintiff’s proposed new claims are simply variations on the theme of the
       previous two complaints. Absent an enforceable promise or contractual
       obligation for a perpetual tax exemption, the proposed claims will fare no better
       than their predecessors. The amendment would therefore be futile. Accordingly,
       plaintiff’s motion to amend the complaint is denied. [Citation omitted.]

Finally, the Court of Claims denied plaintiff’s motion for class certification, reasoning that its
earlier decisions had rendered that motion moot.

        Defendant reacted by filing a motion for reconsideration, which the Court of Claims
denied. In so ruling, the Court reasoned, “Plaintiff has not demonstrated a palpable error by
which the Court and the parties have been misled and has not shown that a different disposition
of the motion must result. MCR 2. l l 9(F).” This appeal followed.

                                II. STANDARDS OF REVIEW

        We review the trial court’s grant of summary disposition pursuant to MCR 2.116(C)(8)
and (C)(10) “de novo to determine if the moving party is entitled to judgment as a matter of
law.” Maiden v Rozwood, 461 Mich. 109, 118; 597 NW2d 817 (1999). Constitutional issues are
also reviewed de novo, Barrow v City of Detroit Electric Comm, 301 Mich. App. 404, 411; 836
NW2d 498 (2013), whereas a trial court’s decision denying a motion to amend a pleading is
reviewed for an abuse of discretion, Weymers v Khera, 454 Mich. 639, 654; 563 NW2d 647
(1997). “An abuse of discretion occurs when the court’s decision results in an outcome that falls
outside the range of principled outcomes.” Epps v 4 Quarters Restoration LLC, 498 Mich. 518,
528; 872 NW2d 412 (2015).

                                               -4-
                                         III. ANALYSIS

                                 A. BREACH OF CONTRACT

       Plaintiff argues that the Court of Claims erred by summarily dismissing his breach of
contract claim. We disagree.

       “The essential elements of a contract are parties competent to contract, a proper subject
matter, legal consideration, mutuality of agreement, and mutuality of obligation.” McCoig
Materials, LLC v Galui Const, Inc, 295 Mich. App. 684, 694; 818 NW2d 410 (2012).

       [A]bsent some clear indication that the legislature intends to bind itself
       contractually, the presumption is that a law is not intended to create private
       contractual or vested rights but merely declares a policy to be pursued until the
       legislature shall ordain otherwise. This well-established presumption is grounded
       in the elementary proposition that the principal function of a legislature is not to
       make contracts, but to make laws that establish the policy of the state. Policies,
       unlike contracts, are inherently subject to revision and repeal, and to construe
       laws as contracts when the obligation is not clearly and unequivocally expressed
       would be to limit drastically the essential powers of a legislative body. Indeed,
       the continued existence of a government would be of no great value, if by
       implications and presumptions, it was disarmed of the powers necessary to
       accomplish the ends of its creation. Thus, the party asserting the creation of a
       contract must overcome this well-founded presumption, and we proceed
       cautiously both in identifying a contract within the language of a regulatory
       statute and in defining the contours of any contractual obligation.

               The first step in this cautious procession is to examine the statutory
       language itself. In order for a statute to form the basis of a contract, the statutory
       language must be plain and susceptible of no other reasonable construction than
       that the Legislature intended to be bound to a contract. If the statutory language
       provides for the execution of a written contract on behalf of the state the case for
       an obligation binding upon the state is clear. . . . But, absent an adequate
       expression of an actual intent of the State to bind itself, courts should not construe
       laws declaring a scheme of public regulation as also creating private contracts to
       which the state is a party. [Studier v Mich Pub Sch Employees’ Retirement Bd,
       472 Mich. 642, 661-662; 698 NW2d 350 (2005) (quotation marks, citations, and
       brackets omitted).]

        At issue in Studier were amendments to the MPSERS health care plan for retirees that
increased the amount of the deductibles retirees would be required to pay and also increased the
copays and out-of-pocket maximums that retirees would pay for prescriptions. Id. at 646. The
plaintiffs were “six public school retirees” that alleged the increases imposed by statute violated
the contract clauses of the Michigan and United States Constitutions. Id. at 647-648. In
addressing whether these legislative amendments violated contractual obligations imposed by the
previous versions of the statute, the Supreme Court noted that nowhere in the statute at issue “did

                                                -5-
the Legislature provide for a written contract on behalf of the state of Michigan or even use
terms typically associated with contractual relationships, such as ‘contract,’ ‘covenant,’ or
‘vested rights.’ ” Id. at 663-664. The Studier Court added that “[h]ad the Legislature intended to
surrender its legislative powers through the creation of contractual rights, it would have
expressly done so by employing such terms” and that “nowhere in the statute did the Legislature
covenant that it would not amend the statute to remove or diminish the obligation of the
MPSERS.” Id. at 664-665.

        In Advisory Opinion, the Michigan Supreme Court reasoned that 2011 PA 38 was similar
to the statutory provisions at issue in Studier in that neither “contain[ed] any language
‘provid[ing] for a written contract on behalf of the state of Michigan or even use[d] terms
typically associated with contractual relationships, such as “contract,” “covenant,” or “vested
rights.” ’ ” Advisory Opinion, 490 Mich. at 321, quoting Studier, 472 Mich. at 663-664.
Similarly, the Advisory Opinion Court noted that nowhere in the statutory language did the
Legislature promise or state that the statutes could not be amended or that it was surrendering its
power to amend them. Id. at 322-323. The Court concluded that, absent any language in the
statutes indicating that the Legislature intended to be contractually bound, “the tax exemption
statutes do not create contractual rights that cannot be altered by the Legislature.” Id. at 324.

        While the Advisory Opinion Court’s holding does not bind our decision here,1 we find its
reasoning highly persuasive, especially in light of Studier. Plaintiff has pointed to no language
in the Income Tax Act, MCL 206.1 et seq, the State Employees Retirement Act, MCL 38.1 et
seq, or the Public School Employees Retirement Act, MCL 38.1301 et seq, that shows an
adequate expression that the Legislature actually intended for the State to be bound contractually.
Additionally, plaintiff has not pointed to any terms such as “contract,” “covenant,” or “vested
rights” in the pertinent provisions of the germane acts. By failing to identify language indicating
that the Legislature intended to bind successive Legislatures by precluding amendment of the
tax-exempt status of plaintiff’s pension, plaintiff has failed to rebut the presumption that the
Legislature did “not intend[] to create private contractual or vested rights but merely [to]
declare[] a policy to be pursued until the [L]egislature [] ordain[ed] otherwise.” See Studier, 472
Mich. at 661 (quotation marks and citations omitted).

        Plaintiff, however, argues that, notwithstanding the language in the relevant statutes, he
and others like him have a contractual right to a tax-exempt pension or its financial equivalent
due to statements made by MPSERS in its guideline booklets (i.e., statements that public pension
income was tax-exempt). However, those booklets also explicitly state that “the plan is
controlled by the Michigan Public School Employees Retirement Act (Public Act 300 of 1980,
as amended)” and that “[i]f the provisions of the Act conflict with this summary, the Act
controls.” While the booklets did not explicitly inform plaintiff that their provisions were

1
  Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich. 441, 460 n 1; 208 NW2d 469
(1973) (“It is important to emphasize the fact that an advisory opinion does not constitute a
decision of the Court and is not precedentially binding in the same sense as a decision of the
Court after a hearing on the merits.”).

                                                -6-
subject to change, they did explicitly inform him that his retirement plan was governed by a
statute. “Of primary importance to the viability of our republican system of government is the
ability of elected representatives to act on behalf of the people through the exercise of their
power to enact, amend, or repeal legislation.” Studier, 472 Mich. at 660. At most, statements in
the booklets informed plaintiff of extant tax policy; they provided no promise regarding future
tax policy. See Advisory Opinion, 490 Mich. at 322 n 29 (“The fact that the language ‘are
exempt’ was put in the present tense indicates that the Legislature simply intended pension and
retirement incomes to be exempt from taxation while this statutory language remained the law.
However, it does not indicate any intent to forever prohibit a future Legislature from changing
this law and making pension and retirement incomes subject to taxation.”). Nothing in the
booklets can be said to create a binding contractual obligation on the part of defendants to give
plaintiff and those like him a perpetual tax exemption or comparable benefit. We also note that
the Michigan Constitution provides the legislative branch with the power to tax, Const 1963, art
9, § 1, and it explicitly states that “[t]he power of taxation shall never be surrendered, suspended
or contracted away,” Const 1963, art 9, § 2. As such, none of the named defendants in this case
had authority to contract away the Legislature’s taxation power.

        Plaintiff also argues that defendants are judicially estopped from contesting the
contractual nature of public pension tax exemptions due to a position taken in Davis v Mich
Dep’t of Treasury, 489 U.S. 803; 109 S. Ct. 1500; 103 L. Ed. 2d 891 (1989). The doctrine of
judicial estoppel states that “a party who has successfully and unequivocally asserted a position
in a prior proceeding is estopped from asserting an inconsistent position in a subsequent
proceeding.” Opland v Kiesgan, 234 Mich. App. 352, 362; 594 NW2d 505 (1999). “[T]here must
be some indication that the court in the earlier proceeding accepted the party’s position as true.”
Id. Here, there is no indication that defendants are asserting a position that was accepted by the
Davis Court. On the contrary, that Court explicitly rejected the State’s argument. Davis, 489 U.S.
at 816. Thus, plaintiff’s instant argument necessarily fails.

        Finally, plaintiff argues that defendants are equitably estopped from contesting the
contractual nature of the previous tax exemption laws due to statements made in the guidelines
booklets. Equitable estoppel is “a doctrine that may assist a party by precluding the opposing
party from asserting or denying the existence of a particular fact.” Conagra, Inc v Farmers State
Bank, 237 Mich. App. 109, 140-141; 602 NW2d 390 (1999). “Equitable estoppel may arise where
(1) a party, by representations, admissions, or silence intentionally or negligently induces another
party to believe facts, (2) the other party justifiably relies and acts on that belief, and (3) the other
party is prejudiced if the first party is allowed to deny the existence of those facts.” Id. at 141.
Here, plaintiff attempts to use the doctrine of equitable estoppel not to preclude defendants from
“asserting or denying the existence of a particular fact” but to preclude defendants from asserting
a specific legal position (i.e., that the previous statutory provisions that exempted public pension
income from state and local taxation were not a contractual right). However, even if that legal
position were considered a fact, plaintiff has pointed to no statutory language indicating that the
statutory provisions at issue created a private contractual right. Therefore, plaintiff’s equitable
estoppel argument also necessarily fails.

        In sum, regarding his breach of contract claim, plaintiff is unentitled to relief under the
traditional contract theories discussed supra. Consequently, summary disposition of that claim
was appropriately granted.

                                                  -7-
                                 B. PROMISSORY ESTOPPEL

        Plaintiff argues that the Court of Claims erred when it granted defendants summary
disposition regarding his promissory estoppel claim. We disagree.

        “Promissory estoppel is a judicially created doctrine that was developed as an equitable
remedy applicable in common-law contract actions.” Crown Tech Park v D&N Bank, FSB, 242
Mich. App. 538, 548 n 4; 619 NW2d 66 (2000). A party seeking to invoke the doctrine must
show the existence of a promise, that the promisor should have reasonably expected the promise
induce the promissee to act, that the promisee relied on the promise, and that the promise must
be enforced to avoid injustice. Id. at 548-549. “In order to justify reliance and thus supply the
predicate for an estoppel theory, a promise must be ‘actual, clear, and definite.’ ” Gore v
Flagstar Bank, FSB, 474 Mich. 1075 (2006) (TAYLOR, C.J., concurring) (quotation marks and
citation omitted); see also Zaremba Equip, Inc v Harco Nat’l Ins Co, 280 Mich. App. 16, 41; 761
NW2d 151 (2008) (“The promise must be definite and clear[.]”).

       Plaintiff argues that a promise was conveyed to him in the guideline booklets that he
received; namely, that his pension benefits would be tax-exempt in perpetuity. As explained
supra, however, the booklets contained no such promise. Thus, plaintiff’s instant argument fails.
The trial court did not err by granting defendants summary disposition regarding plaintiff’s
promissory estoppel claim.2

                                  C. UNJUST ENRICHMENT

        Plaintiff next argues that, by granting defendants summary disposition regarding his
unjust enrichment claim, the Court of Claims erred. We disagree.

        “The elements of a claim for unjust enrichment are (1) receipt of a benefit by the
defendant from the plaintiff, and (2) an inequity resulting to plaintiff from defendant’s retention
of the benefit.” Bellevue Ventures, Inc v Morag-Kelly Investment Inc, 302 Mich. App. 59, 64; 836
NW2d 898 (2013). In the present case, the benefit cited by plaintiff is his labor, specifically his
33 years of service as a public school teacher. In this regard, it is worth noting that plaintiff

2
  Plaintiff’s reliance on Toussaint v Blue Cross & Blue Shield, 408 Mich. 579; 292 NW2d 880
(1980), is misplaced. In Toussaint, our Supreme Court found that Blue Cross had issued
manuals and guidelines with statement of company policy. Id. at 613-614. The Court held that
“employer statements of policy, such as the Blue Cross Supervisory Manual and Guidelines, can
give rise to contractual rights in employees without evidence that the parties mutually agreed that
the policy statements would create contractual rights.” Id. at 614-615. However, in Rood v Gen
Dynamics Corp, 444 Mich. 107, 138; 507 NW2d 591 (1993) (emphasis in original), the Supreme
Court stated that a threshold inquiry to establishing “a legitimate expectations claim under
Toussaint, is to determine what, if anything, the employer has promised.” When terms are
indefinite, it is unlikely a promise has been made, and without such a promise there is nothing to
enforce. Id. at 139. Here, because no promise was made, there is no promise to enforce.

                                                -8-
acknowledges that his employer during those years was a nonparty school district, not the named
defendants. As this Court explained in Karaus v Bank of New York Mellon, 300 Mich. App. 9, 24;
831 NW2d 897 (2012):

       A third party is not unjustly enriched when it receives a benefit from a contract
       between two other parties, where the party benefited has not requested the benefit
       or misled the other parties. . . . Otherwise stated, the mere fact that a third person
       benefits from a contract between two other persons does not make such third
       person liable in quasi-contract, unjust enrichment, or restitution. Moreover,
       where a third person benefits from a contract entered into between two other
       persons, in the absence of some misleading act by the third person, the mere
       failure of performance by one of the contracting parties does not give rise to a
       right of restitution against the third person. [Quotation marks and citations
       omitted; ellipsis in original.]

 The defendants in this litigation are the various state government officials and departments who
administer public school teachers’ and state employees’ retirement programs and the Department
of Treasury, which collects taxes. Plaintiff has not alleged that he provided any benefit to those
named defendants. Furthermore, he offers no argument that defendants are liable as third parties
under the theories discussed in Karaus. We will not supply such argument for him. This Court
does not function as a research assistant for the parties before it. See Mitcham v City of Detroit,
355 Mich. 182, 203; 94 NW2d 388 (1959) (“It is not enough for an appellant in his brief simply
to announce a position or assert an error and then leave it up to this Court to discover and
rationalize the basis for his claims, or unravel and elaborate for him his arguments, and then
search for authority either to sustain or reject his position. The appellant himself must first
adequately prime the pump; only then does the appellate well begin to flow.”). Ergo, plaintiff’s
instant claim of error warrants no relief.

                             D. CONTRACTUAL IMPAIRMENT

       Next, plaintiff argues that the legislation resulting from 2011 PA 38 is unconstitutional as
applied to the facts of this case because it impaired a contractual obligation owed him by
defendants. We disagree.

        Michigan’s Constitution states that “[n]o bill of attainder, ex post facto law or law
impairing the obligation of contract shall be enacted.” Const 1963, art 1, § 10. Similarly, the
United States Constitution states that “[n]o State shall . . . pass any Bill of Attainder, ex post
facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.” US
Const, art I, § 10, Cl 1. A “threshold inquiry is whether the state law has, in fact, operated as a
substantial impairment of a contractual relationship.” Energy Reserves Group v Kansas Power
& Light Co, 459 U.S. 400, 411; 103 S. Ct. 697; 74 L. Ed. 2d 569 (1983) (quotation marks and
citation omitted). “This inquiry has three components: whether there is a contractual
relationship, whether a change in law impairs that contractual relationship, and whether the
impairment is substantial.” General Motors Corp v Romein, 503 U.S. 181, 186; 112 S. Ct. 1105;
117 L. Ed. 2d 328 (1992). The question of impairment need not be reached when there is no
contractual agreement at issue. Id.

                                                -9-
       Because we conclude that no contractual relationship existed, we need not proceed to the
question of impairment. As applied to the facts of this case, the legislation resulting from 2011
PA 38 does not contravene the contract clauses of our federal and state constitutions.

                                E. GOVERNMENTAL TAKING

       In another constitutional argument, plaintiff contends that 2011 PA 38 unlawfully took a
vested proprietary interest from him—specifically, his interest in a perpetual tax exemption for
his pension benefits—without offering just compensation. We disagree.

        The Fifth Amendment to the United States Constitution states that “nor shall private
property be taken for public use, without just compensation.” US Const, Am V. The Michigan
Constitution similarly states that “[p]rivate property shall not be taken for public use without just
compensation therefore being first made or secured in a manner prescribed by law.” Const 1963,
art 10, § 2. Even assuming, arguendo, that the impairment of a contractual interest is sufficient
to support a claim under the above takings clauses,3 plaintiff does not have a contractual right to
a tax-exempt pension in perpetuity. “[A] taxpayer does not have a vested right in a tax statute or
in the continuance of any tax law.” City of Detroit v Walker, 445 Mich. 682, 703; 520 NW2d 135
(1994). Because plaintiff did not have a property interest in a perpetual tax exemption to his
pension benefits, there is no violation of the takings clause in either the Michigan Constitution or
the United States Constitution.

                                    F. MOTION TO AMEND

      Finally, plaintiff argues that the Court of Claims erred by denying, as futile, his motion to
amend his complaint. We again disagree.

       “Because a court should freely grant leave to amend a complaint when justice so requires,
a motion to amend should ordinarily be denied only for particularized reasons.” Wormsbacher v

3
  That proposition is by no means certain. Compare Lynch v United States, 292 U.S. 571, 579; 54
S. Ct. 840; 78 L. Ed. 1434 (1934) (“Valid contracts are property, whether the obligor be a private
individual, a municipality, a state, or the United States.”) and Connolly v Pension Ben Guar
Corp, 475 U.S. 211, 224; 106 S. Ct. 1018; 89 L. Ed. 2d 166 (1986) (“If the regulatory statute is
otherwise within the powers of Congress . . . its application may not be defeated by private
contractual provisions. For the same reason, the fact that legislation disregards or destroys
existing contractual rights does not always transform the regulation into an illegal taking.”). See
also Pro-Eco, Inc v Bd of Comm’rs of Jay Co, Indiana, 57 F3d 505, 510 n 2 (CA 7, 1995)
(interpreting “Connolly, in conjunction with the line of authority stating that [federal circuit
courts] should look to states to find property rights under the Takings Clause, as effectively
overruling . . . Lynch[.]”).

                                                -10-
Seaver Title Co, 284 Mich. App. 1, 8; 772 NW2d 827 (2009). “Reasons that justify denying leave
to amend include . . . futility.” Id. “An amendment would be futile if it is legally insufficient on
its face, and the addition of allegations that merely restate those allegations already made is
futile.” Id. at 8-9.

        In plaintiff’s proposed second amended complaint, he alleged that he purchased 4.698
years of service credit with his own money “toward his tax exempt pension” and that he entered
into the MIP, in which he contributed portions of his salary to defendants “in exchange for a
yearly increase of 3% on [his] best three years of years of [sic] service.” Plaintiff further alleged
that, by not continuing the tax-exempt status of his pension benefits, defendants broke the
purchase of service credit agreement and the MIP agreement. The only difference between the
breach of contract claims asserted in plaintiff’s first amended complaint and those he sought to
add is the form of consideration allegedly provided by plaintiff. The latter alleged that he paid
portions of his salary in exchange for a deferred benefit whereas the former alleged that he
exchanged his labor in exchange for that benefit. Regardless of the consideration at issue,
however, plaintiff has failed to show that he was promised that his deferred benefit would remain
tax-exempt in perpetuity. As the Court of Claims aptly put it, “Plaintiff’s proposed new claims
are simply variations on the theme of the previous two complaints. Absent an enforceable
promise or contractual obligation for a perpetual tax exemption, the proposed claims will fare no
better than their predecessors. The amendment would therefore be futile.” We find no error in
that ruling.

                         G. REQUEST FOR CLASS CERTIFICATION

        Because we conclude that defendants are entitled to summary disposition regarding
plaintiff’s first amended complaint, and that the trial court properly denied his motion for leave
to file a second amended complaint, the question of whether class certification was proper is
rendered moot. See Anglers of AuSable, Inc v Dept of Envtl Quality, 489 Mich. 884 (2011)
(noting that a case is moot if “it presents ‘nothing but abstract questions of law, which do not rest
upon existing facts or rights.’ ”), quoting Gildemeister v Lindsay, 212 Mich. 299, 302; 180 N.W.
633 (1920). Hence, we decline to address the class certification issue. See Barrow v Detroit
Election Comm, 305 Mich. App. 649, 659; 854 NW2d 489 (2014) (“We generally do not address
moot questions or declare legal principles that have no practical effect in a case.”).

       Affirmed.

                                                              /s/ David H. Sawyer
                                                              /s/ Joel P. Hoekstra
                                                              /s/ Kurtis T. Wilder

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