STUART TRAGER V CITY OF DETROIT
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STATE OF MICHIGAN
COURT OF APPEALS
STUART TRAGER,
UNPUBLISHED
November 23, 1999
Plaintiff-Appellee,
v
Nos. 209668;214835
Wayne Circuit Court
LC No. 97-715854 CL
CITY OF DETROIT,
Defendant,
and
DETROIT BOARD OF TRUSTEES OF THE
GENERAL RETIREMENT SYSTEM OF THE CITY
OF DETROIT,
Defendant-Appellant.
Before: Gribbs, P.J., and Murphy and Griffin, JJ.
PER CURIAM.
In these consolidated appeals, defendant Detroit Board of Trustees of the General Retirement
System of the City of Detroit appeals as of right from an order granting plaintiff’s motion for summary
disposition and appeals by leave granted from an order granting plaintiff’s motion for attorney fees and
costs. We affirm in part and reverse in part.
This case involves a dispute over pension benefits. After plaintiff’s pension rights had vested
and he began drawing a pension, defendant adopted a resolution providing that the pension benefits of a
“retirant” who returns to work for the city will be suspended until he or she again retires. More than a
year after plaintiff returned to city employment, defendant suspended payment of plaintiff’s pension
benefits in accordance with that resolution. Plaintiff sued and the trial court ruled that defendant had
acted illegally and must resume paying plaintiff his pension. It subsequently granted plaintiff’s motion for
costs and attorney fees.
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Defendant first contends that the trial court erred in granting summary disposition for plaintiff.
The trial court’s ruling on a motion for summary disposition is reviewed de novo. Pinckney
Community Schools v Continental Casualty Co, 213 Mich App 521, 525; 540 NW2d 748 (1995).
This case is governed by Const 1963, art 9, § 24, which provides in pertinent part:
The accrued financial benefits of each pension plan and retirement system of the
state and its political subdivisions shall be a contractual obligation thereof which shall not
be diminished or impaired thereby.
That provision “makes the financial benefits of a pension plan a contractual obligation of the
city,” Retired Policemen & Firemen of Lincoln Park v Lincoln Park, 6 Mich App 372, 378; 149
NW2d 206 (1967), and precludes reduction of an accrued benefit, Seitz v Probate Judges
Retirement System, 189 Mich App 445, 451; 474 NW2d 125 (1991), or other impairment thereof.
Campbell v Judges’ Retirement Bd, 378 Mich 169, 181; 143 NW2d 755 (1966). Given that
defendant does not dispute that plaintiff’s pension rights had vested, its resolution requiring him to forfeit
those rights is unconstitutional. Therefore, the trial court properly granted plaintiff’s motion for summary
disposition.
Defendant next contends that the trial court erred in granting plaintiff’s motion for costs and
attorney fees.
“Michigan follows the ‘American rule’ regarding attorney fees. Under this rule, attorney fees
are generally not recoverable unless a statute, court rule, or common-law exception provides to the
contrary.” Schoensee v Bennett, 228 Mich App 305, 312; 577 NW2d 915 (1998). “Exceptions to
the general rule are construed narrowly.” Burnside v State Farm Fire & Casualty Co, 208 Mich
App 422, 427; 528 NW2d 749 (1995).
We reject plaintiff’s claim that there is a general exception permitting trust beneficiaries to
recover attorney fees in trust disputes. The only exception is when recovery of fees is necessary to
avoid an inequitable result, Merkel v Long (On Rehearing), 375 Mich 214, 218, 220; 134 NW2d
179 (1965), and plaintiff has not identified any special circumstances that would produce an inequitable
result if he had to pay his own attorney fees.
Plaintiff primarily premised his claim for attorney fees on this Court’s ruling in Bank of the
Commonwealth v Criminal Justice Inst, 102 Mich App 239; 301 NW2d 486 (1980). In that case,
the plaintiff was the trustee of pension plan assets held in trust for the benefit of the defendant’s
employees. The defendant apparently went out of business and the plaintiff filed an interpleader action
regarding disbursement of the assets. On the bank’s motion, the court appointed counsel to represent
the defendant’s employees, who had been named as party defendants. The employees then filed a
counterclaim/cross-claim, asserting a right to distribution of the plan’s assets. Id. at 246. Because none
of the employees’ p
ension rights had vested, their claim failed. Id. at 243-244. The employees’
attorney filed a motion for attorney fees, which the court granted. This Court held that principles of
equity dictated that the attorney be compensated because the bank requested that he be appointed “and
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defendant governmental bodies, by not opposing such appointment, under circumstances where the
compensation of such legal counsel for the funds under court control reasonably should have been
expected, should not now be permitted to oppose court approval of reasonable attorney fees for
appointed counsel from such funds.” Id. at 247. In so ruling, this Court analogized to MCL
555.63(c)(2); MSA 26.79(13)(c)(2) (authorizing a trustee to charge against the trust principal legal
“expenses incurred in maintaining or defending any action to construe the trust”) because the trustee had
requested the attorney’s appointment. This Court also noted that appointment of counsel to represent
the employees was necessary for an adversarial proceeding, which was the best way to resolve a
dispute over the trust assets between the defendant and its employees. Id. at 245.
We find Bank of the Commonwealth inapplicable in this case. This suit began as an
adversarial proceeding against two parties represented by independent counsel. Plaintiff’s attorney was
retained, not appointed by the court, and was paid by his client. Defendant therefore had no reason to
expect that it might be held responsible for plaintiff’s attorney fees. Accordingly, we find that the trial
court erred in awarding plaintiff attorney fees. The award of attorney fees is therefore reversed.
Plaintiff claims a right to attorney fees on various other grounds, including the “common fund”
doctrine, public policy, and MCL 600.2591; MSA 27A.2591. We disagree and are not persuaded
that any of the exceptions to the American rule apply. Auto Club Ass’n v State Farm Ins Co, 221
Mich App 154, 168; 561 NW2d 445 (1997). Further, we decline to address these issues inasmuch as
the trial court never reached these claims and this Court is usually limited to issues actually decided by
the trial court, Norton Shores v Carr, 81 Mich App 715, 723; 265 NW2d 802 (1978). In light of
our ruling that plaintiff was not entitled to attorney fees under trust law or Bank of the Commonwealth,
we need not reach defendant’s remaining issue regarding the reasonableness and appropriateness of the
fees awarded.
Affirmed in part and reversed in part.
/s/ Roman S. Gribbs
/s/ William B. Murphy
/s/ Richard Allen Griffin
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