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BUSINESS LAW 5: ERISA holds employers liable for the promises of pensions.

Private employers are not required to offer pension plans, but if they do, ERISA requires that the pension plans meet certain standards and retain certain protections. That way, if a worker has been promised a defined pension benefit upon retirement—and if he has fulfilled whatever conditions are required to obtain a vested benefit—he actually will receive it.  Before ERISA, lack of oversight and legal standards often left pension plans without enough money, and employees who counted on those funds with nothing for retirement.

Subchapter III of ERISA requires PBGC to charge participating companies premiums so that if a pension plan fails, PBGC can provide for the timely and uninterrupted payment of pension benefits to participants and beneficiaries.

In this case, the company produced auto parts before going out of business in 2009. Since 1964 it had offered pension benefits to some of its employees, and by the time production was stopped, its pension obligation was underfunded by millions of dollars. To satisfy that liability, PBGC looked to assets that might be treated as the company’s—specifically, a trust started by its founder and assets purchased from the company by the founder’s son in 2009.

When an employer terminates its pension plan, ERISA liability does not end with the company that actually promised pension payments. Instead, a trade or business under common control of the employer is treated as part of the employer and so incurs liability under ERISA.

The Trust assumes but does not concede that it and the Company were under common control. The trust contends, however, that it is not a trade or business under ERISA.

ERISA does not define trades or businesses, and neither the Supreme Court nor this court have defined the phrase in the context of ERISA, but courts, instead, have concluded that the entity that leases property to its commonly controlled company is categorically a trade or business for ERISA purposes.

Structurally, ERISA holds employers liable for the promises of pensions that they make to employees. After a PBGC determination that a pension plan has insufficient assets to meet its liabilities, ERISA holds the plan sponsor liable. The statute then guarantees that a liable sponsor cannot evade its responsibility through tactics such as corporate reorganization or sales to avoid liability for an impending plan termination.

Because there is a body of federal common law applying successor liability in employment and labor cases, it is appropriate to apply that law here, too.

The court held that it was appropriate to apply the federal common law of successor liability, rather than the state’s common law. It vacated the district court’s order of dismissal and remanded for further proceedings.

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REAL ESTATE 38: Plaintiff fails to make land contract payments.

The land contract stated that T Company sold real property to plaintiff. The land contract further stated that if plaintiff failed to make a monthly payment, T Company could execute the quitclaim deed, thereby terminating plaintiff’s rights to the real property under the land contract.

CONTRACTS 6: Do you understand the clauses in your Purchase Agreement?

The trial court granted defendants’ motion for summary disposition, concluding that the claims against the realty companies were barred by the valid release contained in the purchase agreement and that the claims against sellers were required to be resolved in arbitration because they fell within the scope of the arbitration clause in the purchase agreement.

DIVORCE 29: Spousal support in gross is non-modifiable, whereas periodic is subject to modification.

As the name implies, periodic spousal support payments are made on a periodic basis. Periodic spousal support payments are subject to any contingency, such as death or remarriage of a spouse, whereas spousal support in gross is paid as a lump sum or a definite sum to be paid in installments. In addition, one major difference between the two types of spousal support is modifiability. Spousal support in gross is non-modifiable, whereas periodic spousal support is subject to modification pursuant to MCL 555.28.1.

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PROBATE 28: Probate court enters a protective order providing support for a community spouse.

A probate court’s consideration of the couple’s circumstances cannot involve an assumption that the institutionalized spouse should receive 100% free medical care under Medicaid or an assumption that a community spouse is entitled to maintain his or her standard of living. Medicaid is a need-based program, and a Medicaid recipient is obligated to contribute to his or her care.

REAL ESTATE 36: Plaintiff argued that her claim was not time-barred because it did not accrue until the grandmother’s death.

Plaintiff’s interest in the subject property is best characterized as a remainder estate, because her right to possession of the property was postponed until the occurrence of a specific contingency, that being the deaths of the grandparents. Plaintiff pursued this action within the 15-year limitation period; accordingly, this action is not barred by MCL 600.5801(4).

LITIGATION 6: The terms of the agreement prevails over the course of performance.

The trial court determined that under the UCC, the express terms of the parties’ agreements prevailed over the course of their performance and course of dealing. Although a course of performance may show that parties have waived a specific contractual term under MCL 440.1303(6), the statute does not similarly provide that a course of dealing may demonstrate waiver.

PROBATE 27: Petitioner filed a petition for mental-health treatment.

In support of the allegations, petitioner attached clinical certificates from a physician and a psychiatrist who observed respondent at the hospital. Both doctors diagnosed respondent with bipolar disorder, determined that she displayed a likelihood of injuring herself and that she did not understand the need for treatment, and recommended a course of treatment that consisted of 60 days of hospitalization and 90 days of outpatient care.

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FAMILY LAW 32: Trial court committed error in failing to address whether there was an established custodial environment.

On appeal, plaintiff argues that the trial court failed to make any findings regarding (1) the child’s established custodial environment, (2) the child’s best interests regarding the grant of primary physical custody to defendant, (3) the child’s best interests with respect to parenting time, and (4) the child’s best interests pertaining to the parties’ dispute over daycare.

PROBATE 25: Daughter removed as personal representative of the estate.

the probate court determined that Daughter J had managed the estate in a manner that promoted her own interests as a beneficiary over the interests of the estate. The probate court found that such management demonstrated mismanagement of the estate and that removal of Daughter J was therefore in the best interests of the estate.

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REAL ESTATE 32: Plaintiffs and defendants executed a second easement.

Plaintiffs requested that the trial court, either through reformation of the First Easement or interpretation of the Second Easement, quiet title in favor of plaintiffs and declare them to be the owners of an easement to access Lake Superior through the ravine on defendants’ property, enjoin defendants from interfering with their use of the easement, and order compensation for damages to the stairs.

LITIGATION 4: Plaintiff claimed installation of hardwood flooring breached the condo bylaws.

Defendants completed the project. Plaintiff did not pay for any of the costs of the project. Defendants moved to compel plaintiff to pay one-half of the costs under the agreement. Plaintiff responded that defendants had materially breached the agreement in several ways, including by denying her the right to supervise the project, by refusing to give her an installation schedule, and by starting work before plaintiff approved of the start date.

FAMILY LAW 30: Discretionary trust assets cannot be reached to satisfy claims for child support and alimony.

The key difference between discretionary trusts, support trusts, and spendthrift trusts is that creditors cannot compel the trustee of a discretionary trust to pay any part of the income or principal in order that the creditors may be paid. The opposite is true of spendthrift and support trusts, which allow trust assets to be reached to satisfy creditors, including creditors seeking to satisfy claims for child support and alimony.

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FAMILY LAW 29: Quitclaim deed signed after prenuptial agreement prevails.

The court ruled that title to the land prevails and that once the deed was signed, the property became the undivided whole interest for both the decedent and appellee and became appellee’s property upon the decedent’s death. Consequently, the court concluded that the prenuptial agreement did not have any impact on the property rights of appellee in this case.

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