author: WILLIS, Judge.

text:
    In re TRUSTS A & B Created under the Last Will and Testament OF Rube DIVINE a/k/a Ruben Divine.
    No. A03-405.
    Court of Appeals of Minnesota.
    Jan. 6, 2001.

      James F. Baldwin, Gregory J. Wiley, Moss & Barnett, P.A., Minneapolis, MN, (for appellant Perry Divine).
    Alan I. Silver, Jessica Mason Pieklo, Bassford Remele, P.A., Minneapolis, MN, (for respondent U.S. Bank National Association).

      Robert D. Schwartz, St. Louis Park, MN, (for respondent estate of Patricia Divine).
    Arnold Schribman, Plymouth, MN, (for respondents Dianne Divine and Neil Bo-derman).
    Considered and decided by KLAPHAKE, Presiding Judge; WILLIS, Judge; and ANDERSON, Judge.
   OPINION

WILLIS, Judge.

In this dispute, arising from the trustees’ motion for an order approving an accounting for two trusts, appellant challenges the district court’s grant of summary judgment to the trustees. Appellant argues that there are genuine issues of material fact that preclude summary judgment and that the district court erred (1) in its interpretation of the term “sole discretion” as it is used in the trusts; (2) by concluding that the exculpatory clause in one of the trusts is valid and enforceable; and (3) by relying on extrinsic evidence of the settlor’s intent, including inadmissible hearsay evidence. Because we find no error by the district court, we affirm.

FACTS

Appellant Perry Divine is the sole current beneficiary of a testamentary trust created by his now-deceased father, Ruben Divine, and respondent U.S. Bank is one of the trustees. In 1983, Ruben Divine created two trusts, Trust A and Trust B, and named as trustees First Trust Company; respondent Neil Boderman, a long-time friend; and Patricia Divine, Ruben Divine’s wife and appellant’s mother. In 1991, American Bank and Trust Company, which later became Firstar Bank and ultimately respondent U.S. Bank, became corporate trustee.

Appellant’s parents were co-owners of the Enivid Corporation, whose sole asset is a commercial building in Saint Paul, and each parent owned half of Enivid’s 50 shares of stock. Ruben Divine died in 1986, and his 25 shares of Enivid stock became assets of the trusts, with 18 shares being held by Trust A and seven shares by Trust B. The trusts also hold interests in various limited partnerships, all of which are highly illiquid and none of which has ever generated significant income.

Trust A provides that appellant’s mother, who died in May 2001, was entitled to all of the net income generated by Trust A. During her lifetime, the trustees also were required to distribute to appellant’s mother

such sum or sums out of the principal of the trust as the Trustees, in their sole discretion, shall deem advisable for maintenance, care and support, taking into consideration in making such payments the then size of the trust, the station of life to which she has been accustomed, and her probable future requirements.

Appellant’s mother could also “require the Trustees to distribute” to her up to $10,000 per year from the principal of Trust A. Finally, pursuant to the provisions of Trust A, its corpus was to be transferred to Trust B when appellant’s mother died.

Trust B provides that the trustees “pay ... the net income from the trust to [appellant’s mother] during her lifetime or [appellant], or both of them.” Trust B further provides that

the Trustees may pay such amounts of principal from the trust as [U.S. Bank], in its sole discretion, shall deem necessary for the support and maintenance of [appellant’s mother] and for the support and maintenance of [appellant], taking into consideration the station of life to which they have been accustomed, the then size of the trust estate, their probable future requirements and their other assets.... [TJhese discretionary provisions [shall] be construed liberally and applied in [appellant’s mother’s] interest and for her benefit, and ..., in the event of any doubt or conflict of interest, the rights and interests of all others hereunder [shall] be dealt with by [U.S. Bank] as subordinate and secondary to her rights and interests[.] ... [U.S. Bank] may rely upon and need not verify the statements of [appellant’s mother] as to her other assets and its judgment as to the amount and advisability of such discretionary payments shall be final and conclusive upon all persons interested in [Ruben Divine’s] estate, and upon making any such payments, [U.S. Bank] shall be released and discharged from all further liability or accountability therefor.

Prior to 1991, appellant’s mother received $5,000 per month from Trust A, an amount slightly greater than the trust’s net income, and all of the net income from Trust B. U.S. Bank, Boderman, and appellant’s mother met “several” times in 1991 to discuss the trust assets and to determine whether they would ever provide significant income to the trusts. The trustees decided to continue monthly distributions of $5,000 from Trust A to appellant’s mother, in addition to the annual $10,000 distribution that she could demand. From 1990 through 1996, appellant’s mother also received distributions from Trust B in excess of $80,000. Because of U.S. Bank’s concerns about rapid depletion of the assets of Trust A, the trustees decided in 1997 to distribute to appellant’s mother a total of $5,000 per month from the two trusts’ income and principal.

At the time of the 1991 meetings, the trustees decided to make distributions from Trust B to appellant’s mother and not to appellant because of “concerns about [appellant’s] stability, and his ability to manage money.” The record shows that appellant began treatment for depression in 1991 and that he had not supported himself since then. Except for a four-month period in 1998 during which Boder-man employed him, appellant had been unemployed continuously since 1991. The record also shows that appellant’s mother used funds she received from both trusts to support appellant and his family. Indeed, appellant testified that his mother paid all of his living expenses from 1991 or 1992 until her death.

In April 2000, appellant met with a representative of U.S. Bank and requested a distribution of $50,000 from the trusts to finance an “air taxi business.” U.S. Bank discussed appellant’s request with his mother, and she instructed U.S. Bank to discontinue her monthly distributions and to distribute the money to appellant. Over the course of ten months beginning in May 2000, appellant received $50,000 from the trusts, but he failed to start the air-taxi business.

During the summer of 2000, appellant’s mother met with a U.S. Bank representative and discussed distribution of Enivid shares from Trust A to her. Appellant’s mother had been diagnosed with cancer, and, as part of her estate planning, she had created her own testamentary trust to hold her 25 Enivid shares. The trust was for the benefit of appellant’s children, and appellant’s mother named as co-trustees her attorney and her former daughter-in-law, Dianna Lynn Divine, who is appellant’s former spouse. Appellant’s mother expressed concern that “leaving [appellant] and Dianna (as trustee) as 50/50 partners in Enivid created a risk of conflict ... which could have an adverse impact on her grandchildren.”

In December 2000, U.S. Bank approved the distribution of two shares of Enivid from Trust A to appellant’s mother. U.S. Bank valued Enivid at $6,000 per share, based on “a prior appraisal and the real estate tax statement for the company’s building and the value of its mortgage.” U.S. Bank made the distribution based on (1) the right of appellant’s mother to demand distribution from the principal of Trust A; (2) the bank’s “deference to [her] judgment as to the best way to ensure the support of [appellant] and [appellant’s] children following her death”; (3) the bank’s “understanding of [Ruben Divine’s] directive in his will that the trustees apply the trust distribution provisions for” the benefit of appellant’s mother; and (4) the bank’s “independent judgment that [appellant] had not shown that he would be capable of appropriately controlling the family corporation.”

In August 2001, U.S. Bank and Boder-man moved the district court for an order approving an accounting for Trust A and Trust B for the period from March 1, 1996, through February 28, 2001. Appellant objected, contending that the trustees failed to prudently invest the trusts’ assets, improperly made distributions to his mother instead of to him, and improperly distributed the two shares of Enivid to her.

The trustees moved for summary judgment. In support of his opposition to the trustees’ summary-judgment motion, appellant submitted the affidavit of a trust expert, who opined that the trustees breached their fiduciary duty to appellant by (1) distributing the two Enivid shares from Trust A to appellant’s mother because the distribution created “a situation where the Trusts had a minority interest in what had been a family-owned business” and a “prudent trustee would not have permitted a transfer of trust assets that he knew was intended to be a transfer to a non-beneficiary”; (2) having “inappropriately valued the shares of Enivid” because a “prudent trustee would have valued the shares by evaluating all of the pertinent facts and financial data with respect to Enivid”; and (3) “not participating in the management of Enivid Corporation.” The district court granted summary judgment for the trustees, and this appeal follows.

ISSUES

I. Are there genuine issues of material fact that preclude summary judgment?

II. Did the district court err in its interpretation of the term “sole discretion” as it is used in the trusts?

III. Did the district court err by concluding that Trust B’s exculpatory clause is valid and enforceable?

IV. Did the district court err by relying on extrinsic evidence of the testator’s intent, including inadmissible hearsay evidence?

ANALYSIS

On appeal from summary judgment, a reviewing court asks two questions: (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). The reviewing court views the evidence in the light most favorable to the party against whom the judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993).

I.

Appellant argues that there are genuine issues of material fact regarding (1) whether the trustees acted contrary to Ruben Divine’s testamentary intent by distributing the two Enivid shares from Trust A to appellant’s mother; (2) whether the trustees breached their fiduciary duty to appellant by distributing the two Enivid shares, by improperly valuing them, or by imprudently managing Enivid; and (3) whether the trustees complied with the trusts’ distribution provisions.

Actions Alleged to Be Contrary to Settlor’s Intent

Appellant contends that the trustees acted contrary to Ruben Divine’s testamentary intent by distributing the two Enivid shares from Trust A because his father intended that control of Enivid would never pass to someone outside his immediate family. The district court concluded that it was “consistent with [Ruben Divine’s] intent [] not to leave control of Enivid equally divided between [appellant] and the trust in which his ex-wife” was a trustee.

The principal purpose of construing a will is to ascertain the testators intent at the time of execution. In re Wyman, 308 N.W.2d 311, 315 (Minn.1981). Extrinsic evidence of the meaning of a will is admissible only when the text of the will is ambiguous. In re Will of Hartman, 347 N.W.2d 480, 483 (Minn.1984); cf. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn.1979) (stating that the meaning of a written contract presents a question of law unless there is ambiguity and construction depends on extrinsic evidence, in which case it becomes a question of fact).

Appellant asserts that there is a genuine issue of material fact concerning his father’s intent, but he does not contend that the language of the will is ambiguous, and nothing suggests that the district court relied on extrinsic evidence when determining Ruben Divine’s testamentary intent as it relates to the distribution of Enivid shares from Trust A. Appellant’s contention concerning his father’s intent therefore presents a question of law, which we review de novo. See Frost Benco Elec. Ass’n v. Minn. Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn.1984).

In the event that appellant dies before complete distribution of the income and principal of Trust A, the will establishing the trusts. provides for distribution to appellant’s children; then to Dianna Lynn Divine, his spouse at the time the will was executed; and finally to Ruben Divine’s niece and nephew. Accordingly, the plain language of the trusts indicates no intent on the part of Ruben Divine to keep control of Enivid within his immediate family. Further, the language of Trust A, which held the Enivid shares at issue, specifically gives the trustees the discretion to make distributions from the principal of Trust A to appellant’s mother. We conclude, therefore, that distribution of the two Eni-vid shares from Trust A to' appellant’s mother was not contrary to Ruben Divine’s testamentary intent.

Alleged Breach of Fiduciary Duty

Appellant also asserts that there is a genuine issue of material fact regarding whether the trustees breached their fiduciary duty to him by distributing the two Enivid shares to his mother, by improperly valuing the shares, and by imprudently managing Enivid. In an action for breach of fiduciary duty by a professional trustee, “the plaintiff ‘must present evidence of the applicable standard of care, and that the standard of care was breached.’ ” In re Trusteeship of Williams, 631 N.W.2d 398, 406 n. 8 (Minn.App.2001) (quoting Wartnick v. Moss & Barnett, 490 N.W.2d 108, 116 (Minn.1992)), review denied (Minn. Sept. 25, 2001). But a professional trustee is not required to “conform its conduct to a standard of care unless a legally recognized duty exists.” See Ser-viceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 307 (Minn.1996). And while expert testimony regarding industry custom is “important in establishing a standard of care, [the testimony] does not by itself establish a legal duty to exercise that care.” Id.; see also Potter v. Pohlad, 560 N.W.2d 389, 395 (Minn.App.1997) (holding that “conclusory statements of an expert” will not preclude summary judgment), review denied (Minn. June 11, 1997).

Here, appellant’s expert does not raise fact issues but instead makes conclu-sory statements about whether the trustees’ actions, the facts of which are undisputed, constituted a breach of fiduciary duty. Rather than raising a genuine issue of material fact, appellant appears to argue that the trustees had a legal duty not to distribute the two Enivid shares to his mother, to value the shares differently, and to manage Enivid differently than they did. The existence of a legal duty is a question of law, which we review de novo. Williams, 631 N.W.2d at 404.

Appellant cites no authority for the proposition that the trustees had a legal duty not to distribute the two Enivid shares to his mother, and we find support in the record for the proposition that the distribution of shares was consistent with the trustees’ duty to administer the trusts for the benefit of appellant and his mother. The record shows that the trustees had reason to believe that appellant was unable to manage Enivid responsibly. Avoiding an even division in ownership between Trust B and the trust of which appellant’s former spouse was a trustee allowed appellant’s mother to ensure the appropriate management of Enivid and, thereby, to provide not only for appellant’s children but also for appellant.

Regarding the value that U.S. Bank attached to the shares, appellant argues that his expert’s opinion establishes that the shares were not valued correctly. To be sure, U.S. Bank explained the basis for its valuation. But even if the shares of Eni-vid were worth substantially more than $6,000 each, the share price is relevant only if the trustees were limited in the amount that they could distribute to appellant’s mother. And the record shows that they were not; rather, the distribution of the shares from Trust A was made pursuant to the trustees’ right, in their “sole discretion,” to make distributions of principal to appellant’s mother. We conclude, therefore, that there is no genuine issue of material fact regarding whether U.S. Bank breached its fiduciary duty to appellant.

Appellant also fails to cite any support for his contention that the trustees had a legal duty to manage Enivid differently than they did. Likewise, neither appellant nor his expert identifies particular activities of Enivid that were allegedly improper or would have been prevented or corrected by closer monitoring from the trustees.

Compliance With Trusts’ Distribution Provisions

Appellant further claims that there is a genuine issue of material fact regarding whether the distributions to his mother and to him were made in compliance with the provisions of the trusts. Again, appellant raises no fact issues regarding the distributions, instead contending that the distributions, the facts of which are undisputed, did not comply with the terms of the trusts as a matter of law.

Appellant claims that his mother spent more than $200,000 from the trusts to gamble at casinos from 1996 through 2000. In fact, the record shows only that there were checks drawn for “cash” and “casinos” in that amount, and cashing a check at a casino is not the equivalent of a gambling loss in that amount. Appellant asserts that distributions made to his mother for gambling could not have been made for her “maintenance, care, and support,” as Trust A requires, or for her “support and maintenance,” as Trust B requires.

But Trust A vests “sole discretion” for distributions in the trustees, and Trust B vests “sole discretion” in U.S. Bank. Appellant does not contend that his mother received excessive distributions from the trusts. Indeed, the record shows that the amount of her monthly distribution was reduced in 1997 when it became apparent that the trusts would not generate sufficient income to continue distributions at their previous level. Further, in 2000 and 2001, appellant’s mother voluntarily stopped receiving her monthly distributions over a period of ten months, directing the trustees to make the distributions instead to appellant to fund the air-taxi business that he proposed to start.

Appellant’s contention that the trustees’ failure to make distributions to him violated the terms of Trust B also fails to raise a genuine issue of material fact. Appellant does not dispute the basis of the trustees’ decision to make distributions to his mother instead of to him, which was the trustees’ determination that appellant had demonstrated emotional instability and the inability to manage his finances effectively. The language of Trust B gave the trustees the right to distribute income only to appellant’s mother during her lifetime and, further, gave U.S. Bank sole discretion over distributions of principal.

We conclude that appellant raises no genuine issue of material fact that precludes summary judgment. Appellant’s contentions regarding Ruben Divine’s testamentary intent, the trustees’ alleged breach of fiduciary duty, and whether they complied with the trusts’ distribution provisions are legal arguments, and we find each of them unpersuasive.

II.

Appellant further argues that the district court erred in its interpretation of the term “sole discretion” as it is used in the trusts. The district court, citing White Stone Partners L.P. v. Piper Jaffray Cos., 978 F.Supp. 878, 882-88 (D.Minn.1997), concluded that “the person to whom sole discretion is vested will be exposed to liability only for dishonest conduct, not for the exercise of discretion, even if the trustees’ decisions are unreasonable.” But White Stone is a U.C.C. case concerning the implied covenant of good faith and fair dealing in a commercial contract. Appellant contends that the proper standard here is whether the trustees abused their discretion, and he asserts that the trustees did so with regard to the distribution of two Enivid shares from Trust A to appellant’s mother.

The well-settled rule in Minnesota is that the courts will not substitute their discretion for that of a trustee except when necessary to remedy an abuse of discretion. In re Campbells Trusts, 258 N.W.2d 856, 866 (Minn.1977). What constitutes an abuse of discretion by a testamentary trustee, however, appears to be an issue of first impression in Minnesota.

Citing the Restatement (Second) of Trusts, the Iowa Supreme Court has enumerated six factors for determining whether a trustee has abused its discretion. See In re Manahans Estate, 255 Iowa 1060, 125 N.W.2d 135, 138 (1963). The factors are

(1) the extent of the discretion conferred upon the trustee by the terms of the trust; (2) the purposes of the trust; (3) the nature of the power; (4) the existence or non-existence, the definiteness or indefiniteness, of an external standard by which the reasonableness of the trustee’s conduct can be judged; (5) the motives of the trustee in exercising or refraining from exercising the power; [and] (6) the existence or nonexistence of an interest in the trustee conflicting with that of the beneficiaries.

Id. The Eighth Circuit has adopted the same factors, see, e.g., Cox v. Mid-America Dairymen, Inc., 965 F.2d 569, 572 (8th Cir.1992), and we do so now.

When we consider these six factors, we conclude that appellant has failed to show that the trustees abused their discretion. First, the extent of the discretion conferred on the trustees to make distributions of Trust A principal is broad; Ruben Divine gave the trustees “sole discretion.” Further, the trusts were established to benefit appellant and his mother, and nothing suggests that the distribution was not made for this purpose. The nature of the power to decide the amount of distributions and to whom they are paid also does not convince us that the trustees’ actions were an abuse of discretion.

Appellant cites nothing in the record that establishes a definite external standard against which to measure the reasonableness of the trustees’ actions; as discussed above, the affidavit of appellant’s expert contains only conclusory statements regarding whether the trustees breached their fiduciary duty, without suggesting a standard for determining the reasonableness of their actions. Further, the trustees’ motives in exercising their discretion included legitimate concerns about appellant’s inability to manage his own finances or to manage the family corporation. Appellant alleges no improper motive, and he likewise fails to allege any interest on the part of the trustees that conflicts with his interests as a beneficiary of Trust B. We conclude, therefore, that the trustees did not abuse their discretion by distributing the two Enivid shares from Trust A to appellant’s mother.

III.

Appellant also argues that the district court erred by concluding that Trust B’s exculpatory clause is valid and enforceable. The district court determined that the exculpatory clause “protects the corporate trustee against any liability with respect to the amount and advisability of discretionary distributions.” Appellant asserts that the provision is unenforceable and, in any event, does not excuse the trustees’ actions with respect to distributions from Trust A, which he asserts constitute a breach of fiduciary duty.

In In re Trusteeship of Williams, 591 N.W.2d 743, 751 (Minn.App.1999), this court held that, “[d]ue to the strict construction given exculpatory clauses and the higher standard of care required of professional trustees, the law now requires strong evidence or explicit language that the grantor intended the clause to exculpate a professional trustee.” Appellant urges a strict construction of the exculpatory provision here and asserts that it applies only to discretionary distributions of principal from Trust B by U.S. Bank to appellant’s mother.

The language of the trust certainly supports such an interpretation. But appellant does not suggest how such a narrow reading would change the outcome of the summary-judgment proceeding. Even if the exculpatory clause does not absolve the trustees from liability in connection with distributions of principal or income from Trust A or income from Trust B, appellant has not shown that the trustees made any improper distributions of principal or income that might create liability.

IV.

Appellant argues finally that the district court improperly relied on extrinsic evidence of Ruben Divine’s testamentary intent, including inadmissible hearsay evidence. Extrinsic evidence of the meaning of a will is admissible only when the text of the will is ambiguous. Hartman, 347 N.W.2d at 483. When deciding any summary-judgment motion, the district court must disregard hearsay evidence that would be inadmissible at trial. Murphy v. Country House, Inc., 307 Minn. 344, 349, 240 N.W.2d 507, 511 (1976).

Appellant asserts that the district court’s finding regarding appellant’s “personal and emotional problems, lack of responsibility in handling finances, and inability to support himself’ shows that the court considered extrinsic evidence of Ruben Divine’s testamentary intent. What appellant characterizes as the court’s “derogatory statements” about him were supported by appellant’s own testimony. Further, the court cited this finding regarding appellant not as evidence of his father’s testamentary intent but, rather, as a basis for concluding that the trustees’ decision to make distributions to appellant’s mother instead of to appellant was justified.

Appellant also asserts that the affidavit of appellant’s mother was hearsay evidence that the court should not have considered. The record shows, however, that appellant admitted the truthfulness of almost all of the assertions in his mother’s affidavit. Finally, nothing in the record shows that appellant objected in the district court to admission of the evidence, and this court will not consider issues that were not previously pi-esented to and decided by the district court. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988).

■ DECISION

There are no genuine issues of material fact that preclude summary judgment. Further, the district court did not err (1) in its interpretation of “sole discretion” as it is used in the trusts; (2) by concluding that Trust B’s exculpatory clause is valid and enforceable; or (3) by relying on extrinsic evidence of the testator’s intent.

Affirmed.

      . The district court's interpretation of "sole discretion,” and appellant's assignment of error thereto, is discussed below in Section II.


source: Caselaw Access Project

author: KALITOWSKI, Judge.

license: Public Domain

text:
    In the Matter of The CITY OF OWATONNA’S NPDES/SDS PROPOSED PERMIT REISSUANCE FOR the DISCHARGE OF TREATED WASTEWATER (A03-331), In the Matter of The CITY OF FARIBAULT’S NPDES/SDS PROPOSED PERMIT REISSUANCE FOR the DISCHARGE OF TREATED WASTEWATER (A03-333).
    Nos. A03-331, A03-333.
    Court of Appeals of Minnesota.
    Jan. 6, 2004.

      Janette K. Brimmer, Minnesota Center for Environmental Advocacy, St. Paul, MN, for relator Minnesota Center for Environmental Advocacy.
    Christopher M. Hood, Steven W. Nyhus, Thomas P. Klecker, Flaherty & Hood, PA-> St. Paul, MN, for respondents Cities of Owatonna and Faribault.
    Mike Hatch, Attorney General, Robert B. Roche, Stephanie Morgan, Assistant Attorneys General, St. Paul, MN, for respondent Minnesota Pollution Control Agency.
    Considered and decided by KALITOWSKI, Presiding Judge, HALBROOKS, Judge, and STONEBURNER, Judge.
   OPINION

KALITOWSKI, Judge.

Relator Minnesota Center for Environmental Advocacy (MCEA) challenges the decision of respondent Minnesota Pollution Control Agency (MPCA) to reissue National Pollutant Discharge Elimination System (NPDES) permits to wastewater treatment facilities in respondents Fari-bault and Owatonna without requiring removal of phosphorus from the facilities’ discharge to a limit of 1 mg/L.

FACTS

This consolidated appeal arises out of the MPCA’s issuance of NPDES permits for the Faribault and Owatonna wastewa-ter treatment facilities without phosphorus effluent limits. Relator contends that because (1) phosphorus discharges from the two facilities affects Lake Byllesby; and (2) the facilities are not removing phosphorus “to the fullest practicable extent,” the MPCA was required to impose a phosphorus limit pursuant to Minn. R. 7050.0211, subp. la (2001) (the phosphorus rule). In the alternative, relator contends that the evidence demonstrates a dispute of material fact such that contested case hearings on issuance of the facilities’ permits are warranted.

The phosphorus rule states in relevant part: “Where the discharge of effluent is directly to or affects a lake or reservoir, phosphorus removal to one milligram per liter shall be required.... ” Minn. R. 7050.0211, subp. la. The rule goes on to state: “In addition, removal of nutrients from all wastes shall be provided to the fullest practicable extent wherever sources of nutrients are considered to be actually or potentially detrimental to preservation or enhancement of the designated water uses.” Id.

In March 2000 the MPCA developed a phosphorus guidance document entitled the Phosphorus Strategy. The Phosphorus Strategy states that “affects” in the phosphorus rule is “measured in terms of actual or predicted increases in chlorophyll-a concentration, increased frequency of nuisance algae blooms, reduced transparency, reduced dissolved oxygen concentrations (attributable to decaying algae), or related adverse responses to phosphorus.” The Phosphorus Strategy further defines “measurable impact” as “the individual contribution of the discharge in causing any of the adverse changes [discussed in the definition of ‘affects’].”

Phosphorus is an important measure of water quality of a lake or reservoir because excessive phosphorus results in adverse changes in water quality. These changes have a negative impact on fish, vegetation, and oxygen levels. Responses to phosphorus in the system can be determined by measuring chlorophyll-a and water transparency. In 1996, the MPCA reported that Lake Byllesby’s phosphorus levels far exceeded the natural levels for its applicable ecoregions. At that time, Lake Byllesby’s average summer in-lake phosphorus levels were 258 micrograms per liter (gg/L). According to the MPCA, the target phosphorus levels for Lake Byllesby’s ecoregions are 40-90 ¡xg/L. The MPCA also noted that Lake Byllesby is suffering a variety of adverse effects from the high phosphorus levels. And Lake Byllesby has recently been included on the state’s Impaired Waters List as being impaired by excess nutrients.

Both Faribault and Owatonna operate wastewater treatment facilities that discharge to the Straight River, which flows into the Cannon River, and finally to Lake Byllesby. The Faribault wastewater facility is located approximately 26-27 miles upstream from Lake Byllesby; the Owa-tonna facility is located approximately 45-46 miles upstream from Lake Byllesby. Both cities are required to hold a NPDES permit, which is reviewed and reissued by the MPCA approximately every five years. Currently, Owatonna discharges phosphorus at 2.6 mg/L and Faribault discharges phosphorus at 4.0 mg/L.

In July and September 2002, the MPCA published notice, of intent to reissue NPDES permits for the Faribault and Ow-atonna wastewater treatment facilities, respectively. In response, relator submitted comments and a request for contested case hearings under Minn.Stat. §§ 14.57, 14.58, and Minn. R. 1400.5010 et seq., on the need for a phosphorus effluent limit of 1 mg/L based upon the MPCA’s modeled effects to Lake Byllesby and the application of the phosphorus rule.

The MPCA conducted water quality modeling analyses to determine whether Faribault and Owatonna, separately, have a measurable impact on the adverse conditions present in Lake Byllesby. The MPCA’s modeling showed that reducing the Owatonna facility’s phosphorus effluent discharge to 1 mg/L would result in reductions of in-lake phosphorus of 9%, and reducing the Faribault facility’s phosphorus effluent discharge to 1 mg/L would result in reductions of in-lake phosphorus of 15.86%.

But according to the MPCA, the modeling results indicated that reducing the cities’ phosphorus effluent discharge to 1 mg/L would not have a measurable impact on the chlorophyll-a concentration or water transparency in Lake Byllesby, despite the fact that the modeling predicted that a 1 mg/L effluent limit for Owatonna would reduce chlorophyll-a by 4% and a 1 mg/L effluent limit for Faribault would reduce chlorophyll-a by 7%. The MPCA modeling analysis indicated that these predicted changes in chlorophyll-a and water transparency fell within the model’s statistical margin of error. But relator’s experts testified that (1) the model had a high margin of error and the actual reductions in chlorophyll-a might in fact be higher; and (2) the MPCA model was inadequate because it was better calibrated to predict changes in the amount of phosphorus than changes in chlorophyll-a and water transparency. Finally, the MPCA analysis concluded that “[i]mprovements in lake water quality will likely only result from a combination of point and nonpoint source activities that dramatically reduce inflow phosphorus concentrations.”

Relator’s experts prepared a report and testified at the MPCA board meeting. Relator did not conduct any new modeling on the issue; instead, the report relied on the modeling done by the MPCA. Relator presented expert testimony that a 1 mg/L effluent limit for Faribault and Owatonna would have a measurable impact on Lake Byllesby because it would likely alter the in-lake dynamics, and it would alter the response that the lake will have to future decreases in the phosphorus load. Relator’s experts also stated that the modeling technique used by the MPCA had a high margin of error, and that the modeling results did not support the MPCA’s conclusions.

The MPCA board, following the recommendation of its staff who reviewed the documents produced by relator, concluded that none of the articles, memos, or other documents on which relator relied indicated any evidence of individual measurable effects by the cities’ wastewater treatment facilities on Lake Byllesby. The MPCA further concluded that relator did not show a reasonable basis for its position that the facilities’ discharges affect Lake Byllesby such that contested case hearings would aid the MPCA in resolving the matter.

Despite its stated concern regarding phosphorus levels in Lake Byllesby, and its modeling that indicated a 1 mg/L phosphorus limit for both facilities would result in an almost 25% reduction of phosphorus in the lake, the MPCA concluded that the individual discharge of phosphorus from each facility does not affect Lake Byllesby. Thus, the MPCA did not require either facility to limit phosphorus discharge pursuant to the phosphorus rule.

But, in issuing the NPDES permits, the MPCA included a requirement that a phosphorus management plan (PMP), be included in both NPDES permits. A PMP requires a wastewater facility to undertake a study to determine if its phosphorus discharge can be reduced through pollution prevention or improved wastewater treatment methods. Additionally, the MPCA has stated to this court that it is in the process of developing a total maximum daily load for Lake Byllesby, which will measure all sources of phosphorus and assign appropriate waste-load allocations to the various sources.

Relator contends that because its experts established that the discharges from the Faribault and Owatonna treatment plants have an adverse effect on Lake Byllesby, the phosphorus rule must be applied to the NPDES permits and the facilities must conform to the phosphorus effluent limit of that rule. In the alternative, relator argues that the evidence demonstrates disputed issues of material fact, such that contested case hearings on issuance of the NPDES permits are warranted.

ISSUES

1. Did the MPCA err in its application of Minn. R. 7050.0211, subp. la, to the NPDES permits for the Faribault and Ow-atonna wastewater treatment plants?

2. Did the MPCA err in denying contested case hearings on the Faribault and Owatonna NPDES permits?

ANALYSIS

Our standard of review of an agency decision denying a contested case hearing and granting a permit is governed by Minn.Stat. § 14.69(a)-(f) (2002). Under that statute, this court determines whether the agency’s decision is in violation of constitutional provisions, in excess of the agency’s statutory authority or jurisdiction, made upon unlawful procedure, affected by other error of law, unsupported by substantial evidence, or arbitrary or capricious. Id. Appellate courts defer to an agency’s expertise in fact-finding and will affirm the agency’s decision so long as it is lawful and reasonable. In re Intra-LATA Equal Access and Presubscription, 532 N.W.2d 583, 588 (Minn.App.1995), review denied (Minn. Aug. 30, 1995). “If an administrative agency engages in reasoned decisionmaking, this court will affirm, even though it may have reached a different conclusion had it been the factfinder.” Cable Communications Bd. v. Nor-West Cable Communications P’ship, 356 N.W.2d 658, 669 (Minn.1984). But “[wjhere there is a combination of danger signals which suggest the agency has not taken a hard look at the salient problems and has not genuinely engaged in reasoned decision making it is the duty of the court to intervene.” Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 825 (Minn.1977) (quotation omitted).

I.

Relator contends that the MPCA’s decision to issue the pennits without imposing a 1 mg/L restriction on phosphorus, as required by the phosphorus rule, is arbitrary and capricious and not supported by substantial evidence. “Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” In re Hibbing Taconite Co., 431 N.W.2d 885, 891 (Minn.App.1988). Further, an agency’s decision is considered arbitrary and capricious if it represents the agency’s will, rather than its judgment. Trout Unlimited, Inc. v. Minnesota Dep’t of Agric., 528 N.W.2d 903, 907 (Minn.App.1995) (quotation and citation omitted), review denied (Minn. Apr. 27,1995).

The phosphorus rule states that “[w]here the discharge of effluent is directly to or affects a lake or reservoir, phosphorus removal to one milligram per liter shall be required.” Minn. R. 7050.0211, subp. la (2001). The MPCA acknowledged in its brief to this court that it “is concerned about cumulative phosphorus effects on Lake Byllesby” and that in the future “the Faribault and Owatonna facilities could be required to limit their discharge.” The MPCA contends that in determining whether a discharge “affects” a lake under the rule, reference must be made to the MPCA’s “phosphorus strategy,” which was developed in 2000. But the strategy, by its own terms, is “not intended to be a rule and does not create any rights, substantive or procedural.” And of course the strategy cannot contravene the plain meaning of the phosphorus rule, which was enacted in 1974 and has the force and effect of law. Nor can enforcement of the rule be ignored or delayed by the adoption of a strategy or by requiring development of a management plan.

The MPCA conducted what is referred to as BATHTUB modeling to determine whether Owatonna’s wastewater treatment facility was affecting Lake Byllesby. Both parties agree that, within a margin of error, the modeling demonstrated that a reduction in phosphorus discharge to 1 mg/L would result in a reduction of phosphorus in Lake Byllesby of 13 jjcg/L, which represents a reduction of in-lake phosphorus of 9%. And the parties agree that the BATHTUB modeling for Faribault’s wastewater treatment facility demonstrates that a reduction in phosphorus to 1 mg/L would result in a reduction in phosphorus in Lake Byllesby of 23 |xg/L, which represents a reduction of in-lake phosphorus of 15.86%.

But the MPCA concluded that the loading of phosphorus levels reflected by the modeling was insufficient to show that Lake Byllesby is “affected.” Citing its phosphorus strategy, it contends that the phosphorus rule does not apply unless a discharge from an individual wastewater treatment facility causes a significant change in chlorophyll-a or water clarity. And the MPCA further claims that because its modeling indicates that changes in chlorophyll-a and water clarity caused by the individual discharge from each facility was within the model’s margin of error, the MPCA was required to conclude that the phosphorus discharges from the waste-water treatment facilities did not affect Lake Byllesby. But relator offered expert testimony challenging the modeling methodology used by the MPCA. Specifically, relator’s experts stated that the MPCA’s model did not accurately predict changes in chloraphyll-a or water clarity because the model was calibrated to most accurately predict changes in phosphorus, not chlorophyll-a or water clarity.

We agree with relator that the record before us raises questions concerning whether the MPCA engaged in reasoned decision-making. First, in addition to the fact questions raised by relator concerning methodology, the record raises concerns regarding the modeling process conducted by the MPCA. The first modeling analysis, which occurred sometime before June 80, 2002, determined the effects of applying the phosphorus rule to the Owatonna wastewater facility; the modeling also measured the effects the phosphorus rule would have if applied to both the Owaton-na and Faribault facilities. Notwithstanding the fact that the MPCA performed modeling that combined the effects of the phosphorus discharge from both facilities, the MPCA’s response to relator’s arguments concerning the combined effects of the two facilities is that combined effects are of no consequence when determining whether to apply the phosphorus rule.

Second, the MPCA’s subsequent modeling analysis, which did not occur until January 2003, examined the effects of applying the phosphorus rule on Faribault’s wastewater facility. And the results of the two models were summarized in separate office memoranda, the first, dated June 30, 2002, and the second, dated January 27, 2003. The stated purpose of both memo-randa was “to provide you with an assessment of the need for a phosphorus effluent limit and the basis for such recommendation for the reissuance of NPDES [permits].” for the respective facilities. But the record indicates that the MPCA had already published a notice of intent to reissue Faribault’s NPDES permit without a phosphorus limitation in July 2002, several months before any modeling was done on the effects of Faribault’s facility.

Third, the conclusory manner with which the MPCA rejected relator’s concerns is troublesome given the fact that the MPCA has, on previous occasions, acknowledged that Lake Byllesby is suffering from an excessive amount of phosphorus and that Faribault is a major contributor of that phosphorus. Moreover, the record suggests that MPCA board members may have relied on factors outside the phosphorus rule in determining the applicability of the rule. Specifically, the record indicates that at least one board member voted in favor of issuing the permits without phosphorus limits because of inclusion in the permit of a requirement that a phosphorus management plan be developed. And the record also indicates concern by MPCA board members that “this is not a good economic time to put on a phosphorus limit,.” This concern with economics was further evidenced by a board member’s comment that “I’m going to vote in favor of the staff resolution today, ... because of the high dollar hurdle that I heard for the two locations.” But the phosphorus rule does not take into account economic considerations or the imposition of alternative regulatory schemes. Because the MPCA board has acknowledged a problem, acknowledged a source of the problem, and may have improperly considered factors outside of the phosphorus rule, we conclude that there are danger signals indicating the board’s decision may not be reasoned and may reflect its will, rather than its judgment.

In addition, although not determinative, we note that the MPCA’s phosphorus strategy specifically establishes that a phosphorus discharge of less than 1,800 lbs. per year by a publicly owned treatment works is “de minimus,” because discharge at that level does not have “a measurable impact on the environment.” In contrast to this “de minimus” level, the MPCA staff have estimated that the phosphorus discharges from the Faribault and Owatonna treatment plants are 46,767 lbs. per year and 33,941 lbs. per year respectively. If the phosphorus rule were applied to these facilities, each facility would be required to reduce its total yearly phosphorus discharge by an amount far greater than the “de minimus” amount.

Relator offered the opinions of three experts, and a report prepared by an environmental consulting firm that challenged the MPCA’s interpretation of its models and concluded, based on the MPCA’s models, that the Faribault and Owatonna wastewater treatment facilities were “affecting” Lake Byllesby. One expert stated that the “MPCA’s conclusion that phosphorus from Owatonna and/or Faribault is not affecting Lake Byllesby is unsupported by its own modeling, its own correspondence and memorandum over the years, and its own Lake Assessment Program report.” When experts disagree, a fact question arises. Notch v. Victory Granite Co., 306 Minn. 495, 506, 238 N.W.2d 426, 433 (1976). On this record we cannot conclude that the MPCA’s decision not to apply the phosphorus rule is supported by substantial evidence.

In conclusion, because we are uncertain as to whether the record establishes that the MPCA’s decision was supported by substantial evidence, and because, as discussed below, we are remanding for contested case hearings, we do not reach the merits of relator’s arguments that (1) because the discharges from the two facilities affect Lake Byllesby, application of the phosphorus rule is mandatory; and (2) the phosphorus rule requires the two facilities to remove phosphorus “to the fullest practicable extent.”

II.

Relator argues that if this court concludes that the evidence is not fully adequate to support ordering phosphorus limits in the permits, at a minimum we should hold that the evidence demonstrates a dispute of material fact such that contested case hearings are warranted. While the above discussion indicates our concern regarding the decision-making process employed by the MPCA, we are not prepared to accept relator’s invitation to re-write the permits to include a 1 mg/L phosphorus limitation. Rather, we have concluded that it would benefit the MPCA’s decision-making process to fully analyze the fact issues raised by relator in contested case hearings on these permits.

Under its rules, the MPCA must grant a party’s petition to hold a contested case hearing if it finds that

A. there is a material issue of fact'in dispute concerning the matter pending before the agency;
B. the agency has the jurisdiction to make a determination on the disputed material issue of fact; and
C. there is a reasonable basis underlying the disputed material issue of fact or facts such that the holding of a contested case hearing would allow the introduction of information that would aid the agency in resolving the disputed facts in making a final decision on the matter.

Minn. R. 7000.1900, subp. 1 (2001). The MPCA contends there is no basis for ordering contested case hearings because relator failed to satisfy the third criterion. We disagree.

The burden is on relator, as the party requesting a contested case hearing, to demonstrate the existence of material facts that would aid the agency in making a decision. In re Solid Waste Permit for the NSP Red Wing Ash Disposal Facility, 421 N.W.2d 398, 404 (Minn.App.1988), review denied (Minn. May 18, 1988). And there must be some showing that evidence can be produced that is contrary to the action proposed by the agency. In re Amendment No. 4 to Air Emission Facility Permit No. 202I-85-OT-1, 454 N.W.2d 427, 430 (Minn.1990).

The MPCA relies on In re Solid Waste Permit for the NSP Red Wing Ash Disposal Facility, for the proposition that relator is not entitled to a contested case hearing because they have not produced any “new” evidence. 421 N.W.2d at 404. But that case is distinguishable because the Red Wing court found that (1) the MPCA had not yet done the testing necessary to determine whether there would be adverse environmental affects; and (2) since there had been no testing, the issues raised by the relator were not supported with any facts such that a contested case hearing would have aided the MPCA in making a final decision on the permit. Id. at 403-05. In addition, the Red Wing court recognized that expert testimony “would aid in the resolution” of the problem, but noted that relator failed to provide any specific expert’s name or any indication of what specific new facts an expert might testify to at a contested case hearing. Id. at 404. Therefore, the court held that relator was not entitled to a contested case hearing. Id. at 404-05.

Here, although challenged by relator, the MPCA has conducted modeling which it deems adequate to determine whether the wastewater treatment facilities are adversely affecting Lake Byllesby. And, unlike the facts in Red Wing, relator has identified the names and provided affidavits of experts who have (1) challenged both the MPCA’s methodology and interpretation of its modeling for phosphorus effects; and (2) determined that the wastewater treatment facilities at issue are affecting Lake Byllesby. In addition, relator has introduced a report by an environmental consulting firm that concluded, based on MPCA modeling, that (1) the wastewater treatment facilities were individually having a negative effect on Lake Byllesby; and (2) a 1 mg/L total phosphorus effluent limit on the Faribault and Owatonna facilities would substantially improve the water quality of the lake.

We conclude that this information constitutes evidence regarding disputed material facts and would aid the MPCA in a reasoned decision-making process. And we reject the MPCA’s contention that because the MPCA board chose to disregard relator’s evidence in the previous proceedings, a contested case is precluded because relator’s evidence is not “new.” Where relator has raised a genuine question concerning whether the MPCA adequately addressed the disputed fact issues, we conclude that a presentation of these issues to a neutral administrative law judge in a contested ease hearing will “aid the agency in resolving the disputed facts and making a final decision on the matter.” Minn. R. 7000.1900, subp. 1 (2001).

DECISION

There is a question of fact as to whether, in fight of the plain language of the phosphorus rule, the MPCA’s decision not to apply the phosphorus rule to the NPDES permits for the Faribault and Owatonna wastewater treatment facilities is supported by substantial evidence. And relator has raised issues of fact regarding the methodology and interpretation of phosphorus modeling studies conducted by the MPCA. We therefore reverse the MPCA’s issuance of NPDES permits and remand this matter for contested case hearings.

Reversed and remanded.


author: MARING, Justice.

text:
    2003 ND 202
    Frederick E. SAEFKE, Jr., Petitioner and Appellant v. Wayne STENEHJEM, Attorney General, State of North Dakota and Richard J. Riha, State’s Attorney of Burleigh County, North Dakota, Respondents and Appellees.
    No. 20030202.
    Supreme Court of North Dakota.
    Dec. 29, 2003.
    Rehearing Denied Jan. 21, 2004.

      Frederick E. Saefke, Jr., pro se, Bismarck, ND, for petitioner and appellant.
    Douglas Alan Bahr, Solicitor General, Bismarck, ND, for respondent and appel-lee Wayne Stenehjem.
    Scott K. Porsborg, Smith Bakke Oppe-gard Porsborg Wolf, Bismarck, ND, for respondent and appellee Richard J. Riha.
   MARING, Justice.

[¶ 1] Frederick E. Saefke, Jr., appealed from a judgment dismissing his action against Attorney General Wayne Ste-nehjem and Burleigh County State’s Attorney Richard J. Riha. Saefke alternatively petitioned this Court to exercise its supervisory jurisdiction and issue a supervisory writ. We affirm the dismissal of Saefke’s claims against Stenehjem and dismiss Saefke’s appeal of his claims against Riha, and we decline to issue a supervisory writ.

I

[¶ 2] Saefke’s claims relate to the Bur-leigh County Commission’s financial contributions to the Bismarck-Mandan Symphony Orchestra [“Symphony”] for July 4th celebrations at the capítol grounds. In a January 3, 2002, letter to Burleigh County Commissioner Marian Haakenson, Riha concluded that, with certain exceptions for distributions to an authorized industry, enterprise, or business of the county which had been established on or before the donation, donations by a political subdivision to private groups were prohibited by N.D. Const, art X, § 18.

[¶ 3] In a June 27, 2002, response to a letter from Burleigh County Auditor Kevin Glatt, Riha reiterated his opinion about donations to private groups and concluded a requested donation to the Symphony for the upcoming July 4th celebration would violate N.D. Const, art. X, § 18. On July 1, 2002, the Burleigh County Commission passed a resolution to “officially celebrate the 4th of July and the life of Theodore Roosevelt” and to “initiate its 4th of July Celebration and ensure fire safety by supporting the celebration to take place on the capítol grounds on the'4th of July.” Commissioner William Delmore stated “there [was] no money associated with this resolution and added that if we can get people to go to the capítol grounds rather than setting off their own fireworks we reduce the risk of fire, especially with the very dry conditions in the area.” The Burleigh County Commission, with Commissioner Haakenson absent, then voted to donate $5,000 to the Symphony for the July 4, 2002, celebration. According to Riha, he was not then asked for an opinion on whether the connection to fire safety made the donation legal.

[¶ 4] On July 3, 2002, Glatt asked Riha for an opinion regarding payment of the $5,000 in view of Riha’s June 27, 2002, opinion about the legality of the donation. Riha informed Glatt that he was “obligated to act as the commission directs.”

[¶ 5] On August 9, 2002, Riha requested a formal opinion from Stenehjem about donations from 1997 to 2001 to support the July 4th celebrations for those years and about the 2002 donation. In an August 26, 2002, letter to Stenehjem, Burleigh County Commissioner Claus Lembke explained that, before authorizing the donation, the commission had debated and passed a motion making the July 4th celebration an “authorized enterprise or business” of Bur-leigh County, and the commission followed Riha’s advice “to the letter and acted according to his instruction.” Lembke’s letter indicated Riha “was present during the debate of this issue and never voiced any concern over our actions,” and the commission believed it was “following the law and the constitution.” On September 24, 2002, Stenehjem issued a formal opinion, concluding the donations were prohibited and any authority for a county to make a donation for an authorized industry, enterprise, or business must be derived from a state law that authorized the donation. Ste-nehjem’s opinion also concluded Riha had discretionary authority under N.D.C.C. § 11-16-01(13) to bring an action to recover any money illegally donated against those individual county commissioners who voted for the donations.

[¶ 6] Riha determined that, in addition to the 2002 donation, $11,000 had been donated to the Symphony from 1997 to 2001. According to Riha, he:

decided to demand on behalf of the county re-payment of the $5,000 contribution made in 2002, in lieu of pursuing past contributions. My rationale for deciding on this compromise was as follows:
1) The commissioners did not personally benefit from the contributions, as op- ■ posed to the situation in Grant County-
2) The past contributions were made innocently, before I issued my opinion on the legality of the contributions.
3) A special assistant appointed under section 11-16-07 would have quickly expended far more in county funds than the $11,000 that would eventually be collected. I felt $5,000 was a reasonable compromise, and one the commissioners would accept, thus avoiding costly litigation. The Commissioners who voted for the contribution had already requested that I “appeal” the Attorney General’s opinion to the District Court, as they were anxious to have the decision overturned. I declined.... However, it was clear that the Commissioners would vigorously challenge any suit in an attempt to overrule the Attorney General’s opinion. I saw little benefit to the County in spending more county funds on a special assistant than the amount that would eventually be collected.
4) In spite of the law on this issue, I felt there was little likelihood of success. The contributions to the Symphony were politically popular, and the only source of recovery for the monies was from the commissioners personally. I felt the fact that none of the commissioners benefited from the contributions made it unlikely a fact-finder would hold them personally responsible for repayment.

[¶ 7] In November 2002, after a donation from a local benefactor, the Symphony refunded $5,000 to Burleigh County,- and Riha did not initiate a civil action against the individual commissioners to recover donations made from 1997 through 2001. In December 2002, after a request from Saefke to criminally prosecute the commissioners who voted for the donations, Riha formally referred the matter to Stenehjem for possible criminal proceedings against those commissioners. In December 2002, Stenehjem concluded criminal charges were not warranted and declined to prosecute.

[¶ 8] Saefke commenced this action against Stenehjem and Riha, claiming present and former Burleigh County Commissioners misapplied public funds and asking the district court to' (1) overrule Stenehjem’s formal opinion that Riha had discretionary authority to prosecute the county commissioners and Stenehjem’s December 2002 decision that criminal charges against the commissioners were not warranted, (2) find Riha had neglected his duty, and (3) appoint an attorney under N.D.C.C. § 11-16-06 to prosecute civil and criminal actions against the county commissioners who had voted for the donations. Saefke alternatively sought a writ of mandamus directing Riha to fulfill his duties. The district court dismissed Saefke’s action, concluding - his complaint failed to state a claim against Stenehjem and Riha had not failed to perform his duties under N.D.C.C. § 11-16-06. Saefke appealed from the judgment dismissing his action and alternatively sought a supervisory writ.

II

[¶ 9] Saefke asks this Court to overrule Stenehjem’s formal opinion that Riha had “discretionary” authority to prosecute the county commissioners, to hold Riha had a “duty” to prosecute the commissioners, and to issue a supervisory writ directing the district court to appoint an attorney to prosecute civil and criminal actions against the county commissioners who voted for the donations.

A

[¶ 10] Saefke’s complaint alleged Stenehjem’s “Formal Opinion ... with respect to the State’s Attorney having ‘Discretion’ to act against the Burleigh County Commissioners, civilly and that no criminal charges were warranted, by memorandum, December 23, 2002, were both in error.” The district court ruled Saefke’s complaint failed to state a claim against Stenehjem under N.D.R.Civ.P. 12(b)(vi).

[¶ 11] The purpose of a N.D.R.Civ.P. 12(b)(vi) motion is to test the legal sufficiency of the claims presented in the complaint. Ziegelmann v. Daimler-Chrysler Corp., 2002 ND 134, ¶ 5, 649 N.W.2d 556. On appeal from a dismissal under N.D.R.Civ.P. 12(b), we construe the complaint in the light most favorable to the plaintiff, taking as true the well-pleaded allegations in the complaint. Id. A complaint should not be dismissed under N.D.R.Civ.P. 12(b) unless it discloses with certainty the impossibility of proving a claim upon which relief can be granted. Id. We will affirm a judgment dismissing a complaint for failure to state a claim if we cannot discern a potential for proof to support the complaint. Id.

[¶ 12] Saefke’s complaint effectively asked the district court for a declaratory judgment to overrule the formal opinion and memorandum of Stenehjem. In In Interest of McMullen, 470 N.W.2d 196, 198-99 (N.D.1991), we outlined criteria from Iverson v. Tweeden, 78 N.D. 132, 138-40, 48 N.W.2d 367, 370-71 (1951), for obtaining declaratory relief:

The requisite precedent facts or conditions which the courts generally hold must exist in order that declaratory relief may be obtained may be summarized as follows: (1) there must exist a justiciable controversy; that is to say, a controversy in which a claim of right is asserted against one who has an interest in contesting it; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy, that is to say, a legally protectible interest; and (4) the issue involved in the controversy must be ripe for judicial determination....
In order to present a justiciable controversy under the declaratory judgments act, the complaint must allege facts upon which the court can render a judgment or decree that will terminate the controversy or remove an uncertainty....
Among the essentials necessary to the raising of a justiciable controversy is the existence of a genuine conflict in the tangible interests of the opposing litigants. Complainant must prove his possession of a legal interest or right which is capable of and in need of protection from the claims, demands, or objections emanating from a source competent legally to place such legal interest or right in jeopardy. Although complainant need not necessarily possess a cause of action (as that term is ordinarily used) as a basis for obtaining declaratory relief, nevertheless he must, as a minimum requirement, possess a bona fide legal interest which has been, or with respect to the ripening seeds of a controversy is about to be, affected in a prejudicial manner.

[¶ 13] The attorney general is the chief law officer of the state and legal advisor for state officials. State v. Baker, 74 N.D. 244, 259, 21 N.W.2d 355, 364 (1945). The attorney general has the statutory duty to issue opinions to state officers and public entities and to consult with and advise the several state’s attorneys in matters relating to the duties of their office. N.D.C.C. § 54-12-01(4), (6) and (19). Although courts are not bound by attorney general’s opinions, courts will give respectful attention to and follow those opinions if they are persuasive. Werlinger v. Champion Healthcare Corp., 1999 ND 173, ¶ 47, 598 N.W.2d 820. An attorney general’s opinion guides officials until superseded by judicial opinion. Id. at ¶ 47.

[¶ 14] Other courts have recognized that no justiciable controversy exists in a declaratory judgment action challenging the correctness of an attorney general’s opinion. See Askew v. City of Ocala, 348 So.2d 308, 310 (Fla.1977); Kelley v. Board of Registration in Optometry, 351 Mass. 187, 218 N.E.2d 130, 133 (1966); Gershman Inv. Corp. v. Danforth, 517 S.W.2d 33, 35-36 (Mo.1974); City of Jackson v. Heritage Savings & Loan Assoc., 639 S.W.2d 142, 145-46 (Mo.Ct.App.1982).

[¶ 15] Here, Saefke’s claims against Stenehjem are not raised in the context of a present actual case or controversy challenging the commission’s authority to make donations to the Symphony. See State ex rel. Sanstead v. Freed, 251 N.W.2d 898, 902-03 (N.D.1977) (holding justiciable controversy existed because the posture of the case raised a present actual controversy between lieutenant governor and president pro tem of senate about substance of attorney general’s opinion). See also Danzl v. City of Bismarck, 451 N.W.2d 127, 128-29 (N.D.1990) (allowing a taxpayer to sue to enjoin the City of Bismarck from proceeding with construction project in which City’s procedures for awarding contracts allegedly violated competitive bidding statutes). In the absence of a present actual ease or controversy challenging the commission’s authority to make donations to the Symphony, any resolution of Saefke’s claims against Stenehjem about the correctness of Stenehjem’s opinion would result in an advisory opinion. Courts do not render advisory opinions. Nord v. Herrman, 1998 ND 91, ¶ 12, 577 N.W.2d 782. We conclude Saefke’s claims against Ste-nehjem do not create a justiciable controversy in which a claim is asserted against one who has an interest in contesting the claim. We hold the district court did not err in dismissing Saefke’s claims against Stenehjem.

B

[¶ 16] Saefke’s complaint alleged Riha neglected and failed in his duty to stop the illegal donations and to prosecute the county commissioners for a criminal violation. Saefke alleged Riha did not have “absolute” discretion to decline to prosecute the commissioners, rather Riha had a “duty” to prosecute them. Saefke asked the district court to declare Riha had neglected and failed in his duty and to appoint an attorney to prosecute the civil and criminal allegations under the N.D.C.C. § 11-16-06. Saefke alternatively asked the court to issue a writ of mandamus directing Riha to fulfill his duties.

[¶ 17] The district court concluded Riha did not neglect his duties in settling all civil claims against the commissioners for $5,000 and in referring any potential criminal prosecution to the attorney general, who ultimately concluded criminal charges were not warranted. The district court denied Saefke’s request it issue a writ of mandamus directing Riha to fulfill his duties.

[¶ 18] In Wilson v. Koppy, 2002 ND 179, ¶ 1, 653 N.W.2d 68, we affirmed a district court’s denial of a writ of mandamus to compel a state’s attorney to prosecute the petitioner’s wife and alleged lover for adultery and unlawful cohabitation. We recognized we would not reverse a district court’s determination on a mandamus petition “ ‘unless the writ should not issue as a matter of law or the court abused its discretion.’ ” Id. at ¶ 12 (quoting Frank v. Traynor, 1999 ND 183, ¶ 9, 600 N.W.2d 516). We said a petitioner for a writ of mandamus must show both a clear legal right to performance of the act sought to be compelled and there is no other plain, speedy, and adequate remedy in the ordinary course of the law. Wilson, at ¶ 13. We concluded, as a matter of law, the petitioner was not entitled to a writ of mandamus because he had a plain, speedy, and adequate remedy available under N.D.C.C. § 11-16-06. Wilson, at ¶ 14. See also Olsen v. Koppy, 1999 ND 87, 593 N.W.2d 762. Under Wilson, we conclude the district court did not err in not issuing a writ of mandamus to Riha.

[¶ 19] In Olsen, 1999 ND 87, ¶ 15, 593 N.W.2d 762, we concluded an order under N.D.C.C. § 11-16-06 refusing to appoint a private attorney to initiate a criminal prosecution was not appealable under N.D.C.C. § 28-27-02. In that case, although the appeal was not authorized by statute, we considered the attempted appeal as a request for a supervisory writ. Olsen, at ¶ 16. Under Olsen, we conclude the district court’s order refusing to appoint a private attorney under N.D.C.C. § 11-16-06 is not appealable, and we consider Saefke’s attempted appeal in conjunction with his alternative petition for a supervisory writ.

[¶ 20] We exercise our supervisory jurisdiction only rarely and cautiously to rectify errors or to prevent an injustice. Mitchell v. Sanborn, 536 N.W.2d 678, 683 (N.D.1995). In Olsen, 1999 ND 87, ¶ 17, 593 N.W.2d 762, we said:

Our power to issue supervisory writs is discretionary and cannot be invoked as a matter of right. Sanborn, 536 N.W.2d at 682-83; B.H. v. K.D., 506 N.W.2d 368, 372-73 (N.D.1993); City of Fargo v. Dawson, 466 N.W.2d 584, 585 (N.D.1991); Odden v. O’Keefe, 450 N.W.2d 707, 708 (N.D.1990). We exercise our supervisory jurisdiction over lower courts rarely to rectify errors or to prevent injustice where no adequate alternative remedies exist. Sanborn, 536 N.W.2d at 682-83; B.H., 506 N.W.2d at 372-73; Dawson, 466 N.W.2d at 585; Odden, 450 N.W.2d at 708. Our jurisdiction to issue supervisory writs is, in a sense, both appellate and original in character, because supervisory proceedings are independent in nature with process directed to a trial court, but our decision reviews the trial court’s judicial act. See Burke, 32 N.D.L.Rev. at 199-201 (comparing original supervisory jurisdiction and original jurisdiction to issue prerogative writ in publici juris cases).

[¶ 21] Under N.D.C.C. § 11-16-01(13), state’s attorneys shall prosecute criminal proceedings and institute civil proceedings in the name of a county to recover money paid by the county commissioners without legal authority. See Olsen, 1999 ND 87, ¶ 18, 593 N.W.2d 762; Keidel v. Mehrer, 464 N.W.2d 815, 816 (N.D.1991); Hennebry v. Hoy, 343 N.W.2d 87, 90-91 (N.D.1983); State ex rel. Ilvedson v. Dist. Court, 70 N.D. 17, 25, 291 N.W. 620, 624 (1940). In Olsen, at ¶ 18, we said a state’s attorney is vested with discretion to initiate criminal prosecutions. See Bell v. State, 1998 ND 35, ¶ 19, 575 N.W.2d 211; Mehrer, at 816-17; Hoy, at 90-91; Ilvedson, 70 N.D. at 25, 291 N.W. at 624. We have defined an abuse of discretion as acts that are arbitrary, unreasonable, or unconscionable, not the product of a rational mental process leading to a reasoned determination, or a misinterpretation or misapplication of the law. See, e.g., Langness v. Fencil Urethane Sys. Inc., 2003 ND 132, ¶ 9, 667 N.W.2d 596. In Olsen, at ¶ 19, we recognized these types of cases effectively involve three tiers of discretion: (1) the state’s attorney’s discretion to initiate proceedings; (2) the district court’s discretion to appoint a private attorney; and (3) our discretion to issue a supervisory writ.

[¶ 22] Here, Riha’s affidavit states he investigated and considered whether to bring a civil action against the county commissioners, and he concluded it was appropriate, under the circumstances, to compromise the civil action because of the costs involved in collecting a civil judgment for the remainder of the money paid to the Symphony. Riha’s affidavit indicates he investigated and balanced the costs and benefits of bringing a civil action against the likelihood of success. Riha’s reasons for not pursuing a civil action are the product of a rational mental process leading to a reasoned determination and support his discretionary decision not to initiate a civil proceeding against the county commissioners. Morever, Riha’s affidavit indicates he referred any potential criminal prosecution to the attorney general, who found there was not “a sufficient factual and legal basis to conclude that the actions of the individual Burleigh County commissioners violated an ‘offense’ defined by the constitution or statute of this state that would warrant the initiation of criminal proceedings.” Under these circumstances, we conclude the reasons advanced by Riha support his discretionary decision not to institute a civil action against the commissioners and his decision to refer any potential criminal prosecution to the attorney general. Those reasons support the district court’s decision not to appoint an attorney under N.D.C.C. § 11-16-06. On this record, we decline to exercise our supervisory jurisdiction and issue a supervisory writ.

Ill

[¶ 23] We affirm the district court’s dismissal of Saefke’s claims against Ste-nehjem, we dismiss Saefke’s appeal from the court’s decision denying appointment of an attorney under N.D.C.C. § 11-16-06, and we decline to exercise our supervisory jurisdiction and issue a supervisory writ.

[¶ 24] WILLIAM A. NEUMANN, J., JOHN C. MCCLINTOCK, JR., D.J., EVERETT NELS OLSON, S.J., and DALE V. SANDSTROM, Acting C.J., concur.

[¶ 25] The Honorable JOHN C. McCLINTOCK, JR., D.J., and the Honorable EVERETT NELS OLSON, S.J., sitting in place of KAPSNER, J., and VANDE WALLE, C.J., disqualified.