author: SACKETT, C.J.

text:
    THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY, Petitioner-Appellant, v. BOARD OF REVIEW OF THE COUNTY OF MONTGOMERY, Iowa, Respondent-Appellee.
    No. 03-0705.
    Court of Appeals of Iowa.
    June 23, 2004.

      John J. Hines and Carolyn A. Rafferty of Dutton, Braun, Staack & Heilman, P.L.C., Waterloo, for appellant.
    Bruce B. Green and Frank W. Pechacek, Jr., of Willson & Pechacek, P.L.C., Council Bluffs, for appellee.
    Robert F. Holz, Jr. and Deborah M. Tharnish of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for amicus curiae Iowa Health Care Association.
    Heard by SACKETT, C.J., and HUITINK and MILLER, JJ.
   SACKETT, C.J.

The focal question in this case is whether plaintiff-appellant, the Evangelical Lutheran Good Samaritan Society, is entitled to a full property tax exemption on a property it owns and operates as an eighty-eight bed skilled-nursing facility in Red Oak, Montgomery County, Iowa. The facility cares for persons whose fees are paid by the government under a provision referred to as Title XIX, and persons referred to as “private pay,” whose fees are paid for from their own funds. The appel-lee-defendant, the Montgomery County Board of Review, determined plaintiff was entitled only to a partial exemption based on the percentage of Title XIX residents and vacancies at the facility on January 1st of the years 2000, 2001 and 2002. The district court agreed. On appeal plaintiff contends (1) the district court erred in using Iowa Code section 427.1(14) (1999) as authority for its decision to limit its exemption, (2) it is entitled to a total property tax exemption under section 427.1(8), and (3) the facility should be classified as residential property as defined by section 441.21(11). We affirm on the exemption claims and reverse and remand on the classification claim.

Scope and standard of review. The district court hears appeals from board of review decisions in equity. Iowa Code § 441.39 (2003). Our review, therefore, is de novo. Iowa R.App. P. 6.4. We look at the decision of the board of review rather than the decision of the district court. Mayflower Homes v. Bd. of Review, 472 N.W.2d 632, 634 (Iowa Ct.App.1991). The statutes exempting property from taxation are strictly construed. Atrium Village, Inc. v. Bd. of Review, 417 N.W.2d 70, 72 (Iowa 1987). If there is any doubt upon the question, it must be resolved against the exemption and in favor of taxation. Southside Church of Christ v. Bd. of Review, 243 N.W.2d 650, 654 (Iowa 1976) (citing Wisconsin Evangelical Lutheran Synod v. Regis, 197 N.W.2d 355, 357 (Iowa 1972)). In Southside, the court noted, “[t]he trend toward disallowing exemptions ... flows from the increasing extent and value of exempt property not on the tax rolls, and the resulting impact of such exemptions on the property taxpayer.” Id. at 654. Exemption statutes are premised on the theory that benefits received by the community from exempted use outweigh the inequality caused by exemption of the property from taxation. Although taxation is the rule, and exemption the exception, decisions in this realm rest largely on the unique facts of each case. Partnership for Affordable Housing, Ltd. Partnership Gamma v. Bd. of Review, 550 N.W.2d 161, 164 (Iowa 1996); City of Osceola v. Bd. of Review, 490 N.W.2d 539, 540 (Iowa 1992).

Background > facts and proceedings. Plaintiff is a charitable non-profit society that owns, in addition to the Montgomery county facility, a number of other similar facilities across the United States. At any given time the care of over fifty percent of its residents is paid for by Title XIX. Plaintiff contends the Title XIX payments do not totally satisfy the cost of those persons receiving it in the Red Oak facility. Evidence at trial was the facility’s rate for a semi-private room, the only type of room provided for Title XIX recipients, was $116, and the Title XIX payment was $103. The Title XIX payment received by the facility was the second highest of sixteen comparable facilities in Iowa communities of comparable size, and its cost of $116 is the highest.

The balance of the residents in the Red Oak Facility who pay for their own care pay a higher cost than Title XIX recipients. The facility concedes these residents pay fees in excess of the cost of their care. Evidence at trial indicated that the daily charge for private pay patients was $121.99 and the cost was $111.94. These payments more than offset losses associated with the Title XIX patients.

Plaintiff has charged more for private and semi-private rooms than any other nursing home in Montgomery County that operated -for profit. In every year between 1995 and 2002 the total facility has operated at a profit except 2002 when the facility operated at a loss, but even looking at the loss the facility had net annual revenues of approximately $92,000 in the 1995 to 2002 years.

From its inception in 1966 through 1999 the Red Oak facility was considered exempt from property taxes under Iowa Code section 427.1(8) (1999). In 2000 the county sought to impose property taxes on that percentage of the facility serving “private pay” residents who paid their own fees. Plaintiff protested assessments made in 2000, 2001, and 2002, contending it should have a full exemption, for it was a non-profit charitable organization. The defendant determined there was insufficient evidence to prove the property was used solely for the appropriate objects of the society as stated under section 427.2. Plaintiff appealed to the district court, which agreed with the board.

Weight to be given to the district court findings. Plaintiff initially complains the district court adopted the Board’s proposed findings of fact and conclusions of law verbatim, thus review of the court’s findings should be less deferential. Ex parte requests of counsel to submit proposed findings have been criticized. See Production Credit Ass’n v. Shirley, 485 N.W.2d 469, 475 (Iowa 1992); Kroblin v. RDR Motels, Inc., 347 N.W.2d 430, 436 (Iowa 1984). However, here both parties apparently at the request of the district court submitted proposed findings, conclusions, and judgment following trial. Although trial courts are not encouraged to adopt findings and conclusions prepared by counsel, a separate standard of review is not applied when a trial court does so. Care Initiatives v. Bd. of Review, 500 N.W.2d 14, 16 (Iowa 1993); Production Credit, 485 N.W.2d at 471. While there are few factual disputes in this case, our ability to apply the usual deferential standard to the factual disputes is undermined by the district court’s verbatim adoption of defendant’s proposed factual findings and legal conclusions, because the customary deference accorded trial courts cannot fairly be applied when the decision on review reflects the findings of the prevailing litigant rather than the court’s own scrutiny of the evidence and articulation of controlling legal principles. See Rubes v. Mega Life & Health Ins. Co., 642 N.W.2d 263, 266 (Iowa 2002).

Property tax exemption. Plaintiffs first contention for reversal is that there is no authority to grant a partial exemption under section 427.1(14). Plaintiff contends this section is not applicable because it is limited only to those engaged in some type of commercial venture. Plaintiff additionally contends it is entitled to a complete exemption under section 427.1(8), and that it should not have been given only a partial exemption under the guise that the portion of the facility utilized by residents who paid the cost, or more of their care, was leased or used with a view to pecuniary profit. These two arguments are interrelated, and we address them together, as they focus to a large extent on the operation of the facility, that is, whether it is used for commercial purposes and/or whether it is used with a view to pecuniary profit.

In order to qualify for a property tax exemption under section 427.1(8) a facility must (1) be operated by a charitable, benevolent or religious institution or society; (2) be used solely for their appropriate objects; and (3) not be operated with a view toward pecuniary profit. Id.; see Congregation B’Nai Jeshurun v. Bd. of Review, 301 N.W.2d 755, 756 (Iowa 1981); Holy Spirit Retirement Home, Inc. v. Bd. of Review, 543 N.W.2d 907, 910 (Iowa Ct.App.1995).

In the years in question, the county has not sought to tax that portion of the facility devoted to Title XIX patients, so whether these three common law requirements were met for that portion of the facility is not at issue. At issue is whether portions of the facility can be subject to taxation and other portions of the facility exempt from taxation. Plaintiff contends the facility is not commercial, consequently it cannot be taxed in portions, and because part qualifies it all does. Compare Iowa Code § 427.1(8) (total exemption) with § 427.1(14) (partial exemption if commercial use).

As we are only dealing here with the question of whether a portion of the facility can be taxed, we look to whether the plaintiff has shown that the portion of the facility the county seeks to tax meets the three common law requirements, and further, whether it meets the specific statutory requirement of “not leased or otherwise used or under construction with a view to pecuniary profit,” or “used for commercial purpose.”

The first common law requirement that it be a charitable institution is not in dispute. The second common law requirement is based less on the plaintiffs statement of purpose than on the actual use of the property. See Friendship Center West, Inc. v. Harman, 464 N.W.2d 455, 457 (Iowa Ct.App.1990). Whether an organization and its “appropriate objects” are charitable is a question of fact. Mayflower, 472 N.W.2d at 634. The gratuitous or partly gratuitous care of elderly persons has been found to be a charitable purpose. Evangelical Lutheran Good Samaritan Soc. v. Bd. of Review, 267 N.W.2d 413, 414 (Iowa Ct.App.1978). However, the fact plaintiff gives only partial gratuitous care to the elderly needs to be considered in conjunction with the third factor which is whether its facility is operated without a view towards pecuniary profit. See Evangelical Lutheran, 267 N.W.2d at 415-416. And it further needs to be considered in view of whether the portion of the facility sought to be taxed is used for a commercial purpose.

In addressing these issues, the cases have considered a number of specific facts in arriving at a series of different conclusions. In denying an exemption in Evangelical Lutheran Good Samaritan Society v. Board of Review, 200 N.W.2d 509 (Iowa 1972), the court noted that there was no evidence plaintiff cared for anyone as a matter of charity or benevolence as it had assurance of payment by a public agency plus a guarantor. Evangelical Lutheran, 200 N.W.2d at 511.

In Southside Church v. Board of Review, the court denied a church a tax exemption on a home owned by it and built and used to provide care for foster children. Southside Church, 243 N.W.2d at 655. In denying the exemption the count considered the home was in competition with some eighty other private homes in Des Moines caring for foster children. Id.

In Evangelical Lutheran, 267 N.W.2d at 416, the court granted a nursing home an exemption finding it was not operated with a view to pecuniary profit. The facility was invited to the community, $40,000 was raised for it, and it was given a farm. Id. at 414. The average rate of return for a three-year period was about 3.3 %. Id. at 415. There was substantial volunteer time given the home. Id. The facility was donating its physical plant and it had given a community home and assets of about two and one-half million dollars to another community and given up its interests in a hospital in another. Id. at 416. An expert examined the society’s equity growth and surplus and gave the opinion the home was not being operated with a view to pecuniary profit. Id. at 415. Funds went to the society’s central office for services essential to the operation of the home and excess money from one of their facilities might be loaned to another. Id. at 416.

An exemption was denied in Iowa Methodist Hospital v. Board of Review, 252 N.W.2d 390 (Iowa 1977). There, no residents were accepted who were not able to pay, and the court found some paid privately while others were welfare patients and their payment was made by a governmental agency. Iowa Methodist, 252 N.W.2d at 392. If they were unable to pay privately, they were told where to apply for welfare or advised of cheaper nursing homes. Id. The facility received no financial support from the Methodist Hospital or Church. Id. It anticipated the fees paid would meet its operating expenses and provide a modest surplus for retirement of debt and to buy capital equipment. Id. at 393.

In Dow City Senior Citizens Housing, Inc. v. Board of Review, 230 N.W.2d 497, 500 (Iowa 1975), the court denied an exemption to a low-rent housing unit. The court noted that the government, through an FHA loan, had already assumed a large share of the burden of meeting the need for low income elderly persons as well as the fact it was providing only living space, not care. Dow City, 230 N.W.2d at 499.

In granting an exemption in Richards v. Iowa Department of Revenue, 414 N.W.2d 344, 348 (Iowa 1987), the court considered substantial gifts at the inception and during the operation of the facility, the fact that the facility established a permanent endowment fund to be used for charitable disbursals to residents, and the fact the residents are guaranteed lifetime care. Though Richards focused more on the question of whether the housing was a charity, it also did say that charging residents fees does not indicate an institution intends to make a profit even when the income exceeds the institution’s expenses. Richards, 414 N.W.2d at 351 (citing Annotation, Receipt of pay from beneficiaries as affecting tax exemption of charitable institutions, 37 A.L.R.3d 1191, 1197 (1971).)

In Atrium Village, Inc. v. Board of Review, 417 N.W.2d 70, 71 (Iowa 1987) a nursing home was denied an exemption despite having received many dollars from contributors, having many hours of voluntary services, having an endowment fund, setting its monthly charges according to estimates of the marginal costs of maintaining the facility, and providing proper care for the residents, but not accepting persons receiving benefits from Title XIX. In doing so, the court said, “in assessing the genuineness of the charity, example is more important than precept.” Atrium Village, 417 N.W.2d at 73.

In Friendship Center West, Inc. v. Harman, 464 N.W.2d 455, 459-60 (Iowa Ct.App.1990), this court denied an exemption where there was no money available for financial assistance, anyone with marginal finances had to obtain a guarantor, and the facility had never reduced or made a concession on fees.

In Carroll Area Child Care Center, Inc. v. Board of Review, 613 N.W.2d 252, 257-59 (Iowa 2000), the court allowed an exemption though some parents paid the full charge for their children’s care and others paid what the Department of Human Services allowed, which was between thirteen and seventy cents an hour less than it charged the other families. In reaching this determination the court considered that the center’s charge was less than the cost of care and it obtained contributions from the community to make up the difference in addition to the concession made to low income parents. Carroll Area, 613 N.W.2d at 259. It rejected the Board’s argument that the exemption should be limited to that percentage of clients who qualify for Department of Human Services assistance. Id. The court also noted while it was difficult to determine the hourly cost of providing care and contributions were a significant portion of the center’s income, except for one year it had consistently operated at a loss. Id. at 257, n. 1.

While a review of these cases is helpful, they provide no bright line as to when a nursing homes operated by charitable organizations should be taxed. Nor do they provide a bight line for defining pecuniary profit and commercial operation. We have come to the conclusion that two terms which we see as somewhat synonymous look at whether the facility is a business whose primary focus is making money and whether its structure is to do so. Looking at the portion of the facility the defendant seeks to tax, we believe it is clear it is operated both for pecuniary profit and is a commercial enterprise.

In arriving at this conclusion we recognize there are factors which support the exemption being available to the entire facility. It is agreed the facility is operated by a charitable organization. It provides some gratuitous care of the elderly. Evangelical Lutheran, 267 N.W.2d at 414. It provides a level of care as opposed to just housing. Carroll, 613 N.W.2d at 255; Richards, 414 N.W.2d at 351. Some of the excess money it pays to its national organization is sometimes loaned to other facilities. Part of the money generated from the care of private pay patients is used to subsidize the care of Title XIX patients.

Certain factors weigh against the exemption. There is no charity given the private pay residents. Nor are patients who cannot pay their own way or qualify for the very substantial amount of government assistance Title XIX provides admitted. It appears that Title XIX pays close to ninety percent of the cost. There is no endowment to provide for persons unable to pay or qualify for Title XIX, nor is there any provision to provide care when residents are unable to continue to pay, as opposed to Richards, 414 N.W.2d at 344, where an endowment existed, financial assistance was available, and residents were guaranteed lifetime care, the presence of which the court considered in allowing the exemption. Plaintiff is in competition with a number of similar private facilities in the area and state, many of whom charge private pay patients less and receive less title XIX reimbursement despite being subject to property taxes. The Iowa Health Care Association filed an amicus curiae brief indicating it has a membership of over fifty-five long-term care facilities operating in Iowa, including 137 non-profit facilities. (In Southside, 243 N.W.2d at 650, the court considered the fact the foster home seeking exemption was in competition with private homes providing care in denying the exemption). Despite being a non-profit organization, plaintiff receives few charitable contributions. It financed the purchase of the facility with bonds and cash contributions, which in 2001 and 2002 were four percent to one percent of total revenue. (In Evangelical Lutheran, 267 N.W.2d at 413, the community raised $40,000 and gave a farm to encourage the facility to locate there. In Richards, 414 N.W.2d at 344, in granting exemptions the court considered substantial gifts at the inception and operation. In Carroll, 613 N.W.2d at 259, in granting exemption the court considered a substantial portion of income was contributions). Plaintiff sends a substantial amount of money annually to the national organization, which from 1995 to 2001 increased its assets from $725 million to $970 million, an increase of some $245 million dollars. Yet the national organization makes no contributions to the Red Oak facility. (In Iowa Methodist, 252 N.W.2d at 390, the court considered the fact the facility received no money from the Methodist Church in denying an exemption.) Not only does plaintiff not receive contributions from the national organization, it sends four percent of its revenue out of state to the national organization each year, which plaintiff contends serves to reduce its administrative cost and enable them to provide low cost care. Yet the record shows them as being the highest priced facility in Montgomery County. There was expert testimony that the facility operated at a ten percent rate of return and with a view to pecuniary profit. (In Evangelical Lutheran, 267 N.W.2d at 413, the court considered its rate of return of 3.3 percent in granting exemption and that an expert gave the opinion it was not being operated with a view to pecuniary profit. In Iowa Methodist, 252 N.W.2d at 390, the court denied an exemption where fees charged would meet operating expenses with modest surplus for debt retirement and capital equipment. In Carroll, 613 N.W.2d at 259, in granting an exemption the court considered the center had consistently operated at a loss).

Plaintiff had minimal volunteer hours. The fact the facility enjoyed substantial volunteer help was a factor considered by the court in awarding an exemption in Evangelical Lutheran, 267 N.W.2d at 415. Additionally it receives substantial government funding through Title XIX and Medicare payments. (The fact the facility had received government assistance was a factor considered in denying an exemption in Dow, 230 N.W.2d at 497).

We agree with the district court. A facility that operates with an eye towards a profit, generally sees a ten percent return, sends four percent of its revenue to its out-of-state national organization that continues to accumulate assets and returns nothing in the way of money to the local facility, takes and keeps only those residents who qualify for government assistance that meets nearly ninety percent of their projected cost and others who pay in excess of their projected costs, and charges more than other similar facilities in the county and state, is a commercial facility operating for pecuniary profit and should not enjoy a total property tax exemption. We affirm the partial property tax exemption.

Commercial or residential property. Plaintiff also claims it should be classified as residential property instead of commercial property. Iowa Code section 441.21(11) defines “residential property:”

“residential property” ... includes land and buildings used primarily for human habitation which land and buildings are owned and operated by organizations that have received tax-exempt status under section 501(c)(3) of the Internal Revenue Code and rental income from the property is not taxed as unrelated business income under section 422.33, subsection 1A.

Id. The corresponding Iowa Administrative Code sections further define and distinguish residential and commercial property. Plaintiff claims it falls within the statutory definition and the Board erred in refusing to classify it as residential property. The Board argues some residents may have their own homes and receive a homestead exemption, the residents’ stay at Red Oak is temporary like at a hospital or hotel, and Red Oak operates “with an eye toward pecuniary profit.” Plaintiff responds that at least all of the residents receiving public assistance do not have another residence or they would not qualify for assistance. The turnover in residents is not because they are returning to their homes, as in the case of a hospital or hotel, but reflects the death of the resident. The residents at Red Oak come because their age or infirmity makes them unable to live independently.

The administrative code definition of commercial real estate includes examples of multiple unit properties such as hotels, motels, and rest homes. Iowa Admin. Code r. 701-71.1(5). However, such properties are not commercial real estate because of the exception that,

regardless of the number of separate living quarters or any commercial use of the property, ... land and buildings used primarily for human habitation and owned and operated by organizations that have received tax-exempt status under Section 501(c)(3) of the Internal Revenue Code, if the rental income from the property is not taxed as unrelated business income under Iowa Code section 422.33(1A), shall be classified as residential real estate.

Id. The exception repeats the statutory definition of residential property in section 441.21(11).

Red Oak is property used primarily for human habitation, in contrast to “property primarily used or intended as a place of business where goods, wares, services, or merchandise is stored or offered for sale at wholesale or retail;” owned and operated by a section 501(c)(3) tax-exempt society, and the income from the property is not taxed as unrelated business income. We find nothing in the statutory definition or the administrative code relating to homestead exemptions or the length of residence as affecting the classification of property as residential or commercial. Because we find Red Oak meets the definitions of residential property and residential real estate, we conclude the district court and the Board erred in not classifying the Red Oak facility as residential. We therefore reverse the district court’s decision on this issue and remand for a reclassification of the property.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

      . This represents rates for one of the years but is illustrative.

      . This represents one year but is illustrative.

      .Iowa Code 427.1(14) provides:
      The assessor, in arriving at the valuation of any property of the society or organization, shall take into consideration any uses of the property not for the appropriate objects of the organization and shall assess in the same manner as other property, all or any portion of the property involved which is leased or rented and is used regularly for commercial purposes for a profit to a party or individual. If a portion of the property is used regularly for commercial purposes, an exemption shall not be allowed upon property so used and the exemption granted shall be in the proportion of the value of the property used solely for the appropriate objects of the organization, to the entire value of the property.

      . Iowa Code section 427.1(8) provides, in pertinent part:
      Property of religious, literary, and charitable societies. All grounds and buildings used or under construction by literary, scientific, charitable, benevolent, agricultural, and religious institutions and societies solely for their appropriate objects, not exceeding three hundred twenty acres in extent and not leased or otherwise used or under construction with a view to pecuniary profit.

      . Webster’s Third New International Dictionary, 456 (2002), includes in its definitions of commercial 2a: “from the point of view of profit.”

      .The district court was to say:
      The Facility operates profitably and has done so in all years since 1995, except 2001. Thus, a review of the evidence indicates that there is no question but that the entire facility for which the exemption is claimed does not qualify since the “private pay” portion thereof is clearly used for profit as any other business. However the issue as to the entire facility is not before us though

      . The district court, while only addressing the issue of a partial exemption for the years at issue, did find "[tjhere is no evidence in the record that the entire operation is operated for a charitable and benevolent use.”

      . Of or relating to money; monetary a pecuniary interest in the lawsuit.
      Black's Law Dictionary 1152 (7th ed.1999)

      . The opinion does not address whether the government payment paid all costs.

      . Unlike most similar cases as here when review by the appellate courts is de novo in Richards the court was engaged in judicial review of an agency action, consequently the agency was given fact findings deference because of the presumably greater expertise an agency has over matters within its purview.

      . The Iowa Administrative Code provides:
      701-71.1(4) Residential real estate. Residential real estate shall include all lands and buildings which are primarily used or intended for human habitation, including those buildings located on agricultural land. Buildings used primarily or intended for human habitation shall include the dwelling as well as structures and improvements used primarily as a part of, or in conjunction with, the dwelling. This includes but is not limited to garages, whether attached or detached, tennis courts, swimming pools, guest cottages, and storage sheds for household goods. Residential real estate located on agricultural land shall include only buildings as defined in this subrule. Buildings for human habitation that are used as commercial ventures, including but not limited to hotels, motels, rest homes, and structures containing three or more separate living quarters shall not be considered residential real estate. However, regardless of the number of separate living quarters, multiple housing cooperatives organized under Iowa Code chapter 499A and land and buildings owned and operated by organizations that have received tax-exempt status under Section 501(c)(3) of the Internal Revenue Code, if the rental income from the property is not taxed as unrelated business income under Iowa Code section 422.33(1A), shall be considered residential real estate.
      71.1(5) Commercial real estate. Commercial real estate shall include all lands and improvements and structures located thereon which are primarily used or intended as a place of business where goods, wares, services, or merchandise is stored or offered for sale at wholesale or retail. Commercial realty shall also include hotels, motels, rest homes, structures consisting of three or more separate living quarters and any other buildings for human habitation that are used as a commercial venture. Commercial real estate shall also include data processing equipment as defined in Iowa Code section 427A.1(1)";”, except data processing equipment used in the manufacturing process. However, regardless of the number of separate living quarters or any commercial use of the property, single- and two-family dwellings, multiple housing cooperatives organized under Iowa Code chapter 499A, and land and buildings used primarily for human habitation and owned and operated by organizations that have received tax-exempt status under Section 501(c)(3) of the Internal Revenue Code, if the rental income from the property is not taxed as unrelated business income under Iowa Code section 422.33(1A), shall be classified as residential real estate.
      Iowa Admin. Code r. 701-71.1(4), (5) (2002).


source: Caselaw Access Project

author: VAITHESWARAN, J. SACKETT, C.J.

license: Public Domain

text:
    In the Interest of D.H., a Minor Child, M.H., Father, Appellant.
    No. 04-0743.
    Court of Appeals of Iowa.
    July 28, 2004.

      Amanda M. DeMiehelis, of the Bull Law Office, P.C., Des Moines, for appellant-father.
    Thomas J. Miller, Attorney General, Tabitha Gardner, Assistant Attorney General, John P. Sarcone, County Attorney, and Jennifer Galloway, Assistant County Attorney, for appellee-State.
    Cynthia Tofflemire, Des Moines, for the mother.
    Christine Bisignano, Des Moines, for the child.
    Considered by VOGEL, P. J., and HECHT and VAITHESWARAN, JJ., but decided en banc.
   VAITHESWARAN, J.

Mike is the father of Danae, born in 1990. Danae was adjudicated a child in need of assistance in 1995 based on physical abuse by her mother. She remained a child in need of assistance due to ongoing drug abuse by her mother and a repetition of the physical abuse. As a teenager, Danae disclosed that she had also been abused sexually by her father.

Mike’s parental rights to Danae were terminated in 2004. On appeal, Mike does not challenge the grounds for termination. Instead, he contends: 1) the Federal and State Indian Child Welfare Acts apply but were not followed, 2) the State did not properly serve him with the petition for termination of parental rights, and 3) termination was not in the child’s best interests.

I. Mike raises the Indian Child Welfare Acts for the first time on appeal. He states that the juvenile court did not determine whether Danae was an “Indian child” within the meaning of the two Acts. As to the Federal Act (25 U.S.C. §§ 1901— 63), Mike failed to preserve this issue for appellate review. In re J.D.B., 584 N.W.2d 577, 581 (Iowa Ct.App.1998).

Regarding the Iowa Indian Child Welfare Act (Iowa Code ch. 232B (Supp. 2003)), we will assume without deciding that the challenge may be raised for the first time on appeal. Mike correctly notes that Iowa Code section 232B.4(2) requires a party seeking termination of parental rights over an Indian child to determine whether the child is an Indian child. The required inquiry is necessary when a child could be, but is not known to be, an Indian child.

We are not convinced this provision creates a broad duty to inquire of every child’s status as an “Indian child” in every proceeding that may theoretically be covered by chapter 232B. The duty of inquiry is qualified by section 232B.5(3), which provides that the court or a party is “deemed to know or have reason to know that an Indian child” is the subject of an action where 1) the court or party “has been informed ... that the child is or may be an Indian child,” 2) the child “gives the court reason to believe that the child is an Indian child,” or 3) the court or party “has reason to believe” that the child resides or is domiciled in “a predominantly Indian community.” Reading sections 232B.4(2) and 232B.5(3) together, as we must, we conclude that the section 232B.4(2) duty of inquiry concerning a potential Indian child’s status is triggered only by the circumstances set forth in Iowa Code section 232B.5(3).

Applying Iowa Code section 232B.5(3) to the record and argument before us, we find no evidence that 1) Mike or anyone else informed the court Danae is or may be an Indian child, 2) would have given the court reason to believe she was an Indian child, or 3) Danae resides in a predominately Indian community. Therefore, there is no need for an inquiry into her status as a potential Indian child.

II. Mike next contends the record only discloses that he was served with the original notice and not with the petition for termination of parental rights. See In re S.P., 672 N.W.2d 842, 846 (Iowa 2003) (noting order void as to parent who has no notice of proceeding). The record reveals that the Tazewell County Sheriff in Illinois file stamped an original notice and personally served Mike with a “notice.” Included with the return of service was the file stamped original notice, which made explicit reference to “a petition in the above entitled action, a copy of which is attached hereto.” Cf. Chader v. Wilkins, 226 Iowa 417, 420, 284 N.W. 183, 185 (1939) (citation omitted) (stating, absent “clear and satisfactory proof’ to the contrary, we presume that a return of service correctly states the manner of service”). We conclude Mike was properly served with the termination petition.

III. Mike finally argues that termination is not in Danae’s best interests because her maternal grandmother is willing and able to care for the child as she has in the past. See Iowa Code § 232.116(3)(a) (stating court need not terminate parental rights if “relative has legal custody of child”). He also argues “the child should have been called upon to state her views on the termination.” Id. § 232.116(3)(b) (stating court need not terminate if “child is over ten years old and objects to the termination”).

It is true that Danae’s grandmother was her caretaker for much of the nine-year period preceding termination. However, Danae was removed from the grandmother’s home in early 2003 when an investigation revealed that she failed to protect Danae from recurring physical abuse by her mother. Following that removal, Danae was placed in foster care, then in a shelter, and finally at a facility providing residential treatment services.

Meanwhile, Mike was sentenced to a 180 month prison term for conspiring to sell methamphetamine. Even before his incarceration, he was only seeing his daughter once a year. His prospects for renewing contact with her were faint, given a confirmed report that he sexually abused her as well as recent revelations by Danae that the abuse was more extensive than she first disclosed.

At the time of the termination hearing, Danae suffered from conduct disorder, post-traumatic stress disorder, and depressive disorder. Her move to a restrictive setting was precipitated by “out of control” behaviors which included setting a fire in a school bathroom, running away from home, using crack cocaine, sexually abusing two children, and attempting suicide.

As for Danae’s views concerning termination of her father’s parental rights, there is no evidence that Mike asked to have her testify at the termination hearing. There is also no evidence to suggest Danae wished to maintain a relationship with her father.

On our de novo review, we conclude termination of Mike’s parental rights to Danae was in her best interests.

AFFIRMED.

All judges concur except SACKETT, C. J., who partially dissents.

SACKETT, C.J.

(concurs in part and dissents in part).

I concur in part and dissent in part. I would order a limited remand.

An allegation has been made for the first time on appeal that no inquiry was made as to D.H.’s possible Indian heritage, as required under Iowa Code section 232B.4 (Supp.2003), and that the termination should be reversed because of the failure of an inquiry. I agree strongly with the State and the majority that this alone is not grounds for reversal. But I would not end our inquiry on this issue there. Rather, I would remand by order to the juvenile court to hold a hearing to determine the Indian status, if any, of this child.

I recognize, as the majority found, there is no real evidence that the child would qualify as an Indian child. Yet the State has failed to state in its petition that either there is evidence the child qualified under the federal or state Indian Child Welfare Act or there is not evidence the child qualified under either act. Furthermore, there is no real evidence the child does not qualify under either act. If, as the allegation for reversal suggests, the father’s current attorney has evidence that the child would qualify, that evidence can only be entered in the record with a remand. Consequently, if this challenge can first be made on appeal as this court is doing, the only way to intelligently address the issue is to remand for further proceedings, an alternative suggested by the State.

The majority has held that the need for the court to inquire as to the child’s status is only triggered by the circumstances set forth in Iowa Code section 232B.5(3) and apparently only at the trial court level, yet they address it without the juvenile court having had an opportunity to do so. The whole Iowa statutory scheme of chapter 232B has wide-open definitions of an Indian child and places substantial burdens on both the court and the State to make inquiry. Additionally, the failure to correctly identify a child as an Indian child could result in a termination being set aside in an action filed under the federal Indian Child Welfare Act.

25 U.S.C. § 1914 (2002) provides:

Any Indian child who is the subject to any action for foster care placement or termination of parental rights under State law, any parent or Indian custodian from whose custody such child was removed and the Indian child’s tribe may petition any court of competent jurisdiction to invalidate such action upon a showing that such action violated any provision of section 1911, 1912 and 1913 of this act.

Section 1912 provides for a state court that knows or has reason to know the child may be subject to the federal act to notify certain persons in a certain manner and to do certain other things that did not happen in this case. A failure to comply with these provisions could invalidate this termination procedure. See Doe v. Mann, 285 F.Supp.2d 1229, 1233 (N.D.Cal.2003) (noting a tribal member is not precluded from bringing a federal court action challenging the state court’s child custody determination as a violation of the Indian Child Welfare Act, the issue not having been raised or adjudicated in state court).

I understand that we have a responsibility to see parental termination cases are handled expeditiously. But the short time necessary to remand for a hearing is insignificant when compared with the time that the termination order could be held in limbo by further litigation challenging the termination should the child qualify under either or both the federal and state acts.

The better practice, it would appear, is for the State that has responsibility for determining the child’s status to include an allegation in its petitions that a basic inquiry has been made and there is or is not evidence the child qualifies under the Act. The better practice for us is to take those precautions necessary to strictly comply with both acts making further litigation less likely and to assure that termination orders from Iowa courts shall withstand challenges under the federal act.

      . Iowa Code chapter 232B contains the Iowa Indian Child Welfare Act. The federal Indian Child Welfare Act is found in 25 U.S.C. §§ 1901-63 (2002).

      . By the time of a termination hearing, the State has gathered substantial evidence on the child and his or her family and I would suggest that the better practice would be for the State to make such an allegation. In saying this, I do not suggest that the failure to do so in and of itself is grounds for a reversal, as I have agreed with the State and the majority it does not.

      .Any attorney raising this issue at the appellate level should have evidence that the child qualifies or evidence that raises a debatable question as to whether the child qualifies. Any attorney representing a party in juvenile court who has evidence the child may qualify would have an obligation to make that evidence known to the court and not wait to raise the issue for the first time on appeal.

      . In saying this I recognize the majority has elected not to raise the preservation issue raised by the State.

      . Iowa Code § 232B.3(6).

      . Iowa Code § 232B.5.

      . Iowa Code 232B.5(2) provides:
      The federal Indian child Welfare Act and this chapter are applicable without exception in any child custody proceedings. A state court does not have the discretion to determine the applicability of the federal Indian Child Welfare Act or this chapter to a child custody proceeding based upon whether an Indian child is part of an existing Indian family.
      Iowa Code § 232B.5(2).

      .Whether this statute also puts these requirements on an appellate court when it is the first to be advised there may be a question of the child's eligibility is not clear.


author: HANSON, Justice.

text:
    Vernon Neal POWERS, petitioner, Appellant, v. STATE of Minnesota, Respondent.
    No. A04-31.
    Supreme Court of Minnesota.
    Oct. 14, 2004.
    Rehearing Granted Nov. 19, 2004.
    Harlan Goulett, Harlan M. Goulett & Associates, Minneapolis, for Appellant.

      Mike Hatch, Minnesota Attorney General, Thomas Rolf Ragatz, Assistant Attorney General, St. Paul; and Patrick William Flanagan, Mower County Attorney Office, Austin, for Respondent.
   OPINION

HANSON, Justice.

Appellant Vernon Neal Powers seeks postconviction review of his convictions of first-degree murder and first-degree assault in connection with the murders of Juan Ramirez and Raul Gutierrez, and the shooting of Benjamin Hernandez, on June 30, 2000, in Austin, Minnesota. The district court sentenced Powers to two mandatory life sentences for two first-degree premeditated murder convictions and a presumptive sentence of 86 months for the first-degree assault conviction, all sentences to run consecutively. Powers appeals from the order of the postconviction court denying his petition without a hearing. He argues that the postconviction court should have granted a hearing on his claim that he was prejudiced by the district court’s refusal to sever his trial from that of two codefendants and that the consecutive sentencing violated the rule in Apprendi v. New Jersey. Because all of the issues raised in this petition could have been raised in Powers’ direct appeal, we affirm.

A detailed description of the facts can be found at State v. Powers, 654 N.W.2d 667 (Minn.2003). Only the procedural history is relevant to this appeal. On direct appeal, this court affirmed Powers’ convictions, concluding that (1) Powers did not suffer substantial prejudice from joinder of his trial with that of two eodefendants; (2) severance of the joined defendants was not necessary for a fair trial; (3) the district court did not abuse its discretion when limiting testimony in a Schwartz hearing; (4) disparaging comments by the prosecutor during closing remarks did not impair Powers’ rights to a fair trial; (5) Powers’ absence at three hearings was harmless error; (6) Powers was not denied effective assistance of counsel; and (7) Powers’ rights to an impartial jury and adequate voir dire were not violated. Id. Powers did not challenge his sentence on direct appeal.

On December 16, 2003, Powers filed for postconviction relief under MinmStat. § 590.02 (2002). The only new information he supplied with his petition was the affidavit of his codefendant, David Christian, who stated that, had their trials been severed, Christian would have provided exculpatory testimony in Powers’ trial.

The issue we must consider is whether the postconviction court abused its discretion in summarily denying Powers’ petition. “On appeal from a summary denial of postconviction relief, we examine whether sufficient evidence exists to support the postconviction court’s findings and will reverse those findings only upon proof that the postconviction court abused its discretion.” Ives v. State, 655 N.W.2d 633, 635 (Minn.2003). A postconviction court must grant a timely hearing on a motion for postconviction relief “[ujnless the petition and the files and records of the proceeding conclusively show that the petitioner is entitled to no relief[.]” Minn. Stat. § 590.04, subd. 1 (2002); see also State v. Rhodes, 627 N.W.2d 74, 86 (Minn.2001). But, once a defendant has directly appealed his conviction, this court will not consider, in a subsequent postconviction petition, any matters that were raised in the direct appeal or were known at the time of that appeal. State v. Knaffla, 309 Minn. 246, 252, 243 N.W.2d 737, 741 (1976). And a district court may summarily deny a petition for postconviction relief “when the issues raised in it have previously been decided by the court of appeals or the supreme court in the same case.” Minn. Stat. § 590.04, subd. 3 (2002).

Two exceptions to the Knaffla rule allow for postconviction relief despite the fact that the claims could have been raised on direct appeal: (1) where a novel legal issue is presented; or (2) where the interests of fairness and justice require relief. Washington v. State, 675 N.W.2d 628, 630 (Minn.2004). To justify a hearing on a novel legal issue, the claim must be so novel that its legal basis was not reasonably available to counsel at the time the direct appeal was taken. King v. State, 649 N.W.2d 149, 156 (Minn.2002). Claims decided in the interests of justice require that the claims have substantive merit. Id. at 157-58.

I.

Powers argues that he is entitled to a hearing on his claim of error in the failure to grant severance because “[s]ev-eral factual conclusions” were “at least contestable” and “essential to its result.” To support this assertion, Powers provided an affidavit of codefendant David Christian, who avers that, if the trials had been severed, he would have testified at Powers’ trial and would have offered exculpatory testimony that Powers was not involved in the Austin murders. David Christian claims that Powers was too physically impaired, medicated, and intoxicated to have participated in the crimes.

Powers does not argue that this claim falls under either of the exceptions in Knaffla. He does not claim that the statements in the David Christian affidavit are newly discovered evidence or that these statements could not have been known at the time of the trial or raised in the direct appeal. We agree with the state that the issues of joinder and severance were thoroughly examined by this court in Powers’ direct appeal. We conclude that Powers’ claim that it was error to deny his motion for severance is procedurally barred under Knaffla.

II.

Powers’ second claim is that his consecutive sentences violate his Fifth and Sixth Amendment rights under the rule in Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000). He argues that Apprendi requires that the factors that support a decision to impose consecutive sentences must be determined by the jury, beyond a reasonable doubt, and not by the judge. But Powers does not argue that he could not have made this argument on direct appeal. And because Apprendi was decided before Powers’ direct appeal, Powers cannot argue that it provides the basis for a novel legal claim. We conclude that Powers’ argument under Apprendi is also procedurally barred under Knaffla.

Accordingly, we hold that the postcon-viction court did not abuse its discretion when it summarily denied Powers’ petition for postconviction relief.

Affirmed.

ANDERSON, G. BARRY, J., not having been a member of this court at the time of the argument and submission, took no part in the consideration or decision of this case.

      . Powers raised four arguments other than severance in his petition to the postconviction court: (1) that he was improperly convicted based on uncorroborated testimony of an accomplice; (2) that the trial court committed reversible error by not instructing the jury as to the elements of the underlying felony of first-degree robbery; (3) that the court erred in failing to continue the trial to allow him to obtain private counsel; and (4) that he was denied his constitutional right to effective assistance of counsel. Powers does not argue any of these issues in his brief to this court. Issues raised in a petition for postconviction relief but not addressed by a party’s brief are considered waived. Rainer v. State, 566 N.W.2d 692, 696 (Minn.1997).


author: PER CURIAM.

text:
    In re PETITION FOR DISCIPLINARY ACTION AGAINST Alfred PEREZ, Jr., a Minnesota Attorney, Registration No. 181353.
    No. A03-1327.
    Supreme Court of Minnesota.
    Nov. 18, 2004.

      Kenneth L. Jorgensen, Director, Office of Lawyers Professional Responsibility, Martin A. Cole, First Assistant Director, St. Paul, MN, for Appellant.
    Alfred Perez, Jr., Commerce, CA, for Respondent.
   OPINION

PER CURIAM.

On September 9, 2003, respondent Alfred Perez, Jr. admitted service of a notice of petition for disciplinary action against him. In the petition, the Minnesota Director of the Office of Lawyers Professional Responsibility alleged that Perez had failed to notify the Director of a felony conviction and subsequent disciplinary proceedings in California. As a result, the Director petitioned that we disbar Perez or impose otherwise appropriate discipline. We appointed a referee to hear this matter and to issue his recommendation for discipline. The matter is now before us on the referee’s report and recommendation of disbarment. We agree with the referee’s recommendation and order that Alfred Perez, Jr. be disbarred.

Alfred Perez, Jr. was born and raised in California. He obtained his undergraduate degree from Yale University and law degree from Hastings Law School in San Francisco. After failing the California bar examination several times, Perez realized that he could represent clients in federal immigration proceedings as soon as he obtained a license to practice law from any state. Apparently, Perez had relatives in Minnesota, which led him to apply for admission here. On April 27, 1987, he was granted a license to practice law in Minnesota. He then joined the practice of a Los Angeles area organization specializing in immigration matters. In August 1988, Perez was finally granted a license to practice law in California. The following year, he requested that Minnesota place him on continuing legal education restricted status.

In January 1990, Perez met lawyer Wade Shang. Shang was leaving the legal profession and offered to transfer his practice to Perez. Perez accepted the offer and took over Shang’s practice in Burlin-game, a city just south of San Francisco. Two months later, Perez opened a second office in the Los Angeles suburb of South Pasadena.

At the time Perez opened these two law offices, the Federal Bureau of Investigation was investigating personal injury insurance fraud schemes in California. The FBI conducted sting operations where agents posed as either uninjured accident victims seeking recovery on personal injury claims or as “cappers.” Cappers are essentially client brokers, who arrange medical treatments and legal representation for personal injury claimants in return for a fee or percentage of any eventual insurance settlement. This practice is illegal in California.

As part of an FBI sting operation, agent George Henderson posed as an uninjured automobile accident victim seeking recovery on a personal injury claim. Perez had inherited Henderson’s case from Shang. While working on Henderson’s case, Perez met with two other FBI agents posing as cappers. Then, in September 1990, these agents referred three new clients to Perez’s Burlingame office. All three clients were also undercover FBI agents. According to Perez, his assistant Dennis Santos recommended that the three clients seek treatment from a physician, Dr. Ap-polonia Dimapilis. Perez asserted that he never met Dimapilis in person prior to his grand jury indictment for insurance fraud. Dimapilis treated the three new clients between September 18 and October 3, 1990. It appears that with respect to at least one of these cases, Perez’s law office also had a relationship with Zoila Coronel, an administrative employee of the St. Anthony Medical Clinic.

Perez struggled to maintain his law practice in Burlingame, and ultimately closed that office in March 1991. He then relocated his Burlingame practice to Santos’s home. In November 1992, FBI agents searched Perez’s South Pasadena office. Shortly thereafter, in March 1993, Perez also closed that office.

On October 6, 1993, Perez was charged in the Northern District of California with criminal mail fraud and money laundering in violation of Title 18, United States Code § 1341 (1993) and § 1956 (1993). A su-perceding indictment alleging eight counts of mail fraud and money laundering was filed on August 8,1994. The named defendants were Perez, Dimapilis, Coronel, Perez’s South Pasadena office assistant Joseph Der-Yeghianyan, Perez’s Burlingame office assistant Vivian Ocampo, and the St. Jude Medical Center.

Under the indictment, the defendants were each charged with devising a scheme and artifice to defraud and obtain money by means of false and fraudulent pretenses, representations, and material omissions. More particularly, the defendants were charged with advancing personal injury claims based on false representations about the nature and extent of medical treatments rendered to supposed victims of automobile accidents. The physician and clinic administrator defendants were charged with preparing false medical bills and treatment records reflecting care never administered and expenses exceeding those actually incurred. Perez was charged with settling personal injury claims based on these false medical records.

On October 19, 1994, Perez pleaded guilty to four counts of mail fraud and was sentenced to five months of supervised home detention, three years of probation, and a fine of $3,000. Three months later, on January 20, 1995, the California State Bar suspended Perez from the practice of law in California pending final disposition of disciplinary proceedings. On April 13, 1995, the California State Bar Court issued an Order to Show Cause as to why Perez should not be disbarred. In October 1995, the California Supreme Court accepted Perez’s resignation from the practice of law in California with charges pending from the California State Bar. Following Perez’s resignation, the disciplinary proceedings were “dismissed without prejudice to further proceedings therein should he hereafter seek reinstatement.” At the time the disciplinary action presently before us was filed, Perez had never sought reinstatement to the California State Bar. At oral argument, however, Perez indicated that he has inquired about and intends to seek reinstatement in California once this disciplinary action is resolved.

As soon as Perez was subject to disciplinary charges before the California State Bar, he was required to notify the Director of Minnesota’s Office of Lawyers Professional Responsibility that he was subject to public discipline in another jurisdiction. Minn. R. Lawyers Prof. Resp. 12(d) (2004). Perez did not notify the Director as required. Rather, he continued to work in the legal profession as a legal assistant from 1994 to 1999. In his oral presentation before the court, Perez admitted that shortly after his probation ended in 1999, he used his Minnesota license to practice immigration law in California and Arizona and continued to do so until 2004. Because he was not licensed to practice law in any other state, Perez practiced law using exclusively his Minnesota license. We note that during this time period, Perez’s Minnesota license remained on continuing legal education restricted status.

On May 22, 2000, Perez failed to appear on behalf of a client in Arizona before Immigration Judge John W. Richardson. Richardson found Perez in contempt and filed a complaint with the Director’s office. In October 2000, the Director issued Perez an admonition. At that time, the Director was aware that Perez resided in California and practiced law exclusively in federal immigration courts. Nevertheless, the Director did not discover until July 2003 that Perez had been convicted of a felony and had resigned his California license with charges pending against him. Upon learning this information, the Director submitted this petition for disciplinary action, requesting that we disbar Perez or impose otherwise appropriate discipline.

We appointed District Judge Peter A. Hoff as referee, and he heard the matter on February 18, 2004. The referee filed his Findings of Fact, Conclusions of Law and Recommendation for Discipline on March 11, 2004, finding that Perez had been convicted of a felony, and concluding that Perez violated Minnesota Rules of Professional Conduct 3.4(c) (2004), and 8.4(b), (c), and (d) (2004). The referee also found that Perez had resigned his California license with disciplinary charges pending, yet failed to notify the Director in violation of Minnesota Rules on Professional Responsibility 12(d). The referee found that Perez continued to practice immigration law in Arizona and California using his Minnesota license.

Based on these findings, the referee recommended that we disbar Perez. In reaching this conclusion, the referee found that although Perez offered explanations for his conduct, he did not produce evidence of substantial mitigation. Based on the referee’s recommendation and in accordance with Minnesota Rules on Lawyers Professional Responsibility 16(e), we suspended Perez from the practice of law in Minnesota on April 8, 2004, pending final determination of the disciplinary proceedings. Because Perez did not order a transcript of the hearing, the referee’s findings of fact and conclusions are conclusive. Minn. R. Lawyers Prof. Resp. 14(e) (2004).

I.

In considering a petition for disciplinary action against a lawyer, we have the ultimate responsibility for determining the appropriate sanction. In re Oberhauser, 679 N.W.2d 153, 159 (Minn.2004). But we will not set aside the findings and conclusions of a referee unless they are clearly erroneous. Id. The purposes of disciplinary sanctions for professional misconduct are to protect the public, to protect the judicial system, and to deter future misconduct by the disciplined lawyer as well as by other lawyers. Id.

Perez asserts that the imposition of identical reciprocal discipline by this court would be unjust and substantially different from what is warranted in Minnesota. Thus, we first consider the propriety of the imposition of reciprocal discipline in Minnesota based on Perez’s misconduct in California. After Perez’s felony conviction, the California Supreme Court accepted his resignation from the practice of law with charges pending before the California State Bar. Following his resignation, the disciplinary proceedings were dismissed without prejudice. When another jurisdiction disciplines a lawyer, we will impose an identical disciplinary measure upon that lawyer unless the procedures in that jurisdiction were unfair or the imposition of the same discipline would be unjust or substantially different from the discipline warranted in Minnesota. Minn. R. Lawyers Prof. Resp. 12(d).

We conclude that this present matter is not a reciprocal discipline proceeding. We reach this conclusion because imposition of identical discipline to that imposed in California is impossible. Minnesota does not allow a lawyer to resign with charges pending. We have stated:

[Tjhis court will not entertain petitions for resignation while disciplinary petitions alleging serious misconduct are pending. When a lawyer’s flagrant violations of professional responsibilities justify disbarment, resignation will not be allowed. To permit a lawyer to resign when disbarment is clearly called for would not serve the ends of justice nor deter others from legal misconduct.

In re McCoy, 447 N.W.2d 887, 891 (Minn.1989) (citations omitted).

Because we conclude that reciprocal discipline is not applicable in this case, we need not consider Perez’s argument that the imposition of identical discipline by this court would be unjust and unwarranted in light of the discipline he received in California. Therefore, we must independently evaluate Perez’s conduct to determine whether disciplinary sanctions should be imposed.

II.

We impose disciplinary sanctions on a case-by-case basis, considering the specific acts of misconduct and any aggravating or mitigating circumstances, while looking to similar cases for guidance. In re Koss, 611 N.W.2d 14, 16 (Minn.2000). Here, Perez engaged in felony-level criminal conduct within his law practice that involved fraud and dishonesty. On October 19, 1994, Perez pleaded guilty to four counts of felony mail fraud in violation of 18 U.S.C. § 1341 and § 1956 and was convicted. A lawyer’s criminal conviction is “conclusive evidence that the lawyer committed the conduct for which the lawyer was convicted.” Minn. R. Lawyers Prof. Resp. 19(a). Therefore, Perez’s felony-level criminal conduct is conclusively established.

We view felony convictions as serious misconduct, and we have disbarred lawyers convicted of a felony absent significant mitigating factors. In re Anderley, 481 N.W.2d 366, 369 (Minn.1992). In the case of Koss, we disbarred a lawyer convicted of racketeering and mail fraud in California. 611 N.W.2d at 14. We approved the recommendation of disbarment for a lawyer who, along with other misconduct, committed felony mail fraud in his representation of a trust. In re Klane, 659 N.W.2d 701, 701 (Minn.2003). We disbarred a lawyer convicted of racketeering, aiding and abetting, interstate transportation of property obtained by fraud, and mail fraud. In re Holman, 322 N.W.2d 726, 726 (Minn.1982). We also disbarred a lawyer convicted of interstate transportation of stolen goods, mail fraud, conspiracy, and theft of property. In re Kraemer, 361 N.W.2d 402, 402-03 (Minn.1985). And finally, in the case of In re Ostfield, we disbarred a lawyer convicted of mail fraud and tax evasion. 349 N.W.2d 274, 275 (Minn.1984).

We may stop short of disbarring a lawyer convicted of a felony if it is shown that a variation from that usual disciplinary sanction is appropriate. In order to determine whether a variation is appropriate, we consider the aggravating and mitigating circumstances present in the individual case. Anderley, 481 N.W.2d at 369. For example, in a case where a lawyer was disbarred in New Hampshire for engaging in improper sexual behavior toward six of his female clients but failed to notify Minnesota authorities of his disbarment, we suspended the lawyer for five years due to significant mitigating circumstances. In re Otis, 582 N.W.2d 561, 561-62 (Minn.1998). In Otis, the lawyer claimed that he had a psychological condition that caused his misconduct, and he established that he had not engaged in any inappropriate behavior since he began treatment six years before the Minnesota disciplinary hearing. Id. at 564. The lawyer had not engaged in the practice of law since his disbarment in New Hampshire. Id. Based on these circumstances, we concluded that disbarment was not an appropriate sanction. Id. at 565.

Perez argues that, similar to Otis, there are factors that mitigate the severity of his misconduct. He argues that he has already been punished through the loss of his California license and federal conviction and that a substantial amount of time has passed since he was disciplined in California. But Perez cannot and should not benefit from the 10-year passage of time since his conviction as there is no statute of limitations in lawyer discipline proceedings. For example, a lawyer was disbarred in Minnesota in 2000 after a similar 1991 mail fraud conviction in California. Koss, 611 N.W.2d at 14. Perez also describes in detail the circumstances of his personal life, and how he and his family would be affected by his disbarment. But the referee found that while Perez offered explanations for his misconduct, he fell short of providing mitigating factors significant enough to allow him to avoid disbarment. Moreover, this matter is distinguishable from Otis. Otis claimed psychological mitigation, while Perez makes no such claim. Also, Otis did not practice law after he was disbarred in New Hampshire, whereas Perez practiced law using his Minnesota license for five years after he resigned his California license.

More significantly, we conclude that there are aggravating factors that weigh in favor of disbarment. The nature of the offense was serious. We note that in the plea agreement, the parties stipulated to an upward adjustment from a base offense level of six to an adjusted level of fourteen. The parties stipulated that the basis for the upward adjustment was that the fraud scheme to which Perez pleaded guilty had an intended loss of more than $20,000, multiple victims, and involved an “abuse of a position of trust.” The final offense level was reduced to twelve, but only provided that Perez “clearly demonstrate a recognition and affirmative acceptance of responsibility for his criminal conduct.”

In both his brief and his oral presentation, Perez failed to indicate a real acceptance of responsibility for his behavior. He failed to recognize the gravity of his criminal conduct, maintaining that there were no real victims and no money was lost because the clients were FBI agents and the insurance companies had set money aside for the sting operation. He also maintained that he was an innocent party, and argued that his guilty plea leading to conviction was a result of poor advice from his lawyer. Further, he denied that he was aware that he was required under Rule 12(d) to notify the Director after he became subject to discipline in California.

We also note that Perez’s conduct occurred within the practice of law. When a lawyer’s felony criminal misconduct occurs within the practice of law, we are more likely to disbar that lawyer. In Anderley, we disbarred a lawyer convicted of mail fraud for defrauding an insurance company client. 481 N.W.2d at 366. In In re Shoemaker, we disbarred a lawyer with a felony theft conviction for misappropriation from his former law firm and its clients. 518 N.W.2d 552, 552 (Minn.1994). Finally, in In re Benson, we disbarred a lawyer convicted of felony theft by swindle and perjury arising out of the lawyer’s dealings with client assets. 431 N.W.2d 120, 124-25 (Minn.1988). Here, Perez used his Minnesota license exclusively for five years after he resigned his California license in order to practice immigration law in California and Arizona. Thus, he clearly benefited from his failure to notify the Director as required by Rule 12(d).

Based on our review of the record, we conclude that there is no reason - to set aside the referee’s findings and conclusions on the grounds that they are clearly erroneous. Perez’s felony conviction establishes serious misconduct, and the absence of mitigating factors as well as the presence of aggravating factors weigh heavily against him. Accordingly, we conclude that disbarment is the appropriate sanction.

We order that Alfred Perez, Jr. be, and hereby is, disbarred.

ANDERSON, G. BARRY, J., not having been a member of this court at the time of the argument and submission, took no part in the consideration or decision of this case.

      . Rule 12 of the Rules of the 2004 Minnesota State Board of Continuing Legal Education governs continuing legal education restricted status. A lawyer who is by choice on restricted status remains a member of the bar in good standing.

      . Rule 12(d) states:
      Upon learning from any source that a lawyer licensed to practice in Minnesota has been publicly disciplined or is subject to public disciplinary charges in another jurisdiction, the Director may commence an investigation and, without further proceedings, may file a petition for disciplinary action [with] this court. A lawyer subject to such charges or discipline shall notify the Director.

      (Emphasis added.)

      . Rule 3.4(c) states:
      A lawyer shall not: * ⅜ * (c) knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists. Rule 8.4(b), (c) and (d) states:
      It is professional misconduct for a lawyer to * * * (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice.

      . Rule 12(d) provides:
      If the lawyer has been publicly disciplined in another jurisdiction, this Court may issue an order directing that the lawyer and the Director inform the court within thirty (30) days whether either or both believe the imposition of the identical discipline by this Court would be unwarranted and the reasons for that claim. Without further proceedings this court may thereafter impose the identical discipline unless it appears that discipline procedures in the other jurisdiction were unfair, or the imposition of the same discipline would be unjust or substantially different from discipline warranted in Minnesota. If this court determines that imposition of the identical discipline is not appropriate, it may order such other discipline or such other proceedings as it deems appropriate.


text:
    Rusttee Allan TORRES, petitioner, Appellant, v. STATE of Minnesota, Respondent.
    No. A03-1624.
    Supreme Court of Minnesota.
    Nov. 18, 2004.

      Philip Michael Zrimsek, Northfield, MN, for Appellant.
    Mike Hatch, Attorney General, St. Paul, MN; and G. Paul Beaumaster, Rice County Attorney, Faribault, MN, for Respondent.
   OPINION

HANSON, Justice.

In his petition for postconvietion relief, appellant Rusttee Allan Torres claims ineffective assistance of trial counsel, arguing that counsel improperly conceded Torres’ guilt to certain elements of the crimes with which he was charged. We conclude from our review of the trial record that counsel did not make concessions of guilt. Thus Torres’ claim does not fall within any exception to the procedural bar of State v. Knaffla, 309 Minn. 246, 243 N.W.2d 737 (1976), and we affirm the denial of his petition.

Torres was convicted of murder in the first degree in the course of a burglary, in violation of Minn.Stat. § 609.185(3) (2000), and murder in the second degree, in violation of Minn.Stat. § 609.19(1) (2000), in connection with the May 9, 1999, death of Jesse Springer in Faribault, Minnesota. We affirmed the convictions on direct appeal against challenges that the district court erred when denying a requested jury instruction on voluntary intoxication and that the prosecutor committed misconduct. State v. Torres, 632 N.W.2d 609 (Minn.2001).

Torres brought this petition for postcon-viction relief claiming that he received ineffective assistance of both trial counsel and appellate counsel. The postconviction court denied Torres’ petition. The court held that the claim of ineffective assistance of trial counsel was procedurally barred under the rule in Knaffla because it could have been raised on direct appeal. The court further held that Torres was not entitled to an evidentiary hearing on his claim of ineffective assistance of appellate counsel because it had been conclusively shown that he was not entitled to appellate relief (citing Sessions v. State, 666 N.W.2d 718, 723 (Minn.2003)). Torres appeals only from the denial of his claim of ineffective assistance of trial counsel.

Torres argues that during closing argument his trial counsel improperly conceded his guilt with regard to elements of first-degree murder in the course of a burglary and second-degree murder. Torres does not identify the specific statements by counsel that he claims are concessions. He summarily argues that counsel “made no arguments and did not contest the elements of [the two crimes]”; that counsel “implicitly admitted, and on occasion, explicitly admitted several elements of both counts by acknowledging and failing to refute the assertion that petitioner acted in concert with the other alleged perpetrators of the crime, Chris St. Martin, Dylan Frohn and Tracy Sailor”; and that counsel “did not contest the elements of * * * burglary in any way.”

I.

Torres invites us to adopt a bright-line rule that the failure to raise a claim of ineffective assistance of trial counsel on direct appeal does not bar the claim from being brought in a postconviction petition, relying in part on the recent decision of the United States Supreme Court in Massaro v. United States, 538 U.S. 500, 123 S.Ct. 1690, 155 L.Ed.2d 714 (2003). In Massaro, the Court overturned the “procedural default” rule that had been followed in some federal circuits which held that a claim of ineffective assistance of trial counsel was barred if the defendant did not raise it on direct appeal. The Court stated that the “procedural-default rule is neither a statutory nor a constitutional requirement, but it is a doctrine adhered to by the courts to conserve judicial resources and to respect the law’s important interest in the finality of judgments.” 538 U.S. at 504, 123 S.Ct. 1690. The Court noted that requiring a defendant to raise the issue of ineffective assistance of counsel on direct appeal is inherently difficult because the trial record is often “incomplete or inadequate for this purpose.” Id. at 505, 123 S.Ct. 1690. The Court concluded that “failure to raise an ineffective-assistance-of-counsel claim on direct appeal does not bar the claim from being brought in a later, appropriate [postconviction] proceeding under [28 U.S.C.] § 2255.” Id. at 509, 123 S.Ct. 1690.

Because the ruling in Massaro is based on the Supreme Court’s supervisory power over federal courts and is not constitutional in nature, it does not bind us and we decline to adopt it. We believe that the Minnesota rule, first announced in Knaffla, is superior to the rule in Massaro. Under Knaffla, all claims brought or known on direct appeal are barred from consideration in a collateral proceeding. 309 Minn, at 252, 243 N.W.2d at 741. Two exceptions are made: first, a claim is not barred where the claim “is so novel that the legal basis was not available on direct appeal” and, second, a claim is not barred where the “petitioner did not ‘deliberately and inexcusably’ fail to raise [the claim] on direct appeal * * * [and] fairness requires its consideration.” Dukes v. State, 621 N.W.2d 246, 251 (Minn.2001) (quoting Roby v. State, 531 N.W.2d 482, 484 (Minn.1995)). Under the second exception, we have held that a claim of ineffective assistance of trial counsel is not barred by Knaffla if it cannot be determined from the district court record and requires additional evidence, such as that involving attorney-client communications. Robinson v. State, 567 N.W.2d 491, 494-95 (Minn.1997).

Thus, our rule recognizes that not all ineffective assistance of trial counsel claims are alike. A claim of ineffective assistance of trial counsel that can be decided on the basis of the trial court record must be brought on direct appeal and is procedurally barred when raised in a post-conviction petition. But a claim of ineffective assistance of trial counsel that cannot be decided on the district court record because it requires additional evidence need not be brought on direct appeal and may be brought in a postconviction petition. We believe that our rule is preferable because it preserves the goals of finality and efficiency where appropriate and overrides them only where necessary in the interests of justice.

When the postconviction claim of ineffective assistance of trial counsel is based on the contention that trial counsel improperly conceded guilt on certain elements of a charge without the defendant’s consent, the application of the Knaffla rule is somewhat more complicated because that contention requires a two-part inquiry. First, the postconviction court must review the record to see if trial counsel in fact conceded guilt. If the postconviction court determines from the trial record that there was no concession of guilt, no further evidence is required, no evidentiary hearing is necessary and there is no exception to the Knaffla bar. But if there is evidence on the trial record that trial counsel in fact conceded guilt, the court must proceed to the second prong of the inquiry— whether the defendant acquiesced in that concession. If the defendant acquiesced, the claim of ineffective assistance of trial counsel fails. State v. Provost, 490 N.W.2d 93, 97 (Minn.1992). Because this inquiry on acquiescence requires evidence of attorney-client communications, an evidentiary hearing should be held and the interests of justice require that the court lift the Knaffla procedural bar.

II.

Applying this analysis to the present case, we first conduct a de novo review of the trial record to determine whether Torres trial counsel conceded guilt on any element of the two charges. In this regard, silence on a particular element of a crime is not the same as a concession. Whether the failure to address the element is ineffective assistance of counsel depends on the facts in the case and what arguments can credibly be made. State v. Roberts, 279 Minn. 319, 323, 156 N.W.2d 760, 763 (1968) (holding that failure of defense counsel to interpose a particular defense is not ineffective assistance when, on the record, the defense has no merit); State v. Morrison, 298 Minn. 179, 180, 213 N.W.2d 629, 631 (1974) (holding that defense counsel’s failure to argue that the shooting at issue was an accident, in view of the strong evidence against defendant, was not ineffective representation).

Furthermore, a slightly different test applies to claims of implied concessions of guilt. We have recognized that we must exercise great caution when defining an implied concession lest the “semantics of every questioned word, statement or misstatement of counsel by inadvertence, negligence or perhaps cleverness * * * [become] an automatic ground for a new trial.” Dukes v. State, 660 N.W.2d 804, 812 (Minn.2003). We will find an implied concession only where a “reasonable person” viewing the “totality of the circumstances” would conclude that counsel conceded the defendants guilt. Id. at 812-13 (citing State v. Vick, 632 N.W.2d 676, 688 (Minn.2001)).

Torres argues that defense counsel impliedly conceded that one of the four defendants in the apartment killed Jesse Springer and thereby conceded Torres’ guilt as one who aided and abetted. In her closing argument, defense counsel does suggest that codefendants Frohn and Sailor, who testified for the state as part of a plea bargain, each had motives to lie about the role of Torres. But counsel did not state or imply that either Frohn or Sailor committed the killing. Instead, her focus was to discredit the testimony of the two witnesses who each said that Torres committed the murder. The major point of the argument was that the testimony of these witnesses did not eliminate reasonable doubt about Torres’ guilt. In fact, counsel did not explicitly admit that Torres, Frohn or Sailor were even present at the scene, although all of the evidence suggested that they were. When counsel chooses not to argue a particular point because the weight of the evidence is against her and instead chooses to attack the credibility of the states witnesses, a reasonable person would not conclude that counsel implied the defendants guilt.

Torres next argues that counsel explicitly admitted that whoever took the actions assaulting Springer intended to kill him. But his only support for this claim is that counsel referred to Frohn’s testimony about how Springer had been cut “ear to ear.” Counsel did not state that anyone intended to kill Springer. To the contrary, counsel argued that all codefendants were heavily intoxicated and that none of them could have formed the requisite intent for a specific intent crime. That argument may have had some effect on the jury, which acquitted Torres of premeditated murder.

Torres argues that counsel admitted that a burglary had occurred. But Torres bases that argument on the claim that counsel failed to specifically respond to the state’s allegations that the four men rushed into Springer’s apartment, or tricked Springer into opening the door. Although counsel did not make strong arguments as to whether a burglary occurred, she did not concede the point. In fact, when the state stated in rebuttal that defense counsel did not argue that there was no burglary, counsel requested surre-buttal to address the point. The district court granted surrebuttal and counsel clarified that she had not conceded any of the issues, including the burglary offense.

Finally, Torres argues that counsel failed to argue that Torres was an innocent bystander and therefore did not aid and abet the crimes of his codefendants. But counsel did argue that all of the testimony of the codefendants was inconsistent, that “there was not premeditation on that day on the part of Mr. Torres” and that the evidence did not prove that Torres intended to assist his friends in the commission of any crime.

Because the trial record discloses that defense counsel made no concessions of Torres’ guilt, evidence of whether Torres acquiesced is irrelevant. KnaffLa applies to procedurally bar the claim. Accordingly, we hold that the denial of the postcon-viction petition without a hearing was not an abuse of discretion.

Affirmed.

ANDERSON, G. BARRY, J., not having been a member of this court at the time of submission, took no part in the consideration or decision of this case.

      . Recognizing that the absence of a bright line rale might be confusing in some circumstances, we have noted that the "best procedure for raising such a claim, however, is to file a petition for postconviction relief before appeal.” Robinson v. State, 567 N.W.2d at 495 n. 3 (emphasis in original) (citing Roby v. State, 531 N.W.2d at 484 n. 1 (Minn.1995)).

      . The application of the KnaffLa rule is somewhat superfluous in these circumstances. Even if KnaffLa did not procedurally bar Torres' claim, the conclusion that defense counsel did not concede guilt would also defeat the claim on the merits.


author: KLAPHAKE, Judge.

text:
    John R. JENSEN, Appellant, v. DULUTH AREA YMCA, a Minnesota non-profit corporation, Respondent.
    No. A04-807.
    Court of Appeals of Minnesota.
    Nov. 16, 2004.

      Thomas D. Jensen, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, MN, for appellant.
    Eric D. Hylden, Nicole R. Weinand, Reyelts Leighton Bateman Hylden & Stur-devant, Ltd., Duluth, MN, for respondent.

      Considered and decided by HUDSON, Presiding Judge, KALITOWSKI, Judge, and KLAPHAKE, Judge.
   OPINION

KLAPHAKE, Judge.

Appellant John R. Jensen filed suit against respondent Duluth Area YMCA (the YMCA) for terminating his membership in violation of the Minnesota Nonprofit Corporation Act (the act). The district court granted summary judgment to the YMCA. Jensen challenges the dismissal of his claim under the act and his breach of contract claim. Because Jensen failed to follow the requirements necessary to bring a cause of action under Minn.Stat. § 317A.467 (2000), and because Jensen failed to establish damages to support a breach of contract claim, we affirm.

FACTS

On October 2, 2001, Jensen was running on the track at the YMCA in an attempt to finish 32 laps (two miles) in 20 minutes. Jensen was preparing to take his military physical training test for his position in the National Guard. During his second mile, a group of children came out onto the track and “essentially enveloped” Jensen. Jensen allegedly yelled at the children “get out of the way or I’ll run you over.”

The next two times Jensen came around the track, he found himself surrounded by children again. Unable to avoid contact, Jensen bumped into some children on the track. Jensen allegedly struck one child on the behind and pushed others out of the way.

The Executive Director of the YMCA, Jeffrey H. Palmer, notified the Board Executive Committee that he was inquiring into the incident and that he would make a decision regarding whether to terminate a member. Palmer interviewed the adults who were in the area during the altercation. He also consulted the incident reports from Jensen, the aquatics director, the swim coaches, and the gymnastics coach who were all present. After hearing Jensen’s version of the incident, Palmer terminated Jensen’s YMCA membership.

Jensen thereafter sued the YMCA. Following discovery, the YMCA moved for summary judgment. The district court granted summary judgment on four of Jensen’s five claims; the parties agreed to dismiss the remaining claim, which alleged defamation. On appeal, Jensen only challenges the dismissal of his claim under the act and his breach of contract claim.

ISSUES

1. Did the district court err in granting summary judgment on the claim alleging a violation of the Minnesota Nonprofit Corporation Act?

2. Did the district court err in granting summary judgment on the breach of contract claim?

ANALYSIS

On appeal from summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). “A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993).

I.

Jensen argues that the district court erred in granting summary judgment to the YMCA on his claim under the Minnesota Nonprofit Corporation Act (the act). Jensen argues that the YMCA violated Minn.Stat. § 317A.411 (2000), which provides that a membership may not be terminated “except pursuant to a procedure that is fair and reasonable and is carried out in good faith.” Id., subd. 1. The statute further provides that a procedure is fair and reasonable if it provides “not less than 15 days’ prior notice” of the termination and the reason for it, and “an opportunity for the member to be heard ... not less than five days before the effective date of the ... termination.” Id., subd. 2(1), (2).

The following facts are undisputed: (1) Jensen’s YMCA membership was terminated after the October 2, 2001 incident; (2) a meeting between Jensen and Palmer took place on October 3, 2001 regarding the incident and Jensen’s continued membership at the YMCA; (3) Jensen received a termination letter dated October 3, 2001; and (4) the letter was accompanied by payment for Jensen’s unused portion of his membership.

MinnStat. § 317A467

The YMCA contends that even if it failed to follow the procedures for terminating a membership, which it does not concede, Jensen did not meet the requirements to bring a cause of action under the act. Specifically, the YMCA argues that the remedy for a violation of MinmStat. § 317A.411 is set out in Minn.Stat. § 317A.467 (2000), which provides:

If a corporation or an officer or director of the corporation violates this chapter, a court in this state, in an action brought by at least 50 members with voting rights or ten percent of the members with voting rights, whichever is less, or by the attorney general, may grant equitable relief it considers just and reasonable in the circumstances and award expenses, including attorney fees and disbursements, to the members.

It is undisputed that Jensen did not meet the requirements of this statute.

Jensen argues that this statute does not apply to his cause of action because it is only meant to cover ultra vires actions of the corporation. MinmStat. § 317A.467, however, does not refer to ultra vires acts and is found in the section of the act addressing membership. A general comment to the act notes that the threshold number of members required “is intended to be high enough to prevent frivolous actions that drain potentially limited resources of nonprofit corporations, while still allowing a minority of members to act.” MinmStat. Ann. § 317A.165 gen. cmt. (West 2004). Jensen insists that because this comment follows MinmStat. § 317A.165, the statute that specifically addresses ultra vires acts, only actions involving ultra vires acts fall within the requirement for a threshold number of members. We disagree. The comment recognizes that “this is the threshold number of members required throughout the act in order to initiate certain member actions.” Thus, the fact that the comment follows Minn.Stat. § 317A.165 does not limit the threshold member requirement to suits challenging ultra vires acts.

Jensen next argues that MinmStat. § 317A.467 does not apply because he is not seeking equitable relief. His complaint, however, seeks relief not only in the form of damages, but also reinstatement of his membership without condition. Reinstatement of his membership constitutes an equitable remedy.

Lastly, Jensen argues that this court should avoid the absurd result of not allowing a member terminated in violation of the act to bring a cause of action without support from the threshold number of members. Jensen asks that this court reconcile Minn.Stat. §§ 317A.467 and 317A.411, and grant individual members rights in such situations. Given the general comment, which indicates that the purpose behind the threshold number is to protect nonprofit corporations from frivolous lawsuits, we do not believe that the result reached here is absurd. Additionally, Minn.Stat. § 317A.467 begins with an explanation that it applies when “a corporation or an officer or director of the corporation violates this chapter.” We therefore conclude that a member alleging a violation of MinmStat. § 317A.411 must meet the requirements of Minn.Stat. § 317A.467, in order to initiate an action against the nonprofit corporation.

The district court did not err in granting summary judgment to the YMCA on Jensen’s claim that the YMCA violated the act.

Minn.Stat. § 8.81

Jensen alternatively argues that he can maintain his action under Minn.Stat. § 8.31, subd. 3a (2000), which provides:

In addition to the remedies otherwise provided by law, any person injured by a violation of any of the laws referred to in subdivision 1 [which includes violations of the Nonprofit Corporation Act] may bring a civil action and recover damages, together with costs and disbursements, including costs of investigation and reasonable attorney’s fees, and receive other equitable relief as determined by the court.

This statute, referred to as the Private Attorney General Statute, has been held to apply only to claimants who demonstrate that their cause of action benefits the public. See Ly v. Nystrom, 615 N.W.2d 302, 313-14 (Minn.2000).

In Ly, 615 N.W.2d at 313, the supreme court stated that “[s]ince the Private AG Statute grants private citizens the right to act as a ‘private’ attorney general, the role and duties of the attorney general with respect to enforcing the fraudulent business practices laws must define the limits of the private claimant under the statute.” The court further stated that “[t]he duty of the attorney general’s office ... is the protection of public rights and the preservation of the interests of the state.” Id. Consequently, claimants under the Private Attorney General Statute must show that their cause of action benefits the public. Id. at 314. The holding in Ly thus limits the scope of the Private Attorney General Statute from “any person” injured by a violation of certain laws to those “who demonstrate that their cause of action benefits the public.” Id. (footnote omitted).

Here, Jensen challenges the termination of his individual membership. His claim relates to a single one-on-one incident that affected only him. A successful prosecution of Jensen’s claim that the YMCA violated the act would not advance any state interest or be of any benefit to the public. Jensen’s claim cannot be considered within the duties and responsibilities of the attorney general to investigate and enjoin. Thus, the district court did not err in granting summary judgment to the YMCA on Jensen’s claim under the Private Attorney General Statute.

II.

Jensen argues that the district court erred by granting summary judgment on his breach of contract claim. A breach of contract claim fails as a matter of law if the plaintiff cannot establish that he or she has been damaged by the alleged breach. See Logan v. Norwest Bank Minn., N.A., 603 N.W.2d 659, 663 (Minn.App.1999); Nguyen v. Control Data Corp., 401 N.W.2d 101, 105 (Minn.App.1987). “[T]here can be no recovery for damages which are remote, conjectural, or speculative.” Carpenter v. Nelson, 257 Minn. 424, 428, 101 N.W.2d 918, 921 (1960). But damages need not be proved with certainty; it is legally sufficient that a reasonable basis for approximating loss is shown. Polaris Indus. v. Plastics, Inc., 299 N.W.2d 414, 419 (Minn.1980).

After the termination of Jensen’s membership from the YMCA, he joined the University of Minnesota Duluth Recreation Sports Program at an annual cost of $545; his YMCA membership was $510. Jensen contends that the difference in the cost of these memberships constitutes his damages. Jensen’s membership with the YMCA, however, ran for only one year; after that year, either party was free to terminate the membership. It is undisputed that the YMCA reimbursed Jensen the unused portion of his yearly membership. The cost of a membership at another health club cannot be considered consequential damages, because it was not something foreseeable at the onset of the contract. See Kleven v. Geigy Agric. Chems., 303 Minn. 320, 324, 227 N.W.2d 566, 569 (1975) (stating that direct damages arise out of the breach itself, while consequential damages are damages fore-seeably resulting from the breach). We therefore conclude that the district court did not err in granting summary judgment on Jensen’s breach of contract claim.

DECISION

Because Jensen failed to meet the requirements to bring a cause of action under Minn.Stat. § 317A.467 (2000) or Minn. Stat. § 8.31, subd. 3a (2000), and failed to show damages to support his breach of contract claim, the district court did not err in granting summary judgment to the YMCA.

Affirmed.

      . We note that the YMCA’s bylaws also set out a procedure for termination of a membership based on activities inimical to the best interests of the YMCA. Those bylaws only require a member to be given "10 days’ notice in writing of the grounds for such termination, and [the member] shall be afforded a reasonable opportunity to be heard.”