author: LARSON, Justice. CADY, Justice CARTER, Justice

text:
    Frank HOLLAND, Loyal Rue and Marilyn Rue, Appellants, and Norwin Nesheim, Jaerdis Nesheim, James Fritz and Elizabeth Fritz, Plaintiffs, v. CITY COUNCIL OF DECORAH and Wal-Mart Stores, Inc., Appellees.
    No. 00-2113.
    Supreme Court of Iowa.
    April 2, 2003.
    As Amended on Denial of Rehearing June 16, 2003.
    Karl G. Knudson, Decorah, for appellants.
    Richard D. Zahasky, Decorah, for appel-lee City Council of Decorah.
    Mark McCormick, Charles F. Becker, and Margaret C. Callahan of Belin Lam-son McCormick Zumbach Flynn, P.C., Des Moines, for appellee Wal-Mart Stores, Inc.
   LARSON, Justice.

This is an appeal in a certiorari case brought by landowners along the Upper Iowa River in Decorah to block the filbng of a portion of the floodplain for the purpose of building a Wal-Mart Super Center. The defendants are Wal-Mart and the City Council of Decorah, to which we will cobectively refer as Wal-Mart. The district court annulled the writ of certiorari, allowing the project to go forward, and the plaintiffs appealed. The court of appeals reversed, concluding the city council had exceeded its statutory authority in permitting the fill. We agree.

I. Facts and Prior Proceedings.

Under Iowa Code section 455.275(3) (1999), Wal-Mart was required to seek permission from the Iowa Department of Natural Resources (DNR) before filling, excavating, or building on the floodplain. The DNR granted Wal-Mart’s application to place fill and excavate on at least part of the property.

In reliance on City Ordinance section 17.120.020, Wal-Mart applied to the Deco-rah City Council for a permit to place fill on the floodplain. That ordinance provides this with respect to floodplains in the city:

Principal permitted uses. Only the uses of structures or land listed in this section shall be permitted in the F-l floodplain district:
A. Agriculture, truck gardening, and nurseries, and the usual accessory buildings, but not including livestock feedlots or poultry farms or similar uses; provided, that no permanent dwelling units shall be erected thereon;
B. Forests and forestry preserves, wildlife areas;
C. Publicly owned parks, nature areas, playgrounds, golf courses and similar noncommercial recreational uses;
D. Any use erected or maintained by a public agency, public and private parking lots;
E. Public utility structures, subject to approval of the board of adjustment, except those utilities and structures constructed by the city;
F. Dumping of approved materials for landfill purposes, subject to prior approval of the city council and appropriate state agencies.

(Emphasis added.) The last use, “F,” is relied on by Wal-Mart, and the interpretation of that provision lies at the heart of this appeal.

In July 1999, before Wal-Mart applied to the city council, it wrote to the Decorah City Administrator to say Wal-Mart would be applying to the board of adjustment for a special exception to the floodplain ordinance. However, the application was never filed. On August 15, 2000, Wal-Mart’s representatives appeared before the city council, which, by a four-to-three vote, approved Wal-Mart’s request to fill the property. The fill request was presented and granted as part of a plan to build a Wal-Mart Super Center on the site. However, the council’s vote only approved the fill; it did not change the zoning of the area or approve a site plan.

A neighboring floodplain owner, Upper Iowa Marine (UIM), also wanted to fill its property in order to construct a building. UIM applied to the board of adjustment for a special exception to the zoning ordinance. (UIM, like Wal-Mart, had previously obtained a permit from the DNR to fill the floodplain.) The board of adjustment denied UIM’s fill request, finding it was inconsistent with Decorah’s comprehensive zoning plan. The board of adjustment concluded:

Upper Iowa Marine has not met its burden of showing evidence that the granting of the special exception and subsequent filling of the site won’t adversely affect public interest.

II. Authority of the Board of Adjustment.

The plaintiffs argue that Wal-Mart’s request to place fill on the floodplain should have been submitted to the board of adjustment, as Upper Iowa Marine had done, and not to the city council because that is what Iowa Code section 414.7 requires:

The council shall provide for the appointment of a board of adjustment and in the regulations and restrictions adopted pursuant to the authority of this chapter shall provide that the said board of adjustment may in appropriate cases and subject to appropriate conditions and safeguards make special exceptions to the terms of the ordinances in harmony with its general purpose and intent and in accordance with general or specific rules therein contained and provide that any property owner aggrieved by the action of the council in the adoption of such regulations and restrictions may petition the said board of adjustment direct to modify regulations and restrictions as applied to such property owners.

(Emphasis added.)

Under section 414.12,

[t]he board of adjustment shall have the following powers:
2. To hear and decide special exceptions to the terms of the ordinance upon which such board is required to pass under such ordinance.

We have explained the rationale underlying the dual-board (board of adjustment and city council) approach under chapter 414:

Standard zoning laws quite uniformly provide for a zoning commission, to hold hearings and make report to the city council. On such report, the city council adopts an ordinance defining the boundaries and describing the various uses that may be made of the land in the use districts laid out, and the height of the structures in the height area districts. It would be impracticable, if not impossible, for the city council to hold hearings and make decisions in respect to the classifications and restrictions of each individual property, while manifestly a rigid adherence to invariable district lines and designated uses and classifications and height regulations therein would in many cases work unnecessarily individual injustice and hardship, and not only invalidate the zoning as to them, but, by their unreasonable or confiscatory operation as to some, imperil the constitutionality of the ordinance as to all. In order to avoid an unreasonable and arbitrary and unconstitutional operation of the law in specific instances, and also to provide a local board to pass upon individual cases, resort is had to a zoning board of appeal, or in this state to the board of adjustment.

Anderson v. Jester, 206 Iowa 452, 457, 221 N.W. 354, 357 (1928) (citations omitted).

While Iowa Code section 414.7 states the board of adjustment “may ... make special exception to the terms of the ordinance” (emphasis added), this clearly does not mean some other entity, such as a city council, is empowered to do it if the board does not. In fact, our cases make it clear that such matters are the responsibility of the board of adjustment, not the city council. See, e.g., City of Des Moines v. Lohner, 168 N.W.2d 779, 784 (Iowa 1969) (“These powers [under section 414.12] are placed exclusively in the board [of adjustment] and effectively restricted by statute.”); Depue v. City of Clinton, 160 N.W.2d 860, 862 (Iowa 1968) (“[I]s the jurisdiction of the board of adjustment, conferred by sections 414.7 and 414.12, an exclusive jurisdiction? We think the answer! ][is] affirmative.... ”).

III. Prior Iowa Cases.

In Depue the plaintiffs were neighbors who challenged the action of the Clinton City Council in granting a special-use permit authorizing the construction of a nursing home in their neighborhood, which was zoned R-l residential by a 1965 zoning ordinance. The nursing home promoters petitioned the city council to rezone their tracts from R-l to R-3, which would permit a nursing home. The city council did not act on the rezoning petition, following a negative recommendation by its city planning commission. Depue, 160 N.W.2d at 860-61.

The nursing home promoter then applied to the council for a special-use permit. The city planning commission recommended against it. The matter was never referred to the board of adjustment, but it was nevertheless approved by the city council. Id. at 861. The city had an interesting ordinance that provided for “special use” applications to be filed with the city council and “special exception” proceedings to be handled by the board of adjustment. We held the ordinance provision that permitted special-use applications to be part of the council’s jurisdiction to be void, and the council’s action under it to be invalid as well. Id. at 862. We said:

There can be little doubt that power conferred on the board by state statute may not be limited by city ordinance. Insofar as this ordinance conflicts with section 414.12, subd. 3 [delineating powers of the board of adjustment], the statute controls.

Id. at 863. We held the council had no jurisdiction to act on the application for special use. We explained the rationale for limiting jurisdiction to the board of adjustment.

[WJhere a legislative body establishes standards in advance, the application of those standards to a specific situation is an administrative or quasi-judicial act. The application cannot be handled by the legislative body that created the standard without danger of contravening the separation of powers doctrine. When the Iowa legislature mandated a board of adjustment, whose members are appointed for long terms on a staggered basis, and provided for appeal directly to the courts, it eliminated the objection. Thus the constitutional issue does not arise.

Depue, 160 N.W.2d at 864 n. 5.

In Lohner the city council ruled that Lohner could no longer use his land for a salvage yard, even though the operation was initially legal. 168 N.W.2d at 780. The city ordered cessation of the salvage operation on the strength of this ordinance:

3. The uses hereinafter listed shall be permitted subject to approval by the city council after public hearing, and after report and recommendation by the plan commission. If any application under this section of the ordinance shall have been denied by the city council, then no new application covering the same property and additional property shall be filed with or considered by the city council until one (1) year from the date of the filing of the first application. In its determination upon the particular uses at the location requested, the city council shall consider all of the following provisions!.]

Id. Lohner had been operating his salvage yard under a 1965 ordinance that specifically allowed salvage yards in the area designated as M-2, heavy industry, in the city’s comprehensive plan. In effect, the city attempted to “unauthorize” a use previously and expressly allowed as a use in the comprehensive plan. We held this was improper because issues such as special exceptions must be resolved by the board of adjustment. We said:

‘We are satisfied from our examination of the statute [chapter 414] and the terminology used by the courts and other authorities in dealing with zoning problems that ‘special exceptions’ includes ‘special uses,’ and that both must be placed within the jurisdiction of the board of adjustment.” This being so, we must hold the council’s attempt to provide for its own determination and approval of special uses in paragraph 3 ... is in conflict with chapter 414 of the Code and therefore ineffective and void.

Lohner, 168 N.W.2d at 783 (quoting Depue, 160 N.W.2d at 864); see also Roger A. Cunningham, Land Use Control — The State and Local Programs, 50 Iowa L.Rev. 367 (1965).

It is clear that the planning commission may be used in a recommendatory capacity, and it is also clear that the board of adjustment itself can be reduced to a recommendatory role. Consequently, some municipalities have sought to bypass the board of adjustment entirely, providing that the local governing body shall grant “special exceptions” or “special use permits” on recommendation of the planning commission. Whether such a procedure will be generally sustained in the courts is not clear.

Cunningham, 50 Iowa L.Rev. 400-01 (footnotes omitted). It is clear, for the reasons to be discussed, that Iowa does not allow a council to bypass boards of adjustment.

IY. The Decorah Ordinance.

Wal-Mart contends the council’s grant of permission to fill Wal-Mart’s land was not a “special use” because “dumping of approved materials” in the floodplain is listed as a “principal permitted use” (emphasis added) under ordinance section 17.120.020(F). It seeks to distinguish Lohner and Depue on that basis.

As to a “permitted use,” Wal-Mart argues, the council has only a “limited, technical review” to determine compliance with city or state regulations. These review responsibilities, according to Wal-Mart, were limited to (1) a simple yes or no response to the question of whether Wal-Mart had obtained a fill permit from the DNR and (2) whether the fill material was free from waste materials. Wal-Mart contends the council was not obliged to examine any broader issues, such as whether the proposed change was consistent with the city’s comprehensive plan.

It is true, as Wal-Mart argues, the ordinance in Lohner, that we struck down as being beyond the jurisdiction of the city council, prescribed detailed inquiries and findings to be made by the city council. The ordinance in Lohner provided for notice and hearing on special-use applications presented to the city council and stated:

In its determination upon the particular uses at the location requested, the city council shall consider all of the following provisions....
5. That such use shall be in accord with the intent, purpose and spirit of this ordinance and the comprehensive plan of the city of Des Moines.

Lohner, 168 N.W.2d at 780. In contrast, the Decorah ordinance on which Wal-Mart relies requires no findings by the council except the abbreviated inquiries described above. Wal-Mart contends that this is a basis for distinguishing Lohner. We believe in fact the effect of the ordinances, as applied by the city councils, are the same. The ordinances were interpreted by the respective city councils to grant powers in each case to the council that chapter 414 vests in boards of adjustment. The ordinance in the present case, if interpreted as Wal-Mart urges, would grant authority to the city council to rule on applications to fill floodplains with only a perfunctory review of the circumstances (DNR approval and the quality of the fill) without any inquiry on essential issues surrounding such a matter such as the impact on a city’s comprehensive plan.

Zoning must be in accordance with a comprehensive plan. Iowa Code § 414.3; Wolf v. City of Ely, 493 N.W.2d 846, 849 (Iowa 1992); Brackett v. City of Des Moines, 246 Iowa 249, 256-57, 67 N.W.2d 542, 546 (1954). We have noted

[a] majority of courts in states where zoning must be “in accordance with a comprehensive plan” hold a plan external to the zoning ordinance is not required. However, an increasing number of legislatures specifically require that a plan be adopted. The “comprehensive plan” requirement was imposed to prevent piecemeal and haphazard zoning. The word “plan” connotes an integrated product of a rational process; the word “comprehensive” requires something beyond a piecemeal approach.

Wolf, 493 N.W.2d at 849 (citations omitted).

V. The Council Meeting.

Wal-Mart’s application to fill came up for consideration at a regular meeting of the city council at 7:30 p.m. on August 15, 2000. Seven members of the council were present, as well as a number of interested residents. The mayor opened the discussion to the public allocating “thirty to forty-five” minutes for discussion. Loyal Rue, one of the plaintiffs in this appeal, commented that it would be inappropriate to approve the fill application while an appeal of the DNR permit was pending. Another resident’s letter, which was read into the minutes, said in part, “if we let them put in fill before rezoning we are putting the cart before the horse.” The minutes also showed that person “wondered, why, when other communities are taking structures out of the floodplain at great cost, we are in a rush to build in ours.” Others asked what would happen if the fill was in place and plans for construction of the store were rejected — specifically, who would be responsible for removing it.

Another resident noted the “planning and zoning commission” had not approved the application. He suggested there be a public hearing on the application and said “granting permission will be contrary to city policy.” Another noted that UIM had lost its bid with the board of adjustment to fill its land and, according to the minutes, that person “wondered if [UIM], a small local business which was turned down by the Board of Adjustment, would be able to come back now that ‘big business’ has made this request.”

Others raised environmental issues and questions about where the fill would be obtained. One speaker, apparently alluding to Wal-Mart’s influence, said, “They come, they ask, they get.” According to the minutes, one individual’s concern was more practical: “Now that he knows Wal-Mart has taken care of the floodplain issue his only concern is what is going to be in the deli section.”

Other residents spoke in favor of Wal-Mart’s plan, one accusing the opponents of “just [wanting] to stall progress in Deco-rah.” The same person questioned whether the land was even a floodplain, saying “I’ve spoken with eighty-nine and ninety-year-old men and they have never seen water on that land.”

A council member suggested some type of compromise, that the matter be studied further, and that a task force be formed, saying, “This doesn’t need to be decided tonight.” This suggestion failed, and at the end of the time allotted by the mayor for public discussion, the mayor announced an end to the discussion. The council voted four to three to approve the application. The meeting was obviously heated. The minutes noted one resident “was shocked by the low level both sides have resorted to and feels the language used has been inappropriate.”

The issuance of special-use permits is quasi-judicial or administrative. Johnson v. Bd. of Adjustment, 239 N.W.2d 873, 885 (Iowa 1976) (citing Lohner, 168 N.W.2d at 784). The problems with allowing a political, legislative body such as a city council to rule on applications of this nature (in addition to lacking statutory authority) are apparent in this case. The city council had no hearing procedures, notice requirements, or the type of guidelines that would govern the board of adjustment.

Even on the cold minutes of the meeting, it is apparent the council would have known by the time the discussion was concluded, if they did not already know, they had a tiger by the tail. The residents were deeply divided on the issue, raising concerns about the environmental impact, the fairness of the proceedings (especially in view of the fact the board of adjustment had denied a similar permit), and the prospect of 120,000 cubic yards of fill being placed in the floodplain in the event the DNR appeal was successful or the construction plans were thwarted for some other reason.

VI. Disposition.

Decorah’s comprehensive plan expressly provides for the integrity of its floodplains. Goal number five is:

To provide that in the development and implementation of all land-use plans and policies, protection of the environment is ensured, including:
a. Aesthetic quality; archeological, historic, and cultural values; the unique geology of the area, and the woodlands and wetlands.
c. The floodplains' of the planning area as natural resources that should be preserved for use ■ as permanent open space for parks and recreational uses and for wildlife protection.
d. Regulation of development in the floodplains to protect life and property, prevent water pollution, and reduce costs to taxpayers.

The city council did not .discuss or make any findings with respect to the city’s comprehensive plan, as far as the record shows.

We conclude this case does not turn on the question of whether the “permitted use” language of section 17.120.020(F) is actually a special use or special exception, as the plaintiffs claim' — or whether, as Wal-Mart claims, it is a broad grant of powers to the council. If, in fact, the permitted use under this section is construed as- a special use or a special exception, the case is controlled by Lohner and Depue, and the council’s actions were void. Wal-Mart does not challenge that.

If, on the other hand, the ordinance is applied as a broad grant of authority by the council to itself, the application of the ordinance is illegal. As we noted in Loh-ner,

the council’s attempt to provide for its own determination and approval of special uses ... is in conflict with chapter 414 of the Code and therefore ineffective and void.

168 N.W.2d at 783.

If Wal-Mart’s interpretation of ordinance section 17.120.020(F) is correct, the ordinance would violate Iowa Code section 414.3, which requires ordinances to comply with the city’s comprehensive plan. Under Wal-Mart’s interpretation, the ordinance grants broad authority to the council to alter the character of the floodplain without any consideration of the city’s comprehensive plan. By assuming, through the ordinance, the authority to decide this issue, the council has violated Iowa Code sections 414.7 and 414.12, concerning the jurisdiction of the board of adjustment. To the extent the council has claimed authority to grant the fill permit in this case, it has diminished the jurisdiction of the board of adjustment. As we have said,

[t]he board [of adjustment] having been created, its jurisdiction is fixed by statute, not by city ordinance.
There can be little doubt that power conferred on the board by state statute may not be limited by city ordinance. Insofar as this ordinance conflicts with [the statute] the statute controls.

Depue, 160 N.W.2d at 863.

We conclude the actions taken by the city council in reliance on its interpretation of ordinance section 17.120.020(F) are null and void. We therefore affirm the decision of the court of appeals and reverse the judgment of the district court. We remand to the district court for an order sustaining the writ of certiorari.

DECISION OF COURT OF APPEALS AFFIRMED; JUDGMENT OF DISTRICT COURT REVERSED; CASE REMANDED.

All justices concur except CADY, J., who concurs specially, and CARTER, J., who dissents.

CADY, Justice

(concurring specially).

I agree with the position taken by the dissent. The board of adjustment has no role in this proceeding. The ordinance in dispute only authorizes the city council to approve “dumping ... for landfill purposes.” This power granted to the city council does not interfere with the comprehensive plan of the city or the role of the board of adjustment. Nevertheless, I agree with the result reached by the majority because the request submitted by Wal-Mart did not constitute “dumping ... for landfill purposes.” It was, in reality, a request to transform the character of the land to change the permitted use of the land. The ordinance was never contemplated to be used in such a manner. It did not apply to this case and the city council had no authority to grant the request.

CARTER, Justice

(dissenting).

I dissent.

The statute establishing the role of the board of adjustment provides that

[t]he council shall provide for the appointment of a board of adjustment and in the regulations and restrictions adopted pursuant to the authority of this chapter shall provide that the said board of adjustment may in appropriate cases and subject to appropriate conditions and safeguards make special exceptions to the terms of the ordinances....

Iowa Code § 414.7 (emphasis added). Wal-Mart’s request to place fill in the floodplain did not require any special exception to the local ordinance. That ordinance by its terms permitted that use subject to approval by the city council. In no way can the granting of that approval be considered to be a “special exception” to the terms of the local ordinance. Consequently, the board of adjustment has no role to play in this proceeding.

The issue in the Lohner case did involve an exception to a local ordinance and, consequently, unlike the present case, did call for action by the board of adjustment.

If there is some reason that the type of ordinance that the City of Decorah adopted in the present case is invalid, the appellants have certainly failed to point out that reason. I would affirm the judgment of the district court.

      . DNR's permit covered most, but not quite all, of Wal-Mart’s property. Under our disposition, it is unnecessary to consider whether this is a fatal defect in the council’s proceedings, as the plaintiffs argue.

      . Wal-Mart attributes considerable weight to the fact that the DNR had approved a filling proposal. However, even assuming the city council could validly delegate to the DNR the authority to effect a change in the city’s comprehensive plan, the floodplain approved by the DNR was of a smaller dimension. The city's comprehensive plan covered areas subject to inundation by a 29,000-cubic-feet-per-second flood, while the DNR standard covers only a 22,300-cubic-feet-per-second flood area.


source: Caselaw Access Project

author: MAHAN, J.

license: Public Domain

text:
    STATE of Iowa, Plaintiff-Appellee, v. Lawrence Merle VANDER ESCH, Defendant-Appellant.
    No. 01-1342.
    Court of Appeals of Iowa.
    Nov. 15, 2002.

      Francis Goodwin of Baron, Sar, Goodwin, Gill & Lohr, Sioux City, for appellant.
    Thomas J. Miller, Attorney General, Sheryl A. Soich, Assistant Attorney General, and Mark J. Schouten, County Attorney, for appellee.
    Heard by VOGEL, P.J., and MAHAN and EISENHAUER, JJ.
   MAHAN, J.

Lawrence Vander Esch appeals his conviction, based on a guilty plea, on four counts of sexual abuse in the third degree, in violation of Iowa Code sections 709.1 and 709.4(1) (2001). Vander Esch claims section 709.1(1) does not permit a conviction for sexual abuse on a theory of fraud or deception. He also claims the language of the statute does not give fair notice of the conduct prohibited by the statute. We affirm.

I. Background Facts and Proceedings

Vander Esch was a co-owner of Pizza Ranch restaurants. In June 1998 he asked a young male employee, John Doe #1, if he would be willing to donate a sample of semen for a scientific research project. Doe # 1 was promised fifty dollars for a successful donation, and he agreed to the procedure. Vander Esch showed Doe # 1 his own penis “to make him feel comfortable.” Vander Esch then put a condom on Doe # 1, and when the procedure was finished he “milked” the penis to “get out all the semen,” then took the condom off. He tied the condom, and put it on ice, stating it would be sent to a laboratory for testing. He later told Doe # 1 his sperm count was not high enough for him to be paid for the sample. Similar circumstances occurred on a second occasion with Doe # 1, and on two occasions with John Doe # 2, who was also a young male employee at the restaurant. Vander Esch was never authorized by any scientific body to collect human semen samples. The victims indicated they would not have consented to these sex acts if they had known no legitimate research project existed.

Vander Esch was charged with four counts of third-degree sexual abuse under section 709.4(1) (“The act is done by force or against the will of the other per-son_”). He filed a motion to dismiss, claiming the young men had consented to the sexual contact. He relied on section 709.1(1), which defines sexual abuse as a sex act under the following circumstances:

The act is done by force or against the will of the other. If the consent or acquiescence of the other is procured by threats of violence toward any person or if the act is done while the other is under the influence of a drug inducing sleep or is otherwise in a state of unconsciousness, the act is done against the will of the other.

Vander Esch claimed section 709.1(1) set forth the only means recognized in Iowa to negate consent, and that fraud and deceit do not negate consent.

The district court looked at section 709.5, which states, “the circumstances surrounding the commission of the act may be considered in determining whether or not the act was done by force or against the will of the other.” The court concluded section 709.1(1) gave examples of conduct that were “against the will,” but did not exclude other possible means. The court concluded:

Since Iowa law allows the consideration of all surrounding circumstances, the minutes of testimony in this case, if unexplained, would warrant a conviction. The harm Iowa’s law seeks to prevent is the same whether sexual contact is obtained through threats of violence, drugs, or deception. A fair reading of Chapter 709 gives adequate notice that sexual contact obtained through deceit is sexual abuse.

After the district court denied his motion to dismiss, Vander Esch pled guilty to the charges against him. He was sentenced to concurrent terms of. imprisonment not to exceed ten years. Vander Esch appeals.

II. Standard of Review

We review matters of statutory construction for the correction of errors at law. State v. Randle, 603 N.W.2d 91, 92 (Iowa 1999).

III. Statutory Construction

We apply the rules of statutory construction only when the explicit terms of a statute are ambiguous. State v. Schweitzer, 646 N.W.2d 117, 120 (Iowa Ct.App.2002). A statute is ambiguous if reasonable persons could disagree as to its meaning. IBP, Inc. v. Harker, 633 N.W.2d 322, 325 (Iowa 2001). The supreme court has stated:

to resolve ambiguity and ultimately determine legislative intent [the court] consider[s] (1) the language of the statute; (2) the objects sought to be accomplished; (3) the evils sought to be remedied; and (4) a reasonable construction that will effectuate the statute’s purpose rather than one that will defeat it.

Id. (citations omitted).

When we engage in statutory construction, the fundamental rule is to ascertain and, if possible, give effect to the intention or purpose of the legislature as expressed in the statute. Stille v. Iowa Dep’t of Transp., 646 N.W.2d 114, 116 (Iowa Ct.App.2001). Statutes regarding sex offenses are common examples of the employment of strict liability intended to protect the public welfare. State v. Christensen, 414 N.W.2d 843, 846 (Iowa Ct.App.1987).

In considering section 709.1(1), Vander Esch relies on the doctrine of in-clusio unius est exclusio alterius, which means that when certain items are listed, there is an inference that the exclusion of other items is intentional. See TLC Home Health Care, L.L.C. v. Iowa Dep’t of Human Servs., 638 N.W.2d 708, 716 (Iowa 2002). He claims that under section 709.1(1), consent or acquiescence is negated only if: (1) it was procured by threats of violence toward any person; (2) the victim is under the influence of a drug inducing sleep; or (3) the victim is otherwise in a state of unconsciousness. He asserts that because the legislature listed only these three items, these are the only means statutorily recognized to negate consent in Iowa. He points out that fraud and deceit are not listed in section 709.1(1).

We note the rule that inclusion implies exclusion is a useful tool of statutory construction, but it is subordinate to the primary rule that legislative intent governs statutory interpretation. State v. Carpenter, 616 N.W.2d 540, 543 (Iowa 2000). The rule does not apply if there is a special reason for mentioning one thing and none for mentioning another which is otherwise within the statute. Id. at 544. In addition, the rule is not applied where there is no evidence of legislative intent for it to apply. Id.

Under section 4.4(2), we presume an entire statute is intended to be effective. State v. Lewis, 514 N.W.2d 63, 69 (Iowa 1994); Schweitzer, 646 N.W.2d at 120 (“A statute should be construed so that effect will be given to all of its provisions, and no part is superfluous or void.”). In chapter 709, section 709.1(1) is not the'only provision which deals with whether an act is done by force or against the will of another. We determine the district court properly looked to section 709.5, which provides:

Under the provisions of this chapter it shall not be necessary to establish physical resistance by a person in order to establish that an act of sexual abuse was committed by force or against the will of the person. However, the circumstances surrounding the commission of the act may be considered in determining whether or not the act was done by force or against the will of the other.

(Emphasis added.) This section means all the. circumstances, subjective as well as objective, should be considered. State v. Plaster, 424 N.W.2d 226, 233 (Iowa 1988); State v. Bauer, 324 N.W.2d 320, 322 (Iowa 1982).

In looking at all of the provisions of chapter 709, we concur in the district court’s conclusion that in section 709.1(1), “the legislature intended to give examples of conduct that is ‘against the will,’ while not excluding other possible means.” Van-der Esch’s interpretation of section 709.1(1) would make superfluous or void the provision of section 709.5 to consider all of the circumstances, surrounding the act, contrary to the mandate of section 4.4(2).

IV. Types of Fraud

Vander Esch also contends cases from other jurisdictions do not support the district court’s interpretation of chapter 709 because these cases interpret different statutes. The State concedes the statutes of other states differ from Iowa’s sexual abuse statute.

Vander Esch goes on to argue:

The standard of voluntary consent which the district court adopted would open the door to litigation far beyond anything contemplated by the legislature. ■ The claims of lack- of consent based on deception under that standard would easily include that “he didn’t really love me, he just said he did to get me into bed” and “it wasn’t voluntary because I would never have agreed if I had known he was married.”

On this issue we look to a distinction made by courts of other states. In Boro v. Superior Court, 163 Cal.App.3d 1224, 210 Cal.Rptr. 122, 124 (1985), the court noted:

if deception causes a misunderstanding as to the fact itself (fraud in the factum) there is no legally-recognized consent because what happened is not that for which consent was given; whereas consent induced by fraud is as effective as any other consent, so far as direct and immediate legal consequences are concerned, if the deception relates not to the thing done but merely to some collateral matter (fraud in-the inducement).

(quoting R. Perkins & R. Boyce, Criminal Law (3d ed.1982) ch. 9, § 3, p. 1079).

In Boro, the victim consented to sex after the defendant told her she had a “dangerous, highly infectious and perhaps fatal disease” which could be cured by having sexual intercourse with a person who had been injected with a serum. The court concluded this was fraud in the inducement, which did not vitiate consent. Boro, 210 Cal.Rptr. at 126. The victim had clearly understood the nature of the act, but had “succumbed to petitioner’s fraudulent blandishments.” Id.

In other cases, however, where consent was to a pathological and not a carnal act, this is considered to be fraud in the fac-tum, and not merely fraud in the inducement. People v. Ogunmola, 193 Cal.App.3d 274, 238 Cal.Rptr. 300, 304 (1987). In Ogunmola, the victims consented to a gynecological examination, but instead of a speculum, the doctor inserted his penis into their vaginas and the court concluded the victims had not consented to the nature of the act which was performed. Id. See also State v. Ely, 114 Wash. 185, 194 P. 988, 991 (1921).

In McNair v. State, 108 Nev. 53, 825 P.2d 571, 572-73 (1992), the victims likewise had consented to a gynecological examination, but as the Nevada court found, “Unfortunately, the trusting patients discovered that they had unwittingly positioned themselves for an anal penile penetration by their physician.” The court concluded that when a defendant had obtained sexual intercourse by means of fraud, legally recognized consent is negated. McNair, 825 P.2d at 574. The victims had consented to one thing, and the defendant did something materially different. Id. We note that like our Iowa statute, the Nevada statute “only requires the commission of the act of sexual penetration against the will of the victim.” Id.

Two Illinois cases are also instructive. In People v. Costello, 224 Ill.App.3d 500, 166 Ill.Dec. 784, 586 N.E.2d 742 (1992), the defendant posed as a medical doctor and offered the victim a free medical examination, which including touching her breasts and vagina. The court stated, “There is no evidence to suggest that [the victim] would have consented to defendant’s acts of sexual penetration if she was aware that defendant was not the doctor he represented himself to be,” and concluded, “undoubtedly this deception took away [the victim’s] ability to give knowing consent to these acts.” Costello, 166 Ill.Dec. 784, 586 N.E.2d at 748. In People v. Quinlan, 231 Ill.App.3d 21, 172 Ill.Dec. 749, 596 N.E.2d 28 (1992), the defendant, a respiratory therapist, told the victim she needed a special test, in which he placed his fingers in her rectum and vagina. The court found the victim had consented to an invasive medical procedure, not to sexual acts, and concluded her consent was vitiated because it was received through deceit. Quinlan, 172 Ill.Dec. 749, 596 N.E.2d at 31.

As in the cases outlined above, the victims in the present case consented to a pathological, or medical, procedure. They did not consent to be participants in a sex act. Thus, the fraud in this case is fraud in the factum, and not fraud in the inducement. When consent is caused by fraud in the factum, there is no legally-recognized consent. See Boro, 210 Cal. Rptr. at 124. The statements and fears outlined by Vander Esch above clearly come within the ambit of fraud in the inducement, which does not negate consent. Thus, we believe our holding will not open the door to excessive litigation.

V. Due Process

Vander Esch claims the district court’s ruling violates the Due Process Clause because section 709.5 fails to give fair notice of the conduct prohibited by that ruling. He did not raise this issue in his motions to dismiss. Because this constitutional claim was not asserted in district court, it will not be considered on appeal. See State v. Leutfaimany, 585 N.W.2d 200, 209 (Iowa 1998).

We affirm Vander Esch’s convictions for third-degree sexual abuse.

AFFIRMED.

HUITINK, J., takes no part.

      . At various times Vander Esch represented he was authorized to collect semen samples by the University of Iowa, Iowa State University, or the Sioux County Public Health Nurse. Vander Esch indicated human sperm samples were required for "prostate” cancer research.

      . One victim was promised $30,000 for something "[he did] every day.” He was shown a cash register receipt and told Vander Esch could set up direct tuition payments.

      . Vander Esch explained to the victims that he had worked for the Sioux County Public Health Nurse and was specially trained to apply and remove a "collection device”. He explained that he needed to be present during the procedure to prevent air exposure to the semen sample during removal of the condom and to "certify” the identity of the donor.

      . In one instance, Vander Esch and a victim drove to the University of Iowa Hospitals where Vander Esch went through the motions of carrying a semen sample into the hospital. The victim stayed in the car and was informed Vander Esch had deposited the sample for evaluation.

      . It is clear no one was ever paid, and that Vander Esch told all the victims their sperm counts were too low to qualify for payment. He urged the victims to tiy again and advised them they could achieve higher sperm counts if they were willing to let someone else perform the procedure on them.

      . In response to Boro, the California legislature amended its laws to include a new offense called “Inducing consent to sex act by fraud or fear.” Patricia Falk, Rape by Fraud and Rape by Coercion, 64 Brook. L.Rev. 39, 111 (1998).


author: MEYER, Justice. HANSON, Justice BLATZ, Chief Justice

text:
    George JANSSEN, et al., Respondents, v. BEST & FLANAGAN, et al., Defendants, and Minneapolis Police Relief Association, Petitioner, Appellant.
    No. CX-01-2207.
    Supreme Court of Minnesota.
    May 22, 2003.

      Patrick J. McLaughlin, Eric Moutz, Dorsey & Whitney, LLP, Minneapolis, for appellant.
    William J. Mavity, Pamela Marie Miller, Mavity & Associates, Minneapolis, for respondents.
    Martin J. Costello, Hughes & Costello, St. Paul, for Amicus Curiae, Minnesota Teamsters Joint Council 32, et al.
   OPINION

MEYER, Justice.

We are called on to decide certain questions of first impression regarding the law of nonprofit corporations in Minnesota. The principal issue concerns how a nonprofit board may respond to a member’s demand to commence legal action on behalf of the association. We also consider the degree of deference that a district court may give to a nonprofit board’s decision to reject a member’s demand to commence legal action.

The board of directors of the Minneapolis Police Relief Association (MPRA) made an improvident investment in a company known as Technimar and lost approximately fifteen million dollars. Certain members of MPRA (Janssen, et al., whom we will refer to collectively as “Janssen”) brought a derivative suit on behalf of MPRA against Best & Flanagan alleging attorney malpractice with respect to the Technimar investment. MPRA appointed special counsel to review the merits of the derivative suit. Special counsel concluded that proceeding with the derivative suit would not be in the best interests of MPRA and MPRA moved to dismiss the suit. The district court treated special counsel as a special litigation committee, applied the business judgment rule to the committee’s decision not to proceed with the derivative action, and dismissed Jans-sen’s suit. The court of appeals reversed, concluding that the legislature had not granted nonprofit corporations authority to appoint special litigation committees, and the district court was precluded from deferring to the decision of MPRA’s special counsel. MPRA petitioned for review, seeking a reversal of the court of appeals’ decision.

MPRA is a Minnesota nonprofit corporation that administers a pension plan for Minneapolis police officers hired before June 15, 1980. Minn.Stat. § 423B.01-.04 (2002). MPRA was formed under and is subject to Minn.Stat. ch. 317A (2002), the Minnesota Nonprofit Corporation Act, and is governed by a board of nine directors. See Minn.Stat. § 423B.05, subd. 1 (2002).

In 1996 and 1997, MPRA lost approximately fifteen million dollars that it had invested with David Welliver in a company called Technimar. The circumstances surrounding this loss were the subject of several investigations and at least two prior lawsuits. The most important aspect of this history for the instant case is that two law firms, Jones, Day, Reavis and Pogue (Jones Day) and Dorsey & Whitney, LLP (Dorsey Whitney), had already conducted investigations surrounding some of the issues.

Janssen alleges in this action that MPRA’s former attorneys, Best & Flanagan, committed malpractice in representing MPRA during and after the Welliver investments were made in 1996 and 1997. Janssen alleges, among other claims, that Best & Flanagan attorneys served as general counsel to MPRA and were negligent in failing to conduct a “due diligence” inquiry into the Welliver investment. In bringing this derivative suit, Janssen did not have an attorney-client relationship with Best & Flanagan, so their suit depended upon MPRA joining them as a plaintiff.

In response to this lawsuit, MPRA appointed attorney Robert A. Murnane (Murnane) as special counsel to investigate Janssen’s claims and determine whether MPRA should join the derivative suit. The MPRA board issued a resolution in June of 2000 instructing Murnane to conduct an independent review and evaluate the derivative lawsuit to determine on behalf of MPRA’s board of directors whether or not MPRA should join in legal action against Best & Flanagan. The resolution specifically instructed Murnane to “not re-investigate, verify or otherwise attempt to prove or disprove the factual findings, determinations, events or circumstances” described in the prior investigative reports of Jones Day and Dorsey Whitney and a set of discovery materials in a related lawsuit. Murnane was specifically instructed to “accept as correct” the factual findings of these reports and discovery materials. Murnane was not limited, however, by the conclusions of the previous reports.

Murnane reviewed “thousands of pages of reports, documents and deposition transcripts” over a few months in investigating the merits of a malpractice action against Best & Flanagan. However, the record does not indicate that he conducted any of his own investigation, nor did he personally speak to the Janssen claimants or their counsel. Murnane submitted his report to the MPRA board on September 26, 2000, concluding that “the totality of the materials reviewed does not support a finding that Best & Flanagan committed legal malpractice in its handling of the MPRA affairs,” and that “to spend money in the pursuit of a legal malpractice claim against Best & Flanagan would not be prudent use of the MPRA funds.” Following submission of Murnane’s report, the MPRA board brought a motion to dismiss the instant lawsuit under the principle of law that the court should defer to the business judgment of Murnane, MPRA’s special litigation committee.

In considering MPRA’s motion to dismiss, the district court described the appropriate role that special litigation committees play in acting on behalf of for-profit corporations. The court determined that a nonprofit corporation is also authorized to utilize the special litigation committee procedure. The court treated Mur-nane as a special litigation committee and applied the business judgment rule to the committee’s report. Under the business judgment rule enunciated by the court, it examined only whether the committee conducted its investigation with independence and good faith. The court concluded that “[Murnane’s] investigation cannot survive even this limited review.” The court could not find that Murnane was independent because “he was told by the board of directors what to believe.” The court could not find good faith because there was no indication from Murnane that he sought or received input from the plaintiffs and the court was left to assume that such input was not sought because the board’s instructions limited the scope of the investigation. Finally, the court could not clearly discern whether Murnane was offering legal advice or, in fact, rendering a business judgment decision.

Rather than deny MPRA’s motion to dismiss the Janssen lawsuit, the district court postponed a decision on the motion to allow MPRA an opportunity to remedy the deficiencies in MPRA’s delegation of authority to its special litigation committee. The court instructed MPRA that if it sought deference for its committee’s litigation decision, the court would not grant such deference unless and “until adequate evidence of independence and good faith is submitted by the MPRA, and until it is clear that Murnane has rendered a business judgment.”

Consequently, MPRA issued a second resolution in December of 2000 to Mur-nane, declaring that he was to function as a special litigation committee, not being limited in any way as to how to conduct his investigation or what material he may consider: “[slpecial counsel shall have complete independence and may undertake whatever good faith investigation he chooses.” The resolution asked Murnane to exercise his “business judgment” regarding whether it was in the best interest of MPRA to join in the derivative suit. Mur-nane conducted an investigation that included meeting with certain of the named plaintiffs in the action and the involved attorneys at Best & Flanagan. Murnane submitted a second report and in that report concluded it would be a “poor business judgment” for MPRA to join in litigation against Best & Flanagan. MPRA renewed its motion to dismiss. The district court reviewed Murnane’s second report and concluded that MPRA’s special litigation committee (Murnane) had conducted an investigation that was independent and conducted in good faith. The court deferred to the committee’s business judgment and granted MPRA’s motion to dismiss the complaint against Best & Flanagan.

Janssen appealed and the court of appeals reversed. It concluded that a nonprofit corporation lacks the statutory authority to appoint a special litigation committee to evaluate derivative claims. Additionally, the court concluded that even if a nonprofit corporation has the authority to appoint a special litigation committee, in this ease the special litigation committee failed to meet the threshold test of the business judgment rule. The court reversed and remanded for trial. This appeal followed.

I.

We concern ourselves with two questions: (1) whether the Minnesota Nonprofit Corporations Act prohibits a nonprofit corporation’s board of directors from establishing an independent committee with authority to make decisions about derivative lawsuits; and (2) whether Mur-nane, as special counsel, displayed sufficient independence and good faith to be entitled to the deference of the business judgment rule. We exercise de novo review of the primary issues in this case, as they involve statutory interpretation and novel questions of law. State v. Loge, 608 N.W.2d 152, 155 (Minn.2000). We also note that other states have recently held that they will review de novo a decision of a district court to dismiss a derivative suit. See Brehm v. Eisner, 746 A.2d 244, 253 (Del.2000); In re PSE & G S’holder Litig., 173 N.J. 258, 801 A.2d 295, 313 (2002).

A. The Business Judgment Rule and Derivative Lawsuits

To resolve this case we must strike a balance between two competing interests in the judicial review of corporate decisions. See PSE & G, 801 A.2d at 306. On one hand, courts recognize the authority of corporate directors and want corporations to control their own destiny. Stoner v. Walsh, 772 F.Supp. 790, 796 (S.D.N.Y.1991). On the other hand, courts provide a critical mechanism to hold directors accountable for their decisions by allowing shareholder derivative suits. See Barrett v. Southern Conn. Gas Co., 172 Conn. 362, 874 A.2d 1051, 1055 (1977) (remarking that “ W the duties of care and loyalty which directors owe to their corporations could be enforced only in suits by the corporation, many wrongs done by directors would never be remedied’ ” (citation omitted)); Brown v. Tenney, 125 Ill.2d 348, 126 Ill. Dec. 545, 532 N.E.2d 230, 232 (1988) (stating that “[t]he derivative suit is a device to protect shareholders against abuses by the corporation, its officers and directors, and is a vehicle to ensure corporate accountability”). Because shareholder-derivative litigation is not an everyday occurrence in Minnesota’s courts, we address these issues for the first time.

Courts have attempted to balance these two competing concerns by establishing a “business judgment rule” that grants a degree of deference to the decisions of corporate directors. The business judgment rule was developed by state and federal courts to protect boards of directors against shareholder claims that the board made unprofitable business decisions. “The business judgment rule is a presumption protecting conduct by directors that can be attributed to any rational business purpose.” Dennis J. Block, et al., The Business Judgment Rule: Fiduciary Duties of Corporate Directors 18 (5th ed.1998). The business judgment rule means that as long as the disinterested director(s) made an informed business decision, in good faith, without an abuse of discretion, he or she will not be liable for corporate losses resulting from his or her decision. Id. at 39. Two major reasons buttress the decision to grant a degree of deference to corporate boards. First, protecting directors’ reasonable risks is considered positive for the economy overall, as those risks allow businesses to attract risk-averse managers, adapt to changing markets, and capitalize on emerging trends. Second, courts are ill-equipped to judge the wisdom of business ventures and have been reticent to replace a well-meaning decision by a corporate board with their own. See, e.g., Auerbach v. Bennett, 47 N.Y.2d 619, 419 N.Y.S.2d 920, 393 N.E.2d 994, 1000 (1979).

Where the shareholders of a corporation believe the board has acted improperly, corporate law recognizes the shareholders’ ability to bring a derivative lawsuit. Derivative suits allow shareholders to bring suit against wrongdoers on behalf of the corporation, and force hable parties to compensate the corporation for injuries so caused. Tenney, 126 Ill.Dec. 545, 532 N.E.2d at 233. A derivative action actually belongs to the corporation, but the shareholders are permitted to bring the action where the corporation has failed to take action for itself. See id. Because of the business judgment rule, however, not all shareholders’ derivative suits proceed on their merits. While derivative suits may benefit a corporation, any benefit must be weighed against the possibility that disgruntled shareholders will bring nuisance lawsuits with little merit and that even legitimate suits may not be worth pursuing when the likelihood of victory is compared with the time, money, and hostility necessary to win. The substantive decision about whether to pursue the claims advanced in a shareholder’s derivative action involves “the weighing and balancing of legal, ethical, commercial, promotional, public relations, fiscal and other factors familiar to the resolution of many if not most corporate problems.” Auerbach, 419 N.Y.S.2d 920, 393 N.E.2d at 1002. The careful balancing of those factors is best done by the board of directors, which is familiar with the appropriate weight to attribute to each factor given the company’s product and history. Thus, courts apply the business judgment rule when evaluating the decision by a board of directors whether to join or quash a derivative suit belonging to the corporation. Block, supra, at 1702-03.

Having established the principles by which we apply the business judgment rule to a for-profit corporate board’s decision whether to join a derivative lawsuit, we consider whether to grant similar deference to nonprofit boards of directors. The parties in this case have presumed the business judgment rule will apply to MPRA. Other states have applied the business judgment rule to decisions of nonprofit corporations, explicitly or implicitly. The highest courts of Alabama, Hawaii, and South Dakota have done so, as have intermediate appellate courts of Colorado, New York, Ohio, South Carolina, Tennessee, and Wisconsin. We find no case denying a nonprofit organization the protection of the business judgment rule.

In addition to finding support in other jurisdictions for giving judicial deference to nonprofit corporate decisions, the primary rationales for applying the business judgment rule in the for-profit context apply in the nonprofit context as well. Organizations are autonomous agents that should control their own destiny. See Auerbach, 419 N.Y.S.2d 920, 393 N.E.2d at 1000-01. Directors of nonprofits may take fewer risks than would be optimal if they were overly concerned about liability for well-meaning decisions. See Daniel R. Fischel & Michael Bradley, The Role of Liability Rules and the Derivative Suit in Corporate Law: A Theoretical and Empirical Analysis, 71 Cornell L.Rev. 261, 270 (1986). Additionally, courts are not well-equipped to scrutinize the decisions of a corporation; judges should not be caught in the middle of fighting factions of nonprofits any more than they should be thrust between dissatisfied shareholders and profit-seeking boards. See id. at 273. Therefore, we conclude that the boards of nonprofit corporations may receive the protection of the business judgment rule.

B. Special Litigation Committees

We turn now to consider whether a nonprofit board of directors that is not sufficiently independent to decide whether to join a member’s derivative lawsuit may establish a special litigation committee with authority to make the decision. Janssen claims a nonprofit may not appoint a special litigation committee because the Minnesota Nonprofit Corporation Act (Nonprofit Act) provides no such authority. Minn.Stat. § 317A.241 (2002). MPRA argues'that the Nonprofit Act permitted them to appoint Murnane as its special litigation committee, and the district court agreed. The court of appeals concluded that the statute prohibited nonprofits from appointing special litigation committees. We agree with the district court.

Special litigation committees are made up of disinterested board members or individuals appointed by the board who are charged with informing themselves fully on the issues underlying the derivative suit and deciding whether pursuit of litigation is in the best interests of the corporation. See, e.g., Houle v. Low, 407 Mass. 810, 556 N.E.2d 51, 53 (1990); Drilling v. Berman, 589 N.W.2d 503, 505-07 (Minn.App.1999); PSE & G, 801 A.2d at 303. The key element is that the board delegates to a committee of disinterested persons the board’s power to control the litigation. Block, supra, at 1689. A mere advisory role of the special litigation committee fails to bestow a sufficient legitimacy to warrant deference to the committee’s decision by the court. If the board properly delegates its authority to act to the special litigation committee, the court will extend deference to the committee’s decision under the business judgment rule. See Drilling, 589 N.W.2d at 510; Skoglund v. Brady, 541 N.W.2d 17, 22 (Minn.App.1995); Black v. NuAire, Inc., 426 N.W.2d 203, 211 (Minn.App.1988).

C. Minnesota Nonprofit Corporations Act

We look to the Nonprofit Act to determine whether MPRA had statutory authority to appoint its special litigation committee. The relevant part of the statute reads:

A resolution approved by the affirmative vote of a majority of the board may establish committees having the authority of the board in the management of the business of the corporation to the extent provided in the resolution. Committees are subject at all times to the direction and control of the board.

Minn.Stat. § 317A.241, subd. 1 (2002).

The first inquiry in statutory interpretation is whether the law is ambiguous. See Minn.Stat. § 645.16 (2002). If the words are clear and unambiguous, “the letter of the law shall not be disregarded under the pretext of pursuing the spirit.” Id. MPRA argues the statute unambiguously allows nonprofit boards to create independent committees. It maintains that the statute does not limit the types of committees that nonprofits can create in any way, thereby making litigation committees acceptable. In addition, MPRA posits that the phrase “subject at all times to the direction and control of the board” does not strip the committees of the independence necessary for the protection of the business judgment rule. Instead, it argues that “subject * * * to” simply indicates a “possibility of control,” not a necessity of constant control.

Janssen also argues that the statute is unambiguous but urges a contrary meaning: a committee that must be “subject to” the “control” of the board cannot be sufficiently independent from the board to deserve the protection of the business judgment rule. Janssen also points to subdivision 5 of the statute, noting that a director cannot fulfill his or her standard of conduct by delegating authority to the board, as an indication that nonprofit directors have to retain control over all board committees.

The language in subdivision 1 indicating that committees must be subject to the board’s control and direction could reasonably be interpreted to mean either that the board must control every move of the committees, or simply that the board has a duty to oversee the work of the committees. The former interpretation would make true independence impossible, while the latter interpretation is flexible enough to allow for independent committees. As both parties’ interpretations are plausible, we conclude the statute is not clear and free from all ambiguity.

If the words of a statute are not explicit, we interpret the statute’s meaning by considering the intent of the legislature in drafting the law. Minn.Stat. § 645.16 (2002). There are three overarching considerations we consider in discerning legislative intent in this case: the context of the 1989 revision of the Nonprofit Act, contemporaneous legislative history, and consequences of a particular interpretation. Id. We will address each of these in turn. In addition, we presume that the legislature did not intend an absurd result or to violate the Constitution, and that it intended the entire statute to have effect and favor the public interest. Minn.Stat. § 645.17 (2002).

The 1989 revision of the Nonprofit Act was carried out eight years after the legislature enacted a wholesale revision of the Minnesota Business Corporation Act (Business Act), Minn.Stat. ch. 302A (2002), in 1981. See Minnesota Business Corporation Act of 1981, ch. 270, §§ 1-125, 1981 Minn. Laws 1141-1222. Shortly after the revised Business Act was adopted, the Minnesota State Bar Association organized a group to study the counterpart statute for nonprofits, and found it was outdated and unworkable, with many ambiguities. Hearing on H.F. 1203, H. Subcomm. Civil Law, 76th Minn. Leg., April 24, 1989 (audio tape) (comments of Kathleen Pontius). The act had not been revised since 1951, when the archetypal nonprofit in legislators’ minds was a social club like the Jaycees or Rotary. Hearing on H.F. 1203, H. Subcomm. Civil Law, 76th Minn. Leg., April 24, 1989 (audio tape) (comments of Patrick Plunkett, president of Ramsey County Bar Ass’n). This original conception made the statute a poor fit for the growing number and variety of nonprofit organizations, and for the lawyers who served them. Id. A legislative committee drafted a new statute governing nonprofits, with three major sources: the Business Act, the ABA’s Revised Model Nonprofit Act, and Minnesota’s old nonprofit act. Hearing on H.F. 1203, H. Subcomm. Civil Law, 76th Minn. Leg., April 24, 1989 (audio tape) (comments of Rep. Thomas Pugh, bill’s sponsor).

Minnesota Statutes § 317.241 was passed in the context of a wholesale revision of the Nonprofit Act. The legislature did not pass the statute to specifically address the committee structure of nonprofits or their ability to control derivative suits. We conclude that the legislature’s purpose in revising the Minnesota Nonprofit Corporations Act in 1989 had nothing to do with special litigation committees, and sheds little light on our inquiry.

We next examine the contemporaneous legislative history to determine legislative intent. In reaching its decision that the legislature did not intend to empower nonprofit boards to create special litigation committees, the court of appeals emphasized the difference between the Business Act and the Nonprofit Act on this subject. The Business Act specifically says a board of directors may establish special litigation committees of one or more directors “to consider legal rights or remedies of the corporation and whether those rights and remedies should be pursued. Committees other than special litigation committees * * * are subject at all times to the direction and control of the board.” Minn. Stat. § 302A.241, subd. 1 (2002) (emphasis added). The court of appeals was concerned that not only does the Nonprofit Act lack a specific provision for special litigation committees, it also does not exempt any committees from board control.

The comparison between the Business Act and the Nonprofit Act does not illuminate as much legislative intent as the court of appeals derived, however. The Nonprofit Act was passed eight years after the Business Act, making any attempt to infer meaning from a comparison between the two less convincing. A careful review of the available legislative history produced no discernible indication why the special litigation committee language was dropped. The absence of the special litigation language in the nonprofit statute could mean several things, including that the drafters did not think derivative suits were an issue for nonprofits and therefore did not address litigation committees in the Nonprofit Act.

Given that little legislative intent concerning section 317A.241 can be inferred from either the purpose of the 1989 revision of the Nonprofit Act or the comparison with the Business Act, we are left with one remaining consideration in discerning legislative intent under Minn.Stat. § 645.16: the consequences of a particular interpretation. On this point it becomes clear that the district court reached the correct result. The district court noted that if nonprofit corporate boards are unable to establish independent committees whose informed business judgments merit deference from the courts, the judiciary would be forced to review the merits of every lawsuit brought by a member of a nonprofit corporation. Reviewing all derivative suits for nonprofit corporations would intrude on the authority of nonprofit boards, significantly tax our court system’s limited resources, and require judges to step significantly beyond their expertise. The district court concluded that “[s]uch a procedure — totally removing from the board of directors any control over litigation brought on behalf of the organization the board is supposed to govern — is clearly untenable.” We agree. We see no reason to assume that the courts are better equipped to make business judgments about the merits of a lawsuit brought by a member of a nonprofit corporation than is a properly functioning board of directors whose duty it is to govern and promote the nonprofit corporation’s best interests.

There are no characteristics of nonprofits that justify treating nonprofit and for-profit corporations differently in terms of their ability to delegate board authority to independent committees to review the merits of derivative suits. There are nonprofits, like MPRA, that function very-much like for-profit corporations and would benefit from the ability to weed out nuisance suits. In addition to pension funds, these nonprofits may include hospitals, schools, and homeowners associations. We are not alone in reaching this conclusion; two other states have used the business judgment rule when reviewing decisions by nonprofit litigation committees: Finley v. Superior Court, 80 Cal.App.4th 1152, 96 Cal.Rptr.2d 128, 132 (2000); Miller v. Bargaheiser, 70 Ohio App.3d 702, 591 N.E.2d 1339, 1343 (1990).

Refusing nonprofit corporations the ability to create special litigation committees is counter to our common law tradition as well. While statutes govern certain aspects of corporate life, including the initial incorporation, corporate litigation has been largely a creature of the common law. Derivative suits developed during the nineteenth century as an equitable means of protecting corporations and minority shareholders from fraudulent directors. Block, supra, at 1380. The first judicial opinions to apply the business judgment rule to the decision of a special litigation committee did not rely on statutory authority, but rather relied upon case law to determine whether a committee could terminate a shareholder lawsuit. Block, supra, at 1690-93.

A nonprofit corporation’s power to appoint a special litigation committee, in the absence of a statutory prohibition, may also spring from the existence of corporate “incidental” powers to carry out corporate purposes. Aiple v. Twin City Barge & Towing Co., 274 Minn. 38, 45, 143 N.W.2d 374, 378 (1966) (identifying corporate powers as being limited to “those actions expressly authorized by statute and such as are incidental thereto and necessary to carry them into effect”). It is now universally accepted in corporate jurisprudence that corporations have the ability to exercise incidental or necessary powers:

Formerly, corporations were viewed as possessing only such powers as were specifically granted to them by the state. This grant of powers was found in the certificate of incorporation * * * or in the special statute granting a charter to the corporation.
⅜ ⅜ ‡ ⅜
Today, in all the states, a corporation is deemed to possess all the powers of a natural person except those powers which are specifically forbidden to such corporations by the law. The old concept of a corporation as a bundle of only a few, specifically granted powers, has been replaced by the concept of a corporation as an artificial person, lacking only those powers which the law specifically denies to it.

Howard L. Oleck, Non-Profit Corporations, Organizations, & Associations § 168 (6th ed.1994); see also 13 William Meade Fletcher, et al., Fletcher’s Cyclopedia of the Law of Private Corporations § 5963 (perm.ed., rev.vol.1984).

The untenable consequence of concluding the Nonprofit Act prohibits litigation committees, in combination with the common law tradition favoring corporate control of derivative actions, leads us to conclude that nonprofit corporations have the power to create committees that are sufficiently independent to merit judicial deference. We hold the Minnesota Nonprofit Corporations Act does not prohibit corporations from appointing independent committees with the authority to decide whether the corporation should join a member’s derivative suit.

II.

Having determined that nonprofit corporations have the power to create special litigation committees, the question remains whether Murnane deserved the deference of the business judgment rule. The court of appeals concluded that Murnane, as a special litigation committee, failed to meet the threshold test of independence and good faith, and ordered the lawsuit to proceed. We agree and affirm.

All the state variations upon the business judgment rule as applied to committees reviewing litigation have two common elements. At a minimum, the board must establish that the committee acted in good faith and was sufficiently independent from the board of directors to dispassionately review the derivative lawsuit. See, e.g., Grimes v. Donald, 673 A.2d 1207, 1219 (Del.1996); Houle, 556 N.E.2d at 59; PSE & G, 801 A.2d at 312; Auerbach, 419 N.Y.S.2d 920, 393 N.E.2d at 1000. A key factor in evaluating independence is whether the board delegates to a committee of disinterested persons the board’s power to control the litigation. Block, supra, at 1689. A mere advisory role of the special litigation committee fails to bestow a sufficient legitimacy to warrant deference to the committee’s decision 'by a court. Thus, we consider whether Murnane conducted his investigation with sufficient independence and good faith to deserve the deference of the business judgment rule. If not, the committee does not receive the court’s deference and the derivative suit proceeds.

In reviewing Murnane’s first report, we conclude that the board failed to establish the independence and good faith of Murnane’s investigation. We agree with the district court’s determination that Murnane lacked independence because the MPRA’s initial resolution restricted his factual investigation. Murnane was told to rely on facts developed by law firms that had been hired to represent MPRA in lawsuits about other legal issues. Additionally, Murnane’s independence is suspect because his conduct suggests that he saw his role in conformance with his title: special counsel. Murnane did not talk to Janssen or their attorneys in investigating the suit and gave a conclusion that sounds like legal advice. That behavior belies MPRA’s attempt to portray Murnane as a special litigation committee; instead MPRA hired Murnane to serve as its special counsel and he acted more like a legal advisor than a neutral decision maker.

In addition, we conclude that Murnane did not engage in a good faith attempt to deduce the best interest of MPRA with respect to the litigation against Best & Flanagan. Murnane never interviewed Janssen or their attorneys, a fundamental task in reaching an informed decision about the merits of their complaints. Murnane also gave no indication that he had undertaken the careful consideration of all the germane benefits and detriments to MPRA that is indicative of a good faith business decision. Murnane opined that “the totality of the materials reviewed does not support a finding that Best & Flanagan committed legal malpractice in its handling of the MPRA affairs,” and that “to spend money in the pursuit of a legal malpractice claim against Best & Flanagan would not be prudent use of the MPRA funds.” The language of his conclusion hints that his decision was that of a special counsel evaluating the likelihood of a legal victory. But a much more comprehensive weighing and balancing of factors is expected in situations like this, taking into consideration how joining or quashing the lawsuit could affect MPRA’s economic health, relations between the board of directors and members, MPRA’s public relations, and other factors common to reasoned business decisions. See Auerbach, 419 N.Y.S.2d 920, 393 N.E.2d at 1002. We conclude that Murnane’s initial investigation of the derivative action instituted by Janssen against Best & Flanagan lacked the independence and good faith necessary to merit deference from this court.

Implicitly acknowledging the failures in its first resolution and investigation, the MPRA board urges us to consider the second resolution and improved investigation. We decline to do so. Generally, when the committee authorized with making a business decision for the corporation is found to lack the independence needed to grant summary judgment, or where the independence is uncertain, the derivative suit proceeds on its Merits. See, e.g., Hasan v. CleveTrust Realty Investors, 729 F.2d 372, 380 (6th Cir.1984); Will v. Engebretson & Co., Inc., 213 Cal.App.3d 1033, 1043-45, 261 Cal.Rptr. 868 (1989); Lewis v. Fuqua, 502 A.2d 962, 972 (Del.Ch.1985); Davidowitz v. Edelman, 153 Misc.2d 853, 858, 583 N.Y.S.2d 340 (Sup.Ct.1992). See also Houle, 556 N.E.2d at 58-60 (reversing summary judgment in favor of defendant board of directors and remanding for an evidentiary hearing before a judge regarding a committee member’s independence, and noting that “[u]nless the defendant sustains its burden of proof as to both of those questions, the case should proceed to trial.”). The Auerbach court was blunt in its assessment of the consequences when proof of an investigation shows that the investigation is too restricted in scope or so shallow in execution as to constitute a pretext; such proof “would raise questions of good faith * * * which would never be shielded by that doctrine.” Auerbach, 419 N.Y.S.2d 920, 393 N.E.2d at 1003 (emphasis added).

The practice of allowing derivative suits to proceed to trial if a corporate board’s initial attempt at a business decision fails the minimal requirements for judicial deference is supported by the principles underlying the application of the business judgment doctrine. We strike a balance between allowing corporations to control their own destiny and permitting meritorious suits by shareholders and members by limiting a board of directors to one opportunity to exercise its business judgment. See, e.g., Kaplan v. Wyatt, 484 A.2d 501, 508 (Del.Ch.1984) (explaining that if the court determines the litigation committee failed the minimal review of the business judgment rule, the “court shall deny the motion for such reason and need go no farther, the result being that the shareholder plaintiff may resume immediate control of the litigation”). If the courts allow corporate boards to continually improve their investigation to bolster their business decision, the rights of shareholders and members will be effectively nullified. We conclude that the district court erred in deferring MPRA’s motion to dismiss and permitting the board to remedy defects in its first grant of authority to Murnane. We further conclude that Mur-nane failed to conduct his initial investigation with sufficient independence and good faith to deserve the deference of the business judgment rule and, therefore, hold that the district court erred when it granted MPRA’s motion to dismiss the suit against Best & Flanagan.

Affirmed.

GILBERT, J., took no part in the consideration or decision of this case.

HANSON, Justice

(concurring in part, dissenting in part).

Although I concur with the decisions that boards of nonprofit corporations are protected by the business judgment rule, that nonprofit corporations may avail themselves of that rule by appointing a special litigation committee to decide whether the corporation should join a members’ derivative suit, and that Mur-nane may be viewed as a special litigation committee, I respectfully dissent on the decision to limit our review to Murnane’s first report. The district court did not base its dismissal order on Murnane’s first report because it concluded that procedural deficiencies precluded deference to Mur-nane’s recommendations. The district court granted MPRA’s motion to dismiss specifically on the basis of Murnane’s second report, concluding that it was entitled to deference because it reflected an independent investigation that was conducted in good faith.

I find no authority to support the majority opinion’s development of a “one strike you’re out” rule for conducting an investigation of claims made in a derivative action. The cases cited by the majority stand only for the proposition that the derivative action proceeds to trial when a motion to dismiss, based on the recommendation of a special litigation committee, is denied. They do not address the question of whether such denial is with prejudice to later renewal or, more specifically applicable here, whether the district court has discretion to defer ruling on the motion to dismiss to allow further investigation. Drawing on the analogy to summary judgment motions generally, the federal decisions are unanimous in holding that the denial of a motion for summary judgment does not become the “law of the case” so as to preclude the later grant of a renewed motion. See, e.g., Paulson v. Greyhound Lines, Inc., 628 F.Supp. 888, 891 (D.Minn.1986), and cases cited in 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 2718 n. 6 (1998). This rule has been recognized by the Minnesota Court of Appeals in Invest Cast, Inc. v. City of Blaine, 471 N.W.2d 368, 370 (Minn.App.1991); Brantner v. Fruehauf Corp., 1991 WL 10225 (Minn.App.). Even more to the point are those cases which hold that it is within the trial court’s discretion to deny a motion for summary judgment without prejudice to it being renewed at a later time. See Wright, Miller and Kane § 2718 n. 5; 2 David F. Herr & Roger S. Haydock, Minnesota Practice § 56.11 (1998).

For these reasons, I would not limit review to Murnane’s first report. Under these facts, where the deficiencies of the first report resulted from structural impediments imposed by the corporation upon the scope of the special litigation committee’s investigation, I would conclude that the district court has discretion to defer (or to deny without prejudice) a motion to dismiss to allow the corporation an opportunity to remove those structural impediments.

Moreover, I would conclude that MPRA did remove the structural impediments to Murnane’s investigation and that Mur-nane’s second report did reflect sufficient independence and good faith to warrant dismissal.

In reaching this conclusion, I am persuaded that the deficiencies in Murnane’s first report were not the product of any wrongdoing by Murnane, but instead were the necessary result of the structural impediments imposed by MPRA. That conclusion is confirmed by the majority opinion’s review of Murnane’s first report, which concludes that “Murnane lacked independence because the MPRA’s initial resolution restricted his factual investigation.” The resolution of the MPRA board, authorizing Murnane’s continuing investigation after his first report, was appropriately broad:

Special Counsel is not required to assume as correct any portion of the previous reports prepared on behalf of the Board of Directors. Special Counsel is encouraged to solicit facts, argument and other input from the parties to the litigation in such manner and form as Special Counsel deems appropriate. Special Counsel is not limited in any way as to how to conduct his investigation or what material he may consider. Special Counsel shall have complete independence and may undertake whatever good faith investigation he chooses.

The fault in Murnane’s first report was cured by his further investigation and second report. Murnane interviewed Janssen and their attorneys, reviewed documents they provided and analyzed the arguments they presented. Murnane considered all of the germane benefits and detriments to MPRA of participating in the litigation.

There may be situations where an initial investigation by a special litigation committee is so tainted that an expanded investigation, at least by the same committee, could not cure the deficiencies in the required independence and good faith. For example, if there was evidence that Murnane had developed some bias or was committed to reach the same recommendation no matter what facts or arguments were brought to his attention, the second report would stand no better than the first. However, I see no evidence that this was the case.

Finally, I cannot agree with the majority opinion’s view that Murnane’s legal evaluation of the likely outcome of the derivative action somehow discredited the independence or good faith of his investigation. Although Murnane, as a special litigation committee, was expected to exercise the “business judgment” of a board of directors, that business judgment must be applied to the merits of the derivative action. The best interests of MPRA depend upon an objective assessment of whether the likely outcome of the derivative action justifies the expenditure of time, effort and collegiality. In such a cost-benefit analysis, the potential benefit depends directly upon the likelihood of a favorable outcome in the litigation — the less likely a favorable outcome, the less benefit.

Murnane’s report concludes that there would be no benefit to participating in the derivative action — “the association would be unsuccessful in prosecuting a cause of action against Best & Flanagan, Brian Rice and Charles Berquist” — but that the cost would be significant, despite the willingness of Janssen’s counsel to proceed on a contingent fee basis — “the ongoing viability of the association and a harmonious relationship between its board of directors and legal counsel” would be adversely affected. This is precisely the type of business judgment that a special litigation committee is expected to make and, when made in good faith by a committee that is independent of the corporation’s board, it is entitled to deference by the court. Accordingly, I would reverse the court of appeals and conclude that the district court did not err when it dismissed the derivative action based on Murnane’s second report and recommendation.

BLATZ, Chief Justice

(concurring in part, dissenting in part).

I join in the concurrence and dissent of Justice Hanson.

      . For a thorough discussion of the rationale behind judicial deference to business decisions, see Peter V. Letsou, Implications of Shareholder Diversification on Corporate Law and Organization: The Case of the Business Judgment Rule, 77 Chi.-Kent L.Rev. 179, 181-82 (2001); Eric W. Orts, The Complexity and Legitimacy of Corporate Law, 50 Wash. & Lee L.Rev. 1565, 1588 (1993); Ralph K. Winter, On ‘Protecting the Ordinary Investor,’ 63 Wash. L.Rev. 881, 895 (1988); Daniel R. Fischel & Michael Bradley, The Role of Liability Rules and the Derivative Suit in Corporate Law: A Theoretical and Empirical Analysis, 71 Cornell L.Rev. 261, 270-71 (1986).

      . See Fairhope Single Tax Corp. v. Rezner, 527 So.2d 1232, 1236 (Ala.1987); Chun v. Bd. of Trustees of the Employees’ Ret. Sys. of the State of Hawaii, 87 Hawaii 152, 952 P.2d 1215, 1226-27 (1998); Mahan v. Avera St. Luke’s, 621 N.W.2d 150, 154 (S.D.2001); Rywalt v. Writer Corp., 34 Colo.App. 334, 526 P.2d 316, 317 (1974); Scheuer Family Foundation Inc. v. 61 Associates, 179 A.D.2d 65, 582 N.Y.S.2d 662, 663 (1992); Solomon v. Edgewater Yacht Club, Inc., 35 Ohio Misc.2d 1, 519 N.E.2d 429, 431 (Mun.1987); Dockside Ass'n, Inc. v. Detyens, 291 S.C. 214, 352 S.E.2d 714, 716 (App.1987); Burke v. Tennessee Walking Horse Breeders’ & Exhibitors’ Ass’n, 1997 WL 277999, *9 (Tenn.Ct.App.1997); John v. John, 153 Wis.2d 343, 450 N.W.2d 795, 801-02 (Wis.Ct.App.1989).

      . Both Janssen and MPRA accepted the premise that the full MPRA board was not independent enough to merit judicial deference as a decision maker, and made no arguments about deferring to the decision of the board of directors to accept Murnane’s report. Thus, we are focusing on whether Murnane's decision is entitled to deference.

      . See Peter Frumkin & Alice Andre-Clark, Nonprofit Compensation and the Market, 21 U. Haw. L.Rev. 425, 427 (1999) (describing a lawsuit by a trustee of an educational organization against another trustee); Miller v. Bar-gaheiser, 70 Ohio App.3d 702, 591 N.E.2d 1339, 1341 (1990) (involving a derivative suit on behalf of a nonprofit hospital); Dockside Ass’n, 352 S.E.2d at 714 (involving a suit against a property association).

      . We do not adopt a particular version of the business judgment rule for use with Minnesota nonprofit organizations today. Because we hold that Murnane’s investigation failed the most minimal version of a business judgment rule, requiring that a litigation committee act in good faith, with independence, we need not reach the question of whether a more exacting standard of judicial review may be appropriate for nonprofit corporations than in the case of for-profit corporations. The members of nonprofits are not akin to diversified shareholders — any risk sustained by them cannot necessarily be spread among their other investments. Nor can they necessarily protect themselves by taking their assets elsewhere.

      . We note that the district court could have deferred the motion in order to simply supplement the record. However, there is a marked difference between allowing a corporation to supply documents that better indicate the process it employed in reaching its business decision, and allowing the corporation to reconst-inite its litigation committee and revamp its investigation. The former is permitted by a judge’s authority to continue a summary judgment motion to more "fully develop the record; the latter is not supported by the principles underlying the application of the business judgment doctrine.


author: /s/Paul H. Anderson Associate Justice

text:
    In re Petition for DISCIPLINARY ACTION AGAINST John V. NORTON, a Minnesota Attorney, Registration No. 79911.
    No. C2-03-102.
    Supreme Court of Minnesota.
    June 13, 2003.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent John V. Norton has committed professional misconduct warranting public discipline, namely, that respondent, beginning in at least 1999, misappropriated funds in excess of $60,000 from his trust account; failed to repay approximately $28,250 to his former client; failed to provide the client with either a proper accounting or release of her trust funds; made false statements to the client in order to conceal his misappropriation; failed to maintain required trust account books and records; and used his trust account for personal purposes, in violation of Minn. R. Prof. Conduct 1.4, 1.15(a), (c) and (h), 4.1 and 8.4(c) and (d).

Respondent has entered into a stipulation with the Director in which respondent withdraws his answer to the petition, acknowledges that under Rule 13(b), Rules on Lawyers Professional Responsibility (RLPR), the allegations in the petition are therefore deemed admitted, and waives his rights under Rule 14, RLPR. The parties jointly recommend that the appropriate discipline is disbarment and payment of $900 in costs and $108.25 in disbursements under Rule 24, RLPR.

This court has independently reviewed the file and approves the jointly recommended disposition.

Based upon all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that respondent John V. Norton is disbarred from the practice of law, effective immediately, and that he shall pay $900 in costs and $108.25 in disbursements under Rule 24, RLPR.

BY THE COURT:

/s/Paul H. Anderson Associate Justice