This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C3-96-1903

Donald Herbst,

Appellant,

vs.

Princeton Bank,

Respondent.

Filed June 10, 1997

Affirmed as modified

Holtan, Judge

[*]

Mille Lacs County District Court

File No. C8951062

Donald A. Herbst, 13690 25th Street N.E., P.O. Box 185, Foley, MN 56329 (appellant pro se)

Jeffrey R. Ansel, Winthrop & Weinstine, P.A., 3200 Minnesota World Trade Center, 30 East Seventh Street, St. Paul, MN 55101 (for respondent)

Considered and decided by Davies, Presiding Judge, Harten, Judge, and Holtan, Judge.

U N P U B L I S H E D O P I N I O N

HOLTAN, Judge

Appellant Donald Herbst filed a complaint in district court, seeking court-supervised mediation under the Farmer-Lender Mediation Act due to respondent Princeton Bank's alleged failure to participate in good faith voluntary mediation. The district court dismissed appellant's complaint for failure to state a claim upon which relief could be granted and ordered Herbst to pay $500 of the bank's attorney fees. We affirm as modified.

D E C I S I O N

When reviewing a dismissal under Minn. R. Civ. P. 12, the only question is whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Commissioner of Pub. Safety, 298 N.W.2d 29, 32 (Minn. 1980). A complaint must be dismissed if its allegations, even taken as true, do not support a claim for relief. Geldert v. American Nat'l Bank, 506 N.W.2d 22, 25 (Minn. App. 1993), review denied (Minn. Nov. 16, 1993).

During foreclosure proceedings initiated by the bank as mortgagee of property owned by Herbst, Herbst sought mediation under the Farmer-Lender Mediation Act, Minn. Stat. § 583.24. Although the bank questioned the applicability of the act, it nevertheless participated in mediation that was terminated without agreement on January 11, 1995. Herbst based his claim for court-supervised mediation on his assertion that the bank's participation in the mediation was not in good faith.

If the mediator finds the creditor has not participated in mediation in good faith, the debtor may require court supervised mandatory mediation by filing the [mediator's] affidavit with the district court * * *.

Minn. Stat. § 583.27, subd. 3 (1996).

Ten months after termination of the voluntary mediation, Herbst executed an affidavit of lack of good-faith mediation on which he based his complaint. However, a claim for supervised mediation requires the mediator to make a finding of bad faith. Minn. Stat. § 583.27, subd. 1 (1996); see also Production Credit Ass'n v. Spring Water Dairy Farm, Inc., 407 N.W.2d 88, 91 (Minn. 1987) (act requires finding of bad faith be made by mediator, not by district court). In spite of this requirement, Herbst argues that his cause of action is also supported by Minn. Stat. § 583.27, subd. 6 (1996), that provides in part:

(a) Upon petition by a debtor * * * a court may review * * * a mediator's failure to file an affidavit of lack of good faith of a creditor * * *. The review is limited to whether the mediator committed an abuse of discretion in * * * failing to file an affidavit of lack of good faith. * * *

(b) If the court finds that the mediator committed an abuse of discretion in * * * failing to file an affidavit of lack of good faith, the court may: (1) reinstate mediation and the stay of creditors' enforcement actions; (2) order court supervised mediation * * *.

While this subdivision does allow a debtor to petition a district court to review a mediator's failure to find bad faith, a court's review is limited to determining if the mediator abused her discretion. Herbst did not claim that the mediator abused her discretion by failing to find bad faith. Even if he had made such a claim, when Herbst's complaint was filed ten months after mediation terminated, the district court would not have abused its discretion by refusing to order supervised mediation. See id. (even where mediator abused discretion, court's decision to order relief is permissive).

The parties already participated in mediation, the mediator declined to submit an affidavit of lack of good-faith mediation, and Herbst did not claim that the mediator's failure to file the affidavit was an abuse of discretion. Under these circumstances, the district court properly dismissed Herbst's complaint.[1]

After the district court's March 22 order dismissing his complaint and before judgment was entered, Herbst brought a motion to amend findings and judgment and erroneously relied on Minn. R. Civ. P. 56. The bank characterized Herbst's motion as an improper motion to reconsider the court's order to dismiss.[2] The district court denied Herbst's motion and ordered him to pay $500 of the bank's attorney fees; however, that order was not made a part of the judgment. Nevertheless, Herbst attempts to appeal from the order for attorney fees.

The court's order for attorney fees could be considered one that was encompassed within the judgment under Minn. R. Civ. App. P. 103.03. But see American Family Mut. Ins. v. Peterson, 380 N.W.2d 495, 497 (Minn. 1986) (remanding to dismiss appeal until all issues, including attorney fees, are decided by judgment). Even if the order for attorney fees is not appealable because it was not part of the judgment, we grant discretionary review.

An objective standard of reasonableness applies to determine if a party should be sanctioned. Uselman v. Uselman, 464 N.W.2d 130, 143 (Minn. 1990) (applying Minn. R. Civ. P. 11). Even though a party's conduct may be sanctionable, a district court must follow procedural requirements before awarding fees under Minn. Stat. § 549.21 or Minn. R. Civ. P. 11. See Uselman, 464 N.W.2d at 143 (because focus of sanctions is deterrence, party should have procedural opportunity to correct future conduct before sanctions are imposed); Spicer, Watson & Carp v. Minnesota Lawyers Mut. Ins. Co., 502 N.W.2d 400, 405 (Minn. App. 1993) (holding Uselman procedural requirements apply to section 549.21 and holding no attorney fees can be awarded where the trial court fails to follow Uselman), review denied (Minn. Sept. 30, 1993). Here, the district court did not cite authority for its award, did not make qualifying findings, and did not give Herbst notice of its intention to sanction. Accordingly, the sanction was an abuse of discretion, and we modify that part of the court's order awarding the bank attorney fees. See Spicer, 502 N.W.2d at 405 (reversing attorney fee sanction where Uselman procedure not followed).

Affirmed as modified.

[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.

[ ]1 The district court also dismissed Herbst's complaint because he did not allege facts to establish his eligibility for mediation as a farmer under the act. We need not decide this issue. Even assuming Herbst was a farmer under the act, he still failed to allege facts to support his claim for court-supervised mediation.

[ ]2 We note that no rule of civil procedure provides for a motion to reconsider.