Lawrence H. Crosby, Crosby & Associates, 25 Empire Drive, St. Paul, MN 55103-1800 (for Appellants)

Jeff C. Braegelmann, Gislason, Dosland, Hunter & Malecki, P.L.L.P., One South State Street, P.O. Box 458, New Ulm, MN 56073 (for Respondents Agribank, Farm Credit Services, and Resch)

Mark B. Rotenberg, General Counsel, Tracy M. Smith, Associate General Counsel, University of Minnesota,, 325 Morrill Hall, 100 Church Street S.E., Minneapolis, MN 55455 (for Respondents Bloch and University of Minnesota)

Considered and decided by Kalitowski, Presiding Judge, Crippen, Judge, and Harten, Judge.

Appellants dispute the trial court's dismissal for failure to state a claim on the issue of mediator immunity. Appellants also claim causes of action against other defendants for failure to mediate in good faith and for breach of contract. We affirm.

At an April 20, 1994 mediation session, Resch orally indicated to the appellants that Farm Credit would accept the balance of the mortgage without certain "recaptured" obligations. Resch indicated that Farm Credit would accept either cash or a letter of commitment from another lender who would finance the balance. If appellants wished to pursue the settlement, either the cash or the letter of commitment was due by May 9, 1994. At the May 9 mediation session, appellants presented Resch with a letter from the president of 21st Century Bank of Balaton, Minnesota. In the letter, the bank president indicated that the bank was "interested in completing an application to submit to Rural Finance Authority" and that "it is safe to assume that the State of Minnesota would approve a loan." Resch did not consider the letter to be a definite letter of commitment and refused to accept it. Resch also claimed that the period in which to accept his offer had expired and that he would not accept any other letters. Appellants claimed that the mediation period should have continued until May 24, 1994, and that the letter constituted a valid commitment letter. The mediator, James Bloch, determined that no agreement could be reached, and he signed a termination document that stated this decision.

After the parties failed to reach an agreement in mediation, AgriBank foreclosed on August 30, 1994. The redemption period expired one year later, on August 30, 1995. After the redemption period had passed, appellants brought an action in state court against respondents Agribank, Farm Credit, Resch, Bloch, and agencies offering Bloch's services. Appellants claimed, first, that the mediator was negligent for his alleged failure to reduce an oral agreement on April 20, 1994, to writing. The trial court dismissed this claim on the principle of mediator immunity. Next, appellants claimed that the foreclosure sale was voidable, alleging that AgriBank violated its duties by not accepting appellants' initial debt reduction plan and failing to mediate effectively. The trial court granted summary judgment on this claim for failure to state a valid cause of action. Finally, appellants sued for breach of contract on the alleged agreement made on April 20, 1994. The trial court granted summary judgment on this final claim for the lack of a genuine issue of material fact.

1. Mediator Immunity

The first issue appellants raise is whether the mediator and his sponsoring agencies are immune from liability. The duties of a mediator under the Farmer-Lender Mediation Act are defined by Minn. Stat. § 583.26, subd. 6 (1996). Interpreting the scope of a statute is a matter of law, which this court may review without deference to the trial court's decision. See Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985) (holding that the construction of a statute is a question of law fully reviewable by an appellate court).

The trial court found the mediator, the University of Minnesota, the Farm Credit Mediation Program, and the Minnesota Extension Service all immune from liability. The court based its conclusion on the statutory provision that a mediator is immune from civil liability for actions within the scope of the position as mediator. Minn. Stat. § 583.26, subd. 7 (1996). Appellants argue that the statute is inapplicable because the mediator erred while performing ministerial duties not related to the scope of his position as mediator. Specifically, appellants allege that the mediator should have noted the "agreement" that had been reached between themselves and Resch; namely, they agreed that Resch would have accepted cash or a letter of commitment for the balance of the mortgage. Consistent with the views of respondents, even if the recording of an actual agreement were considered a ministerial task, the mediator used his independent judgment within the scope of his duties as a mediator to determine that no agreement could be reached between the parties. As such, Bloch's determination was a discretionary matter subject to the provisions of section 583.26.

Appellants compare the position of a mediator to that of an arbitrator and cite L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 376 (Minn. 1989), for the proposition that the doctrine of arbitral immunity does not protect every action of an arbitrator. In Rapistan, the Minnesota Supreme Court, noting its policies of encouraging arbitration and protecting the independence of the process, upheld an arbitrator's immunity for failure to disclose prior business of social contacts. Id. at 337. But the court emphasized that arbitrators would not be immune from criminal liability or claims of fraud; although plaintiffs could not seek civil liability of the arbitrator for these actions, the court concluded that plaintiffs in such a situation could sue to set aside an arbitrator's award. Id. In the immediate case, appellants do not allege criminal liability or fraud on the part of the mediator such that the validity of his decision should be called into question.

Because the mediator and his sponsoring agencies are immune under Minn. Stat. § 583.26, subd. 7 (1996), we need not also address the disputed proposition that mediators are also protected by a quasi-judicial common law immunity. See Gammel v. Ernst & Ernst, 245 Minn. 249, 254, 72 N.W.2d 364, 368 (1955) (extending quasi-judicial immunity to arbitrators); Stewart v. Case, 53 Minn. 62, 67, 54 N.W.2d 938, 938 (1893) (extending quasi-judicial immunity to assessors); see also Tindell v. Rogosheske, 428 N.W.2d 386, 387 (Minn. 1988) (extending quasi-judicial immunity to guardians ad litem).

2. Cause of Action to Void the Foreclosure

Appellants also claim that they have a cause of action for respondents' failure to accept a proposed restructuring proposal and point to Federal Land Bank v. Overboe, 404 N.W.2d 445, 449 (N.D. 1987) and Burgmeier v. Farm Credit Bank, 499 N.W.2d 43, 51 (Minn. App. 1993), review denied (Minn. July 15, 1993), for the proposition that this court may void the foreclosure sale. In Overboe, the North Dakota Supreme Court expressly recognized that although no implied right of action exists for violations of the Farm Credit Act or its regulations, the Act "may nevertheless afford a basis for an equitable defense to a foreclosure action." 404 N.W.2d at 448. The regulation at issue in Overboe directed the lenders to develop loan servicing policies that provide a means of forbearance for a cooperative borrower who is making an honest effort to meet the loan contract and is capable of handling the debt burden. Id. at 447 (quoting 12 C.F.R. § 614.4510(d)(1)). Appellants in the present case allege that they may bring a cause of action for respondents' failure to mediate in good faith. But the court in Overboe concluded that the regulation did not imply a private right of action and instead gave rise to a "valid equitable defense to a foreclosure action under state law," which is not the application of law proposed here. Id. at 449.

In Burgmeier, this court permitted a former landowner to bring suit to enjoin further foreclosure proceedings and void a foreclosure sale for the lender's failure to provide the landowner with a "meaningful opportunity to restructure his debt." Burgmeier, 499 N.W.2d at 46. Although the redemption period in Burgmeier had expired by the time this court issued its opinion, appellants properly brought their cause of action in trial court during the redemption period. While Burgmeier may provide a borrower an equitable defense to a state foreclosure action and allow a landowner to enjoin foreclosure proceedings, it does not suggest that the claim can be advanced by a suit commenced after the period of redemption has expired. In the present case, appellants failed to state their cause of action within the permissible redemption period, thus forfeiting any claim that they may have had.

3. Breach of Contract

Appellants allege that they have a cause of action for breach of contract because respondents failed to accept 21st Century Bank's "letter of commitment." This issue turns on a matter of contract interpretation. The construction and effect of a contract are questions of law for the court. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979).

It is undisputed that Resch's offer called for cash or a commitment by a lender. The trial court found that 21st Century's letter was not a valid "letter of commitment" as intended by Resch, the offeror. The letter observed that because appraisal and cash flow information were received by the bank, "it is safe to assume" that a $221,000 state loan would be approved by the state. The court determined that such language was not sufficient as a "commitment" and contrasted sharply from a letter of commitment that the appellants received in 1982 that stated "[w]e will be able to make a $330,000 gross loan." Although 21st Century's letter indicated that appellants should not have a problem receiving a loan, the trial court correctly determined that this language is not a final commitment as a matter of law.

Affirmed.