author: SNELL, Justice.

text:
    John Francis ANDERSON, Appellee, v. The CITY DEVELOPMENT BOARD OF the STATE of Iowa, Appellant, City of Des Moines, Intervenor-Appellant.
    No. 99-0932.
    Supreme Court of Iowa.
    April 25, 2001.
    Rehearing Denied Aug. 27, 2001.

      Thomas J. Miller, Attorney General, and Christie J. Scase, Assistant Attorney General, for appellant City Development Board.
    Mark Godwin, Deputy City Attorney, Des Moines, for appellant City of Des Moines.
    Frank Murray Smith of Frank M. Smith Law Office, Des Moines, for appellee.
   SNELL, Justice.

There are three parties involved in this appeal. The City Development Board of the State of Iowa (Board) is the appellant. The City of Des Moines (DSM) intervened in these proceedings and is also an appellant. The citizens of the unincorporated territory of “West Carlisle,” led by John Anderson, are the appellees. At the agency level, the Board dismissed West Car-lisle’s involuntary petition to be annexed into Carlisle. On judicial review, the district court reversed this dismissal. We reverse the district court’s decision and remand for a reinstatement of the petition’s dismissal.

I. Factual Background and Procedure

In 1990, DSM and the City of Carlisle executed a moratorium agreement which precluded annexation of West Carlisle by Carlisle for a period of ten years. Pursuant to the agreement, Carlisle agreed to prevent any voluntary annexation of West Carlisle and decline permission for annexation of this area into Carlisle.

In 1998, Anderson and others of West Carlisle were interested in being annexed by Carlisle to avoid being involuntarily annexed by DSM. Anderson filed a petition to voluntarily annex West Carlisle into Carlisle. Citing the moratorium agreement, Carlisle refused to annex West Car-lisle. Anderson then filed a petition with, the state Board to involuntarily annex West Carlisle into Carlisle. The Board found that the moratorium agreement between Carlisle and DSM for this area was dispositive. Because annexation into Car-lisle would violate the terms of the agreement, the Board dismissed West Carlisle’s petition.

The Board determined that DSM and Carlisle had statutory authority to enter into such agreement. See Iowa Code § 368.4 (1997). Such authority imposed their agreement on those who may wish to contravene it, including Anderson and West Carlisle. The Board found that a contrary holding would violate the moratorium agreement. The Board unanimously upheld its determination on rehearing. Anderson then sought judicial review of the Board’s dismissal of the petition. Anderson argued that a contract between Carlisle and DSM could not prevent a nonparty from seeking annexation — the contract should only limit the actions of DSM and Carlisle.

Anderson further argued that the agreement violated the due process and equal protection rights of the citizens of West Carlisle. He also alleged that the moratorium was invalid because statutory procedures were not followed. The district court passed no judgment on either issue. Instead, the court determined that if the Board had allowed West Carlisle to involuntarily annex itself into Carlisle, the agreement would not have been violated. Under standard contract law, the court held that only Carlisle or DSM could violate their own agreement. A nonparty to the moratorium could neither violate it nor be bound by it.

Both the Board and DSM appeal this decision. They argue: (1) Such a decision makes the statutory moratorium agreement provision useless; (2) Ordinary contract principles do not govern these type of agreements; (3) The procedural challenge made by Anderson and West Carlisle was waived by their failure to assert it before the Board; and (4) The constitutional arguments do not pass muster. DSM makes two additional arguments. First, it suggests the district court did not apply the proper standard of review to make its decision. Second, it seeks a ruling that unincorporated territories have no authority to involuntarily annex a city.

II. Scope and Standard of Review

Statutory law dictates how we review appeals from the City Development Board. Iowa Code § 368.22.

The court’s review on appeal of a decision is limited to questions relating to jurisdiction, regularity of proceedings, and whether the decision appealed from is arbitrary, unreasonable, or without substantial supporting evidence. The court may reverse and remand a decision of the board or a committee, with appropriate directions.

Id. We are limited in our review of the district court’s reversal to only those issues initially addressed by the agency. Ahrendsen ex rel. Ahrendsen v. Iowa Dep’t of Human Servs., 613 N.W.2d 674, 676 (Iowa 2000) (citing Office of Consumer Advocate v. Iowa State Commerce Comm’n, 465 N.W.2d 280, 283 (Iowa 1991)).

Upon our review of the district court’s reversal, we simply look to see if the district court applied the correct standard. City of Waukee v. City Dev. Bd., 590 N.W.2d 712, 716 (Iowa 1999). “Thus, we need to decide whether the district court correctly applied the law and whether substantial evidence supported the Board’s finding.” Id. There is substantial evidence “if a reasonable mind could accept it as adequate to reach the same finding.” Id.

III. Issues on Appeal

DSM argues that the district court applied an improper standard of review. Iowa Code section 17A.19(8) cannot be considered when the district court is reviewing the Board’s decision under section 368.22. See Iowa Code § 368.22(3). It is clear the district court based its review on the provisions found in section 17A,19(8). Although the district court failed to employ the standard enunciated in section 368.22, we could still uphold this decision if we agree the Board’s decision was unreasonable because it was based upon an erroneous interpretation of the law. Accordingly, this is not reversible error.

A. The Moratorium Agreement

The involuntary petition at issue here seeks to have Carlisle annex West Carlisle. Carlisle has a moratorium agreement with DSM agreeing to refrain from annexing West Carlisle. Statutory authority for a moratorium agreement is found in Iowa Code section 368.4. This provision states:

A city, following notice and hearing, may by resolution agree with another city or cities to refrain from annexing specifically described territory for a period not to exceed ten years and, following notice and hearing, may by resolution extend the agreement for subsequent periods not to exceed ten years each. Notice of a hearing shall be,, served on the board, and a copy of the agreement and a copy of any resolution extending an agreement shall be filed with the board within thirty days of enactment. If such an agreement is in force, the board shall dismiss a petition or plan which violates the terms of the agreement.

Id. § 368.4 (emphasis added).

Anderson argues that section 368.4 does not prevent West Carlisle from petitioning to be involuntarily annexed by Carlisle because it is not a party to the moratorium agreement. It is true that section 368.11 gives a territory the right to file an involuntary petition. However, when a territory’s involuntary petition is granted, the city would then be required to annex the territory. As such, by forcing Carlisle to annex West Carlisle, Carlisle would likewise be forced to violate the moratorium agreement.

Anderson places great emphasis on the general contract premise that those not a party to a contract cannot be bound by its terms. See Herington Livestock Auction Co. v. Verschoor, 179 N.W.2d 491, 494 (Iowa 1970). However, this premise is not applicable here. Under the above interpretation, the moratorium agreement does not bind a nonparty — it binds Carlisle to refrain from annexing the prohibited territory. If the Board had granted West Car-lisle’s petition, Carlisle could not have kept its agreement with DSM. Under the authority of section 368.4, the Board was required to dismiss West Carlisle’s petition.

The effect of a moratorium agreement can be analogized to that of a covenant not to compete. A valid covenant not to compete does not allow a party to it to do business with those he might otherwise have utilized had no agreement existed. This is not the same thing as binding a nonparty to the agreement — the party to the agreement is simply not able to make himself available for the benefit of a non-party. This may have a negative impact on a nonparty, but it does not have a binding effect. Here, Carlisle is not able to avail annexing procedures to benefit West Carlisle without violating the moratorium agreement. The district court’s conclusion, that dismissal of West Car-lisle’s petition would impermissibly bind a nonparty to the moratorium agreement, is incorrect.

The district court felt a contrary interpretation would deprive a territory of its statutory right to seek involuntary annexation and that section 368.11 would be useless whenever a moratorium agreement was present. It concluded that the legislature could not have intended such a result. An examination of the legislative history of section 368.4 reveals that the legislature purposely broadened its language in 1972. 1972 Iowa Acts ch. 1088, § 28. The moratorium agreement provision previously read:

After the adoption of such resolutions and the execution of such agreement by all of such agreeing cities and towns, no agreeing city or town shall commence any annexing proceedings under the provisions of this section as to any specifically described territory which is the subject of said agreement....

Iowa Code § 362.26(7) (1971) (emphasis added). This language was changed to read as it does today: “If such an agreement is in force, the board shall dismiss a petition or plan which violates the terms of the agreement.” Iowa Code § 368.4 (1997). The language is no longer limited to a restriction on the actions of the parties to the agreement, but also requires dismissal of any petitions that would offend the agreement. The intent to preclude involuntary petitions that force a city to violate its agreement is clear.

Perhaps realizing that the petition might be barred by the moratorium agreement, Anderson endeavors to recharacterize the petition as an attempt by West Carlisle to annex Carlisle. This prompts the question whether a territory has the power to annex a city. Iowa Code section 368.11 gives a territory the authority to seek involuntary annexation, i.e., to force a city to annex the territory. However, no section in chapter 368 provides West Carlisle with the authority to annex Carlisle. In fact, chapter 368 provides a definition of annexation: “ ‘Annexation’ means the addition of territory to a city.” Id. § 368.1(2). This definition does not include the addition of a city to a territory. As such, this characterization of West Carlisle’s petition cannot provide relief.

B. Remaining Issues

On appeal, Anderson argues that the moratorium agreement was invalid because proper procedures were not followed. Anderson also makes several constitutional arguments. The district court did not resolve these claims.

1. Alleged Procedural Errors

The alleged errors include: (1) a typographical error in the description of the land subject to the moratorium agreement presented to the Des Moines City Council and in the notice published by Carlisle, (2) inadequacy of the description of the affected land in the actual moratorium agreement, and (3) failure to provide notice to the Board as required to effectuate the moratorium agreement. We note that “a failure to comply with every word of our annexation statutes is not fatal. Substantial compliance with prescribed procedural law is sufficient....” City of Des Moines v. City Dev. Bd., 473 N.W.2d 197, 200 (Iowa 1991).

First, in order to eviscerate the validity of the agreement, typographical errors must be substantial. Gorman v. City Dev. Bd., 565 N.W.2d 607, 610-11 (Iowa 1997). In Gorman we found that the omission of two-thirds of the affected territory invalidated the annexation. In the instant case, the errors were insignificant as the territory was adequately described and an accurate diagram provided. The error stems not from an improper description of the territory, but from an inconsistent statement as to what direction the territory lays from each city. This error was inconsequential to the notice of the citizens of West Carlisle as each map clearly showed what directions were implicated. Further, Anderson makes no cogent argument that this inconsistency had a prejudicial effect on the citizens of West Carlisle,

Second, the moratorium agreement itself did provide a somewhat ambiguous description of the land in question. However, when combined with the maps provided, such a description clearly alerts those in the affected area that their land falls within the agreement. In effect, Anderson argues the description was insufficient. We have said that insufficiency is not enough to invalidate the agreement. Id. at 611. Rather, a showing that the description is in fact incorrect is required. Id. (citing City of Muscatine v. Waters, 251 N.W.2d 544, 551 (Iowa 1977); City of Clinton v. Owners of Prop. Situated Within Certain Described Boundaries, 191 N.W.2d 671, 674 (Iowa 1971)).

Third, annexation law requires that two notices be sent to the City Development Board to effectuate a valid moratorium agreement. Iowa Code § 368.4. Here, only one notice could be located. The Board’s involvement in this process is incidental to the greater purpose of providing those affected by the agreement with notice. See id. § 368.6. The record contains no evidence that the lack of the second notice to the Board, if indeed one was not provided, substantially affected the validity of the agreement. As such, we agree with the appellants that the procedures utilized to enact the moratorium agreement in question were substantially followed. City of Des Moines, 473 N.W.2d at 200-01.

2. Constitutional Claims

Anderson argues that our interpretation of the moratorium agreement violates the federal equal protection and due process rights of the citizens of West Car-lisle. See U.S. Const, amend. V, XIV. We reject the constitutional arguments for two reasons: (1) Those affected by the moratorium agreement were provided notice and a hearing, and (2) Annexation law is governed by statute and any right section 368.11 provides for involuntary annexations does not stem from constitutional property rights. See, e.g., City of Cedar Rapids v. Cox, 252 Iowa 948, 959-60, 108 N.W.2d 253, 260 (1961).

“The United States Supreme Court has stated that municipal boundaries may be altered without the consent of the inhabitants of the territory affected and ‘nothing’ in the Federal Constitution is to the contrary.” City of Monticello v. Adams, 200 N.W.2d 522, 524 (Iowa 1972) (quoting Hunter v. City of Pittsburgh, 207 U.S. 161, 179, 28 S.Ct. 40, 47, 52 L.Ed. 151, 159 (1907)). It follows then that there are no constitutional problems when a city decides not to change its boundaries against the wishes of a territory seeking to be annexed. “Although the inhabitants and property owners may ... suffer inconvenience, ... there is nothing in the Federal Constitution which protects them from these injurious consequences.” Hunter, 207 U.S. at 179, 28 S.Ct. at 46-47, 52 L.Ed. at 159.

Because West Carlisle’s petition would require Carlisle to violate its moratorium agreement with DSM, we find that the Board’s dismissal was correct. We reverse the decision of the district court and remand for reinstatement of the petition’s dismissal.

REVERSED AND REMANDED.


source: Caselaw Access Project

author: GILBERT, Justice.

license: Public Domain

text:
    FARMER’S STATE BANK OF DARWIN, Plaintiff, v. Jill SWISHER, Defendant and Third-Party Plaintiff, Petitioner, Appellant, v. Mark Leonard Johnson, Third-Party Defendant, Respondent, and Darwin Bancshares, Inc., Third-Party Defendant.
    No. C9-00-261.
    Supreme Court of Minnesota.
    July 19, 2001.
    Gregory J. Holly, McGuigan & Holly, P.L.C., St. Paul, for appellant, Jill Swisher.
    H. Kelsey Page, Daniel Greenstein, Standke, Greene & Greenstein, LTD, Minnetonka, for respondent, Mark Leonard Johnson.
    John A. Fabian, III, Donald H. Nichols, Nichols, Raster & Anderson, Minneapolis, for Farmers State Bank of Darwin, plaintiff, and Darwin Bancshares, Inc., third-party defendant.
   OPINION

GILBERT, Justice.

Appellant Jill Swisher seeks review of a court of appeals’ decision affirming a district court’s application of a Rule 68 offer of judgment made by two third-party defendants to reduce a jury verdict against the remaining third-party defendant. Upon respondent’s post-trial motion, the district court reduced the jury’s verdict by the $50,000 offer of judgment after determining that receipt of the Rule 68 judgment and the jury verdict constituted a double recovery because appellant’s claims against the various defendants were not “different in kind.” The court of appeals affirmed. We reverse.

In August 1987, Swisher- accepted Mark Johnson’s repeated job offers to work at the Farmer’s State Bank of Darwin (Bank) cleaning after hours and on weekends. Swisher claimed that almost immediately after she became employed, Johnson-who, as the Bank’s president, was her sole supervisor-would regularly touch her sexually and attempt to force her to have sexual intercourse with him at the Bank and at other locations. Swisher also claimed that Johnson offered her overdraft privileges, loans, and gifts in exchange for sexual favors. She testified that Johnson’s requests were unwelcome, but eventually she engaged in a sexual relationship with him.

Swisher claimed that throughout her relationship with Johnson he was hostile, threatening, abusive, domineering and violent. She also claimed to be the victim of his repeated physical and sexual assaults and batteries. Swisher alleged that on separate occasions, Johnson “pounded” Swisher’s head on the cement floor of the Bank, caused her to dislocate her shoulder,

boxed her ears and broke her ear drum, grabbed her and shook her, threw her around, struck her face, grabbed her hair and pulled her up, and punched her repeatedly, causing bruising all over her body. He also bruised her ribs.

Before Swisher ended her relationship with Johnson in 1996, she obtained two consumer loans from the Bank. One loan was an $11,155 secured auto loan and the other was a $2,750 unsecured loan. The recovery of these loans formed the basis of the Bank’s claims against Swisher. The Bank maintained that Swisher had not made any payments on the auto loan since May 1996 and $9,312.04 plus interest remained due. The Bank also maintained that Swisher had not made any payments on the unsecured loan and that the full principal amount plus interest remained due.

In response to the Bank’s complaint, Swisher filed a counterclaim and an amended counterclaim against the Bank and joined Darwin Bancshares, Inc. (DBI) and Johnson as additional third-party defendants. Swisher’s amended counterclaim alleged sexual harassment in violation of the Minnesota Human Rights Act (MHRA), assault and battery, intentional and negligent infliction of emotional distress, negligent retention and supervision, aiding and abetting, and obstructing. She sought compensatory damages, punitive damages, and attorney fees, costs, and disbursements “jointly and severally.” She also sought dismissal of the Bank’s claim against her.

All parties but Swisher filed motions for summary judgment, and on March 29, 1998, the district court dismissed Swisher’s claim of negligent infliction of emotional distress against the Bank and DBI. The court also dismissed Swisher’s MHRA claim against Johnson after determining that he was not an “employer.” On May 10, 1999, the Bank and DBI served and filed an offer of judgment under Minn. R. Civ. P. 68 for $50,000. The offer proposed to settle all claims Swisher asserted against the Bank and DBI and included “reasonable costs, disbursements, interest and reasonable attorney’s fees.” Swisher accepted the offer on May 11, 1999. The district court entered judgment on Swisher’s claims against the Bank and DBI for an agreed upon dollar amount of $50,000, and a satisfaction filed with the court on June 4, 1999 indicated that this judgment was paid in full. The offer of judgment did not prohibit claims against Johnson or provide for any offsets.

On June 1, 1999, the jury trial began on the Bank’s consumer loan claims against Swisher and on Swisher’s assault, battery, intentional infliction of emotional distress, and punitive damage claims against Johnson. The jury was aware of the resolution of Swisher’s claims against the Bank and DBI but not of the amount. Upon completion of the trial, the jury found in a special verdict dated June 16, 1999 that Swisher acted under duress when she signed one, but not both, consumer notes and that Johnson assaulted, battered, and intentionally inflicted emotional distress on Swisher. The jury awarded Swisher compensatory damages of $124,500 by special verdict for past and future pain, disfigurement, embarrassment, or emotional distress; medical services; and a future reduction in earning capacity, and it awarded punitive damages of $15,000 by a separate special verdict.

In a post-trial motion, Johnson moved for, among other things, a dismissal of all Swisher’s claims against him and also moved for a reduction in the jury award equal to the $50,000 Rule 68 judgment. He argued that Swisher’s receipt of the Rule 68 judgment amount and the jury verdict constituted a double recovery because the Bank, DBI, and Johnson were joint tortfeasors and the claims against all three third-party defendants were not “different in kind.”

In response to Johnson’s post-trial motion, Swisher argued that she did not receive a double recovery because the offer of judgment included attorney fees, which she was entitled to on her MHRA claim but not on her intentional tort claims. However, Swisher did not submit evidence of the exact dollar amount of attorney fees. Instead, she submitted numerous time records indicating that her attorney and her attorney’s law clerks had expended a total of over 465 hours for legal work on Swisher’s behalf prior to the May 10, 1999 offer of judgment. She indicated that attorney fees for this work incurred prior to the offer of judgment were more than double the amount of the $50,000 Rule 68 judgment.

The court denied Johnson’s motion to dismiss all claims, but it granted Johnson’s motion to offset the jury verdict by the amount of the Rule 68 judgment. The court applied Minn.Stat. § 604.01 (2000) (comparative fault) and Pacific Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548, 558 (Minn.1977) (explaining and applying Minnesota’s comparative fault statute in the context of a negligence action). The court also applied Wirig v. Kinney Shoe Corp., 461 N.W.2d 374, 379 (Minn.1990), to determine whether Swisher proved the exception to the general rule prohibiting double recovery unless her claims were “different in kind.” The court determined that Swisher did not meet her burden of proof because the facts were “common to all Counts against both tort-feasors” and “Swisher did not present evidence at trial that the damages were for separate harms.” The court then determined that if the jury verdict stood, Swisher would recover twice for the same injury.

Swisher appealed, and the court of appeals affirmed in an unpublished opinion. The court of appeals applied Wirig and held that Swisher did not meet her burden of “showing] there was not a double recovery” because she failed to provide any evidence as to what amount of the Rule 68 judgment constituted attorney fees. Farmer’s State Bank of Darwin v. Swisher, No. C9-00-261, 2000 WL 1693616, at *2 (Minn.App. Nov.14, 2000). Swisher appeals to this court arguing that she did not receive a double recovery and the lower courts erred in determining that she had the burden to prove that she did not receive a double recovery.

We review a lower court’s legal determinations regarding Minn. R. Civ. P. 68 offers of judgment de novo with no presumption of correctness. Stoebe v. Merastar Ins. Co., 554 N.W.2d 733, 735 (Minn.1996). From the outset we note that Minn. R. Civ. P. 68 was designed to shift the burden of paying costs properly taxable under Minn. R. Civ. P. 54.04 to encourage settlements by allowing entry of judgment to the effect specified or to pay or accept a specific sum of money with costs and disbursements then accrued. See Minn. R. Civ. P. 68 advisory committee’s note. In the instant case, that purpose of encouraging settlements among some of the parties without a trial was achieved when Swisher accepted the Rule 68 offer of judgment from the plaintiff and one of the two third-party defendants. However, pursuant to respondent’s request, the district court also used the Rule 68 judgment to reduce the jury’s verdict against Johnson, the remaining nonsettling third-party defendant.

The court of appeals agreed with the district court’s application of the Rule 68 judgment to offset the jury verdict, and both lower courts based their’ decisions in part on Wirig and Pacific Indent. Co. In Wirig, an employee sued her employer asserting parallel MHRA and tort claims of battery and defamation. 461 N.W.2d at 376. Both claims arose from the same set of operative facts, which consisted of offensive physical contact-kissing, pinching, patting, and putting an arm around the employee at the workplace. Id. at 377. We held that the employee was legally entitled to maintain both causes of action against her employer but we did not uphold double recovery for the same harm. Id. at 379. We noted there were two legal remedies for the same wrongful conduct. Id. The employee in Wirig did not recover under both claims because she could not show by clear and convincing proof that the misconduct forming the basis of the $100,000 punitive damage award in the battery action was different in kind from the misconduct forming the basis of the $6,000 punitive damage award in the sexual harassment claim. Id. As a result, we determined that the.claims were not “different in kind” because the claims could not be asserted independently, and the employee’s right to recover under her battery claim was denied to prevent two legal remedies for the same wrongful conduct. Id. at 377-79.

In addressing the two punitive damage awards in Wirig, we did not define “different in kind.” But we noted that the difference in size between the punitive damages award under the MHRA claim ($6,000) and the punitive damages award under the tort claim ($100,000) was not clear and convincing proof that the claims were different in kind. Id. at 379. We stated that comparison of the amount of the damage awards “tells us little * * *.” In contrast to Wir-ig, in this case we do not have two duplicate awards for punitive damages. We only have one verdict against the sole remaining third-party defendant and a Rule 68 judgment against the employer and its holding company without any designation of its effect other than the agreed upon dollar amount.

Similarly, in Rosenbloom v. Flygare, 501 N.W.2d 597 (Minn.1993), there were two awards for punitive damages, one for $65,000 for willful indifference and the other for $6,000 for unfair discriminatory practices. In Rosenbloom, we explained that Wirig fell short in meeting her burden of proof, and we did not find the proof offered on the battery and the sexual harassment different enough to justify two separate awards of punitive damages. Id. at 600.

We then examined the claims at issue in Rosenbloom and determined that the battery claim was actionable independent of its racial motivation because the claim was based on the plaintiffs physical injuries. Id. at 600. We examined the MHRA claim and determined that it was based on racial epithets and was actionable regardless of the racial animus. Id. Thus, the plaintiff could recover punitive damages under both claims because the wrongful conduct forming the basis of each claim was “different in kind.” Id. We also examined the compensatory damages that were detailed on a special verdict form and determined that the plaintiff did not receive a double recovery because the compensatory damages were limited to the battery claim. Id. However, we were concerned about the method used to assert and resolve the punitive damage claims. Id. Rather than order a new trial, we directed the district court to reduce the punitive damage award in the battery action to $30,000. Id. at 602.

We applied the same reasoning in Vaughn v. Northwest Airlines, Inc. when we were asked to determine whether the plaintiffs common law tort claim survived preemption by the MHRA. 558 N.W.2d 736, 737 (Minn.1997). The defendant in Vaughn argued essentially the same theory as Johnson argues in the instant ease-that Wirig precludes a double recovery when the same set of operative facts forms the basis for parallel MHRA and tort claims. Id. at 745. However, in Vaughn we specifically rejected Johnson’s argument and clarified Wirig stating “[although] we held [in Wirig ] that the MHRA’s prohibition against workplace sexual harassment did not preempt a factually parallel common-law battery claim [,]*** we foreclosed double recovery for conduct giving rise to more than one claim.” Id. at 744-45 (emphasis added). The plaintiff in Vaughn was allowed to maintain and recover damages under parallel MHRA and tort claims because the alleged tort was actionable independent of the discrimination. Id.

In the instant case, Swisher’s MHRA claim against the Bank and DBI is based on sexual harassment that occurred while she was employed by the Bank, which was controlled by DBI. It included a statutory claim for attorney fees that was disposed of by the acceptance of the Rule 68 offer. See Minn.Stat. § 363.14, subd. 3 (2000). In contrast, Swisher’s intentional infliction of emotional distress and assault and battery claims against Johnson are based on actual, physical, and emotional injuries without any claim for attorney fees. Therefore, there was no evidence presented about attorney fees in the remaining causes of action against Johnson because Swisher’s intentional tort claims are based on actual, physical, and emotional injuries and did not contain the element of damage related to attorney fees. Swisher did submit her attorney’s time records in response to post-trial motions. While the dollar amount of the fees was not included, the records indicated that 456 hours had been expended prior to trial. The Bank’s and DBI’s further liability for attorney fees that could be incurred through trial was also eliminated by Swisher’s acceptance of the Rule 68 offer. Accordingly, there were different claims and ample consideration for the Rule 68 offer without determining the actual amount of attorney fees.

Furthermore, this is not a situation as in Pacific Indem. Co. where a joint and several judgment against a joint tortfeasor requires a pro tanto reduction in liability of the joint tortfeasors by the amount paid by one tortfeasor. 260 N.W.2d at 668. At the time Swisher accepted the Rule 68 offer of judgment, the district court had already dismissed her negligent infliction of emotional distress claim against the Bank and DBI and her MHRA claims against Johnson, but it had not dismissed Swisher’s MHRA claim against the Bank and DBI, which was based on sexual harassment. Swisher’s other claims that survived summary judgment against the Bank and DBI for assault and battery and intentional infliction of emotional distress were based on theories of vicarious liability or were direct claims of negligent retention and supervision without a joint liability component. Accordingly, there were no joint and several common law tort claims remaining against the Bank or DBI.

In regard to Swisher’s second MHRA claim against the Bank and DBI based on aiding and abetting Johnson’s wrongful conduct, the court’s order simply noted “that [the court] did not find an aiding and abetting [sic] under the MHRA claim made against Mark Johnson. Therefore, [the court] did not rule on this issue.”

Even if this statutory aiding and abetting claim against the Bank and DBI survived summary judgment, under the MHRA, the Bank and DBI as employers were the alleged wrongdoers, even though it was Johnson’s wrongful conduct that forms the basis of Swisher’s aiding and abetting claim against the Bank and DBI. However, the aiding and abetting claim was disposed of by Swisher’s acceptance of the Rule 68 offer of judgment. Furthermore, an aiding and abetting claim under the MHRA, which Swisher asserted, is based on intentional acts. See Minn.Stat. § 363.03, subd. 6. In contrast, Minnesota’s comparative fault statute applies when the fault is based on “acts or omissions that are in any measure negligent or reckless * * See Minn.Stat. § 604.01, subd. 1a; Florenzano v. Olson, 387 N.W.2d 168, 176 (Minn.1986) (stating “[without question, principles of comparative negligence would not apply to an intentional tort; we have never so applied them”). As a result, under this record, Swisher is entitled to recover damages under her intentional tort claims against Johnson as the sole alleged intentional tortfeasor without having the jury verdict reduced by the Rule 68 judgment.

Finally, nothing further was specified in regard to the offer of judgment as to its effect other than the payment of money. As with any settlement, we must examine it on a case-by-case basis and assess its validity and effect. Pacific Indem. Co., 260 N.W.2d at 558. On this record, the offer of judgment upon acceptance becomes merely a contractual agreement between the offeror and offeree with no intent expressed about any right to offset or reduction or release, which would pass the direct benefit of this settlement onto the remaining nonsettling defendant. There was no secrecy surrounding the settlement and it did not act to prejudice the rights of the nonparties. It is not for the courts to speculate or to create uncertainty about the effect of Rule 68 offers of judgment when they are free from ambiguity. Moreover, in this case we are not, as in Wirig or Rosenbloom, confronted with two separate awards for punitive damages arising out of the same cause of action. We conclude that the tort claims Swisher asserted against Johnson are different enough from her employment-related claims brought pursuant to the MHRA to justify a separate award of damages against the remaining defendant Johnson. Accordingly, we hold that the lower courts erred when they applied the Rule 68 judgment against the jury verdict.

Reversed and remanded.


author: LANCASTER, Justice.

text:
    STATE of Minnesota, Petitioner, Appellant, v. Rick Allen ROCHEFORT, Respondent.
    No. C2-00-148.
    Supreme Court of Minnesota.
    July 19, 2001.

      Mike Hatch, Attorney General, Kelly O’Neill Moller, Asst. Attorney General, St. Paul, Brian Roverud, Faribault County Attorney, Blue Earth, MN, for appellant.
    John M. Stuart, State Public Defender, Marie Wolf, Asst. State Public Defender, Minneapolis, MN, for respondent.
   OPINION

LANCASTER, Justice.

We granted review in this case to address a narrow question: What is the correct standard of review for an appellate court examining a district court’s probable cause determination made upon issuing a search warrant? The court of appeals reviewed the determination de novo. Because we conclude that the court of appeals erred in conducting a de novo review, we reverse and remand to that court for application of the correct, deferential standard of review.

On March 1, 1999, police executed a search warrant at respondent Rick Allen Rochefort’s residence and seized methamphetamine and various items used in the production of methamphetamine. In fact, all the products (or empty containers of those products) necessary to manufacture methamphetamine were discovered in the house. Based on the evidence seized that day, Rochefort was charged with three counts of first-degree controlled substance crime for the manufacture, possession, and sale of methamphetamine. See Minn.Stat. § 152.021, subds. 1(1) (sale), 2(1) (possession), and 2a (manufacture) (2000).

Rochefort filed a pretrial motion to suppress all evidence seized during the March 1 search. Rochefort argued to the district court that the warrant was not supported by probable cause. The court disagreed with Rochefort and denied his motion to suppress. After a three-day jury trial, Rochefort was found guilty of all three charges against him. He was sentenced to 98 months in prison.

Rochefort appealed his conviction to the court of appeals. He argued, among other things, that the affidavit submitted in support of the application for the search warrant did not provide a substantial basis for the issuing court’s probable cause determination. More specifically, he argued that the affidavit relied on various informants without establishing their reliability, that the information in the warrant application was stale, and that the primary allegation the district court relied on in issuing the warrant — two purchases of iodine crystals, a precursor for the manufacture of methamphetamine — was not sufficient to find probable cause.

The court of appeals agreed with Roche-fort that the warrant was not supported by probable cause. State v. Rochefort, 619 N.W.2d 564, 567 (Minn.App.2000). In reaching this conclusion, the court explained its standard of review as follows:

The United States and the Minnesota constitutions provide that warrants must be supported by probable cause. See U.S. Const.Amend. IV; Minn. Const. Art. I, § 10; State v. Bradford, 618 N.W.2d 782 (Minn.2000). Appellate courts give great deference to the factual findings of the court issuing a warrant and will reverse “only if clearly erroneous.” Bradford, 618 N.W.2d 782 (citation omitted). An appellate court re-vieius a probable cause determination de novo and analyzes whether “there was a substantial basis to conclude that probable cause existed.” Id. (citation omitted).
A search warrant may be issued if, based on the totality of the circumstances, “there is a fair probability that contraband or evidence of a crime will be found in a particular place.” In reviewing the sufficiency of an affidavit under the totality of the circumstances test, courts must be careful to avoid reviewing each component of the affidavit in isolation. Further, doubtful or marginal cases should be largely determined by the deference to be accorded to warrants.

Rochefort, 619 N.W.2d at 566 (emphasis added) (citations omitted). The court of appeals’ use of the de novo standard is the primary basis of the state’s argument to this court. The state contends that the court of appeals erred in conducting a de novo review, rather than a deferential review, of the probable cause determination made by the district court when it issued the warrant.

We have repeatedly held that, when reviewing a district court’s probable cause determination made in connection with the issuance of a search warrant, an appellate court should afford the district court’s determination great deference. E.g., State v. Harris, 589 N.W.2d 782, 787 (Minn.1999); State v. Souto, 578 N.W.2d 744, 747 (Minn.1998); State v. Zanter, 535 N.W.2d 624, 633 (Minn.1995); State v. Wiley, 366 N.W.2d 265, 268 (Minn.1985). Am appellate court reviews a district court’s decision to issue a warrant only to consider whether the issuing judge had a substantial basis for concluding that probable cause existed. Souto, 578 N.W.2d at 747. This standard of review is consistent with the standard used by the United States Supreme Court:

[W]e have repeatedly said that after-the-fact scrutiny by courts of the sufficiency of an affidavit [submitted in support of a search warrant application] should not take the form of de novo review. A magistrate’s determination of probable cause should be paid great deference by reviewing courts. A grudging or negative attitude by reviewing courts toward warrants is inconsistent with the Fourth Amendment’s strong preference for searches conducted pursuant to a warrant * * *.

Illinois v. Gates, 462 U.S. 213, 236, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983) (emphasis added) (internal quotation marks and citations omitted). Therefore, to the extent that the court of appeals applied a de novo standard of review in this case, we reverse.

Our deferential standard of review for probable cause determinations made in connection with issuance of a search warrant must not be confused with the standard we apply when reviewing probable cause determinations made by police for warrantless searches. Unlike cases involving searches conducted pursuant to a warrant, we do conduct a de novo review of probable cause determinations made in connection with ivarrantless searches. In re Welfare of G.M., 560 N.W.2d 687, 690 (Minn.1997) (“This court will review de novo a trial court’s determination of reasonable suspicion as it relates to Terry * * * stops and probable cause as it relates to warrantless searches.” (footnote omitted)). This standard is, again, consistent with that enunciated by the Supreme Court. Ornelas v. United States, 517 U.S. 690, 691, 116 S.Ct. 1657, 184 L.Ed.2d 911 (1996) (“We hold that the ultimate questions of reasonable suspicion and probable cause to make a warrantless search should be reviewed de novo.”).

There are strong policy reasons for maintaining different standards of review for searches conducted pursuant to a warrant and for warrantless searches. As the Court in Ornelas emphasized, “[t]he Fourth Amendment demonstrates a strong preference for searches conducted pursuant to [the authority of| a warrant.” 517 U.S. at 699, 116 S.Ct. 1657 (internal quotation marks omitted); see Massachusetts v. Upton, 466 U.S. 727, 733, 104 S.Ct. 2085, 80 L.Ed.2d 721 (1984) (“A deferential standard of review is appropriate to further the Fourth Amendment’s strong preference for searches conducted pursuant to a warrant.”). The main purpose of the warrant requirement “is the interposition of a judicial officer between a police officer and the object of his investigation. The design of this structure is to require an independent assessment of the inferences to be drawn from the available evidence and thereby to secure the people from unreasonable searches and seizures.” State v. Nolting, 312 Minn. 449, 452, 254 N.W.2d 340, 343 (1977). To eliminate the distinction between the standards of review for warrant-based and warrantless searches would be to eliminate the incentive for police to obtain a warrant before conducting a search and thereby eliminate that safeguard against unreasonable searches and seizures. Ornelas, 517 U.S. at 699, 116 S.Ct. 1657.

Our opinion today merely reaffirms that the standard of review appropriate for an appellate court reviewing a district court’s probable cause determination made upon issuing a warrant is the deferential, substantial basis standard. Accordingly, we remand this case to the court of appeals for application of the correct standard of review.

Reversed and remanded.

      . The court of appeals cited State v. Bradford, 618 N.W.2d 782 (Minn.2000), as support for the proposition that an appellate court reviews de novo probable cause determinations made in connection with issuance of a warrant. Rochefort, 619 N.W.2d at 566. In Bradford, as in this case, we considered whether the district court erred in concluding that the police affidavit submitted in support of the warrant application was sufficient to support a probable cause determination.
        Bradford, 618 N.W.2d at 794. We articulated the standard of review as follows:
      Both the United States and Minnesota Constitutions protect individuals from unreasonable searches and seizures and provide that warrants must be supported by probable cause. * * * This court affords great deference to an issuing judge’s findings of fact, which we will reverse only if clearly erroneous. See State v. Lee, 585 N.W.2d 378, 382-83 (Minn.1998) (citing Ornelas v. United States, 517 U.S. 690, 699, 116 S.Ct. 1657, 134 L.Ed.2d 911 (1996)). But we review de novo the determination of probable cause. See id. On review, we determine whether there was a substantial basis to conclude that probable cause existed. See State v. Zanter, 535 N.W.2d 624, 633 (Minn.1995).

        Bradford, 618 N.W.2d at 794. Because in Bradford we affirmed the district court’s probable cause determination, that case is not affected by our decision today. Furthermore, from a review of that decision it is clear that a deferential review of the district court’s probable cause determination was in fact conducted.


author: TOUSSAINT, Chief Judge

text:
    In the Matter of the WELFARE OF T.D.
    No. C4-00-2208.
    Court of Appeals of Minnesota.
    July 13, 2001.
    Patrick D. McGee, Assistant Ramsey County Public Defender,' St. Paul, MN, (for appellant).
    Mike Hatch, Attorney General, St. Paul, MN; and Susan Gaertner, Ramsey County Attorney, Kathryn Marie Eilers, Assistant County Attorney, St. Paul, MN, (for respondent).
    Paul W. Bergstrom, St. Paul, MN, (for Guardian ad Litem).
    Considered and decided by TOUSSAINT, Chief Judge, STONEBURNER, and LINDBERG, Judges.

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

   OPINION

TOUSSAINT, Chief Judge

Appellant KL.D.’s parental rights to T.D. were terminated by default. Appellant moved the district court to vacate the order arguing that: (1) the district court lacked personal jurisdiction over her due to insufficient service by publication; (2) procedural irregularities resulted in a denial of due-process rights; and (3) the district court improperly considered whether appellant had a meritorious defense in deciding appellant’s motion to vacate the final order. Because the district court lacked personal jurisdiction over appellant due to deficient service by publication, we reverse.

FACTS

Appellant is homeless and developmentally disabled. A concerned teacher first notified Ramsey County Community Human Services Department (RCCHSD) that appellant was five months pregnant. T.D., appellant’s child, was born on April 3, 1999. Because appellant refused to sign a voluntary placement agreement, the police placed T .D. under a 72-hour hold.

On April 9, 1999, T.D. was returned to appellant on the condition that appellant participate in the Parent Child Development Institute’s parenting and transitional housing program, where appellant would care for T.D. in a supervised setting at the home of her great aunt. In the following days, the great aunt expressed to RCCHSD her concerns about appellant’s failure to care for T.D.

On April 16, 1999, appellant signed a voluntary placement agreement allowing T.D. to remain in the great aunt’s care. Appellant agreed to participate in the Nekton Program, a specialized parenting program for developmentally disabled parents, and to visit T.D. twice per week. On May 24, 1999, appellant visited T.D. with her program worker at the great aunt’s home for the first time since signing the voluntary placement agreement. Appellant has had no contact with T.D. or RCCHSD since that meeting.

In her October 2000 affidavit, the great aunt stated that appellant had contacted her several times. In June 1999, appellant told her great aunt that she did not want to work with her social worker, that she did not want RCCHSD to know where she was, and that she did not care if she ever got custody of T.D. again. The great aunt asserted that appellant also threatened to slash the throats of the child-protection worker and the intake worker. The great aunt stated that in July 1999, appellant called her to inquire about T.D.’s alleged father, but did not inquire about T.D.

In August 1999, RCCHSD filed a Child in Need of Protection or Services (CHIPS) petition. Because appellant’s whereabouts were unknown, the court authorized service by publication. Appellant failed to appear at the hearing, and T.D. was adjudicated by default a child in need of protection or services. A case plan was submitted, but appellant did not participate in its development because her whereabouts remained unknown. Appellant failed to appear at a review hearing, where it was determined appellant had not contacted T.D. or inquired about her child’s welfare for seven months.

The great aunt had no contact with appellant until February 2000, when the great aunt told an RCCHSD worker that appellant called asking her to meet appellant with T.D. so that she could run away with the baby. The great aunt asserted that during that conversation she gave appellant the name and phone number of her social worker.

In February 2000, RCCHSD filed a petition for termination of parental rights (TPR). The district court ordered appellant to be served by publication. The publication notice stated the date, time, location, and purpose of the hearing, but it did not explain that a failure to appear could result in a default judgment. In her affidavit, the great aunt states that T.D.’s alleged father spoke with appellant over the phone and told her the date and time of the TPR hearing. Appellant failed to appear at the TPR hearing. The court waited three hours after the scheduled time and then summarily found appellant in default. No testimony was taken. In July 2000, the court filed a written order terminating appellant’s parental rights to T.D. based on the record submitted with the TPR petition.

In October 2000, appellant filed a motion to vacate the final order because of mistake, fraud, void judgment, and any other reason justifying relief. Appellant argued that service by publication was insufficient and that she was denied due process because she was not represented by an attorney and a default judgment was entered at an initial hearing without any testimony. The district court denied appellant’s motion, finding appellant had actual notice of the TPR hearing from the alleged father, that service by publication was properly made given that appellant’s whereabouts were unknown, that there was no evidence that appellant received actual notice by publication, and that the prior juvenile rules did not require information about the consequences for non-appearance. The district court further found that appellant (1) presented no evidence that her whereabouts or address were known; (2) had no reasonable excuse for her failure to appear; (3) was not denied due process; and (4) did not show due diligence in seeking to have the TPR vacated. The district court also found that T.D. would be prejudiced if the order was vacated. Appellant challenges the district court’s denial of her motion to vacate the final order.

ISSUE

Was service of process by publication sufficient to give the district court personal jurisdiction over appellant?

ANALYSIS

Appellant challenges the district court’s denial of her motion to vacate the order terminating her parental rights to T.D. The Rules of Juvenile Procedure in effect at the time of appellant’s motion to vacate the order did not have a provision comparable to Minn. R. Civ. P. 60.02. See Minn. R. Juv. P. 81.02 (2001) (delineating grounds for relief from juvenile-protection order applicable to matters filed after March 1, 2000). The parties agree that rule 60.02 generally applies to juvenile matters filed before March 1, 2000, such as this. Cf In re Welfare of 476 N.W.2d 525, 527-28 (Minn.App.1991) (applying rule 60.02 in considering whether to justify vacating order terminating parental rights). A reviewing court will uphold the district court’s decision to grant or deny a rule 60.02 motion absent a clear abuse of discretion. Id. at 526-27.

Appellant argues that the order is void because she was not properly served. A judgment is void if the district court lacked personal jurisdiction over the parties through a failure of service that has not been waived. Bode v. Minnesota Dept, of Natural Res., 594 N.W.2d 257, 261 (Minn.App.1999), aff'd, 612 N.W.2d 862 (Minn.2000). A determination of whether service of process was proper is a question of law, which we review de novo. Patterson v. Wu Family Corp., 608 N.W.2d 863, 866 (Minn.2000).

The district court may proceed with a hearing in a juvenile matter when an interested person is not present if that person was provided appropriate notice of the proceeding. Minn. R. Juv. P. 42.02 (1999) (current version, effective March 1, 2000, at Minn. R. Juv. P. 63.02 (2001)). The rules require minimum initial service for parents in juvenile protection proceedings:

The court, unless it finds that notice would be ineffectual and it would be in the interest of the child to proceed without notice, shall issue and cause notice to be served to the persons with the right to participate.

Minn. R. Juv. P. 44.02, subd. 3(B) (1999) (current version, effective March 1, 2000, at Minn. R. Juv. P. 69.02, subd. 2(a) (2001)). An interested party may be served personally or at their dwelling house or usual place of abode, or by mail. Minn. R. Juv. P. 44.02, subd. 6 (1999) (current version, effective March 1, 2000, at Minn. R. Juv. P. 69.02, subd. 3(a) (2001) (requiring summons shall be personally served unless the court orders service by publication)).

The county argues that the district court could exercise personal jurisdiction over appellant because notice would have been ineffectual where appellant’s whereabouts were unknown and it was in the best interests of T.D. that the district court exercise personal jurisdiction. See Minn. R. Juv. P. 44.02, subd. 3(B) (1999). Even if notice by mail would have been ineffectual, the district court must obtain personal jurisdiction over all persons who had the right to attend through service of notice. See Minn. R. Juv. P. 42.02 (1999). Service by publication is sufficient to confer personal jurisdiction where “it is not reasonably possible or practicable to give more adequate warning.” Abu Dalbouh v. Abu-Dalbouh, 547 N.W.2d 700, 703 (Minn.App.1996) (quoting Gill v. Gill, 277 Minn. 166, 171, 152 N.W.2d 309, 313 (1967)); see also Minn. R. Civ. P. 4.04(a); Electro-Measure, Inc. v. Ewald, Enter., Inc., 398 N.W.2d 85, 88 (Minn.App.1986) (emphasizing that publication must be “reasonably calculated” to reach the interested party), review denied (Minn. Mar. 13, 1987). Specifically in termination of parental rights cases, the rules require initial service by certified mail and publication for three weeks before the hearing. Minn. R. Juv. P. 44.02, subd. 7(B) (1999) (current version, effective March 1, 2000, at Minn. R. Juv. P. 69.02, subd. 5(b) (2001)). The district court ordered service by publication in the St. Paul Legal Ledger on March 2, 9, and 16, 2000. The published notice stated:

NOTICE TO: [appellant], mother of the above-named child.
ATTENTION
A petition has been filed * * * alleging among other things that the parental rights of [appellant] to [T.D.], should be terminated upon grounds as stated in the petition filed * * * asking for an order of this Court terminating such parental rights.
THEREFORE, notice is hereby given that the matter of said petition will be called for hearing before the Juvenile Court * * * on March 30, 2000 at 1:30 p.m. or as soon thereafter as the Matter can be heard.
YOU ARE THEREFORE NOTIFIED to be and appear before said Court at said time and place.

Appellant argues that the notice did not comply with the requirements of the statute because it did not contain a statement explaining that failure to appear at the hearing could result in a default judgment. The rules provide that the summons or notice must include

a statement describing the purpose of the hearing and the possible consequence of the hearing that custody of the child may be removed from the parent(s) or legal custodian and placed with another * * *.

Minn. R. Juv. P. 44.03(c) (1999) (current version, effective March 1, 2000, at Minn. R. Juv. P. 69.02, subd. 4(c) (2001) (stating that specifically in termination of parental rights matters, the summons must also contain a statement that if the person fails to appear the court may conduct the hearing in his or her absence and the hearing may result in the termination of parental rights)). The county concedes that the notice does not contain the information required by Minn. R. Juv. P. 44.03(c) but that the error is harmless. “ ‘Service of process in a manner not authorized by the rule is ineffective service.’ ” Lundgren v. Green, 592 N.W.2d 888, 890 (Minn.App.1999) (quoting Tullis v. Federated Mut. Ins. Co., 570 N.W.2d 309, 311 (Minn.1997)) (construing Minn. R. Civ. P. 4.03(a)), review denied (Minn. July 28, 1999). “Service of process must accord strictly with statutory requirements.” Id. (quotation omitted); see, e.g., Hughes v. Lund, 603 N.W.2d 674, 677 (Minn.App.1999) (finding service under Minn. R. Civ. P. 4.05 ineffectual where appellants did not include an acknowledgment form and self-addressed, postage-prepaid, return envelope in strict accordance with the rule). Because the published summons failed to contain the information required by rule 44.03(c), it is deficient and service of process is ineffective.

Because we conclude that the district court lacked personal jurisdiction over appellant, we need not reach appellant’s alleged violation of due process, or whether appellant needed to establish a defense on the merits to prevail in her motion to vacate the order.

DECISION

Service on appellant by publication was deficient because the published summons did not contain the information required by Minn. R. Juv. P. 44.03(c) (1999). Consequently, the district court did not have personal jurisdiction over appellant to terminate her parental rights to T.D.

Reversed.


author: HANSON, Judge.

text:
    STATE of Minnesota, Appellant, v. Janice Cruz LOPEZ, Respondent.
    No. C0-01-384.
    Court of Appeals of Minnesota.
    July 17, 2001.
    Review Denied Sept. 25, 2001.

      Mike Hatch, Attorney General, St. Paul, MN; and Lisa N. Borgen, Brian J. Melton, Clay County Attorney’s Office, Moorhead, MN, (for appellant).
    John M. Stuart, Mark D. Nyvold, State Public Defender’s Office, The Minnesota Building, St. Paul, MN, (for respondent).
    Considered and decided by HALBROOKS, Presiding Judge, WILLIS, Judge, and HANSON, Judge.
   OPINION

HANSON, Judge.

Appellant State of Minnesota contests a pretrial order in which the district court suppressed the evidence, resulting in a dismissal of the charge of procuring alcohol for a minor. The state challenges the district court’s ruling that a police officer, having stopped a vehicle for having no license plates, should have terminated the detention immediately upon noticing a “drive-out sticker” on the vehicle’s rear window, and that her conversation with the driver, during which she smelled alcohol, did not provide a lawful basis for further investigation. We reverse and remand.

FACTS

Officer Melissa Hill was on routine patrol when she noticed a car without license plates. She initiated a traffic stop. As she approached the car, she noticed a white “drive-out” sticker in the rear window, indicating the car was properly licensed and registered. Nonetheless, Hill approached B.H., the driver, to explain why she had made the stop. While she was speaking to B.H., Hill smelled a faint odor of alcohol coming from the car’s interior.

There were five occupants in the car. The driver stated that the car did not belong to him and a passenger, N.J.G., identified himself as the son of the owner. Officer Hill asked N.J.G. to step out of the car and asked him if there was anything illegal in the car or anything she should be aware of. N.J.G. said there was an alcoholic beverage and that it belonged to appellant Janice Lopez. Officer Hill asked N.J.G. if she could look in the car, and he said she could. When Hill searched the car, she found a twelve-pack of beer with three cans missing and two opened cans next to the twelve-pack. Lopez, a passenger in the car, said the beer belonged to her. Officer Hill then conducted preliminary blood tests on the vehicle’s occupants. B.H., a minor, tested positive for alcohol. Lopez was charged with providing alcohol to a minor in violation of Minn.Stat. § 340A.503, subd. 2(1) (2000).

Lopez moved the court to dismiss the charges due to lack of probable cause. After a contested omnibus hearing, the district court stated that Officer Hill should have terminated the stop as soon as she saw the “drive-out” sticker in the car’s rear window. The court concluded that the continued detention was illegal and all evidence obtained thereafter must be suppressed as the fruit of the illegal stop. Accordingly, the court dismissed the charge. This appeal followed.

ISSUES

1. Did the district court err by concluding that the arresting officer did not have probable cause to search the vehicle?

2. Was the consent to search the vehicle voluntary?

ANALYSIS

When the state appeals from a pretrial order dismissing a criminal charge, this court will reverse only if the state clearly and unequivocally demonstrates that the district court erred and that the error, unless reversed, will have a critical impact on the outcome of the prosecution. State v. Othoudt, 482 N.W.2d 218, 221 (Minn.1992). When reviewing the state’s appeal from a pretrial order suppressing evidence, this court “may independently review the facts and determine, as a matter of law, whether the district court erred in suppressing * * * the evidence.” State v. Harris, 590 N.W.2d 90, 98 (Minn.1999) (citation omitted). Here, the state has demonstrated critical impact because the district court’s order prevents it from prosecuting the charge against Lopez. Because the facts are not in dispute, this court need only determine whether the district court erred as a matter of law in suppressing the evidence. State v. Robb, 605 N.W.2d 96, 99 (Minn.2000).

Lawful basis to continue the traffic stop

Neither the state nor Lopez disputes the validity of the initial stop. The state, however, argues that the district court erred in concluding that Officer Hill illegally prolonged the stop. The district court found that the justification for the stop was dispelled when Hill saw the “drive-out” sticker in the ear’s rear window and thus the stop was illegal by the time she began speaking with the car’s driver.

The district court relied on this court’s decision in State v. Hickman, 491 N.W.2d 673, 675 (Minn.App.1992), which held that it was an unconstitutional intrusion for an officer to ask for a person’s driver’s license after the validity of the traffic stop had expired:

[Officer] Doran testified that he stopped Hickman only because of the expired registration sticker. Doran also testified that, while still seated in his patrol car after the stop, he saw a yellow 21 day temporary permit in the left-hand corner of Hickman’s rear window and that he then confirmed the validity of the permit as he walked to Hickman’s vehicle. * * *
Doran nonetheless approached Hickman and asked to see his driver’s license. Hickman admitted that he did not have a valid driver’s license. Doran then charged Hickman with driving after revocation.

Id. at 674. The circumstances of the present case, however, are distinguishable from those in Hickman.

Here, Hill acknowledged that the original purpose for the detention ended at the moment she saw the “drive-out” sticker. However, Hill approached the driver merely to explain her error, not to conduct an investigation. She did not ask to see B.H.’s driver’s license and she did not initially request additional information. This was not an unconstitutional intrusion. It would be impractical to suggest that the officer, upon seeing evidence of lawful registration, immediately turn away and leave the stopped vehicle without explanation. Instead, the validity of the original stop continues at least long enough for the officer to approach the car and inform the driver he is free to go.

Reasonable suspicion for further detention

In the process of the lawful act of approaching the car, Hill detected the odor of alcohol coming from the interior. The district court held that the odor of alcohol alone was insufficient to provide Hill with probable cause to search the vehicle. However, Officer Hill did not move directly from the odor of alcohol to the search. Instead, she relied upon the odor of alcohol to continue or recommence the detention. The legal test for continuing detention is the same as that for the initial stop. “A brief investigatory stop requires only reasonable suspicion of criminal activity, rather than probable cause.” State v. Pike, 551 N.W.2d 919, 921 (Minn.1996) (citing Terry v. Ohio, 391 U.S. 1, 21-22, 88 S.Ct. 1868, 1880, 20 L.Ed.2d 889 (1968)). “The factual basis required to support a stop is minimal, and an actual violation is not necessary.” State v. Haataja, 611 N.W.2d 853, 354 (Minn.App.2000) (citation omitted) review denied (Minn. Jan. 27, 1999).

Because the odor of alcohol provided Officer Hill with reasonable suspicion of criminal activity, i.e., an open bottle in the car, she had a lawful basis to continue the detention and conduct an investigation.

Probable cause to search

Before searching the vehicle, Officer Hill asked the owner’s son whether there was anything illegal or anything that she should know about in the car. He replied that there was an alcoholic beverage. This response, added to the odor of alcohol, provided Officer Hill with probable cause to search the vehicle.

“An officer may search a vehicle under the automobile exception [to the Fourth Amendment] if the officer has probable cause to believe the search will produce evidence of a crime.” State v. Bauman, 586 N.W.2d 416, 422 (Minn.App.1998) (citations omitted), review denied (Minn. Jan. 27, 1999). Probable cause is defined as “some showing by evidence which fairly and reasonably tends to show the existence of the facts alleged.” State v. Pederson-Maxwell, 619 N.W.2d 777, 781 (Minn.App.2000) (quotation omitted).

The district court incorrectly focused on the question whether the odor of alcohol alone was sufficient to provide probable cause for the search. The court concluded that while the supreme court has stated that the odor of alcohol is sufficient to provide probable cause, it has never affirmed a finding of probable cause in a case where the only evidence was the odor of alcohol emanating from the vehicle. This is the wrong inquiry because there was more than the odor of alcohol in this case, N.J.G.’s admission that there was alcohol in the car. Moreover, it is an overly narrow reading of the supreme court cases.

In State v. Schinzing, 342 N.W.2d 105, 109 (Minn.1983), the supreme court affirmed a finding of probable cause to search a vehicle where the vehicle was being driven erratically, the officer knew the vehicle’s occupants and knew they were underage, the officer smelled alcohol coming from the vehicle’s interior and, when the officer asked the passengers if they had been drinking, the minors responded, “Yes.”

In State v. Schuette, 423 N.W.2d 104, 106 (Minn.App.1988), this court affirmed a finding that probable cause existed where the driver was speeding with the car’s headlights on high beam, the driver showed visible signs of intoxication and failed the field sobriety test and the officer saw, in plain view, an empty beer bottle on the vehicle’s floor and a six-pack between the vehicle’s front seats containing one empty and one full beer bottle.

While it is true that each case involved facts in addition to the odor of alcohol, those facts were not identified as prerequisites to a finding of probable cause. To the contrary, while those facts (e.g., erratic driving, slurred speech, etc.) would be evidence of intoxication, they are not particularly probative of an open bottle in the car. In both Schinzing and Schuette, the court stated that the mere odor of alcohol is sufficient to permit an officer to continue a stop and to search a vehicle for an open bottle. Schinzing, 342 N.W.2d at 109 (“[The police officer’s] detection of the odor of alcohol coming from the car gave him probable cause to believe that a search of the passenger compartment would reveal open bottles or cans of alcohol”); Schuette, 423 N.W.2d at 106 (citation omitted) (“An officer’s detection of an alcoholic odor emanating from an automobile constitutes probable cause to search the automobile for open bottles or cans of alcohol”).

Consent to search

Finally, the district court ruled that N.J.G.’s consent to the search was invalid because it was the product of an unlawful detention and because N.J.G.’s consent was not voluntary. A valid consent could make a search lawful, even if the detention was not. See State v. Shelli-to, 594 N.W.2d 182, 186 (Minn.App.1999) (citations omitted) (stating that the consent of a defendant who is being illegally detained may be “tainted by the illegality” and therefore invalid). Because we conclude that Hill had probable cause to search the vehicle, we need not consider the question of the voluntariness of N.J.G.’s consent.

DECISION

The district court erred by suppressing the evidence and dismissing the charges against Lopez of procuring alcohol for a minor. We reverse the district court’s decision and remand for trial.

Reversed and remanded.


author: STONEBURNER, Judge.

text:
    Lisa FEDIE, Respondent, v. MID-CENTURY INSURANCE COMPANY, Appellant.
    No. C9-01-318.
    Court of Appeals of Minnesota.
    July 31, 2001.

      Gary T. LaFleur, Babcock, Neilson, Mannella, LaFleur & Klint, Anoka, for respondent.
    James A. Jardine, Yotel, Anderson & McEachron, St. Paul, for appellant.
    Considered and decided by TOUSSAINT, Chief Judge, STONEBURNER, Judge, and LINDBERG, Judge

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

   OPINION

STONEBURNER, Judge.

Appellant Mid-Century Insurance Company appeals from the district court’s order confirming an arbitration award, alleging that the district court abused its discretion by allowing respondent Lisa Fedie to amend her complaint to request mandatory arbitration of her claim for un-derinsured-motorist benefits and by ordering the parties to arbitration. Fedie argues that Mid-Century’s failure to appeal the order compelling arbitration precludes this appeal. Because an order compelling arbitration is not appealable and because the record supports the district court’s finding that Mid-Century would suffer no prejudice by allowing Fedie to amend her complaint, we affirm.

FACTS

Respondent Lisa Fedie sought underin-sured-motorist benefits under her insurance policy with appellant Mid-Century Insurance Company for injuries she sustained in an accident that occurred on August 28, 1996. The policy contained the following arbitration clause:

If an insured person and we do not agree (1) that the person is legally entitled to recover damages from the owner or operator of an underinsured motor vehicle, or (2) as to the amount of payment under this Part, either that person or we may demand that the issue be determined by arbitration.
⅜ ⅜ ⅜ ⅜
Submission to arbitration is mandatory in all cases where a claim is made by an insured person in an amount of $5000 or less and the amount is in dispute.

Fedie initially read the clause as restricting mandatory arbitration to claims of $5,000 or less. In correspondence with Mid-Century, Fedie mentioned the possibility of arbitration but made no request or demand for arbitration prior to initiating suit on September 1, 1998. The complaint did not contain a demand for arbitration. Mid-Century answered on the merits and did not raise the issue of arbitration. In the summer of 1999, Fedie became aware that several district courts had interpreted this type of arbitration clause to require arbitration of all underinsured claims on demand. Fedie formally demanded arbitration by letter dated July 29, 1999. A Scheduling Order was issued on August 16, 1999, establishing a discovery deadline of November 1, 1999 and setting the matter for a court trial on February 28, 2000. Mid-Century declined the arbitration demand, asserting that Fedie waived the right to arbitration by initiating the lawsuit. By motion dated September 28, 1999, Fedie moved to amend the complaint to add a demand for binding arbitration. After a hearing on October 22, 1999, the district court granted the motion to amend, ordered the parties to binding arbitration, and dismissed the lawsuit without prejudice.

The arbitration was held on April 27, 2000. The neutral and Fedie’s arbitrator ordered $101,274.96 in various benefits. Mid-Century’s arbitrator refused to sign the award. The parties brought cross-motions to confirm and vacate the award. By order filed December 14, 2000, the district court found that Fedie had demanded arbitration prior to putting the matter into suit and confirmed the award. Mid-Century appeals, arguing that the district court clearly erred by finding that Fedie demanded arbitration before starting her lawsuit. Mid-Century asserts that because Fedie did not demand arbitration prior to suit or in her original complaint, the district court abused its discretion by allowing Fedie to amend her complaint to add the demand and by ordering the parties to binding -arbitration more than a year after the suit was initiated. Fedie argues that Mid-Century waived its right to appeal by failing to appeal from the order compelling arbitration-.

ISSUES

1. , Did Mid-Century waive its right to appeal by failing to appeal from the order compelling arbitration?

2. Did the district court abuse its discretion by allowing Fedie to amend her complaint to add a demand for arbitration?

ANALYSIS

I.

Fedie argues that dismissal of the lawsuit without prejudice operated as an adjudication on the merits pursuant to Minn. R. Civ. P. 41.02 because it was an “involuntary dismissal.” This argument is without merit. The rule provides that an involuntary dismissal is an adjudication upon the merits “[ujnless the court specifies otherwise in its order,” which is precisely what the district court did by specifying that the dismissal was without prejudice. See Minn. R. Civ. P. 41.02.

Mid-Century relies on language from County of Hennepin v. Ada-Bec Sys., 394 N.W.2d 611 (Minn.App.1986), review denied (Minn. Dec. 17, 1986), to support its assertion that an order compelling arbitration is appealable. Ado-Bee involved an appeal from a denial of a motion to stay court proceedings pending arbitration. Id. at 613. This court noted that the Minnesota Uniform Arbitration Act provides for appeal from an order denying an application to compel arbitration. Id. (citing Minn.Stat. § 572.09(a) (1984), now codified at Minn.Stat. § 572.26, subd.l (2000) (listing appealable orders, not including orders to compel arbitration)). The court found that “[bjecause this order effectively operates as a denial of arbitration, it is the functional equivalent of an order to compel arbitration and is appealable.” Id. Although the wording of Ada-Bec implies that an order to compel arbitration is ap-pealable, it is clear from the context of the statement and the facts of the case that this court was relying on statutory language that makes an order denying an application to compel arbitration appeal-able. The implication that an order to compel arbitration is appealable is dictum and does not create a right to appeal from such orders. See Minn. R. Civ.App. P. 103.03 (listing which judgments and orders are appealable); Minn. R. Civ.App. P. 103.03(j) (indicating appeal may be taken from such other orders or decisions as may be appealable by statute or under decisions of the Minnesota appellate courts). No statute or case law makes an order to compel arbitration appealable. Therefore, Mid-Century did not waive its right to appeal by failing to appeal from the order compelling arbitration.

II.

Fedie did not demand arbitration prior to initiating the lawsuit and the district court’s finding that she made such a demand is clearly erroneous, but, the factual error is not dispositive. Mid-Century argues that because Fedie did not demand arbitration prior to initiating the lawsuit, she has waived her right to demand arbitration. Waiver in general is ordinarily a question of fact, and intent to relinquish a known right is “rarely to be inferred as a matter of law.” Flaherty v. Independent Sch. Dist. No. 2144, 577 N.W.2d 229, 232 (Minn.App.1998) (citations and quotations omitted), review denied (Minn. Jun. 17, 1998).

Waiver of a contractual right to arbitration is ordinarily a question of fact and determination of this question, if supported by substantial evidence, is binding on an appellate court.

David Co. v. Jim W. Miller Const., Inc., 428 N.W.2d 590, 595 (Minn.App.1988) (quotation omitted), aff'd, 444 N.W.2d 836 (Minn.1989); see, e.g., Har-Mar, Inc. v. Thorsen & Thorshov, Inc., 300 Minn. 149, 157, 218 N.W.2d 751, 756 (1974) (finding “trial court’s factual conclusion cannot be sustained” where no facts in record support a voluntary relinquishment of known right); County of Hennepin v. Ada-Bec Sys., 394 N.W.2d 611, 613 (Minn.App.1986) (quoting language from Har-Mar and finding “trial court’s factual conclusion cannot be sustained” where no facts support appellants’ voluntary relinquishment of known right), review denied (Minn. Dec. 17, 1986); see also Bast v. Capitol Indem. Corp., 562 N.W.2d 24, 29 (Minn.App.1997) (finding no facts suggest voluntary relinquishment of contractual right to arbitrate). Findings of fact shall not be set aside unless clearly erroneous. Minn. R. Civ. P. 52.01. If there is reasonable evidence to support the district court’s findings of fact, a reviewing court will not disturb those findings. Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn.1999) (citation omitted).

Minnesota favors arbitration as a means of conflict resolution, but the right to arbitration may be waived. Hughes v. Lund, 603 N.W.2d 674, 676 (Minn.App.1999). In Anderson v. Twin City Rapid Transit Co., the transit company appealed from a denial of a motion for summary judgment. Anderson v. Twin City Rapid Transit Co., 250 Minn. 167, 183, 84 N.W.2d 593, 604 (1957). One of the issues addressed in Anderson was whether the transit company had waived the right to assert an arbitration provision that was not asserted in their answer or otherwise raised before the motion for summary judgment. Id. at 178-79, 84 N.W.2d at 601. Plaintiffs in that case had served a note of issue and demanded a jury trial in January 1955. Id. at 179, 84 N.W.2d at 601. The case was set for trial on April 19, 1956, and the transit company moved for summary judgment to be heard following the date on which the case had been set for trial, some 16 months after the suit was initiated. Id. The supreme court stated:

We think under all the circumstances which this controversy presents that, after issue had been joined on the merits without any demand for arbitration or motion for a stay in order that arbitration might be had, it was too late for the defendants to draw back or retrace their steps and compel arbitration. * * *.
When a party who has agreed to arbitrate any controversy that may arise prefers to take a controversy to court in the ordinary way, there comes a time in the course of the litigation when it would be unfair to permit one side to resort to arbitration over the protest of the other. That time is reached when the defendant files an answer on the merits, joining with the plaintiff in rejecting arbitration and tendering the controversy to the court for trial.

Id. at 181, 84 N.W.2d at 602 (quotations omitted). The supreme court went on to state: “The effect of the waiver by the defendants of the right, if any, to arbitrate is that such alleged right is gone beyond recall.” Id. at 182, 84 N.W.2d at 603 (citing Anderson v. M. Burg & Sons, Inc., 170 Minn. 53, 57, 212 N.W. 9, 11 (1927) (holding defendant’s refusal to recognize contract waived right to assert arbitration required before suit could be brought)).

In Brothers Jureiuicz, Inc. v. Atari, Inc., the supreme court affirmed the district court’s determination that Atari’s right to arbitration had been lost where Atari failed to raise arbitration in its answer and participated in litigation for nearly one year without moving the court to stay the proceedings and compel arbitration. Brothers Jurewicz, Inc. v. Atan, Inc., 296 N.W.2d 422, 428-29 (Minn.1980). The opinion is based on laches but the analysis is of “laches and waiver.” Id. at 428. In a footnote, the supreme court noted, with approval, decisions from other jurisdictions requiring a finding of waiver to be based not only upon a finding of intentional relinquishment of a known right but also upon a finding of prejudice to the opposing party:

Thus, under this modern view, action by the party seeking arbitration which is inconsistent with the right to arbitration is not enough to support a finding of waiver unless such action is accompanied by prejudice to the objecting party. In this case, granting Atari’s request for arbitration would clearly be prejudicial to The Brothers Jurewicz, since it would have undergone the expense and delay of 18 months of litigation only to have the additional burden of having to resolve the dispute in California.

Id. at 429 n. 8 (citation omitted). Recent cases have held that prejudice to the party asserting waiver is a requirement to finding waiver. See Hughes, 603 N.W.2d at 676 (citing Preferred Fin. Corp. v. Quality Homes, Inc., 439 N.W.2d 741, 743 (Minn.App.1989) (citing Brothers Jurewicz, 296 N.W.2d at 428-29 n. 8)).

Here, the district court found that Mid-Century would not be prejudiced by allowing Fedie to amend her complaint. Whether a party is prejudiced is a question of fact. Cf. Hopkins by LaFontaine v. Empire Fire & Marine Ins. Co., 474 N.W.2d 209, 213 (Minn.App.1991) (stating whether insurer has been prejudiced by its insured’s late notification of suit is a question of fact); see, e.g., State by Gomez-Bethke v. Eastern Air Lines, Inc., 346 N.W.2d 184, 186 (Minn.App.1984) (treating question of prejudice as a question of fact in finding evidence supported findings that employer was substantially prejudiced).

Mid-Century has conceded that it would have engaged in the same preparation for arbitration as for trial and does not assert that arbitration has lengthened the proceedings, which were, in fact, shortened by arbitration. Mid-Century’s assertion that the matter was fully ready for trial is inaccurate where the transcript of the hearing on Fedie’s motion to amend indicates that the doctors’ trial depositions had not been taken. Mid-Century argued to the district court that because the case had lasted for over a year and considerable discovery had taken place

[tjhere is prejudice to us if the case is submitted to arbitration, and obviously it’s going to limit our ability and our right to appeal if it’s a non-binding arbitration as opposed to a jury decision. * * * [Wjhat it really gets down to is the plaintiff feels they can do better with arbitrators. They have been in this court for more than a year, they have taken advantage of the scheduling order and all of the other help we get from the Court, and they have waived their right to arbitration, and we believe we should proceed to trial before a jury.

To support its finding that Mid-Century would not be prejudiced by allowing Fedie to amend the complaint to add a demand for arbitration and an order compelling arbitration, the district court noted that the parties were scheduled to participate in alternative dispute resolution prior to trial and that arbitration is one of the favored means of resolving conflicts in Minnesota. See Hughes, 603 N.W.2d at 676 (stating arbitration is favored means of resolving conflicts in Minnesota); Preferred Fin., 439 N.W.2d at 745 (acknowledging purpose behind arbitration is a speedy, inexpensive, and informal means of dispute resolution); see also Ada-Bec, 394 N.W.2d at 613 (stating participation in discovery and delay were not enough to show waiver, rather participation in discovery is “consonant with the flexibility inherent in the arbitration process”).

The passage of time alone does not constitute sufficient prejudice to require a finding of waiver of the right to arbitrate. See Har-Mar, 300 Minn, at 157, 218 N.W.2d at 756. In Har-Mar, the six-year statute of limitations prevented suit, but summary judgment on the arbitration demand was inappropriate because there was no time limit on the demand for arbitration and no facts in the record to establish waiver of the right to arbitrate as a matter of law. Id. (stating “[e]ven though many years of unexplained delay followed the initial fee dispute, there are no facts in the record supporting Thorsen’s voluntary relinquishment of its contractual right to arbitrate”). The court in Ada-Bec held that the district court erred in denying a motion to stay proceedings pending arbitration where appellant-sureties asserted an arbitration defense in answer to Hennepin County’s complaint but did not move to stay proceedings, apply for arbitration, or move to compel arbitration for over six years. 394 N.W.2d at 612-13.

Mid-Century’s challenge to the district court’s order confirming the arbitration award is .based on the assertion that the district court abused its discretion in allowing Fedie to amend her complaint to add an arbitration demand. None of the prior cases involving waiver of the right to arbitrate have involved a motion to amend the complaint to add a demand for arbitration. The parties agree that the effect of the amendment is that the demand relates back to the original complaint. As counsel for Mid-Century stated at the hearing on the motion to amend, “It’s as though we were back in the beginning and he demanded arbitration, as he should have, under the arbitration clause.” “We will not reverse a decision to allow the amendment of a pleading absent a clear abuse of discretion.” Rhee v. Golden Home Builders, Inc., 617 N.W.2d 618, 621 (Minn.App.2000) (citing Warrick v. Giron, 290 N.W.2d 166, 169 (Minn.1980)). Headings may be amended to assert an affirmative defense, even though an affirmative defense must be pleaded specifically and the failure to do so results in a waiver of the defense. Id. “Ordinarily, amendments to pleadings should be freely granted except when prejudice would result to the other party.” Id. (citing Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993)). “Minn. R. Civ. P. 15.01 authorizes the court to allow an amendment to the pleadings when justice so requires,” and the rule gives no time limit for bringing a motion to amend pleadings. Id. (quotation omitted).

We find that the record supports the district court’s finding that Mid-Century would suffer no prejudice by allowing Fed-ie to amend her complaint. Mid-Century drafted the arbitration clause that permits either party to demand arbitration. The contract does not limit the time to demand arbitration. Mid-Century admits that its preparation would have been the same for arbitration as for trial, and the matter was resolved more quickly, and, presumably more cheaply, than it would have been in trial.

DECISION

Mid-Century did not waive its right to appeal by failing to appeal from the order permitting Fedie to amend the complaint to add a demand for arbitration, because that order was not appealable. The district court did not abuse its discretion by finding that because Mid-Century was not prejudiced, Fedie had not waived the right to demand arbitration, or by permitting her to amend the complaint to add a demand for arbitration.

Affirmed.

      . Hughes does not analyze the issue of prejudice. Because the court in Hughes found no lawsuit was commenced, the issue of whether initiating litigation constitutes waiver was not relevant.

      . At the time of the hearing, Mid-Century had not requested a jury trial and the matter was set for a court trial.