author:
FORSBERG, Judge.
     MINGE, Judge

text:
    MAVCO, INC., d/b/a Maverick Construction, Appellant, v. Rodney EGGINK, et al., Respondents, Vermillion State Bank, et al., Defendants, Wells Fargo Bank, N.A., Respondent.
    No. A05-2018.
    Court of Appeals of Minnesota.
    Aug. 29, 2006.
    Frank J. Rajkowski, St. Cloud, MN, for appellant.
    Robert J. Feigh, Gray, Plant, Mooty, Mooty & Bennett, St. Cloud, MN, for respondents Rodney Eggink, et al.
    John C. Holper, Thomas H. Boyd, Winthrop & Weinstine, P.A., Minneapolis, MN, for respondent Wells Fargo Bank.

      Considered and decided by MINGE, Presiding Judge, HALBROOKS, Judge, and FORSBERG, Judge.
   OPINION

FORSBERG, Judge.

On appeal in this mechanic’s lien foreclosure action, appellant construction company argues that (1) respondent mortgagee is not protected by the statute of limitations in Minn.Stat. § 514.12, subd. 3 (2004), because the mortgage was issued after appellant’s mechanic’s lien was filed and the mortgage was not recorded until after appellant’s mechanic’s lien action was started; and, alternatively, (2) the district court should have allowed appellant to amend its complaint to relate back under Minn. R. Civ. P. 15.03 to give appellant’s mechanic’s lien priority over the mortgage for purposes of these proceedings. We affirm.

FACTS

Respondents Rodney and Karla Eggink own residential property in Becker, Minnesota. Appellant Mavco, Inc., d/b/a Maverick Construction, provided services, labor, skill, and material in connection with improvements to the Eggink property. The last date that Mavco contributed to the improvement was November 26, 2003.

The Egginks did not pay Mavco for all of its work. On January 23, 2004, Mavco filed a mechanic’s lien statement pursuant to Minn.Stat. § 514.08, subd. 2 (2004). Mavco commenced this mechanic’s lien foreclosure action on May 18, 2004. On May 19, 2004 Mavco filed a notice of lis pendens with the Sherburne County Recorder.

On May 14, 2004, three days before Mavco commenced this action, the Egginks refinanced their debt on the property and provided respondent Wells Fargo Bank, N.A., with a mortgage against the property. On or about June 30, 2004, in the answer to the complaint, the Egginks informed Mavco of the existence of the Wells Fargo mortgage. The mortgage was recorded with the Sherburne County Recorder’s Office on July 28, 2004.

On January 5, 2005, the Egginks and Mavco entered into a mediated settlement agreement under which the Egginks agreed to pay Mavco $100,000. The agreement provided that, if payment was not made by March 5, 2005, a mechanic’s lien judgment, plus attorney fees and costs, would be entered. Wells Fargo was not a party to the mediation or the mediated settlement agreement.

On May 9, 2005, Mavco filed a motion seeking to join Wells Fargo, by supplemental complaint, as a defendant in this action, establish priority of Mavco’s lien over the Wells Fargo mortgage, and enforce the mediated settlement agreement. The Egginks did not oppose Mavco’s motion.

Following a hearing, the district court denied Mavco leave to join Wells Fargo as a defendant and concluded that Wells Fargo’s mortgage had priority over Mavco’s mechanic’s lien. This appeal followed.

ISSUES

I. Did the district court properly conclude that the one-year limitations period in Minn.Stat. § 514.12, subd. 3 (2004), precludes Mavco from joining Wells Fargo as a defendant to this action?

II. Did the district court abuse its discretion in declining to allow the supplemental complaint to relate back to the initial complaint?

ANALYSIS

I.

Statutory construction is a question of law, which this court reviews de novo. Ryan Contracting, Inc. v. JAG Inv., Inc., 634 N.W.2d 176, 181 (Minn.2001).

Minn.Stat. § 514.12, subd. 3 (2004), states:

No lien shall be enforced in any case unless the holder thereof shall assert the same, either by filing a complaint or answer with the court administrator, within one year after the date of the last item of the claim as set forth in the recorded lien statement; and, no person shall be bound by any judgment in such action unless made a party thereto within the year; and, as to a bona fide purchaser, mortgagee, or encumbrancer without notice, the absence from the record of a notice of lis pendens of an action after the expiration of the year in which the lien could be so asserted shall be conclusive evidence that the lien may no longer be enforced and, in the case of registered land, the registrar of titles shall refrain from carrying forward to new certificates of title the memorials of lien statements when no such notice of lis pendens has been registered within the period.

It is undisputed that Mavco failed to seek to add Wells Fargo as a party to this action until more than one year after the date Mavco furnished its last contribution to the improvement. The statutory language of Minn.Stat. § 514.12, subd. 3, does not specifically address the situation here, in which the mortgage was executed before, but recorded after, this action was commenced.

The one-year limitations period in Minn. Stat. § 514.12, subd. 3, has been strictly enforced for more than 100 years. In Morrison County Lumber Co. v. Duclos, 138 Minn. 20, 24-25, 163 N.W. 734 (1917), the supreme court applied a predecessor to Minn.Stat. § 514.12, subd. 3, to bar a claim against a subsequent mortgagee, holding that “it was beyond the power of the court to revive a lien which the statute declares dead.” The holding is based on the plain statutory language without regard to when the mortgage was executed and recorded. In Hokanson v. Gunderson, 54 Minn. 499, 503, 56 N.W. 172 (1893), the defendant did not acquire her interest in the property until after the mechanic’s lien action was started, and her mortgage was not recorded until after the one-year limitations period had expired. The supreme court concluded that a defendant was not bound by the judgment in a mechanic’s lien action when the action was not commenced against the defendant within one year after the date of the last item on the account for labor and materials of any of the lien claimants in the action. Id.

Recently, the supreme court stated:

The requirements for the attachment and creation of a mechanics’ lien are to be strictly construed.... The one-year limitation of the lien statutes is no ordinary statute of limitations; it puts a limit to the life and duration of the lien. The statutes require that not only filing a complaint, but also making [each defendant] a party ... must be done within one year. If these requirements are not met, the lien and any cause of action flowing therefrom cease to exist at the end of the year.

Ryan Contracting, 634 N.W.2d at 183 (citations omitted).

The plain language of Minn.Stat. § 514.12, subd. 3, expressly places the burden on the lienholder to bring parties into a mechanic’s lien foreclosure action within one year after the lienholder’s final contribution to an improvement. The statutory language is consistent with the longstanding precedent of strict enforcement of the one-year limitations period in Minn.Stat. § 514.12, subd. 3. Accordingly, we hold that a mortgagee is protected by the statute of limitations in MinmStat. § 514.12, subd. 3, when the mortgage is issued before, but not recorded until after, the mechanic’s lien foreclosure action is started.

II.

Maveo argues alternatively that the district court should have allowed the supplemental complaint to relate back under Minn. R. Civ. P. 15.03, which states:

Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against the party, the party to be brought in by amendment (1) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against that party.

We review the denial of a motion to amend a complaint under an abuse of discretion. Beberman v. Frisch, 242 Minn. 12, 22, 64 N.W.2d 132, 139 (1954). Maveo asserts that it incorrectly named Vermillion State Bank, rather than Wells Fargo, as a party because Vermillion State Bank held the mortgage of record when this action was commenced.

The only reported case applying Minn. R. Civ. P. 15.03 in a mechanic’s lien foreclosure action involved the substitution of the parent corporation of the named defendant. R.B. Thompson, Jr. Lumber Co. v. Windsor Dev. Corp., 383 N.W.2d 357, 361 (Minn.App.1986), review denied, (Minn. May 22, 1986). As the parent corporation, it had received notice and knew that, but for a mistake concerning the identity of the proper party, an action would have been brought against it. Id. Here, there is no relationship between Vermillion State Bank and Wells Fargo. Therefore, it was not an abuse of discretion for the district court to deny Mavco’s supplemental complaint.

DECISION

The district court did not did not abuse its discretion by denying Maveo leave to join Wells Fargo as a defendant and by concluding that Wells Fargo is protected by the limitations period in Minn.Stat. § 514.12, subd. 3 (2004).

Affirmed.

MINGE, Judge

(dissenting).

I respectfully dissent. Minn.Stat. § 514.11 (2004), which governs commencement of a mechanic’s lien foreclosure action, defines the defendants in the action in terms of lienholders that have “filed a lien statement for record.” When Maveo began this action and filed its notice of lis pendens, Wells Fargo had not yet recorded its mortgage. As of that date, Wells Fargo lacked an interest of public record. Maveo had no knowledge of Wells Fargo’s interest until several weeks later.

Because Wells Fargo was not an interested party of record when this action was commenced or when notice of lis pendens was filed, I would hold that Wells Fargo is not protected by Minn.Stat. § 514.12, subd. 3 (2004). This approach respects the notice function of the recording system. See Minn.Stat. § 507.32 (2004) (stating that the “record ... of any instrument properly recorded shall be taken and deemed notice to parties”)', Minn.Stat. § 557.02 (2004) (stating that “[f]rom the time of the filing of [notice of lis pendens], and from such time only, the pendency of the action shall be notice to purchasers and encumbrancers of the rights and equities of the party filing the same to the premises”). In other contexts, the supreme court has held that a party holding an interest in property that is not recorded until after a notice of lis pendens is recorded takes the property subject to the action for which notice of lis pendens was recorded. See Marr v. Bradley, 239 Minn. 503, 510, 59 N.W.2d 331, 335 (1953) (specific performance action); Bredeson v. Nickolay, 156 Minn. 506, 194 N.W. 460, 461 (1923) (same).

Neither the language of Minn.Stat. § 514.11 nor case law compel the result reached by the majority. Minn.Stat. § 514.12, subd. 3, is silent as to when a party must acquire and record a property interest to be protected by the one-year limitations period. The cases relied on by the majority are distinguishable. In all of them, the party objecting to the mechanic’s lien foreclosure either otherwise had a position of priority over the mechanic’s lien or was in privity with a recorded interest in the property at the time the lien foreclosure action was commenced. In Duelos, the mortgage was recorded before the mechanic’s lien statement was filed and thus before the mechanic’s lien foreclosure started. Morrison County Lumber Co. v. Duclos, 138 Minn. 20, 21, 163 N.W. 734, 735 (1917). Similarly, in Hokanson the mortgage predated the mechanic’s lien and the claiming party, as the purchaser of the property at the mortgage foreclosure sale, was in privity with that earlier recorded interest. Hokanson v. Gunderson, 54 Minn. 499, 502, 56 N.W. 172, 173 (1893).

The rule stated in this case would allow a person who recorded an interest 364 days into the one-year deadline for foreclosure to obtain priority over the holder of the mechanic’s lien unless the lienholder amended his complaint and served the newcomer in the brief one-day period before the one-year deadline expired. This is not a reasonable result. Although last-minute checking of real estate records is possible, serving an amended complaint may be physically impossible. In fact, a party (like Wells Fargo in this case) who is loaning money and acquiring a mortgage after the mechanic’s lien has been filed has been put on notice of an adverse claim and can protect itself by inquiry. To give that party priority over the mechanic’s lien claimant who timely forecloses the lien is not consistent with general rules of real estate priority or logical development of the law.

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

      . The district court also concluded that Mav-co was entitled to recover $100,000 from the Egginks plus reasonable attorney fees under the mediated settlement agreement, but that conclusion is not at issue on appeal.


source: Caselaw Access Project

author: LANSING, Judge.

license: Public Domain

text:
    James J. KELLOGG, et al., Respondents, v. William B. WOODS, defendant and third party plaintiff, Appellant, v. Wayne Anderson, d/b/a Mariway Land Consultants, third party defendant, Respondent.
    No. A05-1837.
    Court of Appeals of Minnesota.
    Sept. 12, 2006.

      Todd M. Johnson, Johnson Law Group, L.L.P., Minnetonka, MN, for respondents James J. Kellogg, et al.
    Glenn P. Bruder, Mitchell, Bruder & Johnson, Edina, MN, for appellant.
    Erik J. Askegaard, Askegaard & Robinson, P.A., Brainerd, MN, for respondent Wayne Anderson, d/b/a Mariway Land Consultants.
    Considered and decided by LANSING, Presiding Judge; KLAPHAKE, Judge; and PARKER, Judge.

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

   OPINION

LANSING, Judge.

The district court entered judgment against William Woods for violating the mandatory-disclosure requirements for individual sewage-treatment systems set forth in MinmStat. § 115.55, subd. 6 (2004). Woods appeals, arguing that the district court misinterpreted the statute, that the record does not support the district court’s findings that the system was noncompliant when he sold the property and that he had reason to know of the noncompliance, and that the district court improperly limited damages for the septic-system inspector’s breach of contract. Because the district court correctly applied section 115.55, subdivision 6, and the findings supporting the judgment are not clearly erroneous, we affirm Woods’s liability to the buyers under section 115.55. But because the district court erred in its legal determination of the scope of damages for a negligent septic-system inspection, we reverse and remand for further proceedings on damages.

FACTS

William Woods purchased a lake cabin in the fall of 1996 for seasonal use. Because his family rarely used the cabin, he decided to sell it in 2000. James and Tari Kellogg signed a purchase agreement for the property in March 2001 and closed on the sale in April 2001. An addendum to the purchase agreement stated that the “[s]eller agrees to provide buyers with a current septic inspection and warrants its compliance.”

Jim Christensen, Woods’s real estate agent, contracted with Wayne Anderson to inspect the septic tank, and on March 28, 2001, Anderson deemed it compliant. Anderson testified that he removed the cover from the septic tank and visually examined the tank with a flashlight. He then used a piece of rebar to comb across the bottom of the tank two or three times. He testified that gray-colored water prevented him from seeing the bottom of the tank, but, because the rebar did not catch on the bottom of the tank, he determined that it was not cracked.

The inspection was consistent with a previous disclosure statement, signed by Woods and issued in September 2000. The disclosure statement represented that the tank was in compliance with applicable laws and rules, had a 500-gallon capacity, was pumped three times a year, and had last been emptied in September 1999.

Shortly after signing the purchase agreement, the Kelloggs arranged to have the tank emptied because they had noticed, when first viewing the property, that the tank level-indicator showed that the tank was full. According to James Kellogg, the company he hired went to the site on March 28, and Anderson, who was inspecting the tank, said that it did not need emptying. Anderson disputes this claim. Between March 28 and June 4, 2001, the Kelloggs used the cabin twice. They first emptied the tank on June 4, removing 750 gallons. Although the cabin was not used between June 4 and June 22, the indicator again showed that the tank was full on June 22. On July 19 the Kelloggs had 700 gallons removed from the septic tank at 10:00 a.m. At 10:00 p.m., with no intervening activity at the cabin, the tank had ten inches of water in it.

The Kelloggs hired Arlen Sergent to inspect the septic tank in August 2001. Sergent found that the bottom of the tank was cracked and that the septic system was failing. The Kelloggs later sold the property and, for purposes of the sale, removed the septic tank in May 2002 and installed two 750-gallon tanks. When removing the old tank, Sergent noted in his report that, when the tank was emptied for the August 2001 inspection, it had “numerous cracks in the floor.” The report also noted that, “It appeared to have been that way for a long time.”

The Kelloggs sued Woods and Anderson in conciliation court in September 2002 to recover the costs of replacing the cracked septic tank. The conciliation court found Woods liable to the Kelloggs for the cost of replacing the tank because he had warranted the septic system’s compliance. The conciliation court dismissed the claim against Anderson because the Kelloggs had no contractual relationship with Anderson.

In response to Woods’s demand, the case was removed to the district court. The district court granted the parties leave to amend the complaint and answer and also granted Woods’s motion to join Anderson as a third-party defendant. The Kelloggs amended their complaint to state claims only against Woods. They alleged that Woods violated Minn.Stat. § 115.55, subd. 6(b) (2004), and breached the warranty in the purchase-agreement addendum. In a cross-claim, Woods alleged that Anderson was obligated to indemnify him for any amount for which the court found Woods liable to the Kelloggs.

Following a trial, the district court determined that Woods violated Minn.Stat. § 115.55, subd. 6(b). The court ordered Woods to pay the Kelloggs the costs incurred to replace the septic tank and the statutorily permitted attorneys’ fees. On Woods’s cross-claim against Anderson, the district court determined that Anderson was negligent in conducting his inspection but limited Woods’s recovery to $150, the cost of the second compliance inspection. In this appeal from judgment, Woods contends that the district court misinterpreted section 115.55, subdivision 6. Alternatively, he contends that, if he is liable to the Kelloggs, he is entitled to full indemnification from Anderson.

ISSUES

I. Did the district court err by applying Minn.Stat. § 115.55, subd. 6(b) (2004), to find that a seller is liable to a buyer for representing a septic system’s compliance with sewage-treatment-system rules on the ground that the seller had reason to know the representations were false?

II. Is the evidence sufficient to support the district court’s finding that, at the time of the sale, the seller had reason to know that the septic system was not in compliance?

III. Did the district court err by limiting a septic-system inspector’s liability for a negligent inspection to the costs of a second inspection?

ANALYSIS

I

Minnesota law requires that, before entering an agreement for the sale of real property, the seller must disclose to the buyer, in writing, the method for managing sewage generated on the property. Minn.Stat. § 115.55, subd. 6 (2004). If the sewage is not routed to a permitted facility, the seller must make a series of specific disclosures, including whether the system is, “to the seller’s ... knowledge, in compliance with applicable sewage treatment laws and rules.” Id., subd. 6(a)(2). Subdivision 6(b) also provides for the disclosure of the known status of an individual sewage-treatment system at the time of sale and provides specific penalties relating to a failure to disclose or a false disclosure of the status of the system. Id., subd. 6(b). A seller who “knew or had reason to know of the ... known status of the system” is liable for costs related to bringing the system into compliance and for reasonable attorneys' fees associated with the collection of those costs. Id.

Woods argues that the district court erred in its interpretation of Minn.Stat. § 115.55, subd. 6(b), because the court used a constructive-knowledge standard instead of an actual-knowledge standard. This interpretation, he argues, effectively makes sellers guarantors of septic systems when selling real property.

Statutory interpretation is a question of law, which we review de novo. ILHC of Eagan, LLC v. County of Dakota, 693 N.W.2d 412, 419 (Minn.2005). The goal of statutory interpretation is “to ascertain and effectuate the intention of the legislature.” Minn.Stat. § 645.16 (2004). Our starting point is the specific language of the statute to determine whether it has a plain meaning. Id. If on its face a statute’s meaning is plain, judicial construction is neither necessary nor proper. Am. Tower, L.P. v. City of Grant, 636 N.W.2d 309, 312 (Minn.2001). Minnesota appellate courts have not yet addressed the meaning of subdivision 6(b), but the language of the subdivision supports the district court’s interpretation. This interpretation is not as broad as Woods suggests.

Subdivision 6(a)(2) first requires a seller to disclose, “to the seller’s ... knowledge,” whether the system is in compliance with state regulations. Minn.Stat. § 115.55, subd. 6(a)(2). Subdivision 6(b) provides for liability of a seller who fails to disclose a known status when the seller “knew or had reason to know of the ... known status.” Id. subd. 6(b). Woods interprets the statute to impose liability only for intentional misrepresentations. But the express language “had reason to know” must be given its plain meaning; it expands the relevant state of mind beyond actual knowledge to include what the seller should reasonably know. See ILHC, 693 N.W.2d at 419 (noting that “[wjhenever possible, no word, phrase, or sentence should be deemed superfluous, void, or insignificant” (quotation omitted)).

The specific context of subdivision 6 and the general context of the statute as a whole make it clear that the provisions are aimed at ensuring that buyers are informed. The statute would lose its force if a seller could make statements that the seller either has reason to know are false or does not actually know to be true or false. See Yost v. Millhouse, 373 N.W.2d 826, 830 (Minn.App.1985) (noting that, for purposes of misrepresentation claim, knowledge of falsity is not required and can be satisfied by proof that representer asserted facts of own knowledge without knowing their truth or falsity). As applied to subdivision 6(b) a seller may therefore be held liable to the buyer when the seller has reason to know that he has erroneously represented the status of the septic system.

The statute does not, as Woods interprets the district court to suggest, make the seller a guarantor of the system; the statute only requires disclosure of its status. Neither does the district court’s decision impose an independent obligation on sellers to obtain compliance inspections before the sale of real property. It was instead the terms of the purchase agreement that required Woods, as the seller, to obtain a “current septic inspection and warrant[] its compliance.” The facts of this case raise only the issue of whether the variant operation of the system gave Woods reason to know that the septic tank was not functioning properly and that he should not have represented it to the buyer as a fully compliant system. The district court did not err by applying Minn. Stat. § 115.55, subd. 6(b), to find that a seller is liable to a buyer when the seller makes representations about a septic system’s compliance with sewage-treatment-system rules and the seller has reasom to know that the representations are false.

II

Woods' next argues that, even if the district court applied the proper statutory standard, the record does not support the district court’s findings that the septic tank had cracks in it in March 2001 and that Woods had reason to know of problems with the tank at the time of the sale. We review the district court’s findings of fact for clear error. Minn. R. Civ. P. 52.01.

Sufficient evidence supports the district court’s finding that the septic tank was cracked when Woods sold the property to the Kelloggs. Circumstantial evidence is adequate to support a decision if the evidence justifies the fact-finder’s reasonable inferences and these inferences outweigh conflicting evidence. Smith v. Kahler Corp., 297 Minn. 272, 276, 211 N.W.2d 146, 150 (1973). Significantly, Woods’s initial disclosure indicated that the tank had a 500-gallon capacity, but the tank held 1,250 gallons, and Woods testified that, during his period of ownership, he had the tank emptied only one time in 1997. Records produced at trial indicated that the tank was actually emptied once in 1996, twice in 1997, and not at all between 1997 and when the Kelloggs first emptied the tank in 2001.

In March 2001, despite limited use of the property by Woods’s family, the level-indicator signified that the tank was full. Anderson testified that the tank “should have been pumped” in March. The tank was finally emptied on June 4. It was full again on June 22, and the Kelloggs did not use the property between June 4 and June 22. Similarly, on July 19 the Kelloggs discovered that even though the cabin had not been used, the tank was nonetheless beginning to fill again. Although the Kel-loggs did not confirm that the tank was cracked and that ground water was seeping into the tank until August 2001, the evidence supports the court’s finding that the cracks were present in March, and the tank was therefore noncompliant. See Minn. Rules 7080.0060, subp. 3 (stating compliance criteria for individual sewage-treatment systems), .0130, subp. 1(A) (requiring sewage tanks to be watertight) (2005).

The record also supports the district court’s finding that Woods had reason to know that the tank was noncompliant at the time of the sale. Woods testified that, throughout his ownership, he “never paid attention to [the septic tank] at all, period.” But the record demonstrates that, despite his inattention, several incidents gave Woods reason to know the tank had operational problems and was not in the condition he represented in the 2000 disclosure statement.

Woods acknowledged that he had to empty the tank in 1997, even though he used the cabin only two times that season. And although he contends that he believed the tank held only 500 gallons, a November 1997 receipt states that 700 gallons were removed from the septic tank. Woods also testified that he never saw the level-indicator raised other than once in 1997. But James Kellogg and Anderson each testified that the indicator was obviously raised in March 2001, and Woods testified that he used the cabin only once or twice in 2000, and only six to eight times during the entire time he owned the cabin. Furthermore, when asked at trial about his reaction to learning the actual capacity of the septic tank, Woods testified, “That would explain to me why the bobber kept going up and down. When I would push it down, it would go back up and down.” This specific testimony contradicts his general testimony that he had not noticed how the system operated and also contradicts his testimony that he never saw the level-indicator raised except in 1997.

Although Woods challenges the district court’s decision to credit Kellogg’s testimony over his, credibility determinations are exclusively the province of the fact-finder. Gada v. Dedefo, 684 N.W.2d 512, 514 (Minn.App.2004). He further challenges the court’s reliance on documented statements by Sergent, but Woods did not object to the district court’s admission of any exhibits. See Lake Superior Ctr. Auth. v. Hammel, Green & Abrahamson, Inc., 715 N.W.2d 458, 481 (Minn.App. 2006) (noting that party that fails to object to evidence at trial waives objection on appeal), review denied (Minn. Aug. 23, 2006).

Based on its determination that the septic tank was noncompliant in March 2001, the district court found that Anderson did not properly conduct the compliance inspection. Woods’s real estate agent, Christensen, hired Anderson to perform the inspection. The court found that Christensen was negligent in failing to arrange to empty the tank before the inspection, and that Anderson was negligent in carrying out the inspection using only a flashlight and a piece of rebar when the tank was not empty. The district court did not clearly err in finding that the inspection was negligently performed, and a principal is liable for his agents’ acts committed in the scope of the agency relationship. See Bedow v. Watkins, 552 N.W.2d 543, 547 (Minn.1996) (discussing principal’s liability for agent’s acts).

Paired with the many indicators that the tank was not properly operating, the district court did not err by determining that Woods’s inattention and inadequate inspection of the tank supported liability under section 115.55. Woods provided a disclosure to the Kelloggs as required by the statute, but his disclosure was not informed. He had reason to know that the system was not in the condition represented in the 2000 disclosure statement. The statement is full of incorrect information that Woods either had reason to know was not true or did not know to be true or false, given his repeated testimony that he paid little attention to the tank. Woods therefore failed to make an accurate disclosure when he had reason to know the status of the septic system, and the district court did not err by finding him liable to the Kelloggs under Minn.Stat. § 115.55, subd. 6.

Ill

When an agent acts for a disclosed principal and enters a contract with a third party on behalf of the principal, the contract is between the principal and the third party. Kost v. Peterson, 292 Minn. 46, 49, 193 N.W.2d 291, 294 (1971). Christensen hired Anderson to perform the compliance inspection. Although the district court in its memorandum denying posttrial motions noted that Christensen was Woods’s agent for purposes of liability under section 115.55, the court inconsistently concluded that Christensen was not his agent with respect to hiring Anderson’s services. Anderson knew that Woods was the owner of the property and that the inspection was for the purpose of transferring title. The district court therefore erred in its determination that Woods did not have a contractual relationship with Anderson. Anderson did not file a notice of review to appeal the district court’s finding that he failed to perform the inspection properly.

Woods challenges the district court’s determination of damages that Anderson owes to Woods as a result of improperly performing the inspection. The appropriate measure for breach-of-contract damages is the amount that will place the nonbreaching party in the same position he would be in had the contract been performed. Frank v. Jansen, 303 Minn. 86, 95, 226 N.W.2d 739, 745 (Minn.1975). Had Anderson properly performed his inspection, he would have discovered the cracks in the septic tank. Woods likely would have replaced the system and the Kelloggs would not have sued him. Woods therefore would have incurred the costs of replacing the septic tank, but he would not have incurred the cost of Sergent’s inspection, $150, or the cost of the Kelloggs’ attorneys’ fees, $3,861.20.

The district court determined that Anderson cannot be held liable for attorneys’ fees because Minn.Stat. § 115.55, subd. 6(b), which permits a buyer to recover reasonable attorneys’ fees, is framed in terms of the seller’s liability and does not address third-party liability. But Anderson’s liability does not result from a cause of action against him under section 115.55. Woods, as the seller, is liable to the Kelloggs for violating the statute. Anderson’s liability to Woods derives from a separate cause of action based in contract. The court therefore erred in its determination that Woods’s recovery is limited to $150 in tort liability, and we remand for further proceedings on the determination of damages.

DECISION

The district court correctly interpreted Minn.Stat. § 115.55, subd. 6(b) (2004), to impose liability on a seller who represents that a septic system is compliant with applicable sewage-treatment-system laws and rules when the seller has reason to know the system is noncompliant. Because the seller’s liability to the buyer resulted from a negligent septic-tank inspection, and the seller sought indemnification from the inspector based in contract and not under section 115.55, the seller may recover from the inspector the attorneys’ fees for which he is liable to the buyer.

Affirmed in part, reversed in part, and remanded.


author: FORSBERG, Judge.

text:
    STATE of Minnesota, Respondent, v. William Arthur ANDERSON, Appellant.
    No. A05-1167.
    Court of Appeals of Minnesota.
    Sept. 12, 2006.

      John J. Muhar, Itasca County Attorney, Grand Rapids, MN, and Mike Hatch, Attorney General, Kelly O’Neill Moller, Assistant Attorney General, St. Paul, MN, for respondent.
    John M. Stuart, State Public Defender, G. Tony Atwal, Assistant State Public Defender, Minneapolis, MN, for appellant.
    Considered and decided by WILLIS, Presiding Judge, ROSS, Judge, and FORSBERG, Judge.
   OPINION

FORSBERG, Judge.

Appellant challenges his conviction of possession of a firearm by an ineligible person, arguing that (1) he was not subject to the firearm restriction because his felony burglary conviction was deemed to be a misdemeanor after he completed probation; (2) the district court erred in concluding that the search of his home under a condition of his probation not imposed by the sentencing court itself, was lawful; and (3) the prosecutor committed prejudicial misconduct in closing argument by injecting his personal opinion and vouching for the credibility of witnesses. We affirm.

FACTS

Appellant William Arthur Anderson was on probation while he lived with his girlfriend Tina Ruschmeyer; his son Tanner Anderson; and Tanner’s girlfriend, Amy Lane. Appellant’s criminal history leading up to his probation is as follows. In 1996, appellant pleaded guilty to second-degree burglary. The district court stayed imposition of the sentence and placed appellant on probation for the offense. In 2001, upon successful completion of his probation, the district court discharged appellant from probation and ordered that his felony conviction would be deemed a misdemeanor under Minn.Stat. § 609.13, subd. 1(2) (2000).

In 2003, appellant pleaded guilty to, inter alia, a fifth-degree controlled substance crime, for which he was again placed on probation. At the sentencing hearing, the district court ordered probation but did not discuss the terms of the probation agreement. The probation agreement signed by appellant, effective until 2008, required that he remain law abiding and obtain permission before leaving the state, and prohibited appellant from owning, using, or possessing a firearm or using or possessing controlled substances. The agreement also provided that “[appellant] shall, when ordered by [his probation] Agent, submit to search of [his] ... residence or any other property under [his] control.”

In September 2004, Ruschmeyer phoned her mother, Irene Steel, to report that appellant had guns, that appellant had threatened her the previous day, and that appellant has been arrested in Superior, Wisconsin. Steel, in turn, called Itasca County Sheriff Investigator Greg Snyder and told him that appellant had been arrested in Superior and had posted bail. Snyder contacted the Superior Police Department and confirmed that appellant had been arrested and charged with domestic assault against Ruschmeyer the previous day. Snyder phoned appellant’s probation officer, Anthony Athmann, and left a message telling him what he had learned regarding appellant.

That same day, a woman claiming to be the mother of appellant’s girlfriend phoned Athmann, and told him that appellant had assaulted Ruschmeyer while in a Superior hotel room. The caller, later identified as Steel, reported that Ruschmeyer had told her that appellant kept guns and a large amount of drugs in his home, that the guns were located under his bed, and that there was methamphetamine in a secret compartment behind appellant’s dryer. Ath-mann called appellant to discuss the Superior incident but was unable to reach him.

Later that evening, Athmann, Snyder, and another deputy drove to appellant’s house; the officers did not have a warrant to search the house. Outside appellant’s house, they met appellant’s son, Tanner Anderson, who let them in.

Once inside, Athmann introduced himself to appellant, and told him that he was there to conduct a search for firearms “as explained ... in his conditions for probation.” Appellant replied, “that’s fíne. I’ve got nothing to hide.” Athmann asked appellant where his bedroom was, and appellant pointed him to his bedroom. Inside the bedroom, the officers lifted appellant’s mattress and found two firearms, a .22 semi-automatic rifle and a .20 gauge shotgun, in a compartment at the base of the bed. Appellant denied knowledge of the guns in the bedroom and said to Tanner, “I thought your mother got all your guns out of here.” No drugs were found in the home.

Appellant was charged with possession of a firearm by an ineligible person in violation of Minn.Stat. § 609.165, subd. lb (2004). Appellant pleaded not guilty to the charge and filed a pre-trial motion to suppress the firearm evidence, arguing that it was obtained as the result of an illegal warrantless search. Following an omnibus hearing, the district court denied the motion, determining that the warrantless search was reasonable and did not violate the Fourth Amendment because appellant’s probation agreement provided that he submit to searches of his home and the police had reasonable suspicion to believe appellant had violated the agreement.

At trial, the parties disputed the ownership and possession of the guns. Rus-chmeyer testified that, before his arrest, appellant had handed the shotgun found under appellant’s bed to her and told her to place it in the compartment under his bed. Ruschmeyer testified that she saw a second gun in the compartment. Amy Lane testified that the guns were brought to appellant’s home for Tanner Anderson to use for hunting. David Estey, a friend of appellant’s, testified that he saw two guns in appellant’s bedroom while visiting the home and offered to take the guns because appellant was prohibited from possessing firearms, but that Ruschmeyer told him that Tanner was still hunting with guns and that she would take care of them.

Following a jury trial, appellant was found guilty of possession of a firearm by an ineligible person. This appeal follows.

ISSUES

I. Was appellant properly convicted of possession of a firearm by an ineligible person even though his prior felony burglary conviction was later deemed a misdemeanor?

II. Did the district court err in refusing to suppress the evidence of guns found in appellant’s residence during the course of a warrantless search?

III. Did the prosecutor commit misconduct that denied appellant the right to a fair trial?

ANALYSIS

I.

Appellant contends that he was improperly convicted of possession of a firearm by an ineligible person because his prior burglary conviction was deemed a misdemeanor after he completed probation, and a misdemeanor is not a “crime of violence” mandating imposition of a firearms restriction. As a threshold matter, the state argues that appellant’s argument is waived because it was not raised before the district court. This court will generally not consider matters not argued and considered in the court below. State v. Mills, 562 N.W.2d 276, 284 (Minn.1997). But this court has discretion to review “any other matter as the interests of justice may require.” Minn. R.Crim. P. 28.02, subd. 11.

Appellant concedes that the issue was not raised below, but argues that the interests of justice require this court to address the merits of his argument. We agree. Appellant was convicted of a statutory offense, i.e., possession of a firearm by an ineligible person under Minn.Stat. §§ 609.165, subd. lb (firearm prohibition statute), 624.712, subd. 5 (2004). Appellant challenges the applicability of the firearm prohibition statute to him on the grounds that he was not a felon for purposes of the statute. We conclude that the interests of justice require an examination of the applicability of the firearm prohibition statute to appellant.

Appellant was convicted under Minn. Stat. § 609.165, subd. lb, which provides that “[a]ny person who has been convicted of a crime of violence, as defined in section 624.712, subdivision 5, and who ships, transports, possesses, or receives a firearm, commits a felony.” A “crime of violence” includes second-degree burglary. Minn.Stat. § 624.712, subd. 5.

That state argues that the Minnesota Supreme Court addressed the precise issue before us in State v. Moon, 463 N.W.2d 517 (Minn.1990). In that case, Moon was convicted of felony theft and placed on probation. Id. at 518. Upon his discharge from probation, the offense was deemed to be a misdemeanor, but the court ordered that Moon could not possess firearms. Id. at 518. The definition of “crime of violence” at that time included “felonious theft.” Minn.Stat. § 624.712, subd. 5 (1990). Moon moved to have the language stricken from the order, arguing that he did not commit a “crime of violence” under the statute because his felony theft conviction was deemed to be a misdemeanor and misdemeanor theft was not a “crime of violence” under the statute. Moon, 463 N.W.2d at 519. On review, the supreme court disagreed, holding that “the definitions of the offenses listed as crimes of violence in section 624.712, subdivision 5, relate to the elements of the offense for which the defendant was originally convicted rather than the disposition subsequently imposed by the trial judge.” Id. at 521.

Here, as in Moon, appellant was convicted of a felony that was later deemed to be a misdemeanor. The district court correctly applied the firearm prohibítion statute against appellant because appellant was originally convicted of second-degree burglary, a “crime of violence” under section Minn.Stat. § 624.712, subd. 5. The subsequent stay of imposition of appellant’s sentence and the later treatment of his conviction as a misdemeanor do not alter the fact that he has been convicted of a crime of violence under the statute. Moon, 463 N.W.2d at 520.

Appellant acknowledges that his argument was rejected by the Moon court, but argues that legislative amendments to the definition of “crime of violence” give cause for this court to reexamine the holding in Moon. In 2003, the Minnesota Legislature amended Minn.Stat. § 624.712, subd. 5.2003 Minn. Laws ch. 28, art. 3, § 7. Under the amended statute, the list of designated “crimes of violence” was reca-tegorized. See id. While under the old version only some of the listed crimes were felonies, the revised list of “crimes of violence” is limited to felonies. See id. The previous version of the statute read, “ ‘Crime of violence’ includes [listing offenses]”; the revised version reads, “ ‘Crime of violence’ means: felony convictions of the following offenses: [providing revised list of offenses].” Id. (emphasis added).

Appellant argues that he did not commit a “crime of violence” under the revised statute because the addition of the language “felony convictions” limits the application of the firearm prohibition statute to felonies that are not later deemed misdemeanors by the district court. In support of his position, appellant quotes portions of the following language in Moon:

A person who commits an offense which is not described with the words felony or felonious in section 624.712, subdivision 5, clearly is subject to the firearms restriction even if the conviction is deemed to be a misdemeanor pursuant to section 609.13. For instance, if a person commits fourth degree burglary, he or she is subject to the firearms restriction even if the conviction is deemed to be a misdemeanor because the definition of the offense does not include the words felony or felonious, which arguably would invoke the operation of section 609.13.

Appellant’s reading of Moon is strained. Moon, in essence, held that as long as a “crime of violence” has been committed under Minn.Stat. § 624.712, subd. 5, the firearm prohibition statute applies, regardless of whether the conviction is later deemed to be a misdemeanor. See Moon, 463 N.W.2d at 521 (holding that “the offenses listed as crimes of violence in section 624:712, subdivision 5, relate to the elements of the offense for which the defendant was originally convicted rather than the disposition subsequently imposed by the trial judge”). Therefore, we conclude that the 2003 amendments to Minn. Stat. § 624.712, subd. 5, do not alter the supreme court’s holding in Moon or warrant reversal of appellant’s conviction.

But appellant argues that amended Minn.Stat. § 624.712, subd. 5, specifically excludes misdemeanor-level convictions, and thus, it would be inconsistent with the result in Moon for this court to hold that the firearm prohibition statute applies to him. Appellant’s argument requires us to construe the statute. Statutory construction is a question of law, which this court reviews de novo. State v. Stewart, 624 N.W.2d 585, 588 (Minn.2001). Words and phrases must be construed according to their common meaning unless they have otherwise acquired a technical or special meaning. Minn.Stat. § 645.08(1) (2004). The purpose of all statutory interpretation is to discern the intention of the legislature. Minn.Stat. § 645.16 (2004).

We first examine the plain language of Minn.Stat. § 624.712, subd. 5. Appellant is correct in stating that the statute excludes those who have been solely convicted of misdemeanor-level crimes. See id. (“ ‘Crime of violence’ means felony convictions ... ”). But the statute proscribes possession of firearms by “[a]ny person who has been convicted of a crime of violence,” including a felony conviction of second-degree burglary. Minn.Stat. § 609.165, subd. lb. Here, appellant “has been convicted” of felony second-degree burglary. Id. His conviction was later deemed a misdemeanor, but that does not change his underlying conviction for the purposes of the statute. Moon, 463 N.W.2d at 520. Thus, the plain language of the firearm prohibition statute supports its application to appellant.

The state argues that appellant’s conviction is also consistent with the legislative intent underlying the firearm prohibition statute. We agree. As the supreme court observed, the statute is “designed to protect the public safety by keeping firearms out of the hands of convicted criminals who have committed crimes which, in the legislature’s judgment, are indications of future dangerousness.” Moon, 463 N.W.2d at 520. Nothing in the revised definition of “crime of violence” suggests a change in this policy. If the legislature intended to override Moon, it could have included a provision in its 2003 amendments to expressly indicate that it did not intend for those convicted of felonies which are later deemed to be misdemeanors to be prohibited from possessing firearms. In light of the supreme court’s holding in Moon, and the plain language and purpose of the firearm prohibition statute, we conclude that appellant was subject to prosecution under the statute.

II.

Appellant contends that the district court erred in refusing to suppress the evidence of firearms found in his residence during the course of a warrantless search because the search was conducted pursuant to an invalid probationary agreement and the officers lacked reasonable suspicion to believe he was engaged in criminal activity. “When reviewing pretrial orders on motions to suppress evidence, we may independently review the facts and determine, as a matter of law, whether the district court erred in suppressing — or not suppressing — the evidence.” State v. Harris, 590 N.W.2d 90, 98 (Minn.1999).

The Fourth Amendment to the United States Constitution and Article I, Section 10 of the Minnesota Constitution proscribe unreasonable searches by the government of “persons, houses, papers, and effects[J” U.S. Const, amend. IV; Minn. Const, art. I, § 10. An individual has a reasonable expectation of privacy in his or her own home, and a warrantless search of a person’s home is generally prohibited. See State v. Othoudt, 482 N.W.2d 218, 224 (Minn.1992) (noting that Minnesota courts do “not look kindly upon warrantless entries of family residences”).

“In Minnesota, a search involving a person on probation for a criminal offense is not ‘strictly governed by automatic reference to ordinary search and seizure law,’ and a probationer is entitled to less privacy protection than the average citizen.” State v. Kouba,, 709 N.W.2d 299, 306 (Minn.App.2006) (citing State v. Earnest, 293 N.W.2d 365, 368 (Minn.1980)). Under this framework, “[a] consensual search is accepted as a reasonable search under the Fourth Amendment. Thus, a [warrantless] search pursuant to a valid probation agreement generally will not violate the Fourth Amendment.” Kouba, 709 N.W.2d at 306 (citations omitted).

Under facts similar to this case, the United States Supreme Court held that the balancing of governmental and private interests of probationer “require[d] no more than reasonable suspicion to conduct a search of [a] probationer’s house.” United States v. Knights, 534 U.S. 112, 121, 122 S.Ct. 587, 592, 151 L.Ed.2d 497 (2001). California law required Knights, a probationer, to “[s]ubmit his ... person, property, place of residence, vehicle, personal effects, to search anytime, with or without a search warrant, warrant of arrest or reasonable cause by any probation officer or law enforcement officer.” Id., at 114, 534 U.S. 112, 122 S.Ct. 587, 151 L.Ed.2d 497. Several days after Knights had been placed on probation, police suspected that he had been involved in several incidents of arson and vandalism. Based on that suspicion and pursuant to the search condition of his probation, a police officer conducted a warrantless search of Knights’s apartment and found arson and drug paraphernalia. Id. at 115-116, 534 U.S. 112, 122 S.Ct. 587, 151 L.Ed.2d 497. The Court held that the search did not violate Knights’s Fourth Amendment rights because the probation was subject to a search condition as terms of his probation and the officers had “reasonable suspicion” that Knights was engaged in criminal activity. Id. at 121, 122 S.Ct. at 593.

Here, as in Knights, the officers’ search of appellant’s home was supported by the terms of appellant’s probation, which provided that “[appellant] shall when ordered by [his probation] Agent, submit to search of [his] ... residence or any other property under [his] control.” And the search was ordered and conducted by appellant’s probation officer. Appellant submitted to the search when informed by the officer, stating that he had “nothing to hide.” Therefore, the search was conducted pursuant to the probation agreement.

For the first time on appeal, however, appellant argues that his probation agreement is invalid because it was not imposed pursuant to the sentencing order for his second-degree burglary offense, and thus, the district court erred in refusing to suppress the evidence seized pursuant to the agreement. Generally, this court will not consider matters not argued and considered in the court below. State v. Mills, 562 N.W.2d 276, 284 (Minn.1997). Here, because appellant did not raise this argument below, the state was not put on notice and did not have the opportunity to present evidence regarding the terms of appellant’s probation. Thus, appellant has waived this argument.

But even considering appellant’s argument, it cannot be said that the probation agreement was invalid. Appellant relies on State v. Henderson, 527 N.W.2d 827 (Minn.1995), to argue that any conditions of probation must be imposed directly by the sentencing court and that his probation agreement is therefore invalid. In Henderson, the district court stayed execution of the sentence on the condition that Henderson complete probation. Id. at 828. While on probation, Henderson was informed by the corrections department that he would be placed in a “Special Supervision Program” (SSP) that lasted nine months and, inter alia, required three face-to-face contacts between Henderson and his probation officer per week, two urina-nalyses per month, and random urinana-lyses. Id. Henderson sought a hearing to clarify the terms of his sentence, and the district court determined that the SSP was merely a level of probation supervision, not an “intermediate sanction,” and thus the corrections department had the authority to mandate appellant’s participation in the program. Id. The Minnesota Supreme Court reversed, holding that the SSP was an “intermediate sanction” and thus the authority to impose the program rested exclusively with the court. Id. at 830. But the court also noted that flexibility in the implementation of conditions is desirable and stated that the district court “should not be burdened with administrative issues relating to the implementation of conditions of probation.” Id. at 829.

This case is distinguishable from Henderson. Here, appellant agreed to and signed the terms of his probation. Appellant makes no showing that his probation agreement imposed any kind of “intermediate sanction” that would have to come directly from the sentencing court. See Minn.Stat. § 609.135, subd. 1(b) (2004) (defining “intermediate sanction” to include, inter alia, incarceration, home detention, or electronic monitoring). The probation agreement here required only that he remain law abiding, avoid possessing firearms or illegal narcotics, inform his probation officer before leaving the state, and submit to searches of his residence. Although the district court did not specifically order the precise terms of appellant’s probation at the sentencing hearing, appellant has not shown his probation agreement is invalid. Therefore, the district court did not err by refusing to suppress the evidence seized as the result of a search authorized by the probation agreement.

Appellant argues that the search of his home was unreasonable because it was not supported by reasonable suspicion of criminal activity there. The quantum of evidence needed to demonstrate reasonable suspicion is not high, but police are required to make that showing when reasonableness is challenged. Richards v. Wisconsin, 520 U.S. 385, 394-95, 117 S.Ct. 1416, 1421-22, 137 L.Ed.2d 615 (1997). The Minnesota Supreme Court has defined reasonable suspicion as something more than an unarticulated hunch; rather, “the officer must be able to point to something that objectively supports the suspicion at issue.” State v. Wasson, 615 N.W.2d 316, 320 (Minn.2000).

Here, the officers acted on more than a mere “hunch” that appellant had violated his probation agreement and was engaged in illegal activity. The district court determined that the probation officer had multiple reasonable bases for searching appellant’s home based on information received by Steel and confirmed by appellant’s probation officer with the Superior police indicating that appellant had violated his probation agreement by leaving the state without informing his officer, by committing the crime of disorderly conduct in that state, and by possessing guns and illegal contraband in his home. Appellant’s probation officer tried unsuccessfully to reach appellant by phone before proceeding to the residence. Under these facts, the officers had “reasonable suspicion” that appellant had engaged in criminal activity.

Appellant argues that this court may hold that the search of his home was invalid because “Minnesota appellate courts have not directly addressed whether it is lawful for a condition of probation to subject a probationer to random and indiscriminate searches of his home.” But the search of his home in this case was not random or indiscriminate, and was based on specific and actionable information provided by Steel and confirmed with the Superior Police Department. Thus, appellant’s argument lacks merit. Therefore, the district court did not err by not suppressing the evidence seized as a result of the search of appellant’s residence.

III.

Appellant next contends that he was denied the right to a fair trial because the prosecutor expressed his personal opinion and vouched for the truthfulness of witnesses during closing argument. This court will reverse a conviction due to prosecutorial misconduct at trial only if the misconduct, “when considered in light of the whole trial, impaired the defendant’s right to a fair trial.” State v. Powers, 654 N.W.2d 667, 678 (Minn.2003). Except in cases involving unusually serious misconduct, reversal is required only when the misconduct substantially influenced the verdict. State v. Steward, 645 N.W.2d 115, 121 (Minn.2002). “We look ... at the closing argument as a whole, rather than just selective phrases or remarks that may be taken out of context or given undue prominence.” State v. Walsh, 495 N.W.2d 602, 607 (Minn.1993).

Vouching occurs “when the government implies a guarantee of a witness’s truthfulness, refers to facts outside the record, or expresses a personal opinion as to a witness’s credibility.” State v. Gail, 713 N.W.2d 851, 866 (Minn.2006) (quotation omitted). The prosecutor may not express a personal opinion about the truthfulness of witness testimony. State v. Salitros, 499 N.W.2d 815, 817 (Minn.1993). “But the state may argue that particular witnesses were or were not credible.” State v. Lopez-Rios, 669 N.W.2d 603, 614 (Minn.2003).

Appellant argues that the prosecutor improperly injected his own opinion by prefacing four of his statements with “I would suggest to you that” or “I suggest to you that[.]” For example, the prosecutor stated, “Ladies and gentlemen of the jury, I suggest to you that Ms. Ruschmeyer was a very credible witness in this case.” Appellant did not object to these statements during trial. Generally, a party waives any challenge to the alleged misconduct on appeal by failing to object or seek a cautionary instruction. State v. Ture, 353 N.W.2d 502, 516 (Minn.1984). But an appellate court may consider a waived issue if there is (1) error; (2) that is plain; and (3) the error affects the defendant’s substantial rights. State v. Griller, 583 N.W.2d 736, 740 (Minn.1998). It is the defendant’s “heavy burden” to demonstrate that the error affected his substantial rights. Id. at 741.

Here, the prosecutor’s prefatory phrase “I suggest” is the equivalent to “I submit” or “the state submits,” which Minnesota courts have held are not impermissible expressions of opinion. State v. Bradford, 618 N.W.2d 782, 799 (Minn.2000) (concluding that prosecutor’s use of “I submit” was an interpretation of the evidence and, therefore, not misconduct); State v. Reed, 398 N.W.2d 614, 617 (Minn.App.1986) (concluding that prefacing argument with “the state submits” is not an injection of personal opinion and does not constitute misconduct), review denied (Minn. Feb. 13, 1987). And the state was permitted to argue that particular witnesses, such as Ms. Ruschmeyer, were or were not credible. Lopez-Rios, 669 N.W.2d at 614. Therefore, appellant demonstrates no plain error.

Appellant argues that the prosecutor improperly stated, without objection, that witness Amy Lane “flat out lied” to the jury when she testified that she knew that her boyfriend Tanner Anderson had stored his guns in appellant’s residence. But the prosecutor did not insinuate that he knew anything the jury did not, and he did not misrepresent any testimony. Rather, the prosecutor was drawing a reasonable inference for the jury because Lane admitted on cross examination that she told the police on the day of the search that she did not know of any guns at appellant’s house. See State v. Ashby, 567 N.W.2d 21, 28 (Minn.1997) (noting that a “prosecutor may draw reasonable inferences from the evidence produced at trial”). Thus, the statement was not plain error.

Appellant next argues that the prosecutor improperly stated, without objection, that “the lies in this case began when [appellant] accused Tanner of leaving the guns under his bed.... They continued through yesterday’s testimony.” But the prosecutor was merely arguing that appellant’s version of the events, which were that the guns belonged to his son, Tanner, was not credible. Further, the prosecutor was anticipating appellant’s argument that the guns found at the residence belonged to his son. State v. Starkey, 516 N.W.2d 918, 927 (Minn.1994) (noting that prosecutor may call into question an anticipated defense argument). Because appellant demonstrates no plain error affecting his substantial rights, the prosecutor committed no misconduct denying appellant his right to a fair trial.

DECISION

Appellant’s conviction of felony burglary is a crime of violence mandating imposition of a firearms restriction under MinmStat. §§ 609.165, subd. lb and 624.712, subd. 5 (2004). The district court did not err in refusing to suppress evidence seized as a result of the warrantless search of appellant’s home because the search was conducted pursuant to a valid probation agreement and the police had reasonable suspicion to believe that appellant was engaged in criminal activity. In addition, appellant demonstrates no plain error substantially affecting his rights made by the prosecutor during closing arguments at trial. Accordingly, we affirm appellant’s conviction of possession of a firearm by an ineligible person.

Affirmed.

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

      . In determining the validity of a search of a probationer's home, Minnesota courts have employed the balancing test used in administrative searches. Kouba, 709 N.W.2d at 306. Under this test, the state’s interests in integrating probationers into the community and combating recidivism are weighed against the probationer’s reasonable expectation of privacy. Samson v. California, — U.S.-,-, 126 S.Ct. 2193, 2196-97, 165 L.Ed.2d 250 (2006).

      . Knights was very recently discussed with approval in Samson, — U.S. at -, 126 S.Ct. at 2196-97. In Samson, the Supreme Court held that "the Fourth Amendment does not prohibit a police officer from conducting a suspicionless search of a parolee.” Id. at -, 126 S.Ct. at 2202.

      . The Supreme Court did not address whether the terms of probation alone satisfied the reasonableness requirement of the Fourth Amendment, stating that "we need not address the constitutionality or a suspicionless search because the search in this case was supported by reasonable suspicion.” Knights at 120 n. 6, 122 S.Ct. at 587. We therefore address both whether the search satisfied the terms of appellant's probation agreement and whether the search was supported by reasonable suspicion.


author: WRIGHT, Judge.

text:
    In re THE CLAIMS FOR NO-FAULT BENEFITS AGAINST PROGRESSIVE INSURANCE COMPANY.
    Nos. A05-2020, A06-58, A06-59.
    Court of Appeals of Minnesota.
    Sept. 12, 2006.

      Michael W. Lowden, The Lowden Law Firm, L.L.C., Bloomington, MN, for appellant Progressive Insurance Company.
    Douglas E. Schmidt, Douglas E. Schmidt Law Office, Minnetonka, MN, for respondents Luis Pallares and Edgar Vil-Mana Pallares.
    Loren Dorshow, Griffel <& Dorshow, Chartered, Minnetonka, MN, for respondents Pedro Sanchez and Aneth Galindo.
    Mark A. Karney, Karney & Associates, Minneapolis, MN, for respondents Elizur Garcia, Maria Castrejon, Francisco Martinez, Pedro Fernandez and Blanca Bona-vides.
    Timothy J. Johnson, Johnson Law Office, P.A., Oakdale, MN, for respondent Elmer Minero.
    Considered and decided by ROSS, Presiding Judge; SHUMAKER, Judge; and WRIGHT, Judge.
   OPINION

WRIGHT, Judge.

Appellant-insurer challenges district court orders confirming ten no-fault automobile-insurance arbitration awards. Appellant argues that the district court erred by (1) denying its motion to vacate because the arbitrators lacked subject-matter jurisdiction and the awards were procured by fraud, and (2) refusing to stay proceedings in district court pending resolution of a related federal lawsuit. Appellant also challenges the district court’s imposition of sanctions under Minn. R. Civ. P. 11 and respondents’ motion for sanctions on appeal. We affirm in part, reverse in part, and deny the motion for sanctions on appeal.

FACTS

These consolidated appeals arise from ten separate arbitration awards granting medical-expense benefits under the Minnesota No-Fault Automobile Insurance Act (No-Fault Act). The claimants were insured by appellant Progressive Insurance Company (Progressive) and sought treatment at Alivio Chiropractic Clinic (Alivio) for injuries received in their automobile accidents. The first arbitration award was issued on November 20, 2003, and the last award was issued on July 13, 2005.

Progressive moved to vacate the arbitration awards based on fraud or, in the alternative, requested that the district court stay the awards pending the outcome of related federal proceedings. Progressive also argued in nine cases that the arbitrators lacked subject-matter jurisdiction because Progressive had not denied those insureds’ claims. Those nine cases were consolidated in Hennepin County District Court by order of the Minnesota Supreme Court. In the tenth case, that of Edgar Villafana Pallares, Progressive denied benefits. The Pallares case was litigated separately in Hennepin County District Court before a different judge. In each of the ten cases, the insured moved to confirm the arbitration award and for sanctions under Minn. R. Civ. P. 11 and Minn.Stat. § 549.211 (2004).

In an order dated August 8, 2005, the district court in the Pallares case confirmed the arbitration award and found no legal basis to stay the arbitration award pending the outcome of the federal lawsuit. In a subsequent order dated November 28, 2005, the district court imposed $1,500 in sanctions against Progressive. In the nine consolidated cases, in an order dated November 18, 2005, the district court denied Progressive’s motion for a stay, confirmed the nine arbitration awards, and imposed sanctions on Progressive in the amount of $1,500 for each insured. Progressive appealed each decision, and we consolidated the cases for appellate review.

ISSUES

I.Did the district court err in denying Progressive’s motion to vacate the arbitration awards based on the claim that the arbitrators exceeded their authority when they considered claims for medical-expense benefits that had not been denied but were under investigation?
II. Did the district court err in denying Progressive’s motions to vacate the arbitration awards based on fraud by medical-service providers?
III. Did the district court violate Progressive’s procedural-due-process rights when it declined to hold evi-dentiary hearings relating to the alleged fraud?
IV. Did the district court abuse its discretion when it declined to stay the arbitration awards until the resolution of a related federal lawsuit?
V. Did the district court abuse its discretion when it imposed sanctions against Progressive?
VI. Should Pallares’s motion for sanctions on appeal be granted?

ANALYSIS

I.

Progressive claims that the district court erred in denying its motion to vacate the arbitration awards in the nine consolidated cases because the arbitrators exceeded their powers when they arbitrated claims for benefits that had not been denied by Progressive. Under the Minnesota Uniform Arbitration Act, upon application of a party, a reviewing court shall vacate an arbitration award when (1) the award was procured by fraud, corruption, or other undue means; (2) there was evident partiality, prejudicial misconduct, or corruption of the arbitrator; (3) the arbitrator exceeded his or her powers; (4) improper conduct of the hearing resulted in substantial prejudice; or (5) there was no arbitration agreement. Minn.Stat. § 572.19, subd. 1 (2004). Whether an arbitrator exceeded his or her authority is a question of law, which we review de novo. Klinefelter v. Crum & Forster Ins. Co., 675 N.W.2d 330, 333 (Minn.App.2004).

Rather than denying the claims for benefits, Progressive issued form letters noting that the claim had been received but that further information was needed. To describe the information that was needed, a box labeled “Other (see below for details)” was checked. Below this box was a line stating “Details: pending further investigation.” Progressive maintains that, under the rules for arbitration of no-fault automobile-insurance claims, arbitration may be initiated only after there has been a denial of a claim. Accordingly, Progressive argues, the arbitrators lacked subject-matter jurisdiction to consider the claims in the consolidated cases.

Under Minnesota’s statutory scheme for no-fault automobile insurance, claims for benefits that are $10,000 or less are subject to mandatory arbitration. Minn.Stat. § 65B.525, subd. 2 (2004). Progressive relies on Minn. R. No-Fault Arb. 5 to support its assertion that arbitrators obtain subject-matter jurisdiction only after a claim is denied. See Minn.Stat. § 65B.525, subds. 1, 2 (2004) (authorizing court rules providing for no-fault arbitration procedure). Rule 5 provides: “At such time as the [insurer] denies a claim, the [insurer] shall advise the claimant of claimant’s right to demand arbitration.” Minn. R. No-Fault Arb. 5(a). A claim is deemed denied if an insurer “fails to respond in writing within 30 days after reasonable proof of the fact and the amount of loss is duly presented” to the insurer. Minn. R. No-Fault Arb. 5(d). But regardless of whether Progressive’s response to the claims at issue here constitutes a denial, Progressive’s argument that rule 5 governs the arbitrator’s subject-matter jurisdiction is without merit.

The language of the No-Fault Act as enacted in 1974 establishes that the no-fault arbitration rules are merely procedural. The section of the act that grants jurisdiction to the arbitrators is titled “MANDATORY ARBITRATION OF CERTAIN CLAIMS; SUPREME COURT TO PROMULGATE RULES OF PROCEDURE.” 1974 Minn. Laws ch. 408, § 12, at 776. The current statute provides that “the [s]upreme [c]ourt and the several courts of general trial jurisdiction of this state shall by rules of court or other constitutionally allowable device, provide for the mandatory submission to binding arbitration of all cases at issue where the claim ... is in an amount of $10,000 or less ... for no-fault benefits....” Minn.Stat. § 65B.525, subd. 1. And the Minnesota Supreme Court has observed that the “jurisdictional mandate for arbitration” arises from the monetary threshold. Ill. Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 804 (Minn.2004). The supreme court reasoned:

The No-Fault Act provides that arbitration is mandatory to resolve all claims ... in .an amount of $10,000 or less. Black’s Law Dictionary defines “claim” as “[t]he aggregate of operative facts giving rise to a right enforceable by a court.” We have defined “claim” in the context of the arbitration provisions of the No-Fault Act as the amount the claimant is asking for.

Id. at 803-04 (quotations and citation omitted).

Under Progressive’s theory, an insured does not have a “claim” until benefits have been denied. But the language of III. Farmers suggests otherwise. Arbitrators have mandatory jurisdiction to consider “claims” when the amount of the claim is $10,000 or less. Id. As such, rule 5(a) is properly viewed as a notice provision requiring only that insurers provide certain information to insureds whose claims have been denied. Thus, because subject-matter jurisdiction arises from the monetary amount of the claim, not the insurer’s denial of the claim, the arbitrators did not exceed their authority when they evaluated the claims for no-fault benefits in the nine cases in which the claims were not denied.

Because the no-fault insurance benefits claims were in the amount of $10,000 or less, the arbitrators had subject-matter jurisdiction over the claims, and the district court did not err in denying the motion to vacate the nine awards on this ground.

II.

Progressive next argues that the arbitration awards should be vacated under Minn.Stat. § 572.19, subd. 1(1), because they were procured by fraud. Progressive claims that Alivio and associated service providers overbilled for their services, rendering the bills submitted in the arbitration hearings fraudulent. Progressive admits that the insureds were unaware of, and did not participate in, any fraudulent activity on the part of Alivio and its associates. Relying on this admission, the district court determined that there was no basis to vacate the awards on grounds of fraud. Moreover, in the Pallares case, the district court noted that the issue of overbilling was a fact determination that had already been considered and decided by the arbitrator. Progressive argues on appeal that the alleged fraud by Alivio and its associates should have been considered by the district court.

As an initial matter, Progressive’s argument requires consideration of whether, for purposes of the No-Fault Act, an arbitration award may be vacated under section 572.19 based on fraud by one who was not a party to the arbitration proceeding. Alivio and its associates were not parties to the arbitration proceedings or the district court proceedings. The Minnesota Uniform Arbitration Act, Minn. Stat. §§ 572.08- 30 (2004), governs the rights and duties of the parties before the arbitrator. See State ex rel. Hatch v. Cross Country Bank, 703 N.W.2d 562, 569 (Minn.App.2005) (holding that state as third party was not bound by arbitration agreement in individuals’ contracts with credit-card company). Our extensive research has not produced, nor has Progressive cited, any legal authority wherein an arbitration award in Minnesota has been vacated for fraud committed by one who was not a party to the arbitration. See 6A Steven J. Kirsch, Minnesota Practice § 57.18 (3d ed.1990) (noting that Minn. Stat. § 572.19, subd. 1(1), refers to misconduct of opposing parties); see also Aaron v. III. Farmers Ins. Group, 590 N.W.2d 667, 670 (Minn.App.1999) (“Minn.Stat. § 572.19, subd. 1(2), proscribes prejudicial misconduct on the part of an arbitrator, not a party.... Misconduct by one of the parties falls under Minn.Stat. § 572.19, subd. 1(1)... .”).

We do not intend to encourage an arbitrator or a district court to ignore evidence of fraud when presented. In seeking to vacate an award for fraud, “the burden of the assault rests with the attacking party, and to prevail he must establish the fraud ... by clear allegations and proof.” Mork v. Eureka-Sec. Fire & Marine Ins. Co., 230 Minn. 382, 391, 42 N.W.2d 33, 38 (1950). But Progressive did not plead fraud with specificity and presented no evidence of fraud apart from a photocopy of the federal complaint against Alivio. See Abd Alla v. Mourssi, 680 N.W.2d 569, 574 (Minn.App.2004) (holding that mere allegation that arbitrator had ex parte communication with interested third party does not demonstrate fraud, corruption, or other undue means). Progressive also failed to present evidence of fraud in the arbitration hearings. It is evident from the record that Progressive failed to meet its burden of pleading and proving that it is entitled to vacation of the arbitration awards on the ground of fraud under Minn.Stat. § 572.19, subd. 1(1).

Progressive argues that this is a special case in which it was precluded from submitting evidence of fraud during arbitration in order to prevent its investigation from being compromised. But the No-Fault Act provides an insurer with concerns similar to those of Progressive with a remedy if the insurer pays

benefits which are not payable, but are in fact paid, because of an intentional misrepresentation of a material fact ... by a person providing products or services for which basic economic loss benefits are payable. The action may be brought only against the person providing the products or services, unless the claimant has intentionally misrepresented the facts, or knew of the misrepresentation.

Minn.Stat. § 65B.54, subd. 4 (2004) (emphasis added). As between vacating an otherwise valid arbitration award under section 572.19 and pursuing a separate cause of action against the third-party medical-service provider for fraud, the legislature has made clear its preference through enactment of section 65B.54. On the record before us, Progressive’s remedy for alleged fraudulent practices by medical-service providers does not lie under section 572.19. The district court, therefore, did not err in denying Progressive’s motions to vacate the arbitration awards based on fraud.

III.

Progressive maintains that the district court’s refusal to hold evidentiary hearings on the issue of whether the awards in these consolidated appeals were procured by fraud violated the right to procedural due process. We review de novo the process afforded a party to determine whether it is constitutionally infirm. Zellman ex rel. M.Z. v. Indep. Sch. Dist. No. 2758, 594 N.W.2d 216, 220 (Minn.App.1999), review denied (Minn. July 28, 1999).

The United States Constitution guarantees the right to due process of law. U.S. Const, amends. V, XIV. “The fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner.” Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976) (quotation omitted). When considering a procedural-due-process challenge, we apply a balancing test to determine whether the process adequately balances the private interest at stake, the risk that the process utilized will result in erroneous deprivation of the private interest, the probable value of additional procedural safeguards, and the state’s interest in the procedures provided, including the administrative burden and expense additional procedures would require. In re Conservatorship of Foster, 547 N.W.2d 81, 85 (Minn.1996).

Progressive was afforded all the procedural safeguards ordinarily provided to a party in an arbitration proceeding. Progressive chose not to present evidence of fraud in those proceedings and, thus, did not give the arbitrators the opportunity to develop a factual record on the alleged fraud. When reviewing an arbitration award, the district court’s role is not to develop additional facts relating to the claim. Liberty Mut. Ins. Co. v. Sankey, 605 N.W.2d 411, 413-14 (Minn.App.2000), review denied (Minn. Apr. 18, 2000). Rather, its role is limited to determining whether any of the statutory grounds for vacating the award exists. Id. Because Progressive admitted that there was no evidence of fraud by the insureds or the arbitrators entitling it to vacation under Minn.Stat. § 572.19, subd. 1(1), any evidence of fraud by the service providers presented in an evidentiary hearing would address claims for relief under Minn.Stat. § 65B.54, subd. 4, which were not before the district court. Because an evidentiary hearing would have created an additional administrative burden on the district court, without any additional protection of Progressive’s interests, Progressive’s procedural-due-process argument fails.

IV.

Progressive sought a stay of the proceedings in each case pending the resolution of its federal lawsuit. In the Pallares case, the district court found that the initiation of a civil action against Alivio in federal court did not establish a legal basis to stay the arbitration award. In the nine consolidated cases, the district court denied Progressive’s motion to stay the awards. Progressive now challenges these decisions.

We review the district court’s denial of a stay pending the outcome of the federal proceedings for an abuse of discretion. Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438, 449 (Minn.App.2001). “In deciding whether to defer to another court, a trial judge must determine which action will best serve the parties’ need for a comprehensive solution, consider judicial economy, cost and convenience to the litigants, and assess the possibility of overlapping multiple determinations of the same dispute.” Green Tree Acceptance, Inc. v. Midwest Fed. Sav. & Loan Ass’n of Minneapolis, 433 N.W.2d 140, 142 (Minn.App.1988). We consider these factors in light of the purposes of Minnesota’s No-Fault Act, which include to “speed the administration of justice, to ease the burden of litigation on the courts of this state, and to create a system of small claims arbitration to decrease the expense of and to simplify litigation.... ” Minn.Stat. § 65B.42(4) (2004). Granting Progressive’s request for a stay would not have served the interests of the insureds, the purposes of the No-Fault Act, or judicial economy. Payment of the arbitration awards at issue here has already been delayed for years. And supplemental information provided to this court indicates that, during a portion of this time, Progressive’s federal lawsuit has been stayed pending a criminal investigation into Ali-vio’s billing practices. See In re Livingood, 594 N.W.2d 889, 895-96 (Minn.1999) (noting that court of appeals may consider documentary evidence not provided to district court if evidence is uncontroverted and supportive of district court’s decision).

Granting the relief Progressive seeks would contravene the purposes of the No-Fault Act. In Wolf v. State Farm Ins. Co., we determined that an insured has a right to basic economic-loss benefits under the No-Fault Act. 450 N.W.2d 359, 362 (Minn.App.1990), review denied (Minn. Mar. 16, 1990). Several statutory provisions express the legislature’s preference for immediate payment of benefits with later recovery of unwarranted payment over indefinite suspension of payments. For example, benefits are considered overdue if not paid within 30 days after submission of reasonable proof of the claim and are subject to interest accrual. Minn.Stat. § 65B.54, subds. 1, 2 (2004). And as addressed above, section 65B.54 allows insurers to recover benefits that are paid and later proven to be fraudulently procured under circumstances identical with those alleged here. The district court was well within its discretion when it denied the motions to stay.

V.

A.

On October 17, 2005, Pallares moved the district court for sanctions under Minn. R. Civ. P. 11 and Minn.Stat. § 549.211 (2004). In its order dated November 28, 2005, the district court granted the motion and imposed sanctions of $1,500. Progressive argues that Pallares’s motion for sanctions was untimely because the underlying claim had been resolved by an order confirming the arbitration award on August 8, 2005. As a result, Progressive had no opportunity to withdraw or correct its pleading on receipt of the notice of motion for sanctions.

A motion for sanctions under rule 11 “shall not be filed with or presented to the [district] court unless, within 21 days after service of the motion (or such other period as the [district] court may prescribe), the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.” Minn. R. Civ. P. 11.03(a)(1); see Minn.Stat. § 549.211, subd. 4(a) (2004) (providing essentially the same service and filing requirement). A district court abuses its discretion if it imposes sanctions when the moving party has not complied with the so-called “safe-harbor provision” “because the offending party is unable to withdraw the improper papers or otherwise rectify the situation.” Gibson v. Coldwell Banker Burnet, 659 N.W.2d 782, 790 (Minn.App.2003) (quotation omitted).

Pallares did not comply with the safe-harbor provision when he served and filed his motion for sanctions after the order confirming the contested arbitration award had issued. The district court’s imposition of sanctions was an abuse of discretion and, therefore, is reversed.

B.

In the nine consolidated cases, the district court also imposed sanctions of $1,500 for each insured. The order neither contained findings of fact related to the sanctions nor addressed the conduct that the district court found objectionable. Both section 549.211 and rule 11 require the district court when imposing sanctions to make factual findings as to the improper conduct and explain the basis for the sanction. Minn.Stat. § 549.211, subd. 5(c) (2004); Minn. R. Civ. P. 11.03(c). The district court abused its discretion when it imposed sanctions without complying with these requirements. Accordingly, we reverse the imposition of sanctions in the nine consolidated cases.

VI.

Respondents moved this court for sanctions on May 15, 2006. But respondents failed to cite any legal authority in that motion for imposing sanctions. The appellate rules prescribe the procedure for seeking attorney fees but do not provide a substantive basis for awarding fees. Minn. R. CivApp. P. 139.06 1998 advisory comm. cmt. Were we to construe the motion as submitted under Minn.Stat. § 549.211, deficiencies in the motion would preclude us from granting relief. The motion was not served at least 21 days in advance of filing, as required by Minn.Stat. § 549.211, subd. 4(a), and the motion did not identify the pleadings or assertions alleged to be unfounded to afford Progressive the required opportunity to correct or withdraw them. Nor, in light of the relief obtained by Progressive, can we characterize the appeals as taken merely to delay proceedings on the underlying judgment, the showing required for an award of damages or costs under Minn. R. Civ.App. P. 138. We, therefore, deny the motion for sanctions on appeal.

DECISION

Because the claims for benefits were for amounts of $10,000 or less, the arbitrators had subject-matter jurisdiction to arbitrate the claims even without a formal denial of benefits by Progressive. Because Progressive presented no evidence of fraud by the insureds, the district courts properly denied Progressive’s motions to vacate based on fraud. Progressive’s requests to stay proceedings pending completion of a related federal lawsuit were properly denied because a stay would not have served judicial economy, the interests of the insureds, or the purposes of the No-Fault Act. Accordingly, the confirmation of the arbitration awards is affirmed. But it was an abuse of discretion to impose sanctions on Progressive absent compliance with the safe-harbor provision and the requirement that an order imposing sanctions identify the offending conduct and explain the basis for the sanctions imposed. Thus, the imposition of sanctions is reversed. We also deny the motion for sanctions on appeal.

Affirmed in part and reversed in part; motion denied.

      . Progressive filed suit in federal district court on May 18, 2005, alleging that Alivio and other associated service providers, including the attorney for five respondents, engaged in racketeering to defraud Progressive through overbilling.

      . The district court concluded that the arbitrators did not exceed their authority on the ground that, by indefinitely delaying payment and providing the insureds with no information about how or when its investigation would conclude, Progressive constructively denied the claims. We affirm this conclusion for reasons other than constructive denial. Progressive relies on 'Weaver v. State Farm Ins. Cos. for authority supporting the reasonableness of its failure to pay or deny claims within 30 days. 609 N.W.2d 878, 885 (Minn. 2000); see Minn. R. No-Fault Arb. 5(d) (deeming insurer's failure to respond to claim within 30 days a denial). But the reasonableness of Progressive's actions has no bearing on whether the arbitrator lacked subject-matter jurisdiction over the claims. In Weaver, the Minnesota Supreme Court recognized that it may "at times [take] more than 30 days to investigate a claim." 609 N.W.2d at 885. But Weaver also determined that the reasonableness of an investigation is a question of fact for the arbitrator. Id. at 884-85. Although decided in the context of an independent medical examination, Weaver’s analysis supports our conclusion that suspension of a claim pending investigation does not affect the jurisdiction of the arbitrator. Rather, it poses a question of fact that may influence the result of the arbitration proceeding.

      . Progressive argues that Alivio essentially was a party because the insureds had assigned their benefits to Alivio. But Progressive did not present evidence of such an assignment.

      . We also observe that, in an order dated May 16, 2006, the federal district court denied Progressive’s motion for a preliminary injunction to enjoin future submission of no-fault insurance claims and arbitration petitions related to services provided by Alivio. In doing so, the federal district court found that Progressive had not made a sufficient showing of irreparable harm because any injury could be adequately remedied by monetary damages. Progressive N. Ins. Co. v. Alivio Chiropractic Clinic, Inc., No. 05-0951 (PAM/RLE), 2006 WL 1371672 (D.Minn. May 16, 2006) (order).