Albany Ready Mix, Inc., Appellant,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A24-0541

Albany Ready Mix, Inc.,
Appellant,

vs.

Craig Reinke, et al.,
Respondents.

Filed December 16, 2024
Affirmed
Schmidt, Judge

Stearns County District Court
File No. 73-CV-22-5466

Sarah R. Jewell, River Valley Law, P.A., Waite Park, Minnesota (for appellant)

Craig G. Reinke, Michelle M. Reinke, Richmond, Minnesota (pro se respondents)

Considered and decided by Smith, Tracy M., Presiding Judge; Frisch, Judge; and
Schmidt, Judge.
NONPRECEDENTIAL OPINION
SCHMIDT, Judge
In this appeal from a final judgment, appellant Albany Ready Mix, Inc. argues the
district court abused its discretion when it imposed sanctions against Albany Ready Mix’s
counsel. Because we conclude that respondents Craig and Michelle Reinke complied with
the safe harbor provision of Minn. R. Civ. P. 11.03 and because the district court did not
abuse its discretion by imposing sanctions, we affirm.
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FACTS
Albany Ready Mix provides concrete for residential and commercial projects. The
Reinkes own real property in Richmond, Minnesota. In June 2021, Craig Reinke called
Albany Ready Mix about a new concrete driveway. Trent Pauls—an independent
contractor working for Albany Ready Mix— answered the call. Pauls stated that Albany
Ready Mix was too busy to pour the driveway, but he said that he pours concrete as a side
job and offered to do so for the Reinkes. Pauls measured the driveway and texted Craig
Reinke with a bid of $33,000. Pauls claims that at some later point in time the project
doubled in size. The Reinkes claim they only agreed to pay $3,000 extra for more concrete
by a shed and for an area of the driveway that Pauls forgot to include in his initial estimate.
From July 7–15, 2021, Pauls and his team po ured the concrete for the driveway.
Pauls used concrete supplied by Albany Ready Mix. Craig Reinke was unhappy with the
work after it was completed. Pauls offered to acid stain the driveway for an additional cost
and Craig Reinke agreed. The Reinkes and Pauls dispute the quality of the staining work.
Pauls claims he used an Albany Ready Mix company credit card to purchase the stain and
other materials. Pauls also claims that the Albany Ready Mix invoices initially had both
his name and Craig Reinke’s name because he planned to give the Reinkes the contractor
price, but that he (Pauls ) removed his name and the contractor price after the dispute
escalated.
On November 13, 2021, Jeff Kostreba —the owner of Albany Ready Mix—visited
Craig Reinke and gave him a prelien notice. Kostreba served and filed for a record of a
mechanic’s lien statement on December 22, 2021. Albany Ready Mix later sued the
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Reinkes to foreclose the mechanic’s lien and for breach of contract, unjust enrichment,
quantum meruit, and account stated. The Reinkes counterclaimed for slander of title and
civil conspiracy. The Reinkes also added Pauls as a third-party defendant.
On July 18, 2022, the Reinkes’ counsel served Albany Ready Mix with a motion for
sanctions under Minn. R. Civ. P. 11.03. On November 4, 2022, t he Reinkes filed the
rule 11 motion for sanctions and a motion for summary judgment. After a hearing, the
district court granted summary judgment for the account stated claim, but otherwise denied
the summary judgment motion as premature and reserved ruling on the rule 11 motion.
In August 2023, after further discovery, the Reinkes filed both a second motion for
summary judgment and a second motion for rule 11 sanctions. After Pauls filed for
bankruptcy, the district court dismissed him from the case, and the bankruptcy resulted in
a stay of the Reinkes’ civil conspiracy claim against Albany Ready Mix. After a hearing,
the district court dismissed all of Albany Ready Mix’s claims and granted $5,000 in
attorney fees as sanctions against Albany Ready Mix’s counsel. The district court later
held a bench trial on the Reinkes’ slander of title claim and found the Reinkes failed to
prove the claim by a preponderance of the evidence.
Albany Ready Mix appeals.
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DECISION
I. The district court acted within its discretion in considering the first rule 11
motion that complied with the safe harbor provision.

Albany Ready Mix argues the Reinkes failed to follow the rule 11 safe harbor
provision before filing the first motion for sanctions. A rule 11 motion for sanctions must
be served on the other party, “but shall not be filed with or presented to the court unless,
within 21 days after service of the motion . . . the challenged document, claim, defense,
contention, allegation, or denial is not withdrawn or appropriately corrected.” Minn. R.
Civ. P. 11.03(a)(1). A court abuses its discretion by imposing sanctions if the moving party
failed to serve the motion 21 days before filing it. Gibson v. Coldwell Banker Burnet,
659 N.W.2d 782, 790 (Minn. App. 2003).
The district court found that the Reinkes properly complied with the safe harbor
provision for the rule 11 motion served on July 18, 2022, and filed with the court on
November 4, 2022. The district court initially reserved ruling on the motion to allow for
discovery. After discovery occurred, the district court considered the Reinkes’ initial
rule 11 motion and found that Albany Ready Mix “had clear notice that the [c]ourt would
consider [r]ule 11 sanctions upon a renewed motion[.]” The Reinkes filed a second rule 11
sanctions motion on August 10, 2023, which had not been served 21 days before it was
filed. The district court appropriately compared the two motions and expressly refused to
consider any sanctionable conduct that had not been raised in the first motion.
Because the district court limited its review to the issues presented in the first
motion, we conclude that the court did not abuse its discretion by imposing sanctions.
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II. The district court acted within its discretion in imposing sanctions.

A. The district court did not abuse its discretion in concluding Albany
Ready Mix’s counsel did not have a reasonable basis for pursuing the
claims.

When filing or submitting documents to the court, Minnesota requires an attorney
to certify that “to the best of the person’s knowledge, information, and belief, formed after
an inquiry reasonable under the circumstances:” (1) the document is not presented to the
court for an improper purpose; (2) the “legal contentions therein are warranted by existing
law”; and (3) the allegations and factual contentions have—or will after reasonable
discovery have—evidentiary support. Minn. R. Civ. P. 11.02. A district court may
sanction an attorney for violating one of the above provisions. Minn. R. Civ. P. 11.03.
“Sanctions should not be imposed when counsel has an objectively reasonable basis for
pursuing a factual or legal claim or when a competent attorney could form a reasonable
belief a pleading is well-grounded in fact and law.” Leonard v. Nw. Airlines, Inc.,
605 N.W.2d 425, 432 (Minn. App. 2000) (quotation omitted), rev. denied (Minn. Apr. 18,
2000). We review a court’s award of sanctions for an abuse of discretion. Id.
1. The existence of a valid oral contract.
Albany Ready Mix argues the district court abused its discretion by imposing
sanctions because its counsel had an objectively reasonable belief that it had a valid oral
contract with the Reinkes. The district court imposed sanctions after finding that Albany
Ready Mix pursued its claim for breach of an oral contract without any objectively
reasonable basis to support the claim.
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After discovery closed, Albany Ready Mix had no evidence of any communication
between Albany Ready Mix and the Reinkes about ordering concrete. Discovery revealed
that Pauls operated as an independent contractor on the Reinkes’ project and that he ordered
the concrete. The court sanctioned Albany Ready Mix’s counsel for continuing to pursue
the “unfounded” breach of oral contract claim after learning these facts in discovery.
Albany Ready Mix places great weight on the district court’s finding that Albany
Ready Mix undisputedly provided concrete and received no payment. But that finding
does not prove the existence of a contract between Albany Ready Mix and the Reinkes. At
best, Albany Ready Mix had a contract with Pauls. “[A]n owner is not liable for work or
materials furnished [to] a contractor when he is not a party to the contract between the
contractor and the materialman.” Duluth Lumber & Plywood Co. v. Delta Dev., Inc., 281
N.W.2d 377, 384 (Minn. 1979). Without evidence of a contract between Albany Ready
Mix and the Reinkes, the fact that the concrete was delivered and not paid for does not
provide evidence for a breach of contract claim against the Reinkes.
1
Because Albany Ready Mix continued to pursue its breach of an oral contract claim
against the Reinkes without an objectively reasonable basis to support it, we conclude the
district court did not abuse its discretion by imposing sanctions.

1 Albany Ready Mix argues it had an objectively reasonable basis to pursue the oral
contract claim based on a theory of partial performance, which provides an exception to
the oral agreement being invalid under the statute of frauds. But Albany Ready Mix did
not present this theory to the district court. We will not consider whether the district court
abused its discretion based on an issue that Albany Ready Mix failed to present to it. See
Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).
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2. The existence of a valid mechanic’s lien that satisfied the prelien
notice requirement or a valid exception.

Albany Ready Mix argues no prelien notice was required because its counsel had
an objectively reasonable belief that it contracted directly with the Reinkes. The district
court properly rejected this argument for at least three reasons.
First, as noted above, Albany Ready Mix had no objectively reasonable basis to
believe a valid contract existed between Albany Ready Mix and the Reinkes. As the district
court found, Pauls acted as an independent contractor, ordered the concrete, and purchased
other materials on his own. Once Albany Ready Mix’s counsel discovered these facts, she
no longer could have an objectively reasonable belief that a contract existed or that Albany
Ready Mix qualified for the prelien notice exception for general contractors, assuming it
otherwise could have. Minn. Stat. § 514.011, subd. 1 (2022).
Second, the district court found that a statutory exception to the prelien notice,
Minn. Stat. § 514.011, subd. 4a (2022), did not apply because no evidence in the record
supported “a conclusion that the Reinkes were acting as their own general contractor[.]”
As the claimant of the exception, Albany Ready Mix bore the burden to prove that the
Reinkes acted as their own general contractor and therefore no prelien notice was required.
Lighthouse Mgmt. Inc. v. Oberg Fam. Farms, 966 N.W.2d 29, 42 (Minn. App. 2021), rev.
denied (Minn. Nov. 16, 2021). Albany Ready Mix failed to meet its burden.
Finally, Albany Ready Mix’s attempt to serve the required prelien notice was
untimely.
2 The first shipment of concrete arrived on July 7, 2021. Albany Ready Mix

2 On appeal, Albany Ready Mix maintained that no prelien notice was required because it
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served the prelien notice on November 13, 2021, well past the timeframe for serving a
prelien notice if Albany Ready Mix did not enter into a direct contract with the Reinkes .
See Minn. Stat. § 514.011, subds. 1-2 (2022). The district court’s finding was not clearly
erroneous and its decision to impose sanctions was not an abuse of discretion.
B. The district court had discretion to impose sanctions without first
finding counsel acted with subjective bad faith.

Albany Ready Mix appears to argue that the district court’s failure to find its counsel
acted in bad faith means the sanctions award should be reversed. But “the objective
standard under Rule 11 permits the imposition of sanctions for the filing of a meritless
claim, without a finding of subjective bad faith.” Peterson v. Hinz, 605 N.W.2d 414, 417
(Minn. App. 2000), rev. denied (Minn. Apr. 18, 2000). A district court retains wide
discretion to impose sanctions even without an express finding of bad faith. Id. Thus, the
district court here did not need any bad faith finding in order to impose sanctions.
When imposing sanctions the district court found:
A reasonable re-evaluation of Albany Ready Mix’s claims and
of the evidence should have suggested its asserted claims
against the Reinkes were unsupported by the evidence. The
Court is especially troubled by counsel’s maintenance of this
suit against the Reinkes based on repeated empty assertions
that there was a contract between the Reinkes and Albany
Ready Mix, and insistence on more discovery without any
apparent indication that any discoverable evidence exists to
support Albany Ready Mix’s claims.

The court acted within its discretion by imposing sanctions without a finding of bad faith.

was not a subcontractor and, instead, contracted directly with the homeowner. We address
this third reason only because the record reflects that Albany Ready Mix did attempt to
serve a prelien notice, albeit an untimely one.
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C. The imposition of sanctions did not conflict with the district court’s
determination on the Reinkes’ slander of title claim.

Albany Ready Mix argues that the district court should have vacated the sanctions
order after finding that the Reinkes failed to prove their slander of title claim at trial. 3
Albany Ready Mix cites Thuma v. Kroschel for the proposition that it is an abuse of
discretion for the district court to impose sanctions after trial when the summary judgment
issues mirror the basis for imposing sanctions. 506 N.W.2d 14, 21 (Minn. App. 1993), rev.
denied (Minn. Dec. 14, 1993). But Thuma is distinguishable. In Thuma, we held that
sanctions were inappropriate because a party “who survived a motion to dismiss and
summary judgment, had no reason to believe that the court deemed the claim frivolous or
meritless.” Id. Unlike in Thuma, all of Albany Ready Mix’s claims were dismissed on
summary judgment because the claims lacked evidentiary support.
The district court also distinguished the slander of title and the sanctions issues. For
slander of title, the court considered whether Albany Ready Mix acted with malice when
it filed the initial mechanic’s lien. Whereas for sanctions, the court considered the
attorney’s knowledge after discovery closed. The Reinkes’ failure to prove that Albany
Ready Mix acted with malice when filing the mechanic’s lien ha d no bearing on the
attorney pursuing claims that had no support in the evidence produced during discovery.
Affirmed.

3 We reject the Reinkes’ contention that Albany Ready Mix forfeited this argument by
failing to raise it with the district court. The order including the slander of title claim is
part of the record on appeal and therefore can be considered by this court. See
Plowman v. Copeland, Buhl & Co., 261 N.W.2d 581, 583 (Minn. 1977); Minn. R. Civ.
App. P. 103.04, 110.01.