IN THE SUPREME COURT OF IOWA

No. 12–0064

Filed December 13, 2013

LARRY D. SCHAEFER and ELAINE M. SCHAEFER,

Appellants,

vs.

DALE L. PUTNAM, PUTNAM LAW OFFICE, and SMP, L.L.C.,

Appellees.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Cerro Gordo County, 

James M. Drew, Judge.

A farm creditor seeks further review of a court of appeals decision 

reversing a district court ruling that found it had subject matter 

jurisdiction to foreclose a mortgage on agricultural property. DECISION 

OF COURT OF APPEALS VACATED IN PART AND AFFIRMED IN 

PART; DISTRICT COURT JUDGMENT AFFIRMED.

Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for 

appellants.

Dale L. Putnam of Putnam Law Office, Decorah, for appellees.
2

ZAGER, Justice.

In this appeal, we are asked to interpret Iowa Code section 

654A.6(1) (2009) when a farm creditor, after being sued regarding the 

validity of its mortgages, brought a counterclaim to foreclose the 

mortgages without first obtaining a mediation release. Larry and Elaine 

Schaefer filed suit against their sons, their former attorney, Dale 

Putnam, a limited liability company, SMP, L.L.C. (SMP), and others. 

SMP, without first seeking mediation, counterclaimed to foreclose on a 

mortgage granted by the Schaefers on their agricultural property. The 

district court foreclosed the mortgage. After the district court denied the 

Schaefers’ motion to quash or stay the sheriff’s sale, they appealed, 

arguing that the district court lacked subject matter jurisdiction to 

foreclose on the agricultural property without SMP first obtaining the 

mediation release required by Iowa Code section 654A.6(1). The court of 

appeals agreed and reversed the district court. We granted further 

review. For the reasons set forth below, we conclude SMP was not 

required to obtain the mediation release prior to filing a counterclaim to 

foreclose its mortgage. We therefore reverse the court of appeals on this 

issue and affirm the decision of the district court.

I. Background Facts and Proceedings.1

In 1998, Land O’ Lakes obtained a judgment against Larry 

Schaefer for $127,125 plus interest. After the judgment, Larry Schaefer 

transferred by quitclaim deed, for no consideration, real property located 

in Oklahoma to his wife Elaine. After Land O’ Lakes commenced a 

 

1The procedural history of this case is lengthy and complex. However, some 

history regarding the facts leading up to the current dispute will be instructive.
3

fraudulent-transfer action against Larry and Elaine Schaefer2 in 

Oklahoma, it obtained a judgment for $161,749.19. The Oklahoma 

judgment amount represented the original judgment against Larry plus 

accrued interest and costs.

On January 12, 2001, G.R.D. Investments L.L.C. (G.R.D.) filed its

“Articles of Organization” with the Iowa Secretary of State, naming the 

Schaefers as the managers of G.R.D. The Schaefers entered into an 

employment agreement with G.R.D., which entitled Larry and Elaine 

each to health insurance and a salary. G.R.D.’s operating agreement 

named Raymond and Dean Schaefer, the Schaefers’ sons,3 as the initial 

members of G.R.D. The purpose of G.R.D., according to the operating 

agreement, was to purchase, sell, and rent real estate. G.R.D. was 

formed with the assistance of the Schaefers’ attorney, Dale Putnam.4

In January 2001, the Schaefers transferred by quitclaim deed all of 

their nonexempt real property to G.R.D. The property consisted of 

approximately 160 acres of farmland and other real estate on which 

houses and buildings were situated. The Schaefers retained forty acres 

of real estate in Cerro Gordo County, which they claimed as their fortyacre homestead. After the transfer of the real property, Liberty Bank,

F.S.B.

5 loaned money to G.R.D., and G.R.D. executed and delivered to 

 

2We will refer individually to Larry Schaefer and Elaine Schaefer as Larry and 

Elaine. We will refer collectively to Larry and Elaine Schaefer as the Schaefers.

3To avoid confusion with Larry and Elaine Schaefer (Schaefers), we will refer to 

Raymond and Dean Schaefer as Raymond and Dean.

4We will refer collectively to Dale Putnam and Putnam Law Office as Putnam.

5Liberty Bank, F.S.B. is successor by merger of Hancock County Bank & Trust. 

The loans in question were actually made by Hancock County Bank, but for purposes of 

clarity, we refer to the lender as Liberty Bank, which was a party to this suit, though it 

has no role in this appeal.
4

Liberty Bank mortgages on the real property transferred previously by 

the Schaefers to G.R.D.

In July 2001, Land O’ Lakes filed a complaint in the United States 

District Court for the Northern District of Iowa seeking to enforce its 

judgment against the 160 acres of farmland, despite the Schaefers’ 

purported transfer of the farmland to G.R.D. Afterwards, Land O’ Lakes 

and the Schaefers discussed settlement. In May 2003, the parties 

reached a settlement agreement under which the Schaefers agreed to pay 

Land O’ Lakes $85,000.

On April 2, the Schaefers executed a promissory note for $85,000

payable to G.R.D. A mortgage on the Schaefers’ previously retained 

forty-acre homestead, executed the same day, secured the note. On May 

1, G.R.D. borrowed $275,000 from Liberty Bank and executed a

promissory note. G.R.D. then loaned the Schaefers $85,000. On May 

12, the Schaefers tendered to Land O’ Lakes the settlement funds.

In October 2003, the Schaefers filed for Chapter 7 bankruptcy. On 

March 30, 2004, the bankruptcy trustee filed a complaint seeking to 

avoid as fraudulent the January 2001 transfers by the Schaefers to 

G.R.D. The bankruptcy court afterward voided the 2001 transfers under 

the Bankruptcy Code.

6 See 11 U.S.C. § 548 (2000). As a result of the 

bankruptcy ruling, the trustee had the authority to take control of the 

real property, liquidate it, and distribute sale proceeds to the Schaefers’ 

creditors.

To prevent the trustee from selling the real property, the Schaefers 

had to pay their creditors, the trustee’s fees, and the trustee’s attorney

 

6The effect of this bankruptcy ruling on who held title to the real property was 

examined in Schaefer v. Schaefer, 795 N.W.2d 494, 502 (Iowa 2011).
5

fees. The Schaefers borrowed the necessary money from SMP. In late 

2005, the Schaefers executed four promissory notes payable to SMP and 

granted SMP a mortgage on certain real property. Also, on June 8, 2006, 

G.R.D. assigned to SMP the mortgage on the forty-acre homestead dated 

April 2, 2003, which secured the $85,000 promissory note with the same 

date. The Schaefers defaulted on the notes.

On September 23, 2008, the Schaefers filed their petition at law for 

declaratory relief against Putnam, SMP, G.R.D., Raymond and Dean, and 

Liberty Bank.7 The Schaefers alleged Putnam negligently advised them 

with respect to their bankruptcy and the formation of G.R.D. The 

Schaefers also alleged Putnam and SMP breached their fiduciary duties 

to the Schaefers. According to the petition, these breaches of fiduciary

duties rendered the mortgages delivered to SMP unenforceable.

Both Putnam and SMP filed answers and counterclaims. Putnam 

counterclaimed for unpaid attorney fees. SMP counterclaimed seeking to 

foreclose all its mortgages, including the $85,000 mortgage on the fortyacre homestead. With respect to the mortgage on the forty-acre 

homestead, SMP’s counterclaim contended that “[d]ue to the Plaintiff’s 

filing their Petition, and the claim of SMP constituting a compulsory 

counterclaim, there is no requirement for mediation or a Notice to Cure.” 

In their answer to SMP’s counterclaim, among their other responses, the 

Schaefers “den[ied] the allegations . . . with respect to the requirement 

for mediation.”

The district court bifurcated the proceedings and commenced a 

jury trial on February 8, 2011. The jury reached a verdict on March 4 in 

 

7Because this appeal addresses only the claims and counterclaims among the 

Schaefers, Putnam, and SMP, only the facts and proceedings relevant to those claims 

have been set forth here.
6

which it rejected the Schaefers’ claims against Putnam. The jury 

returned a verdict in favor of Putnam on his counterclaim for unpaid 

attorney fees. Accordingly, the court dismissed the claims against 

Putnam and entered judgment for him in the amount of $12,200. The 

court later denied all of the Schaefers’ posttrial motions.

On June 6, the district court issued its findings of fact and 

conclusions of law regarding SMP’s counterclaims to foreclose its 

mortgages. Based on its findings and conclusions, the court entered 

judgment in rem in favor of SMP for $149,596.80 plus $86,079.25 in 

attorney fees and foreclosed the mortgage on the forty-acre homestead.8

On September 7, on behalf of Putnam, a “Notice of Sheriff’s Levy 

and Sale” was issued notifying the Schaefers of the sheriff’s intent to sell

the Schaefers’ right to appeal the district court’s June 6 order. The sale 

was scheduled for November 17. Also on September 7, on behalf of SMP, 

a “Notice of Sheriff’s Levy and Sale” was issued informing the Schaefers 

the sheriff planned to liquidate the foreclosed real property, including the 

forty-acre homestead. The sale was scheduled for December 8, and the 

notice indicated the sale was not subject to a right of redemption.

On November 3, the Schaefers filed a motion to quash, seeking to 

prevent the sale of their appeal rights. The Schaefers argued the right to 

appeal was not subject to levy under Iowa Code section 626.21. Putnam 

resisted, arguing the right to appeal is like any other asset, and as such, 

is subject to execution. On November 15, the district court found that

Putnam, as a judgment creditor of the Schaefers, may levy on appeal 

rights relating to the claims brought by the Schaefers. Putnam could 

 

8In the same order, the district court also foreclosed an additional mortgage that 

secured the four additional promissory notes, totaling $476,148.39.
7

not, however, levy on the appeal rights of the claims brought against the 

Schaefers. The court ordered the sheriff’s sale cancelled. Following 

receipt of another levy and sale notice, this one reflecting the district 

court’s order narrowing Putnam’s right to levy on the appeal rights, the 

Schaefers sought again to quash the sale. Again, SMP resisted. The 

district court denied the second motion to quash.

On November 30, the Schaefers filed another motion to quash, this 

time seeking to prevent the sale of the forty-acre homestead. The 

Schaefers argued for the first time that under Iowa Code chapter 654A

the district court lacked subject matter jurisdiction to foreclose the fortyacre homestead. According to the Schaefers, the forty-acre homestead 

was agricultural property under Iowa Code chapter 654A, and SMP did 

not obtain a mediation release prior to asserting its counterclaim seeking 

foreclosure. The mediation release, the Schaefers argued, was a 

jurisdictional prerequisite to the district court’s subject matter 

jurisdiction over the foreclosure proceeding. The Schaefers asserted the 

sale of the forty-acre homestead should therefore be quashed or stayed. 

In addition to contesting jurisdiction, the Schaefers asserted the sale 

should be subject to a right of redemption. SMP resisted.

On December 7, the district court denied the Schaefers’ motion to 

quash the Sheriff’s sale of the forty-acre homestead. Nevertheless, noting 

that SMP agreed that the forty-acre homestead was agricultural property, 

the court found the sale should be subject to a one-year right of 

redemption.

On January 6, 2012, the Schaefers appealed the district court’s 

ruling denying their motion to quash the sale of the forty-acre 

homestead. On March 8, the Schaefers appealed the court’s ruling 

denying their motion to quash the sale of their appeal rights. We 
8

consolidated the two appeals and transferred the case to the court of 

appeals.

In February 2013, the court of appeals issued its opinion. Finding 

that Iowa Code section 626.21 permits creditors to levy upon “things in 

action” and that the rights of the Schaefers to appeal the affirmative 

claims brought by them were just such “things,” the court held the 

district court did not abuse its discretion when it denied the Schaefers’ 

motion to quash the levy and sale of their appeal rights. The Schaefers 

do not seek further review of the court’s holding affirming the district 

court.

The court of appeals did, however, reverse the foreclosure of the 

forty-acre homestead. As they had at the district court, the Schaefers 

argued the court lacked subject matter jurisdiction to hear SMP’s 

counterclaim seeking foreclosure because SMP did not first obtain the

mediation release required by Iowa Code section 654A.6(1). SMP 

countered that the mediation requirement did not apply to its 

counterclaim because it did not “desire” to “initiate” the foreclosure 

proceeding, which SMP asserted was a compulsory counterclaim under 

Iowa Rule of Civil Procedure 1.241.

The court did not determine whether the foreclosure proceeding 

was a compulsory counterclaim. Rather, based on the court’s

examination of the legislative history of chapter 654A and our precedent,

the court of appeals concluded the legislature intended a broad 

construction of the mediation requirement to protect farmers facing 

foreclosure. Adopting this broad construction, the court of appeals held 

the phrase “desiring to initiate a proceeding” used in Iowa Code section 

654A.6(1)(a) encompassed the filing of a counterclaim. Because SMP had 

not obtained a mediation release before asserting its counterclaim, it had 
9

not met the jurisdictional prerequisites of section 654A.6(1). The court of 

appeals concluded, therefore, that the district court lacked subject 

matter jurisdiction to hear SMP’s foreclosure counterclaim.

SMP sought further review, which we granted to interpret Iowa 

Code section 654A.6(1).

II. Standard of Review.

We review subject matter jurisdiction rulings for correction of 

errors at law. Klinge v. Bentien, 725 N.W.2d 13, 15 (Iowa 2006); see also

Iowa R. App. P. 6.907. “A ‘court has inherent power to determine 

whether it has jurisdiction over the subject matter of the proceedings 

before it.’ ” Klinge, 725 N.W.2d at 15 (quoting Tigges v. City of Ames, 356 

N.W.2d 503, 512 (Iowa 1984)). Questions of statutory construction also 

are reviewed for corrections of legal error. Hardin Cnty. Drainage Dist. 

55, Div. 3, Lateral 10 v. Union Pac. R.R., 826 N.W.2d 507, 510 (Iowa 

2013); cf. Wesley Ret. Servs., Inc. v. Hansen Lind Meyer, Inc., 594 N.W.2d 

22, 29 (Iowa 1999) (ruling compelling mandatory arbitration under Iowa 

Code section 679A.1 is reviewed for correction of errors at law).

III. Discussion.

On further review, we have discretion to review any issues raised 

on appeal, whether or not they were raised in the application for further 

review. Chamberlain, L.L.C. v. City of Ames, 757 N.W.2d 644, 648 (Iowa 

2008). We here choose not to review the court of appeals’ affirmance of 

the trial court’s denial of the Schaefers’ motion to quash the sale of their 

appeal rights. Therefore, the court of appeals decision on that issue 

stands. Cf. Hills Bank & Trust Co. v. Converse, 772 N.W.2d 764, 770 

(Iowa 2009) (holding court of appeals decision stood on issues not 

addressed on further review).
10

The sole issue before us is whether a farm creditor that brings a 

compulsory counterclaim to foreclose agricultural property is subject to 

the mandatory mediation requirement contained in Iowa Code section 

654A.6(1)(a) (2009).

9 On further review, SMP makes two arguments. 

First, SMP contends it did not desire to initiate the proceeding to 

foreclose the mortgage on the forty-acre homestead. Second, SMP argues 

the Schaefers could have pursued voluntary mediation under Iowa Code 

section 654A.5, the voluntary mediation provision. The Schaefers’ failure 

to do so, according to SMP, relieved SMP of the obligation to seek 

mediation under section 654A.6(1), the mandatory mediation provision.

The Schaefers urge us to broadly interpret section 654A.6(1), 

which would prevent SMP from bringing its counterclaim prior to 

pursuing mediation. The Schaefers assert we should not address SMP’s 

second argument, which they note SMP did not raise at the court of 

appeals. Alternatively, the Schaefers insist their election not to mediate 

under the voluntary mediation provision has no effect on the 

jurisdictional requirement that SMP first seek mediation under the 

mandatory mediation provision.

A. Compulsory Counterclaim. As a preliminary matter, we must 

determine whether SMP’s counterclaim to foreclose on the forty-acre 

homestead was indeed compulsory. The court of appeals did not answer 

this question. Under Iowa Rule of Civil Procedure 1.241, a party who 

fails to raise a compulsory counterclaim loses the claim. See Iowa R. Civ. 

P. 1.241. A compulsory counterclaim is a claim that arises out of the 

same transaction or occurrence that is the basis of the opposing party’s 

claim if the following are true: (1) the claim is then matured, (2) the claim

 

9Unless otherwise noted, all references are to the 2009 Iowa Code.
11

is not the subject of any other pending action, (3) the claim is held by the 

pleader against the opposing party, and (4) the claim does not require the 

presence of necessary parties over whom the court cannot acquire 

jurisdiction. Iowa R. Civ. P. 1.241 official cmt; Harrington v. Polk Cnty. 

Fed. Savs. & Loan Ass’n of Des Moines, 196 N.W.2d 543, 545 (Iowa 

1972). In order to determine whether a claim arises out of the same 

transaction or occurrence, we ask whether there is any logical relation 

between the plaintiff’s claim and the counterclaim. Harrington, 196 

N.W.2d at 545. SMP’s foreclosure counterclaim was logically related to 

the Schaefers’ claim. In fact, the Schaefers’ petition sought to have the 

mortgages declared unenforceable because, they alleged, SMP had 

breached its fiduciary duties to the Schaefers. See Farmers State Bank v. 

Cook, 251 Iowa 942, 948, 103 N.W.2d 704, 707 (1960) (finding 

counterclaim to foreclose on a trailer was compulsory after buyer sought 

damages for breach of warranty). A counterclaim is mature when the 

party possessing the claim “is entitled to a legal remedy.” Sky View Fin., 

Inc. v. Bellinger, 554 N.W.2d 694, 697 (Iowa 1996). SMP’s claim to 

foreclose on the forty-acre homestead was mature because the Schaefers 

were in default on the mortgage and promissory note.

The other elements of a compulsory counterclaim are also met. 

The foreclosure action was not pending at the time the Schaefers filed 

their petition, it was held by SMP against the Schaefers, and the 

foreclosure action did not require the presence of parties over whom the 

district court could not acquire jurisdiction. Accordingly, SMP’s right to 

foreclose the mortgage on the forty-acre homestead clearly was a 

compulsory counterclaim in the Schaefers’ action to declare that 

mortgage invalid.
12

B. Statutory Interpretation. This case requires us to interpret 

the language of Iowa Code section 654A.6(1). In doing so, we apply wellsettled principles:

“The purpose of statutory interpretation is to determine the 

legislature’s intent. We give words their ordinary and 

common meaning by considering the context within which 

they are used, absent a statutory definition or an established 

meaning in the law. We also consider the legislative history 

of a statute, including prior enactments, when ascertaining 

legislative intent. When we interpret a statute, we assess the 

statute in its entirety, not just isolated words or phrases. 

We may not extend, enlarge, or otherwise change the 

meaning of a statute under the guise of construction.”

State v. Romer, 832 N.W.2d 169, 176 (Iowa 2013) (quoting In re Estate of 

Bockwoldt, 814 N.W.2d 215, 223 (Iowa 2012)).

1. The provenance and purpose of farm mediation in Iowa. Before 

proceeding to analyze the terms of the mandatory mediation statute, it is 

helpful to examine its history and the events that culminated in its 

enactment. We examine the statute’s legislative history and the 

circumstances under which it was enacted to aid our understanding of 

the legislature’s intent. See Iowa Code § 4.6(2) (permitting courts when 

resolving ambiguity to examine the circumstances of a statute’s 

enactment); Romer, 832 N.W.2d at 176 (noting we consider legislative 

history when interpreting an ambiguous statute); State v. Lindell, 828 

N.W.2d 1, 5 (Iowa 2013) (“We also consider the legislative history of a 

statute when determining legislative intent.”). The history of chapter 

654A and the circumstances under which it was enacted offer support 

for our ultimate interpretation of the mandatory mediation provision.

In the late 1970s and early 1980s, sudden economic changes 

“caused the bottom to fall out of the U.S. farm economy.” Bethany 

Verhoef Brands et al., The Iowa Mediation Service: An Empirical Study of 

Iowa Attorneys’ Views on Mandatory Farm Mediation, 79 Iowa L. Rev. 
13

653, 661 (1994) [hereinafter Brands]; see also Leonard L. Riskin, Two

Concepts of Mediation in the FmHA’s Farmer–Lender Mediation Program, 

45 Admin. L. Rev. 21, 25–26 (1993) (describing the onset of the farm 

crisis). The bust followed a boom. Brands, 79 Iowa L. Rev. at 657–63 

(contrasting the 1970s with the 1980s). In the 1970s, world agricultural 

commodity markets vastly expanded, agricultural land prices rapidly 

increased, and credit for farmers freely flowed. See id. at 658–61. When 

the farm crisis descended, farmers who had taken on heavy debt 

burdens could no longer manage the interest payments on those debts. 

Id. at 665. Lenders responded by foreclosing on real property or seeking 

to recover farm machinery shortly after loans became delinquent. Id.

The crisis not only devastated farms, small banks, and agribusinesses, 

but also destroyed farmers and their families. See id. at 665–67. 

Substance abuse, violence, and suicide tore through Iowa’s farm 

communities. See id. at 667.

In response, advocacy groups formed to aid distressed farmers. Id. 

They established hotlines and held workshops to inform farmers of their 

rights. Id. at 668. They gathered media attention. Id. Members of the 

clergy, social workers, and healthcare professionals visited farmers and 

their families, but attorneys capable of handling farmers’ legal problems 

were scarce. Id. at 668–69.

In 1985, disparate groups including farmers, mediators, and 

creditors created a voluntary mediation program to ease tensions 

between farmers and creditors. See id. at 672–73. The next year, the 

Iowa legislature, by enacting Iowa Code chapter 654A, went a step 

further and mandated a creditor seek mediation in some cases before it 

could proceed to foreclosure. See 1986 Iowa Acts ch. 1214, § 19 (codified 
14

at Iowa Code § 654A.6(1) (1987)).10 It also enacted that same year the 

voluntary mediation provision. See id. § 18 (codified at Iowa Code 

§ 654A.5 (1987)). The legislature found specifically that foreclosure 

threatened farmers who were unable to make mortgage payments, that 

the farm crisis affected all rural businesses, and that the “agricultural 

sector of the economy of this state [was] under severe financial stress.” 

Id. § 1. The legislature further noted “[t]he agricultural economic 

emergency require[d] an orderly process . . . to adjust agricultural 

indebtedness to preserve the general welfare and fiscal integrity of the 

state.” Id. Interpreting the statute shortly after it was enacted, we 

described a “general legislative intent to give some relief to farmers in 

dire financial straits.” First Nat’l Bank in Lenox v. Heimke, 407 N.W.2d 

344, 346 (Iowa 1987).

2. The terms of the mandatory mediation provision. We have had 

few opportunities to review Iowa Code section 654A.6. See generally Kent 

Feeds, Inc. v. Manthei, 646 N.W.2d 87, 89–90 (Iowa 2002) (holding on a 

narrow reading of chapter 654A that the mandatory mediation provision 

does not require a creditor to engage in mediation before pursuing a 

 

10Like Iowa, other states have passed statutes mandating that creditors seek 

mediation or provide debtors notice of the chance to mediate before foreclosing on 

agricultural property. See, e.g., Ark. Code Ann. § 2-7-302 (West, Westlaw current 

through 2013 Reg. and First Ex. Sess.); Minn. Stat. Ann. § 583.26 (West, Westlaw 

current through 2013 First Special Sess.); S.D. Codified Laws § 54-13-10 (Westlaw 

current through 2013 Reg. Sess.). Some states have provided for voluntary mediation 

schemes before agricultural property foreclosure. See, e.g., Neb. Rev. Stat. Ann. § 2-

4808 (Westlaw current through 2013 Reg. Sess.); Or. Rev. Stat. Ann. § 36.256 (West, 

Westlaw current through 2013 Reg. and Special Sess.); Wis. Stat. Ann. § 93.50 (West, 

Westlaw current through 2013 Wis. Act 57). Still other states have adopted mediation 

programs that apply to residential property foreclosures generally. See, e.g., Conn. 

Gen. Stat. Ann. § 8-265ee (Westlaw current through 2013 Reg. and Special Sess.); Me. 

Rev. Stat. Ann. tit. 14, § 6321-A (Westlaw current through 2013 First Reg. Sess. and 

First Special Sess. of the 126th Legis.). Our research has not revealed another case 

involving facts analogous to those presented by this case.
15

personal judgment); Prod. Credit Ass’n of the Midlands v. Shirley, 485 

N.W.2d 469, 471 (Iowa 1992) (explaining section 654A.6 stays 

proceedings until a creditor obtains a mediation release); Graham v. 

Baker, 447 N.W.2d 397, 399 (Iowa 1989) (“The procedural requirements 

imposed by the statute mandate only that a creditor request mediation 

and participate therein.”); Heimke, 407 N.W.2d at 346 (holding the 

mandatory mediation provision is retrospectively applicable).

Chapter 654A applies to “borrowers” who are operating farms. 

Iowa Code § 654A.4(2). The chapter applies to creditors of those 

borrowers with a secured debt of at least twenty thousand dollars against 

the borrower. Id. § 654A.4(1). Under the chapter a “creditor” is, among 

other things, “the holder of a mortgage on agricultural property.” Id.

§ 654A.1(3) (emphasis omitted).

The mandatory mediation provision, Iowa Code section 

654A.6(1)(a), in relevant part provides, “A creditor . . . desiring to initiate 

a proceeding to enforce a debt against agricultural property which is real 

estate under chapter 654 . . . shall file a request for mediation with the 

farm mediation service.” The phrase “initiate a proceeding to enforce a 

debt” could mean Iowa Code section 654A.6(1)(a) requires only that a 

creditor bringing the initial claim first seek mediation. The district court 

adopted this interpretation, and accordingly, found it was not deprived of 

jurisdiction to hear SMP’s foreclosure counterclaim.

It is not apparent from the plain language, however, that section 

654A.6 is so limited in scope. The phrase could also be interpreted more 

broadly to require mediation prior to a counterclaimant’s action to 

enforce a debt, which, if so interpreted, would deprive the district court 

of jurisdiction in this case. The Schaefers urge this interpretation, the 

same one adopted by the court of appeals. We agree the statute is 
16

susceptible of two interpretations and reasonable persons could disagree. 

See Bockwoldt, 814 N.W.2d at 223. The statute is ambiguous and “we 

must turn to the principles of statutory construction.” Id.

We examine this statute in its entirety when determining the 

legislature’s intent. See Romer, 832 N.W.2d at 176; see also Lindell, 828 

N.W.2d at 5 (noting we consider the context in which statutory terms are 

used); Hardin Cnty. Drainage Dist. 55, 826 N.W.2d at 512 (“We also 

examine statutory language holistically.”). Although on further review 

SMP directs much of its argument toward insisting the court of appeals 

placed insufficient emphasis on what SMP actually “desired,” the real 

crux of this dispute is what it means to “initiate” a proceeding under the 

mandatory mediation provision. See Iowa Code § 654A.6(1)(a). We 

believe Iowa Code section 654A.6 does not require a creditor to seek 

mediation before asserting a compulsory counterclaim against a creditor.

The legislature left “initiate” undefined. Therefore, “ ‘we may refer 

to prior decisions of this court and others, similar statutes, dictionary

definitions, and common usage’ ” to ascertain the meaning of the word. 

Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d 138, 145 (Iowa 2013) 

(quoting Bernau v. Iowa Dep’t of Transp., 580 N.W.2d 757, 761 (Iowa 

1998)). The dictionary definitions of “initiate” are “to cause or facilitate 

the beginning of” and “set going.” Merriam Webster’s Collegiate 

Dictionary 644 (11th ed. 2004). Black’s Law Dictionary also defines 

initiate: “Commence; start; originate; introduce; inchoate.” Black’s Law 

Dictionary 784 (6th ed. 1990). In Iowa Code section 654A.6, then, 

“initiate” means to start or commence. Read with this meaning, the 

mandatory mediation provision mandates a creditor first seek mediation 

before it starts a proceeding. See Iowa Code § 654A.6(1)(a). On the other 

hand, a creditor named as a defendant in a proceeding, like SMP in this 
17

case, by a borrower, like the Schaefers in this case, need not seek 

mediation because the creditor did not start the proceeding.

The word “initiates” appears again in section of 654A.6(1). Iowa 

Code section 654A.6(1)(b), the jurisdictional prerequisite provision, which 

directly impinges on this dispute, provides that the requirements of the 

mandatory mediation provision “are jurisdictional prerequisites to a 

creditor filing a civil action that initiates a proceeding subject to [chapter 

654A].”11 This provision is noteworthy for its similarity to Iowa’s 

procedural rule governing the commencement of actions. That rule

provides, “For all purposes, a civil action is commenced by filing a 

petition with the court.” Iowa R. Civ. P. 1.301(1). As noted above, one 

definition of “initiate” is “commence.” Black’s Law Dictionary at 784. 

The initiation of a civil action is thus achieved by filing a petition with a 

court. See Iowa R. Civ. P. 1.301(1). Because we interpret statutes and

court rules so as to harmonize them with one another, we do not view 

the jurisdictional prerequisite provision as an effort by the legislature to 

alter the method of commencing a civil action for these particular suits. 

Cf. Jud. Branch v. Iowa Dist. Ct., 800 N.W.2d 569, 576 (Iowa 2011) 

(explaining that when interpreting statutes we seek to harmonize them 

with statutes on the same topic). Rather, we view the jurisdictional 

prerequisite provision only as requiring a creditor to first comply with the 

mandatory mediation requirements before it starts a civil action in the 

manner prescribed by the rules of civil of procedure. The provision has 

no effect on compulsory counterclaimants, who do not start civil actions.

 

11We acknowledge the specific definition of “[f]ile” for purposes of chapter 654A, 

see Iowa Code § 654A.1(5) (emphasis omitted), but we do not interpret that definition to 

apply to “filing” within the jurisdictional prerequisite provision.
18

The mandatory mediation provision displays one final indication it 

poses no impediment to a creditor asserting a compulsory counterclaim 

to foreclose without first seeking mediation. Section 654A.6(1)(a) 

provides that until the creditor receives a mediation release or until a 

court determines that the creditor would suffer irreparable harm by 

mediating, the “creditor shall not begin the proceeding subject to this 

chapter.” Iowa Code § 654A.6(1)(a) (emphasis added). This provision 

bars a creditor, like SMP, from starting a proceeding before first 

satisfying either of the two conditions to suit. SMP did not seek 

mediation and it did not seek a determination that it would suffer 

irreparable harm by mediating, but it did not need to. By definition, a 

compulsory counterclaim does not begin an action. See Iowa R. Civ. P. 

1.241 (requiring a party’s responsive pleading to contain any matured 

claim arising out of the same transaction or occurrence not already part 

of the pending action); Iowa R. Civ. P. 1.242 (permitting a party to 

counterclaim on any matured claim “held by the party when the action 

was originally commenced”).

In this case, it was the Schaefers that filed the petition with the 

court, thus commencing the action. See Iowa R. Civ. P. 1.301(1). 

Nothing in the mandatory mediation provision prohibited the Schaefers 

from starting the action because they were borrowers, not creditors. See

Iowa Code § 654A.6(1). Once the action had commenced, nothing in the 

statute precluded SMP from raising its foreclosure counterclaim, even 

though SMP is a creditor. The mandatory mediation statute requires a 

creditor “desiring to” start “a proceeding” to file a mediation request with 

the farm mediation service. Id. § 654A.6(1)(a). When SMP filed its 

compulsory counterclaim, it did not start the proceeding, nor is there any 

indication in the record SMP desired to start such a proceeding until it 
19

was confronted with the Schaefers’ initial claim. The statute by its terms 

inhibits only a creditor’s ability to initiate a proceeding. See Iowa Code 

§ 654A.6(1)(a).

3. Mandatory mediation and subject matter jurisdiction. That 

leaves open the question of the effect of the jurisdictional prerequisite 

provision in this case. We have never passed on the effect of the 

jurisdictional prerequisite provision contained in section 654A.6(1). We 

have though reviewed a nearly identical provision in a similar statute, 

Iowa Code section 654B.3 (2005). See Klinge, 725 N.W.2d at 17–18. The 

general assembly enacted chapter 654B in 1990 because it found the 

new chapter “necessary to extend programs enacted in 1986 to provide 

legal assistance to farmers suffering financial distress and to provide 

farmer-creditor mediation services.” 1990 Iowa Acts ch. 1143, § 1.

The substance of chapters 654A and 654B is similar. Chapter 

654B applies to certain types of farm disputes. See Iowa Code § 654B.3. 

Section 654B.3(1) prescribes that “[a] person who is a farm resident, or 

other party, desiring to initiate a civil proceeding to resolve a dispute, 

shall file a request for mediation with the farm mediation service.” Id. 

§ 654B.3(1)(a); see also Klinge, 725 N.W.2d at 17–18 (explaining the 

consequences of an amendment to section 654B.3(1)). Section 654B.3(1)

prohibits commencing a “proceeding until the person receives a 

mediation release,” unless pursuing mediation would cause “irreparable 

harm.”

12 Iowa Code § 654B.3(1)(a)(1).

Neither chapter 654A nor chapter 654B, as originally enacted, 

contained a jurisdictional prerequisite provision. Only after a 1999 

 

12Iowa Code section 654B.3(1) permits another exception, which is not available 

under chapter 654A and not applicable to this case, if the “dispute involves a claim 

which has been brought as a class action.” Iowa Code § 654B.3(1)(a)(2).
20

federal district court ruling did the legislature amend the statutes to 

resolve any lingering doubt as to the effects of a litigant’s failure to 

comply with the statutes’ mediation requirements. In Rutter v. Carroll’s 

Foods of the Midwest, Inc., a group of property owners in Clay County, 

Iowa sued Carroll’s Foods of the Midwest, Inc. (CFM), to enjoin the 

establishment of a pig nursery and confinement facility. 50 F. Supp. 2d 

876, 877–78 (N.D. Iowa 1999). CFM removed the case to federal court 

and filed a motion to dismiss for lack of subject matter jurisdiction. Id.

at 878. CFM asserted that the property owners, except for one couple, 

failed to comply with the mandatory mediation requirement in chapter 

654B, which CFM viewed as a prerequisite to suit. Id. The property 

owners resisted. Id.

The federal court first found that the property owners, except for 

one couple, failed to fulfill “the prerequisite of obtaining a mediation 

release before pursuing this action.” Id. at 880. The court then 

examined “whether the mediation release requirement is in fact 

‘jurisdictional,’ or merely a condition precedent to suit, and hence 

whether failure to obtain such a release requires dismissal for lack of 

subject matter jurisdiction, as CFM contends.” Id. at 882. Noting the 

national dearth of authority on the specific question, the court “roughly” 

analogized the mediation release requirement to the requirement that 

employment discrimination plaintiffs first obtain a right-to-sue letter 

from the appropriate agency before pursuing a civil suit for 

discrimination. Id. Under Title VII, the court found, the right-to-sue 

letter is a “ ‘condition precedent’ ” to suit, not a “ ‘jurisdictional 

prerequisite’ ” to suit, meaning the defect could be cured after the filing 

of a suit. Id.; see also 42 U.S.C. § 2000e-5 (1994). The court also 

distinguished Swanger v. Iowa, 445 N.W.2d 344 (Iowa 1989), in which 
21

we held that the exhaustion of administrative remedies was 

jurisdictional, on the basis that Iowa waives sovereign immunity, “a 

jurisdictional matter,” only after the requirements of the relevant statute

have been met. Rutter, 50 F. Supp. 2d at 882 (citing Swanger, 445 

N.W.2d at 346–47). “[B]y analogy to comparable cases,” the federal court 

concluded that obtaining the mediation release under Iowa Code chapter

654B was a condition precedent to suit, meaning the court did not have 

to dismiss the case for lack of subject matter jurisdiction.13 See id. at 

882–83 (explaining that the defect of failing to obtain a mediation release 

is “curable after suit has been filed”); cf. Walsh v. Larsen, 705 N.W.2d 

638, 641–43 (S.D. 2005) (relying on Rutter and concluding that South 

Dakota’s mandatory mediation provision in agricultural foreclosure 

statute was not jurisdictional).

 

13Subject matter jurisdiction is “ ‘the authority of a court to hear and determine 

cases of the general class to which the proceedings in question belong, not merely the 

particular case then occupying the court’s attention.’ ” Christie v. Rolscreen Co., 448 

N.W.2d 447, 450 (Iowa 1989) (quoting Wederath v. Brant, 287 N.W.2d 591, 594 (Iowa 

1980)). Subject matter jurisdiction is conferred by the constitution or by statute, and 

parties cannot confer on a court subject matter jurisdiction. Klinge, 725 N.W.2d at 15. 

If a court that lacked subject matter jurisdiction enters a judgment, “the judgment is 

void and subject to collateral attack.” Id. at 16.

Subject matter jurisdiction is distinct from a court’s authority to hear a 

particular case. See id. (explaining Iowa courts’ increasing care with regard to 

distinguishing between subject matter jurisdiction and authority to hear a case). A 

court may have subject matter jurisdiction over a case, but nevertheless “may not be 

able to entertain the particular case.” Christie, 448 N.W.2d at 450. In such a situation, 

and despite having subject matter jurisdiction, the court lacks authority to hear the 

case. See id. The distinction is important because a judgment “entered without 

authority is voidable rather than void.” Klinge, 725 N.W.2d at 16. Unlike subject 

matter jurisdiction, which may not be conferred on a court by the parties, a “court’s 

authority can be obviated by consent, waiver or estoppel.” State v. Mandacino, 509 

N.W.2d 481, 483 (Iowa 1993). “ ‘Thus if a party waives the court’s [lack of] authority to 

hear a particular case, the judgment becomes final and is not subject to collateral 

attack.’ ” Klinge, 725 N.W.2d at 16 (quoting In re Estate of Falck, 672 N.W.2d 785, 790 

(Iowa 2003)).
22

In 2000, after the Rutter case, the Iowa legislature amended Iowa 

Code chapters 654A and 654B. See 2000 Iowa Acts ch. 1129, §§ 1–2 

(codified at Iowa Code § 654A.6(1)(b) (2001); id. § 654B.3(1)(b)). The 

amendment to chapter 654A, which is nearly the same as the 

amendment to chapter 654B,14 clarified that the mandatory mediation 

requirements in section 654A.6(1)(a) “are jurisdictional prerequisites to a 

creditor filing a civil action that initiates a proceeding subject to this 

chapter.” Id. § 1 (codified at Iowa Code § 654A.6(1)(b)). The explanation 

that accompanied the introduced version of the legislation states:

This bill amends the mandatory mediation provisions 

of two Code sections relating to resolution of farm disputes. 

The bill specifies that the mediation requirements in Code 

sections 654A.6 and 654B.3 are jurisdictional prerequisites 

that must be satisfied before a case can be filed under those 

chapters. A 1999 federal district court ruling held that the 

current Code language did not prevent the filing of a suit 

under chapter 654B prior to mediation of the dispute.

H.F. 2521, 78th G.A., 2d Sess., explanation (Iowa 2000). There were no 

relevant amendments before the bill’s enactment.

In 2006, we had the chance to examine section 654B.3 in light of 

Rutter and the 2000 amendment. Klinge, 725 N.W.2d at 16–18. In 

Klinge, the parties entered into a contract covering the raising and 

feeding of pigs. Id. at 14. Klinge sued Bentien for breach of contract in 

small claims court, and Bentien counterclaimed for negligence. Id. 

Neither party was represented by counsel, and neither party sought 

mediation under chapter 654B. Id. After the small claims court entered 

judgment in favor of both parties, Klinge appealed to the district court. 

 

14The amendment to chapter 654B clarifies that the requirements of section 

654B.3(1)(a) “are jurisdictional prerequisites to a person filing a civil action that initiates 

a civil proceeding to resolve a dispute subject to this chapter.” 2000 Iowa Acts ch. 

1129, § 2 (codified at Iowa Code § 654B.3(1)(b)) (emphasis added).
23

Id. The district court found a lack of evidence to support either claim, 

but because Bentien did not appeal, it ordered that the judgment against 

Bentien must stand. Id. at 15.

Bentien’s newly hired attorney then sent the district court a letter 

to draw its attention to Iowa Code chapter 654B. Id. The attorney 

argued that the court lacked jurisdiction because neither party sought 

mediation, but the district court refused to take further action. Id. On 

appeal to this court, Bentien sought dismissal and argued both the small 

claims court and district court lacked subject matter jurisdiction. Id.

After finding that chapter 654B was applicable to the parties and 

to their dispute, we examined the consequences under chapter 654B of 

failing to obtain a mediation release prior to bringing suit. Id. at 16–18. 

We first explained that in Rutter, the federal district court used terms 

different than we would have used to articulate the same legal concepts. 

Id. at 17 (citing Rutter, 50 F. Supp. 2d at 882–83). The Rutter court 

“used ‘jurisdictional prerequisite’ to refer to subject matter jurisdiction 

and ‘condition precedent’ to refer to the authority of a court to hear a 

case.” Id. (quoting Rutter, 50 F. Supp. 2d at 882). Instead, “we would 

have articulated the issue as a matter of the court’s authority to hear the 

particular case rather than a condition precedent to suit.” Id. at 18.

After addressing those semantic differences, we turned to the 2000 

amendment to chapter 654B. Id. We viewed the timing of the 

amendment, which followed closely on the heels of Rutter, the use of the 

phrase “jurisdictional prerequisites” in both Rutter and the 2000 

amendment to chapter 654B, and the bill’s explanatory statement as 

indicative of the legislature’s intent to guide a different result than that 

reached in Rutter. See id. at 17–18 (explaining reasoning behind the 

conclusion that “the legislature intended a different result than that of 
24

the Rutter decision”). We therefore concluded that, under chapter 654B, 

“the legislature intended obtaining a mediation release from the farm 

mediation service to be a prerequisite to subject matter jurisdiction.” Id.

at 18. Accordingly, we held the small claims and district court decisions 

were void for lack of subject matter jurisdiction. Id. As we noted in 

Klinge, 

The legislature may create jurisdictional prerequisites to 

subject matter jurisdiction. In this case, the parties are not 

deprived of their day in court. The legislature has merely 

made a policy decision that farm disputes shall be mediated 

before a suit is filed.

Id. at 18 n.2.

There is no reason in this case to depart from our holding in 

Klinge. A farm creditor’s failure to comply with the mandatory mediation 

requirements under Iowa Code section 654A.6(1), as with a litigant’s 

failure to mediate under section 654B.3(1), deprives the district court of 

subject matter jurisdiction to hear the claim. Compare Iowa Code 

§ 654A.6(1)(b), with id. § 654B.3(1)(b); see also Klinge, 725 N.W.2d at 18

(holding failure by the plaintiff to mediate under Iowa Code section 

654B.3 deprived the district court of subject matter jurisdiction). As we 

explained above, however, the jurisdictional prerequisite provision’s effect 

is limited. In amending section 654A.6(1) in 2000, the legislature was 

careful to impose a jurisdictional impediment only when a “creditor fil[es] 

a civil action that initiates a proceeding.” Iowa Code § 654A.6(1)(b). 

Because SMP did not file a civil action, but rather filed a compulsory

counterclaim, the jurisdictional prerequisite provision was not 

implicated. Therefore, the district court did have jurisdiction to foreclose 

the mortgage on the forty-acre homestead, just as it had jurisdiction to 

foreclose the other mortgage at issue in the case.
25

The history and purposes of chapter 654A, both its initial 

enactment and subsequent amendment, confirm our view that the 

mandatory mediation provision does not require a creditor to mediate 

before raising a compulsory counterclaim. The mandatory mediation 

provision sensibly slows down the foreclosure process by placing in front 

of creditors a procedural hurdle. See Graham, 447 N.W.2d at 399 

(explaining the “requirements placed upon creditors by chapter 654A are 

procedural, adding an additional step in the process required for 

forfeiture”); Heimke, 407 N.W.2d at 346 (explaining the provision adds an 

additional procedure in the foreclosure process). The purposes of the 

farm mediation statute would not be served by requiring a creditor to 

first seek mediation before raising a compulsory counterclaim. Once a 

borrower initiates a civil action against a creditor, there is no process to 

slow down because both parties are already in court. Once the Schaefers

filed suit against SMP, there was no possibility mediation would ease 

tensions between the two parties. The well was poisoned. There is no 

reason to expect at that point the Schaefers would have derived any 

benefit from a debt adjustment process directed only toward the 

mortgage on their agricultural property, especially when as part of the 

same case the Schaefers faced foreclosure of another mortgage for which 

the mediation statute offered no protection.

Moreover, despite SMP acknowledging in its counterclaim the 

applicability of the farm mediation statute, the Schaefers did not move to 

have the claim dismissed. They held back their jurisdictional challenge 

and reduced a laudable statute, enacted to protect beleaguered farmers, 

to a tactic, withheld until the end of trial and only then deployed to 

forestall the sale of judicially foreclosed real estate.
26

The Schaefers chose to go on the offensive and litigate against their 

creditor, SMP. In doing so, the Schaefers put into issue the very 

mortgage over which they now argue they should have had the chance to 

mediate. As SMP points out, the Schaefers eschewed the orderly 

adjustment process available to them under the voluntary mediation 

provision. That provision permits either a borrower “or a creditor of that 

borrower” to “request mediation of the indebtedness by applying to the 

farm mediation service.” Iowa Code § 654A.5. The choice by a borrower 

not to pursue voluntary mediation does not relieve a creditor of its 

obligation to mediate when required to do so by the mandatory mediation 

provision. Nevertheless, the decision by the Schaefers not to pursue 

voluntary mediation demonstrates they did not view the opportunity to 

adjust or discuss their debts using that process as useful or beneficial. 

If a borrower bypasses voluntary mediation and proceeds directly to 

court, and in doing so challenges the enforceability of the very mortgage 

that would be discussed in mediation, we see no reason why a creditor 

must first pursue mediation before raising its compulsory counterclaim 

to enforce that mortgage on the borrower’s agricultural property.

C. Conclusion. After reviewing the statute’s history, the statutory 

language, and the circumstances under which it was enacted, we 

conclude the legislature did not intend Iowa Code section 654A.6(1) to 

require creditors seek mediation before raising a compulsory 

counterclaim brought to enforce a debt. SMP was not required to satisfy 

the jurisdictional prerequisites as it was not “filing a civil action that

initiate[d] a proceeding” to foreclose the mortgage on the forty-acre 

homestead. Id. § 654A.6(1)(b).
27

IV. Disposition.

We vacate the decision of the court of appeals requiring SMP to 

seek mediation before raising its counterclaim and affirm the judgment of 

the district court on that issue. We affirm the court of appeals decision

and district court judgment on the motion to quash the sale of the 

Schaefers’ appeal rights.

DECISION OF COURT OF APPEALS VACATED IN PART AND 

AFFIRMED IN PART; DISTRICT COURT JUDGMENT AFFIRMED.