Cannon v. Bodensteiner Implement Co.

• Decision Date: 27 October 2017
• Docket Number: No. 15-0741,15-0741
• Citation: 903 N.W.2d 322
• Parties: Jason CANNON, Appellant, v. BODENSTEINER IMPLEMENT COMPANY, Appellee, and Windridge Implements, LLC, ECK & Glass, Inc. d/b/a EPG Insurance, Inc., and CNH America LLC d/b/a Case IH, Appellees.
• Court: Iowa Supreme Court

903 N.W.2d 322

Jason CANNON, Appellant,

v. BODENSTEINER IMPLEMENT COMPANY, Appellee,andWindridge Implements, LLC, ECK & Glass, Inc. d/b/a EPG Insurance, Inc., and CNH America LLC d/b/a Case IH, Appellees.

No. 15-0741

Supreme Court of Iowa.

Filed October 27, 2017

Judith M. O'Donohoe of Elwood, O'Donohoe, Braun, White, L.L.P., Charles City, for appellant.

A. John Arenz, McKenzie R. Hill, and Brenton M. Tunis of O'Connor & Thomas, P.C., Dubuque, for appellee Bodensteiner Implement Company.

Andrew P. Nelson of Meyer, Lorentzen & Nelson, Decorah, for appellee Windridge Implements, LLC.

Michael A. McEnroe and Erin P. Lyons of Dutton, Braun, Staack & Hellman, P.L.C., Waterloo, for appellee ECK & Glass, Inc.

Richard J. Kirschman of Whitefield & Eddy, P.L.C., Des Moines, for appellee CNH America, LLC.

WIGGINS, Justice.

An independent contractor providing liquid manure disposal services purchased a used Case IH tractor from a John Deere implement dealer. When the tractor proved to be a "lemon," the contractor brought claims against multiple parties, including the implement dealer. The trial court granted all of the defendants' motions for summary judgment. The contractor appealed and we transferred the case to the court of appeals.

The court of appeals affirmed the district court in all aspects except with regard to the district court's grant of summary judgment on the contractor's express warranty claim against the implement dealer. The implement dealer filed an application for further review, which we granted.

On further review, we exercise our discretion and only review the court of appeals ruling on the express warranty issues. On those issues, we find the disclaimers contained in the purchase agreement negate any express warranties allegedly made by the implement dealer. Therefore, we affirm the decision of the court of appeals in part, vacate it in part, and affirm the judgment of the district court.

I. Background Facts and Proceedings.

Jason Cannon was an independent contractor affiliated for several years with D & J Pumping, which provides liquid manure disposal services to operators of livestock confinement facilities in northeast Iowa. Cannon's work required a heavy-duty tractor to haul tanks holding manure off premises to other premises where he would spread the waste on cropland as fertilizer. The work is very time sensitive as there are only brief periods in the spring and fall that are appropriate for the application.

In October 2010, Cannon was using a John Deere 8430 tractor he had purchased used from Bodensteiner Implement (Bodensteiner). Bodensteiner is a John Deere dealership that also deals in used farm equipment from other manufacturers. The John Deere tractor was not working properly, and Cannon found himself in need of a tractor. In the past, Cannon had always purchased John Deere tractors. However, he worked alongside brothers, Brian and Bruce Mitchell, who used Case IH tractors, and they spoke favorably of the brand.¹ Cannon knew the brothers for his whole life and valued their opinions about tractors.

Cannon had also previously consulted with others about Case IH tractors and had heard favorable comments about the brand, including their higher horsepower. Cannon decided to contact Roger Monroe, a salesperson at the Bodensteiner branch in Clermont, to inquire about available Case IH tractors.² Cannon had worked with Monroe before in prior purchases, including the purchase of the tractor he currently owned and was seeking to trade or sell. Cannon asked Monroe if the dealership had any used Case IH 285 tractors. Monroe was aware Cannon would be using the tractor for manure-hauling purposes. According to Cannon, Monroe "knew exactly what [he] needed."

Although the Clermont branch did not have any "red" tractors,³ Monroe was able to find a used Case IH Magnum 305 tractor at Bodensteiner's Monticello branch.⁴ A Case IH dealer sold this tractor when it was new to Gansen Pumping, which used it in a similar liquid manure disposal business. Gansen Pumping traded the tractor to the Monticello branch. At the time of its original sale, the tractor came with the manufacturer's warranty. Gansen Pumping also purchased an extended warranty entitled "Purchase Protection Plan" (PPP), effective from November 18, 2008, to April 21, 2013. The PPP covered certain powertrain repairs during this period and was transferrable.

Monroe informed Cannon about the red tractor at the Monticello branch. According to Cannon, Monroe also told him the tractor "had a little more horsepower than what [Cannon] had, about the same hours, [and was a] really good tractor [that] should work great for [him]." Cannon wanted to confirm the tractor had a big axle and a big draw bar on it. Monroe agreed to check whether the tractor had these items and called the Monticello branch to find out. Monroe told him the tractor had been used to haul manure already "so it was all setup and ready to go[;] it was all weighted up [and] had the big draw bar ready to go." Cannon knew Monroe had never seen the tractor in question. According to Cannon, Monroe told him the tractor had been "in the shop" and "everything [had been] tested out."

Monroe admits he told Cannon the tractor was in good condition. In addition, Monroe spoke with Phil Kluesner, a salesperson at the Monticello branch who took the Case IH Magnum 305 tractor in on trade from Gansen Pumping. Monroe relayed to Cannon that Kluesner said it was a good tractor, had been used satisfactorily for manure pumping, had passed inspection at the Monticello dealership, and had been driven around. Cannon also spoke to Neil, a mechanic at the Clermont branch, about the Case IH Magnum 305. Neil told Cannon that "[Cannon] would be happy with the horsepower and [with] what [he] was getting." Cannon understood Neil was speaking about the Case IH 305 generically and not about this tractor in particular.

Monroe informed Cannon if he was interested in the tractor he could go to Monticello, or Bodensteiner could truck the tractor up to Clermont. Bodensteiner was unwilling to transport the tractor from Monticello to Clermont unless Cannon actually purchased it and paid the $1000 trucking fee. In return, Bodensteiner agreed to trade tractors even up with Cannon, which on paper was a $138,000 trade. Monroe also told Cannon the PPP would be included with the purchase. He was not, however, familiar with the details of the PPP and suggested Cannon contact a Case IH dealer for more information. Cannon was in a hurry to get a new tractor, so he agreed to purchase the tractor without seeing it, inspecting it, or test driving it. Cannon allegedly told Monroe if it was a good running tractor and would work for manure pumping he wanted it.

The following day, October 6, 2010, Cannon signed the contract to purchase the tractor. The Case IH Magnum 305 arrived at the Clermont branch, and according to Monroe, he drove it approximately a block or block and a half and it drove fine. Cannon noted, however, that contrary to what Monroe had told him, the tractor did not have a big enough draw bar, so Cannon had to order one.

Cannon left his John Deere tractor, which he had just traded in, at Bodensteiner and proceeded to drive the Case IH tractor home. On the way home, he contacted Windridge Implement (Windridge), an authorized Case IH dealer, to inquire about the PPP. He also checked whether the PPP effectively transferred to him. The ten-mile drive to his residence was uneventful. Upon arriving at his residence, Cannon proceeded to hook an empty tank to the tractor and start work for the day. After a couple of miles, he quickly realized the tractor did not have sufficient power, which he attributed to the turbocharger. A subsequent inspection revealed twelve turbo bolts were broken and rusted. Additionally, that same day, the nineteenth gear of the tractor went out, and shortly thereafter, the hydraulic pump exploded. Within a day or two of taking delivery, Cannon spoke to Monroe about these issues and asked for a loaner tractor while Windridge repaired the Case IH. Monroe advised him this was not possible.

Many of the initial issues with the tractor have been repaired and covered under the PPP. However, within a short period, the transmission overheated and the brakes failed.⁵ This has become a recurring problem. Although numerous Case IH technicians and a field service agent attempted to address these issues, no one has been able to determine the underlying cause, and by 2012, Cannon concluded the tractor was a "lemon" and thus "unfixable."

On April 22, 2013, Cannon filed this suit. After amending his petition multiple times, Cannon ultimately alleged claims for fraudulent misrepresentation, breach of implied warranties, breach of an implied covenant of good faith and fair dealing, and equitable rescission against Bodensteiner. Cannon brought a breach of contract claim against Eck & Glass, Inc., the insurer who issued the PPP. Finally, Cannon brought claims against CNH America LLC for negligent design, manufacture, assembly, testing and warning; breach of implied warranty of merchantability; breach of express warranties; and fraudulent concealment or fraudulent nondisclosure. On motions for summary judgment, the district court dismissed all claims against all defendants.⁶ With regard to defendant Bodensteiner specifically, the district court found "[t]he written contract between [the] parties disclaimed any express warranties other than the extended warranty or PPP, and there is no dispute that Cannon got the benefit of the PPP." Cannon appealed, challenging the district court's ruling in its entirety. We transferred the case to the court of appeals.

The court of appeals initially rejected Cannon's argument that the disclaimer on the purchase agreement was of no effect because Bodensteiner provided it after the parties reached an oral agreement. The court noted Cannon did not raise this issue in the district court, the district court did not address...