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Date: 11-08-2017

Case Style:

Jason Cannon v. Bodensteiner Implement Company, et al.

Iowa Supreme Court

Case Number: 15–0741

Judge: Wiggins

Court: Supreme Court of Iowa

Plaintiff's Attorney: Judith O'Donohue

Defendant's Attorney: 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.

Description: 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
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
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
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
1Cannon stated in his September 24, 2013 deposition that he regarded the
Mitchell brothers as knowledgeable about Case IH tractors and looked to them as a
source of guidance. “They said [the Case IH 305 tractors] are . . . phenomenal tractor[s]
and [people who own the Case IH 305] love them, they are . . . great tractor[s].”
2Cannon opted in part to go to a John Deere dealer for a used Case IH tractor
because he believed he would get a better deal on his John Deere tractor at a John
Deere dealer and a John Deere dealer would not want to have a “red” tractor (a Case IH
tractor) in its inventory for long.
3Case IH are often referred to as “red” tractors, as opposed to John Deere “green”
tractors. Farmers and other owners are often very loyal to their brand.
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,
4Bodensteiner has dealerships in several locations including Clermont and
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
5Cannon subsequently learned the tractor, while owned by Gansen Pumping,
had a significant repair history, including issues with the brakes and transmission
overheating. Cannon asserted “[n]o one at Bodensteiner told him about the history of
the tractor before he bought [it].”
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 the issue, and Cannon failed to file a rule
1.904(2) motion. See Iowa R. Civ. P. 1.904(2). We agree with the court of
appeals that Cannon failed to preserve this argument for our review. See
Stammeyer v. Div. of Narcotics Enf’t, 721 N.W.2d 541, 548 (Iowa 2006).
The court of appeals, however, found a genuine issue of material
fact existed as to whether Monroe’s assurances to Cannon that the
“[tractor] is fit, it is ready, it is field ready” and “was in good condition”
and “ready to go” created an express warranty upon which Cannon
relied. The court concluded Bodensteiner’s reliance upon the written
6Defendant AMT Warranty Corp. was previously dismissed from the case on
summary judgment. Cannon also had a claim against Windridge for breach of contract,
and Windridge had filed a counterclaim against Cannon for breach of contract based on
nonpayment of repair bills. They subsequently settled.
disclaimers in the purchase agreement was “subject to resolution of
whether Monroe’s representations were mere puffing or opinion” and
“under the facts of this case, resolution of that issue is for the fact
finder.” The court affirmed the district court on all other issues.
Bodensteiner filed an application for further review, which we granted.
II. Issues on Appeal.
When considering an application for further review, we have
discretion to review all the issues raised on appeal or let the court of
appeals decision stand as the final decision on an issue. In re Marriage
of Mauer, 874 N.W.2d 103, 106 (Iowa 2016). In the exercise of our
discretion, we will only review the court of appeals ruling on the express
warranty issues. Therefore, the court of appeals decision on all other
issues will stand as the final decision of this court in all other respects.
III. Scope of Review.
We review a district court’s ruling on a motion for summary
judgment for correction of errors at law. Des Moines Flying Serv., Inc. v.
Aerial Servs. Inc., 880 N.W.2d 212, 217 (Iowa 2016). “Our review is
limited to determining whether the law was applied correctly or whether
there is a genuine issue of material fact.” Id. “The moving party has the
burden of showing the nonexistence” of a genuine issue of material fact.
Nelson v. Lindaman, 867 N.W.2d 1, 6 (Iowa 2015) (quoting Hlubek v.
Pelecky, 701 N.W.2d 93, 95 (Iowa 2005)); see also Iowa R. Civ.
P. 1.981(3) (“The judgment sought shall be rendered . . . if the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a
matter of law.”). “An issue of fact is ‘material’ only when the dispute
involves facts which might affect the outcome of the suit, given the
applicable governing law.” Nelson, 867 N.W.2d at 6 (quoting Wallace v.
Des Moines Indep. Cmty. Sch. Dist. Bd. of Dirs., 754 N.W.2d 854, 857
(Iowa 2008)). “An issue is ‘genuine’ if the evidence in the record ‘is such
that a reasonable jury could return a verdict for the non-moving party.’ ”
Id. (quoting Wallace, 754 N.W.2d at 857).
IV. Discussion and Analysis.
A. Was There an Oral Express Warranty? The district court did
not expressly address this issue. Rather, the district court decided even
if Bodensteiner created any oral express warranty regarding the tractor
through Monroe’s conversations with Cannon, the written contract
between the parties disclaimed any express warranty that Bodensteiner
might have made to Cannon. On the other hand, the court of appeals
concluded there was a genuine issue of material fact as to whether
Monroe’s assurances to Cannon that the tractor was fit, field ready, and
in good condition created an express warranty by Bodensteiner.
However, the court of appeals never reached the disclaimer issue.
For purposes of this appeal, we will assume without deciding, that
Bodensteiner created at least one express warranty regarding the tractor
through Monroe’s conversations with Cannon. We agree with the district
court, however, this part of the case can be resolved by analyzing the
disclaimer issue. Therefore, we vacate that part of the court of appeals
decision finding there was a genuine issue of material fact as to whether
Monroe’s assurances to Cannon created an express warranty.
B. Was There an Effective Disclaimer? The purchase agreement
used in the transaction is essential to the analysis of the disclaimer
issue. This agreement is a preprinted John Deere products form signed
by Cannon and Monroe on October 6, 2010, at the Clermont branch
shortly before the tractor arrived from the Monticello branch.
The form lists the used 2008 Case IH 305 MFWD tractor as the
“product” with a cash price of $139,000. It also includes under product
the “Case Warranty.” Under trade-in is listed the 2007 John Deere 8430
MFWD tractor with a trade-in value of $138,000 and a balance due of
$1000. Directly below the description of the product and trade-in is the
following language:
warranty applicable to new John Deere product(s) is printed
on the back side of this document. There is no warranty on
used products. The new product warranty is part of this
(Emphasis added.) Below this, Cannon signed his name in the customer
signature space, and Monroe signed as the salesperson accepting for
Clermont Implement. The reverse side of the purchase agreement
further states,
. . . .
Where permitted by law, neither John Deere [nor] any
company affiliated with it makes any warranties,
representations, or promises, express or implied as to the
quality or performance, or freedom from defects of its
agricultural products other than those set forth above.
. . . .
(Emphases added.) The dealer made the delivery acknowledgment on
October 11, 2010.
Section 554.2316 provides for the exclusion or modification of
warranties. In pertinent part, it provides,
1. Words or conduct relevant to the creation of an
express warranty and words or conduct tending to negate or
limit warranty shall be construed wherever reasonable as
consistent with each other; but subject to the provisions of
this Article on parol or extrinsic evidence (section 554.2202)
negation or limitation is inoperative to the extent that such
construction is unreasonable.
Iowa Code § 554.2316(1) (2011). However, whenever words or conduct
tend to limit or negate a seller’s warranty, “the Code requires that the
provision be construed as consistent with the warranty, if such a
construction is reasonable.” Limited Flying Club, Inc. v. Wood, 632 F.2d
51, 57 (8th Cir. 1980); see Iowa Code § 554.2316(1). The parol-evidence
rule, however, limits this requirement. See Iowa Code § 554.2316(1).
The parol-evidence rule states,
Terms with respect to which the confirmatory
memoranda of the parties agree or which are otherwise set
forth in a writing intended by the parties as a final
expression of their agreement with respect to such terms as
are included therein may not be contradicted by evidence of
any prior agreement or of a contemporaneous oral agreement
but may be explained or supplemented
1. by course of performance, course of dealing, or
usage of trade (section 554.1303); and
2. by evidence of consistent additional terms unless
the court finds the writing to have been intended also as a
complete and exclusive statement of the terms of the
Iowa Code § 554.2202.
Furthermore, this court has stated,
When the parties adopt a writing or writings as the final and
complete expression of their agreement, the agreement is
fully integrated. Determining whether an agreement is fully
integrated is a question of fact, to be determined from the
totality of the evidence. The presence of an integration
clause is one factor we take into account in determining
whether an agreement is fully integrated. Nevertheless, the
parol-evidence rule does not prohibit the introduction of
extrinsic evidence to show “the situation of the parties, . . .
attendant circumstances, and the objects they were striving
to attain.” The parol-evidence rule also does not prohibit the
admission of extrinsic evidence to prove fraud in the
C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65, 85 (Iowa 2011)
(citations omitted) (quoting Kroblin v. RDR Motels, Inc., 347 N.W.2d 430,
433 (Iowa 1984)). Thus, in a fully integrated agreement, a party may not
use extrinsic evidence, such as a prior oral agreement, “solely to vary,
add to, or subtract from the agreement.” Id.; see Whalen v. Connelly,
545 N.W.2d 284, 290 (Iowa 1996); Kroblin, 347 N.W.2d at 433; see also
Nationwide Agribusiness Ins. v. SMA Elevator Constr. Inc., 816 F. Supp.
2d 631, 690–91 (N.D. Iowa 2011).
Cannon fails to argue clearly that the purchase agreement is not a
fully integrated document. Although there is no integration clause, there
is no other evidence, other than the argument that there was an oral
express warranty from the dealer regarding the condition of the tractor,
to show that the written document is not fully integrated. This draws
parallels to Bartlett Grain Co., LP v. Sheeder, 829 N.W.2d 18 (Iowa 2013).
In that case, one party was “trying to replace [an] arbitration clause with
its polar opposite—the lack of an arbitration clause.” Id. at 25. We
noted the party was not trying to “supplement” the written confirmations
but trying to reverse it. See id. We held “[t]he parol evidence rule exists
to prevent this result.” Id.
Here, if we were to allow the oral affirmations of warranty from the
dealer to aid us in interpreting the purchase agreement, the oral
affirmations would replace, or better yet reverse, the written disclaimers
in the purchase agreement, rather than supplement them. In other
words, Cannon is attempting to write out of the purchase agreement the
written disclaimers that used products have no warranties and that the
dealer can make no warranty of its own. See Midwest Printing, Inc. v. Am
Int’l, Inc., 108 F.3d 168, 171 (8th Cir. 1997) (“Under Missouri law, the
disclaimer of warranties in a contract document is effective to bar a claim
based on express warranty.”); Iowa Elec. Light & Power Co. v. Allis-
Chalmers Mfg. Co., 360 F. Supp. 25, 34 (S.D. Iowa 1973) (holding “[t]he
language in the warranty clause [was] simply too clear to be subject to”
parol evidence).
Cases relied upon by Cannon are also distinguishable because
they did not involve issues of a disclaimer. See generally Tralon Corp. v.
Cedarapids, Inc., 966 F. Supp. 812, 824, 826 (N.D. Iowa 1997) (declining
to discuss disclaimer in one price quotation because there were material
issues of fact as to which of two price quotations constituted the terms of
the contract and concluding oral assertions of performance capabilities of
the equipment in question may constitute express warranties); Keith v.
Buchanan, 220 Cal. Rptr. 392, 395–99 (Ct. App. 1985) (concluding
affirmation of vessel’s seaworthiness in sales brochures constituted,
under the circumstances, an express warranty but no discussion of any
disclaimer); Weng v. Allison, 678 N.E.2d 1254, 1256 (Ill. App. Ct. 1997)
(finding the seller’s statements to the buyers concerning the condition of
the car were affirmations of fact that created an express warranty but no
discussion of any disclaimer); Redmac, Inc. v. Computerland of Peoria,
489 N.E.2d 380, 383 (Ill. App. Ct. 1986) (finding statements “free of
defects” and would “work for a reasonable period of time” formed part of
the basis of the parties’ bargain but no discussion of any disclaimer);
Pake v. Byrd, 286 S.E.2d 588, 590 (N.C. Ct. App. 1982) (holding under
the circumstances defendant expressly warranted the tractor was in good
condition and free from major mechanical defects with no discussion of
any disclaimer at issue). Still other cases involved warranty disclaimers
that were not obvious or clearly disclosed. See Jacobson v. Benson
Motors, Inc., 216 N.W.2d 396, 402 (Iowa 1974) (holding disclaimers not
called to the plaintiff’s attention and not sufficiently conspicuous were
devoid of any force or effect); Dailey v. Holiday Distrib. Corp., 260 Iowa
859, 864, 870, 151 N.W.2d 477, 481, 485 (1967) (holding where “[a]n
unqualified purchase order appears on the face of a printed form [and]
contains no reference to special conditions printed on the reverse side
relating to warranties . . . ,” the alleged disclaimer lacked legal effect).
Several other cases are distinguishable for other reasons. In
Limited Flying Club, Inc., the buyer of an aircraft signed a document
stating he had inspected the aircraft and accepted it “as is” for the
amount previously agreed upon. 632 F.2d at 53. Thereafter, an expert
inspected the plane and found serious issues. Id. at 54. The buyer
alleged the FAA-mandated logbook, including the certificates of
airworthiness, applied. See id. at 56. The court concluded “[t]he ‘as is’
. . . clause was certainly not a ‘complete and exclusive statement of the
terms of the agreement’ between [the parties].” Id. at 57 (quoting Iowa
Code § 554.2202). It found “[t]he description of the airplane as set forth
in the logbook [constituted] a consistent additional term and may be
introduced to explain the actual agreement between the parties.” Id.
There is nothing remotely akin to an airplane’s FAA-mandated logbook
Cannon also claims Bodensteiner misinterprets Williams v. Mid-
Iowa Equip., Inc., 223 F. Supp. 3d 866 (S.D. Iowa 2015). In that case,
the federal magistrate granted summary judgment to the auctioneer of a
tractor who allegedly told the buyer that the tractor was “100% field
ready.” 223 F. Supp. 3d at 870, 873. The listing information stated all
equipment was sold “as is” with no guarantees. Id. at 870. In addition,
the invoice stated the seller made no warranties of any kind and all sales
were “AS IS.” Id. The buyer did not inspect the tractor before the
purchase. Id. After receiving the tractor, the buyer alleged it had a
substantial oil leak, more service hours than the logged hours, which
were noted to be unverified, and less horsepower than advertised. Id.
In his claims against the seller, the buyer did not raise, however,
any warranty claims. Id. at 871. Rather, he raised breach of contract.
Id. He claimed the contract was not fully integrated, such that parol
evidence allowed the alleged “100% field ready” representation to be part
of the contract. Id. Since “as is” is readily understood to mean the buyer
is taking the item in its present condition, the court concluded there
would have to have been a meeting of the minds for “100% field ready” to
become a term of the contact. Id. at 872. Assuming the document was
not fully integrated, the court found no evidence that “100% field ready”
was made a term of the contract. Id. It was not contained in the invoice
and Williams paid the invoice thus agreeing to the terms thereon. Id.
Here, Cannon agreed “[t]he court correctly held that if the
statement ‘100% field ready’ was to be made part of the contract[,] it
should have been referred to in the written contract in light of the ‘as is’
language.” His only response to the situation at hand is that the
disclaimer of warranty information is in very small print and arguably
speaks only to John Deere products. This is an argument Cannon
should have pursued in the district court, but he failed to do so. See
Segura v. State, 889 N.W.2d 215, 219 (Iowa 2017) (“It is a fundamental
doctrine of appellate review that issues must ordinarily be both raised
and decided by the district court before we will decide them on appeal.”
(quoting Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002))).
Therefore, assuming the statements made by Monroe constituted
an oral express warranty, we hold the purchase agreement signed by
both parties effectively disclaim such a warranty.

Outcome: Finding the disclaimers contained in the purchase agreement
negate any express warranties allegedly made by Monroe through
conversations with Cannon, we affirm the decision of the court of appeals
in part, vacate it in part, and affirm the judgment of the district court.

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