Rural Mutual Insurance Company v. Ballweg Implement Co., Inc.

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
August 1, 2024
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2023AP2183 Cir. Ct. No. 2022CV199

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

RURAL MUTUAL INSURANCE COMPANY,

PLAINTIFF-APPELLANT,

V.

BALLWEG IMPLEMENT CO., INC.,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Portage County:
MICHAEL D. ZELL, Judge. Affirmed.

Before Kloppenburg, P.J., Blanchard, and Nashold, JJ.

¶1 BLANCHARD, J. Ballweg Implement sold a used tractor to an
entity insured by Rural Mutual Insurance. Rural Mutual alleges that the tractor
spontaneously combusted after the sale and after it came into the possession of the
insured. Pursuing a subrogated claim in the place of the tractor purchaser, Rural
No. 2023AP2183

Mutual filed the action here against Ballweg (and other parties), alleging that
Ballweg had breached an implied warranty of merchantability arising from the
tractor sale. On Ballweg’s motion, the circuit court dismissed it as a defendant
based on a provision in the purchase order for the tractor sale in which Ballweg
purported to disclaim an implied warranty of merchantability otherwise arising
from the sale. Rural Mutual challenges this ruling on three alternative grounds.

¶2 Rural Mutual argues that the tractor sale was subject to WIS. ADMIN.
CODE § Trans 139.06(3) (March 2020), which limits the ability of “dealers” of
“motor vehicle[s]” to disclaim implied warranties of merchantability, and that
under § Trans 139.06(3) the disclaimer here is unenforceable.1 This argument is
based on the premise that sales of all tractors in Wisconsin are subject to
§ Trans 139.06(3) because all tractors are self-propelled motor vehicles. We
disagree. We conclude that § Trans 139.06(3) does not apply to the facts alleged
here because Ballweg, as the tractor’s seller, was not a “dealer” of the type
regulated by WIS. ADMIN. CODE ch. Trans 139, when closely related statutes and
regulations are taken into account. Notably, under those closely related provisions
sellers of “farm tractors” are not “dealers” of “motor vehicles” for purposes of
ch. Trans 139.

¶3 Rural Mutual separately argues that the terms of the disclaimer are
ambiguous about whether an implied warranty of merchantability is excluded. We
conclude that the disclaimer unambiguously excludes such warranties.

1
All references to WIS. ADMIN. CODE ch. Trans 139 are to the version published in
March 2020.

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¶4 Rural Mutual also contends that the disclaimer is subject to a
provision in the Uniform Commercial Code (UCC), WIS. STAT. § 402.719(2)
(2021-22), which states that when a contract provides an “exclusive or limited
remedy,” but circumstances prevent application of that remedy, then other
provisions of the UCC may be relied on to determine the appropriate remedy.2
While Rural Mutual’s argument is difficult to track, the contention appears to be
that, under the remedy gap-filler rule in § 402.719(2), Rural Mutual must be
allowed to pursue statutory remedies against Ballweg. We reject this argument for
at least the following reason: Rural Mutual fails to provide a legally supported
argument that its specific claim here of breach of an implied warranty of
merchantability states a claim for which relief can be granted, even if we assume
that § 402.719(2) applies.

¶5 Accordingly, we affirm.

BACKGROUND

¶6 The following summarizes allegations in Rural Mutual’s operative
complaint, which we assume to be true for purposes of our analysis. In August
2020, Rural Mutual’s insured, Eron Beef LLC, purchased a used, Case brand
tractor from Ballweg. Eron never received a signed copy of a contract for the sale.
Ballweg provided only an unsigned copy of a purchase order, and this occurred
only after Eron had paid for the tractor. The purchase order included a provision
purporting to disclaim the implied warranty of merchantability that is recognized

2
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.

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in WIS. STAT. § 402.314.3 The complaint contained allegations based on WIS.
ADMIN. CODE § Trans 139.06(3), under which a warranty disclaimer is not
enforceable if the sale at issue was not “explicitly negotiated” by the parties at the
time of the sale on an “as is” or “no warranty” basis. This included the allegation
that Eron and Ballweg did not “explicitly negotiate[]” the sale through the
purchase order. The result, according to the complaint, was that Ballweg did not
disclaim the implied warranty through the provision in the purchase order or
otherwise. In October 2021, while Eron representatives were using the tractor, it
“spontaneously combusted, causing a fire.” The fire destroyed the tractor and
other Eron property. Rural Mutual paid for the resulting damages under its policy
insuring Eron.

¶7 Pursuant to Rural Mutual’s subrogation rights under the policy, it
commenced this action in July 2022, standing in the shoes of Eron for purposes of
Ballweg’s liability to Eron. Pertinent here, Rural Mutual named Ballweg as a
defendant. Rural Mutual sought as relief a declaration by the circuit court that an
implied warranty of merchantability arose at the time of the tractor sale and also
sought a judgment reflecting that Ballweg breached that warranty.4

3
Under WIS. STAT. § 402.314(1), a contract for the sale of goods contains an “implied”
“warranty that the goods shall be merchantable” “if the seller is a merchant with respect to goods
of that kind.” Merchantability is defined in part as “[p]ass[ing] without objection in the trade
under the contract description” and being “fit for the ordinary purposes for which such goods are
used.” See § 402.314(2)(a), (c).
4
Rural Mutual brought claims against other defendants, but these are generally not
pertinent to this appeal. The exception is a reference we make in the text below to factual
allegations in the operative complaint in the other claims, because these allegations shed light on
whether Rural Mutual’s complaint states a claim for breach of the implied warranty against
Ballweg. The circuit court dismissed Ballweg’s insurer as a defendant, and Rural Mutual does
not challenge this ruling.

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¶8 Ballweg moved to dismiss the claims against it for failure to state a
claim on which relief can be granted. See WIS. STAT. § 802.06(2)(a)6. In support
of the motion, Ballweg submitted an affidavit of its owner and shareholder, who
averred that the tractor sale was conducted pursuant to a two-page document
entitled “Purchase Order for John Deere Equipment (U.S. Only).” The purchase
order was attached to the affidavit. Ballweg argued that, under the incorporation-
by-reference doctrine, Rural Mutual’s complaint incorporated the contents of the
purchase order. See Soderlund v. Zibolski, 2016 WI App 6, ¶¶37-38, 366 Wis. 2d
579, 874 N.W.2d 561 (under the “incorporation-by-reference doctrine,” the
contents of a document that is referenced in a complaint and central to a claim of
the plaintiff is “not outside the pleadings” and may be considered in a motion to
dismiss). Ballweg based its motion to dismiss on a provision in the purchase order
that Ballweg argued disclaimed an implied warranty of merchantability arising
from the tractor sale.

¶9 In opposing the motion to dismiss, Rural Mutual did not contest that
the terms of the purchase order, including the disclaimer, are incorporated by
reference into the operative complaint. Instead, Rural Mutual made the following
arguments in the alternative: that the tractor sale is subject to WIS. ADMIN. CODE
§ Trans 139.06(3), under which the purchase order disclaimer is unenforceable
because the tractor sale was not “explicitly negotiated” by the parties at the time of
the sale on an “as is” or “no warranty” basis; that the disclaimer is ambiguous, and
therefore it should be construed against Ballweg as the drafter—with the result
that the implied warranty applies to the sale; and that the disclaimer is barred
under WIS. STAT. § 402.719(2), which is a remedy gap-filler that applies to some
sales contracts.

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¶10 The circuit court rejected each of Rural Mutual’s arguments and
concluded that the disclaimer applies to bar Rural Mutual’s claims against
Ballweg. The court ruled that WIS. ADMIN. CODE § Trans 139.06(3) does not
apply to the tractor sale. The court also appeared to reject the argument that the
disclaimer is ambiguous, concluding instead that it is “a valid and enforceable
waiver of any implied warranties” under the UCC. The court agreed with Ballweg
that WIS. STAT. § 402.719(2) does not apply to the disclaimer because the
disclaimer is not a limitation on remedies or damages. Based on these rulings, the
court ultimately dismissed Ballweg from the action.5

¶11 Rural Mutual appeals.

DISCUSSION

¶12 On appeal, Rural Mutual renews the same three arguments that it
made in the circuit court, summarized above.

¶13 The issue is whether the allegations in Rural Mutual’s operative
complaint state a claim against Ballweg on which relief can be granted. See WIS.
STAT. §§ 802.02(1), 802.06(2)(a)6., (b). This presents an issue of law that we
review de novo. See Johnson v. Rogers Mem’l Hosp., Inc., 2001 WI 68, ¶15, 244
Wis. 2d 364, 627 N.W.2d 890.

5
Stated more precisely, the circuit court converted Ballweg’s motion to dismiss into a
motion for summary judgment to consider what ultimately turned out to be an uncontested factual
point. But the parties agree that, for purposes of this appeal, the issue here is whether the
complaint “state[s] a claim upon which relief can be granted.” See WIS. STAT. §§ 802.06(2)(a)6.,
(b), 802.08(2); Broome v. DOC, 2010 WI App 176, ¶9, 330 Wis. 2d 792, 794 N.W.2d 505 (first
step in summary judgment methodology is to determine if the complaint states a claim for relief).

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¶14 As part of our review, we assume that all factual allegations in the
complaint, along with reasonable inferences arising from the allegations, are true.
See CreditBox.com, LLC v. Weathers, 2023 WI App 37, ¶14, 408 Wis. 2d 715,
993 N.W.2d 802. Consistent with its arguments in the circuit court, Rural Mutual
does not contest that the terms of the purchase order are incorporated by reference
into the allegations of the complaint and therefore are part of the analysis, nor
more generally does Rural Mutual dispute that the purchase order generally
governed the terms of the tractor sale at issue. See Fleming v. Amateur Athletic
Union of the United States, Inc., 2023 WI 40, ¶4 & n.3, ¶12, 407 Wis. 2d 273,
990 N.W.2d 244 (reviewing motion to dismiss complaint for failure to state a
claim based on allegations of complaint and documents attached to motion to
dismiss incorporated by reference into the complaint). In contrast, we ignore legal
conclusions stated in the complaint. CreditBox.com, 408 Wis. 2d 715, ¶14.

¶15 We review de novo all of the issues here: the interpretation and
application of statutes, see Meyers v. Bayer AG, 2007 WI 99, ¶22, 303 Wis. 2d
295, 735 N.W.2d 448; the interpretation of administrative regulations, see State v.
Brown, 2006 WI 131, ¶18, 298 Wis. 2d 37, 725 N.W.2d 262; and the
interpretation of contract language, including the determination of whether a
contract provision is ambiguous, see Chapman v. B.C. Ziegler & Co., 2013 WI
App 127, ¶2, 351 Wis. 2d 123, 839 N.W.2d 425.

I. Applicability of WIS. ADMIN. CODE § Trans 139.06(3)

¶16 Rural Mutual argues that the disclaimer of the implied warranty in
the purchase order is unenforceable under WIS. ADMIN. CODE § Trans 139.06(3),
because the operative complaint sufficiently alleges that the tractor sale was not
“explicitly negotiated” on an “as is” basis as required by § Trans 139.06(3).

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Ballweg argues in pertinent part that § Trans 139.06(3) does not apply here,
because when one traces through pertinent rules and statutes, § Trans 139.06(3)
does not apply to farm tractors used for farming like the one at issue here. See
WIS. ADMIN. CODE § Trans 139.01.

¶17 We conclude that WIS. ADMIN. CODE § Trans 139.06(3) does not
apply to the farm tractor sale here because other regulatory provisions, based on
several statutory definitions, exclude the farm tractor as a subject of
§ Trans 139.06(3). More specifically, the other regulations and statutes: (1) limit
the application of § Trans 139.06(3) to sales of “motor vehicles” by “dealers”; and
(2) define “dealers” based on whether they sell vehicles that, under state statutes,
must be registered in order to operate on state highways. See WIS. STAT.
§§ 340.01(22), 341.01(1) (defining “highway” in this context to mean “all public
ways and thoroughfares and bridges on the same”). After we explain this
conclusion further, we explain why we reject Rural Mutual’s argument that what
governs here are regulations that rely on alternative statutory definitions of
“dealers” and of “motor vehicles” based on the concept of vehicle self-propulsion.
Rural Mutual argues that this alternative set of regulatory and statutory provisions
establishes that “motor vehicles” includes all tractors, used for farming or
otherwise, including the one sold here. Previewing our rejection of that argument,
we conclude that this argument based on the vehicle self-propulsion definition
fails in the face of regulatory provisions that rely on other definitions of dealers of
motor vehicles, which exclude all those vehicles that are not required to be
registered to operate on state highways.

¶18 “‘When interpreting administrative regulations, we use the same
rules of interpretation as we apply to statutes.’” DOR v. Menasha Corp., 2008 WI
88, ¶45, 311 Wis. 2d 579, 754 N.W.2d 95 (quoted source omitted). These rules of

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interpretation include that the pertinent rule language “is given its common,
ordinary, and accepted meaning, except that technical or specially-defined words
or phrases are given their technical or special definitional meaning.” See State ex
rel. Kalal v. Circuit Ct. for Dane Cnty., 2004 WI 58, ¶45, 271 Wis. 2d 633, 681
N.W.2d 110. Further, the context and structure of the administrative rule inform
the meaning of the rule’s “operative language.” See id., ¶46. Therefore, “[t]he
language in [an] administrative rule must be interpreted in the context in which it
is used, and not in isolation but as part of a whole, and in relation to the language
of surrounding or closely related administrative rules.” See Security Health Plan
of Wis. Inc. v. American Standard Ins. Co. of Wis., 2018 WI App 68, ¶57, 384
Wis. 2d 545, 920 N.W.2d 340 (citing Kalal, 271 Wis. 2d 633, ¶46).

¶19 WISCONSIN ADMIN. CODE § Trans 139.06(3) provides in pertinent
part:

No implied warranty of merchantability or fitness
shall be excluded in the sale of a motor vehicle unless the
sale is explicitly negotiated between the purchaser and
dealer licensee on an “AS IS—NO WARRANTY” basis
and is in conformity with [WIS. ADMIN. CODE
§] Trans 139.04(6)(a)5.

The parties agree that § Trans 139.06(3) applies to the facts alleged in the
operative complaint here if two things are true: the tractor sale counts as “the sale
of a motor vehicle,” and Ballweg counts as a “dealer.”

¶20 With this framing in mind, and applying the standards governing
administrative rule interpretation stated above, we conclude that WIS. ADMIN.
CODE § Trans 139.01, which limits the “[p]urpose and scope” of the chapter,
directs that a definition of “motor vehicle” that excludes farm tractors applies to

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the implied warranty rule in WIS. ADMIN. CODE § Trans 139.06(3). As a result,
we conclude that § Trans 139.06(3) does not apply to the tractor sale here.6

¶21 Explaining further, WIS. ADMIN. CODE § Trans 139.01 accomplishes
this result by defining limited circumstances in which ch. Trans 139 and its
implied warranty rule apply to the buying and selling of motor vehicles, based on
the role of the Wisconsin Department of Transportation in licensing certain kinds
of “dealers” and related types of businesses under subchapter I of WIS. STAT.
ch. 218. See WIS. STAT. § 218.0101(19) (defining “licensor” to include the
department); WIS. STAT. § 218.0111(1). Specifically, § Trans 139.01 defines these
limited circumstances as follows:

(2) APPLICABILITY. This chapter applies to any
person applying for or holding a Wisconsin motor vehicle
salvage dealer, manufacturer, distributor wholesale auction,
dealer or salesperson license.

(3) This chapter applies to any sale or lease of a
vehicle by a dealer to a person within the state of
Wisconsin if the vehicle is delivered within the boundaries
of this state notwithstanding any contractual agreement
between the dealer and person to the contrary.

6
Because we conclude that WIS. ADMIN. CODE § Trans 139.01, and the additional
regulatory and statutory provisions that it implicates, are dispositive on the issue of whether WIS.
ADMIN. CODE § Trans 139.06(3) applies, there are several arguments by the parties that we need
not reach. See Maryland Arms Ltd. P’ship v. Connell, 2010 WI 64, ¶48, 326 Wis. 2d 300, 786
N.W.2d 15 (appellate courts should typically decide cases on the narrowest available grounds;
“[i]ssues that are not dispositive need not be addressed”). For this reason, we do not address
arguments of the parties regarding the reference in § Trans 139.06(3) to “conformity with” WIS.
ADMIN. CODE § Trans 139.04(6)(a)5. Further, we do not reach the issue of whether, assuming
that § Trans 139.06(3) could apply here, the allegations of the complaint support a reasonable
inference that the tractor sale was not “explicitly negotiated” on an “as is” or “no warranty” basis,
as required by § Trans 139.06(3). Nor do we address the issue of whether the department would
have exceeded its statutorily conferred rulemaking authority to the extent that it purported to
apply § Trans 139.06(3) to a definition of “motor vehicles” that includes farm tractors. See WIS.
STAT. § 227.11(2)(a) (“a rule is not valid if the rule exceeds the bounds of correct interpretation”
of “provisions of a statute enforced or administered by an agency”); Koschkee v. Taylor, 2019
WI 76, ¶15, 387 Wis. 2d 552, 929 N.W.2d 600.

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On their face, these provisions limit the application of ch. Trans 139, including the
provision addressing implied warranties in WIS. ADMIN. CODE § Trans 139.06(3),
to one of two sets of circumstances: when the seller is an applicant for, or holder
of, a license to conduct the named types of businesses under § Trans 139.01(2); or
when a vehicle sale or lease is made by “a dealer” under the circumstances
described in § Trans 139.01(3).

¶22 Rural Mutual does not argue that any of the allegations in the
operative complaint state or give rise to a reasonable inference that Ballweg is a
“salvage dealer, manufacturer, distributor wholesale auction,” or “salesperson.”
This leaves the issue of whether WIS. ADMIN. CODE ch. Trans 139 applies to the
allegations here because Ballweg is a “dealer” for purposes of either WIS. ADMIN.
CODE § Trans 139.01(2) or (3).

¶23 As we now explain, “dealer” is defined for purposes of WIS. ADMIN.
CODE ch. Trans 139 through a series of cross-references that are tied to WIS. STAT.
§ 218.0101. The result is that “dealer,” when used in ch. Trans 139, is limited to
those who sell “motor vehicles” that do not include tractors that are used for
farming.

¶24 To begin, WIS. ADMIN. CODE § Trans 139.02(10g) states that
“‘[m]otor vehicle dealer’ or ‘dealer’ has the same meaning as provided in” WIS.
ADMIN. CODE § Trans 138.02(5g) (April 2024). Section Trans 138.02(5g), in turn,
states that the definition is the same as in WIS. STAT. § 218.0101(23)(a). These
connections and cross-references lead to § 218.0101(23)(a), which defines “motor
vehicle dealer” as “any person, firm[,] or corporation” who:

1. For commission, money or other thing of value,
sells, leases, exchanges, buys, offers or attempts to

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negotiate a sale, consumer lease or exchange of an interest
in motor vehicles; or

2. Is engaged wholly or in part in the business of
selling or leasing motor vehicles, including motorcycles,
whether or not the motor vehicles are owned by that
person, firm or corporation.

These definitions rely in turn on the phrase “motor vehicle,” which is also defined
under § 218.0101. Specifically, § 218.0101(22) defines “motor vehicle” as “any
motor-driven vehicle required to be registered under” WIS. STAT. ch. 341
(“registration of vehicles”).7

¶25 Summarizing the analysis to this point, persons, firms and
corporations are defined as “dealers” for purposes of WIS. STAT. ch. 218—and by
extension are “dealers” under WIS. ADMIN. CODE § Trans 139.01—only if they
sell “motor-driven vehicles” that are required to be registered under chapter 341 of
the Wisconsin Statutes.

¶26 This brings us to relevant aspects of WIS. STAT. ch. 341. This
chapter addresses the types of vehicles that must be registered for use on any
“highway of this state.” See, e.g., WIS. STAT. § 341.04(1) (prohibiting the
operation of a “motor vehicle” on state highways unless the vehicle is registered or
exempt from registration, or fits within temporary exceptions not pertinent here).

7
We observe that, in contrast to WIS. ADMIN. CODE §§ 138.02(5g)
and Trans 139.02(10g), which both combine the definition for “‘motor vehicle dealer’ and
‘dealer,’” the statute that provides general definitions for the motor vehicle code provides
separate definitions for these terms. See WIS. STAT. § 340.01(11), (35e). For reasons we explain
in the text, however, we do not rely on § 340.01 for its definitions of “motor vehicle,” “motor
vehicle dealer,” or “dealer,” because WIS. ADMIN. CODE §§ Trans 139.01(2)-(3) and 139.02(5g)
unambiguously point to WIS. STAT. § 218.0101 and then to WIS. STAT. ch. 341 for pertinent
definitions. And, in any case, the definition of “motor vehicle dealer” in § 340.01(35e) could not
support Rural Mutual’s approach, because it refers to § 218.0101(23)(a), which in turn requires
reliance on the rules requiring that certain vehicles be registered to operate on state highways.

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WISCONSIN STAT. § 341.05 lists the types of vehicles that are exempt from a
registration requirement, which includes “farm tractor[s]” when used for certain
purposes. See § 341.05(7). Starting with the “[f]arm tractor” aspect, this is
defined to be a “motor vehicle designed and used primarily as an implement of
husbandry for drawing, or having attached to it, other implements of husbandry.”
See WIS. STAT. §§ 340.01(16), 341.01(1) (incorporating definitions from § 340.01
into ch. 341).8 Turning to the required purposes, farm tractors are exempt from
registration on the highways when they are:

used exclusively in agricultural operations, including
threshing, or used exclusively to provide power to drive
other machinery, or to transport from job to job machinery
driven by a farm tractor; used for special occasions such as
display and parade purposes or for participation in tractor
or antique vehicle clubs, including traveling to and from
such events; or used for testing, maintenance, and storage
purposes.

Sec. 341.05(7).

¶27 Taking into account all of these statutes and regulations, then, as
pertinent here under WIS. ADMIN. CODE § Trans 139.01, the application of WIS.
ADMIN. CODE ch. Trans 139 is limited to circumstances involving “dealers,”
which is based on a definition of the sales of “motor vehicles” that excludes farm
tractors because they need not be registered for operation on state highways.

¶28 We now turn to the relevant allegations in the operative complaint to
determine if there is any reasonable inference that the tractor that Ballweg sold

8
As pertinent to the meaning of “farm tractor,” the phrase “implement of husbandry” is
defined by statute to include a “towed vehicle that is manufactured, designed, or reconstructed to
be used and that is exclusively used in the conduct of agricultural operations.” See WIS. STAT.
§ 340.01(24)(a)1.

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No. 2023AP2183

was not a “farm tractor.” If it was not a “farm tractor,” it would have to be
registered for state highway use, and WIS. ADMIN. CODE § Trans 139.01 would
apply to potentially preserve the implied warranty here.

¶29 The complaint does not allege many details about this tractor, about
Eron Beef, or about Eron’s use or intended use of the tractor after purchasing it,
but it does include the following. It refers to Eron as a farm. It provides
allegations about the manufacturer’s design of the type of tractor at issue here, in
addition to the manufacturer’s alleged efforts to correct the design flaw that Rural
Mutual alleges (in claims that are not at issue in this appeal) caused the tractor to
combust. These additional allegations refer to “reports from around the world”
involving “farmers … observing the [tractor] fires” ignited by an alleged defect.
The alleged defect involved the buildup of “field debris” in one part of the
tractor’s exhaust pipe. Taken altogether, these allegations suggest that the tractor
here was a “farm tractor” that was “used exclusively in agricultural operations” or
“exclusively to … transport … machinery driven by a farm tractor.” See WIS.
STAT. § 341.05(7).

¶30 We have just explained why we conclude that the tractor sale here
was not the sale of a “motor vehicle” by a “dealer.” But, as noted above, WIS.
ADMIN. CODE ch. Trans 139 applies not only to sales of “motor vehicles” by
“dealers,” it also “applies to any person applying for or holding a Wisconsin motor
vehicle … dealer … license” of the kind regulated under WIS. STAT. ch. 218. See
WIS. ADMIN. CODE § Trans 139.01(2)-(3). For this reason, there remains the
possibility that Ballweg was subject to ch. Trans 139 as a dealer license holder or
applicant. Yet Rural Mutual fares no better when we consider this alternative
theory. This is because the operative complaint contains no allegations that
Ballweg held or applied for a license at any pertinent time. More generally, the

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complaint is sparse in providing relevant allegations regarding Ballweg’s business
activities from which such license holding could reasonably be inferred. Stepping
back, as part of Rural Mutual’s larger series of concessions by failing to address
registration-based definitions of “dealer” and “motor vehicle,” it effectively
concedes that there is no theory under § Trans 139.01(2) or (3), supportable by the
allegations of the complaint, that could save Rural Mutual’s argument that WIS.
ADMIN. CODE § Trans 139.06(3) applies here to render the purchase order’s
disclaimer unenforceable.

¶31 Thus, accounting for the fact that WIS. ADMIN. CODE ch. Trans 139
is based in part on the concept of “dealers,” as defined in pertinent statutes, the
allegations of the amended complaint do not support application of ch. Trans 139
here to exclude the disclaimer. Accordingly, the implied warranty rule in WIS.
ADMIN. CODE § Trans 139.06(3) does not apply to Rural Mutual’s claims against
Ballweg to prevent dismissal of those claims based on the disclaimer.

¶32 Turning to Rural Mutual’s position regarding WIS. ADMIN. CODE
§ Trans 139.01, it fails in its reply brief to meaningfully address Ballweg’s
arguments on the topic. In fact, Rural Mutual incorrectly asserts that Ballweg
does not cite to the administrative code in support of its argument. Instead of
attempting to address Ballweg’s arguments head-on, Rural Mutual merely
emphasizes that its proposed interpretation—that “motor vehicles” always
includes tractors—has the benefit of being less complex than Ballweg’s, because it
involves fewer legal principles and cross-references. But Rural Mutual does not
explain why, regardless of the number of steps that may be required to track
Ballweg’s positions, following those steps is not the legally correct path. We treat
this gap in Rural Mutual’s reply brief as a concession of the issue and, standing by
itself, this concession supports accepting Ballweg’s position on this issue. See

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No. 2023AP2183

United Co-op. v. Frontier FS Co-op., 2007 WI App 197, ¶39, 304 Wis. 2d 750,
738 N.W.2d 578. But in the interest of completeness, we now explain why we
reject the limited argument that Rural Mutual offers.

¶33 Rural Mutual’s limited argument, offered as a counter to Ballweg’s
registration-based WIS. STAT. § 218.0101(22) definition summarized above, rests
on the following proposition: WIS. ADMIN. CODE ch. Trans 139 imports into the
implied warranty rule in WIS. ADMIN. CODE § Trans 139.06(3) a definition of
“motor vehicle” that includes tractors. As we discuss in the next paragraph, it is
true that, when one puts entirely to the side the “applicability” provisions in WIS.
ADMIN. CODE § Trans 139.01(2)-(3), Rural Mutual’s alternative interpretation of
“motor vehicle” logically traces the directions that are provided in another part of
ch. Trans 139 to import a definition based on a vehicle being self-propelled. But
Rural Mutual specifically fails to provide a basis to set § Trans 139.01 to the side
and generally fails to account for the applicability of ch. Trans 139 as a whole.

¶34 We now detail Rural Mutual’s limited argument. It starts with the
observation that WIS. ADMIN. CODE § Trans 139.02 states that “[w]ords and
phrases defined in” WIS. STAT. § 340.01 “apply” to the provisions of
ch. Trans 139, “unless a different definition is specified.” Rural Mutual further
notes that none of the definitions provided in § Trans 139.02 correspond to “motor
vehicles.” As a result, according to Rural Mutual, § Trans 139.02 directs that any
reference to “motor vehicle” in ch. Trans 139 must match the definition in
§ 340.01. Section 340.01 defines “motor vehicle” as “a vehicle … which is self-
propelled, except a vehicle operated exclusively on a rail.” Sec. 340.01(35); see
also § 340.01(74) (“‘Vehicle’ means every device in, upon, or by which any
person or property is or may be transported or drawn upon a highway, except
railroad trains.”). As the final step in its argument, Rural Mutual observes that our

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No. 2023AP2183

supreme court has concluded generally that, because tractors are self-propelled, all
tractors are “motor vehicles” under the definitions in § 340.01(35) and (74). See
Lemon v. Federal Ins. Co., 111 Wis. 2d 563, 565, 567, 331 N.W.2d 379 (1983)
(applying § 340.01 definitions to a “John Deere tractor with a backhoe on one end
and a loader at the other end”).9

¶35 To repeat, Rural Mutual’s interpretations are logical as far as they
go. But they are fatally incomplete. We conclude that the department’s
definitions contained in WIS. ADMIN. CODE § Trans 139.02 operate within the
scope of regulatory WIS. ADMIN. CODE ch. 139, which does not apply to farm
tractors. That is, § Trans 139.02 and its definitions are subject to the applicability
provisions in WIS. ADMIN. CODE § Trans 139.01. Taking into account all the
pertinent provisions, we conclude that it is not reasonable to interpret WIS. ADMIN.
CODE § Trans 139.06(3) to mean that “dealer” and “motor vehicle” encompass the
sale of a type of vehicle (a farm tractor) that—according to § Trans 139.01 and by
extension pertinent provisions of WIS. STAT. ch. 218—is not the subject of the
regulations in ch. Trans 139. In arguing to the contrary, Rural Mutual emphasizes
the conclusion of our supreme court in Lemon that the definition of “motor
vehicle” in WIS. STAT. § 340.01 based on vehicle self-propulsion applies to all
tractors of any kind. Thus, it appears that tractors of all types and uses are

9
The definitions of “motor vehicle” and “vehicle” in WIS. STAT. § 340.01, as it existed
at the time Lemon was decided, are substantially similar to the current versions. See Lemon v.
Federal Ins. Co., 111 Wis. 2d 563, 567, 331 N.W.2d 379 (1983) (“‘“Motor vehicle” means a
vehicle which is self-propelled ….’” (quoting then § 340.01(35)); “‘“Vehicle” means every
device in, upon or by which any person or property is or may be transported or drawn upon a
highway….’” (quoting then § 340.01(74)).

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included wherever this § 340.01 definition squarely applies, as in Lemon itself.10
But that has no solving power in this appeal. Rural Mutual fails to explain why
the unambiguous registration-based definition in ch. 218 should not apply instead.

¶36 Rural Mutual mistakenly asserts that WIS. ADMIN. CODE
§ Trans 139.02 does not define “dealer,” and based on that misstep contends that
the definition of “dealer” used in WIS. STAT. § 340.01(11) applies here. If this
were true, it would tend to support the position that the implied warranty rule in
WIS. ADMIN. CODE § Trans 139.06(3) relies on the definition of “motor vehicles”
in § 340.01(35): any vehicle that is self-propelled. But, as Ballweg observes and
as noted above, § Trans 139.02(10g) does supply a definition for “‘[m]otor vehicle
dealer’ or ‘dealer’” that traces through various cross-references to WIS. STAT.
§ 218.0101(23), not to § 340.01. Although the “dealer” definition in § 340.01(11)
in some respects resembles part of the definition of “motor vehicle dealer” in
§ 218.0101(23), each relies on the different definitions of “motor vehicles”
provided in WIS. STAT. chs. 340 and 218, respectively.

¶37 Stepping back, our interpretation of “dealer” in this context has the
effect of excluding tractors and other self-propelled vehicles that do not require
highway-use registration from the trade practice protections of WIS. ADMIN. CODE
ch. Trans 139, including the implied warranty rule in WIS. ADMIN. CODE
§ Trans 139.06(3). This is a result that the legislature (or the department, in its use
of authority delegated by the legislature) can be reasonably understood to intend—

10
In Lemon, a statute limiting the availability of damages due to the negligent operation
of a state or municipal “motor vehicle” required reference to the self-propelled definition in WIS.
STAT. § 340.01(35). See Lemon, 111 Wis. 2d at 566-67 (applying WIS. STAT. § 345.05 (1975-76)
based on definitions imported into WIS. STAT. ch. 345, from § 340.01, under WIS. STAT.
§ 345.01).

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No. 2023AP2183

this is not an “absurd or unreasonable result[].” See Kalal, 271 Wis. 2d 633, ¶46;
Menasha Corp., 311 Wis. 2d 579, ¶45. Whatever the potential policy
considerations may be in favor or against the decision, the legislature can
rationally decide that purchasers of those vehicles that must be registered for use
on Wisconsin’s highways merit additional levels of trade practice protections, as
opposed to purchasers of those vehicles that are exempt from registration. One
rationale would be that vehicles that must be registered make more frequent use of
the highways and the trade practice protections increase the level of safety of those
vehicles joining the general public on the highways. Rural Mutual not only fails
to engage with Ballweg’s argument regarding the applicability of ch. Trans 139,
but it also does not present an argument undermining this bigger picture point.

II. Ambiguity of Disclaimer

¶38 Rural Mutual argues that the warranty disclaimer in the purchase
order is ambiguous and that this provides an alternative basis to conclude that the
disclaimer does not exclude an implied warranty of merchantability, which would
require the denial of Ballweg’s motion to dismiss. We provide additional
pertinent standards and background before explaining our conclusion that the only
reasonable interpretation of the purchase order is that it unambiguously excludes
any implied warranty of merchantability.

¶39 In interpreting the pertinent contract language, we “generally seek[]
to give effect to the parties’ intentions” as expressed in the contract. See Tufail v.
Midwest Hosp., LLC, 2013 WI 62, ¶25, 348 Wis. 2d 631, 833 N.W.2d 586. When
the terms of the contract are unambiguous, the terms control its interpretation. See
id., ¶¶25-26. “‘A contract provision is ambiguous if it is fairly susceptible of more
than one construction.’” See id., ¶27 (quoted source omitted). “Contract language

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is construed according to its plain or ordinary meaning, consistent with ‘what a
reasonable person would understand the words to mean under the circumstances.’”
Id., ¶28 (cited and quoted authority omitted).

¶40 Turning to additional background about the purchase order, it has the
overall appearance of a form document. It bears the title “Purchase Order for John
Deere Equipment (U.S. Only).” There is no dispute that the purchase order
identifies the sale of only the following item: a 2014 model tractor manufactured
by Case (not by John Deere). The purchase order also contains a checked box
indicating that the Case tractor is used and, under the label “Hours of Use,” states
“583.”

¶41 The purchase order also contains the warranty disclaimer, which
states the following, omitting bolding:

IMPORTANT WARRANTY NOTICE: The John Deere
warranty applicable to new John Deere Equipment is
printed and included with this document. There is no
warranty on used equipment. The new equipment warranty
is part of this contract. Please read it carefully. YOUR
RIGHTS AND REMEDIES PERTAINING TO THIS
PURCHASE ARE LIMITED AS SET FORTH IN THE
WARRANTY AND THIS CONTRACT. IMPLIED
WARRANTIES OF MERCHANTABILITY AND
FITNESS ARE NOT MADE AND ARE EXCLUDED
UNLESS SPECIFICALLY PROVIDED IN THE JOHN
DEERE WARRANTY.[11]

11
All further quotation of the warranty disclaimer in the purchase order will continue to
omit bolding and will further omit the disclaimer’s use of all-capitalized letters. There is no
argument in this appeal that the purchase order was void or unenforceable for any reason,
including based on its type face or formatting. See WIS. STAT. § 402.316(2) (requiring, in part,
that written exclusions of the implied warranty of merchantability “must be conspicuous”).

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No. 2023AP2183

Despite this reference to “the John Deere warranty,” there is no dispute that, as
alleged in the operative complaint, no document that could be construed as a John
Deere warranty was included with the purchase order or given to Eron at the time
of the sale.12

¶42 Rural Mutual does not argue that any feature of the purchase order,
apart from the disclaimer paragraph, is ambiguous or contributes to ambiguity.
Rather, Rural Mutual argues that the following features of the disclaimer render it
ambiguous as to whether it excludes the implied warranty of merchantability:

 The disclaimer states that a warranty on “new John Deere equipment is
… included” and “part of this contract,” even though no such additional
document was provided at the time of the sale, and even though the
disclaimer also states that “[t]here is no warranty on used equipment.”

 The disclaimer also states that the purchaser’s “rights and remedies …
are limited” by “the warranty and this contract” and that there is no
implied warranty of merchantability “unless specifically provided in the
John Deere warranty,” again even though no printed warranty was
provided at the time of the sale.

Rural Mutual asserts that, because the purchaser was not provided with a basis to
understand what was contained in the “the John Deere warranty” referenced in the
purchase order, there are reasonable interpretations of the purchase order under
which the disclaimer does not exclude an implied warranty of merchantability.

¶43 We conclude that Rural Mutual fails to establish ambiguity in the
purchase order when it is properly interpreted as a whole and each provision is

12
Rural Mutual assails the “sales tactic” of limiting a purchaser’s rights and remedies in
a purchase order that references, but is not accompanied by, a warranty document, asserting that
this “should not be tolerated.” This assertion implies arguments that are not discernably
connected to any of the three arguments that Rural Mutual raises in this appeal, and we reject it
on that basis.

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No. 2023AP2183

considered in context. Instead, Rural Mutual merely directs our attention to
isolated references involving the “the John Deere warranty” that was not provided
to Eron. See Pheasant W., LLC v. University of Wis. Med. Found., Inc., 2023
WI App 55, ¶27, 409 Wis. 2d 539, 998 N.W.2d 600 (contracts are interpreted “‘as
a whole, to avoid the potential for ambiguity that can result if a small part of the
agreement is read out of context’” (quoted source omitted)).

¶44 Explaining further, the reasonable reader of the purchase order as a
whole, including the disclaimer, would understand that, because it identified the
only item being sold as a used tractor, and one that was not manufactured by John
Deere, there would be “no warranty,” and the contents of a “John Deere warranty”
would not apply to the purchase. Therefore, the absence of an additional
document was meaningless because these references were merely relics of the fact
that this was a form contract that was otherwise used for different types of sales.

¶45 Put differently, there was no reasonable confusion about what the
purchase order refers to as “[t]he John Deere warranty applicable to new John
Deere Equipment,” “printed and included with this document,” and “part of this
contract.” This is because the only reasonable interpretation of these phrases, in
context, is that the purchase order is a form document that was designed to
memorialize both used and new purchases, but that in this particular case
memorialized the sale of a used tractor. The reasonable reader would understand
that the statement later in the disclaimer that “implied warranties of
merchantability and fitness are not made and are excluded unless specifically
provided in the John Deere warranty,” meant that there was no warranty of
merchantability at all—the purchase order (“this contract”) did not contain such a
warranty, and the purchase order provided no reason to think that a “John Deere
warranty” document would supply one.

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No. 2023AP2183

¶46 In sum, we conclude that the disclaimer is not ambiguous as to
whether any implied warranty of merchantability was excluded—the purchase
order unambiguously excluded this implied warranty.

III. Applicability of WIS. STAT. § 402.719

¶47 Although the argument is unclear, Rural Mutual contends that the
disclaimer is invalid because what it states about the purchaser’s “rights and
remedies” under “the warranty and this contract” rendered the purchase order
subject to WIS. STAT. § 402.719(2). As noted, § 402.719(2) is a part of the UCC.
It states that, when a contract provides an “exclusive or limited remedy,” and
“circumstances cause” the remedy “to fail of its essential purpose,” then other
provisions of the UCC may be relied on to determine the appropriate remedy. We
now summarize the argument as we understand it. It begins by highlighting the
language in the disclaimer that refers to the inclusion of a warranty document for
new John Deere equipment which, as we have explained above, was obviously not
at issue in this sale. Based on this reference, Rural Mutual argues that the
purchase order provided the purchaser with some kind of remedies in the event of
dissatisfaction with the transaction. Given the prospect of purchaser remedies of
some kind, the argument proceeds, because the purchase order does not specify
particular remedies, and because no warranty document was provided to the
purchaser at the time of sale to fill this gap, the unspecified remedies fail of their
essential purpose. Thus, Rural Mutual argues, under § 402.719(2) it is entitled to
pursue UCC remedies against Ballweg (although Rural Mutual does not specify
which UCC remedies).

¶48 We conclude that Rural Mutual’s argument fails for at least the
reason that it ignores the fact that Rural Mutual has pursued only one claim here:

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No. 2023AP2183

breach of an implied warranty of merchantability. Rural Mutual does not explain
how an issue involving potential remedies that Rural Mutual might be able to
obtain, presumably if it had pursued different causes of action than the implied
warranty breach that it actually did pursue, prevents dismissal of the specific cause
of action that it has pursued.

¶49 This fundamental problem comes into sharp focus when one
compares the difference between an agreement to limit purchaser remedies, which
is related to the topic of WIS. STAT. § 402.719(2), and an agreement to exclude
warranties, such as the disclaimer here. As Ballweg notes, our supreme court has
explained the following regarding the difference between exclusions of warranties
and limitations on purchaser remedies. “Under the [UCC], a seller of goods may
limit [the seller’s] contractual liability in two ways.” Murray v. Holiday Rambler,
Inc., 83 Wis. 2d 406, 414, 265 N.W.2d 513 (1978). The seller “may limit the
buyer’s remedies for a breach of warranty, pursuant to [§] 402.719” or it “may
disclaim or limit [the seller’s] warranties, pursuant to [WIS. STAT. §] 402.316.”
See id. “These methods are closely related, and in many cases their effect may be
substantially identical. Conceptually, however, they are distinct.” Id. (citations
omitted). “A limitation of remedies … restricts the remedies available to the
buyer once a breach is established.” Id. “A disclaimer of warranties,” in contrast,
“limits the seller’s liability by reducing the number of circumstances in which the
seller will be in breach of the contract; it precludes the existence of a cause of
action.” Id.

¶50 Bearing this distinction in mind, Rural Mutual fails to explain how
the topic of remedies being inadequately alluded to in the purchase order could
shed light on the meaning or applicability of the disclaimer here. We have
explained above why we reject Rural Mutual’s argument that the disclaimer is

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No. 2023AP2183

ambiguous. In the words of Murray, here the effect of the disclaimer of the
implied warranty of merchantability is that the purchase order “precludes the
existence of a cause of action” based on the implied warranty of merchantability.
See Murray, 83 Wis. 2d at 414. This is precisely the cause of action that Rural
Mutual brought against Ballweg in the operative complaint.

¶51 Put differently, Rural Mutual fails to show how WIS. STAT.
§ 402.719(2) could apply here to allow Rural Mutual to pursue remedies against
Ballweg for a breach of a warranty that is excluded for reasons we have explained
above. Whatever effect the reference to “right and remedies” that is made in the
disclaimer might have in other circumstances, involving other kinds of claims,
Rural Mutual does not provide a legally supported argument that establishes a
basis to reverse the dismissal of Ballweg from this action on a claim of a breach of
an implied warranty of merchantability.

CONCLUSION

¶52 For all of these reasons, we affirm the circuit court’s order granting
Ballweg’s motion to dismiss.

By the Court.—Order affirmed.

Not recommended for publication in the official reports.

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