The Wisconsin federal court’s decision in Sunrise Marine, LLC v. Aqua Traction Marine, LLC, No. 25-CV-722, 2026 U.S. Dist. LEXIS 1409 (E.D. Wis. Jan. 6, 2026) is best understood as reflecting the WFDL’s long‑recognized pro‑dealer (pro-franchisee) character. By broadly construing contractual protections, recognizing inaction as a basis for statutory liability, interpreting accrual in a manner that preserved the dealer’s claim, and sustaining all of Sunrise’s causes of action at the pleading stage, the court strengthened the dealer’s ability to hold the supplier accountable for conduct that undermined the competitive viability of its exclusive territory. For these reasons, the case should be viewed as a strongly pro‑franchisee, pro‑dealer decision within the broader landscape of Wisconsin dealership and franchise jurisprudence.
Decision
The court’s decision in Sunrise Marine, LLC v. Aqua Traction Marine, LLC was strongly pro‑dealer, holding that Sunrise Marine plausibly alleged violations of the Wisconsin Fair Dealership Law and that Aqua Traction’s failure to enforce territorial protections could constitute both a statutory violation and a breach of contract. The judge denied Aqua Traction’s motion to dismiss in full, applying the WFDL liberally in favor of protecting the dealer.
Aqua Traction Marine, LLC manufactured custom flooring for recreational boats and had operated a dealership network. Sunrise Marine, LLC had served as one of its dealers since 2019 under an agreement granting Sunrise an exclusive territory covering roughly the eastern third of Wisconsin and a portion of Michigan’s Upper Peninsula. The dealership agreement stated that Aqua Traction would protect each dealer’s territory and would ensure that no additional dealers’ territories overlapped. It also described a specific procedure for handling opportunities lying in another dealer’s territory, requiring conference calls and multi‑party agreement before moving forward.
Beginning in 2022, Sunrise Marine heard rumors that another dealer—C. Martin Contracting, LLC (doing business as Aqua Traction of Central Wisconsin)—had been performing work inside Sunrise’s exclusive territory. When Sunrise asked Aqua Traction’s representative, Josh Clymer, whether a new dealership had been granted, he refused to provide information. In early 2023, Sunrise met with Collin Martin of Central Wisconsin. Shortly afterward, Sunrise learned that Central Wisconsin was actively soliciting customers within Sunrise’s territory. Sunrise reviewed Aqua Traction’s work orders and Martin’s social media posts, which corroborated the encroachment. When Sunrise complained, Clymer promised to “take care of the matter,” but the encroachments continued.
On August 24, 2023, Sunrise met with Aqua Traction and Central Wisconsin. Martin admitted that Central Wisconsin had performed work in Sunrise’s territory, and Clymer acknowledged that continued violations could lead to litigation. Sunrise agreed to “start over” and move forward.
Despite this, Sunrise learned in January 2024 that Central Wisconsin continued operating in its territory. Sunrise again raised concerns in February 2024, prompting Aqua Traction to state that it would strictly enforce dealer territories going forward. Sunrise continued to investigate, eventually prompting Aqua Traction—on November 11, 2024—to state that it would “not spend more time on this situation.” Sunrise later discovered that Martin had created a new business, Premier Marine, to disguise additional territorial incursions, and that Central Wisconsin had performed substandard installations in Sunrise’s territory in early 2025.
Sunrise filed suit on April 11, 2025 in state court, alleging that Aqua Traction violated the Wisconsin Fair Dealership Law (WFDL) by substantially changing the competitive circumstances of the dealership without good cause, and also asserting breach of contract and breach of the duty of good faith and fair dealing. Aqua Traction removed the case to federal court and moved to dismiss.
Court’s Reasoning
The court explained that although statute‑of‑limitations defenses generally are not resolved on a Rule 12(b)(6) motion, a complaint may be dismissed if it affirmatively pleads facts showing it is untimely. Under the WFDL, a claim must be filed within one year after it accrues. Aqua Traction argued that the claim accrued in 2022, when territorial incursions first occurred. Sunrise countered that the claim did not accrue until November 11, 2024—the point when Aqua Traction essentially abandoned its efforts to enforce territorial boundaries and stated it would no longer address the issue.
The court held that Aqua Traction had not shown that the complaint was untimely on its face. It reasoned that isolated violations might not constitute a “substantial change” under the WFDL; only when they form a pattern or when the grantor disavows its obligations does a claim accrue. Because Sunrise alleged that Aqua Traction only abandoned enforcement in November 2024, its April 2025 filing plausibly fell within one year. Thus, dismissal on limitations grounds was improper.
Aqua Traction argued that the WFDL requires an affirmative action by the grantor, not inaction. The court rejected this, noting that nothing in the statute’s text, structure, or purpose supported such a limitation. A refusal to supply a dealer—an act typically described as “inaction”—could plainly violate the WFDL. Likewise, failing to protect a dealer’s exclusive territory could constitute a substantial change in competitive circumstances.
The court also rejected Aqua Traction’s narrow reading of the contract language. The agreement imposed two separate obligations: (1) to protect each dealer’s territory; and (2) to ensure no dealer territories overlapped. Aqua Traction’s argument that it had only the latter duty was inconsistent with the contract’s grammar and repetition of the broader obligation to “protect” dealer territories.
The court further clarified that Sunrise had not alleged the lack of shipment monitoring alone constituted a WFDL violation; instead, Sunrise used it to show Aqua Traction could have taken steps to enforce territorial protections but chose not to. Finally, the court noted that the WFDL concerns competitive circumstances, not general profitability. A dealer’s profitability may or may not reflect competitive harm. Here, the alleged territorial encroachment and Aqua Traction’s failure to address it plausibly constituted a change in competitive circumstances. Therefore, the WFDL claim was adequately pled.
The court held that Sunrise adequately stated a breach of contract claim. Aqua Traction argued Sunrise had not identified any contractual breach, but the court disagreed, noting that the contract expressly required Aqua Traction to protect Sunrise’s exclusive territory. Sunrise did not merely allege that another dealer entered its territory; it alleged that Aqua Traction failed to take reasonable and available steps to enforce the protections it had promised, despite having the contractual authority to act.
Whether Aqua Traction’s actions were sufficient to satisfy its contractual duties was a factual matter inappropriate for resolution at the motion‑to‑dismiss stage. Therefore, the breach claim survived. Under Wisconsin law, all contracts contain an implied duty of good faith and fair dealing. Sunrise alleged that Aqua Traction violated this duty by failing to take steps—such as verifying where products were being installed—that, although not explicitly required, would have supported the intended mutual benefits of the agreement.
The court held that these allegations plausibly described conduct undermining the spirit of the agreement. Because Sunrise’s claim went beyond mere restatement of the breach of contract claim, the good‑faith claim also survived.
Conclusion – The Decision Was Pro-Franchisee
This case reflects a decidedly pro‑dealer, or by analogy pro‑franchisee, orientation under the Wisconsin Fair Dealership Law (WFDL). Although the parties were not formally in a franchise relationship, the WFDL is widely understood as one of the strongest dealer‑protection statutes in the United States, and the court applied it in a manner consistent with that remedial purpose. Sunrise Marine alleged that Aqua Traction repeatedly failed to protect Sunrise’s exclusive territory from encroachment by another authorized dealer and ultimately announced that it would no longer address the problem. Sunrise asserted statutory and contractual claims, including violations of the WFDL, breach of contract, and breach of the implied covenant of good faith and fair dealing. Aqua Traction moved to dismiss all claims. The court denied the motion in its entirety, and in doing so, adopted an interpretive posture that unmistakably favored the dealer.
The court began by construing the contract broadly in Sunrise’s favor. Aqua Traction had argued that its duties were limited to avoiding the assignment of overlapping territories, but the court rejected this narrow interpretation. The court held that the dealership agreement imposed two distinct obligations: a general duty to protect each dealer’s territory and a separate obligation to ensure no dealership territories formally overlapped. By reading the territorial‑protection language expansively rather than narrowly, the court reinforced the protective nature of the dealer’s contractual rights and refused to limit those rights to the narrow boundaries urged by the supplier. This approach mirrors other WFDL cases in which courts emphasize the statute’s purpose of correcting the imbalance of power between suppliers and their dependent dealers.
The court also rejected Aqua Traction’s attempt to limit the reach of the WFDL to affirmative acts. Aqua Traction argued that only an overt change—rather than inaction or neglect—could constitute a substantial change in competitive circumstances under § 135.03. The court disagreed, emphasizing that nothing in the statutory text, structure, or history required such a limitation. The court explained that a supplier’s refusal to act can be just as damaging to a dealer’s competitive position as an affirmative act, and that inaction, such as abandoning the enforcement of territorial protections, can fall squarely within the statute’s prohibition on substantial changes in competitive circumstances without good cause. This expansion of what may constitute a statutory violation further demonstrates the decision’s pro‑dealer orientation because it prevents suppliers from avoiding liability simply by declining to intervene when competitive harm occurs.
On the statute‑of‑limitations issue, the court again adopted a view favorable to the dealer. Aqua Traction argued that the claim accrued when encroachments first allegedly occurred in 2022, thus making Sunrise’s 2025 filing untimely. The court rejected this argument and emphasized that a WFDL claim accrues not when small or isolated circumstances arise, but when the substantial change in competitive circumstances occurs. Sunrise plausibly alleged that the decisive change occurred in November 2024, when Aqua Traction informed Sunrise that it would no longer expend effort on enforcing territorial protections. Treating that refusal as the accrual date ensured that Sunrise’s lawsuit was timely. This ruling aligned with the WFDL’s remedial purpose, which directs courts to construe the statute liberally in favor of protecting dealers rather than granting grantors technical escape routes.
The court found Sunrise’s breach of contract claim viable, emphasizing that the meaning of “protect” in the agreement required factual exploration and could not be resolved at the pleading stage. Importantly, Sunrise did not allege breach simply because another dealer entered its territory; Sunrise alleged that Aqua Traction had the contractual authority and the practical ability to enforce territorial protections, yet failed to do so despite multiple complaints and opportunities. The court held that these allegations stated a plausible claim and deserved development in discovery. This finding again demonstrates judicial sensitivity to the power imbalance between suppliers and their dealers.
The court also allowed the good‑faith‑and‑fair‑dealing claim to proceed, noting that Wisconsin law imposes a duty to honor not only the express terms of the agreement but also its spirit. Sunrise had alleged that Aqua Traction refused to take reasonable steps—such as verifying where product shipments were used—to ensure that territorial boundaries were respected. Even if such steps were not expressly required in the agreement, they could fall within the doctrine of good faith because they furthered the fundamental expectations of the parties’ relationship. The court rejected Aqua Traction’s attempt to characterize the claim as duplicative of the breach claim, finding that Sunrise had plausibly alleged conduct inconsistent with the broader expectations inherent in the agreement.
