Latino Food Marketer v. Ole Mexican Foods ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-2691
LATINO FOOD MARKETERS, LLC and
MEXICAN CHEESE PRODUCERS, INC.,
Plaintiffs-Appellees,
v.
OLÉ MEXICAN FOODS, INC.,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 03 C 0190—Barbara B. Crabb, Chief Judge.
____________
ARGUED JANUARY 19, 2005—DECIDED MAY 12, 2005
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Before CUDAHY, MANION, and EVANS, Circuit Judges.
EVANS, Circuit Judge. At long last, Latino Food Marketers
and Olé Mexican Foods have come to an agreement. Un-
fortunately, the only thing they agree on is that they dis-
agree about whether they ever made an agreement in the
first place. A jury found that they did not, and Olé, the party
unhappy with the verdict, appeals.
Latino sells Mexican-style cheese products made by a
company, Mexican Cheese Producers, Inc. Miguel and
2 No. 04-2691
Martina Leal are the controlling owners of both companies.
Olé, which sold cheese manufactured by Mexican Cheese
Producers for several years, began buying directly from
Latino in September 2001.
The two sides soon began negotiating a 3-year contract for
Olé to continue buying cheese directly from Latino. The
biggest sticking point was that Latino wanted Olé to prom-
ise to buy exclusively from Latino, while Olé wanted to be
free to purchase from other manufacturers. On November 9,
2001, Olé faxed Latino a draft contract that did not promise
exclusivity. Three days later, Latino handwrote changes
that made the contract exclusive, limited a lower price guar-
antee from the entire world to the southeast United States,
and allowed for mutual changes in the products covered.
Leal signed the contract and faxed it to Olé, with instruc-
tions for Veronica Moreno, vice-president of Olé, to sign the
agreement and fax it back to Latino.
This case essentially turns on what happened next. Olé
says it signed the agreement and sent it back to Latino by
Federal Express on November 16, 2001. Latino claims it
never received a signed contract. On November 21, Moreno
called Leal, angry that Latino had threatened to stop ship-
ping Olé’s orders because it had not been paid. Leal claims
that Moreno told him that she would not sign the contract.
On November 29, Leal sent an e-mail to Albert Garcia,
Latino’s future sales broker, telling him that Moreno did
not want to sign the contract.
Despite the dispute, Latino continued shipping products
and Olé continued paying for them, even as both sides com-
plained about the other’s performance on numerous oc-
casions. Although it was still selling to Olé, Latino claims
it never thought the two sides had agreed to the original
deal and did not realize that Olé thought there was a valid
contract until the two sides met on February 10, 2003, to
discuss a number of issues. After that meeting, Latino
No. 04-2691 3
asked to see the signed contract. Olé faxed Latino a copy of
the proposed deal, but it was not signed by Olé.
Dealings between the two companies finally broke down
in April 2003. Latino filed suit in the Western District of
Wisconsin, claiming Olé owed it more than $1.1 million for
cheese it had received from Latino. Olé responded with its
own suit for 17 causes of action against Latino in the
Northern District of Georgia. The Georgia court eventually
dismissed Olé’s lawsuit under the first-to-file rule. Olé then
filed a motion to dismiss the Wisconsin suit based on a
forum selection clause in the disputed contract that re-
quired all litigation to be brought in Georgia.
The district court (Chief Judge Barbara B. Crabb) sched-
uled an evidentiary hearing on Olé’s motion to dismiss. Just
before the hearing, Olé produced what it claimed was a
valid, signed copy of the contract. Because Latino disputed
its authenticity, however, the hearing proceeded. After
3 days of testimony and argument, Judge Crabb concluded
(for purposes of venue only regarding the forum selection
clause) that Olé did not show that a valid contract existed,
meaning that the suit could continue in the Wisconsin
court. Olé filed its answer, along with 17 counterclaims, 16
of which were dismissed.
The case then proceeded to trial. The jury found that the
parties never entered into the disputed contract but also
found in favor of Olé on part of its claim that Latino
breached its duty of good faith. At the end of the day, Olé
owed Latino $1,121,913 on its contract claim, and Latino
owed Olé $954 on its good-faith claim. Olé appeals, claiming
that Judge Crabb erred (1) in denying its motion for di-
rected verdict, (2) in failing to give certain jury instructions,
and (3) in improperly placing the burden of proof on Olé
rather than Latino. Olé also argues the judge erred in
failing to admit evidence of FDA standards for unfit products
and in granting Latino’s motion for summary judgment on
Olé’s fraudulent misrepresentation counterclaim.
4 No. 04-2691
Olé first argues that the judge erred in denying its motion
for judgment as a matter of law on the question of whether
Ole and Latino entered into the contract in question. We
review the denial de novo and will affirm if any reasonable
jury could have found that there was no agreement. Our job
is not to determine whether the jury believed the right
people, but only to assure that it was presented with a
legally sufficient basis to support its verdict. See Harvey v.
Office of Banks & Real Estate, 377 F.3d 698, 707 (7th Cir.
2004).
Olé argues that, whether or not both sides actually signed
the contract, the evidence was clear that they agreed to it.
It suggests that Moreno orally agreed to Latino’s proposed
changes to Olé’s written contract offer during the November
2001 phone call with Leal. Latino contends the two sides
were still negotiating and never came to a full understand-
ing.
Wisconsin law governs this case, and under that law, al-
though an agreement need not be in writing to be valid, see
Zeige Distrib. Co. v. All Kitchens, Inc., 63 F.3d 609, 612 (7th
Cir. 1995) (“[I]n order for acceptance of a contract to occur,
there must be a meeting of the minds, a factual condition
that can be demonstrated by word or deed.”), the jury here
could most certainly have reasonably concluded that there
was no agreement. Moreno testified that, during her phone
call with Leal, the parties agreed to certain changes, then
promised that both would sign the agreement. But Leal tes-
tified that the week after he faxed the proposed amended
contract to Olé, Moreno called him and threatened not to
sign it. That threat suggests that she did not think that the
parties would be bound until the contract was signed;
otherwise, it would have been little more than an empty
threat. And if Olé was free to back out of the deal, as
Moreno seems to have thought, so was Latino. Thus, it was
reasonable for the jury to find that there was no agreement.
No. 04-2691 5
Olé also claims the fact that Latino shipped products to it
proved that Latino believed the two sides had an agree-
ment. While that is one plausible interpretation, it is also
reasonable to imagine that Latino continued shipping
products to Olé simply because it wanted to make as many
sales as possible, regardless of whether it believed the two
sides had made any binding contractual promises to each
other. Deciding which explanation made more sense was
best left to the jury, and Judge Crabb did not err in failing
to substitute her judgment for its after the verdict was
returned.
In a related argument, Olé claims that the judge erred
in failing to give the Wisconsin pattern jury charge in-
structing that acceptance of a contract may be inferred from
conduct. We review decisions regarding instructions for an
abuse of discretion. Spiller v. Brady, 169 F.3d 1064, 1066
(7th Cir. 1999).
Olé asked for an instruction that “acceptance of the con-
tract may also be implied from the conduct of the parties.”
Olé says it presented evidence that both sides performed as
though they were bound by the contract and that Latino
added Olé as an additional insured on its insurance policy,
enough, it claims, for the jury to find an implied contract.
The problem for Olé is that it barely argued for the exist-
ence of an implied contract during the trial. Instead, Olé
focused almost exclusively on its claim that it had a legit-
imate signed contract. That was an understandable tactical
decision, as Olé might have worried that pressing an implied
contract argument would reduce the chances that the jury
would believe that there was an actual contract. But having
put so much emphasis on its contention that there was a
valid signed agreement, Olé cannot now complain that the
judge did not give adequate attention to an argument that
Olé itself virtually ignored.
6 No. 04-2691
Similarly, Olé claims that the judge erred in failing to
instruct the jury that “[a] party may accept a contract in a
manner or method other than the manner or method re-
quested by the offering party” and that a written agreement
may be effective even if both parties have not signed it. But
while Judge Crabb didn’t use that language in her charge
to the jury, she clearly incorporated the concept when she
told it that “acceptance may be made by a communication to
the offeror, either in writing or orally.” Thus, the jury knew
that it could find a valid contract even if it did not believe
Olé’s claim that it signed the agreement.
Olé next claims that the judge erred at the evidentiary
hearing on Olé’s motion to dismiss by placing on it the
burden of proving that the contract was signed. Citing
Wisconsin Statute § 891.25, Olé contends that its production
of a written contract should have shifted the burden to
Latino to prove that the contract was not validly executed.
Olé also claims the judge erred in rejecting its request that
the jury be instructed on a § 891.25’s effect on the burden
of proof.
We note first that Olé failed to argue § 891.25’s applica-
tion until after the evidentiary hearing, but it shouldn’t
have made any difference. Latino sued not on the original
contract—it claimed the two sides never agreed to that one—
but on a contract it claimed was formed through purchase
orders and other dealings. And Latino successfully showed
that the Western District of Wisconsin was an appropriate
place for a suit on that contract to take place. Olé was free
to argue, as it did, that there was no contract formed
through the purchase order process because there was a
prior controlling agreement, but that argument most closely
resembles an affirmative defense. Thus, the burden was
appropriately placed on Olé to prove the existence of the
original agreement.
Section 891.25 does not change that analysis. That
statute, in part, says:
No. 04-2691 7
When any written instrument constitutes the subject of
the action or proceeding or when the signing of such
instrument is put in issue and the instrument purports
to have been signed, the instrument itself is proof that
it was signed until denied by oath or affidavit of the
person by whom it purports to have been signed or by
a pleading.
Therefore, even if Olé had properly raised the argument,
§ 891.25 would only have concerned the question of whether
Moreno actually signed the contract. But that was never an
issue. Latino questioned when Moreno signed the contract
but never disputed whether she did so. Thus, Olé had the
burden of proving the existence of the contract, see, e.g.,
Bantz v. Montgomery Estates, Inc., 473 N.W.2d 506 (Wis.
Ct. App. 1991), and there was no error.
Olé’s final two claims can be quickly resolved. First, it
argues that Judge Crabb erred in refusing to take judicial
notice of FDA standards it says supported its claim that
Latino acted in bad faith by shipping contaminated prod-
ucts. But, once again, Olé is arguing that the judge hurt its
ability to contest a fact that was never contested. Latino
never claimed that some of the products were not contami-
nated; the question was whether Latino intentionally shipped
bad products. Olé claims it wanted to use the FDA stan-
dards to impeach Latino’s claim. But Latino never claimed
that its products met FDA standards, so there was no
testimony or witness to impeach.
Finally, Olé challenges the dismissal of its counterclaim
that Latino made fraudulent representations to induce Olé
to continue buying exclusively from Latino. Olé claims
Latino intentionally misrepresented that it was selling to
Olé at its lowest prices and that it was not selling directly
to Olé’s customers.
Olé’s claim runs into trouble, however, because of its failure
to plead its claim with particularity and the fact that the
8 No. 04-2691
claim might be barred by the economic loss doctrine. Worse
still, Olé never offered any evidence that it reasonably
relied on the alleged misrepresentations, as required to
state a claim for fraudulent misrepresentation. See, e.g.,
Hennig v. Ahearn, 601 N.W.2d 14, 24 (Wis. Ct. App. 1999).
In addition, as Judge Crabb noted, Olé admitted in its
counterclaim that it knew that Latino was selling cheese to
one of Olé’s customers, making any reliance unreasonable.
The judgment of the district court is AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-12-05