In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-3297

PRODUCTION SPECIALTIES GROUP, INC.,

a Wisconsin Corporation,

Plaintiff-Appellee,

v.

MINSOR SYSTEMS, INC., a Michigan Corporation

and MINSOR POWERTRAIN SYSTEMS LLC,

a Michigan limited liability company,

Defendants-Appellants.

____________

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 04 C 758—Charles N. Clevert, Jr., Judge.

____________

ARGUED MARCH 26, 2007—DECIDED JANUARY 17, 2008

____________

Before ROVNER, WILLIAMS, and SYKES, Circuit Judges.

WILLIAMS, Circuit Judge. Minsor Systems and Minsor

Powertrain Systems (“Minsor”) entered into a contract

with Production Specialties Group (“PSG”) in which PSG

agreed to make Minsor a machine needed for manufacturing an automotive part. Minsor cancelled the contract

after PSG was unable to deliver an acceptable machine,

and PSG brought this diversity action for breach of

contract and fraud in the inducement. A jury found for

PSG on both claims and awarded punitive damages on the
2 No. 06-3297

fraud claim. Minsor moved for judgment notwithstanding the verdict and for a new trial on the fraud claim,

arguing that PSG’s claims were barred by the economic

loss doctrine; that the court issued erroneous jury instructions; and that the evidence was insufficient to

support either a verdict for the plaintiff on the fraud claim

or punitive damages. The district court denied both

motions, and Minsor appeals from that ruling. We find

that Minsor failed to preserve its economic loss argument and that an erroneous burden of proof instruction

did not constitute plain error. In addition, we conclude

that the district court did not err in giving a punitive

damages instruction because there was sufficient evidence

to show that Minsor intentionally disregarded PSG’s

rights. For these reasons, we affirm.

I. BACKGROUND

Minsor supplies automotive parts. In March 2004,

Minsor solicited bids on a contract to manufacture a

machine that could turn a steel forging into a “TB

knuckle,” an automotive part that is attached to a truck

axle. Minsor needed to submit a prototype of the TB

knuckle to its customer by April 15, 2004. Minsor selected

PSG to produce the machine as it was the only company

that could commit to delivering the prototype TB knuckles

on time. In early April, PSG received steel forgings so

it could begin making the prototypes. At this point,

PSG began having problems. Before it submitted its bid,

Minsor’s vice-president of engineering, Brett Stevenson,

told PSG that it would need to make a machine that

could remove 2.0 millimeters to 2.5 millimeters of excess

material per side from the steel forging. But when PSG

received the steel forgings to make the prototype, it

discovered that they actually contained significantly

more than 2.5 millimeters of excess material. This
No. 06-3297 3

meant that the machine PSG was making could not

transform the forgings into TB knuckles as quickly as its

original bid had promised. PSG informed Stevenson of

this problem, and according to PSG’s vice-president of

sales and engineering, Rick Glowacki, Stevenson assured

PSG that the steel forgings it had received were just

preliminary prototypes and PSG would be able to make

changes to the forgings that would be used during the

actual production process. After receiving this assurance,

PSG signed the contract on April 13, 2004. The contract,

consistent with PSG’s original bid, required PSG to

produce a machine that could manufacture 22 parts per

hour. A couple weeks later, PSG learned that, contrary

to Stevenson’s assurance, the forgings could not be

changed to eliminate the excess material. Realizing that

this meant it would have difficulty providing Minsor

with a machine that could manufacture the promised

22 parts per hour, PSG offered to cancel the contract and

return Minsor’s initial payment. Minsor declined and told

PSG to keep working on the machine to see how close it

could come to meeting the 22 parts per hour goal. By June,

PSG had still not been able to produce an acceptable

machine, and Minsor had rejected PSG’s proposals to

address the problem. Minsor then cancelled the contract because of PSG’s failure to perform.

PSG brought suit for breach of contract and fraud in the

inducement. It claimed that Minsor fraudulently induced

it to enter into the contract when Stevenson told PSG’s

Glowacki that the steel forgings with the excess stock

were just prototypes that could be changed later. PSG’s

principal evidence that this statement was false was the

testimony of Minsor’s vice-president of quality assurance,

Patrick Smith. Smith testified that he knew early in the

process that the production forgings would likely be the

same as the prototypes and could probably not be changed.
4 No. 06-3297

At the trial, Minsor unsuccessfully moved for judgment

as a matter of law at the close of PSG’s case. It did not

renew this motion at the close of all the evidence, and the

jury returned a verdict in favor of PSG. Minsor then

retained new counsel who moved for judgment notwithstanding the verdict and for a new trial. In its motions,

Minsor argued that: (1) PSG should have written into

the contract Stevenson’s assurance that the forgings

could be changed and, therefore, was barred from asserting a fraud claim under the economic-loss doctrine;

(2) the district court erroneously instructed the jury that

the standard of proof on the fraud claim was by a preponderance of the evidence instead of clear and convincing

evidence; (3) insufficient evidence supported the jury’s

verdict on the fraud claim; and (4) there was insufficient

evidence to justify the giving of a punitive damages

instruction. Minsor did not challenge the jury’s verdict on

the breach of contract claim.

PSG argued that Minsor had waived the economic-loss

doctrine defense because it did not raise this defense

before trial in a motion for summary judgment or a motion

to dismiss. It contended that Minsor was only entitled to

plain error review of the erroneous jury instruction

because it did not object at trial and that the instruction

did not violate Minsor’s substantial rights because the

court also instructed the jury that to award punitive

damages it had to find by clear and convincing evidence

that Minsor intentionally disregarded PSG’s rights.

Finally, PSG pointed to Smith’s testimony as evidence

that was sufficient to support the jury’s verdict on the

fraud claim and support the giving of a punitive damages

instruction. The district court accepted all of these arguments and denied Minsor’s motions.
No. 06-3297 5

1 Effective December 1, 2006, Rule 50 was amended “to permit

renewal of any Rule 50(a) motion for judgment as a matter of

law, deleting the requirement that a motion be made at the close

of all the evidence.” Fed. R. Civ. P. 50 advisory committee’s note.

II. ANALYSIS

As an initial matter, we note that at the time of the

trial in this case, the Federal Rules of Civil Procedure

required a party moving for judgment notwithstanding

the verdict (“J.N.O.V.”) to first move for judgment as a

matter of law at the close of all the evidence. Fed. R. Civ.

P. 50(b) (2005);1 see also Laborers’ Pension Fund v. A & C

Envtl., Inc., 301 F.3d 768, 775 (7th Cir. 2002). As PSG

points out, Minsor did not do this, and we have strictly

enforced this rule in the past, even in cases where a

defendant moved for judgment as a matter of law at the

close of the plaintiff’s case. See, e.g., Mid-Am. Tablewares,

Inc. v. Mogi Trading Co., 100 F.3d 1353, 1364 (7th Cir.

1996); Downes v. Volkswagen of Am., Inc., 41 F.3d 1132,

1139-40 (7th Cir. 1994). Therefore, we must affirm the

denial of Minsor’s motion for J.N.O.V.

These procedural rules do not apply to motions for a new

trial however. See Fed. R. Civ. P. 59. Therefore, we can

consider all of Minsor’s arguments in support of that

motion. On appeal, Minsor renews the arguments it

made in the district court.

A. Economic Loss Doctrine

PSG argues that Minsor waived its argument that the

economic loss doctrine bars PSG from recovering on its

fraud claim by not raising it sooner, and we agree. A

motion for a new trial is not the appropriate place to

raise for the first time arguments that could have been

brought earlier in the proceedings. Naeem v. McKesson
6 No. 06-3297

Drug Co., 444 F.3d 593, 610 (7th Cir. 2006); Anderson v.

Flexel, Inc., 47 F.3d 243, 247 (7th Cir. 1995). Minsor’s

economic-loss argument is a legal question that could have

been easily resolved at the summary judgment stage or

even as a motion to dismiss for failure to state a claim.

Minsor brought neither of these motions and did not

even raise this defense in the course of the trial itself.

B. Sufficiency of the Evidence & Burden of Proof

Instruction

Minsor next argues that the district court erroneously

denied its motion for a new trial on the grounds that

the jury was given the wrong burden of proof on the

fraud claim and that PSG did not present sufficient

evidence to support the jury’s verdict on that claim. Under

Wisconsin law, which the parties agree applies, PSG

had to prove the following elements to support its fraud

claim: (1) Minsor made a factual misrepresentation before

contract formation, (2) Minsor knew the representation was untrue or made it recklessly without caring

whether it was true, (3) Minsor made the representation

intending to deceive PSG and induce PSG to act on it, and

(4) PSG believed the representation to be true and justifiably relied on it. Kaloti Enters., Inc. v. Kellogg Sales Co.,

699 N.W.2d 205, 211 (Wis. 2005); Malzewski v. Rapkin,

723 N.W.2d 156, 162 (Wis. Ct. App. 2006). Each element

must be proven by “clear, satisfactory, and convincing

evidence.” Digicorp, Inc. v. Ameritech Corp., 662 N.W.2d

652, 663 (Wis. 2003) (internal quotation marks omitted).

The jury, however, was instructed that in order to find

that Minsor committed fraud, PSG had the burden of

establishing each element by a preponderance of the

evidence. PSG submitted the wrong instruction to the

district court, and the error went unchecked. Minsor
No. 06-3297 7

never supplied its own correct instruction and waited

until its motion for a new trial to challenge the court’s

instruction.

Fed. R. Civ. P. 51(d)(2) permits a court to consider a

plain error in the jury instructions affecting substantial

rights that has not been preserved as required by Fed. R.

Civ. P. 51(d)(1). As in the criminal context, “before an

appellate court can correct an error not raised at trial,

there must be (1) error, (2) that is plain, and (3) that

affects substantial rights,” and (4) the court must be

convinced that the error “seriously affects the fairness,

integrity or public reputation of judicial proceedings.” See

Johnson v. United States, 520 U.S. 461, 466-67 (1997)

(internal quotation marks omitted); Higbee v. Sentry Ins.

Co., 440 F.3d 408, 409 (7th Cir. 2006).

Although the district court clearly erred by giving the

wrong instruction, we find that Minsor has not met its

“burden of establishing that the error affected substantial rights, i.e., that the outcome probably would have

been different without the error.” United States v. Pree,

408 F.3d 855, 869 (7th Cir. 2005) (internal quotation

marks omitted). We conclude that the jury probably

would have found that Minsor committed fraud, even if

it had been instructed under the proper, higher burden of

proof of “clear, satisfactory, and convincing evidence.” In

challenging this point, Minsor focuses principally on the

last element of the fraud claim: that PSG believed the

representation to be true and justifiably relied on it.

Minsor points out that before PSG signed the contract, it

had already begun working with the prototype forgings

and knew that they contained more than 2.5 millimeters

of excess material. Therefore, Minsor contends, PSG

could not have justifiably relied on Minsor’s statement

that the machines it was making would only have to

remove 2.0 millimeters to 2.5 millimeters of excess material from the forgings.
8 No. 06-3297

2 The jury was correctly instructed that this heightened burden

applied for PSG’s punitive damages claim.

This argument ignores the evidence that Minsor made

further false representations about the excess material

after PSG informed Minsor of the difficulties it was having with the prototype forgings. Rick Glowacki (of PSG)

testified that Brett Stevenson (of Minsor) told him that

the prototype forgings were just preliminary and could

be changed later. Based on this statement, Glowacki

was reassured that the original representations about

the excess material to be removed from the forging would

be honored even though the prototype forgings turned out

to have more excess material than expected. PSG presented enough evidence for the jury to conclude that

Stevenson’s statement was knowingly false. Specifically,

Patrick Smith (of Minsor) testified that he knew the

prototype forgings probably could not be changed early in

the process, around the same time that Stevenson told

Glowacki the prototype forgings could be changed. Smith

also testified that he had discussions with Stevenson

about problems with the prototypes. The jury could

easily infer from this testimony that at the time Stevenson told Glowacki that changes could be made to the

prototypes, Stevenson, like Smith, knew that changes

probably would not be possible. Indeed, that the jury

awarded PSG punitive damages suggests that it found

by “clear, satisfactory, and convincing evidence”2

 that

Stevenson had made a knowing misrepresentation. Cf.

United States v. Verrusio, 803 F.2d 885, 892 (7th Cir. 1986)

(finding plain error when an incorrect burden of persuasion was assigned to a criminal defendant because the

evidence on the relevant issue was roughly in equipoise).

In its reply brief, Minsor argues that PSG was not

justified in relying on Stevenson’s statement because all
No. 06-3297 9

he said was that the forgings could be changed, not

that they would be changed, and because PSG made no

attempt to write this assurance into the contract. A party

is not justified in relying on a representation that it

should recognize as obviously false. Hennig v. Ahearn,

601 N.W.2d 14, 24 (Wis. Ct. App. 1999). But Minsor’s

representation that changes could be made to the

forgings was not obviously false. As we have pointed

out, there was enough evidence for the jury to conclude

that Minsor knew there was little possibility of changing

the forgings when it told PSG otherwise. Furthermore,

Glowacki testified that PSG relied on Minsor’s statement

that changes would be possible when it agreed to go

through with the contract in spite of the problems it was

having with the prototypes. The jury could have questioned

whether PSG really did rely on Stevenson’s statement

about making changes to the forgings given the vague and

uncertain nature of that statement. But the jury’s verdict

suggests that it believed Glowacki’s testimony that PSG

did rely on Stevenson’s statement, and we do not ordinarily overturn a jury’s credibility finding. Pearson v.

Wellborn, 471 F.3d 732, 738 (7th Cir. 2006).

At any rate, Minsor has failed to show that the particular error here is of the kind that if left uncorrected would

result in a miscarriage of justice. As explained above,

Minsor probably would have lost on PSG’s fraud claim

even if the jury had been properly instructed, so Minsor

is hard-pressed in claiming that this error tainted the

district court proceedings. And here, the civil litigant

claiming that it alone has been harmed by an erroneous

instruction bears significant responsibility for that error

in the first place. Cf. Diaz-Fonseca v. Puerto Rico, 451

F.3d 13, 36 (1st Cir. 2006) (vacating damages award

stemming from an erroneous jury instruction in an Individuals with Disabilities Education Act case in part because

the award would impact non-party school children by
10 No. 06-3297

diverting scarce educational resources). Minsor had a

chance to submit proposed jury instructions to the court.

See Fed. R. Civ. P. 51(a). It chose not to do so, instead

relying on the instructions submitted by PSG. Minsor has

not provided any reason why the court should cure this

“self-inflicted wound.” See Rivera Castillo v. Autokirey,

Inc., 379 F.3d 4, 10 (1st Cir. 2004); see id. at 12 (finding

no miscarriage of justice when a party failed to propose

jury instructions or object to the court’s instructions).

Indeed, Minsor’s failings run deeper: when the parties

were hashing out the final instructions and the court

sought to clarify that PSG’s punitive damages claim

required a higher burden of proof than the preponderance

standard, Minsor’s counsel simply agreed, never alerting the court that a higher burden should also apply

to PSG’s fraud claim. In sum, because Minsor has not

given us a good reason to excuse its many mistakes, we

conclude that the erroneous instruction here did not

“seriously affect[ ] the fairness, integrity or public reputation of judicial proceedings.”

C. Punitive Damages

Finally, Minsor argues that the district court erred by

instructing the jury on punitive damages because there

was not sufficient evidence to show that Minsor acted

maliciously, vindictively, or with an improper motive. But

PSG did not have to show that Minsor acted maliciously

or vindictively; it had to show only that Minsor intentionally disregarded PSG’s rights. See Wis. Stat.

§ 895.043(3) (formerly § 895.85(3)); Wischer v. Mitsubishi

Heavy Indus. Am., Inc., 694 N.W.2d 320, 324-25 (Wis.

2005). As we explained above, there was enough evidence

in the record for the jury to conclude that when Minsor

told PSG it could make changes to the prototype forgings,

it knew that this was not true. In addition, there is
No. 06-3297 11

evidence that Minsor was aware that its misstatement

would affect PSG’s ability to perform the contract—PSG

expressed concern to Minsor about its ability to meet the

contract terms if the final forgings contained as much

excess material as the prototypes. We also do not agree

with Minsor that there is no evidence of an improper

motive on Minsor’s part. There is evidence that Minsor

was on a tight deadline to produce prototypes of the TB

knuckle for its customer and that PSG was the only

company that said it could produce the prototypes on

schedule. Therefore, the jury could have concluded that

Minsor wanted to deceive PSG so PSG would continue

producing the prototypes even if doing so meant that PSG

might have trouble meeting its contractual obligations

in the long term. We believe this is enough for the jury

to conclude that Minsor intentionally disregarded PSG’s

rights, and therefore the district court did not err by

instructing the jury on punitive damages.

III. CONCLUSION

For the above reasons, we AFFIRM the decision of the

district court denying Minsor’s motions for judgment

notwithstanding the verdict and for a new trial.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—1-17-08