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Sunny Handicraft Ltd. v. Envision This!, LLC

United States District Court, N.D. Illinois, Eastern Division

January 16, 2015

SUNNY HANDICRAFT LTD., AND BIN TEH HANDICRAFT (SHENZEN) CO., LTD., Plaintiff(s),
v.
ENVISION THIS!, LLC, AND WALGREEN CO., Defendants.

MEMORANDUM OPINION AND ORDER

JOHN Z. LEE, District Judge.

This case arises from a deteriorating supply chain relationship between defendant, a middleman for retailers importing goods to the United States, and two plaintiff corporations that coordinate the manufacture and export of Christmas and other holiday decorations to the United States. Plaintiffs Sunny Handicraft, Ltd. ("Sunny Handicraft") and Bin Teh Co., Ltd. ("Bin Teh") have filed a two-count amended complaint against Defendants Envision This!, LLC ("Envision") and Walgreen, Co. ("Walgreens"), alleging a breach of contract claim against Envision and an unjust enrichment claim against Walgreens. In response, Defendant Envision has filed a six-count counterclaim, alleging two breach of contract claims, two unjust enrichment claims, a tortious interference with economic advantage claim, and a breach of implied covenant of merchantability claim against Plaintiffs.

Walgreens moves to dismiss Plaintiffs' unjust enrichment claim under Count II of Plaintiffs' Amended Complaint for failure to state a claim under Federal Rule of Civil Procedure ("Rule") 12(b)(6). Walgreens argues that Plaintiffs have not alleged any facts to demonstrate that they expected payment from Walgreens. Plaintiffs counter that they have sufficiently pleaded that Walgreens was aware of Plaintiffs' involvement in the shipment of goods and that it knew of their expectation to be paid for the goods that they shipped to Walgreens. Plaintiffs also move to dismiss the entirety of Envision's Amended Counterclaims for failure to state a claim under Rule 12(b)(6).

For the reasons stated herein, the Court grants Walgreens' Rule 12(b)(6) motion to dismiss Count II of Plaintiffs' Amended Complaint. The Court grants in part and denies in part Plaintiffs' Rule 12(b)(6) motion to dismiss Envision's Amended Counterclaims. The Court grants Plaintiffs' motion to dismiss Count III and V, and denies Plaintiffs' motion to dismiss Counts I, II, IV, and VI.

I. Factual Background[1]

A. Plaintiffs' Two-Count Amended Complaint

Plaintiff Sunny Handicraft, a Hong Kong corporation, processes purchase orders for Christmas and other holiday decorations. Am. Compl. ¶ 2. Plaintiff Bin Teh, a China corporation, manufactures Christmas and other holiday decorations for Plaintiff Sunny Handicraft. Id. ¶ 3. Defendant Envision, a Florida limited liability company, imports and resells these goods to retailers in the United States. Id. ¶ 4.

Plaintiffs allege that Defendant Walgreens entered into five agreements with Envision to purchase Christmas decorations in 2013. Id. ¶ 8. They assert that on or about the same dates that Envision entered into agreements with Walgreens, Envision entered into agreements with the Plaintiffs to purchase Christmas decorations manufactured by Bin Teh for resale to Walgreens. Id. ¶ 9. Under this agreement, Envision agreed to purchase goods worth $3, 496, 267.66 and pay Plaintiffs once the goods were delivered to Walgreens or placed in Walgreens' care in the United States. Id.

Plaintiffs assert that they shipped the manufactured goods to the United States and Walgreens received all of the goods pursuant to Plaintiffs' agreement with Envision. Id. ¶ 10. Plaintiffs claim, however, that Envision breached its contract with the Plaintiffs because it failed to pay for the purchased goods. Id. ¶¶ 12, 13. Plaintiffs state that they have performed all of the conditions of the agreement and that Envision's failure to pay them resulted in damages worth $3, 496, 267.66. Id. ¶¶ 14, 15.

Because Envision has failed to pay for the shipped goods, Plaintiffs assert that Walgreens has been unjustly enriched by the transaction. Id. ¶¶ 16, 19. Specifically, they allege that Walgreens has "received the benefit of the goods shipped to it by Plaintiffs" and that "[a]t all times, Walgreens was aware of Plaintiffs' involvement in the manufacture and delivery of the goods and knew of Plaintiffs' reasonable expectation that they would be paid for the goods that were shipped to Walgreens for sale in Walgreens pharmacies." Id. ¶¶ 16, 17. Plaintiffs argue that it is unfair and unjust to allow Walgreens to benefit at Plaintiffs' expense. Id. ¶ 19.

For its part, Defendant Walgreens has moved to dismiss Plaintiffs' unjust enrichment claim for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Def. Walgreens' Mem. Supp. Mot. Dismiss 1. Specifically, Walgreens argues that Plaintiffs cannot assert an unjust enrichment claim because they had a contract with Envision regarding the shipped goods and they have not alleged any expectation of payment from Walgreens. Def. Walgreens' Mem. Supp. Mot. Dismiss 3.

B. Defendant Envision's Counterclaims

On July 22, 2014, Defendant Envision filed a six-count amended counterclaim against the Plaintiffs. In Count I, Envision claims that the Plaintiffs breached their contract with Envision regarding shipments to Walgreens. Envision explains that in or about 2007, Envision and Sunny Handicraft entered into an oral agreement. Am. Countercls. ¶ 8. Under the agreement, Envision agreed to pay Sunny Handicraft for seasonal merchandise that Envision would then resell to Walgreens. Id. When Walgreens ordered goods, Envision would send purchase orders to Sunny Handicraft; Sunny Handicraft would then ship the goods directly to Walgreens. Id. ¶ 9. Pursuant to their oral contract, the parties agreed to settle their accounts at the end of year by deducting certain agreed-upon expenses, including advertising and packaging design costs, bank fees for letters of credit, and cost of goods sold. Id. ¶¶ 10, 11.

The parties adhered to their agreement from 2007 to 2012. Id. ¶ 11. However, Envision alleges that in 2013 Sunny Handicraft breached the parties' agreement by failing to reimburse Envision for various advertising costs; ship 2013 Christmas decorations to Walgreens on time without a justifiable excuse; reimburse Envision for bank fees on letters of credit; provide originating documents to freight forwarder; and include costs of goods on an invoice. Id. ¶¶ 13-23, 26-31. For its part, Envision states that it complied with the parties' agreement by paying for expenses that were to be reimbursed by Sunny Handicraft. Id. ¶ 32. Based on these breaches, Envision alleges damages worth in excess of $634, 659.78. Id. ¶ 33.

In Count II, Envision relies on the same facts as in Count I, but asserts an unjust enrichment claim in the alternative to its breach of contract claim. Envision alleges that Sunny Handicraft has been unjustly enriched because it received the benefit of Envision's payment of the costs arising from Plaintiffs' breaches. Id. ¶ 57. Moreover, Envision asserts that "[i]t would be unfair and unjust for Sunny Handicraft to retain the benefits provided by Envision without compensating Envision." Id. ¶ 58.

In Count III, Envision brings a breach of contract claim regarding its non-Walgreens agreements with the Plaintiffs. Envision asserts that in or about 2002, the parties entered into an oral agreement under which Envision agreed to pay Sunny Handicraft for seasonal merchandise that Envision would then resell to United States retailers. Id. ¶ 60. Envision alleges that the parties agreed to reconcile any shipping expenses owed to the other at the end of each year by making "appropriate and agreed upon deductions." Id. ¶ 62.

As part of this Count, Envision asserts that, from 2006 to 2013, it provided resource management and product development services to Sunny Handicraft due to Sunny Handicraft's inexperience and inability to provide such services on its own. Id. ¶¶ 63-65, 68. Envision asserts that it has not been paid for this service support, which had a fair value of $100, 000.00 per year. Id. ¶ 68. Envision also explains that Sunny Handicraft failed to pay for artwork that Envision provided to Sunny Handicraft for packaging. Id. ¶ 70, 73. Moreover, Envision alleges that Plaintiffs did not reimburse Envision for costs and expenses worth $479, 725.53 on prior 2013 orders. Id. ¶ 75. For its part, Envision states that it has met all of the conditions of the parties' agreement because it performed ...


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