United States District Court, N.D. Illinois, Eastern Division
SUNNY HANDICRAFT (H.K.) LTD., a Hong Kong corporation, and BIN TEH HANDICRAFT SHENZHEN CO. LTD., a China corporation, Plaintiffs,
BETH ANN EDWARDS and ROBERT J. HETZLER, Defendants.
MEMORANDUM OPINION AND ORDER
Z. Lee United States District Judge
Sunny Handicraft (H.K.) Ltd. (“Sunny”) and Bin
Teh Handicraft (Shenzhen) Co. Ltd. (“Bin Teh”)
have sued Defendants Beth Ann Edwards (“Edwards”)
and Robert J. Hetzler (“Hetzler”), alleging
claims for fraud, breach of fiduciary duty, and defamation.
Defendants have moved to dismiss the complaint for lack of
personal jurisdiction pursuant to Federal Rule of Civil
Procedure (“Rule”) 12(b)(2). In the alternative,
they have moved to dismiss Plaintiffs' defamation claims
for failure to state a claim to relief pursuant to Rule
12(b)(6). For the reasons stated herein, Defendants'
motion to dismiss  is granted in part and denied in part.
Bin Teh is a Chinese corporation that manufactures Christmas
decorations. Compl. ¶ 3, ECF No. 1. Plaintiff Sunny is a
Hong Kong corporation that processes orders from retailers
for the purchase of decorations manufactured by Bin Teh.
Id. ¶¶ 2-3. From 2006 to 2013, Plaintiffs
worked with a Florida-based company called Envision This! LLC
(“Envision”). Id. ¶¶ 1, 8.
Envision served as Plaintiffs' sales representative,
assisting Plaintiffs in managing their business relationships
with various retailers. Id. ¶ 8. Envision's
sole members are Defendants Edwards and Hetzler, both of whom
are Florida residents. Id. ¶ 4.
in 2007, Walgreen Co. (“Walgreens”), an Illinois
corporation with its principal place of business in
Deerfield, Illinois, regularly purchased merchandise from
Plaintiffs. Id. ¶¶ 7, 10-11. From 2007 to
2012, Plaintiffs sold and shipped merchandise to Walgreens on
at least eleven occasions. Id. ¶ 11. Envision
served as Plaintiffs' sales representative with respect
to these shipments. Id. ¶ 12. For each
shipment, Walgreens paid for Plaintiffs' merchandise by
issuing letters of credit listing Sunny as the sole
beneficiary. Id. ¶¶ 13, 15.
to Plaintiffs, one of Envision's responsibilities as
Plaintiffs' sales representative was to ensure that
Walgreens paid Plaintiffs by issuing letters of credit.
Id. ¶ 40. To that end, in coordinating sales of
Plaintiffs' goods, Envision was responsible for
forwarding “Import Buying Confirmation Forms”
from Plaintiffs to Walgreens. Id. ¶ 41. The
Confirmation Forms included information that designated Sunny
as the entity to be named as the beneficiary for the letters
of credit backing each transaction. Id. ¶¶
2013, as in past years, Walgreens placed orders for the
purchase of Plaintiffs' merchandise in anticipation of
the holiday season. Id. ¶ 16. Walgreens ordered
about $3.5 million in merchandise. Id.
Plaintiffs' general manager, Daniel Huang, sent
Confirmation Forms for these orders to Edwards and Hetzler,
with the understanding that Edwards and Hetzler would then
forward the forms to Walgreens and that Walgreens would pay
Plaintiffs accordingly. Id. ¶ 42. In the
meantime, Plaintiffs began manufacturing the ordered
merchandise and preparing its shipment to Walgreens.
Id. ¶ 20.
to Plaintiffs, however, Edwards and Hetzler did not forward
the Confirmation Forms to Walgreens as instructed.
Id. ¶ 43. Instead, after they received the
forms from Huang, Edwards and Hetzler altered them so as to
designate Envision-not Sunny-as the beneficiary of
Walgreens's letters of credit. Id. Plaintiffs
allege that these alterations were made without
Plaintiffs' approval or knowledge. Id. After
making the alterations, Hetzler e-mailed the Confirmation
Forms to Walgreens representatives in Illinois, flagging in
the body of his e-mail that Walgreens should “note the
change of beneficiary.” Id. ¶ 44.
May to August 2013, Huang repeatedly asked Edwards and
Hetzler when letters of credit would issue from Walgreens,
explaining that Plaintiffs needed the letters of credit in
order to obtain a loan to finance the manufacture of the
merchandise Walgreens had ordered. Id. ¶¶
47-48. In response, Edwards and Hetzler represented to Huang
that a letter of credit naming Sunny as the beneficiary was
forthcoming. Id. ¶ 49. According to Plaintiffs,
however, these representations were false, and Edwards and
Hetzler knew all along that no such letters of credit would
be issued. Id.
18, 2013, Walgreens issued an irrevocable, transferable
letter of credit naming Envision as the sole beneficiary.
Id. ¶ 22. Several days later, Walgreens
employee Karl Waldschmidt, while in Illinois, e-mailed
Hetzler to inform him that this letter of credit had been
issued. Id. ¶ 52. On August 1, 2013, Walgreens
issued a second letter of credit, again naming Envision as
the sole beneficiary. Id. ¶ 23. Around this
time, Hetzler instructed Huang not to discuss the letters of
credit with any of Walgreens's representatives.
Id. ¶ 53. Plaintiffs allege that Hetzler gave
Huang this instruction in order to conceal the fact that
Edwards and Hetzler had surreptitiously altered the
Confirmation Forms to name Envision as the beneficiary for
the letters of credit. Id.
August 8, 2013, Hetzler informed Plaintiffs for the first
time that Walgreens had issued letters of credit naming
Envision, rather than Sunny, as the beneficiary. Id.
¶ 24. Plaintiffs asked Edwards and Hetzler to transfer
these letters of credit to Sunny, but they refused to do so,
falsely telling Plaintiffs that the letters of credit were
nontransferable. Id. ¶¶ 25, 59-60.
a letter of credit to guarantee payment, Plaintiffs had
difficulty financing the manufacturing and shipment of the
merchandise that Walgreens had ordered. Id. ¶
27. Edwards and Hetzler promised to assist Plaintiffs in
arranging financing by obtaining a $1.5 million letter of
credit for Plaintiffs, but they never delivered on this
promise. Id. ¶ 28. According to Plaintiffs,
Edwards and Hetzler promised to provide this letter of credit
in order to induce Plaintiffs to continue manufacturing and
shipping the merchandise for Walgreens. Id.
September 16, 2013, Walgreens issued a third and final letter
of credit listing Envision as the beneficiary. Id.
¶ 29. According to Plaintiffs, Envision pocketed
approximately $3 million by drawing down on the three letters
of credit, and neither Envision nor Walgreens has ever paid
Plaintiffs anything for manufacturing and shipping the
merchandise that Walgreens ordered for the 2013 holiday
season. Id. ¶¶ 34, 36, 39.
October 11, 2013, Edwards sent an e-mail to various Walgreens
employees. See Id. ¶ 79; id., Ex. F.
At least one of these employees was located in
Illinois. Id. ¶ 75; id., Ex.
F. Edwards's e-mail was a response to an inquiry from
Walgreens employee Teresa Chu about the status of certain
shipments of merchandise from Plaintiffs. See id.,
Ex. F. In responding to Chu's inquiry, Edwards wrote:
[T]he bookings were done by the factory. They changed our
passwords [on the freight forwarding system] and . . . we are
blind with the facts, hence the reason we were working on
trying to gather the information collectively to help put a
stop to the nonsense. . . . Again, all our facts were all
documents were submitted. So there is a litany of
misrepresentations by Sunny Handicraft. Such to the fact that
legal action has transpired.
Id. at 2.
days later, on October 13, 2013, Edwards sent a separate
e-mail to Hadieh Hasan, a Walgreens employee also located in
Illinois. Id. ¶ 75. In this e-mail, Edwards
As for Daniel [Huang] at this point this is just pure Chinese
thievery, gangsters. We have written confirmation all docs
were submitted. It is one continual lie upon lie on their
end. Their actions are ...