United States District Court, N.D. Illinois, Eastern Division
SUNNY HANDICRAFT (H.K.) LTD. and BIN TEH HANDICRAFT SHENZHEN CO. LTD., Plaintiffs/Counter-Defendants,
ENVISION THIS!, LLC, Defendant/Counter-Plaintiff, and WALGREEN CO., Defendant.
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”)
are foreign corporations in the business of manufacturing and
exporting holiday decorations and other seasonal merchandise.
Around 2006 or 2007, Plaintiffs began working with Defendant
Envision This!, LLC (“Envision”), a Florida-based
company that sources goods from overseas factories for sale
to U.S. retailers. For several years, Plaintiffs and Envision
worked together to arrange regular shipments of merchandise
to various U.S. retailers, including to Defendant Walgreen
2013, however, the parties' business relations soured.
For their part, Plaintiffs assert that Envision and Walgreens
have wrongfully withheld payment of over $3 million owed to
Plaintiffs for goods shipped during that year. Plaintiffs
have accordingly brought claims against Envision and
Walgreens for breach of contract and unjust enrichment, as
well as additional claims against Envision for defamation,
fraud, and breach of fiduciary duty. In response, Envision
has filed counterclaims against Plaintiffs for defamation,
breach of contract, unjust enrichment, tortious interference
with economic advantage, and breach of implied warranty of
party has filed a motion for summary judgment. For the
reasons provided herein, Plaintiffs' motion for partial
summary judgment  is granted in part and denied in part.
Envision's motion for partial summary judgment  is
also granted in part and denied in part. Walgreens's
motion for summary judgment  is denied in its entirety.
is a Hong Kong corporation with its principal place of
business in Hong Kong. Pls.' LR 56.1(a)(3) Stmt. ¶
1, ECF No. 153. Bin Teh is a Chinese corporation with its
principal place of business in Shenzhen, China. Id.
¶ 2. Bin Teh manufactures goods that Sunny then ships to
retailers. Envision's LR 56.1(a)(3) Stmt. ¶ 3, ECF
No. 163. Although Sunny and Bin Teh are separate companies,
they are operated by the same general manager, Daniel Huang.
Id. ¶¶ 4-5. Envision is a Florida limited
liability company with its principal place of business in
Miami Beach, Florida. Pls.' LR 56.1(a)(3) Stmt. ¶ 3.
Its sole members, Beth Edwards and Robert Hetzler, are both
Florida residents. Id. Walgreens is an Illinois
corporation with its principal place of business in
Deerfield, Illinois. Id. ¶ 4.
are in the business of manufacturing and shipping seasonal
merchandise for U.S. retailers. Id. ¶ 7. Around
2006 or 2007, Plaintiffs began working with Envision to
facilitate sales of their merchandise. Id. The
parties dispute which services Envision provided in
connection with these sales. According to Plaintiffs,
Envision's role was to set up appointments with retailers
on Plaintiffs' behalf, communicate with buyers regarding
price quotes and samples, and collaborate with Plaintiffs in
designing samples and artwork for the packaging of some of
Plaintiffs' goods. Id. ¶ 8. Envision
rejects this characterization of the services it performed.
Envision's LR 56.1(b)(3) Stmt. ¶ 8, ECF No. 171.
Rather, according to Envision, it provided Plaintiffs with
product development, trend tracking, database management, and
invoice management services in the course of sourcing goods
on retailers' behalf. Id.
2007 to 2013, Walgreens was one of the U.S. retailers who
purchased Plaintiffs' merchandise. Id. ¶
16. Envision played a role in facilitating these purchases,
but the parties dispute how Envision's role is best
characterized. According to Plaintiffs, Envision
“worked for, and was compensated by, Plaintiffs for
serving as Plaintiffs' sales representative” in
these transactions. Pls.' LR 56.1(b)(3) Stmt. Resp.
Envision ¶ 8, ECF No. 176. For its part, Envision
asserts that it worked not for Plaintiffs but instead for
Walgreens as Walgreens's vendor, contracting with
Walgreens for the sale of merchandise and in turn
subcontracting with Plaintiffs for the manufacture of this
merchandise. Envision's LR 56.1(b)(3) Stmt. ¶ 16.
and Envision had an agreement governing the compensation
structure by which Plaintiffs paid Envision for its services
in facilitating sales of Plaintiffs' goods. Pls.' LR
56.1(a)(3) Stmt. ¶ 9. This agreement governed all sales
of Plaintiffs' goods to U.S. retailers, including sales
to Walgreens. See Id. ¶¶ 9, 16. Under the
terms of the agreement, Plaintiffs paid Envision (1) an
annual fee of $10, 000, (2) a commission consisting of a
percentage of the price of each item Envision helped
Plaintiffs to sell, and (3) “certain expenses,
including the amounts Envision paid for samples, courier
charges, hotel fees in Asia, and third-party translation
services.” Id. ¶ 10. When one party owed
money to the other at the end of the year, Plaintiffs and
Envision settled their accounts through a “truing
up” process, either paying the other party any
outstanding amount owed or carrying any outstanding balance
as a credit into the following year. Id. ¶ 14.
Plaintiffs and Envision do not dispute these basic terms of
their agreement, they dispute whether the agreement contained
certain additional terms. For example, Envision claims (and
Plaintiffs deny) that Plaintiffs agreed to separately
compensate Envision for the cost of its product development,
trend tracking, and database management services, as well as
for artwork that Envision developed to market Plaintiffs'
goods. See Envision's LR 56.1(b)(3) Stmt.
¶¶ 10, 12; Pls.' Reply Envision's LR
56.1(b)(3) Stmt. ¶¶ 89-92, ECF No. 188. In
addition, Plaintiffs claim (and Envision denies) that
Envision was responsible for coordinating with Walgreens to
ensure that Sunny received payment for the merchandise that
Plaintiffs manufactured and shipped. Envision's LR
56.1(b)(3) Stmt. ¶ 18.
2007 to 2012, in order to coordinate shipments of
Plaintiffs' goods for sale to Walgreens, Envision
regularly submitted Import Buying Confirmation Forms to
Walgreens. Pls.' LR 56.1(a)(3) Stmt. ¶ 18. Walgreens
paid for the goods corresponding to each Confirmation Form by
issuing letters of credit. Id. ¶¶ 18-19.
From 2007 to 2012, the Confirmation Forms that Envision
submitted to Walgreens regarding Plaintiffs' goods always
listed Sunny as the entity to be named as the beneficiary for
the letters of credit. Id. ¶ 18. Accordingly,
for each shipment of goods sold to Walgreens from 2007 to
2012, Plaintiffs received payment in the form of letters of
credit issued by Walgreens. Id. ¶¶ 18-19.
did not go as usual in 2013. That year, Walgreens initiated a
transaction (“the 2013 Transaction”) for the
purchase of Christmas decorations manufactured by Plaintiffs.
Id. ¶ 22. The purchased merchandise had a face
value of just under $3.5 million. Id. When Envision
sent the Confirmation Forms to Walgreens for the 2013
Transaction, however, the forms listed Envision-not Sunny-as
the entity to be named as the beneficiary of Walgreens's
letters of credit. Id. ¶ 23. According to
Plaintiffs, their general manager, Daniel Huang, had
previously e-mailed Envision copies of Confirmation Forms
listing Sunny as the beneficiary for the 2013 Transaction,
but Envision later altered the forms to list itself as the
beneficiary without Plaintiffs' knowledge. Id.
Envision denies this accusation, maintaining instead that
Plaintiffs agreed to designate Envision as the beneficiary
for the 2013 Transaction and that Plaintiffs were aware of
this arrangement no later than December 2012. Envision's
LR 56.1(b)(3) Stmt. ¶¶ 23, 96.
on the information provided in the Confirmation Forms for the
2013 Transaction, Walgreens issued three transferable letters
of credit listing Envision as the beneficiary. Pls.' LR
56.1(a)(3) Stmt. ¶ 24. On August 8, 2013, Envision
notified Plaintiffs that these letters of credit had been
issued. Id. ¶ 25. According to Plaintiffs, this
was the first time they learned that the letters of credit
listed Envision rather than Sunny as the beneficiary.
Id. Plaintiffs requested that Envision transfer the
letters of credit to Sunny, but Envision did not do so.
Id. Envision later drew down about $3.069 million
from the letters of credit and deposited the money into its
bank account. Id. ¶ 30.
August 20, 2013, Huang called Walgreens's buying
representative, Hadieh Hasan, to request that Walgreens issue
a new letter of credit listing Sunny as the beneficiary.
Id. ¶ 35. Envision and Walgreens assert (while
Plaintiffs deny) that Huang told Hasan during this
conversation that Sunny would not ship the merchandise for
the 2013 Transaction unless Walgreens issued a new letter of
credit. Pls.' LR 56.1(b)(3) Stmt. Resp. Envision ¶
24; Pls.' LR 56.1(b)(3) Stmt. Resp. Walgreens LR 56.1
Stmt. ¶ 30, ECF No. 179. Envision further asserts that
Plaintiffs defamed Envision during this conversation by
telling Hasan that Envision was refusing to make a payment to
Plaintiffs. Envision's LR 56.1(b)(3) ¶ 68.
September and early October of 2013, Plaintiffs withheld
freight forwarder documents that were necessary for some of
the merchandise in the 2013 Transaction to clear customs.
Pls.' LR 56.1(a)(3) Stmt. ¶ 40. Plaintiffs claim
that they withheld these documents to obtain a written
guarantee of payment for the merchandise from either Envision
or Walgreens. Id. By contrast, Envision claims that
Plaintiffs' purpose in withholding these documents was to
obtain a new letter of credit listing Sunny as the
beneficiary. Envision's LR 56.1(b)(3) Stmt. ¶ 40.
October 11, 2013, Envision sent an e-mail to Teresa Chu, a
Walgreens employee. Envision's LR 56.1(a)(3) Stmt.
¶¶ 46-47. Chu had inquired about the status of the
delayed shipments for the 2013 Transaction. Id., Ex.
AA at 1-2. In responding to Chu's inquiry, Envision
[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.
October 13, 2013, Envision sent a separate e-mail to Hasan.
Envision's LR 56.1(a)(3) Stmt. ¶ 48. In this e-mail,
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 completely unethical and our lawyers
Envision's LR 56.1(a)(3) Stmt., Ex. AB at 1.
October 15, 2013, Plaintiffs finally provided the freight
forwarder documents needed for the merchandise in the 2013
Transaction to clear customs. Pls.' LR 56.1(a)(3) Stmt.
¶ 41. By November 20, 2013, all of the merchandise had
arrived at Walgreens's distribution centers.
Walgreens's LR 56.1(a)(3) Stmt. ¶ 35, ECF No. 166.
Neither Envision nor Walgreens has ever paid Plaintiffs for
manufacturing and shipping the merchandise. Pls.' LR
56.1(a)(3) Stmt. ¶¶ 27, 32.
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). To survive summary judgment, the
nonmoving party must “do more than simply show that
there is some metaphysical doubt as to the material facts,
” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986), and instead must
“establish some genuine issue for trial such that a
reasonable jury could return a verdict in her favor.”
Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73
(7th Cir. 2012). In reviewing a motion for summary judgment,
the Court gives the nonmoving party “the benefit of
conflicts in the evidence and reasonable inferences that
could be drawn from it.” Grochocinski v. Mayer
Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir.
2013). The Court must not make credibility determinations or
weigh conflicting evidence. McCann v. Iroquois Mem'l
Hosp., 622 F.3d 745, 752 (7th Cir. 2010).
Plaintiffs' Breach of Contract Claim Against
their Third Amended Complaint, Plaintiffs allege a claim for
breach of contract against Walgreens based upon
Walgreens's failure to pay Plaintiffs for the merchandise
that was manufactured and shipped as part of the 2013
Transaction. 3d Am. Compl. ¶¶ 42-51, ECF No. 124.
Although the parties never memorialized the 2013 Transaction
in a formal writing, Plaintiffs argue that they had a
contract implied in fact for the sale of the merchandise.
Walgreens denies that any such contract ever existed and
seeks summary judgment as to this claim.
Uniform Commercial Code (UCC) governs contracts for the sale
of goods in Illinois. 810 Ill. Comp. Stat. 5/1-101 et
seq.; Razor v. Hyundai Motor Am., 854 N.E.2d
607, 615 (Ill. 2006). Under the UCC, a contract for the sale
of goods may be implied in fact. 805 Ill. Comp. Stat.
5/2-204. A contract implied in fact may arise “under
circumstances which, according to the ordinary course of
dealing and the common understanding of men, show a mutual
intention to contract.” Dynegy Mktg. & Trade v.
Multiut Corp., 648 F.3d 506, 517 (7th Cir. 2011)
(quoting Mowatt v. City of Chi., 127 N.E. 176, 177
parties have formed a contract implied in fact “depends
on the facts, circumstances, and expressions by [the] parties
demonstrating an intent to be bound.” Trapani
Constr. Co. v. Elliot Grp., Inc., 64 N.E.3d 132, 141
(Ill.App.Ct. 2016). In cases where the parties dispute
whether the facts and circumstances demonstrate their intent
to be bound, the existence of a contract implied in fact is a
question of fact that must be decided by a jury. Id.
(citing Quinlan v. Stouffe, 823 N.E.2d 597, 602
(Ill.App.Ct. 2005)). A jury may infer the existence of an
implied-in-fact contract from the parties' general course
of dealing. Dallis v. Don Cunningham & Assocs.,
11 F.3d 713, 716 (7th Cir. 1993) (citing In re Estate of
Brumshagen, 169 N.E.2d 112, 117 (Ill.App.Ct. 1960)).
and Walgreens do not dispute that, from 2007 to 2012,
Walgreens routinely paid for Plaintiffs' goods by issuing
letters of credit listing Sunny as the sole beneficiary.
Pls.' Stmt. Add. Facts Opp. Walgreens ¶¶ 12-13,
ECF No. 180. At trial, Plaintiffs is entitled to argue to the
jury that this course of dealing evinces the existence of an
implied-in-fact contract with Walgreens for the sale of
merchandise in the 2013 Transaction. See Trapani, 64
N.E.3d at 141; Dallis, 11 F.3d at 716. Plaintiffs
have therefore raised a genuine issue of material fact as to
whether the parties had an implied-in-fact contract. This
issue precludes summary judgment in Walgreens's favor on
Plaintiffs' breach of contract claim. See, e.g.,
Beacon Textile Unit-2 v. JK Grp., Ltd., No. 09 CV
3301, 2010 WL 4338477, at *4 (N.D. Ill. Oct. 25, 2010)
(denying summary judgment on breach of contract claim
involving an implied contract for the sale of goods where
parties disputed the contract's existence).
contends that Plaintiffs have waived their ability to rely
upon the parties' course of dealing in support of their
breach of contract claim. Walgreens's Mem. Supp. Mot.
Summ. J. at 12-13, ECF No. 165. In reviewing Walgreens's
motion for summary judgment, it remains unclear to the Court
whether Walgreens intends to argue that this alleged waiver
precludes Plaintiffs from proving the existence of an
implied-in-fact contract, or whether Walgreens instead
intends to argue that waiver precludes Plaintiffs from
enforcing the purported contract's terms. In any event,
neither argument is availing, because Plaintiffs have not
made any type of waiver in relation to this claim.
the UCC, the parties' course of performance may
“give rise to waiver of express contractual terms if
those terms are not strictly adhered to.” Midwest
Builder Distrib., Inc. v. Lord & Essex, Inc., 891
N.E.2d 1, 28 (Ill.App.Ct. 2007). Although waiver can be
implied by the parties' conduct, courts will find an
implied waiver only if the waiver is clearly inferable from
the circumstances. Id.; Lavelle v.
Dominick's Finer Foods, Inc. of Ill., 592 N.E.2d
287, 291 (Ill.App.Ct. 1992).
evidence of Plaintiffs' alleged waiver, Walgreens points
only to the fact that Plaintiffs shipped the merchandise for
the 2013 Transaction after they had already learned that
Sunny was not listed as the beneficiary on Walgreens's
letters of credit. Walgreens LR 56.1(a)(3) ¶¶
36-37. It is by no means clearly inferable, however, that
Plaintiffs intended this shipment to serve as an implied
waiver of Walgreens's obligation to pay for the shipped
goods. Rather, by finalizing the shipment, Plaintiffs appear
to have been simply performing their end of the contract they
claim to have had with Walgreens. Cf. Emerald Investments
Ltd. P'ship v. Allmerica Fin. Life Ins. & Annuity
Co., 516 F.3d 612, 618 (7th Cir. 2008) (“If a
party to a contract breaks it, the other party . . . can
continue with the contract and sue for damages.”). At
trial, Walgreens may note the timing of Plaintiffs'
shipment in arguing to the jury that Plaintiffs lacked an
intent to be bound by an implied-in-fact-contract. See
Trapani, 64 N.E.3d at 142-44. But Walgreens has not
persuaded the Court that Plaintiffs' shipment amounted to
a waiver that precludes Plaintiffs as a matter of law from
proceeding with their breach of contract claim.
Walgreens's motion for summary judgment as to
Plaintiffs' breach of contract claim is thus denied.
Plaintiffs' Unjust Enrichment Claim ...