Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Sunny Handicraft (H.K.) Ltd. v. Envision This!, LLC

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

September 27, 2019

SUNNY HANDICRAFT (H.K.) LTD. and BIN TEH HANDICRAFT (SHENZHEN) CO. LTD., Plaintiffs/Counter-Defendants,
v.
ENVISION THIS!, LLC, Defendant/Counter-Plaintiff, and WALGREEN CO. and BETH ANN EDWARDS, Defendants.

          MEMORANDUM OPINION AND ORDER

          John Z. Lee United States District Judge.

         Plaintiffs Sunny Handicraft (H.K.) Ltd. (“Sunny”) and Bin Teh Handicraft (Shenzhen) Co. Ltd. (“Bin Teh”) manufactured and shipped holiday merchandise worth approximately $3.4 million to Defendant Walgreen Co. (“Walgreens”) for its 2013 Christmas retail season. Defendant Envision This!, LLC (“Envision”) facilitated the transaction and transmitted order forms and payment information. On the forms it sent to Walgreens confirming the purchase, Envision listed itself-instead of Sunny-as the intended recipient of Walgreens’s letters of credit. As a result, Envision received letters of credit from Walgreens worth approximately $3.8 million. Envision then drew on approximately $3.06 million from the letters. Plaintiffs have never received any payment for the merchandise.

         A jury found in Plaintiffs’ favor on their claims for breach of contract, fraud, and defamation against Envision, and defamation against Defendant Beth Ann Edwards (one of the principals of Envision). The jury also found in Plaintiffs’ favor on Envision’s counterclaims for breach of contract, tortious interference with prospective economic advantage, and defamation.

         Plaintiffs’ two remaining equitable claims are now ripe for resolution. As to Count II, unjust enrichment against Walgreens, the Court finds in favor of Plaintiffs in the amount of $426, 636.29. As to Count VI, breach of fiduciary duty against Envision, the Court finds in favor of Envision. This opinion resolves all claims remaining in this case. Prior to entering judgment, however, the Court will set a briefing schedule for Plaintiffs’ motion for prejudgment interest.

         Procedural History

         This case, filed in March 2014, has a lengthy procedural history, including three rounds of motions to dismiss and one hotly contested set of cross-motions for summary judgment. The Court presumes familiarity with its prior opinions in this case, and in the now-consolidated case Plaintiffs brought against Envision’s owners Beth Ann Edwards and Robert Hetzler. See Sunny Handicraft (H.K.) Ltd. v. Edwards, No. 16-cv-4025 (N.D. Ill. filed Apr. 5, 2016) (“the ’16 case”).

         The parties proceeded to a jury trial in February 2018. At that point, Plaintiffs’ claims were as follows: breach of contract against Walgreens (Count I); unjust enrichment against Walgreens (Count II); breach of contract against Envision (Count III); unjust enrichment against Envision (Count IV); fraud against Envision (Count V); breach of fiduciary duty against Envision (Count VI); defamation against Envision (Count VII); and defamation against Edwards (Count III in the ’16 case). Envision also maintained counterclaims for breach of contract (Count I); tortious interference with business advantage (Count V); and defamation (Count VII). See Final Pretrial Order at 5, ECF No. 250.

         Prior to trial, the Court determined that Plaintiffs’ unjust enrichment and breach of fiduciary duty claims (Counts II, IV, and VI) were equitable in nature and, therefore, could not be resolved by a jury. See Mem. Op. & Order of 2/6/18, ECF No. 247. Accordingly, those claims were stayed, and a jury trial was held as to Plaintiffs’ and Envision’s remaining legal claims.

         At the conclusion of the trial, the jury found in Plaintiffs’ favor as to all of their claims against Envision and Edwards, but in favor of Walgreens as to Plaintiffs’ contract claim. See Order of 2/28/18, ECF No. 261. The jury also found in favor of Plaintiffs as to all of Envision’s counterclaims. See Id . The jury awarded $3, 069, 631.37 in compensatory damages for Envision’s breach of contract, $400, 000.00 in compensatory damages for Envision’s fraud, $903, 890.00 in punitive damages for Envision’s fraud, and $10, 000.00 in compensatory damages for Edwards’s defamation. See Id . Although the jury found in Plaintiffs’ favor as to their defamation claim against Envision, it did not award any damages as to that claim. See id.

         The parties have submitted proposed findings of fact and conclusions of law as to Plaintiffs’ remaining equitable claims for unjust enrichment against Walgreens (Count II) and breach of fiduciary duty against Envision (Count VI).[1] Furthermore, Plaintiffs have moved for prejudgment interest as to the claims on which they have already prevailed and expressed their intent to seek prejudgment interest as to their equitable claims as well. See Mot. Prejudgment Interest, ECF No. 304.

         Standard of Decision

         Where an action is “tried on the facts without a jury, ” Federal Rule of Civil Procedure 52 requires the district court to “find the facts specially and state its conclusions of law separately.” Fed.R.Civ.P. 52(a); see Khan v. Fatima, 680 F.3d 781, 785 (7th Cir. 2012). In doing so, the district court must “explain the grounds” for its decision and provide a “reasoned, articulate adjudication.” Arpin v. United States, 521 F.3d 769, 776 (7th Cir. 2008).

         In rendering its decision on the remaining equitable claims in this case, the Court has considered the admissible testimony and documentary evidence offered at trial. In so doing, the Court has considered the weight to be given to the evidence and has assessed the credibility of the witnesses in light of their demeanor; their ability to see, hear, and know the matters about which they testified; and any potential for bias. Furthermore, the Court has considered the memoranda and proposed findings of fact submitted by the parties and the legal and factual arguments set forth therein. Finally, in ruling on the equitable claims, the Court “is bound both by [the] jury’s explicit findings of fact and those findings that are necessarily implicit in [its] verdict.” LG Elecs. U.S.A., Inc. v. Whirlpool Corp., 790 F.Supp.2d 708, 722 (N.D. Ill. 2002) (quoting Bartee v. Michelin N. Am., Inc., 374 F.3d 906, 912–13 (10th Cir. 2004)); see also Int’l Fin. Servs. Corp. v. Chromas Techs. Can., Inc., 356 F.3d 731, 735 (7th Cir. 2004) (“[T]he jury’s determination of factual issues common to both the legal and equitable claims . . . bind[s] the court.”).

         The Trial

         At trial, Plaintiffs called four fact witnesses: Shengwen (“Daniel”) Huang, the general manager of both Bin Teh and Sunny; Hetzler; Edwards; and Karl Waldschmidt, who in 2013 was the manager of import operations and administration at Walgreens. In turn, Defendants called six fact witnesses: Edwards; James Osborne, a category manager at Walgreens; Waldschmidt; Hadieh Hasan, director of merchandising for Walgreens; Huang; and Hetzler.[2] Finally, each side read into the record certain deposition testimony, including from Daniel Huang’s brother, Frank.

         I. Daniel Huang

         Huang testified first and explained the nature of Bin Teh’s and Sunny’s businesses. The two businesses work together to manufacture and export holiday decorations and other seasonal merchandise; Bin Teh manufactures the goods, and Sunny ships them to retailers. See generally Trial Tr.[3] at 12–14, 26–28. Huang explained that, beginning in 2006 or 2007, Plaintiffs began working with Envision to arrange regular shipments of holiday merchandise to U.S. retailers, including Walgreens. See generally Id . at 35–37. Huang described the manner in which this relationship functioned in the years prior to 2013, including how Plaintiffs compensated Envision and how Walgreens paid Plaintiffs for the merchandise. See generally Id . at 37–116, 173–74, 221– 22.

         Then, Huang gave his account of what happened during the 2013 transaction. According to Huang, Walgreens issued purchase orders of $3, 496, 267.66 for merchandise that Bin Teh manufactured and Sunny shipped. See generally Id . at 219–20. Walgreens guaranteed payment for these orders by issuing letters of credit. Huang, as usual, emailed to Envision forms listing Sunny as the intended beneficiary of Walgreens’s letters of credit, but Envision surreptitiously altered the forms to list Envision as the beneficiary. See generally Id . at 127–146, 210, 218–21.

         When he did not receive the letters of credit, Huang testified, he repeatedly asked Envision about their status, believing that he was still to receive them, but Envision misled him by assuring him that everything was fine when, in fact, Envision had arranged to receive the payments for itself. See generally Id . at 147–48, 174–201, 211–26. Huang explained that he became concerned about the lack of payment and took certain actions to try to rectify the situation, such as delaying shipping and contacting Hasan at Walgreens for assistance. See generally Id . at 201–10, 254–56, 287–96, 307–09. According to Huang, Plaintiffs were never paid for the 2013 merchandise that they provided to Walgreens. See Id . at 220:7-12.

         II. Robert Hetzler

         Hetzler, who handles the financial side of Envision’s business, see Id . at 926:3-21, testified as to his understanding of the 2013 transaction. Hetzler stated that two manufacturers-Bin Teh and Innovative Lighting (or “ILIL”)-were to produce the merchandise. See generally Id . at 432– 40. Because of this, Hetzler testified, Envision and Huang agreed in January 2013 that the letters of credit would be issued to Envision so that it could direct the appropriate payment to the two manufacturers, as necessary. See generally Id . Hetzler testified that he changed the forms sent to him by Huang to reflect that agreement. See generally Id . at 376–87. He further testified as to his communications with Huang and Walgreens representatives concerning the letters of credit. See generally Id . at 376–403, 946–47. Finally, Hetzler described Envision’s business with Huang over the years, including how Plaintiffs would compensate and cover Envision’s expenses. See generally Id . at 932–43.

         III. Beth Edwards

         Edwards, who is married to Hetzler and handles the product-development side of Envision’s business, recounted her view of Envision’s relationship with Plaintiffs and Walgreens. See generally Id . at 596–646, 658–60. She also testified as to Envision’s communications with Huang and Walgreens concerning the 2013 transaction, the letter-of-credit issue, and the delayed shipping of some of the merchandise. See generally Id . at 514–24, 650–57, 681–89, 691–93.

         IV. Karl Waldschmidt

         Waldschmidt testified that his job at Walgreens involved handling overseas shipping of merchandise to the U.S. and the creation of letters of credit to pay for that merchandise. See generally Id . at 541–42. He testified that Envision was Walgreens’s vendor, and described the process that occurred with respect to the 2013 transaction, including payment and shipping. See generally Id . at 544–62, 583–87, 755–68, 776–86. Furthermore, he explained how he assisted Envision in drawing on the letters of credit after they had initially expired. See generally Id . at 565–69, 571–82.

         V. James Osborne

         Defendants called Osborne, who met with Huang in November 2013, after most of the events pertaining to the 2013 transaction had taken place. See Id . at 747:5-7. The meeting’s purpose, Osborne testified, was to review seasonal items. See Id . at 748:1-2. But, Osborne explained, Huang told Osborne that Walgreens should stop working with Envision. This shocked Osborne, and he ended the meeting. See Id . at 748:5-20.

         VI. Hadieh Hasan

         Hasan testified regarding Walgreens’s relationship with Envision as well as with Plaintiffs. See generally Id . at 790–808, 844–51. Hasan further testified about her communications with the parties during the 2013 transaction; she explained that Huang called her about the letter-of-credit issue and that she then encouraged the parties several times to work the payment issue out among themselves. See generally Id . at 808–32. Finally, Hasan testified, her experience with the shipping delays and other problems with the 2013 transaction caused her to drop Envision as a supplier. See generally Id . at 855.

         VII. Frank Huang

         Defendants presented deposition testimony of Frank Huang, the sales manager for Sunny and Bin Teh. See Id . at 1130:7-16. During his deposition, Frank explained how his brother Daniel instructed Expeditors International, the shipping company used by Plaintiffs, to withhold documents required to ship some of the 2013 merchandise. See generally Id . at 1131–42.

         Findings of Fact as to Equitable Claims

         1. Sunny, a Hong Kong corporation, and Bin Teh, a China corporation, work together in the business of manufacturing and exporting holiday decorations and other seasonal merchandise for U.S. retailers. Final Pretrial Order, Ex. C, Stipulations and Uncontested Facts (“Stip.”) ¶ 1, ECF No. 250. Bin Teh manufactures the goods and Sunny coordinates shipments to retailers. Id. ¶ 4. Daniel Huang operates both companies as general manager. Id. ¶ 5.

         2. Envision is a Florida limited liability company, and its sole members are husband and wife, Robert Hetzler and Beth Ann Edwards. Id. ¶ 6; Trial Tr. at 333:11-17. Envision sources goods from overseas factories for sale to U.S. retailers. Stip. ¶ 6.

         3. Walgreens is an Illinois corporation that owns and operates retail stores that sell prescription drugs, health and wellness products, photo services, and other items, including seasonal holiday decorations. Id. ¶ 7.

         4. From 2007 to 2013, Plaintiffs and Envision worked together to arrange regular shipments of holiday merchandise to various U.S. retailers, including ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.