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. and BETH ANN EDWARDS, 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”)
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.
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.
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.
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”).
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.
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.
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.
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). 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.
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).
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.”).
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. Finally, each side read into the
record certain deposition testimony, including from Daniel
Huang’s brother, Frank.
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. 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,
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,
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.
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
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.
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.
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.
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.
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.
of Fact as to Equitable Claims
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.
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.
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.
2007 to 2013, Plaintiffs and Envision worked together to
arrange regular shipments of holiday merchandise to various
U.S. retailers, including ...