Aaron, MacGregor & Associates, LLC et al v. Zhejiang Jinfei Kaida Wheels Co., Ltd. et al

Filing 109

OPINION AND ORDER: The Court now OVERRULES all of the Defendants' evidentiary objections (DE 85 , 90 , 92 , and 98 ); DENIES Defendants' 72 Renewed Motion for Sanctions; DENIES Plaintiffs' 75 motion to compel; GRANTS IN PART a nd DENIES IN PART 69 AMA and Zou's Motion for Partial Summary Judgment; and GRANTS IN PART and DENIES IN PART 73 Defendants' Motion for Partial Summary Judgment. The Clerk is DIRECTED to enter judgment in favor of AMA and Zou on Jinfe is Second Counterclaim of Unjust Enrichment, Third Counterclaim of Conversion, and Fourth Counterclaim of Fraud as pled in Defendants First Amended Answer to First Amended Complaint, Third-Party Complaint and Counterclaims [DE 52]. The Clerk is DI RECTED to enter judgment in favor of Defendants on Plaintiffs claims for Unfair Competition (Count VI) and Trademark Infringement and False Designation of Origin (Count VII) in their First Amended Complaint 14 . Future Industrial & Trading, Inc ., Bingzao Ge, and Aaron Zou are terminated as parties in this action. The Court NOTES that AMA and Zou filed three exhibits (DE 70 , 70-1, 70-2) related to its motion for partial summary judgment and two exhibits (DE 76 , 76-1) related to its mo tion to compel under seal without the Courts permission. The Court ORDERS Plaintiffs to submit a brief including authority and good cause for sealing the documents by 7/6/2018. Defendants may file a response by 7/13/2018. No further briefing will be accepted. Defendants' counsel is ORDERED to show cause by 6/29/2018 why the Court should not find the 72 Renewed Motion for Sanctions was presented for an improper purpose. Signed by Magistrate Judge Michael G Gotsch, Sr on 6/20/18. (jld)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
AARON MACGREGOR & ASSOCIATES,
LLC and FUTURE INTERNATIONAL,
LLC,
Plaintiffs,

CASE NO.: 3:15-cv-00254-MGG

v.
ZHEJIANG JINFEI KAIDA WHEELS CO.,
LTD., FUTURE INDUSTRIAL &
TRADING, INC., and GE BINGZAO,
Defendants.
ZHEJIANG JINFEI KAIDA WHEELS CO.,
LTD.,
Counter-claimant/
Third-Party Plaintiff,
v.
AARON, MACGREGOR & ASSOCIATES,
LLC,
Counter-defendant,
and
AARON ZOU,
Third-Party Defendant.

OPINION AND ORDER

This case stems from a business relationship gone bad in the world of vehicle
parts sales. Aaron Zou (“Zou”), president and founder of Aaron, MacGregor &
Associates, LLC (“AMA”), met the Chairman of Zhejiang Jinfei Kaida Wheels Co., Ltd.
(“Jinfei”), Bingzao Ge (“Ge”), on a trip to China in 2011 for a business conference. Zou
and Ge began discussions that continued after Zou returned to Indiana about forming a
new company in Elkhart through which AMA could assist Jinfei as it expanded into the
recreational vehicle market in Elkhart. The two companies executed agreements to
govern their new business relationship. Jinfei sought approval from the Chinese
government to invest in the new American company. Zou hosted Jinfei employees in
Indiana and facilitated meetings between Jinfei and prospective American clients.
Ultimately, things went south and the AMA-Jinfei relationship, as embodied in
the creation of Future International, LLC (“Future International”), deteriorated. Jinfei
decided to launch a separate business entity for its work, Future Industrial & Trading,
Inc. (“FIT”). AMA and Zou claim Jinfei employed subterfuge to circumvent the parties’
contractual relationship related to Future International while Defendants allege Zou
misrepresented what he and AMA could do on Jinfei’s behalf in Indiana before the
contracts were executed. Through competing claims in this lawsuit, the parties allege
damages arising from the demise of the business relationship that started with Zou and
Ge’s introduction at that 2011 business conference in China.
Now the Court has been presented with two motions for partial summary
judgment, filed within a day of each other at the end of December 2017, that seek to
eliminate all but the primary breach of contract claims between the parties. In their
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motion filed on December 28, 2017, Counterdefendant AMA and Third-Party
Defendant Zou ask the Court to grant summary judgment as to all counterclaims by
Jinfei. [DE 69]. Specifically, AMA and Zou challenge Jinfei’s counterclaims of breach of
fiduciary duty against AMA only and unjust enrichment, conversion, fraud against
AMA and Zou. Through their motion filed on December 29, 2017, Defendants Jinfei,
FIT, and Ge, seek summary judgment on Plaintiffs AMA’s and Future International’s
claims of unjust enrichment; unfair competition under state and federal law; federal
trademark infringement and false designation of origin; as well as all claims against Ge.
[DE 73].
These are not clean motions for summary judgment, however. This case has been
contentious throughout as evidenced by Defendants’ previous motion for sanctions
under Fed. R. Civ. P. 11, 28 U.S.C. § 1927, and the Court’s inherent authority to manage
its docket (“the Original Motion for Sanctions”), alleging that Plaintiffs had not
conducted reasonable pre-complaint inquiry into their claims. The Court denied
Plaintiffs’ Original Motion for Sanctions without prejudice on October 30, 2017. [DE 64].
However, the parties’ frustrations with each other did not subside as became clear
through two motions filed within two days of the motions for summary judgment, both
of which arguably seek to punish the nonmovants for their approach to this litigation.
First, Defendants renewed their motion for sanctions (“the Renewed Motion for
Sanctions”), seeking once again dismissal of all Plaintiffs’ claims with prejudice citing
additional evidence in support of allegation that Plaintiffs did not conduct reasonable
pre-complaint inquiry into their claims. [DE 72]. Second, Plaintiffs filed a motion to
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compel seeking (1) complete discovery responses from Defendants related to requests
made in 2016; (2) additional discovery related to the key issue of “use in commerce” on
Plaintiffs’ federal trademark infringement and false designation of original claim to
support their opposition to Defendants’ motion for summary judgment; and (3)
discovery of Defendants’ computers not ever requested before. [DE 75].
Lastly, Defendants have filed multiple objections to evidence Plaintiffs submitted
in support of the Renewed Motion for Sanctions and the two motions for summary
judgment. [DE 85, 90, 92, 98]. The Court heard oral argument on all these outstanding
matters on April 26, 2018. The undersigned now issues the following opinion and order
with jurisdiction conferred by the consent of the parties and 28 U.S.C. § 636(c).
I.

RELEVANT BACKGROUND
A.

Factual Background

As part of their joint efforts to sell vehicle parts in Indiana, AMA and Jinfei
agreed to form Future International. In December 2011, Zou, on behalf of AMA,
registered Future International as an LLC with the State of Indiana. Three contracts
were executed between AMA and Jinfei to govern the funding, development, and
management of Future International.
The first two contracts 1, executed on February 26, 2012, (“the February 2012
Contracts”) provided that AMA and Jinfei would both invest money to form Future

The parties label these contracts, written in Chinese, differently. [See DE 33 at 5]. AMA and Zou call
them the Investment Contract [DE 69-3] and the Consultation Contract [DE 69-4], while Jinfei refers to
them as a Letter of Intent and an Agreement [DE 91 at 9, ¶ 3]. The Court need not resolve the parties’
dispute over the translation of these document titles at this time.
1

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International, an Indiana business entity that would purchase automotive parts from
Jinfei for resale to American customers. The contracts more specifically provided that
Jinfei would invest 90% of the funds in the amount of $270,000, while AMA would
invest 10% of the funds in the amount of $30,000. The contracts also divided profits 90%
to Jinfei and 10% to AMA.
In the contracts, AMA agreed to use his legal, tax, and business expertise in the
American RV and automotive industries to help Jinfei’s Chinese representatives build a
warehouse for its products and conduct and solicit business in the United States. AMA
was expected to lease a vehicle and an apartment as well for the Jinfei’s representatives
to use while visiting from China. In return, Jinfei agreed to fund the leases and to
participate jointly with AMA in meetings with prospective American customers. The
parties agreed that any results of their joint efforts would become the property of
Future International.
Both AMA and Jinfei took steps to develop Future International. AMA facilitated
the leases of the vehicle and apartment. Jinfei provided AMA with $30,000 for that
purpose. Jinfei expended time and resources seeking Chinese approval of their
investment in Future International. Yet by October 2012, neither company had invested
in Future International. AMA chose not to invest before Jinfei did and Jinfei was
waiting to invest until it received approval from the Chinese government. By October
2012, Jinfei had repeatedly told AMA that the approval had not yet been granted.
Therefore, AMA and Jinfei executed a new contract in October 2012 changing the
parameters of their business relationship. The October 2012 Contract provided that
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AMA would transfer its 10% ownership in Future International to Jinfei while Jinfei
would pay a consulting fee to AMA to compensate for its work for Future International
back to February 2012. Jinfei also agreed to pay AMA a monthly consulting fee through
November 2013. At the same time and at Jinfei’s request, AMA canceled the apartment
lease but maintained the vehicle lease for Jinfei. Yet AMA never transferred its
ownership in Future International to Jinfei and Jinfei allegedly never paid AMA the
consulting fees.
However, on January 31, 2013, Jinfei and Ge registered FIT as a corporation
without AMA’s knowledge. Through the complaint in this action filed in 2015, AMA
and Future International allege that FIT is still operating and retaining all the profits
generated as the result of AMA’s work with Jinfei for Future International. The
operative amended complaint includes claims for breach of the three contracts, breach
of fiduciary duty, unjust enrichment, unfair competition, and trademark infringement.
Jurisdiction for this action arises from 28 U.S.C. § 1331 and AMA and Future
International’s Lanham Act (15 U.S.C. § 1051 et seq.) claim for federal trademark
infringement.
II.

ANALYSIS
A.

Defendants’ Evidentiary Objections

As a preliminary matter, Defendants filed objections to assorted evidence
Plaintiffs submitted in support of the instant motions. Despite Defendants’ multiple
objections, the Court only needed to rely upon one piece of evidence that Defendants’
challenged—Zou’s Affidavit about how he spent the $30,000 Jinfei wired to AMA and
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whether he or AMA received any benefit from the $30,000—to resolve the relevant
motions. [See DE 92 at 3 (citing DE 69-2 at ¶¶ 32–33)]. As to Zou’s Affidavit, Defendants
argue that Zou is making improper legal conclusions about the definition of the term
“benefit” in connection with various claims in this action. Additionally, Defendants
contend that Zou’s accompanying chart of expenditures lacks foundation because the
chart is not the best evidence of the alleged use of monies and Jinfei disputes whether
Zou actually spent the money as he claims.
Defendants’ grounds for objection are not enough to justify exclusion of these
statements in Zou’s Affidavit in consideration of AMA and Zou’s motion for partial
summary judgment. First, Defendants cite only to Fed. R. Evid. 701/702 in support of
their objection of improper legal opinion without directing the Court to any further
interpretation to show that the term “benefit” in the relevant claims requires a legal
conclusion. Second, Mr. Zou is allowed to testify by affidavit as to his personal
knowledge about expenditures and the concept of benefit. Third, AMA and Zou did
present documentation related to the apartment and vehicle leases. And lastly, any
dispute as to Zou’s actual expenditures was not supported with any evidence from
Jinfei. Thus, the Court is not persuaded that Zou’s Affidavit statements should be
excluded from consideration.
The remaining objections have no effect on the outcome of the motions below
and need not be considered. Accordingly, the Court OVERRULES all of Defendants’
evidentiary objections. [DE 85, 90, 92, 98].

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B.

Defendants Jinfei, FIT, and Ge’s Renewed Motion for Sanctions

The Court can also dispense quickly with Defendants’ Renewed Motion for
Sanctions. Defendants’ instant motion, filed on December 29, 2017 [DE 72], requests the
same relief that this Court denied without prejudice in an order dated October 30, 2017
(“the October 2017 Order”) [DE 64]. The Court need not repeat the substance of that
order in full. Yet as relevant here, parties filing a motion for Rule 11 sanctions must
make a prima facie showing of sanctionable conduct based on non-frivolous allegations.
Vandeventer v. Wabash Nat’l Corp., 893 F. Supp. 827, 840 (N.D. Ind. 1995) (citing Shrock v.
Altru Nurses Registry, 810 F.2d 658 (7th Cir. 1987). Once the prima facie showing is made,
“the burden of proof shifts to the non-movant to show it made a reasonable pre-suit
inquiry into its claim.” Digeo, Inc. v. Audible, Inc., 505 F.3d 1362, 1368 (Fed. Cir. 2007). In
applying this two-step analysis, the Court found that neither Defendants nor Plaintiffs
met their respective burdens. [DE 64 at 12]. First, the Court found “Defendants’
allegations of Rule 11 sanctionable misconduct to be unreasonable, and therefore,
frivolous making them insufficient to establish a prima facie case of sanctionable
conduct.” [Id. at 11]. The Court then found “nothing in the record describing Plaintiffs’
pre-filing investigation” of the claims in their complaint and consequently stated that
Plaintiffs had not met their burden to show reasonable pre-complaint inquiry into their
claims. [Id. at 12].
Here in their Renewed Motion for Sanctions, Defendants once again ask the
Court to dismiss with prejudice any and all claims in the First Amended Complaint and
to award them monetary sanctions in the form of reasonable attorney fees incurred in
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this action since removal to this Court. [DE 72 at 2]. In support, Defendants merely
attach, without explanation, excerpts from the deposition testimony of Mr. Zou, both in
his individual capacity and as a Rule 30(b)(6) deponent for AMA. Defendants then
baldly assert that “Mr. Zou’s deposition testimony supports, and confirms, the grounds
under which Defendant brought the original motion. (See Dkt. 60, 61, and 63).” [Id.]. In
so doing, Defendants successfully incorporate the briefing on their original motion for
sanctions, but fail to specify exactly what parts of the excerpts of Mr. Zou’s deposition
testimony they are relying upon or which arguments from the original briefing are
confirmed by the same deposition testimony.
As a result, Defendants have left Plaintiffs and this Court unclear as to how the
additional evidence of Mr. Zou’s deposition testimony should change the outcome of
the Court’s Rule 11 sanctions analysis in its October 2017 Order. Defendants seem to
expect both Plaintiffs and this Court to study the deposition excerpts and their previous
briefing and infer the effect of the additional evidence on their arguments. This is not
the Court’s job. Indeed, “[j]udges are not like pigs, hunting for truffles buried in [the
record].” United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991); see also Friend v. Valley
View Cmty. Unit Sch. Dist. 365U, 789 F.3d 707, 711 (7th Cir. 2015) (“[The court is] not
required to scour through . . . deposition transcript[s] in order to verify an assortment of
facts, each of which could be located anywhere within the . . . depositions cited.”);
Corley v. Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990, 1001 (7th Cir. 2004) (“[The court]
will not root through the hundreds of documents and thousands of pages that make up
the record here to make his case for him.”). As such, the Court sees nothing new in the
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record that would change its previous conclusion that Defendants have not met their
burden to make a prima facie showing of sanctionable conduct based on non-frivolous
allegations, thus still precluding sanctions.
The Court acknowledges that Defendants present arguments in their reply brief
related to the Renewed Motion that rely upon Mr. Zou’s deposition testimony.
However, Defendants’ arguments in their reply brief still fail to show a prima facie case
of sanctionable conduct based upon non-frivolous allegations. Defendants rely on Mr.
Zou’s deposition testimony as uncontroverted evidence that contradicts Plaintiffs’ claim
in its trademark infringement and unfair competition claims that the Future
International and FIT marks were used in commerce. Again, Defendants’ arguments
comment on the substantive merit of Plaintiffs’ claims in light of evidence acquired
during discovery rather than showing unreasonable pre-complaint inquiry into the
claims. [See DE 64 at 11].
In the end, the mere addition of Mr. Zou’s deposition testimony to the record did
not—and could not—help Defendants satisfy their burden under Rule 11 standards
even if they had not waived such arguments by failing to develop any arguments in
their Renewed Motion. Therefore, the Court DENIES Defendants’ Renewed Motion for
Sanctions. [DE 72].
Lastly, Defendants filed their Renewed Motion for Sanctions with a complete
understanding of the Court’s Rule 11(b)(2) analysis of Plaintiffs’ pre-complaint inquiry
as presented in the October 2017 Order. Therefore, Defendants’ Renewed Motion
appears frivolous as they had insight from which to anticipate accurately the Court’s
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approach to the “new” evidence included with the Renewed Motion. Moreover,
Defendants’ counsel would have—or at least should have—understood the effect of
failing to specify evidence and argument in their Renewed Motion. In light of these two
realities, Defendants and their counsel have also caused the Court to question whether
they violated Fed. R. Civ. P. 11(a) by filing the Renewed Motion. Accordingly, the Court
invokes Fed. R. Civ. P. 11(c)(3) and ORDERS Defendants’ counsel to show cause by
June 29, 2018, why the Court should not find that the renewed motion for sanctions was
presented for an improper purpose as prohibited under Fed. R. Civ. P. 11(b)(1) and
should not impose monetary sanctions accordingly.
C.

Plaintiffs’ AMA and Future International’s Motion to Compel

Plaintiffs’ Motion to Compel Discovery and Enforce the Court’s October 30, 2017
Order filed on December 30, 2017, is not persuasive either even after review in light of
the standards of both Fed. R. Civ. P. 37 related to discovery and Fed. R. Civ. P. 56(d)
related to summary judgment.
1.

Relevant Background

The instant discovery dispute grew largely out of Request 1-1 in Plaintiffs’ First
Request for Production of Documents served on Jinfei on July 13, 2016. Request 1-1
sought “all Communications and Documents exchanged between [Defendants] and any
third party relating to or discussing the sale or potential sale of any automobile parts in
Indiana.” [DE 75-1 at 4, Document Request 1-1]. Premised on AMA’s belief that Jinfei
had no presence in Indiana before it began working with AMA, Request 1-1 was

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designed to elicit evidence from Jinfei showing that AMA was entitled to a portion of
the profits resulting from Jinfei’s and FIT’s business in Indiana.
On October 30, 2016, Jinfei provided responses to Plaintiffs’ document requests,
but Plaintiffs found them deficient. Based on AMA’s belief that more information
existed as to third party companies, Plaintiffs served non-party requests for production
of documents on three companies doing business with Jinfei and with whom AMA had
a previous relationship. Despite Jinfei’s objections to all three non-party subpoenas, two
of the companies—Tredit Tire & Wheel Co. and Lionshead Specialty Tire & Wheel,
LLC—produced a large number of documents related to Request 1-1 in December 2016
that Plaintiffs thought Jinfei should have produced themselves.
With Tredit’s and Lionshead’s documents in hand, Plaintiffs began a series of
communications with Jinfei seeking supplemental responses to Request 1-1. On January
23, 2017, Plaintiffs first requested the supplemental responses. On February 3, 2017,
Jinfei requested that Plaintiffs produce the Tredit and Lionshead documents first. Jinfei
also argued that the non-party information Plaintiffs sought was not all relevant
because some of the customer meetings occurred before the parties signed the February
2012 contracts. Jinfei had especially objected to producing documents evidencing their
relationship with the third non-party Plaintiffs had subpoenaed, Americana
Development, Inc., because Jinfei and Americana had a business relationship before
Jinfei and AMA began working together such that AMA could not have introduced
Jinfei to Americana. Plaintiffs responded by letter on March 30, 2017, explaining why

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they believed all the requested non-party information to be relevant under the
standards of Fed. R. Civ. P. 26.
On April 6, 2017, before Jinfei had produced any of the supplemental responses,
Americana produced hundreds of pages of documents regarding its business
relationship with Jinfei back to 2012. On April 21, 2017, Jinfei served its supplemental
responses on Plaintiffs including documents dating back to 2011 related to its business
relationships with Tredit and Lionshead, but nothing reflective of the relationship with
Americana. On the same day, Plaintiffs provided Defendants with all documents they
had received from Tredit, Lionshead, and Americana. Plaintiffs sent three additional
letters to Jinfei about the outstanding responses to Request 1-1 on April 21, April 28,
and May 2, 2017.
With the dispute over Request 1-1 unresolved, Defendants filed their Original
Motion for Sanctions. Plaintiffs’ response brief included references to their ongoing
dissatisfaction with Jinfei’s responses to Request 1-1. The Court resolved the Original
Motion by order dated October 30, 2017. In addition to addressing the sanctions issue
raised in Defendants’ Original Motion, the Court ordered all parties to supplement all
existing discovery responses by November 6, 2017. Before the Court issued its order,
however, the parties had scheduled the depositions of AMA and Zou for November 16,
2017, and of Jinfei and FIT, on November 17, 2017.
None of the parties filed a supplemental response by the November 6th deadline.
Yet on the night of November 15th, less than a day before the scheduled depositions
were set to begin, Jinfei served some supplemental responses, including a 4-page
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spreadsheet of sales figures relevant to Request 1-1, on Plaintiffs. Jinfei located the
documents for the first time after November 6th while preparing for its deposition.
Jinfei did not, however, produce any Americana documents.
The depositions proceeded as scheduled. As relevant here, Zou testified that
Jinfei had arranged the meeting he attended with Americana unlike many, or possibly
all, of the other customer meetings where Zou and AMA had initiated meetings with
Jinfei. Additionally, Plaintiffs’ counsel did not review the spreadsheet Jinfei had
produced on November 15th before deposing its Rule 30(b)(6) witness, its Deputy
General Manager, Hongxing (Kevin) Ren, on November 17th. As a result, Plaintiffs’
counsel did not ask Ren about the newly produced information. Jinfei then
supplemented its discovery responses again on November 21, 2017, with Jinfei’s
application to the Chinese government for permission to invest in FIT, a document that
had not been located due to some confusion about a cover sheet that was resolved at
Ren’s deposition.
The deadline for the close of all discovery passed on November 28, 2017. On
December 6, 2017, Plaintiffs sent another letter to Defendants outlining their continuing
dissatisfaction with Defendants’ conduct during discovery. Specifically, Plaintiffs noted
Jinfei’s failure to produce any documents related to Jinfei’s relationship with
Americana, Defendants failure to comply with the Court’s order for supplemental
discovery by November 6th, Jinfei’s late production of its 2012 application to invest in
FIT, and Ren’s allegedly evasive answers at his deposition making him an absent
witness. Plaintiffs concluded proposing that the discovery deadline be extended to
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allow for further production of documents, Ren’s deposition be reconvened, and Jinfei
produce mirror images of Defendants’ computers. On December 20, 2017, Defendants
wrote a letter to Plaintiffs rejecting their requests.
On December 29, 2017, Defendants filed their motion for partial summary
judgment on, among other things, Plaintiffs’ federal trademark infringement claim.
Plaintiffs filed their instant motion to compel on December 30, 2017, asking the Court to
issue an order compelling Defendants “(1) to produce a ‘mirror image’ copy of the hard
drives of all Jinfei computers used by Mr. Ren and Mr. Ge from 2011-2016” for
Plaintiffs’ inspection; “(2) to produce any and all documents . . . reflecting a business
relationship between Jinfei and Americana; (3) permit Plaintiffs to reconvene the
deposition of Mr. Ren; (4) pay Plaintiffs’ fees and other expenses; and (5) all other just
and proper relief.” [DE 75 at 3]. In their response to Defendants’ motion for summary
judgment on January 23, 2018, Plaintiffs then incorporated the instant motion to compel
as part of its argument for further discovery under Fed. R. Civ. P. 56(d) as to their
trademark infringement claim and all claims alleged against Ge. [DE 87 at 7]. Notably,
Plaintiffs presented no substantive arguments against summary judgment on these
claims.
2.

Analysis

Plaintiffs argue that additional discovery should be allowed under both Fed. R.
Civ. P. 37 and Fed. R. Civ. P. 56(d). The Court is not persuaded under either standard.

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a.

Rule 37 Motion to Compel

Motions to compel under Rule 37 are premised on the general discovery rules,
which allow discovery into
any nonprivileged matter that is relevant to any party’s claim or defense
and proportional to the needs of the case, considering the importance of
the issues at stake in the action, the amount in controversy, the parties’
relative access to relevant information, the parties’ resources, the
importance of the discovery in resolving the issues, and whether the
burden or expense of the proposed discovery outweighs its likely benefit.
Fed. R. Civ. P. 26(b)(1). This Court has broad discretion in deciding whether to compel
discovery and may deny discovery to protect a party from oppression or undue burden.
Fed. R. Civ. P. 26(c); Sattar v. Motorola, Inc., 138 F.3d 1164, 1171 (7th Cir. 1998); Gile v.
United Airlines, Inc., 95 F.3d 492, 495-96 (7th Cir. 1996). When ruling on a motion to
compel, “a district court should independently determine the proper course of
discovery based upon the arguments of the parties.” Gile 95 F.3d at 496. A party
objecting to discovery retains the burden to show why the discovery request is
improper. U.S. v. 58.16 Acres of Land, more or less in Clinton Cty., State of Ill., 66 F.R.D. 570,
572–73 (E.D. Ill. 1975).
Here, Plaintiffs filed the instant motion to compel based on contentions that
Defendants failed to produce all documents, specifically the Americana documents,
requested in Request 1-1; failed to produce a 30(b)(6) witness capable of addressing the
noticed topics; and failed to timely supplement their discovery responses as ordered by
this Court on October 30, 2017. See Fed. R. Civ. P. 37(a)(3)(B)(iv); (a)(4); (b); (c). As to the
Americana documents, Plaintiffs say they are relevant to the calculation of their

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damages premised on sales generated by Jinfei’s business resulting from AMA and
Zou’s introductions. Yet Zou testified that he did not introduce Jinfei to Americana
bringing into question, if not eliminating, the possibility that Plaintiffs played any role
at all in the profits generated through Jinfei and Americana’s business relationship. As
such, the relevance of the Americana documents to Plaintiffs’ contract damages is
questionable at best. Moreover, Plaintiffs already possess hundreds of Americana
documents produced by Americana itself. Comparing Jinfei’s production to
Americana’s for completeness is not a sufficient reason at this late stage of litigation to
reopen discovery.
As to Ren’s deposition, Plaintiffs’ assertion that he was evasive in his answers or
otherwise unprepared to address noticed topics must be balanced against other facts.
First, the deposition transcript shows that Plaintiffs’ counsel did not ask Ren questions
about most of the non-party documents in its possession, including the Americana
documents. Second, Plaintiffs’ counsel had time to review the four-page spreadsheet
produced right before the depositions, but did not. And third, Plaintiff merely
speculates without support that Ren had or should have had information Plaintiffs
want. Additionally, a Rule 30(b)(6) witness is not unqualified if he cannot remember
everything or is not completely knowledgeable about every question asked. E.E.O.C. v.
Celadon Trucking Servs., Inc., No. 1:12-CV-275-SEB-TAB, 2013 WL 5915206, at *1 (S.D.
Ind. Nov. 1, 2013).
As to the Court’s order dated October 30, 2017, there is no dispute that neither
Defendants nor Plaintiffs served any supplemental discovery responses by the Court’s
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November 6th deadline. Yet parties cannot produce what they do not have. Here,
Defendants produced what they found as soon as they found it. While the dates on
Defendants’ documents produced later in November 2017 suggest that they should
have known they existed long before they were produced, Defendants have reasonably
explained challenges that prevented the documents from being identified sooner.
Moreover, Plaintiffs have produced no evidence of bad faith by Defendants.
Most importantly, Plaintiffs have not demonstrated any undue prejudice arising
from these discovery issues. In fact, Plaintiffs’ counsel ended Ren’s deposition earlier
than required and did not inquire about some of the arguably relevant documents
Defendants had produced before the deposition. Plaintiffs even waited until after the
close of discovery and the filing of two motions for summary judgment before seeking
the Court’s assistance on a discovery dispute brewing since the fall of 2016. Cf. Murata
Mfg. Co. v. Bel Fuse, Inc., 242 F.R.D. 470, 475 (N.D. Ill. 2007) (“[M]otions to compel filed
after the close of discovery are almost always deemed untimely.”) (citing Packman v.
Chicago Tribune Co., 267 F.3d 628, 647 (7th Cir. 2001)). Accordingly, Plaintiffs have
contributed to any predicament they sense.
Plaintiffs also seek to increase unnecessarily the time and costs of discovery by
requesting, for the first time, the creation of mirror images of Ren’s and Ge’s computers.
Such a request would likely have been deemed unduly burdensome even if raised at the
beginning of litigation given the international concerns this type of request presents, the
overly broad disclosure of unrelated Jinfei information it would require, and the high, if
not prohibitive, costs to all parties of reviewing and organizing the information on the
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computers. As a result, reopening discovery at this time would be both unduly
burdensome and disproportional to the needs of the case.
b.

Rule 56(d) Request of Discovery

Under Fed. R. Civ. P. 56(d), the court may delay ruling on a motion for summary
judgment if the non-movant can “affirmatively demonstrate[e] why [it] cannot respond
to a movant’s affidavits . . . and how postponement of a ruling on the motion will
enable [it], by discovery or other means, to rebut the movant’s showing of the absence
of a genuine issue of fact.” Korf v. Ball State Univ., 726 F.2d 1222, 1230 (7th Cir. 1984)
(quotations omitted). “A party seeking the protection of [Rule 56(d)] must make a good
faith showing that it cannot respond to the movant’s affidavits.” Kalis v. ColgatePalmolive Co., 231 F.3d 1049, 1058 (7th Cir. 2000). The non-movant must also identify the
material facts that he anticipates discovery. See Grundstad v. Ritt, 166 F.3d 867, 873 (7th
Cir. 1999) (“A party . . . may not use [Rule 56(d)] to gain a continuance where he has
made only vague assertions that further discovery would develop genuine issues of
material fact.” (quotations omitted)).
Through his Affidavit dated January 22, 2018, Plaintiffs’ counsel states that
“Plaintiffs are unable to present facts essential to justify its opposition to Defendants’
Motion for Summary Judgment as to Count VII: Federal Trademark Infringement and
False Designation of Origin and as to all counts and claims against Defendant Bingzao
Ge.” [DE 87-1 at 3, ¶ 3]. By invoking Plaintiffs’ instant motion to compel, Plaintiffs’
counsel avers that Defendants are responsible for Plaintiffs’ inability to defend against
summary judgment on these matters because of their alleged “withhold first, product
19

later if caught” approach to discovery. While Plaintiffs’ counsel’s Affidavit recites the
language of Rule 56(d), neither the Affidavit nor Plaintiffs’ briefing of either the motion
to compel or the motion for summary judgment provide the substantive support
necessary to justify delaying resolution of Defendants’ motion for summary judgment.
First, Plaintiffs have not demonstrated good cause for their counsel’s decisions
not to review the relevant four-page spreadsheet before Ren’s deposition, not to pursue
the “use in commerce” issue relevant to Plaintiffs’ trademark infringement claim at
Ren’s deposition, and not to seek the Court’s assistance on this critical discovery issue
before the close of discovery or before motions for summary judgment were filed. As
such, the Court is not persuaded that they were precluded from gathering facts to
justify opposition to Defendants’ motion for summary judgment.
Second, Plaintiffs suggest that the undisclosed Americana documents could
include facts showing to show use in commerce of the Future International or Future
Industrial marks as required to show trademark infringement. Similarly, Plaintiffs
contend that Jinfei’s internal emails could include facts relevant to use in commerce. Yet
Plaintiffs already have a considerable number of Americana documents in hand and
have not presented any “use in commerce” facts from those documents. Moreover, Both
Ren and Zou testified at their depositions that neither Future International nor FIT ever
engaged in business, suggesting that both companies are essentially shells without
assets, employees, or customers.
Plaintiffs seem to be searching for a “smoking gun” on an issue that could have
and should have been a central focus of discovery much sooner. Additionally, a
20

reasonable jury could, and likely would, rely on other evidence in the record, namely
Zou’s own testimony, to overcome Plaintiffs’ “use in commerce” argument. Thus, the
Court is not persuaded that the additional discovery Plaintiffs seek will give rise to a
genuine dispute of material fact.
3.

Conclusion

Upon consideration of both the Fed. R. Civ. P. 37 and Fed. R. Civ. P. 56(d)
standards, the Court DENIES Plaintiffs’ motion to compel. [DE 75]. Discovery remains
closed as of November 28, 2017. The Court will proceed to address the pending motions
for summary judgment. No award of costs, including attorney fees, for the instant
motion to compel is granted. The parties shall bear their own costs.
D.

Motions for Summary Judgment

Summary judgment is appropriate when the “pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as to
any material fact and the movant is entitled to a judgment as a matter of law.” Fed. R.
Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317 (1986). A genuine issue of material fact
exists when “the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “Only
disputes over facts that might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment.” Id. To determine whether a
genuine issue of material fact exists, the court must review the record, construing all
facts in the light most favorable to the nonmoving party and drawing all reasonable
inferences in that party’s favor. Heft v. Moore, 351 F.3d 278, 282 (7th Cir. 2003).
21

To overcome a motion for summary judgment, the nonmoving party cannot rest
on the mere allegations or denials contained in its pleadings. Rather, the nonmoving
party must present sufficient evidence to show the existence of each element of its case
on which it will bear the burden at trial. Celotex, 477 U.S. at 322–23; Robin v. Espo Eng’g
Corp., 200 F.3d 1081, 1088 (7th Cir. 2000). Where a factual record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue
for trial. Fed. R. Civ. P. 56(e); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986). In other words, “[s]ummary judgment is not a dress rehearsal or
practice run; it is the put up or shut up moment in a lawsuit, when a party must show
what evidence it has that would convince a trier of fact to accept its version of the
events.” Hammel v. Eau Galle Cheese Factory, 407 F.3d 852, 859 (7th Cir. 2005) (quotations
omitted); see also Goodman v. Nat’l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010).
1.

Defendants’ Motion for Partial Summary Judgment

As mentioned above, Defendants, Jinfei, FIT, and Ge, seek summary judgment
on some of Plaintiffs’ claims, specifically (1) Count V, unjust enrichment against Jinfei
only; (2) Count VI, unfair competition under state and federal law against Jinfei, FIT
and Ge; and (3) Count VII, trademark infringement and false designation of origin
against Jinfei, FIT, and Ge.
a.

Trademark Infringement and Unfair Competition against
Jinfei, FIT, and Ge

To succeed on a trademark infringement claim under Section 43(a) of the
Lanham Act, 15 U.S.C. § 1125(a), plaintiffs must demonstrate that: “(1) the [] marks
22

[they assert] are protectable; (2) Defendants have used the marks in commerce; and (3)
their use of the term is likely to cause confusion.” Kastanis v. Eggstacy LLC, 752 F. Supp.
2d 842, 848 (N.D. Ill. 2010) (citing Ty Inc. v. Jones Group Inc., 237 F.3d 891, 897 (7tfh Cir.
2001)); see also 15 U.S.C. § 1114 (Lanham Act trademark infringement). To show that an
unregistered mark, like Future International, is protectable, a plaintiff must establish the
first actual use of the mark in commerce. Purepecha Enters., Inc. v. El Matador Spices &
Dry Chiles, No. 11 C 2569, 2012 WL 3686776, at *9 (N.D. Ill. Aug. 24, 2012) (citations
omitted). As such, the key to Plaintiffs’ infringement and false designation of origin
claim under the Lanham Act is Plaintiffs’ actual use in commerce of the Future
International mark and Defendants’ actual use in commerce of the FIT mark.
Defendants argue that summary judgment is warranted because Plaintiffs have
not presented any evidence that the Future International or FIT marks were ever used
in commerce. In response, Plaintiffs say nothing about the quantity or quality of
evidence they have on the issue of “use in commerce.” Instead, Plaintiffs ask the Court
to allow further discovery under Fed. R. Civ. P. 56(d)—a request the Court denied
above. Moreover, Zou testified at his deposition that Future International has never
done business, including selling or transporting goods or rendering services as required
under the Lanham Act to establish use in commerce. See 15 U.S.C. § 1127. Similarly, Ren
testified that the FIT mark had never been used. Therefore, Plaintiffs have not
established (and based on this record, cannot establish) a genuine dispute of material
fact as to use in commerce entitling Defendants to judgment as a matter of law on

23

Plaintiffs’ trademark infringement and false designation of origin claim under the
Lanham Act.
The “use in commerce” element is also essential in the analysis of Plaintiffs’
trademark infringement claim under the Indiana Trademark statute and their unfair
competition claims. 2 See Heckler Koch, Inc. v. German Sport Guns GmbH, 71 F. Supp. 3d
866, 924 (S.D. Ind. 2014) (citing Ind. Code § 24-2-1-13(1)); Fortres Grand Corp. v. Warner
Bros. Entm’t Inc., 947 F. Supp. 2d 922, 926 (N.D. Ind. 2013), aff’d, 763 F.3d 696 (7th Cir.
2014) (“[I]t is well established that [trademark] infringement, federal unfair competition,
and state unfair competition . . . are analyzed under the same trademark infringement
analysis.”). As a result, Plaintiffs’ failure to present evidence to show a genuine dispute
of material fact as to the use in commerce of the Future International or FIT marks also
dooms any state law trademark claim and any unfair competition claim at the federal or
state level. Notably, Plaintiffs’ state law trademark infringement claim also fails because
the Future International mark is not registered with the State of Indiana as required
under Ind. Code § 24-2-1-13(1).

Indeed, “any conduct, the natural and probable tendency and effect of which is to deceive the public so
as to pass off the goods or business of one person as and for that of another, constitutes actionable unfair
competition.” Hartzler v. Goshen Churn & Ladder Co., 104 N.E. 34, 37 (Ind. App. 1914). Consistent with the
Hartzler definition of unfair competition, “federal courts have interpreted Indiana’s law on unfair
competition as an attempt to create confusion as to the source of the unfair competitor’s goods.” Hammons
Mobile Homes, Inc. v. Laser Mobile Home Transp., Inc., 501 N.E.2d 458, 461 (Ind. Ct. App. 1986) (citing
Westward Coach Mfg. Co. v. Ford Motor Co. (7th Cir. 1968), 388 F.2d 627, 633, cert. denied, 392 U.S. 927 (1968);
Terry v. Int’l Dairy Queen, Inc., 554 F. Supp. 1088, 1098 (N.D. Ind. 1983)). The centrality of the likelihood of
confusion to both the trademark infringement and the unfair competition claims make it understandable
that the same analysis applies, including the element of “use in commerce.” See Heckler Koch, Inc., 71 F.
Supp. 3d at 924; Fortres Grand Corp., 947 F. Supp. 2d at 926.

2

24

Plaintiffs’ argument that their unfair competition claims are based on different
facts than their trademark infringement claims does not save the unfair competition
claims from summary judgment. While Plaintiffs outline with great specificity the facts
suggesting that deception was the natural and probable consequence of Jinfei’s conduct
in relation to FIT and Future International, those facts also support their overarching
allegations in their trademark infringement claim that FIT adopted its name to confuse
consumers and that the FIT name is confusingly similar to Future International. Thus,
with the same facts at issue and no evidence of use in commerce to establish the
likelihood of confusion necessary for the unfair competition claims, any facts that
remain in dispute will not affect the outcome of the unfair competition claims making
them immaterial. Accordingly, Defendants are entitled to judgment as a matter of law
on all of Plaintiffs’ trademark infringement and unfair competition claims in Counts VI
and VII of the amended complaint.
Therefore, the Court GRANTS IN PART Defendants’ motion for partial
summary judgment as to Plaintiffs Count VI for Unfair Competition and Count VII for
Trademark Infringement and False Designation of Origin. [DE 73]. With no further
claims against FIT or Ge, both are completely dismissed from this action.
Lastly, the Court NOTES that subject matter jurisdiction originated in this case
from Plaintiffs’ federal Lanham Act claims, none of which have survived summary
judgment. Nevertheless, the Court will continue to exercise supplemental jurisdiction
over the remaining state law claims in this action because substantial federal judicial
resources have been expended on this case in the last three years and remanding this
25

case would cause unnecessary inefficiencies. See 28 U.S.C. § 1367(c)(3); Williams Elecs.
Games, Inc. v. Garrity, 479 F.3d 904, 907 (7th Cir. 2007); Van Harken v. City of Chicago, 103
F.3d 1346, 1354 (7th Cir. 1997). Arguably, subject matter jurisdiction based on a
diversity of citizenship now exists as well because the amount in controversy in this
action exceed $75,000 and only Jinfei, the only citizen of China in this action, remains as
Defendant, Counterclaimant, and Third-Party Plaintiff.
b.

Unjust Enrichment against Jinfei

Unjust enrichment is a common law remedy where there is no contract, but
“where the circumstances are such that under the law of natural and immutable justice
there should be a recovery as though there had been a promise.” Bayh v. Sonnenburg,
573 N.E.2d 398, 408 (Ind. 1991). Accordingly, a claim for unjust enrichment is not
cognizable when the parties’ conduct is governed by an express contract. Town of New
Ross v. Ferretti, 815 N.E.2d 162, 168 (Ind. App. 2004); DiMizio v. Romo, 756 N.E.2d 1018,
1025 (Ind. App. 2001). “Nonetheless, plaintiffs seeking recovery for breach of contract
often plead unjust enrichment in the alternative, because this theory allows for the
possibility of recovery even if the court finds that no contract existed or that a contract
existed but was unenforceable.” CoMentis, Inc. v. Purdue Research Found., 765 F. Supp. 2d
1092, 1101–02 (N.D. Ind. 2011) (internal quotation and citation omitted).
Here, Jinfei contends that AMA’s unjust enrichment claim is improper because
the conduct underlying the claim is the same conduct governed by the parties’
contracts. Additionally, Jinfei argues that Plaintiffs did not properly plead unjust
enrichment in the alternative. “To plead in the alternative, a plaintiff must claim both
26

that a contract was breached and that a contract did not exist but equity demands that
the injury be compensated.” Id. at 1103. “A party cannot pursue equitable relief simply
because its contract claim fails, without alternatively alleging that there was either no
contract on point or the contract at issue was unenforceable.” Id. AMA contends that it
has successfully done just that.
While agreeing that the conduct underlying the unjust enrichment claim is the
same as the conduct underlying the breach of contract claims, AMA argues that the
invalidity or unenforceability of the contracts can be inferred, in the alternative, from
the fact that Future International did not raise the unjust enrichment claim against
Jinfei. As AMA suggests, Future International would not exist if the contracts turn out
to be invalid or unenforceable, a question the Court has not yet been required to
resolve. Yet AMA will exist regardless of the status of the contracts. And there is no
dispute that AMA performed services for Jinfei and was not compensated.
Accordingly, AMA’s unjust enrichment can still coexist with Plaintiffs’ breach of
contract claims until such time the validity and enforceability of the contracts are
determined. Therefore, the Court DENIES IN PART Defendants’ motion for partial
summary judgment as to AMA’s Count V for Unjust Enrichment. [DE 73].
2.

Counter-Defendant AMA’s and Third-Party Defendant Zou’s
Motion for Partial Summary Judgment

Through the instant motion, AMA and Zou seek summary judgment on Jinfei’s
four counterclaims and third-party claims, specifically its First Counterclaim of breach
of fiduciary duty against AMA; its Second Counterclaim of unjust enrichment against

27

AMA and Zou; its Third Counterclaim of conversion against AMA and Zou; and its
Fourth Counterclaim of fraud against AMA and Zou. [DE 52 at 31–36].
1.

Fraud against AMA and Zou

Jinfei’s claim of fraud against AMA and Zou is based on allegations that Zou and
AMA made false statements of material facts to Jinfei regarding their familiarity with
and good will within the American auto parts industry and assorted matters regarding
the legal, tax, and business environment in Indiana as well as their ability to “obtain
various preferential treatments in tax and land use” based on Zou’s relationship with
Indiana officials and agencies. [DE 52 at 34]. Jinfei also alleges that it relied upon these
statements in deciding to partner with AMA and Zou in its efforts to initiate business as
a foreign company in the United States.
AMA and Zou now seek summary judgment on Jinfei’s fraud claim based on its
contention that Jinfei has not presented any evidence that Zou misrepresented anything
in his conversations with Jinfei. Liability for fraud requires intentional or reckless deceit
that misleads another. Eby v. York-Division, Borg-Warner, 455 N.E.2d 623, 628 (Ind. Ct.
App. 1983). To prove fraud, a plaintiff must establish
“(1) a material misrepresentation of past or existing fact which (2) was
untrue, (3) was made with knowledge of or in reckless ignorance of its
falsity, (4) was made with the intent to deceive, (5) was rightfully relied
upon by the complaining party, and (6) which proximately caused the
injury or damage complained of.”
Kesling v. Hubler Nissan, Inc., 997 N.E.2d 327, 335 (Ind. 2013).
Here, AMA and Zou contend that Zou told Jinfei he was familiar with aspects of
the industry and community that would be of assistance in getting Jinfei’s business
28

started. On the other hand, Jinfei alleges that Zou does not have the specialized
knowledge or relationships in the Indiana legal, financial, governmental, and business
environment that he reported to Jinfei and therefore that he lied to Jinfei. Instead, Jinfei
alleges that Zou only had the knowledge of an average person that would have been
insufficient for it to rely upon in its pursuit of entering the American parts industry. As
such, a dispute of fact exists as to whether Zou’s representations about his knowledge,
expertise, and relationships in Indiana and the relevant American auto/RV industry
were truthful. This dispute of fact, however, is not material to any determination of the
misrepresentation element of Jinfei’s fraud claim.
In its attempt to establish a genuine dispute of material fact, Jinfei cites the
following facts: (1) Zou is not a licensed lawyer or accountant; (2) AMA and Zou
concealed Indiana’s professional licensing requirements from it; (3) neither AMA nor
Zou had a previous relationship with prospective customer Americana, with whom
Jinfei had a business relationship predating the Jinfei/AMA connection; (4) prospective
customers and third-parties Lionshead Specialty Tire & Wheel, Inc. (“Lionshead”) and
HiSpec Wheels & Tires, Inc. (“HiSpec”) submitted affidavits denying any previous
relationship or interest in a business relationship with AMA or Zou; and (5) AMA and
Zou are not governmental employees or contractors. [DE 91 at 8–12]. What is missing
from the record, however, is any evidence that Zou told Jinfei he was a licensed
attorney or accountant or a government employee. Similarly, nothing in the record
suggests that a license was required for Zou to offer his insights to a business partner
based on his own experience with legal, tax, or governmental matters as a business
29

owner. Therefore, failure to disclose such licensing requirements is irrelevant to
whether or not Zou misrepresented his expertise to Jinfei.
Additionally, Jinfei has produced no evidence that AMA and Zou claimed to
have relationships with every company in the vehicle parts industry. Accordingly,
AMA’s and Zou’s lack of relationship with Americana, Lionshead, and HiSpec does not
conflict with the representation that they maintained relationships in the industry. As a
result, the facts cited by Jinfei may be disputed, but are not sufficient for a reasonable
jury to find that AMA and Zou intentionally or recklessly misrepresented facts about
Zou’s experience, expertise, or relationships. Therefore, any disputed interpretation of
Zou’s statements to Jinfei about his credentials to assist in its business expansion are not
material to the misrepresentation element of the fraud claim.
Due to Jinfei’s failure to present evidence to establish a genuine dispute of
material fact as to misrepresentation element, AMA and Zou are entitled to judgment as
a matter of law on Jinfei’s fraud claim. Accordingly, the Court GRANTS IN PART
AMA and Zou’s motion for partial summary judgment as to Jinfei’s Fourth
Counterclaim of fraud. [DE 69].
2.

Breach of Fiduciary Duty against AMA

Generally speaking, Jinfei alleges in its First Counterclaim that it was harmed
because AMA, as Jinfei’s agent in the Future International project, breached its fiduciary
duty by (1) failing to release its control over Future International; (2) failing to provide
support to Jinfei and its employees as promised; and (3) failing to provide a detailed
accounting of how it spent Jinfei’s $30,000 and diverting benefits gained to itself rather
30

than Jinfei. [DE 52 at 31–32]. “[A] claim for breach of fiduciary duty requires proof of
three elements: (1) the existence of a fiduciary relationship; (2) a breach of that duty
owed by the fiduciary to the beneficiary; and (3) harm to the beneficiary.” Rapkin Grp.,
Inc. v. Cardinal Ventures, Inc., 29 N.E.3d 752, 757 (Ind. Ct. App. 2015) (internal citation
omitted). Here, AMA seeks summary judgment on Jinfei’s breach of fiduciary duty
claim by solely alleging that a fiduciary relationship did not exist between them.
AMA’s argument is premised on its interpretation that Jinfei is alleging breach of
fiduciary duty in its own capacity rather than on behalf of Future International. On first
glance, this makes sense as Jinfei alleges a partnership and agency in its first allegation
in the counterclaim: “As a result of AMA’s partnership with Jinfei, AMA essentially
acted as Jinfei’s agent in their joint investment project.” [DE 52 at 31, ¶ 47]. Yet Jinfei
also alleged a fiduciary duty in direct relation to Future International in the same
paragraph when it stated that
AMA owed a fiduciary duty to Jinfei, including, but not limited to, the
duty of undivided loyalty, the duty to act with the utmost good faith and
honesty toward Jinfei, and the duty to disclose to Jinfei all facts within
AMA’s knowledge that were material to the operation and management
of Future International.
[Id.]. Thus, AMA’s argument here that Jinfei is alleging breach of fiduciary duty in its
individual capacity rather than as a member of Future International is not clearly
supported by the pleading or the parties’ briefing of the instant motion.
And more curiously, AMA admitted in its answer to the counterclaim “that Jinfei
and AMA were in a fiduciary relationship” while denying the remaining allegations.
[DE 54 at 21, ¶ 47]. Consistent with that answer, AMA argues in the instant motion that
31

it was not an agent of Jinfei in an attempt to support its assertion that a fiduciary
relationship did not exist. Yet AMA’s admission in that very same answer that it was in
a fiduciary relationship with Jinfei conflicts directly with this conclusion. The
contradiction is even starker when compared to AMA’s own allegation, as part of its
own breach of fiduciary duty claim against Jinfei in its First Amended Complaint. AMA
pleaded that “[a]s partners in a joint venture and co-members in an LLC, AMA and
Jinfei were in a fiduciary relationship.” [DE 14 at 8, ¶ 38].
“Judicial admissions are formal concessions in the pleadings, or stipulations by a
party or its counsel, that are binding upon the party making them.” Keller v. United
States, 58 F.3d 1194, 1199 (7th Cir. 1995). “[T]hey are not evidence at all but rather have
the effect of withdrawing a fact from contention.” Id. (internal quotation and citations
omitted). “A judicial admission is conclusive, unless the court allows it to be
withdrawn; ordinary evidentiary admissions, in contrast, may be controverted or
explained by the party.” Id.
In two of its pleadings, the First Amended Complaint and the answer to Jinfei’s
counterclaim, AMA admitted that it was in a fiduciary relationship with Jinfei. These
concessions in AMA’s pleadings constitute judicial admissions and are therefore
binding on AMA unless the Court would allow them to be withdrawn. Yet, despite
having the opportunity to do so, AMA makes no argument that withdrawal is
warranted.
Regardless of AMA’s judicial admissions, officers and members of Indiana LLCs,
like Future International, share a common law fiduciary duty absent contrary
32

provisions in the LLC’s operating agreements. See Purcell v. S. Hills Invs., LLC, 847
N.E.2d 991, 996 (Ind. App. 2006). Here, Jinfei and AMA are the only members of Future
International, LLC, creating just such a common law fiduciary relationship. AMA did
not address this legal reality in its reply brief either.
Nevertheless, AMA argues that it was not the agent of Jinfei and that
consequently, no fiduciary relationship existed between them. Indeed, “[a] confidential
or fiduciary relationship [can exist] when confidence is reposed by one party in another
with resulting superiority and influence exercised by the other.” Strong v. Jackson, 777
N.E.2d 1141, 1148 (Ind. Ct. App. 2002) (internal quotation and citation omitted).
However, an arms’ length business relationship between two business partners may not
translate into a fiduciary relationship despite a certain amount of trust between them.
Iom Grain, LLC v. ZEA Global Seeds, SA, Cause No. 1:10-CV-337-TLS, 2011 WL 5006314,
at *12 (N.D. Ind. Oct. 20, 2011).
In Iom Grain, this Court carefully analyzed the full range of facts surrounding the
parties’ business relationship before determining that a fiduciary relationship did not
exist because neither party dominated or controlled the activity of the other. Id. Yet the
business partners in Iom Grain were not co-members of an LLC nor had any party
admitted in its pleadings that a fiduciary relationship existed. Therefore, the agencybased analysis was necessary and appropriate. Here, AMA does not even attempt to
explain why its agency-based argument should supplant its own judicial admissions or
its fiduciary relationship with Jinfei arising from their status as co-members of Future
International. As a result, the Court is not persuaded to allow AMA to withdraw its
33

judicial admissions or to ignore the fiduciary relationship inherit in its LLC
membership. While a direct agency relationship may or may not exist between Jinfei
and AMA, a fiduciary relationship definitely does.
Therefore, AMA is not entitled to judgment as a matter of law on Jinfei’s breach
of fiduciary duty counterclaim. To resolve the remaining elements of Jinfei’s
counterclaim, it may be necessary for a finder to fact at trial to determine which party
shall succeed. Accordingly, the Court DENIES IN PART AMA’s motion for partial
summary judgment [DE 69] as to Jinfei’s First Counterclaim of breach of fiduciary duty.
3.

Conversion against AMA and Zou

In its Third Counterclaim for conversion against AMA and Zou, Jinfei alleges
that they “have obtained, and continue to retain, the benefit of the $30,000 that was
wired by Jinfei (such as the leased pick up truck), including any remaining sums of
money.” [DE 52 at 33, ¶ 59]. “Conversion, as a tort, consists either in the appropriation
of the personal property of another to the party’s own use and benefit, or in its
destruction, or in exercising dominion over it, in exclusion and defiance of the rights of
the owner or lawful possessor.” Computers Unlimited, Inc. v. Midwest Data Sys., Inc., 657
N.E.2d 165, 171 (Ind. Ct. App. 1995). “Where the initial possession is lawful, conversion
occurs only after an unqualified demand for return.” Coffel v. Perry, 452 N.E.2d 1066,
1069 (Ind. Ct. App. 1983).
In this case, Jinfei cannot succeed on its conversion counterclaim unless it can
prove that AMA and Zou obtained the $30,000 at issue illegally and that it made an
unqualified demand to AMA and Zou for return of the $30,000. In their motion for
34

partial summary judgment, AMA and Zou argue that Jinfei can prove neither and that
they are therefore entitled to judgment as a matter of law on the conversion
counterclaim. Yet Jinfei contends that a genuine dispute of material fact exists as to both
elements. Specifically, Jinfei argues that AMA and Zou’s alleged fraud, discussed
above, creates a genuine dispute of material fact as to whether AMA lawfully came into
possession of the $30,000.
No doubt, it is unlawful to come into possession of something by fraud. See
Kollar v. State, 556 N.E.2d 936, 939 (Ind. Ct. App. 1990), disapproved of by Jackson v. State,
50 N.E.3d 777 (Ind. 2016) (“a conviction of theft by false pretenses under IC 35-43-41(b)(4) requires a showing that misrepresentations as to past or present facts were made
in order to gain possession of another's property”). Yet the Court already granted
summary judgment as to Jinfei’s Fourth Counterclaim of fraud above. With no genuine
dispute of material fact as to the alleged fraud, Jinfei has not established a genuine
dispute of material fact as to whether AMA and Zou possessed the $30,000 lawfully.
Therefore, AMA and Zou are entitled to judgment as a matter of law on Jinfei’s
conversion counterclaim regardless of whether a genuine dispute of material fact exists
as to Jinfei’s unqualified demand for return of the $30,000.
Accordingly, the Court GRANTS IN PART AMA and Zou’s motion for partial
summary judgment as to Jinfei’s Third Counterclaim of conversion. [DE 69].
4.

Unjust Enrichment against AMA and Zou

Through its Second Counterclaim for unjust enrichment against AMA and Zou,
Jinfei once again seeks a remedy for what it believes to be AMA’s and Zou’s
35

exploitation and retention of benefits from the $30,000 Jinfei wired to them to obtain
and pay leases pursuant to their contracts. As discussed thoroughly above, parties
cannot recover on the equitable theory of unjust enrichment, or quantum meruit, when a
contract controls the rights of the parties. See Town of New Ross, 815 N.E.2d at 168;
DiMizio, 756 N.E.2d at 1025. A contract, however, must address the “identical subject”
raised in the unjust enrichment claim to preclude liability under the equitably theory.
Engelbrecht v. Prop. Developers, Inc., 296 N.E.2d 798, 801 (Ind. Ct. App. 1973); see also Eagle
Aircraft, Inc. v. Trojnar, 983 N.E.2d 648, 660 (Ind. Ct. App. 2013) (concluding that unjust
enrichment did not apply because the contract between the parties governed their
relationship and set forth terms addressing the benefit at the heart of the unjust
enrichment claim).
Here, the parties dispute whether their contracts governed Jinfei’s provision of
the $30,000 specifically and whether the contracts required AMA and Zou to return any
unused sums from the $30,000. AMA and Zou’s reliance on Eagle Aircraft to support
their contention that the parties’ contracts governed their conduct generally and
therefore precludes any equitable remedy like unjust enrichment does not overcome
this dispute over the scope of the contracts. First, Eagle Aircraft is premised on a contract
that governed the benefit for which compensation through an equitable remedy was
sought. 983 N.E.2d at 660.
Second, AMA and Zou have not demonstrated that the contracts dictated the
logistics of funding the apartment and vehicle leases. For instance, the contracts
generally require AMA and Zou to secure the leases and for Jinfei to cover those costs,
36

but do not specify how much could be spent, how or when Jinfei would cover the costs
incurred by AMA and Zou, or how AMA and Zou would be required to handle any
money received including the return of unused sums. With such general contract terms,
it is unclear whether the conduct at issue in Jinfei’s unjust enrichment counterclaim is
indeed covered by the contracts. As such it would be premature to preclude Jinfei’s
counterclaim based on the contracts alone. Nevertheless, the Court can give Jinfei the
benefit of the doubt here as the nonmovant and assume for the sake of argument that
the unjust enrichment counterclaim is not precluded by the parties’ contracts.
Should the Court get to the merits of the counterclaim, however, Jinfei’s unjust
enrichment counterclaim cannot succeed. “To prevail on a claim of unjust enrichment, a
plaintiff must establish that a measurable benefit has been conferred on the defendant
under such circumstances that the defendant’s retention of the benefit without payment
would be unjust.” Sonnenburg, 573 N.E.2d at 408. In response to AMA and Zou’s motion
for partial summary judgment, Jinfei has provided no evidence that AMA and Zou
received any measurable benefit from the $30,000. In fact, Jinfei does not even mention
Zou’s affidavit, which AMA and Zou cited in their motion for partial summary
judgment. In his affidavit, Zou delineated expenditures “to benefit and further the
purposes of Future International” totaling $48,663.00 and averred that “[n]either [Zou]
nor AMA personally received any benefit from the $30,000 because all of it was spent to
benefit Future International.” [DE 69-2 at 9, ¶¶ 32–33]. Furthermore, Jinfei offers no
rebuttal to Ren’s Rule 30(b)(6) deposition testimony that Jinfei “cannot identify an
improper usage of the money by Mr. Zou, and that Jinfei doesn’t remember seeing
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receipts and invoices memorializing the legitimate expenses Mr. Zou accrued on behalf
of Jinfei/Future International.” [DE 71 at 31 (citing DE 70 at 23, 85:17–86:13)].
Instead, Jinfei relies solely on the contractual argument discussed above to
advocate for the survival of its unjust enrichment counterclaim. While a win here based
on the contractual argument would keep Jinfei’s unjust enrichment counterclaim alive,
it would not ensure success for Jinfei on the counterclaim. Jinfei would be still be
required to present sufficient evidence to show the existence of each element of the
claim to survive summary judgment. See Celotex, 477 U.S. at 322–23; Robin, 200 F.3d at
1088. By failing to present evidence that AMA and Zou benefitted personally from the
$30,000, none of which remains unused based Zou’s Affidavit, Jinfei has not met its
burden. See Fed. R. Civ. P. 56(e); Matsushita Elec. Indus. Co., 475 U.S. at 587.
Therefore, there remains no genuine dispute of material fact and AMA and Zou
are entitled to judgment as a matter of law. Accordingly, the Court GRANTS IN PART
AMA and Zou’s motion for partial summary judgment [DE 69] as to Jinfei’s Second
Counterclaim of unjust enrichment.
III.

CONCLUSION
For the reasons discussed above, the Court now
(1)

OVERRULES all of Defendants’ evidentiary objections [DE 85, 90, 92, 98];

(2)

DENIES Defendants’ Renewed Motion for Sanctions [DE 72];

(3)

DENIES Plaintiffs’ motion to compel [DE 75];

(4)

GRANTS IN PART and DENIES IN PART AMA and Zou’s Motion for
Partial Summary Judgment [DE 69]; and

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(5)

GRANTS IN PART and DENIES IN PART Defendants’ Motion for
Partial Summary Judgment [DE 73].

The Clerk is DIRECTED to enter judgment in favor of AMA and Zou on Jinfei’s
Second Counterclaim of Unjust Enrichment, Third Counterclaim of Conversion, and
Fourth Counterclaim of Fraud as pled in Defendants’ First Amended Answer to First
Amended Complaint, Third-Party Complaint and Counterclaims [DE 52]. The Clerk is
DIRECTED to enter judgment in favor of Defendants on Plaintiffs’ claims for Unfair
Competition (Count VI) and Trademark Infringement and False Designation of Origin
(Count VII) in their First Amended Complaint [DE 14].
With all claims dismissed against them, Future Industrial & Trading, Inc.,
Bingzao Ge, and Aaron Zou are terminated as parties in this action.
As an ancillary matter, the Court NOTES that AMA and Zou filed three exhibits
[DE 70, 70-1, 70-2] related to its motion for partial summary judgment and two exhibits
[DE 76, 76-1] related to its motion to compel under seal without the Court’s permission.
The Court must determine whether good cause exists to seal any part of the record of a
case because it is in the public interest to keep court proceedings publicly accessible. See
Citizens First Nat. Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 944 (7th Cir. 1999).
“Information that affects the disposition of litigation belongs in the public record unless
a statute or privilege justifies nondisclosure.” United States v. Foster, 564 F.3d 852, 853
(7th Cir. 2009). Without supporting authority or a showing of good cause that the
exhibits at issue should be protected from disclosure to the public, the Court ORDERS
Plaintiffs to submit a brief including authority and good cause for sealing the

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documents by July 6, 2018. Defendants may file any response by July 13, 2018. No
further briefing will be accepted.
And, lastly, as explained above, the Court invokes Fed. R. Civ. P. 11(c)(3) and
ORDERS Defendants’ counsel to show cause by June 29, 2018, why the Court should
not find that the Renewed Motion for Sanctions [DE 72] was presented for an improper
purpose as prohibited under Fed. R. Civ. P. 11(b)(1) and should not impose monetary
sanctions accordingly.
SO ORDERED.
Dated this 20th day of June 2018.
s/Michael G. Gotsch, Sr.
Michael G. Gotsch, Sr.
United States Magistrate Judge

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