                                            NOT PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT



              Nos. 15-1536 and 15-1610
                   _____________


  INTERLINK GROUP CORPORATION USA, INC.,

                                     Appellant in No. 15-1536

                          v.

AMERICAN TRADE AND FINANCIAL CORPORATION;
           ANATOLI TIMOKHINE

                          v.

             ALEXANDER KARPMAN
                 _____________

  INTERLINK GROUP CORPORATION USA, INC.,

                          v.

AMERICAN TRADE AND FINANCIAL CORPORATION;
           ANATOLI TIMOKHINE

                                  Appellants in No. 15-1610

                          v.

             ALEXANDER KARPMAN



    On Appeal from the United States District Court
           for the District of New Jersey
        (District Court No.: 2-12-cv-06179)
                      District Judge: Honorable James B. Clark III

                       Submitted under Third Circuit LAR 34.1(a)
                                  on February 8, 2016

             Before: FUENTES, KRAUSE and RENDELL, Circuit Judges

                             (Opinion filed: March 22, 2016)


                                      O P I N I O N*



RENDELL, Circuit Judge:

       This case is about a business relationship gone south. In 2005, Interlink Group

Corporation, through its president Alexander Karpman, partnered with American Trade

and Financial Corporation (“ATFC”), through its president Anatoli Timokhine, to export

eggs from the United States to Russia and other former Soviet Union countries. Years

later, in 2012, Interlink sued ATFC and Timokhine, alleging they had breached a non-

compete agreement (“NCA”) and their fiduciary duty to Interlink. In response, ATFC and

Timokhine asserted several counterclaims for breach of contract, as well as counterclaims

for unjust enrichment and promissory estoppel. ATFC and Timokhine also filed a third-

party complaint against Karpman, alleging breach of fiduciary duty, fraudulent

misrepresentation, and tortious interference with contractual relations. Interlink’s claims

and the counterclaims of ATFC and Timokhine went to a bench trial, where the District




*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
                                             2
Court1 rejected all of them. The parties appeal these rulings. We will affirm the District

Court’s order as to Interlink’s claims for breach of the NCA and breach of fiduciary duty.

But we will vacate its order as to ATFC and Timokhine’s counterclaims and remand.

I.     Background

       In 2005, Interlink and ATFC started exporting eggs from the United States to

Russia and other former Soviet Union countries. As part of their business arrangement,

they each assumed certain duties. Interlink, as the face of the operation, conducted most

negotiations related to the business and was the named party in all contracts with the U.S.

egg suppliers and foreign customers. ATFC, for its part, drafted exclusivity agreements

with the U.S. egg suppliers and managed Interlink’s books, among other things. At the

start of this relationship, Interlink and ATFC orally agreed to split the profits equally.

       In April 2011, Interlink (via Karpman) sought to reduce ATFC and Timokhine’s

share of the profits. Karpman testified at trial that he told Timokhine that he was

changing the ratio from 50/50 to 70/30 in Interlink’s favor. By contrast, Timokhine

testified that he rejected this modification, Karpman accepted his rejection, and they

continued operating under the original 50/50 agreement through February 2012. As the

basis for one of their breach of contract counterclaims against Interlink, ATFC and

Timokhine claimed that Interlink still owed them profits under the parties’ profit-sharing

agreement.



1
 The parties consented to proceed before U.S. Magistrate Judge James B. Clark, III, see
28 U.S.C. § 636(c), and we therefore have jurisdiction pursuant to 28 U.S.C. § 1291.
Hereinafter we refer to Judge Clark’s decision as that of the District Court.
                                              3
       Karpman also testified that he had reduced ATFC and Timokhine’s share because

of Timokhine’s poor job performance, an accusation on which Interlink based its breach

of fiduciary duty claim against ATFC and Timokhine. He contended that Timokhine had

made critical mistakes in drafting and executing the exclusivity agreements with some of

their U.S. egg suppliers. For example, Timokhine had supposedly caused Morris

Hatchery, one of Interlink’s U.S. egg suppliers, to file a lawsuit against Interlink in

Florida that resulted in the invalidation of the unlimited duration term in the exclusivity

agreement.

       In that lawsuit, Interlink counterclaimed against Morris Hatchery for breach of the

agreement. In May 2012, a jury awarded Interlink $2,066,711.02, which Timokhine

claims netted the company about $1,556,000.00 after deducting fees and costs. At trial,

Timokhine contended that he and Karpman had agreed that Interlink and ATFC would

split any judgment. Karpman, on the other hand, testified that he had never promised to

split the judgment. As the basis for another breach of contract counterclaim against

Interlink, ATFC and Timokhine claimed that Interlink owed them half of the judgment.

       In August 2012, a little over four months after Interlink and ATFC’s business

relationship had ended, Timokhine signed an NCA with Karpman. It prohibited

Timokhine from (1) disclosing any information about their egg export business, (2)

seeking employment from or consulting with any Interlink customers or competing

businesses, and (3) soliciting business from Interlink customers. It also stated that

Timokhine was accepting $780,504.75 “as sufficient and due consideration for the

faithful performance of his obligations under this agreement.” (App. 1423.) Soon

                                              4
thereafter, ATFC and Timokhine’s lawyer informed Interlink by letter that the NCA was

“void ab initio.” (App. 1444.)

       Interlink claimed that ATFC and Timokhine breached the NCA. In April 2012,

after Interlink and ATFC’s business relationship had ended but before Timokhine signed

the NCA, Keith Smith Company Inc., one of Interlink’s U.S. egg suppliers, hired ATFC

to broker egg deals with Russian buyers. And starting on August 7, 2012, which was after

Timokhine had signed the NCA, Timokhine sent several emails to Keith Smith Company

Inc. that Interlink argued demonstrate that ATFC and Timokhine breached the NCA.

       After a bench trial, the District Court granted judgment against Interlink on its

claims against ATFC and Timokhine for breach of the NCA and breach of fiduciary duty.

It also granted judgment against ATFC and Timokhine on their counterclaims against

Interlink for breach of contract, unjust enrichment, and promissory estoppel, all of which

emanated from Interlink’s alleged failure to pay ATFC and Timokhine profits from the

egg business and their half of the Florida judgment. The parties appeal these rulings.

II.    Standard of Review

       On appeal from a bench trial, we “review[] a district court’s findings of fact for

clear error and its conclusions of law de novo.” VICI Racing, LLC v. T-Mobile USA, Inc.,

763 F.3d 273, 282–83 (3d Cir. 2014). “A finding of fact is clearly erroneous when it is

completely devoid of minimum evidentiary support displaying some hue of credibility or

bears no rational relationship to the supportive evidentiary data.” Berg Chilling Sys., Inc.

v. Hull Corp., 369 F.3d 745, 754 (3d Cir. 2004) (quotation marks and citations omitted).

“For mixed questions of law and fact we apply the clearly erroneous standard except that

                                             5
the District Court’s choice and interpretation of legal precepts remain subject to plenary

review.” VICI Racing, 763 F.3d at 283 (quotation marks and citation omitted).

III.   Interlink’s Appeal

       Interlink appeals the District Court’s grant of judgment against it on its claims

against ATFC and Timokhine for breach of the NCA and breach of fiduciary duty. We

discern no reversible error in these rulings, and so we will affirm the District Court.

       Interlink argues that it established at trial that ATFC and Timokhine breached the

NCA by sending (1) the emails to Keith Smith Company Inc.; and (2) the letter from

ATFC and Timokhine’s attorney to Interlink stating that the NCA was void ab initio.

       The District Court properly rejected these arguments. It found that the emails at

issue that Timokhine had sent to Keith Smith Company Inc. “evidence a desire to end the

business relationship he had previously established with Keith Smith prior to signing the

NCA and discuss how Timokhine wished to send out letters indicating his removal from

the egg shipping industry.” (App. 23.) Interlink selectively highlights certain language

from these emails in arguing that Timokhine breached the NCA, but, on balance, the

District Court correctly concluded that the emails reflect Timokhine’s desire to end his

relationship with Keith Smith Company Inc.—an action not expressly forbidden by the

NCA’s terms. Indeed, Eddy Slick, a Keith Smith Company Inc. representative, testified

that his understanding of the emails was that they were meant to wind down any business

relations between ATFC and Keith Smith Company Inc. As for the lawyer’s letter to

Interlink stating that the NCA was void ab initio, the District Court properly decided that

the letter was not “in and of itself a breach of the NCA,” as Interlink had not submitted

                                              6
any evidence that ATFC and Timokhine had actually violated the NCA. (App. 24 (citing

Sheet Metal Workers Int’l Ass’n Local Union No. 27, AFL-CIO v. E.P. Donnelly, Inc.,

737 F.3d 879, 900 (3d Cir. 2013).)

       Regarding its breach of fiduciary duty claim, Interlink contends that it shared a

fiduciary relationship with ATFC and Timokhine in which it was the principal and they

were its agents. For that reason, according to Interlink, ATFC and Timokhine owed it a

duty to exercise reasonable skill and care when acting on its behalf, a duty that they

breached with Timokhine’s missteps in connection with the exclusivity agreements.

       The District Court properly rejected this argument. It correctly concluded that

Interlink and ATFC/Timokhine were engaged not in a principal-agent relationship but in

a joint venture, see, e.g., Wittner v. Metzger, 178 A.2d 671, 675 (N.J. Super. Ct. App.

Div.), cert. denied, 181 A.2d 12 (1962), and that as partners in a joint venture they owed

each other a statutory duty not to engage in “‘grossly negligent or reckless conduct,

intentional misconduct, or a knowing violation of law,’” (App. 33 (quoting N.J. Stat.

Ann. § 42:1A-24).) And, as the District Court also correctly concluded, Interlink offered

no evidence that any of ATFC and Timokhine’s challenged actions rose to the level of

gross negligence or intentional misconduct. Rather, they were, at most, mistakes or

courses of action that were not successful to the extent that Interlink desired. See, e.g.,

Stelluti v. Casapenn Enters., LLC, 975 A.2d 494, 508 n.6 (N.J. Super. Ct. App. Div.

2009), aff’d, 1 A.3d 678 (N.J. 2010) (equating “gross negligence” with “palpably

unreasonable” or “willful and wanton” conduct); Banks v. Korman Assocs., 527 A.2d



                                              7
933, 934 (N.J. Super. Ct. App. Div. 1987) (describing “gross negligence” as constituting

“an indifference to consequences”).

IV.    ATFC and Timokhine’s Cross-Appeal

       ATFC and Timokhine cross-appeal the District Court’s grant of judgment against

them on their counterclaims against Interlink for breach of contract, unjust enrichment,

and promissory estoppel. They argue that the District Court erred because it rejected all

of these counterclaims based on an unsupported factual finding that it made earlier in its

opinion while analyzing the consideration underlying the NCA. We agree.

       Before the District Court considered whether ATFC and Timokhine had breached

the NCA, it examined whether the agreement was supported by valid consideration. As

mentioned earlier, the NCA contained a provision detailing the consideration paid by

Interlink to ATFC and Timokhine for their agreement to abide by the NCA’s terms:

       Since [ATFC/Timokhine] is leaving a business relationship with [Interlink],
       [ATFC/Timokhine] agrees to accept the sum of 780,504.75 ($           ) and
       other good and valuable consideration, the sufficiency of which is hereby
       acknowledged, as sufficient and due consideration for the faithful
       performance of [ATFC/Timokhine’s] obligations under this agreement.

(App. 1423.)

       Despite this unambiguous statement, the District Court concluded that the

$780,504.75 was consideration not only for the NCA but also for ATFC and Timokhine’s

agreeing to release their claims to (i) any profits that Interlink still owed them, and (ii) the

one-half of the Florida judgment to which they claimed entitlement. It stated, “Given all

of the testimony and all of the circumstances surrounding the parties’ relationship at that

time, it appears most likely to the Court that the payment to Timokhine of $780,504.75

                                               8
and the signing of the NCA represented an effort by both sides to come to some sort of

overall agreement concerning all of their claims against each other and to finally part

ways.” (App. 20.) The District Court thus “conclude[d] that the $780,504.75 constitutes

valid consideration for both the NCA and for the discharge of any remaining legal

obligations under the profit-sharing agreement.” (Id. at 20–21.)

       Later in the opinion, the District Court relied on this finding to reject ATFC and

Timokhine’s counterclaims for breach of contract, unjust enrichment, and promissory

estoppel. For example, in rejecting their breach of contract counterclaims, the District

Court first referenced how earlier it had found “that the $780,504.75 paid from Interlink

to Defendants constitutes both the profits owed to Defendants pursuant to the egg

shipping business plus the consideration for the NCA.” (App. 25.) It therefore determined

that “there is no breach of contract by [Interlink] or Karpman of the profit-sharing

agreement in the egg shipping business, or at the very least, [that] any breach that existed

when Karpman refused to pay the money following Timokhine’s exit from the business

has been satisfied by the subsequent payment of the $780,504.75.” (Id.)

       The District Court erred in deciding the consideration issue on which it based its

rejection of ATFC and Timokhine’s counterclaims. While the District Court itself cited

no authority allowing it to consider evidence outside of the NCA, New Jersey courts do

allow “broad use of extrinsic evidence to achieve the ultimate goal of discovering the

intent of the parties.” Conway v. 287 Corp. Ctr. Assocs., 901 A.2d 341, 347 (N.J. 2006).

Indeed, even in a case such as this one where the agreement was unambiguously clear

that the $780,504.75 was consideration solely for the NCA, the New Jersey Supreme

                                             9
Court has indicated that parol evidence may nonetheless be used to elucidate the parties’

intent. See id. at 346–48. Here, however, even assuming that the District Court was

within its authority to consider parol evidence, it cited no specific record evidence in

concluding that the $780,504.75 “most likely” constituted consideration both for the

NCA and for ATFC and Timokhine’s agreeing to give up any claims that they had

against Interlink for unpaid profits and for half of the Florida judgment. See id. at 347–48

(pointing to specific pieces of extrinsic evidence that informed the court’s interpretation

of contractual provisions); (App. 20.) Rather, it vaguely cited “all of the testimony” and

“all of the circumstances.” (App. 20.) But we identify no evidence supporting that

conclusion as to the parties’ intent or agreement.

       We will thus vacate the District Court’s order granting judgment against ATFC

and Timokhine on their counterclaims and remand so that the court can either articulate

the legal authority and record evidence supporting its ruling on the consideration issue or

resolve the factual disputes underlying the counterclaims and decide them on their merits.




                                             10
