INTERLINK GROUP CORPORATION USA, INC. v. AMERICAN TRADE AND FINANCIAL CORPORATION et al

Filing 138

OPINION and ORDER, the parties shall appear before Magistrate Judge James B. Clark., on 5/9/2017 10:00 AM, and it is further Ordered that the Court will conduct a Telephone Status Conference with the parties on 4/28/2017 11:30 AM before Magistrate Judge James B. Clark., etc. Signed by Magistrate Judge James B. Clark on 4/12/2017. (JB, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
_____________________________________
INTERLINK GROUP CORP. USA, INC.,
Plaintiff,

Civil Action No. 12-6179 (JBC)

v.
AMERICAN TRADE AND FINANCIAL
CORP., et al.,

OPINION AND ORDER

Defendants/
Third-Party Plaintiffs,
v.
ALEXANDER KARPMAN,
Third-Party Defendant.

CLARK, United States Magistrate Judge
This matter returns to the Court on remand from the United States Court of Appeals for
the Third Circuit. This Court conducted a bench trial in this matter beginning on August 4, 2014,
and concluding on August 6, 2014. Following the decision of this Court, Plaintiff Interlink
Group Corporation USA, Inc. (“Interlink” or “Plaintiff”) filed an appeal with the Third Circuit
on February 27, 2015 [Dkt. No. 122], and Defendants American Trade and Financial
Corporation (“ATFC”) and Anatoli Timokhine (collectively “Defendants”) filed a cross appeal
on March 10, 2015 [Dkt. No. 124]. The Third Circuit, in an Opinion dated March 22, 2016,
affirmed this Court’s ruling on Interlink’s claims against ATFC and Timokhine and vacated this
Court’s Order granting judgment against Timokhine and ATFC on their counterclaims and

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remanded. See Interlink Grp. Corp. USA v. Am. Trade & Fin. Corp., 645 F. App'x 125 (3d Cir.
2016).1
I.

BACKGROUND AND PROCEDURAL HISTORY2
In 2005, Interlink, through its president Alexander Karpman, partnered with ATFC,

through its president Anatoli Timokhine, to export broiler hatching eggs from the United States
to Russia and other former Soviet Union Countries. At the beginning of their business
relationship, the parties orally agreed to split the profits from the business equally. As part of the
business arrangement, each party assumed certain duties. Interlink would purchase eggs from
United States suppliers, take custody of the eggs, and then arrange for their overseas transport.
As the face of the operation, Interlink was the named party in all contracts. Timokhine assumed
the title of Chief Financial Officer, for which he received no additional compensation.
Timokhine’s duties involved negotiations with suppliers, the drafting of purchasing and
exclusivity agreements, the keeping of Interlink’s business documents, and the management of
Interlink’s bookkeeping and finances.
In its contracts with egg suppliers, Interlink used Exclusivity Agreements, which were
drafted by Timokhine and reviewed by Karpman. The Exclusivity Agreements were separate
documents, signed and executed by the egg suppliers and Interlink, which established an
exclusive relationship between the supplier and Interlink as long as Interlink purchased a stated
quantity of eggs per year. One of Interlink’s suppliers was Morris Hatchery. Interlink and Morris
Hatchery entered into an exclusive business relationship, which included an Exclusivity

In the interest of consistency, when referring to the Third Circuit’s Opinion remanding this matter, the remainder
of this Opinion and Order cites to the Docket Entry which contains the Third Circuit’s Opinion.
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This Opinion includes only the facts relevant to ATFC and Timokhine’s counterclaims which were remanded by
the Third Circuit. For a full recitation of the background of this matter, including Interlink’s claims against ATFC
and Timokhine, see the Court’s Findings of Facts and Conclusions of Law entered on February 20, 2015 [Dkt. No.
120].
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Agreement, in January of 2007.3 On June 28, 2010, Timokhine sent an email to Ed Morris of
Morris Hatchery to begin discussions regarding a renewal of Interlink’s contract with Morris
Hatchery. Although the contract between Interlink and Morris Hatchery included an Exclusivity
Agreement with an unlimited duration term, Timokhine, purportedly by mistake, stated in an
email that the exclusive contract between Interlink and Morris Hatchery would expire at the end
of the year. In late 2010, Morris Hatchery filed for declaratory judgment in the United States
District Court for the Southern District of Florida to determine that the Exclusivity Agreement
expired at the end of 2010 (the “Florida Action”). Interlink alleged that Morris Hatchery violated
the terms of the Exclusivity Agreement and counterclaimed for breach of contract. Timokhine
and ATFC were not named as parties in the Florida Action. In May of 2012, the jury in the
Florida Action returned a verdict in favor of Interlink on its breach of contract counterclaim and
awarded a judgment of $2,066,711.02, which was paid to Interlink.
In April of 2011, during the pendency of the Florida Action, Karpman sought to reduce
ATFC and Timokhine’s share of profits in the egg shipping business from a 50% per party
profit-sharing arrangement to 70% to Interlink and 30% to ATFC and Timokhine. Although
under the new arrangement ATFC was to take on an additional share of the office rent and
communication expenses, each party would continue to cover their own expenses and their roles
in the business would stay the same. According to Karpman, the reduction in ATFC’s share of
the profits was due to Timokhine’s purportedly poor job performance, in particular the problems
Interlink had experienced with the Exclusivity Agreements drafted by Timokhine. The new

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The agreement between Interlink and Morris Hatchery was amended twice after its original negotiation. First, it
was amended to expand the territory covered by the exclusivity provision to Ukraine in November of 2007 and
second in October of 2008 to reduce the quantity of eggs to be purchased.

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profit-sharing arrangement was presented to Timokhine as an ultimatum: either Timokhine
would agree to accept a reduced share in the profits or he would leave the business.
According to Karpman, Timokhine accepted the changes to the profit-sharing
arrangement over the telephone and continued to work with Interlink in the egg shipping
business, which further indicated his acceptance of the new agreement. However, according to
Timokhine, the reduced profit share was rejected at the time it was proposed and Timokhine’s
continued work with Interlink in the egg shipping business was under the original 50/50 split. In
late 2011 and early 2012, the relationship between the parties deteriorated further. Timokhine
attributed the decline to Karpman’s alleged refusal to split the profits 50/50 in accordance with
their original agreement. On March 8, 2012, Timokhine sent an email outlining his duties and
participation in the business and outlined several options for payments and wrapping up the
business. On March 31, 2012, the parties terminated their working relationship and stopped their
collective egg shipping business efforts.
At some point between May 2012 and June 2012, Karpman forwarded Timokhine a draft
of a Non-Compete Agreement (the “NCA”). Timokhine responded in an email and proposed a
final resolution to their business relationship, which would include Timokhine leaving the
company as of April 1, 2012, after certain conditions were met, including the proper distribution
of profits from 2010, 2011, and the portion of 2012 prior to the dissolution of the egg shipping
business, and the payment of 50% of the monies from the Florida Action to Timokhine. Despite
stating these conditions, Timokhine signed the NCA on August 3, 2012. The NCA 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. The NCA also included a statement that Timokhine

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was accepting $780,504.75 “as sufficient and due consideration for the faithful performance of
his obligations until this agreement.” Dkt. No. 1, Ex. B at ¶ 4.
Interlink filed its Complaint in this action on October 2, 2012, seeking damages for
breach of contract and breach of fiduciary duties relating to Timokhine’s alleged breach of the
NCA. See Dkt. No. 1. Defendants filed counterclaims against Interlink for breach of contract,
unjust enrichment, promissory estoppel, declaratory judgment, and tortious interference with
contractual relations on December 8, 2012. See Dkt. No. 18.4 Defendants’ counterclaims arose
from Interlink’s alleged failure to pay ATFC and Timokhine profits from the egg business and
half of the judgment from the Florida Action. This Court conducted a bench trial in this matter
beginning on August 4, 2016, and concluding on August 6, 2014. After the bench trial, this Court
granted judgment against Interlink on its claims against ATFC and Timokhine for breach of the
NCA and breach of fiduciary duty and granted judgment against ATFC and Timokhine on their
counterclaims against Interlink for breach of contract, unjust enrichment, and promissory
estoppel.
Following the entry of judgment by this Court, Interlink filed an appeal with the Third
Circuit on February 27, 2015 [Dkt. No. 122], and Defendants filed a cross appeal on March 10,
2015 [Dkt. No. 124]. In their appeal, Defendants argued that this Court erred in rejecting their
counterclaims based on an “unsupported” factual finding that the $780,504.75 set forth in the
NCA was consideration not only for the NCA but also for Defendants agreeing to release their
claims to any profits still owed to them by Interlink and the 50% of the judgment from the
Florida Action to which Defendants claimed entitlement. The Third Circuit affirmed this Court’s
Order as to Interlink’s claims for breach of the NCA and breach of fiduciary duty but vacated as

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Defendants filed an Amended Counterclaim on September 13, 2013 [Dkt. No. 49].

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to ATFC and Timokhine’s counterclaims and remanded “so that [this] 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.” Dkt. No.
131-1 at p. 10.
II.

DISCUSSION5
In vacating this Court’s judgment on Defendants’ counterclaims, the Third Circuit found

that the NCA was “unambiguously clear that the $780,504.75 was consideration solely for the
NCA” and that this Court erred in concluding that the $780,504.75 also constituted consideration
for Defendants agreeing to release their claims to any profits still owed to them by Interlink and
agreeing to release their claims to one-half of the judgment from the Florida Action to which
Defendants claimed entitlement. Dkt. No. 131-1 at p. 9. In light of the Third Circuit’s Opinion,
and upon review of the parties’ testimony and evidence in this matter, the Court concludes that
its conflation of the issues concerning consideration for the NCA, the Florida judgment, and the
sharing of profits was at best unclear, and at worst erroneous. Accordingly, the Court revises its
prior finding that the payment of $780,504.75 constituted consideration for the NCA and for
ATFC’s and Timokhine’s agreeing to release their claims to any unpaid profits owed to them by
Interlink and the one-half of the Florida judgment. Instead, the Court explicitly finds that the
$780,504.75 was consideration solely for the NCA. Accordingly, in light of this revised finding,
the Court must now address Defendants’ claims to: (1) a portion of the judgment from the
Florida Action; and (2) any additional profits owed to Defendants by Interlink.

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References to the transcript of the bench trial held in this matter will be referred to as follows: the testimony of
Anatoli Timokhine is referenced as “Timokhine Test.” and the testimony of Alexander Karpman is referenced as
“Karpman Test.” There are three transcripts from the trial: (1) Volume I, dated August 4, 2014, Dkt. No. 117 (“Vol.
I”); (2) Volume II, dated August 5, 2014, Dkt. No. 118 (“Vol. II”); and (3) Volume III, dated August 6, 2014, Dkt.
No. 119 (“Vol. III”). Any specific citations to testimony in the transcript will be designated as follows: “Timokhine
Test., Vol. I, Page number:Line number”.

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A. The Florida Action
During the trial of this matter, Timokhine and Karpman offered differing testimony
regarding whether there existed any agreement between them to split the proceeds of the Florida
Action. Timokhine stated that it was his understanding that all expenses associated with the
Florida Action and any proceeds received from the Florida Action were to be divided equally
between the parties, just as it was his understanding that the parties shared equally the costs and
profits from the egg shipping business. Timokhine Test., Vol. II, 193:12-15. Defendants claim
that Timokhine, through ATFC, did in fact pay an equal share of the attorney’s fees in
connection with the Florida Action “solely based upon the agreement that [Defendants] would
equally share in any settlement or judgment in Interlink’s favor.” Dkt. No. 137 at p. 11.
Defendants assert that Timokhine’s participation in the Florida Action, including his testimony
therein, and the payment of his own expenses in connection with his participation further
demonstrates his understanding that any proceeds were to be equally split.
As evidence of Karpman’s alleged understanding that the costs and proceeds from the
Florida Action would indeed be shared equally, Defendants further rely on a document
containing Karpman’s “hand-written notes” which references a sum classified as “attorney’s
fees” and then includes a calculation of the equal division of that sum. See Timokhine Test, Vol.
II, 195-200. These notes, Defendants claim, demonstrate Karpman’s understanding that the costs
of the Florida Action would be shared equally between the parties, which in turn, Defendants
argue, leads to the conclusion that the parties also intended to share equally in any proceeds from
the Florida Action. Dkt. No. 137 at p. 12. In addition, Defendants cite to the fact that Interlink’s

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attorney continued to include Timokhine in correspondence related to the Florida Action even
after the dissolution of the egg shipping business.
In contrast to Timokhine’s assertions as to the existence of an agreement to share equally
in the judgment from the Florida Action, Plaintiff asserts that “the record evidence is void of any
promises, agreements, or assent to divide the Florida [Action] proceeds in any fashion” which
was verified by Karpman’s trial testimony. Dkt. No. 136 at p. 15. The Court agrees. First, the
Court addresses Defendants’ assertion that their payment of half of the attorney’s fees in
connection with the Florida Action demonstrates the existence of an agreement to share the
proceeds. While the payment of half of the attorney’s fees in the Florida Action would
demonstrate, at least from Timokhine’s perspective, an agreement to share the judgment, the
record of this case, including Timokhine’s trial testimony, does not show that half of the
attorney’s fees were in fact paid by Defendants.
According to the parties, there were two invoices sent to both Timokhine and Karpman
for attorney’s fees in the Florida Action. The first invoice for $12,596.01 was sent to the parties
on April 23, 2012. Timokhine Test., Vol. 2, 205-207; Karpman Test., Vol. III, 413-414. Both
Plaintiff and Defendants agree that half of the amount of the invoice, $6,298.00 was paid by
Defendants in the form of a check dated April 28, 2012. Timokhine Test., Vol. II, 206-207;
Karpman Test., Vol. III, 414. However, Karpman claimed that he was not aware that Defendants
were paying half of the amount of the invoice and that when he discovered Defendants’ payment,
he issued a check to Defendants to reimburse them for the payment. Karpman Test., Vol. III,
414: 2-9. The second invoice for $40,000 was sent to the parties in May of 2012. Upon receiving
the invoice, Timokhine sent a check to Interlink’s attorney in the amount of $20,000.00. After
the check was not deposited, Timokhine contacted Interlink’s attorney who informed Timokhine

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that the total amount of the invoice had been paid by Interlink and therefore Timokhine’s check
would not be deposited. Timokhine Test., Vol. II, 214: 9-21. Based on the evidence submitted by
the parties and their testimony at trial, it does not appear to the Court that Defendants paid any of
the attorney’s fees in connection with the Florida Action.
The Court is likewise unconvinced that Timokhine’s payment of his own expenses and
his inclusion in correspondence from Interlink’s attorney in connection with his participation in
the Florida Action as a testifying witness evidences any agreement between the parties to share
in the judgment of the Florida Action. While Defendants may have been operating under the
impression that the proceeds were to be divided when Timokhine paid his expenses to travel to
Florida, Defendants have failed to set forth any documentation or testimony which demonstrates
a mutual understanding or agreement by Plaintiff. As to the inclusion of Timokhine in
correspondence from Interlink’s attorneys relating to the Florida Action, Karpman testified that
such an inclusion did not represent any understanding between the parties to share in any
judgment, but rather occurred because including Timokhine in correspondence related to
Interlink “was a usual order of things” which Interlink’s attorney continued even after the parties
ended their business relationship. Karpman Test., Vol. III, 494: 10-11. Finally, as to Karpman’s
hand-written notes, the Court declines to find that this document, which it seems was neither
meant to constitute any sort of official business document nor meant to be utilized outside of
Karpman’s private notetaking, establishes any agreement between the parties to share in the
judgment from the Florida Action.
In light of the foregoing, the Court finds that Defendants have failed to demonstrate the
existence of any agreement between the parties to share, equally or otherwise, in the judgment

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from the Florida Action and therefore Defendants are not entitled to any of the proceeds
therefrom.
B. Shared Profits
The only remaining issue requiring resolution by the Court concerns Defendants’
possible entitlement to a portion of the additional profits from 2011 and the period of 2012 prior
to the termination of the parties’ business relationship. The parties agree that sometime in early
2012 Defendants were paid $275,000.00 by Interlink for shared profits from their joint venture.
However, the parties disagree as to whether that amount represented payment to Defendants of
all outstanding profits to which they were entitled or a partial payment of Defendants’ share of
the profits. In addition, the parties disagree as to whether Defendants’ profit share should be
calculated using a 50/50 split or a 70/30 split. Plaintiff asserts that the $275,000.00 constituted
full payment to Defendants for any outstanding share in the profits from the egg shipping
business while Defendants claim that even if the Court finds that the profits were to be split
70/30 as asserted by Plaintiff, they are entitled to additional payment for shared profits from
2011 through the dissolution of the parties’ business relationship in 2012. Upon review of the
record, the Court has determined that there is insufficient evidence to make a final determination
as to whether Defendants are entitled to any additional payment for shared profits from the egg
shipping business, and if so, what amount Defendants are owed. Accordingly, the Court will
conduct a hearing during which the parties will offer testimony regarding this issue to allow the
Court to make a final determination.6

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It should be noted that the reopening of a trial in cases where the trial record appears less than complete is perfectly
appropriate and within the sound discretion of the trial court. See Johnson v. Hix Wrecker Service, Inc., 528 Fed.
Appx. 636 (7th Cir. 2013) (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331-32 (1971); Fed.
R. Civ. P. 59(a)(2); Nanda v. Ford Motor Co., 509 F.2d 213, 223 (7th Cir. 1974); Oak Hall Cap & Gown Co. v. Old
Dominion Freight Line, Inc., 899 F.2d 291, 295 (4th Cir. 1990)).

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III.

CONCLUSION AND ORDER
The Court having considered the papers submitted pursuant to Fed. R. Civ. P. 78, and for

the reasons set forth above;
IT IS on this 12th day of April, 2017,
ORDERED that the parties shall appear before the Honorable James B. Clark, III,
U.S.M.J., Courtroom 8, 2 Federal Square, Newark, New Jersey 07102, on May 9, 2017 at 10:00
AM; and it is further
ORDERED that the Court will conduct a telephone conference with the parties to
discuss the specifics of the above hearing on April 28, 2017 at 11:30 AM. Counsel for Plaintiff
shall initiate the call.

s/ James B. Clark, III
JAMES B. CLARK, III
United States Magistrate Judge

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