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Interlink Group Corporation Usa, Inc. v. American Trade and Financial Corporation

United States District Court, Third Circuit

April 25, 2013

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

OPINION & ORDER

FAITH S. HOCHBERG, District Judge.

This matter comes before the Court upon Interlink Group Corporation's ("Interlink") Motion for a Preliminary Injunction [Docket No. 3] and Motion to Dismiss Count 5 of the Counterclaim [Docket No. 19]. The Court has reviewed the submissions of the parties and considered the motions without oral argument pursuant to Federal Rule of Civil Procedure 78.

I. Background

In approximately 2005, American Trade Financial Corporation ("ATFC") and its sole employee and owner, Anataloi Timokhine ("Defendants"), began a business relationship with Interlink. The parties' business relationship concerned, inter alia, broiler hatching egg shipments from suppliers located in the United States to purchasers located in various countries from the former Soviet Union. (Compl. at ¶ 6). In 2007, Defendants drafted an agreement between Interlink and an American broiler hatching egg supplier called Morris Hatchery, Inc. ("Morris Hatchery"). (Id. at ¶¶ 17-19). Morris Hatchery and Interlink eventually entered into litigation regarding that agreement, which ended in a verdict in Interlink's favor for $1, 925, 000 in May 2012. (Id. at ¶¶ 23-29).

While this litigation was ongoing, the business relationship between Interlink and Defendants deteriorated. The parties dispute the reason for this deterioration. Interlink contends that it was the result of Defendants' conduct regarding the agreement with Morris Hatchery. (Id. at 28). Defendants state that the two companies had an agreement to split the profits from their egg shipping business equally. However, by 2012 Interlink and its president, Alexander Karpman, allegedly ceased splitting the profits. (Opp. to Mot. for Preliminary Inj. at 5). Defendants also claim that the two companies had entered into a separate agreement to purchase 3, 000 tons of coal in Poland. Timokhine has certified that "Karpman inexplicably and without substantiation reported to me that 2000 of the 3000 tons of coal, which we together purchased for sale in Poland washed into a river' and that there were no proceeds - insurance or otherwise - from that purportedly lost coal." ( Id., Aff. Anatoli Timokhine at ¶ 19). It is undisputed that the parties ceased conducting business together in March of 2012. (Compl. at ¶ 28; Timokhine Aff. at ¶ 20).

In June of 2012, Defendants contacted the Keith Smith Company, Inc., regarding establishing an agreement to sell broiler hatching eggs to a company called White Bird. (Id. at ¶ 30). Defendants subsequently entered into a non-competition, non-disclosure and nonsolicitation agreement (the "NCA") with Interlink. (Id. at ¶ 34). According to the NCA, Defendants received $780, 504.75 as consideration. ( Id., Ex. B. at 2-3). On September 21, 2012, counsel for Defendants wrote Interlink a letter stating that the NCA was "fraudulently procured and is substantially unconscionable and unenforceable, and is void ab initio." (Id. at ¶ 36).

Interlink then filed a complaint in this Court alleging four causes of action, including breach of contract, breach of fiduciary duties, and tortious interference with business relations. Defendants have filed a counterclaim alleging breach of contract, unjust enrichment, promissory estoppel, and tortious interference with business relations. Defendants also seek a declaratory judgment that the NCA is unenforceable.

II. The Motion for a Preliminary Injunction

Interlink has filed a motion for a preliminary injunction seeking to enforce the terms of the NCA.

a. Standard of Review

The Supreme Court has stated that "[a] preliminary injunction is an extraordinary and drastic remedy; it is never awarded as of right." Munaf v. Geren , 553 U.S. 674, 689-90 (2008) (internal citations omitted). In the Third Circuit, a party seeking a preliminary injunction must show: "(1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest favors such relief." Kos Pharms., Inc. v. Andrx Corp. , 369 F.3d 700, 708 (3d Cir. 2004). This Circuit has emphasized the importance of demonstrating a likelihood of success on the merits and irreparable harm, stating that "[w]e cannot sustain a preliminary injunction ordered by the district court where either or both of these prerequisites are absent." Hoxworth v. Blinder, Robinson & Co. , 903 F.2d 186, 197 (3d Cir. 1990) (internal quotation omitted).

b. Discussion

The burden of showing irreparable injury rests with Interlink. Oburn v. Shapp , 521 F.2d 142, 150 (3d Cir. 1975). The Third Circuit has explained that "[g]rounds for irreparable injury include loss of control of reputation, loss of trade, and loss of goodwill." Pappan Enters., Inc. v. Hardee's Food Sys., Inc. , 143 F.3d 800, 805 (3d Cir. 1998). A preliminary injunction may issue to enforce a non-competition agreement. Nat'l Reprographics, Inc. v. Strom, 621 F.Supp.2d irreparable harm must be demonstrated." Continental Group, Inc. v. Amoco Chemicals Corp. , 614 F.2d 351, 358 (3d Cir. 1980). In Continental Group, the Third Circuit noted that with regard to noncompetition and nondisclosure agreements:

Injunctions will not be issued merely to allay the fears and apprehensions or to soothe the anxieties of the parties. Nor will an injunction be issued to restrain one from doing what ...

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