ROTH, Circuit Judge.
Petron Scientech, Inc., and Yogendra Sarin had numerous business dealings with Ronald P. Zapletal and Aluchem, Inc., over the course of several years. These dealings culminated in a joint venture that ultimately failed. Both sides then asserted contractual claims against each other. Zapletal and Aluchem also requested an award of attorney fees because they believed that Petron and Sarin had made frivolous claims. After a bench trial, the District Court held that no party was entitled to any damages or fees from any other party. Both sides appealed. We will affirm.
A. Factual Background
In 1991, Sarin founded Petron, a chemical engineering company. Petron has developed a process that improves the environmental sustainability of an aspect of plastic-making. In 2007, hoping to profit from this technology, Zapletal and Sarin signed a Letter of Intent that proposed that a new company, to be formed and controlled by Zapletal and possibly several others, acquire Petron's assets. On July 2, 2007, Zapletal paid a $100,000 down payment, which would convert to a loan to Petron if the acquisition was not completed by October 14th, 2007. Formalizing this arrangement, Zapletal sent a promissory note to Petron, which Sarin signed. The acquisition was never completed.
Subsequently, Sarin and Zapletal became aware of a business opportunity involving the construction of a chemical plant for Dow Chemical. In order to pursue this opportunity, on May 11, 2009, Sarin and Zapletal agreed to a joint venture. Their agreement, the "Green Biochemicals contract," created a new entity called Green Biochemicals, LLC. This entity was owned equally by Petron and Aluchem. The parties agreed that Zapletal, "as CEO of [Green Biochemicals], will arrange loans/grants, equity, government funding or private funding of $2.5 million for the first Dow project for [Green Biochemicals] as quickly as is possible." Then, "[f]rom initial funds arranged, [Green Biochemicals] will make a non recourse/non refundable cash payment of $1.0 million to Petron as upfront technology development and project support fee. Petron will retire a $100,000 Note to . . . Zapletal. . . ." The parties further agreed that Sarin would contribute expertise in the development of these projects, for which he would be paid $250,000 annualy, and that Petron would receive certain technology license and development fees. While negotiating this agreement, Zapletal suggested to Sarin that he would be able to secure funding easily.
However, the Dow Chemical deal was never completed because Green Biochemicals was never able to secure a needed loan or grant from the Department of Energy. By December 2009, Sarin and Petron knew that the funding was not forthcoming, but the parties continued to seek licensing opportunities for Petron's plastic-making process. In March 2010, Green Biochemicals began negotiating terms of a potential deal with Coca-Cola, which was interested in creating bottles using Petron's green technology. During the Coca-Cola negotiations, Sarin told Zapletal that Petron's financial situation was improving, and Zapletal requested payment on the promissory note, but no payment followed. By May 2011, the Coca-Cola deal failed because, again, Green Biochemicals was unable to secure loan or grant money.
In June 2011, after the Coca-Cola negotiations had failed, Zapletal sent Sarin a letter requesting payment on the promissory note by August 15, 2011. Sarin responded by letter, asserting that the amount owed under the promissory note was not yet due and that, because Petron and Sarin had fulfilled their obligations under the agreements creating Green Biochemicals, Zapletal and Green Biochemicals owed Sarin $1 million for four years of back pay and Petron $900,000 (that is, $1 million under the agreement offset by the $100,000 loan).
B. Procedural Background
On November 18, 2011, Sarin and Petron filed a lawsuit in New Jersey Superior Court of Middlesex County against Zapletal and Aluchem. The plaintiffs alleged breach of contract, breach of the covenant of good faith and fair dealing, tortious interference with economic benefit, knowing misrepresentation, and conversion. Sarin sought damages equal to the $1 million in salary that he had requested by letter from Zapletal, and Petron sought damages equal to the $1 million in technology development and project support fees that Sarin had requested in the same letter. On December 7, 2011, the defendants removed the case to federal court. On November 7, 2012, the defendants filed a counterclaim seeking damages of $100,000 for failure to satisfy the note. In addition, the defendants filed a motion for attorney fees on the ground that the plaintiffs' claims were frivolous.
A five day bench trial began on December 3, 2015. At the end of the final day of trial, the District Court read its decision from the bench. The court concluded that neither party was entitled to any remedy.
Sarin and Petron have appealed, arguing that Zapletal breached the covenant of good faith and fair dealing and that the termination clause of the contract was not their sole remedy for breach. Thus, they argue that they should be awarded damages. Zapletal and Aluchem have cross-appealed the denial of their counterclaim, arguing that Petron still owes Zapletal under the terms of the promissory note and that their motion for attorney fees should have been granted.
A. Good Faith and Fair Dealing
On the good faith and fair dealing claim, the District Court found that Zapletal's description of his ability to secure financing for Green Biochemicals's deals was mere puffery and therefore not actionable. The plaintiffs do not contest that Zapletal's statements were mere puffery. Instead, the plaintiffs argue that Zapletal, by engaging in puffery, breached the implied covenant of good faith and fair dealing in the Green Biochemicals contract,
B. Termination Clause
The District Court held that Sarin and Petron's only remedy for Zapletal's failure to secure funding for the Dow Chemical project was to terminate the agreement. The plaintiffs disagree; they argue that they should have been awarded expectation damages.
Under New Jersey law, the usual remedy for breach of contract is to put the nonbreaching party in the same position as that party would have been in had the breach not occurred.
Based on the contractual language and trial testimony, the District Court determined that this provision specifies what would happen if Green Biochemicals failed to secure funding and pay Petron $1 million. Moreover, to the extent that Sarin also challenges the determination that he was not entitled to any salary, the contract provides, "[Sarin's s]alary will begin when first project funding is arranged." Because funding was never arranged, Sarin was never entitled to salary. Because the parties in fact did as provided in the contract, there is no further remedy available.
C. The Promissory Note
The District Court reasoned that the promissory note was "subsumed" into the Green Biochemicals contract, so termination of the Green Biochemicals contract also terminated Petron's obligation to repay the note. Thus, the District Court concluded that "there's no obligation of Mr. Sarin, under any theory I can think of, to repay [the] promissory note at this time." The defendants cross-appeal, claiming that this conclusion was clearly erroneous.
"Clear error exists when, giving all deference to the opportunity of the trial judge to evaluate the credibility of witnesses and to weigh the evidence, we are left with a definite and firm conviction that a mistake has been committed."
D. Attorney Fees
Defendants also claim that the District Court should have granted their motion for attorney fees. They argue that plaintiffs' claims were frivolous or insubstantial and that it was an abuse of discretion not to award attorney fees.
For the foregoing reasons, we will affirm the District Court's judgment.