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Globe Motor Co. v. Igdalev

Superior Court of New Jersey, Appellate Division

August 7, 2014

GLOBE MOTOR COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, AND THE MARGOLIS LAW FIRM, LLC, PLAINTIFFS-RESPONDENTS,
v.
ILYA IGDALEV AND JULIA IGDALEV, DEFENDANTS-APPELLANTS

Argued: December 11, 2013.

Approved for Publication August 7, 2014.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-8638-11.

Christopher J. Koller argued the cause for appellants.

Sara A. Kimball argued the cause for respondents (The Margolis Law Firm LLC, attorneys; Ms. Kimball, on the brief).

Before Judges SAPP-PETERSON, LIHOTZ and HOFFMAN. The opinion of the court was delivered by LIHOTZ, J.A.D. SAPP-PETERSON, P.J.A.D., dissenting.

OPINION

Page 792

[436 N.J.Super. 596] LIHOTZ, J.A.D.

Defendants, Ilya and Julia Igdalev,[1] appeal from a May 11, 2012 order denying their motion for summary judgment and a separate order entered the same day granting summary judgment in favor of plaintiffs Globe Motor Company (Globe) and The Margolis Law Firm (Margolis). Defendants further appeal from the final judgment filed on September 12, 2012, awarding plaintiffs damages of $42,381, which included an award of attorney's fees. On appeal, defendants raise several arguments maintaining entry of summary judgment was erroneous. We disagree and affirm.

These are the facts viewed most favorably toward defendants. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529-30, 666 A.2d 146 (1995). Plaintiffs filed a declaratory judgment action (BER-L-8638-11) seeking a determination that defendants were responsible to pay various costs and expenses resulting from defendants' failure to comply with the terms of the parties' settlement agreement ( Globe II ). Prior to addressing the issues presented, we must provide background information regarding the [436 N.J.Super. 597] settlement in the underlying action and events supporting plaintiffs' declaratory judgment complaint.

The underlying action (BER-C-203-08) was initiated by Globe, as represented by Margolis, which alleged breach of contract and fraud against defendants and two others ( Globe I ). That action was settled by a six-page written settlement agreement. Among the terms of settlement was paragraph 2, which stated:

That ILYA and JULIA shall jointly pay to GLOBE the amount of SEVENTY-FIVE THOUSAND ($75,000.00) DOLLARS, by certified or attorney trust account check payable to " The Margolis Law Firm LLC, as attorneys for Globe Motor Company" and delivered to The

Page 793

Margolis Law Firm LLC not later than 1:00pm on Friday, October 2, 2009 TIME BEING EXPRESSLY MADE OF THE ESSENCE.

The settlement agreement also provided that " [i]n the event ILYA does not pay, for any reason or no reason, any portion of the settlement amount, then in such event, JULIA shall pay the entire SEVENTY-FIVE THOUSAND ($75,000.00) DOLLARS of the settlement amount, as required by the provisions of paragraph #2 hereof." Upon " full payment" plaintiffs would enter a stipulation dismissing the litigation and the agreement contained a full mutual release of claims between the parties.

By October 2009, Margolis received two certified bank checks totaling $75,000. More specifically, one check was for $12,000 and the other for $63,000, each made payable to " The Margolis Law Firm, LLC as Attorneys for Globe Motor Company." The larger check contained a notation stating: " Remitter Mike Povolotsky."

Margolis accepted the certified checks as defendants' payment under the terms of the settlement agreement. A stipulation of dismissal, with prejudice, was later filed concluding Globe I.

Almost one year later, Globe and Margolis were served with a complaint filed by Brian Leonard, the designated Chapter 7 Trustee assigned to supervise the bankruptcy case initiated by the debtor Auto Point, Limited (Auto Point).[2] Leonard, on behalf of [436 N.J.Super. 598] the debtor's estate, filed an adversary proceeding to recover $75,000 alleged to have been fraudulently transferred from the debtor's assets and paid to Margolis and Globe. Leonard asserted Auto Point " was not a client of, and owed no obligations to" Margolis or Globe, and the debtor had " received less than a reasonably equivalent value in exchange for the [t]ransfers." Furthermore, Leonard's complaint maintained the transfers were made when Auto Point was insolvent or the debtor became insolvent as a result of the transfers. Leonard alleged the transfers were voidable under various provisions of the Bankruptcy Code.

Plaintiffs learned Povolotsky, defendants' friend and business associate, owned Auto Point. The trustee had determined the monies transmitted to Margolis to satisfy defendants' obligations under the settlement agreement were taken from Auto Point's funds.

Margolis and Globe hired separate bankruptcy counsel. A settlement resolving Leonard's claims was reached, requiring payment of $22,500. Additionally, they incurred attorney's fees and costs.

When the bankruptcy action was terminated, plaintiffs filed Globe II, seeking to recover damages sustained in defending and settling the adversary proceeding. Plaintiffs alleged defendants had breached the terms of settlement in the underlying action by " fail[ing] to tender the amount due under the Settlement free and clear from claims of others and not subject to surrender . . . ." Plaintiffs alleged defendants' breach caused plaintiffs to suffer damages equivalent to the amounts paid to Leonard to settle the trustee's claims, along with attendant attorney's fees and costs, both in the bankruptcy action and the declaratory judgment matter. The Globe II complaint also alleged unjust enrichment, breach of the covenant of good faith and fair dealing, fraud, and also sought indemnification from Julia.

The parties filed cross-motions for summary judgment. Plaintiffs' counsel restated

Page 794

the facts regarding the Globe I litigation, [436 N.J.Super. 599] settlement agreement, checks received, Minnesota bankruptcy proceedings, terms of settlement of the adversary proceeding, and attorney's fee expense incurred. Globe's vice president affirmed these facts.

In support of defendants' motion for summary judgment, Ilya certified:

4. In order to resolve that litigation, I entered into a Settlement Agreement, wherein Globe was to receive $75,000.00, payable to The Margolis Law Firm LLC, as Attorneys for Globe Motor Company.
5. This settlement was made as a business decision by all parties.
6. Pursuant to the Settlement Agreement and Release, I was to pay the sum of $75,000.00 and my former wife, Julia Igdalev, was a guarantor of said payment and in addition, entered into a confession of judgment if those payments were not made.
7. At approximately the same time the Settlement Agreement was executed, my New Jersey bank accounts had been restrained due to allegations in a criminal action against me.
8. Prior to the restraint of my funds, in the New Jersey bank accounts, I had a business and personal relationship with an individual named Michael Povolotsky.
9. Michael Povolotsky was a buyer and seller of cars in Minnesota, and also operated a business in Minnesota called " Auto Point Limited."
10. About the same time the Settlement Agreement was reached, Michael Povolotsky, individually, was holding more than $75,000.00 of money owed to me from prior dealings.
11. I requested Michael Povolotsky to make checks payable to The Margolis Law Firm LLC, in the total amount of $75,000.00 in settlement of this case.

Ilya averred neither he nor Julia " were asked, nor agreed to indemnify or hold [plaintiffs] harmless from any claims[,]" stating " [t]here was absolutely no provision in the Settlement Agreement . . . that the funds were to come from my wife or myself, individually, or [from] any specific payor." Maintaining he acted " in good faith," Ilya insisted he made the payment required under the settlement agreement, and based on the release, neither he nor Julia had a further obligation to plaintiffs.

Julia too filed a certification adopting as true and correct all statements made by Ilya. " In addition, [she noted] all payments were timely made and accepted without protest by [p]laintiff[s], who had ...


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