Globe Motor Company v. Ilya Igdalev(074996)

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the

convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the

interest of brevity, portions of any opinion may not have been summarized.)

Globe Motor Company v. Ilya Igdalev (074996) (A-43-14)

Argued January 19, 2016 – Decided June 29, 2016

PATTERSON, J., writing for a unanimous Court.

In this appeal concerning an action for breach of a settlement agreement that resolved prior litigation, the

Court considers whether the record before the motion court, viewed under the summary judgment standard

prescribed by Rule 4:46-2(c), established plaintiffs’ right to judgment as a matter of law.

The prior litigation involved claims that Globe Motor Company (Globe) asserted against a limited liability

company and its members, defendants Ilya Igdalev (Ilya) and Julia Igdalev, for violating an agreement which

precluded defendants from exporting certain Mercedes Benz vehicles to foreign countries. The parties settled the

action and executed a Settlement Agreement and Release which required defendants to pay the settlement amount of

$75,000. The settlement amount was paid through two certified checks. The remitter on one check was Povolotsky,

later identified as Ilya’s friend and business associate who was affiliated with Auto Point, Limited. The second

check was a cashier’s check which referenced a Wells Fargo Bank branch located in Minnesota. After the

settlement amount was paid, Globe dismissed its lawsuit, with prejudice.

Auto Point subsequently filed a voluntary petition pursuant to Chapter 7 of the United States Bankruptcy

Code. Approximately one year later, the bankruptcy trustee filed an adversary proceeding against Globe and its

attorneys, contending that the funds paid to settle Globe’s action belonged to Auto Point, and the transfers of these

funds to Globe were voidable. Globe and its attorneys resolved the adversary proceeding by a payment of $22,500

to Auto Point’s bankruptcy estate. Because the parties settled this claim, the bankruptcy court did not determine

whether the trustee was entitled to the funds. Globe and its attorneys then filed this action for a declaratory

judgment, asserting that defendants had agreed to pay the settlement amount free and clear from claims of others,

and were therefore liable for breach of contract, fraud, and other wrongful conduct. The parties filed cross-motions

for summary judgment. Plaintiffs relied on the settlement agreement, the Auto Point bankruptcy proceedings, and

their settlement payment in the adversary proceeding. Defendants asserted that Ilya asked Povolotsky, who was

holding more than $75,000 owed to him from prior dealings, to pay the settlement on defendants’ behalf.

The trial court granted plaintiffs’ motion for summary judgment, and denied defendants’ cross-motion.

The judge reasoned that, based on the trustee’s allegations that the $75,000 payment was made by Auto Point and

could be recovered in the bankruptcy proceeding, defendants had not satisfied their obligations under the settlement

agreement. The Appellate Division affirmed that determination, with one judge dissenting. The panel majority

found that, based on the trustee’s claim, the settlement amount paid to Globe came from Auto Point’s assets, and the

trial court therefore properly granted summary judgment to plaintiffs. The dissenting judge concluded that the panel

majority improperly construed the facts and drew inferences in the light most favorable to plaintiffs, rather than

defendants, who were the non-moving parties, and also erroneously based its conclusions on untested allegations in

the adversary proceeding. Defendants appealed to this Court as of right under Rule 2:2-1(a)(2) based on the dissent

in the Appellate Division.

HELD: The record before the motion court, when viewed under the summary judgment standard prescribed by

Rule 4:46-2(c), did not establish plaintiffs’ right to judgment as a matter of law. When all legitimate inferences are

drawn in defendants’ favor, as required by the summary judgment standard, there exists a genuine issue of material

fact on the critical question of whether the settlement monies paid to Globe were Auto Point’s assets, or, instead,

were owned by defendant’s friend and owed to defendant.

1. The Court reviews the grant of summary judgment under the same standard applicable to the motion judge under

Rule 4:46-2(c). That standard compels the grant of summary judgment if the pleadings, depositions, answers to

1

interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to

any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law. In order

to demonstrate the existence of a genuine issue of material fact, the opposing party must do more than point to any

fact in dispute. Once the moving party presents sufficient evidence in support of the motion, the opposing party

must demonstrate, by competent evidential material, that a genuine issue of fact exists. (pp. 10-12)

2. A court deciding a summary judgment motion does not draw inferences from the factual record, as does the

factfinder in a trial. Instead, the motion court draws all legitimate inferences from the facts in favor of the non-

moving party. The motion court must analyze the record in light of the substantive standard and burden of proof

that a factfinder would apply at trial. (pp. 12-13)

3. The court’s task is to determine whether a rational factfinder could resolve the alleged disputed issue in favor of

the non-moving party. When the movant is the plaintiff, the motion court must view the record with all legitimate

inferences drawn in the defendant’s favor, and decide whether a reasonable factfinder could determine that the

plaintiff has not met its burden of proof. If a reasonable factfinder could decide in the defendant’s favor, the court

must deny summary judgment. (pp. 13-14)

4. A settlement agreement is governed by general principles of contract law. To demonstrate a breach of contract, a

plaintiff must demonstrate that the parties entered a contract containing certain terms; plaintiff performed as the

contract required; defendant did not perform as required, and breached the contract; and defendant’s breach caused

plaintiff to suffer a loss. In this case, the initial task before the motion court was to determine the parties’ intended

meaning of the agreement’s payment provision, which they sharply disputed. Plaintiffs asserted that the contract

required the payment of funds that were owned by defendants and that would not be subject to future claims;

defendants countered by asserting that the agreement required only that they provide the funds to plaintiffs by

certified or attorney trust account check, made payable to plaintiffs’ counsel. To resolve this question, the court

must determine the parties’ intent from the contract language, and cannot rewrite the contract. (pp. 15-17)

5. The motion court did not adopt either party’s construction of the settlement agreement’s payment term, or state

its own conclusion as to the meaning of the provision. The court found only that the objective intent stated in the

agreement was for Globe to receive $75,000. The court, in granting summary judgment, therefore failed to construe

a critical term of the agreement, and, notwithstanding the unresolved meaning of the payment term, concluded that

plaintiffs established a breach of the settlement agreement. (pp. 17-18)

6. When all legitimate inferences are drawn in defendants’ favor, as the summary judgment standard requires, the

record presents a genuine issue of material fact on the critical question of whether the settlement funds belonged to

Auto Point, as the trustee alleged, or were owned by defendant’s friend and owed to defendant. The bankruptcy

court did not determine this issue since the parties settled the adversary proceeding, and the critical factual question

was therefore left undecided in the summary judgment record. A reasonable factfinder considering the evidence in

the record, with all legitimate inferences drawn in defendants’ favor, could find that plaintiffs did not prove by a

preponderance of the evidence that defendants breached the payment obligations imposed by the settlement

agreement. As a result, plaintiffs were not entitled to judgment as a matter of law on the breach of contract claim.

(pp. 19-20)

The judgment of the Appellate Division is REVERSED, and the matter is REMANDED to the trial court

for further proceedings consistent with this opinion.

CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, FERNANDEZ-VINA and

SOLOMON; and JUDGE CUFF (temporarily assigned), join in JUSTICE PATTERSON’s opinion.

2

SUPREME COURT OF NEW JERSEY

A-43 September Term 2014

074996

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 January 19, 2016 – Decided June 29, 2016

On appeal from the Superior Court, Appellate

Division, whose opinion is reported at 436

N.J. Super. 594 (App. Div. 2014).

Christopher J. Koller argued the cause for

appellants.

Michael A. Mark argued the cause for

respondents.

JUSTICE PATTERSON delivered the opinion of the Court.

This appeal as of right arises from defendants’ alleged

breach of a settlement agreement executed by defendants and one

of the plaintiffs in this action, Globe Motor Company (Globe),

to resolve prior litigation between the parties. Shortly after

defendants sent two checks totaling $75,000 to plaintiffs to

settle the earlier action, a Trustee appointed to represent the

estate of an insolvent Minnesota entity brought an adversary

1

proceeding against plaintiffs. The Trustee demanded that

plaintiffs disgorge the settlement funds, on the ground that

those funds had belonged to the bankrupt entity, not to

defendants, and that the transactions were therefore voidable

under provisions of the United States Bankruptcy Code, 11

U.S.C.A. §§ 544 and 548. Plaintiffs paid $22,500 to resolve the

bankruptcy Trustee’s claim.

Plaintiffs filed this action against defendants, seeking to

recover the money that they paid to settle the bankruptcy

proceeding as well as attorneys’ fees and costs. They asserted

claims for breach of contract, breach of the implied covenant of

good faith and fair dealing, unjust enrichment, fraud, and

indemnification. The motion judge entered summary judgment for

plaintiffs on their breach of contract claim. An Appellate

Division panel affirmed that determination, with one judge

dissenting.

We hold that the motion judge improperly granted summary

judgment in plaintiffs’ favor. We conclude that the record

before the motion court, viewed in accordance with the summary

judgment standard prescribed by Rule 4:46-2(c), did not

establish plaintiffs’ right to judgment as a matter of law. We

therefore remand this case to the motion court for the

development of a factual record, and a determination of

plaintiffs’ claims based on that record.

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I.

The prior litigation that gave rise to this matter was

instituted by plaintiff, the Margolis Law Firm, LLC (Margolis),

as counsel for Globe, against a New Jersey limited liability

company, Gemp, LLC (Gemp) and its members, defendants Ilya

Igdalev (Ilya) and his wife Julia Igdalev (Julia).1 In October

2009, the parties resolved the matter. They executed an undated

Settlement Agreement and Release (Settlement Agreement) that

provided for the payment of the settlement amount in accordance

with the following terms:

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 Margolis Law

Firm LLC not later than 1:00pm on Friday,

October 2, 2009 TIME BEING EXPRESSLY MADE OF

THE ESSENCE.

The Settlement Agreement required Julia to pay Globe the

entire $75,000 in the event that Ilya “does not pay, for any

reason or no reason, any portion of the settlement amount.”

1 According to a certification submitted by Globe, the litigation

“arose out of [defendants’] violation against Globe and [their]

agreements with purchasers of several Mercedes Benz vehicles

which were, pursuant to said agreements, not to be exported to

foreign countries[,]” but “were in fact exported in violation of

the aforesaid agreements.” Globe sought damages for breach of

contract and fraud, among other claims.

3

On or about October 1, 2009, Margolis received two

certified checks in amounts totaling $75,000. As the Settlement

Agreement required, each check was made payable to “The Margolis

Law Firm LLC, as attorneys for Globe Motor Company.” One check,

in the amount of $63,000, was drawn on a bank identified as M&I

Marshall & Ilsley Bank, with no address. The check stated that

the remitter was Mike Povolotsky, an individual later identified

as a friend and business associate of Ilya. Povolotsky was

affiliated with Auto Point, Limited (Auto Point), an entity

organized under the laws of Minnesota. The second check, in the

amount of $12,000, was a cashier’s check drawn on Wells Fargo

Bank N.A., and included the address of a Wells Fargo branch in

Golden Valley, Minnesota.

Neither Globe nor Margolis objected to the manner in which

the settlement funds were paid, and the checks apparently

cleared. Five months later, Globe and defendants executed a

stipulation dismissing Globe’s action, with prejudice and

without costs.

Following the dismissal of Globe’s action, Auto Point filed

a voluntary petition pursuant to Chapter 7 of the United

States Bankruptcy Code (Chapter 7), 11 U.S.C.A. §§ 701-784, in

the United States Bankruptcy Court for the District of

Minnesota. The Bankruptcy Court appointed a Trustee to

represent Auto Point’s bankruptcy estate. Almost a year later,

4

the Trustee instituted an adversary proceeding pursuant to

Federal Rules of Bankruptcy Procedure §§ 7001, 7003 and 7004

against Globe and Margolis. The Trustee contended that the

$75,000 used to settle Globe’s action against defendants

belonged to Auto Point and that the transfers of those funds to

plaintiffs were voidable pursuant to 11 U.S.C.A. §§ 544 and 548.

The Trustee alleged that Auto Point had no obligation to Globe

or Margolis and had received less than “a reasonably equivalent

value” in exchange for the $75,000 disbursement. In the

alternative, the Trustee alleged that Auto Point was either

insolvent when the payment was made, or became insolvent because

of the payment.

Plaintiffs retained Minnesota bankruptcy counsel. They

eventually resolved the adversary proceeding by paying $22,500

to Auto Point’s bankruptcy estate. According to plaintiffs,

they decided to settle the matter on the advice of their

bankruptcy counsel. Because of the settlement, the United

States Bankruptcy Court for the District of Minnesota did not

determine whether the Trustee was entitled to the funds.

Globe and Margolis then filed this declaratory judgment

action pursuant to N.J.S.A. 2A:16-52. They alleged that in the

Settlement Agreement that resolved the prior litigation,

defendants had agreed to pay the settlement amount “free and

clear from claims of others and not subject to surrender,” and

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were therefore liable for breach of contract, breach of the

implied covenant of good faith and fair dealing, unjust

enrichment, fraud, and common-law indemnification. They also

asserted a claim against Julia for contractual indemnification.

Globe and Margolis claimed damages in the amount that they had

paid to settle the claims of the Trustee, as well as attorneys’

fees and costs for both the Minnesota action and the declaratory

judgment action.

The parties filed cross-motions for summary judgment. In

support of their motion for summary judgment, plaintiffs set

forth the terms of the Settlement Agreement, presented the

checks received in payment of the settlement amount, recounted

the history of the Minnesota bankruptcy proceeding, and

documented their claims for damages and attorneys’ fees.

In a certification filed in support of defendants’ summary

judgment motion, Ilya stated that at the time of the settlement

of Globe’s action against him, his “New Jersey bank accounts had

been restrained due to allegations in a criminal action against

[him].” According to Ilya, he asked Povolotsky, who “was

holding more than $75,000.00 of money owed to [Ilya] from prior

dealings,” to “make checks payable [to Margolis], in the total

amount of $75,000.00 in settlement of this case.” Ilya

represented that neither he nor Julia had been asked to

indemnify plaintiffs or hold them harmless from any claims, and

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did not do so, and that the Settlement Agreement did not mandate

that “the funds were to come from my wife or myself,

individually, or any specific payor.” Defendants’ motion was

also supported by a certification signed by Julia, adopting the

contentions set forth in Ilya’s certification and further noting

that plaintiffs “accepted [the checks] without protest[.]”

The court granted plaintiffs’ motion for summary judgment,

and denied defendants’ cross-motion for summary judgment.

Although the motion judge did not individually address each of

plaintiffs’ claims, his grant of summary judgment was premised

on plaintiffs’ cause of action for breach of contract.2 The

judge reasoned that, by virtue of the Trustee’s allegation that

the $75,000 was transferred by Auto Point and could be recovered

by Auto Point’s estate in bankruptcy, defendants had not

satisfied their obligations under the Settlement Agreement.

The motion court entered judgment for $22,500, the amount

that plaintiffs had paid to settle the Chapter 7 adversary

proceeding brought by the Trustee of Auto Point’s bankruptcy

estate. The court evidently concluded that Julia was

2 The motion judge did not specifically mention plaintiffs’

claims for breach of the implied covenant of good faith and fair

dealing, unjust enrichment or common-law indemnification. He

briefly suggested that defendants might have committed fraud,

but then indicated that he was only referring to an allegation

in the Minnesota bankruptcy proceeding and stated that he made

no finding as to fraud.

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individually liable on a theory of contractual indemnification

because it entered judgment against her as well as Ilya.

The motion court initially denied without prejudice

plaintiffs’ application for attorneys’ fees but granted a later

fee application. It entered judgment compelling defendants to

pay $19,881 in fees, expenses and costs, in addition to the

$22,500 awarded as compensatory damages, for a total of $42,381.

Defendants appealed the grant of plaintiffs’ motion for

summary judgment. With one judge dissenting, an Appellate

Division panel affirmed the judgment of the motion court. The

majority concluded that when the record is viewed in the light

most favorable to defendants, Ilya’s certification demonstrates

nothing more than that Povolotsky was holding money owed to

Ilya, and that Povolotsky was asked by Ilya to pay plaintiffs

the amount owed by defendants to fulfill the terms of the

Settlement Agreement. The Appellate Division majority concluded

that, based on the Minnesota bankruptcy Trustee’s claim, it

appears that Povolotsky paid the checks using the assets of Auto

Point. It held that the motion court properly exercised its

discretion when it granted summary judgment and awarded

attorneys’ fees and costs.

The dissenting Appellate Division judge asserted that the

majority construed the facts and drew inferences in the light

most favorable to plaintiffs rather than in the light most

8

favorable to defendants, who were the non-moving parties. The

dissenting judge criticized the majority’s conclusion that the

contested funds belonged to Auto Point as premised on nothing

more than an untested allegation in the United States Bankruptcy

Court’s adversary proceeding. She concluded that, although

defendants are potentially liable for breach of the implied

covenant of good faith and fair dealing, unjust enrichment,

fraud, or common-law indemnification, the motion judge should

have granted summary judgment in favor of defendants on two of

plaintiffs’ claims, dismissing the causes of action for breach

of contract and contractual indemnification against Julia.3

Pursuant to Rule 2:2-1(a)(2), defendants filed a notice of

appeal as of right based on the dissent in the Appellate

Division.

II.

Defendants argue that the Appellate Division majority

misapplied the summary judgment standard, because it failed to

view the record in the light most favorable to defendants and to

draw inferences that supported defendants’ arguments. They

contend that they did not breach the Settlement Agreement,

3 The dissenting Appellate Division judge did not address the

motion court’s award of attorneys’ fees and costs; consequently,

that award is not before the Court. R. 2:2-1(a)(2).

Nevertheless, because plaintiffs were improperly granted summary

judgment, they are not entitled to attorney’s fees or costs.

9

because they provided certified funds in the proper amount in

accordance with that Agreement, and plaintiffs accepted the two

checks without questioning the origin of the funds. Defendants

also contest the conclusion of the Appellate Division dissenting

judge that they could be held liable for breach of the implied

covenant of good faith and fair dealing, unjust enrichment,

fraud, or common-law indemnification.

Plaintiffs counter that the motion judge’s entry of summary

judgment was premised on the judge’s unavoidable conclusion that

defendants failed to provide “good funds,” as the Settlement

Agreement required. They argue that, in accordance with the

parties’ objective intent as manifested by the contract terms,

the Settlement Agreement should be construed to require the

payment of funds free of potential legal claims. Plaintiffs

contend that the money transferred to them was fraudulently

obtained or otherwise constituted “bad funds” because that money

was subject to the adversary proceeding instituted by Auto

Point’s Chapter 7 Trustee. They urge the Court to affirm the

Appellate Division’s judgment.

III.

A.

We review the grant of summary judgment “in accordance with

the same standard as the motion judge.” Bhagat v. Bhagat, 217

N.J. 22, 38 (2014) (citing W.J.A. v. D.A., 210 N.J. 229, 237-38

10

(2012); Henry v. N.J. Dep’t of Human Servs., 204 N.J. 320, 330

(2010)). That standard compels the grant of summary judgment

“if the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact

challenged and that the moving party is entitled to a judgment

or order as a matter of law.” R. 4:46-2(c).

The summary judgment rule set forth in Rule 4:46-2

“serve[s] two competing jurisprudential philosophies”: first,

“the desire to afford every litigant who has a bona fide cause

of action or defense the opportunity to fully expose his case,”

and second, to guard “against groundless claims and frivolous

defenses,” thus saving the resources of the parties and the

court. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520,

541-42 (1995) (quoting Robbins v. Jersey City, 23 N.J. 229, 240-

41 (1957)). In light of the important interests at stake when a

party seeks summary judgment, the motion court must carefully

evaluate the record in light of the governing law, and determine

the facts in the light most favorable to the non-moving party.

R. 4:46-2(c).

Rule 4:46-2(c)’s “genuine issue [of] material fact”

standard mandates that the opposing party do more than “point[]

to any fact in dispute” in order to defeat summary judgment.

Brill, supra, 142 N.J. at 529. Under that standard, once the

11

moving party presents sufficient evidence in support of the

motion, the opposing party must “demonstrate by competent

evidential material that a genuine issue of fact exists[.]”

Robbins, supra, 23 N.J. at 241; see also Brill, supra,

142 N.J. at 529 (noting opposing party should “come forward with

evidence that creates a ‘genuine issue as to any material fact

challenged’” (quoting R. 4:46-2)). As Justice Coleman noted in

Brill, supra, if the party opposing the summary judgment motion

offers . . . only facts which are immaterial

or of an insubstantial nature, a mere

scintilla, “fanciful, frivolous, gauzy or

merely suspicious,” he will not be heard to

complain if the court grants summary judgment,

taking as true the statement of uncontradicted

facts in the papers relied upon by the moving

party, such papers themselves not otherwise

showing the existence of an issue of material

fact.

[142 N.J. at 529 (quoting Judson v. Peoples

Bank & Trust Co. of Westfield, 17 N.J. 67,

75 (1954)).]

A court deciding a summary judgment motion does not draw

inferences from the factual record as does the factfinder in a

trial, who “may pick and choose inferences from the evidence to

the extent that ‘a miscarriage of justice under the law’ is not

created.” Id. at 536 (quoting R. 4:49-1(a)). Instead, the

motion court draws all legitimate inferences from the facts in

favor of the non-moving party. R. 4:46-2(c); see also Durando

v. Nutley Sun, 209 N.J. 235, 253 (2012) (noting “courts construe

12

the evidence in the light most favorable to the non-moving party

in a summary judgment motion” (quoting Costello v. Ocean Cty.

Observer, 136 N.J. 594, 615 (1994))); Brill, supra, 142 N.J. at

536 (explaining “[o]n a motion for summary judgment the court

must grant all the favorable inferences to the non-movant”).

The motion court must analyze the record in light of the

substantive standard and burden of proof that a factfinder would

apply in the event that the case were tried. Bhagat, supra,

217 N.J. at 40; Davis v. Devereux Found., 209 N.J. 269, 286

(2012); see Davidson v. Slater, 189 N.J. 166, 187 (2007). Thus,

“neither the motion court nor an appellate court can ignore the

elements of the cause of action or the evidential standard

governing the cause of action.” Bhagat, supra, 217 N.J. at 38;

see, e.g., id. at 47-48 (reviewing grant of summary judgment in

light of elements of valid and irrevocable gift and clear and

convincing standard of proof); Durando, supra, 209 N.J. at 253-

57 (applying clear and convincing evidentiary standard to grant

of summary judgment in defamation action); Brill, supra, 142

N.J. at 542-45 (evaluating motion court’s summary judgment

determination in light of substantive standard and burden of

proof governing cause of action of breach of duty owed by

insurer to insured). With the factual record construed in

accordance with Rule 4:46-2(c), “the court’s task is to

determine whether a rational factfinder could resolve the

13

alleged disputed issue in favor of the non-moving party[.]”

Perez v. Professionally Green, LLC, 215 N.J. 388, 405-06 (2013);

see also Bhagat, supra, 217 N.J. at 39 (noting when deciding

summary judgment motion, court determines whether reasonable

jury could rule in favor of non-moving party).

Accordingly, when the movant is the plaintiff, the motion

court must view the record with all legitimate inferences drawn

in the defendant’s favor and decide whether a reasonable

factfinder could determine that the plaintiff has not met its

burden of proof. See, e.g., Bhagat, supra, 217 N.J. at 38;

Durando, supra, 209 N.J. at 253; Brill, supra, 142 N.J. at 523.

If a reasonable factfinder could decide in the defendant’s

favor, then the plaintiff has not demonstrated that it is

“entitled to a judgment or order as a matter of law” and the

court must deny the plaintiff’s summary judgment motion. R.

4:46-2(c); see, e.g., Bhagat, supra, 217 N.J. at 47-49

(reversing grant of summary judgment because genuine issues of

fact exist as to elements necessary to establish irrevocable

gift); Lyons v. Twp. of Wayne, 185 N.J. 426, 434-37 (2005)

(reversing grant of summary judgment because record was

inconclusive as to whether dispute exists regarding plaintiffs’

nuisance claim).

B.

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We apply those settled principles to the trial court’s

grant of summary judgment in favor of plaintiffs on their breach

of contract claim.

An agreement to settle litigation is “governed by [the

general] principles of contract law.” Brundage v. Estate of

Carambio, 195 N.J. 575, 600-01 (2008) (quoting Thompson v. City

of Atl. City, 190 N.J. 359, 379 (2007)). Our law imposes on a

plaintiff the burden to prove four elements: first, that “[t]he

parties entered into a contract containing certain terms”;

second, that “plaintiff[s] did what the contract required [them]

to do”; third, that “defendant[s] did not do what the contract

required [them] to do[,]” defined as a “breach of the contract”;

and fourth, that “defendant[s’] breach, or failure to do what

the contract required, caused a loss to the plaintiff[s].”

Model Jury Charge (Civil), § 4.10A “The Contract Claim --

Generally” (May 1998); see also Coyle v. Englander’s, 199 N.J.

Super. 212, 223 (App. Div. 1985) (identifying essential elements

for breach of contract claim as “a valid contract, defective

performance by the defendant, and resulting damages”). Each

element must be proven by a preponderance of the evidence. See

Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 169 (2006) (citing

State v. Seven Thousand Dollars, 136 N.J. 223, 238 (1994)).

Under that standard, “a litigant must establish that a desired

inference is more probable than not. If the evidence is in

15

equipoise, the burden has not been met.” Ibid. (quoting Biunno,

Current N.J. Rules of Evidence, comment 5a on N.J.R.E. 101(b)(1)

(2005)).

The initial task before the motion court was to determine

the parties’ intent, which, in an appropriate setting, is “a

purely legal question that is particularly suitable for decision

on a motion for summary judgment.” Pressler & Verniero, Current

N.J. Court Rules, comment 5 on R. 4:46-2 (2016); see also

Khandelwal v. Zurich Ins. Co., 427 N.J. Super. 577, 585 (App.

Div.) (noting interpretation of contract “is generally

appropriate to resolve . . . on summary judgment”), certif.

denied, 212 N.J. 430 (2012).4 Here, the Settlement Agreement

required defendants to pay Globe “the amount of [$75,000], by

certified or attorney trust account check payable to [‘]The

Margolis Law Firm LLC, as attorneys for Globe Motor Company.’”

Neither party submitted extrinsic evidence of contractual

intent; the record before the court on that issue was limited to

the language of the Settlement Agreement’s payment provision.

4 Generally, if a contract is unambiguous, “then the words

presumably will reflect the parties’ expectations.” Kieffer v.

Best Buy, 205 N.J. 213, 223 (2011). When the parties’ intent

cannot be derived from a contract’s plain text, however, our

jurisprudence “permit[s] a broad use of extrinsic evidence to

achieve the ultimate goal of discovering the intent of

the parties” and thus, “[e]xtrinsic evidence may be used to

uncover the true meaning of contractual terms.” Conway v. 287

Corp. Ctr. Assocs., 187 N.J. 259, 270 (2006); see also

Manahawkin Convalescent v. O’Neill, 217 N.J. 99, 118 (2014).

16

The parties sharply disputed the meaning of that language.

Plaintiffs argued that the contract required the payment of

funds that were owned by defendants and that would not be

subject to claims in the future. Defendants countered that the

Settlement Agreement required only that they provide the funds

to plaintiffs, by certified or attorney trust account check made

payable to Margolis as Globe’s counsel. In resolving that

question, the motion court’s task was “not to rewrite a contract

for the parties better than or different from the one they wrote

for themselves.” Kieffer, supra, 205 N.J. at 223. Instead, the

court was charged to determine “the intention of the parties to

the contract as revealed by the language used [by them.]”

Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J.

Super. 324, 339 (App. Div.), certif. denied, 188 N.J. 353

(2006); see also Pacifico v. Pacifico, 190 N.J. 258, 266 (2007)

(“[I]t is a basic rule of contractual interpretation that a

court must discern and implement the common intention of the

parties.”).

The motion court never adopted either party’s construction

of the Settlement Agreement’s payment term or stated its own

conclusion as to the meaning of that provision. Its only

finding on that issue was that “[t]he objective intent was to

receive $75,000.” Although the court questioned why plaintiffs

did not insist on language in the Settlement Agreement requiring

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defendants to hold plaintiffs harmless in the event of a claim

against the settlement funds, it also stated that a plaintiff

who settles a case has the right to expect that the settlement

funds will not be challenged two years after the matter is

resolved. Thus, the motion court premised a grant of summary

judgment on a breach of contract claim without clearly

construing the critical term.

Notwithstanding the unresolved meaning of the Settlement

Agreement’s payment term, the motion court concluded, as a

matter of law, that plaintiffs established a breach of the

Settlement Agreement. To properly make such a determination,

the court was required to view the record with all legitimate

inferences drawn in defendants’ favor, and to determine if there

was no genuine issue of material fact. See R. 4:46-2(c); see

also Durando, supra, 209 N.J. at 253; Brill, supra, 142 N.J. at

536. At a minimum, that conclusion required competent evidence

substantiating plaintiffs’ allegation that the funds in question

belonged to Auto Point.

Plaintiffs did not submit evidence demonstrating that

defendants’ $75,000 payment was made using funds that were owned

by Auto Point. They contended, instead, that because the

bankruptcy Trustee filed an adversary proceeding seeking the

return of the settlement funds, and plaintiffs paid $22,500 to

settle that proceeding, defendants breached the Settlement

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Agreement. The certification that they submitted to the motion

court, summarizing the Minnesota adversary proceeding and their

settlement of the Trustee’s claim, demonstrated only that the

Trustee had asserted that the funds belonged to Auto Point’s

bankruptcy estate. Plaintiffs submitted no certification,

financial records, or other competent proof to demonstrate that

the funds were Auto Point’s.

Defendants relied solely on Ilya’s certification, which

reiterated defendants’ claim that Povolotsky was “holding” money

owed to Ilya “from prior dealings,” and that the funds in

question belonged to Ilya, not to Auto Point. That

certification was also inconclusive; it did not document the

origin of the money or substantiate defendants’ representations

that the funds belonged to Ilya.5

The record did not adequately support the motion court’s

conclusion that defendants breached the payment terms of the

Settlement Agreement and that plaintiffs were entitled to

summary judgment on their breach of contract claim. When all

legitimate inferences are drawn in defendants’ favor, the record

presents a genuine issue of material fact on a critical

question: whether the settlement funds were Auto Point’s, as

5 The motion judge commented that he did not believe Ilya’s

“insulting self-serving statement” in his certification that the

$75,000 paid to settle the parties’ litigation was his money, in

the custody of Povolotsky.

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the Trustee alleged, or were owned by Povolotsky and owed to

Ilya based on prior transactions. To be sure, the Trustee may

have been entitled to a remedy under 11 U.S.C.A. §§ 544 and 548,

and plaintiffs’ decision to settle the Trustee’s adversary

proceeding for thirty percent of the amount claimed, rather than

devote resources to the litigation of that action, may represent

sound legal strategy. Because of that settlement, however, the

crucial evidence was never presented to the United States

Bankruptcy Court, and that court never determined that the

disputed funds were in fact assets of Auto Point’s bankruptcy

estate. Before the motion court, plaintiffs demonstrated

nothing more than that the Trustee filed a complaint, and that

the Trustee’s claim was settled. In short, the critical factual

question was left undecided by the summary judgment record.

Accordingly, defendants raised a genuine issue of material

fact with respect to the breach of contract claim. A reasonable

factfinder considering the evidence set forth in the record,

with all legitimate inferences drawn in defendants’ favor, could

find that plaintiffs did not prove by a preponderance of the

evidence that defendants breached the payment obligations

imposed by the Settlement Agreement. Plaintiffs were not

entitled to judgment as a matter of law on their breach of

contract claim.

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Notwithstanding our ruling that the motion judge’s grant of

summary judgment constituted error, we do not concur with the

dissenting judge’s view that plaintiffs’ breach of contract

claim and contractual indemnification claim against Julia should

have been dismissed on summary judgment. On remand, the parties

will have the opportunity to develop a factual record regarding

all of the claims asserted in this case and to file motions for

summary judgment based on that record.

IV.

The judgment of the Appellate Division is reversed, and the

matter is remanded to the trial court for further proceedings

consistent with this opinion.

CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, FERNANDEZ-

VINA and SOLOMON; and JUDGE CUFF (temporarily assigned), join in

JUSTICE PATTERSON’s opinion.

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