Case Name: 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
Court: New Jersey Superior Court, Appellate Division
Jurisdiction: New Jersey
Decision Date: 2014-08-07
Citations: 436 N.J. Super. 594
Docket Number: 
Parties: GLOBE MOTOR COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, AND THE MARGOLIS LAW FIRM, LLC, PLAINTIFFS-RESPONDENTS, v. ILYA IGDALEV AND JULIA IGDA-LEV, DEFENDANTS-APPELLANTS.
Judges: 
Reporter: New Jersey Superior Court Reports
Volume: 436
Pages: 594–620

Head Matter:
95 A.3d 791
GLOBE MOTOR COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, AND THE MARGOLIS LAW FIRM, LLC, PLAINTIFFS-RESPONDENTS, v. ILYA IGDALEV AND JULIA IGDA-LEV, DEFENDANTS-APPELLANTS.
Superior Court of New Jersey Appellate Division
Argued December 11, 2013
Decided August 7, 2014.
Sapp-Peterson, P. J.A.D., filed a dissenting opinion.
Before Judges SAPP-PETERSON, LIHOTZ and HOFFMAN.
Christopher J. Roller argued the cause for appellants.
Sara A. Kimball argued the cause for respondents (The Mar-golis Law Firm LLC, attorneys; Ms. Kimball, on the brief).

Opinion:
The opinion of the court was delivered by
LIHOTZ, J.A.D.
Defendants, Ilya and Julia Igdalev, 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 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 Margolis Law Firm LLC not later than 1:00 pm 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). Leonard, on behalf of 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 [transfers." 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 the facts regarding the Globe I litigation, 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 Povo-lotsky, 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 dismissed the . action with prejudice."
Following a lengthy oral argument, the Law Division judge denied defendants' and granted plaintiffs' motion for summary judgment. The judge found defendants had materially breached the settlement agreement because the monies tendered were determined to have been transferred from the debtor Auto Point, without consideration, and were legally subject to recovery. The judge therefore concluded Ilya did not pay the $75,000 as required by the settlement agreement. He entered orders memorializing this decision on May 11, 2012. Subsequent motions were filed regarding recovery of attorney's fees and costs. Final judgment was entered on September 12, 2012. Defendants' appeal ensued.
We review the trial court's summary judgment order de novo, applying the same standard that governs the trial court. W.J.A. v. D.A., 210 N.J. 229, 237, 43 A.3d 1148 (2012); Lapidoth v. Telcordia Tech., Inc., 420 N.J.Super. 411, 417, 22 A.3d 11 (App. Div.), certif. denied, 208 N.J. 600, 34 A.3d 781 (2011). Pursuant to Rule 4:46, we "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540, 666 A.2d 146. "[Wjhen the evidence is so one-sided that one party must prevail as a matter of law, the trial court should not hesitate to grant summary judgment." Ibid, (citation and internal quotation marks omitted). If no genuine factual dispute exists, we must decide whether the trial court's ruling on the law, to which we owe no deference, was correct. W.J.A., supra, 210 N.J. at 237-38, 43 A.3d 1148.
Also implicated in our review are principles governing the enforcement of the parties' terms of settlement. "Public policy favors the settlement of disputes. Settlement spares the parties the risk of an adverse outcome and the time and expense— both monetary and emotional—of protracted litigation." Willingboro Mall, Ltd. v. 240/242 Franklin Ave., L.L.C., 215 N.J. 242, 253-54, 71 A.3d 888 (2013). See also Herrera v. Twp. of S. Orange Vill., 270 N.J.Super. 417, 424, 637 A.2d 526 (App.Div.1993) (noting "[t]here is a clear public policy in this state favoring settlement of litigation"), certif. denied, 136 N.J. 28, 641 A.2d 1039 (1994). "Settlements avert the risks of litigation, spare the parties ruinous litigation expenses, and conserve judicial resources." Pinto v. Spectrum Chems. & Lab. Prods., 200 N.J. 580, 594, 985 A.2d 1239 (2010). Moreover, settlements permit "litigants to resolve disputes on mutually acceptable terms in place of risking exposure to an adverse judgment[.]" DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 259, 966 A.2d 1036 (2009) (citation omitted). "A defendant's likely settlement calculation is whether the payout is less than the 'cost of the predicted judgment, discounted by its probability, plus the transaction costs of further litigation.' " Pinto, supra, 200 N.J. at 594, 985 A.2d 1239 (quoting Evans v. Jeff D., 475 U.S. 717, 734, 106 S.Ct. 1531, 1541, 89 L.Ed.2d 747, 762 (1986)).
" 'An agreement to settle a lawsuit is a contract, which like all contracts, may be freely entered into and which a court, absent a demonstration of fraud or other compelling circumstances, should honor and enforce as it does other contracts.'" Brundage v. Estate of Carambio, 195 N.J. 575, 601, 951 A.2d 947 (2008) (quoting Pascarella v. Bruck, 190 N.J.Super. 118, 124-25, 462 A.2d 186 (App.Div.), certif. denied, 94 N.J. 600, 468 A.2d 233 (1983)). The "[ijnterpretation of a settlement agreement implicates significant legal and policy principles[.]" Kaur v. Assured Lending Corp., 405 N.J.Super. 468, 474, 965 A.2d 203 (App.Div. 2009). Our review of legal questions is plenary. Zabilowicz v. Kelsey, 200 N.J. 507, 512, 984 A.2d 872 (2009).
When examining the terms of a settlement agreement, we are guided by the rules of contract construction. Brundage, supra, 195 N.J. at 601, 951 A.2d 947. See also Thompson v. City of Atl. City, 190 N.J. 359, 379, 921 A.2d 427 (2007). "The polestar of contract construction is to discover the intention of the parties as revealed by the language used by them." Karl's Sales & Serv., Inc. v. Gimbel Bros., Inc., 249 N.J.Super. 487, 492, 592 A.2d 647 (App.Div.), certif. denied, 127 N.J. 548, 606 A.2d 362 (1991). In interpreting a contract, the focus is on "the intention of the parties to the contract as revealed by the language used, taken as an entirety; and, in the quest for the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain____" Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J.Super. 324, 339, 897 A.2d 373 (App.Div.) (citation and internal quotation marks omitted), certif. denied, 188 N.J. 353, 907 A.2d 1013 (2006). In that regard, the court may not re-write a contract or grant a better deal than that for which the parties expressly bargained. Solondz v. Kornmehl, 317 N.J.Super. 16, 21, 721 A.2d 16 (App.Div.1998).
Recognizing the parties' autonomy in resolving their disputes, "[i]t follows that any action which would have the effect of vitiating the provisions of a particular settlement agreement and the concomitant effect of undermining public confidence in the settlement process in general, should not be countenanced." Dep't of Pub. Advocate, Div. of Rate Counsel v. N.J. Bd. of Pub. Utils., 206 N.J.Super. 523, 528, 503 A.2d 331 (App.Div.1985). With these principles in mind, we consider defendants' arguments.
On appeal, defendants contend the judge incorrectly granted summary judgment to plaintiffs, asserting the only "competent evidential material ]" before the court was Ilya's certification stating the $75,000 transferred by Povolotsky was Ilya's money. Therefore, the funds could not belong to the debtor, Auto Point. Because defendants challenged plaintiffs' claim regarding the ownership of the money used to satisfy the obligations under the settlement agreement, defendants argue material factual disputes obviated entry of summary judgment.
To support this contention, defendants claim "all parties were aware of the restraint on Ilya['s] . funds in Bergen County." Defendants' brief purports to quote from Ilya's certification filed in support of defendants' motion and in opposition to plaintiffs' motion for summary judgment. However, the certification as filed contains no statement placing plaintiffs on notice of the restraint of defendants' funds or the need to rely on Povolotsky. In fact, the recitals recounted and relied on by defendants in their brief materially differ from the actual facts of record.
Nevertheless, accepting as true Ilya's statement Povolotsky was "holding . money owed . from prior dealings" does not prove funds sent to plaintiffs by Povolotsky were Ilya's or refute that the money transferred to plaintiffs actually belonged to Auto Point. Defendants' contrary suggestion made to create a dispute of material facts is illusory. See Shelcusky v. Garjulio, 172 N.J. 185, 200-01, 797 A.2d 138 (2002) ("The very object of the summary judgment procedure then is to separate real issues from issues about which there is no serious dispute."). Quite simply, the assertion that Povolotsky held Ilya's money does not mean he sent Ilya's money.
Also, defendants mistakenly contend that absent a judgment from the Bankruptcy Court determining the funds actually were Auto Point's must mean they were Ilya's funds in Povolotsky's possession. That Povolotsky held Ilya's money creates no dispute of a material fact, which should subject plaintiffs to the burden of a trial. Merely because Povolotsky held Ilya's money does not establish he used those funds when making payment to plaintiffs. Indeed, Ilya asserts no personal knowledge establishing his money was actually transferred; at its best, defendants' suggestion in this regard is merely supposition, which is insufficient to defeat summary judgment.
The record, viewed most favorable to defendants, shows only that after Ilya asked his friend and business associate to satisfy the settlement obligation with money owed to him, Povolotsky did so using assets of his company, Auto Point. Ilya does not maintain Auto Point owed him money.
Auto Point's ownership of the funds is evident from the bankruptcy pleadings. Leonard is a fiduciary appointed by the United States Bankruptcy Court to oversee the debtor's estate. See 11 U.S.C.A. § 321 to § 323 (stating eligibility and general duty of bankruptcy trustee). After examining the debtor's books and records, Leonard filed the adversary proceeding to recover money he found was taken from Auto Point's account and transferred to plaintiffs. There is no dispute regarding the amount transferred, which matched the sums delivered to plaintiffs or that the checks as issued were made payable to Margolis as attorney for Globe. Further, there is no evidence Auto Point owed a debt or obligation to plaintiffs or Ilya. Because the transfer was without consideration, it is subject to recovery. See 11 U.S.C.A. § 548 (allowing trustee to avoid fraudulent transfers made by a debtor within the four-year limitations period). The settlement of the adversary action represented a compromise by the parties with respect to the contested and disputed issues, accepting the trustee's evidence, along with each side's assessment of the cost and expense in proceeding to trial.
We conclude plaintiffs cannot be faulted for settling rather than trying the adversary proceeding. See Frank Stamato & Co. v. Lodi, 4 N.J. 14, 21, 71 A.2d 336 (1950) (citing Ramsey v. Perth Amboy Shipbuilding Eng'g Co., 72 N.J. Eq. 165, 65 A. 461 (Ch.1906), aff'd. 73 N.J. Eq. 742, 70 A. 1101 (E. & A.1908)). ("[I]t is well established that a party who has been injured by a breach of contract must make reasonable efforts to mitigate his damages!.]"). To suggest plaintiffs were required to complete a trial and obtain a judicial determination is specious. Pinto, supra, 200 N.J. at 594, 985 A.2d 1239.
We additionally reject defendants' argument suggesting the motion judge's determination was erroneously based on his finding Ilya was not credible. The judge's cited comments were not a determination of contested facts; rather, the statements represent an assessment that the asserted facts do not create a material dispute. As the Court held in Shelcusky:
The determination that an offsetting affidavit creates only a sham factual dispute is squarely within the trial court's authority at the summary judgment stage, when the court is required to evaluate, analyze, and sift evidence to determine whether the evidential materials, when viewed in the light most favorable to the opposing party, would permit a rational factfinder to resolve the issue in favor of the opposing party. That rule does not intrude on the function of the jury because it does not require the trial court to determine credibility, or to determine the relative weight of conflicting evidence. We are confident that trial courts have the ability to distinguish sham affidavits from affidavits that raise a genuine issue of material fact.
[Shelcusky, supra, 172 N.J. at 201, 797 A.2d 138.]
Defendants next assert they fully complied with the settlement terms as drafted and were innocent because they lacked knowl edge of any wrongdoing by their friend Povolotsky. Essentially, defendants believe their presentation of certified checks that were accepted by plaintiffs, who thereafter filed a full release and stipulation of dismissal, ends our inquiry. Additionally, defendants argue plaintiffs could have rejected the tender of the funds drawn on a Minnesota Bank or after noticing one check contained Povolotsky's name as remitter. We examine these points.
Evaluating the relative innocence of the parties, when deciding who bears the burden of Povolotsky's actions, we conclude the manner and methods chosen were controlled by defendants and accomplished at their direction. Therefore, the consequences of Povolotsky's unseemly conduct falls to them rather than plaintiffs. Povolotsky's failure equates to defendants' failure to perform and strikes at the very heart of the settlement agreement, defeating its purpose and representing a material breach of its terms. See Restatement (Second) Contracts § 241 comment a (1981) (discussing a material breach of contract).
Defendants' contention that they complied with the letter of the settlement agreement when they tendered a cashier's and a bank check totaling $75,000 is legally unfounded. An essential element of the agreement was that plaintiffs received the agreed-upon amount. Because legal claims attached to the money tendered, which were not immediately apparent, payment was illusory.
The constrained construction of the contractual obligations asserted by defendants completely ignores the reality that legal defenses attached to the funds, which prevented plaintiffs' retention. By accepting the compromise set forth in the settlement agreement, plaintiffs sought to end the litigation with defendants and had no intention of becoming embroiled in a new suit. When the monies used to satisfy defendants' obligation were not free of the claims of others, the essence of the settlement agreement was breached. Although Ilya delivered payment, the funds used did not belong to Povolotsky and could not be transferred to another. Therefore, the trustee's recovery of $22,500 results in defendants not paying plaintiffs the agreed sum of $75,000.
We also find defendants' argument that plaintiffs should have been suspect of the out-of-state checks highly disingenuous. After all, defendants commissioned Povolotsky to act. Plaintiffs had no reason to doubt the efficacy of the negotiable instruments, N.J.S.A 12A:3-104(c), or know the money tendered actually belonged to Auto Point. The mode of payment specified in the settlement agreement was intended to provide some security that receipt of the designated instruments evidenced existence of the funds. See Merchants' Nat'l Bank v. State Bank, 77 U.S. 604, 648 (10 Wall.), 19 L.Ed. 1008, 1019 (1870) (acknowledging "[t]he practice of certifying checks has grown out of the business needs of the country," and noting "[t]hey enable the holder to keep or convey the amount specified with safety. They enable persons not well acquainted to deal promptly with each other, and they avoid the delay and risks of receiving, counting, and passing from hand to hand large sums of money."). Defendants' provision of a cashier's check and a bank check, paid to the order of plaintiffs, reflected monies drawn on the banks' funds, again a mode implying security of the payment. N.J.S.A 12A:3-104(g). However, even a cashier's check is not free of legal defenses. See Santos v. First Nat'l State Bank of N.J., 186 N.J.Super. 52, 63, 451 A.2d 401 (App.Div. 1982).
Contrary to the inference sought by defendants, there is no evidence plaintiffs were party to Povolotsky's actions. As such, plaintiffs qualified as a holder in due course, as defined under Article 3 of the Uniform Commercial Code (UCC), codified as N.J.S.A. 12A:3-101 to -605. A "holder in due course" is a holder who takes the instrument (a) for value, (b) in good faith and (c) without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. N.J.S.A. 12A:3-302(a)(2).
Our assessment that defendants are liable under these facts (rather than suggesting plaintiffs are at fault), aligns with this concept.
The basic philosophy of the holder in due course status is to encourage free negotiability of commercial paper by removing certain anxieties of one who takes the paper as an innocent purchaser knowing no reason why the paper is not as sound as its face would indicate. It would seem to follow, therefore, that the more the holder knows about the underlying transaction, and particularly the more he [or she] controls or participates or becomes involved in it, the less he [or she] fits the role of a good faith purchaser for value; the closer his [or her] relationship to the underlying agreement which is the source of the note, the less need there is for giving him [or her] the tension-free rights considered necessary in a fast-moving, credit-extending commercial world.
[Unico v. Owen, 50 N.J. 101, 109-10, 232 A.2d 405 (1967).]
We also reject defendants' contention plaintiffs should have included provisions in the settlement agreement restricting payment solely from Ilya's funds, or otherwise requiring indemnification, including in the event of third-party recovery, as occurred here. Any notion that settlement agreements must include lan guage to curb all possible sharp or illicit practices is antagonistic to one's obligation to negotiate in good faith. Perhaps it was unforeseen that Povolotsky would be a scoundrel, but we cannot ignore Ilya controlled that process. Therefore, he may not be relieved of the responsibility to tender full payment if the process he chose was flawed. Under the terms of the agreement, Julia was responsible if Ilya failed to pay "for any reason or no reason." Thus, she too is liable. Globe is due $22,500.
We turn to defendants' challenges to the award of attorney's fees. Citing the American Rule, defendants maintain the fee award was legally unsupported. We are not persuaded.
In accordance with the American Rule, generally, attorney's fees are not recoverable unless authorized by statute or recognized as available by our Court Rules. See R. 4:42-9. However, fee awards have been ordered when incurred as damages sustained by a party forced into litigation with another as a result of fraud, see Hagen v. Gallerano, 66 N.J.Super. 319, 333, 169 A.2d 186 (App.Div.1961), and for third-party litigation arising because of a party's breach of contract, Dorofee v. Planning Bd. of Pennsauken, 187 N.J.Super. 141, 144, 453 A.2d 1341 (App.Div. 1982). "The award of counsel fees as traditional damages in such settings is not precluded by R[ule] 4:42-9." Ibid, (citing Cohen v. Fair Lawn Dairies, Inc., 86 N.J.Super. 206, 206 A.2d 585 (App. Div.1965), aff'd 44 N.J. 450, 210 A.2d 73 (1965)).
The judge found the fees incurred were necessary consequences of defendants' breach of the settlement agreement. Noting the fees incurred were causally related to defendants' breach, the judge reasoned, "defendants put you in this situation. You had no other choice [but] to do it [i.e., defend the adversary proceeding]." Counsel's certification in support of the fee request detailed the basis of all costs and expenses. The judge found the request reasonable. Following our review we cannot determine the judge misapplied his reasoned discretion. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444, 771 A.2d 1194 (2001).
Affirmed.
To avoid confusion, when referring to each individual defendant, we use his or her first name.
Auto Point filed its voluntary petition pursuant to Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Minnesota on April 23, 2010.
Our dissenting colleague maintains it is reasonable to "infer . that the funds Povolotsky used to buy the checks were those owed to Ilya." Post at 614, 95 A.3d at 803. We cannot abide by such a conclusion. Auto Point was a corporation. As such, it is an independent legal entity. Thus, if Povolotsky owed Ilya money, payment could not reasonably or permissibly come from Auto Point's funds. Importantly, Ilya never asserts Auto Point owed him money, as the dissent assumes. Post at 614, 95 A.3d at 803.
The dissent suggests the judge improperly faulted defendants for their "fail[ure] to participate in [the bankruptcy action] to which they had never been made a party." Post at 615, 95 A.3d at 804. We provide only these brief comments. Joinder implicates establishment of subject matter jurisdiction, which is grounded in and limited by statute. Celotex Corp. v. Edwards, 514 U.S. 300, 307, 115 S.Ct. 1493, 1498, 131 L.Ed.2d 403, 410 (1995). Pursuant to 28 U.S.C.A. § 157(b)(1), bankruptcy judges hear all core proceedings and "may enter final orders and judgments with respect to such proceedings." In re J.T. Moran Fin. Corp., 124 B.R. 931, 936 (S.D.N.Y.1991). Core proceedings are those "arising under Title 11 or arising in or related to a case under Title 11[.]" Phar-Mor, Inc. v. Coopers & Lybrand, 22 F.3d 1228, 1234 n. 9 (3d Cir.1994). See also 28 U.S.C.A. § 157(b)(2) (providing a non-exhaustive list of core proceedings). "By contrast, proceedings which are 'related to' a bankruptcy case are non-core." Id. at 1235. "In non-core proceedings, unless the parties consent to the bankruptcy court's jurisdiction, the bankruptcy judge has the power only to 'submit proposed findings of fact and conclusions of law to the district court,' and the parties are entitled to de novo review of any matter to which they 'timely and specifically' object." In re Arnold Print Works, Inc., 815 F.2d 165, 167 (1st Cir.1987) (quoting 28 U.S.C.A. § 157(c)(1)). Jurisdiction over a non-core matter is permissible only if "the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcyf.] " Celotex Corp., supra, 514 U.S. at 308, 115 S.Ct. at 1499, 131 L.Ed.2d at 411 n. 6. Here, plaintiffs' action to enforce the settlement agreement had no impact on the estate. Further, as we noted, Ilya's suggestion that Povolotsky held his funds would not defeat the trustee's position that funds were transferred from Auto Point and paid to plaintiffs.
Defendants also argue the judge erred because the settlement agreement did not contain a specific term that, if Ilya did not pay, a judgment would be entered against him. This argument lacks merit. R. 2:11—3(e)(1)(E).
We do not agree with our dissenting colleague that cashier's checks are the functional equivalent of cash. Post at 618, 95 A.3d at 805-06. In fact, Parks v. Commerce Bank, 377 N.J.Super. 378, 872 A.2d 1116 (App.Div.2005), makes clear federal regulatory treatment of the speed with which banks must process these instruments makes it "reasonable for the marketplace to treat them as the functional equivalents to cash." Id. at 385, 872 A.2d 1116. Provisions of the Uniform Commercial Code remain applicable and "it is a mistake to conclude that cashier's checks are like cash in all situations." Santos, supra, 186 N.J.Super. at 63, 451 A.2d 401. We can agree that "[u]nless otherwise agreed, if a certified check, cashier's check, or teller's check is taken for an obligation, the obligation is discharged to the same extent that discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation." N.J.S.A. 12A:3-310(a). However, if legal defenses defeat the payment, the obligation must be restored. This refutes our dissenting colleague's assertion that defendants complied with the settlement as a matter of law. Post at 618, 95 A.3d at 805-06.
As noted above, defendants' reliance on the proposition that plaintiffs knew what Povolotsky was doing was premised on a certification that is not part of the record.
We understand the dissent finds the absence of such provisions compelling. Post at 617-19, 95 A.3d at 805-06. We disagree because the practical applica tion of requiring the enumeration of all provisions that could defeat the apparent obligation of payment would be burdensome as impractical and, thus, discourage settlement arrangements. We also cannot accept that when weighing the responsibilities presented by these facts, Margolis should have rejected the cashier's check, because it did not reflect Ilya was the remitter. Post at 618, 95 A.3d at 805-06.
We agree with our dissenting colleague that Margolis does not have a claim against defendants for breach of the settlement agreement. Post at 615-16, 95 A.3d at 804. We do not agree the payment to Leonard was differentiated between Margolis and Globe, as such an allocation of liability is not evident in the settlement terms. Nevertheless, if Margolis received money, it was for attorney's fees paid by Globe from the $75,000 recoveiy. Globe would remain liable for the fees recovered; therefore, defendants must repay the entirety of the sum remitted to Leonard.
The American Rule generally requires each party to bear all legal expense incurred in representation and generally precludes recovery of counsel fees from an adversary. N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 569, 730 A.2d 843 (1999).