Despite all of the advantages that bankruptcy may provide, there are many valid reasons for choosing not to file a petition. Some of these concern problems in the cases of particular debtors; others relate simply to the fact that bankruptcy is not the only means to address the debtor'slegal problems and may not be necessary.
Loss of property
One consequence of a Chapter 7bankruptcy is the loss of nonexempt property or its value in cash. This is not a problem for many debtors because consumer debtors rarely have any nonexempt property. Except in those few states that have low exemptions and have passed laws making the federal bankruptcyexemptions unavailable to their residents, the amount of property a debtor is allowed to keep is generous enough to protect the property of most nonhomeowners and many homeowners. As of 2011 (these figures change periodically) only debtors with equity of substantially more than $21,000 per debtor in a home, $3,225 in a car or $10,775 in household goods and certain other property are likely to have problems under the federal exemptions. Even in those cases, a Chapter 13bankruptcy often presents a viable alternative through which debtors may retain all of their possessions.
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A bankruptcy will be part of a debtor'scredit history for as long as the law allows, that is, 10 years under the Fair Credit Reporting Act. This means that anyone who requests a credit report will be informed of the bankruptcy filing. The effect this will have on future credit cannot be predicted, but it is an understandable concern of many people who are considering bankruptcy.
There is no definite response to this concern. However, debtors who owe substantial amounts, especially if they are in default, already have poor credit ratings. In the eyes of some creditors, a bankruptcy that wipes the slate clean will be an improvement. Not only will the potential customer be free of other financial obligations, but he or she will also be unable to obtain a Chapter 7 discharge for another eight years in most cases. For these reasons, some creditors have been known to actively solicit recent bankruptcydebtors.
As bankruptcy has become more prevalent in the United States, creditors have increasingly considered it only one factor in their decision about granting credit, and most have chosen not to automatically exclude the ever-growing number of people who have filed a bankruptcycase. Even mortgage lenders are often willing to disregard a bankruptcy that is more than a few years old.
Bankruptcy's effect on a debtor's reputation in the community is almost always imperceptible. In a small town, however, especially if debts are owed to local people, the stigma of bankruptcy cannot be entirely discounted. The potential harm can only be evaluated locally, on a case-by-case basis, and weighed against the advantages that bankruptcy offers. Again, the possibility of voluntarily paying selected debts should not be overlooked if it would ameliorate the problem.
Closely related to the problem of reputation is that of discrimination against debtors who have filed bankruptcycases. To a large extent, the BankruptcyCode alleviates this problem.
Government bodies generally may not discriminate on the basis of a bankruptcy or because of a debt discharged in bankruptcy. Thus, a housing authority or grantor of government assistance benefits cannot deny benefits to a person based on previously discharged debts. Similarly, utilities may not deny service based on a bankruptcy or discharged debts, though they may demand a security deposit for continued service. Private employers may not discriminate with respect to employment or terminate employment based on bankruptcy or discharged debts. Debtors can rest assured that the law protects them in this regard and that they will be able to enforce their rights in court, if necessary.
However, the distinction between discrimination based on bankruptcy or discharged debts and discrimination based on future financial responsibility should be clearly understood. That is, even creditors who are precluded from discrimination based on bankruptcy may refuse new credit or other services if the refusal is properly based on other considerations.
The law regarding discrimination by other private entities, such as creditors who provide essential services, is not as clear. It should be pointed out that this type of discrimination is extremely rare, especially in urban areas where many providers of goods and services are available. It would be most likely to occur in a small town, where only one merchant offered a particular product or service. In that case, if it could be shown that later discrimination was a prohibited attempt to coerce payment of the debt, the debtor could go to court to seek damages because the creditor violated the bankruptcylaws.
Again, the situation can best be assessed locally, on a case-by-case basis. Discrimination against debtors who have filed bankruptcycases is normally not a problem, but if a debtor is in doubt, he or she should consult an experienced bankruptcyattorney.
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Cost of filing a petition
Besides any attorneys' fee, which are reasonable in the Law Firm of Rafael Gomez, bankruptcy carries an out-of-pocket cost of at least $284-$299 for the court fees and fees for a prebankruptcycredit counseling briefing and a credit education course requierd after the case is filed. Other fees may raise this figure somewhat. In a Chapter 13case, for example, the trustee is usually entitled to a commission of up to 10 percent of the payments made through the plan. In some cases, various utilities may require security deposits to ensure continued service.
These costs, like the less tangible costs, must be weighed when deciding whether to file a bankruptcy case. Where the debts are not large or troublesome, it may simply not be worthwhile to spend the amount necessary to eliminate them.
In some cases, bankruptcy is simply the wrong tool to use, and none of the advantages will be realized. One such situation is that of the debtor whose debts are fully secured by security interests or other liens on property that cannot be impaired through bankruptcy and who does not have sufficient income to remedy a default even with all of the help bankruptcy provides. Unless there is some advantage to litigating in bankruptcycourt, bankruptcy will not solve this debtor's basic problems. At most, it may discharge the debtor's personal liability for the debts and gain the advantage of the automatic stay for a month or more. Although in some cases this could be worthwhile, in most it will not ultimately benefit the debtor.
The problem of debtors in this predicament is often that their current expenses exceed their income. Because bankruptcy (except for Chapter 13's ability to stretch out or reduce certain types of short-term expenses) basically deals with assets and liabilities, it does not address this problem directly in most cases.
The opposite situation can also sometimes cause problems. If a debtor has substantial and valuable nonliened property that cannot be exempted, a premature bankruptcy will generally hasten property loss rather than prevent it. Because unsecured creditors must sue the debtor to obtain judgmentliens or levies on the debtor's property, loss of the property outside bankruptcy may be quite slow. On the other hand, liquidation of nonexempt property generally occurs quickly in the bankruptcy process. And, because unsecured creditors are entitled to the present value of nonexempt property in Chapter 13, a case under that chapter would be quite costly. In this situation, the best option is probably to wait at least until execution on the property appears imminent, unless the debtor can afford the necessary Chapter 13case.
Some debtors may be barred altogether from filing a bankruptcy for some period of time. An individual cannot file if he or she had a previous bankruptcycase dismissed in the past 180 days and the dismissal was (1) for willful failure to abide by court orders or to appear in court in proper prosecution of the case or (2) a voluntary dismissal following a request for relief from the automatic stay of section 362 of the Code.
Finally, some debtors may stand to gain little from a Chapter 7bankruptcy because they cannot receive a discharge due to a prior bankruptcy. For these people, the prospect is somewhat brighter. In most cases, a Chapter 13case can still provide significant relief.
The principal goal of most bankruptcies is to have most unsecured debts discharged. The bankruptcy discharge totally eliminates any personal obligation to pay many types of debts. (A few types of debts are not dischargeable. Also, if a creditor has a lien on property taken as collateral, the debt owed to that creditor may still have to be dealt with after bankruptcy because the lien will, in some cases, survive.) For most New Jersey debtors, bankruptcy is a relatively quick and easy way to end the creditor harassment, hardship, anxiety and marital stress normally associated with debt overload.
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Protection of property and income from unsecured creditors Bankruptcy is often the only sure way to protect a debtor's property from unsecured creditors (those who did not take a lien on property as collateral at the time of the transaction). Bankruptcy may provide total protection for a home, car or other vital property.
The amount of property that debtors can protect from creditors through exemptions in bankruptcy is, in many states, far greater than the amount that they can protect under the state law execution processes through which creditors attempt to seize debtors' property or income. Even where state execution exemptions are similar to or better than the federal bankruptcyexemptions or where the federal exemptions are not available, bankruptcy allows the debtor to avoid having to assert the exemptions repeatedly in response to the execution attempts of different creditors.
Normally, bankruptcy also serves to prevent any garnishment (attachment or seizure) of wages or other income after the petition is filed. This, in turn, may protect an individual's job if the employer does not favor multiple wage garnishments. Even attempts to reduce Social Security or other public benefit payments to get back previous overpayments should be preventable by a timely bankruptcy petition.
A bankruptcy discharge does not, by itself, eliminate the liens on a debtor's property that secured creditors have obtained before bankruptcy. However, other provisions in the Bankruptcy Code do give debtors mechanisms to deal with most secured creditors. Many types of liens may be eliminated or reduced, either because they impair exemptions or because they are on property that is worth less than the liens. In a Chapter 13 case, payments on most other secured debts can be lowered, and a reasonable time can be gained to cure almost any defaulted secured debt. Often, one or more of these aspects of bankruptcy enable a debtor to retain a home, car or furniture that would otherwise be lost.
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Automatic stay
The most valuable feature of a bankruptcy is sometimes the automatic stay, which the debtor gains instantaneously on filing a petition. The stay is an automatic court order that prohibits all sorts of collection attempts by creditors, allowing the bankruptcy to proceed in an orderly fashion. It forces an abrupt halt of most creditor actions against the debtor, including repossessions, garnishments or attachments, utility shutoffs, foreclosures and evictions. Many of these can thereafter be permanently prevented. The stay is also an effective way (though hardly the only way) to end creditor collection efforts. Creditors who violate the stay risk contempt of court, money damages and attorneys' fees. Beyond all this, the stay gives the debtor a breathing spell, time to sort things out.
Bankruptcy may offer the only possible way for an individual to keep or regain a driver's license that is subject to revocation because of an unpaid debt arising from a motor vehicle accident. This, in turn, may mean employment and income for the individual's family. In some cases, bankruptcy may mean freedom for a debtor who might otherwise be incarcerated for failure to pay support obligations or as a result of a contempt proceeding involving some other debt. The BankruptcyCode also protects the debtor from many types of discriminatory actions by government bodies and private employers on the basis of unpaid debts discharged in bankruptcy.
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58*58On appeal from the Superior Court, Appellate Division, whose opinion is reported at 436 N.J. Super. 594 (App. Div. 2014).
Christopher J. Koller, Hackensack, argued the cause for appellants.
59*59Michael 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 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."
60*60On 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 BankruptcyCourt for the District of Minnesota. The BankruptcyCourt appointed a Trustee to represent Auto Point's bankruptcy estate. Almost a year later, 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 BankruptcyCourt 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 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.
61*61In 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 Jerseybank 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 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 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 favorable to defendants, who were the non-moving parties. The dissenting judge criticized the majority's conclusion 62*62 that the contested funds belonged to Auto Point as premised on nothing more than an untested allegation in the United States BankruptcyCourt'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.
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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, 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.
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 saving63*63 the resources of the parties and the court. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 541-42, 666 A.2d 146 (1995) (quotingRobbins v. Jersey City, 23 N.J. 229, 240-41, 128 A.2d 673 (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, 666 A.2d 146.Under that standard, 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[.]"Robbins, supra, 23 N.J. at 241, 128 A.2d 673; see alsoBrill, supra, 142 N.J. at 529, 666 A.2d 146(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 inBrill, 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.
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, 666 A.2d 146 (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 alsoDurando v. Nutley Sun, 209 N.J. 235, 253, 37 A.3d 449 (2012)(noting "courts construe the evidence in the light most favorable to the non-moving party in a summary judgment motion" (quotingCostello v. Ocean Cty. Observer, 136 N.J. 594, 615, 643 A.2d 1012 (1994))); Brill, supra, 142 N.J. at 536, 666 A.2d 146(explaining "[o]n a motion for summary judgment the court must grant all the favorable inferences to the non-movant").
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, 84 A.3d 583; Durando, supra, 209 N.J. at 253, 37 A.3d 449; Brill, supra,142 N.J. at 523, 666 A.2d 146.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, 84 A.3d 583(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, 888 A.2d 426 (2005)(reversing grant of summary judgment because record was inconclusive as to whether dispute exists regarding plaintiffs' nuisance claim).
B.
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, 951 A.2d 947 (2008) (quotingThompson v. City of Atl. City, 190 N.J. 359, 379, 921 A.2d 427 (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 alsoCoyle v. Englander's, 199 N.J.Super. 212, 223, 488 A.2d 1083 (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. SeeLiberty Mut. Ins. Co. v. Land, 186 N.J. 163, 169, 892 A.2d 1240 (2006)(citingState v. Seven Thousand Dollars,136 N.J. 223, 238, 642 A.2d 967 (1994)). Under that standard, "a litigant must establish that a desired inference is more probable than not. If the evidence is in 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,65*65Current N.J. Court Rules, comment 5 on R. 4:46-2 (2016); see alsoKhandelwal v. Zurich Ins. Co., 427 N.J.Super. 577, 585, 50 A.3d 52 (App.Div.)(noting interpretation of contract "is generally appropriate to resolve ... on summary judgment"), certif. denied, 212 N.J. 430, 54 A.3d 810 (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.
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, 14 A.3d 737.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, 897 A.2d 373 (App.Div.),certif. denied,188 N.J. 353, 907 A.2d 1013 (2006);see alsoPacifico v. Pacifico, 190 N.J. 258, 266, 920 A.2d 73 (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 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 alsoDurando, supra, 209 N.J. at 253, 37 A.3d 449; Brill, supra,142 N.J. at 536, 666 A.2d 146.At a minimum, 66*66 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 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 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 BankruptcyCourt, 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.
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 67*67 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, FERNANDEZVINA and SOLOMON; and Judge CUFF (temporarily assigned), join in Justice PATTERSON's opinion.
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[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.
[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.
[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.
[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.
