New Jersey Appeals Court Awards Fees and Costs Despite Illegitimate Payment Made by Automobile Wholesaler

Thursday, August 21, 2014

  The majority of the Appellate Division recently upheld a New Jersey Supreme Court decision that The Margolis Law Firm and its client were awarded $42,000.00, in addition to keeping the $75,000.00 settlement, despite the fact that the adversary paid the $75,000.00 settlement obligation with money that did not belong to him.

     In 2008, the firm represented Globe Motor Co., a Mercedes-Benz retailer, who was a plaintiff in a lawsuit against Ilya Igdalev, an automobile wholesaler.  Globe filed a lawsuit against Mr. Igdalev for allegedly engaging in inappropriate business transactions.  The case was settled in 2009, with Mr. Igdalev agreeing to pay $75,000.  Mr. Igdalev had allegedly asked his alleged business associate, Michael Povolotsky, Owner, Auto Point, Ltd., to send him the settlement funds.

     Thereafter, The Margolis Law Firm and Globe received a complaint from a trustee in a bankruptcy matter for Auto Point in Missouri stating the money did not come from Mr. Povolotsky, but from his company, Auto Point.  The firm and Globe sought bankruptcy counsel and settled with the trustee for $22,500.00.  They later filed a Complaint against Mr. Igdalev, seeking $42,381.00 for reimbursement of legal fees and costs.

     Mr. Igdalev argued that Mr. Povolotsky owed him the money, which is why Mr. Povolotsky paid the $75,000.00.  Mr. Igdalev’s bank accounts were frozen after he and numerous others were charged with stealing customers’ identities to purchase luxury vehicles and then selling them on the European black market.

     Two of the three New Jersey Appellate Division Judges — Marie Lihotz and Richard Hoffman — ruled in favor of The Margolis Law Firm and Globe, stating that Mr. Igdalev and Mr. Povolotsky acted in bad faith by using money from sources other than their personal financial accounts and did so knowingly. 

     “The majority’s opinion is right on point,” said Martin G. Margolis, Founding Partner of The Margolis Law Firm of Livingston, New Jersey and New York, New York.  “I think we made the right moves all around.  You make pragmatic decisions in a law office.  You don’t make decisions on theory; you don’t make them strictly on a whim.  The dissent suggested litigating with the trustee in Missouri.  Such a victory would have benefitted the wrongdoer; a default would have resulted in a forfeiture of the $75,000.00 paid. There is a virtue in settling a case.”

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