ANGELO CANTILLO v. BART FRAENKEL

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ANGELO CANTILLO,

Plaintiff-Appellant,

v.

BART FRAENKEL,

Defendant-Respondent.

__________________________________________

December 19, 2016

Submitted October 25, 2016 Decided

Before Judges Messano and Guadagno.

On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-4462-13.

Harold P. Cook, III, Esquire and Associates, attorneys for appellant (Harold P. Cook, III, on the brief).

Bart Fraenkel, respondent pro se.

PER CURIAM

Plaintiff Angelo Cantillo filed a complaint alleging that, based upon the advice and representations of defendant Bart Fraenkel, he invested $97,000 with Carr Miller Capital, LLC, which was later revealed to be operating a fraudulent Ponzi scheme. Plaintiff's complaint alleged causes of action for negligent misrepresentation (count one), aiding and abetting fraud (count two), fraud (count three), breach of fiduciary duty (count four), breach of the duty of care (count five), violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -19 (the CFA) (count six), and violation of N.J.S.A. 49:3-52(a), a provision of the New Jersey Securities Act (the Securities Act) (count seven). With a trial date fixed for June 8, 2015, on April 10, defendant moved for summary judgment.1 Plaintiff filed opposition on May 21, arguing there were genuine disputes of material facts, and the motion was untimely, having not been filed and made returnable at least thirty days before the scheduled trial date. R. 4:46-1.

On June 1, 2015, the judge entered an order granting summary judgment (the June order). His handwritten statement of reasons provided: "Discovery period ended 3-22-15. There are no issues of genuine material facts to show [d]efendant . . . is in any way responsible for [p]laintiff's financial losses." The order bore the stamp, "unopposed."

On June 22, plaintiff moved for reconsideration pursuant to Rule 4:49-2. He asserted that "a clerical error prevented the [c]ourt from considering [his] timely[-]filed [o]pposition," and plaintiff reiterated his argument that genuine material facts were in dispute. The judge entered an order on July 16, 2015 (the July order), denying the motion for reconsideration. His handwritten statement of reasons provided

Movant has provided no explanation as to why the original motion was not opposed in a timely manner. Movant has therefore not established as per R. 4:49-2 that the [c]ourt overlooked or failed to consider any controlling decisions or evidence/argument which was properly submitted to the Court.2

Plaintiff filed this appeal on August 28, 2015, seeking review of the July order.3

Before us, plaintiff initially contends the judge mistakenly exercised his discretion by refusing to consider the merits of his earlier-filed opposition to defendant's summary judgment motion. We agree.

Reconsideration is to be utilized narrowly, and reserved for situations where the court relied "on plainly incorrect reasoning," where the court failed to consider probative, competent evidence, or where "there is good reason for [the court] to reconsider new" evidence. Town of Phillipsburg v. Block 1508, Lot 12, 380 N.J. Super. 159, 175 (App. Div. 2005) (emphasis added) (quoting Pressler, Current N.J. Court Rules, comment on R. 4:49-2 (2005)). Motions for reconsideration are addressed to "the sound discretion of the Court, to be exercised in the interest of justice." Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990)); see also Casino Reinvestment Dev. Auth. v. Teller, 384 N.J. Super. 408, 413 (App. Div. 2006) (reconsideration should be exercised "in the service of the ultimate goal of substantial justice") (quoting Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 264 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988)).

By the terms of the June order, the judge concluded that defendant's summary judgment motion was unopposed. It follows that plaintiff's motion for reconsideration presented compelling reasons for the exercise of the judge's discretion, since he had never considered any of the facts or legal arguments plaintiff had presented earlier. Instead of considering the merits of that new material, the judge denied plaintiff's motion for reconsideration because plaintiff failed to explain why his original opposition was late. This was a mistaken exercise of the judge's discretion.

Initially, we note defendant's summary judgment motion was certainly untimely, since it was not made returnable until May 29, 2015, only ten days before the scheduled trial date. Rule 4:46-1 permits the court to waive the requirement that the summary judgment motion be made returnable at least thirty days prior to trial "for good cause shown." But, there is no indication that the judge found any good cause to excuse defendant for his violation of the rule.

Plaintiff, in turn, did not comply with the requirement that an opposition to a summary judgment motion be filed at least ten days prior to the return date, ibid., since the opposition was filed on May 21, eight days before the motion's return. However, in similar circumstances, we said "[i]t is a mistaken exercise of judgment to close the courtroom doors to a litigant whose opposition papers are late but are in the court's hands before the return day for a motion which determines the meritorious outcome of a consequential lawsuit." Tyler v. N.J. Auto. Full Ins. Underwriting Ass'n, 228 N.J. Super. 463, 468 (App. Div. 1988); see also R. 1:1-2(a) (permitting relaxation of and dispensation with a rule "if adherence to it would result in an injustice"). Therefore, the judge erred in refusing to consider the merits of plaintiff's reconsideration motion.

We might otherwise remand and require the judge to reevaluate defendant's motion for summary judgment. However, when reviewing an order granting summary judgment, we analyze the decision applying the "same standard as the motion judge." Globe Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016) (quoting Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)).

That standard mandates that summary judgment be granted "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."

[Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189, 199 (2016) (quoting R. 4:46-2(c)).]

Because we ultimately review the same motion record presented to the trial judge and apply the same standard, a remand is unnecessary. See Fusco v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 461 (App. Div.) (noting that "in some cases a motion for reconsideration may implicate the substantive issues in the case and the basis for the motion judge's ruling on the summary judgment and reconsideration motions may be the same[,]" thereby permitting "appellate review of the merits of the case"), certif. denied, 174 N.J. 544 (2002).

Our review of the summary judgment motion record reveals the following. In his affidavit in support of the motion, defendant claimed he never sold "any securities related products" to plaintiff. He acknowledged using "unoccupied office space" in Carr Miller's office to conduct his insurance practice, but defendant asserted he was never an employee of Carr Miller. Defendant denied ever developing an investment plan for plaintiff, or meeting with plaintiff and the principals of Carr Miller. Defendant stated that the Office of the Attorney General had filed suit against Carr Miller and its employees for running a Ponzi scheme.

In opposition, plaintiff certified that defendant developed an investment plan that consisted of an investment in an annuity, for his wife, and an investment with Carr Miller in plaintiff's name. Defendant arranged a meeting with Brian Carr, of Carr Miller and was present when plaintiff met with Carr. Plaintiff stated defendant told him the investment with Carr Miller was "safe and did not involve a high degree of risk." After the Ponzi scheme was revealed, defendant sent plaintiff an email, assuring him that the investment was safe, that Carr was no longer handling the account and offering plaintiff alternative investments. Plaintiff also furnished a newspaper article from 2009 in which defendant purported himself to be an employee of Carr Miller.

Plaintiff also furnished portions of defendant's deposition. Defendant had worked with Carr at New England Financial, and after both left, Carr offered defendant free office space to make it look "like there were more people" in the office. In addition, defendant had access to a telephone and the ability to use Carr Miller's conference room. Defendant acknowledged having a number of clients who would invest with Carr Miller following their initial meeting with defendant. Carr would usually introduce himself to defendant's potential clients while they were waiting to meet with defendant, and, following Carr's introduction, potential clients would ask who Carr was, and defendant would tell them Carr was a "certified financial planner."

Considering this motion record in a light most favorable to plaintiff as the non-moving party, we conclude summary judgment was appropriately granted for counts two, three, four, five, six and seven of the complaint.

To establish common law fraud, a plaintiff must show: "(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages." Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73 (2005) (quoting Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997)). The defendant must act "knowingly and with an intent to deceive the plaintiffs in the course of making representations." Gennari, supra, 148 N.J. at 611.

In order to show defendant was aiding and abetting fraud, plaintiff must demonstrate

(1) the party whom the defendant aids must perform a wrongful act that causes an injury; (2) the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance; (3) the defendant must knowingly and substantially assist the principal violation.

[State, Dep't of Treasury, Div. of Inv. ex rel. McCormac v. Qwest Commc'ns Int'l, Inc., 387 N.J. Super. 469, 483-84 (App. Div. 2006) (emphasis added) (quoting Tarr v. Ciasulli, 181 N.J. 70, 84 (2004)).]

The motion record lacks any evidence defendant was aware of Carr Miller's Ponzi scheme when he recommended that plaintiff should invest money with the company. Defendant's after-the-fact assurance that plaintiff's money was "safe" provides no proof that plaintiff was fraudulently induced to invest with Carr Miller as a result of defendant's material misrepresentations.

In count four, plaintiff alleged defendant breached his fiduciary duty by "failing to give . . . proper investment advice." In count five, plaintiff alleged defendant breached the duty of care owed by "[a] reasonable insurance broker," or "financial advisor." A breach of fiduciary duty, like professional negligence, is a theory in tort. See In re Estate of Lash, 169 N.J. 20, 27 (2001). A "fiduciary is liable for harm resulting from a breach of the duties imposed by the existence of such a relationship." McKelvey v. Pierce, 173 N.J. 26, 57 (2002) (quoting F.G. v. MacDonell, 150 N.J. 550, 563-64 (1997)) (citing Restatement (Second) of Torts) 874 (1979)). "The fiduciary's obligations to the dependent party include a duty of loyalty and a duty to exercise reasonable skill and care." Ibid. (quoting F.G., supra, 150 N.J. at 563-64) (citing Restatement (Second) of Trusts 170, 174 (1959)).

The essence of a fiduciary relationship is that one party places trust and confidence in another who is in a dominant or superior position. A fiduciary relationship arises between two persons when one person is under a duty to act for or give advice for the benefit of another on matters within the scope of their relationship.

[Ibid. (quoting F.G., supra, 150 N.J. at 563-64) (citing Restatement (Second) of Torts 874 cmt. a (1979)).]

The Court has recognized insurance agents and brokers owe fiduciary duties to their clients. Aden v. Fortsh, 169 N.J. 64, 78-79 (2001).

However, plaintiff never produced an expert report, defining the duty owed by defendant in providing professional advice, either as an insurance broker or a financial adviser, or setting forth the fiduciary obligations imposed upon members of either profession. Nor did plaintiff ever file an affidavit of merit regarding alleged breaches of defendant's duty as an insurance broker. See N.J.S.A. 2A:53A-26(o) (listing "insurance producer" as a "licensed person" for whom a plaintiff must supply an affidavit of merit pursuant to N.J.S.A. 2A:53A-27).

The Court has made clear that the CFA "was not meant to reach the sale of securities." Lee v. First Union Nat'l Bank, 199 N.J. 251, 263 (2009). Plaintiff has cited no authority for the proposition that the Securities Act provides a private cause of action for violations. Our courts "have been reluctant to infer a statutory private right of action where the Legislature has not expressly provided for such action." In re N.J. Firemen's Ass'n Obligation to Provide Relief Applications under Open Public Records Act, 443 N.J. Super. 238, 258 (App. Div. 2015) (quoting R.J. Gaydos Ins. Agency, Inc. v. Nat'l Consumer Ins. Co., 168 N.J. 255, 271 (2001)). In sum, we affirm the grant of summary judgment on counts two through seven of plaintiff's complaint. We reach a different result as to count one.

The elements of the tort of negligent misrepresentation are: "[a]n incorrect statement, negligently made and justifiably relied on, [and] may be the basis for recovery of damages for economic loss . . . sustained as a consequence of that reliance." Kaufman v. I-Stat Corp., 165 N.J. 94, 109 (2000) (alterations in original) (quoting H. Rosenblum, Inc. v. Adler, 93 N.J. 324, 334 (1983)). "[T]he statement[] must be a proximate cause of the plaintiff's damages." Karu v. Feldman, 119 N.J. 135, 147 (1990) (citing Rosenblum, supra, 93 N.J. at 350). "[N]egligent misrepresentation does not require scienter as an element," therefore, "it is easier to prove than fraud." Kaufman, supra, 165 N.J. at 110.

In opposing summary judgment, plaintiff certified defendant acted as a financial planner, creating a comprehensive investment plan for plaintiff and his wife that included different investment recommendations for each. Plaintiff further asserted defendant told him investing in Carr Miller would provide better returns without increasing investment risk, and suggested an investment with Carr Miller was "appropriate considering the plaintiff's age and investment expectations." As a result of these statements and meetings with Carr at which defendant was allegedly present, plaintiff invested with Carr Miller. Applying appropriate summary judgment standards, we conclude count one of plaintiff's complaint alleging negligent misrepresentation should not have been dismissed on summary judgment.

Defendant argues there were alternate grounds supporting his motion for summary judgment that were unaddressed by the motion judge. He contends plaintiff's complaint should have been dismissed for failing to name Carr Miller and its principals as "indispensable" parties pursuant to Rule 4:28-1(a). He also contends summary judgment was appropriate because the regulatory action against Carr Miller initiated by the Attorney General provided plaintiff with the forum and opportunity for relief, and therefore, plaintiff's complaint is barred by the doctrine of res judicata.

These arguments lack sufficient merit to warrant discussion beyond the following brief comments. R. 2:11-3(e)(1)(E). "[A] party is not truly indispensable unless he has an interest inevitably involved in the subject matter before the court and a judgment cannot justly be made between the litigants without either adjudging or necessarily affecting the absentee's interest." Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 394 N.J. Super.71, 82 (App Div. 2007) (citing Jennings v. M & M Transp. Co., 104 N.J. Super.265, 272 (Ch. Div. 1969)). Plaintiff's claims for relief against defendant did not require the joinder of any other parties.

It does not appear that defendant advanced any argument before the motion judge based upon res judicata or related principles of law.4 We could, therefore, refuse to consider it now, Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973), but, for the sake of completeness, we reject the argument on substantive grounds. Plaintiff was provided minimal financial relief as a result of the regulatory action. Any finding in the action brought by the Attorney General that Carr Miller committed fraud does not foreclose plaintiff's ability to pursue defendant in this appropriate forum.

Affirmed in part, reversed in part and remanded. We do not retain jurisdiction.

1 Somewhat confusingly, the notice of motion sought summary judgment "pursuant to Rule 4:6-2(e) and/or to [otherwise] dismiss plaintiff's complaint for failure to state a claim upon which relief can be granted pursuant to R. 4:46 and/or for failure to join necessary and indispensable parties pursuant to R. 4:28-1."

2 The record does not include defendant's opposition to the motion for reconsideration, however, the July order reflects that plaintiff's motion was "opposed."

3 Any direct review of the June order is time-barred. See R. 2:4-1(a) ("Appeals from final judgments of courts . . . shall be taken within [forty-five] days of their entry."). A timely motion for reconsideration tolls "the running of time for taking an appeal" and "[t]he remaining time shall again begin to run from the date of the entry of an order disposing of such a motion." R. 2:4-3(e). Plaintiff's notice of appeal only seeks review of the July order.

4 Because defendant's Law Division brief was not part of the record, we directed that he furnish us with a copy to assess what arguments were actually advanced before the motion judge.