EQUIOM (ISLE OF MAN) LIMITED v. JACOBS et al

Filing 70

OPINION. Signed by Judge Claire C. Cecchi on 1/29/2021. (lag, )

Case 2:16-cv-04362-CCC-JBC Document 70 Filed 01/29/21 Page 1 of 16 PageID: 1543

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

Civil Action No.: 16-04362

EQUIOM (ISLE OF MAN) LIMITED (as
Trustee of the Lausar Settlement Trust),
Plaintiff,

OPINION

v.
ROBERT JACOBS, COREY SINGMAN,
ROBO ASSOCIATES LLC, and LLOYD
HARBOR PARTNERS LLC,
Defendants.
CECCHI, District Judge.
This matter comes before the Court on the motions for partial summary judgment (ECF Nos.
53-54) of Defendants Robert Jacobs (“Jacobs”) and Robo Associates LLC (“Robo”) (collectively,
“Defendants”). 1 The motions seek judgment on Counts Two and Three of the Complaint (ECF No. 1)
(“Compl.”), filed by Equiom (Isle of Man) Limited (“Plaintiff”). The Court has considered the
submissions made in support of and in opposition to the instant motions. See ECF Nos. 53-1, 54-1,
55, 59-1, 60-1. The motions are decided without oral argument pursuant to Federal Rule of Civil
Procedure 78. 2 For the reasons set forth below, Defendants’ motions for partial summary judgment
are DENIED.

1

The two motions present identical arguments.

2

The Court considers any new arguments not presented by the parties to be waived. See Brenner v.
Local 514, United Bhd. of Carpenters & Joiners of Am., 927 F.2d 1283, 1298 (3d Cir. 1991) (“It is
well established that failure to raise an issue in the district court constitutes a waiver of the argument.”).

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I.

BACKGROUND
This case arises out of an investment by Plaintiff in Metro Design USA, LLC (“Metro NJ”) as

a result of multiple alleged misrepresentations made to Plaintiff by Defendants. ECF No. 53-4 ¶¶ 10,
23-24 (“Def. SMF”). 3
Metro NJ was founded in 2007 by non-parties Warren Vogel (“Vogel”) and Michael Coughlin
(“Coughlin”) and was engaged in the business of marketing and selling various consumer products to
“big-box retailers.” Id. ¶¶ 1-2. As of late 2013, Metro NJ struggled to turn a profit and “needed outside
assistance if it was going to survive as a going concern.” Id. ¶ 3. Around this time, Defendants contend
that they were hired by Metro NJ to provide “management consulting services.” Id. ¶¶ 4-5. Defendant
Jacobs formed Robo to provide “management consulting services to struggling businesses.” Id. ¶ 4.
Around late 2013, Jacobs was introduced to Vogel to try to help turn around Metro NJ’s operations,
and by late March 2014, Robo was formally engaged by Metro NJ to provide consulting services. Id.
¶¶ 4-5.
The parties dispute Defendants’ degree of involvement in Metro NJ. Id. ¶ 5; ECF No. 58 at 23 (“Pl. Resp.”). According to Plaintiff, Defendants were not mere consultants, but rather “had control
over Metro [NJ].” Pl. Resp. at 2-3. Plaintiff maintains that this control was total as of December 2014;
Vogel and Coughlin received all their directions from Jacobs, Jacobs was in full control of Metro NJ’s
cash management and the board, and Jacobs even dictated the employment terms and salaries of all
Metro NJ employees, including Vogel and Coughlin. Id. at 3, 7. Accordingly, whether Defendants
were directors or officers of Metro NJ is in dispute. Def. SMF ¶ 27; Pl. Resp. at 13-14; ECF No. 59-1
at 17-18 (“Def. Reply”). Plaintiff argues that Jacobs appointed himself to the board of managers,
labeled himself as managing director, listed himself as a board member on both internal emails and

3

Unless otherwise indicated, the following facts are not in dispute and are drawn from the parties’
Local Rule 56.1 statements. The Court notes that if a fact is in dispute, it will be represented by
citations to both parties’ Local Rule 56.1 statements.

2

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those with third parties, and maintained that he had sole discretion to appoint a third member of a fiveperson board. Pl. Resp. at 13-14. Defendants contend that they were never appointed board members,
and that Metro NJ’s operating agreement was never amended to name them as board members. Def.
Reply at 17.
It is disputed whether Jacobs purposely forwarded to Defendant Corey Singman
(“Singman”)—an investment banker who had many investor contacts—inflated projections and other
false information knowing that Singman would forward the information directly to Plaintiff to induce
its investment. 4 Def. SMF ¶ 10; Pl. Resp. at 6-7; Def. Reply at 8, 28. It is undisputed that toward the
latter part of 2014, Jacobs introduced Vogel to Singman. Def. SMF ¶ 8. However, Defendants aver
that it was at Vogel’s direction that Singman specifically pursue Plaintiff as an investor. Id. Plaintiff
contends that it was Jacobs, not Vogel, who instructed Singman to pursue Plaintiff as an investor. Pl.
Resp. at 5. Nevertheless, acting at the behest of Metro NJ, Singman duly contacted Plaintiff in
December 2014 through Plaintiff’s agent, Phillip Scott (“Scott”), asking for and securing Plaintiff’s
investment. Def. SMF ¶¶ 9-10. Plaintiff contends that throughout the course of the negotiation
between Scott and Singman, Jacobs was in constant contact with Singman regarding Plaintiff’s
potential investment. Id. These contacts included Jacobs sending Singman a “pitch deck” of slides
with false information about Metro NJ, the company’s past financials, and a set of inflated projections
for 2015 that Jacobs personally created (“Jacobs Projections”). Pl. Resp. at 14-17. Plaintiff contends
that this false information provided to it by Singman—who received it from Jacobs—is what induced
its investment in Metro NJ. Def. SMF ¶¶ 23-24. It is disputed whether Jacobs knew Singman was
going to forward these emails directly to Scott. Id. ¶ 10; Pl. Resp. at 6-7; Def. Reply at 8, 28.
Nonetheless, some of the emails from Jacobs to Singman were directly forwarded to Scott. Pl. Resp.
at 6-7, Def. Reply at 8.

4

A default has since been entered against Singman. See ECF No. 24 at 2; see also ECF No. 8.

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Plaintiff contends there were multiple misrepresentations (and omissions) of material
information that induced Plaintiff’s investment in Metro NJ. Pl. Resp. at 14-23. One of the alleged
misrepresentations made by Singman to Scott was that Plaintiff’s investment would be used to
strategically restructure Metro NJ’s business. Def. SMF ¶ 11. The investment was also conditioned
on Metro NJ “merg[ing] with and into a newly formed limited liability company” shortly after the
transaction was completed.

Id. ¶ 18.

Defendants concede that “Equiom relied on the

misrepresentations of Singman” (id. ¶ 12), but maintain that they were not made by Singman with the
intent to mislead, Id. ¶¶ 28-29. Plaintiff argues that both Singman and Jacobs were aware that they
were conveying false information to Scott, and that they also intentionally withheld material
information to mislead Scott, all to induce Plaintiff’s investment. Pl. Resp. at 18-27.
Plaintiff agreed to invest $500,000 in Metro NJ, and the note purchase agreement was signed
by Metro NJ, Vogel, and Coughlin. Def. SMF ¶¶ 16-17, 24. Plaintiff maintains that Vogel and
Coughlin signed at Jacobs’ direction, and that they played no role in any negotiations. Pl. Resp. at 8-9.
On January 12, 2015—a day before the loan was to be made—Metro NJ’s attorney registered Metro
Design USA LLC (“Metro DE”) as a Delaware limited liability company, pursuant to the condition of
the investment. Def. SMF ¶ 19. However, Defendants contend that “[u]nbeknownst to both Plaintiff
and Defendants, Vogel had apparently pledged 100% of Metro [NJ’s] equity to Sean Moore
(“Moore”).” Id. ¶ 20. Plaintiff does not dispute that Vogel did this but contends that Jacobs knew that
the equity was pledged to Moore while the negotiations with Scott and Singman were ongoing, and
therefore was aware that the merger condition agreed to was not possible to satisfy. 5 Pl. Resp. at 10.

5

Plaintiff avers that other impediments also existed that prevented the merger. These included a
forbearance agreement with AmRock (a creditor of Metro NJ), Metro NJ’s insolvency, and the fact
that Metro NJ was considering seeking protection under the federal bankruptcy laws as of January
2015. Pl. Resp. at 11. Defendants contend that the equity pledge to Moore was the only real
impediment, and that “any other impediments could have been adequately addressed.” Def. Reply at
14.

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Finally, Plaintiff claims that “[n]one of the principal on the $500,000 loan to Metro NJ has
been repaid,” that “none of the Default interest accruing on the principal at the annual rate of 12% has
been paid,” and that Plaintiff never received any equity in any successor entity. Compl. ¶¶ 71-74.
II.

PROCEDURAL HISTORY
In its Complaint, Plaintiff asserted the following claims against these Defendants: breach of

fiduciary duty (Count Two), aiding and abetting fraud (Count Three), and unjust enrichment (Count
Five). See Compl. ¶¶ 80-120. On May 4, 2017, Defendants moved to dismiss Counts Two and Five of
the Complaint. 6 See ECF Nos. 21-1, 22-1 at 1. By order and opinion dated December 22, 2017, the
Court denied Defendants’ motions to dismiss in their entirety. See ECF No. 39. Defendants now move
for partial summary judgment on Counts Two and Three of the Complaint. 7 See ECF Nos. 53-1, 54-1.
III.

LEGAL STANDARD
Summary judgment is appropriate if the “depositions, documents, electronically stored

information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other
materials” demonstrate that there is no genuine issue as to any material fact, and, construing all facts
and inferences in a light most favorable to the non-moving party, “the moving party is entitled to a
judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); see also Pollock v.
Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986); Fed. R. Civ. P. 56(c).
The moving party has the initial burden of proving the absence of a genuine issue of material
fact. See Celotex, 477 U.S. at 323. Once the moving party meets this burden, the non-moving party

6

Defendants also initially moved to dismiss Count One of the Complaint. However, Plaintiff clarified
that Count One of the Complaint is not directed at either Jacobs or Robo. ECF No. 24 at 1. Defendants
subsequently dropped any claims with regards to Count One of the Complaint. See ECF Nos. 25-1,
26-1 at 1.
7

Defendants’ motions for partial summary judgment were administratively terminated after this Court
ordered the parties to mediation on July 24, 2019. See ECF No. 61. After mediation proved
unsuccessful, the motions were reinstated on November 25, 2020.

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has the burden of identifying specific facts to show that, to the contrary, a genuine issue of material
fact exists for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87
(1986). In order to meet its burden, the nonmoving party must “go beyond the pleadings and by [its]
own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate
‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. at 324; see also Lujan
v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990) (stating that “[t]he object of [Rule 56(e)] is not to
replace conclusory allegations of the complaint . . . with conclusory allegations of an affidavit”);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Big Apple BMW, Inc. v. BMW of N. Am.,
Inc., 974 F.2d 1358, 1363 (3d Cir. 1992) (“To raise a genuine issue of material fact . . . [the opponent
must] exceed[] the ‘mere scintilla’ threshold.”).
An issue is “genuine” if it is supported by evidence such that a reasonable jury could return a
verdict in the nonmoving party’s favor. Anderson, 477 U.S. at 248. A fact is “material” if, under the
governing substantive law, a dispute about the fact might affect the outcome of the suit. Id. In
considering a motion for summary judgment, a district court may not make credibility determinations
or engage in any weighing of the evidence; instead, the non-moving party’s evidence “is to be believed
and all justifiable inferences are to be drawn in his favor.” Marino v. Indus. Crating Co., 358 F.3d
241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).
IV.

DISCUSSION
A. Count Two (Breach of Fiduciary Duty)
Defendants contend that they are entitled to summary judgment on the breach of fiduciary duty

claim for two reasons: (1) Plaintiff lacks standing to bring this claim because it can only be asserted
derivatively (and Plaintiff has brought it as a direct claim); and (2) even if Plaintiff had asserted the
claim derivatively, Defendants were not directors or officers of Metro NJ, and as such, did not owe
Plaintiff a fiduciary duty. ECF Nos. 53-1, 54-1 at 12-16. Plaintiff asserts that under New Jersey law,
it is permissible for creditors to bring direct claims against directors of a company for breach of fiduciary

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duty once the company becomes insolvent (as Plaintiff argues it was here). ECF No. 55 at 22. Plaintiff
also argues that the evidence shows that Jacobs had taken full control of Metro NJ, and as a controlling
board member of an insolvent company, Jacobs owed Plaintiff fiduciary duties. Id. at 20.
i.

Plaintiff has Standing to Assert a Breach of Fiduciary Duty Claim

“A claim for breach of fiduciary duty . . . requires that a plaintiff show (1) the existence of a
fiduciary duty, (2) the breach of that duty by the defendant, and (3) resulting damages.” Miller v.
Butler, 2014 WL 1716184, at *3 (D.N.J. Apr. 30, 2014). Generally, “directors owe no [fiduciary] duty
to corporate creditors.” VFB L.L.C. v. Campbell Soup Co., 482 F.3d 624, 635-36 (3d Cir. 2007).
However, under New Jersey law, “[o]nce a corporation becomes insolvent . . . the directors assume a
fiduciary or ‘quasi-trust’ duty to the corporation’s creditors” where the directors cannot prefer one
creditor over another. Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d
164, 173 (3d Cir. 2002) (citing AYR Composition, Inc. v. Rosenberg, 261 N.J. Super. 495, 505 (App.
Div. 1993)). This claim can be asserted directly. See e.g., Foodtown, 296 F.3d at 173 (finding that a
board of trustees of a pension fund [creditor] had standing to directly pursue breach of fiduciary duty
claims against a corporation’s officers and directors).
Plaintiff has produced sufficient evidence to establish, or at the very least raise a genuine issue
of material fact, that Metro NJ was insolvent as of January 2015 (the same month Plaintiff made its
investment). See ECF No. 56, Scott Aff. ¶ 14(a); ECF No. 56, Ex. 9; ECF No. 56, Ex. 16; ECF No.
57-3, Ex. 47; ECF No. 57-5, Ex. 79, Vogel Dep. Tr. at 8:20-23; ECF No. 57-5, Ex. 80, Coughlin Dep.
Tr. at 9:21-10:8. There is also evidence of Jacobs favoring other creditors over Plaintiff. ECF No. 56,
Scott Aff. ¶ 14(q); ECF No. 57-4, Exs. 69-70. Accordingly, as a creditor of an insolvent company,
Plaintiff has standing to bring a direct claim for breach of fiduciary duty under the laws of New Jersey.
See e.g., Foodtown, 296 F.3d at 173. The only remaining inquiry is whether Defendants were directors
and/or officers, thereby permitting Plaintiff to assert the breach of fiduciary duty claim specifically
against them.

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Defendants arguments to the contrary are unavailing. Defendants argue that because New
Jersey caselaw “is clearly very limited” with regards to situations in which creditors may bring claims
for breach of fiduciary duties, this Court should defer to Delaware law. ECF Nos. 59-1, 60-1 at 7
(citing Canter v. Lakewood of Voorhees, 420 N.J. Super. 508, 517 (App. Div. 2011) (holding that
absent authority in New Jersey, New Jersey courts consult Delaware corporate law for guidance)).
Under Delaware law, a breach of fiduciary duty claim brought by a creditor of an insolvent corporation
must be brought derivatively, not directly. Quadrant Structured Prods. Co. v. Vertin, 102 A.3d 155,
166 (Del. Ch. 2014) (citing N. Am. Catholic Educ. Programming Found., Inc. v. Gheewalla, 930 A.2d
92, 103 (Del. 2007)). However, given the legal authority cited above, New Jersey law is not “absent
authority” on this topic as Defendants suggest. 8 See ECF Nos. 53-1, 54-1 at 13 n.2. New Jersey law
appropriately applies here as to all of Metro NJ’s corporate governance issues. Metro NJ was organized
under the laws of New Jersey, ECF Nos. 53-1, 54-1 at 7, maintains its principal place of business in
New Jersey, ECF No. 56, Scott Aff. ¶ 3, and thus, has no connection with Delaware.
Defendants further attempt to distinguish New Jersey caselaw by arguing that “those creditors
[in the New Jersey cases] were not analogous to Plaintiff’s position as an investor, which is a special
type of creditor,” is also without merit. ECF Nos. 59-1, 60-1 at 7. Defendants characterize the
transaction with Plaintiff as “a convertible loan of $500,000.” Def. SMF ¶ 10 (emphasis added).
Additionally, the authority Defendants point to makes no explicit distinction between creditors and
“investors,” the latter of which Defendants contend “is a special type of creditor.” See ECF Nos. 591, 60-1 at 7; see also Foodtown, 296 F.3d at 173 (using the phrase “corporation’s creditors,” making
no meaningful distinction among creditors).

8

The Court notes that it also applied New Jersey law in its previous opinion when discussing Plaintiff’s
breach of fiduciary duty claim. See ECF No. 39 at 5-7.

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ii.

Defendants were Directors and/or Officers

Defendants contend that no fiduciary duty was breached here because no fiduciary relationship
ever existed. ECF Nos. 53-1, 54-1 at 16. Defendants argue that they were not officers or directors but
merely consultants hired by Metro NJ to help with the company’s finances. See id. In fact, they assert
that the operating agreement did not mention Defendants in any capacity. Id. Thus, Defendants argue,
summary judgment should be entered in their favor on this claim. Id. Plaintiff contends that since
Defendants exerted full control over Metro NJ’s finances, held themselves out to third parties as
members of the board, controlled the board, spoke for the board, and even seemingly appointed
themselves to the board, they owed fiduciary duties to all of Metro NJ’s creditors. ECF No. 55 at 2122. The Court finds that there is a genuine issue of material fact here. See Celotex, 477 U.S. at 323.
As to the evidence presented, Defendants point to Metro NJ’s operating agreement which lacks
any mention of Defendants, and does not include any amendment indicating any changes to include
Defendants as members of the board. See ECF No. 53-3, Ex. A. By contrast, Plaintiff presented a
plethora of evidence to, at the very least, rebut the notion that there is no genuine dispute. Per the
documents, Jacobs held himself out to be Executive Chairman of the Board of Managers. See ECF
No. 57-2, Ex. 40. In an October 2014 email to Singman—which included a “pitch deck” to induce
potential investors of Metro NJ—on a slide titled “Board Members,” Jacobs listed himself. See ECF
No. 57-1, Ex. 21. In a prior email to Vogel in June of 2014, Jacobs stated that “Augie Deluca and Bob
Jacobs will join the Metro Board,” and that “Bob Jacobs/Robo, at his sole discretion can appoint a 3rd
member.” ECF No. 57-2, Ex. 41 (emphasis added). These representations were also made to third
parties outside of Metro NJ. In a February 2015 email, Jacobs emailed Tammy Telerico—the owner
of a license Metro NJ used—again referring to himself as a board member. See ECF No. 57-3, Ex. 42.
The record also indicates instances of Jacobs speaking for the board. See ECF No. 56, Scott Aff. ¶ 9;
ECF No. 56, Ex. 3 (“[S]ee attached to help understand the Board’s confidence in management’s 2015
revenue projections. . . . I am (and the Board) very confident 2015 will be a breakout year for Metro if

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funded appropriately.”).
In addition to these representations made by Jacobs, it appears that there also is a material
dispute regarding the degree of control Jacobs exercised over Metro NJ. Plaintiff produced evidence
demonstrating that Jacobs eventually exerted sole control over Metro NJ’s finances, thereby displacing
any role that Vogel or Coughlin held. See ECF No. 57-5, Ex. 77, Jacobs Dep. Tr. at 19:4-7, 203:1518; ECF No. 57-5, Ex. 78, Singman Dep. Tr. at 72:23-74:9; ECF No. 57-5, Ex. 80, Coughlin Dep. Tr.
at 74:8-75:20. The evidence suggests that Jacobs was able to dictate how Plaintiff’s entire investment
would be spent. See ECF No. 56, Scott Aff. ¶ 14(p); ECF No. 57-2, Exs. 33-38; ECF No. 57-5, Ex.
77, Jacobs Dep. Tr. at 19:4-7, 252:18-253:17, 277:9-18. Jacobs also apparently had total “approval
authority” over Vogel and Coughlin’s employment terms and salaries. See ECF No. 57-1, Exs. 19-20;
ECF No. 57-5, Ex. 79, Vogel Dep. Tr. at 45:9-47:25; ECF No. 57-5, Ex. 80, Coughlin Dep. Tr. at
77:13-80:8. The sole fact that the operating agreement was never amended to adequately reflect
Defendants position in the company is not fatal to Plaintiff’s claim. On a motion for summary
judgment, the Court is not to weigh the evidence nor make credibility judgments; rather, the nonmoving party’s evidence is to be believed and all inferences are to be made in their favor. Marino, 358
F.3d at 247 (citing Anderson, 477 U.S. at 255). Thus, at the very least, the above evidence produced
by Plaintiff creates a genuine issue of material fact as to whether Defendants were in fact directors or
officers. See Celotex, 477 U.S. at 330. Therefore, the motions are denied as to Count Two.
B. Count Three (Aiding and Abetting Fraud)
Defendants next argue that summary judgment is proper as to Count Three because “Plaintiff
cannot show that a fraud was committed [by Singman],” and as such, the aiding and abetting fraud
claim against Defendants must fail. 9 ECF Nos. 53-1, 54-1 at 17. Defendants further contend that even

9

There is no fraud claim against Defendants. See ECF Nos. 53-1, 54-1 at 17. The fraud claim is only
against Singman. Id.

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if the fraud claim against Singman could be established, there is no evidence that Defendants aided
and abetted said fraud. Id. at 18. Plaintiff asserts that the evidence establishes that Jacobs and Singman
not only knew that the information Singman provided to Scott was false, but in fact, it was Jacobs who
“orchestrated and directed everything Singman did and did not tell [Plaintiff].” ECF No. 55 at 24-27.
Plaintiff concludes that this evidence demonstrates that Defendants did aid and abet Singman in his
fraud, or at a minimum, it creates a genuine dispute as to whether they did. Id. at 27.
i.

Common Law Fraud

Defendants contend that there is “no evidence that Singman committed a fraud or conveyed
anything to Plaintiff he knew to be false.” ECF Nos. 53-1, 54-1 at 18. Plaintiff claims that the evidence
demonstrates that both Singman and Jacobs knew the information provided to Scott was false. ECF
No. 55 at 25. The Court finds that a genuine issue of material fact exists as to this issue. See Celotex,
477 U.S. at 323.
Establishing fraud is a prerequisite to proving a claim of aiding and abetting fraud. See State
Dep’t of Treasury, Div. of Inv. ex. rel. McCormac v. Qwest Commc’ns Int’l, Inc., 387 N.J. Super. 469,
485 (App. Div. 2006). Under New Jersey law, “[t]he elements of common-law fraud are (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.” Allstate N.J. Ins. Co. v. Lajara, 222 N.J. 129, 147 (2015)
(emphasis added) (internal citations omitted). Defendants appear to contend that the “knowledge”
element of the fraud claim is absent here. See ECF Nos. 53-1, 54-1 at 18.
Defendants direct the Court to Singman’s deposition testimony to establish that Singman did
not convey anything to Plaintiff that he knew to be false. Id. At his deposition, Singman was directly
asked whether he believed that the representations he made to Scott were untrue, to which he
responded, “No.” See ECF No. 53-3, Ex. B, Singman Dep. Tr. at 159:6-18. When asked if he was
“trying to deceive [Scott],” he again responded, “No.” Id. 154:13-14. However, Singman’s two lines

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of testimony, taken alone, are insufficient to satisfy Defendants’ burden of establishing the absence of
a genuine dispute as to whether Singman knew he was conveying untrue information. See Irwin Katz
& Assocs., Inc. v. Concepts in Health, Inc., 2015 WL 4251156, at *3 (D.N.J. July 13, 2015) (stating
that a defendant’s self-serving testimony alone was not sufficient to meet her burden of showing that
no genuine dispute of material fact existed) (internal citations omitted).
Moreover, Plaintiff has provided ample evidence to the contrary; the most compelling of which
is a December 9, 2014 email sent by Vogel to certain Metro NJ employees after a board meeting—
including both Jacobs and Singman—that contained sales projections for 2015 (“Vogel Projections”).
See ECF No. 56, Scott Aff. ¶ 8; see also ECF No. 56, Ex. 2. According to the Vogel Projections, Metro
NJ was projected to do about $3,000,000 in sales, having the potential to grow to $5,700,000. ECF
No. 56, Ex. 2. However, when Singman emailed Scott to discuss Plaintiff’s potential investment in
Metro NJ on December 19, 2014, Singman sent him a document created by Jacobs—the Jacobs
Projections—that projected that Metro NJ would have a revenue of $8,295,258; a much higher amount
compared to the modest Vogel Projections that were circulated internally. See ECF No. 56, Scott Aff.
¶ 9; see also ECF No. 56, Ex. 1. Scott was never sent the Vogel Projections. See ECF No. 56, Scott
Aff. ¶ 14(c). A few weeks later, when Scott questioned Singman regarding the Jacobs Projections,
Singman forwarded him an email from Jacobs which characterized the Jacobs Projections as
“conservative.” See ECF No. 56, Scott Aff. ¶ 9; see also ECF No. 56, Exs. 3, 5. Between December
9 and December 19, there is no evidence suggesting that the company’s finances improved to warrant
the drastic increase seen between the Vogel Projections and the Jacobs Projections. See e.g., ECF No.
57-3, Ex. 44 (showing Metro NJ was a month and a half late on rent as of December 18, 2014).
Additionally, Plaintiff presented evidence that demonstrates that Jacobs and Singman both knew that
Metro NJ’s 2014 projections were missed by almost $2,000,000. ECF No. 56, Scott Aff. ¶ 14(b); ECF
No. 57, Exs. 43, 48-51 (emails containing 2014 projections). Thus, it is not clear what the increase
was predicated on (if anything).

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Under New Jersey law, an action for common law fraud “must be predicated on a statement of
present or past fact. Predictions of future events are not actionable.” Pai v. DRX Urgent Care, L.L.C.,
2014 WL 837158, at *12 (D.N.J. Mar. 4, 2014) (emphasis added) (internal citations omitted); see also
Chatlos Sys., Inc. v. Nat’l Cash Register Corp., 479 F. Supp. 738, 748-49 (D.N.J. 1979), aff’d in part,
rev’d in part, 635 F.2d 1081 (3d Cir. 1980) (“Statements as to future or contingent events, as to
expectations and probabilities, or as to what will be or is intended to be done in the future, do not
constitute misrepresentations even though they turn out to be false, at least where they are not made
with intent to deceive, and where the parties have equal means of knowledge . . . .”) (emphasis added)
(internal citations omitted). Contrary to Defendants’ assertion, the fraud claimed here is not based
solely on the future projections. See ECF Nos. 59-1, 60-1 at 8. Viewing the evidence in the light most
favorable to Plaintiff, as the Court must at this stage, there are triable issues of fact as to whether
Defendants should have been aware that the Jacobs Projections were not “conservative” in light of the
fact that Metro NJ missed its 2014 projections by nearly $2,000,000. ECF No. 56, Scott Aff. ¶ 14(b);
ECF No. 57, Exs. 43, 48-51 (emails containing 2014 projections). The record indicates that Defendants
chose to send their allegedly inflated projections—not the more modest ones that were circulated
internally—to a potential investor to induce its investment. Plaintiff was never provided the Vogel
Projections to assess its decision to invest. See ECF No. 56, Scott Aff. ¶ 14(c). Given the evidence
herein, there are triable issues of fact as to whether Singman knew he was making false representations
to Scott. Accordingly, since the elements of the underlying fraud claim have been satisfied, the Court
will now turn to the merits of the aiding and abetting claim.
ii.

Aiding and Abetting Fraud

Defendants aver that even if Plaintiff could prove that Singman committed fraud, they are
nevertheless entitled to summary judgment on Count Three because Plaintiff cannot establish that
Defendants had actual knowledge of the fraud, nor that they substantially assisted in the advancement
of the fraud. ECF Nos. 53-1, 54-1 at 18-19. Plaintiff argues that not only did Jacobs know of

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Singman’s fraud, but “Singman’s fraud against [Plaintiff] was orchestrated and directed by Jacobs.”
ECF No. 55 at 27. The Court again finds that a genuine issue of material fact exists. See Celotex, 477
U.S. at 323.
A claim of aiding and abetting fraud requires proof of the following elements: “(1) the
commission of a wrongful act [the underlying fraud]; (2) knowledge of the act by the alleged aiderabettor; and (3) the aider-abettor knowingly and substantially participated in the wrongdoing.”
Morganroth & Morganroth v. Norris, McLaughlin & Marcus, P.C., 331 F.3d 406, 415 (3d Cir. 2003)
(internal citations omitted). Defendants argue that even if the Court finds element one to be satisfied,
Plaintiff cannot satisfy elements two and three. ECF Nos. 53-1, 54-1 at 18-19. Defendants maintain
that “[t]here are no documents or testimony that demonstrate or even infer that Jacobs or Robo thought
Singman was committing a fraud.” ECF Nos. 53-1, 54-1 at 19 (emphasis in original). However, the
only evidence that Defendants presented to the Court is an affidavit from Jacobs. See ECF Nos. 53-1,
54-1 at 19. In it, Jacobs states that “[a]ny information I relayed to Singman were my honest opinions
and projections based on my knowledge and expertise.” 10 ECF No. 53-2, Jacobs Aff. ¶ 13; see Irwin
Katz, 2015 WL 4251156, at *3 (stating that “[t]he fact that some [contrary evidence] . . . appears in,
and only in, [defendant’s] self-serving testimony is insufficient for Defendants to meet their burden of
showing that no genuine dispute of material fact exists on this point”) (internal citations omitted).
Nonetheless, Plaintiff has presented enough factual evidence to rebut the notion, thus creating
a genuine dispute for trial. Plaintiff directs the Court to much of the same evidence produced to
establish a dispute regarding Singman’s alleged fraud. See ECF No. 55 at 27-28. Sometime in the
middle of 2014, it was Jacobs who contacted Singman and informed him that Metro NJ was an
“opportunity for investment and restructure.” See ECF No. 57-5, Singman Dep. Tr. at 8:5-19. On

10

Defendants characterize this statement by Jacobs as establishing that he “whole-heartedly believed
that Metro’s finances could be turned around.” Def. SMF ¶ 30.

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October 15, 2014, Jacobs sent an email to Singman that included both the “pitch deck” (the same one
that listed Jacobs as a board member) and financials of the company; it also stated that Metro NJ needed
$500,000. See ECF No. 57-1, Ex. 21. On December 18 of the same year, Jacobs sent Singman the
Jacobs Projections. See ECF No. 57-1, Ex. 23. The following day, Singman contacted Scott—using
the materials sent to Singman by Jacobs—to inform Scott about Metro NJ and how it was a “great
investment opportunity” because the company was “about to take off and become highly profitable.”
ECF No. 56, Scott Aff. ¶ 5; see also ECF No. 56, Ex. 1; ECF No. 57-5, Singman Dep. Tr. at 36:237:18 (stating that the “pitch deck” and Jacobs Projections were created and sent to him by Jacobs).
On December 30, 2014, Scott raised questions about the Jacobs Projections to Singman; 11 Jacobs
drafted a response and sent it to Singman, who subsequently directly forwarded it to Scott a few hours
later. See ECF No. 56, Scott Aff. ¶ 9; see also ECF No. 56, Ex. 3. In his response, Jacobs described
the Jacobs Projections as “conservative” when he knew that they were significantly higher than the
Vogel Projections (the projections circulated internally). ECF No. 56, Ex. 3. Regardless of whether
Jacobs believed Singman would directly forward Scott the response or simply reword it, based on the
evidence produced, a reasonable jury could conclude that Jacobs knew that Singman was interacting
with Scott about a potential investment, and that he also knew that the information that he was
providing to Singman would be given to Scott (in some form) to potentially induce Plaintiff’s
investment. This evidence is enough to create a genuine dispute as to whether Jacobs knew and
substantially assisted in Singman’s alleged fraud. Accordingly, the motions are denied as to Count
Three.

11

It is undisputed that Jacobs and Scott never directly interacted. See ECF Nos. 59-1, 60-1 at 9.
However, Plaintiff maintains that Jacobs sent emails to Scott and Plaintiff through Singman. See id.

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V.

CONCLUSION
For the foregoing reasons, the motions for summary judgment are DENIED as to Counts Two

and Three. An appropriate order accompanies this opinion.

DATED: January 29, 2021

CLAIRE C. CECCHI, U.S.D.J.

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