OLEG SHTUTMAN VS. BRIAN PATRICK CARR Â (L-0638-12, BURLINGTON COUNTY AND STATEWIDE)(CONSOLIDATED), A-1064-15T1/A-1093-15T3

Background

Plaintiff Shtutman invested over $1.5 million via nine-month promissory “CM notes” issued by Carr Miller Capital, LLC (CMC) after conversations at social/sporting events where defendant Brian Carr (a licensed advisor and CMA officer) touted Indigo-Energy and CMC investments. Shtutman claimed he relied on Carr’s representations.
The litigation arose from a larger Ponzi scheme attributed to Everett Miller/CMC; most defendants were dismissed pretrial and only Carr proceeded to trial.
On summary judgment the trial court dismissed Shtutman’s common-law fraud and aiding-and-abetting fraud claims as to Carr (and other claims), but left negligence and negligent-misrepresentation claims for trial; a jury found Carr negligent and awarded damages.
Post-trial appeals were filed by both parties. The Appellate Division consolidated the appeals and reviewed (1) summary-judgment rulings, (2) sanctions against plaintiff for discovery delays, and (3) several trial-evidence rulings including admission of testimony referencing a consent order.
The court affirmed sanctions and the dismissal of the common-law fraud claim, reversed summary judgment on aiding-and-abetting fraud, vacated denial of summary judgment on negligent misrepresentation to the extent it rested on a non-disclosure of unregistered securities, and reversed denial of summary judgment on negligence (thus vacating the verdict). The court also found admission of testimony about a consent order was prejudicial error and ordered remand.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sanctions under R.4:23-2(b) for discovery noncompliance	Sanctions were unjust; counsel misstatements and delay prejudiced him	Sanctions appropriate because plaintiff repeatedly missed deadlines and deposition scheduling	Affirmed: sanctions and fee award were proper; plaintiff gave no substantial justification
Common-law fraud (misrepresentation of present/past fact)	Carr told plaintiff investment was "risk free" and Indigo would "go huge" — actionable misrepresentations	Statements were predictions/opinions (puffery), not misrepresentations of existing/past fact	Affirmed dismissal: statements were puffery/predictions, not actionable fraud
Aiding-and-abetting fraud (liability for Carr as aider to Miller)	Carr aided Miller’s fraud via solicitations and advice	Without Miller as a party/finding, aiding-and-abetting cannot stand	Reversed: granting summary judgment was error — jury may be asked to find Miller’s fraud and Carr’s role even if Miller is not a litigant
Negligent misrepresentation / negligence (duty and actionable misstatement)	Carr negligently misstated or omitted that CM notes were unregistered/non-exempt; relied on Carr as CMA/CMC representative	Statements were opinion/prediction/puffery; no actionable misstatement of past/present fact; Carr did not owe duty unless acting on behalf of CMC	Mixed: duty could exist if Carr held himself out as CMC representative (per Restatement §552 line of cases), but summary judgment should have been granted on negligence/negligent-misrep claims grounded on mere opinion/puffery/prediction; remanded to resolve whether the non-disclosure about unregistered securities survives sham-affidavit review
Admission of Consent Order and related evidence at trial	Consent Order findings show pattern and are probative/contextual	Consent Order findings were neither admitted by Carr nor established in adversarial proceeding; highly prejudicial and propensity-based	Reversed verdict and remanded: admission of the Consent Order material was prejudicial and violated Cofield/Cofield-principles (404(b)/403); new trial required

Key Cases Cited

Gennari v. Weichert Co. Realtors, 148 N.J. 582 (N.J. 1997) (elements of common-law fraud require present or past fact misrepresentation)
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (N.J. 1995) (summary-judgment standard and view of evidential record)
H. Rosenblum, Inc. v. Adler, 93 N.J. 324 (N.J. 1983) (professionals may be liable for negligent misrepresentations to foreseeable third-party investors)
Petrillo v. Bachenberg, 139 N.J. 472 (N.J. 1995) (attorney’s duty may run to foreseeable third parties who rely on the lawyer’s opinion)
Shelcusky v. Garjulio, 172 N.J. 185 (N.J. 2002) (sham-affidavit doctrine permitting courts to disregard affidavits contradicting prior deposition testimony)
State v. Rose, 206 N.J. 141 (N.J. 2011) (standards for admitting other-crimes evidence and limiting instructions)
State v. Cofield, 127 N.J. 328 (N.J. 1992) (four-part test for admissibility of other-crimes/wrongs evidence)