SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0274-17T2

REED S. KEAN,

Plaintiff-Respondent/

Cross-Appellant,

v.

INTOWN INVESTMENT GROUP, LLC, 1

DAVID BLACK, CATHLEEN BLACK, 

and VICINITY MEDIA GROUP, INC.,

Defendants-Appellants/

Cross-Respondents.

____________________________________

Argued November 8, 2018 – Decided

Before Judges Koblitz, Ostrer, and Mayer.

On appeal from Superior Court of New Jersey, Law 

Division, Morris County, Docket No. L-2733-15.

Mitchell J. Decter argued the cause for 

appellants/cross-respondents (Ferro Labella & Zucker 

 

1

 InTown Investment Group, LLC was dissolved prior to this litigation and is 

not a party to the appeal.

NOT FOR PUBLICATION WITHOUT THE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.

December 7, 2018
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LLC, attorneys; Mitchell J. Decter, of counsel and on 

the briefs).

Jordan D. Weinreich argued the cause for 

respondent/cross-appellant (Sherman Wells Sylvester 

& Stamelman LLP, attorneys; Julian W. Wells and 

Jordan D. Weinreich, of counsel; Matthew F. 

Chakmakian, on the brief). 

PER CURIAM

Defendants David Black,2 Cathleen Black, and Vicinity Media Group, Inc. 

(VMG) appeal from an August 8, 2017 judgment entered against them, jointly 

and severally, in favor of plaintiff in the amount of $112,500. 3 Plaintiff crossappeals from the trial court's denial of his claim that defendants violated the 

New Jersey Uniform Securities Law, N.J.S.A. 49:3-47 to -83 (NJUSL). 

We affirm in part and remand in part. We affirm as to the entry of the 

judgment, inclusive of plaintiff's $100,000 investment, and the trial court's 

denial of plaintiff's claim under the NJUSL. We remand for the trial court to

 

2

 We refer to David Black interchangeably as David Black and Black. We refer 

to his wife as Cathleen Black throughout this opinion. 

3

 The trial court entered judgment in the amount of $112,500, finding $100,000 

represented plaintiff's initial investment for the project known as InTown and 

Around and $12,500 represented a subsequent investment by plaintiff to Black 

for a different business venture known as Best of Essex. Defendants' appeal is 

limited to the $100,000 portion of the judgment.
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provide findings of fact and conclusions of law regarding the imposition of joint 

and several liability against Black, Cathleen Black, and VMG. 

The relevant facts are straightforward. Black had an idea to develop a 

mobile application to link local residents with local businesses within a 

particular community. The idea involved development of a new media platform,

capitalizing on Black's existing business connections in the print magazine field. 

Black and his wife had experience marketing local businesses to area residents 

through their company, VMG.4 Black saw an opportunity to use his business 

expertise and VMG's publishing skills to create a product tailored to the digital 

age. 

To make his vision a reality, Black sought investors for his idea. Plaintiff 

had no background in software development, but liked Black's idea and decided 

to meet with Black. Black asked plaintiff to invest $100,000 and gave plaintiff 

a spreadsheet with financial information.5 The spreadsheet contained growth 

projections for the venture over a five-year period. The projections were 

prepared by Black with the assistance of the owner of a landscaping company 

 

4

 VMG published several print magazines touting local businesses.

5

 During depositions, the parties referred to the spreadsheet as the "prospectus."
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who advertised in VMG's print publications. Black did not consult any financial 

advisors or other professionals in preparing the spreadsheet. 

Black sent plaintiff emails confirming the investment and describing each 

investors' role in the application to be known as "InTownandAround.com"

(InTown). In December 2013, the parties signed an operating agreement for 

InTown. In accordance with the operating agreement, spreadsheet, and Black's 

emails, plaintiff was the only investor contributing cash for InTown. In August 

2013, plaintiff agreed to invest $100,000, payable in several installments, for a 

21.8 percent share of InTown. According to the documents, another investor, 

Eric Lanel, was to provide an in-kind contribution toward the project, offering

his advertising and marketing expertise, in return for a 21.8 percent share of 

InTown. The Blacks also would provide in-kind contributions for a collective 

56.4 percent share of InTown. Black's contributions included hiring and 

managing staff, using VMG's offices, and creating the content for the mobile 

application. Cathleen Black, for her share of InTown, would provide 

contributions in the form of marketing, bookkeeping, paying invoices, and 

writing checks. 

Within ten months of plaintiff paying the first investment installment,

InTown failed. According to Black, due to advances in mobile technology, the 
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platform was obsolete. Ultimately, InTown dissolved. Plaintiff then filed a 

lawsuit against defendants alleging fraud, fraud in the inducement, breach of 

contract, breach of fiduciary duty, conversion, unjust enrichment, and violation 

of the NJUSL. 

The matter was tried before a judge without a jury. The judge heard 

testimony on July 11, July 12, and July 28, 2017. Eric Lanel, plaintiff, and Black

testified. Cathleen Black, who was present in the courtroom during the trial, did 

not testify. 

The judge summarized the testimony in an oral opinion. Overall, the 

judge found the testimony provided by plaintiff and Lanel to be more credible 

than the testimony provided by Black. Based on the testimony, the judge found 

Black invoiced InTown for the in-kind contributions he was obligated to 

perform. The judge also concluded plaintiff was not aware of the monthly 

management fee InTown paid to VMG. The judge determined the operating 

agreement afforded plaintiff "financial oversight" of InTown, which Lanel 

believed included access to accounting and banking information and the ability 

to challenge InTown's expenditure of money. 

While the judge found plaintiff unable to specifically recall receipt of the 

emails and spreadsheet from Black, plaintiff did not deny reviewing the 
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documents. The judge determined plaintiff opened InTown's bank account, 

using the same bank where plaintiff had his personal account, to facilitate the 

payment of his investment installments. Plaintiff claimed he was unaware 

InTown was making payments to VMG because the Blacks, through VMG, were 

supposed to provide in-kind services for the start-up of InTown. While plaintiff 

attended several meetings regarding InTown, plaintiff testified he never 

discussed where his investment money was being spent. Plaintiff characterized 

himself as a "passive investor" of InTown despite being granted "financial 

oversight" of InTown, opening InTown's bank account, and attending numerous 

meetings to discuss InTown. 

The judge found Black's testimony "inconsistent," "unbelievable," and 

"rambling and . . . unresponsive to the questions being asked." In reviewing the 

financial projections in the spreadsheet sent to plaintiff, Black was asked about 

several line items. The judge found Black could not identify the services a "pod 

account manager" would perform despite listing a pod account manager in the

spreadsheet. Nor was Black able to explain the purpose of the legal fees listed 

in the spreadsheet or explain how he arrived at the dollar amount for that line 

item. In arriving at the projected gross profits for InTown, Black told the judge 

the figures were "illustrative" and "potential based on the numbers." Black 
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based his "numbers" on internet research but did not retain his search results. 

Black admitted he did not seek the advice of investment bankers or professional 

financial advisors in creating the spreadsheet. When Black was asked whether 

the information in the spreadsheet provided to plaintiff was realistic, Black 

responded the information was "totally speculative." 

Responding to questions about the language in InTown's operating 

agreement, Black conceded the document was "unclear" regarding many terms, 

including the terms "staff" and "office" used to describe his in-kind 

contributions toward InTown. 

Also troubling to the judge was Black's lack of knowledge or information 

regarding the invoices VMG submitted to InTown. According to Black, 

Cathleen Black prepared invoices on behalf of VMG and submitted them to 

InTown for payment. Cathleen Black then issued payment for VMG's invoices 

from InTown's bank account. Black was unable to explain the discrepancies 

between the amounts invoiced by VMG and the line item amounts in the 

spreadsheet. The judge concluded, "Black's answers simply did not make 

sense." In addition, Black told the judge any advertising revenue generated by 

InTown was "deposited into VMG's accounts" and "none of the [advertising] 

revenue was put back into InTown." Black also admitted VMG's revenue had 
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declined approximately forty percent between 2008 and 2013 when InTown was 

launched. 

Based on the testimony, the judge found plaintiff met his burden of proof 

on his fraud claim as the "goals and the prospectus of InTown were totally 

speculative." The judge found:

Mr. Black had no basis for the financial projections for 

the venture. . . . Mr. Black came up with [the gross 

profit] figures on his own without consultation with 

financial advisors or investment bankers. Mr. Black 

had no basis or reason to expect such growth from 

InTown. In addition, at no point did Mr. Black disclose 

the extent to which he planned VMG's involvement in 

the venture. . . . Mr. Black was to make an in-kind 

contribution to staff, office[,] and infrastructure 

development and sales. Instead, Mr. Black, through 

VMG, invoiced InTown for the in-kind contribution he 

was obligated to perform. In total, VMG invoiced 

InTown for nearly $75,000 in services rendered. In 

addition, the cash infusion of VMG came at a time 

when revenue had declined by [forty] percent over a 

five-year period.

The judge concluded plaintiff was entitled to the return of his $100,000 

investment for InTown.

Plaintiff submitted a form of judgment pursuant to R. 4:42-1(c) reflecting 

the judge's decision. According to the language in the proposed judgment, the 

judge found against David Black, Cathleen Black, and VMG "jointly and 

severally, in the amount of $112,500." While the judge made findings that Black 
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committed fraud, he made no such findings as to Cathleen Black or VMG in his 

decision.

The judge also considered and rejected plaintiff's NJUSL claim. On the 

issue of plaintiff's status as an investor to invoke the NJUSL, the judge found:

Plaintiff is trying to argue essentially both sides of the 

same coin. Plaintiff asserts that the expectation of all 

parties was that plaintiff was to be a passive investor; 

however, plaintiff then states that defendant should be 

estopped from arguing that plaintiff is a passive 

investor and the [c]ourt should treat [plaintiff] as an 

active investor for the purpose of designated exception 

[ ] N.J.S.A. 49:3-50(a)(12)(b)(9). Plaintiff has 

presented conflicting testimony as to whether [he] was 

or was not a passive investor. Accordingly, plaintiff 

has not met [his] burden in establishing a claim under 

New Jersey's Uniform Security Law.

On appeal, defendants argue the judge erred in finding plaintiff's $100,000

cash investment was procured through fraud and imposing joint and several 

liability against Cathleen Black and VMG. On the cross-appeal, plaintiff 

challenges the judge's denial of his claim under the NJUSL.

Our review of a trial court's factual findings is limited to whether the 

findings are supported by sufficient credible evidence. Rova Farms Resort v. 

Investors Ins. Co., 65 N.J. 474, 483–84 (1974). A trial judge's evaluation of 

credibility, based on his or her opportunity to see and hear witnesses, should be 

honored unless manifestly against the weight of the evidence. Valdez v. Tri-
10 A-0274-17T2

State Furniture, 374 N.J. Super. 223, 232 (App. Div. 2005). However, a trial 

court's legal conclusions are reviewed de novo. See, e.g., Kieffer v. Best Buy, 

205 N.J. 213, 222 (2011). A trial court's application of the law to the facts is 

also reviewed de novo. State v. Harris, 181 N.J. 391, 416 (2004). 

In reviewing a common-law fraud claim, a plaintiff is required to prove: 

(1) a material misrepresentation by the defendant of a presently existing fact or 

past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intent 

that the plaintiff rely on the statement; (4) reasonable reliance by the plaintiff; 

and (5) resulting damages to the plaintiff. Gennari v. Weichert Co. Realtors, 

148 N.J. 582, 610 (1997). A plaintiff must prove a fraud claim through clear 

and convincing evidence. Stochastic Decisions, Inc. v. DiDomenico, 236 N.J. 

Super. 388, 395 (App. Div. 1989).

Generally, "the alleged fraudulent representation must relate to some past 

or presently existing fact and cannot ordinarily be predicated upon matters in 

futuro." Ocean Cape Hotel Corp. v. Masefield Corp., 63 N.J. Super. 369, 380 

(App. Div. 1960) (alterations omitted). There is an exception to this rule in the 

case of a false representation of an existing intention. Ibid. "A promise to pay 

in the future is fraudulent if there is no present intent ever to do so." Van Dam 
11 A-0274-17T2

Egg Co. v. Allendale Farms, Inc., 199 N.J. Super. 452, 457 (App. Div. 1985). 

As we held in Stochastic Decisions, fraudulent intention 

may be derived from circumstantial evidence such as: 

the recklessness or implausibility of the statement in

light of later events; showing that the promisor's 

intentions were dependent on contingencies known 

only to the promisor; or simply from evidence 

indicating that the promisor would not or could not 

fulfill the promise. 

[Stochastic Decisions, 236 N.J. Super. at 396.]

Black's promises regarding InTown were not simply puffery or opinions 

as to future events. Black made statements to plaintiff to obtain a $100,000 cash

investment for InTown, knowing the statements were made without financial 

support, and the projections were "totally speculative." Black also committed 

fraud by failing to disclose his intention to use money from InTown for his own 

financially declining company, VMG, when Black expressly agreed to 

contribute in-kind services through VMG in exchange for his percentage share 

of InTown. 

Having reviewed the record, plaintiff met his burden of proving fraud 

under the circumstances. Black made false misrepresentations about InTown 

that were without any financial basis or other support, and dependent on 

information known only to Black; specifically, his intention to bill InTown for 
12 A-0274-17T2

VMG's services that were supposed to be included as Black's in-kind 

contributions toward InTown in lieu of a cash contribution. 

Black also knew plaintiff would rely on the information in the spreadsheet. 

Without the spreadsheet, there was no reason for plaintiff to invest in InTown. 

Plaintiff testified he agreed to the $100,000 investment based on the materials 

plaintiff received from Black, including the spreadsheet. Plaintiff reasonably 

relied on Black's spreadsheet because plaintiff had no experience in the 

development of mobile applications. Black's representations regarding InTown 

were made in bad faith with the intent to induce plaintiff to make a large cash 

investment. 

We next consider defendants' challenge to the entry of the final judgment 

jointly and severally against all defendants. Rule 1:7-4 requires a trial court find

"the facts and state its conclusions of law thereon . . . on every . . . written order 

that is appealable as of right[.]" The failure of a trial court to meet the 

requirements of the rule "constitutes a disservice to the litigants, the attorneys 

and the appellate court." Curtis v. Finneran, 83 N.J. 563, 569–70 (1980) 

(quoting Kenwood Assocs. v. Bd. of Adj. Englewood, 141 N.J. Super. 1, 4 (App. 

Div. 1976)). The failure to advance reasons in support of a judicial decision 
13 A-0274-17T2

results in our speculating as to the trial court's thinking. See Salch v. Salch, 240 

N.J. Super. 441, 443 (App. Div. 1990). 

Here, the judge failed to make the required findings of fact and state his 

legal reasons for imposing joint and several liability against all defendants. The 

judge determined David Black committed fraud. However, we are unable to 

discern from the record whether the fraud findings extended to Cathleen Black 

and VMG. Thus, we are constrained to remand the matter to the trial court to 

explain the imposition of joint and several liability on David Black, Cathleen 

Black, and VMG. We take no position on the court's determination of this issue

on remand.

We next examine plaintiff's cross-appeal regarding the judge's denial of 

his NJUSL claims. Having reviewed the record, we are satisfied that to be an 

"investment contract" within the definition of a security under the NJUSL, an 

investor must be a "passive investor." See S.E.C. v. Howey, 328 U.S. 293, 298 

(1946) (applying federal securities law).6 A "passive investor" is one who 

derives profits "solely through the efforts of [others]." Ibid. An investor who 

 

6

 Under the NJUSL, courts have to power to review federal law for guidance on 

the sale of securities. See N.J.S.A. 49:3-75. 
14 A-0274-17T2

has legal rights and enjoys certain powers is not a passive investor. See

Goodwin v. Elkins & Co., 730 F.2d 99, 107 (3d Cir. 1984).

The judge found plaintiff "presented conflicting testimony as to whether 

[he] was or was not a passive investor." Plaintiff admitted he had certain rights 

such as opening the bank account for InTown, an ability to access InTown's bank 

statements and transactions, attending meetings with InTown's investors, 

appointment as secretary of InTown, and "financial oversight" over InTown. 

Whether or not plaintiff chose to exercise these rights with respect to InTown 

does not equate with his being a "passive investor." Under the circumstances,

we are satisfied plaintiff was not a passive investor entitled to pursue a claim 

under the NJUSL. 

We affirm as to the amount of the final judgment entered and the denial 

of plaintiff's claims under the NJUSL. We remand to the court to explain the 

basis for the entry of the judgment against David Black, Cathleen Black, and 

VMG jointly and severally. We do not retain jurisdiction.