Lord Abbett Municipal Income Fund, Inc. v. Asami

MEMORANDUM

Lord Abbett Municipal Income Fund, located in New Jersey, appeals from the district court’s grant of summary judgment to the defendants in Lord Abbett’s action for damages arising out of its purchase of bonds issued by a California nonprofit private school that later failed, Win-drush. We affirm the district court’s judgment in favor of both the individual board members of the school and Stone & Youngberg (“S & Y”), the broker-dealer handling the sale of the bonds.

The district court did not err in granting summary judgment in favor of S & Y under both the California Securities Act and the New Jersey Uniform Securities Law. There is no dispute that the California Securities Act requires strict privity between a buyer and a seller in order to maintain a claim against a seller for relief. See, e.g., Apollo Capital Fund, LLC v. Roth Capital Partners, LLC, 158 Cal.App.4th 226 , 70 Cal.Rptr.3d 199, 221-22 (2007). Lord Abbett argues that privity is not required under the New Jersey Uniform Securities Law, but the controlling authority is the New Jersey Supreme Court’s decision in Kaufman v. i-Stat Corp., 165 N.J. 94 , 754 A.2d 1188 (N.J. 2000), which holds that the New…