Cambridge Place Investment Management Inc. v. Morgan Stanley & Co., Inc. et al

Filing 227

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER "In accordance with the foregoing, 1) defendants objection to the Diversity R&R (Docket No. 210 ) is SUSTAINED; 2) after consideration of defendants objection thereto, the Diversity R&R (Docket No. 202 ) is NOT ACCEPTED OR ADOPTED; 3) defendants joint motion for leave to take jurisdictional discovery (Docket No. 158 ) is ALLOWED; 4) plaintiffs motion to remand to state court (Docket No.133), the Remand R&R (Docket No. 203 ), and defendantsobjection thereto (Docket No. 209 ) are all TAKEN UNDERADVISEMENT..." (Duong, Diep)

United States District Court
District of Massachusetts
________________________________
)
CAMBRIDGE PLACE INVESTMENT
)
MANAGEMENT, INC.,
)
Plaintiff,
)
)
Civil Action No.
v.
)
10-11376-NMG
)
MORGAN STANLEY & CO., INC., et
)
al.,
)
Defendants.
)
________________________________ )

MEMORANDUM & ORDER
GORTON, J.
Cambridge Place Investment Management, Inc. (“CPIM”) brings
suit against numerous investment firms, underwriters and dealers
who sold mortgage-backed securities (collectively the “Wall
Street Bank defendants”) and those who purchased or acquired
mortgage loans, securitized them and were the issuers of the
securities sold by the Wall Street Bank defendants (collectively
the “Depositor defendants”) for alleged violations of the
Massachusetts Uniform Securities Act, Mass. Gen. Laws ch. 110A,
§ 410.
I.

Background
In August, 2010, defendants removed the action to federal

court and CPIM moved to remand the action to state court the
following month.

In October, 2010, defendants moved to take

jurisdictional discovery which plaintiff opposed.
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The motions

were referred to Chief Magistrate Judge Judith G. Dein, who
issued 1) a Report and Recommendation (“Diversity R&R”)
recommending that defendants’ motion to take discovery be denied
and 2) a Report and Recommendation (“Remand R&R”) recommending
that plaintiff’s motion to remand be allowed on the basis of
abstention.

Defendants have filed objections to both R&Rs to

which plaintiff has responded.
II.

Analysis
A.

Diversity R&R

In its broad discretion, the Court may allow jurisdictional
discovery where the moving party has made a “colorable claim” of
jurisdiction.

See United States v. Swiss Am. Bank, Ltd., 274

F.3d 610, 625-27 (1st Cir. 2001).

The Court must examine and

disregard an assignment “if it be found to have been made
principally to defeat removal.”

JMTR Enters., LLC v. Duchin, 42

F. Supp. 2d 87, 92 (D. Mass. 1999) (quotations omitted).

Whether

an assignment was collusively made “is to be resolved as a simple
question of fact.”

Id. (quotations and citations omitted).

Factors to be considered in determining whether an assignment is
collusive include: 1) a partial rather than total assignment, 2)
lack of consideration paid by the assignee to assignor, 3) the
plaintiff’s motive was to stay in state court, 4) the assignee
had no interest in the litigation before the assignment and 5)
the assignment was made shortly before the suit was filed.

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Id.

Having considered the extensive and thorough briefing on the
issue, the Court finds that the defendants have stated a
“colorable claim” of jurisdiction and limited jurisdictional
discovery is, therefore, warranted.

Before deciding the ultimate

issue of whether diversity jurisdiction exists, limited
jurisdictional discovery will be permitted in accordance with the
schedule set forth by the Court and solely with respect to: 1)
the assignments, 2) the citizenship of the foreign hedge funds
and 3) the identity of which foreign hedge fund purchased which
individual security and with what involvement, if any, by CPIM.
Accordingly, the defendants’ objection to the Diversity R&R
will be sustained, the Diversity R&R will not be accepted or
adopted and the defendants’ motion for leave to take
jurisdictional discovery will be allowed.
B.

Remand R&R

Because the Court finds that limited jurisdictional
discovery is warranted with respect to the determination of
whether diversity jurisdiction exists, the Court will take the
plaintiff’s motion to remand and the corresponding Remand R&R and
objections thereto under advisement.

At the close of

jurisdictional discovery, the parties will be permitted to submit
supplemental briefs on the issue of whether to remand this action
to state court.

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ORDER
In accordance with the foregoing,
1)

defendants’ objection to the Diversity R&R (Docket No.
210) is SUSTAINED;

2)

after consideration of defendants’ objection thereto,
the Diversity R&R (Docket No. 202) is NOT ACCEPTED OR
ADOPTED;

3)

defendants’ joint motion for leave to take
jurisdictional discovery (Docket No. 158) is ALLOWED;

4)

plaintiff’s motion to remand to state court (Docket No.
133), the Remand R&R (Docket No. 203), and defendants’
objection thereto (Docket No. 209) are all TAKEN UNDER
ADVISEMENT.

Accordingly, the Court hereby authorizes limited
jurisdictional discovery with respect to a) the assignments, b)
the citizenship of the foreign hedge funds and c) the identity of
which foreign hedge fund purchased which individual security and
with what involvement, if any, by CPIM.

Furthermore, pursuant to

that discovery:
1)

defendants shall serve the plaintiff with a joint
document request and Rule 30(b)(6) deposition notice on
or before May 13, 2011;

2)

plaintiff shall serve responses and objections to
defendants’ document request and Rule 30(b)(6)
deposition notice on or before May 27, 2011;

3)

defendants shall complete the Rule 30(b)(6) deposition
of the plaintiff on or before June 17, 2011;

4)

defendants shall file a supplemental brief (not to
exceed 10 pages), if any, regarding the plaintiff’s
motion to remand on or before July 1, 2011; and

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5)

plaintiff shall file a supplemental brief (not to
exceed 10 pages), if any, on or before July 15, 2011.

No extensions of time will be allowed.
So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated May 2, 2011

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