Nature’s Plus Nordic A/S v. Natural Organics, Inc., No. 09-CV-04256 (E.D.N.Y. Jan. 10, 2015) [click for opinion]
Plaintiff, a Norwegian company, filed a claim for breach of contract against a New York based defendant for failure to comply with a notice and opportunity to cure provision of a distribution agreement. Plaintiff sought a judgment in Norwegian Krone for lost profits and out of pocket expenses incurred as a result of Defendant’s breach. At trial, Plaintiff filed a motion in limine for judicial notice of the exchange rate for the Norwegian Krone and U.S. Dollar at the date of the breach, and for an order precluding Defendant from offering evidence regarding the present exchange rate.
The court granted Plaintiff’s motion in limine, holding that the exchange rate as of the date of the breach applied. In a diversity case, the law of the forum state governs the date upon which the conversion rate of a foreign currency judgment will be based. Under New York law, when a claim is based on an obligation denominated in a currency other than a currency of the United States, the court applies the rate of exchange as of the date of entry of judgment. However, where the obligation is not denominated in a foreign currency, the “breach day rule” applies, and thus the rate of exchange is calculated as of the date of the breach. The court held that Defendant’s obligation to provide notice and opportunity to cure was a performance obligation, thus not an obligation denominated in any currency. As such, the “breach day rule” applied, and the proper exchange rate was the rate at the date of the breach.
Christina Wong of the San Francisco office contributed to this summary.