Competex, S.A. v. Labow

783 F.2d 333 (2nd Cir. 1986)

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Nature of the Case

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Facts

LaBow, a New Yorker, lost a substantial sum of money through speculation in copper on the London Metal Exchange. His broker, Competex, satisfied these debts. Competex then sued LaBow for breach of contract in an English court and obtained a default judgment of 187,929.82 pounds, which included principal, interest, and costs. Competex then sued in diversity to enforce the English judgment. The English judgment was determined to be valid and recognized and enforced. Determination of the date on which to convert a foreign currency debt into dollars was a substantial question in the case, and the trial judge determined that he was compelled to apply the New York law; the breach-day conversion rule. The trial court reasoned that the claim was based on the English judgment rather than on the underlying contract; thus Competex’s American claim had therefore accrued upon the date of entry of the English judgment. The trial court then applied the conversion rate prevailing (1 to 2.2) on that date and entered a judgment for $538,201.78 which included interest and a fee award pursuant to FRCP 56(g). The pound had depreciated substantially relative to the dollar between the dates of the English and American judgments. On the date of the American judgment, the conversion rate was 1 to 1.50. The pound continued to depreciate. LaBow then moved for a clarification of the American judgment under 60(b) and a declaration that he could satisfy the American judgment by paying the underlying English judgment in pounds. LaBow then borrowed the necessary funds and paid the English judgment in pounds. LaBow’s motion was denied, and the trial court held that the American judgment had to be satisfied. LaBow was credited with the English payment at the 1 to 1.2 rate, and this left a balance owed of $236,000. LaBow appealed.