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February 28, 1977


Robert J. Ward, District Judge.

The opinion of the court was delivered by: WARD

ROBERT J. WARD, District Judge.

Defendant Royal Resources Corporation ("Royal") moves for judgment on the pleadings pursuant to Rule 12(c), Fed.R.Civ.P., or, in the alternative, for summary judgment under Rule 56, Fed.R.Civ.P., on the grounds that this action is barred by the applicable statute of limitations. Because affidavits and exhibits have been furnished to the Court, the motion will be treated as one for summary judgment. For the reasons hereinafter stated, defendant's motion is granted.

 Natural Resources Corporation ("NRC") brings this action against Royal to recover damages resulting from the latter's alleged fraud in connection with the sale to NRC of rights and interests in certain Wyoming uranium properties ("Green Mountain Properties"). Plaintiff alleges that defendant failed to disclose an agreement which it had with a third party which restricted defendant's ability to sell the rights and interests it purported to sell to NRC. These rights and interests constitute securities and this suit is brought under § 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder (17 C.F.R. 240.10b-5).

 In its complaint NRC claims that it was defrauded into paying $497,187.50 on or about August 26, 1969 and $248,802.00 on or about May 27, 1970. However, plaintiff contends that the fraud was not discovered until between March and December 1972, a matter which will be addressed later in this opinion. This action was commenced on November 21, 1975.

 NRC's complaint describes it as a Maryland corporation with its principal place of business in Denver, Colorado. Royal is a Delaware corporation with its principal place of business also in Denver, Colorado. Royal was and is a wholly owned subsidiary of The Colorado Corporation ("TCC"). TCC was adjudicated bankrupt in the United States District Court for the District of Colorado on September 6, 1974. The complaint indicates that NRC has filed a reclamation petition in the TCC bankruptcy proceeding.

 The federal securities laws under which this action is brought do not provide for a statute of limitations. Accordingly, the federal court must apply the statute of limitations of the forum state, including any applicable "borrowing statute." Sack v. Low, 478 F.2d 360, 365 (2d Cir. 1973) (" Sack v. Low "). See Mittendorf v. J. R. Williston & Beane Inc., 372 F. Supp. 821, 830 (S.D.N.Y.1974).

 The relevant law of the forum state is the New York statute of limitations for fraud, which is six years from the time of the fraud itself or two years from the time plaintiff discovered or could, with reasonable diligence, have discovered the fraud, whichever is later. N.Y. CPLR §§ 203(f), 213(8) (McKinney Supp. 1976). See Mittendorf v. J. R. Williston & Beane Inc., supra at 830.

 The New York borrowing statute, CPLR § 202 (McKinney 1972), as applicable to non-resident parties, reads as follows:

An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued.

 The parties agree that the cause of action accrued "without the state." They differ, however, as to where it accrued. In Sack v. Low, supra at 365, the Second Circuit stated:

The traditional view has been that a cause of action for tort arises when and where "the last event necessary to make an actor liable . . . takes place." Restatement of the Conflict of Laws § 377 (1934). [("First Restatement")] Since a tort action traditionally has not been viewed as complete until the plaintiff suffers injury or loss, the cause of action has been considered to arise at the place where this damage was sustained. As applied to a cause of action for fraud or deceit, the closest common law analogy to an action under Rule 10b-5, see Klein v. Auchincloss, Parker & Redpath, 436 F.2d 339, 341 (2 Cir. 1971); 3 Loss, Securities Regulation 1774 (2d ed. 1961); 6 id. 3901-02 (1969), and cases there cited, this reasoning leads in the direction of the rule of the First Restatement of Conflicts, § 377, note 4, that "when a person sustains loss by fraud, the place of wrong is where the loss is sustained, not where fraudulent representations are made."

 Continuing, the Court said that "loss from fraud is deemed to be suffered where its economic impact is felt, normally the plaintiff's residence." Id. at 366 (citations omitted). Such a claim has been said to arise where "plaintiffs' pocketbooks are situated." Arneil v. Ramsey, 414 F. Supp. 334, 338 (S.D.N.Y.1976), aff'd, 550 F.2d 774 (2d Cir. 1977) (" Arneil v. Ramsey ").

 The parties differ as to the location of plaintiff's pocketbook. In bringing on this motion, Royal contends that since NRC's principal place of business is Colorado, its cause of action accrued in that state. Therefore, Colorado's three year statute of limitations for fraud rather than the longer New York statute applies, and this action is time-barred.

 NRC replies that its economic loss was incurred in 1969 and 1970 when it made the payments sued upon here. At that time, it asserts, its principal place of business was Ferney-Voltaire, France. Appended to NRC's papers in opposition to this motion is an opinion letter signed by Olivier Roux, Avocat a la Cour, expressing the view that a French ten year statute of limitations applies. A copy of the purportedly relevant provision was submitted accompanied by an English translation certified to be a "true and faithful translation" by a sworn translator to the Court of Appeal of Paris. Under the New York borrowing statute, the shorter of the two time limits, French or New York, applies. Therefore, NRC contends, the New York six year statute of limitations governs and the action is timely.

 Royal responds by reiterating its original argument and also by propounding an alternative theory. Royal claims that in the period 1968-70 NRC's place of business was Geneva, Switzerland and therefore the Swiss statute of limitations would apply. Defendant asserts and offers to prove at a future hearing that the relevant Swiss statute of limitations is one year. Since it is shorter than New York's fraud statute of limitations, under the New York borrowing statute, the Swiss one year statute of limitations would apply and would render NRC's claim time-barred.

 If the First Restatement approach must be applied to this statute of limitations problem, then this dispute as to NRC's location is of great significance. However, a thoughtful discussion in Sack v. Low, must not be overlooked.

 The Second Circuit Court of Appeals noted that the First Restatement approach to conflict of laws had fallen into disfavor and that New York courts, in accord with the principles of Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963) and the Restatement (Second) of the Conflict of Laws (1971) ("Second Restatement"), had largely abandoned it. The borrowing statute, however, the Court saw as an exception.

The few borrowing statute cases since Babcock afford no inkling that the New York courts are applying its sophisticated teachings, rather than the rigid approach of the First Restatement of Conflicts, to the problem of where a cause of action arose under the borrowing statute. Quite to the contrary, they take a rather simplistic approach, adhering to the mechanical question where the cause of action arose or, in the words of the borrowing statute, whether the "cause of action [accrued] without the state . . . ." Cellura v. Cellura, 24 A.D.2d 59, 263 N.Y.S.2d 843 (4th Dep't 1965); Myers v. Dunlop Tire & Rubber Corp., supra, 40 A.D.2d 599, 335 N.Y.S.2d 961; Daigle v. Leavitt, 54 Misc.2d 651, 283 N.Y.S.2d 328 (Sup.Ct. 1967). A recent note, Choice of Law and the New York Borrowing Statute: A Conflict of Rationales, 35 Albany L.Rev. 754, 762 (1971), concludes, although with some regret:
The impact of the conflict of laws decisions discussed above [i.e., Babcock v. Jackson, et al. ] on the New York State "borrowing statute" has been nonexistent. Except for a few commentaries to the effect that these decisions should affect the borrowing statute, there has been no actual impact on the statute by these decisions.

 Sack v. Low, supra at 367.

 This is no longer true. Modern conflict of laws thinking has finally had some impact on the borrowing statute, in a case entitled Martin v. Julius Dierck Equipment Co., 52 A.D.2d 463, 384 N.Y.S.2d 479 (2d Dep't 1976) (" Martin "). Dean McLaughlin has stated:

[The] Martin decision is the first borrowing statute case to recognize that determining where a cause of action arises is just as capable of subtle conflict of laws analysis as the most discriminating choice of law decisions. Thus, New York, as the forum, must decide where the cause of action arose; and the Martin case indicates that the question is an much subject to a choice of law as any other question of law. Accordingly, that question should be decided under the "grouping of contacts" or "center of gravity" conflict of laws doctrine that now prevails generally.

 J. McLaughlin, Supp.Prac.Comm. to N.Y. CPLR § 202 (McKinney Supp. 1976).

 Martin, a resident of the District of Columbia, was injured while operating a fork lift truck on his job in Virginia. He sued both the New York manufacturer and distributor of the vehicle on causes of action for negligence and breach of warranty. The court below determined that the warranty claim accrued in New York where the truck had been sold, while the negligence cause of action accrued in Virginia where the injury occurred.

 The Second Department disapproved of this approach. The Court opted for "modern conflict of laws doctrine," stating that

[The] test requires us to determine what the essence of the action is and which jurisdiction has the most significant contacts with the issues before the court (cf. Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 ...

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