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January 17, 1986


The opinion of the court was delivered by: GLASSER

GLASSER, United States District Judge:

Plaintiff Bank of Boston International of Miami ("BBIM") *fn1" brought this action against defendants Roberto Arguello Tefel and Matilde Osorio de Arguello to collect on a promissory note allegedly made by Roberto Arguello and a loan agreement executed by both defendants. Defendants have moved for an order dismissing the action on the ground that it is time-barred, or through the operation of the doctrine of forum non conveniens. For the reasons set forth below, defendants' motion will be denied.

 I. Statute of Limitations

 There is no significant dispute as to the facts underlying this portion of defendants' motion. BBIM alleges that defendants defaulted on their obligations "by failing to make the full principal payment that was due on January 15, 1979 and have defaulted on all payments due" since that date. Amended Complaint at P 23. The complaint in this action was filed on March 9, 1984, more than five years later. The only task, therefore, is to determine what statute of limitations applies to this action.

 The first step in this determination is to observe that subject matter jurisdiction in this case is based on diversity of citizenship. As such, this court must apply the statute of limitations that would be applied by the state in which it sits. Guaranty Trust Co. v. York, 326 U.S. 99, 89 L. Ed. 2079, 65 S. Ct. 1464 (1945). Next, it should be noted that "under New York law the statute of limitations is considered procedural . . . and New York will apply its own statute of limitations even though the injury which gave rise to the action occurs in another state." Stafford v. International Harvester Co., 668 F.2d 142, 147 (2d Cir. 1981), citing Martin v. Julius Dierck Equipment Co., 43 N.Y.2d 583, 588, 403 N.Y.S.2d 185, 187, 374 N.E.2d 97 (1978). *fn2" Because of this aspect of New York law, the court need not, at this time, determine what law will ultimately govern the merits of this action. Thus, defendants' argument that a grouping of contacts test would lead to the choice of Nicaraguan law is simply irrelevant to the issue at hand. By the same token, it is unnecessary to consider plaintiff's contention that a choice of law provision in the promissory note that refers to Massachusetts law will govern. See Sears, Roebuck & Co. v. Enco Associates, Inc., 43 N.Y.2d 389, 397, 401 N.Y.S.2d 767, 772, 372 N.E.2d 555 (1977) ("The contract provision that the agreement was to be governed by Michigan law operated only to import the substantive law of Michigan.").

 There is no question that with regard to New York's six-year statute of limitations for contract actions, N.Y. C.P.L.R. § 213 (McKinney's 1972 & Supp. 1984-1985), this action is timely. However, because of New York's "borrowing statute," N.Y. C.P.L.R. § 202 (McKinney's 1972), our inquiry does not end there. That statute provides:

 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, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.

 Because it is agreed that this action did not accrue in New York, and because neither BBIM nor Bank of Boston Trust Company (Bahamas), Ltd., in whose favor the action originally accrued, see note 1 supra, is not a resident of New York, see United States Fidelity & Guaranty Co. v. E.W. Smith Co., 46 N.Y.2d 498, 414 N.Y.S.2d 672, 387 N.E.2d 604 (1979), it must be decided whether this action is barred by the "state where the cause of action accrued."

 In determining where a cause of action accrues for the purpose of the borrowing statute, it has been said that "[t]he New York Court of Appeals has furnished little guidance." In re "Agent Orange "Product Liability Litigation, 597 F. Supp. 740, 801 (E.D.N.Y. 1984). Nevertheless, decisions of lower New York courts and of our own Court of Appeals provide some assistance. Preliminarily, it must be noted that defendants' attempt to invoke modern choice of law doctrine, by incorporating that doctrine into the borrowing statute, is once again unavailing:

 Although some lower courts -- apparently motivated by the conviction that the "grouping of contacts" approach consistently provides far more rational results than the old "place of injury" rule -- have hypothesized that New York's highest court would apply the "modern" conflict of laws analysis to the borrowing statute, the Second Circuit Court of Appeals has consistently held that it would not.

 Lang v. Paine, Webber, Jackson & Curtis, Inc., 582 F. Supp. 1421, 1425 (S.D.N.Y. 1984). See also In re Agent Orange, supra, 597 F. Supp. at 802 ("In the absence of state case law directly on point, the Second Circuit, estimating what New York's highest court would rule, has embraced the traditional doctrine that the place of injury determines where a cause of action accrues."); Maiden v. Biehl, 582 F. Supp. 1209, 1212 (S.D.N.Y. 1984) ("The Second Circuit has made it clear that choice of law principles based on grouping of contacts do not apply to borrowing statute analysis.").

 With regard to the more specific inquiry as to how the borrowing statute applies to a breach of contract claim, both parties cite Tandoc v. Luckenbach S.S. Co., 5 A.D.2d 857, 171 N.Y.S.2d 381 (1st Dep't 1958), as authority. Tandoc teaches that "[a] cause of action arises when and where the breach occurs, even though the place of contracting be elsewhere." 5 A.D.2d at 858, 171 N.Y.S.2d at 382. In light of Tandoc, defendants argue that "the breach or non-performance occurred in Nicaragua when the stock held as security depreciated in value and defendants were unable to make payments by reason of currency restrictions." Defendants' Brief at 9-10. Plaintiff rebuts defendants' argument as follows:

 [Defendants] argue that the causes of action accrued in Nicaragua because various events occurred in Nicaragua, e.g., civil insurrection, the enactment of currency restrictions and the expropriation of their property, which they claim explain their refusal to repay the loan. While these events may have constituted acts of default which would have given BBIM the right (but not the obligation) to accelerate the amounts due under the Promissory Note and Loan Agreement, they are simply not the breaches upon which this action is based.

 Plaintiff's Brief at 11. Instead, plaintiff argues that the relevant breaches were the defendants' failure to make payments on the loan in January 1979 and thereafter. Because under the terms of the promissory note all payments were to be made at the head office of the First National Bank of Boston, in Boston, Massachusetts, ...

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