Opinion ID: 216819
Heading Depth: 2
Heading Rank: 2

Heading: Applicable Exchange Rate

Text: Ventas appeals the district court's decision to apply the U.S./Canadian exchange rate as of the date of injury, rather than the date of judgment. Because the decision of the district court rests on an interpretation of state law, we review de novo. See Competex, S.A. v. Labow, 783 F.2d 333, 334 (2d Cir.1986) (stating that [b]ecause determination of the date on which to convert a foreign currency debt into dollars is a substantive question, federal courts sitting in diversity will apply state law). In the proceedings below, the parties disputed the exchange rate applicable to Ventas' damages. Ventas sought to apply the exchange rate as of the date of judgment, while HCP sought to apply the exchange rate as of the date of injury. The district court agreed with HCP, and held that [t]he proper exchange rate for Ventas'[] damages is determined on the date of injury, which was April 26, 2007, the date that the Sunrise unitholders approved Ventas' revised offer of $16.50 per unit. The district court relied upon the rule set forth in two older Supreme Court cases, that if the cause of action arises under U.S. law, then the conversion date is the date of injury. See, e.g., Die Deutsche Bank Filiale Nurnberg v. Humphrey, 272 U.S. 517, 47 S.Ct. 166, 71 L.Ed. 383 (1926); Hicks v. Guinness, 269 U.S. 71, 46 S.Ct. 46, 70 L.Ed. 168 (1925). On appeal, Ventas argues that the district court should have used the date of judgment exchange rate. Ventas contends that the Supreme Court cases cited by the district court are not controlling because state law governs the appropriate currency rate in diversity cases. (Ventas Br. at 71.) Ventas asserts that Kentucky would follow the commentary to § 823 of the Restatement (Third) of Foreign Relations Law (1987), which states that if the foreign currency has appreciated since the injury or breach, judgment should be given at the rate of exchange applicable on the date of judgment or the date of payment. Restatement (Third) of Foreign Relations Law § 823, cmt. (c). Although no Kentucky law is on point, we find that the district court correctly predicted that Kentucky would select the exchange rate from the date of injury. Nothing in Kentucky jurisprudence suggests that the state would rely on a comment to the Restatement (Third) of Foreign Relations, particularly in the face of Supreme Court precedent to the contrary. See, e.g., Mt. Lebanon Pers. Care Home, Inc. v. Hoover Universal, Inc., 276 F.3d 845, 852-53 (6th Cir.2002) (predicting that the Kentucky Supreme Court would reject a certain rule because, among other reasons, the U.S. Supreme Court had done so); accord Siematic Mobelwerke GmbH & Co. KG v. Siematic Corp., 669 F.Supp.2d 538, 542 (E.D.Pa. 2009) (In the absence of pertinent state law precedent, federal courts in diversity suits have frequently adopted the federal approach.) (collecting cases from courts applying the laws of Minnesota, Illinois, Colorado, Missouri, Tennessee, and Florida); Elite Entm't, Inc. v. Khela Bros. Entm't, Inc., 396 F.Supp.2d 680, 694 (E.D.Va.2005) (Courts generally agree that the judgment day interest rate is relevant only when the cause of action arises entirely under foreign law.) (predicting Virginia law). Furthermore, because the purpose of compensatory damages is to make the victim whole, selecting the date of injury for purposes of the exchange rate would better approximate the damage sustained by the victim since such an approach looks to the point at which the victim was injured. [14] The date of judgment is merely an arbitrary and speculative future date that is determined by variables unrelated to the underlying injury, including litigation posturing and docket pressures. Setting the currency conversion rate as of the date of injury provides for greater certainty in economic relationships, allowing market players to more accurately assess their risks. It also prevents bad faith attempts to, for instance, delay the entry of judgment to engage in currency speculation. Accordingly, we AFFIRM the district court decision to apply the date of injury rule for currency conversion as a matter of Kentucky law.