Hartford Fire Ins. Co. v. U.S.

• Decision Date: 29 August 2007
• Docket Number: Slip Op. 07-132.,Court No. 07-00101.
• Citation: 507 F.Supp.2d 1331
• Parties: HARTFORD FIRE INSURANCE CO., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

Page 1331

507 F.Supp.2d 1331

HARTFORD FIRE INSURANCE CO., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 07-132.

Court No. 07-00101.

United States Court of International Trade.

August 29, 2007.

Barnes, Richardson & Colburn,(Daniel F. Shapiro, Eric W. Lander, and Sandra L. Friedman), New York City, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael J. Dierberg), Beth C. Brotman, Bureau of Customs and Border Protection, of counsel, for the Defendant.

Before: Pogue, Judge.

OPINION

DONALD C. POGUE, Judge.

Faced with a demand by the United States Bureau of Customs and Border Protection ("Customs") for the payment of antidumping duties pursuant to Plaintiff's bond guaranteeing the payment of such duties, Plaintiff, in this action, asks the court to declare its bond unenforceable. Pursuant to USCIT R. 12(b)(1), Defendant moves to dismiss, claiming a lack of subject matter jurisdiction because of Plaintiffs failure to utilize or exhaust its administrative protest remedies. For the reasons stated herein, the court grants Defendant's motion.

Background

This action involves three entries of merchandise imported into the United States by Brother Packaging Inc. The merchandise is subject to antidumping duties. Plaintiff, Hartford Fire Insurance Company ("Plaintiff' or "Hartford") guaranteed a basic importation and entry bond for payment of duties, taxes and charges on these entries.

In its three-count complaint, Plaintiff now asks the court to declare its bond unenforceable, claiming that the Continued Dumping and Subsidy Offset Act of 2000, Pub.L. No. 106-387, § 1003, 114 Stat. 1549, 1623 (2000) codified at 19 U.S.C. § 1675c¹ ("CDSOA" or "Byrd Amendment"), has rendered its bond inapplicable and invalid.

The Byrd Amendment altered the government's use of antidumping and countervailing duties ("ADD" and "CVD" respectively) collected pursuant to ADD and CVD orders on subject merchandise. Customs continues, as it did before the Byrd Amendment, to collect antidumping and countervailing duties, but, pursuant to the Byrd Amendment, rather than depositing those duties into the general treasury of the United States, Customs now deposits all duties collected into "special accounts" established within the U.S. Treasury for each antidumping and countervailing duty order. 19 U.S.C. § 1675c(e); 19 C.F.R. § 159.64.², ³ In addition each year, Customs distributes all monies contained in those special accounts, plus interest, on a pro rata basis, to "affected domestic producers," i.e., domestic companies (who continue to produce the subject merchandise under the ADD or CVD order) and worker groups that supported the petition for the antidumping or countervailing duty order. The funds distributed, known as the "continued dumping and subsidy offset," 19 U.S.C. § 1675c(a), 19 C.F.R. § 159.61(a) ("Byrd Distributions"), are allocated based on "qualifying expenditures," i.e., certain enumerated business expenses such as manufacturing facilities, equipment, input materials, health benefits for employees, and "[w]orking capital or other funds needed to maintain production," paid by affected domestic producers. 19 U.S.C. §§ 1675c(b)(4); 1675c(d)(2)-(3); 19 C.F.R. § 159.61(c).⁴

Plaintiff claims that, under contract and surety common law, it is not obligated by the terms of its bond to pay what amounts to a subsidy to the U.S. domestic industry. Rather, Plaintiff claims, the Byrd Amendment constitutes a material alteration of its bond that increased Plaintiffs risk of loss, which material alteration discharges Plaintiff from its obligation under the bond. Plaintiff asserts that the court has jurisdiction of what Plaintiff styles a common law dispute pursuant to 28 U.S.C. § 1581(i).⁵

Defendant moves to dismiss because Plaintiff has filed no protest in response to Customs' demand for payment of duties guaranteed by Plaintiffs bond. Defendant notes that Customs' demand that Plaintiff pay antidumping duties and interest is a "charge" within the plain meaning of 19 U.S.C. § 1514(a)⁶ and that jurisdiction for a challenge to such a charge must be established pursuant to 28 U.S.C. § 1581(a).⁷

Citing a long line of decisions from the Court of Appeals for the Federal Circuit for the proposition that, when jurisdiction under subsection (a) of § 1581 is or could have been available, jurisdiction pursuant to section 1581(i) may not be invoked unless relief under section 1581(a) would be "manifestly inadequate," see Am. Signature Inc. v. United States, 31 CIT ___, 477 Fed. Supp.2d 1281, 1287 (2007), Defendant argues that Plaintiff may not, in this matter, invoke jurisdiction under section 1581(i), but must first utilize its protest remedy and obtain jurisdiction pursuant to section 1581(a). Defendant also relies on 28 U.S.C. § 2637(d) which states that "the Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies."⁸ Finally, Defendant notes that under the rule announced in the court's decision in American Motorists Ins. Co. v. United States, 14 CIT 298, 737 F.Supp. 648 (1990), Plaintiffs complaint is untimely because a protest denying liability under an import bond must be filed within the 180-day period of the Customs decision challenged thereby. 19 U.S.C. § 1514(c) (2004). Nor has Plaintiff paid the duties required by 28 U.S.C. § 2637(a) as a condition for assertion of protest jurisdiction.

Plaintiff concedes that Customs' demand for payment under the bond is a charge. Plaintiff argues, however, that it "is not challenging the charge itself." Rather, Plaintiff claims that the issue is whether the surety bond is valid, or whether the bond covers the charge.

Plaintiff argues that its contract and surety claims are not claims identified as protestable pursuant to 19 U.S.C. § 1514(a). Consequently, Plaintiff claims, "Mike the plaintiff in Old Republic," it had only the options of (1) not paying the duties demanded, and waiting until Customs brought an action against it, at which time it could assert its contract claim, or (2) proceeding with its claim under 1581(i). See, Old Republic Ins. Co. v. United States, 10 CIT 589, 599, 645 F.Supp. 943, 952 (1986). It chose "proactively to seek the court's assistance" by invoking 1581(i) jurisdiction.

Jurisdiction and Standard of Review

A jurisdictional challenge to the court's consideration of Plaintiffs action raises a threshold inquiry. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577-78 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999); Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). The court must therefore address Defendant's motion to dismiss for lack of subject matter jurisdiction and make an initial determination that jurisdiction exists before it may reach the merits of Plaintiff's claim.

In deciding a USCIT R. 12(b)(1) motion that does not challenge the factual basis for the complainant's allegations, the court assumes "all factual allegations [contained in the complaint] to be true and [draws] all reasonable inferences in plaintiff's favor." Henke v. United States, 60 F.3d 795, 797 (Fed.Cir.1995). Nonetheless, as the Federal Circuit explained in Norsk Hydro Canada, Inc. v. United States, the "`mere recitation of a basis for jurisdiction ... cannot be controlling[;]'" rather, analysis of jurisdiction requires determination of the "`true nature of the action....'" Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347, 1355 (Fed. Cir.2006) (quoting Williams v. Sec'y of Navy, 787 F.2d 552, 557 (Fed.Cir.1986)).

Having determined the true nature of the action, the court then applies the provisions of the various paragraphs of section 1581 to determine the appropriate treatment of a plaintiff's claim. See Parkdale Intern. Ltd. v. United States, 31 CIT ___ 491 F.Supp.2d 1262 (2007)("Parkdale I"); see also Parkdale Intl Ltd. v. United States, Slip Op. 07-122, 2007 WL 2261379, 31 CIT ___ (2007)("Parkdale I"). In Parkdale I, the court recently reviewed the meaning of the Federal Circuit's "manifest inadequacy" jurisprudence for articulating the scope of the court's jurisdiction under Section 1581(i). The court noted that in the harbor maintenance tax ("HMT") litigation, the Federal Circuit recognized that a party may assert § 1581(i) jurisdiction even where jurisdiction under § 1581(a) could have been exercised. Cf. U.S. Shoe Corp. v. United States, 114 F.3d 1564, 1570 (Fed.Cir.1997), aff'd, 523 U.S. 360, 118 S.Ct. 1290, 140 L.Ed.2d 453 (1998) with Swisher Int'l., Inc. v. United States, 205 F.3d 1358, 1369 (Fed.Cir.2000). The court concluded that "where the core of a dispute is within § 1581(i), i.e., it relates to a general issue of administration and enforcement policy as to the matters listed in § 1581(i)(1)-(3), § 1581(i) should function according to its terms, unless it is clear that another provision of § 1581 applies." Parkdale I, 31 CIT at ___, 491 F.Supp.2d at 1268 (emphasis omitted).

The "manifest inadequacy" rubric was also recently discussed in Abitibi-Consol., Inc. v. United States, 30. CIT ___, ___ 437 F.Supp.2d 1352, 1357 (2006) (noting that Section 704 of the Administrative Procedure Act (which provides that "[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review", 5 U.S.C. § 704 (2000)) "is mirrored in the court's residual jurisdiction case law, which ... prescribes that section 1581(i) supplies jurisdiction only if a remedy under another section of 1581 is unavailable or manifestly inadequate.") In Abitibi, the court declined to accept jurisdiction over interlocutory agency determinations made in an antidumping proceeding where a remedy under subsection 1581(c) was available, adequate and reviewable.

Discussion

Plaintiff's...