990 F.2d 610 (Fed. Cir. 1993), 92-1390, United States v. Cocoa Berkau, Inc.

Docket Nº:92-1390.
Citation:990 F.2d 610
Party Name:The UNITED STATES of America, Plaintiff-Appellant, v. The COCOA BERKAU, INCORPORATED, and Washington International Insurance Company, Defendants-Appellees.
Case Date:March 30, 1993
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 610

990 F.2d 610 (Fed. Cir. 1993)

The UNITED STATES of America, Plaintiff-Appellant,

v.

The COCOA BERKAU, INCORPORATED, and Washington International

Insurance Company, Defendants-Appellees.

No. 92-1390.

United States Court of Appeals, Federal Circuit

March 30, 1993

Page 611

Susan Burnett Mansfield, Sr. Trial Counsel, Dept. of Justice, New York City, argued, for plaintiff-appellant. With her on the brief, were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, and Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office.

Ronald W. Gerdes, Sandler, Travis & Rosenberg, P.A., Washington, DC, argued, for defendants-appellees. Gilbert Lee Sandler, Sandler, Travis & Rosenberg, P.A., Miami, FL, was on the brief, for defendants-appellees.

Wayne Jarvis and Michael G. Hodes, Hodes & Pilon, Chicago, IL, were on the brief, for amicus curiae Old Republic Ins. Co.

Before ARCHER, LOURIE and SCHALL, Circuit Judges.

LOURIE, Circuit Judge.

The United States appeals from the judgment of the United States Court of International Trade granting the motion of Washington International Insurance Company to dismiss the government's action to recover liquidated damages as time-barred under 28 U.S.C. § 2415(a) (1988). United States v. The Cocoa Berkau, Inc., 789 F.Supp. 1160 (Ct. Int'l Trade 1992). Because the government filed its complaint more than six years after its right of action accrued and the statute of limitations was not tolled by any administrative proceeding required by contract or by law, we affirm.

BACKGROUND

On March 6, 1984, The Cocoa Berkau, Inc., as principal, and Washington, as surety, executed and delivered to the U.S. Customs Service a single entry bond in the amount of $111,500 to secure the immediate delivery of sweet chocolate to be imported from Brazil. Paragraph 4 of the entry bond required Cocoa Berkau to redeliver, upon proper demand by Customs, any and all merchandise found not to comply with the law and regulations governing importation of the merchandise into the United States. It further provided that upon default of redelivery, Cocoa Berkau (and Washington, as its surety) would be liable for liquidated damages as may be demanded by Customs, not to exceed the face amount of the bond.

On March 26, 1984, Cocoa Berkau entered 500 metric tons of sweet chocolate under item 156.20, Tariff Schedules of the United States (TSUS). An entry summary for consumption was submitted to Customs and it was eventually accepted. At the time of entry, a sample of the imported merchandise was taken by Customs for laboratory testing. Customs' analysis of the sample revealed that the imported merchandise contained milk solids, properly classified under item 156.30, TSUS. Merchandise so classified was subject to an import quota under item 950.16, TSUS.

Consequently, on January 31, 1985, Customs issued a notice ordering Cocoa Berkau to redeliver the imported merchandise to Customs within 30 days from the date of the notice. The notice was mailed to Cocoa Berkau at its address of record. A second notice to redeliver, dated February 11, 1985, was mailed to Cocoa Berkau at a new address. Cocoa Berkau subsequently advised Customs that the imported merchandise could not be redelivered to Customs because it had already been sold. The imported merchandise was never redelivered to Customs.

Page 612

Customs determined that Cocoa Berkau's failure to redeliver the imported merchandise upon demand constituted a breach of the bond. On June 26, 1985, Customs demanded payment from Cocoa Berkau of liquidated damages in the amount of $1,114,812 to be paid within 60 days. Cocoa Berkau did not pay these damages. 1

On March 18, 1988, Customs liquidated the imported merchandise under item 156.20, TSUS, under which the merchandise was originally entered. On November 30, 1990, formal demand for $111,500 in liquidated damages was made on Washington for Cocoa Berkau's breach of the entry bond, to be paid within 30 days. That amount represented the face amount of the bond which Washington executed as bond surety. On December 28, 1990, Washington petitioned for mitigation relief and that petition was denied by Customs on July 19, 1991.

On August 22, 1991, the government filed suit against Cocoa Berkau and Washington in the U.S. Court of International Trade to recover the $111,500, plus pre-judgment and post-judgment interest and costs. Washington moved for dismissal on the ground that the government failed to timely file its complaint within the six-year limitations period of 28 U.S.C. § 2415(a). Washington argued that the government's right of action accrued no later than March 13, 1985, when the bond was breached by the principal. The government claimed that its right of action accrued on December 30, 1990, when the surety defaulted on its obligation under the bond.

The trial court granted Washington's motion to dismiss. The trial court determined that in an action for breach of an entry bond, the six-year limitations period of 28 U.S.C. § 2415(a) begins to run on the importer's breach of its bond, which in the instant case occurred no later than March 13, 1985, when Cocoa Berkau failed to redeliver the imported merchandise within 30 days of Customs' demand for redelivery. Because the government's complaint was filed on August 22, 1991, more than six years after the government's right of action accrued, the trial court concluded that the action was time-barred under section 2415(a).

The trial court also rejected the government's alternative argument that the mitigation proceeding initiated by Washington tolled the limitations period until July 19, 1991, when Customs rendered a final decision denying Washington's request for relief. The trial court determined that the limitations period under section 2415(a) is tolled only by mandatory administrative...

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