Bar Bea Truck Leasing Co., Inc. v. United States

• Decision Date: 11 August 1982
• Docket Number: Court No. 82-4-00582.
• Citation: 4 CIT 70,546 F. Supp. 558
• Parties: BAR BEA TRUCK LEASING CO., INC., Bar-Mar Warehouse Co., Inc., Plaintiffs, v. The UNITED STATES, et al., Defendants, and Midlantic National Bank/South, Intervenor.
• Court: U.S. Court of International Trade

546 F. Supp. 558

4 CIT 70

BAR BEA TRUCK LEASING CO., INC., Bar-Mar Warehouse Co., Inc., Plaintiffs, v. The UNITED STATES, et al., Defendants and Midlantic National Bank/South, Intervenor.

Court No. 82-4-00582.

United States Court of International Trade.

August 11, 1982.

Fredric J. Gross, Haddonfield, N. J., for plaintiffs.

J. Paul McGrath, Asst. Atty. Gen., Washington, D. C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, New York City (John J. Mahon, Asst. Branch Director and Saul Davis, New York City), for defendants.

Elson, Aibel & Cole, New York City, for intervenor.

NEWMAN, Judge:

The prelitigation history of this dispute resembles a jigsaw puzzle comprising many half-hidden and missing pieces, but nevertheless adequate to discern for determination of the several legal issues presented.

In this action, plaintiffs Bar-Mar Warehouse Co., Inc. (BMW) and Bar Bea Truck Leasing Co., Inc. (BBT), two separate New Jersey corporations, seek declaratory and injunctive relief prohibiting Customs from interfering with their conduct of a Customs cartage business under a Customhouse license (CHL) 1777 issued to a third related corporation, Bar-Mar Trucking Co., Inc. (BMT), which latter corporation is not a party to these proceedings.

Specifically, plaintiffs request the following relief:

(1) A judgment declaring Bar-Mar Warehouse Co., Inc. to be the holder of CHL 1777.

(2) An injunction permanently preventing defendants from suspending, cancelling, revoking or nullifying CHL 1777 on the basis of any past revocation of its corporate authority by the State of New Jersey.

(3) An injunction permanently preventing defendants from suspending, cancelling, revoking or nullifying CHL 1777 on the basis of its use by Bar Bea Truck Leasing Co., Inc. during the period of time up to and including 14 days after notice is received of Customs' final disposition of BBT's license application, and without prejudice to any requested extension thereof should Customs reject that application.¹

FACTUAL BACKGROUND

Some 16 years ago — on February 7, 1966 — Customs issued CHL 1777 to BMT, a cartman doing business in the Newark District. However, within two years, and without apparent reason Customs began to accept yearly bonds under CHL 1777, posted on behalf of BMW, a completely independent corporation, albeit comprised of the same officers and shareholders of BMT.

The dominant force behind BMT and BMW is Anthony F. Gallagher, who testified at length that in 1967 unnamed Customs officials prevented Gallagher from obtaining a license for more than one corporation owned by the same principals. No Customs regulation, past or present, was called to this Court's attention which prevents such licensing, and the incumbent Customs officials deny knowledge of the existence of such a policy. Thereafter, and over the succeeding 14 years, BMW conducted its cartage business as though it had been issued CHL 1777 with the full knowledge and consent of Customs.

By 1976, plaintiff BBT, the third closely related corporation controlled by Gallagher, was engaged in Customs cartage, also using CHL 1777. Indeed, BBT negotiated various government contracts which required a Customhouse license predicated upon CHL 1777. When BBT requested its own license, but was informed by Customs that the application process would entail an investigation and take some time, Gallagher asserted to a Customs officer that his third company, BBT, would continue to operate under BMW's CHL 1777. Clearly, by this time and by this course of events the license was considered by all parties to be held by BMW. It is not disputed by the government that in the 14 years of hauling bonded cartage, plaintiffs have been penalized for merely one small fine ($25.00) for a technical infraction of Customs' rules and regulations.

We thus find this scenario: since 1976 BBT, without a license, carted bonded cargo throughout the Newark area until March, 1982. As inexplicably as it had accepted BMW in the place of BMT as the holder of CHL 1777 and with as little formality, Customs by a letter to BMW dated March 22, 1982 notified BMW that CHL 1777 had been determined by Customs to be "null and void". Additionally, Customs demanded the return of CHL 1777 and various documents issued under the license and seized a BBT truck purporting to operate under the license.

Significantly, Customs' determination that BMW's license was null and void was not predicated upon any Customs regulation nor upon a revocation proceeding in accordance with 19 CFR 112.30. Rather, Customs simply posited that CHL 1777 had become null and void as a consequence of BMW's failure to pay New Jersey corporate franchise taxes and the consequent repeal of its corporate charter, leaving the corporate entity nonexistent under state law. See NJSA 54:11-1 and 54:11-2. Plaintiffs assert that BBT merely followed BMW's footsteps in reliance upon the advice of Customs officials allegedly given in 1967 limiting Mr. Gallagher to only one license.

Upon notice of Customs' action, BMW paid the arrearages in franchise taxes and requisite penalties, and its corporate charter was reinstated retroactively by the State of New Jersey.

At this juncture, BBT filed an application for its own Customhouse license. After a period of some four months, BBT's application was denied by Customs subsequent to the conclusion of the hearing and submission on the pending motions.

PROCEDURAL HISTORY

Following Customs' refusal to grant BMW a hearing concerning the nullification of CHL 1777, or to honor the New Jersey reinstatement of BMW's corporate charter, plaintiffs filed this lawsuit in the United States District Court for the District of New Jersey seeking preliminary and permanent injunctive relief, return of the seized truck, and compensatory and punitive damages sounding in tort from the United States and the individually named defendants. In view of the jurisdiction of the Court of International Trade over actions contesting the revocation of a cartman's license (See: this Court's holding in Di Jub Leasing Corp. v. United States, 1 CIT 42, 505 F.Supp. 1113 (1980), the New Jersey District Court transferred the entire matter to the Court of International Trade on April 28, 1982. The transfer order was entered pursuant to 28 U.S.C. § 1584(a) without prejudice to retransfer those causes of action outside the jurisdiction of this Court back to the New Jersey District Court when appropriate. During the course of proceedings in this Court, the government moved, without opposition, to retransfer those claims of the plaintiffs relative to the seized truck and the alleged tortious conduct by the United States and the individually named defendants to the New Jersey District Court upon jurisdictional grounds.

On April 28, 1982 plaintiffs applied to my colleague, Judge Boe, assigned to the Motion Part on that date, for a Temporary Restraining Order (TRO) prohibiting Customs from interfering with the conduct of their cartage business under CHL 1777. Judge Boe granted the TRO over the government's opposition and set this matter down for a hearing on a preliminary injunction before the Motion Part Judge presiding on May 6, 1982. Prior to that hearing, the Midlantic National Bank/South was granted permission to intervene in this action to contest ownership of the seized truck tractor.

Thereafter, as Motion Part Judge in May, I was faced with several matters requiring immediate resolution.² The ten witnesses who testified in this case were forced by the immediacy of urgent Court business to appear at different intervals, thereby lengthening an already complicated proceeding.

This hearing focused on the purported nullification of CHL 1777 by Customs in March, 1982 as it affected both plaintiffs, and as raised by the motions for a preliminary injunction and for declaratory judgment. Post hearing briefs were received by July 9, 1982 in which the parties indicated their agreement that the issue of the nullification of CHL 1777 is ripe for resolution on the merits. The nullification issue is, of course, of common concern to the parties, and obviously judicial review of such administrative action falls within the jurisdiction of the Court. The TRO has been continued in force — and without objection. Subsequent to the hearing and submission of the case, plaintiff BBT filed an amendment under Court Rule 15(a) to the Fourth Cause of Action set forth in the complaint to challenge Customs' denial of BBT's application for a license. Essentially, BBT's "amended complaint" seeks a trial relative to Customs' determination that BBT's financial position and past unauthorized use of CHL 1777 require that its license application be denied. In response, defendants have moved to dismiss the new cause of action and amended complaint for lack of jurisdiction and untimeliness.

CONTENTIONS OF THE PARTIES

Plaintiff BMW claims that it is the holder of CHL 1777, as consistently recognized by Customs until the revocation of its corporate charter by the State of New Jersey. BMW further contends that under New Jersey law its corporate charter was reinstated retroactively after payment of delinquent fees and taxes, and therefore CHL 1777 is not null and void by operation of New Jersey law, as asserted by defendants.

Plaintiff BBT maintains that it should be permitted to operate under CHL 1777 on the theory of equitable estoppel, and requests that the government be enjoined from interfering in its business, at least until its license application, filed on March 24, 1982, is acted upon by Customs. Upon receiving notice of the denial of its application for a Customhouse license, BBT filed its so-called amended complaint contesting the denial and now seeks a trial on the new cause of action presented. Additionally, plaintiffs have requested that the temporary restraining order remain in force until the resolution of the new cause of action.

Def...