Hartford Fire Ins. Co. v. United States

• Decision Date: 10 October 2017
• Docket Number: Slip Op. 17–139,Court No. 13–00352
• Citation: 273 F.Supp.3d 1212
• Parties: HARTFORD FIRE INSURANCE COMPANY, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

273 F.Supp.3d 1212

HARTFORD FIRE INSURANCE COMPANY, Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 17–139

Court No. 13–00352

United States Court of International Trade.

Dated: October 10, 2017

Frederic Deming Van Arnam, Jr., Barnes, Richardson & Colburn, LLP of New York, NY, argued for plaintiff.

Edward Francis Kenny, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant.With him on the brief were Stuart F. Delery, Assistant Attorney General, and Amy Rubin, Acting Assistant Director.With them on the supplemental briefs was Benjamin C. Mizer, PrincipalDeputy Assistant Attorney General.Of counsel on the reply was Beth S. Brotman, Office of the Assistant Chief Counsel for International Trade Litigation, U.S. Customs and Border Protection, of Washington, DC.

Paul C. Rosenthal and Michael J. Coursey, Kelley Drye & Warren LLP of Washington, DC, argued for amici curiae.With them on the brief were Will E. Leonard and John C. Steinberger, Adduci, Mastriani & Schaumberg, L.L.P. of Washington, DC.

OPINION

Katzmann, Judge:

Can a surety's argument—that the United States Customs and Border Protection's ("Customs")demands for payment on bonds issued by the surety are untimely because they fall outside of the statutory limitations period—be raised in an administrative protest before Customs?Can the surety challenge Customs' denial of its protest and raise that argument before this court?These are the principal questions presented by this case.PlaintiffHartford Fire Insurance Company("Hartford") initiated this lawsuit seeking a declaration from this Court that the claims of Customs for payment under certain customs bonds issued by Hartford became barred by the running of the six year limitations period on those claims on January 21, 2012.SeePl.'s Compl.at 9, Oct. 9, 2013, ECF No.2("Compl.").Defendant United States ("the Government") has moved to dismiss Hartford's action for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Rules of the United States Court of International Trade.Def.'s Mot. To Dismiss, Jan. 30, 2014, ECF No. 9("Def.'s Mem.");seePl.'s Sum., Oct. 9, 2013, ECF No. 1.The Government argues that the court cannot entertain Hartford's action, brought under 28 U.S.C. § 1581(i)(2012),¹ the residual or "catch-all" jurisdiction provision,² because jurisdiction for the very same arguments was available to Hartford under § 1581(a).³SeeDef.'s Mem.at 5.Hartford opposes the Government's motion.Pl.'s Resp. in Opp'n to Def.'s Mot. To Dismiss, July 8, 2014, ECF No. 18("Pl.'s Opp'n").For the reasons discussed hereafter, the court grants the Government's motion and dismisses Hartford's action for lack of subject matter jurisdiction.

BACKGROUND

Hartford is a surety company that issues single-entry bonds ("SEBs") to importers, who use them to cover potential liabilities that may be retroactively assessed by Customs on the goods they import.Compl.¶¶ 7–9.The bonds at issue covered shipments of preserved mushrooms from the People's Republic of China, and were filed at the Ports of Tampa, Florida, and Minneapolis—St. Paul, Minnesota between March 3 and October 6, 2004 by the importer of record, Sino Trend, Inc.("Sino").Id.¶¶ 7–8, 11.All of the entries were subject to an anti-dumping duty order for preserved mushrooms from China.Id.¶ 10.The entry summaries for each of the entries identify antidumping duty order "A–570–851–000" as applicable to the Imported Merchandise.Id."A–570–851–000" refers to the antidumping duty order Notice of Amendment of Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Certain Preserved Mushrooms from the People's Republic of China, 64 Fed. Reg. 8308(Feb. 19, 1999).Id.At the time of entry of these goods, the supplier, Guangxi Hengxian Pro–Light Foods, Inc.("Pro–Light"), was a new shipper undergoing a new shipper review, which entitled the importer to submit a bond in lieu of a cash deposit for each entry from this supplier.Compl.¶ 11.Hartford, as surety, agreed to issue bonds covering those liabilities for the entries at issue.Id.¶ 9.Liquidation of the entries was suspended during the pendency of the Sixth Administrative Review of the Order before the U.S. Department of Commerce("Commerce"), covering the period of review February 1, 2004 to January 31, 2005.Id.¶ 12.

On July 21, 2005, Commerce issued the final results of the Sixth Administrative Review in Certain Preserved Mushrooms from the People's Republic of China: Notice of Partial Rescission of Antidumping Duty Administrative Review, 70 Fed. Reg. 42,038(July 21, 2005), in which Commerce published its partial rescission of the review of the Order as to Pro–Light and twenty-four other companies.Compl.¶ 13.The subject entries liquidated by operation of law six months thereafter, on January 21, 2006.Id.¶ 16;see19 U.S.C. § 1504(d).On July 8 and August 19, 2011, depending on the entry, Customs actually liquidated the subject entries at the bonded antidumping duty rate of 198.63%. Def.'s Mem.at 3.Customs issued bills to Sino.Id.; Compl.¶ 18.Because Sino did not pay the assessed antidumping duties, Customs issued the aforementioned demands for payment to Hartford.Def.'s Mem.at 3; Compl.¶ 20.On December 30, 2011 and February 15, 2012, Hartford filed six protests ("Protests")⁴ contesting Customs' demand for payment on the SEBs, alleging, among other arguments, that the SEBs were unenforceable because of defects in the bonds.Compl.¶ 21.ProtestNos. 1801–12–100011 and 1801–12–100012 were filed on February 15, 2012, and cover Tampa entry nos. 032–0318520–6, 032–0318521–4 and 032–0319678–1. Id.¶ 8.These two Tampa protests asserted that 1) the single entry bonds contain facial defects which cause them to be void and unenforceable, and 2) the statute of limitations set forth in 28 U.S.C. § 2415(a) expired on January 21, 2012, six years from the deemed liquidation of the entries, thereby barring Customs' demands for payment as of that date.⁵Pl.'s Opp'nat 3, n.1.The remaining four protests, ProtestNos. 3501–12–100004/5/6/7, were filed on December 30, 2011, at the Port of Minneapolis and cover the balance of the entries at issue.Compl.¶ 8.Despite substantial similar circumstances giving rise to the demands for payment challenged in all six protests, these four Minneapolis protests argue only that Customs' demands should be cancelled because the single entry bonds contain facial defects.Pl.'s Opp'nat 3.None of the six protests were ever amended.See19 C.F.R. § 174.14.

Customs denied the Protests on March 13 and 16, 2012. Compl.¶ 22.Hartford paid the amount demanded by Customs, up to the penal value⁶ of the SEBs, and on September 10, 2012 Hartford filed summonses in this Court, contesting the denied Protests under 28 U.S.C. § 1581(a).Compl.¶¶ 32–33.

Notwithstanding those actions, which challenge the denial of the six underlying Protests, Hartford commenced the instant case on October 9, 2013, pursuant to 28 U.S.C. § 1581(i).Pl.'s Sum.This action covers the same entries and demands at issue in the six § 1581(a)cases noted above.Hartford asserts that the six year statute of limitations set forth in 28 U.S.C. § 2415(a)⁷ expired as of January 21, 2012, which is six years plus 30 days after the deemed liquidation of the subject entries on July 21, 2006.Compl.¶¶ 23–28.Hartford alleges that it was improper for Customs to continue to demand payment on these entries beyond that date, and seeks a declaration from this court that all of Customs' claims against Hartford on the SEBs for the entries were time-barred and thus that all of Customs' actions in demanding and accepting payment from Hartford on the SEBs after January 21, 2012 were a) invalid, arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, b) contrary to constitutional right, power, privilege or immunity, c) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, d) without observance of the procedure required by law, e) unsupported by substantial evidence, and f) unwarranted by the facts to the extent that the facts are subject to trial de novo by this Court.Compl.¶ 40.Hartford is asserting these claims in this action, rather than in the relevant § 1581(a)cases, because, it contends, 19 U.S.C. § 1514,⁸ which enumerates governmental actions that an aggrieved party may protest in order to ultimately obtain jurisdiction under § 1581(a), "does not provide a surety the opportunity via protest to challenge whether the government is time-barred from commencing a collection action against bonds the surety issued, and as such jurisdiction in the U.S. Court of International Trade to raise such an argument cannot be based on 28 U.S.C. § 1581(a)."Compl.¶ 29.Per Hartford, the only established way to raise that argument was to refuse to pay Customs' demands and allow the Government to commence a collection action against it pursuant to 28 U.S.C. § 1582, whereupon Hartford would raise it as an affirmative defense.Compl.¶ 30.

On January 30, 2014, the Government moved to dismiss this action for lack of subject matter jurisdiction under USCIT Rule 12(b)(1). Def.'s Mem. Hartford filed its response in opposition to the Government's motion on July 8, 2014.Pl.'s Opp'n.The Government replied on August 29, 2014.Reply to Pl.'s Opp'n, Aug. 19, 2014, ECF No. 25("Def.'s Reply").Oral argument on the motion was held on March 24, 2015.Oral Argument, Mar. 24, 2015, ECF No. 43.

On May 26, 2015, the court ordered parties to submit supplemental briefs, and supplemental replies to those briefs.Order, May 26, 2015, ECF No. 44.Both parties filed their supplemental briefs on July 1, 2015, and both parties filed their supplemental replies on August 5, 2015.Pl.'s Suppl.Br. in Opp'n to Def.'s Mot. to Dismiss, July 1, 2015, ECF No. 47("Pl.'s Suppl.Br. 1");Def.'s...