In re Apex Oil Co., 91-0372C(3).

CourtUnited States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
Citation131 BR 712
Docket NumberNo. 91-0372C(3).,91-0372C(3).
PartiesIn re APEX OIL COMPANY, et al. UNITED STATES CUSTOMS SERVICE, Appellant, v. APEX OIL COMPANY, et al., Appellees and Cross-Appellants.
Decision Date27 August 1991

Frederick J. Dana, Assistant U.S. Atty., Michele L. Kenney, Office of Asst. Chief Counsel, U.S. Customs Service, Indianapolis, Ind., Charles D. Stodghill, Civ. Div., U.S. Dept. of Justice, Washington D.C., and A. Robert Beikirch, Dist. Director, Dept. of Treasury, U.S. Customs Service, Baltimore, Md., for U.S. Customs Service.

James J. Cole, Asst. U.S. Trustee, St. Louis, Mo.

Robert H. Brownlee, Thompson & Mitchell, St. Louis, Mo., for Chemical Bank.

John P. Kreis, Thomas A. Bolan, Paul A. Maas, Gendel Raskoff Shapiro & Quittner, St. Louis, Mo., and John A. Moe, II, Gendel Raskoff Shapiro & Quittner, Los Angeles, Cal., William H. Bode and John M. Mason, Washington D.C., for debtor Apex Oil Co.

Frederick H. Mayer, Steven Cousins, Joseph R. Niemann, and David L. Going, Armstrong Teasdale Schlafly Davis & Dicus, St. Louis, Mo., for official, unsecured creditors.


HUNGATE, District Judge.

This matter is before the Court on cross-appeals by the United States Customs Service ("Customs") and Apex Oil Company ("Apex") from a final order entered in Apex Oil Co. v. U.S. Customs Service (In re Apex Oil Co.), 122 B.R. 559 (Bankr. E.D.Mo.1990). Customs appeals that portion of the order in which the Bankruptcy Court ruled that all post-petition administrative actions taken by Customs against Apex violated the automatic stay. Apex appeals the decision of the Bankruptcy Court to permissively abstain from deciding Customs' claim against Apex under 28 U.S.C. § 1334(c)(1) and delegating that claim to the Court of International Trade ("CIT") for adjudication.

This Court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a). For the reasons stated below, this Court affirms the ruling concerning Customs' violation of the automatic stay and vacates the Bankruptcy Court's permissive abstention ruling.

Customs' claim arises primarily from Apex's importation and exportation of crude oil and petroleum products. Customs maintains that Apex received excessive rebates (or drawbacks) for certain duties paid and must return the excess. Customs also maintains that Apex should have paid higher duties for certain oil imports because they originated in the Soviet Union.

Apex submitted two drawback claims to Customs in August 1984 and January 1985, asserting entitlement to rebates by exporting sufficient domestically-refined petroleum products. Customs regulations provide for accelerated drawback payments which the claimant receives before a determination that the drawback is justified. 19 C.F.R. § 191.72. Accelerated drawback payments are available only to those claimants who are not delinquent or otherwise remiss in transactions with Customs. Id. Customs refunded what Apex claimed on both drawbacks. Pursuant to 19 U.S.C. § 1509 and Customs' regulations, drawbacks are rebated subject to a final audit, referred to as liquidation, wherein Customs either accepts or denies all or part of the drawback.

Customs liquidated the first drawback entry in September 1986 and determined that this drawback entry would be disallowed. Customs issued this determination in November 1986 and demanded that Apex repay the first drawback. Apex protested this decision on February 4, 1987, pursuant to 19 C.F.R. § 174.12. On December 24, 1987, Apex filed its Chapter 11 bankruptcy petition, thereby invoking an automatic stay of actions against the debtor. See 11 U.S.C. § 362(a)(1). In September 1988, Customs notified Apex that it must return all of the second drawback as well. On January 17, 1989, Customs denied Apex's protest relating to the first drawback. Customs did not seek relief from the automatic stay before taking these post-petition actions.

Also related to this case is Apex's importation of gas oil during 1984 which Apex listed as of Dutch origin and paid the corresponding duty. In May 1988, Customs administratively liquidated several of the relevant gas oil entries and determined that some of the oil imports were from the Soviet Union and thus subject to a higher duty. In December 1988, Customs issued a pre-penalty notice claiming that Apex was guilty of "gross negligence" in failing to list the Soviet Union as the origin of all relevant gas oil entries. Again, Customs took these actions without seeking relief from the automatic stay.

On February 12, 1988, Customs filed its initial proof of claim against Apex. This claim was amended nine times. On September 27, 1989, Apex objected to Customs' fifth amended proof of claim.

Customs alleges that the Bankruptcy Court erred in ruling that all post-petition actions taken by Customs with respect to Apex violated the automatic stay. In support of this position, Customs asserts that its actions were not actions against the debtor and were not actions to collect a claim against the debtor. Alternatively, Customs maintains that it is exempt from the automatic stay under 11 U.S.C. § 362(b)(9).

Section 362(a)(1) of the Bankruptcy Code operates as a stay of:

the commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title. . . .

11 U.S.C. § 362(a)(1). The September 1988 determination to disallow Apex's second drawback claim, the January 1989 denial of Apex's pre-petition protest relating to the first drawback, the May 1988 liquidation of gas oil entries, and the December 1988 issuance of a pre-penalty notice were all post-petition actions taken by Customs which the Bankruptcy Court found violated the stay provision of the Bankruptcy Code.

In essence, Customs asserts that it had to liquidate the drawback and entry claims to determine whether it had a claim against Apex. Customs maintains that its actions are no different than what any creditor must do to determine whether it has a claim, and it would be inefficient to require Customs to seek relief from the stay in every situation involving a bankrupt. The Court finds these arguments non-persuasive.

Customs filed its original proof of claim in February 1988, which included an unliquidated claim for the second drawback. Oddly, Customs' post-petition liquidation of the second drawback claim yielded the same amount as stated in its original proof of claim. Moreover, the Bankruptcy Code contains a broad definition of "claim". A "claim" includes any right to payment whether liquidated or unliquidated. 11 U.S.C. § 101(4)(A). Additionally, Customs' argument is undermined by a Bankruptcy Code provision that can invest Customs with a priority claim for all entries that were unliquidated as of the filing date. 11 U.S.C. § 507(a)(7)(F).

In addition to these inconsistencies, and perhaps more importantly, Customs' postpetition liquidation was final and conclusive. "Decisions of the appropriate Customs officer . . . as to . . . the liquidation or reliquidation of an entry, or any modification thereof . . . shall be final and conclusive upon all persons. . . ." 19 U.S.C. § 1514(a)(5). Any protest must be filed within ninety days of the notice of liquidation. 19 U.S.C. § 1514(c). Apex's failure to protest within this time period renders the liquidation final and unreviewable. Thus, the actions taken by Customs are more than a simple determination of whether Customs has a claim. These post-petition actions were actions taken against Apex which dramatically altered the status quo.

The cases cited by Customs in support of its position are likewise non-persuasive. None of the cases involved actions which determine the ultimate obligation of the debtor. See David v. Hooker, Ltd, 560 F.2d 412 (9th Cir.1977); First National Bank v. Roach (In re Roach), 660 F.2d 1316 (9th Cir.1981).

Finally, the Court does not find that Customs qualifies for the exemption from the automatic stay provision. Section 362(b)(9) exempts from the automatic stay "the issuance to the debtor by a governmental unit of a notice of tax deficiency." The Court concurs in the Bankruptcy Court's determination that:

Customs has cited no case which holds that the assessment of import duties is the functional equivalent of a tax deficiency assessment for purposes of Section 362(b)(9). This Court declines to read into the statute that which is not excepted from the automatic stay provision.

Apex/Customs, 122 B.R. at 567. Based on the foregoing, the Court finds that Customs' post-petition actions violated the automatic stay, and will affirm the Bankruptcy Court's ruling on this issue.

With respect to the Bankruptcy Court's abstention ruling, Apex contends that consigning Customs' claim to the CIT would not be in the "interest of justice". To the contrary, Apex asserts that abstention would foster judicial inefficiency and greatly interfere with Apex's reorganization plan.

28 U.S.C. § 1334(c)(1) provides:

Nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11.

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