Int'l Fid. Ins. Co. v. United States

• Decision Date: 30 May 2017
• Docket Number: Slip Op. 17–64,Court No. 12–00064
• Citation: 227 F.Supp.3d 1353
• Parties: INTERNATIONAL FIDELITY INSURANCE CO., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

227 F.Supp.3d 1353

INTERNATIONAL FIDELITY INSURANCE CO., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 17–64

Court No. 12–00064

United States Court of International Trade.

May 30, 2017

Taylor Pillsbury, Meeks, Sheppard, Leo & Pillsbury, of Newport Beach, CA, for the plaintiff. With him on the brief was Michael B. Jackson, Jr.

Amy M. Rubin, Assistant Director, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for the defendant. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Jeanne E. Davidson, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC. Of Counsel on the brief was Chi S. Choy, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of New York, NY.

OPINION

Eaton, Judge:

Before the court is plaintiff International Fidelity Insurance Company's ("plaintiff" or "International Fidelity") motion for summary judgment challenging United States Customs and Border Protection's ("Customs") decision to extend the liquidation period for four entries of textiles imported by Family Warehouse, Inc. ("Family Warehouse").¹ See Pl.'s Mem. Supp. Mot. Summ. J., ECF No. 24 ("Pl.'s Br."); Pl.'s Mem. Resp. Opp'n Def.'s Cross–Mot. Summ. J. ("Pl.'s Resp. Br."). Specifically, International Fidelity argues that Customs unlawfully extended the liquidation period for the entries by "unreasonably delay[ing] its investigation" by "long periods of inaction ... before [it] acted or requested further information." See Pl.'s Br. 13. Because, plaintiff insists, the extensions were unreasonable, the entries should be found to have been deemed liquidated under 19 U.S.C. § 1504(d) (2006).² Pl.'s Br. 1, 9.

The United States ("defendant" or "the Government"), on behalf of Customs, cross-moves for summary judgment, claiming that the entries were not deemed liquidated and asserting that Customs' liquidation extensions did not abuse the agency's discretion, in light of Customs' responsibility to make accurate verifications of North American Free Trade Agreement ("NAFTA") claims. See Def.'s Mem. Supp. Cross–Mot. Summ. J., ECF No. 33 ("Def.'s Br.") 8; Def.'s Reply Pl.'s Resp., ECF No. 38 ("Def.'s Reply Br.").

The court has jurisdiction under 28 U.S.C. § 1581(a) (2012), which provides that "[t]he Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under [19 U.S.C. § 1515 ]."

Because plaintiff points to no record evidence demonstrating that Customs abused its discretion by extending any period for liquidation, and Customs has cited to record evidence showing that the extensions were within its discretion, plaintiff's motion for summary judgment is denied, and defendant's cross-motion for summary judgment is granted.

BACKGROUND

The facts described below have been taken from the parties' statements of undisputed material facts. See Pl.'s Revised USCIT R. 56.3(a) Statement of Undisputed Material Facts Supp. Mot. Summ. J., ECF No. 35–1 ("Pl.'s Statement"); Def.'s USCIT R. 56.3(a) Statement of Undisputed Material Facts Supp. Cross–Mot. Summ. J., ECF No. 33 ("Def.'s Statement"); Def.'s Resp. Pl.'s Statement, ECF No. 38–1 ("Def.'s Resp. Statement").³ Citation to the record is provided where a fact, although not admitted in the parties' papers, is uncontroverted by record evidence.

Plaintiff served as the surety for the duties owed on entries made by U.S. importer Family Warehouse of poketin bleached woven fabric and poplin unbleached woven fabric.⁴ Between July 30, 2007, and January 7, 2008, Family Warehouse imported thirty-three entries of various fabrics through the Port of Laredo, Texas, claiming, on its entry summaries, that the goods qualified for duty-free treatment under NAFTA as "originating goods" from Mexico.⁵ Decl. of John L. Amaya (Nov. 12, 2015) ¶ 6, ECF No. 33–1 ("Amaya Decl."); Def.'s Statement ¶ 5. Of the thirty-three total entries made by Family Warehouse, four are at issue in this action: two entries of poketin bleached woven fabric (entry numbers 726–1307217–1 and 726–1307218–9 (together, "the Poketin Entries")), which entered the United States on July 31, 2007, and two entries of poplin unbleached woven fabric (entry numbers 726–1307052–2 and 726–1307053–0 (together, "the Poplin Entries")), which entered the United States on July 30, 2007. Def.'s Statement ¶ 2; Pl.'s Br., Ex. A–D. Plaintiff secured the duties owed on these entries by issuing four single transaction bonds to the importer,⁶ as principal, for amounts nearly equal to the value entered for each entry. See Compl. ¶¶ 7, 8, 19.

On February 2, 2008, shortly after the importation of the last of Family Warehouse's thirty-three entries of fabric claiming duty-free treatment, Customs issued its first notice of extension, thereby giving it an additional year from the final date of the initial liquidation period to verify the country of origin and ultimately liquidate the subject entries.⁷ See Def.'s Resp. Pl.'s Req. Admis. No. 9; 19 U.S.C. § 1504(b)(1) ; 19 C.F.R. § 159.12(a). Thus, the first notice of extension gave Customs until July 31, 2009, to liquidate the Poketin Entries and until July 30, 2009, to liquidate the Poplin Entries.⁸ On April 11, 2009, Customs issued its second notice of extension for the Poketin Entries, giving it until July 31, 2010, to liquidate those entries. On July 25, 2009, Customs issued its second notice of extension for the Poplin Entries, giving it until July 30, 2010, to liquidate those entries.⁹ See Def.'s Resp. Pl.'s Req. Admis. No. 9. The reason given for making these extensions was that Customs needed more time to both "obtain information" and "await[ ] delinquent responses to its requests for information."¹⁰ Def.'s Resp. Pl.'s Req. Admis. Nos. 8, 14, 15. The Poplin Entries and one of the Poketin Entries (entry number 726–1307217–1) were liquidated on June 18, 2010. One of the Poketin Entries (entry number 726–1307218–9) was liquidated on July 16, 2010. Thus, all four entries were liquidated prior to the expiration of the second extension period. See Def.'s Resp. Pl.'s Req. Admis. No. 9; Compl. ¶ 28. For clarity, the details of the proceedings are discussed separately based on each entry's fabric.

I. THE POKETIN ENTRIES

The Poketin Entries entered the United States on July 31, 2007. As will be discussed hereafter, Customs did not immediately take action on the entries, but waited until all thirty-three Family Warehouse entries were made.¹¹ Thereafter, Customs sent a verification letter to Textiles Raamsa S.A. de C.V. ("Textiles Raamsa") seeking to confirm the poketin fabric's country of origin. Textiles Raamsa was the company claimed on some of Family Warehouse's entry papers to be the Mexican producer of that fabric. See Amaya Decl. ¶¶ 10–12. On February 2, 2008, as Customs' initial investigations were still underway, it extended the liquidation period for the first time. The parties agree that the reason Customs extended the time for liquidation was to "await[ ] delinquent responses to its requests for information." Pl.'s Statement ¶ 11. It was subsequently "discovered," however, "that several entries of poketin bleached woven fabric ..., including [the entries at issue,] involved a different claimed producer, Textycom S.A. de C.V." ("Textycom"). Amaya Decl. ¶ 12. How the "discovery" was made is unclear. Nonetheless, on October 7, 2008, Customs sent a CBP Form 28 Request for Information ("Request for Information") to Family Warehouse's Mexican exporter Exportadora Deisy, S.A. de C.V. ("Exportadora Deisy") in an effort to determine the origin of the entries and to request further information regarding the entries' producer. Amaya Decl. ¶ 12; Pl.'s Br., Ex. C, CBP Form 28 Request for Information, Oct. 7, 2008, ECF No. 24–1 ("Oct. 7, 2008 Request for Information"). The Request for Information was prompted by the lack of clarity in Family Warehouse and Exportadora Deisy's entry papers concerning the fabric's country of origin:

[I]nvoices [of the Poketin Entries] shows [Textycom], [Exportadora Deisy's] NAFTA Certificate of Origin provided with the entry summary shows [Exportadora Deisy] as exporter but not as producer in block 8. If [Textycom] is not the producer of the fabric of [the Poketin Entries], then notify this office as to which firm is the actual producer of the fabrics. What is the complete name and office title of the individual with [Textycom] or the actual producer of the fabrics who can certify as to the accuracy of the information provided to your firm for your NAFTA Certificate of Origin? What is the complete fax number of [Textycom] or the actual producer of the fabrics?

Oct. 7, 2008 Request for Information. The record contains nothing indicating that the October 7, 2008 Request for Information received a response.

On December 1, 2008, Customs sent a Request for Information to producer Textycom regarding the fabric's origin. Pl.'s Br., Ex. C, CBP Form 28 Request for Information, Dec. 1, 2008, ECF No. 24–1 ("Dec. 1, 2008 Request for Information"). Textycom, however, failed to provide any information. Pl.'s Br., Ex. C, CBP Form 29 Notice of Action, Sept. 23, 2009, ECF 24–1 ("Sept. 23, 2009 Notice of Action").

Having received no response regarding origin information, on December 31, 2008, Customs sent a CBP Form 29 Notice of Action ("Notice of Action") to inform the exporter, Exportadora Deisy, of Customs' intent to deny duty-free treatment. A Notice of Action serves as notice that a negative determination is being proposed, yet provides an additional opportunity for an exporter or producer to submit information before being denied duty-free treatment. Amaya Decl. ¶ 18. Specifically, the Notice of Action informed Exportadora Deisy that "[i]f the requested [origin] information is not supplied within 30 days ... preferential...