Intercargo Ins. Co. v. US, Slip Op. 96-129. Court No. 94-05-00269.

• Decision Date: 12 August 1996
• Docket Number: Slip Op. 96-129. Court No. 94-05-00269.
• Citation: 936 F. Supp. 1049,20 CIT 951
• Parties: INTERCARGO INSURANCE COMPANY, Plaintiff, v. The UNITED STATES of America, Defendant.
• Court: U.S. Court of International Trade

936 F. Supp. 1049

20 CIT 951

INTERCARGO INSURANCE COMPANY, Plaintiff, v. The UNITED STATES of America, Defendant.

Slip Op. 96-129. Court No. 94-05-00269.

United States Court of International Trade

August 12, 1996.

Hodes & Pilon (Wayne Jarvis, Michael G. Hodes, and James L. Sawyer), Chicago, IL, for plaintiff.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Rhonda K. Schnare), for defendant.

MEMORANDUM OPINION AND ORDER

DiCARLO, Chief Judge:

Intercargo Insurance Company, a corporate surety, provides customs bonds in the customs territory of the United States. Intercargo filed a complaint alleging, inter alia, the United States Customs Service regulation regarding delinquent sureties, 19 C.F.R. § 113.38 (1994), violates due process and is subject to the statute of limitations.

Defendants moved to dismiss claiming a lack of jurisdiction based on standing, ripeness, and finality of agency action. Intercargo argued that the notices Customs sent to Intercargo pursuant to 19 C.F.R. § 113.38 constituted an imminent threat of sanctions through nonacceptance of Intercargo's bonds at the district, regional, and national levels, and would entitle it to pre-enforcement review. Upon consideration of these motions, this court granted defendant's motion to dismiss. Intercargo Ins. Co. v. United States, 912 F.Supp. 544 (Ct.Int'l Trade 1995).

DISCUSSION

By the present motion, Intercargo seeks a rehearing of the court's decision pursuant to Rule 59 of this court. Intercargo claims: (1) that the court's refusal to permit discovery or conduct an evidentiary hearing constituted a significant flaw in the proceedings, and (2) that the court's denial of Intercargo's partial summary judgment motion was improper.

Rule 59(a) of this court permits a rehearing for any of the reasons for which rehearings are granted in suits in equity in United States courts, USCIT R. 59(a), and the court may use its sound discretion in deciding whether to grant or deny a motion for a rehearing, USCIT R. 59(a); Xerox Corp. v. United States, Slip.Op. 96-107 at 2, 1996 WL 392228 (Ct.Int'l Trade July 9, 1996).

The purpose of a rehearing is not to relitigate a case. BMT Commodity Corp. v. United States, 674 F.Supp. 868, 869 (Ct. Int'l Trade 1987), aff'd per curiam, 852 F.2d 1285 (Fed.Cir.1988), cert. denied, 489 U.S. 1012, 109 S.Ct. 1120, 103 L.Ed.2d 183 (1989). Rather, a court will grant a rehearing only under certain limited circumstances. These circumstances include where the original proceeding suffered from: (1) an error or irregularity; (2) a serious evidentiary flaw; (3) the absence of new evidence which even a diligent party could not have discovered in time; or (4) an accident, unpredictable surprise or unavoidable mistake which impaired a party's ability to adequately present its case. Xerox, Slip Op. 96-107 at 2-3, 1996 WL 392228 (citing Kerr-McGee Chem. Corp. v. United States, 14 Ct. Int'l Trade 582, 583, 1990 WL 127166 (1990)). Further, the court will not disturb its previous decision unless it is manifestly erroneous. United States v. Gold Mountain Coffee, Ltd., 601 F.Supp. 212, 214 (Ct.Int'l Trade 1984) (citing Quigley & Manard, Inc. v. United States, 496 F.2d 1214 (C.C.P.A.1974)). With these standards in mind, the court turns to Intercargo's arguments.

A. Intercargo's Discovery Requests

Intercargo argues that the court's refusal to permit discovery or conduct an evidentiary hearing constituted a significant flaw in the proceedings. According to Intercargo, the court's Scheduling Order stayed discovery pending a ruling on initial dispositive motions, and therefore, forced Intercargo to oppose the Government's Motion to Dismiss based solely upon the notices issued by Customs under subsection 113.38(c)(4). By placing a heavy burden on the surety to demonstrate that its losses were sufficient for pre-enforcement review, Intercargo argues this court treated the government's Motion to Dismiss as a motion for summary judgment. Intercargo contends that discovery is necessary to expose fully the imminence of the injury it faces from Customs. Intercargo notes that Customs has continued to send it notices threatening sanction pursuant to 19 C.F.R. § 113.38(c)(4).

Intercargo alleged two types of injury. First, that Customs' notices threatening sanctions issued pursuant to 19 C.F.R. § 113.38(c)(4) (1994) were "concrete and particularized" and demonstrated that Intercargo was "one day away" from being sanctioned. Intercargo, 912 F.Supp. at 546. Such sanctions, according to Intercargo, would be disastrous for the company. (Compl. ¶ 30.) Second, Intercargo contended that responding to the (c)(4) notices consumed significant resources and had placed a substantial burden on the surety. Id.

The court accepted Intercargo's general factual allegations as true, but found that Intercargo purported no allegations outside the issuance of subsection 113.38(c)(4) notices to demonstrate the imminence of Customs' sanctions. Intercargo, 912 F.Supp. at 546. The court therefore granted defendant's Motion to Dismiss. Cf. Schering Corp. v. United States, 626 F.2d 162, 167 (C.C.P.A. 1980) (finding no error in Customs Court's ruling denying rehearing absent facts in either importer's response to cross motion to dismiss or its motion for rehearing which would establish jurisdiction). The court did not, sua sponte, transform the government's motion into a motion for summary judgment, as Intercargo could not demonstrate its entitlement to pre-enforcement review.

Subsection (c)(4) letters merely present notice that Customs officials could refuse to accept the bonds of a delinquent surety at the district, regional, or national level, 19 C.F.R. § 113.38(c)(4), and, further, "provide an opportunity for resolution of outstanding debts." 19 C.F.R. § 113.38(c)(5); Intercargo, 912 F.Supp. at 546. Nonetheless, the sanctions threatened in the notices are within Customs' discretion and take effect only after review, final decision, and written notice by the appropriate Customs official pursuant to subsection 113.38(c)(5). Intercargo, 912 F.Supp. at 546-48.

By the terms of the regulation, Customs cannot sanction Intercargo without following certain prescribed procedures. Customs has yet to take such steps. Thus, even if the court accepts Intercargo's allegations that it has received subsection 113.38(c)(4) notices, feels threatened by the potential sanctions, and is heavily burdened in responding to the notices, Customs has not committed any act demonstrating that sanctions are imminent. Until Customs issues Intercargo a notice pursuant to subsection 113.38(c)(5) (establishing effective date for sanctions), the court cannot speculate that Customs will ever sanction Intercargo. For this reason, the additional (c)(4) letters that Customs has sent Intercargo do not alter the reality that Customs has not made a decision to sanction Intercargo, and has not commenced the procedures mandated by the regulations necessary to do so.

Discovery, therefore, would not aid Intercargo in its attempt to demonstrate its entitlement to pre-enforcement review, because Customs is still bound to abide by its regulations. The indisputable fact remains that Customs' intent is of little significance if Customs has not issued notice pursuant to subsection 113.38(c)(5) that it will impose sanctions. Even if certain evidence exists that would clarify Customs' intent, Customs must still follow the procedures established by the regulations, and given its discretion, Customs is free to change its position at any time. After discovery, Intercargo would not be any closer to meeting the requirements for pre-enforcement review. Although Intercargo alleges the court has made improper findings of fact in granting defendant's Motion to Dismiss, Intercargo, in actuality, is demanding that the court accept its conclusions of law as general factual allegations. The court's findings that Customs' (c)(4) letters do not constitute an imminent threat were conclusions of law based on the court's reading of the plain language of the regulation.

Finally, although Intercargo has expended time and costs in responding to these letters and was concerned about the effect of sanctions on its reputation, this court's previous opinion has noted that such transactions and Intercargo's concerns are not "outside of Intercargo's ordinary responsibilities as a surety,"...