Shiepe v. U.S., Slip Op. 15.

• Court: U.S. Court of International Trade
• Writing for the Court: Wallach
• Citation: 36 F.Supp.2d 402
• Decision Date: 04 February 1999
• Docket Number: Slip Op. 15.,Court No. 96-12-02866.
• Parties: Abraham SHIEPE, Customs Broker Licenseholder No. 7114, Plaintiff, v. UNITED STATES; The Commissioner of Customs and the Secretary of the Treasury, Defendants.

36 F.Supp.2d 402 Abraham SHIEPE, Customs Broker Licenseholder No. 7114, Plaintiff,
v.
UNITED STATES; The Commissioner of Customs and the Secretary of the Treasury, Defendants. Slip Op. 15. Court No. 96-12-02866. United States Court of International Trade. February 4, 1999.

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Grunfeld, Desiderio, Lebowitz & Silverman, LLP (Steven P. Florsheim), New York, NY, for Plaintiff.

Frank W. Hunger, Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Field Office; Mikki Graves Walser, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; Paul Wilson, Associate Chief Counsel, Office of Associate Chief Counsel, United States Customs Service, Washington, DC, for Defendant.

OPINION

WALLACH, Judge.

I INTRODUCTION

Plaintiff Abraham L. Shiepe ("Shiepe") contests the decision of the Secretary of the Treasury ("Secretary") to revoke his customs broker's license. He contends that the alleged misconduct that resulted in the revocation of his license was due to confusion about the procedure for filing corporate documents with the California Secretary of State and U.S. Customs Service ("Customs") and that the revocation of his license is fundamentally unfair. He has moved for Summary Judgment on the Administrative Record pursuant to USCIT R. 56.1. For the reasons which follow, his Motion is denied, and the revocation is affirmed.

II RELEVANT FACTS

In 1988, Modawest International Inc. ("Modawest"), a California corporation, decided to engage in importing. See Direct Examination of Coligny Couderc on 7/27/95 ("Examination of C. Couderc"), at Court Record ("C.R.") 808-09; Cross-Examination of Deborah McAllister Scott on 7/26/95 ("Cross-Examination of Scott"), at C.R. 563-64; Memorandum signed by Michelle Couderc, Vice-President and Secretary, of 8/15/88 ("Memorandum signed by M. Couderc of 8/15/88"), Shiepe Exh. 26, at C.R. 939. To do so, Modawest needed an officer who was a licensed broker. See 19 C.F.R. § 111.11(c)(2) (1992); Direct Examination of Caroll Marie Daunis on 7/25/95 ("Examination of Daunis"), at C.R. 105; Examination of C. Couderc, at C.R. 809. As a result, on August 15, 1988, the Board of Directors of Modawest elected Shiepe, a licensed broker, an officer of the corporation. Memorandum signed by M. Couderc of 8/15/88, Shiepe Exh. 26, at C.R. 939; Direct Examination of Shiepe on 7/27/95 ("Examination of Shiepe"), at C.R. 624-27; Examination of C. Couderc, at C.R. 809. From that point on, Shiepe supervised Modawest's import business. Direct Examination of Michelle Couderc on 7/26/95, at C.R. 491-92.

On December 2, 1988, Shiepe signed and filed an application on behalf of Modawest for a customs broker's license. See Application

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for Customhouse Broker's License of 12/2/88, Shiepe Exh. 23, at C.R. 934-35. On August 11, 1989, Customs informed Shiepe that Modawest's application was unacceptable because the corporation's Articles of Incorporation failed to state that Modawest was "empowered ... to transact Customs brokerage business" as required by 19 C.F.R. § 111.11(c)(1). Memorandum from Janiszewski, Chief, Broker Compliance and Evaluation Branch to District Director, Los Angles, CA, of 8/11/89 ("Memorandum from Janiszewski of 8/11/89"), Agency Exh. 2/16, at C.R. 960. Later that month, under Shiepe's supervision, Modawest sent Customs a Certificate of Amendment ("Amendment") to its Articles of Incorporation with the language Customs required. See Facsimile from Tammons, Broker Compliance, Los Angeles, CA, to Rosenthal, Headquarters, Broker Compliance, of 8/24/89 and Amendment of 8/21/89, Agency Exhs. 16/1-16/2, at C.R. 1124-5; Examination of Shiepe, at C.R. 699-701.

The corporation number assigned to Modawest by the California Secretary of State was noted at the top right hand corner of the Amendment. See Amendment of 8/21/89, Agency Exh. 16/2, at C.R. 1125. The Amendment, however, had not been accepted by the California Secretary of State. Amendment of 8/21/89 with handwritten notes, Shiepe Exh. 2, at C.R. 876; Direct Examination of Deborah McAllister Scott on 7/26/95, at C.R. 528-30. When it was submitted to Customs, there was no cover letter accompanying the document or any other explanatory paper that disclosed that the Amendment had not been properly filed. See Decision and Order of the Administrative Law Judge, at C.R. 53 (citing Examination of Shiepe, at C.R. 696).

On September 11, 1989, Customs, unaware of the delayed clearance of the Amendment by the California Secretary of State, issued Modawest a customhouse broker's licence. See License For Customhouse Broker, Agency Exh. 2/9, at C.R. 953; Examination of Shiepe, at C.R. 699-700, 702. In June 1990, a Customs inspector discovered Modawest's Articles of Incorporation had never been filed in California. Examination of Daunis, at C.R. 185, 239. On February 11, 1991, the California Secretary of State confirmed that no Amendment to the Articles of Incorporation had been filed. See Certification from March Fong Eu, Secretary of State of State of California, of 2/11/91, Agency Exh. 2/18, at C.R. 962; Examination of Daunis, at C.R. 238-40. Therefore, until Customs investigated the matter, the agency was led to believe that the Amendment to Modawest's Articles of Incorporation submitted by Plaintiff on August 23, 1989 was a true copy of a valid corporate Amendment.

After Modawest was licensed, Shiepe decided to form Modawest Custom House Broker, Inc. ("MCHB"), a separate corporation that would only conduct customs business. Examination of Shiepe, at C.R. 662. On April 13, 1990, Shiepe submitted to Customs copies of an application requesting a name change, MCHB's Articles of Incorporation, and an unfiled Amendment to MCHB's Articles of Incorporation noting that the purpose of the corporation was, inter alia, "TO TRANSACT CUSTOMS BROKERAGE BUSINESS."¹ Letter from Shiepe to Broker Compliance, U.S. Customs Service, of 4/13/90 with attachments, Agency Exhs. 2/19-2/26, at C.R. 963-970; Examination of Daunis, at C.R. 106.

Shiepe's cover letter and the attached application sought a corporate name change

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from Modawest to MCHB. Examination of Daunis, at C.R. 110-111. Shiepe, however, never submitted an authorization from the California Secretary of State to change Modawest's name, as required by Customs' regulations. See 19 C.F.R. § 111.12(a) (1992) ("If the applicant proposes to operate under a trade or fictitious name in one or more States within the [Customs' district in which the applicant intends to do business], evidence of the applicant's authority to use the name in each such State must accompany the application.").

Shiepe frequently called Customs to check on the status of the application for a name change and assured the Supervisory Customs Entry Inspector ("Entry Inspector") who received the application that the Chief of the Broker Compliance and Evaluation Branch had reviewed the documents and approved the application. See Examination of Daunis, at C.R. 100-02, 105-06, 121-22; Memorandum from Janiszewski of 8/11/89, Agency Exh. 2/16, at C.R. 960. Shiepe requested that the Entry Inspector give her approval over the telephone, but she refused. Examination of Daunis, at C.R. 122. Instead, on May 23, 1990, the Entry Inspector drafted a memorandum, signed by an Assistant District Director, that informed Customs' Headquarters that Modawest's name was being changed to MCHB, forwarded copies of a filing believed to have been approved by the California Secretary of State and requested the issuance of a license under the name of MCHB. See id. at C.R. 122-23; Memorandum from Rasmussen, Assistant District Director, Entry Division, Los Angeles District, to Director, Entry Procedures and Penalties Division, Chief, Entry Licensing & Restricted Merchandise Branch, U.S. Customs Service, Washington, DC, of 5/23/90, Agency Exh. 18, at C.R. 1135. The Entry Supervisor testified that "[she] took the application that Mr. Shipe submitted, and in good faith, [she] just forwarded the application, as he said, to headquarters for them to review." See Examination of Daunis, at C.R. 122.

Soon after receiving the Assistant District Director's Memorandum, the Acting Division Director reviewed MCHB's Articles of Incorporation. Memorandum from Worley, Acting Director, Field Operations Division, to Assistant District Director, Entry Division, Los Angeles, CA, of 5/31/90, Agency Exh. 19, at C.R. 1136. He concluded that MCHB was a new corporation requiring a formal application for a broker's license. Id.

As a result, by letter dated June 15, 1990, Customs advised Shiepe that (1) based upon a review of the MCHB Articles of Incorporation, it appeared a new corporation was formed and, therefore, a new corporate application was required, (2) MCHB's Articles of Incorporation did not specifically authorize the corporation to conduct Customs brokerage business, and (3) since MCHB did not exist until March 23, 1990, the date of the California Secretary of State's "filed" stamp, then the unfiled Amendment dated March 5, 1990 was invalid and a new Amendment authorizing MCHB to engage in Customs brokerage business was needed. Letter from Trotter, Acting District Director, to Shiepe, of 6/15/90 ("Letter from Trotter of 6/15/90"), Agency Exh. 2/27-2/29, at C.R. 971-73.

On June 20, 1990, Shiepe informed Customs that he had already submitted a "duplicate certificate of amendment to Sacremento requesting an `original' stamp on it" and "[u]pon receipt of the certificate of amendment (duplicate)" he would immediately forward it to the agency. Letter from Shiepe to Broker Compliance, U.S. Customs Services, of 6/20/90 ("Letter from Shiepe of 6/20/90"), Agency Exh. 2/30, at C.R. 974. Shiepe asked Customs to process MCHB's application while he obtained the stamped copy of the Amendment from the California Secretary of State. Id. Shiepe did not acknowledge Customs' notice that the March 5, 1990 Amendment...