St. Paul Fire and Marine Ins. Co. v. US
| Decision Date | 29 January 1990 |
| Docket Number | Court No. 85-04-00628. |
| Citation | 729 F. Supp. 1371 |
| Parties | ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Sandler, Travis & Rosenberg, Edward M. Joffe, Joanne Sargent, Gilbert Lee Sandler, Miami, Fla., and Beth C. Ring, New York City, for plaintiff.
Stuart M. Gerson, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, International Trade Field Office, U.S. Dept. of Justice, Commercial Litigation Branch, Civil Div., and Kenneth N. Wolf, New York City, for defendant.
This action is presently before the court on plaintiff's motion, pursuant to Rule 15(a) of the Rules of this Court, to amend its original complaint to include additional claims. Defendant opposes the motion and maintains the court lacks jurisdiction over the subject matter of the additional claims.
Plaintiff St. Paul Fire and Marine Insurance Company acted as corporate surety for Opera Garment Inc. (Opera), the importer of record, under two term bonds covering the entries involved in this action, to wit: leather, fur and fabric coats.
The garments were imported at full net invoiced value and then exported to Opera's plant in Montreal, Canada, for alleged repair or alteration. Opera re-entered the merchandise for sale in the United States seeking treatment under item 806.20,1 Tariff Schedules of the United States (TSUS), which would require the importer to pay a duty only on the value of the repairs or alterations upon re-entry of the merchandise. The United States Customs Service (Customs) denied the importer's application and liquidated the merchandise at full net invoiced value in accordance with Schedule 3 of the TSUS. Opera failed to pay the liquidated duties and plaintiff, as surety, tendered the amount due to Customs. Plaintiff then commenced this action challenging the denial of Opera's protest2 of Customs' decision to disallow item 806.20, TSUS, treatment for the subject merchandise, and the resulting classification at full Schedule 3 rates.
Plaintiff now claims that certain information received from Customs through discovery revealed that Opera was under investigation by the Customs Service for fraudulent or criminal conduct before and during the time of the subject entries. Plaintiff contends that Customs' failure to disclose this information caused plaintiff both to insure a risk it would not have otherwise insured and to pay monies required under the surety bond. Consequently, nearly thirteen months after receiving the defendant's discovery responses, plaintiff moves to amend its original complaint to include claims against the government for breach of obligations under the surety bond contract and to estop the government from retaining all monies paid.
In opposition to plaintiff's motion to amend the complaint, defendant maintains that this Court lacks jurisdiction over the subject matter of the proposed amended complaint.
Thus, to determine whether the court should grant plaintiff leave to amend its complaint to include the new causes of action, the court must examine the jurisdictional propriety of those claims.
Plaintiff contends that the court has jurisdiction over the subject matter of the amended complaint by virtue of the All Writs Act (Act), 28 U.S.C. § 1651(a) (1982).3 The Act is applicable, plaintiff argues, because there is no jurisdictional statute in this Court which specifically covers the subject matter of the additional claims in issue. Plaintiff's Reply Brief at 11. Defendant counters that the Act is not applicable because Customs' demand on plaintiff to fulfill its contractual obligation to pay the amount in question was protestable as a "charge" or "exaction" within the framework of 19 U.S.C. § 1514(a)(3) (1988),4 in which case this Court's jurisdiction would be premised on 28 U.S.C. § 1581(a) (1982).5
Two prerequisites must be met before jurisdiction may be invoked under the All Writs Act: (1) there must be no jurisdictional statute specifically addressing the subject matter of the claims at issue; and (2) the court must already have jurisdiction over the other issues of the action. See Pennsylvania Bureau of Correction v. United States Marshals Service, 474 U.S. 34, 106 S.Ct. 355, 88 L.Ed.2d 189 (1985); United States Alkali Export Ass'n v. United States, 325 U.S. 196, 65 S.Ct. 1120, 89 L.Ed. 1554 (1945); Nakajima All Co. v. United States, 12 CIT ___, 682 F.Supp. 52 (1988). Consequently, if, as the plaintiff asserts, the demand against the plaintiff's bond does not constitute a "charge" or "exaction" within the purview of section 1514(a)(3), then the first prerequisite of the All Writs Act is satisfied. Regarding the second prong, the plaintiff has already properly invoked the exclusive jurisdiction of this Court by filing a summons to a denied protest filed by its principal under 28 U.S.C. § 1581(a). St. Paul Fire and Marine Ins. Co. v. United States, 2 CIT 104, 525 F.Supp. 880 (1981). Therefore, the All Writs Act is applicable only if the demand against the plaintiff's bond is not a "charge" or "exaction."
Plaintiff argues that this case merely involves an assessment of ordinary customs duties, which does not constitute a "charge" or "exaction" within the meaning of section 1514(a)(3). Plaintiff submits that had the importer paid the duties, there would be no question that they would be treated as ordinary customs duties. Payment by the surety, plaintiff insists, does not "transform them into charges or exactions" within the purview of section 1514(a)(3). St. Paul Fire and Marine Ins. Co. v. United States, 1 CIT 283, 284-85, 1981 WL 2459 (1981).
Defendant concurs that the assessment of ordinary customs duties does not constitute an exaction but maintains that the essential inquiry is whether a demand for payment against plaintiff's bond is protestable as a "charge or exaction" under section 1514(a)(3).
The terms "charges" and "exactions" "have been applied to actual assessments of specific sums of money (other than ordinary customs duties) on imported merchandise." Alberta Gas Chemicals, Inc. v. Blumenthal, 82 Cust.Ct. 77, 82, C.D. 4792, 467 F.Supp. 1245, 1247 (1979); see Puget Sound Freight Lines v. United States, 19 Cust.Ct. 70, C.D. 1070 (1947), aff'd, 36 CCPA 70, C.A.D. 400, 173 F.2d 578 (1949); Atlantic Transport Co. v. United States, 5 Ct.Cust.App. 373, T.D. 34872 (1914).
A "charge" has been interpreted as an obligation or duty; a claim or encumbrance; a liability, an expense or the price of an object; an entry in an account of what's due from one party to another, 1 West's Law & Commercial Dictionary in Five Languages 237 (1985); West's Legal Thesaurus and Dictionary 127, (1985); Webster's Third New Int'l Dictionary 377 (1981); Black's Law Dictionary 211 (5th Ed.1979); whereas an "exaction" has been described as the wrongful demand for payment under color of official authority, where no payment is due; an unjust compulsory levy. Webster's supra, at 790; Black's supra, at 500. These sources indicate that a demand for payment under the surety bond may be characterized as an obligation or duty to pay and therefore could be regarded as a "charge". See United States v. Bavarian Motors, Inc., 4 CIT 83 (1982); United States v. Utex Int'l, Inc., 11 CIT 325, 659 F.Supp. 250 (1987), rev'd on other grounds, 857 F.2d 1408 (Fed.Cir.1988). Payment under the surety bond was made in fulfillment of the plaintiff's contractual obligation. Plaintiff was liable to Customs for payment of any liquidated entries upon importer's failure to do so. Hence, demand against the plaintiff's bond constitutes a "charge" under section 1514(a)(3).
Moreover, 19 U.S.C. § 1514(c)(2) (1988) states in pertinent part:
A protest by a surety which has an unsatisfied legal claim under its bond may be filed within 90 days from the date of mailing of notice of demand for payment against its bond. If another party has not filed a timely protest, the surety's protest shall certify that it is not being filed collusively to extend another authorized person's time to protest as specified in this subsection.
The legislative history of this section demonstrates that Congress intended this provision to "permit a surety to file a protest in its own name and extend the time within which it may file a protest." S.Rep. No. 96-249, 96th Cong., 2d Sess. 254, reprinted in 1979 U.S. Code Cong. & Admin. News 381, 640. Thus, section 1514(c)(2) further supports the Court's conclusion that a demand for payment against a surety's bond constitutes a protestable matter.
The All Writs Act is inapplicable to the case at bar because had the plaintiff protested Customs' demand for payment of liquidated duties in a timely manner, the court's jurisdiction would have been properly invoked under 19 U.S.C. § 1514(a)(3) and 28 U.S.C. § 1581(a). The All Writs Act is a residual source of authority and "where a statute specifically addresses the particular issue at hand, it is that authority, and not the All Writs Act, that is controlling." Pennsylvania Bureau of Corrections, 474 U.S. at 43, 106 S.Ct. at 361. The Act cannot be applied simply because compliance with the statutory procedures are inconvenient or even less appropriate. Id. 28 U.S.C. § 2638
In the alternative, plaintiff asserts that jurisdiction is founded upon the denied protests which form the basis for the original complaint. Plaintiff relies on 28 U.S.C. § 2638 (1982), which provides that:
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