St. Paul Fire & Marine Ins. Co. v. U.S., 90-1343

• Decision Date: 26 March 1992
• Docket Number: No. 90-1343,90-1343
• Citation: 959 F.2d 960
• Parties: ST. PAUL FIRE & MARINE INSURANCE CO., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 960

959 F.2d 960

13 ITRD 2345

ST. PAUL FIRE & MARINE INSURANCE CO., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 90-1343.

United States Court of Appeals Federal Circuit.

March 26, 1992.

Edward M. Joffe, Sandler, Travis & Rosenberg, P.A., Miami, Fla., argued, for plaintiff-appellant. With him on the brief, was Gilbert Lee Sandler.

Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, Dept. of Justice, New York City, argued, for defendant-appellee. With him on the brief, were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Susan Burnett Mansfield. Also on the brief, was Karen Binder, Atty., U.S. Customs Service, of counsel.

Before NIES, Chief Judge, NEWMAN and ARCHER, Circuit Judges.

NIES, Chief Judge.

St. Paul Fire & Marine Insurance Co. appeals from a decision by the United States Court of International Trade denying St. Paul's motion to amend its complaint to include claims nullifying St. Paul's obligations under its surety bond and seeking a refund of amounts St. Paul had paid for duties as surety for Opera Garments, Inc. The trial court denied the motion after determining that it lacked subject matter jurisdiction over the contract claims St. Paul sought to add. St. Paul Fire & Marine Ins. Co. v. United States, 729 F.Supp. 1371 (Ct.Int'l Trade 1990). We reverse.

I. BACKGROUND

This case concerns the importation of wearing apparel consisting primarily of jackets or coats. The importer of record, Opera, brought the garments into the United States, exported them to Canada for alleged repair or alteration, and then allegedly brought the same garments back into the United States for sale. On re-entry of the garments, Opera sought treatment under item 806.20 of the Tariff Schedules of the United States (TSUS) which limits the basis of the import duty on such articles to the value of the repairs or alterations. Customs, however, for some time had been investigating Opera's operations and had concluded that the coats exported to Canada were being sold there, and that in their place, Opera was bringing back more expensive coats, thus causing a loss of revenue to the United States. Customs denied Opera's protests for treatment under TSUS 806.20 and calculated the duty on the full net invoiced value of the merchandise. After Opera failed to pay the requested duty, the government demanded payment from St. Paul, Opera's surety. St. Paul promptly paid the amount due.

St. Paul's original complaint simply appealed the denial of Opera's protests for TSUS 806.20 treatment. About a year after this suit began, St. Paul states it learned through discovery about Customs' investigation of Opera. Then St. Paul in September of 1988 moved to amend its complaint ¹ to seek nullification of its bond obligations by reason of the government's breach of duties to St. Paul in failing to disclose Customs' ongoing investigations into Opera's fraudulent conduct and in failing to require deposit of full duties from Opera upon entry of the merchandise. As a result of the government's misconduct, St. Paul claims it insured a risk it would not have otherwise insured and paid monies, required under the surety bond, it would not have otherwise paid.

The trial court denied St. Paul's motion to amend its complaint because the court concluded it had no jurisdiction over the new counts. Per the court, jurisdiction in the Court of International Trade would exist if St. Paul had protested the demand for payment under the bond and appealed the denial of such protest thereby establishing jurisdiction under 19 U.S.C. § 1514(a)(3) (1988) ² and 28 U.S.C. § 1581(a) (1988). ³

After the motion to amend its complaint was denied, St. Paul moved for a rehearing and sought dismissal of its original complaint. The trial court denied the motion for rehearing and dismissed the action, per St. Paul's request. St. Paul now appeals the trial court's denial of its motion to amend the complaint.

II. ISSUES

1. Must St. Paul's appeal be dismissed because St. Paul requested the dismissal of its original complaint?

2. If St. Paul's appeal is properly before this court, was the trial court correct in determining that it lacked jurisdiction over the claims St. Paul seeks to add?

III. APPEALABILITY

The Government asserts that since St. Paul voluntarily sought and obtained a dismissal of its action in the court below, no adverse judgment exists from which St. Paul could appeal, and that, therefore, this appeal is not properly before us. The Government is correct in that generally, "a plaintiff who has voluntarily dismissed his complaint may not sue out a writ of error." United States v. Procter & Gamble Co., 356 U.S. 677, 680, 78 S.Ct. 983, 985, 2 L.Ed.2d 1077 (1958); United States v. Babbitt, 104 U.S. (14 Otto) 767, 768, 26 L.Ed. 921 (1881); see also 5 J.W. Moore, Moore's Federal Practice p 41.05 (2d ed. 1991). However, the Supreme Court, in Procter & Gamble, 356 U.S. at 680-81, 78 S.Ct. at 985, set out an exception to that rule. There, the Government as plaintiff was ordered to turn over the transcript of a grand jury proceeding. To avoid being charged with civil contempt, the Government requested that the district court's order be amended to provide that, if the transcript were not produced, its complaint would be dismissed. Because production was not made, an order of dismissal was entered and the government appealed to obtain a ruling on the order to produce. The Supreme Court noted that it was understandable why the Government sought to avoid any unseemly conflict with the district court, and stated, "[w]hen the Government proposed dismissal for failure to obey, it had lost on the merits and was only seeking an expeditious review." Id. The Court then held that the government "did not consent to a judgment against [it], but only that, if there was to be such a judgment, it should be final in form instead of interlocutory, so that [it] might come to this court without further delay." Id. (quoting Thomsen v. Cayser, 243 U.S. 66, 83, 37 S.Ct. 353, 358, 61 L.Ed. 597 (1917)).

Here, St. Paul sought dismissal of the original complaint only as an expedient to obtaining review of the denial of its motion to amend its complaint. As it admits, its complaint as filed "is no longer factually supportable based upon the newly-discovered evidence." St. Paul, by its request for dismissal, did not agree it was liable but only sought to avoid a trial on the merits of the existing count which otherwise would have been necessary in order to appeal the interlocutory order denying its motion to amend. While other procedures might have been followed, St. Paul's request for dismissal was not "voluntary" in the sense of the general rule that a party may not appeal a judgment to which it consented.

IV. JURISDICTION OF THE COURT OF INTERNATIONAL TRADE

St. Paul advances a number of alternative statutory bases on which jurisdiction could be found in the trial court over St. Paul's contract claims, including 28 U.S.C. § 1581(i) (1988). ⁴ This section provides, in pertinent part, as follows:

In addition to the jurisdiction conferred upon the Court of International Trade by subsections (a)-(h) of this section ... the Court of International Trade shall have exclusive jurisdiction of any civil action commenced against the United States ... that arises out of any law of the United States [governing import transactions].

Id. St. Paul argues that the new claims could not be brought under 28 U.S.C. § 1581(a), or any other subsection of § 1581, and fall within the parameters of the above subsection. For the following reasons, we conclude the trial court had jurisdiction under section 1581(i).

The trial court determined that, while the new claims fell within the scope of 1581(i), that section could not be invoked because St. Paul could have filed an administrative protest to Customs' demand for payment on St. Paul's bond. ⁵ Had St. Paul done so, its claims could then have been brought under section 1581(a) and, therefore, per the court, section 1581(i) is not available as a basis for jurisdiction. Because St. Paul filed no protest, the court also concluded that the foundation for bringing a claim under section 1581(a) was lacking and that, therefore, the counts could not be added.

The trial court is clearly correct that section 1581(i) cannot be used to bypass the requirement for administrative protest. The statute plainly states that its jurisdictional grant is "[i]n addition to the jurisdiction conferred upon the Court of International Trade by subsections (a)-(h) of this section...." 28 U.S.C. § 1581(i). Moreover, if the grant of jurisdiction in section 1581(i) were interpreted to overlap with the grant in section 1581(a), litigants could easily circumvent the jurisdictional scheme of review. To illustrate, a protest must be filed within 90 days of the disputed administrative decision, 19 U.S.C. § 1514(c), whereas a suit under section 1581(i) must be filed within two years of the date a claim accrues. 28 U.S.C. § 2636(h) (1988). Thus, if a suit could be maintained on a protestable decision under both sections 1581(a) and 1581(i), a party could circumvent the time requirements associated with a protestable decision and completely evade the administrative review process. Rejecting this interpretation of section 1581, this court held in Miller & Co. v. United States, 824 F.2d 961, 963 (Fed.Cir.1987), cert. denied, 484 U.S. 1041, 108 S.Ct. 773, 98 L.Ed.2d 859 (1988): "Section 1581(i) jurisdiction may not be invoked when jurisdiction under another subsection of section 1581 is or could have been available...." Accord National Corn Grower's Ass'n v. Baker, 840 F.2d 1547, 1556-59 (Fed.Cir.1988).

There is also no question that a surety may protest the government's demand for payment on its bond provided it files such protest within 90 days of the demand. 19 U.S.C. § 1514(c). Clearly, the alleged facts of St....