Tomoegawa (USA), Inc. v. US

• Decision Date: 29 April 1991
• Docket Number: 83-01-00082 and 83-03-00390.,82-09-01351,Court No. 82-04-00558
• Citation: 763 F. Supp. 614,15 CIT 182
• Parties: TOMOEGAWA (U.S.A.), INC., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

763 F. Supp. 614

15 CIT 182

TOMOEGAWA (U.S.A.), INC., Plaintiff, v. The UNITED STATES, Defendant.

Court Nos. 82-04-00558, 82-09-01351, 83-01-00082 and 83-03-00390.

United States Court of International Trade.

April 29, 1991.

Mandel and Grunfeld, Steven P. Florsheim, New York City, for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Barbara M. Epstein, Civ. Div., U.S. Dept. of Justice, New York City, for defendant.

MEMORANDUM OPINION AND ORDER

RE, Chief Judge:

The Government has filed a motion to remove four actions that are pending on a suspension calendar, and simultaneously to amend its answers in these actions to assert a counterclaim.

On the basis that the Government's motion is untimely, plaintiff, Tomoegawa (U.S. A.), Inc., opposes the Government's motion to amend its answers to assert a counterclaim. Moreover, Tomoegawa cross-moves to remove the four actions from the suspension calendar and to dismiss them.

These motions raise questions that bear on the relationship of the Government's statutory right to assert a counterclaim under 28 U.S.C. § 1583 and the effect of the court's test case and suspension practice under USCIT R. 84. The specific questions presented are: (1) whether the Government's motion to amend its answers to include a counterclaim was timely filed; and (2) whether this court should grant the Government's motion in lieu of plaintiff's subsequently filed motion to dismiss the actions.

The court holds that the Government's motion to amend its answers to assert a counterclaim was timely filed. Accordingly, the Government's motion to remove the four actions from the suspension calendar and to amend its answers to include a counterclaim is granted. Tomoegawa's cross-motion to remove the actions from the suspension calendar and voluntarily dismiss the actions is denied.

BACKGROUND

In June 1984, Tomoegawa moved under USCIT R. 84, to designate Court No. 82-06-00853 as a test case and suspend several actions, including those at bar, under the test case. Tomoegawa represented that the question presented in the test case and the suspended actions was identical and pertained to the classification, for customs duties purposes, of merchandise imported from Japan and described on the commercial invoices as toner, dry imaging ink, or developer. While the Government did not consent to Tomoegawa's motion, it noted no objection to the motion, and the motion was granted by the court.

The Customs Service classified the imported merchandise in the test case as chemical mixtures not specifically provided for under the Tariff Schedules of the United States (TSUS) under item 432.20 for entries in 1980, and under item 432.25 for entries in 1981. Tomoegawa protested the classification and contended that the merchandise was electrostatic inks properly classifiable as other inks under item 474.26 of the TSUS.

In January 1986, the Government moved in the test case to amend its answer to include certain counterclaims. While plaintiff did not consent to the Government's motion, its response stated that it did not object to the amendment of the Government's answer. The court then granted the Government's motion. In one of its counterclaims, the Government contended that the toner and developer were properly classifiable as "photographic chemicals" under TSUS item 405.20 for the 1980 entries and item 408.41 for the 1981 entries. However, in 1986, the Government did not raise this claim or any other claim by way of a motion to amend its answer and the assertion of a counterclaim with respect to the four actions at bar.

In 1988, this court decided the test case and determined that the merchandise in issue was classifiable in accordance with the counterclaim asserted by the Government. Tomoegawa, U.S.A., Inc. v. United States, 12 CIT 112, 681 F.Supp. 867 (1988). The appellate court affirmed that decision holding that the imported merchandise was properly classifiable as photographic chemicals under the TSUS, as counterclaimed by the Government, with the exception of two non-benzenoid products. As to those two products, the appellate court remanded the action to this court for a determination of the correct classification. Tomoegawa, U.S.A., Inc. v. United States, 861 F.2d 1275 (1988). Subsequently, this court entered judgment as to those two products. Tomoegawa, U.S.A., Inc. v. United States, 15 CIT ___, slip op. 91-26, 1991 WL 56041 (Apr. 10, 1991).

In January 1989, the parties commenced discussions on the disposition of these actions. The Government proposed that the parties enter into a stipulation to effectuate a reliquidation of the similar merchandise in these actions under the photographic chemicals provision of the TSUS, in accordance with the decision in the test case.

Plaintiff countered indicating a preference for the original classification, which was rejected by this court and the appellate court, and suggested dismissal of the actions pursuant to USCIT R. 41(a)(1)(B). To that end, plaintiff represents that, on May 4, 1990, it served on the Government a proposed stipulation of dismissal in which plaintiff sought the Government's agreement to dismiss these four actions pursuant to USCIT R. 41(a)(1)(B). When the Government rejected plaintiff's proposed stipulation of dismissal, plaintiff sought to file with the Clerk's Office those stipulations of dismissal, unsigned by Government counsel. The Clerk's Office returned the stipulations to plaintiff since they were not in substantial conformity or compliance with the Rules of this court.

Subsequently, on June 6, 1990, eighteen months after the appellate court's decision, the Government filed a motion to remove these four actions from the suspension calendar, and simultaneously to amend its answer in each action to assert a counterclaim. The proffered counterclaim in each action mirrored the counterclaim in the test case which was sustained by this court and the Court of Appeals for the Federal Circuit. On June 12, 1990, plaintiff filed a motion to remove the four actions from the suspension calendar and voluntarily dismiss them pursuant to USCIT R. 41(a)(2).

DISCUSSION

The authority of a party to assert a counterclaim in an action is found in 28 U.S.C. § 1583, which provides:

In any civil action in the Court of International Trade, the court shall have exclusive jurisdiction to render judgment upon any counterclaim, cross-claim, or third-party action of any party, if (1) such claim or action involves the imported merchandise that is the subject matter of such civil action, or (2) such claim or action is to recover upon a bond or customs duties relating to such merchandise.

28 U.S.C. § 1583 (1988).

This statutory provision is implemented by Rule 13 of the Rules of the United States Court of International Trade which, in pertinent parts, provides:

(a) Counterclaims. A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if (1) the claim involves the imported merchandise that is the subject matter of the civil action, or (2) the claim is to recover upon a bond or customs duties relating to such merchandise.

(b) Counterclaim Exceeding Opposing Claim.

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(c) Counterclaim Against the United States.

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(d) Counterclaim Maturing or Acquired After Pleading.

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(e) Omitted Counterclaim. When a pleader fails to set up a counterclaim through oversight, inadvertence or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment.

(f) Cross-Claim Against Co-Party.

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(g) Joinder of Additional Parties.

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(h) Separate Trials — Separate Judgments.

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USCIT R. 13(a) and (e).

It is undisputed that the proffered counterclaims satisfy the requirements of Rule 13(a), namely that they involve the imported merchandise that is the subject matter of the civil action, and that they seek to recover customs duties relating to the subject merchandise. It also is undisputed that the proposed counterclaims are compulsory and cannot be independently asserted in later actions since they "arise out of the transaction or occurrence that is the subject matter of plaintiff's claim." M & M/Mars Snackmaster v. United States, 5 CIT 43, 44, 1983 WL 4991 (1983).

Nonetheless, plaintiff contends that the Government's motion to amend its answers to include a counterclaim in each of these actions should be denied because it was not timely filed. Specifically, plaintiff objects to the Government's assertion of the counterclaims because they were interposed six to seven years after the filing of the answer in each action, and more than four years after the Government became aware of the existence of the facts necessary to assert its counterclaims. Furthermore, plaintiff states that the Government's assertion of a counterclaim more than one and one half years after the decisions by this court and the Federal Circuit in the test case constitutes inexcusable excessive delay.

The Government contends that since the correct classification of the imported merchandise was upheld in the test case under the provision asserted in its counterclaim, "justice clearly requires that the merchandise be classified under the correct provision."

While the Government did not cite a specific provision of Rule 13, a careful reading of the motion papers reveals that Rule 13(e) serves as the basis of its motion to amend its pleadings to include certain counterclaims. By its terms, Rule 13(e) requires that a counterclaim not filed in conjunction with an answer be pleaded by way of amendment. In turn, that requires that Rule 13(e) operate in conjunction with Rule 15(a), the rule generally governing the amendment of pleadings.

USCIT R. 15(a) specifically provides:

(a) Amendments. A party may amend the party's pleading once as a matter of course at any time

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