United States v. Aegis Sec. Ins. Co.
| Decision Date | 26 February 2021 |
| Docket Number | Slip Op. 21- 24,Consol. Court No. 11-00388 |
| Parties | UNITED STATES, Plaintiff, v. AEGIS SECURITY INSURANCE COMPANY, Defendant. AEGIS SECURITY INSURANCE COMPANY, Third-Party Claimant, v. TRICOTS LIESSE 1983, INC., Third-Party Defendant. |
| Court | U.S. Court of International Trade |
Before: Richard K. Eaton, Judge
MEMORANDUM OPINION and ORDER[Third-Party Claimant Aegis Security Insurance Company's unopposed motion for summary judgment granted.]
Stephen C. Tosini, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Plaintiff.
T. Randolph Ferguson, Sandler, Travis & Rosenburg, PA, of San Francisco, CA, for Defendant, and Third-Party Claimant.
John B. Brew and Frances P. Hadfield, Crowell & Moring LLP, of Washington, DC, for Third-Party Defendant.
Eaton, Judge: Before the court is an unopposed motion for summary judgment by Aegis Security Insurance Company ("Aegis"), in its capacity as Third-Party Claimant, against Third- Party Defendant Tricots Liesse 1983, Inc. ("Tricots"). See Aegis' Original Mem. Supp. Mot. Summ. J., ECF No. 126 ("Aegis Original Br."). Aegis, a surety company, commenced this third-party action against Tricots, an importer, following the complaint in the main action, brought by Plaintiff the United States ("Plaintiff") to collect unpaid duties owed by Tricots that were secured by a customs bond written by Aegis. See Aegis' Answer and Third-Party Claim (Jan. 9, 2012), ECF No. 13; Pl.'s Compl., Ex. A (bond), ECF No. 2-1.
The court has jurisdiction over Aegis' third-party action under 28 U.S.C. § 1583(2). See 28 U.S.C. § 1583(2) (2012) ().
For the reasons that follow, the court grants summary judgment in favor of Aegis, and directs Aegis to submit proof of the amount of its reasonable attorney's fees, costs, and expenses, and a proposed judgment, in accordance with this Memorandum Opinion and Order.
In the main action, the United States sued on a customs bond written by Aegis to secure duties owed by Tricots on its imports of knitted circular fabric from Canada. See United States v. Aegis Sec. Ins. Co., 43 CIT ___, 422 F. Supp. 3d 1328 (2019). The court granted summary judgment in favor of Plaintiff, finding that the United States "ha[d] been deprived of lawful duties and fees as a result of Tricots' violation of [19 U.S.C.] § 1592(a), and that the unpaid duties and merchandise processing fees [were] due and owing to the Government from Tricots and from Aegis, as surety." See id., 43 CIT at ___, 422 F. Supp. 3d at 1352. In so ruling, the court noted that "Aegis' liability for duties [was] solely contractual and [was] limited by the face amount of the bond." Id., 43 CIT at ___, 422 F. Supp. 3d at 1352 n.18 (citing 19 C.F.R. § 113.62(a)).
Judgment in the main action was entered on January 9, 2020. See Judgment (Jan. 9, 2020), ECF No. 125. As against Aegis, the court entered judgment in the amount of $500,113.32 in lost revenue up to the bond limit, plus $260,031.35 in statutory interest and $81.98 per day in post-judgment interest. As against Tricots, the court entered judgment in the amount of $2,249,196.04 for unpaid duties and merchandise processing fees, plus post-judgment interest.
On May 1, 2020, Aegis tendered $768,916.53 to Plaintiff in satisfaction of the judgment against it. See Aegis Original Br., Ex. 1.
On May 14, 2020, Aegis filed its motion for summary judgment, seeking reimbursement of the amount it tendered to Plaintiff, plus reasonable attorney's fees, costs, and expenses incurred in defending the main action and pursuing its third-party action.
On June 17, 2020, Tricots filed a consent motion for an extension of time to respond to Aegis' motion, citing, as good cause, the close of its factory and facilities due to the COVID-19 pandemic. See Tricots' Mot. Extension of Time (June 17, 2020), ECF No. 127. The court granted the extension, giving Tricots an additional two months, i.e., until August 17, 2020, to respond. See Order (June 23, 2020), ECF No. 128. No response was filed by the extended deadline. Counsel for Tricots withdrew their appearances approximately five weeks after the extended deadline, on September 23, 2020. See Order (Sept. 23, 2020), ECF No. 132. Tricots did not obtain substitute counsel.
On November 18, 2020, the court ordered supplemental briefing on the contractual basis for Aegis' claims for reimbursement and attorney's fees, costs, and expenses. See Order (Nov. 18, 2020), ECF No. 133. In response, Aegis filed its first supplemental brief, to which it attached the declaration of Amy Morlier, an employee of Aegis' agent, Avalon Risk Management, Inc., regarding an "Application and Indemnity Agreement" that was entered into by Avalon and Tricots on October 17, 2000. See Aegis' First Suppl. Br., ECF No. 136.
On December 10, 2020, the court scheduled oral argument on Aegis' motion for summary judgment. See Order (Dec. 10, 2020), ECF No. 135. Tricots received notice of the scheduled proceeding and declined to participate.
Oral argument was held on December 17, 2020, following which the court ordered Aegis to provide further supplemental briefing in support of its motion, relating to the extent, if any, the language in the bond, that was the subject of the main action, supported Aegis' third-party claim for reimbursement. See Order (Dec. 17, 2020), ECF No. 138. In response, Aegis filed its second supplemental brief, to which it attached a second declaration by Ms. Morlier. See Aegis' Second Suppl. Br., ECF No. 141.
By way of proof in support of its claim for attorney's fees, costs, and expenses, Aegis has attached to its motion what appears to be attorney time sheets, but has not submitted a declaration or other proof to support the reasonableness of the amounts it claims to have incurred. See Aegis' Original Br., Ex. 2.A & 2.B.
Summary judgment may be granted where there is no genuine issue of material fact, and the movant is otherwise entitled to judgment as a matter of law. See U.S. CT. INT'L TR. R. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986).
A customs bond is a tripartite agreement, entered into by a principal and a surety, for the benefit of the United States.1 See 19 C.F.R. § 113.62(a)(1)(ii) (); see also Hartford Fire Ins. Co. v. United States, 40 CIT ___, ___, 254 F. Supp. 3d 1333, 1355 (2017) (). U.S. Customs and Border Protection ("Customs") regulations set out requirements for bond contracts, including that the signature and seal of corporate sureties and principals appear on the bond, among other requirements and conditions. See generally 19 C.F.R. Pt. 113; see also id. § 113.37(e) (); id. § 113.33(b) (). This Court has held that Customs' regulatory bond requirements are "procedural" in that they "are meant to protect Customs in furtherance of its mission to protect revenue of the United States, and do not clearly alter the rights of the private parties engaging in the bonding procedure." Hartford Fire Ins. Co., 40 CIT at ___, 254 F. Supp. 3d at 1351.
Principles of contract law determine the validity of the bond contract and the respective duties of the parties. See Hartford Fire Ins. Co., 40 CIT at ___, 254 F. Supp. 3d at 1355 (citations omitted) (applying "ordinary principles of contract construction as would be applicable to any contract action between private parties" in evaluating the bonds at issue). Thus, the failure to satisfy a procedural requirement under Customs' regulations does not invalidate the bond, where the evidence otherwise shows the parties' intention to be bound by the contract. See id., 40 CIT at ___, 254 F. Supp. 3d at 1355 (citing NRM Corp. v. Hercules, Inc., 758 F.2d 676, 681 (D.C. Cir. 1985)). Accordingly, the absence of an importer's signature on a bond does not render a bond void for want of an "essential term," where other circumstances, including, as in Hartford, entry paperwork, indicated the importer's intention to be bound. See id., 40 CIT at ___, 254 F. Supp. 3d at 1357-58.
By its motion, Aegis maintains that there is no genuine issue of material fact that would preclude granting summary judgment in its favor on its claim that Tricots agreed (1) to reimburse it for amounts paid to the United States on Tricots' behalf for lost duties and interest, and (2) to indemnify it for attorney's fees, costs, and expenses incurred in defending the main action and in bringing the third-party action.
In the year 2000, Tricots applied for a continuous transaction bond in the amount of $230,000 from Aegis through Aegis' agent, Avalon Risk Management, Inc. See Aegis' First Suppl. Br., Ex. 3 (Morlier Decl.) ¶ 6. To obtain the bond, on October 17, 2000, Tricots executed a "Customs Bond Application and Indemnity" form and submitted it to Avalon. See Aegis' First Suppl. Br., Ex. 3.1. Under the Indemnity Agreement on the back of the form, the...
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