United States v. Am. Home Assurance Co.

• Decision Date: 26 May 2017
• Docket Number: 2016-1088, 2016-1090
• Citation: 857 F.3d 1329
• Parties: UNITED STATES, Plaintiff-Appellant v. AMERICAN HOME ASSURANCE COMPANY, Defendant-Cross-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

857 F.3d 1329

UNITED STATES, Plaintiff-Appellant

v.AMERICAN HOME ASSURANCE COMPANY, Defendant-Cross-Appellant

2016-1088, 2016-1090

United States Court of Appeals, Federal Circuit.

Decided: May 26, 2017

Beverly A. Farrell , International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York, NY, argued for plaintiff-appellant. Also represented by Amy M. Rubin; Benjamin C. Mizer, Jeanne E. Davidson , Washington, DC; Brandon Rogers , Office of Assistant Chief Counsel, United States Customs and Border Protection, Indianapolis, IN; Paula S. Smith , New York, NY.

Herbert C. Shelley , Steptoe & Johnson, LLP, Washington, DC, argued for defendant-cross-appellant. Also represented by Mark Frederick Horning .

Edward Graham Gallagher , The Surety & Fidelity Association of America, Washington, DC, for amicus curiae The Surety & Fidelity Association of America.

Before Moore, Taranto, and Chen, Circuit Judges.

Moore, Circuit Judge.

The government appeals from the United States Court of International Trade's ("Trade Court") judgment on the pleadings holding that the government is not entitled to non-statutory equitable interest for unpaid antidumping duties for imported goods. United States v. Am. Home Assur. Co. , 100 F.Supp.3d 1364, 1373 (Ct. Int'l Trade 2015) (" AHAC II "). American Home Assurance Company ("AHAC") cross-appeals the Trade Court's decision to award the government interest on the unpaid duties under 19 U.S.C. §§ 580 and 1505(d). Id. at 1371. We affirm the Trade Court decision on all issues.

BACKGROUND

This appeal stems from four collection actions in which the government sought to recover unpaid antidumping duties from AHAC, a surety. AHAC secured three different importers' importation of preserved mushrooms and crawfish tail meat from China by issuing numerous single transaction and continuous entry bonds in 2001 and 2002. The issued bonds obligated the importers and AHAC to pay, up to the face amounts of the bonds, "any duty, tax or charge and compliance with law or regulations" resulting from covered activities. Customs liquidated the entries secured by the bonds and assessed antidumping duties on the merchandise. Each importer failed to pay the duties owed. The parties do not dispute that AHAC is liable for the principal amounts of antidumping duties owed on the bonds.

After liquidation, Customs started charging statutory post-liquidation interest on the unpaid duties of two of the collections that did not exceed the face amount of the bonds pursuant to 19 U.S.C. § 1505(d) (" § 1505(d) interest"). From 2003 to 2009, Customs issued multiple demands notifying AHAC of the government's intent to seek § 1505(d) interest. AHAC protested the government demands and Customs denied the protest. AHAC could have challenged Customs' denial at the Trade Court under 28 U.S.C. § 1581(a), but elected not to do so. In 2009, the government commenced four suits at the Trade Court for the collection of unpaid duties and interest, which the Trade Court consolidated. After discovery, the parties cross-moved for summary judgment. Relevant to this appeal, the parties disputed the application of equitable prejudgment interest, § 1505(d) interest, and 6% statutory prejudgment interest under 19 U.S.C. § 580 (" § 580 interest").

The Trade Court granted in part and denied in part both the government's and AHAC's motions. It ordered AHAC to pay § 1505(d) interest up to the face amounts of the bonds. It held that § 1505(d) interest involves "charges or exactions of whatever character" under 19 U.S.C. § 1514(a)(3) and that the statute does not contain an exception for charges or exactions arising after liquidation. It held that the bonds statutorily and contractually serve to secure the payment of duties and any interest—they do not distinguish between pre- and post-liquidation interest. It held that because the § 1505(d) interest determination is "final and conclusive" under § 1514(a) and AHAC failed to contest its denied protest, AHAC was precluded from asserting any defenses regarding its liability for § 1505(d) interest.

The Trade Court also held AHAC liable for § 580 interest, which is 6% statutory prejudgment interest. The Trade Court declined to award equitable prejudgment interest because the 6% rate of the § 580 interest "far exceeds the applicable rates at which the Government would receive equitable interest" and awarding equitable prejudgment interest in these circumstances would over-compensate the government. The government appeals the Trade Court's denial of non-statutory equitable interest, and AHAC cross-appeals the Trade Court's award of § 580 and § 1505(d) interest to the government. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

DISCUSSION

We review the Trade Court's grant or denial of summary judgment for correctness as a matter of law and we decide de novo "the proper interpretation of the governing statute and regulations as well as whether genuine issues of material fact exist." United States v. Am. Home Assur. Co. , 789 F.3d 1313, 1319 (Fed. Cir. 2015) (" AHAC I "). We review the Trade Court's determination not to award equitable prejudgment interest for abuse of discretion. Princess Cruises, Inc. v. United States , 397 F.3d 1358, 1367 (Fed. Cir. 2005).

A. Equitable Prejudgment Interest

The government argues the Trade Court erred in denying the government equitable prejudgment interest because its decision was predicated on the assumption that § 580 interest is compensatory. It argues the purpose of equitable prejudgment interest is to compensate the government for the time value of money, whereas the purpose of § 580 interest is to penalize a noncompliant party. We do not agree with the government's characterization. While we agree that § 580 interest and equitable prejudgment interest are not mutually exclusive, the mere availability of dual sources of prejudgment interest does not mandate their application in every case. The Trade Court retains broad discretion to apply equitable prejudgment interest in accordance with the facts of each case.

Equitable prejudgment interest "serves to compensate for the loss of use of money due as damages from the time the claim accrues until judgment is entered, thereby achieving full compensation for the injury those damages are intended to redress." Princess Cruises , 397 F.3d at 1367 (quoting West Virginia v. United States , 479 U.S. 305, 310 n.2, 107 S.Ct. 702, 93 L.Ed.2d 639 (1987) ). No statute or regulation explicitly authorizes equitable prejudgment interest; its award is governed by traditional judge-made principles. Id. Factors a court may consider in awarding equitable prejudgment interest may include the degree of wrongdoing on the part of the defendant, the availability of alternative investment opportunities to the plaintiff, whether the plaintiff delayed bringing the action, and other fundamental considerations of fairness. United States v. Great Am. Ins. Co. of N.Y. , 738 F.3d 1320, 1326 (Fed. Cir. 2013).

In its entirety, 19 U.S.C § 580 states: "Upon all bonds, on which suits are brought for the recovery of duties, interest shall be allowed, at the rate of 6 per centum a year, from the time when said bonds became due." Section 580 applies to bonds securing the payment of antidumping duties when the government sues for payment under those bonds. AHAC I , 789 F.3d at 1324–28.

Generally, equitable remedies are unavailable when a party has an adequate statutory remedy. Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 381, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) ; accord West Virginia , 479 U.S. at 308–09, 107 S.Ct. 702 ("In the absence of an applicable federal statute, it is for the federal courts to determine, according to their own criteria, the appropriate measure of damage, expressed in terms of interest, for nonpayment of the amount found to be due."). AHAC argues that to allow both statutory prejudgment interest at 6% and equitable prejudgment interest would amount to a windfall to the government and permit double recovery or more. In the current environment where interest rates are less than 6%, the statutory rate chosen by Congress under § 580 amounts to full recovery plus some. This, of course, is Congress' choice and we are bound by the statute.

The availability of statutory interest would normally render equitable interest unavailable. Here, however, Congress expressly indicated the availability of both statutory and equitable prejudgment interest when it enacted the Trade Facilitation and Trade Enforcement Act of 2015 ("TFTEA"). See Pub. L. No. 114–125, 130 Stat. 122. TFTEA provided authority for the government to deposit interest earned on antidumping duties into the special account created by the Continued Dumping and Subsidy Offset Act. 19 U.S.C. § 4401. Congress recognized that interest earned on antidumping duties includes "[e]quitable interest under common law and interest under section 580 of this title awarded by a court against a surety under its bond for late payment of antidumping duties." Id. § 4401(c)(2)(C) (emphasis added). The plain meaning of this statutory language indicates that Congress recognized that a court may award both equitable and § 580 interest. See also AHAC I , 789 F.3d at 1330.

That the Trade Court may , in its discretion, award dual sources of prejudgment interest does not mean that the Trade Court must award dual sources of prejudgment interest when the government brings an action to recover duties. The fact that the plain language of § 580 covers bonds securing the payment of antidumping duties does not transform the statute into one that is punitive in nature. In fact, the statute expressly designates the § 580 monies as "interest." We conclude that the Trade Court retains broad discretion to apply nonstatutory prejudgment interest according to traditional equitable principles, which is exactly what it did in this case.

The Trade Court did not abuse...