United States v. Am. Home Assurance Co.

• Decision Date: 19 August 2015
• Docket Number: Slip Op. 15–88.,Court No. 09–00403.
• Citation: 100 F.Supp.3d 1364
• Parties: UNITED STATES, Plaintiff, v. AMERICAN HOME ASSURANCE CO., Defendant.
• Court: U.S. Court of International Trade

100 F.Supp.3d 1364

UNITED STATES, Plaintiff

v.AMERICAN HOME ASSURANCE CO., Defendant.

Slip Op. 15–88.

Court No. 09–00403.

United States Court of International Trade.

Aug. 19, 2015.

Beverly A. Farrell, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for Plaintiff, United States. With her on the briefs were Stuart F. Delery, Acting Assistant Attorney General, Barbara S. Williams, Attorney–in–Charge, Amy M. Rubin, Acting Assistant Director, Aimee Lee, Senior Trial Counsel, Edward F. Kenny, Trial Attorney, and Alexander Vanderweide, Trial Attorney. Of counsel on the briefs were Paula S. Smith, U.S. Customs and Border Protection, Office of Assistant Chief Counsel, of New York, NY, and Brandon T. Rodgers, U.S. Customs and Border Protection, Office of Assistant Chief Counsel, of Indianapolis, IN.

Herbert C. Shelley, and Mark F. Horning, Steptoe & Johnson LLP, of Washington, DC, argued for Defendant, American Home Assurance Company.

OPINION

GORDON, Judge:

This consolidated collection action¹ is before the court on cross-motions for summary judgment. See Def.'s Mot. for Summ. J., Consol. Court No. 09–00403, ECF No. 59 (“Def.'s Br.”); Pl.'s Mot. for Summ. J., Consol. Court No. 09–00403, ECF No. 61 (“Pl.'s Br.”). Plaintiff United States (“Government”) seeks to recover unpaid antidumping duties from Defendant American Home Assurance Company (“AHAC”), a surety, along with statutory and equitable pre-judgment interest, and post-judgment interest. Payment of duties was secured by numerous single transaction bonds (“STBs”) and continuous entry bonds (“CBs”) issued by AHAC during the period March 2001 to February 2002. AHAC's liability for the principal amounts of antidumping duties owed on these bonds is not in issue.

For entries in which antidumping duties do not exceed the face value of the bonds (Court Nos. 09–00403 and 10–00343), the Government is seeking statutory pre-judgment interest under 19 U.S.C. § 1505(d) (“post-liquidation interest” or “1505(d) interest”) for non-payment of the duties. Over and above any antidumping duties and 1505(d) interest owed, the Government claims statutory pre-judgment interest as an exaction pursuant to 19 U.S.C. § 580 (“580 interest”) for having to commence these four collection actions. The Government also seeks equitable pre-judgment interest on any amounts in excess of the face amounts of the relevant bonds to compensate the Government for the loss of the time value of the funds owed. Finally, the Government maintains that it is entitled to post-judgment interest under 28 U.S.C. § 1961.

The court has jurisdiction pursuant to 28 U.S.C. § 1582(2) (suit on a bond) and 1582(3) (suit for collection of unpaid duties)² (2012). For the reasons set forth below, the Government's motion for summary judgment is granted in part and denied in part, and AHAC's cross-motion is granted in part and denied in part.

I. Background

The subject bonds covered entries of preserved mushrooms and fresh water crawfish tail meat from the People's Republic of China, with each product subject to an antidumping duty order. Declaration of Mark Pessolano in Support of Def.'s Mot. for Summ. J. (“Pessolano Decl.”), Consol. Court No. 09–00403, ECF No. 59–1. These bonds secured the importation of the subject merchandise during the period May 4, 2001 through August 6, 2002 by three different importers (American Jianglin, Y & Z International Inc., and JH Brain Trading Inc.). Id. In Court No. 09–00403, AHAC issued both CBs and STBs for the relevant entries. Id. In the other three actions, AHAC issued only CBs for the relevant entries.

In the consolidated actions, AHAC secured the importation of the subject merchandise by issuing the underlying STBs and CBs. The 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 activity covered by those bonds. See Compl., Exs. C & L, Court No. 09–00403, ECF No. 4; Compl., Ex. A (copy of printout from Customs' Automated Commercial System reflecting Bond No. 100175644 as bond destroyed at the World Trade Center site on Sept. 11, 2001), Court No. 10–00125, ECF No. 4; Compl., Ex. A, Court No. 10–00175, ECF No. 4; Compl., Ex. A, Court No. 10–00343, ECF No. 4.

U.S. Customs and Border Protection (“Customs” or “CBP”) liquidated the entries secured by these bonds and assessed antidumping duties on the subject merchandise. For each of those entries, the respective importer received a bill from Customs and failed to pay the duties owed. Because of the importers' defaults, Customs issued demands³ to AHAC, as the surety, for payment under its bonds. AHAC protested the demands for payment, which Customs ultimately denied. Since AHAC refused to make payment, the Government commenced these actions for the collection of unpaid duties and interest.

AHAC conceded liability for duties on the subject bonds, except for the CB related to Count III in Court No. 10–00343. The parties agree that the principal amounts owed in Court Nos. 10–00125 and 10–00175 are $1,400,000 and $800,000 respectively. The parties disagree as to the principal amounts owed in the other two actions. The Government claims that $4,989,085.89 is the principal amount owed in Court No. 09–00403, while AHAC maintains that $4,489,085.89 is owed. The disagreement centers on Customs' treatment of a partial payment of $500,000. Customs intends to allocate that payment in accordance with 19 C.F.R. § 24.3a, which directs that any late payment received first be applied, on an entry by entry basis, to interest charges, i.e., 1505(d) interest, equitable pre-judgment interest, and 580 interest, and then finally to the delinquent principal itself. AHAC does not dispute that the $4,989,085.89 was the original amount owed, but maintains that the partial payment should be fully credited against principal, not applied to any interest that may be owed.

With respect to the CB related to Count III in Court No. 10–00343, the parties reached an understanding that “$50,000 ... would be the number used in determining the applicable amount of interest, if any, to be awarded.” Jt. Letter, Court No. 10–00343, ECF No. 17. Subsequently, AHAC sent Customs a check for $50,000 in payment for the moneys related to Count III. See Pl.'s Resp. to Court's Request for Information, Confid. Att. at 29, ECF No. 113–2. The Government claims that $70,645.34 is the principal amount owed in Court No. 10–00343, whereas AHAC maintains that $20,645.34 is owed. The disagreement again centers on the allocation, interest first or principal first, of the $50,000 paid by AHAC with respect to Count III in the 10–00343 action. In both instances Customs is holding the payments in suspense accounts awaiting resolution of the pre-judgment interest issues.

II. Standard of Review

USCIT Rule 56 permits summary judgment when “there is no genuine issue as to any material fact.” USCIT R. 56(c) ; see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In considering whether material facts are in dispute, the evidence must be considered in the light most favorable to the non-moving party, drawing all reasonable inferences in its favor. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ; Anderson, 477 U.S. at 261 n. 2, 106 S.Ct. 2505. Because the dispositive issues are solely legal and the material facts are uncontroverted, summary judgment is appropriate. See 10A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Richard L. Marcus & Adam N. Steinman, Federal Practice & Procedure § 2725 (3d ed. 2015) ; see also Dal–Tile Corp. v. United States, 24 CIT 939, 944, 116 F.Supp.2d 1309, 1314 (2000) (citing Marathon Oil Co. v. United States, 24 CIT 211, 214, 93 F.Supp.2d 1277, 1279–80 (2000) ).

III. Discussion

This consolidated action involves whether pre- and post-judgment interest, if any, are due in a collection action by the Government for non-payment of antidumping duties on underlying import transactions that were secured by basic importation and entry bonds. The court begins with the issue of statutory pre-judgment interest under 19 U.S.C. § 1505(d) and 19 U.S.C. § 580. The court then examines the appropriateness of an award of equitable pre-judgment interest in addition to statutory pre-judgment interest. The court next addresses the effect of AHAC's prior payments. Lastly, the court considers if an award of post-judgment interest is warranted.

A. 1505(d) Interest

An importer is required to pay antidumping duties assessed by the United States pursuant to 19 U.S.C. § 1673. A surety who underwrites a customs bond agrees to joint and several liability with the importer for any duties, fees, and charges (including interest) owed, capped at the face amount of the bond. 19 C.F.R. § 113.62(a) (2015) (principal and surety jointly and severally agree to pay all “duties, taxes, and charges ... legally fixed and imposed on any entry” secured by an STB or CB); see also United States v. Washington Int'l Ins. Co., 25 CIT 1239, 1241–42, 177 F.Supp.2d 1313, 1316 (2001) (“Normally, a surety is liable for any duties, fees, and interest owed up to the face amount of the surety bond and any further liability for increased payment usually arises in a litigation context.”). A surety's obligation arises at the time of the importer's breach, unless the parties agree otherwise. See United States v. Cocoa Berkau, Inc., 990 F.2d 610, 614 (Fed.Cir.1993).

19 U.S.C. § 1505 governs the payment of duties and fees on entries of imported merchandise. Once Customs liquidates or reliquidates an entry, any duties and fees (including pre-liquidation interest) due and owing are payable 30 days after Customs issues a bill. 19 U.S.C. § 1505(b). If a bill is not paid in full within the 30–day grace period, the unpaid balance is considered delinquent and subject to “post-liquidation interest.” Id. § 1505(d)....