United States v. Am. Home Assurance Co.

• Decision Date: 28 October 2015
• Docket Number: Court No. 10–00179.,Slip Op. 15–120.
• Citation: 113 F.Supp.3d 1297
• Parties: UNITED STATES of America, Plaintiff, v. AMERICAN HOME ASSURANCE COMPANY, Defendant.
• Court: U.S. Court of International Trade

113 F.Supp.3d 1297

UNITED STATES of America, Plaintiff,

v.AMERICAN HOME ASSURANCE COMPANY, Defendant.

Slip Op. 15–120.

Court No. 10–00179.

United States Court of International Trade.

Oct. 28, 2015.

Edward F. Kenny and Beverly A. Farrell, Trial Attorneys, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY, and Brandon T. Rogers, Office of Assistant Chief Counsel, United States Customs and Border Protection, of Indianapolis, IN, argued for plaintiff. With them on the brief were Marcella Powell, Trial Attorney, Stuart F. Delery, Assistant Attorney General, and Amy Rubin, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY.

Herbert C. Shelley, Michael T. Gershberg, and Mark F. Horning, Steptoe & Johnson LLP, of Washington, DC, argued for defendant. With them on the brief were Taylor Pillsbury, Ralph Sheppard, and Michael B. Jackson, Meeks, Sheppard, Leo & Pillsbury, of Newport Beach, CA, and Fairfield, CT, argued for defendant.

OPINION

EATON, Judge:

This matter is before the court on the cross-motions for summary judgment of plaintiff, the United States ("plaintiff" or the "United States"), on behalf of the United States Customs and Border Protection Agency ("Customs"), and defendant American Home Assurance Company ("defendant" or "AHAC"). See Pl.'s Cross Mot. for Summ. J. (ECF Dkt. No. 41–1); Def. American Home Assurance Company's Mot. for Summ. J. (ECF Dkt. No. 44) ("Def.'s Br."). In this action, the United States seeks to recover on a continuous transaction bond, issued by AHAC to secure unpaid duties and interest on freshwater crawfish tail meat imported into the United States from the People's Republic of China ("PRC"). The United States claims that AHAC is liable to Customs for: (1) unpaid antidumping duties; (2) statutory prejudgment interest pursuant to 19 U.S.C. § 580, in excess of the bond amount; (3) post-liquidation interest under 19 U.S.C. § 1505(d) for non-payment of the duties; (4) equitable prejudgment interest; and (5) post-judgment interest.¹ See Pl.'s Mem. in Opp'n to Def.'s Mot. for Summ. J. & in Supp. of Gov't's Cross Mot. for Summ. J. 6 (ECF Dkt. No. 41) ("Pl.'s Br."). By its motion, with the exception of post-judgment interest, defendant disputes these claims. Jurisdiction lies pursuant to 28 U.S.C. § 1582(2) (2012).

For the reasons set forth below, defendant's motion for summary judgment is granted in part, and plaintiff's cross-motion for summary judgment is granted in part.

STANDARD OF REVIEW

Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." USCIT R. 56(a) ; see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "When both parties move for summary judgment, the court must evaluate each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration." JVC Co. of Am. v. United States, 234 F.3d 1348, 1351 (Fed.Cir.2000).

BACKGROUND

The facts described below have been taken from defendant's statement of undisputed material facts.² See Def.'s Statement of Material Facts (ECF Dkt. No. 33–2) ("Def.'s Statement"). Citation to the record is provided where a fact, although not admitted in the parties' papers, is uncontroverted by record evidence.

"Importers must generally post security before [Customs] will release imported merchandise from its custody. Importers often use surety companies to post the required security." United States v. Am. Home Assurance Co. (AHAC II ), 38 CIT ––––, ––––, 964 F.Supp.2d 1342, 1345 (2014) (citation omitted), aff'd in part, vacated in part, rev'd in part on other grounds, 789 F.3d 1313 (Fed.Cir.2015) ; see 19 C.F.R. § 142.4(a) (2001). "A surety bond creates a three-party relationship, in which the surety becomes liable for the principal's debt or duty to the third party obligee (here, the government). ‘If the surety fails to perform, the Government can sue it on the bonds.’ " Ins. Co. of W. v. United States, 243 F.3d 1367, 1370 (Fed.Cir.2001) (quoting Balboa Ins. Co. v. United States, 775 F.2d 1158, 1160 (Fed.Cir.1985) ).

In January 2001, AHAC, a company authorized to issue surety bonds, entered into a continuous transaction bond³ with importer Grand Nova International Inc. ("Grand Nova") to secure duties owed on the entry of its imported merchandise. See Compl. ¶¶ 4, 6 (ECF Dkt. No. 2). Following the importer's default on payment of antidumping duties to Customs, the United States, in this action, now seeks recovery on the bond, from AHAC, for these unpaid duties. See 28 U.S.C. § 1582(2) (suit on a bond).

Between June and August 2001, Grand Nova made twenty-three entries that were subject to the antidumping duty order on freshwater crawfish tail meat from the PRC. Def.'s Statement ¶¶ 1, 2; Freshwater Crawfish Tail Meat From the PRC, 62 Fed.Reg. 48,218 (Dep't of Commerce Sept. 15, 1997) (notice of amendment to final determination of sales at less than fair value and antidumping duty order) ("Order"). Each of these entries occurred during the first annual bond period⁴ (i.e., between January 2001 and January 2002). Twenty-two of the entries were exported by Qingdao Zhengri Seafood Co., Ltd. ("Qingdao Zhengri") and the other entry was exported by Yancheng Yaou Seafood Co., Ltd. ("Yancheng Yaou"). See Def.'s Statement ¶ 3. Grand Nova declared a 0% ad valorem antidumping duty rate for the twenty-two entries exported by Qingdao Zhengri and a 201.63% rate for Yancheng Yaou's entry. See Def.'s Statement ¶ 3. Because these entries were subject to an antidumping duty order, and an administrative review had been requested, liquidation was suspended by operation of law. See United States v. Am. Home Assurance Co. (AHAC I ), 35 CIT ––––, ––––, Slip Op. 11–57, at 11, 2011 WL 1882635 (2011).

On April 21, 2003, the Department published the final results of its administrative review of the antidumping duty order on freshwater crawfish tail meat for the period of review September 1, 2000 through August 31, 2001, in which it assigned both exporters, Qingdao Zhengri and Yancheng Yaou, the PRC-wide rate of 223.01%. See Freshwater Crawfish Tail Meat from the PRC, 68 Fed.Reg. 19,504, 19,508 (Dep't of Commerce Apr. 21, 2003) (notice of final results of antidumping duty administrative review) ("Final Results").

On May 21, 2003, Qingdao Zhengri, Yancheng Yaou, and a third exporter, China Kingdom Import & Export Co., Ltd. ("China Kingdom"), whose merchandise was subject to the Final Results, brought suit in this Court, challenging the rates they were assigned by Commerce. See China Kingdom Imp. & Exp. Co. v. United States (China Kingdom I ), 31 CIT 1329, 1330, 507 F.Supp.2d 1337, 1340 (2007). On July 1, 2003, the China Kingdom Court entered an injunction against liquidation of subject merchandise, including merchandise with duties covered by AHAC's bond. See Prelim. Inj. to Enjoin the Liquidation of Certain Entries, China Kingdom Imp. & Exp. Co. v. United States, No. 03–00302 (CIT July 1, 2003) ECF Dkt. No. 8 ("China Kingdom Prelim. Inj."). On September 4, 2007, the Court sustained the PRC-wide rate of 223.01% assigned to Qingdao Zhengri and Yancheng Yaou in the Final Results. See China Kingdom, 31 CIT at 1366, 507 F.Supp.2d at 1370–71. The Court also remanded to Commerce China Kingdom's rate, directing the Department to calculate and assign a new antidumping duty rate for that company. See id. at 1366, 507 F.Supp.2d at 1370–71.

On January 23, 2009, following the entry of judgment in China Kingdom, Customs liquidated Yancheng Yaou's entry of freshwater crawfish tail meat, and on April 3, 2009, Customs liquidated the other twenty-two entries exported by Qingdao Zhengri. See Def.'s Statement ¶¶ 13, 14. Neither the importer nor AHAC protested the liquidation of the twenty-three entries.

After the importer, Grand Nova, defaulted on payment of the antidumping duties owed on each entry, Customs mailed its first demand to AHAC in April 2009, seeking payment under the bond for the entry of Yancheng Yaou's merchandise. See Compl. Ex. C. In July 2009, Customs also sent AHAC its first demand on the bond for payment of unpaid duties and accrued interest for the twenty-two entries made by Grand Nova of Qingdao Zhengri's merchandise. See Compl. Ex. D. Each month thereafter, Customs sought payment from AHAC on the bond in addition to accrued post-liquidation interest under 19 U.S.C. § 1505(d). See Compl. Ex. D.

In June and July 2002, Grand Nova also entered freshwater crawfish tail meat into the United States that was exported by a new shipper,⁵ Shouzhou Huaxiang Foodstuffs Co., Ltd. ("Shouzhou Huaxiang"). See Def.'s Statement ¶ 15–16. As a new shipper, Shouzhou Huaxiang was assigned the PRC-wide deposit rate of 201.63% ad valorem. See Order, 62 Fed.Reg. at 48,219. Both the June entry and the July entry were made during the second annual bond period (i.e., January 2002 through January 2003) under AHAC's bond. In addition to AHAC's continuous transaction bond, Grand Nova also secured the entries with two single transaction bonds⁶ issued by Lincoln General Insurance Company ("Lincoln General"). Def.'s Statement ¶ 20, Exs. A–B.

In June 2004, Customs liquidated Shouzhou Huaxiang's June 2002 entry. Def.'s Statement ¶ 21. Lincoln General timely protested Customs' liquidation of the June entry of Shouzhou Huaxiang's merchandise, and Customs denied Lincoln General's protest on November 8, 2005. Def.'s Statement ¶ 22. AHAC, however, did not file a protest of its own. In January 2006, Customs reliquidated the June entry. Def.'s Statement ¶ 23. In March 2010, following Grand Nova's default in payment of the antidumping duties owed, Customs sent its first demand for payment on the June entry to AHAC, which included post-liquidation interest under 19 U.S.C. § 1505(d). Def.'s Statement ¶ 25. Each month...