United States v. Am. Home Assurance Co.

• Decision Date: 17 June 2015
• Docket Number: 2014–1355.,Nos. 2014–1292,s. 2014–1292
• Parties: UNITED STATES, Plaintiff–Cross–Appellant v. AMERICAN HOME ASSURANCE COMPANY, Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

789 F.3d 1313

UNITED STATES, Plaintiff–Cross–Appellant

v.AMERICAN HOME ASSURANCE COMPANY, Defendant–Appellant.

Nos. 2014–1292

2014–1355.

United States Court of Appeals, Federal Circuit.

June 17, 2015.

Edward Francis Kenny, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York, N.Y., argued for plaintiff-cross-appellant. Also represented by Stuart F. Delery, Jeanne E. Davidson, Amy M. Rubin.

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

Before MOORE, SCHALL, and REYNA, Circuit Judges.

Opinion

SCHALL, Circuit Judge.

American Home Assurance Company (“AHAC”) appeals, and the government cross-appeals, the final decision of the United States Court of International Trade in United States v. American Home Assurance Co., 964 F.Supp.2d 1342 (Ct. Int'l Trade 2014) (“American Home ”). In its decision, the Court of International Trade made three rulings on summary judgment. First, the court held that AHAC was liable to the government under the continuous bond that it had issued to secure the payment of antidumping duties owed by JCOF (USA) International, Inc. (“JCOF”). Specifically, the court ruled that AHAC was liable under the bond for antidumping duties in connection with two entries of freshwater crawfish tail meat from China. Id. at 1347–49. Second, the court held that the government was not entitled to statutory prejudgment interest under 19 U.S.C. § 580 on the amount due under the bond. Id. at 1351–54. Third, the court held that AHAC was liable to the government for equitable prejudgment interest on the amount due under the bond. Id. at 1354–57. AHAC appeals the court's rulings on liability and equitable prejudgment interest; the government cross-appeals its ruling on statutory prejudgment interest.

For the reasons set forth below, we (1) affirm the Court of International Trade's ruling that AHAC is liable to the government under its bond; (2) reverse the court's ruling that the government is not entitled to statutory prejudgment interest on the amount due; and (3) vacate the court's ruling that AHAC is liable to the government for equitable prejudgment interest on the amount due. The case is remanded to the Court of International Trade for further proceedings consistent with this opinion.

Background

The facts of the case are generally undisputed and are set forth in the Court of International Trade's decision. See Am. Home, 964 F.Supp.2d at 1345–46. We recite here the facts pertinent to the issues before us.

I.

Following a 1996 investigation, the U.S. Department of Commerce (“Commerce”) determined that freshwater crawfish tail meat imported from China was being sold in the United States at less than fair market value. See Freshwater Crawfish Tail Meat from the People's Republic of China, 62 Fed.Reg. 41,347 (Aug. 1, 1997). As a result, Commerce ordered that entries of freshwater crawfish tail meat from China be subject to antidumping duties upon entry into the United States.¹

II.

JCOF is an importer based in New York. In 2001, it arranged to import into the United States shipments of freshwater crawfish tail meat from a Chinese exporter, Yangzhou Lakebest Foods Company, Ltd. (“Yangzhou”). Yangzhou did not export freshwater crawfish tail meat to the United States during the period of Commerce's 1996 investigation. For that reason, for purposes of exporting freshwater crawfish tail meat to the United States in 2001, it qualified as a “new exporter” of merchandise under 19 U.S.C. § 1675(a)(2)(B). Yangzhou's “new exporter” status gave JCOF options for how it could post the security necessary for the Bureau of Customs and Border Protection (“Customs”) to release the imported goods from its custody. It had the option of “posting, until the completion of the [administrative] review [of the new exporter], ... a bond or security in lieu of a cash deposit.” 19 U.S.C. § 1675(a)(2)(B)(iii).

Exercising that option, JCOF chose to use a surety company to post the required security. In April 2001, it contracted with AHAC, a New York-based surety, for the issuance of a one-year, continuous bond in the amount of $600,000.² The bond became effective on May 4, 2001, and provided Customs with security for future duties owed on entries of freshwater crawfish tail meat from Yangzhou. [J.A. 23] Under the terms of the bond, AHAC and JCOF were jointly and severally obligated, and had a liability cap of $600,000. Am. Home, 964 F.Supp.2d at 1345.

During the period covered by the bond, JCOF made two entries of crawfish tail meat from Yangzhou at the Port of Los Angeles/Long Beach. Id. The entries occurred on November 1, and 2, 2001, and were identified as M42–1164064–2 and M42–1164065–9, respectively. At the time of entry, JCOF declared a 0% ad valorem antidumping duty rate, which was the deposit rate then in effect for shipments by Yangzhou. Id. Based on JCOF's bond, Customs allowed the freshwater crawfish tail meat to be released from its custody and to enter the stream of commerce in the United States.

Shortly thereafter, Commerce conducted an administrative review of freshwater crawfish tail meat entries during the period of September 1, 2001, through August 31, 2002.³ During the review, liquidation of JCOF's two entries was suspended while Yangzhou's final antidumping duty rate was determined.⁴ When Commerce eventually published the final results of its administrative review in February 2004, it assigned Yangzhou a 223.01% ad valorem antidumping duty rate. See Freshwater Crawfish Tail Meat from the People's Republic of China, 69 Fed.Reg. 7,193, 7,194 (Feb. 13, 2004).

On May 12, 2004, Commerce issued instructions directing Customs to liquidate JCOF's November 2001 entries at the new rate assigned to Yangzhou. Customs thereafter liquidated the entries on June 25, 2004, and billed JCOF for duties owed. Am. Home, 964 F.Supp.2d at 1346. Following JCOF's failure to pay the duties, Customs sought payment from AHAC, as JCOF's surety. In November 2004, AHAC denied liability and responded to Customs' demand for payment under the bond by filing Protest No. 2704–04–102655 (the “102655 protest”).

At about the same time, Shanghai Taoen International Trading Co., Ltd. (“Shanghai Taoen”), one of the other exporters of freshwater crawfish tail meat subject to Commerce's 2004 administrative review, filed suit in the Court of International Trade challenging the results of the review. Id. Shanghai Taoen's suit precipitated a preliminary injunction enjoining liquidation of the entries of crawfish tail meat exported by it. Id. Yangzhou was not named in the injunction, however, as it was not a party to the pending litigation. Id. Subsequently, in February 2005, the Court of International Trade sustained Commerce's final results. Shanghai Taoen Int'l Trading Co., Ltd. v. United States, 360 F.Supp.2d 1339, 1348 (Ct. Int'l Trade 2005). The court's affirmance dissolved the outstanding injunction, and Customs was instructed to liquidate Shanghai Taoen's entries at the applicable rate.

Following dissolution of the Shanghai Taoen injunction, and even though the injunction had not applied to shipments from Yangzhou, Customs reliquidated JCOF's two November 2001 entries on June 3, 2005, believing that the original liquidations in June 2004 may have been in violation of the Shanghai Taoen injunction. See Joint Appendix (“J.A.”) 109–112.⁵ As a result of those mistaken reliquidations, Customs voided its prior bills for duties owed and issued new bills to JCOF. When JCOF failed to pay the duties, Customs again sought payment from AHAC. Several weeks later, in July 2005, apparently not appreciating the effect of its reliquidation action, Customs denied the 102655 protest. That protest had remained unresolved following the original June 2004 liquidations. In September 2005, Customs issued a second demand to AHAC for payment of duties on the entries reliquidated in June 2005.

AHAC did not appeal the denial of the 102655 protest by filing suit in the Court of International Trade. Instead, in December 2005, it filed a second protest, Protest No. 2704–05–102579 (the “102579 protest”), contesting Customs' further demand for payment under the continuous bond following the erroneous reliquidations. In July 2006, Customs denied AHAC's protest. AHAC did not file an action in the Court of International Trade contesting the denial.

On February 9, 2007, Customs sent a third demand letter to AHAC. In it, Customs sought a total payment of $1,157,898.22 for unpaid duties and interest in connection with JCOF's two November 2001 freshwater crawfish tail meat entries. Am. Home, 964 F.Supp.2d at 1346. AHAC denied liability and refused to make payment under the bond.

III.

On June 21, 2010, the government filed suit in the Court of International Trade to recover from AHAC, as JCOF's surety, the duties and interest allegedly owed on the November 2001 entries. The parties, in due course, cross-moved for summary judgment on various issues. Seeking summary judgment on the merits, AHAC asserted that the government's collection action was moot due to the 2005 reliquidations. It argued that the erroneous reliquidations voided the previous timely liquidations of June 2004, resulting in a scenario where no valid liquidation or reliquidation occurred. According to AHAC, since no valid liquidation was on record, the entries at issue should have been deemed liquidated by operation of law under 19 U.S.C. § 1504(d) at the initially-declared 0% rate six months after the suspension of liquidation was removed in February 2004.

The government moved for summary judgment on entitlement to prejudgment statutory interest under 19 U.S.C. § 580. Section 580 provides that “[u]pon all bonds, on which suits are brought for the recovery of duties, interest shall be allowed ... from the time when said bonds became due.” The government argued that the statute's plain...