United States v. Great Am. Ins. Co. of Ny

• Citation: 791 F.Supp.2d 1337
• Decision Date: 31 August 2011
• Docket Number: Slip Op. 11–109.Court No. 09–00187.
• Parties: UNITED STATES, Plaintiff,v.GREAT AMERICAN INSURANCE CO. OF NY, and Washington International Insurance Co., Defendants.
• Court: U.S. Court of International Trade

791 F.Supp.2d 1337

UNITED STATES, Plaintiff,

v.GREAT AMERICAN INSURANCE CO. OF NY, and Washington International Insurance Co., Defendants.

Slip Op. 11–109.Court No. 09–00187.

United States Court of International Trade.

Aug. 31, 2011.

Tony West, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Amy M. Rubin, New York, NY), Office of Assistant Chief Counsel for the U.S. Customs and Border Protection (Joseph M. Barbato and Andrew G. Jones), Of Counsel, Office of Chief Counsel for the International Trade Administration, U.S. Department of Commerce (Joanna Theiss) Of Counsel, for the plaintiff.Crowell & Moring LLP (Mark D. Plevin, Theodore R. Posner, and Alexander H. Schaefer), Washington, DC, for defendant, Great American Insurance Company of New York.Sandler, Travis, & Rosenberg, P.A. (Thomas Randolph Ferguson and Arthur K. Purcell, New York, NY), for defendant, Washington International Insurance Company.

OPINION

GOLDBERG, Senior Judge:

Before this Court are cross-motions for summary judgment submitted by Plaintiff United States (the “Government”) and Defendants Great American Insurance Company of New York (“Great American”) ¹ and Washington International Insurance Company (“Washington International”).

The Government seeks to recover in excess of $8 million on eight single transaction bonds (“STBs”) identifying Great American as surety and one continuous entry bond (“CEB”) identifying Washington International as surety. The bonds at issue secure the payment of antidumping duties on entries imported by New Phoenix International Trade Corp. (“New Phoenix”), the principal on the bonds. The bonds cover seven entries of crawfish tail meat imported into the United States from the People's Republic of China (“PRC”) during 2000 and 2001.

The Plaintiff's motion is granted in part and denied in part. The Defendant Great American's motion is granted in part and denied in part. The Defendant Washington International's motion is denied.

BACKGROUND

The pertinent facts are not in dispute.

On August 1, 1997, the U.S. Department of Commerce (“Department” or “Commerce”) issued an antidumping duty order covering crawfish tail meat from the PRC (the “subject merchandise”).² Between October 5, 2000 and May 17, 2001, New Phoenix (now defunct) imported seven entries of the subject merchandise from two PRC exporters. Five of the entries (the “Suqian Entries”) were exports by Suqian Foreign Trade Corp. (“Suqian”). The other two entries (the “Coastal Entries”) were exports by Coastal (Jiang Su) Foods Co., Ltd. (“Coastal”).

New Phoenix posted bonds in lieu of a cash deposit for the Coastal and Suqian Entries.³ Customs accepted eight STBs identifying New Phoenix as the principal and Great American as the surety. Customs also accepted one CEB, valued at $50,000, identifying New Phoenix as the principal and Washington International as the surety. For the five Suqian Entries, James C. Davis signed and executed the STBs provided to Customs as Great American's agent (the “Suqian Bonds”). For the two Coastal Entries, Great American filed three STBs (the “Coastal Bonds”). Agent Davis signed and executed one of the Coastal Bonds. Another Great American agent, William Groves, signed and executed the remaining two STBs (the “Groves Bonds”) for the other Coastal Entry. At the time Davis and Groves executed the STBs with New Phoenix, they were agents of Great American with power-of-attorney authority to execute surety bonds on Great American's behalf. See 19 C.F.R. § 113.37(g)(4) (a corporate surety power of attorney continues in force and effect until revoked).

On October 26, 2001, in response to timely requests from interested parties, ⁴ Commerce published a notice in the Federal Register that it was initiating an administrative review of the antidumping order covering the subject merchandise from the PRC for the period of review (“POR”) between September 1, 2000 and August 31, 2001. Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 66 Fed.Reg. 54,195, 54,196 (Dep't Commerce Oct. 26, 2001) (“ Notice of Initiation ”). Pending the outcome of the administrative review, Commerce suspended the liquidation of merchandise subject to the review, including the entries at issue. See id. (listing Coastal and Suqian as named exporters subject to the review). Customs provided notice of the suspension to New Phoenix and Washington International pursuant to section 504 of the Tariff Act of 1930, 19 U.S.C. § 1504(c) (2006).⁵ Customs did not notify Great American of the suspension.

On August 6, 2002, Commerce rescinded its administrative review of Coastal, as well as certain other PRC exporters of the subject merchandise, via publication in the Federal Register. Notice of Rescission, 67 Fed.Reg. at 50,861. On January 7, 2003, Commerce issued liquidation instructions to Customs for the Coastal Entries at the “as-entered” rate. On April 21, 2003, Commerce published the final results of the administrative review. See Freshwater Crawfish Tail Meat from the People's Republic of China, 68 Fed.Reg. 19,504 (Dep't Commerce Apr. 21, 2003) (final results of administrative review) (“ Final Results ”). Commerce then issued liquidation instructions to Customs for the entries suspended pending the completion of the administrative review.

After liquidation of the subject entries, Customs was unable to obtain payment of the assessed antidumping duties from New Phoenix. Customs sought payment from both sureties. To date, Great American and Washington International have not made any payments. The Government commenced this action on May 8, 2009.

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1582(2) (2006).

Both parties have filed for summary judgment. Summary judgment is appropriate “if the pleadings, discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law.” USCIT R. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A party moving for summary judgment bears the burden of demonstrating that there are no genuine issues of material fact in dispute. Herman v. William Brooks Shoe Co., 7 Fed.Appx. 941, 943 (Fed.Cir.2001).

DISCUSSION

Great American's motion for summary judgment raises a number of affirmative defenses to the Government's action to recover on the bonds at issue.

First, Great American claims that the five Suqian Bonds and two Groves Bonds are void under principles of agency law because the value of the STBs exceeded the power-of-attorney authority of the agents who executed the STBs on Great American's behalf.

Second, Great American argues that the Government's claims on all of the STBs are time-barred. According to Great American, Customs' failure to provide Great American with section 1504(c) ⁶ notice of the suspension of liquidation of the entries at issue invalidated the suspension as a matter of law. Consequently, Great American asserts the entries liquidated by operation of law one year from the date of entry, pursuant to 19 U.S.C. § 1504(a)(1), more than six years before the Government filed its complaint. See 28 U.S.C. § 2415(a). Although Washington International received notice of the suspension, it joins Great American's argument that the Government's claims are untimely because Customs' failure to provide statutory notice to Great American, the STB surety, invalidated the suspension. Great American, but not Washington International, argues in the alternative that even if the lack of notice did not invalidate the suspension as a matter of law, the suspension was invalidated in this case because Customs' procedural error in failing to provide notice was not harmless and prejudiced Great American.

Third, Great American asserts that Customs' failure to provide notice of the suspension of liquidation of the subject entries discharged Great American's obligations as surety under the law of suretyship.

Finally, according to Great American, even if the court finds the suspension of liquidation valid despite Great American's lack of notice, the Government's claims under the three Coastal Bonds are still untimely because the Coastal Entries were deemed liquidated six months after Commerce published the Notice of Rescission in the Federal Register, pursuant to 19 U.S.C. § 1504(d), more than six years before the Government filed its complaint. See 28 U.S.C. § 2415(a).

The court examines these defenses separately.

1. The Validity of the Suqian and Groves Bonds Under Agency Law Principles

Great American claims that the five Suqian Bonds executed by agent Davis are invalid because the value of the bonds exceeded his power-of-attorney authority to execute surety bonds on Great American's behalf. Great American further claims that Customs improperly accepted the two Groves Bonds for a single entry. Moreover, the combined value of the Groves Bonds exceeded Groves's power-of-attorney authority, as stated on the face of the bonds. The court disagrees and finds that the Suqian and Groves Bonds are not void.

a. The Suqian Bonds are not void under agency law principles

Under Customs' regulations, a surety must file a corporate surety power-of-attorney on a Customs Form 5297 (“Form 5297”) for agents it appoints to execute customs bonds on its behalf. See 19 C.F.R. § 113.37(g). In 1996, Great American filed a Form 5297 for Davis.⁷ Between September 2000 and February 2001, Davis executed a separate STB for each of the five Suqian Entries with importer New Phoenix, the principal on the bonds. Each of the Suqian Bonds had a face value of approximately $1.2 million and identified Great American as the surety.

Great American challenges the validity of the...