United States v. Int'l Fid. Ins. Co.

Decision Date05 October 2017
Docket NumberCourt No. 13–00256,Slip Op. 17–136
Citation273 F.Supp.3d 1170
Parties UNITED STATES, Plaintiff, v. INTERNATIONAL FIDELITY INSURANCE COMPANY, Defendant.
CourtU.S. Court of International Trade

Monica P. Triana, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of New York, NY, for Plaintiff United States. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, and Amy M. Rubin, Assistant Director. Of counsel on the brief was Chi S. Choy, Attorney, Office of the Assistant Chief Counsel for International Trade Litigation, U.S. Customs and Border Protection of New York, NY.

Ralph H. Sheppard, Taylor Pillsbury, and Michael B. Jackson, Meeks, Sheppard, Leo & Pillsbury of Fairfield, CT, for Defendant International Fidelity Insurance Company.

Gordon, Judge:

This is a collection action by Plaintiff United States ("Plaintiff" or "Government") against Defendant International Fidelity Insurance Company ("Defendant" or "Fidelity") as surety for unpaid antidumping duties,1 plus statutory pre-judgment interest under 19 U.S.C. § 580, equitable pre-judgment interest, and post-judgment interest. Before the court are the parties' USCIT Rule 56 cross-motions for summary judgment. See Pl.'s Mem. Opp'n Def.'s Mot. Summ. J. and Supp. Pl.'s Cross–Mot. Summ. J., ECF No. 32 ("Pl.'s Br."); Def.'s Mem. Supp. Mot. Summ. J., ECF No. 24–1 ("Def.'s Br."); Pl.'s Reply to Def.'s Resp. and Supp. Pl.'s Cross–Mot. Summ. J., ECF No. 53 ("Pl.'s Reply"); Def.'s Reply Mem. and Opp'n Pl.'s Cross–Mot. Summ. J., ECF No. 46 ("Def.'s Reply").

Defendant contends that (1) the Government's claims are time-barred; (2) the bond on which those claims are based, Customs Bond No. 017447—a single transaction bond in the amount of $231,000 ("subject bond")—is invalid and unenforceable; and (3) even if the subject bond is valid, the Government is not entitled to statutory or equitable pre-judgment interest or post-judgment interest.2 Conversely, Plaintiff maintains that (1) its claims are timely; (2) the subject bond is valid and enforceable; and (3) the Government is entitled to statutory and equitable pre-judgment interest and post-judgment interest. The court has jurisdiction pursuant to 28 U.S.C. § 1582(2) (2012). For the reasons that follow, the court denies Defendant's motion for summary judgment and grants Plaintiff's cross-motion, except with respect to Plaintiff's claim for equitable pre-judgment interest, which is denied.

I. 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). 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 (4th ed. 2017) ; 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) ).

II. Background

On May 1, 2002, U.S. China Leader Express Co. ("China Leader"), a U.S. importer, imported fresh garlic from the People's Republic of China ("PRC") at the Port of New York/Newark under entry number 267–4221127–4 ("subject entry"). See Diffley Decl., ECF No. 32–2 (public version) & 36–4 (confidential exhibits). The underlying merchandise was exported by Huaiyang Hongda Dehydrated Vegetable Company ("Hongda"), a producer and exporter of garlic from the PRC, see Diffley Decl., Ex. A, ECF No. 36–4 (entry paperwork), and subject to a PRC-wide antidumping duty margin of 376.67%, see Fresh Garlic from the PRC, 59 Fed. Reg. 59,209 (Dep't of Commerce Nov. 16, 1994) (antidumping duty order). At the time of entry, China Leader submitted the subject bond as security for the estimated antidumping duties, in lieu of a cash deposit. See Def.'s Br., Ex. 2, ECF No. 24–2.

The subject bond identified China Leader as the principal on that bond, Fidelity as the surety, and Mid–America Overseas, Inc. ("Mid–America") as the customs broker. See Def.'s Br., Ex. 2. International Bond & Marine Brokerage, Ltd. ("IB & M") was Fidelity's third-party agent at the time of the execution of the subject bond. See Def.'s Statement of Material Facts as to which There is No Genuine Issue to be Tried ¶ 2, ECF No. 24–4 ("Def.'s Statement").

In December 2002, the U.S. Department of Commerce ("Commerce") initiated a periodic administrative review under 19 U.S.C. § 1675 covering Hongda's shipments of garlic for the period May 1, 2002 through October 31, 2002 ("POR"). Initiation of Antidumping and Countervailing Duty Admin. Revs., 67 Fed. Reg. 78,772 (Dep't of Commerce Dec. 26, 2002). In August 2003, Commerce rescinded the administrative review with respect to Hongda, thereby subjecting Hongda's garlic shipments to the PRC-wide antidumping duty rate. See Fresh Garlic from the PRC, 68 Fed. Reg. 46,580 (Dep't of Commerce Aug. 6, 2003) (notice of rescission).

In September 2003, Hongda challenged Commerce's rescission decision and the application of the PRC-wide antidumping duty rate to its garlic shipments by commencing an action in this Court. See Huaiyang Hongda Dehydrated Vegetable Co. v. United States, 28 CIT 1944 (2004) (" Huaiyang Hongda"). In the course of that action, Hongda obtained a statutory injunction enjoining liquidation of subject merchandise exported by Hongda and entered during the POR, including the subject entry. See id., ECF No. 18 (order enjoining liquidation of entries). Subsequently, Commerce notified U.S. Customs and Border Protection ("Customs") of the injunction, instructing Customs not to liquidate entries of the subject merchandise exported by Hongda during the POR. See Pl.'s Br., Ex. E (Commerce Message No. 3316202 to Customs (Nov. 12, 2003)).

In November 2004, at the conclusion of the litigation, the court sustained Commerce's rescission decision. See Huaiyang Hongda. Subsequently, a copy of the court's decision was published in the Customs Bulletin and Decisions ("Customs Bulletin"). Def.'s Statement ¶ 11 (citing 38 Cust. B. & Dec. 50 (Dec. 8, 2004)). Thereafter, on January 21, 2005, the 60–day period for appeal expired, with no party filing an appeal.

Two years later, on January 24, 2007, Commerce sent an electronic message to Customs notifying Customs of the dissolution of the injunction in Huaiyang Hongda and directing Customs to liquidate the entries whose liquidation was previously suspended. See Pl.'s Br., Ex. F (Commerce Message No. 7024202 to Customs (Jan. 24, 2007)) ("Liquidation Instructions"). On September 21, 2007, approximately nine months after Commerce issued its Liquidation Instructions, Customs liquidated the subject entry at the PRC-wide antidumping duty rate of 376.67%. Def.'s Statement ¶ 13.

Thereafter, Customs sought to collect the outstanding antidumping duties from China Leader but was unsuccessful. See Compl. ¶ 14; Def.'s Br., Ex. 6 (Customs letter to Fidelity dated Apr. 21, 2008 regarding delinquent Bill Number 44899663). Customs then demanded payment from Fidelity by letters dated April 21, 2008, and May 1, 2013. See Def.'s Br., Ex. 6; Pl.'s Br., Ex. G, ECF No. 36–2.

On July 25, 2008 and December 30, 2010, Fidelity filed protests regarding each of Customs' demand letters, denying liability on the subject bond. See Pl.'s Br., Ex. H, ECF No. 36–3. On September 18, 2009, Customs denied Fidelity's 2008 protest in part, explaining that liquidation had occurred by operation of law at the rate declared by the importer at the time of entry up to $231,000, the face value of the subject bond. See Def.'s Br., Ex. 1, ECF No. 24–4. According to Fidelity, Customs had not issued a decision as to the 2010 protest as of the time it filed its summary judgment motion. See Def.'s Statement ¶ 20.

Subsequently, on July 23, 2013, the Government commenced this action seeking the unpaid antidumping duties, capped by the face amount of the subject bond, plus pre-and post-judgment interest. See Compl., ECF No. 2.

III. Discussion
A. Statute of Limitations

Under 28 U.S.C. § 2415(a), the Government may bring a collection action on a bond contract within six years of the date on which the Government's right of action accrues. In a collection action on a customs bond, "[t]he Government's right of action accrues from the date of liquidation."

United States v. Great Am. Ins. Co., 35 CIT ––––, ––––, 791 F.Supp.2d 1337, 1350 (2011).

Where, as here, liquidation of an entry was suspended by court order, Customs "shall liquidate the entry ... within 6 months after receiving notice of the removal [of the suspension] from [Commerce], other agency, or a court with jurisdiction over the entry." 19 U.S.C. § 1504(d). If Customs fails to liquidate the entries within six months of receiving notice of the removal of the suspension of liquidation, liquidation is deemed to have occurred by operation of law. 19 U.S.C. § 1504(d) ; see also Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364, 1376 (Fed. Cir. 2002) ("[I]n order for a deemed liquidation to occur, (1) the suspension of liquidation that was in place must have been removed; (2) Customs must have received notice of the removal of the suspension; and (3) Customs must not liquidate the entry at issue within six months of receiving such notice.").

When liquidation occurs by operation of law, the six-year statute of limitations commences on the date of the deemed liquidation. See United States v. Am. Home Assurance Co., 40 CIT ––––, ––––, ...

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