United States v. Mizrahie

• Decision Date: 19 March 1985
• Docket Number: Court No. 83-8-01189.
• Parties: The UNITED STATES, Plaintiff, v. Saul MIZRAHIE and Safeco Insurance Company of America, Defendants, SAFECO INSURANCE COMPANY OF AMERICA, Defendant-Third-Party Plaintiff, v. Rebecca MIZRAHIE, Third-Party Defendant.
• Court: U.S. Court of International Trade

606 F. Supp. 703

The UNITED STATES, Plaintiff, v. Saul MIZRAHIE and Safeco Insurance Company of America, Defendants, SAFECO INSURANCE COMPANY OF AMERICA, Defendant-Third-Party Plaintiff, v. Rebecca MIZRAHIE, Third-Party Defendant.

Court No. 83-8-01189.

United States Court of International Trade.

March 19, 1985.

COPYRIGHT MATERIAL OMITTED

Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch (Jerry P. Wiskin, New York City), for plaintiff.

Marks & Brooklier, Beverly Hills, Cal. (Anthony P. Brooklier, Beverly Hills, Cal.), for defendant, and third-party defendant.

Hart & Hume, New York City (Mark S. Gamell, New York City), for defendant-third-party plaintiff.

MEMORANDUM OPINION

RE, Chief Judge:

The question presented in this case is whether a surety seeking indemnification on an import bond, pursuant to 28 U.S.C. § 1583 (1982), may obtain a writ of attachment against an indemnitor's real property located in California. This Court holds that it is empowered to issue a writ of attachment affecting property located in California, and that the requirements of California law, for the issuance of the writ, have been met.

On March 6, 1985, defendant-third-party plaintiff, Safeco Insurance Company of America (Safeco), sought an ex parte right to attach order, and the issuance of a writ of attachment affecting real property, located in the State of California, owned by third-party defendant, Rebecca Mizrahie. Upon due consideration and examination of Safeco's application and supporting affidavits, on March 8, 1985, this Court ordered that the Clerk of the Court issue a writ of attachment.

This is the first case before this Court in which a private party has requested, and has been granted a writ of attachment prior to judgment.

FACTS

On August 18, 1983, September 29, 1983, and July 17, 1984, pursuant to 28 U.S.C. § 1582(2) (1982), plaintiff, the United States, instituted three separate actions in this Court, U.S.C.I.T. Nos. 83-8-1189, 83-9-1385, and 84-7-990, against Saul Mizrahie and Safeco. On February 19, 1985, the Court issued an order consolidating all three actions into one action bearing consolidated court number XX-X-XXXX. In each of these actions, the United States seeks to recover liquidated damage penalties against Saul Mizrahie for his alleged violations of 19 C.F.R. § 12.80, which governs the importation of vehicles that do not conform to federal motor vehicle safety standards, and against Saul Mizrahie and Safeco for breach of three Immediate Delivery and Consumption Bonds (bonds or consumption bonds).¹ The relief sought by the United States is the recovery of $43,811 in liquidated damage penalties, plus pre-judgment interest from the date of each liquidated damage assessment made by the Customs Service.

The imported merchandise consisted of various models of Mercedez Benz automobiles (vehicles) which were entered, on separate occasions, at the port of Long Beach, California. On each occasion, the vehicles, which did not conform to federal motor vehicle safety standards, were conditionally released to Saul Mizrahie. As a condition of each vehicle's release, Mizrahie was obligated, within ninety days, either to provide a satisfactory statement that the vehicles had been altered to conform to federal safety standards, or to redeliver the nonconforming vehicles. As security for any liquidated damage penalties that might be incurred for failure to perform his obligations, Mizrahie executed, jointly with Safeco as surety, the three consumption bonds that form the basis of Safeco's cross and third-party claims.

Alleging that Saul Mizrahie neither provided satisfactory statements of conformity, nor redelivered the vehicles within ninety days after their respective releases, the Customs Service, on June 2, 1978 and March 30, 1979, assessed liquidated damages against him. Saul Mizrahie then petitioned for, and was denied, mitigation of the assessment of liquidated damage penalties. Plaintiff, the United States, subsequently brought the three actions against Saul Mizrahie and Safeco.

In each of the three actions Safeco interposed an answer, and cross-claimed for judgment against Saul Mizrahie based upon the common law right of a surety to indemnification from its principal, and upon a written General Agreement of Indemnity, dated June 26, 1977 (Indemnity Agreement). The Indemnity Agreement was executed by Saul and Rebecca Mizrahie, in favor of Safeco.

Pursuant to Rule 4(d) of the Rules of this Court, Rebecca Mizrahie was personally served with a third-party summons and complaint on December 13, 1983 and November 9, 1984. To date, Saul Mizrahie, who has appeared and answered in these actions, has not served an answer to the cross-claims of Safeco as required by Rule 7(a) of the Rules of this Court. Rebecca Mizrahie has neither appeared, nor served an answer to Safeco's third-party complaint.

On January 31, 1985, the United States moved for summary judgment against Saul Mizrahie and Safeco.² On March 6, 1985, Safeco moved ex parte, pursuant to Rule 64, for a "right to attach order" and for the issuance of a writ of attachment, contending that, since Saul and Rebecca Mizrahie are in default as to Safeco's claims against them, they are liable to Safeco for any judgment which may be obtained by the United States against Safeco.

The following questions were presented by Safeco's application for the issuance of a writ of attachment:

1. Whether this Court is empowered to order the issuance of an ex parte writ of attachment affecting property located in the State of California; and

2. Whether Safeco has satisfied the requirements, under California law, for the issuance of an ex parte writ of attachment.

For the reasons that follow, the court has granted Safeco's ex parte application for a right to attach order and a writ of attachment.

Jurisdiction

With the enactment of the Customs Courts Act of 1980, Pub.L. No. 96-417, 94 Stat. 1727 (1980), Congress expanded and clarified the jurisdiction of this Court to create "a comprehensive system for judicial review of civil actions arising out of import transactions and federal statutes affecting international trade." Statement of President Carter, 16 Weekly Comp. of Pres. Doc. 2183 (Oct. 11, 1980). See H.R.Rep. No. 96-1235, 96th Cong., 2d Sess. 18-20 (1980), U.S.Code Cong. & Admin.News 1980, p. 3729.

Pursuant to 28 U.S.C. § 1582, this Court was granted exclusive subject-matter jurisdiction over civil penalty actions under sections 592, 704(i)(2), and 734(i)(2) of the Tariff Act of 1930, and over actions "to recover upon a bond relating to the importation of merchandise" required by federal law or Treasury regulations. 28 U.S.C. § 1582. In addition, pursuant to 28 U.S.C. § 1583, the Court of International Trade has exclusive jurisdiction over any counterclaim, cross-claim, or third-party action of any party to recover on a bond related to the importation of merchandise that is the subject of the civil action. Id. § 1583.

An examination of the legislative history of the Customs Courts Act of 1980 sheds considerable light on these sections. As originally introduced, the predecessor bill to the 1980 Act, H.R. 6394, did not provide for cross-claims and third-party actions arising out of suits by the United States to recover on a bond. See H.R. 6394, 96 Cong., 2d Sess., 126 Cong.Rec. 1530 (1980). Under that proposal, an aggrieved surety who wished to recover for breach of contract against the principal would have been required to bring a separate action in a federal district court or in a state court. After hearings on the bill, it became clear that it would be preferable to allow all claims arising out of an underlying import transaction to be adjudicated in one action before the Court of International Trade. See H.R.Rep. No. 96-1235, 96th Cong., 2d Sess. 37-38 (1980). Accordingly, the Sub-committee on Monopolies and Commercial Law of the Committee on the Judiciary, amended the proposed section 1583 to authorize the assertion of any counterclaim, cross-claim or third-party action of any party in an action to recover on the bond. Id. at 38. Section 1583, therefore, as enacted, manifests clearly the intent of the Congress to have the rights of all of the parties adjudicated fully and completely in one action before the Court of International Trade. See id. at 50-51.

Since Safeco's cross-claim and third-party action seek indemnification on a bond required by Treasury regulations, this action falls squarely within section 1583. The defendant, Saul Mizrahie, and third-party defendant, Rebecca Mizrahie, were both duly served with process in this action. Thus, it is clear that this Court possesses subject-matter and personal jurisdiction over the parties.

The Court's Equitable Powers

Of equal significance to the Court's expanded jurisdiction in the 1980 Act was Congress' explicit conferral upon the Court of International Trade of "all the powers in law and equity of, or as conferred by statute upon, a district court of the United States." 28 U.S.C. § 1585 (1982). Thus, the Act granted this Court "remedial powers co-extensive with those of a federal district court." H.R.Rep. No. 96-1235, 96th Cong., 2nd Sess. 61 (1980), U.S.Code Cong. & Admin.News 1980, p. 3773. See also Budd Co. Ry. Div. v. United States, 1 CIT 175, 176-78 (1981). With certain limited exceptions, not relevant here, Congress authorized the Court "to order any form of relief that is appropriate in a civil action, including, but not limited to, declaratory judgments, orders of remand, injunctions, and writs of mandamus and prohibition." 28 U.S.C. § 2643(c) (emphasis added). See also 28 U.S.C. § 1651 (1982); Alberta Gas Chem., Inc. v. United States, 85 Cust.Ct. 122, 125, C.R.D. 80-13, 496 F.Supp. 1332, 1334-36 (1980). The legislative history of the Customs Courts Act of 1980 leaves no doubt...