US v. Imperial Food Imports

• Decision Date: 02 April 1987
• Docket Number: Court No. 86-04-00492.
• Citation: 660 F. Supp. 958,11 CIT 254
• Parties: UNITED STATES of America, Plaintiff, v. IMPERIAL FOOD IMPORTS and American Motorists Insurance Company, Defendants.
• Court: U.S. Court of International Trade

660 F. Supp. 958

11 CIT 254

UNITED STATES of America, Plaintiff, v. IMPERIAL FOOD IMPORTS and American Motorists Insurance Company, Defendants.

Court No. 86-04-00492.

United States Court of International Trade.

April 2, 1987.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Director, Commercial Litigation Branch, Civil Div., Dept. of Justice (Paula N. Rubin) New York City, for plaintiff.

Russotti & Barrison, Harvey Barrison, New York City, for defendant American Motorists Ins. Co.

DiCARLO, Judge:

The United States brings this action pursuant to 28 U.S.C. § 1582(2) (1982) against an importer, Imperial Food Imports (Imperial) and its surety, American Motorists Insurance Company (American Motorist) to recover unpaid liquidated damages in the amount of $220,749.00 relating to the importation of merchandise under nine immediate delivery and consumption entry bonds. Plaintiff moves and defendant American Motorist cross-moves for summary judgment. Plaintiff's motion is granted.

The government alleges the following facts. Between January 4, 1984 and August 16, 1984, Imperial entered merchandise through the Port of Seattle by means of nine consumption entries covered by bonds executed by Imperial as principal and American Motorist as surety. Between February 27, 1984 and August 20, 1984, the Federal Food and Drug Administration (FDA) issued notices of refusal of admission, finding that the merchandise was adulterated within the meaning of section 402 of the Food, Drug and Cosmetic Act, 21 U.S.C. § 342 (1982). Customs mailed notices of refusal of admission to Imperial ordering it to export or destroy portions of merchandise covered by all nine entries within 90 days. At no time did Imperial seek relief from the FDA findings. Imperial failed to export or destroy the merchandise within 90 days, and Customs issued notices of redelivery requiring redelivery of the merchandise to Customs custody within 30 days. None of the merchandise, valued at $214,963.00, was returned to Customs custody. Beginning September 25, 1985 Customs sent notices of liquidated damages and demands for payment to Imperial and sent copies of the notices to Imperial's surety, American Motorist. Liquidated damages, totaling $220,749.00 were assessed based on the value of the refused merchandise plus estimated duties, under 19 C.F.R. § 141.113(g). After numerous demands for payment were made, Customs sent a final demand to American Motorist on April 17, 1985. Neither Imperial nor American Motorist has paid any part of the liquidated damages demanded by Customs. Since service of process was not effected against Imperial, this action proceeds only against American Motorist.

American Motorist does not contest the facts alleged by the government, but argues that those facts do not show that the government is entitled to judgment. First, American Motorist says that the government has failed to produce notices of detention and hearing for all entries except one, and thus under United States v. Borge, 9 CIT ___, Slip Op. 85-101 (1985), the government has failed to prove that Imperial had an obligation under Customs regulations to comply with the order to export or destroy. The government does not agree that production of notices of detention is a condition precedent to recovery under Borge, but meets the objection by providing copies of the notices in further support of its motion for summary judgment. The Court need not, and therefore does not, reach the question whether such notices are a condition precedent to recovery of liquidated damages under a bond.

American Motorist in its reply contends that the notices of detention supplied by the government do not show that there was a proper finding that the merchandise was adulterated as to some shipments, since some notices reveal that the detention was not based on sampling and analysis. Thus American Motorist essentially alleges as a defense a failure by the government to establish the underlying violation.

The finding by the FDA that the imported merchandise appeared to be adulterated within the meaning of section 402 of the Food, Drug and Cosmetic Act is not the subject of this action under 28 U.S.C. § 1582(2). This action concerns the failure of an importer and its surety to pay, under the terms of various bonds, liquidated damages which were assessed for noncompliance with notices of redelivery issued by Customs after the importer failed...