United States v. American Home Assurance Co.
2017 U.S. App. LEXIS 9177
| Fed. Cir. | 2017Background
- AHAC (surety) issued bonds in 2001–2002 guaranteeing payment of antidumping duties on imports; importers failed to pay after Customs liquidated entries and assessed antidumping duties.
- Customs assessed post-liquidation statutory interest under 19 U.S.C. § 1505(d) and repeatedly demanded payment; AHAC protested those demands and Customs denied the protests.
- AHAC did not bring a timely action in the Trade Court to challenge the protest denials. The government sued AHAC in 2009 to collect unpaid duties and interest; actions were consolidated.
- The Trade Court awarded the government: (1) § 1505(d) post-liquidation interest up to bond face amounts; and (2) 6% prejudgment interest under 19 U.S.C. § 580 on the bond (including on § 1505(d) interest), but declined to award additional non‑statutory equitable prejudgment interest.
- AHAC appealed certain aspects; the government appealed the denial of equitable prejudgment interest. The Federal Circuit affirmed the Trade Court in all respects.
Issues
| Issue | Plaintiff's Argument (Government) | Defendant's Argument (AHAC) | Held |
|---|---|---|---|
| Whether court abused discretion by denying equitable prejudgment interest in addition to § 580 interest | Equitable interest compensates time value; § 580 is punitive—both may be awarded, so denial was error | § 580 provides adequate statutory remedy; awarding equitable interest would double recover the government | Denial affirmed: court has broad equitable discretion; § 580 sufficiently compensates here and equitable interest not required |
| Whether § 580 interest may be assessed on § 1505(d) interest (i.e., interest-on-interest) | § 580 applies to “all bonds” and covers duties, fees, and interest assessed under the bond | § 580 should not apply to § 1505(d) interest or interest-on-interest | Affirmed: § 580 may be assessed on the bond up to its face value, including applicable § 1505(d) interest |
| Proper start date for § 580 interest calculation | Runs from the time the bond became due, which is when government first made a formal demand | § 580 should start only after § 1505(d) interest becomes legally fixed (after protest denial) | Affirmed: § 580 interest runs from first formal demand for payment |
| Whether AHAC waived right to contest § 1505(d) interest by failing to timely pursue protest/Trade Court review | § 1514 finality bars unprotested challenges; sureties must protest or sue like importers | AHAC argued § 1514 applies only to importers during liquidation and not to sureties for post-liquidation § 1505(d) interest | Affirmed: AHAC waived challenges to § 1505(d) interest by not contesting Customs’ denial; § 1514 applies to sureties and covers § 1505(d) charges |
Key Cases Cited
- Princess Cruises, Inc. v. United States, 397 F.3d 1358 (Fed. Cir. 2005) (standards and purpose for awarding equitable prejudgment interest)
- West Virginia v. United States, 479 U.S. 305 (1987) (equitable prejudgment interest compensates time value of money where no statutory remedy applies)
- United States v. American Home Assur. Co., 789 F.3d 1313 (Fed. Cir. 2015) (AHAC I) (prior panel decision construing § 580 and availability of remedies)
- United States v. Cherry Hill Textiles, Inc., 112 F.3d 1550 (Fed. Cir. 1997) (finality of liquidation under § 1514 bars unprotested challenges)
- St. Paul Fire & Marine Ins. Co. v. United States, 959 F.2d 960 (Fed. Cir. 1992) (surety may protest government demands; § 1514 applies to sureties)
- United States v. Reul, 959 F.2d 1572 (Fed. Cir. 1992) (no interest runs against a surety on principal until formal demand is made)