United States v. International Fidelity Insurance Co.
2017 CIT 136
| Ct. Intl. Trade | 2017Background
- May 1, 2002: China Leader imported garlic from PRC (entry no. 267-4221127-4) and posted Customs Bond No. 017447 (Fidelity as surety) in lieu of cash deposits for estimated antidumping duties.
- Commerce initiated and then rescinded an administrative review for the exporter Hongda; Hongda litigated and obtained an injunction suspending liquidation of entries including the subject entry; that injunction became final on January 21, 2005.
- Commerce sent electronic "Liquidation Instructions" to Customs on January 24, 2007 directing liquidation; Customs liquidated the subject entry on September 21, 2007, and by operation of law the entry was deemed liquidated on July 24, 2007.
- Customs demanded payment from Fidelity; Fidelity protested and denied liability. The Government sued Fidelity on July 23, 2013 seeking up to the bond face amount ($231,000), statutory pre-judgment interest (19 U.S.C. § 580), equitable pre-judgment interest, and post-judgment interest.
- Fidelity argued the claims were time-barred, the bond was invalid because of handwritten changes, and that the Government was not entitled to statutory or equitable pre-judgment interest or post-judgment interest. The court granted the Government summary judgment on liability and statutory and post-judgment interest, but denied equitable pre-judgment interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Statute of limitations for Government collection on bond | Accrual date is deemed liquidation; Commerce's Jan 24, 2007 message to Customs provided §1504(d) notice so deemed liquidation was July 24, 2007; suit filed July 23, 2013 is timely | Notice occurred earlier (Jan 21, 2005 when injunction became final) or via Customs Bulletin; therefore suit is time-barred | Held timely: Commerce's Jan 24, 2007 electronic Liquidation Instructions constituted §1504(d) notice; deemed liquidation July 24, 2007; suit within six years. |
| 2) Validity/enforceability of the customs bond | Bond on its face is valid; Customs approved the bond and entry paperwork identifies the covered entry; defects in form do not defeat enforcement when Customs accepted the bond | Handwritten interlineations (entry number, port code, CVD/AD box) invalidated bond under 19 C.F.R. §113.23 and Customs should have rejected it | Held valid: Customs approved the bond; submitters had duty of reasonable care; defects in form cannot be asserted by surety after Customs acceptance. |
| 3) Entitlement to statutory pre-judgment interest under 19 U.S.C. §580 | §580 applies to bonds securing antidumping duties; entitles Government to 6% from when bond became due (first formal demand) | §580 applies only to traditional customs duties, not antidumping duties | Held for Government: Federal Circuit precedent holds §580 covers antidumping duties; award of 6% from date bond became due. |
| 4) Entitlement to equitable pre-judgment interest and post-judgment interest | Requests equitable interest in addition to §580 interest; and post-judgment interest per 28 U.S.C. §1961 (via §1585) | Opposes equitable interest as duplicative; cites Government delay; accepts statutory/post-judgment rates are inappropriate | Held: Equitable pre-judgment interest denied because §580 already provides full compensation; post-judgment interest awarded as a matter of right under §1961 applied via §1585. |
Key Cases Cited
- Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364 (Fed. Cir.) (Commerce publication, not merely availability of a decision, is required to constitute §1504(d) notice in certain contexts)
- Int'l Trading Co. v. United States, 281 F.3d 1268 (Fed. Cir.) (elements for deemed liquidation under §1504(d))
- United States v. Am. Home Assurance Co., 789 F.3d 1313 (Fed. Cir.) (§580 covers antidumping duties and guidance on awarding dual sources of pre-judgment interest)
- United States v. Great Am. Ins. Co. of N.Y., 738 F.3d 1320 (Fed. Cir.) (factors for equitable pre-judgment interest and post-judgment interest authority)
- West Virginia v. United States, 479 U.S. 305 (U.S.) (purpose of pre-judgment interest is to compensate loss of use of money)
- Osterneck v. Ernst & Whitney, 489 U.S. 169 (U.S.) (standards guiding discretionary award of pre-judgment interest)