Hanover Insurance v. United States , 25 Ct. Int'l Trade 447 ( 2001 )

Slip Op. 01 - 57
UNITED STATES COURT OF INTERNATIONAL TRADE
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THE HANOVER INSURANCE COMPANY, :
Plaintiff, :
v. : Court No. 94-07-00438
:
THE UNITED STATES,
:
Defendant.
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Opinion & Order
[On cross-motions, partial summary judgment
for the plaintiff.]
Decided: May 16, 2001
Sandler, Travis & Rosenberg, P.A. (Arthur K. Purcell);
Neville, Peterson & Williams (John M. Peterson) for the plaintiff.
Stuart E. Schiffer, Acting Assistant Attorney General; Joseph
I. Liebman, Attorney in Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (Bruce N. Stratvert); and Office of the Assistant Chief
Counsel, International Trade Litigation, U.S. Customs Service (Beth
C. Brotman), of counsel, for the defendant.
AQUILINO, Judge: This action arises out of the manu-
facture in and exportation from Italy of equipment for a Grand
Coulee electrical power plant of the Columbia Basin Project in the
State of Washington. Its importation was pursuant to contract with
the Bureau of Reclamation, U.S. Department of the Interior, but the
pricing thereof fell within the ambit of determination(s) by other
federal-government department(s) of sales at less than fair value.
Court No. 94-07-00438 Page 2
See, e.g., Final Results of Antidumping Duty Administrative Review;
Large Power Transformers From Italy, 52 Fed.Reg. 46,806 (Dec. 10,
1987). That determination by the International Trade Administra-
tion, U.S. Department of Commerce, set 71.40 percent as the margin
of the Italian manufacturer's dumping of such equipment at the time
of delivery to the United States.
I
According to the amended complaint filed by the above-
encaptioned plaintiff surety, the U.S. Customs Service computed
that margin to result in an antidumping duty of $292,638.12 on the
entry herein, which amount the surety ultimately paid1. That
complaint alleges jurisdiction pursuant to 28 U.S.C. §§ 1581(a) and
1581(i)(4), pleading causes of action predicated in essence upon
averments (i) that the plaintiff never received notice of suspen-
sion of liquidation, as required by 19 U.S.C. §1504(c); (ii) that
it also never received notice of suspension on Customs Form 4333-A,
as required by 19 C.F.R. §159.12(c); (iii) that the price payable
by the United States through the Bureau of Reclamation included
import duty and was subject to mandatory adjustment under which the
government was obliged to absorb duties, including any for dumping;
1
Plaintiff's single consumption entry bond on Customs Form
7551 was in the name of The Legnano Electric Corporation, the
nominal importer of the merchandise manufactured by Industrie
Elettriche di Legnano, which firm a decree of the Italian Ministry
of Industry placed under "Extraordinary Administration" by a
government-appointed commissioner subsequent to the entry herein.
See Nuove Industrie Elettriche di Legnano S.p.A. v. United States,
14 CIT 334, 335, 739 F.Supp. 1567, 1569 (1990).
Court No. 94-07-00438 Page 3
(iv) that, under the terms of the government contract, the assess-
ment of additional duties triggered an increase in the contract
price of the merchandise, which, in turn, should have caused an
equivalent increase in its United States Price, resulting in a
determination that no antidumping duties were due; and (v) that the
United States have been unjustly enriched by acquiring the
equipment via the lowest public bid price and thereafter also
collecting antidumping duties thereon.
In its answer to the amended complaint, the defendant
denies, among other allegations, that this Court of International
Trade has subject-matter jurisdiction over plaintiff's Counts III,
IV and V, pleading that those purported causes of action sound in
government contract, which is the statutory province of the United
States Court of Federal Claims. As for the other two causes
posited by the plaintiff, the defendant denies that this court has
jurisdiction pursuant to 28 U.S.C. §1581(i) or that the plaintiff
has properly invoked jurisdiction under section 1581(a).
A
This joinder of issue has been followed by a motion for
(partial) summary judgment on the part of the plaintiff and a
cross-motion by the defendant for similar summary relief. The
gravamen of the surety's motion is that the subject entry was li-
quidated by operation of law since Customs failed to provide notice
Court No. 94-07-00438 Page 4
of suspension of liquidation and that the Service's assessment of
the antidumping duties was erroneous in that it failed to follow
the Commerce Department's liquidation instructions. This motion is
accompanied by a required statement of material facts as to which
it is contended there is no genuine issue to be tried within the
meaning of then-applicable CIT Rule 56(i)2. It states, in perti-
nent part:
12. Section 1.1.6 of the "Specifications" identified
in paragraph 11 above[3] provides that "the contract
price" includes all applicable duties paid upon importa-
tion. Section 1.1.6 also provides that the contract
price shall be increased by the amount of any duty
increase assessed after the contract property is im-
ported, resulting from any "statute, court decision,
written ruling, or regulation", which requires the
contractor (importer) to "pay or bear the burden" of such
duty "or increase in the rate thereof" which would not
otherwise have been payable on such transactions or
property.
13. Antidumping duties assessed on imported mer-
chandise under 19 U.S.C. §1675[] constitute statutory
"duties" and/or "increases" in the rate of duty, within
the meaning of Section 1.1.6 of the "Specifications"
identified . . . above. The Commerce Department's Final
2
This requirement of amended Rule 56 has been relettered (h),
effective May 1, 2000.
3
This statement (erroneously) has two preceding paragraphs
numbered 11, the first of which refers to a Solicitation DS-7371
that
included a form issued by the Bureau of Reclamation,
numbered 7-1481 (9-76) and entitled "Specifications,
Division 1 - General Requirements". Section 1.1.6 of
these Specifications, entitled "Federal, State, and Local
Taxes", discusses the affect of federal, state, and local
taxes and duties on "the contract price".
Court No. 94-07-00438 Page 5
Results in 52 Fed.Reg. 46,806, imposing antidumping duty
margins on merchandise previously imported by Legnano,
required Legnano, and the plaintiff as surety, to "pay or
bear the burden" of the duty increase.
14. The . . . Final Results . . . constitute[] a
"written ruling" within the meaning of . . . Section
1.1.6.
15. Liquidation of the subject entry was suspended
by statute in accordance with 19 U.S.C. §1675(a) (1982).
16. On or about February 2, 1988, [] Customs . . .
issued . . . Information Exchange ("C.I.E.") number N-
169/70 (Supplement 13), setting forth the "Master List"
and indicating the actual antidumping duty applicable to
the entry in question was $292,638.12. . . .
17. . . . Customs . . . liquidated the merchandise
on June 10, 1988, together with interest on the antidump-
ing duties . . . through the date of liquidation.
18. Legnano never paid the antidumping duties in
question, or any interest accruing thereon.
19. The first demand made upon the . . . surety was
November 4, 1988. Plaintiff filed a protest . . . on
January 23, 1989 in order to challenge the demand . . ..
20. In the Ruling dated March 22, 1994 . . ., the
District Director of Customs (Seattle) granted plain-
tiff's protest . . . with respect to the applicability of
interest, pursuant to . . . Headquarters' decision on
Application for Further Review dated March 8, 1994 (HQ
224397), but denied plaintiff's protest with respect to
the . . . antidumping duties. Customs determined in the
1994 Ruling that Hanover's protest was timely filed.
21. On or about April 7, 1994, plaintiff tendered
and the . . . Service received payment in the amount due
. . ..
22. Defendant is the same entity which purchased
the subject merchandise through its Department of
Interior . . . at a price which the defendant determined
to be dumped.
* * *
Court No. 94-07-00438 Page 6
26. The "Master List" issued by the Treasury
Department . . . directed . . . Customs . . . to notify
. . . Service Headquarters of any "information on file
which might affect the appraised value under the anti-
dumping provisions." C.I.E. number N-169/70 (Supplement
13). If such information was on file, Customs was
instructed to "suspend liquidation of the affected
entries until a decision is made concerning the applica-
bility of the additional information."
27. Under the terms of the Contract, the assessment
of additional duties, as evidenced by the assessment
instructions in the Master List, triggered an increase in
the contract price for the imported merchandise. This,
in turn, should have caused an equivalent increase in the
"United States Price" for the merchandise, resulting in
a determination that no antidumping duties were due.
28. . . . Customs had an obligation to follow the
Master List instructions, and having been fully aware of
the price adjustment clause of the Contract, the District
Director of Customs (Seattle) should have notified . . .
Headquarters and adjusted the United States Price of the
goods to offset the amount of antidumping duties (and
other duties) found to be due.
29. Customs failed to appraise and liquidate the
merchandise in accordance with the price adjustment
clause in the Contract, and in accordance with the
instructions from the Treasury Department (via the
Commerce Department) contained in the "Master List".
In its response to this statement, the defendant admits
paragraphs 15, 16, 21 and 26. It admits paragraphs 17, 19, 20 and
28 in part. Its denials of portions of those four paragraphs and
of the other paragraphs (11 (first), 12, 13, 14, 18, 22-24, 27 and
29, supra) in toto also aver that such contradiction does not
signify the existence of issues of material facts which would
preclude summary judgment, albeit in favor of the defendant.
Court No. 94-07-00438 Page 7
Defendant's own Statement of Additional Material Facts as to Which
There Is No Genuine Issue to be Tried is as follows:
1. Plaintiff's searches for notices of suspension
in connection with the subject entry were performed for
the first time by (a) Michael M. Tracey in 1988, (b) Mary
Beth Duquette (Myers) in 1994, and (c) Ronald Ritland on
or about the date of his affidavit, July 28, 1998.
2. Customs computer records indicate that notices
of suspension were issued to plaintiff, as well as the
importer of record, in November 1981, November 1982, and
November 1983, at their respective proper addresses.
3. At the time of entry, the importer of record
submitted a bond to Customs in the amount of $358,000 to
cover potential antidumping duty liability on the subject
merchandise, pursuant to the antidumping finding in
Treasury Decision 72-161.
The plaintiff denies paragraphs 2 and 3, while admitting
in part and denying in part the first paragraph of this statement.
II
The defendant characterizes as "new"4 the claim in
plaintiff's summary-judgment motion that the assessment of the
antidumping duties by Customs was erroneous in that the Service
failed to follow the Commerce Department's liquidation instruc-
tions, and it proceeds to argue that this claim is not
"related to the same administrative decision listed in
section 514 of the Tariff Act of 1930 that was contested
in the protest." See 28 U.S.C. § 2638. The legislative
history of section 2638 reveals that any newly raised
ground must fall within the same category as the decision
contested in the protest. . . .
4
Defendant's Memorandum in Support of its Motion for Summary
Judgment, p. 25.
Court No. 94-07-00438 Page 8
Plainly, Hanover's new claim fails to meet the
requirements of section 2638. Indeed, this new claim, in
essence, challenges the underlying dumping determination;
thus, this Court lacks jurisdiction over such claim.
Defendant's Memorandum, pp. 25-26 (other citations omitted).
Of course, if this claim were indeed aimed at the
underlying dumping determination, the court would readily concur
that it lacks jurisdiction to hear and decide such subject pursuant
to 28 U.S.C. §1581(a). But this court is unable to conclude that
the claim actually does invoke section 1581(c) or a basis of
subject-matter jurisdiction other than that pleaded by the
plaintiff, namely, 1581(a).
That section requires that issues brought thereunder to
this Court of International Trade must have been properly protested
per 19 U.S.C. §1514 (1994), subsection (a) of which Title 19
section enumerates the grounds for protesting "decisions of the
Customs Service, including the legality of all orders and findings
entering into the same, as to", among others,
. . . (5) the liquidation or reliquidation of an entry,
or reconciliation as to the issues contained therein, or
any modification thereof; . . ..
See, e.g., American Hi-Fi Int'l, Inc. v. United States, 19 CIT 1340(1995), citing Mitsubishi Elec. America, Inc. v. United States, 44
F.3d 973 (Fed.Cir. 1994). And plaintiff's protest appears to have
been pursuant to this subsection (a)(5) from the beginning, e.g.:
Court No. 94-07-00438 Page 9
2. We hereby protest the liquidation or reliquidation
of the above entry with increased duties represent-
ing antidumping duties. The surety herein did not
issue a bond for the payment of antidumping duties
covering this entry.
3. We protest liquidation or reliquidation with dump-
ing duties reflected on the demand on surety in
excess of the amount reflected in the assessment
instructions for this entry in C.I.E. N-169/70. . .
and interest calculated from an incorrect princi-
pal . . . in violation of 19 U.S.C. §1673e(c)(3).
Defendant's Memorandum, Exhibit 6, third page.
The part of the Customs Courts Act of 1980 which the
defendant cites, 28 U.S.C. §2638, provides that, in any civil
action
in which the denial, in whole or in part, of a protest is
a precondition to . . . commencement . . ., the court, by
rule, may consider any new ground in support of the civil
action if such new ground --
(1) applies to the same merchandise that was the
subject of the protest; and
(2) is related to the same administrative decision
listed in section 514 of the Tariff Act of 1930 that was
contested in the protest.
To the extent plaintiff's contention that Customs failed to follow
Commerce's instructions is genuinely "new", according to the
foregoing provision it need only apply to the same merchandise and
be related to the same Service decision, which clearly is the case
at bar. That the reasons for contesting liquidation may be
different is not controlling, only that they lie within 19 U.S.C.
§1514(a). See, e.g., C.L. Hutchins & Co. v. United States, 67
Cust.Ct. 60, C.D. 4252, 331 F.Supp. 318 (1971) (jurisdiction over
Court No. 94-07-00438 Page 10
new claim upheld as within the same category of protestable
decision). Also, the question of jurisdiction under section
1581(a) turns on which agency makes the decision. See, e.g.,
American Hi-Fi Int'l, Inc. v. United States, supra.
The defendant has no support for its position that the
"essence" of plaintiff's "new" claim is a challenge to the
underlying dumping determination. The plaintiff does not contest
that determination, rather that Customs liquidated the subject
entry without reporting the escalation clauses in the contract as
"any information on file which might affect the appraised values"
of the goods, as required by Commerce's liquidation instructions
themselves. As has been pointed out, 19 U.S.C. §1514(a)
contemplates that both legality and correctness of a
liquidation be determined, at least initially, via the
protest procedure. The wording . . . makes it clear that
any challenge to the propriety of a liquidation . . .
must be through this statute.
LG Elec. U.S.A., Inc. v. United States, 21 CIT 1421, 1426, 991
F.Supp. 668, 674 (1997) (emphasis in original), quoting United
States v. A.N. Deringer, 66 CCPA 50, 55, 593 F.2d 1015, 1020
(1979). Indeed, "[j]urisdiction for actions challenging Customs'
failure to follow Commerce's actual liquidation instructions . . .
is found under 28 U.S.C. §1581(a)." American Hi-Fi Int'l, Inc. v.
United States, 20 CIT 910, 916, 936 F.Supp. 1032, 1037 (1996); ABC
Int'l Traders, Inc. v. United States, 19 CIT 787, 791 (1995) (claim
Court No. 94-07-00438 Page 11
that Customs failed to follow Commerce's liquidation instructions
"may be brought before the court under 28 U.S.C. §1581(a) . . .
after denial of protests by Customs").
III
The defendant takes the position that, under the Tariff
Act of 1930, as amended, notice to an importer of suspension of
liquidation of an entry was sufficient to forego liquidation at the
rate and amount of duty posited by it at the time of entry. That
is, notice to a surety of such suspension was not necessary.
The amended section of that act provided at the time of
entry herein:
(a) Liquidation
Except as provided in subsection (b) of this
section, an entry of merchandise not liquidated within
one year from:
(1) the date of entry of such merchandise . . .
shall be deemed liquidated at the rate of duty, value,
quantity, and amount of duties asserted at the time of
entry by the importer, his consignee, or agent. . . .
(b) Extension
The Secretary may extend the period in which to
liquidate an entry by giving notice of such extension to
the importer, his consignee, or agent in such form and
manner as the Secretary shall prescribe in regulations,
if . . .
(2) liquidation is suspended as required by statute
or court order; . . ..
Court No. 94-07-00438 Page 12
(c) Notice of suspension
If the liquidation of any entry is suspended, the
Secretary shall, by regulation, require that notice of
such suspension be provided to the importer or consignee
concerned and to any authorized agent and surety of such
importer or consignee.
19 U.S.C. §1504. The regulations promulgated in conjunction with
this statute were as follows:
§ 159.11 Entries liquidated by operation of law.
(a) Time limit generally. Except as provided in
§159.12, an entry not liquidated within 1 year from the
date of entry of the merchandise . . . shall be deemed
liquidated by operation of law at the rate of duty,
value, quantity, and amount of duties asserted by the
importer at the time of filing an entry summary for
consumption in proper form . . ..
§ 159.12 Extension of time for liquidation.
(a) Reasons -- (1) Extension. The district direct-
or may extend the 1-year statutory period for liquidation
for an additional period not to exceed 1 year if:
(i) Information needed by Customs. Information
needed by Customs for the proper appraisement or classi-
fication of the merchandise is not available, or
(ii) Importer's request. The importer requests an
extension in writing before the statutory period expires
and shows good cause why the extension should be granted.
. . .
(2) Suspension. The 1-year liquidation period may
be suspended as required by statute or court order.
(b) Notice of extension. If the district director
extends the time for liquidation, as provided in para-
graph (a)(1) of this section, he promptly shall notify
the importer or the consignee and his agent and surety on
Customs Form 4333-A, appropriately modified, that the
time has been extended and the reasons for doing so.
Court No. 94-07-00438 Page 13
(c) Notice of suspension. If the liquidation of an
entry is suspended as required by statute or court order,
as provided in paragraph (a)(2) of this section, the
district director promptly shall notify the importer or
the consignee and his agent and surety on Customs Form
4333-A, appropriately modified, of the suspension.
19 C.F.R. §§ 159.11, 159.12 (1980).
The duty of the court is to give effect to the intent of
Congress, and in doing so the first reference is to the literal
meaning of the words adopted. E.g., Flora v. United States, 357
U.S. 63, 65 (1958). See also Kelly v. Robinson, 479 U.S. 36, 43
(1986); Madison Galleries, Ltd. v. United States, 870 F.2d 627, 629
(Fed.Cir. 1989) (the "starting point in every case involving
construction of a statute is the language itself"). Moreover, the
inquiry
must cease if the statutory language is unambiguous and
"the statutory scheme is coherent and consistent." . . .
The plainness or ambiguity of statutory language is
determined by reference to the language itself, the
specific context in which that language is used, and the
broader context of the statute as a whole.
Robinson v. Shell Oil Co., 519 U.S. 337, 340-41 (1997), quoting
United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 240
(1989), and citing Connecticut Nat'l Bank v. Germain, 503 U.S. 249,
253-54 (1992), Estate of Cowart v. Niklos Drilling Co., 505 U.S.
469, 477 (1992), and McCarthy v. Bronson, 500 U.S. 136, 139 (1991).
Interpretation must "not be guided by a single sentence or member
of a sentence" but by the "provisions of the whole law, and . . .
its object and policy." Philbrook v. Glodgett, 421 U.S. 707, 713
(1975) (citations omitted).
Court No. 94-07-00438 Page 14
The defendant contends that the plain meaning of section
1504, supra, supports its position that notice to a surety is not
required for an extension of liquidation due to suspension by
statute or court order. Under the statute, liquidation is deemed
to occur one year from the date of entry, "[e]xcept as provided in
subsection (b)". 19 U.S.C. §1504(a). Since that subsection does
not provide for sureties, even though suspension is one basis for
extension, the argument is that no notice was required in this
case. See Defendant's Memorandum, pp. 7-10.
On its face, however, the statute is not unambiguous, and
the court thus cannot rely exclusively on subsection (b)'s enacted
language. In such a circumstance, "congressional intent is
particularly relevant." United States v. Hohri, 482 U.S. 64, 71
(1987). While section 1504(b), supra, does not specify notice to
sureties, subsection (c) explicitly requires notice to them of
suspension. In short, subsections (a), (b) and (c), read together,
are not perfectly "coherent and consistent", and the intent of
Congress cannot be gleaned solely from their erstwhile words.
The history of section 1504 does reflect reasonably-clear
legislative intent. The primary justification for requiring notice
to sureties under subsection (c) was to minimize risk of loss. See
H.R. Rep. No. 95-621, p. 25 (1977); S. Rep. No. 95-778, p. 32
(1978). The latter report (of the Senate Finance Committee) noted
that prior to the enactment of the section there was no law re-
Court No. 94-07-00438 Page 15
quiring liquidation to be completed within a specific time period.
See S. Rep. No. 95-778, p. 31. It stated that subsection (c) would
require notice of any suspension of liquidation to be given to the
importer or consignee concerned and to any authorized agent and
surety of such importer or consignee. See id. at 32. The report
explained that the law was designed to
increase certainty in the customs process for importers,
surety companies, and other third parties with a poten-
tial liability relating to a customs transaction. Under
the present law, an importer may learn years after goods
have been imported and sold that additional duties are
due, or may have deposited more money for estimated
duties than are actually due but be unable to recover the
excess for years as he awaits liquidation. Surety
companies, which are jointly liable with importers for
additional duties, would be better able to control their
liabilities. Sureties would also be better protected
against losses resulting from the dissolution of their
principals in instances where there has been undue delay
in liquidating entries.
Id. Similarly, the House Ways and Means Committee Report explains
that subsection (c)
provides notice of any suspension of liquidation to the
importer or consignee concerned and to any authorized
agent and surety of such importer or consignee. The
addition of this subsection gives notice to the sure[t]y
companies and other third parties that there is a po-
tential for loss.
Thus, the sureties can take appropriate measures
upon receiving this notice to make sure that at least as
to continuing activities, the risk of loss will be
minimized.
H.R. Rep. No. 95-621, p. 25. Indeed, for the Customs Service to
extend the liquidation period based on a suspension without
notifying the surety would seemingly diminish this legislative
purpose.
Court No. 94-07-00438 Page 16
In addition to the legislative history, some case law
supports an interpretation requiring notice to sureties of
suspension of liquidation. In Old Republic Ins. Co. v. United
States, 10 CIT 589, 596, 645 F.Supp. 943, 950 (1986), for example,
the court held that notice to the surety was not required for a
valid extension when notice was given to the importer. That
opinion noted different treatment of sureties with regard to
suspension, to wit:
Suspension of liquidation is one ground upon which
an extension may be granted. . . . Pursuant to the
statutory scheme, it appears that if liquidation has been
suspended and the time for liquidation will be extended
as a result, then the Secretary must tell the importer or
consignee and their authorized agent and surety of the
suspension, but need only notify the importer, the
consignee, or agent of the extension. Thus, if the ex-
tension does not involve a suspension there would be no
requirement of notice to the surety under the statute.
10 CIT at 595 and 645 F.Supp. at 949, n. 14 (citation omitted).
Finally in 1993, Congress amended the statute to require
notice to sureties of all extensions of liquidation. The report of
the House Ways and Means Committee commented on the version of
section 1504 at issue herein in explaining the reasons for the
legislative confirmation:
With regard to notification of sureties, the bill
corrects an omission in existing law and codifies
existing administrative practice. Presently, Customs is
only required to provide notice of an extension of liqui-
dation of an entry to sureties when the liquidation is
suspended by statute or court order. The statute does
not require notice to be sent to the surety when liquida-
tion is extended because Customs requires more informa-
Court No. 94-07-00438 Page 17
tion or when the importer requests an extension. The
bill will now require notification of sureties in all
three instances.
H.R. Rep. No. 103-361, pt. 1, p. 139 (1994) (emphasis added).
Obviously, this confirmed the view within Congress that the statute
as it existed required notice to sureties of suspension of
liquidation.
In sum, this court, in the light of the legislative
history (including the subsequent congressional confirmation), as
well as of the administrative approach and judicial interpretation,
concludes that Customs had to have notified the plaintiff of the
suspension in extending the period of time within which to
liquidate Legnano's entry.
IV
The defendant asserts that the Service "gave notice of
the suspension to the surety". Defendant's Memorandum, p. 7.
Hanover disagrees. Each side now moves for summary judgment upon
its respective stance. As a rule, such judgment
shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a
matter of law.
CIT Rule 56(c) (2000). Summary judgment will not lie, however, if
the evidence is such that a reasonable trier of fact could return
a verdict for the nonmoving party. See, e.g., Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). Moreover, when there are
Court No. 94-07-00438 Page 18
cross-motions for summary judgment, a court must decide each motion
by interpreting the evidence submitted by the moving party in a
light most favorable to the opposing party. See, e.g., Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
In cases turning on the alleged giving of notice and lack
of receipt thereof, there is a presumption that
letters or other communications, properly addressed,
stamped, and deposited in the mail, are received by the
addressee in due course. . . . That presumption is re-
buttable by proof of non-receipt. . . .
Where a notice is required to be given by Customs
officials, the burden of going forward with the evidence
initially falls upon the plaintiff because the notice is
deemed to have been given by virtue of the presumption of
regularity which attaches to official acts. However, the
burden of proof then is on the Government because it is
the Government's statutory responsibility to provide the
notice. The proofs offered by a plaintiff at this point
are directed toward negating the presumed delivery by way
of evidence of non-receipt, non-issuance, or non-delivery
of the notice. When the plaintiff has met this initial
requirement, the burden of going forward shifts to the
Government to establish that notice was given. . . .
Intra-Mar Shipping Corp. v. United States, 66 Cust.Ct. 3, 5-6, C.D.
4160 (1971) (citations omitted). See also Int'l Cargo & Sur. Ins.
Co. v. United States, 15 CIT 541, 544, 779 F.Supp. 174, 177 (1991);
F.W. Myers & Co., Inc. v. United States, 6 CIT 215, 215-16, 574
F.Supp. 1064, 1065 (1983).
A
It has been held that an affidavit from a plaintiff
importer's record-keeper, stating that an extension notice had not
been received, was sufficient to rebut the presumption that notice
Court No. 94-07-00438 Page 19
was in fact given. See, e.g., Enron Oil & Transp. Co. v. United
States, 15 CIT 511 (1991), vacated and remanded on other grounds,
988 F.2d 130 (Fed.Cir. 1993); Int'l Cargo & Sur. Ins. Co. v. United
States, 15 CIT at 544, 779 F.Supp. at 177 ("The presumption is not
conclusive, and may be rebutted by a declaration or other evidence
indicating that notice was not received").
Here, the plaintiff has submitted affidavits from the
Hanover employees and broker responsible for handling suspension
notices received from Customs. The sum and substance of each
affiant is that he or she has no recollection of ever receiving or
reviewing a Notice of Suspension of Liquidation for Legnano
Electric Corporation entry 81-534208-9 and that The Hanover
Insurance Company never received such a notice. See Plaintiff's
Summary Judgment Exhibit F (Affidavit of Michael M. Tracy, para.
10); Exhibit G (Affidavit of Jeannette Heroux, para. 6); Exhibit H
(Affidavit of Mary Beth Duquette, para. 10); and Exhibit I
(Affidavit of Ronald E. Ritland, para. 6). In the absence of such
receipt, according to these affidavits, no suspension file was
established or subsequently located, whereupon the plaintiff claims
that "the reasonable inference which may be drawn from the absence
of a specific file is that . . . notice was not received."
Plaintiff's Response Brief, p. 16.
The court finds that these submissions, at a minimum,
rebut the presumption that notice was in fact given. Cf. G.
Weissenberger, Federal Evidence, §803.37, p. 499 (3d ed. 1998):
Court No. 94-07-00438 Page 20
. . . In a regularly conducted business activity where
a person with personal knowledge systematically prepares
and maintains records at a time proximate to the occur-
rence of the event or transaction recorded, comprehen-
siveness and accuracy may be assumed. Consequently, lack
of a record concerning the event is persuasive evidence
of its nonoccurrence or nonexistence.
B
Defendant's primary evidence is a computer printout from
the Customs extension/suspension history file, accompanied by
written attempts under oath by two Service employees to explain
standard operating procedures for printing, mailing, and recording
notices of suspension of the kind at issue herein. One declarant
is of the
opinion that if the history file has a record of an
extension or suspension notice for an entry, then the
notice was printed and mailed to the address shown on the
record . . ..
Defendant's Memorandum, Exhibit 2 (Declaration of Roger Odom, para.
15). Similarly, the second declaration (by Arthur Versich) states:
. . . [W]here, as here, a record of a notice is extracted
from the history file, we know that the notice was
formatted for printing and copied to the printer spool.
These end-of-week programs and printing operations must
be performed, and there is no doubt in my mind that where
Customs has a record of a notice, the notice was printed
at or about the time indicated by the run date.
Id., Exhibit 3, para. 23.
The court finds these submissions by the defendant, at a
minimum, undermine plaintiff's motion for summary judgment on the
Court No. 94-07-00438 Page 21
issue of notice. Cf. A.N. Deringer, Inc. v. United States, 20 CIT
978 (1996)(judgment entered for Customs after trial involving
similar notice printout and explanatory testimony).
C
Viewing this evidence submitted in defendant's motion in
a light most favorable to it, however, does not lead this court to
conclude that a reasonable trier of fact could not return a verdict
for the plaintiff. On the other hand, the court is also not led by
plaintiff's motion to conclude that it could not find for the
defendant, given all the papers presented to date. In other words,
the dispositive question of notice, or lack thereof, herein is a
material matter which must be addressed at trial and subjected to
cross-examination, which has been said to be the surest test of
truth and a better security than the oath.
V
In furtherance of the foregoing discussion, defendant's
cross-motion for summary judgment must be denied, while plaintiff's
motion for (partial) summary judgment can be, and it hereby is,
granted, save the issue of the provision by Customs to, and of its
receipt by, The Hanover Insurance Company of notice of the
suspension of liquidation of The Legnano Electric Corporation's
entry 81-534208-9, and also except for the issue of whether the
Service failed to follow the Commerce Department's liquidation
Court No. 94-07-00438 Page 22
instructions5, which matters must be resolved by trial.
The parties are hereby directed to confer and prepare and
present a proposed pretrial order on or before June 29, 2001, by
which time a date for the trial will be set.
So ordered.
Decided: New York, New York
May 16, 2001
________________________________
Judge
5
The plaintiff articulates its stance on this question as
follows:
Once Commerce's review was completed, and . . . had
issued the Master List setting forth its final de-
termination, . . . Customs . . . was required to perform
the ministerial task of carrying out the instructions in
the Master List . . . [, which] did not merely instruct
Customs to liquidate the entries and collect antidumping
duties, but also required Customs officers to first make
inquiry in their files concerning whether they had any
information on hand which would have affected the
appraisement of the transformers under the antidumping
duty laws. Customs officials at Seattle had such
information; however, they failed to forward this
information to Customs Headquarters and suspend liqui-
dation, as directed, but instead proceeded directly to
liquidation of the entry at bar. Had Customs correctly
carried out the Master List instructions, the price
escalation clauses of the contract -- directly relevant
to the appraisement of the goods for antidumping purposes
-- would presumably have been taken into account,
eliminating the antidumping duty liability. Customs'
failure to carry out the Master List instructions,
therefore, resulted in an improper liquidation and an
incorrect and excessive assessment of antidumping duties.
Plaintiff's Memorandum, pp. 50-51 (emphasis in original). Compare
Defendant's Memorandum, pp. 1-2, n. 1 and p. 23, n. 11.