United States v. American Home Assurance Co. , 100 F. Supp. 3d 1364 ( 2015 )

Slip Op. 15-88
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES,
Plaintiff,
Before: Leo M. Gordon, Judge
v.
Consol. Court No. 09-00403
AMERICAN HOME ASSURANCE CO.,
Defendant.
OPINION
[Summary judgment granted in part and denied in part for Plaintiff; summary judgment
granted in part and denied in part for Defendant.]
Dated: August 19, 2015
Beverly A. Farrell, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of New York, NY, argued for Plaintiff, United States. With her
on the briefs were Stuart F. Delery, Acting Assistant Attorney General, Barbara S. Williams,
Attorney-in-Charge, Amy M. Rubin, Acting Assistant Director, Aimee Lee, Senior Trial Counsel,
Edward F. Kenny, Trial Attorney, and Alexander Vanderweide, Trial Attorney. Of counsel on
the briefs were Paula S. Smith, U.S. Customs and Border Protection, Office of Assistant Chief
Counsel, of New York, NY, and Brandon T. Rodgers, U.S. Customs and Border Protection,
Office of Assistant Chief Counsel, of Indianapolis, IN.
Herbert C. Shelley, and Mark F. Horning, Steptoe & Johnson LLP, of Washington, DC,
argued for Defendant, American Home Assurance Company.
Gordon, Judge: This consolidated collection action1 is before the court on cross-
motions for summary judgment. See Def.’s Mot. for Summ. J., Consol. Court No. 09-
1
This action consists of four separate actions - Court Numbers 09-00403, 10-00125,
10-00175, and 10-00343, consolidated under the lead case, Consol. Court No. 09-00403.
Consol. Court No. 09-00403 Page 2
00403, ECF No. 59 (“Def.’s Br.”); Pl.’s Mot. for Summ. J., Consol. Court No. 09-00403,
ECF No. 61 (“Pl.’s Br.”). Plaintiff United States (“Government”) seeks to recover unpaid
antidumping duties from Defendant American Home Assurance Company (“AHAC”), a
surety, along with statutory and equitable pre-judgment interest, and post-judgment
interest. Payment of duties was secured by numerous single transaction bonds (“STBs”)
and continuous entry bonds (“CBs”) issued by AHAC during the period March 2001 to
February 2002. AHAC’s liability for the principal amounts of antidumping duties owed on
these bonds is not in issue.
For entries in which antidumping duties do not exceed the face value of the bonds
(Court Nos. 09-00403 and 10-00343), the Government is seeking statutory pre-judgment
interest under 19 U.S.C. § 1505(d) (“post-liquidation interest” or “1505(d) interest”) for
non-payment of the duties. Over and above any antidumping duties and 1505(d) interest
owed, the Government claims statutory pre-judgment interest as an exaction pursuant to
19 U.S.C. § 580 (“580 interest”) for having to commence these four collection actions.
The Government also seeks equitable pre-judgment interest on any amounts in excess
of the face amounts of the relevant bonds to compensate the Government for the loss of
the time value of the funds owed. Finally, the Government maintains that it is entitled to
post-judgment interest under 28 U.S.C. § 1961.
Consol. Court No. 09-00403 Page 3
The court has jurisdiction pursuant to 28 U.S.C. § 1582(2) (suit on a bond) and
1582(3) (suit for collection of unpaid duties)2 (2012). For the reasons set forth below, the
Government’s motion for summary judgment is granted in part and denied in part, and
AHAC’s cross-motion is granted in part and denied in part.
I. Background
The subject bonds covered entries of preserved mushrooms and fresh water
crawfish tail meat from the People’s Republic of China, with each product subject to an
antidumping duty order. Declaration of Mark Pessolano in Support of Def.’s Mot. for
Summ. J. (“Pessolano Decl.”), Consol. Court No. 09-00403, ECF No. 59-1. These bonds
secured the importation of the subject merchandise during the period May 4, 2001
through August 6, 2002 by three different importers (American Jianglin, Y&Z International
Inc., and JH Brain Trading Inc.). Id. In Court No. 09-00403, AHAC issued both CBs and
STBs for the relevant entries. Id. In the other three actions, AHAC issued only CBs for the
relevant entries.
In the consolidated actions, AHAC secured the importation of the subject
merchandise by issuing the underlying STBs and CBs. The bonds obligated the importers
and AHAC to pay, up to the face amounts of the bonds, “any duty, tax or charge and
compliance with law or regulations” resulting from activity covered by those bonds. See
Compl., Exs. C & L, Court No. 09-00403, ECF No. 4; Compl., Ex. A (copy of printout from
2
28 U.S.C. § 1582(2) is the basis for jurisdiction in all four of the actions, whereas
28 U.S.C. § 1582(3) is an additional basis for jurisdiction in Court No. 10-00175.
Consol. Court No. 09-00403 Page 4
Customs’ Automated Commercial System reflecting Bond No. 100175644 as bond
destroyed at the World Trade Center site on Sept. 11, 2001), Court No. 10-00125, ECF
No. 4; Compl., Ex. A, Court No. 10-00175, ECF No. 4; Compl., Ex. A, Court No. 10-00343,
ECF No. 4.
U.S. Customs and Border Protection (“Customs” or “CBP”) liquidated the entries
secured by these bonds and assessed antidumping duties on the subject merchandise.
For each of those entries, the respective importer received a bill from Customs and failed
to pay the duties owed. Because of the importers’ defaults, Customs issued demands3 to
AHAC, as the surety, for payment under its bonds. AHAC protested the demands for
payment, which Customs ultimately denied. Since AHAC refused to make payment, the
Government commenced these actions for the collection of unpaid duties and interest.
AHAC conceded liability for duties on the subject bonds, except for the CB related
to Count III in Court No. 10-00343. The parties agree that the principal amounts owed in
Court Nos. 10-00125 and 10-00175 are $1,400,000 and $800,000 respectively. The
parties disagree as to the principal amounts owed in the other two actions. The
Government claims that $4,989,085.89 is the principal amount owed in Court No. 09-
00403, while AHAC maintains that $4,489,085.89 is owed. The disagreement centers on
Customs’ treatment of a partial payment of $500,000. Customs intends to allocate that
payment in accordance with 19 C.F.R. § 24.3a, which directs that any late payment
3
Customs appears to have made demands on AHAC for payment (across the four
consolidated actions) beginning in December 2003 and ending in December 2009.
Consol. Court No. 09-00403 Page 5
received first be applied, on an entry by entry basis, to interest charges, i.e., 1505(d)
interest, equitable pre-judgment interest, and 580 interest, and then finally to the
delinquent principal itself. AHAC does not dispute that the $4,989,085.89 was the original
amount owed, but maintains that the partial payment should be fully credited against
principal, not applied to any interest that may be owed.
With respect to the CB related to Count III in Court No. 10-00343, the parties
reached an understanding that “$50,000 . . . would be the number used in determining
the applicable amount of interest, if any, to be awarded.” Jt. Letter, Court No. 10-00343,
ECF No. 17. Subsequently, AHAC sent Customs a check for $50,000 in payment for the
moneys related to Count III. See Pl.’s Resp. to Court’s Request for Information, Confid.
Att. at 29, ECF No. 113-2. The Government claims that $70,645.34 is the principal amount
owed in Court No. 10-00343, whereas AHAC maintains that $20,645.34 is owed. The
disagreement again centers on the allocation, interest first or principal first, of the $50,000
paid by AHAC with respect to Count III in the 10-00343 action. In both instances Customs
is holding the payments in suspense accounts awaiting resolution of the pre-judgment
interest issues.
II. Standard of Review
USCIT Rule 56 permits summary judgment when “there is no genuine issue as to
any material fact.” USCIT R. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). In considering whether material facts are in dispute, the evidence must
be considered in the light most favorable to the non-moving party, drawing all reasonable
Consol. Court No. 09-00403 Page 6
inferences in its favor. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970);
Anderson, 477 U.S. at 261 n.2. Because the dispositive issues are solely legal and the
material facts are uncontroverted, summary judgment is appropriate. See 10A Charles
Alan Wright, Arthur R. Miller, Mary Kay Kane, Richard L. Marcus & Adam N. Steinman,
Federal Practice & Procedure § 2725 (3d ed. 2015); see also Dal-Tile Corp. v. United
States, 24 CIT 939, 944, 116 F. Supp. 2d 1309, 1314 (2000) (citing Marathon Oil Co. v.
United States, 24 CIT 211, 214, 93 F. Supp. 2d 1277, 1279-80 (2000)).
III. Discussion
This consolidated action involves whether pre- and post-judgment interest, if any,
are due in a collection action by the Government for non-payment of antidumping duties
on underlying import transactions that were secured by basic importation and entry
bonds. The court begins with the issue of statutory pre-judgment interest under 19 U.S.C.
§ 1505(d) and 19 U.S.C § 580. The court then examines the appropriateness of an award
of equitable pre-judgment interest in addition to statutory pre-judgment interest. The court
next addresses the effect of AHAC’s prior payments. Lastly, the court considers if an
award of post-judgment interest is warranted.
A. 1505(d) Interest
An importer is required to pay antidumping duties assessed by the United States
pursuant to 19 U.S.C. § 1673. A surety who underwrites a customs bond agrees to joint
and several liability with the importer for any duties, fees, and charges (including interest)
owed, capped at the face amount of the bond. 19 C.F.R. § 113.62(a) (2015) (principal
Consol. Court No. 09-00403 Page 7
and surety jointly and severally agree to pay all “duties, taxes, and charges . . . legally
fixed and imposed on any entry” secured by an STB or CB); see also United States v.
Washington Int’l Ins. Co., 25 CIT 1239, 1241-42, 177 F. Supp. 2d 1313, 1316 (2001)
(“Normally, a surety is liable for any duties, fees, and interest owed up to the face amount
of the surety bond and any further liability for increased payment usually arises in a
litigation context.”). A surety’s obligation arises at the time of the importer’s breach, unless
the parties agree otherwise. See United States v. Cocoa Berkau, Inc., 990 F.2d 610, 614
(Fed. Cir. 1993).
19 U.S.C § 1505 governs the payment of duties and fees on entries of imported
merchandise. Once Customs liquidates or reliquidates an entry, any duties and fees
(including pre-liquidation interest) due and owing are payable 30 days after Customs
issues a bill. 19 U.S.C. § 1505(b). If a bill is not paid in full within the 30-day grace period,
the unpaid balance is considered delinquent and subject to “post-liquidation interest.” Id.
§ 1505(d). Post-liquidation interest accrues in 30-day periods from the date of liquidation
or reliquidation until the balance is paid in full, excluding the 30-day period in which the
bill is paid. Id.
Here, CBP liquidated the entries secured by AHAC’s bonds and assessed
antidumping duties on the subject merchandise. When the importers failed to pay the
dumping duties owed, CBP made multiple demands on AHAC for payment. On each
occasion, CBP notified AHAC of the Government’s intent to seek post-liquidation interest.
See Pl.’s Compl. Ex. 4, Court No. 09-00403, ECF No. 4 (citing Washington Int’l Ins. Co.,
Consol. Court No. 09-00403 Page 8
25 CIT at 1241-42, 177 F. Supp. 2d at 1316). AHAC filed protests on Customs’ demands
for payment of the duties and any attendant interest, all of which CBP subsequently
denied. AHAC then had the option to challenge those demands, including the charge for
post-liquidation interest, by commencing an action under 28 U.S.C. § 1581(a). AHAC
chose not to commence suit.
In Court Nos. 09-00403 and 10-00343, the duties owed do not exceed the face
amounts of the relevant bonds. The Government contends that, under these
circumstances, 1505(d) interest continues to accrue and constitutes part of the unpaid
balance for which the individual importer, and in turn AHAC, as surety, are liable. The
Government also argues that CBP’s demands (including payment of post-liquidation
interest) became final and conclusive in accordance with 19 U.S.C. § 1514 when AHAC
failed to contest its denied protests. Thus, the question before the court is whether the
final and conclusive language of § 1514 precludes AHAC from asserting an affirmative
defense in a Government enforcement action to collect post-liquidation interest under
§ 1505(d).
Section 1514 provides that any Customs decision (enumerated in one of the seven
categories in § 1514) must be protested or it becomes “final and conclusive upon all
persons (including the United States and any officer thereof).” 19 U.S.C. § 1514(a).
Section 1514 further provides that if a protest is filed, and Customs denies the protest,
the protesting party may challenge the denial in the U.S. Court of International Trade,
Consol. Court No. 09-00403 Page 9
under 28 U.S.C. § 1581(a). Id. Failure to commence a 1581(a) action after a protest is
denied also renders Customs’ decision “final and conclusive.” Id.
It is well established that all decisions by CBP relating to an entry merge into the
liquidation, which, in turn, becomes final and conclusive unless challenged in accordance
with § 1514. See Volkswagen of America, Inc. v. United States, 532 F.3d 1365, 1370
(Fed. Cir. 2008) (citations omitted). The finality of those decisions applies to both importer
duty recovery suits and to Government enforcement actions. See United States v. Cherry
Hill Textiles, Inc., 112 F.3d 1550 (Fed. Cir. 1997). This action, however, does not raise
issues related to the liquidation of the subject entries. Rather, it involves CBP’s post-
liquidation decision to charge 1505(d) interest on unpaid antidumping duties pursuant to
a demand for payment on a bond.
AHAC maintains that the bond language does not commit it to pay post-liquidation
interest. See Def.’s Resp. Br. In Opp. to Pl.’s Mot. for Summ. J. 7, ECF No. 69. In this
regard, AHAC maintains that “a surety’s concession of liability for the principal amount
owed [(the duties)] does not waive any defenses to the government’s claim for interest
which is made on statutory, not contractual grounds.” Id. 7-8. As to § 1514, AHAC
contends that the final and conclusive language does not preclude it from asserting
defenses as a shield in a collection action for 1505(d) interest. AHAC argues that CBP’s
decision to seek 1505(d) interest was made post-liquidation, and therefore is not
protestable under § 1514. The court disagrees.
Consol. Court No. 09-00403 Page 10
Among the protestable decisions set forth in § 1514 are CBP decisions that involve
“charges or exactions of whatever character within the jurisdiction of the Secretary of the
Treasury.” 19 U.S.C. § 1514(a). It is generally viewed that interest on duties comes within
the description of a charge or exaction. See Castelazo & Assocs. v. United States, 126
F.3d 1460, 1462 (Fed. Cir. 1997); Syva Co. v. United States, 12 CIT 199, 202-03, 681
F. Supp. 885, 888 (1988) (interest on delinquent payment of liquidated regular Customs’
duties protestable as charge or exaction); American Hi-Fi Int’l, Inc. v. United States,
19 CIT 1340, 1341-45 (1995) (19 U.S.C. § 1677g pre-liquidation interest on
underpayments of antidumping duties constitutes charge or exaction protestable under
§ 1514). The statute does not contain an exception for “charges or exactions” arising after
liquidation, nor “charges or exactions” arising on particular kinds of duties. The
distinctions drawn by AHAC do not appear in § 1514’s broad “charges or exactions of
whatever character” language. See 19 U.S.C. § 1514(a).
Furthermore, the basic importation and entry bonds at issue statutorily and
contractually secure the payment of “duties” and any attendant interest. They do not
distinguish between interest on a delinquent payment of regular customs duties and
interest on a delinquent payment of other duties, such as antidumping duties. They also
do not distinguish between pre-liquidation and post-liquidation interest. See Compl.,
Exs. C & L, Court No. 09-00403, ECF No. 4; Compl., Ex. A (copy of printout from Customs’
Automated Commercial System reflecting Bond No. 100175644 as bond destroyed at the
World Trade Center site on Sept. 11, 2001), Court No. 10-00125, ECF No. 4; Compl.,
Consol. Court No. 09-00403 Page 11
Ex. A, Court No. 10-00175, ECF No. 4; Compl., Ex. A, Court No. 10-00343, ECF No. 4.
The consequence for non-payment of those “other duties” is the same here as it would
be for the non-payment of regular customs duties – the obligation to pay post-liquidation
interest. Because there is no distinction in the statute or the bond agreements, as AHAC
contends, 1505(d) interest constitutes a “charge or exaction” protestable under § 1514.
AHAC also contends that a Customs’ decision must be substantive in nature for it
to be protestable. Since 1505(d) interest is determined by using “‘an automatic interest
calculation model,’” Def.’s Reply in Supp. of Def.’s Mot. for Summ. J. 13 & Att. D, ECF
No. 74, AHAC argues that CBP did not engage in any substantive decision-making.
Consequently, a demand for 1505(d) interest is not a protestable event, and falls outside
the scope of § 1514’s final and conclusive language.4 Once again, the court disagrees.
This is not a circumstance where CBP took “no active role whatsoever.” U.S. Shoe
Corp. v. United States, 114 F.3d 1564, 1569 (Fed. Cir. 1997). Here, CBP made a
substantive determination that involved “the application of pertinent law and precedent to
a set of facts” as opposed to taking a passive role where “no analysis” was performed,
“no directives or decisions” were issued, or “no liability” was imposed. Id. CBP had to
determine that the importers on the underlying entries failed to pay the duties owed. CBP
then needed to (1) identify the applicable bonds, (2) determine whether the duties owed
exceeded the face amount of the bonds, (3) determine if 1505(d) interest was applicable,
4
The implicit assumption in AHAC’s argument is that 1505(d) interest is a charge or
exaction, and that but for the automatic nature of the calculation of 1505(d) interest would
be protestable under § 1514.
Consol. Court No. 09-00403 Page 12
and (4) then make a demand on the surety for non-payment of the duties by the importers,
plus any applicable interest, including 1505(d) interest. AHAC is correct that there is an
automatic aspect to 1505(d) interest. However, that automaticity occurred only after
Customs had undertaken an analysis and made the substantive decisions that supported
its demands for payment. Cf. Dart Export Corp. v. United States, 43 CCPA 64, 69-70
(1956) (describing substantive decision-making relating to the assessment of duties and
charges in the context of CBP’s prior organizational structure).
Since AHAC failed to contest its denied protests, CBP’s charge of 1505(d) interest
is final and conclusive pursuant to § 1514. As a result, AHAC is precluded from asserting
any defenses to its liability for 1505(d) interest. Accordingly, AHAC shall pay the
Government interest pursuant to 19 U.S.C. § 1505(d) on certain entries in Court No. 09-
00403 and all entries in Court No.10-00343 up to the face amount of the bonds covering
those entries.
B. 580 Pre-Judgment Interest
The Government requests an award of statutory pre-judgment interest under
19 U.S.C. § 580. Section 580 provides that, in suits brought by the Government on a bond
for the recovery of duties, “interest shall be allowed, at a rate of 6 per centum a year, from
the time when said bond[] became due.” 19 U.S.C. § 580. AHAC disputes the
Government’s entitlement to 580 interest arguing, among other things, that the statute
applies to only regular duties and not antidumping duties.
Consol. Court No. 09-00403 Page 13
The U.S. Court of Appeals for the Federal Circuit recently resolved the issue of
whether the Government may recover 580 interest on dumping duties in a companion
case involving the same litigants, but different bonds. See United States v. Am. Home
Assurance Co., 789 F.3d 1313, 1324-28 (2015) (“Am. Home Assurance I”). There the
Federal Circuit held, “as a matter of law, that 19 U.S.C. § 580 provides for interest on
bonds securing both traditional customs duties and antidumping duties.” Id. at 1324.
There are no issues involving § 580 that distinguish this action from American
Home Assurance I. Given that binding precedent, AHAC is liable for statutory pre-
judgment interest on the unpaid antidumping duties secured by the subject bonds. In
accordance with § 580, that interest will run at a rate of 6% per annum from the date the
subject bonds became due, which is the date of the Government’s first formal demand
for payment. See 19 C.F.R § 113.62(a)(ii) (2014).
C. Equitable Pre-Judgment Interest
The Government also seeks an award of equitable pre-judgment interest on the
unpaid duties. Generally, pre-judgment interest “compensate[s] for the loss of use of
money due as damages from the time the claim accrues until judgment is entered, thereby
achieving full compensation for the injury those damages are intended to redress.” West
Virginia v. United States, 479 U.S. 305, 310 n.2 (1987); see United States v. Goodman,
6 CIT 132, 140, 572 F. Supp. 1284, 1289 (1983) (Pre-judgment interest “is awarded to
make the wronged party whole.”). An award of pre-judgment interest is not limited by the
Consol. Court No. 09-00403 Page 14
face amount of the subject bond. See United States v. U.S. Fid. & Guar. Co., 236 U.S.
512, 530-31 (1915).
Here, there is a statute, 19 U.S.C § 580, providing for pre-judgment interest in a
Government enforcement action on a bond. Am. Home Assurance I, 789 F.3d at 1324-
28. That would appear to resolve the matter because equity operates in the absence of a
statute governing an award of pre-judgment interest, thereby resulting in the denial of the
Government’s request for equitable relief. However, the Federal Circuit has suggested
that an award under § 580 may “alter[] the landscape” in this type of action. Id. at 1330.
The Court stated that the Court of International Trade, as the trial court, should have “the
opportunity to consider the effect of an award of § 580 interest and whether dual sources
of interest are proper,” with “full compensation [for the injured party, the Government,]
being the court’s overriding concern.” Id. (quoting United States v. Am. Home Assurance
Co., 38 CIT ___, ___, 964 F. Supp. 2d 1342, 1356 (2014) (“Am. Home Assurance II”))
(internal quotation marks omitted).
In determining whether to award equitable pre-judgment interest, the court is to
exercise its discretion, United States v. Imperial Food Imps., 834 F.2d 1013, 1016 (Fed.
Cir. 1987), guided “by traditional judge-made principles.” City of Milwaukee v. Cement
Div., Nat’l Gypsum Co., 515 U.S. 189, 194 (1995). When bonds secure the Government
in the payment of antidumping duties, considerations that affect an award of equitable
pre-judgment interest include: “[1] the degree of personal wrongdoing on the part of the
defendant, [2] the availability of alternative investment opportunities to the plaintiff,
Consol. Court No. 09-00403 Page 15
[3] whether the plaintiff delayed in bringing or prosecuting the action, and [4] other
fundamental considerations of fairness.” United States v. Great Am. Ins. Co. of N.Y.,
738 F.3d 1320, 1326 (Fed. Cir. 2013) (quoting Osterneck v. Ernst & Whitney, 489 U.S.
169, 175-76 (1989)) (internal quotation marks omitted). Since the court has awarded the
Government statutory pre-judgment interest under 19 U.S.C. § 580, it must also “consider
the effect” of that award and “whether dual sources of interest are proper.” Am. Home
Assurance I, 789 F.3d at 1338 (quoting Am. Home Assurance II, 38 CIT at ___ 964
F. Supp. 2d at 1356 (internal quotation marks omitted) (citations omitted)).
AHAC contends that equitable considerations do not favor an award of pre-
judgment interest in this action. In particular, AHAC maintains that it did not engage in
dilatory conduct by “unjustly withhold[ing] payment [of the dumping duties] after being
notified of the default of the [bond] principal[s].” Def.’s Resp. Br. in Opp. to Pl.’s Mot. for
Summ. J. 9 (quoting U.S. Fid. & Guar. Co., 236 U.S. at 530-31 (emphasis in original),
ECF No. 69. It also argues that the Government engaged in unnecessary delay by waiting
until a few days prior to the expiration of the applicable statute of limitations to commence
this action, and that its factual and legal positions in defending this action were
reasonable. Lastly, AHAC argues that any award of equitable pre-judgment interest is
precluded by the Continued Dumping and Subsidy Offset Act of 2000, 19 U.S.C. § 1675c
(2000) (“CDSOA”).5 Specifically, AHAC contends that the subject antidumping duties
5
Pub. L. No. 106-387, § 1001-03, 114 Stat. 1549, 1549A-72-75, 19 U.S.C. § 1675c
(2000), repealed by Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 7601(a), 120
Stat. 4, 154 (Feb. 8, 2006; effective Oct. 1, 2007).
Consol. Court No. 09-00403 Page 16
once collected are deposited into special non-interest bearing accounts for the benefit of
affected domestic producers and not into the general Treasury of the United States.
Consequently, the Government did not lose the use of any money and is not entitled to
additional compensation in the form of equitable pre-judgment interest.
The Government did not unreasonably delay bringing or prosecuting this action.
The Government filed its complaints in the four consolidated actions from September
2009 through November 2010. These filings ranged approximately from 6 to 27 months
after the Government’s final demands for payment and from 3 to 14 months prior to
running of the applicable six-year statute of limitations under 28 U.S.C. § 2415. Although
the Government may appear lax in commencing these actions from Defendant’s
perspective, each of them was nonetheless commenced within the applicable statute of
limitations. See United States v. Millenium Lumber Distribution Co., 36 CIT ___, ___, 899
F. Supp. 2d 1340, 1344 n.6 (2012) (quoting 28 U.S.C. § 2415(a) (“A complaint to recover
liquidated damages must be filed ‘within six years after the right of action accrues or within
one year after final decisions have been rendered in applicable administrative
proceedings required by contract or by law, whichever is later.’”). Even though the
Government’s timing may not have been optimal, the court cannot say that the
Government unreasonably delayed the bringing of this action. Additionally, the docket of
the consolidated lead action, Court No. 09-00403, reveals a long and involved litigation
with many filings and numerous requests for extensions of time, but does not reflect that
Consol. Court No. 09-00403 Page 17
the Government was the source of any unreasonable delay. Lastly, AHAC has never paid
the outstanding duties, with one exception, despite Customs’ numerous requests.
While those factors may favor an award of equitable interest, the Government’s
entitlement to statutory pre-judgment interest under 19 U.S.C. § 580 outweighs those
considerations. Customs’ demands for payment apparently began in December 2003 and
ended in December 2009. Equitable pre-judgment interest, if applicable, would run at the
rate provided in 28 U.S.C. § 2644 and in accordance with 26 U.S.C. § 6621. See United
States v. Golden Gate Petroleum Co., 30 CIT 174, 182-83 (2006) (citing Goodman, 6 CIT
at 140, 572 F. Supp. at 1290). With December 2003 as a starting point and ending with
the date of issuance of the judgment in this action, the range of applicable Federal short
term funds rates under 26 U.S.C. § 6621 is 0.16% to 5.16%, with an average rate of
1.70%, and a median rate of 0.74%.
The 6% rate under § 580 far exceeds the applicable rates at which the Government
would receive equitable interest. Section 580 interest more than fairly compensates the
Government for the time value of the unpaid duties. To award equitable pre-judgment
interest in these circumstances would overcompensate the Government. The court
therefore declines to award equitable pre-judgment interest to the Government in addition
to § 580 interest.6
6
Because equitable pre-judgment interest is not warranted here, the court does not reach
the issue of the effect of the CDSOA on the award of that interest.
Consol. Court No. 09-00403 Page 18
D. Effect of AHAC’s Partial Duty Payments
AHAC maintains that Customs should apply AHAC’s payments of $500,000 in
Court No. 09-00403 and $50,000 in Court No. 10-00343 first towards the principal
amounts owed, and then interest. AHAC anticipates an appeal of the judgment in this
action as there was in the companion case, so AHAC is seeking to minimize the impact
of any interest that may continue to accrue during that period. See Reply in Supp. of
Def.’s Mot. for Permission to Make Deposit and for Entry of Final J. 1-4 (Apr. 11, 2014),
ECF No. 90.
Unfortunately for AHAC, Customs by regulation must apply AHAC’s payments to
interest before principal. Specifically, “[i]n the case of any late payment, the payment
received will first be applied to the interest charge on the delinquent principal amount and
then to the payment of the delinquent principal amount.” 19 C.F.R. § 24.3a(c)(4). AHAC
identifies no legal basis for the court to issue a judgment contrary to the express terms of
this regulation. Accordingly, in awarding statutory interest to the Government the court
will not direct Customs to allocate AHAC’s payments differently than that provided for in
19 C.F.R. § 24.3a(c)(4).
E. Post-Judgment Interest
Lastly, the Government seeks an award of post-judgment interest. 28 U.S.C.
§ 1961(a) provides that post-judgment “[i]nterest shall be allowed on any money judgment
in a civil case recovered in a district court.” Section 1961 does not directly apply to
judgments rendered by this Court. See 28 U.S.C. § 1961(c)(4). However, the award of
Consol. Court No. 09-00403 Page 19
post-judgment interest by the Court of International Trade is predicated on 28 U.S.C.
§ 1585, which states that the Court “posses[es] all the powers in law and equity of, or as
conferred by statute upon, a district court of the United States.” United States v. Great
Am. Ins. Co. of New York, 738 F.3d 1320, 1326 (Fed. Cir. 2013) (extending power to
award post-judgment interest under 28 U.S.C. § 1961 to Court of International Trade
pursuant to 28 U.S.C. § 1585).
Post-judgment interest is not discretionary, but rather is available as a matter of
right to prevailing parties. United States v. Servitex, Inc., 3 CIT 67, 68 n.5, 535 F. Supp.
695, 696 n.5 (1982); see also Great Am. Ins. Co., 738 F.3d at 1326. Under § 1961(a)
post-judgment interest is calculated from the date of entry of the judgment. This is a civil
case – a suit on a bond for the collection of unpaid duties – that has resulted in a money
judgment against AHAC. Accordingly, the Government is entitled to post-judgment
interest at the rate provided for in § 1961.
IV. Conclusion
Based on the foregoing reasons, Plaintiff’s motion for summary judgment is
granted in part and denied in part, and Defendant’s motion for summary judgment is
granted in part and denied in part. Judgment will enter accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: August 19, 2015
New York, New York