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Hartford Fire Insurance Company v. United States

August 11, 2011


Appeal from the United States Court of International Trade in case no. 07-CV-0067, Chief Judge Donald C. Pogue.

The opinion of the court was delivered by: Plager, Circuit Judge.

Before RADER, Chief Judge, PLAGER and LOURIE, Circuit Judges.

Opinion for the court filed by Circuit Judge PLAGER. Dissenting opinion filed by Circuit Judge LOURIE.

This is a suretyship case arising under the customs laws of the United States. The surety was barred from suing to challenge its liability under its surety contract on the grounds that, because it knew of its potential protest grounds in time to file its protest administratively within the time period provided in 19 U.S.C. § 1514(c)(3), it could not bring a lawsuit under the special provisions of 28 U.S.C. § 1581(i). Because we conclude that the United States Court of International Trade ("Court of International Trade") erred in determining that the surety's claim accrued prior to the end of the protest period, we reverse the dismissal of the complaint and remand the case for further proceedings consistent with this opinion.


During one month in the summer of 2003, Sunline Business Solutions Corporation ("Sunline") imported eight entries of frozen cooked crawfish from the People's Republic of China. These entries are referred to as the "Hubei entries" by the parties and the Court of International Trade. United States Customs and Border Protection ("Customs") law requires that importers post securities for entries of imported merchandise. 19 C.F.R. § 142.4. Importers often use a surety bond as a method of posting the required security, whereby the surety guarantees to the United States that it will pay the importer's entry obligation should the importer fail to make its required payment. Sunline procured its required eight single entry bonds, see 19 C.F.R. § 113.62, for the Hubei entries from Appellant Hartford Fire Insurance Company ("Hartford").

At the time of entry into the United States, the Hubei entries were subject to an existing antidumping order (A-570-848-036). However, following an administrative review of that order by the International Trade Administration, the Hubei entries were liquidated, as defined in 19 C.F.R. § 159.1, and a new, higher, antidumping duty rate was levied. See Freshwater Crawfish Tail Meat from the People's Republic of China; Notice of Final Results of Antidumping Duty Administrative Review, and Final Rescission of Review, in Part, 69 Fed. Reg. 61,636 (Dep't of Commerce Oct. 20, 2004) (notice of final results of admin. review). By June 22, 2005, Sunline had not made a payment for these additional antidumping duties, so Customs sought to obtain the payment from Sunline's surety, Hartford. Hartford Fire Ins. Co. v. United States, 679 F. Supp. 2d 1362, 1364 (Ct. Int'l Trade 2009).

Meanwhile, in May of 2005, Hartford's counsel learned from an individual connected with a Customs brokerage firm that personnel from Sunline had been arrested for using false invoices. See United States v. Shen, No. 03-CR01208 (C.D. Cal. Nov. 25, 2003). On June 3, 2005, Hartford undertook an investigation into the Shen matter by filing a Freedom of Information Act ("FOIA") request with Customs. Then, on October 7, 2005, Hartford requested a copy of the Shen criminal case file from the Central District of California. From investigating the Shen case file, Hartford believed it learned of potential grounds upon which it could deny liability regarding Customs demand for payment. Hartford, 679 F. Supp. 2d at 1367.

Specifically, within the Shen case file there was a letter dated June 19, 2003, from Shanghai Taoen International Trading Company ("STI") to Customs alleging that illegal importations of crawfish tailmeat from China were occurring. This notification to Customs occurred more than a month before Hartford began issuing surety bonds to Sunline for the Hubei entries. Following the receipt of the STI letter, Customs began an investigation into the importation of crawfish tailmeat from China. Hartford alleges in its amended complaint that the failure of Customs to disclose its crawfish tailmeat investigation to Hartford prior to its issuance of the Sunline surety bonds constitutes a material misrepresentation by Customs, thus making the bonds voidable at Hartford's election.

Pursuant to 19 U.S.C. § 1514, Hartford had 90 days in which to file an administrative protest with Customs from the mailing date of the notice of demand for payment against its bonds-which it did not do. Instead, on February 7, 2007, Hartford filed suit under 28 U.S.C. § 1581(i) in the Court of International Trade, seeking to have its surety bonds with Sunline voidable at Hartford's option because of the information it discovered after investigating the Shen case file. Id. at 1365.

Subsection 1581(i) of title 28 grants exclusive jurisdiction to the Court of International Trade over:

[A]ny civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for-

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other ...

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