Court Opinion

ID: 9489109
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:06:02.016381+00
Date Added: 2024-06-11T17:53:19.645999
License: Public Domain

BRYSON, Circuit Judge,
dissenting.
I concur with respect to the contempt issue (Hanover’s cross-appeal) but respectfully dissent with respect to the statute of limitations issue (the government’s appeal).
The result reached by the court in this case may well be right: The government’s effort to enforce a time-barred obligation by using its leverage over Hanover looks questionable and may be unlawful. But I disagree with the route the court has taken to get to that result. In my view, the statute of limitations does not bar the action the Customs Service proposes to take against Hanover. If Customs’ proposed action is unlawful, it is because the Customs regulations on which the government relies do not permit it to disqualify a surety based on an outstanding, but time-barred, obligation. That issue, however, should be decided by the Court of International Trade in a challenge brought by Hanover under the Administrative Procedure Act; it is not part of the underlying enforcement action that was brought by the United States and has been dismissed.
The government sought to recover its claim against Hanover in an enforcement action, but lost on statute of limitations grounds. The government then sought to bar Hanover from serving as a surety for importers until Hanover paid the amount that had been the subject of the unsuccessful enforcement action. The court holds that the effort to disqualify Hanover as a surety is barred by the same statute of limitations that barred the government’s enforcement action. That seems to me to read the statute of limitations too broadly.
The statute, 28 U.S.C. § 2415(a), establishes a six-year limitations period for “every action for money damages brought by the United States” founded upon contract, and it should be limited to that class of cases. The government’s enforcement action was such an action, and section 2415(a) was therefore properly invoked to determine whether the government’s enforcement action was barred. But the administrative disqualification proceeding is not an “action for money damages brought by the United States,” and it is therefore not barred by section 2415(a).
The eases addressing the scope of section 2415(a) are consistent in treating it as limited to civil actions for money damages. See S.E.R., Jobs for Progress, Inc. v. United States, 759 F.2d 1, 5 (Fed.Cir.1985) (section 2415(a) inapplicable to administrative decision that contractor owes government money); United States v. Alvarado, 5 F.3d 1425, 1429-30 (11th Cir.1993) (section 2415(a) inapplicable to government foreclosure action); Westnau Land Corp. v. United States Small Business Admin., 1 F.3d 112 (2d Cir.1993) (same); King v. Railroad Retirement Bd., 981 F.2d 365, 367 (8th Cir.1992) (section 2415(a) inapplicable to action to recover excess retirement payments); Jones v. Cavazos, 889 F.2d 1043, 1048 (11th Cir.1989) (section 2415(a) inapplicable to offset against tax refund); Thomas v. Bennett, 856 F.2d 1165, *10571169 (8th Cir.1988) (same). A case closely analogous to this one is Arch Mineral Corp. v. Babbitt, 894 F.Supp. 974 (S.D.W.Va.1995). In that case, the court held that section 2415(a) did not bar the Interior Department from denying or refusing to renew mining permits to an operator that was delinquent in paying reclamation fees to the Department, even though the direct collection of the fees was time-barred. The court explained (894 F.Supp. at 982):
[The Office of Surface Mining] is neither suing nor threatening to sue Arch for money damages. Rather, it is exercising its mandate, pursuant to [the pertinent statute], to determine the fitness of applicants to receive new permits. The possibility that outstanding debt, which may be uncol-lectible in a civil action, can serve as the basis for a permit-block does not conflict with the purpose of the statute of limitations because the statute of limitations cuts off the remedy of collection only, without extinguishing the debt itself.
The theme of all the above-cited cases is that section 2415(a) does not apply to setoffs or other administrative actions; substantive and procedural limitations on proceedings other than “actions for money damages” must be found elsewhere.
To be sure, the majority opinion makes a telling point in citing section 2415(i), the subsection that excludes administrative offsets from the operation of section 2415. If Congress had viewed section 2415(a) as limited to actions for money damages, the argument goes, it would not have found it necessary to exclude administrative offsets from the operation of the statute. In my view, however, Congress’s enactment of section 2415(i) is best understood as a clarification of the limited scope of section 2415(a), to ensure that section 2415 would not be applied to administrative offsets.
The legislative history of the 1982 amendment that added section 2415(i) provides support for that interpretation. Before 1982, the Justice Department had concluded that, absent an amendment, section 2415 could be invoked to prevent the administrative offset of debts more than six years old. See S.Rep. No. 378, 97th Cong., 2d Sess. 16-17 (1982). The Comptroller General took the opposite position, arguing that section 2415 had no application to the administrative offset of debts. See Debt Collection Act of 1981: Hearings on S. 1219 before the S. Comm. on Governmental Affairs, 97th Cong., 1st Sess. 88 (1981). Noting the contrary position taken by the Justice Department, the Comptroller General recommended enacting subsection (i) “as a means of resolving the differences between us.” Id. By adopting section 2415(i), Congress thus did not have to decide whether the Department of Justice or the Comptroller General had the better of the argument as to the proper construction of the pre-1982 version of section 2415.
In light of that background, the enactment of subsection (i) cannot be invoked to support the inference that Congress regarded section 2415(a) as extending to administrative actions. In any event, any such inference that could be drawn from the enactment of subsection (i) is not strong enough to overcome the clear language of section 2415(a). Particularly in light of the principle that statutes of limitations running against the sovereign are to be strictly construed, see E.I. Dupont De Nemours & Co. v. Davis, 264 U.S. 456, 462, 44 S.Ct. 364, 366, 68 L.Ed. 788 (1924), the apparent superfluity of section 2415(i) does not justify reading section 2415(a) to apply to cases that fall outside its explicit reach. I therefore disagree with the court’s conclusion that the government’s proposed administrative proceeding against Hanover is barred by section 2415(a).
That is not to say that the government should prevail on the merits of the underlying dispute. The governing regulations provide that “[n]o person shall be accepted as surety on a Customs bond while in default as principal on any other Customs bond.” 19 C.F.R. § 113.38(a). It is at least open to question whether a surety that has obtained a judgment in its favor on a bond, even on statute of limitations grounds, can be regarded as “in default” on that bond. The regulations further state that the surety must be given the opportunity to “provide justification for the failure to pay, or demonstrate the existence of a significant legal issue justi-*1058lying further delay in payment.” Id. § 118.38(c)(4). That provision may suggest that upon presenting a “justification for the failure to pay” in the form of a judgment that no debt is owing, the company may not be barred from serving as a surety. Similarly, the regulations provide that a district director or regional commissioner can recommend that a surety company be removed from the Treasury Department’s approved list of sureties if the surety “has neglected or refused to pay a valid demand made on the surety company’s bond or otherwise has failed to honor an obligation on that bond.” Id. § 113.39. Once again, however, that regulation raises the question whether a surety’s refusal to pay a bond obligation that has been held unenforceable constitutes a refusal to pay “a valid demand” or the “failure to honor an obligation on that bond.” In my view, those are decisions that turn not on the language of section 2415, but on the meaning of the regulations and the nature of the surety’s obligations under its bond. Those issues should be addressed by the Court of International Trade in the first instance in an action brought in that court to challenge the application of the Customs Service delinquency regulations. I would therefore reverse the judgment in favor of Hanover that was entered as an ancillary order in this governmental enforcement action.