Court Opinion

ID: 819081
Source: CourtListenerOpinion
Date Created: 2013-02-04 06:04:19.487752+00
Date Added: 2024-06-11T10:39:51.537988
License: Public Domain

Slip Op. 02 - 71

             UNITED STATES COURT OF INTERNATIONAL TRADE

- - - - - - - - - - - - - - - - - - x

THE HANOVER INSURANCE COMPANY,          :

                           Plaintiff, :

                     v.                 :   Court No. 94-07-00438

                                        :
THE UNITED STATES,
                                    :
                         Defendant.
- - - - - - - - - - - - - - - - - - x

                           Memorandum

[Upon trial of Customs Service notice
 to surety of suspension of liquidation,
 judgment for the plaintiff.]

                                            Decided:   July 19, 2002

     Sandler, Travis & Rosenberg, P.A. (Arthur K. Purcell); Nev-
ille Peterson LLP (John M. Peterson) for the plaintiff.

     Robert D. McCallum, Jr., Assistant Attorney General; John J.
Mahon, Acting 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: As discussed in the slip opinion 01-57,

25 CIT          (2001), filed herein, familiarity with which is

presumed, this court was unable to resolve all of the issues raised

by the parties' pleadings and subsequent cross-motions for summary

judgment.    That opinion did hold that, as a matter of law, the

plaintiff surety for the importer of Entry No. 81-534208-9 was

entitled to formal notification by the U.S. Customs Service of the
Court No. 94-07-00438                                                     Page 2

suspension of the liquidation of that entry.                Customs claims to

have provided such notice, which the plaintiff denies, both sides'

having submitted affidavits or declarations in support of their

respective cross-motions on this issue.            The court determined to

require the individuals who subscribed to those submissions to

appear at a trial and undergo cross-examination upon the long-held

belief that that kind of interrogation is the surest test of truth

and a better security than the oath.              See, e.g., John Henry

Wigmore, Treatise on the System of Evidence in Trials at Common

Law, vol. 3 (1904); Francis L. Wellman, The Art of Cross-Examina-

tion (1903); Sir Matthew Hale, History of the Common Law, ch. 12

(1680).

                                       I

            With one exception, excusable de bene esse, the original

affiants and declarants in this case appeared in open court, where

they and    other   witnesses   were       subjected   to   some   fine   cross-

examination by opposing counsel.           Their questioning, however, did

not transform the sum and substance of the record now more-fully

established, and upon which the court makes the following findings

of fact1:

            1. In T.D. 72-161, the U.S. Secretary of the Treasury

reported his "finding of dumping" with respect to Large Power

Transformers From Italy, 37 Fed.Reg. 11,772 (June 14, 1972).

     1
      To the extent the court's findings in slip opinion 01-57 are
germaine to that which has now been tried, they are hereby
incorporated herein by reference.
Court No. 94-07-00438                                         Page 3

            2. That finding of dumping remained in full force and

effect during the administrative dispute underlying this case.

            3. In fulfillment of its contract per U.S. Department of

the Interior, Bureau of Reclamation Solicitation No. DS-7371, Power

Transformer, Grand Coulee Left Powerplant, Columbia Basin Project,

Washington2, Industrie Elettriche di Legnano, Italy manufactured

and shipped equipment to that electrical facility.

            4. The contract equipment entered the United States at

the port of Seattle, Washington, Entry No. 81-534208-9.

            5. The importer of record was The Legnano       Electric

Corporation, as consignee for the Bureau of Reclamation.

            6. On or about November 25, 1980, Frank P. Dow Co., Inc.,

as attorney-in-fact for The Hanover Insurance Company, executed an

Immediate Delivery and Consumption Entry Bond (Single Entry) on

Customs Form 7551 for Entry No. 81-534208-9 in the amount of

$358,000.00.    See Defendant's Exhibit A.

            7. F.W. Myers & Company succeeded Frank P. Dow Co., Inc.

as the agent for The Hanover Insurance Company, the surety with

regard to the consumption entry bond herein.

            8. Liquidation of Entry No. 81-534208-9 was suspended

pursuant to statute.

            9. Suspension of liquidation of an entry subject to an

outstanding antidumping-duty order pending administrative review

thereof by the International Trade Administration, U.S. Department

of Commerce ("ITA") is for an indefinite period of time.

     2
         Plaintiff's Exhibit P-3.
Court No. 94-07-00438                                             Page 4

          10.   Generally,   notice   of   suspension   of   liquidation

pending ITA administrative review was provided only once by the

Customs Service.

          11. Such notice of suspension of liquidation was provided

on Customs Form 4333A.

          12. The Customs Form 4333A had space delineated for

information encaptioned from left to right "series, type and entry

no., date of entry, liquid[ation] code, initial amount, liquidation

amount" and below right "importer number, date of liquidation".

          13. The parties could not or did not either discover

before, or produce at, the trial a Customs Form 4333A bearing any

such prescribed information relative to this case.

          14. The parties could not or did not either discover

before, or produce at, the trial a Customs Form 4333A, or copy

thereof, either sent to or received by the plaintiff in this case.

          15. The Customs Forms 4333A produced at trial were blank

samples, as is the photocopy of one marked and received in evidence

herein as Defendant's Exhibit U2.

          16. Defendant's Exhibit B in evidence herein is a photo-

copy of a Customs computer printout extracted on January 27, 1993

from Service data that references six times the entry at issue

herein, three of which include the name and address of the Legnano

Electric Corporation and three of which include the name and

address of the Hanover Insurance Company, and that also references

a mail cycle encoded to reflect particular weeks in 1981, 1982, and

1983.
Court No. 94-07-00438                                                 Page 5

               17. In its Final Results of Antidumping Duty Administra-

tive Review; Large Power Transformers From Italy, 52 Fed.Reg. 46,-

806 (Dec. 10, 1987), the ITA set 71.40 percent as the margin of

Industrie Elettriche di Legnano's dumping at the time of the entry

at issue herein.

               18. Pursuant to this ITA final determination, antidumping

duties    on    Entry   No.   81-534208-9   were   computed   to   amount   to

$292,638.12.

               19. The Customs Service liquidated Entry No. 81-534208-9

on June 10, 1988.

               20. The Legnano Electric Corporation did not remit the

antidumping duties or any interest accruing thereon, whereupon the

Customs Service made a demand therefor upon the surety.

               21. In January 1989, the surety filed a protest with

Customs, No. 3001-9-000059, challenging the Service's demand upon

it.      See Defendant's Motion for Summary Judgment, Appendix 6

(Defendant's Exhibit O).

               22. In ruling HQ 224397, dated March 1994, the Customs

Service denied the surety's protest with respect to payment of the

antidumping duties demanded but granted it with respect to payment

of interest. See Defendant's Motion for Summary Judgment, Appendix

7 (Defendant's Exhibit P).

               23. On or about April 7, 1994, the surety tendered and

the Customs Service received all of the duties demanded.
Court No. 94-07-00438                                             Page 6

          24. In its slip opinion 01-57 filed herein, the court

held that the affidavits submitted in support of plaintiff's motion

for summary judgment, at a minimum, rebutted the presumption that

notice to the surety was in fact given, whereupon at the trial the

defendant was called upon to adduce its evidence first.

          25. The papers for Entry No. 81-534208-9, Defendant's

Exhibit A, were timely annotated "S" (for suspension) by the

responsible Customs Service officer.

          26. The Trade Agreements Act of 1979 went into effect

during the calendar year of Entry No. 81-543208-9, at which time

the Customs Service was relying on the "old revenue system". Trial

transcript ("Tr."), p. 90.

          27. The Customs Service's Automated Commercial System or

"ACS", upon which the defendant relied at trial, first became

operational in 1984.      See, e.g., Tr., p. 90.

          28. At the time of Entry No. 81-534208-9, Customs Forms

4333A were printed automatically in series and then detached from

each other and sealed individually for mailing.

          29.   Customs    Service   records   reference   some   18,000

notices of extensions or suspensions of liquidation to The Hanover

Insurance Company during 1981, 1982, and 1983.

          30. Most Customs Service notices to The Hanover Insurance

Company during 1981, 1982, and 1983 were of extensions, as opposed

to suspensions, of liquidation.
Court No. 94-07-00438                                                   Page 7

           31. One employee of The Hanover Insurance Company was

responsible for processing all such Customs Service notices during

1981, 1982, and 1983.

           32. That one employee of The Hanover Insurance Company

responsible for processing all such Customs notices during 1981,

1982, and 1983 was familiar with Service notices of suspension of

liquidation on Customs Form 4333A.

           33. That one employee of The Hanover Insurance Company

responsible for processing all such Customs notices during 1981,

1982, and 1983 has no recollection of having received or reviewed

a Service notice of the suspension of the liquidation of Entry No.

81-534208-9.

           34. All Customs Service notices to The Hanover Insurance

Company of extensions or suspensions of liquidation in 1981, 1982,

and 1983 were subject to review and audit by that surety's national

underwriting manager.

           35. The Hanover Insurance Company's national underwriting

manager considered Customs Service notices of suspension of liqui-

dation to be more important than notices of extension of liquida-

tion.

           36. The Hanover Insurance Company's national underwriting

manager was familiar with Service notices of suspension of liqui-

dation on Customs Form 4333A.

           37. The amount of the single entry bond in this case

would   have   made   it   subject   to   regular   audit   by   The   Hanover

Insurance Company.
Court No. 94-07-00438                                             Page 8

           38. The Hanover Insurance Company established files for

bonds and underlying entries subject to its audit.

           39. No such audit file was established or later discov-

ered with regard to Entry No. 81-534208-9.

           40. F.W. Myers & Company reported monthly to The Hanover

Insurance Company on the status of outstanding Customs bonds.

           41. F.W. Myers & Company did not inform The Hanover

Insurance Company of the Customs Service's suspension of the liqui-

dation of Entry No. 81-534208-9.

           42. The Hanover Insurance Company's national underwriting

manager was not aware of the outstanding Treasury           Department

finding of dumping of large power transformers from Italy at the

time of Entry No. 81-534208-9.

           43. Copies of Customs Service notices of suspension of

liquidation involving bonds underwritten by The Hanover Insurance

Company were placed in a master file by that surety.

           44. No copy of a Customs Service notice of the suspension

of the liquidation of Entry No. 81-534208-9 was discovered in the

master file for such notices maintained by The Hanover Insurance

Company.

           45.   Customs   Service   notices   of   extensions   and   of

suspensions of liquidation involving bonds underwritten by The

Hanover Insurance Company were forwarded on a regular basis to F.W.

Myers & Company.
Court No. 94-07-00438                                       Page 9

          46. One employee of F.W. Myers & Company was responsible

for receiving and filing all such Customs Service notices forwarded

by The Hanover Insurance Company during 1981, 1982, and 1983.

          47. That one employee of F.W. Myers Company responsible

for receiving and filing all such Customs notices forwarded by The

Hanover Insurance Company during 1981, 1982, and 1983 was familiar

with Service notices of suspension of liquidation on Customs Form

4333A.

          48. That one employee of F.W. Myers Company responsible

for receiving and filing all such Customs notices forwarded by The

Hanover Insurance Company during 1981, 1982, and 1983 has no

recollection of having received from The Hanover Insurance Company

a Service notice of the suspension of the liquidation of Entry No.

81-534208-9.

          49. That one employee of F.W. Myers Company responsible

for receiving and filing all such Customs notices forwarded by The

Hanover Insurance Company during 1981, 1982, and 1983 set up files

for all Service notices of suspension of liquidation received by

her.

          50. That one employee of F.W. Myers Company responsible

for receiving and filing all such Customs Service notices forwarded

by The Hanover Insurance Company during 1981, 1982, and 1983 has no

recollection of having established a file for Entry No. 81-534208-9

in conjunction with the suspension of its liquidation.
Court No. 94-07-00438                                                  Page 10

           51. That one employee of F.W. Myers Company responsible

for receiving and filing all such Customs Service notices forwarded

by The Hanover Insurance Company during 1981, 1982, and 1983 was

unable to discover for production in this case any file established

for Entry No. 81-534208-9 in conjunction with the suspension of its

liquidation.

                                     II

           Each of the government's witnesses who appeared and test-

ified at    the   trial   herein   lent   support    to   the   long-standing

judicial presumption that civil servants carry out their official

duties in an orderly and regular manner under the law. Cf. United

States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15 (1926); U.S.

Postal Service v. Gregory, 534 U.S. 1,              , 122 S.Ct. 431, 436

(2001).

                                     A

           None of them, however, was able to unrebut the corollary

presumption in this case that such expectable regularity resulted

in the requisite notice to the surety.         Cf. Int'l Cargo & Surety

Ins. Co. v. United States, 15 CIT 541, 544, 779 F.Supp. 174, 177

(1991).    Two of them, namely, Arthur Versich and Roger Odom, also

testified from their acquired perspectives at the Customs Service's

centralized computer data center with regard to the matter of Ford

Motor Co. v. United States, wherein the court found that the

     computer systems in place at Customs for the preparation
     and mailing of extension notices are sufficient to give
     rise to the presumption that Customs properly prepared
     and mailed the notices of extension of liquidation.
Court No. 94-07-00438                                       Page 11

     These notices are presumed to have been received by the
     plaintiff, who has the burden of proving non-receipt.3

The court held that the plaintiff did not satisfy this burden,

essentially because the court was

     not persuaded that Ford's internal record retention and
     transmittal system could account adequately for all
     incoming mail so as to preclude the misplacement of
     extension and suspension notices.

21 CIT at 1001-02, 979 F.Supp. at 889.         While that opinion

mentions both kinds of notices, in that action extensions of liqui-

dation remain the issue, which kind the evidence in this case

clearly shows to be much more commonplace and thus numerous and

infinitely more difficult to keep track of.   Whatever the problems

of the Ford Motor Company in fielding such notices (and even of The

Hanover Insurance Company), the record now established at bar

reflects a concerted, coordinated effort by the plaintiff to

husband each and every one of the much-less-frequent notices of

suspension of liquidation received by it from Customs.   Indeed, an

anomaly in this case is that, while defendant's exhibit B lists

notices of suspension to Hanover in 1981, 1982, and 1983, the

standard Service operating procedure has been to provide but one

such notice, doubtless due to the indefinite duration of most, if

not all, suspensions.

          Once, as herein, the government's presumption of notice

has been rebutted, it is incumbent upon Customs to prove mailing.

     3
       21 CIT 983, 1001, 979 F.Supp. 874, 889 (1997), vacated and
remanded for trial, 157 F.3d 849 (Fed.Cir. 1998), dismissed after
trial, 24 CIT    , 116 F.Supp.2d 1214 (2000), rev'd and remanded,
286 F.3d 1335 (Fed.Cir. 2002).
Court No. 94-07-00438                                       Page 12

See, e.g., F.W. Myers & Co. v. United States, 6 CIT 215, 216-17,

574 F.Supp. 1064, 1065 (1983), citing Orlex Dyes & Chemicals Corp.

v. United States, 41 Cust.Ct. 168, 170, C.D. 2036, 168 F.Supp. 220,

222 (1958).    The Service should best do so by producing an

individual involved in delivering its notices to the mail, for

example, or having been somehow or -where within the ambit of

attempted forwarding to an importer and surety.   See, e.g., United

States v. Int'l Importers, Inc., 55 CCPA 43, 52-53, C.A.D. 932

(1968), citing Compass Instrument & Optical Co. v. United States,

47 Cust.Ct. 10, C.D. 2271 (1961); Orlex Dyes & Chemical Corp. v.

United States, supra; Clayton Chemical & Packaging Co. v. United

States, 38 Cust.Ct. 617, R.D. 8774, 150 F.Supp. 628 (1957).     The

defendant has not done so in this case4, whereupon it became neces-

sary for it to adduce

     proof of an invariable custom or usage in an office of
     depositing mail in a certain receptacle, that the letter
     in question was deposited in such receptacle, and in
     addition there must be testimony of the employee, whose
     duty it was to deposit the mail in the post office, that
     he either actually deposited that mail in the post
     office, or that it was his invariable custom to deposit
     every letter left in the usual receptacle, and that he
     never failed in carrying out that custom.

United States v. Int'l Importers, Inc., 55 CCPA at 53, quoting

     4
       Apparently, those particular individual(s) were not Customs
officers, rather civilian contractor(s). See Tr., p. 137. The one
government witness at the trial who could have been a direct
participant in the notification process proved not to have been.
See id. at 18, 21, 39, 40. Cf. United States v. Getz Brothers &
Co., 55 CCPA 90, C.A.D. 938 (1968)(Customs Deputy Collector
testified that he personally processed entries and notices with
regard thereto, including stamping, dating, and mailing, always in
the presence of a witness).
Court No. 94-07-00438                                        Page 13

United States ex rel. Helmecke v. Rice, 281 Fed. 326, 331 (S.D.

Tex. 1922).

          Again, the defendant has not done so.   Essentially, the

only document of any moment produced by the defendant is its

exhibit B, which is nothing more than a computer abstract derived

more than a decade later via a program not in existence at the time

notice should have been provided to the surety now at bar.   While

the faith exhibited by defendant's witnesses in their computerized

system(s) may be well-placed, difficult cases such as this should

not be decided upon after-the-fact, electronically-based faith

alone.

                                B

          To assume, on the other hand, acceptable proof of mailing

would raise a presumption of delivery.    See, e.g., Rosenthal v.

Walker, 111 U.S. 185, 193 (1884); Intra-Mar Shipping Corp. v.

United States, 66 Cust.Ct. 3, 5-6, C.A.D. 4160 (1971).   Of course,

that presumption is also rebuttable.   See, e.g., Francis Wharton,

A Commentary on the Law of Evidence in Civil Cases, vol. 2, §1323

(2d ed. 1879).   Indeed,

     [p]roof of mailing is not ipso facto proof that the no-
     tice was given to the importer, where the unrefuted
     testimony is that no notice was received.

Intra-Mar Shipping Corp. v. United States, 66 Cust.Ct. at 6, citing

United States v. Int'l Importers, Inc., supra.    To be sure, to

     require the government to prove not only mailing, but
     actual receipt of Form 4333-A by the importer, would
     erect a virtually unassailable hurdle. Rarely, if ever,
     would the government possess or elicit proof of receipt
     from an importer claiming nonreceipt.
Court No. 94-07-00438                                       Page 14

A.N. Deringer, Inc. v. United States, 20 CIT 978, 993 (1996).   Cf.

Ford Motor Co. v. United States, supra; Prosegur, Inc. v. United

States, 25 CIT   , 140 F.Supp.2d 1370 (2001).   Hence, that has not

been the approach taken in this case.   Rather, the plaintiff has

presented its witnesses in open court for cross-examination by

government counsel, which, however skillful, did not diminish their

original attestations of nonreceipt.    Moreover, their testimony

buttressed the appropriateness of accepting, de bene esse, the af-

fidavit of the other Hanover witness with integral knowledge of the

receipt, review, filing, and forwarding of all Customs notices of

suspensions of liquidation by the plaintiff5. Finally, plaintiff's

counsel were able to elicit upon cross-examination of defendant's

witnesses the existence of Service glitches.     According to Mr.

Versich, for example, Customs discovered in 1989, notwithstanding

the operation of its more sophisticated "ACS" by then, that several

thousand notices, dating back to 1986, had not been actually

     5
       See, e.g., Tr., pp. 241-43. Compare A.N. Deringer, Inc. v.
United States, 20 CIT 978, 981 (1996)(the employee in a similar
role at Deringer not called to testify and no explanation for her
absence from trial offered by the plaintiff) and Sanford Steel Pipe
Products Co. v. United States, 68 Cust.Ct. 192, 195, C.D. 4359
(1972):

     . . . Neither the mailroom girl nor the export manager,
     who sometimes got mail destined for the import manager,
     was called as a witness in the case, and their non-
     appearance as witnesses in the case remains un-
     explained[;]

with Orlex Dyes & Chemicals Corp. v. United States, 41 Cust.Ct.
168, C.D. 2036, 168 F.Supp. 220 (1958)(the necessary witnesses in
the established path of receipt of Customs Service notices each
called to testify, thereby buttressing presumption of nonreceipt).
Court No. 94-07-00438                                            Page 15

printed and thus delivered.       See Tr., p. 105.    On his part, Mr.

Odom admitted that the "old"6 computer revenue system in effect at

the time of Entry No. 81-534208-9 was more prone to errors than the

one underlying the problem discovered in 1989.       See id. at 136-37.

                                    C

              Be those particular imperfections as they were, whichever

side better sustains its burden(s) of proof must be the prevailing

party.      And a fair preponderance of the evidence has been held to

be that standard in a civil suit like this.          E.g., Addington v.

Texas, 441 U.S. 418, 423 (1979); St. Paul Fire & Marine Ins. Co. v.

United States, 6 F.3d 763, 769 (Fed.Cir. 1993).           The court of

appeals in St. Paul defined preponderance of the evidence in civil

actions to mean "the greater weight of evidence, evidence which is

more convincing than the evidence which is offered in opposition to

it."       6 F.3d at 769, quoting Hale v. Dep't of Transp., 772 F.2d

882, 885 (Fed.Cir. 1985).

              Here, the evidence now on the record clearly favors the

plaintiff in terms of both weight and content.        In fact, there is

little left of defendant's position once the legal presumptions

appropriately favoring its role and circumstance were rebutted by

the plaintiff with regard to notification by the Customs Service of

the suspension of the liquidation of Entry No. 81-534208-9.

       6
           Tr., p. 90.
Court No. 94-07-00438                                        Page 16

                                 III

            Plaintiff's preponderance on the issue of notice is so

clear-cut that the court hereby concludes that its resolution of

the other issue reserved by slip opinion 01-57 for the trial, to

wit, whether or not the Customs Service failed to follow the ITA's

liquidation instructions7, is not now necessary.     Judgment will

enter accordingly.

Decided:    New York, New York
            July 19, 2002

                                 ________________________________
                                               Judge

     7
         See Slip Op. 01-57, p. 22 and 25 CIT   , n. 5.
                               J U D G M E N T

             UNITED STATES COURT OF INTERNATIONAL TRADE

                     Thomas J. Aquilino, Jr., Judge

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THE HANOVER INSURANCE COMPANY,            :

                             Plaintiff, :

                     v.                   :    Court No. 94-07-00438

                                          :
THE UNITED STATES,
                                    :
                         Defendant.
- - - - - - - - - - - - - - - - - - x

            The parties having interposed cross-motions for summary

judgment; and the court in its slip opinion 01-57, 25 CIT

(2001), having held that, as a matter of law, the plaintiff surety

for the importer of Entry No. 81-534208-9 was entitled to formal

notification by the United States Customs Service of the suspension

of the liquidation of that entry; and the court having held a trial

on the issue of whether or not there had been such notification and

having, after due deliberation, rendered a decision thereon;              Now

therefore, in conformity with said decisions, it is hereby

            ORDERED, ADJUDGED and DECREED that the plaintiff recover

from the defendant the duties which were paid by it to the United

States Customs Service with regard to Entry No. 81-534208-9 and

which    underlie   this   case,   together   with   interest   thereon    as

provided by law.

Dated:    New York, New York
          July 19, 2002

                                                       Judge