Slip Op. 04-43
UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
UNITED STATES, :
:
Plaintiff, :
:
v. : Court No. 03-00047
:
LEONARD GULDMAN and :
L&M FIRING LINE, INC., :
:
Defendants. :
______________________________:
[Defendants’ motion for summary judgment denied.]
Dated: April 28, 2004
Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice (David Samuel Silverbrand, Cristina Carlucci Ashworth, and William K.
Olivier), David Goldfarb, Assistant Chief Counsel, Jennifer Stilwell, Attorney, United States
Bureau of Customs and Border Protection, of counsel, for plaintiff.
Law Offices of Charles H. Bayar (Charles H. Bayar), James A. Dubee, of counsel, for
defendants.
MEMORANDUM OPINION AND ORDER
RESTANI, Chief Judge:
Defendants move for summary judgment in this action, in which the Government seeks to
enforce a civil penalty for Defendants’ alleged fraudulent, grossly negligent, and negligent
importation of a firearm. Defendants’ motion presents two issues. First, the court must
determine whether the Government’s allegedly improper service of the summons and complaint
COURT NO . 03-00047 PAGE 2
precludes it from exercising personal jurisdiction over Defendants. If personal jurisdiction
exists, the court must then determine whether the statute of limitations bars the Government’s
claims. For the reasons that follow, Defendants’ motion is denied.
JURISDICTION AND STANDARD OF REVIEW
The court has subject matter jurisdiction over this penalty recovery action pursuant to 28
U.S.C. § 1582(1) (2000). Summary judgment to Defendants is appropriate only “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 judgment as a matter of law.” USCIT R. 56(d).
BACKGROUND
The material facts are not in dispute. Defendants purchased an Express Maxim firearm
from S.A.B. Societa Armi Bresciane S.r.L. (“Gamba Italy”) in early 1996 for $27,500 and a small
credit from Gamba Italy.1 First National Gun Banque, d/b/a Gamba USA, was the importer of
record for the Maxim, which entered into U.S. commerce through the port of Denver, Colorado,
on or about March 29, 1996, Entry No. 110-0566524-3. Gamba USA presented an invoice to the
United States Customs Service (“Customs”), now known as the United States Bureau of Customs
and Border Protection, that grossly understated the firearm’s purchase price at $12, which in turn
greatly reduced the amount of import duties and other fees collected by Customs. Customs
1
It is undisputed that the firearm itself cost $12,000, and that defendants paid an
additional $15,500 for extensive custom engraving. Plaintiff avers that the credit note taken from
Gamba Italy was for $3000, but Defendants maintain that the note was actually for 3,000 Italian
lira (approximately $690). Compl. ¶ 9, Defs.’ Mot. Summ. J. Ex. A; Answer ¶ 8, Defs.’ Mot.
Summ. J. Ex. B. The parties’ factual dispute on this point is not material to the disposition of the
present motion.
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treated the initial declaration as a clerical error and determined that the invoice should have read
$12,000, the actual purchase price of the basic weapon. Compl. ¶ 7, Defs.’ Mot. Summ. J. Ex. A.
An additional invoice in the amount of $15,500 for extensive custom engraving of the Maxim,
which was allegedly sent only to Defendants, was never supplied to Customs.2
As a result, Customs issued Defendants a Notice of Penalty or Liquidated Damages
Incurred and Demand for Payment (“Penalty Notice”) in the amount of $52,000 under 19 U.S.C.
§ 1592 on August 21, 1997. Defs.’ Mot. Summ. J. Ex. F. The Penalty Notice advised that, by
failing to inform the importer of record and/or Customs of the true value of the firearm,
Defendants caused the actual duties, merchandise processing fees, and excise taxes not to be
paid, as well as caused the correct Bureau of Alcohol, Tobacco and Firearms license not to be
filed. Id. The Notice stated that “[t]he penalty is issued at the fraud level for the domestic value
of the rifle.” Id.
In exchange for a mitigated penalty of $16,712.08 and an extension of time in which to
pay it, Defendant Leonard Guldman, President of L&M Firing Line, executed a series of one-year
waivers of the limitations period in 19 U.S.C. § 1621. Customs prepared the waivers, which
Guldman had only to sign and date. The first waiver was signed on August 27, 2000, and waived
the statute of limitations for one year, “commencing with the date of execution.” Pl.’s Opp. to
Defs.’ Mot. Summ. J. Ex. 1. The Chief of the Penalties Branch, Charles D. Ressin,
2
In its complaint, Customs alleged that Defendants knew that there were two separate
invoices for the firearm, but that they failed to disclose the existence of the invoice for $15,500 to
Gamba USA or to Customs. Compl. ¶ 10, Defs.’ Mot. Summ. J. Ex. A. Defendants admitted
that they received the two invoices from Gamba Italy, but disclaimed any knowledge of the
documentation sent by Gamba Italy to Gamba USA, the importer of record, and the existence of
a § 1592(a) violation by Defendants. Answer ¶ 10, Defs.’ Mot. Summ. J. Ex. B.
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acknowledged the waiver “commencing on August 27, 2000 and effective through August 27,
2001,” a copy of which was forwarded to Defendants approximately two months later. Id. Exs. 2
& 5. Defendants again waived the statue of limitations on April 13, 2001, “for a period of one
(1) year, commencing with the date of execution.” Id. Ex. 3. Chief Ressin again confirmed
receipt of the waiver by letter and stated that it was “effective through April 13, 2002.” Id. Ex. 4.
A copy of the acknowledgment was forwarded to Defendants by letter dated May 24, 2001. Id.
Ex. 6. Guldman executed the third and final waiver on February 5, 2002. Defs.’ Mot. Summ. J.
Ex. H. It was, in all material respects, identical to the two prior waivers Guldman had signed.
Customs again sent a letter to Guldman acknowledging that “the waiver is made for a one-year
period commencing on February 5, 2002, and effective through February 5, 2003.” Id. Ex. I.
Throughout this time, the parties’ attempts to resolve the matter were unsuccessful.
Customs then filed the summons and complaint in this action on February 5, 2003, one year and
one day after Guldman executed the final one-year waiver of the statute of limitations. The
complaint alleged that Defendants caused the Maxim firearm to be entered or introduced into
U.S. commerce by means of entry documents containing material and false statements, acts, or
omissions as to the Maxim’s purchase price in violation of 19 U.S.C. § 1592. Compl. ¶¶ 5–6,
Defs.’ Mot. Summ. J. Ex. A. In their answer, Defendants averred, among other things, that the
court lacks personal jurisdiction over them as a result of Plaintiff’s improper service of process,
and that the complaint was untimely filed beyond the period of limitations in 19 U.S.C. § 1621.
Answer ¶¶ 32–33, Defs.’ Mot. Summ. J. Ex. B. Defendants filed the instant motion for summary
judgment on December 5, 2003, claiming that the action should either be dismissed without
prejudice for improper service of process or dismissed as time-barred.
COURT NO . 03-00047 PAGE 5
DISCUSSION
A. Whether the Action Should Be Dismissed Without Prejudice for Improper Service
of Process
Rule 4(c)(1) of the Rules of the United States Court of International Trade (“USCIT”)
provides that “[s]ervice of summons and complaint may be effected by any person who is not a
party and who is at least 18 years of age.” USCIT R. 4(c)(1) (emphasis added). Defendants
argue that the summons and complaint were improperly served upon them by a Customs
agent—a representative of the Government and thus a party in this action—in contravention of
the rule. They also maintain that the Government has no “good cause” for its failure to effectuate
proper service that would justify an extension of time. See USCIT R. 4(m) (providing the court
with discretion to “extend the time for service for an appropriate period” upon plaintiff’s
showing of “good cause”).
This argument is without merit. Customs agents are specifically authorized by Congress
to “execute and serve any order, warrant, subpoena, summons, or other process issued under the
authority of the United States.” 19 U.S.C. § 1589a(2) (2000). The rules of this court clearly
contemplate that Government agents, such as United States marshals, may serve process. See
USCIT R. 4(c)(1). Similarly, other courts have recognized that a Government employee may
serve process as a representative of the Government in full compliance with the corresponding
Federal Rule of Civil Procedure. See, e.g., United States v. Kahn, No. 5:02-CV-230-OC-10GRJ,
2003 WL 22384761 (M.D. Fla. Sept. 2, 2003) (rejecting argument that the Government’s
complaint should be dismissed for improper service of process because defendant was personally
served by an IRS officer). Accordingly, the court finds that the Customs agent who served
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Defendants was merely acting as a representative of the United States and was not a “party” for
the purposes of USCIT Rule 4(c)(1).
B. Whether the Action Must Be Dismissed As Untimely Filed
Defendants maintain that, even if service of process was proper, this action is barred by
the applicable five-year statute of limitations. See 19 U.S.C. § 1621(1) (2000) (“[I]n the case of
an alleged violation of section 1592 or 1593a of this title, no suit or action . . . may be instituted
unless commenced within 5 years after the date of the alleged violation or, if such violation arises
out of fraud, within 5 years after the date of discovery of fraud.”). Although Defendants admit
that they waived the statute of limitations “for a period of one (1) year, commencing with the
date of execution” on February 5, 2002, they assert that the waiver expired by its own terms on
February 4, 2003, rendering this action, filed the following day, untimely. See Defs.’ Mot.
Summ. J. Ex. H; Defs.’ Mem. in Supp. of Mot. Summ. J. at 13. “The party asserting this defense
must first establish a prima facie case that the claim is time barred . . . . If a prima facie case is
established, the burden then shifts to the plaintiff to show that some exception to the statute of
limitations existed.” United States v. Thorson Chemical Corp., 16 CIT 441, 444, 795 F. Supp.
1190, 1192–93 (1992).
There is no dispute that the Government’s claims are prima facie time-barred.3 The only
issue is whether the one-year waiver Defendants signed on February 5, 2002, bars the instant
3
The Penalty Notice seeking to impose penalties “at the fraud level for the domestic
value of the rifle” was issued to Defendants on August 21, 1997. Accordingly, the statute of
limitations on Count I of the complaint (fraud) began to run, at the latest, on that date, rendering
the Government’s fraud claim prima facie time-barred after August 21, 2002. Counts II and III
of the complaint (gross negligence and negligence) are prima facie time-barred after March 29,
2001, five years after the alleged violations. The summons and complaint herein was filed on
February 5, 2003.
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action, which was filed on February 5, 2003. As an initial matter, the court rejects the
Government’s claim that Defendants waived their statute of limitations defense by not
specifically pleading it in their answer.4 Nevertheless, as discussed infra, the court finds that
Customs’s application of the “anniversary method” in computing the waiver’s expiration date5
was appropriate given the waiver’s ambiguity and the applicable law.
The court has long analogized the computation of effective dates of statute of limitations
waivers with the computation of the limitation periods themselves. Statutes of limitation are
4
Defendants unequivocally asserted in their answer that “[t]his civil action is untimely
brought beyond the period of limitations set forth in 19 U.S.C. § 1621.” Answ. ¶ 32, Defs.’ Mot.
Summ. J. Ex. B. Defendants continued that the action was time-barred because their offer of a
waiver of the statute of limitations was not accepted by a Customs official invested with
authority to do so. Id. In their motion for summary judgment, Defendants argue for the first time
that the suit was untimely filed because the waiver, by its express terms, expired the day before
the Government filed the summons and complaint. The Government asks the court to find that
the affirmative defense was waived because the specific legal argument relied upon in
Defendants’ motion was not raised in their answer.
Rule 8(d) of this court merely requires Defendants to “set forth affirmatively” their
defense of statute of limitations. USCIT R. 8(d). There is no dispute that Defendants have
satisfied this basic requirement. The question of whether they are then limited by the specific
legal theory advanced in support of the defense in their answer is a closer one, but must also be
resolved against Plaintiff. “The purpose of [USCIT Rule 8(d)] is to put opposing parties on
notice of affirmative defenses and to afford them the opportunity to respond to the defenses.”
Daingerfield Island Protective Soc’y v. Babbitt, 40 F.3d 442, 444 (D.C. Cir. 1994). Because the
statute of limitations defense was affirmatively pled in their answer, the Government was clearly
put on notice that Defendants intended to assert the defense in this action. The Government also
had the opportunity to—and did—respond to Defendants’ specific arguments raised here in its
opposition to Defendants’ motion for summary judgment. As a result, the court finds that
Defendants satisfied both the rule’s express requirement and its underlying purpose. See id. at
445 (“[W]hile a limitations defense must ‘be asserted in a responsive pleading,’ it ‘need not be
articulated with any rigorous degree of specificity,’ and is ‘sufficiently raised for purposes of
Rule 8 by its bare assertion.’”) (citation omitted).
5
The Government defines the “anniversary method” as follows: “Pursuant to this
method, a waiver does not expire until the anniversary date of its execution has passed. For
calculation purposes, the actual date of commencement is excluded from the one year period.”
Pl.’s Mem. in Supp. of Opp’n to Defs.’ Mot. Summ. J. at 3.
COURT NO . 03-00047 PAGE 8
“construed to include the anniversary date of the accrual of the cause of action” under USCIT
Rule 6(a). United States v. Neman Bros. & Assocs., 15 CIT 536, 538, 777 F. Supp. 962, 964
(1991). Rule 6(a) provides that, “[i]n computing any period of time prescribed or allowed by
these rules, . . . the day of the act, event, or default from which the designated period begins to
run shall not be included.” USCIT R. 6(a). Thus, an action filed on the anniversary date of the
accrual of the cause of action would be timely filed under a statute of limitation running “from”
or “after” the date of the alleged violation. See 19 U.S.C. § 1621(1) (prescribing the five-year
statute of limitations applicable here). In Neman Brothers, the court found that the anniversary
method was the appropriate tool for computing the effective dates for waivers of the statute of
limitations “[b]ecause Rule 6(a) of this Court is analogous to Fed. R. 6(a), and other precedent
holds that the time computation method used in Fed. R. 6(a) applies to waivers.” 15 CIT at 538,
777 F. Supp. at 964. The Neman Brothers court concluded that the waiver at issue—which was
valid for “one (1) year commencing August 1, 1988 ”—was valid through the anniversary date of
its execution, so that the Government’s action filed on that date was not barred by the statute of
limitations. Id.
Neman Brothers has remained good law for over ten years and has informed Customs’s
polices and procedures with respect to § 1621(1) waivers since that time. Just last year, however,
the court refused to follow Neman Brothers in light of the explicit language used in the waiver at
issue, which provided that the waiver period “commenc[ed] on December 14, 1999.” United
States v. Inn Foods, Inc., 264 F. Supp. 2d 1333, 1338 (emphasis added), reconsideration denied
by 276 F. Supp. 2d 1359 (Ct. Int’l Trade 2003), appeal docketed 04-1035 (Fed. Cir. Oct. 23,
2003). The Inn Foods court found that such unambiguous language rendered a penalty recovery
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action untimely when filed on the waiver’s anniversary date. Id. Crucial to the court’s holding
was that, given that waiver’s explicit designation of its commencement date, Rule 6(a) was
inapplicable. Id. at 1337.
Defendants assert that Neman Brothers incorrectly analogized USCIT Rule 6(a) to the
waiver in question and that the court should follow Inn Foods. The court finds, however, that the
facts of the present case distinguish it from Inn Foods and render it more like Neman Brothers,
which correctly looked to Rule 6(a) to resolve the ambiguity as to the proper computation of the
waiver’s effective dates. As previously discussed, Defendants’ February 5, 2002 waiver of the
statute of limitations was effective “for a period of one (1) year, commencing with the date of
execution.” Defs.’ Mot. Summ. J. Ex. H (emphasis added). The waiver did not explicitly state
the date that it became operative or the date that it expired, rendering it quite unlike the waiver in
Inn Foods. Here, the term “commencing with the date of execution” could mean “commencing
on” that date, or could mean, like the applicable statute of limitations, “commencing from” or
“after” that date.6 In looking solely at the express terms of the waiver, it is impossible to
ascertain whether the parties intended to abandon the established anniversary method for
calculating the waiver’s effective dates.
Given the waiver’s ambiguity, the court has considered the extrinsic evidence related to
the parties’ intent and understanding of the waiver’s terms. See Julius Goldman’s Egg City v.
United States, 697 F.2d 1051, 1058 (Fed. Cir. 1983) (stating that the parties’ conduct before a
6
Looking to dictionary definitions of the term “with” is not helpful, because such
definitions do not shed light on the particular issue presented, where both a procedural rule and
court precedent include the anniversary date of the operative event for time computation
purposes.
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controversy arises is relevant to ascertaining the parties’ intent). Over the years, the Government
mailed Defendants three different acknowledgment letters explicitly applying the anniversary
method to compute the waivers’ effective dates. Defendants never disputed Customs’s
interpretation of the waivers and continued to sign them as written and interpreted by Customs.
Even more striking is that Defendants’ answer, while pleading the statute of limitations defense,
did not argue that the anniversary method was inappropriate. Defendants did not challenge the
anniversary method until the subsequent issuance of the Inn Foods decision, raising their
argument for the first time in this motion. See supra n.4. Based on the foregoing, the court
concludes that the parties’ intent, as evidenced by their conduct, was to compute the waiver’s
effective dates by applying the established anniversary method. Accordingly, the present action
was timely filed.
CONCLUSION
The waiver “commencing with the date of execution” is ambiguous, and the extrinsic
evidence submitted with the briefs supports the Government’s argument that the parties
objectively intended to use the anniversary method to compute the effective dates of the February
5, 2002 waiver. Defendants’ conduct from the time they received the first acknowledgment in
2000 until the filing of the present motion indicates that they understood the waiver in the same
manner as the Government. Because the Defendants’ waiver was still in effect on the date the
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Government filed this action, Defendants are not entitled to summary judgment on the ground
that the suit was untimely filed. Accordingly, the Defendants’ motion for summary judgment is
DENIED.
SO ORDERED.
/s/ Jane A. Restani
Jane A. Restani
Chief Judge
Dated: New York, New York.
This 28th day of April, 2004.