Slip Op. 03-50
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
:
UNITED STATES OF AMERICA, :
:
Plaintiff, :
: Court No.
v. : 01-01106
:
INN FOODS, INC., :
:
Defendant. :
___________________________________:
Defendant, Inn Foods, Inc. (“Inn Foods”), moves to dismiss the
Complaint filed by the United States on December 14, 2001, pursuant
to USCIT R. 12(c) or, in the alternative, for summary judgment
pursuant to USCIT R. 56, for failure to state a claim under 28
U.S.C. § 1582 (2000) and to file a timely complaint. The United
States Customs Service (“Customs”) commenced this action to recover
civil penalties and unpaid duties and fees for violation of section
592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592 (2000).
Inn Foods contends that December 13, 2001, was the last day the
five-year statute of limitations under 19 U.S.C. § 1621 (2000) was
waived, and argues that this action, commenced one day later, is
time-barred as to all the subject entries.
Held: For the reasons stated below Inn Foods’ motion for
summary judgment is granted.
[Inn Foods’ summary judgment motion is granted. Case dismissed.]
Dated: May 13, 2003
Robert D. McCallum, Jr., Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (A. David Lafer, Senior Trial
Attorney, and Michael S. Dufault) for the United States of America,
plaintiff.
Horton, Whiteley & Cooper (Robert Scott Whiteley and Craig A.
Mitchell) for Inn Foods, defendant.
Court No. 01-01106 Page 2
MEMORANDUM OPINION
TSOUCALAS, Senior Judge: Defendant, Inn Foods, Inc. (“Inn
Foods”), moves to dismiss the Complaint filed by the United States
on December 14, 2001, pursuant to USCIT R. 12(c) or, in the
alternative, for summary judgment pursuant to USCIT R. 56, for
failure to state a claim under 28 U.S.C. § 1582 (2000) and to file
a timely complaint. The United States Customs Service (“Customs”)1
commenced this action to recover civil penalties and unpaid duties
and fees for violation of section 592 of the Tariff Act of 1930, as
amended, 19 U.S.C. § 1592 (2000). Inn Foods contends that December
13, 2001, was the last day the five-year statute of limitations
under 19 U.S.C. § 1621 (2000) was waived, and argues that this
action, commenced one day later, is time-barred as to all the
subject entries.
JURISDICTION
The Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1582 (2000).
Standard of Review
USCIT R. 12(c) provides that any party may move for judgment
on the pleadings after the pleadings are closed and if it would not
1
The United States Customs Service was renamed the Bureau
of Customs and Border Protection of the Department of Homeland
Security, effective March 1, 2003. See H.R. Doc. No. 108-32
(2003).
Court No. 01-01106 Page 3
delay trial. A USCIT R. 12(c) motion “is designed to dispose of
cases where the material facts are not in dispute and a judgment on
the merits can be rendered by looking to the substance of the
pleadings and any judicially noticed facts.” Herbert Abstract Co.
v. Touchstone Properties, Ltd., 914 F.2d 74, 76 (5th Cir. 1990)
(citations omitted). A motion for judgment on the pleadings may be
granted if the moving party is entitled to judgment as a matter of
law. See N.Z. Lamb Co. v. United States, 40 F.3d 377, 380 (Fed
Cir. 1994). The Court may convert a motion to dismiss into a
motion for summary judgment under USCIT R. 56 if it relies on
evidence outside the pleadings. See USCIT R. 12(c). “On a motion
for summary judgment, it is the function of the court to determine
whether there are any factual disputes that are material to the
resolution of the action.” Phone-Mate, Inc. v. United States, 12
CIT 575, 577, 690 F. Supp. 1048, 1050 (1988) (citation omitted).
Summary judgment is appropriate only when there are no genuine
issues of material fact and the moving party is entitled to
judgment as a matter of law. See USCIT R. 56; see also Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
A ruling on a motion for judgment on the pleadings is reviewed
under the same standard as a motion to dismiss under USCIT R. 12(b)
for failure to state a claim. See GATX Leasing Corp. v. Nat’l
Union Fire Ins. Co., 64 F.3d 1112, 1114 (7th Cir. 1995). A
Court No. 01-01106 Page 4
district court may not dismiss a complaint for failure to state a
claim “unless it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to
relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957) (citation
omitted).
In deciding a motion to dismiss for failure to state a claim,
as well as a USCIT R. 12(c) motion for judgment on the pleadings,
the Court must accept all well-pleaded facts as true and view them
in the light most favorable to the plaintiff. Wendell v. Putnal,
75 F.3d 190, 196 (5th Cir. 1996). To avoid dismissal, however, a
plaintiff must plead specific facts, and not merely conclusory
allegations.
DISCUSSION
I. Background
The United States filed the Complaint to collect Customs
duties and fees from Inn Foods for produce imported from Mexico
between January 22, 1987 and January 19, 1990. See Compl. ¶ 6.
Customs alleges that during this time, Inn Foods “knowingly aided
and abetted” Seaveg, Ltd. (“Seaveg”),2 also an importer of produce,
in the entry or introduction of produce from Mexican suppliers to
the United States through the port of Hidalgo, Texas. See id. ¶¶
2
Seaveg filed for bankruptcy on October 13, 1998, and
was formally dissolved on December 1, 1998. See Compl. ¶ 4.
Court No. 01-01106 Page 5
4, 6. The Complaint claims that Inn Foods and Seaveg entered into
identical contracts with “six Mexican growers in which the Mexican
growers would sell Inn Foods and Seaveg produce at a prevailing
market price as established by Inn Foods’ parent company.” Id. ¶
7. According to Customs, both Inn Foods and Seaveg maintained
accounting records and financial statements for the subject entries
reflecting the actual prices paid to the Mexican growers for the
produce. See id. ¶ 8. The prices declared to Customs, however,
“were undervalued and did not reflect the prices actually paid to
the Mexican growers.” Id. The Complaint indicates that Inn Foods
and Seaveg were notified of this fact by Customs in April 1989, but
despite this notice, both companies continued to enter the produce
in the same fashion through February 1990. See id. ¶ 10. The
Complaint adds that the subject entries were
entered or introduced, into the United States by means of
material and false documents, statements, acts and/or
omissions, in that Inn Foods knowingly, intentionally,
and fraudulently filed or caused to be filed, and/or
aided or abetted Seaveg in the filing of entry documents
that contained materially false statements or omissions
in violation of 19 U.S.C. §§ 1481, 1484, . . . and 1592.
Id. ¶ 11. Therefore, Customs improperly assessed the duties and
merchandise processing fees in connection with the subject produce,
see id. ¶¶ 12, 17, and was deprived of approximately $618,356.85 in
lawful duties and $6,245.70 in appropriate fees. See id. ¶ 18.
Court No. 01-01106 Page 6
At the request of Customs, Inn Foods waived the five-year
statute of limitations defense provided in 19 U.S.C. § 1621 for a
two-year period commencing on December 15, 1993, thereby extending
the time in which a timely action could be brought against Inn
Foods. See Def.’s Mot. for J. on the Pleadings or in the
Alternative for Summ. J. (“Def.’s Mot.”) at Ex. 2; Pl.’s Resp.
Def.’s Mot. J. Upon the Pleadings or, in the Alternative, for Summ.
J. (“Pl.’s Resp.”) Attach. 1; see also Compl. ¶ 21. Inn Foods
subsequently extended the waiver for three successive two-year
periods commencing on the 14th day of December in 1995, 1997 and
1999. See Def.’s Mot. at 6 & Exs. 3-5. The United States contends
that the December 14, 1999 waiver (“1999 waiver”) was effective
through December 14, 2001, see Compl. ¶ 21, while Inn Foods argues
that the relevant waiver expired on December 13, 2001, just one day
prior to the date that the Complaint was filed. See Def.’s Mot. at
8.
II. Analysis
The statute of limitations applicable to 19 U.S.C. § 1592
actions is set forth in 19 U.S.C. § 1621 providing that “[n]o suit
or action to recover any duty under [19 U.S.C. § 1592] . . . or any
pecuniary penalty . . . accruing under the customs laws shall be
instituted unless such suit or action is commenced within five
years after the time when the alleged offense was discovered.” 19
Court No. 01-01106 Page 7
U.S.C. § 1621. The Customs entries at issue in the Complaint were
made between January 22, 1987 and January 19, 1990. See Compl. ¶
6. Although 19 U.S.C. § 1621 would normally render claims
regarding entries made within this time period time-barred, in this
particular case, Inn Foods waived the five-year statute of
limitations defense for a two-year period commencing December 15,
1993, and subsequently extended the waiver for three successive
two-year periods at the request of Customs commencing on December
14, 1995, December 14, 1997 and December 14, 1999, respectively.
See Def.’s Mot. at 6 & Exs. 2-5.
The 1999 waiver, at issue in this motion, specifically states
that:
Inn Foods, Inc. hereby waives the period of limitations
contained in Title 19, United States Code, Section 1621,
and any other applicable statute(s) of limitations with
respect to Customs entries of frozen fruits and
vegetables, filed with U.S. Customs during the period of
May 1, 1986 through December 31, 1990, for a period from
TWO YEARS, commencing on December 14, 1999. Inn Foods,
Inc. agrees that it will not assert any statutes of
limitations defense in any action brought by the United
States Government concerning the entries designated above
with respect to the TWO-YEAR PERIOD for which the statute
of limitations is hereby waived.
Id. at Ex. 5 (emphasis added). Inn Foods argues, and the Court
agrees, that the plain language of the waiver would render it
effective through the eleventh hour of December 13, 2001, and that
a complaint filed the next day is time-barred.
Court No. 01-01106 Page 8
In its response, the United States relies on United States v.
Neman Bros. & Assocs., 15 CIT 536, 777 F. Supp. 962 (1991), for the
proposition that “two-year waivers of the statute of limitations
are valid through the anniversary date of the commencement of the
waiver, with the first day of the waiver excluded.” Pl.’s Resp. at
2. In Neman Bros., the United States filed its complaint on the
one-year anniversary from the effective date of the waiver. See
Neman Bros., 15 CIT at 537, 777 F. Supp. at 963. The parties in
this current action propound similar arguments to those in Neman
Bros., where the court analogized USCIT R. 6(a)3 to Fed. R. Civ. P.
6(a), both dealing with the computation of time, and ruled in favor
of the United States since “[d]efendants did not cite any precedent
to support the proposition that the one year waiver does not
include the anniversary date.” Neman Bros., 15 CIT at 538, 777 F.
Supp. at 964. The waiver in Neman Bros. was applicable for one
year commencing August 1, 1988 and the action was filed on the one
year anniversary date, August 1, 1989. See Neman Bros., 15 CIT at
536-37, 777 F. Supp. at 963-64.
The United States also references as support a string of
citations, some cited in Neman Bros., that found the anniversary
3
USCIT R. 6(a) provides that “[i]n computing any period of
time prescribed or allowed by these rules, by order of the court,
or by any applicable statute, the day of the act, event, or default
from which the designated period of time begins to run shall not be
included.”
Court No. 01-01106 Page 9
method of computation applicable to specific one-year limitation
periods. See, e.g., Patterson v. Stewart, 251 F.3d 1243, 1246 (9th
Cir. 2001) (finding Fed. R. Civ. Pro. 6(a) applicable to the
Antiterrorism and Effective Death Penalty Act’s one-year grace
period); United States v. Marcello, 212 F.3d 1005, 1010 (7th Cir.
2000) (holding that the anniversary rule should govern “[b]ecause
courts do not have stopwatches in hand when deadlines draw near,
and because the anniversary date is clear and predictable and
therefore easier for litigants to remember, for lawyers to put in
their tickler files, and for courts to administer”); Lawson v.
Conyers Chrysler, Plymouth, & Dodge Trucks, Inc., 600 F.2d 465,
465-66 (5th Cir. 1979) (finding the anniversary method applicable
to the one-year limitation period under the Truth and Lending Act
since courts consistently used the anniversary method prescribed by
Fed. R. Civ. Pro. 6(a) in computing federal statutory time limits);
see also Krajci v. Provident Consumer Discount Co., 525 F. Supp.
145, 150 (E.D. PA 1981) (holding that “[w]here no contrary policy
is expressed in a particular statute, considerations of liberality
and leniency militate in favor of Rule 6(a)’s application”). These
cases, however, do not address the issue of whether R. 6(a) of the
Federal Rules of Civil Procedure or the United States Court of
International Trade Rules is applicable to a waiver agreement that
explicitly designates the day on which a two-year waiver agreement
would begin to toll.
Court No. 01-01106 Page 10
But for the four waiver agreements entered into by Inn Foods
at the request of Customs to extend the period of time in which the
United States could file a timely complaint, the applicable statute
would have extinguished all of Customs’ claims no later than
January 20, 1995. See Compl. ¶ 6 (stating that the last day a
subject entry was made by Inn Foods was on January 19, 1990); see
also Def.’s Mot. at 6. If, therefore, the issue at bar was whether
the anniversary method, as prescribed by USCIT R. 6(a), would be
applicable to computing the last day on which a timely complaint
could be filed as prescribed by 19 U.S.C. § 1621, then the Court
would answer in the affirmative. However, the case before the
Court deals specifically with waiver agreements drafted by Inn
Foods in accordance with the form and content prescribed by
Treasury Regulations. See Def.’s Mot. at 14. See, e.g., T.D. 90-
11, 24 Cust. B. & Dec. 25-26 (1990) (outlining the construction of
a waiver agreement of the period of limitations prescribed under 19
U.S.C. § 1621).
A waiver is not a contract, see Florsheim Bros. Drygoods Co.
v. United States, 280 U.S. 453, 466 (1930), but instead “a
voluntary, unilateral waiver of a defense.” Strange v. United
States, 282 U.S. 270, 276 (1931) (stating that the insertion of an
agency’s signature was not intended to convert a waiver into a
contract, but instead, to serve a purely administrative function).
Court No. 01-01106 Page 11
This is not to say, however, that the actual words of the waivers
are not controlling. See United States v. Hitachi America, Ltd.,
172 F.3d 1319, 1333-34 (Fed. Cir. 1999). Therefore, the Court must
interpret the words of the waiver agreements, and may do so using
contract principles. See Ripley v. Comm’r of Internal Revenue, 103
F.3d 332, 337 (4th Cir. 1996) (court used contractual
interpretation to analyze consent to a waiver); Kronish v. Comm’r
of Internal Revenue, 90 T.C. 684, 693 (1988) (court doing same);
Piarulle v. Comm’r of Internal Revenue, 80 T.C. 1035, 1042 (1983)
(court doing same).
“In interpreting the waiver . . . in terms of contract
principles, courts have looked to the ‘plain meaning’ of the
[agreement].” Tolve v. Comm’r of Internal Revenue, 2002 U.S. App.
LEXIS 4731, at *7 (3rd Cir. Mar. 22, 2002); see also Aleman Food
Servs., Inc. v United States, 994 F.2d 819, 822 (Fed. Cir. 1993)
(stating that a court first turns to the plain language when
interpreting a contract); Gould, Inc. v. United States, 935 F.2d
1271, 1274 (Fed Cir. 1991) (stating that the plain language of a
contract is given first consideration when interpreting written
agreements). If parties to a mutual waiver dispute any terms of
the agreement, then the court will interpret those terms in a
manner that would reflect the objective intentions of both parties.
See Firestone Tire & Rubber Co. v. United States, 444 F.2d 547, 551
Court No. 01-01106 Page 12
(Ct. Cl. 1971) (stating that “the language of a contract must be
afforded the meaning derived from the contract by a reasonably
intelligent person”); Singer-Gen. Precision, Inc. v. United States,
427 F.2d 1187, 1193 (Ct. Cl. 1970) (“It is the objective
manifestations which count.”); see also Hitachi, 172 F.3d at 1334
(stating that “judges should not undermine . . . an agreement
reached by . . . sophisticated parties”).
In the case at bar, Inn Foods drafted all four waiver
agreements in accordance with the applicable Treasury Decision
notice. Compare Def.’s Mot. at Exs. 2-5, with T.D. 90-11, 24 Cust.
B. & Dec. at 25-26. On its face, the 1999 waiver at issue
explicitly states that it is applicable “for a period of TWO YEARS,
commencing on December 14, 1999.” See Def.’s Mot. at Ex. 5
(emphasis added). This language is unambiguous and, accordingly,
this Court finds that the waiver agreement between Inn Foods and
Customs explicitly stated that it was to begin on December 14,
1999, and expired at 11:59 p.m. on December 13, 2001 (two years
from the effective date of the waiver). The action filed by
Customs on December 14, 2001, is therefore untimely.
Even if the language in the waiver agreement was ambiguous,
it is Customs’ policy to count the operative date from which a
waiver is to run as the date of the waiver itself. See T.D. 90-11,
24 Cust. B. & Dec. at 25 (stating that a waiver “commences from the
Court No. 01-01106 Page 13
date of the waiver” and extends for a period of not less than two
years). Since Customs itself has drafted the format for requesting
acceptance of a waiver of the period of limitations, the Court
must construe the language against Customs. According to the
applicable Treasury Decision, “the two-year period ordinarily
commences from the date of the waiver, unless another commencement
date is specified by the waiving party.” T.D. 90-11, 24 Cust. B.
& Dec. at 25. Therefore, in this case, tolling of the waiver began
on December 14, 1999.
CONCLUSION
Since this Court finds that the 1999 waiver explicitly states
that Inn Foods extended its waiver of the period of limitations
prescribed in 19 U.S.C. § 1621 for a period of two years,
commencing on December 14, 1999, such language renders the United
States’ Complaint, filed on December 14, 2001, untimely. Moreover,
because the waivers themselves were first attached to Defendant’s
Motion, and since the applicable Treasury Decision was not
referenced in the pleadings, the Court will grant Inn Food’s motion
for summary judgment. Judgment will be entered accordingly.
___________________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: May 13, 2003
New York, New York