US Using Laches Spat to Deflect From Statute of Limitations Claims, Surety Co. Says at Trade Court
The U.S. is using a spat over whether surety company American Home Assurance Co. can use a laches defense in a customs penalty case "as a red herring" to turn the Court of International Trade's attention away from the surety's statute of limitations defense, AHAC argued in an Oct. 27 reply brief. The matter is a "straight-forward statute of limitations case" since the U.S. brought the action seeking uncollected antidumping duties more than six years after the right of action began, and any attack on the defendant's affirmative defense of laches is merely a distraction, the brief said (United States v. American Home Assurance Co., CIT #20-00175).
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In the case, two importers brought in canned mushrooms from China between 2000 and 2001. DOJ is seeking to recover a customs bond for unpaid AD duties on the mushrooms, arguing that sureties have a unique liability to pay the unpaid duties. To establish that the statute of limitations hasn't run out on collecting payments on a decade-plus-old bill, the government has argued that its issuance of a bill to the surety constitutes a reliquidation of the entries, allowing it to collect duties from the sureties at a much later date than the date of liquidation (see 2105170036).
The government is making a nearly identical argument in the case United States v. Aegis Security Insurance Company. AHAC unsuccessfully tried to stay its action, claiming that the Aegis matter will resolve the questions of whether the government's claim for the antidumping duties is time barred by the six-year statute of limitations and whether "prejudice required for the laches defense may be presumed as a matter of law where there is unreasonable delay in issuing a demand against a customs bond" (see 2111290045).
Carrying on with its laches defense following an order from the court for more briefing on the claim, the surety company said that it cannot actually provide evidence of prejudice but that the case should be decided on statute of limitations grounds (see 2208030070). In its reply, the U.S. disagreed, arguing that the court should reject the attempt to "reduce a two-pronged analysis to a single element," and that the laches defense requires proof that the defendant was prejudiced due to the delay in commencing the legal action (see 2209300029).
AHAC said in its reply that this argument is a "red herring" since the U.S. "implicitly accepted the legal nature" of the laches defense when it filed its motion for judgment. The motion certified that there are no issues of material fact -- a prospect the surety agreed with "given that the prejudice required for laches may be legally presumed where there is unreasonable delay." AHAC also said that it would have conceded its laches defense, given that it cannot produce evidence of actual prejudice, except for "the line of cases holding that prejudice may be presumed from unreasonable delay."
"A showing of actual harm is not required in Statute of Limitations cases. ... The Government is obligated to collect or refund duties 'as determined on a liquidation or reliquidation,'" AHAC argued, citing 19 U.S.C. 1505(b).