Statute of Limitations Does Not Begin When CBP Makes a Payment Demand, Insurer Argues at CIT

CBP cannot collect on a bond due 14 years ago by claiming a breach occurred only when CBP demanded payment through the agency's own error, Aegis Security Insurance Company said in an Oct. 21 response brief and request for dismissal at the Court of International Trade (United States v. Aegis Security Insurance Co., CIT #20-03628).

The case concerns CBP's attempts to collect a bond covering imports entered between 2002 and 2006 at the Port of Miami. CBP first billed the principal, Linyi, on Oct. 3, 2014. When Linyi failed to pay, CBP demanded payment from Aegis on Jan. 7, 2015. Thirty days later, the bill against Aegis became delinquent and CBP argued Aegis breached the terms of the bond.

As established by the U.S. Court of Appeals for the Federal Circuit, the date of accrual runs from when a bond is breached, leaving the only question as to when the breach occurred. Since the terms of the bond say that the surety must pay "as demanded by CBP," DOJ argued, in its Feb. 28 motion for judgment, that the statute of limitations on when to file suit for payment collection began only when CBP actually demanded payment. DOJ claimed the case was timely because its commencement on Oct 2, 2020, was within six years of that demand and subsequent delinquency (see 2202280061). "The terms of the bond at issue were not breached by Aegis until CBP made a demand for payment against Aegis and Aegis failed to pay the duties within the time required by law," DOJ argued.

Aegis argued that the entire action is barred by the six-year statute of limitations. None of the government's arguments rebut "the central reality" that the entries were deemed liquidated on Nov. 4, 2006, and the statute of limitations expired six years later in 2012, Aegis said. Further, Aegis argued that the reference to Customs’ demand does not mandate that the cause of action accrues upon that demand. Section 1505(b), upon which DOJ bases its argument, does not apply to entries that are deemed liquidated by operation of law, Aegis said. "The government's delay in making its demand and filing suit are a direct consequence of its own misunderstanding of the significance of [the] deemed liquidation." CBP's demand is "purely ministerial" and did not alter the finality of the deemed liquidation, Aegis said.