The United States v. Federal Insurance Company and Cometals, Inc.
Docket: 88-1234
Court: Court of Appeals for the Federal Circuit; September 30, 1988; Federal Appellate Court
The United States Court of Appeals for the Federal Circuit addressed an appeal from the United States against Federal Insurance Company and Cometals, Inc. regarding unpaid import duties totaling $230,344.12. The Court of International Trade had previously denied the U.S. Government's request for prejudgment interest on this amount, stating that it lacked the authority to award such interest since the appellate mandate did not explicitly provide for it. However, the appellate court reversed this denial, ruling that the Court of International Trade had erred in its legal interpretation of Federal Rule of Appellate Procedure 37. This rule dictates that if an appellate court modifies or reverses a judgment, the mandate must include instructions for interest allowances. The appellate court vacated the interest awarded by the lower court and remanded the case for recalculation of prejudgment interest, affirming the Government's entitlement to both unpaid import duties and interest.
Rule 37 generally governs the award of interest on judgments but allows for exceptions that may be provided by law. One notable exception is found in 19 U.S.C. Sec. 580, which mandates that interest at a rate of 6% per annum be applied to bonds for the recovery of unpaid import duties from the time the bonds became due. In cases involving such bonds, when a court awards unpaid import duties, it must include interest as specified in section 580. This action involves the United States seeking recovery of unpaid import duties through a bond, aligning with the provisions of section 580.
The Court of International Trade is required to award interest to the United States on these unpaid duties from the time the bonds became due, as mandated by the court's previous ruling favoring the Government. Federal argues against awarding prejudgment interest based on language in Rule 37 that suggests no provision for interest was included in the prior mandate. They cite Supreme Court cases, asserting they support this interpretation. However, the distinction lies in the statutory requirement for interest in this case, which is not present in the cited cases.
Federal further claims that the phrase "unless otherwise provided by law" in Rule 37 modifies only part of the rule and does not apply to the section concerning modified or reversed judgments. This claim is dismissed as the plain language of Rule 37 indicates that the phrase applies to the entire rule. Additionally, Federal argues that the Government's appeal is, in essence, an untimely effort to amend the previous mandate regarding interest, a position that the court does not accept.
The Government, Federal contends that it should be barred from claiming prejudgment interest due to not following the correct procedure for recalling the prior mandate. This assertion is rejected. Rule 37 does not prevent the awarding of statutory prejudgment interest under section 580 in a bond recovery case for import duties. Legally, the Court of International Trade is required to award interest to the United States at the statutory rate from when the bonds became due, in compliance with the prior mandate. The judgment of the Court of International Trade awarding unpaid import duties of $230,344.12 is affirmed; however, the lower court's calculation of interest is deemed erroneous. The court vacates the judgment denying prejudgment interest and granting postjudgment interest, remanding the case for further proceedings consistent with this ruling. Costs on appeal are awarded to the United States. The judgment is reversed and vacated in part.
