United States v. Int'l Trading Servs., LLC, Slip Op. 16–112

190 F.Supp.3d 1263

United States, Plaintiff,

v.International Trading Services, LLC and Julio Lorza, Defendants.

Slip Op. 16–112

Court No. 12–00135

United States Court of International Trade.

December 2, 2016

Mollie L. Finnan, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington D.C., for plaintiff. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director.

Peter S. Herrick, Peter S. Herrick, P.A. of St. Petersburg, FL, for defendant.

OPINION AND ORDER

Barnett, Judge:

The United States of America ("United States" or "Plaintiff") brings this enforcement action against International Trading Services, LLC ("ITS") and Julio Lorza ("Lorza" or "Defendant") (together, "Defendants") to recover unpaid duties and penalties pursuant to 19 U.S.C. § 1592 (2012),¹ or, alternatively, unpaid duties and mandatory accrued interest pursuant to 19 U.S.C. § 1505. See generally Compl., ECF No. 2. Lorza moves to dismiss the complaint as to himself for lack of subject matter jurisdiction and failure to state a claim pursuant to Rules 12(b)(1) and 12(b)(5) of the Rules of the United States Court of International Trade ("USCIT").²

Def. Julio Lorza's Mot. to Dismiss Pursuant to USCIT Rules 12(b)(1) and 12(b)(6), ECF No. 46, and Def. Julio Lorza's Mem. and P. & A. in Supp. of its Mot. to Dismiss ("Def.'s Mot."), ECF No 46–1. Plaintiff timely opposed the motion. Pl.'s Resp. in Opp'n to Def. Lorza's Mot. to Dismiss, ("Pl.'s Resp."), ECF No. 49. For the following reasons, the Court denies the motion.

BACKGROUND

Lorza was the Managing Member and President/Chief Executive Officer ("CEO") of ITS before its December 2009 dissolution by the Florida Department of State for failure to file an annual report. Compl. ¶¶ 3–4; Ans. ¶ 2, ECF No. 4. From May 18, 2007 to June 25, 2007, Defendants allegedly "attempted to enter or introduce, or caused to be entered or introduced," falsely classified commercial shipments of sugar into the United States. Compl. ¶¶ 5–20.³ Lorza "was personally involved in introducing the [misclassified sugar] into commerce." Pl.'s Ex. B, Pl.'s First Set of Reqs. for Admis. ("Pl.'s RFA") ¶ 19, ECF No. 49–2; see also Pl.'s Ex. B, Def.'s Resp. to Pl.'s First. Req. for Admis. ("Def.'s Admis.") ¶ A (admitting to paragraphs 1–6, 8–9, 13–14, 19, 24–25, 31, 33–37), ECF No. 49–2.⁴ In August 2007, Lorza contacted United States Customs and Border Protection ("Customs" or "CBP") about a "notice of action" he had received about misclassified merchandise. Def.'s Ex. D at CBP000131 (Aug. 10, 2007 email to Eric T. Buchanan), CBP000140 (email signature line stating that Mr. Buchanan was a CBP Supervisory Import Specialist). In the email, Lorza asked "what steps [he] should take [because his] company is not at fault here." Def.'s Ex. D at CBP000131 (further stating that his customs broker had advised him on classifying the merchandise).

In October 2009, Customs served a pre-penalty notice on ITS, the importer of record, regarding the misclassified entries. See Pl.'s Ex. A at CBP000174–180, ECF No. 49–1; Pl.'s RFA ¶ 25; see also Def.'s Admis. ¶ A. In February 2010, Customs served the pre-penalty notice on Lorza. See Pl.'s Ex. A at CBP000194–199. The pre-penalty notice was addressed to ITS but mailed to Lorza's residence. See id. at CBP000194, CBP000199; Pl.'s RFA ¶ 2; see also Def.'s Admis. ¶ A. The pre-penalty notice was signed for by "M. Lopez," with whom Lorza was related or acquainted. Pl.'s Ex. A at CBP000199; Pl.'s RFA ¶ 5; Def.'s Admis. ¶ A.

Customs first issued a penalty notice in May 2010; in February 2011, Customs reissued and served the penalty notice, which named ITS only, on ITS through its registered agent, and on Lorza individually. See Pl.'s Ex. A at CBP000141–143 (May 18, 2010 cover letter and penalty notice); id. at CBP000145, CBP000158 (penalty statement for violation of 19 U.S.C. § 1592 ) ("Penalty Statement"); id. at CBP000154–157 (Feb. 2011 cover letter and penalty notice) ("Feb. 2011 Penalty Notice"); id. at CBP000161–165 (delivery of the Feb. 2011 Penalty Notice and Penalty Statement to ITS and Lorza); see also Pl.'s RFA ¶ 3; Def.'s Admis. ¶ A (Defendant's admission that he maintained an address where CBP had sent the Feb. 2011 Penalty Notice).

In April 2011, Customs sent a demand for payment ("Apr. 2011 Payment Demand") to Defendants. See Pl.'s Ex. A at CBP000202–208; see also Pl.'s RFA ¶ 4; Def.'s Admis. ¶ A (Lorza's admission that, in April 2011, he maintained an address where CBP had sent the Apr. 2011 Payment Demand). The Apr. 2011 Payment Demand was sent to ITS in care of Lorza. Pl.'s Ex. A at CBP000202.

That month, Lorza contacted CBP about the misclassified entries. See Pl.'s RFA ¶ 31; Def.'s Admis. ¶ A. On April 25, 2011, Lorza telephoned CBP explaining that his mother-in-law told him he had received a bill from CBP. Pl.'s Ex. C at 2, ECF No. 49–3. Lorza confirmed his current address and asked for the CBP officer's email address. Id.⁵ Also on April 25, 2011, Lorza emailed CBP asking for information about his case. Id. at 4. On April 26, 2011, CBP emailed Lorza the Feb. 2011 Penalty Notice and Apr. 2011 Payment Demand. Id. at 5–6. Lorza responded to that email, stating that he was "looking at [the documents] from [his] phone" and could see that they concerned "some incorrect entries" from when "we were importing sugar." Id. at 7. Lorza promised to "print the file and review [it] in detail." Id. ; see also Pl.'s RFA ¶ 33; Def.'s Admis. ¶ A (Lorza's admission that he received the Feb. 2011 Penalty Notice by email).

In March 2012, Lorza received the Feb. 2011 Penalty Notice sent to him via JOMA Trading & Sales, LLC, at 14994 SW 21st Street, Miramar, Florida 33027. See Pl.'s Ex. A at CBP000225, CBP000230–231; Pl.'s RFA ¶¶ 34–36; Def.'s Admis. ¶ A. The cover letter appended to the notice stated that Lorza and ITS were jointly and severally liable for the penalty. See Pl.'s Ex. A at CBP000225.

The United States filed this lawsuit on May 17, 2012. See generally , Summons, ECF No. 1; Compl. Lorza answered the complaint on September 11, 2012. Ans., ECF No. 4. On July 18, 2016, Lorza moved to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim. Def.'s Mot. Lorza argues that the court lacks subject matter jurisdiction because CBP failed to name him on the pre-penalty and penalty notices, and thereby failed to exhaust administrative remedies. Id. at 1, 3–5. Lorza further argues that CBP's failure to name him on the pre-penalty and penalty notices deprived him of due process, and Plaintiff has insufficiently alleged perfection of the administrative claim. Id. at 5–6. On August 22, 2016, the United States opposed the motion. Pl.'s Resp. Plaintiff argues that Defendant's challenges are untimely, improperly characterized, and lack merit. See generally id.

STANDARD OF REVIEW

I. Subject Matter Jurisdiction

To adjudicate a case, a court must have subject-matter jurisdiction over the claims presented. See Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 94–95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). "[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the court must dismiss the complaint in its entirety." Arbaugh v. Y & H Corp. , 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006).

A plaintiff bears the burden of establishing subject-matter jurisdiction. See Norsk Hydro Can., Inc. v. United States , 472 F.3d 1347, 1355 (Fed. Cir. 2006). When reviewing a motion to dismiss for lack of subject matter jurisdiction, the court proceeds according to whether the motion "challenges the sufficiency of the pleadings or controverts the factual allegations made in the pleadings." H & H Wholesale Servs., Inc. v. United States, 30 C.I.T. 689, 691, 437 F.Supp.2d 1335, 1339 (2006). When the motion challenges the sufficiency of the pleadings, the court assumes that the allegations within the complaint are true. Id. When, as here, "the motion controverts factual allegations supporting the [c]omplaint, ‘the allegations in the complaint are not controlling,’ and ‘are subject to fact-finding by the [trial] court.’ " Id. at 692, 437 F.Supp.2d at 1339 (quoting Cedars–Sinai Medical Ctr. v. Watkins , 11 F.3d 1573, 1583–84 (Fed. Cir. 1993) ) (alterations added). Cf. Power–One Inc. v. United States , 23 C.I.T. 959, 962, 83 F.Supp.2d 1300, 1303 n.9 (1999) (assertion of failure to exhaust administrative remedies in a suit filed pursuant to 28 U.S.C. § 1581(a) represented a "challenge[ ] [to] the actual existence of subject matter jurisdiction"; thus, "the allegations in Plaintiffs' Complaint are not controlling, and only uncontroverted factual allegations are accepted as true").⁶

II. Failure to State a Claim

When reviewing a motion to dismiss for failure to state a claim, "any factual allegations in the complaint are assumed to be true and all inferences are drawn in favor of the plaintiff." Amoco Oil Co. v. United States , 234 F.3d 1374, 1376 (Fed. Cir. 2000) ; see generally USCIT R. 12(b)(6). A court may properly dismiss a case under Rule 12(b)(6) only if the plaintiff's allegations of fact are not "enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted). At the same time, a complaint's "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679, 129 S.Ct. 1937.

DISCUSSION

I. Parties' Contentions

Defendant moves to dismiss for lack of subject matter jurisdiction and failure to state a...