Count Two alleging failure to preserve the value of the collateral,
specifically interest on the collateral for Bond II from the date of
cancellation until the date the money was returned, as well as interest
on the Bond I collateral from the date of payment until the date the
funds were returned, and in Count Three alleging breach of good faith by
Amico. Implicit in that ruling was both a denial of the motion to compel
discovery on those counts and a denial of the motion staying the summary
judgment motion pending discovery.
The opinion also granted Pittston summary judgment on Count One of the
complaint, conversion, but allowed Amico twenty days to submit further
materials to avoid prejudice of the sua sponte granting of summary
judgment in favor of Pittston on Count One.
By order of October 3, 1989, Amico was granted another extension to
December 15, 1989 by which to submit further material with respect to the
conclusions reached in the June 13 opinion. By letter of November 6, 1989
Amico requested a reconsideration of the June 13 decision on the basis of
a November 2, 1989 letter from Customs and a computer printout from the
surety allegedly indicating open violations by Pittston. Pittston also
moved for reconsideration of the dismissal of Counts Two and Three of the
complaint on the basis that they should have been permitted additional
discovery prior to the dismissal and that these counts stated a cause of
action for recovery. Both motions for reconsideration were argued and
considered submitted as of February 16, 1990.
Pittston's Motion for Reconsideration is Untimely
Pursuant to Local Rule 3(j) of the Uniform Civil Rules for the Southern
and Eastern Districts, a motion for reargument must be made within ten
(10) days after the docketing of the court's determination of the
The opinion on the underlying motion was filed June 13, 1989. Pittston
did not make this motion for reconsideration until over five months
later. Although the opinion granted Amico opportunity to present
additional material, Pittston was not granted a similar opportunity and
the material presented by Amico does not affect either Counts Two or
Three dismissed in that opinion. Pittston's motion is untimely and,
moreover, presents no new issues of fact or law upon which a motion for
reargument would be necessary.
Amico's Supplemental Materials Do Not Provide a Basis for Reconsideration
of Count One
At dispute in Count One for conversion is a warehouse bond identified
as Bond III. As stated in the June opinion, on December 12, 1985, Customs
decided to increase the bond requirements and demanded an issuance of a
bond of $100,000. Amico, surety for Pittston, issued Bond III on January
13, 1986 and Pittston provided Amico a standby letter of credit as
security for that obligation. Pittston was, in turn, required to post a
cash collateral with its bank to secure the letter of credit. That letter
of credit automatically extended for one year periods unless thirty days
before the expiration date Pittston notified Amico that they chose not to
renew the letter. Pittston's failure to renew without the consent of
Amico could lead to a draw on the letter of credit in the full amount.
Amico has refused to authorize cancellation of the letter of credit
and, therefore, Pittston's funds are still held in escrow at its bank.
The letter of credit has been renewed annually.
The June opinion held that to secure a release of the collateral,
Pittston was required to establish Amico's lack of liability by showing
not only that there was no likelihood of a claim, but that there is no
future liability. On the basis of the court's interpretation of the
September 21, 1989 letter from the Customs Service, it was found that
Amico was unambiguously relieved from any possible liability for any
claims made under the bond after August 12, 1987, regardless of when the
claims arose or were discovered.
To dispute the interpretation given to the September 21, 1987 letter,
Amico has submitted a November 2, 1989 letter of information within the
meaning of 19 C.F.R. § 177.1(d)(2),
from William G. Rosoff, Chief of Entry Rulings Branch at the U.S. Customs
Service. The letter, however, does no more than reiterate the information
that was available to the court at the time of the original motion. The
letter confirms in pertinent part the court's analysis:
[E]ffective August 12, 1987, any claims issued on or
after that date would be issued against the bond in
effect on or after that date.
Bond III was no longer in effect after the August 12, 1987 date. No
claims were assessed against Pittston, for which Amico would be the
surety, prior to that date.
Moreover, although surety and principal remain liable on a terminated
bond for obligation incurred prior to termination, Customs considers that
the time of breach of a bond for warehouse violations is generally
presumed to be the time of discovery of the irregularities which give rise
to the claim for liquidated damages. After inspection, no such discovery
had been made prior to August 12, 1987. Any breach of the obligations of
the warehouse proprietor discovered currently would be assessed against
the current bond.
Accordingly, no new information has been presented to the court to
merit a reconsideration of the June 13 opinion granting summary judgment
for Pittston on Count One.
It is so ordered.
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