Aegis Opposes DOJ's Bid for Further Discovery in Case Over Late Collection on Bond

Surety insurance provider Aegis Security Agency opposed on Oct. 27 the Department of Justice's bid for further discovery in a case over CBP’s attempt to collect on a bond issued by Aegis eight years after liquidation. Aegis argues that DOJ seeks to expand discovery without meeting the required standard for specificity or regard for the limitations on the scope of discovery in its request (United States v. Aegis Security Insurance Company, CIT #20-03628).

Aegis contests CBP’s attempt to collect on 10 entries subject to AD duties on garlic from China that liquidated in 2006. CBP did not bill Aegis until 2014, despite the six-year statute of limitations set by 28 USC 2415(a). CBP argues the six-year period runs from CBP’s demand for payment from a surety, but Aegis says this upends the surety industry’s understanding that it runs from the date of liquidation, and effectively removes any finality as to when CBP can collect on a customs bond (see 2109210086).

DOJ opposed two declarations submitted by Aegis, one by the Aegis CEO and another from the executive of another surety agency, declaring that they "inject factual disputes into the record." In response, DOJ wants discovery on Aegis' "newly asserted affirmative defense and claims of prejudice." The discovery motion is not limited in any other way except that for the categories for discovery listed in the motion for discovery. "Plaintiff otherwise does not limit its proposed discovery in any way. Indeed, Plaintiff could well take the position that its proposed discovery must consist of document discovery, interrogatories or other written discovery, depositions, or all three," Aegis said.

This motion should be denied since DOJ has not specified what materials it wants to gain through discovery, the brief said. Instead, all DOJ did was lay out the topics it says it needs to explore through discovery to get facts to dispute Aegis' contentions, the surety company said. "Plaintiff’s list reads more like a complaint of deficiencies in Defendant’s declarations rather than a list of specific materials it hopes to obtain through discovery," the brief said. There are also no limits on the volume of the documents related to discovery.

Also, discovery is unnecessary on the points that DOJ does make clear, the defendant said. For instance, the U.S. wants discovery to refute Aegis' claim of prejudice "due to the Plaintiff’s inordinate delay in the commencement of its collection action causing the compromise of Defendant’s subrogation rights against the importer/bond principal and its ability to seek reimbursement from its reinsurer." For instance, DOJ wants information on whether Aegis conducted due diligence on the bond princpal's creditworthiness and if the bond principal exited the U.S. market.

"Discovery is unnecessary on these points," the brief said. "With respect to Defendant’s subrogation rights against the importer/bond principal, Plaintiff is in a superior position to Defendant to know when the importer/bond principal exited the U.S. market. ... Defendant can conduct its own internal investigation and produce a declaration if there is any serious dispute that the importer/bond principal was unavailable such that Defendant could not exercise its subrogation rights."