United States v. Pressman-Gutman Co. (721 F. Supp. 2d 1333, 2010)

OPINION

RIDGWAY, Judge.

The Government commenced this action to collect $120,000 in liquidated damages, plus interest, from Defendant PressmanGutman Co., Inc., or, in the alternative, from Pressman-Gutman’s surety, Defendant American Motorists Insurance Company. See Plaintiffs Brief in Support of its Opposition to Defendants’ Motions to Dismiss This Action (“Pl.’s Opposition to Motions to Dismiss”) at 1, 4; Complaint ¶¶ 1, 5. The Government contends that Pressman-Gutman is liable for liquidated damages because, according to the Government, the company breached the terms of its customs bond by failing to redeliver certain imported merchandise to the U.S. Customs Service, notwithstanding the agency’s issuance of demands for redelivery. See PL’s Opposition to Motions to Dismiss at 1-^L

Now pending before the Court is Pressman-Gutman’s Motion to Dismiss this action for failure to state a claim upon which relief can be granted, filed pursuant to Rule 12(b)(5) of the Rules of this Court. See Defendant’s Memorandum of Law and Points of Authority in Support of its Motion to Dismiss Pursuant to 12(b)(5) (“Pressman-Gutman Motion to Dismiss”) at 1, 27; USCIT R. 12(b)(5). PressmanGutman argues, inter alia, that Customs’ demands for redelivery were untimely, that there is therefore no breach of the company’s customs bond and no basis for any claim for liquidated damages, and, accordingly, that this action must be dismissed. See Pressman-Gutman Motion to Dismiss at 1-3; Defendant’s Reply Addressed to its Motion to Dismiss (“Pressman-Gutman Reply”) at 1-2.

In its Cross Motion to Dismiss Action/Cross Motion for Collateral Security and Attorney’s Fees, AMICO seconds Pressman-Gutman’s arguments urging dismissal of this action. See Defendant, American Motorists Insurance Company’s Memorandum of Law and Points of Authority in Support of its Cross Motion to Dismiss and for Collateral Security and Attorney’s Fees (“AMICO Cross-Motion”) at 1-2. But AMICO devotes the bulk of its seven-page brief to its claim against Pressman-Gutman for collateral security and attorneys’ fees and expenses under an indemnity agreement between the two parties. See AMICO Cross-Motion at 2-7.

Based on its assertions that Customs’ demands for redelivery were untimely (and that the claim for liquidated damages is therefore without merit), Pressman-Gut-man argues that it should not be required to provide collateral security to AMICO, or, in the alternative, that it should be permitted to deposit the security with the Court. See Defendant’s Memorandum of Law and Points of Authority in Support of Its Response to American Motorists Insurance Company’s Cross-Motion to Dismiss and for Collateral Security and Attorney’s Fees (“Pressman-Gutman Response to Cross-Motion”) at 1-2, 9-13. In addition, Pressman-Gutman contends that conflicts of interest and other grounds mitigate its obligation to reimburse AMICO’s attorneys’ fees and expenses. See PressmanGutman Response to Cross-Motion at 2, 13-20.

Jurisdiction lies under 28 U.S.C. §§ 1582 and 1583 (1994). For the reasons that follow, Pressman-Gutman’s Motion to Dismiss must be granted. AMICO’s Cross-Motion as to collateral security is therefore denied as moot; and, as to attorneys’ fees and expenses, the Cross-Motion is granted in part and denied in part.

I. The Motions to Dismiss Filed by Pressman-Gutman and AMICO

Pressman-Gutman emphasizes that Customs regulations require that, in a case such as this, “any demand for redelivery ... be made no later than ... 30 days after the end of the conditional release period.” See 19 C.F.R. § 113.62(d); see generally Pressman-Gutman Motion to Dismiss at 6-17; Pressman-Gutman Reply at 1-2. Pressman-Gutman further argues that Customs Headquarters has consistently interpreted agency regulations to mean that, in a case such as this, the “conditional release period” begins when Customs requests a sample of the merchandise at issue, and ends when Customs receives the requested sample. See Pressman-Gutman Motion to Dismiss at 7-15; Pressman-Gutman Reply at 2-3.

Here, it is undisputed that the demands for redelivery were made well more than 30 days after Customs received the requested samples. See Complaint ¶¶ 13-14, 25-26. As such, Pressman-Gutman contends that Customs’ demands for redelivery were untimely and are unenforceable, that there was therefore no breach of Pressman-Gutman’s customs bond, and that there is thus no basis for the liquidated damages claim that is the subject of this case. See Pressman-Gutman Motion to Dismiss at 2, 17; Pressman-Gutman Reply at 1. Accordingly, Pressman-Gut-man reasons, the Government cannot maintain this action. See Pressman-Gut-man Motion to Dismiss at 2-3, 27; Pressman-Gutman Reply at 2.

The Government concedes that the demands for redelivery in this case were made well more than 30 days after Customs received the requested samples from Pressman-Gutman. See Pl.’s Opposition to Motions to Dismiss at 3-4. However, the Government contends that an individual Customs staffer at the Port of JFK Airport in New York “extended” the conditional release periods here within 30 days of Customs’ receipt of the samples, by sending notices to Pressman-Gutman stating that the samples had been forwarded to the lab for analysis and that the “[e]onditional release period [was being] extended for 90 days pending lab analysis.” See id. at 2-6, 9-13; Complaint, Exhs. 5, 14. The Government asserts that, because the demands for redelivery were issued within 30 days after the end of the “extended” conditional release period, the demands were therefore timely. See Pl.’s Opposition to Motions to Dismiss at 5, 8-10, 14. The Government concludes that Pressman-Gutman breached the terms of its customs bond by failing to redeliver the merchandise at issue, and that Customs is therefore entitled to the liquidated damages at issue in this action. See id. at 1-2; Complaint ¶¶ 6-7,15,19, 27, 31.

As detailed below, the Government’s theory of this case is bankrupt. Its argument rests entirely on the slender thread of a single phrase that is read out of context and appears in only a handful of Customs documents, all of which date back nearly two decades. Even more to the point, the Government’s case flouts both (1) 19 C.F.R. § 113.62(d), which requires that Customs make any demand for redelivery within 30 days of the end of the “conditional release period,” and (2) approximately 20 years of rulings by Customs Headquarters, which have consistently and repeatedly interpreted the agency’s regulations to mean that, in a case such as this, the “conditional release period” ends when Customs receives a requested sample.

The Government has no colorable claim here. This is an action that never should have been brought; and the motions to dismiss it now must be granted.

A. Statement of Facts

The relevant facts are straightforward and uncontested. This action arose from a classification dispute involving two entries of textile fabrics made in September 1999 — the first entry on or about September 3, 1999, and the second on or about September 22, 1999. See Pressman-Gut-man Motion to Dismiss at 3^1; PL’s Opposition to Motions to Dismiss at 3; Complaint ¶¶ 9-10, 21-22, Exhs. 2-3, 11-12. Soon after each entry, Customs issued a standard form “Request for Information” (“CF 28”) for each of the two entries, requesting samples of the merchandise as part of the agency’s analysis of the proper classification and quota category for the goods. See Complaint ¶¶ 11, 23, Exhs. 4, 13; Pressman-Gutman Motion to Dismiss at 4-5; PL’s Opposition to Motions to Dismiss at 3-4; Pressman-Gutman Response to Cross-Motion at 3. The fabric’s country of origin was never at issue. Id.

Pressman-Gutman promptly complied with Customs’ requests. The samples from the first and second entries were sent to Customs on or about October 6, 1999 and on or about October 19, 1999, respectively. See PL’s Opposition to Motions to Dismiss at 3-4; Complaint ¶¶ 12, 24, Exhs. 4,13. The record does not disclose exactly when Customs received the samples. It is, however, undisputed that Customs received the samples from the first entry no later than October 15, 1999, and from the second entry no later than October 25, 1999, because — on those dates, respectively — a Customs staffer at the Port of JFK Airport issued additional CF 28s, both of which stated (in upper case letters):

[Samples] sent to the lab for analysis. Conditional release period extended for 90 days pending lab analysis. Failure to retain merchandise during the conditional release period can result in liquidated damages.

Complaint ¶¶ 13, 25, Exhs. 5, 14; see also Pressman-Gutman Motion to Dismiss at 4-5; Pl.’s Opposition to Motions to Dismiss at 3-4.

One month passed, followed by another, and yet another. Then, on February 8, 2000, more than three months (and, in the case of the first entry, nearly four months) after the agency had acknowledged receipt of the samples from Pressman-Gutman, Customs demanded redelivery of the merchandise from both entries. See Pressman-Gutman Motion to Dismiss at 4-5; PL’s Opposition to Motions to Dismiss at 3-4; Pressman-Gutman Response to Cross-Motion at 3; Complaint ¶¶ 14, 26, Exhs. 6,15. According to the demands for redelivery, the fabric had been misclassified upon entry and had entered the United States under the wrong quota category. See Pressman-Gutman Response to Cross-Motion at 3.

The demands for redelivery directed Pressman-Gutman to either return the merchandise to Customs’ custody or submit new visas reflecting the proper quota category from the exporting country. See Pressman-Gutman Response to Cross-Motion at 3. However, because so much time had elapsed between Pressman-Gut-man’s submission of the requested samples and Customs’ demands for redelivery, such visas were no longer available. Id. The passage of time also made it impossible for Pressman-Gutman to return the merchandise to Customs’ custody. The goods had already been delivered to the company’s customers. See id,.; Recording of Oral Argument at 00:13:10.

When Pressman-Gutman failed to redeliver the merchandise to Customs, the agency advised the company that liquidated damages had been incurred. See PL’s Opposition to Motions to Dismiss at 4; Complaint ¶¶ 15, 27. After PressmanGutman refused to pay the assessment of liquidated damages (on the grounds that the demands for redelivery were untimely), Customs demanded payment from AMICO (Pressman-Gutman’s surety), which also refused to pay. See PL’s Opposition to Motions to Dismiss at 4; AMICO Cross-Motion at 3-4; Complaint ¶¶ 16, 19, 28, 31, Exhs. 8, 17. The Government then filed this action against Pressman-Gutman and AMICO, seeking the liquidated damages that are assertedly due.

B. Standard of Review

In 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 Rule 12(b)(5). Dismissal under Rule 12(b)(5) is thus proper only if the plaintiffs 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 Atl. 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, however, 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. —, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citation omitted). Moreover, “only a complaint that states a plausible claim for relief survives.” Iqbal, 556 U.S. at —, 129 S.Ct. at 1950. And, “[wjhere a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.” ’ ” Iqbal, 556 U.S. at —, 129 S.Ct. at 1949 (quoting Tivombly, 550 U.S. at 557, 127 S.Ct. 1955 (brackets omitted)).

In the instant case, the nuances of Iqbal and Twombly are purely academic. As detailed below, whether considered under Iqbal, Twombly, or any other standard, it is not just implausible that the Government could prevail in this case; it is impossible.

C. Analysis

Pointing to a long and unbroken line of Customs Headquarters rulings stretching back roughly two decades, Pressman-Gutman emphasizes that the agency “has repeatedly and consistently held that Customs officials must issue [any] redelivery notice within thirty days of receiving a sample or other information from the importer in response to a Customs Form 28 [‘CF 28’ or ‘Request for Information’].” See Pressman-Gutman Reply at 2; see generally id. at 3 n. 4, 7, 9-10; Pressman-Gutman Motion to Dismiss at 2, 6-17.

As Pressman-Gutman notes, the relevant Customs Headquarters rulings “interprete ] two governing regulations [concerning the timing of demands for redelivery] so as to resolve ambiguities therein.” See Pressman-Gutman Reply at 2-4; see also Pressman-Gutman Motion to Dismiss at 7, 15-16; HQ 088904 (Feb. 19,1992) (explaining Customs Headquarters’ belief that 19 C.F.R. § 113.62(d) and 19 C.F.R. § 141.113(c) “must be read in conjunction with one another”).

The first regulation — 19 C.F.R. § 141.113(c) — requires that Customs issue any demand for redelivery of imported merchandise “promptly,” but does not define that term. See 19 C.F.R. § 141.113(c). Customs Headquarters rulings explain that the second regulation— 19 C.F.R. § 113.62(d) — gives meaning to the term “promptly.” In relevant part, § 113.62(d) expressly requires that “any demand for redelivery ... be made no later than 30 days after the date that the merchandise was released or 30 days after the end of the conditional release period (whichever is later).” 19 C.F.R. § 113.62(d) (emphasis added). And, finally, Customs Headquarters rulings state unequivocally that — in cases such as this— the “conditional release period” referred to in § 113.62(d) begins when Customs requests that an importer provide a sample or other information, and ends upon Customs’ receipt of the requested sample or other information. By regulation, any demand for redelivery must be made no later than 30 days thereafter. See 19 C.F.R. § 113.62(d).

Customs’ own series of “Informed Compliance” publications reflects the agency’s well-settled reading of 19 C.F.R. § 113.62(d) and 19 C.F.R. § 141.113(c) as requiring that, in a case such as this, any demand for redelivery be made no later than 30 days after Customs’ receipt of a requested sample. Customs publication What Every Member of the Trade Community Should Know About: Entry expressly states, flatly and unequivocally:

A demand for redelivery will be made on CF 1617 no later than ... 30 days after the end of the conditional release period.... A conditional release period is established in one of two ways:

1. By regulation, e.g., 19 CFR 141.113(b) (180 days to determine country of origin of textiles); or

2. By notifying the importer of record of a conditional release period within 30 days after release, such as through issuance of a CF 28 “Request for Information” requesting a sample. The issuance of a notice establishes the beginning of the conditional release period; the period ends when CBP receives the sample.

A failure to comply with a request for redelivery will result in the issuance of a demand for liquidated damages.

U.S. Customs and Border Protection, What Every Member of the Trade Community Should Know About: Entry (March 2004) at 15 (emphases added). The Government fails even to acknowledge — much less seek to explain away-— this “Informed Compliance” publication and its clear and unqualified articulation of Customs Headquarters’ “bright line” rule on the timing of the issuance of demands for redelivery, distilling and succinctly restating the holdings of numerous Customs Headquarters rulings over the years.

Pressman-Gutman cites HQ 115941 as a case with facts “astonishingly similar” to the facts of this case. See PressmanGutman Motion to Dismiss at 12; HQ 115941 (May 15, 2003); see generally Pressman-Gutman Motion to Dismiss at 10-12 (discussing HQ 115941). In that case, Customs Headquarters cancelled redelivery notices issued by Customs personnel at the Port of JFK Airport. See HQ 115941.

The importer at issue in HQ 115941 had made three entries of garments under a folklore provision of the Harmonized Tariff Schedule of the United States (“HTSUS”) that was free from quota and visa requirements. See HQ 115941. To verify that the merchandise was properly classified and therefore free from quota and visa requirements, Customs timely issued three Requests for Information (CF 28s) to the importer, requesting samples and descriptive literature. Id. The CF 28 relating to the first entry was dated January 12, 2000, while the CF 28s relating to the other two entries were dated February 11, 2000. Id. The importer submitted the requested samples, but explained that no descriptive literature was available. Id. Customs received the sample related to the first entry on February 2, 2000, and received the samples for the two remaining entries on March 8, 2000. Id.

On February 11, 2000, the port issued yet another CF 28 “which was attributed to [the first entry] in Block 5 [of the form] but noted that ‘[p]ending on [the other two entries] (descriptive literature and catalogues) ... The samples are going to be sent to national import specialist to determine classification and to determine if the items are traditional folk lore exempt from quota.’ ” See HQ 115941. Thereafter, Customs personnel at the port forwarded the samples and literature (which had been located in the meantime) to the National Commodity Specialist, who concluded that the garments did not qualify as folklore items. Id. Customs personnel at the Port of JFK Airport issued demands for redelivery on April 25, 2000, followed by a demand for liquidated damages on June 7, 2000. Id.

Thus, as Pressman-Gutman correctly observes, the demand for redelivery as to the first entry in question in HQ 115941 was issued not 30 days but, rather, nearly three months after Customs received the requested sample; and the demands for redelivery as to the other entries were issued nearly two months after the samples were received. See Pressman-Gut-man Motion to Dismiss at 11; HQ 115941. The importer protested the demands for redelivery as untimely, and readily prevailed. See id.

In HQ 115941, Customs Headquarters explained:

In Customs Service Decision [C.S.D.] 90-99, [Customs] stated that 19 C.F.R. § 113.62(d) prevents it from enforcing a demand for redelivery issued over 30 days after the date that the merchandise was released unless a conditional release period is established. In addition, a request for a sample on a CF 28 made no later than 30 days after release of the merchandise establishes a conditional release period. The beginning of the conditional release period is the date the CF 28 is issued, and the end of the conditional release period is the date [Customs] receives the sample. A demand for redelivery must be made no later than 30 days after the sample is received.

For the subject merchandise, conditional release periods were established on January 12, 2000, and ... on February 11, 2000, when [Customs] requested samples. The conditional release period for the merchandise that is the subject of [the first entry] ended on February 2, 2002, when a sample was supplied. Similarly, the conditional release period for the merchandise pertaining to the other two entries ended on March 8, 2000, when [Customs] received the requested samples. [Customs] had 30 days from each of those dates to demand redelivery of the respective merchandise. The CF 4647 redelivery demands were issued on April 25, 2000, well beyond the 30-day allowable period. Consequently, the demands for redelivery were not timely and are unenforceable.

HQ 115941 (emphases added).

In the case at bar, the record does not indicate precisely when Customs received the samples submitted by Pressman-Gut-man. However, the Complaint avers that the Customs notices advising PressmanGutman that the samples had been sent to the laboratory are dated October 15, 1999 and October 25, 1999. See Complaint ¶¶ 13, 25. And both demands for redelivery were issued on February 8, 2000. See Complaint ¶¶ 14, 26. Accordingly, by the Government’s own admission, the demands for redelivery in this case were not issued until well over three months after the samples were in Customs’ possession. Pressman-Gutman argues that “[u]nder the authority of HQ 115941, the subject redelivery notices were patently untimely, and the Complaint fails to state a cause of action.” See Pressman-Gutman Motion to Dismiss at 12.

Moreover, as Pressman-Gutman emphasizes, “the holding of HQ 115941 was not a watershed development.” See PressmanGutman Motion to Dismiss at 12. To the contrary, the strict time limitations set forth and enforced in HQ 115941 can be traced back in time, to C.S.D. 90-99 and beyond. See generally C.S.D. 90-99 (HQ 732043) (June 28, 1990). In C.S.D. 90-99, one of the seminal rulings on point, Customs Headquarters clearly set forth the time limitation on Customs’ request for samples or other information as well as the time limitation on Customs’ issuance of any demand for redelivery, and — at the same time — explained the duration of the “conditional release period” for purposes of 19 C.F.R. § 113.62(d):

For purposes of 19 C.F.R. 113.62(d), we consider a request for a sample on a Customs Form (CF) 28 Request for Information, ... issued by Customs no later than 30 days after the date the merchandise is released, to establish a conditional release period. The beginning of the conditional release period is the date the CF 28 is issued; the end of the conditional release period is the date Customs receives the sample.... [Any] demand for redelivery must be made no later than SO days after the end of the conditional release period, i.e., SO days after the receipt of the sample by Customs.

C.S.D. 90-99 (HQ 732043) (emphasis added).

Further, as Pressman-Gutman explains, Customs Headquarters restated its position in response to industry inquiries about the meaning of C.S.D. 90-99. See generally Pressman-Gutman Motion to Dismiss at 13-14 (discussing HQ 223315 (Sept. 4, 1991); HQ 223535 (Sept. 21, 1992)). And, notwithstanding “widespread resistance from its personnel in the field,” a long series of Customs Headquarters rulings has consistently and “steadfastly” maintained the position articulated in C.S.D. 90-99 (HQ 732043) — that is, that, in a case such as this, “the agency has only 30 days from receipt of the sample to issue a redelivery notice.” See Pressman-Gutman Motion to Dismiss at 12.

A little more than a year after C.S.D. 90-99 (HQ 732043) was released, Customs issued HQ 223315 — a letter authored by the Deputy Commissioner of Customs, addressing questions raised by the Northern Border Customs Brokers Association about the intent of C. S.D. 90-99. See HQ 223315 (Sept. 4, 1991). Reiterating Customs Headquarters’ position set forth in C.S.D. 90-99 — i.e., that any demand for redelivery must be made no later than 30 days after Customs’ receipt of requested samples — HQ 223315 explains:

Thank you for your letter ... expressing your Association’s position regarding C. S.D. 90-99. You have stated your concern that, through said decision, the time-frame within which the district director may demand redelivery for merchandise has been expanded and subjects the importer at some later time to punitive damages.

The period during which a sample may be obtained and redelivery ordered is set forth in the regulations.... C.S.D. 90-99 does not contract nor expand the time-frame provided for in the regulations. This decision does not establish a new time-frame for notice of redelivery. Customs still has only 30 days from the date of release of merchandise within which to request a sample. Thereafter, Customs has an additional SO days from the date of receipt of the sample within which to demand redelivery or take any other appropriate action. Nonetheless, we are aware of the fact that there may be some misunderstanding regarding the scope of C.S.D. 90-99. Therefore, the Office of Regulations and Rulings [at Customs Headquarters] is in the process of reviewing this issue in order to clarify any misinterpretation which may exist.

HQ 223315 (emphasis added).

HQ 223315 was followed by HQ 223535, roughly one year later. HQ 223535 — entitled “Issuance of Guidelines on the Time in which Demand for Redelivery Must be Made” — was authored by the Director of the Commercial Rulings Division, in the Office of Regulations and Rulings at Customs Headquarters. See HQ 223535 (Sept. 21, 1992). HQ 223535 once again reinforced the 30-day time limitation on Customs’ issuance of demands for redelivery, stating:

As you are probably aware, a letter, signed by the Deputy Commissioner, was sent on September 4, 1991, to the ... Brokers Association on the subject of the time within which Customs may demand redelivery of merchandise. A copy of this letter ([HQ] 223315) is attached. Basically, the position taken in this letter is that Customs has 30 days from the release of merchandise within which to request information about, or a sample of, the merchandise. If such a request is made, Customs has a second 30-day period from the date of receipt of the information or sample within which to demand redelivery or take other appropriate action.

[A] Notice of Redelivery must be “promptly” issued, that is, it must be issued either: (1) no later than 30 days after the date the merchandise is released if there is no occurrence establishing a conditional release period; or (2) if there is an occurrence establishing a conditional release period ..., no later than 30 days after the end of that period (e.g., if information or a sample is requested, within 30 days from the date of receipt by Customs of the information or sample)....

HQ 223535 (emphases added).

The District Director of Customs at the Port of Charleston subsequently challenged the time limits set forth by Customs Headquarters in HQ 223315 and HQ 223535, expressing concerns about, inter alia, the “danger” inherent in requiring any demand for redelivery to be issued no more than 30 days after Customs’ receipt of requested samples. In HQ 951300, Customs Headquarters acknowledged the legitimacy of the concerns raised, but nevertheless rebuffed the District Director’s challenge and reaffirmed the time limitations once more, explaining:

A policy determination was set in September 1991 by the Deputy Commissioner that Customs must examine the goods or request samples in the first 30 days after the release; thereafter, Customs must complete its exam and order redelivery in the next 30 days. The danger of limiting the time period to decide admissibility to 30 days from the receipt of the sample was raised.... After your request [for reconsideration of the time limitations], this matter was again brought to the attention of the Assistant Commissioner.... A meeting with the Assistant Commissioner was held in late January [1993] on the subject. However, the Assistant Commissioner upheld the prior position on the time in which demand for redelivery must be made by Customs.

HQ 951300 (Aug. 3, 1993) (emphases added).

The Customs Headquarters rulings discussed above have never been modified or revoked to date. Indeed, Customs Headquarters has continued to consistently articulate and apply the time limitations discussed above set forth therein in a wide range of rulings interpreting 19 C.F.R. § 141.113(c) (which requires that any demand for redelivery be issued “promptly”) and/or 19 C.F.R. § 113.62(d) (which requires, inter alia, that any demand for redelivery be made “no later than 30 days ... after the end of the conditional release period”- — ie., no later than 30 days after Customs’ receipt of requested samples). See, e.g., HQ 224872 (July 5, 1994); HQ 225319 (July 26, 1994); HQ 226218 (March 19, 1996); HQ114693 (Dec. 10, 1999); HQ 115941 (May 15, 2003); HQ W968383 (March 2, 2007).

1. The Government’s Arguments

The Government raises several arguments in an effort to establish the timeliness of the demands for redelivery at issue in this action. But none of the Government’s arguments casts a different light on the long and consistent line of rulings by Customs Headquarters discussed above,

a. The Government’s Claims of Compliance With 19 C.F.R. § 118.62(d)

The Government first invokes 19 C.F.R. § 113.62(d), which requires (in relevant part) that “any demand for redelivery ... be made no later than ... 30 days after the end of the conditional release period.” See 19 C.F.R. § 113.62(d). The Government asserts that “nothing in the language of § 113.62(d) ... prevented] [the individual Customs staffer at issue in this action] from extending the conditional release period so long as a demand for redelivery is made within 30 days after the [conditional release] period ends.” See Pl.’s Opposition to Motions to Dismiss at 5; see also id. at 10. However, the Government’s position is squarely at odds with settled agency practice.

Although the Government seeks to focus on the language of 19 C.F.R. § 113.62(d), the text of the regulation itself, standing alone, is not determinative, because the regulation leaves the term “conditional release period” undefined. Pressman-Gut-man points to the “consistent and longstanding interpretation[ ]” of § 113.62(d) reflected in the rulings of Customs Headquarters, holding that the “conditional release period” ends with Customs’ receipt of a requested sample and requiring the issuance of any demand for redelivery within 30 days thereafter. See PressmanGutman Motion to Dismiss at 2; see generally id. at 6-17 (analyzing long line of rulings by Customs Headquarters interpreting “conditional release period” as that phrase is used in 19 C.F.R. § 113.62(d)); Pressman-Gutman Reply at 2, 3 n. 4, 7, 9-10 (same).

In contrast to the Customs Headquarters rulings cited by Pressman-Gutman, the Government cites no case law or Headquarters rulings (or any other authority) to refute Pressman-Gutman’s claim that the conditional release periods ended when Customs received the requested samples in this case. Nor does the Government point to any authority whatsoever to support the notion that a Customs staffer could subsequently commence new conditional release periods (whether by issuing a CF 28 (Request for Information) purporting to do so, or otherwise). Nor can the Government do so. Interpreting applicable Customs regulations, Customs Headquarters has authoritatively and consistently ruled — in cases such as this — that the conditional release period begins when a sample is requested by Customs and ends when the sample is received, and that any demand for redelivery must be made within 30 days thereafter. Contrary to the Government’s implication, the consistent, unequivocal, and unambiguous rulings of Customs Headquarters on this point leave no room for any alternative interpretation of the phrase “conditional release period” or any other part of 19 C.F.R. § 113.62(d) as that regulation applies here.

Thus, under the extant Customs Headquarters rulings, the demands for redelivery in this case were untimely, as Pressman-Gutman claims. Pursuant to the unambiguous and unequivocal holdings of those Headquarters rulings, the conditional release periods in this case began on September 29, 1999 and October 15, 1999 (when Customs requested samples from the first and second entries, respectively), and ended when Customs received the samples from Pressman-Gutman at some point before October 15, 1999 and October 25, 1999 (the dates when Customs acknowledged receipt of the samples). The demands for redelivery were not issued until February 8, 2000, however — much more than 30 days after the samples were received (ending the respective conditional release periods).

Significantly, there is no claim here that Customs Headquarters could not interpret the phrase “conditional release period” (as it is used in 19 C.F.R. § 113.62(d)) to extend beyond Customs’ receipt of samples. Pressman-Gutman argues only that Customs Headquarters has resolutely declined to do so in the past. There is therefore no need to reach that question here.

To be sure, Customs- — like any agency— is free to change its interpretation of its regulations. But any such change in interpretation must be effected properly, in accordance with the law. As the U.S. Court of Appeals for the D.C. Circuit has underscored, “an agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored, and if an agency glosses over or swerves from prior precedents without discussion it may cross the line from the tolerably terse to the intolerably mute.” Bush-Quayle '92 Primary Committee, Inc. v. Federal Election Comm’n, 104 F.3d 448, 453 (D.C.Cir.1997) (quoting Greater Boston Tel. Corp. v. FCC, 444 F.2d 841, 852 (D.C.Cir.1970)); Grace Petroleum Corp. v. Federal Energy Regulatory Comm’n, 815 F.2d 589, 591 (10th Cir.1987) (same). Thus, “[a]n agency interpretation that would otherwise be permissible is, nevertheless, prohibited when the agency has failed to explain its departure from prior precedent.” Bush-Quayle '92 Primary Committee, 104 F.3d at 453 (citations omitted).

In the case at bar — as in Acadian Gas— the agency “has failed to acknowledge even that a departure from past practice has occurred,” much less to proffer any rationale for the change. See Acadian Gas Pipeline Sys. v. Federal Energy Regulatory Comm’n, 878 F.2d 865, 868 (5th Cir.1989) (rejecting agency’s “newly stated interpretation” as “an arbitrary, capricious departure from past practice”). There is no indication that the individual Customs staffer in this case recognized that the demands for redelivery here were bucking 20 years of settled Customs Headquarters precedent.

Moreover, the record reveals nothing special or unusual about these transactions. Nor is there any indication of any significant changes in circumstances in the trade or in the regulatory environment which might suffice to justify a change in Customs’ interpretation of the regulations at issue. See, e.g., Harrington v. Chao, 280 F.3d 50, 60-61 (1st Cir.2002) (holding that Labor Department’s rationale for change in interpretation of agency regulation at issue must “explain whether changing labor market economics justify a modification of prior interpretation or a building construction trades exception to it, or what the other reasons for the change are”) (emphases added). As discussed above, concerns about the difficulty of completing analyses within 30 days of Customs’ receipt of samples had been raised within the agency long before the events at issue here, and were recognized but overruled by Customs Headquarters in formulating the agency’s interpretation of its regulations.

In sum and substance, the Government here contends that individual Customs personnel at ports all across the country are empowered to redefine the concept and duration of the conditional release period “by unilateral fiat” and without explanation, as each individual sees fit, on a case-by-case basis, with no regard for consistency or predictability, effectively over-riding on a “one-off’ basis virtually two full decades of Customs Headquarters rulings setting forth Headquarters’ official, considered interpretation of the agency’s regulations governing the timing of the issuance of demands for redelivery. Merely to state the proposition is to refute it. Compare, e.g., PL’s Opposition to Motions to Dismiss at 5 (asserting that “nothing in the language of § 113.62(d) ... prevents [an individual Customs staffer] from extending the conditional release period so long as a demand for redelivery is made within 30 days after the [conditional release] period ends”) and Pressman-Gutman Motion to Dismiss at 2 (characterizing this as a case where “a single Customs employee sought by unilateral fiat to extend the ‘conditional release’ period”); see also id. at 3, 16, 19, 21, 23; Pressman-Gutman Reply at 1, 4, 7, 8,13-14.

b. The Government’s Claims of Compliance With 19 C.F.R. § 14.1.113(c)

Apart from its argument based on 19 C.F.R. § 113.62(d) (discussed above), the Government also invokes the other regulation at issue— § 141.113(c), which requires Customs to make demands for redelivery “promptly.” See 19 C.F.R. § 141.113(c). Specifically, the Government asserts that “[n]o specific time limit is provided for the port director to demand redelivery ..., but only that the demand for redelivery be made ‘promptly.’ ” See Pl.’s Opposition to Motions to Dismiss at 6; see also id. at 14. The Government thus maintains that “[the Customs staffer’s] actions here complied with ... 19 C.F.R. § 141.113(c).” See Pl.’s Opposition to Motions to Dismiss at 6; see also id. at 14. Again, however, the Government’s argument ignores Customs Headquarters’ established interpretation of the agency’s regulation.

The Government cites no authority whatsoever to support its claim that the demands for redelivery in this case were made “promptly,” as required by 19 C.F.R. § 141.113(c). Nor can the Government do so. Interpreting applicable Customs regulations, Customs Headquarters has authoritatively and consistently ruled that — in cases such as this — “promptly” means no later than 30 days following the agency’s receipt of requested samples. Contrary to the Government’s implication, the consistent, unequivocal, and unambiguous rulings of Customs Headquarters on this point leave no room for any alternative interpretation of the term “promptly” or any other part of 19 C.F.R. § 141.113(c) as that regulation applies here.

Thus, under the extant Customs Headquarters rulings, the demands for redelivery in this case were not made “promptly,” contrary to the Government’s claims. Under the clear holdings of the rulings of Customs Headquarters, the requirement in 19 C.F.R. § 141.113(c) that demands for redelivery be made “promptly” mandates that, in a case such as this, any such demands be issued no later than 30 days following the agency’s receipt of requested samples. In the instant case, Customs received the samples from Pressman-Gut-man no later than October 15, 1999 and October 25, 1999 (when Customs acknowledged receipt of the samples from the first and second entries, respectively). However, the demands for redelivery were not issued until February 8, 2000 — much more than 30 days later.

Customs (like any other agency) is, of course, free to change its interpretation of its regulations — provided that the agency follows the proper procedure, which Customs in this instance did not. See generally section I.C.l.a, supra (summarizing procedural and substantive legal requirements to be met where agency wishes to change its interpretation of a regulation). Pressman-Gutman notably does not claim that Customs Headquarters could not interpret the term “promptly” (as that term is used in 19 C.F.R. § 141.113(c)) to mean a period of more than 30 days following Customs’ receipt of samples. Pressman-Gutman argues only that Customs Headquarters has repeatedly refused to adopt such an interpretation in the past. That suffices to resolve the issue presented here,

c. The Government’s Claim That “Other Appropriate Action” Was Taken

In what seems to be its principal argument for the timeliness of the demands for redelivery in this case, the Government seizes on a phrase that appears in an internal agency memorandum and in two Customs Headquarters rulings (all of which date back nearly two decades), indicating that “Customs has an additional 30 days from the date of receipt of the sample within which to demand redelivery or take other appropriate action.” See PL’s Opposition to Motions to Dismiss at 5 (emphasis added); see also id. at 10-13, 21; Memorandum to Deputy Commissioner of Customs from Assistant Commissioner, Office of Commercial Operations, re: “C.S.D. 90-99, Demand for Redelivery of Merchandise” (Sept. 3, 1991) (“September 3, 1991 Memo”); HQ 223315 (Sept. 4, 1991); HQ 223535 (Sept. 21,1992).

The Government’s theory is that the demands for redelivery at issue in this action are valid even though the demands were not made within 30 days of the agency’s receipt of Pressman-Gutman’s samples, because a Customs staffer at the Port of JFK Airport instead took “other appropriate action” by “notifying] Pressman (by way of Form 28) that the samples had been sent to the laboratory for analysis, and that the conditional release period was extended for 90 days pending laboratory analysis of the samples.” See Pl.’s Opposition to Motions to Dismiss at 11; see also id. at 5, 10-13. Significantly, however, the Government cites no case law or Customs Headquarters rulings to support its claim that the actions of the Customs staffer here excused the agency from issuing a demand for redelivery within 30 days of the agency’s receipt of the requested samples. Nor is there any authority to suggest that the reference to “other appropriate action” in any of the three documents was intended to effectively eviscerate the hard-and-fast 30-day limitation on the issuance of demands for redelivery set forth in 20 years of Customs Headquarters rulings. In fact, all authority is quite to the contrary.

The Government points to a September 3, 1991 memo from the Assistant Commissioner of the Office of Commercial Operations, addressed to the Deputy Commissioner of Customs, transmitting a draft of HQ 223315 (which is the Deputy Commissioner’s response to a letter from the Northern Border Customs Brokers Association seeking clarification as to the effect of C.S.D. 90-99 (HQ 732043) on the limitations on the timing of demands for redelivery). See September 3, 1991 Memo; Pl.’s Opposition to Motions to Dismiss at 11-12; see also Pressman-Gutman Reply at 9 n. 7. The September 3, 1991 Memo states, in relevant part:

Customs has only 30 days from the date of release [of merchandise] within which to request a sample; plus, an additional 30 days from the date of receipt of the sample within which to demand redelivery or take any other appropriate action ....

... The additional 30 days [after the agency receives a sample] may not be sufficient for Customs to make a determination as to whether it will demand redelivery or take any other appropriate action. For instance, if a computer chip is forwarded to Technical Services to determine if the software on a computer chip violates any copyrights, 30 days may not be sufficient time for the lab to complete its review. The same may hold true if the import specialist sends a sample garment to the lab to determine the fabric content....

September 3, 1991 Memo (emphases added). Highlighting the Memo’s references to “other appropriate action,” the Government characterizes the Memo as “addressing] ... the issue in the case at bar — the need for additional time when a laboratory analysis of the imported merchandise cannot be completed within 30 days after receipt of a sample of merchandise.” See Pl.’s Opposition to Motions to Dismiss at 11-12.

The Government’s reliance on the September 3, 1991 Memo is misplaced, however. And, like the Government’s other arguments, this argument too cannot withstand scrutiny. While it is not clear from the record in this action exactly what is contemplated by the phrase “other appropriate action,” it is abundantly clear that the phrase does not license what the Customs staffer did in this case.

HQ 223535 definitively disposes of the Government’s theory. See HQ 223535 (Sept. 21, 1992) (entitled “Issuance of Guidelines on the Time in which Demand for Redelivery Must be Made”). As explained above in the introduction to this section (ie., section I.C), HQ 223535 memorializes the recommendation of the Director of the Commercial Rulings Division in Customs Headquarter’s Office of Regulations and Rulings that a Customs Directive be issued to agency personnel in the field concerning “the time within which Customs may demand redelivery of merchandise.” See HQ 223535. HQ 223535 specifically refers to HQ 223315 (dated September 4, 1991) — the final version of the draft letter transmitted by the September 3, 1991 Memo on which the Government relies — and expressly restates the position set forth in HQ 223315 (that is, that “Customs has 30 days from the release of merchandise within which to request information about, or a sample of, the merchandise,” and that “[i]f such a request is made, Customs has a second 30-day period from the date of receipt of the information or sample within which to demand redelivery or take other appropriate action ”). See HQ 223535 (emphasis added); see also HQ 223315; September 3, 1991 Memo. In the very next paragraph, however, HQ 223535 states flatly and unequivocally — with no hedging whatsoever — that the regulatory requirement that a demand for redelivery be issued “promptly” means that any such demand must be issued “within 30 days from the date of receipt by Customs of the [requested] information or sample.” Period. Full stop. See HQ 223535.

Thus, whatever other measure(s) the phrase “other appropriate action” may authorize, HQ 223535 makes it clear that, contrary to the Government’s assertions, that phrase cannot be read to alter in any way Customs Headquarters’ strict requirement that any demand for redelivery be made no later than 30 days after the agency’s receipt of a requested sample (or other information). To the same effect are numerous other Customs Headquarters rulings that post-date the September 3, 1991 Memo, which — like HQ 223535 — state flatly (with no hedging, no caveat, no equivocation, and no reservation) that any demand for redelivery must be issued within 30 days after Customs’ receipt of a sample or other requested information. Those additional rulings include HQ W968383, which Customs Headquarters issued even as the Government was preparing its response to Pressman-Gutman’s Motion to Dismiss in this action. See Pressman-Gutman Reply at 11 (emphasizing that, “after [Pressman-Gutman] filed its Motion to Dismiss, Customs Headquarters again rejected efforts by the Port of JFK to enforce a redelivery notice more than thirty days after Customs received a sample”); HQ W968383 (March 2, 2007) (explaining that regulatory requirement that demand for redelivery be made “promptly” mandates that, “if information or a sample is requested,” any demand for redelivery must be issued “within thirty days from the date of receipt by [Customs] of the information or sample”).

As discussed above, HQ 223535 and the language of numerous other rulings by Customs Headquarters that post-date the September 3,1991 Memo belie the Government’s claim that the Memo’s reference to “other appropriate action” can be read to authorize the issuance of a demand for redelivery more than 30 days after Customs’ receipt of a requested sample. Those Customs Headquarters rulings alone are enough to rob the Government’s argument of any persuasive force. But the Government’s characterization of the September 3, 1991 Memo as a document addressing “the issue in the case at bar— the need for additional time when a laboratory analysis of the imported merchandise cannot be completed within 30 days after receipt of a sample of merchandise” — also warrants comment. See PL’s Opposition to Motions to Dismiss at 11.

At times, the Government seems to intimate that Customs Headquarters is ignorant of, or has been deaf to, the concerns of Customs personnel that, in some cases (as in this case), analysis may not be completed within 30 days after Customs’ receipt of samples. To the contrary, Customs Headquarters has expressly acknowledged those concerns (in the September 3, 1991 Memo, and thereafter), and has nevertheless elected to repeatedly reinforce the 30-day limitation on issuance of demands for redelivery.

In HQ 951300, for example, Customs Headquarters responded to a request for reconsideration of HQ 088904 made by the District Director of the Port of Charleston. See HQ 951300 (Aug. 3, 1993) (expressly acknowledging that 30 days may be insufficient to complete analysis in some cases, but nevertheless reaffirming 30-day limitation on issuance of demand for redelivery); see also HQ 088904 (Feb. 19, 1992). In ruling on the request for reconsideration, Customs Headquarters explicitly recognized “[t]he danger of limiting the time period to decide admissibility to 30 days from the receipt of the sample,” and noted that the concern had been raised and considered even prior to the issuance of HQ 223315 on September 4, 1991, and, moreover, had been raised with the Assistant Commissioner once again in the context of the District Director’s request for reconsideration. See HQ 951300; HQ 223315 (Sept. 4, 1991). Still, HQ 951300 advised that “the Assistant Commissioner upheld the prior position on the time in which demand for redelivery must be made.” See HQ 951300. Indeed, in its rulings, Customs Headquarters has emphasized time and again that its position limiting the time for issuance of a demand for redelivery has been “thoroughly considered.” See, e.g., HQ 951300 (explaining that “the matter was thoroughly considered prior to the issuance of HQ 088904”); HQ 225319 (July 26, 1994) (stating that Customs’ Headquarters’ “interpretation of [19 C.F.R. § 113.62(d) and § 141.113(c) ] has been thoroughly considered”); HQ W968383 (March 2, 2007) (same); HQ 226218 (March 19, 1996) (stating that “Customs has thoroughly considered the interpretation of [19 C.F.R. § 113.62(d) and § 141.113(c) ]”).

In short, contrary to the Government’s implication, Customs Headquarters has long been keenly aware of the fact that, in some cases (like this one), analysis may not be completed within 30 days after the agency receives requested samples. Nevertheless, Customs Headquarters has repeatedly and consistently ruled that any demands for redelivery must be made within that 30-day period; and Customs Headquarters has not hesitated to void demands for redelivery issued thereafter. See, e.g., HQ 114693 (Dec. 10, 1999) (voiding as “not timely” and “unenforceable” a demand for redelivery made more than 30 days following Customs’ receipt of sample, even though Customs did not receive lab report until after 30-day period had expired).

The Government also conspicuously fails to explain why — if, in fact, the 30-day limitation on issuance of a demand for redelivery could be avoided simply by a Customs staffer’s unilateral issuance of a CF 28 imposing a further conditional release period of some duration, at the staffer’s discretion — that option was never articulated or identified as “other appropriate action” in even a single Customs Headquarters ruling issued over the past two decades, particularly since such an option would have allayed anxious agency staffers. The 30-day limitation on issuance of a demand for redelivery would have generated much less concern among Customs personnel if it could be so readily circumvented. See, e.g., Pressman-Gutman Reply at 9 (underscoring the “lengthy deliberative process in which Customs Headquarters promulgated its strict 30 day rule despite widespread dissent among the agency’s rank and file ”) (emphasis added).

d. The Government’s Attempts to Distinguish This Case on Its Facts

In addition to the legal arguments that it advances, the Government also attempts to distinguish the facts of this case from those in the long and unbroken line of Customs Headquarters rulings on which Pressman-Gutman relies. See generally PL’s Opposition to Motions to Dismiss at 10, 13-15; see also id. at 20 (asserting that instant case is “not in conflict with the earlier rulings” by Customs Headquarters). Specifically, the Government tries to make much of the fact that “[n]one of the authorities relied on by Pressman addressed a situation in which Customs, within 30 days after receipt of samples of merchandise, notified the importer that the conditional release period was extended to allow for laboratory analysis of the samples.” See id. at 10. But the Government’s broad-brush attempts to dismiss the impressive line of Customs Headquarters precedent are unavailing.

It is true that, as the Government indicates, there is no ruling by Customs Headquarters “on all fours” with the facts of this case. However, contrary to the Government’s implication, the anomalous nature, of these facts affords no support for the Government’s position. The Government makes no claim that, prior to this case, any Customs staffer has ever even attempted to affirmatively impose a conditional release period beyond the agency’s receipt of requested samples. The fact that no such case is reflected in approximately two decades of rulings by Customs Headquarters speaks volumes to the uniformity, clarity, and decisiveness of Headquarters’ long-held and oft-repeated position on the timing of the issuance of demands for redelivery.

D. Summary

In this action, the Government seeks to collect $120,000 in liquidated damages from Pressman-Gutman and AMICO, for Pressman-Gutman’s alleged breach of the terms of its customs bond. According to the Government’s Complaint, PressmanGutman breached the terms of its bond by failing to return two entries of merchandise to Customs’ custody notwithstanding demands for redelivery of the goods. As discussed above, however, the demands for redelivery were issued more than 30 days after Customs’ receipt of requested samples, when the “conditional release period” ended. The demands for redelivery were thus untimely and invalid, and PressmanGutman’s failure to make redelivery did not constitute a breach of the terms of its bond.

Absent a breach of the terms of Pressman-Gutman’s customs bond, the Government cannot maintain this action for liquidated damages against Pressman-Gutman or AMICO. Even taking as true all factual allegations in the Government’s Complaint and drawing all inferences in the Government’s favor, there is no set of facts that, if proved, would entitle the Government to the relief sought. The Complaint therefore fails to state a claim. Accordingly, pursuant to USCIT Rule 12(b)(5), Pressman-Gutman’s Motion to Dismiss and AMICO’s Cross-Motion to Dismiss must be granted, and the Government’s Complaint dismissed.

II. AMICO’s Cross Motion for Collateral Security and Attorney’s Fees

Besides joining in Pressman-Gutman’s Motion to Dismiss, AMICO also seeks other relief by cross-motion. See AMICO Cross-Motion at 1-2, 5-7. AMICO first requests that Pressman-Gutman be ordered to deposit funds in the amount of $120,000 with AMICO as collateral security, based upon Customs’ demands against AMICO in connection with the agency’s demands for redelivery of Pressman-Gut-man’s merchandise. Id. at 1-5, 7. In addition, AMICO requests that Pressman-Gut-man be ordered to reimburse a total of $13,246.80 as “reasonable attorney’s fees” and expenses, as invoiced by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (“GDLSK”) and the Law Offices of Michael P. O’Connor. See id. at 2, 6-7; AMICO Cross-Motion, Affirmation in Support of Attorney’s Fees of Edward B. Ackerman, Esq. (“Ackerman Aff.”), Exh. 1; AMICO Cross-Motion, Affirmation of Michael P. O’Connor, Esq. (“O’Connor Aff.”), Exh. 1.

The dismissal of the Government’s Complaint moots AMICO’s motion requesting that Pressman-Gutman be ordered to deposit $120,000 as collateral security. See section I.D, supra. Accordingly, the sole outstanding issue is AMICO’s claim against Pressman-Gutman for attorneys’ fees and expenses under the indemnity agreement.

Pressman-Gutman maintains that GDLSK had a conflict of interest that should have precluded the firm from representing AMICO. See Pressman-Gut-man Response to Cross-Motion at 2, 13-18. Pressman-Gutman contends that all claims for attorneys’ fees and expenses relating to GDLSK’s representation of AMICO — whether incurred by the Law Offices of Michael P. O’Connor or by GDLSK itself — thus must be denied. See id. at 2, 18-20. Pressman-Gutman also objects to payment of certain other fees invoiced by the Law Offices of Michael P. O’Connor, including fees for work related to cases other than the instant action, and a $200 filing fee. See id. at 2, 20 & n. 14.

As discussed in greater detail below, AMICO raises virtually no defense to Pressman-Gutman’s conflict of interest claims, which have substantial merit. Accordingly, AMICO’s Cross-Motion for Collateral Security and Attorney’s Fees must be granted in part, and denied in part.

A. Statement of Facts

Companies that import commercial merchandise into the United States are required, with few exceptions, to post a bond to ensure that all regulatory and statutory obligations associated with the importation of that merchandise are satisfied. See 19 C.F.R. § 113; see also AMICO Cross-Motion at 2. Several years before the entry of the merchandise at issue in this action, at Pressman-Gutman’s request, AMICO executed and delivered to Customs a continuous customs bond in the amount of $120,000, to guarantee Pressman-Gut-man’s obligations to the United States. See id. at 2-3; Complaint, Exh. 1. It is that bond which is at issue in this action.

In consideration of and prior to AMI-CO’s execution of the bond, AMICO required Pressman-Gutman to execute an indemnity agreement. See AMICO Cross-Motion at 3, Exh. B. Pursuant to the “collateral security clause” of that agreement, Pressman-Gutman undertook:

To indemnify and save harmless [AMI-CO] from and against any and all liability, claim, demand, loss, damage, expense, cost, [and] attorney’s fees and expenses, including] without limitation, fees and disbursements of counsel incurred by [AMICO] in any action or proceeding between [Pressman-Gut-man] and [AMICO], or between [AMI-CO] and any third party, which [AMI-CO] shall at any time incur by reason of its execution of any bond or its payment of or its liability to pay any claim, irrespective of whether the claim is made against [AMICO] as a joint or several obligee and whether [Pressman-Gut-man] is then liable to make such payment, and to place [AMICO] in funds to meet all its liability under any bond, promptly upon request and before [AM-ICO] may be required to make any payment thereunder[;] and [a] copy of the claim, demand, voucher or other evidence of the payment by [AMICO] of any liability, claim, demand, loss, damage, expense, cost and attorney’s fees, shall be prima facie evidence of the fact and amount of [Pressman-Gutman’s] liability to [AMICO] under this agreement. Any demand upon [AMICO] by [Customs] shall be sufficient to conclude that a liability exists and [Pressman-Gut-man] shall then place [AMICO] with sufficient funds in a form and amount deemed acceptable in [AMICO’s] sole discretion, as collateral security to cover the liability.

AMICO Cross-Motion at 3, Exh. B (emphases added).

As discussed in section I.A above, in early February 2000, Customs made demands for redelivery of two entries of fabric more than four months after the merchandise had been imported by Pressman-Gutman, and more than three months after Pressman-Gutman had provided samples of the goods for analysis in response to Customs’ requests. See Pressman-Gutman Response to Cross-Motion at 3.

According to the demands for redelivery, the merchandise had been misclassified upon entry, and had entered the United States under the wrong quota category. See Pressman-Gutman Response to Cross-Motion at 3. In the demands for redelivery, Customs directed PressmanGutman to either return the merchandise to the agency’s custody or submit new visas reflecting the proper quota category from