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Sananikone v. United State

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


February 25, 2009

PUONGPUN SANANIKONE, PLAINTIFF,
v.
UNITED STATES OF AMERICA, DEFENDANT,
v.
PAUL TA, ET AL., COUNTERCLAIM-DEFENDANTS.

The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

On December 16, 2008, this Court denied the Government's first motion for service of Counterclaim Defendant Nguyen Vo by publication because the Government's supporting affidavit failed to allege a valid cause of action against the absent party. Presently before the Court is the Government's Renewed Motion, which, for the following reasons, is denied.

BACKGROUND

On October 25, 2007, the Government filed the counterclaim underlying the instant Motion. Through that counterclaim, the Government sought to recover unpaid debts from five Counterclaim Defendants. Only Mr. Vo remains to be served.

Pursuant to Federal Rule of Civil Procedure 4(m), this Court previously granted the Government a 60-day extension of time in which to serve Mr. Vo. The Court's decision was based in part on the declaration of a paralegal with the Tax Division of the United States Department of Justice, Brenda Seegars. According to Ms. Seegars, she had employed a process server in Florida to serve Mr. Vo at his last known address, an endeavor that proved unsuccessful. Ms. Seegars subsequently learned through Mr. Vo's previous employer that Mr. Vo had moved to California.

Counsel for the Government, Michael Pitman, then attempted to locate Mr. Vo by searching through official records of the Internal Revenue Service, westlaw.com's public record databases, and google.com. As a result, Mr. Pitman found seventeen physical addresses and one email address potentially belonging to Mr. Vo. On July 30, 2008, the Government sent letters to each of those addresses, but was again unsuccessful in reaching Mr. Vo.

However, on November 14, 2008, Mr. Pitman received a phone call from a woman claiming to rent one of the properties to which he had sent the July 30 letter. That woman claimed to be party to a lawsuit involving the Vole Trust and further stated that Mr. Vo had recently appeared in court on behalf of that entity.

Mr. Pitman subsequently contacted the Superior Court of California for the County of Sacramento and learned that the Vole Trust was represented by attorney Thomas M. Hogan. On November 17, 2008, by searching westlaw.com's public record databases and google.com, Mr. Pitman found three possible physical addresses for the Vole Trust. He then hired a service company to attempt personal service at all three addresses, which ultimately also proved unsuccessful.

Finally, Mr. Pitman contacted Mr. Hogan by mail to inform him of the legal proceedings against Mr. Vo. On or about December 16, Mr. Hogan contacted Mr. Pitman, but Mr. Hogan was unable to confirm or deny any affiliation between Mr. Vo and the Vole Trust. Nevertheless, Mr. Hogan offered to check his files and forward any appropriate documents to Mr. Pitman. Having heard nothing by December 29, Mr. Pitman again called Mr. Hogan's office at which time he discovered Mr. Hogan would be unavailable until January 5, 2009. Two days later, the Government filed this Renewed Motion Requesting Permission to Serve Mr. Vo by Publication.

STANDARD

Under Federal Rule of Civil Procedure 4(e)(1), a proper service of summons can be made by "following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made."

Accordingly, California's statute on service by publication governs whether substituted service is proper in this case. California Code of Civil Procedure § 415.50(a)(1) allows service by publication "if upon affidavit it appears to the satisfaction of the court in which the action is pending that the party to be served cannot with reasonable diligence be served in another manner specified in this article and that ... [a] cause of action exists against the party upon whom service is to be made or he or she is a necessary or proper party to the action."

"For the purpose of service by publication, the existence of a cause of action is a jurisdictional fact." Harris v. Cavasso, 68 Cal. App. 3d 723, 726 (3d Dist. 1977). Additionally, a party seeking leave to serve process by publication must establish that "reasonable diligence" has been exercised to serve process in another manner permitted by California law. Watts v. Crawford, 10 Cal. 4th 743, 749 n.5 (1995). "'The term 'reasonable diligence' ... denotes a thorough, systematic investigation and inquiry conducted in good faith by the party or his agent or attorney.'" Id. (citations omitted). "Before allowing a plaintiff to resort to service by publication, the courts necessarily require him to show exhaustive attempts to locate the defendant." Id. (internal quotations and citations omitted). This requirement exists because "it is generally recognized that service by publication rarely results in actual notice." Id. (citations omitted). Accordingly, a plaintiff that fails to take exhaustive measures to locate a party to be served cannot establish reasonable diligence. Id. (citations omitted).

ANALYSIS

1. Cause of Action

The Government Has Established the Existence of a Valid

The affidavit in support of the Renewed Motion contains sufficient allegations demonstrating that a valid cause of action exists against Mr. Vo. Mr. Pitman declared under penalty of perjury that this counterclaim was brought against Mr. Vo pursuant to 26 U.S.C. § 6672, which creates liability for unpaid taxes and assessments. Mr. Pitman further declared that

26 U.S.C. § 6502(a) authorizes the United States to bring suit to collect these assessments, and that the action is brought at the direction of the Attorney General of the United States, with the authorization and at the request of Treasury Department, pursuant to 26 U.S.C. § 7401. Based on these allegations, as well as supporting exhibits 3-8, which are Certificates of Assessments and Payments issued by the Department of Treasury against Mr. Vo, the Government satisfied its burden of alleging a valid cause of action exists against the absent Counterclaim Defendant.

2. Diligence

The Government Has Not Established the Requisite

Nevertheless, to prevail on its motion, the Government must also establish that in searching for Mr. Vo it completed a thorough and systematic investigation and inquiry. Watts, 10 Cal. 4th at 749 n.5. Despite the Government's efforts to locate Mr. Vo, it failed to meet this burden.

In Donel, Inc. v. Badalian, a Hawaiian corporation, Donel, similarly failed to establish reasonable diligence justifying service by publication.*fn1 87 Cal. App. 3d 327 (2d Dist. 1978). In that case, Donel's only act of diligence in searching for a missing defendant involved a single search of telephone directories. Id. at 333. That court stated, "Certainly such a search is one reasonable step to be taken but it does not exhaust the myriad of other avenues, such as city directories and tax rolls, to name two, for locating persons." Id.

The court further criticized Donel for failing to take "the one step which patently appeared to hold the most promise for locating [the defendant]--an inquiry addressed to [the defendant's attorney]." Id. Donel had previously corresponded with the defendant's attorney about the contract dispute between the parties. Consequently, the court opined that the plaintiff should have again contacted that attorney in an attempt to locate the defendant. Having failed to make such contact, the court concluded that the plaintiff failed to establish reasonable diligence. Id. at 334.

Later California courts have similarly treated the failure to exhaust available avenues of inquiry as fatal to an application such as the one presently before this Court.

For example, in Kott v. Superior Court, despite newly uncovered information indicating the defendant might reside in Canada, the plaintiff failed to make any attempt, including any inquiry of the defendant's counsel, to ascertain the defendant's new address. 45 Cal. App. 4th 1126, 1138 (2d Dist. 1996). Furthermore, the plaintiff neglected to pursue other available avenues of inquiry such as serving interrogatories on co-defendants who had already been served and were properly before that court. Id. at 1139. Accordingly, the court found a lack of reasonable diligence on the part of the plaintiff. Id.

The above instances stand in stark contrast to California cases that approved service by publication. For example, in Vorburg v. Vorburg, the California Supreme Court upheld a default judgment, made possible by service by publication, when the affidavit by plaintiff's counsel showed that counsel had unsuccessfully (1) examined both city directories and separate telephone directories, (2) contacted the local district attorney's office, and (3) spoken with the defendant's previous attorney, according to whom the defendant had left the state without notice of his new whereabouts. 18 Cal. 2d 794, 795-97 (1941).

In keeping with the above precedents, despite the Government's efforts to locate Mr. Vo, this Court cannot in good conscience grant leave to serve by publication here. The Government does generally reference searches conducted through westlaw.com and google.com, which are somewhat indicative of reasonableness. However, those efforts do not alone rise to the requisite level of both thorough and systematic.

Moreover, while the Government's actions are not blatantly insufficient, neither has the Government demonstrated that it exhausted the myriad of other avenues available to locate Mr. Vo. Notably, the Government failed to contact Mr. Vo's known relatives, to inspect available public records, or to adequately follow up with Mr. Hogan.

Additionally, the Government failed to exhaust the most obvious source of information as to Mr. Vo's whereabouts, his co-defendants in the instant Counterclaim. Indeed, the record is devoid of any attempt to obtain information from co-defendants, and, as such, the Government has failed to convince the Court it properly exhausted available means to find and serve Mr. Vo.

It is of no small import that California law permits service by publication only as a last resort. Thus, despite the Government's efforts to locate Mr. Vo, the availability of other unexhausted means through which to locate the absent Defendant precludes a finding of reasonable diligence.

CONCLUSION

Accordingly, the Renewed Motion for Permission to Serve Mr. Vo by Publication is DENIED without prejudice.*fn2

IT IS SO ORDERED.


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