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Verde Media Corp. v. Levi

United States District Court, N.D. California

July 9, 2014

VERDE MEDIA CORP., Plaintiff,
v.
RON LEVI, ARDESHIR S. AKHAVAN, HARKLET ENTERPRISES, LTD., NUNATON COMPANY, LTD., INTERNET BUSINESS SERVICES, LLC, NAUTELL CAPITAL LTD., CASH TRAFFIC LTD., AND ALACRE TRADING LTD., Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (DKT. NO. 18); GRANTING MOTION TO EXTEND DEADLINE FOR SERVICE OF SUMMONS AND COMPLAINT (DKT. No. 27); DENYING MOTION TO APPEAR BY PHONE (DKT. No. 40).

YVONNE GONZALEZ ROGERS, District Judge.

Plaintiff Verde Media Corporation ("Verde") brings this action alleging claims for: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) unjust enrichment; (4) fraudulent inducement; (5) tortious interference with existing and prospective business relationships; (6) violations of the federal Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.; (7) conspiracy to violate RICO; and (8) false advertising in violation of 15 U.S.C. § 1125(a), the Lanham Act, against multiple defendants. Defendants Ron Levi, Ardeshir S. Akhavan, Harklet Enterprises, Ltd., Nunaton Company, Ltd., Nautell Capital Ltd., Cash Traffic Ltd., and Alacre Trading Ltd. ("Moving Defendants") bring the instant motion to quash or dismiss the summons and complaint. (Dkt. No. 18.) Moving Defendants seek to dismiss or quash service as to Verde's original summons and complaint pursuant to Rules 12(b)(4) and 12(b)(5) of the Federal Rules of Civil Procedure, on the grounds that: (1) Verde's original summons was defective; (2) service on individual defendant Ron Levi was insufficient because it was not attempted at his home or office address; and (3) attempted service on the entity defendants, by leaving documents with a receptionist not authorized to receive service of process, was also insufficient.

Verde subsequently filed its Motion to Extend Deadline for Service of Summons and Complaint (Dkt. No. 27), requesting that Verde be given additional time to serve any defendant as to which the Court finds service deficient.

Having carefully considered the papers submitted and the pleadings in this action, and for the reasons set forth below, the Court hereby ORDERS:

(1) Defendants' Motion to Dismiss pursuant to Rule 12(b)(4) for defective summons is DENIED AS MOOT. The amended summonses, issued April 3, 2014, cured the defects that were the subject of the instant motion.

(2) Defendants' Motion to Dismiss or Quash pursuant to Rule 12(b)(5) is GRANTED IN PART AND DENIED IN PART as set forth below.[1]

I. BACKGROUND

Verde is a broker of internet traffic which connects adult website advertisers with publishers and networks in order to increase website traffic and revenue. Verde's complaint alleges that defendants "engaged in a pattern of deceptive practices, including fraud, to mislead [Verde] into brokering key relationships for Defendants, resulting in tens of millions of dollars of Internet traffic being driven to Defendants' adult and dating websites, and millions of dollars in damages to [Verde] when Defendants first avoided, and later flatly refused, payment of the broker commissions owed to [Verde]." (Complaint ¶ 2.)

Verde filed its original complaint on February 27, 2014, naming as defendants Ron Levi, Ardeshir S. Akhavan, Harklet Enterprises, Ltd. ("Harklet"); Nunaton Company, Ltd., ("Nunaton"); Internet Business Services, LLC ("IBS"); Nautell Capital Ltd., ("Nautell"); Cash Traffic Ltd. ("Cash Traffic"); and Alacre Trading Ltd. ("Alacre").[2] Harklet, Nunaton, Nautell, and Alacre are alleged to be limited companies located in the country of Cyprus. IBS and Cash Traffic are alleged to be limited companies of unknown origin. Verde alleges that individual defendants Levi and Akhavan own and operate a complex collection of domestic, foreign, and international entities, including the named company entity defendants.

With the exception of IBS (which filed a motion to dismiss), all of the defendants named in the original complaint contest service. Verde filed returns of service. (Dkt. Nos. 10-17). As to the individual defendants, the returns of service show several attempts at personal service at home addresses for the individuals, as well as a purported business address, an office on Douglas Fir Road, Calabasas, California. Service was then made by substituted service under California Code of Civil Procedure section 415.20, on "Kat Kruz, " a person apparently in charge of the office. The returns of service on the entity defendants indicate that service was made upon "Ron Levi - Person authorized to accept service of process" by leaving documents with "Kat Kruz." The returns of service do not indicate what documents were served, but only reference an "attached list" that is missing from the filed copies.

II. APPLICABLE STANDARD

Federal Rule of Civil Procedure 4(a)(1)(B) requires that the contents of a summons be directed to the defendant and properly issued by the Court. A separate summons must be issued as to each defendant per Rule 4(b). The plaintiff presents the completed summons to the clerk of the court for signature, seal, and issuance. F.R.C.P. 4(b). Rule 4 further provides that service may be made on an individual in the manner provided under state law or by doing any of the following: (a) delivering a copy of the summons and of the complaint to the individual personally; (b) leaving a copy of each at the individual's usual place of abode with someone of suitable age and discretion who resides there; or (c) delivering a copy of each to an agent authorized to receive service of process. F.R.C.P. 4(e). Where the party to be served is a corporation, partnership or other unincorporated association, service may also be completed by delivering a copy of the summons and complaint to an officer, managing agent, or other agent authorized to receive service of process, among others. F.R.C.P. 4(h). Finally, service on a foreign entity may require compliance with other internationally agreed means of service, such as the Hague Convention. F.R.C.P. 4(f).

A defendant may move to dismiss or quash under Rule 12(b)(4) for a defect in the summons itself and under Rule 12(b)(5) for insufficient service of process. While Rule 4's requirements for the form and contents of the summons itself are construed liberally, requirements for the manner of service are strictly interpreted. Mid-Continent Wood Products, Inc. v. Harris, 936 F.2d 297, 300 (7th Cir. 1991). "Once service is challenged, plaintiffs bear the burden of establishing that service was valid." Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). Where it appears that effective service can be made and there is no unfair ...


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