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United States v. Edwards

United States District Court, E.D. California

November 6, 2017

UNITED STATES OF AMERICA, Plaintiffs,
v.
DAVID J. EDWARDS, CENTRAL CINEMA, LP MARCIA DOERR Truestee of LAP Trust, and STATE OF CALIFORNIA FRANCHISE TAX BOARD, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S APPLICATION TO EXTEND TIME TO SERVE DEFENDANT MARCIA DOERR AND TO SERVE BY PUBLICATION (DOC. 7)

          SHEILA K. OBERTO UNITED STATES MAGISTRATE JUDGE.

         INTRODUCTION

         Before the Court is an ex parte application (the “Application”) filed by Plaintiff United States of America (“Plaintiff”) for an order extending the time to serve process on Defendant Marcia Doerr (“Defendant Doerr”) and permitting such service by publication. (Doc. 7.) For the reasons set forth below, Defendant's Application is GRANTED in part and DENIED in part.

         BACKGROUND

         On August 16, 2017, Plaintiff filed this action seeking to reduce federal income tax assessments incurred by Defendant David J. Edwards (“Defendant Edwards”) to a judgment, pursuant to 26 U.S.C. §§ 7401 and 7403, and foreclose federal tax liens on real property owned by Defendant Edwards in Fresno County. (Doc. 1 (the “Complaint”).) Plaintiff has served Defendant Edwards (Doc. 4) and Defendant Central Cinema (Doc. 5), and Defendant State of California Franchise Tax Board waived service (Doc. 6). Plaintiff has been unsuccessful, however, in its attempts to serve Defendant Doerr.

         According to the Application, Defendant Doerr is the current trustee for LAP Trust, a trust which Defendant Edwards allegedly used to conceal assets from the IRS. (Doc. 7-1, 2:3-5, 2:16-19.) Plaintiff attempted to locate a physical address for Defendant Doerr by searching official records of the IRS, public record databases on Westlaw and Lexis, Accurint for Law Enforcement, Thomson Reuters CLEAR database, and TransUnion's TLOxp for Law Enforcement. (Doc. 7-1, 3:4-11.) As a result, Plaintiff found two physical addresses purportedly belonging to Defendant Doerr, and, through a professional process server, Plaintiff attempted service at those addresses. (Doc. 7-1, 11-14.) Plaintiff's process server attempted service on September 29, 2017, October 3, 2017, and October 10, 2017, and each time the occupant told the process server that Defendant Doerr was unknown to them. (Doc. 7-1, 3:15-4:2.)

         Finally, on November 1, 2017, concurrently with the filing of the present Application, Plaintiff attempted to contact Defendant Doerr by mail at her last known address-a post office box in Oakland. (Doc. 7-1, 4:13-5:7.) Although the time limit within which Defendant Doerr must acknowledge receipt of Plaintiff's service by mail has not expired, Plaintiff believes Defendant Doerr is unlikely to respond.

         Plaintiff now submits this Application for an order extending the time to serve process on Defendant Doerr and permitting Plaintiff to serve Defendant Doerr by publication. (Doc. 7.)

         DISCUSSION

         A. Legal 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 purposes of service by publication, the existence of a cause of action is a jurisdictional fact.” Sananikone v. U.S., 2:07-cv-01434-MCE-EFB, 2009 WL 796544, at *2 (E.D. Cal. Feb. 25, 2009) (quoting 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. Id. (quoting 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. Before permitting service by publication, the Court necessarily requires that the plaintiff “show exhaustive attempts to locate the defendant, ” because “service by publication rarely results in actual notice.” Id. Accordingly, a plaintiff that fails to take exhaustive measures to locate a party to be served cannot establish reasonable diligence. Id.

         B. Analysis

         1. Plaintiff Has Established the Existence of a ...


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