United States District Court, N.D. California
ORDER RE: MOTION FOR LEAVE TO SERVE BY PUBLICATION
Re: Dkt. No. 19
S. Hixson United States Magistrate Judge.
a civil action to reduce to judgment federal income tax
assessed against Defendants Elizabeth C. Benson and Burton O.
Benson and to foreclose the United States' Federal Tax
Liens against real property held by them. The government
moves for leave to serve process on Defendant Belarus
Investments Limited by publication. ECF No. 19. No opposition
has been received. The Court finds this matter suitable for
disposition without oral argument and
VACATES the December 26, 2019 hearing.
See Civ. L.R. 7-1(b). Having considered the
government's position, relevant legal authority, and the
record in this case, the Court GRANTS the
motion for the following reasons.
government filed this action on August 30, 2019. Compl., ECF
No. 1. According to the complaint, the Bensons hold title to
the property located in Contra Costa County at 5 Evans Place,
Orinda, California 94563 (the “Subject
Property”). Id. ¶¶ 6, 13. The
government also brings this case against Defendants USAA
Federal Savings Bank, Belarus Investments Limited, Contra
Costa County Treasurer, and California Franchise Tax Board as
they may claim some right, title, or interest in the Subject
Property. Id. ¶¶ 9-12.
time it filed its complaint, the government was aware that
Burton Benson died on April 21, 2017 and Elizabeth Benson was
ill and in hospice care. Id. ¶ 7; Matchison
Decl. ¶ 2, ECF No. 19-1. Because of her poor health, the
government attempted to facilitate service of the complaint
and other initiating documents through some manner other than
personal service at her hospice bed, but all efforts proved
unsuccessful and Mrs. Benson died on or about October 1,
2019, before being served. Matchison Decl. ¶¶ 3, 5.
The government has been unable to locate a family member or
other individual willing to serve as a representative for
Mrs. Benson in this case. Id. ¶ 7.
to the government, very little information exists with
respect to Belarus Investments Limited. Mot. at 2. A Short
Form Deed of Trust and Assignment of Rents listing Burton O.
Benson and Elizabeth C. Benson as the trustor and Belarus
Investments Limited as both the trustee and beneficiary was
recorded with the Contra Costa County Recorder's Office
on September 25, 2003. Matchison Decl. ¶ 8. Although the
document indicates that Belarus Investments Limited is
secured in the amount of $1, 110, 000 by the Subject
Property, the government maintains that several aspects of
this document are suspect. Mot. at 2. First, there is no
individual identified for Belarus Investments Limited and no
signatures appear on the document on its behalf. Id.
Further, after recording, the deed was sent to
“Preservation Capital Corp., ” whose address is
listed as 426 N. Wiget Lane, Suite B, Walnut Creek,
California 94598, but Preservation Capital Corp. no longer
exists at that address. Matchison Decl. ¶¶ 9-11.
The government also maintains it is unclear whether Belarus
Investments Limited or Preservation Capital Corp. ever did
exist because a search of the California Secretary of
State's website for business entities failed to yield any
results for any permutation of both names and an internet
search has likewise provided no credible leads. Id.
¶¶ 9-10. As a result, the government suspects that
Belarus Investments Limited is likely a fictitious entity
formed to make the Subject Property appear to be near fully
encumbered. Id. ¶ 12. The government seeks to
serve Defendant Belarus Investments Limited by publication.
Mot. at 4. Based on the delay in service, the government also
seeks an extension of time pursuant to Federal Rule of Civil
Procedure 4(m), through March 11, 2020, to complete service
on Defendants Elizabeth C. Benson and Belarus Investments
Federal Rule of Civil Procedure 4(e), a plaintiff may serve
an individual in the United States using any method permitted
by the law of the state in which the district court is
located or in which service is affected. Fed.R.Civ.P.
4(e)(1). California law allows for five basic methods of
service: (1) personal delivery to the party, see
Cal. Civ. Proc. Code § 415.10; (2) delivery to someone
else at the party's usual residence or place of business
with mailing after (known as “substitute
service”), see Id. § 415.20; (3) service
by mail with acknowledgment of receipt, see Id.
§ 415.30; (4) service on persons outside the state by
certified or registered mail with a return receipt requested,
see Id. § 415.40; and (5) service by
publication, see Id. § 415.50.
law permits 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 Article 3 of the California Code of Civil
Procedure. Cal. Civ. Proc. Code § 415.50(a). In
determining whether a plaintiff has exercised
“reasonable diligence, ” the court examines the
affidavit to see whether the plaintiff “took those
steps a reasonable person who truly desired to give notice
would have taken under the circumstances.” Donel,
Inc. v. Badalian, 87 Cal.App.3d 327, 333 (1978). The
“reasonable diligence” requirement “denotes
a thorough, systematic investigation and inquiry conducted in
good faith by the party or his agent or attorney.”
Kott v. Super. Ct., 45 Cal.App.4th 1126, 1137
(1996). “Before allowing a plaintiff to resort to
service by publication, the courts necessarily require him to
show exhaustive attempts to locate the defendant, for it is
generally recognized that service by publication rarely
results in actual notice.” Watts v. Crawford,
10 Cal.4th 743, 749 n.5 (1995) (quotations and citations
omitted). And because of due process concerns, service by
publication should be allowed only “as a last
resort.” Donel, 87 Cal.App.3d at 333.
“However, when there is evidence that a defendant is
evading service, courts are more willing to allow alternative
methods such as service by publication.” Felix v.
Anderson, 2015 WL 545483, at *2 (N.D. Cal. Feb. 9, 2015)
(citing Miller v. Super Ct., 195 Cal.App. 2d 779,
plaintiff has taken one or a few reasonable steps to serve a
defendant does not mean that all “myriad . . .
avenues” have been properly exhausted to warrant
service by publication. Id. But a plaintiff will
generally satisfy its burden through “[a] number of
honest attempts to learn [a] defendant's whereabouts or
his address” by asking his relatives, friends,
acquaintances, or employers, and by investigating
“appropriate city and telephone directories, the
voters' register, and the real and personal property
index in the assessor's office, near the defendant's
last known location.” Kott, 45 Cal.App.4th at
1137 (quotations omitted). “These are likely sources of
information, and consequently must be searched before
resorting to service by publication.” Id. The
reasonable-diligence inquiry is fact and case specific.
Id. at 1137-38 (“[T]he showing of diligence in
a given case must rest on its own facts and no single formula
or mode of search can be said to constitute due diligence in
after the government learned of the short form deed assigning
Belarus Investments Limited as both the trustee and
beneficiary of the Subject Property, it conducted a search of
the online database of business entities, located at the
California Secretary of State's website, for Belarus
Investments Limited and Preservation Capital Corporation,
using both of those specific names as well as other
iterations. Matchison Decl. ¶ 9. Counsel could not
locate any listing, active or dissolved, that matched either
name. Id. The government also conducted an internet
search for Belarus Investments Limited and Preservation
Capital Corporation, using both of those specific names as
well as other iterations, but counsel was unable to find
either a physical or a virtual location for either entity.
Id. ¶ 10. The government also attempted service
by other means. On November 18, 2019, a process server
attempted to serve Belarus Investments Limited at the address
reflected on its deed for Preservation Capital Corporation,
but the process server confirmed that neither entity exists
at that location. Id. ¶ 11. It appears that
Belarus Investments Limited could be a fictitious entity that
was created by the Bensons to make their property appear
both title holders to the property have died and the
government has been unable to locate a family member or other
individual willing to serve as a representative for Mrs.
Benson, who was the last surviving title holder. As such, the
government has been unable to discover from the title holders
or their family members whether Belarus Investments is
legitimate. Id. ¶ 12. Given this ...