United States of America v. Edwards, et al.

Filing 10

ORDER GRANTING IN PART and DENYING IN PART Plaintiff's Application to Extend Time to Serve Defendant Marcia Doerr and to Serve by Publication. (1) Plaintiff's Application is GRANTED to the extent it seeks an enlargement of t ime to effect service on Defendant Doerr. The deadline for service is extended to January 15, 2018; and (2) Plaintiff's Application is DENIED to the extent it seeks to serve Defendant Doerr by publication. Such denial is WITHOUT PREJUDICE TO RE NEWAL if, after the expiration of time for Defendant Doerr to respond to service by mail, Plaintiff can show that it exercised reasonable diligence under Federal Rule of Civil Procedure 4(e)(1) and California Code of Civil Procedure § 415.50(a)(1). Order signed by Magistrate Judge Sheila K. Oberto on 11/6/2017. (Timken, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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Plaintiffs,

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Case No. 1:17-CV-01105-AWI-SKO

UNITED STATES OF AMERICA,

ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’S
APPLICATION TO EXTEND TIME TO
SERVE DEFENDANT MARCIA DOERR
AND TO SERVE BY PUBLICATION

v.

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DAVID J. EDWARDS,
CENTRAL CINEMA, LP
MARCIA DOERR (Truestee of LAP Trust),
and STATE OF CALIFORNIA
FRANCHISE TAX BOARD,
Defendants.

(Doc. 7)

_____________________________________/

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INTRODUCTION
Before the Court is an ex parte application (the “Application”) filed by Plaintiff United

22 States of America (“Plaintiff”) for an order extending the time to serve process on Defendant
23 Marcia Doerr (“Defendant Doerr”) and permitting such service by publication. (Doc. 7.) For the
24 reasons set forth below, Defendant’s Application is GRANTED in part and DENIED in part.
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BACKGROUND
On August 16, 2017, Plaintiff filed this action seeking to reduce federal income tax

27 assessments incurred by Defendant David J. Edwards (“Defendant Edwards”) to a judgment,
28 pursuant to 26 U.S.C. §§ 7401 and 7403, and foreclose federal tax liens on real property owned by

1 Defendant Edwards in Fresno County. (Doc. 1 (the “Complaint”).) Plaintiff has served Defendant
2 Edwards (Doc. 4) and Defendant Central Cinema (Doc. 5), and Defendant State of California
3 Franchise Tax Board waived service (Doc. 6). Plaintiff has been unsuccessful, however, in its
4 attempts to serve Defendant Doerr.
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According to the Application, Defendant Doerr is the current trustee for LAP Trust, a trust

6 which Defendant Edwards allegedly used to conceal assets from the IRS. (Doc. 7-1, 2:3-5, 2:167 19.) Plaintiff attempted to locate a physical address for Defendant Doerr by searching official
8 records of the IRS, public record databases on Westlaw and Lexis, Accurint for Law Enforcement,
9 Thomson Reuters CLEAR database, and TransUnion’s TLOxp for Law Enforcement. (Doc. 7-1,
10 3:4-11.) As a result, Plaintiff found two physical addresses purportedly belonging to Defendant
11 Doerr, and, through a professional process server, Plaintiff attempted service at those addresses.
12 (Doc. 7-1, 11-14.) Plaintiff’s process server attempted service on September 29, 2017, October 3,
13 2017, and October 10, 2017, and each time the occupant told the process server that Defendant
14 Doerr was unknown to them. (Doc. 7-1, 3:15-4:2.)
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Finally, on November 1, 2017, concurrently with the filing of the present Application,

16 Plaintiff attempted to contact Defendant Doerr by mail at her last known address—a post office
17 box in Oakland. (Doc. 7-1, 4:13-5:7.) Although the time limit within which Defendant Doerr
18 must acknowledge receipt of Plaintiff’s service by mail has not expired, Plaintiff believes
19 Defendant Doerr is unlikely to respond.
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Plaintiff now submits this Application for an order extending the time to serve process on

21 Defendant Doerr and permitting Plaintiff to serve Defendant Doerr by publication. (Doc. 7.)
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DISCUSSION

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Legal Standard

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Under Federal Rule of Civil Procedure 4(e)(1), a proper service of summons can be made

25 by “following state law for serving a summons in an action brought in courts of general
26 jurisdiction in the state where the district court is located or where service is made.” Accordingly,
27 California’s statute on service by publication governs whether substituted service is proper in this
28 case. California Code of Civil Procedure § 415.50(a)(1) allows service by publication “if upon
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1 affidavit it appears to the satisfaction of the court in which the action is pending that the party to
2 be served cannot with reasonable diligence be served in another manner specified in this article
3 and that . . . [a] cause of action exists against the party upon whom service is to be made or he or
4 she is a necessary or proper party to the action.”
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“For the purposes of service by publication, the existence of a cause of action is a

6 jurisdictional fact.” Sananikone v. U.S., 2:07-cv-01434-MCE-EFB, 2009 WL 796544, at *2 (E.D.
7 Cal. Feb. 25, 2009) (quoting Harris v. Cavasso, 68 Cal. App. 3d 723, 726 (3d Dist. 1977)).
8 Additionally, a party seeking leave to serve process by publication must establish that “reasonable
9 diligence” has been exercised to serve process in another manner permitted by California law. Id.
10 (quoting Watts v. Crawford, 10 Cal. 4th 743, 749 n.5 (1995)). “The term ‘reasonable diligence’ . .
11 . denotes a thorough, systematic investigation and inquiry conducted in good faith by the party or
12 his agent or attorney.’” Id. Before permitting service by publication, the Court necessarily
13 requires that the plaintiff “show exhaustive attempts to locate the defendant,” because “service by
14 publication rarely results in actual notice.”

Id.

Accordingly, a plaintiff that fails to take

15 exhaustive measures to locate a party to be served cannot establish reasonable diligence. Id.
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Analysis

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1. Plaintiff Has Established the Existence of a Valid Cause of Action.

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The declaration of Aaron M. Bailey, Esq., submitted with Plaintiff’s Application contains

19 sufficient allegations demonstrating that a valid cause of action exists against Defendant Doerr.
20 Mr. Bailey declared under penalty of perjury that this action was brought against Defendant Doerr,
21 among others, pursuant to 26 U.S.C. §§ 7401 and 7403. (Doc. 7-3, ¶ 3.) These provisions provide
22 enforcement for a tax lien against real property located in Fresno County, California, and
23 purportedly used by Defendant Edwards in a criminal tax evasion scheme for which Defendant
24 Edwards was convicted. (Doc. 7-3, ¶ 3; Doc. 7-1, 1:23-2:5.) Mr. Bailey further declared that
25 Defendant Doerr is the “Trustee of ‘LAP Trust,’ an entity which currently holds putative title to
26 the property located at 451 Burl Avenue, Clovis California and is therefore a necessary party to
27 the suit under 26 U.S.C. § 7403(b).” (Doc. 7-3, ¶ 4.) Based on these allegations, as well as
28 supporting Exhibit 1, an affidavit of successor trustee for LAP Trust purportedly executed by
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1 Defendant Doerr, Plaintiff has satisfied its burden of alleging that a valid cause of action exists
2 against Defendant Doerr.
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2. Plaintiff Has Not Established the Requisite Diligence.

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To prevail on its Application, Plaintiff must also establish that in searching for Defendant

5 Doerr, it completed a thorough and systematic investigation and inquiry. Sananikone, 2009 WL
6 796544, at *3 (quotation and citation omitted). Plaintiff has failed to meet this burden.
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In Sananikone, 2009 WL 796544, the Court determined that the U.S. Government failed to

8 establish reasonable diligence justifying service by publication. The Government’s only act of
9 diligence in searching for a missing defendant involved searches conducted through Westlaw and
10 Google.

Id. at *1.

The Court stated that, while those efforts “are somewhat indicative of

11 reasonableness . . . [they] do not alone rise to the requisite level of both thorough and systematic.
12 Id. at *3. The Court further found that the Government failed to “exhaust[] the myriad of other
13 avenues available to locate [the defendant],” including contacting the defendant’s known relatives,
14 counsel for the other defendant, or, “the most obvious source of information … his co15 defendants.” Id. at *4.
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Despite Plaintiff’s efforts to locate Defendant Doerr, the Court cannot grant leave to serve

17 by publication here. Plaintiff generally references searches conducted through Westlaw, Lexis,
18 Accurint for Law Enforcement, Thomson Reuters CLEAR database, and TransUnion’s TLOxp for
19 Law Enforcement, and Plaintiff attempted to serve Defendant Doerr at potentially associated
20 addresses—all of which is reasonable. However, those efforts do not meet the burden of showing
21 thorough and systematic investigation and inquiry. See, e.g., Donel, Inc. v. Badalian, 87 Cal. App.
22 3d 327 (2d Dist. 1978) (finding no reasonable diligence where plaintiff only searched telephone
23 directories); Kott v. Superior Court, 45 Cal. App. 4th 1126, 1138 (2d 1996) (finding no reasonable
24 diligence where plaintiff failed to ask defendant’s counsel for defendant’s new address or to serve
25 interrogatories on the co-defendants); cf., e.g., Vorburg v. Vorburg, 18 Cal. 2d 794 (1941) (finding
26 reasonable diligence, and therefore permitting service by publication, where plaintiff examined
27 city directories and telephone directories, contacted the local district attorney’s office, and, most
28 importantly, spoke with defendant’s previous attorney).
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Plaintiff failed to exhaust “the most obvious source of information” as to Defendant

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2 Doerr’s whereabouts, as the Court in Sananikone characterized it: the other defendants involved in
3 this action. Plaintiff effected service on both of the other named defendants, and thus could
4 potentially explore that avenue to discover Defendant Doerr’s whereabouts. Nor does Plaintiff
5 indicate whether it attempted to locate known relatives of Defendant Doerr. See Sananikone, 2009
6 WL 796544, at *4.
Finally, the time for Defendant Doerr to respond to Plaintiff’s service by mail has not yet

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8 expired. That is, Plaintiff mailed process to Plaintiff’s last known address the same day that
9 Plaintiff filed the present Application, and, under California law, Defendant Doerr has 20 days to
10 return the acknowledgement of receipt. See Cal. Civ. Code § 415.30.
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CONCLUSION
Accordingly, Plaintiff’s Application is GRANTED IN PART AND DENIED IN PART as

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(1) Plaintiff’s Application is GRANTED to the extent it seeks an enlargement of time to

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effect service on Defendant Doerr. The deadline for service is extended to January 15,

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2018; and

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(2) Plaintiff’s Application is DENIED to the extent it seeks to serve Defendant Doerr by

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publication. Such denial is WITHOUT PREJUDICE TO RENEWAL if, after the

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expiration of time for Defendant Doerr to respond to service by mail, Plaintiff can

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show that it exercised reasonable diligence under Federal Rule of Civil Procedure

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4(e)(1) and California Code of Civil Procedure § 415.50(a)(1).

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IT IS SO ORDERED.

24 Dated:
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November 6, 2017

/s/

Sheila K. Oberto

UNITED STATES MAGISTRATE JUDGE

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