United States v. Benson

Background

The United States brought this civil action to reduce federal income-tax assessments against Elizabeth C. Benson and Burton O. Benson to a judgment and to foreclose federal tax liens against real property. The government also named USAA Federal Savings Bank, Belarus Investments Limited, the Contra Costa County Treasurer, and the California Franchise Tax Board because they might claim an interest in the property.

The government moved for permission to serve Belarus Investments Limited by publication. A recorded deed of trust identified Belarus Investments Limited as both trustee and beneficiary and stated that it was secured by $1,110,000 in the property. The government reported that the deed did not identify an individual for the entity, contained no signatures on its behalf, and directed the deed to Preservation Capital Corp. at an address where that company no longer existed. Searches of the California Secretary of State’s business-entity database and the internet did not produce a matching listing or a credible physical or online location for either entity.

The government also reported that Burton Benson had died before the lawsuit was filed and that Elizabeth Benson died before she was served. The government was unable to locate a family member or other person willing to act as Elizabeth Benson’s representative. A process server attempted to serve Belarus Investments Limited at the address associated with Preservation Capital Corp. on November 18, 2019, but confirmed that neither entity existed there.

Legal standard

Federal Rule of Civil Procedure 4(e) allows service on an individual in the United States by methods permitted by the law of the state where the federal district court is located. California law permits service by publication when an affidavit shows that the defendant cannot, despite reasonable diligence, be served by another permitted method.

The court explained that reasonable diligence requires a thorough, systematic, good-faith investigation. The court also noted that publication rarely produces actual notice, so the proposed method must nevertheless be reasonably calculated to provide notice. California law requires publication once a week for four successive weeks, with at least five days between publication dates.

Court’s analysis

The court found that the government had exercised reasonable diligence. It searched state business records and the internet using the names of Belarus Investments Limited and Preservation Capital Corporation, including other name variations. It also attempted service at the address listed for Preservation Capital Corporation and confirmed that neither entity existed there. Because both title holders had died and the government could not locate a representative for Elizabeth Benson, it could not obtain further information from them or their family members about Belarus Investments Limited.

The court further found that publication in The East Bay Times, a newspaper of general circulation in Contra Costa County, was appropriate. The action affected real property in which Belarus Investments Limited might claim an interest, and the government could not locate that entity despite reasonable diligence. The court concluded that publication was the method most likely to provide actual notice, if the entity exists.

Disposition

The court GRANTED the government’s motion. It directed the government to publish the summons in The East Bay Times in accordance with California Code of Civil Procedure section 415.50 and California Government Code section 6064. The court also granted the government an extension until March 11, 2020, to complete service on Elizabeth C. Benson and Belarus Investments Limited.