Wai v. Zhu

Background

The plaintiffs asserted claims arising from their investment in a company allegedly owned by York Yuan Yuan Zhu. On September 17, 2020, a process server left the summons and complaint with Zhu’s wife at a residence in Palo Alto, California.

Zhu moved to quash service, meaning he asked the court to rule that the plaintiffs had not properly delivered the lawsuit papers to him. He submitted evidence that he was a resident of China, that his usual place of abode was in Nantong, China, that he had not been to the Palo Alto property or any other location in California since June 2015, and that he had never authorized his wife to accept legal documents for him.

The plaintiffs argued that the Palo Alto property was Zhu’s home address or mailing address. They also argued that service should be considered sufficient because Zhu did not deny receiving the summons and complaint.

Service of Process

The court applied Federal Rule of Civil Procedure 4(e) and California Code of Civil Procedure § 415.20(b). Those provisions allow substitute service at a person’s dwelling, usual place of abode, usual place of business, or usual mailing address, subject to the rule’s other requirements.

The court found that the plaintiffs offered no evidence disputing Zhu’s statement that he had not visited the Palo Alto property for more than five years. That evidence prevented a finding that the property was his dwelling or usual place of abode. The plaintiffs also offered no evidence that the property was his usual mailing address. The court therefore concluded that the plaintiffs had failed to complete service under § 415.20(b).

The court separately rejected the argument that actual knowledge alone could cure defective service. It relied on Ninth Circuit precedent holding that actual notice is insufficient when the plaintiff has not substantially complied with the service rules. The court found that the plaintiffs had not complied at all, much less substantially complied, with § 415.20(b).

Deadline to Serve

The court granted Zhu’s motion to quash service. The court noted that Zhu asserted he could be served only through procedures under the Hague Convention and that the plaintiffs appeared to acknowledge that procedure would be necessary if their earlier service was invalid. Because the ordinary 90-day service deadline does not apply to service in a foreign country, the court directed the plaintiffs to file proof of service by November 30, 2021.

The court stated that if the plaintiffs did not file proof of service by that date or file a motion showing good cause for a further extension, it would dismiss the action without prejudice for failure to serve. The order itself did not dismiss the action on that ground.

Other Ruling

In light of its ruling on service, the court denied Zhu’s alternative motion to dismiss based on forum non conveniens as moot. The court also vacated the February 12, 2021, case-management conference, to be reset if the plaintiffs filed proof of service.

Disposition