Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-01360/USCOURTS-azd-2_08-cv-01360-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Sandpiper Resorts Development

Corporation, an Arizona corporation for

profit; and Dourian Foster Investments

Inc., an Arizona corporation for profit, 

Plaintiffs, 

v.

Global Realty Investments, LLC, a Nevada

limited liability company; Caroline

Hartman-Altenbernd and Kelly

Altenbernd, husband and wife

individually; Toscana Developers, LLC, a

Florida limited liability company; Cynthia

Estes and John Doe Estes, husband and

wife individually; Estes Development

Corporation, a West Virginia corporation;

Black Corporations 1 through 5; White

Limited Liability Companies, 1 through 5,

Defendants. 

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No. CV 08-1360-PHX-MHM

ORDER

Currently before the Court is the Motion to Dismiss (Dkt.#33) filed by Defendants

Caroline Hartman-Altenbernd and Kelly Altenbernd, Plaintiffs’ Motion for Leave to Serve

Defendant Cynthia Estes by Publication; Motion to Deem Service on Estes Development

Corporation Valid or in the Alternative to Serve Estes Corporation (Dkt.#42), Plaintiffs’

Motion for Hearing on the aforementioned motion (Dkt.#43), and Plaintiffs’ Motion for

Hearing or Conference re: Plaintiff’s Motion for Status Hearing (Dkt.#44). Having

Case 2:08-cv-01360-JWS Document 46 Filed 12/21/09 Page 1 of 10
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considered these motions and their accompanying papers, the Court issues the following Order.

I. Background

A. The underlying claims for fraud and breach of contract

Plaintiffs are suing Defendants for breach of contract and fraud that allegedly occurred

in the context of a bankruptcy proceeding. As explained by Plaintiffs, the crux of the fraud

was that Defendants contracted to purchase certain property from Plaintiffs on an “as is”

basis. The property was at that time subject to a bankruptcy proceeding, and court approval

was required to lift the protections of the bankruptcy stay and proceed with the sale. The

Bankruptcy Judge held a hearing at which Ms. Hartman-Altenbernd’s attorney represented

to the bankruptcy court that the Defendants were going to perform as promised and purchase

the property. On the basis of this assertion, the bankruptcy court lifted the stay to allow the

negotiated sale that Plaintiffs and Plaintiffs’ creditors relied upon. 

Plaintiffs claim to have later learned that the representations made at the bankruptcy

hearing were fraudulent. They further state that “[i]t has become clear that Defendants did

not intend to close and were concealing the facts that they: [1] did not have the requisite

financing in place; [2] did not intend to proceed with the sale if the property appraised at a

lower value than the sale price; and [3] had instead planned, and had engaged in discussions

regarding, purchase of the property from the mortgage holder after foreclosure once the stay

was lifted, at a price substantially below the contract sale price.” (Dkt.#42 at 3)

After learning that the property did not sell, the Bankruptcy Judge ordered the parties’

attorneys to appear for a hearing to determine whether Defendants’ “knew it [the sale] wasn’t

[going forward] or the lawyers for Global are still representing clients who lied to them.”

(Dkt.#34 at 4) The Bankruptcy Judge appears to have stated that he believed Defendants

committed a fraud on the Court. 

B. Attempts to Serve the Altenbernds

Defendants Toscana and Global (the LLCs through which the Altenbernds operated)

were served via their statutory agents. After diligent but unsuccessful efforts were made to

serve the Altenbernds within the 120 day deadline, Plaintiffs filed a motion for an extension

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 These efforts are explained at length in Plaintiffs’ Motion for an Extension of Time

to Serve (Dkt.#21); briefly, they included attempting to serve the Altenbernds at the 48th

Street Residence on November 10, 2008, attempting to locate and serve the Altenbernds via

their LLCs, conducting a skip trace to locate the Altenbernds, and sending process servers

to Nevada. 

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of time to serve the Altenbernds. The Court granted this motion on May 21, 2009, giving

Plaintiffs 20 additional days from the date of the Order. 

On June 8, 2009, Plaintiffs filed an affidavit of service stating that Caroline HartmanAltenbernd and Kelly Altenbernd had been served on June 5, 2009 by leaving the process

with Kelly Altenbernd at the 33rd Avenue Residence that apparently belonged to Mr.

Altenbernd’s sister, Jamie Lowe. 

Plaintiffs explain that after the Court’s May 21 Order, they contacted an investigator

and process server who was informed of the previous efforts1

 to locate and serve the

Altenbernds and instructed to do whatever was necessary to locate the Altenbernds and serve

them. Plaintiff’s process server discovered two addresses the Altenbernds held in common,

the 48th Street Residence and the 33rd Avenue Residence. He also conducted a driver’s

license search on the Altenbernds in Arizona, Nevada and Florida and obtained a current

license with a photo for Mr. Altenbernd. That license listed the current residence of the

Altenbernds as the 48th Street Residence. He was unable to obtain a current driver’s license

for Ms. Altenbernd; however, her expired 2007 license also listed the 48th Street Residence

as her current residence. 

Plaintiffs had previously attempted to serve the Altenbernds at the 48th Street

Residence on November 10, 2008, but they found the home vacant. They also had attempted

to locate and serve the Altenbernds via their LLCs. They also had conducted a skip trace to

locate the Altenbernds and sent process servers to Nevada. Upon doing a public records

search, the private investigator discovered that the 48th Street Residence had been either

foreclosed on or deeded back to the bank on September 24, 2008. 

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A further public records search showed the 33rd Avenue Residence belonged to Mr.

Altenbernd’s sister, Jamie Lowe. The investigator discovered that both Mr. and Ms.

Altenbernd had been personally served at the 33rd Avenue Residence (in an unrelated Justice

Court case) on March 22, 2009. The investigator also located and interviewed Mr.

Altenbernd’s ex-wife, who stated that she had seen him approximately eight months earlier

at a supermarket in the company of his older sister, Jamie Lowe. Based on this information,

the investigator decided to focus on serving the Altenbernds at the 33rd Avenue Residence.

On June 3 and June 4, the investigator and his associate “staked out” the 33rd Avenue

Residence. They spoke to a neighbor who confirmed that Ms. Lowe’s brother lived in the

33rd Avenue home and went on to say that Kelly Altenbernd had left the 33rd Avenue

Residence earlier that morning to take his wife to the hospital because she was having

stomach cramps. The investigator and his associate waited several hours for their return, but

were unsuccessful. They decided to return the next day. 

On June 5, the investigator and his associate approached the door of the 33rd Avenue

Residence. The door was answered by a man who the investigator identified as Kelly

Altenbernd based on his driver’s license photo. The investigator asked if the man was Kelly

Altenbernd. The man responded, “Who wants to know?” The investigator told the man that

he had service for Kelly Altenbernd and Caroline Hartman-Altenbernd. The man then said,

“They don’t live here,” and began to shut the door. The investigator showed the man a copy

of the driver’s license photo and stated that he clearly was Mr. Altenbernd and that he looked

exactly like the photo. The investigator stated under oath that he believes that the man at the

door was the man in Kelly Altenbernd’s driver’s license photo. As the man attempted to

close the door, the investigator dropped the service at the man’s feet. 

After serving the man at the 33rd Avenue Residence, the investigator and his associate

immediately went to another neighbor’s home and asked the neighbor, Alice Estes, if she

knew whether Jamie Lowe’s brother, Kelly Altenbernd, lived next door. The neighbor

confirmed that they did.

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The Altenbernd Defendants challenge this service and move to dismiss this case based

on insufficient service of process. (Dkt.#33)

The Altenbernds claim that the June 5, 2009 service was invalid because it was not

Kelly Altenbernd but a friend of the Lowe’s, Mike Gooler, who answered the door. (Dkt.#33

at 5) According to the Altenbernds, Kelly Altenbernd lived at the Lowe’s 33rd Avenue

Residence only from November 2007 until March 2008 and Caroline Hartman-Altenbernd,

apart from occasional overnight houseguest visits, has never resided at the 33rd Avenue

Residence. (Dkt. #33) They further affirm that neither has any intention of owning, renting,

or maintaining a home in Arizona and that they have purchased real property in Los Angeles

County, California (although Plaintiffs’ search of real property was unable to locate any such

property). (Dkt.#33) They further state that they sold the 48th Street Residence “in

November 2008,” although as mentioned above, the private investigator discovered that the

48th Street Residence had been either foreclosed on or deeded back to the bank on September

24, 2008. 

Plaintiffs outline a number of other attempts to locate and serve process on the

Altenbernd Defendants, including contacting the former counsel for their LLCs, the

Altenbernd’s bankruptcy attorneys, and former counsel for the Altenbernds in this action.

(Dkt.#34) However, all counsel refused to identify the Altenbernds’ present address, citing

concerns about client confidentiality and ethical rules. (Dkt.#34) However, Mr. Ward, the

former counsel for Toscana, LLC, stated that he had forwarded on the service of process to

“Caroline” as a courtesy before immediately withdrawing as a statutory agent because he no

longer had any relationship with Toscana. (Dkt.#34) Moreover, given that the Altenbernds’

counsel in the present action filed the Motion to Dismiss for insufficient service of process

on June 25, 2009, before withdrawing from the case, it is clear that the Altenbernds

necessarily have received actual notice of this action. (Dkt.#34)

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II. Motion to Dismiss (Dkt. #33)

The Altenbernd Defendants move to dismiss the complaint, arguing that alleged June

5, 2009 service of process was insufficient. Defendants also argue that dismissal is proper

because they contend that Plaintiffs failed to effectuate service upon them by June 9, 2009

(the deadline for service according to the Court’s prior Order). Specifically, they argue that

(1) the Lowe 33rd Avenue Residence is not the Altenbrands’ dwelling house or usual place

of abode and (2) that the summons and complaint were not left with a person who resides at

the Lowe 33rd Avenue Residence. 

Plaintiffs respond that the June 5, 2009 service was valid and point to their

investigator’s affidavit to refute Defendants’ claims that the June 5 service was accomplished

on Mike Gooler, not Kelly Altenbernd. Moreover, they argue in the alternative, that because

the Altenbernds received actual notice of the lawsuit (as evidenced by their motion to

dismiss), the “broad and flexible” requirements of Rule 4 are met. In the alternative,

Plaintiffs request an evidentiary hearing so that the Court may better evaluate the credibility

of the conflicting accounts. Finally, they request that the Court allow them to effectuate

service by publication as provided for in Arizona Rule of Civil Procedure 4(n), citing Federal

Rule of Civil Procedure 4(e)(1), which permits service by any method set forth in the rules

of the state of the District Court’s location). 

However, an evidentiary hearing appears unnecessary. Assuming without deciding

that the Altenbernds are correct, and the attempted service on June 5 did not, in fact,

effectuate service upon Kelly Altenbernd, the Court is nonetheless convinced that based on

Plaintiffs’ extraordinary efforts to serve the Altenbernds, service by publication appears

appropriate, particularly given that the Altenbernds have necessarily received actual notice

of the pending matter, as evidenced by their motion to dismiss. A number of Federal courts

have noted that “[t]he rules governing service of process are not designed to create an

obstacle course for plaintiffs to navigate, or a cat-and-mouse game for defendants who are

otherwise subject to the court’s jurisdiction.” TRW, Inc. v. Derbyshire, 157 F.R.D. 59, 60

(D. Colo. 1994); see also Direct Mall Specialists, Inc. v. Eclat Computerized Technologies,

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 This amended complaint was filed as of right under Federal Rule of Civil Procedure

15(a)(1)(A) because no responsive pleading had been served. A Motion to Dismiss is not a

responsive pleading for purposes of this rule. Mayes v. Leipziger, 729 F.2d 605, 607-08 (9th

Cir. 1984).

3

 Plaintiffs initially tried to serve a subpoena on Ms. Estes and a subpoena duces

tecum on Estes corporation..

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Inc., 840 F.2d 685, 688 (9th Cir. 1988) (explaining that “Rule 4 is a flexible rule that should

be liberally construed so long as a party receives sufficient notice of the complaint”).

Accordingly, Plaintiffs will have 45 days from the date of this Order to effectuate service by

publication according to the Arizona Rules of Civil Procedure upon the Altenbernd

defendants. The Altenbernd Defendants’ motion to dismiss is denied.

III. Motion for Leave to Serve by Publication on Defendant Estes (Dkt.#42)

On October 8, 2009, Plaintiffs filed an amended complaint2

 adding Cynthia Estes and

Estes Development Corporation as Defendants. Plaintiffs have cited a similar history of

attempting to serve Defendant Cynthia Estes. Specifically, they tracked Ms. Estes to a

residence in West Virginia. The door was answered by Ms. Estes’ mother, who stated that

Ms. Estes did not live in West Virginia, but South Carolina, and that the process server

should return later. However, when the process server returned, the mother refused to accept

process or to give the process server Ms. Estes’ address. Instead, the mother stated that Ms.

Estes had asked her to give the process server the name and address of her Florida attorney,

Greg Ward, and stated that he would accept service of the subpoenas on Ms. Estes’ behalf.3

However, voice mail messages to Mr. Ward were not returned. A number of emails

were also sent, but went unanswered for over a week until Mr. Ward responded that he could

not accept service of process at that time, but that he would check with his client and let

Plaintiffs know. Plaintiffs’ counsel then spoke on the telephone with Mr. Ward several

times. Ultimately, Mr. Ward responded that he could not accept service and that Plaintiffs

should try to contact Ms. Estes directly. However, he gave Plaintiffs a telephone number that

he identified as belonging to Ms. Estes. When Plaintiffs’ counsel called, the answering

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machine identified the number as belonging to Ms. Estes; however, she never responded to

the messages that were left.

Plaintiffs attempted to serve Ms. Estes at a Florida Residence; however the man who

answered the door explained that he had purchased the residence from Ms. Estes in 2008 and

that she no longer resided there. They also attempted to serve Ms. Estes at here South

Carolina residence; however, their process server found that she no longer resided at this

address either. 

Plaintiffs also attempted to serve Ms. Estes as the statutory agent for Estes

Development, a West Virginia Corporation; however, the address listed for Ms. Estes as the

agent for Estes Development is a postal office box, making personal delivery to the agent

impossible. The Estes corporate filings also identify the West Virginia Residence as Estes

Development’s Principal Office Address. However, as explained above, this residence

apparently belongs to Ms. Estes’ mother, and attempts to reach her there were unsuccessful.

As provided by West Virginia Code § 31D-5-504(c), Plaintiff served the subpoena on the

West Virginia Secretary of State, which accepted service on behalf of Estes Development on

October 16, 2009. Having determined that attempts to serve the Amended Complaint and

Summons would be futile, Plaintiffs served Estes Development by delivering a copy of the

Summons and Amended Complaint to the West Virginia Secretary of State, which accepted

service on October 28, 2009.

Plaintiffs request leave to serve Ms. Estes by publication pursuant to Fed. R. Civ. P.

4(e)(1) and Ariz. R. Civ. P. 4.2(f). They point out that they have attempted to serve her in

three different states, have attempted to contact her via her mother and her attorney, and have

left multiple messages on her cell phone. It appears that Plaintiff has been diligent in

attempting to serve Ms. Estes; moreover, it appears that Ms. Estes is aware that an action has

been filed against her based on the cell phone messages and the messages left with her

mother. As such, Plaintiffs’ request to effectuate service upon Ms. Estes through publication

is granted (Dkt.#42). 

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It appears that Plaintiffs have complied with West Virginia law regarding service upon

Estes Corporation and that service has been effectuated by serving West Virginia’s Secretary

of State. According to the West Virginia Code, service will be “deemed sufficient if return

receipt is signed by an agent or employee of the corporation, or the registered or certified

mail sent by the secretary of state is refused by the addressee and the registered or certified

mail is returned to the secretary of state, or to his or her office, showing the stamp of the

United States postal service that delivery has been refused . . . .” W. Va. Code § 31D-5-

504(c). Accordingly, Plaintiffs’ Motion to Deem Service on Defendant Estes Development

Corporation Valid or in the Alternative to Serve Estes Development Corporation by

Publication (Dkt.#42) is granted to the extent that it deems service valid and denied to the

extent that it seeks leave to serve Estes Corporation by publication.

IV. Other Pending Motions

Given the above rulings, Plaintiffs’ subsequent Motion for an Expedited Hearing on

Motion for Leave to Serve by Publication and on Motion to Deem Service on Defendant

Estes Development Corporation Valid or in the Alternative to Serve Estes Development

Corporation by Publication (Dkt.#43) now appears to be moot; accordingly, it is denied as

moot. 

Similarly, Plaintiffs’ Motion for a Status Hearing (Dkt.#44), filed the same day as the

prior motion, to resolve any outstanding procedural issues, also appears to be mooted by the

above-mentioned determinations. Accordingly, it is similarly denied as moot. 

Accordingly,

IT IS HEREBY ORDERED denying Defendants’ Motion to Dismiss (Dkt.#33)

IT IS FURTHER ORDERED permitting Plaintiffs to serve the Altenbernds by

publication in accordance with the Arizona Rules of Civil Procedure no later than 45 days

from the date of this Order.

IT IS FURTHER ORDERED granting Plaintiffs’ Motion for Leave to Serve

Defendant Cynthia Estes by Publication (Dkt.#42) no later than 45 days from the date of this

Order in accordance with the Arizona Rules of Civil Procedure. 

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IT IS FURTHER ORDERED granting Plaintiffs’ Motion to Deem Service on Estes

Development Corporation Valid (Dkt.#42).

IT IS FURTHER ORDERED denying as moot Plaintiffs’ Motion for Hearing on the

aforementioned motion (Dkt.#43).

IT IS FURTHER ORDERED denying as moot Plaintiffs’ Motion for Status Hearing

(Dkt.#44).

DATED this 21st day of December, 2009.

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