14-2668
Benzemann v. Citibank
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
16th day of November, two thousand fifteen.
Present: JOSÉ A. CABRANES,
ROSEMARY S. POOLER,
DENNY CHIN,
Circuit Judges.
_____________________________________________________
ALEXANDER A. BENZEMANN,
Plaintiff-Appellant,
v. 14-2668-cv
CITIBANK N.A., HOUSLANGER & ASSOCIATES, PLLC,
TODD E. HOUSLANGER, AND NEW CENTURY FINANCIAL SERVICES,
Defendants-Appellees.*
_____________________________________________________
Appearing for Appellant: Andrew L. Tiajoloff, Tiajoloff & Kelly LLP (Edward P. Kelly, on
the brief), New York, NY.
Appearing for Appellees: Robert J. Bergson, Abrams Garfinkel Margolis Bergson, LLP (Eric
B. Post, on the brief), New York, NY, for Defendants-Appellees
Houslanger & Associates, PLLC and Todd E. Houslanger.
*
The Clerk of Court is directed to amend the official caption to conform with the caption
above.
Anthony I. Giacobbe, Zeichner Ellman & Krause LLP (Barry J.
Glickman, on the brief), New York, NY, for Defendant-Appellee
Citibank, N.A.
Appeal from the United States District Court for the Southern District of New York (Buchwald,
J.).
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED IN
PART, VACATED IN PART, AND REMANDED.
Appellant Alexander A. Benzemann appeals from the June 27, 2014, judgment of the
United States District Court for the Southern District of New York (Buchwald, J.), dismissing
his claims under the Fair Debt Collections Practices Act (“FDCPA”), 42 U.S.C. § 1983, the Due
Process Clause of the Fourteenth Amendment, and state law. We assume the parties’ familiarity
with the underlying facts, procedural history, and specification of issues for review.
In this summary order, we address the district court’s dismissal of the Section 1983 and
Due Process claims against Defendants Houslanger & Associates, PLLC and Todd E.
Houslanger (“Houslanger Defendants”) and all of Benzemann’s claims against Defendant
Citibank, N.A (“Citibank”). An accompanying opinion addresses the remainder of Benzemann’s
claims.
I. Section 1983 and Due Process Claims Against Houslanger Defendants
Benzemann sued the Houslanger Defendants under Section 1983 and the Due Process
Clause, arguing that these defendants interfered with his Fifth and Fourteenth Amendment Due
Process rights as well as his Fourth Amendment rights against unreasonable searches and
seizures when they sent restraining notices to Citibank.
“Because the United States Constitution regulates only the Government, not private
parties, a litigant . . . who alleges that her constitutional rights have been violated must first
establish that the challenged conduct constitutes ‘state action.’” Grogan v. Blooming Grove
Volunteer Ambulance Corps, 768 F.3d 259, 263 (2d Cir. 2014) (alterations, emphasis, and
internal quotation marks omitted), cert. denied 135 S. Ct. 1895 (2015). “To demonstrate state
action, a plaintiff must establish both that [1] her alleged constitutional deprivation was caused
by the exercise of some right or privilege created by the State or by a rule of conduct imposed by
the State or by a person for whom the State is responsible, and [2] that the party charged with the
deprivation is a person who may fairly be said to be a state actor.” Id. at 263–64 (emphasis
omitted).
Benzemann’s Section 1983 and due process claims fail both prongs of this state-action
test. First, Benzemann has not established that his alleged constitutional deprivation was caused
by a privilege or right granted by the state. Benzemann argues that the Houslanger Defendants
misused New York State rules allowing attorneys to issue restraining notices, but the Supreme
Court has held that “private misuse of a state statute does not describe conduct that can be
attributed to the State.” Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 940–41 (1982); see
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also Dahlberg v. Becker, 748 F.2d 85, 90 (2d Cir. 1984) (“A private party’s misuse of New
York’s Judiciary Law . . . is not fairly attributable to New York State.”).
Nor can the Houslanger Defendants fairly be said to be state actors. For the purposes of
Section 1983, the actions of a nominally private entity are attributable to the state:
(1) [when] the entity acts pursuant to the “coercive power” of the state or is
“controlled” by the state (“the compulsion test”); (2) when the state provides
“significant encouragement” to the entity, the entity is a “willful participant in
joint activity with the state,” or the entity’s functions are “entwined” with state
policies (“the joint action test” or “close nexus test”); or (3) when the entity has
been delegated a public function by the state, (“the public function test”).
Sybalski v. Indep. Grp. Home Living Program, Inc., 546 F.3d 255, 257 (2d Cir. 2008) (quoting
Brentwood Acad. v. Tennessee Secondary Sch. Athletic Ass’n, 531 U.S. 288, 296 (2001)).
Benzemann argues that the Houslanger Defendants qualify as state actors under the “public
function test.” But to qualify as a state actor under that test, the public function that is delegated
must be one that was “traditionally under the exclusive authority of the state.” Id. at 259.
Benzemann cites no authority supporting his view that sending a restraining notice is
“traditionally under the exclusive authority of the state.” To the contrary, we have previously
recognized that restraining notices are typically issued to banks both by private individuals and
by the state. See Sykes v. Bank of Am., 723 F.3d 399, 406 (2d Cir. 2013) (“Bank of America . . .
did no more than comply with the restraining notice issued by [the state agency] in the same way
it would with a notice from a private attorney on behalf of a private creditor.”). Because the
sending of restraining notices is not traditionally under the exclusive authority of the state,
Benzemann’s argument that the Houslanger Defendants qualify as state actors fails. Accordingly,
the district court properly dismissed both the Section 1983 and the due process claims against the
Houslanger Defendants.
II. Claims Against Citibank
Citibank moved to compel arbitration of Benzemann’s claims against it, arguing that the
claims were subject to arbitration under the parties’ arbitration agreement. The district court
granted the motion, finding that the question whether the claims were arbitrable was itself
delegated to the arbitrator by the agreement. See PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198
(2d Cir. 1996) (noting that under federal law, parties to an arbitration agreement “may provide
that the arbitrator, not the court, shall determine whether an issue is arbitrable”). On appeal,
Benzemann does not challenge the district court’s decision to compel arbitration. Rather, he
argues only that, upon compelling arbitration, the district court improperly dismissed the claims
against Citibank rather than staying the claims pending arbitration.
Recently, we “join[ed] those Circuits that consider a stay of proceedings necessary after
all claims have been referred to arbitration and a stay requested.” Katz v. Cellco P’ship, 794 F.3d
341, 345 (2d Cir. 2015); see also 9 U.S.C. § 3 (providing that district court, after granting motion
to compel arbitration, shall stay proceedings “on application of one of the parties”). Benzemann,
however, did not request a stay before the district court entered judgment. Thus, Section 3 did
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not require the district court to stay the proceedings when it entered judgment against
Benzemann. See Katz, 794 F.3d at 346 (noting that, absent a statutory mandate to stay
proceedings, district courts “enjoy an inherent authority to manage their dockets”). Although
Benzemann sent a letter to the district court on July 23, 2014, requesting that the court modify
the judgment to stay his claims against Citibank, Benzemann then filed a notice of appeal on July
25, 2014. The district court correctly concluded that, after Benzemann filed the notice of appeal,
the court lacked jurisdiction to decide Benzemann’s request to modify the judgment. United
States v. Rodgers, 101 F.3d 247, 251 (2d Cir. 1996) (“As a general matter, ‘the filing of a notice
of appeal . . . confers jurisdiction on the court of appeals and divests the district court of its
control over those aspects of the case involved in the appeal.’” (quoting Griggs v. Provident
Consumer Disc. Co., 459 U.S. 56, 58 (1982)). Thus, the district court did not err in denying
Benzemann’s request to modify the judgment.
CONCLUSION
We have considered the remainder of Benzemann’s arguments and find them to be
without merit. In an opinion issued simultaneously with this summary order, we vacate the
district court’s dismissal of the FDCPA and state law claims. Accordingly, we AFFIRM the
judgment of the district court insofar as it (1) dismissed Benzemann’s claims against the
Houslanger Defendants under Section 1983, the Due Process Clause of the Fourteenth
Amendment, and state law and (2) compelled arbitration of and dismissed Benzemann’s claims
against Citibank. We VACATE the judgment insofar as it dismissed Benzemann’s claims against
the Houslanger Defendants under the FDCPA and state law and REMAND for further
proceedings consistent with the opinion issued simultaneously with this summary order. Each
side to bear its own costs.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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