In the
United States Court of Appeals
For the Seventh Circuit
No. 09-1516
C AROLYN L ONDON, et al.,
individually and on behalf
of all others similarly situated,
Plaintiffs-Appellants,
v.
RBS C ITIZENS, N.A., et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 08 CV 3537—William T. Hart, Judge.
A RGUED D ECEMBER 3, 2009—D ECIDED A PRIL 1, 2010
Before E ASTERBROOK, Chief Judge, and M ANION and
E VANS, Circuit Judges.
M ANION, Circuit Judge. Judgment creditor Chase Bank
filed a citation under Illinois law seeking to discover any
assets of judgment debtors Andrew and Carolyn London
that Charter One Bank had in its possession. After being
served with the citation, Charter One froze the funds in
2 No. 09-1516
the Londons’ checking account, some of which were
Social Security benefits. When the Londons demanded
that Charter One release their Social Security monies,
which are exempt from attachment under federal and
Illinois law, the bank refused. Although the citation was
soon dismissed and their funds unfrozen, the Londons
sued the Charter One defendants in federal court under
42 U.S.C. § 1983. The district court dismissed the com-
plaint for failure to state a claim for which relief could
be granted, and the Londons appeal. We affirm.
I.
Andrew and Carolyn London sued RBS Citizens, N.A.,
Citizens Bank of Pennsylvania, and Citizens Financial
Group, Inc. d/b/a Charter One Bank, N.A. (collectively
“Charter One”) in the Northern District of Illinois,
alleging the following facts in their complaint. In 2004,
Chase Bank (which is not a party to this case) obtained
a judgment against the Londons. On March 26, 2008, at
Chase’s request the Clerk of the Circuit Court of Cook
County, Illinois, issued a Citation to Discover Assets that
named the Londons as defendants and Charter One as
third-party respondent. The citation stated that Chase
was owed money on the 2004 judgment against the
Londons and directed Charter One to appear at a hearing
on April 28, 2008, so that Chase could discover any of the
Londons’ property in Charter One’s possession. In addi-
tion, the citation prohibited Charter One “from making
or allowing any transfer or other disposition of, or inter-
fering with, any property not exempt from execution or
No. 09-1516 3
garnishment” that belonged to the Londons until further
order of the court or termination of the proceedings.
Significantly, a notice included with the citation
indicated that “Social Security and SSI benefits” were
exempt funds. The citation also warned Charter One
that failure to comply could result in a judgment against
it for any unsatisfied amount of the judgment. Chase
served the citation and the notice on Charter One.
The Londons maintained several accounts with Charter
One, one of which was a checking account. Both Mr. and
Mrs. London received monthly Social Security benefit
deposits in the checking account via electronic funds
transfer (“EFT”). Charter One’s records designated these
EFT deposits as Social Security payments from the United
States Treasury. In February and March 2008, several
deposits were posted to the Londons’ checking account,
some of which were Social Security EFTs. On April 10,
Charter One informed the Londons that it had been
served with the citation and was freezing their ac-
counts. Charter One also assessed a $50 processing fee
for its trouble. Mrs. London visited the bank on April 14
and 15 and demanded that it unfreeze the Social Security
funds in her checking account; Charter One refused. On
April 16, a Social Security deposit for $1721.50 was
added to the Londons’ checking account. A few days
later (April 21), Mrs. London returned to the bank and
asked it to release the funds from that deposit. Charter
One declined her request. Then, on April 23, a $687
Social Security deposit was made to the checking account.
Mrs. London demanded the release of that deposit, too,
but was again rebuffed by Charter One. As a result of
4 No. 09-1516
Charter One’s freezing of the checking account, several
checks and bank drafts written by the Londons were
refused and returned due to non-sufficient funds, for
which the bank assessed various fees.
The Londons claim that the defendants were acting
under color of state law when, without a hearing, they
froze (and later refused to release) Social Security funds
they knew were exempt from legal process under 42
U.S.C. § 407(a), actions they say violated § 407(a) and the
Due Process Clause of the Fourteenth Amendment. They
seek remedies for these violations under 42 U.S.C. § 1983
in the form of money damages, declaratory relief, and
injunctive relief. They also request class certification on
behalf of all persons who held accounts at Charter One
and had exempt Social Security benefits restrained by
Charter One in compliance with citations, garnishments,
and similar legal processes.
Charter One moved to dismiss under Federal Rule of
Civil Procedure 12(b)(6), claiming the plaintiffs had failed
to state a claim for which relief could be granted. The
district court granted the motion. In so doing, the
district court first took judicial notice of records from the
Circuit Court of Cook County that indicated that the
citation was dismissed and the freeze on the plaintiffs’
checking account ended following a hearing on April
28—eighteen days after Charter One imposed the freeze.
The district court then concluded that the plaintiffs
were afforded adequate process by the April 28 hearing
before the state court and held that their claim for a
violation of § 407(a) failed because that statute permits
No. 09-1516 5
temporary freezes of Social Security funds in advance of
a prompt court hearing. The Londons appeal the dis-
missal of their complaint.
II.
We review de novo a district court’s dismissal of a
complaint for failure to state a claim, taking the factual
allegations pleaded by the plaintiffs as true and drawing
all reasonable inferences in their favor. Chaudhry v.
Nucor Steel-Indiana, 546 F.3d 832, 836 (7th Cir. 2008). We
may affirm on any basis supported by the record. Brooks
v. Ross, 578 F.3d 574, 578 (7th Cir. 2009). A dismissal under
Rule 12(b)(6) is required if the facts pleaded in the com-
plaint fail to describe a claim that is plausible on its
face. Sharp Elecs. Corp. v. Metro. Life Ins. Co., 578 F.3d 505,
510 (7th Cir. 2009) (citing Ashcroft v. Iqbal, ___ U.S. ___, 129
S. Ct. 1937, 1949 (2009).
In their complaint, the Londons make two § 1983
claims against Charter One: one for violation of their
Fourteenth Amendment right not to be deprived of prop-
erty without due process of law, and one for violation of
§ 407(a), which shields Social Security benefits from
“execution, levy, attachment, garnishment, or other legal
process.” 1 In order to state a claim under § 1983, a plaintiff
1
The plaintiffs concede they are not suing under a private cause
of action created by § 407. Rather, they contend that they may
obtain a remedy under § 1983 for the defendants’ alleged
(continued...)
6 No. 09-1516
must sufficiently allege that (1) a person acting under
color of state law (2) deprived him of a right, privilege,
or immunity secured by the Constitution or laws of the
United States. Buchanan-Moore v. County of Milwaukee, 570
F.3d 824, 827 (7th Cir. 2009). We turn first to examine
whether the plaintiffs’ complaint presents adequate
averments on the color of state law element.
Because § 1983 actions may only be maintained against
defendants who act under color of state law, the defen-
dants in § 1983 cases are usually government officials.
Payton v. Rush-Presbyterian-St.Luke’s Med. Ctr., 184 F.3d
623, 628 (7th Cir. 1999). And although private persons
may also be sued under § 1983 when they act under
color of state law, id., they may not be sued for “merely
private conduct, no matter how discriminatory or wrong-
ful,” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50
(1999) (internal quotation marks and citations omitted).
Two conditions must be satisfied in order for a private
party’s actions to be deemed taken under color of state
law. First, the alleged deprivation of federal rights
1
(...continued)
violation of § 407(a). In order to maintain a § 1983 cause of action
for a violation of § 407(a), the plaintiffs “must demonstrate that
the federal statute creates an individually enforceable right in
the class of beneficiaries to which he belongs.” City of Rancho
Palos Verdes v. Abrams, 544 U.S. 113, 120 (2005). If shown, there
is a rebuttable presumption that the right may be enforced
under § 1983. Id. For the purposes of this opinion, we will
assume, arguendo, that § 407(a) creates a private right that
the Londons may enforce under § 1983.
No. 09-1516 7
must have been caused by the exercise of a right or privi-
lege created by the state, a rule of conduct imposed by
the state, or someone for whom the state is responsible.
Id. Misuse of a state law by a private party, however,
does not satisfy this requirement. Lugar v. Edmondson Oil
Co., 457 U.S. 922, 937 (1982). Second, the private party
must be a person who may fairly be said to be a state
actor. Am. Mfrs., 526 U.S. at 50.
Turning to the first step, the Londons’ complaint, even
when read deferentially, does not allege that Charter One
was following the directives of the citation (or any other
state-imposed rule of conduct) when it froze Social
Security funds it knew were exempt.2 To the contrary:
the citation—attached to the complaint and thus appro-
priate for consideration on a motion to dismiss, Witzke
v. Femal, 376 F.3d 744, 749 (7th Cir. 2004)—states that
Charter One is
prohibited from making or allowing any transfer or
other disposition of, or interfering with, any property
not exempt from execution or garnishment belonging
to the judgment debtor or to which he/she may be
entitled or which may be acquired by or income due
to him/her, until further order of court or termina-
tion of the proceeding.
2
In the briefs and at oral argument, counsel for the plaintiffs
made clear that they are limiting their claims to Charter One’s
actions concerning the post-freeze (April 16 and 23) Social
Security deposits it allegedly knew were exempt and are not
challenging the bank’s conduct regarding the commingled
funds present in their account when the freeze was instituted.
8 No. 09-1516
(emphasis added). The citation’s language is derived from
735 ILCS 5/2-1402(f)(1). The citation notice, consistent
with 735 ILCS 5/2-1402(b), stated that a judgment debtor’s
Social Security benefits are exempt personal property.
Elsewhere in the Illinois statutes, Social Security benefits
are declared to be exempt from judgment and attach-
ment. 735 ILCS 5/12-1001(g)(1). And as already men-
tioned, § 407(a) provides that Social Security monies are
not subject to “execution, levy, attachment, garnishment,
or other legal process.” Because the citation required
Charter One to restrain only the Londons’ non-exempt
funds and expressly listed Social Security benefits as
exempt assets, any action taken by Charter One against
funds it knew were exempt was not in accordance with
the citation and Illinois law. And there is no traction to
the argument that Charter One could use the citation as a
basis for freezing the funds, because the misuse of state
law by a private party is not action taken under color
of state law.3 Lugar, 457 U.S. at 940; Starnes v. Capital Cities
3
Were there any doubt that the Londons contend that Charter
One misapplied the directives from the citation rather than
following them, the plaintiffs removed it with the following
concessions in their briefs: “the citation itself informed the
Defendants that it should not hold exempt property and the
bank knew the deposits were exempt property when it received
them”; “[t]he citation itself does not command the freeze of
exempt funds”; “[the defendants] hid within the citation and
used it as a shield claiming they were compelled to freeze funds
they knew were exempt until a judge told them otherwise”;
and, “the issue here concerns property which the citation
(continued...)
No. 09-1516 9
Media, Inc., 39 F.3d 1394, 1397 (7th Cir. 1994); Winterland
Concessions Co. v. Trela, 735 F.2d 257, 262 (7th Cir. 1984);
Loyd v. Loyd, 731 F.2d 393, 398-99 (7th Cir. 1984); see also
Greco, 775 F.2d at 166 (“When a private party, in violation
of a state statute, deprives another party of property,
that deprivation obviously cannot constitute conduct
fairly attributable to a state rule or decision.”).
Our decision in Beler v. Blatt, Hasenmiller, Leibsker &
Moore, LLC, 480 F.3d 470 (7th Cir. 2007), is not to the
contrary. There, while attempting to collect on a judg-
ment against Beler (the judgment debtor), a law firm sent
a Citation to Discover Assets (pursuant to 735 ILCS 5/2-
1402) to a bank where Beler had a checking account. Id. at
472. The citation there, similar to the one here, informed
the bank that assets that were exempt from execution
should not be turned over. Id. In response, the bank froze
the account. Id. The law firm eventually dismissed the
citation after Beler asserted the entire balance in the
account was exempt Social Security assets. Id. Beler sued
the law firm under the Fair Debt Collection Practices Act,
3
(...continued)
respondent knew was exempt and of which it was never
advised to ‘freeze’ in the first place.”
Although we have recognized that private misuse of a statute
can constitute state action where the private party acted jointly
with a state official who abused his authority, see Greco v. Guss,
775 F.2d 161, 167-68 (7th Cir. 1985), there are no allegations
in the complaint that suggest any such involvement by a state
official here.
10 No. 09-1516
but lost on summary judgment in the district court. Id.
In affirming the district court’s judgment, we noted that
the “citation had the practical effect of freezing the
account until the Bank knew what was exempt.” Id. at 474.
Even if such a “practical effect” were sufficient to satisfy
the first prong of the color of state law requirement—and
we doubt it would be—the Beler language is inapplicable
here because, at least as claimed by the Londons, Charter
One knew that the April 16 and 23 Social Security EFT
deposits were exempt from attachment. The freeze was
thus not the practical effect of the citation.
In sum, the complaint makes clear that Charter One’s
freezing of the Social Security funds it knew were exempt
was not the result of any state-created right, state-pre-
scribed rule, or person for whom the state is responsible
but was, in fact, private conduct that was not in keeping
with state law.4 Therefore, because the Londons did not
allege any action by Charter One that was taken
under color of state law, Charter One may not be held
liable under § 1983. The district court’s dismissal of the
plaintiffs’ complaint for failure to state a claim was
thus appropriate.5
4
Nothing in this opinion should be read to suggest that
when a private party follows state law, it is automatically a
state actor.
5
In their reply brief, the plaintiffs request that they be allowed
to amend their complaint if their pleadings are found inade-
quate. Issues raised for the first time in a reply brief are ordi-
(continued...)
No. 09-1516 11
III.
Based on the foregoing reasons, we hold that the plain-
tiffs’ complaint does not describe a plausible § 1983 claim
against Charter One because it does not contain suf-
ficient factual allegations that Charter One was acting
under color of state law. Accordingly, the judgment of
the district court is A FFIRMED.
5
(...continued)
narily waived. Gonzales v. Mize, 565 F.3d 373, 382 (7th Cir. 2009).
Even if waiver were no obstacle, any proposed amendment
would be futile because the amended complaint could not
survive a motion to dismiss, Vargas-Harrison v. Racine Unified
Sch. Dist., 272 F.3d 964, 974 (7th Cir. 2002): to state a claim under
§ 1983, the plaintiffs would need to allege that Charter One
was following the citation when it froze their exempt Social
Security funds, which is flatly contrary to the terms of the
citation they attached to their complaint. In the event of a
conflict between a complaint proper and an attachment
thereto that forms the basis of the plaintiffs’ claims, the attach-
ment prevails, and dismissal is warranted if, as here, the
attachment negates the plaintiffs’ claims. Thompson v. Illinois
Dep’t of Prof’l Regulation, 300 F.3d 750, 754 (7th Cir. 2002).
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