Alexander A. Benzemann v. Houslanger & Associates, P.L.L.C., Todd E. Houslanger, New Century Financial Services

In a final attempt to salvage his Fair Debt Collection Practices

Act (“FDCPA”) claim against Defendants‐Appellees Houslanger &

3

Associates, PLLC and Todd E. Houslanger (jointly, “Houslanger”),

Plaintiff‐Appellant Alexander A. Benzemann (“Plaintiff”) asks us to

endorse a novel—and potentially far‐reaching—construction of the

FDCPA’s statute of limitations. We decline the invitation.

An FDCPA claim must be filed “within one year from the date

on which the violation occurs.”1 Relying on certain language in our

decision in Benzemann v. Citibank N.A. (“Benzemann I”)2, Plaintiff

contends that an FDCPA “violation” does not “occur[ ]”—and the

statute of limitations does not begin to run—until an individual is

injured and receives “notice of the FDCPA violation.”3 The United

States District Court for the Southern District of New York (Naomi

Reice Buchwald, Judge) rejected Plaintiff’s reading of Benzemann I,

concluded that his FDCPA claim is time‐barred, and granted summary

judgment in Houslanger’s favor. We agree and therefore AFFIRM the

District Court’s March 23, 2018 judgment.

I. BACKGROUND

We draw the facts, which are undisputed or presented in the

light most favorable to Plaintiff, from the summary judgment record.4

1 15 U.S.C. § 1692k(d).

2 806 F.3d 98 (2d Cir. 2015) (“Benzemann I”).

3 Pl.’s Br. 9; see also Benzemann I, 806 F.3d at 103.

4 In re DeRogatis, 904 F.3d 174, 180 (2d Cir. 2018) (“Because the appeals

challenge orders granting summary judgment to defendants, we present here the

4

A. The Restraining Notices

On April 21, 2008, Houslanger sent a restraining notice

referencing a 2003 judgment against an individual named Andrew

Benzemann (“Andrew”) to Citibank, N.A. (“Citibank”), where

Plaintiff held an account.5 The notice named Andrew as the judgment

debtor, but it listed Plaintiff’s social security number and address. On

April 30, 2008, Citibank “froze” Plaintiff’s account. After Plaintiff’s

attorney notified Houslanger of the error, Houslanger withdrew the

restraining notice, and Citibank lifted the freeze.

More than three years later, on December 6, 2011, Houslanger

(somewhat inexplicably) sent Citibank a second restraining notice

containing similar information—i.e., naming Andrew as the judgment

debtor but listing Plaintiff’s social security number and address.

Perhaps not surprisingly, Citibank froze Plaintiff’s accounts. On

December 13, 2011 Plaintiff became aware that he could not gain access

to his Citibank accounts. He called Citibank, but the representative

with whom he spoke gave him little information about why his

accounts were unavailable. Distressed, Plaintiff contacted his attorney

that same evening. The next day, Plaintiff learned that his accounts

had been frozen pursuant to a restraining notice. By the evening of

version of the facts most favorable to [plaintiff]’s claims, and we draw all reasonable

inferences in [his] favor.”).

5 Under New York state law, a “restraining notice serves as a type of

injunction prohibiting the transfer of [a] judgment debtor’s property.” Aspen Indus.

v. Marine Midland Bank, 52 N.Y.2d 575, 579 (1981).

5

December 15, 2011, the freeze had been lifted, and Plaintiff had

regained access to his funds.

About one year later, on December 14, 2012, Plaintiff

commenced this action, asserting, among others, the FDCPA claim at

the center of this appeal.

B. Benzemann I

On June 27, 2014, the District Court dismissed Plaintiff’s FDCPA

claim as untimely.6 The District Court concluded that the alleged

FDCPA violation occurred, triggering the one‐year statute of

limitations, when Houslanger mailed the restraining notice on

December 6, 2011. Because Plaintiff commenced this action one year

and eight days later, the District Court held that his FDCPA claim is

time‐barred.

In Benzemann I, we concluded that the District Court “erred in

finding that the FDCPA violation ‘occurred’ when Houslanger sent the

restraining notice.”7 Instead, we held that “where a debt collector

sends an allegedly unlawful restraining notice to a bank, the FDCPA

6 See Benzemann v. Citibank N.A., No. 12 Civ. 9145 (NRB), 2014 WL 2933140,

at *5–*8 (S.D.N.Y. June 27, 2014).

7 Benzemann I, 806 F.3d at 103.

6

violation does not ‘occur’ for purposes of [the statute of limitations]

until the bank freezes the debtor’s account.”8

Because the record was at that time unclear as to whether

Citibank froze Plaintiff’s accounts on December 13 or December 14,

2011, we remanded for further proceedings.9 We also directed the

District Court to consider, in the event it found that the freeze occurred

on December 13, 2011, whether the FDCPA’s statute of limitations is

subject to the common‐law “discovery rule.”10

C. Additional Factual Development After Remand

After limited discovery, it became clear that Citibank froze

Plaintiff’s accounts on December 13, 2011.

Citibank’s records, produced pursuant to a subpoena, show that

Citibank “blocked” Plaintiff’s accounts and an associated debit card at

6:14 p.m. on the evening of December 13, 2011. A Citibank employee

8 Id.

9 Though seemingly trivial on its face, as is frequently true in cases of

competing claims regarding statutes of limitation, the one‐day difference was

potentially significant. If Citibank froze Plaintiff’s accounts on December 14, 2011,

then his FDCPA claim, commenced exactly one year later, is necessarily timely. If

the freeze occurred even one day earlier, however, then the statute of limitations

might preclude recovery.

10 As we explain below, under the discovery rule, “a plaintiff’s cause of

action accrues when he discovers, or with due diligence should have discovered,

the injury that is the basis of the litigation.” Guilbert v. Gardner, 480 F.3d 140, 149

(2d Cir. 2007) (internal quotation marks omitted).

7

testified that after that time, Plaintiff could not withdraw funds, had

only limited ability to deposit funds, and did not have access to the

accounts electronically.

Plaintiff’s sworn declaration and deposition testimony

corroborate this account. Plaintiff averred that, on December 13, 2011,

in the evening, his wife informed him that “she had a problem using

[his] Citibank debit card at an [automated teller machine].”11 Plaintiff

attempted to gain access to his accounts electronically but was unable

to do so because they “were not visible on‐line.”12 At that point, he

“concluded that [his] accounts had been frozen because the same thing

had occurred . . . in 2008.”13 This realization was “extremely

distressing,”14 and by approximately 8:00 p.m. that evening, Plaintiff

“thought [he] was going to have a heart attack.”15

Notwithstanding his distress, Plaintiff acted immediately. He

contacted Citibank by telephone to learn “what happened to [his]

accounts.”16 A Citibank employee informed Plaintiff that his accounts

had been blocked and instructed him to call the next day for more

11 J.A. 176.

12 Id. at 177.

13 Id. at 176.

14 Id.

15 Id. at 299.

16 Id. at 176.

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information. Plaintiff also contacted his attorney, who represented

him when Citibank erroneously froze his account in 2008, because that

experience led him to believe that he “might [have] a legal problem.”17

The next day, December 14, 2011, Plaintiff learned that Citibank

had frozen his accounts pursuant to the second erroneous restraining

notice sent by Houslanger on December 6, 2011.

D. The District Court’s Memorandum and Order

After discovery, Houslanger moved for summary judgment,

contending once again that Plaintiff’s FDCPA claim is time‐barred.

The District Court agreed and granted summary judgment in

Houslanger’s favor.18

First, the District Court found that Citibank froze Plaintiff’s

accounts—i.e., that the alleged FDCPA violation occurred, triggering

the statute of limitations—on December 13, 2011. Because Plaintiff

filed suit on December 14, 2012, one year and one day later, the District

Court held that Plaintiff’s FDCPA claim is untimely.

Second, the District Court concluded that it did not need to

determine whether the discovery rule applies to FDCPA claims as a

general matter because the outcome in this case would be the same in

any event. The evidence established that Plaintiff learned that Citibank

17 Id. at 302.

18 See Benzemann v. Citibank N.A., No. 12 Civ. 9145 (NRB), 2018 WL 1665253,

at *5–*7 (S.D.N.Y. Mar. 22, 2018).

9

froze his accounts on December 13, 2011, so that the date of injury and

the date of discovery were the same. Accordingly, Plaintiff’s claim

would be time‐barred even under the discovery rule.

This appeal followed.

II. DISCUSSION

A. Standard of Review

We review an award of summary judgment, including on the

basis of “an affirmative defense such as the statute of limitations,”19 de

novo, “construing the evidence in the light most favorable to the

nonmoving party and drawing all reasonable inferences and resolving

all ambiguities in [his] favor.”20 Summary judgment is appropriate if

“there is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.”21

B. Interpreting Benzemann I

The parties’ dispute is based principally on our construction of

the FDCPA’s statute of limitations in Benzemann I.

19 Giordano v. Mkt. Am., Inc., 599 F.3d 87, 93 (2d Cir. 2010).

20 Fox v. Costco Wholesale Corp., 918 F.3d 65, 71 (2d Cir. 2019) (internal

quotation mark omitted).

21 Fed. R. Civ. P. 56(a).

10

As noted above, an FDCPA claim must be brought “within one

year from the date on which the violation occurs.”22 We held in

Benzemann I “that where a debt collector sends an allegedly unlawful

restraining notice to a bank, the FDCPA violation does not ‘occur’ for

purposes of [the statute of limitations] until the bank freezes the

debtor’s account.”23 Though this conclusion appears straightforward,

we also observed that “the FDCPA violation here did not ‘occur’ until

Citibank froze [Plaintiff]’s account because it was only then that he had

a complete cause of action and notice of the FDCPA violation.”24

Plaintiff makes much of this latter passage in Benzemann I. He

contends that, as interpreted in Benzemann I, the FDCPA’s limitations

period commences only when an individual is injured by unlawful

conduct and receives “notice of the FDCPA violation.”25 Here, under

Plaintiff’s theory, the statute of limitations did not begin to run until

Plaintiff learned that Citibank had frozen his accounts pursuant to the

unlawful restraining notice that Houslanger prepared. Plaintiff argues

that, because he did not learn of the restraining notice until December

14, 2011, his FDCPA claim, which he commenced exactly one year

later, is timely.

22 15 U.S.C. § 1692k(d).

23 Benzemann I, 806 F.3d at 103.

24 Id. at 103 (emphasis added).

25 Pl.’s Br. 9.

11

We conclude that our observation regarding “notice” cannot

bear the weight Plaintiff assigns to it. To the extent our decision in

Benzemann I created any confusion, we now make clear that an FDCPA

violation occurs, triggering the statute of limitations, when an

individual is injured by unlawful conduct.

* * *

We reject Plaintiff’s position for several reasons. As an initial

matter, we did not consider in Benzemann I the issue that Plaintiff now

contends we decided. The question before us in Benzemann I was

whether an FDCPA violation can occur, for the purposes of the statute

of limitations, before the victim is injured. We concluded that it could

not. In reaching that conclusion, we were not required to—and, we

now make clear, did not—examine whether the triggering of the

statute of limitations also requires “notice of the FDCPA violation.”

Because that issue was not before us, there is no basis for assuming

that we reached it, especially in light of the otherwise clear principle

we expressly described as our holding.26

In any event, read as a whole, Benzemann I makes clear that we

intended to tether the commencement of the FDCPA’s limitations

period to the date of injury. We began by reciting the “general

26 See Columbia Broad. Sys., Inc. v. Am. Soc’y of Composers, Authors & Publishers,

620 F.2d 930, 935 (2d Cir. 1980) (“[A]ppellate courts, endeavoring to rule beyond

the precise holding of a case, normally make that intention unmistakably clear.”);

United States v. Rubin, 609 F.2d 51, 69 n.2 (2d Cir. 1979) (Friendly, J., concurring) (“A

judge’s power to bind is limited to the issue that is before him.”).

12

principle of law that a cause of action accrues when conduct that

invades the rights of another has caused injury.”27 We then noted that

“[b]efore Citibank froze [Plaintiff]’s account, [he] had suffered no

injury” and therefore “could not have sued Houslanger.”28 To avoid

an “anomaly” wherein “the FDCPA’s statute of limitations . . . begin[s]

to run before an FDCPA plaintiff [can] file suit,”29 we concluded that

an FDCPA violation cannot occur before an individual is injured by

unlawful conduct.30 Thus, from the very beginning, our focus in

Benzemann I was the date of Plaintiff’s injury.

In addition, our instructions to the District Court refute

Plaintiff’s interpretation. Having determined that an FDCPA violation

occurs for the purposes of the statute of limitations when a bank

freezes a debtor’s account, we directed the District Court to conduct

further proceedings to ascertain the date of the freeze.31 If we had

concluded that an FDCPA violation could not occur until an

individual received “notice of the FDCPA violation,” as Plaintiff

suggests, this instruction presumably would have been different. We

also directed the District Court to consider whether the discovery rule

27 Benzemann I, 806 F.3d at 101 (internal quotation marks and brackets

omitted).

28 Id.

29 Id. at 101, 102.

30 Id. at 103.

31 Id.

13

applies to FDCPA claims only if it determined that Citibank froze

Plaintiff’s accounts on December 13, 2011.32 This instruction is

consistent with the conclusion that Plaintiff’s knowledge—or lack

thereof—is irrelevant in determining when an alleged FDCPA

violation occurs.

Accordingly, a careful reading makes clear that we did not

intend in Benzemann I to expand the FDCPA’s statute of limitations by

requiring that individuals receive “notice of the FDCPA violation.”

* * *

Aside from the fact that Benzemann I simply does not say what

Plaintiff would like, there are other reasons to reject Plaintiff’s

proposed notice requirement. First, the statutory text provides no

support for such a rule. We have observed that statutes of limitation

“inevitably reflect[ ] a value judgment concerning the point at which

the interests in favor of protecting valid claims are outweighed by the

interests in prohibiting the prosecution of stale ones.”33 Thus, “strict

adherence to limitation periods is the best guarantee of evenhanded

administration of the law.”34 Here, strict adherence requires little

imagination, since the statutory text is unambiguous: FDCPA claims

must be brought “within one year from the date on which the violation

32 Id. at 103 n.2.

33 Carey v. Int’l Bhd. of Elec. Workers Local 363 Pension Plan, 201 F.3d 44, 47 (2d

Cir. 1999) (internal quotation marks omitted).

34 Id. (internal quotation marks omitted).

14

occurs.”35 A “violation”—“[a]n infraction or breach of the law”36—

“occurs” when it “take[s] place.”37 It is one thing to conclude, as we

did in Benzemann I, that a breach of the law might not take place until

unlawful conduct causes an injury. But it is quite another to suggest

that a breach of the law does not take place until a victim receives

notice of the statutory violation. On Plaintiff’s theory, if an individual

never received such notice, a breach of the law never took place—no

matter that the individual was in fact injured by unlawful conduct.

This novel interpretation might help Plaintiff evade the FDCPA’s

statute of limitations, but it appears to us unsupported by the common

understanding of the words “violation” and “occur.”

Second, unlike the rule we adopted in Benzemann I and restate

today, Plaintiff’s proposal is not easily administrable. Plaintiff makes

no attempt to define the contours of what constitutes sufficient “notice

of the FDCPA violation” other than to suggest that, here, it means

“notice of [a] [r]estraining [n]otice that violates the FDCPA.”38 But

even this limitation provides only so much help. A restraining notice

might violate the FDCPA for any number of reasons. Where, as here,

a fundamental error is evident on the face of the restraining notice, the

notice might itself provide “notice of the FDCPA violation.” That will

not always be the case, however. Yet Plaintiff does not identify a way

35 15 U.S.C. § 1692k(d).

36 Violation, BLACK’S LAW DICTIONARY (10th ed. 2014).

37 Occur, WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1561 (1981).

38 Pl.’s Br. 6.

15

to distinguish between this straightforward case and those instances

in which the type of “notice” necessary to identify “the FDCPA

violation” will be far less self‐evident. Were we to adopt a notice

requirement, the question of how much notice is enough would, we

think, bedevil litigants and courts for some time to come.

Finally, and relatedly, Plaintiff’s proposal undermines the

policies that statutes of limitation serve. Among other things,

limitations periods encourage putative plaintiffs to diligently

prosecute their claims39 and “promote justice by preventing surprises

through plaintiffs’ revival of claims that have been allowed to slumber

until evidence has been lost, memories have faded, and witnesses have

disappeared.”40 Plaintiff’s rule, which incents strategic delay—not to

39 See Statute of Limitations, BLACK’S LAW DICTIONARY (10th ed. 2014) (“The

purpose of [statutes of limitation] is to require diligent prosecution of known claims

. . . .”); see also, e.g., Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 352 (1983)

(“Limitations periods are intended to . . . prevent plaintiffs from sleeping on their

rights.”); United States v. Wiley, 78 U.S. 508, 513–14 (1870) (Statutes of limitation “are

enacted upon the presumption that one having a well‐founded claim will not delay

enforcing it beyond a reasonable time, if he has the power to sue.”).

40 CTS Corp. v. Waldburger, 573 U.S. 1, 8 (2014) (internal quotation marks and

brackets omitted). See also, e.g., Bd. of Regents v. Tomanio, 446 U.S. 478, 487 (1980)

(“[T]here comes a point at which the delay of a plaintiff in asserting a claim is

sufficiently likely either to impair the accuracy of the fact‐finding process or to

upset settled expectations that a substantive claim will be barred without respect to

whether it is meritorious.”); Bell v. Morrison, 26 U.S. 351, 360 (1828) (Statutes of

limitation are “wise and beneficial law[s]” that “afford security against stale

demands, after the true state of the transaction may have been forgotten, or be

incapable of explanation.”); cf. Oliver W. Holmes, Jr., The Path of the Law, 10 HARV.

L. REV. 457, 476–77 (1897) (“[T]he foundation of the acquisition of rights by lapse of

time is to be looked for in the position of the person who gains them, not in that of

16

mention endless litigation concerning the sufficiency of notice—does

just the opposite.

* * *

For these reasons, we conclude that an FDCPA violation occurs

for the purposes of the one‐year statute of limitations when an

individual is injured by unlawful conduct. Here, Plaintiff was injured

on December 13, 2011, when Citibank froze his accounts. Because

Plaintiff filed suit one year and one day later, his FDCPA claim is timebarred.

C. The “Discovery Rule”

Plaintiff also contends that his claim is timely pursuant to the

common‐law “discovery rule.” We disagree.

Under the discovery rule, “a plaintiff’s cause of action accrues

when he discovers, or with due diligence should have discovered, the

injury that is the basis of the litigation.”41 We have not had occasion to

decide whether the discovery rule applies to FDCPA claims and need

the loser. . . . A thing which you have enjoyed and used as your own for a long time,

whether property or an opinion, takes root in your being and cannot be torn away

without your resenting the act and trying to defend yourself, however you came by

it.”).

41 Guilbert, 480 F.3d at 149 (internal quotation marks omitted).

17

not do so here because, as the District Court recognized, Plaintiff’s

claim would be time‐barred in any event.42

The Supreme Court has made clear that, under the discovery

rule, “discovery of the injury, not discovery of the other elements of a

claim, is what starts the clock.”43 This standard is plainly satisfied here.

By Plaintiff’s own account, he discovered the injury—that Citibank

had frozen his accounts—on the same day that it occurred: December

13, 2011. Accordingly, Plaintiff’s FDCPA claim is time‐barred even

under the discovery rule.44

42 In concluding that the FDCPA’s text does not support Plaintiff’s proposed

notice requirement, we do not mean to preclude the possibility that the FDCPA’s

statute of limitations is subject to the discovery rule. Indeed, we have previously

observed that “federal court[s] generally employ[ ] the ‘discovery rule.’” Id.

(emphasis added). There might be reason to question this presumption. See, e.g.,

TRW Inc. v. Andrews, 534 U.S. 19, 27 (2001) (noting that, though “lower federal

courts generally apply a discovery accrual rule when a statute is silent on the issue,”

the Supreme Court has “not adopted that position as [its] own” (internal quotation

marks omitted)). But we need not reach this issue here. Although we interpret the

words “violation” and “occur” as a signal that the FDCPA’s limitations period

generally commences when an individual is injured by unlawful conduct, we do

not discount the possibility that the discovery rule or, in appropriate circumstances,

another doctrine could alter or extend the limitations period. In addition, we note

that the Supreme Court has recently granted certiorari in an action that raises this

question and might soon conclusively resolve the issue. See Rotkiske v. Klemm, 890

F.3d 422 (3d Cir. 2018), cert. granted, 139 S. Ct. 1259 (Feb. 25, 2019) (No. 18‐328).

43 Rotella v. Wood, 528 U.S. 549, 555 (2000) (emphasis added).

44 We have previously described the discovery rule as applying to both the

complained‐of injury and its cause. See A.Q.C. ex rel. Castillo v. United States, 656

F.3d 135, 140 (2d Cir. 2011) (“The diligence‐discovery rule sets the accrual date at

the time when, with reasonable diligence, the plaintiff has or . . . should have

18

D. “Equitable Tolling”

Finally, Plaintiff contends that his claim is timely under the

doctrine of “equitable tolling.” Once again, we disagree.

As an initial matter, Plaintiff failed to raise this argument before

the District Court.45 “[A]n appellate court [generally] will not consider

an issue raised for the first time on appeal.”46 Although we can exercise

our discretion to do so “where necessary to avoid a manifest

injustice,”47 Plaintiff has not attempted to meet this standard.

discovered the critical facts of both his injury and its cause.” (internal quotation

marks omitted; emphasis added)). We need not decide today whether we can

reconcile our description of the discovery rule in cases such as A.Q.C. with the

limitation the Supreme Court expressed in Rotella, which we appeared to adopt in

Guilbert. We agree with the District Court that, to the extent Plaintiff did not know

the precise cause of his injury on December 13, 2011, he possessed enough

information to strongly suspect that it had been caused by conduct that was legally

actionable. See Benzemann, 2018 WL 1665253, at *6–*7 (noting Plaintiff’s deposition

testimony that he contacted his attorney shortly after learning his accounts were

frozen because he concluded, in light of his experience in 2008, that he “might

[have] a legal problem” (internal quotation marks omitted)).

45 We reject Plaintiff’s contention that he implicitly raised the issue during

oral argument before the District Court on the motion to dismiss that was the

subject of our decision in Benzemann I. Had Plaintiff in fact intended to raise

equitable tolling more than three years ago, it is highly unlikely that he would have

failed to do so again in opposing Houslanger’s motion for summary judgment.

46 Spinelli v. Nat’l Football League, 903 F.3d 185, 198 (2d Cir. 2018) (internal

quotation mark omitted).

47 Id. at 198–99.

19

In any event, Plaintiff’s argument fails on the merits. As a

general matter, equitable tolling “pauses the running of, or tolls, a

statute of limitations when a litigant has pursued his rights diligently

but some extraordinary circumstance prevents him from bringing a

timely action.”48 Assuming, for the sake of argument only, that the

doctrine of equitable tolling applies to the FDCPA, there is ample

reason to conclude that Plaintiff has failed to satisfy its requirements.

Plaintiff discovered that Citibank froze his accounts on

December 13, 2011 and began investigating the incident that evening.

By the next day, Plaintiff had gathered all the information necessary to

bring an FDCPA claim. Yet, for reasons known only to Plaintiff and

his counsel, Plaintiff waited just over one year to commence this

action. In the circumstances, it would be difficult indeed to describe

Plaintiff’s pursuit of his rights as “diligent.” Nor, in light of Plaintiff’s

ability to ascertain the necessary information in less than twenty‐four

hours, does it appear that an extraordinary circumstance prevented

him from commencing this action in a timely fashion.

III. CONCLUSION

To summarize, we hold that:

(1) An FDCPA violation “occurs,” for the purposes of the

FDCPA’s one‐year statute of limitations, when an individual

is injured by the alleged unlawful conduct. Because Plaintiff

filed suit one year and one day after Citibank froze his

48 CTS Corp., 573 U.S. at 9 (internal quotation marks omitted).

20

accounts—the injury caused by the claimed FDCPA

violation—his claim is time‐barred.

(2) Even if the “discovery rule” applies to FDCPA claims as a

general matter—an issue we do not decide—Plaintiff’s claim

is time‐barred because he discovered his injury on the same

day that it occurred.

(3) Even if Plaintiff had properly raised the doctrine of

“equitable tolling” before the District Court, it would not

salvage his claim because he did not diligently pursue his

rights, and no extraordinary circumstance precluded him

from timely commencing this action.

For the foregoing reasons, we AFFIRM the District Court’s

March 23, 2018 judgment.