In a recent ruling, the United States Court of Appeals for the Second Circuit
reversed a district court judge’s decision to bar debtor Alexander
Benzermann from bringing an action under the Fair Debt Collection Practices
Act. The FDCPA requires that actions be brought, “within one year
from the date when the violation occurs.” This holding allows for
the statute of limitations for claims brought under this act to start
running when the bank freezes a debtor’s account, not when the notice
of debt is served.
The purpose of the Fair Debt Collection Practices Act is to “eliminate
abusive debt collection practices by debt collectors, to insure that those
debt collectors who refrain from using abusive debt collection practices
are not competitively disadvantaged, and to promote consistent State action
to protect consumers against debt collection abuses.” The FDCPA
creates a private right of action for debtors who have been harmed by
abusive collection practices to accomplish such goals. However, if a plaintiff
wishes to bring a private suit under the FDCPA, he must do so within the
statute of limitations.
Benzemann v. Citibank began in the United States District Court for the Southern District of
New York as a case of mistaken identity. On April 30, 2008, Citibank,
through their attorneys, Houslanger & Associates froze the bank account
of plaintiff and sent him a letter that referenced a judgment entered
in the Civil Court of the City of New York from 2003. This judgement for
$12,942 was actually entered against plaintiff’s brother, Andrew
Benzemann, not plaintiff. Plaintiff also received a restraining notice
from the judgment creditor, New Century Financial Services, a debt buyer.
In this notice, Andrews Benzemann was identified as the judgment debtor,
but the social security number and address were that of the plaintiff.
Upon retaining counsel, the restraining notice was withdrawn by Citibank.
However, approximately three-and-a-half years later Citibank again froze
plaintiff’s account pursuant to a restraining notice based on the
In the Court of Appeals case, the court concluded that the district court
erred in finding the FDCPA violation occurred when the restraining order
was sent. Instead the held that “where a debt collector send an
allegedly unlawful restraining notice to a bank, the FDCPA violation does
not occur for purposes of Section 1602k(d) until the bank freezes the
debtor’s account.” They also held that in Benzemann’s
case, the record was unclear as to when the freeze actually took place.
Due to this uncertainty, the case was remanded to the district court for
“whatever further proceedings are necessary to resolve this issue.”