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Sykes v. Bank of America

United States Court of Appeals, Second Circuit

July 24, 2013

Derry Sykes, Plaintiff-Appellant,
v.
Bank of America, New York City Human Resources Administration, Office of Child Support Enforcement, Defendants-Appellees, State of New York, New York State Child Support Processing Center, Defendants.

Submitted: February 15, 2013

This appeal presents the issue of whether 42 U.S.C. § 659(a) authorizes levy against Supplemental Security Income ("SSI") benefits provided under the Social Security Act to satisfy the benefits recipient's child support obligations. We conclude that SSI benefits are not based upon remuneration for employment within the meaning of § 659(a), and that the section therefore does not preclude Sykes's claim. We also hold that the Rooker-Feldman doctrine and the exception to federal jurisdiction for divorce matters do not preclude the district court from exercising jurisdiction over the matter. We therefore VACATE that portion of the judgment that dismissed Sykes's claims against the Office of Child Support Enforcement and the New York City Human Resources Administration and REMAND for further proceedings. Because Sykes's complaint has not alleged facts establishing that defendant Bank of America is a state actor for purposes of 42 U.S.C. § 1983, we conclude that the district court properly dismissed Sykes's claims against Bank of America and thus AFFIRM that portion of the judgment. The balance of the judgment not subject to this appeal is also AFFIRMED.

Derry Sykes, pro se, Binghamton, New York.

David L. Tillem, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, White Plains, New York, for Defendant-Appellee Bank of America.

Before: Sack, Hall, and Livingston, Circuit Judges.

Per Curiam:

This appeal presents the issue of whether 42 U.S.C. § 659(a) authorizes levy against Supplemental Security Income ("SSI") benefits provided under the Social Security Act to satisfy the benefits recipient's child support obligations. Plaintiff-Appellant Derry Sykes, a recipient of SSI benefits, appeals from a judgment of the United States District Court for the Southern District of New York (Preska, C.J.) sua sponte dismissing Sykes's amended complaint pursuant to 28 U.S.C. § 1915(e)(2)(B).[1] Sykes sought an Order to Show Cause, a temporary restraining order, and a preliminary injunction enjoining the New York City Office of Child Support Enforcement ("OCSE"), New York City Human Resources Administration ("HRA") (collectively, the "agency defendants"), and Bank of America from levying against his SSI benefits to enforce a child support order entered by a New York court. The amended complaint asserted claims under 42 U.S.C. § 1983, alleging violations of Sykes's due process and equal protection rights under the Fourteenth Amendment, his right to be free from unlawful seizures under the Fourth Amendment, and his rights under the Eighth Amendment and the Fair Debt Collection Practices Act.

The district court concluded that SSI benefits are subject to levy, relying on, inter alia, 42 U.S.C. § 659(a), which subjects certain government benefits to withholding to satisfy outstanding child support obligations, provided "the entitlement to [those benefits] is based upon remuneration for employment." We conclude that SSI benefits are not based upon remuneration for employment within the meaning of § 659(a), and that the section therefore does not preclude Sykes's claim. We also hold that the Rooker-Feldman doctrine and the exception to federal jurisdiction for divorce matters do not preclude the district court from exercising jurisdiction over the matter. We therefore VACATE the judgment to the extent the district court dismissed Sykes's claims against the agency defendants and REMAND for further proceedings. Because Sykes's complaint has not alleged facts establishing that defendant Bank of America is a state actor for purposes of § 1983, we AFFIRM that portion of the judgment dismissing Sykes's claims against Bank of America.

BACKGROUND

By letter dated June 24, 2011, Sykes received notice from the New York State Child Support Processing Center that monies belonging to him had been restrained in order to satisfy outstanding child support obligations. Enclosed with the letter was a copy of a restraining notice issued by OCSE. Pursuant to N.Y. C.P.L.R. § 5222, the notice informed Bank of America that Sykes owed a total child support debt of $27, 590.

Sykes, acting pro se, sought leave to proceed in forma pauperis and filed an amended complaint against OCSE, HRA, and Bank of America, seeking relief under 42 U.S.C. § 1983 and alleging that, by placing an unlawful restraining order on his SSI direct deposit account at Bank of America, OCSE had violated 42 U.S.C. §§ 407 and 659 and the Fair Debt Collection Practices Act, deprived him of due process of law and equal protection, and violated his rights under the Eighth Amendment by rendering Sykes, a cancer survivor, unable to afford the nutrition he needed. The amended complaint further alleged that Bank of America had denied him his constitutional and statutory rights by "allowing the placing of an unlawful Restraining Order for a Judgment of Debt on [his] SSI direct deposit accounts, " Am. Compl. ¶ 5, ECF No. 13, despite the fact it "fully knew that [SSI] monies and accounts[, ] unlike Social Security Disability (SSD)[, are] immune from garnishment, " id. at ¶ 6. Sykes sought both compensatory and punitive damages.

In November 2011, the district court sua sponte dismissed Sykes's complaint pursuant to 28 U.S.C. § 1915(e)(2)(B). The court held that SSI benefits were subject to withholding in accordance with State law to satisfy the obligation of an SSI recipient to provide child support or alimony. The court relied primarily on 42 U.S.C. § 659(a), which subjects certain social security benefits to withholding "to enforce the legal obligation of the [recipient] to provide child support." As to Sykes's claims against Bank of America, the court held that he had not established that Bank of America was acting under color of state law for purposes of § 1983.

Moreover, according to the court, even if Sykes had established that his SSI benefits were not subject to levy to satisfy an outstanding child support obligation, any challenge to a state court child support order had to be dismissed pursuant to the "domestic relations exception to federal court jurisdiction, " see Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992), and the Rooker-Feldman doctrine, see Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005), divesting federal courts of jurisdiction to consider suits which seek to overturn a state court judgment. The district court also determined that Sykes had failed to allege a claim under the Fair Debt Collection Practices Act, because child support obligations did not qualify as "debts" under that statute. The court reasoned that child support obligations were not incurred to receive consumer goods or services but were imposed on parents to force them to fulfill their duty to support their children.

After filing his notice of appeal, Sykes moved for in forma pauperis status before this Court. A motions panel of this Court granted the motion in part with respect to Sykes's § 1983 claim that Defendants had violated 42 U.S.C. § 407(a) by levying against his SSI benefits to enforce a child support order. The Court denied the motion as to Sykes's claims under the Equal Protection Clause, the Eighth Amendment, and the Fair Debt Collection Practices Act, and dismissed his appeal as to those claims on the ground that they lacked an arguable basis in law or fact. See 2 ...


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