Court Opinion

ID: 2678507
Source: CourtListenerOpinion
Date Created: 2014-06-16 19:00:27.852898+00
Date Added: 2024-06-11T15:15:27.759603
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 13-1897

                       JANET S. GRAPENTINE,

                      Plaintiff, Appellant,

                                v.

                     PAWTUCKET CREDIT UNION,

                       Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF RHODE ISLAND

       [Hon. John J. McConnell, Jr., U.S. District Judge]

                              Before

                        Lynch, Chief Judge,
              Howard, and Thompson, Circuit Judges.

     Keven A. McKenna, on brief for appellant.
     Joel E. Votolato, John T. Gannon, and McCorry and Gannon, PC.,
on brief for appellee.

                          June 16, 2014
            THOMPSON, Circuit Judge.         The sole question presented on

this appeal is whether the district court properly dismissed the

appellant's complaint for lack of subject matter jurisdiction.

Finding that dismissal was proper, we affirm the ruling of the

district court.

                                  BACKGROUND

            In    September    2008,    appellant    Janet   S.   Grapentine

("Grapentine") entered into a mortgage contract with appellee

Pawtucket Credit Union ("PCU") for the purchase of real estate in

Bristol, Rhode Island.        The mortgage agreement included a covenant

permitting PCU to accelerate its loan and invoke its statutory

power of sale in the event Grapentine defaulted on her loan

payments.    This private contractual remedy, to which the contract

expressly referred, is authorized by Rhode Island General Laws

§ 34-11-22.      That statute provides, in pertinent part:

            The following power shall be known as the
            'statutory power of sale' and may be
            incorporated in any mortgage by reference:

                     (Power)

            But if default shall be made in the
            performance or observance of any of the
            foregoing or other conditions . . . then it
            shall be lawful for the mortgagee . . . to
            sell, together or in parcels, all and singular
            the premises hereby granted or intended to be
            granted, or any part or parts thereof . . . .

R.I. Gen. Laws. § 34-11-22.

                                       -2-
              After Grapentine fell behind on her loan in October 2012,

PCU declared her in default, invoked its statutory power of sale,

and began to foreclose on the property.                  In response, Grapentine

filed suit against PCU in the district court.                  She alleged in her

amended complaint (which we refer to simply as her complaint) that

the foreclosure pursuant to § 34-11-22 violated her federal and

state due process rights because the state statute permitted PCU to

foreclose on her property without a judicial hearing.                    PCU fired

back   with    a    motion    to   dismiss      for    lack    of   subject   matter

jurisdiction.

              The district court granted PCU's motion on June 17, 2013,

finding that none of the statutory bases cited in Grapentine's

complaint     conferred      federal    jurisdiction.          Grapentine     timely

appealed.

                              STANDARD OF REVIEW

              The   existence      of   subject       matter   jurisdiction    is    a

question of law, and we review de novo the district court's grant

of a motion to dismiss for lack of subject matter jurisdiction.

Esso Standard Oil Co. (P.R.) v. Rodríguez-Pérez, 455 F.3d 1, 4 (1st

Cir. 2006).

                                    DISCUSSION

              The   parties    agree     they    are    non-diverse     and   it    is

uncontested that the diversity statute, 28 U.S.C. § 1332, does not

confer federal jurisdiction over Grapentine's claims. We therefore

                                         -3-
review the only other basis for federal jurisdiction asserted by

Grapentine, 42 U.S.C. § 1983.       For the reasons set forth below, we

find no federal jurisdiction.

                         A.   42 U.S.C. § 1983

           Generally speaking, 42 U.S.C. § 1983 provides a cause of

action   for   the   "deprivation    of   any   rights,    privileges,   or

immunities secured by the Constitution and laws" by any person

acting "under color of any statute, ordinance, regulation, custom,

or usage, of any State or Territory."       To state a claim under that

statute, a plaintiff must assert two allegations: (1) "that some

person deprived [her] of a federal right," and (2) that such person

"acted under color of state or territorial law."           Gomez v. Toledo,

446 U.S. 635, 640 (1980) (citing Monroe v. Pape, 365 U.S. 167, 171

(1961)).   Significantly, § 1983 does not apply to "'merely private

conduct, no matter how discriminatory or wrongful.'"              American

Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999) (quoting

Blum v. Yaretsky, 457 U.S. 991, 1002 (1982)).                This is where

Grapentine's complaint falls short.

           We note first that in Rhode Island, the existence of

§ 34-11-22 notwithstanding, "the right to exercise the power of

sale in a mortgage is derived from contract, not statute."           Bucci

v. Lehman Bros. Bank, FSB, 68 A.3d 1069, 1084 (R.I. 2013) (citing

Thurber v. Carpenter, 31 A. 5, 6 (R.I. 1895)).            This "contractual

power of sale was recognized long before § 34-11-22 was enacted in

                                    -4-
1927."     Id.    at   1085.         Thus,     "'though    regulated        by

statute . . . nonjudicial foreclosure is a private procedure

involving private parties, occurring pursuant to a private power of

sale contained in a [mortgage].'"         Id. (alterations in original)

(quoting 55 Am.Jur.2d Mortgages § 472 at 202 (2009)).

          There is no dispute here that PCU--the only defendant

named in Grapentine's complaint--is a private entity.                 At first

glance, it appears Grapentine cannot satisfy the under color of

state law requirement since she has not sued the State, any of its

subdivisions, or any public employee.           This is not by itself

dispositive,   however,   as   "a    private    party     can    be     fairly

characterized as a state actor if the circumstances of the case

meet one of three tests: the public function test, the joint

action/nexus test, or the state compulsion test."               Alberto San,

Inc. v. Consejo De Titulares Del Condomonio San Alberto, 522 F.3d

1, 4 (1st Cir. 2008).1    Grapentine asserts PCU is a state actor

     1
       We note that in Alberto San we cautioned district courts
against dismissing diversity actions asserting claims under § 1983
for lack of jurisdiction because, "[a]lmost by definition, a claim
under § 1983 arises under federal law and will support federal-
question jurisdiction" pursuant to § 1331. 522 F.3d at 3 (quoting
Local Union No. 12004, United Steelworkers v. Massachusetts, 377
F.3d 64, 75 (1st Cir. 2004)).      The plaintiff in Alberto San
asserted that a state statute acted directly upon him by reducing
his voting power in a condominium association.        Id. at 2.
Grapentine's claims here are quite different: her complaint simply
fails to allege any state action apart from the mere existence of
§ 34-11-22. As we discuss, the fact that Rhode Island law permits
a private mortgage contract to incorporate a non-judicial power of
sale, without more, does not implicate state action.

                                    -5-
under all of these tests.       She bears the burden of proving as much,

Mead v. Independence Ass’n, 684 F.3d 226, 231 (1st Cir. 2012), and

after careful review we find that she fails to carry her burden

here, as her complaint does not set forth any allegations of state

action.

                       i. The Public Function Test

              "The public function [test] is designed to flush out a

State’s attempt to evade its responsibilities by delegating them to

private entities."         Perkins v. Londonderry Basketball Club, 196

F.3d 13, 18-19 (1st Cir. 1999).       Common sense tells us that PCU was

not performing any sort of public function when it entered into a

mortgage contract with Grapentine or when it subsequently exercised

the   power    of   sale   contemplated    in   the   parties'   agreement.

Nonetheless, Grapentine attempts to counter this point by arguing

that legislation authorizing non-judicial foreclosures and sales in

itself constitutes state action.

              The Supreme Court, unfortunately for Grapentine, has

squarely rejected the argument that mere legislative authorization

of a creditor's private power of sale with respect to a debt owed

constitutes a delegation of a traditional government function.

Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 162-64 (1978); see

also Apao v. Bank of N.Y., 324 F.3d 1091, 1094 (9th Cir. 2003)

(recognizing Flagg Brothers's holding that "legislative approval of

a private self-help remedy was not the delegation of a public

                                     -6-
function").   We see no reason to depart from this logic here.

Grapentine's allegations simply do not permit any inference that

PCU was performing a public function when it invoked a private

contractual remedy, even though that remedy was permitted by state

law.

                    ii. Joint Action/Nexus Test

          We move on to consider whether Grapentine's allegations

satisfy the joint action/nexus test.     "[A] private party's joint

participation with state officials in the seizure of disputed

property is sufficient to characterize that party as a 'state

actor' for purposes of the Fourteenth Amendment."             Lugar    v.

Edmondson Oil Co., Inc., 457 U.S. 922, 941 (1982).        We note first

that Grapentine did not come right out and allege joint action in

her complaint, nor did she name Rhode Island as a party to this

litigation.   Accordingly, her complaint's bare allegations do not

satisfy the joint action/nexus test.           Nonetheless, on appeal

Grapentine feebly posits an attenuated theory of joint action.

          Grapentine   contends   that   the    state   "dominates    the

foreclosure process" through its police and legislative power, thus

meeting the joint action/nexus test.     We find no allegations here

to support any inference that the state exercised its police power

in conjunction with PCU to effectuate the foreclosure process. Cf.

Lugar, 457 U.S. at 924-25, 940-42 (finding state action where

private party utilized prejudgment attachment procedure set forth

                                  -7-
in state law, pursuant to which a state court issued, and the

sheriff executed, a writ of attachment sequestering another's

property).     And with respect to the implication that the joint

action/nexus test is met simply by the existence of § 34-11-22, we

return to the principle set out in Flagg Brothers, supra, and

conclude that mere legislative sanction of a private remedy does

not constitute state action.       Indeed, far from involving state

action, § 34-11-22 simply permits a lender to exercise a right that

the borrower voluntarily granted to it in a mortgage contract.

             The allegations in Grapentine's complaint do not permit

us to infer that PCU acted in conjunction with any state agency or

public official in connection with the foreclosure.           To the

contrary, from all that appears in her complaint, PCU acted alone,

and as a private entity, when it sought to enforce a contractual

right in the mortgage agreement between two private parties.

Grapentine thus fails to allege sufficient facts to find joint

action between PCU and the state.

                      iii. State Compulsion Test

             Lastly, under the state compulsion test we will find the

state action requirement has been satisfied when a plaintiff

demonstrates that "the state has 'exercised coercive power or has

provided such significant encouragement, either overt or covert,

that the [challenged conduct]'" must be attributed to the state.

Alberto San, 522 F.3d at 4 (alteration in original) (quoting

                                  -8-
Estades-Negroni v. CPC Hosp. San Juan Capestrano, 412 F.3d 1, 5

(1st Cir. 2005)).

           Grapentine's complaint is bereft of any allegation of

state coercion or encouragement, explicit or otherwise.         Nor can

Grapentine rely on the naked existence of § 34-11-22 to satisfy

this test.   In Van Daam v. Chrysler First Fin. Servs. Corp. of

R.I., we explained in an unpublished opinion that, in general, non-

judicial foreclosure statutes do not implicate state action because

           (1)   state   officials   do  not   play   any
           significant role (and often play no role at
           all) in the proceedings, and (2) the statutes
           which authorize 'power of sale' foreclosures
           generally do not create the right or compel
           its exercise, but simply confirm and to some
           extent regulate a right which was recognized
           under common law and which exists in a given
           case by virtue of an agreement between parties
           to the mortgage.

No. 90-1116, 1990 WL 151385, at *2 (1st Cir. 1990) (per curiam)

(unpublished).   This holding is in accordance with those of our

sister   circuits.    See   Apao,   324   F.3d   at   1094   ("When   the

constitutionality of such [non-judicial foreclosure] statutes was

challenged in a series of cases beginning in the 1970s, six

circuits, including our own [i.e., the Ninth], found that the

provisions did not violate the Fourteenth Amendment.").

           We went on to hold in Van Daam that the specific statute

at issue here, § 34-11-22, "is entirely permissive" and simply

"prescribes the form to be used if the parties agree to include" a

non-judicial power of sale in their mortgage agreement.         No. 90-

                                 -9-
1116, 1990 WL 151385, at *3.2         In the end, we upheld dismissal of

the plaintiff's complaint due to the lack of any basis to find that

a foreclosure pursuant to § 34-11-22 involved any state action.

Id.

            Van Daam's reasoning is persuasive and we adopt it here.

Accordingly, we find that Grapentine was not compelled by Rhode

Island law to grant PCU a power of sale, and we conclude that she

has failed to satisfy the state compulsion test.

                               iv. Recap

            After careful review of Grapentine's complaint, we find

that none of PCU's alleged conduct can be ascribed to the state.

Without a showing of state action, the district court had no

jurisdiction    under   42   U.S.C.    §   1983   and   properly   dismissed

Grapentine's complaint.

               B.   Alternative Bases of Jurisdiction

            In addition to 42 U.S.C. § 1983, Grapentine's complaint

asserts federal jurisdiction pursuant to the following federal

statutes:    28 U.S.C. § 1331; 28 U.S.C. § 1337; and 28 U.S.C.

§ 2201.     When it granted PCU's motion to dismiss, the district

court speculated that Grapentine may also have intended to assert

jurisdiction under 28 U.S.C. § 1367.         We have parsed Grapentine's

      2
       Although § 34-11-22 has been amended on several occasions
since our decision in Van Daam, those amendments have not
materially altered the statute with respect to the issues raised in
this appeal.

                                  -10-
brief, and her entire appellate argument is predicated on her

assertion of jurisdiction under § 1983.   Indeed, she does not even

so much as mention any of these statutes, much less provide the

sort of developed argument required to raise an issue on appeal.

Accordingly, we find that Grapentine has waived any argument that

jurisdiction is proper under any statute other than § 1983.     See

United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).

                            CONCLUSION

          Grapentine's complaint does no more than allege "merely

private conduct" over which we have no jurisdiction pursuant to 28

U.S.C. § 1983, "no matter how . . . wrongful."   American Mfrs., 526

U.S. at 50.    To the extent Grapentine is aggrieved by PCU's

foreclosure process, her remedy lies not here, but with the courts

of Rhode Island.

          The judgment of the district court is affirmed.

                               -11-