Supreme Court, Bronx County, August 28, 2023

Warner & Scheuerman, New York City (Jonathon D. Warner of counsel), for Link Point Realty, Inc., defendant.

Gross Polowy, LLC, Williamsville (Amber Jurek of counsel), and Fein, Such & Crane, LLP, Rochester, for plaintiff.

The defendant Link Point Realty, Inc. (LPR) moves for an order pursuant to CPLR 2221 (e), granting it leave to renew this court's order dated February 14, 2017, and entered on February 21, 2017, on the ground that there has been a change of the controlling law that would change this court's prior determination,{**80 Misc 3d at 1102} and upon renewal, granting LPR summary judgment, dismissing the plaintiff's complaint as barred by the statute of limitations (SOL). The plaintiff Bayview Loan Servicing, LLC (plaintiff) opposes the motion.

This is a residential foreclosure action. Plaintiff seeks to foreclose a consolidated mortgage dated December 14, 2007, between defendant borrower Dany Dalal (Dalal) and GFI Mortgage Bankers, Inc., as lender, in the principal amount of $472,500.00 encumbering real property known as 946 Polite Avenue, Bronx, New York (the property). It is alleged that Dalal defaulted on the terms of a note and mortgage by failing to make the payment due and owing on August 1, 2008, and any subsequent payments. LPR is the current owner of the property. Plaintiff's predecessor in interest, Chase Home Finance, LLC (Chase) accelerated the entire mortgage balance by commencing a foreclosure action on January 9, 2009 (Chase Home Fin., LLC v Dalal, Bronx County, index No. 380038/2009) (the prior foreclosure action). Chase subsequently moved to discontinue the prior foreclosure action on January 12, 2015. The motion was granted and the prior foreclosure action was discontinued by order dated April 17, 2015, and entered with the County Clerk on April 21, 2015.

On February 1, 2016, plaintiff commenced the instant action. By notice of motion dated July 6, 2016, plaintiff moved for summary judgment and related relief. LPR opposed the motion and cross-moved for summary judgment dismissing the complaint as barred by the six-year statute of limitations. Plaintiff opposed the cross-motion. In a decision and order dated February 14, 2017, this court inter alia denied both summary judgment motions (the 2017 order). The court found issues of fact as to whether a "de-acceleration" letter sent by plaintiff to Dalal on October 30, 2014, while the prior foreclosure action was still pending, validly de-accelerated the debt and reinstated the loan, thus halting the statute of limitations. LPR subsequently moved for leave to renew the 2017 order. That motion was denied by decision and order of this court dated July 8, 2019 (Hon. Doris Gonzalez, J.) (the 2019 order). The 2019 order was subsequently affirmed on appeal (Bayview Loan Servicing, LLC v Dalal, 184 AD3d 547 [1st Dept 2020]).

This matter has been pending ever since, and as of this date, no final judgment of foreclosure and sale has been entered. LPR now moves for leave to renew the 2017 order on the ground that there has been a change in controlling law that{**80 Misc 3d at 1103} would change the court's prior [*2]determination, and upon renewal, granting LPR summary judgment because this action is barred by the statute of limitations.

CPLR 2221 (e) (2) provides, in pertinent part, that a motion for leave to renew "shall demonstrate that there has been a change in the law that would change the prior determination." A motion to renew based upon a change in the law must be made prior to the entry of a final judgment or before the time to appeal has expired (Matter of 160 E. 84th St. v New York State Div. of Hous. & Community Renewal, 203 AD3d 501, 501 [1st Dept 2022]).

[1] This motion is timely because it was made before a final judgment was entered. Renewal is appropriate because LPR has established that there has been a change in the law that would change this court's prior determination. On December 30, 2022, the Foreclosure Abuse Prevention Act (L 2022, ch 821) (FAPA) went into effect. FAPA amended and codified various statutes, including RPAPL 1301 (4), General Obligations Law § 17-105 (4), CPLR 203 (h), CPLR 205-a, CPLR 213 (4), and CPLR 3217 (e). Pursuant to its terms, FAPA "shall take effect immediately and shall apply to all [residential and commercial foreclosure actions] in which a final judgment of foreclosure and sale has not been enforced" (L 2022, ch 821, § 10).

Significantly, for purposes of this motion, FAPA amended CPLR 3217 to include subdivision (e), which provides:

"(e) Effect of discontinuance upon certain instruments. In any action on an instrument described under subdivision four of section two hundred thirteen of this chapter, the voluntary discontinuance of such action, whether on motion, order, stipulation or by notice, shall not, in form or effect, waive, postpone, cancel, toll, extend, revive or reset the limitations period to commence an action and to interpose a claim, unless expressly prescribed by statute."

FAPA also amended CPLR 203 to include subdivision (h), which provides:

"(h) Claim and action upon certain instruments. Once a cause of action upon an instrument described in subdivision four of section two hundred thirteen of this article has accrued, no party may, in form or effect, unilaterally waive, postpone, cancel, toll, revive, or reset the accrual thereof, or{**80 Misc 3d at 1104} otherwise purport to effect a unilateral extension of the limitations period prescribed by law to commence an action and to interpose the claim, unless expressly prescribed by statute."

Accordingly, FAPA changed the law to declare that the discontinuance of a mortgage foreclosure action would not serve to cancel, toll, or reset the statute of limitations, and following accrual of a residential foreclosure action, a party may not unilaterally modify, postpone, cancel, toll, or extend the limitations period.

In this case, the statute of limitations began to run on January 9, 2009, when plaintiff's predecessor commenced the prior foreclosure action and elected to call due the entire amount secured by the mortgage (U.S. Bank N.A. v Outlaw, 217 AD3d 721 [2d Dept 2023]). Plaintiff discontinued that action in 2015. Since plaintiff did not commence this action until February 1, 2016, more than six years after January 9, 2009, the complaint is time-barred (id.). Plaintiff's voluntary discontinuance of the prior action did not occur until after the SOL expired. In any event, the discontinuance did not serve to halt or reset the SOL (SYCP, LLC v Evans, 217 AD3d 707, 709 [2d Dept 2023], citing CPLR 3217 [e]). Further, the "de-acceleration" letter of October 2014 could not be utilized to reset the SOL (CPLR 203 [h]; see Deutsche Bank Natl. [*3]Trust Co. v Natal, 217 AD3d 835 [2d Dept 2023]). In light of the above, LPR has established a change in law that would change this court's prior determination (CPLR 2221 [e] [2]).

In opposition to the motion, plaintiff argues that FAPA is not meant to apply retroactively, and if it is, such application is unconstitutional because it violates the "Due Process" and "Contracts" Clauses in the United States and New York State Constitutions.^[FN*]

First, contrary to plaintiff's contentions, FAPA applies retroactively. As noted above, FAPA provides that it "shall take effect immediately and shall apply to all actions commenced on an instrument described under subdivision four of section two{**80 Misc 3d at 1105} hundred thirteen of the civil practice law and rules in which a final judgment of foreclosure and sale has not been enforced" (L 2022, ch 821, § 10). Since no final judgment of foreclosure and sale has been entered or enforced in this action, FAPA applies. The court notes that FAPA has been applied retroactively by the Appellate Division with respect to pending mortgage foreclosure actions (U.S. Bank N.A. v Fox, 216 AD3d 445 [1st Dept 2023]; GMAT Legal Title Trust 2014-1 v Kator, 213 AD3d 915 [2d Dept 2023]; MTGLQ Invs., L.P. v Singh, 216 AD3d 1087 [2d Dept 2023]; U.S. Bank N.A. v Outlaw, 217 AD3d 721 [2d Dept 2023]; U.S. Bank N.A. v Onuoha, 216 AD3d 1069 [2d Dept 2023]; Bank of N.Y. Mellon v Norton, 219 AD3d 680 [2d Dept 2023]).

[2] Plaintiff next contends that retroactive application of FAPA violates the Due Process Clauses of the United States and New York State Constitutions. "To comport with the requirements of due process, retroactive application of a newly enacted provision must be supported by 'a legitimate legislative purpose furthered by rational means' " (Matter of Regina Metro. Co., LLC v New York State Div. of Hous. & Community Renewal, 35 NY3d 332, 375 [2020], quoting American Economy Ins. Co. v State of New York, 30 NY3d 136, 157-158 [2017]). "[L]egislative direction concerning the scope of a statute carries a presumption of constitutionality, and the party challenging that direction bears the burden of showing the absence of a rational basis justifying retroactive application of the statute" (id.). The challenging party must demonstrate "the [statute's] constitutional invalidity beyond a reasonable doubt" (American Economy Ins. Co., 30 NY3d at 149). To comply with due process, "there must be a 'persuasive reason' for the 'potentially harsh' impacts of retroactivity" (Matter of Regina Metro. Co., LLC, 35 NY3d at 375, quoting Holly S. Clarendon Trust v State Tax Commn., 43 NY2d 933, 935 [1978]).

In this case, the Legislature specifically articulated the purpose of FAPA:

"The Legislature finds that there is an ongoing problem with abuses of the judicial foreclosure process; that the problem has been exacerbated by court decisions which, contrary to the intent of the Legislature, have given mortgage lenders and loan servicers [*4]opportunities to avoid strict compliance with remedial statutes and manipulate statutes of limitation to their advantage; and that the purpose{**80 Misc 3d at 1106} of the present remedial legislation is to clarify the meaning of existing statutes, codify correct judicial applications thereof, and rectify erroneous judicial interpretations thereof.

"Accordingly, this bill amends certain statutes and rules to clarify the existing law and overturn those decisions that have strayed from legislative prescription and intent. These amendments and clarifications will ensure the laws of this state apply equally to all litigants, including those currently involved in mortgage foreclosures and related actions. The remedial aim of the bill is to thwart and eliminate abusive and unlawful litigation tactics that have been employed by foreclosure plaintiffs to the prejudice of homeowners throughout New York. That some of these tactics have been sanctioned by the judiciary has resulted in perversion of longstanding law and created an unfair playing field that favors the mortgage banking and servicing industry at the expense of everyday New Yorkers." (Senate Introducer's Mem in Support of 2021 NY Senate Bill S5473D [same-as bill to 2021 NY Assembly Bill A7737B, enacted as L 2022, ch 821].)

FAPA did not shorten the six-year statute of limitations and, since it only applies when a final judgment had not yet been entered, the legislation did not affect a party's vested property rights (see Article 13, LLC v Ponce de Leon Fed. Bank, 2023 WL 5179626, *5, 2023 US Dist LEXIS 140580, *11-12 [ED NY, Aug. 11, 2023, No. 20-CV-03553 (HG) (RML)]; U.S. Bank Trust, N.A. v Miele, 80 Misc 3d 839, 854 [Sup Ct, Westchester County 2023, Koba, J.]; HSBC Bank USA, N.A. v IPA Asset Mgt., LLC, 79 Misc 3d 821, 825-826 [Sup Ct, Suffolk County 2023, Quinlan, J.]). As recently determined by courts of coordinate jurisdiction and the Eastern District, retroactive application of FAPA is supported by a legitimate legislative purpose—"to curb mortgage lenders' and loan servicers' 'manipulat[ion] of statutes of limitation to their advantage' " (Article 13, LLC, 2023 WL 5179626, *5, 2023 US Dist LEXIS 140580, *13-14, quoting Senate Introducer's Mem in Support of 2021 NY Senate Bill S5473D [same-as bill to 2021 NY Assembly Bill A7737B, enacted as L 2022, ch 821]), and retroactively applying the statute is necessary to achieve the legislation's remedial objective (id.; Miele, 80 Misc 3d at 853; Deutsche Bank{**80 Misc 3d at 1107}Natl. Trust Co. v Dagrin, 79 Misc 3d 393, 399 [Sup Ct, Queens County 2023, Catapano-Fox, J.]).

Plaintiff also contends that FAPA violates the Contracts Clause of the United States Constitution. "The Contracts Clause restricts the power of States to disrupt contractual arrangements. It provides that '[n]o state shall . . . pass any . . . Law impairing the Obligation of Contracts' " (Sveen v Melin, 584 US — , —, 138 S Ct 1815, 1821 [2018], quoting US Const, art I, § 10, cl 1). To determine whether a law violates the Contracts Clause, a court must determine whether (1) "the state law has 'operated as a substantial impairment of a contractual relationship' " (584 US at —, 138 S Ct at 1821-1822, quoting Allied Structural Steel Co. v Spannaus, 438 US 234, 244 [1978]), and if so, whether (2) "the state law is drawn in an 'appropriate' and 'reasonable' way to advance 'a significant and legitimate public purpose' " (584 US at —, 138 S Ct at 1822, quoting Energy Reserves Group, Inc. v Kansas Power & Light Co., 459 US 400, 411-412 [1983]). However, "[b]efore determining whether there has been a substantial impairment of a contractual relationship, . . . [a court] must determine whether there has been any impairment of a contractual relationship" (American Economy Ins. Co., 30 NY3d at [*5]150). "Stated another way, the initial inquiry contains 'three components: whether there is a contractual relationship, whether a change in law impairs that contractual relationship, and whether the impairment is substantial' " (id., quoting General Motors Corp. v Romein, 503 US 181, 186 [1992]).

In this case, plaintiff has not shown that FAPA impairs any contractual relationship between the parties. CPLR 203 (h) prohibits a mortgagee from unilaterally revoking its acceleration of a mortgage and resetting the statute of limitations once a cause of action has accrued. Plaintiff points to no language in the subject mortgage contract providing that a mortgagee in fact has the right to unilaterally de-accelerate the debt or reset the statute of limitations. Indeed, as noted by the Eastern District in East Fork Funding LLC v U.S. Bank, N.A., nothing in CPLR 3217 (e) or 203 (h) prohibits the parties from agreeing in their mortgage contract that certain specific action will de-accelerate the mortgage and reset the statute of limitations (2023 WL 2660645, *5, 2023 US Dist LEXIS 56719, *12-13 [ED NY, Mar. 23, 2023, No. 20-CV-3404 (AMD) (RML)]). The CPLR amendments of FAPA, therefore, do not impair or interfere with parties' freedom of contract (2023 WL 2660645, *5, 2023{**80 Misc 3d at 1108}US Dist LEXIS 56719, *13; see also IPA Asset Mgt., LLC, 79 Misc 3d at 825-826).

In light of the foregoing, plaintiff failed to meet its burden to establish the FAPA is unconstitutional and failed to raise any issue of fact in opposition to LPR's renewed summary judgment motion.

Accordingly, it is hereby ordered that LPR's motion for leave to renew is granted, and upon renewal, LPR's motion for summary judgment is granted and plaintiff's complaint is dismissed as barred by the statute of limitations, and it is further ordered that the Clerk of this Court is directed to enter judgment accordingly.