Supreme Court, Queens County, December 6, 2023

Shiryak, Bowman, Anderson, Gill & Kadochnikov LLP, Kew Gardens (Matthew J. Routh of counsel), for Glenda Erneste, defendant.

Vallely Law, PLLC, Syosset (Natalia Thomas of counsel), for plaintiff.

By notice of motion, filed January 12, 2023, defendant Glenda Erneste (defendant) moves for an order: (1) granting summary judgment in her favor pursuant to CPLR 3212, or alternatively, (2) dismissing the complaint with prejudice as time-barred, pursuant to CPLR 3211 (a) (5) and 213 (4), or alternatively, (3) dismissing the complaint for failure to state a cause of action, pursuant to CPLR 3211 (a) (1) and (7), and (4) canceling the lis pendens for the subject premises. By notice of cross-motion, filed on March 22, 2023, plaintiff Pennymac Corp. (plaintiff) cross-moves for an order: (1) denying the defendant's motion in its entirety; (2) granting the plaintiff summary judgment for the relief demanded in the complaint pursuant to CPLR 3212; (3) striking the defendant's answer and dismissing her counterclaims; (4) deeming all non-appearing and non-answering defendants in default pursuant to CPLR 3215 (a); (5) amending the caption to substitute Revolve Capital Group LLC for Pennymac Corp.; (6) appointing a referee to compute sums due and report; and (7) awarding the cost of this motion to the plaintiff.

On or about November 12, 2009, the plaintiff's predecessor in interest, Residential Funding Company, LLC, commenced an action against the instant defendant, declaring the entire unpaid balance of the loan immediately due and payable (see Residential Funding Co., LLC v Glenda Erneste, Sup Ct, Queens County, index No. 30326/2009). On August 1, 2013, that plaintiff voluntarily discontinued that action with the filing of an affidavit of discontinuance. By letter dated June 2, 2014, the instant plaintiff advised the defendant that the subject loan that was previously accelerated was "de-accelerated" and that the loan was reinstituted as an installment loan.

The instant action commenced with the filing of a summons, complaint, and notice of pendency to foreclose the residential{**82 Misc 3d at 839} real property located at 219-10 Edgewood Avenue, Springfield Gardens, New York 11413. On or about March 1, 2018, plaintiff moved for a second time for a default judgment, an order of reference, and to amend the caption and complaint, which was granted by decision and order dated May 18, 2018. On January 22, 2020, the defendant appeared and moved to vacate the default and dismiss the complaint for lack of personal jurisdiction. On February 22, 2022, the defendant's motion was granted to the extent of vacating the default, and the matter was set for a traverse hearing. On December 28, 2022, the defendant filed an answer to the complaint with counterclaims with an extension of the plaintiff's time to complete service. The answer includes the defense that this action is barred by the expiration of the statute of limitations. A reply to the counterclaims was filed on January 12, 2023. The instant motion and cross-motion followed.[*3]

In support of her motion and in opposition to the cross-motion, the defendant argues that she is entitled to summary judgment as a matter of law because this action is time-barred by the six-year statute of limitations under CPLR 213, given the acceleration of the subject mortgage in 2009. The defendant relies on the passage of the Foreclosure Abuse Prevention Act (FAPA) (L 2022, ch 821) on December 30, 2022, to assert that the plaintiff cannot unilaterally revoke acceleration through prior discontinuance. The defendant maintains that the plaintiff had until November 13, 2015, to commence another foreclosure action against her and failed to do so timely.

Alternatively, the defendant argues that this action should be dismissed for failure to state a cause of action given the statute of limitations violation. Plaintiff commenced this action on June 1, 2017. The defendant affirms that the previously filed case unambiguously and irrefutably accelerated the mortgage and, consequently, the complaint fails to state a cause of action. The defendant also argues that the plaintiff concedes application of FAPA in its opposition and that the law requires dismissal on statute of limitations grounds.

In support of its cross-motion and in opposition to defendant's motion, the plaintiff argues that the instant action was timely commenced because FAPA's retroactive application is unconstitutional. The plaintiff also asserts that it relied on the existing case law at that time and sent a de-acceleration letter{**82 Misc 3d at 840} on June 2, 2014, to the defendant within the six-year tolling of the statute of limitations. The plaintiff posits that it has a contractual right to de-accelerate the subject mortgage. The plaintiff contends that it has made a prima facie showing for entitlement to a judgment by producing the mortgage, note, and evidence of the default. It is also asserted that the defendant's general denial is insufficient to rebut and defeat its motion for summary judgment. The plaintiff posits that each of the defenses raised in the answer lacks merit and that it has unequivocally demonstrated its standing to maintain this action. The plaintiff also maintains that it established, through documentary evidence, compliance with all the requisite steps for entitlement to summary judgment. Similarly, the plaintiff argues that the defendant's counterclaims lack merit, are boilerplate, and are time-barred.

In New York, "once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt" (Ditmid Holdings, LLC v JPMorgan Chase Bank, N.A., 180 AD3d 1002, 1003 [2d Dept 2020] [citation omitted]). In December 2022, FAPA was passed to specifically overturn Freedom Mtge. Corp. v Engel (37 NY3d 1 [2021]), which held that "the statute of limitations did not bar actions to foreclose certain mortgages because the accelerations of those mortgages that occurred by virtue of the filing of prior foreclosure actions were revoked by the voluntary discontinuances of the prior actions" (Bank of N.Y. Mellon v Stewart, 216 AD3d 720, 723 [2d Dept 2023]). On December 30, 2022, FAPA took immediate effect, applying to all actions concerning instruments described in CPLR 213 (4) in which a final judgment of foreclosure and sale had not been enforced (L 2022, ch 821, § 10). As stated therein, the purpose and intent of FAPA is "to clarify the existing law and overturn those decisions that have strayed from legislative prescription and intent." (Senate Introducer's Mem in Support of 2022 NY Senate Bill S5473-D, 2022 Assembly Bill 7737-B, enacted as L 2022, ch 821.) Specifically, the bill provides that its aim 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{**82 Misc 3d at 841} and servicing industry at the expense of everyday New Yorkers." (Id.)

The act seeks to clarify and codify existing law and is remedial in nature (id.). Under FAPA, "[e]ven if the mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and payable, and the statute of limitations begins to run on the entire debt" (Bank of N.Y. Mellon v Stewart at 722). The law amended several statutes, including RPAPL 1301 (4); General Obligations Law § 17-105 (4); and CPLR 203 (h); 205-a, 213 (4) and 3217 (e) (see Bayview Loan Servicing, LLC v Dalal, 80 Misc 3d 1100, 1103 [Sup Ct, Bronx County 2023]).

Under CPLR 3211 (a) (5), a cause of action may not be maintained where the applicable statute of limitations has expired. Pursuant to CPLR 213 (4), where a prior action was commenced, a plaintiff is estopped from asserting that a debt was not validly accelerated where the statute of limitations has expired, unless the prior action was dismissed based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated. Under CPLR 3217 (e),

"[i]n 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."

Additionally, pursuant to CPLR 203 (h), once a cause of action to foreclose a mortgage of real property has accrued, "no party may, in form or effect, unilaterally waive, postpone, cancel, toll, revive, or reset the accrual thereof, or 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." Under RPAPL 1301 (4),

"[i]f an action to foreclose a mortgage or recover any part of the mortgage debt is adjudicated to be barred by the applicable statute of limitations, any other action seeking to foreclose the mortgage or recover any part of the same mortgage debt shall also be barred by the statute of limitations."{**82 Misc 3d at 842}

As has been held, the plain language in FAPA provides that "a voluntary discontinuance does not reset the applicable six-year statute of limitations" (Article 13, LLC v Ponce de Leon Fed. Bank, 686 F Supp 3d 212, 218 [ED NY, Aug. 11, 2023, 20-CV-03553 (HG) (RML)], citing Deutsche Bank Natl. Trust Co. v Dagrin, 79 Misc 3d 393 [Sup Ct, Queens County 2023]). Relying on FAPA, this Department has held that neither a lender's voluntary discontinuance of a prior case nor a claim of a lender's lack of standing in that prior action could bar application of the statute of limitations, which required dismissal of the proceeding (Bank of N.Y. Mellon v Stewart, 216 AD3d 720). In this Department, where a prior action was voluntarily discontinued, a lender is estopped from asserting that a debt was not validly accelerated where there was no expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated by the commencement of the prior action based on the plaintiff's lack of standing (Bank of N.Y. Mellon v Stewart at 723, citing CPLR 213 [4]). The voluntary discontinuance of a prior action does not act, "in form or effect, [to] waive, postpone, cancel, toll, extend, revive or reset the limitations period to commence an action and to interpose a claim" (id. at 723). Similarly, under GMAT Legal Title Trust 2014-1 v Kator (213 AD3d 915 [2d Dept 2023]), the rule in this Department is that the unilateral voluntary discontinuance of a prior action alone does not serve to reset the statute of limitations as required by FAPA.[*4]

In this case, the plaintiff relies on its voluntary discontinuance of the 2009 action to reset the statute of limitations. However, the controlling law is that the lender cannot unilaterally retract acceleration of the mortgage with the filing of a voluntary discontinuance (see Bank of N.Y. Mellon v Stewart, 216 AD3d 720; GMAT Legal Title Trust 2014-1 v Kator, 213 AD3d 915; SYCP, LLC v Evans, 217 AD3d 707 [2d Dept 2023]; MTGLQ Invs., L.P. v Singh, 216 AD3d 1087 [2d Dept 2023]). The plaintiff's predecessor in interest elected to call all sums due in the prior 2009 action, and the loan was accelerated. The defendant also established that this action commenced more than six years from the time the statute of limitations began to accrue and that there is no basis in law to toll the statute of limitations. The plaintiff has failed to show that the statute of limitations was tolled with the filing of its unilateral voluntary{**82 Misc 3d at 843} discontinuance with application of FAPA, as conceded. The voluntary discontinuance did 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" (ARCPE 1, LLC v DeBrosse, 217 AD3d 999, 1001-1002 [2d Dept 2023], citing CPLR 3217 [e], CPLR 203 [h], and GMAT Legal Title Trust 2014-1 v Kator, 213 AD3d at 917). Consequently, the defendant is entitled to dismissal pursuant to CPLR 213 (4). The defendant's motion to dismiss on CPLR 3211 and 3212 grounds is granted, and the lis pendens attached to the subject premises is cancelled.

New York courts have held that FAPA is retroactive, and the Second Department has consistently applied the law retroactively (see Nationstar Mtge., LLC v Naar, 80 Misc 3d 1203[A], 2023 NY Slip Op 50909[U] [Sup Ct, Westchester County 2023], citing Bank of N.Y. Mellon v Stewart, 216 AD3d 720, and ARCPE 1, LLC v DeBrosse, 217 AD3d 999; HSBC Bank USA, N.A., v IPA Asset Mgt., LLC, 79 Misc 3d 821, 825-826 [Sup Ct, Suffolk County 2023]; see also FV-1, Inc. v Palaguachi, 2023 NY Slip Op 32684[U] [Sup Ct, Queens County 2023] [specifically holding that FAPA is retroactive]). The language of the statute makes it clear that FAPA is intended to apply retroactively to prevent lenders and loan servicers from abusing and manipulating the statute of limitations to their advantage (see Bayview Loan Servicing, LLC v Dalal, 80 Misc 3d 1100). A judgment of foreclosure and sale has not been enforced in this case, and the action is pending. Therefore, FAPA applies and bars the tolling of the statute of limitations through the plaintiff's unilateral deceleration of the loan (see GMAT Legal Title Trust 2014-1 v Kator, 213 AD3d 915).

To establish a violation of the Contract Clause, there must be a substantial impairment of a contractual right (Consumers Union of U.S., Inc. v State of New York, 5 NY3d 327 [2005]). "[W]here there is no existing contractual agreement regarding the terms changed by the legislation, there is no need to consider whether there was in fact an impairment and whether it was substantial" (id. at 359). There is no constitutional violation herein, as there is no showing the plaintiff had a contractual right to unilaterally decelerate the subject loan. The terms{**82 Misc 3d at 844} of the subject loan do not include the plaintiff's right to unilaterally cancel acceleration. Consequently, the plaintiff fails to show that there was a taking of a substantial right (see id.; see also HSBC Bank USA, N.A. v IPA Asset Mgt., LLC, 79 Misc 3d 821 [holding that FAPA did not take any vested rights of the plaintiff]). In this case, there is no evidence that the plaintiff's contractual rights were impaired.

FAPA is remedial in nature and was passed to clarify and enforce existing law that [*5]mandates a six-year statute of limitations in foreclosure cases (see Bayview Loan Servicing, LLC v Dalal, 80 Misc 3d 1100, citing Deutsche Bank Natl. Trust Co. v Dagrin, 79 Misc 3d 393 [Sup Ct, Queens County 2023], and U.S. Bank Trust, N.A. v Miele, 80 Misc 3d 839 [Sup Ct, Westchester County 2023]). FAPA serves to limit "the methods by which a plaintiff in a foreclosure action can reset the accrual date" and extend the statute of limitations beyond the six-year period (HSBC Bank USA, N.A. v IPA Asset Mgt., LLC, 79 Misc 3d at 825). As has been held, under the instant circumstance, FAPA does not violate the Federal or State Constitution or any due process right (Bayview Loan Servicing, LLC v Dalal, 80 Misc 3d 1100). Further, there is a strong presumption that the legislation is constitutional (see White v Cuomo, 38 NY3d 209 [2022]; see also FV-1, Inc. v Palaguachi, 2023 NY Slip Op 32684[U]; HSBC Bank USA, N.A. v IPA Asset Mgt., LLC, 79 Misc 3d 821). The cases cited by the plaintiff to argue that the retroactive application of FAPA violates the constitution or infringes on the Bill of Attainder or Contract Clauses are inapplicable and inapposite to the facts and law herein. The plaintiff's evidence, or lack thereof, does not defeat the statute's constitutionality. Consequently, FAPA applies, and the statute of limitations was not tolled.

Moreover, as has been held, "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" (Bayview Loan Servicing, LLC v Dalal, 80 Misc 3d at 1106; U.S. Bank Trust, N.A. v Miele, 80 Misc 3d 839; HSBC Bank USA, N.A. v IPA Asset Mgt., LLC, 79 Misc 3d 821). Consequently, the plaintiff's cross-motion based on constitutional and due process grounds is denied in its entirety. The remainder of the plaintiff's cross-motion is also denied. The action is time-barred pursuant to CPLR 213 (4), and the defendant is entitled to dismissal.{**82 Misc 3d at 845}

The court has considered the parties' remaining contentions and finds them without merit. Accordingly, the defendant's motion to dismiss on CPLR 3211 and 3212 grounds is granted, and the lis pendens attached to the subject premises is cancelled. The plaintiff's cross-motion is denied. All relief not expressly granted herein is denied.