New York Court of Appeals to Determine Whether FAPA Can Be Applied Retroactively

The U.S. Court of Appeals for the Second Circuit, in the matter of Article 13 LLC v. Ponce De Leon Fed. Bank, 132 F. 4th 586, 594 (2d Cir. 2025), certified the following questions to the New York Court of Appeals on March 25, 2025:

1. Whether, or to what extent does, Section 7 of the Foreclosure Abuse Prevention Act [FAPA], codified at N.Y. C.P.L.R. § 213(4)(b), apply to foreclosure actions commenced before the statute's enactment?
2. Whether FAPA's retroactive application violates the right to substantive and procedural due process under the New York Constitution, N.Y. Const., art. I, § 6?

Unlike in East Fork Funding LLC v. U.S. Bank, National Association, as Trustee for Greenpoint Mortgage Funding Trust Mortgage Pass-Through Certificates, Series 2006-AR6, No. 23-659, 2024 WL 4351792 (2d Cir. Oct. 1, 2024), the New York Court of Appeals accepted the certified questions.

Plaintiff-appellee Article 13 LLC brought an action to quiet title in the U.S. District Court for the Eastern District of New York, seeking to discharge a mortgage that it contends is time-barred.

At summary judgment, the relevant question before the district court was whether a prior foreclosure action on the mortgage constituted a valid acceleration of the mortgage debt. The district court denied the parties' cross motions for summary judgment. Just days after the district court's denial of the parties' respective motions for summary judgment, the New York State Legislature enacted FAPA, 2022 N.Y. Laws 2180-82. FAPA, in part, limits lenders from arguing a loan that was not previously accelerated because an earlier plaintiff lacked standing – unless that issue was conclusively decided by the court. FAPA § 7, 2022 N.Y. Laws at 2181-82.

Arguing that FAPA created an intervening change in controlling law, Article 13 LLC moved in the district court for reconsideration of its summary judgment motion. The district court granted reconsideration, applied FAPA and granted summary judgment to Article 13 LLC. Defendant-appellant U.S. Bank, as trustee, appealed the district court's judgment to the U.S. Court of Appeals for the Second Circuit.

The Second Circuit held, in part, that "whether FAPA applies retroactively cannot squarely be decided by the statute's plain language alone." Furthermore, the appellate court noted that the statutory language "does not determine whether FAPA's retroactivity would violate the New York Constitution's provision for right to due process." The court concluded that "because FAPA's plain language alone does not decide whether FAPA applies retroactively both as a matter of statutory construction and state constitutionality, certification is appropriate."

Although it is far from clear how the New York Court of Appeals will answer the questions, accepting the case is a step toward an ultimate resolution of this issue.

For more information or questions regarding FAPA, please contact the authors.

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