U.S. Bank Trust, N.A. v Miele
Annotate this CaseDecided on June 21, 2023
Supreme Court, Westchester County
U.S. Bank Trust, N.A., as TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, Plaintiff,
against
Stephen D. Miele A/K/A STEPHEN MIELE, CATHERINE G. MIELE A/K/A CATHERINE MIELE, A/K/A KATHERINE G. MIELE A/K/A KATHERIN G. MIELE; AMERICAN EXPRESS TRAVEL RELATED SERVICE; CITIBANK SOUTH DAKOTA, N.A.; SUBURBAN PROPANE LP; DCFS TRUST; and OLIVIA MIELE, Defendants.
Index No. 51023/2016
Quinn Koba, J.
By notice of motion, as amended, (the "Motion"), the defendants, Stephen D. Miele a/k/a Stephen Miele and Catherine G. Miele a/k/a Catherine Miele (the "Mieles"), seek leave to renew their prior motion to dismiss, filed on March 23, 2016 (the "Prior Motion")[FN1] , pursuant to CPLR 2221(e), and upon renewal, for an order: (1) granting the Prior Motion; (2) vacating the Order of Reference, dated November 2, 2017; (3) vacating the Judgment of Foreclosure and Sale, dated January 11, 2023, (4) vacating all orders issued subsequent to the Prior Motion; and (5) granting such further and other relief as this Court deems just and proper. The plaintiff opposes the Motion.
The following papers were considered in connection with the Motion:
PAPER NYSCEF DOC NO.
Notice of motion, 331-334Affirmation in support,
Affirmation (word count)
Affirmation in opposition 338-350, 352
Exhibits 1-11,
Memorandum of law in opposition,
Affidavit of service
NYSCEF Files
Upon review and consideration of the foregoing papers, the Motion is determined as follows:
RELEVANT FACTUAL & PROCEDURAL BACKGROUND
The parties are presumed to be familiar with the procedural and factual background of this lengthy litigation. As is relevant here, on July 7, 2009, JP Morgan Chase Bank, National Association, the plaintiff's predecessor in interest ("Chase"), commenced an action against the Mieles to foreclosure upon the mortgage encumbering the residential property located at 191 Brook Road, Bedford Hills, NY, which the Mieles executed in favor of Washington Mutual Bank, FA to secure a note in the amount of $2.6 million dollars (the "2009 Action").[FN2] The complaint contained an express acceleration of debt provision (NYSCEF Doc. No. 30, ¶ Ninth). Sometime thereafter, the mortgage and note were assigned to the plaintiff.
By decision and order of this Court (DiBella, J.), dated July 2, 2014, rendered in the 2009 Action, Chase was directed to file a motion for summary judgment and an order of reference on or before September 12, 2014. Chase failed to serve its motion for summary judgment as directed, which resulted in the issuance of an order on September 16, 2014 (DiBella, J.) dismissing the 2009 Action due to Chase's failure to comply with the court's July 2, 2014 decision and order.
On or about May 13, 2015 and May 14, 2015, the plaintiff's alleged loan servicer sent the Mieles separate letters purportedly de-accelerating the entire debt and reinstituting the loan as an installment loan (the "De-acceleration Letters"). The De-acceleration Letters specifically stated that "the maturity of the Loan is hereby de-accelerated, immediate payment of all sums owed is hereby withdrawn, and the Loan is re-instituted as an installment loan" (NYSCEF Doc. No. 47).
On January 28, 2016, the plaintiff commenced this action seeking to foreclosure upon the same mortgage that was the subject of the 2009 Action. The complaint contains an express acceleration of debt provision.
On March 23, 2016, the Mieles brought the Prior Motion seeking to dismiss this action as time-barred pursuant to CPLR 213(4) and seeking costs and reasonable attorney's fees. This Court (Bellantoni, J.), denied the Prior Motion pursuant to the order, dated September 23, 2016 (the "Bellantoni Order").[FN3] Therein, the Court acknowledged that Chase had accelerated the entire loan debt by commencing the 2009 Action on July 7, 2009 and that this action had been commenced beyond the six-year statute of limitations. However, the court determined that the acceleration of the debt was revoked within the statute of limitations period by the De-[*2]acceleration Letters, the statute of limitations was tolled thereby, and this action was therefore timely. The Mieles appealed the Bellantoni Order.
On August 5, 2020, the Appellate Division, Second Department, issued a decision and order modifying the Bellantoni Order, on the law, by deleting the provision thereof denying that branch of the motion to dismiss the causes of action relating to unpaid mortgage installments which accrued on or before January 27, 2010 and substituting therefor a provision granting that branch of the motion. The Bellantoni Order was affirmed, as modified (see U.S. Bank Trust, N.A. v Miele, 186 AD3d 526 [2d Dept 2020]). In reaching its holding, the appellate court found that the Mieles had established the six-year statute of limitations began to run on July 7, 2009, when Chase accelerated the mortgage debt and commenced the 2009 Action and that this action was commenced more than six years later on January 28, 2016. However, the appellate court held plaintiff's evidence that it sent de-acceleration letters to each Miele was "sufficient only to raise a question of fact as to whether those causes of action that sought unpaid installments which accrued within the six-year period of limitations preceding the commencement of this action . . . are barred by the statute of limitations due to this alleged de-acceleration by the plaintiff" (id. at 528).
On December 30, 2022, the Foreclosure Abuse Prevention Act [L 2022, ch 821] (the "FAPA") went into effect. The FAPA, in relevant part, amended and codified various statutes, including RPAPL 1301(4), GOL 17-105(4), CPLR 203(h), CPLR 205-a, CPLR 213(4), and CPLR 3217(e). Pursuant to its terms, the 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" (FAPA §10).
On January 11, 2023, this Court granted the plaintiff's motion for an order confirming the referee's report and judgment of foreclosure and sale (the "Judgment"). On March 11, 2023, the Mieles filed this Motion. On April 3, 2023, the plaintiff served a copy of the Judgment with notice of entry and papers opposing the Motion. On April 6, 2023, the plaintiff served the New York State Attorney General's Office with a copy of the memorandum of law in opposition challenging the constitutionality of the FAPA.
In support of the Motion, the Mieles submitted the affirmation of their attorney. Therein, the Mieles assert the FAPA prevents lenders from unilaterally de-accelerating a mortgage debt the lender had accelerated to toll the statute of limitations as was attempted by the plaintiff herein and assert the FAPA applies retroactively to this action. Upon retroactive application, the Mieles argue the De-acceleration Letters were a unilateral attempt by the plaintiff to toll the statute of limitations, which is impermissible under the FAPA. Accordingly, the Mieles contend this action must be dismissed as untimely.
In opposition, the plaintiff submitted, inter alia, the affirmation of its attorney, a copy of the De-acceleration Letters, and a memorandum of law. The plaintiff contends this Court is without authority to entertain the Motion because the time for the Mieles to appeal the Prior Order has expired and this Court cannot reverse the Appellate Division, Second Department's August 5, 2020 decision and order.
The plaintiff further asserts this action is timely because it tolled the six-year statute of limitations by timely de-accelerating the mortgage debt within the six-year statute of limitations period in conformity with existing law. The plaintiff argues the FAPA should be interpreted to apply prospectively. The plaintiff also contends that retroactive application of the FAPA would: "A) constitute a taking, in violation of the Fifth and Fourteenth Amendments, without just [*3]compensation; (B) deny plaintiff due process by depriving it of its vested rights; and (C) violate the Contract Clause by re-writing the subject mortgage to include terms never agreed upon by the parties" (NYSCEF Doc. No. 350 at 5-6).
ANALYSIS
Motion to Renew
"A motion for leave to renew 'shall . . . demonstrate that there has been a change in the law that would change the prior determination' (CPLR 2221[e][2]; see Dinallo v DAL Elec., 60 AD3d 620, 621, 874 N.Y.S.2d 246)" (McLaughlin v Snowlift, Inc. 214 AD3d 720, 721 [2d Dept 2023]). "A motion for leave to renew is the appropriate vehicle for seeking relief from a prior order based on a change in the law (internal quotation marks and citations omitted). However, after entry of a final judgment, a motion for leave to renew pursuant to CPLR 2221(e)(2) based upon a change in the law that would change the prior determination must be made, absent circumstances set forth in CPLR 5015 [which are inapplicable here], before the time to appeal the final judgment has expired [internal quotation marks and citations omitted]" (Opalinski v City of New York, 205 AD3d 917, 919 [2d Dept 2022]). Further, "[a] court of original jurisdiction may entertain a motion for leave to renew . . . even after an appellate court has affirmed the original order" (Yemini v Goldberg, 119 AD3d 557, 558 [2d Dept 2014][internal citations omitted]).
Here, the Motion was brought within three months after the enactment of the FAPA and before the time to appeal the Judgment expired. The plaintiff served the Mieles with a copy of the Judgement with notice of entry on April 3, 2023, several weeks after the Motion was filed. Thus, the Motion is timely. Given the change in the law, this Court grants leave to renew the branch of the Prior Motion to dismiss this action as time barred by the statute of limitations.
CPLR 3211(a)(5) Motion to Dismiss
"On a motion to dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is barred by the statute of limitations, a defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired (internal citations omitted). If the defendant satisfies this burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced the action within the applicable limitations period [internal quotation marks and citation omitted]" (Tulino v Hiller, P.C., 202 AD3d 1132, 1134-1135 [2d Dept 2022]).
"Pursuant to CPLR 213(4), an action to foreclose a mortgage is subject to a six-year statute of limitations (internal citations omitted). Even 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 [internal citations omitted]. Acceleration occurs, inter alia, by the commencement of a foreclosure action wherein the plaintiff elects in the complaint to call due the entire amount secured by the mortgage [internal citations omitted]" (GMAT Legal Trust 2014-1 v Kator, 213 AD3d 915, 916 [2d Dept 2023]).
The Bellantoni Order denied the Prior Motion to dismiss this action as time-barred. On appeal, the appellate court modified the Bellantoni Order by deleting the section denying the branch of the motion seeking dismissal of causes of action accruing prior to January 28, 2010 and as modified, affirmed the same. The appellate court found the Mieles met their initial [*4]burden of establishing, prima facie, that the time in which to sue had expired in that the plaintiff had accelerated the mortgage debt by filing the 2009 Action on July 7, 2009 and this action was not commenced until January 28, 2016, more than six years later (see U.S. Bank Trust, N.A. v Miele, 186 AD3d at 528). The appellate court further held that plaintiff's evidence, i.e. the De-acceleration Letters, were sufficient to raise a question of fact as to whether the action was timely commenced (id.).
The FAPA amended and codified various statutes. As is relevant here, the FAPA amended CPLR 203 by adding subdivision (h), which provides "[o]nce 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 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" (CPLR 203[h]).
Although this action was commenced more than six years after commencement of the 2009 Action, the parties dispute whether the statute of limitations had expired or was tolled, whether the FAPA should be given retroactive effect, and whether the retroactive application of the FAPA is constitutional. If the FAPA does not apply retroactively, then the statute of limitations may have been tolled by the De-acceleration Letters and this action may have been timely. If, on the other hand, the FAPA applies retroactively, then this action is time-barred. If retroactive effect is given to the FAPA and a substantial right of the parties is impacted, then the Court must analyze whether such retroactive application of the FAPA is constitutional.
As a general rule, a "court is to apply the law in effect at the time it renders its decision (Landgraf v USI Film Products, 511 US 244, 264, 114 S. Ct. 1483, 128 L. Ed. 2d 229)" (Matter of Mia S. [Michelle C.], 212 AD3d 17, 21 [2d Dept 2022]). "Although statutory amendments 'are presumed to have prospective application' in the absence of an expression of legislative intent that the statute be retroactively applied, it is another axiom of statutory interpretation, and an exception to the presumption against retroactive application, that 'remedial legislation should be given retroactive effect in order to effectuate its beneficial purpose.' (Matter of Gleason [Michael Vee, Ltd.], 96 NY2d at 122; see Ex parte Collett, 337 US 55, 71, 69 S. Ct. 944, 93 L. Ed. 1207; Freeborn v Smith, 69 US 160, 164, 17 L. Ed. 922; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 584, 696 N.E.2d 978, 673 N.Y.S.2d 966; Nelson v HSBC Bank USA, 87 AD3d 995, 997, 929 N.Y.S.2d 259; Wade v Byung Yang Kim, 250 AD2d 323, 325, 681 N.Y.S.2d 355; Coffman v Coffman, 60 AD2d 181, 188, 400 N.Y.S.2d 833). A remedial statute is one which is 'designed to correct imperfections in prior law, by generally giving relief to the aggrieved party' (Nelson v HSBC Bank USA, 87 AD3d at 998 [internal quotation marks omitted]; see Matter of Asman v Ambach, 64 NY2d 989, 991, 478 N.E.2d 182, 489 N.Y.S.2d 41). Classifying a statute as 'remedial' does not automatically overcome the strong presumption of prospectivity (Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d at 584; see Plaut v Spendthrift Farm, Inc., 514 US 211, 237, 115 S. Ct. 1447, 131 L. Ed. 2d 328; Landgraf v USI Film Products, 511 US at 285). Nonetheless, this principle of statutory construction serves as a 'navigational tool [],' or a guide in the search for legislative intent, at least 'where better guides are not available' (Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d at 584 [internal quotation marks omitted]). 'Other factors in the retroactivity analysis include whether the Legislature has made a specific pronouncement about retroactive effect or conveyed a sense of urgency; whether the statute was designed to rewrite an unintended judicial interpretation; and [*5]whether the enactment itself reaffirms a legislative judgment about what the law in question should be' (Matter of Gleason [Michael Vee, Ltd.], 96 NY2d at 122)" (Matter of Mia S. [Michelle C.], 212 AD3d at 22).
A "statute has retroactive effect if 'it would impair rights a party possessed when [the party] acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed,' thus impacting 'substantive' rights (internal citations omitted). On the other hand, a statute that affects only "the propriety of prospective relief" or the nonsubstantive provisions governing the procedure for adjudication of a claim going forward has no potentially problematic retroactive effect even when the liability arises from past conduct" (Regina Metro Co, v New York State Div of Hous & Community Renewal, 35 NY3d 333, 365-366 (2020), citing Landgraf v Usi Film Prods., 511 US 244 [1994]; Ruth v Elderwood at Amherst, 209 AD3d 1281 [3d Dept 2022]).
Three principles guide the Court's analysis of the FAPA and its application (see James B Nutter & Co v Cnty Of Saratoga, 38 NY3d 350 [2023]). "First, as with all matters of statutory interpretation, [] [the courts'] goal is to give force to the intent of the Legislature and [] [this Court] begin[s] with the text — the clearest indicator of legislative intent [internal quotation marks and citations omitted]" (id. at 355). Thus, "courts should construe unambiguous language to give effect to its plain meaning" (id. [internal quotation marks and citations omitted]). Second, "[w]hen a statute is part of a broader legislative scheme, its language must be construed 'in context and in a manner that harmonizes the related provisions and renders them compatible' (Matter of Kosmider v Whitney, 34 NY3d 48, 55, 108 N.Y.S.3d 399, 132 N.E.3d 592 [2019], quoting Matter of M.B., 6 NY3d 437, 447, 846 N.E.2d 794, 813 N.Y.S.2d 349 [2006]). That is, 'a statute must be construed as a whole and . . . its various sections must be considered with reference to one another' (Matter of Albany Law School v New York State Off. of Mental Retardation & Dev. Disabilities, 19 NY3d 106, 120, 968 N.E.2d 967, 945 N.Y.S.2d 613 [2012])" (James B Nutter & Co v Cnty Of Saratoga, 38 NY3d at 355). Third, the statute of limitations, should be afforded liberal construction, as it is "a remedial provision protecting the right of litigants who have given timely notice of . . . their claims . . .[and] its broad and liberal purpose is not to be frittered away by a narrow construction" (Fleming v Long Island Railroad, 130 AD2d 59, 62 [2d Dept 1987]).
The Legislature clearly and unambiguously intended the FAPA to have retroactive effect as is evident by the express language of the statute, to wit "[t]his act 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" (FAPA §10; see Slewett & Farber v Board of Assessors of the Cnty of Nassau, 54 NY2d 547 [1982]). In enacting the FAPA, the Senate explained:
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 opportunities to avoid strict compliance with remedial statutes and manipulate statutes of limitation to their advantage; and that the purpose 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 [*6]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 (2021 NY S.B. 5473D).
Thus, the FAPA is intended to apply to all pending actions, such as this proceeding, in which a judgment of foreclosure and sale has not been enforced. Consistent with settled precedent, the FAPA has been applied retroactively by the Appellate Division, Second Department to mortgage foreclosure actions pending before it, e.g. GMAT Legal Title Trust 2014-1 v Kator, 213 AD3d 915 (2d Dept 2023); MTGLQ Investors, L.P. v Singh, 2023 NY Slip Op. 02779 (2d Dept 2023); U.S. Bank Nat'l Ass'n v Outlaw, 2023 NY Slip Op. 03038 (2d Dept 2023); SYCOP, LLC v Evans, 2023 NY Slip Op. 03033(2d Dept 2023); U.S. Bank Nat'l Ass'n v Simon, 2023 NY Slip Op. 02702 (2d Dept 2023); Bank of New York Mellon v Stewart, 2023 NY Slip Op. 02487 (2d Dept 2023); U.S. Bank Nat'l Ass'n v Onuoha, 2023 NY Slip Op. 02715 (2d Dept 2023).
Plaintiff contends the retroactive application of the FAPA would violate the US Constitution (NYSCEF Doc. No. 350 at 5-6). We have not located any reported case issued by the Appellate Division addressing the constitutionality of the retroactive application of the FAPA. However, as the FAPA prohibits a party from unilaterally tolling the statute of limitations after it has begun to run due to the note holder's acceleration of the debt by de-accelerating the debt, which it could do by an affirmative act of revocation during the six-year statute of limitations period before enactment of the FAPA, the FAPA has a retroactive effect on plaintiff's substantive rights (see Regina Metro Co, v New York State Div of Hous & Community Renewal, 35 NY3d at 366-367).
The United States "Supreme Court has stated, 'the constitutional impediments to retroactive civil legislation are now modest' (Landgraf, 511 US at 272 [emphasis omitted]). Absent a violation of a specific constitutional provision, the potential unfairness of retroactive civil legislation is not a sufficient reason for a court to fail to give a statute its intended scope" (id. at 267). Moreover, "it is well settled that acts of the Legislature are entitled to a strong presumption of constitutionality (internal quotation marks and citations omitted). [A plaintiff] []bear[s] the ultimate burden of overcoming that presumption by demonstrating [] [FAPA's] constitutional invalidity beyond a reasonable doubt (see County of Chemung, 28 NY3d at 262; Overstock.com, Inc. v New York State Dept. of Taxation & Fin., 20 NY3d 586, 593, 987 NE2d 621, 965 NYS2d 61 [2013], cert denied 571 US 1071, 134 S Ct 682, 187 L Ed 2d 549; 571 US 1071, 134 S Ct 682, 187 L Ed 2d 549 [2013]; LaValle v Hayden, 98 NY2d 155, 161, 773 NE2d 490, 746 NYS2d 125 [2002]; Cook v City of Binghamton, 48 NY2d 323, 330, 398 NE2d 525, 422 NYS2d 919 [1979])" (American Economy Ins Co v State of New York, 30 NY3d 136, 149 [2017] [internal quotation marks omitted]).
The plaintiff asserts the FAPA violates the Contract Clause of the Federal Constitution which "prohibits states from enacting '[l]aw[s] impairing the Obligation of Contracts'" (Raynor, 18 NY3d at 58, quoting US Const, art I, § 10 [1]). "The Supreme Court has repeatedly held that this language should not be read literally and that the States retain the power 'to safeguard the [*7]vital interests of [their] people'" (19th St. Assoc. v State of New York, 79 NY2d 434, 442, 593 NE2d 265, 583 NYS2d 811 [1992], quoting Home Building & Loan Assn. v Blaisdell, 290 US 398, 434, 54 S Ct 231, 78 L Ed 413 [1934]). "'The threshold inquiry is whether the state law has, in fact, operated as a substantial impairment of a contractual relationship' (id., quoting Energy Reserves Group, Inc. v Kansas Power & Light Co., 459 US 400, 411, 103 S Ct 697, 74 L Ed 2d 569 [1983])" (American Economy Ins. Co. v State of New York, 30 NY3d at 150-151).
Here, the FAPA's retroactive application to this action does not impair the plaintiff's ability to contract and does not, contrary to plaintiff's contention, "bind the parties to terms never agreed upon" (NYSCEF Doc No 350 at 12). The subject note does not contain an express provision setting forth what a note holder must do to revoke an election to accelerate the debt. In such circumstance, prior to the FAPA's enactment, plaintiff's right to de-accelerate its prior acceleration of the entire mortgage debt was subject to the constraints of judicial decisions and legislative determinations. The six-year statute of limitations governed foreclosure actions (CPLR 213 [4]), which began to run when an action to foreclose was commenced demanding payment of the entire debt (see U.S. Bank Trust, N.A. v Miele, 186 AD3d at 527). A note holder could be equitably estopped from revoking its election to accelerate the debt if the borrower had changed their position in reliance on the loan acceleration (see Kilpatrick v Germania Life Ins Co, 75 N.E. 1124 [1905]). A mortgagee's voluntary discontinuance of a mortgage foreclosure action in which the note holder had accelerated the full debt was, prior to Freedom Mtge Corp v Engel, 37 NY3d 1 (2021), which holding was nullified by the FAPA, held to be insufficient to de-accelerate the debt and toll the statute of limitations (see Trust v Barua, 184 AD3d 140 [2d Dept 2020]). Second Department precedent held that to revoke the acceleration of the full debt required "an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action" (see U.S. Bank Trust, N.A. v Miele, 186 AD3d at 527), establishment of standing to de-accelerate the debt (see Milone v US Bank Nat'l Ass'n, 164 AD3d 145 (2d Dept 2018) and establishment that de-acceleration of the debt was not "a mere pretext to avoid the onerous effect of the statute of limitations" (Trust v Barua, 184 AD3d at 146). Accordingly, the retroactive application of the FAPA does not violate the Contract Clause of the US Constitution.
Plaintiff also contends the retroactive application of the FAPA would violate the Takings Clause of the Fifth Amendment to the US Constitution by depriving it "of its well-established rights as a mortgage holder [to unilaterally revoke its prior acceleration of a loan] without just compensation" (NYSCEF Doc. No. 350 at 8-10). The Takings Clause, which was made applicable to the States through the Fourteenth Amendment, "[p]rovides that 'private property' shall not 'be taken for public use, without just compensation' (Phillips v Washington Legal Foundation, 524 US 156, 163-164, 118 S Ct 1925, 141 L Ed 2d 174 [1998], quoting US Const 5th Amend). The New York Constitution similarly provides that "[p]rivate property shall not be taken for public use without just compensation (NY Const, art I, § 7 [a])" (American Economy Ins Co v State of New York, 30 NY3d at 155). "The threshold step in any Takings Clause analysis is to determine whether a vested property interest has been identified [internal citations omitted]" (id.). "It is settled that constitutionally protected property interests are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law" (Alliance of American Insurers v Chu, 77 NY2d 573 [1991][internal quotation marks and citations omitted]).
As set forth above, prior to the enactment of the FAPA, plaintiff's right to unilaterally de-[*8]accelerate a mortgage debt was not unfettered. Rather, it could only be de-accelerated if certain defined actions were taken and established. Moreover, retroactive application of the FAPA does not impair plaintiff's vested property rights.
"A vested right, it has been said, is an immediate, fixed right to present or future enjoyment" (Gleason v Gleason, 26 NY2d 28, 40 [1970], citing Pearsall v Great Northern RY, 161 U.S. 646, 673, 16 S. Ct. 705, 713, 40 L.Ed. 838). Although "a statute is not invalid merely because it reaches back to establish the legal significance of events occurring before its enactment, a traditional principle applied to determine the constitutionality of such legislation is that the Legislature is not free to impair vested property rights . . . The vested rights doctrine recognizes that a 'judgment, after it becomes final, may not be affected by subsequent legislation . . . Once all avenues of appeal have been exhausted . . . a judgment becomes an inviolable property right which thereafter may not be constitutionally abridged by subsequent legislation [internal quotation marks and citations omitted]" (Hodes v Axelrod, 70 NY2d 364, 370 [1987]; see also Gilman v Tucker, 28 N.E. 1040 [1891]; Raphael v Goldman Furniture Co, Inc, 246 AD 548 [2d Dept 1935]). However, litigants do not obtain any vested property rights in the orders or judgments of the court during the period they are subject to review by a higher court (see Boardwalk & Seashore Corp v Murdock, 286 NY 494 [1941]; Atlantic Beach Towers Construction Co, Inc v Michaelis, 21 AD2d 875 [2d Dept 1964]).
Here the plaintiff failed to establish the retroactive application of the FAPA impairs its vested property rights. A final judgment was not yet entered in this action on the effective date of the FAPA, and throughout this litigation, the highly contested issue has been whether this action was time barred due to the commencement of this action more than six years after the 2009 Action, which expressly accelerated the entire mortgage debt and started the running of the statute of limitations. Thus, the retroactive application of the FAPA herein does not violate the Takings Clause of the US Constitution.
Next, plaintiff contends the retroactive application of the FAPA would violate its due process rights under the US Constitution by impairing its "vested right to maintain this action because it was timely commenced" and application of the FAPA would "now render it time-barred" (NYCEF Doc. No. 350 at 11). "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'" (American Economy Ins Co v State of New York, 30 NY3d at 157-158, citing General Motors Corp v Romein, 503 US 181, 191, 112 S Ct 1105, 117 L Ed 2d 328 [1992]). As with prospective elements of legislation, legislative 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 (Turner Elkhorn, 428 US at 15). Nevertheless, the Supreme Court has made clear that "retroactive legislation does have to meet a burden not faced by [purely prospective] legislation," which is satisfied when "the application of the legislation is itself justified by a rational legislative purpose" (Pension Benefit Guaranty Corporation v R. A. Gray & Co., 467 US 717, 730, 104 S Ct 2709, 81 L Ed 2d 601 [1984] [emphasis added])" (Regina Metro Co, LLC v New York State Div of Hous & Community Renewal, 35 NY3d at 375).
The Court of Appeals has acknowledged that "retroactive legislation presents problems of unfairness that are more serious than those posed by prospective legislation" (id.). In order to comport with due process, there must be a persuasive reason for the potentially harsh impacts of [*9]retroactivity (id.). "Consideration of the scope of the legislation is critical to a rational basis analysis . . . ." (id. at 315). In particular, the relationship between the length of the retroactivity period and its purpose must be considered (id.). Generally, the courts have found statutory retroactivity that — even if more substantial — is integral to the fundamental aim of the legislation to be constitutional (id.).
New York's statutes of limitations serve the "objectives of finality, certainty, and predictability that New York's contract law endorses. Statutes of limitation not only save litigants from defending stale claims, but also express[ ] a societal interest or public policy of giving repose to human affairs" (ACE Sec Corp, Home Equity Loan Trust, Series 2006-SL2 v DB Structured Prods, Inc, 25 NY3d 581, 593-594 [2015][internal quotation marks and citations omitted]). The legislature's intent in enacting the FAPA was "to clarify the meaning of existing statutes, codify correct judicial applications thereof, and rectify erroneous judicial interpretations thereof" (2021 NY S.B. 5473D). The Legislature had a rational legislative purpose and "persuasive reason" for the "potentially harsh" impact of retroactive application of the FAPA — to prevent lenders and loan servicers from manipulating the statute of limitations and abusing the judicial foreclosure process, and ensure equal application of state laws to all litigants currently in foreclosure actions and related actions." Further, statutory retroactivity is integral to the fundamental objective of the FAPA. The plaintiff has failed to show the absence of any of the foregoing and failed to meet its burden to establish the FAPA is unconstitutional.
In support of its argument that it would violate due process if the FAPA is applied retroactively, the plaintiff relied on two cases, Ruffolo v Garbirini & Scher, P.C., 239 AD2d 8 (1st Dept 1998) and Merz v Seaman, 265 AD2d 385 (2d Dept 1999). The issue presented in those cases, however, is distinguishable from that which is presented here. Both cases involved dismissals of the plaintiffs' respective claims based upon retroactive application of an amendment to CPLR 214(6). The issue before the appellate courts was whether the respective plaintiffs' claims were rendered time-barred by the then-recent amendment to CPLR 214(6), which applied a three-year statute of limitation to their claims. This amendment shortened the six-year statute of limitations that was in effect at the time both actions were commenced under CPLR 213(2). In sum and substance, the appellate courts, after having conducted a retroactivity analysis, determined that retroactive application of the amendment to CPLR 214(6) was impermissible because it would render the respective actions, which had been timely commenced, time barred.
The FAPA did not shorten the six-year statute of limitations within which to commence a foreclosure. The issue here is whether the statute of limitations was tolled or expired prior to the commencement of this action rendering it time-barred based upon the plaintiff's commencement of the 2009 Action, which was dismissed due to the plaintiff's predecessor's failure to comply with the orders of the court after approximately five years of litigation. As final judgment has not yet been entered herein, the plaintiff does not have any vested property rights in this action or the orders of this court and thus its due process rights will not be violated by the retroactive application of the FAPA.
It is undisputed that the six-year statute of limitations applicable to this action began to run on July 7, 2009 when the plaintiff's predecessor in interest commenced the 2009 Action and expressly demanded payment of the entire mortgage debt. It is equally undisputed that this action was commenced on January 28, 2016, more than six years after the cause of action accrued. Based upon CPLR 203 [h], plaintiff was unable to unilaterally toll or extend the statute [*10]of limitations by sending the purported De-acceleration Letters. Accordingly, this action is time-barred.
All other arguments raised on the Motion and evidence submitted by the parties in connection therewith have been considered by this Court, notwithstanding the specific absence of reference thereto.
Accordingly, it is hereby
ORDERED that the motion for leave to renew the motion, filed on or about March 23, 2016, to dismiss is granted to the extent that leave is granted to renew that branch of the motion for an order dismissing this action as barred by the statute of limitations and leave to renew is otherwise denied; and it is further
ORDERED that upon renewal, the branch of the defendants' motion, filed on March 23, 2016, for an order dismissing this action as time barred is granted, and this action is dismissed; and it is further
ORDERED that the judgment of foreclosure and sale, dated January 13, 2023 is vacated; and it is further
ORDERED that the foreclosure auction sale is hereby cancelled.
The foregoing shall constitute the Decision and Order of the Court in this matter.
DATED: June 21, 2023White Plains, New York
E N T E R,
_____________________________
HON. NANCY QUINN KOBA, J.S.C. Footnotes
Footnote 1:Motion Sequence No. 1 (NYSCEF Doc. No. 28).
Footnote 2:See Index No. 15190/2009.
Footnote 3:Motion Sequence No. 1 (NYSCEF Doc. No. 77).
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