Opinion
Index No. 32090/2016E
08-28-2023
BAYVIEW LOAN SERVICING, LLC, Plaintiff, v. Dany DALAL, First American Homes Inc. a/k/a First America Homes, Inc., Link Point Realty, Inc., Bruner Homes, Inc., Gfi Mortgage Bankers, Inc., City of New York-Environmental Control Board, New York State Department of Taxation and Finance, Yonathan A. Peralta, Claribel Munoz, Shatina Miller, Taylor Sannyel, Michelle Macedon, Defendants.
Co-Counsel for plaintiff: Amber Jurek, Esq., Gross Polowy, LLC, 1775 Wehrle Drive, Suite 100, Williamsville, New York 14221, (716) 204-1700 Co-Counsel for plaintiff: Fein, Such & Crane, LLP, 28 East Main St., Suite 1800, Rochester, NY 14614, (585) 226-7310, (no papers submitted) Counsel for defendant Link Point Realty, Inc., Jonathon D. Warner, Esq., Warner & Scheuerman, 6 West 18th Street, 10th Floor, New York, NY 10011, (212) 924-7111
Co-Counsel for plaintiff: Amber Jurek, Esq., Gross Polowy, LLC, 1775 Wehrle Drive, Suite 100, Williamsville, New York 14221, (716) 204-1700
Co-Counsel for plaintiff: Fein, Such & Crane, LLP, 28 East Main St., Suite 1800, Rochester, NY 14614, (585) 226-7310, (no papers submitted)
Counsel for defendant Link Point Realty, Inc., Jonathon D. Warner, Esq., Warner & Scheuerman, 6 West 18th Street, 10th Floor, New York, NY 10011, (212) 924-7111
Mary Ann Brigantti, J. 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, and upon renewal, granting LPR summary judgment, dismissing the plaintiff's complaint as barred by the statute of limitations. 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 the 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. LBR 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 Finance, LLC v. Dalal, et al. , 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. LBR 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. LBR 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.S.C.) (the "2019 Order"). The 2019 Order was subsequently affirmed on appeal ( Bayview Loan Servicing, LLC v. Dalal , 184 A.D.3d 547, 124 N.Y.S.3d 537 [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. LBR now moves for leave to renew the 2017 Order on the ground that there has been a change in controlling law that would change the Court's prior determination, and upon renewal, granting LBR 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 ( 160 East 84th Street v. New York State Division of Housing and Community Renewal , 203 A.D.3d 501, 501, 161 N.Y.S.3d 776 [1st Dept. 2022] ).
This motion is timely because it was made before a final judgment was entered. Renewal is appropriate because LBR 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), GOL 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 subsection (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 subsection (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
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 to entire amount secured by the mortgage ( US Bank N.A. v. Outlaw , 217 A.D.3d 721, 191 N.Y.S.3d 436 [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 A.D.3d 707, 709, 191 N.Y.S.3d 433 [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 National Trust Company v. Natal , 217 A.D.3d 835, 191 N.Y.S.3d 662 [2d Dept. 2023] ). In light of the above, LBR has established that 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 .
In reply, LBR argues, among other things, that Plaintiff waived the right to challenge the constitutionality of FAPA because it failed to put the New York Attorney General on notice of the challenge as required by CPLR 1012(b). On June 2, 2023, Plaintiff e-filed an affidavit of service demonstrating that it notified the Attorney General of this proceeding. To date, the Attorney General has not indicated that it wishes to intervene in this matter. This Court, accordingly, has jurisdiction to hear Plaintiff's constitutional challenge on its merits.
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 hundred thirteen of the civil practice law and rules in which a final judgment of foreclosure and sale has not been enforced" (2022 McKinney's Sess Law News of NY, 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 National Association v. Fox , 216 A.D.3d 445, 188 N.Y.S.3d 52 [1st Dept. 2023] ; GMAT Legal Title Trust 2014-1 v. Kator , 213 A.D.3d 915, 184 N.Y.S.3d 805 [2d Dept. 2023] ; MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415 [2d Dept. 2023] ; U.S. Bank Nat'l Ass'n v. Outlaw , 217 A.D.3d 721, 191 N.Y.S.3d 436 ; U.S. Bank Nat'l Ass'n v. Onuoha , 216 A.D.3d 1069, 190 N.Y.S.3d 108 [2d Dept. 2023] ; Bank of New York Mellon v. Norton , 219 A.D.3d 680, 195 N.Y.S.3d 103 [2d Dept., August 16, 2023] ).
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’ " ( Regina Metropolitan Co., LLC v. New York State Division of Housing and Community Renewal , 35 N.Y.3d 332, 375, 130 N.Y.S.3d 759, 154 N.E.3d 972 [2020], quoting American Economy Ins. Co. v. State , 30 N.Y.3d 136, 157-158, 65 N.Y.S.3d 94, 87 N.E.3d 126 [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 N.Y.3d at 149, 65 N.Y.S.3d 94, 87 N.E.3d 126 ). To comply with due process, "there must be a ‘persuasive reason’ for the ‘potentially harsh’ impacts of retroactivity" ( id. quoting Holly S. Clarendon Trust v. State Tax Commn. , 43 N.Y.2d 933, 935, 403 N.Y.S.2d 891, 374 N.E.2d 1242 [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 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 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.
(New York State Senate Bill S5473D Sponsor Memorandum).
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 Federal Bank , 2023 WL 5179626 *5 [E.D.N.Y., August 11, 2023, No. 20-cv-03553 HG/RML] ; U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust v. Miele , 2023 NY Slip. Op. 23186 at *9, ––– Misc.3d ––––, ––– N.Y.S.3d –––– [Sup. Ct., Westchester Cty., June 21, 2023, Koba, J.] ; HSBC Bank USA, N.A., as Trustee of Ace Securities Corp. Home Equity Loan Trust v. IPA Asset Mgmt., LLC , 79 Misc.3d 821, 825-26, 190 N.Y.S.3d 622 [Sup. Ct., Suffolk Cty., 2023, Quinlan, J.] ). As recently determined by courts of co-ordinate jurisdiction and the Eastern District, retroactive application of FAPA is supported by a legitimate legislative purpose — "to curb mortgage lenders’ and loan services’ ‘manipulat[ion] of statutes of limitation to their advantage’ " ( Article 13, LLC , 2023 WL 5179626 *5, quoting New York State Senate Bill S5473D Sponsor Memorandum), and retroactively applying the statute is necessary to achieve the legislation's remedial objective ( id. ; Miele , 2023 NY Slip. Op. 23186 at *8, ––– N.Y.S.3d –––– ; Deutsche Bank Nat'l Tr. Co., as Tr., in Tr. for the Registered Holders of Morgan Stanley ABS Cap. I Inc. Tr. 2006-HE5 v. Dagrin , 79 Misc.3d 393, 399, 190 N.Y.S.3d 582 [Sup. Ct., Queens Cty., April 12, 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 , ––– U.S. ––––, 138 S.Ct. 1815, 1821, 201 L.Ed.2d 180 [2018], quoting U.S. 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’ " ( id. , quoting Allied Structural Steel Co. v. Spannaus , 438 U.S. 234, 244, 98 S.Ct. 2716, 57 L.Ed.2d 727 [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’ " ( id. , quoting Energy Reserves Group, Inc. v. Kansas Power & Light Co. , 459 U.S. 400, 411-412, 103 S.Ct. 697, 74 L.Ed.2d 569 [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 N.Y.3d at 150, 65 N.Y.S.3d 94, 87 N.E.3d 126 [emphasis in original]). "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 U.S. 181, 186, 112 S.Ct. 1105, 117 L.Ed.2d 328 [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 [E.D.N.Y., March 23, 2023, No. 20-cv-3404 AMD/RML] ). The CPLR amendments of FAPA, therefore, do not impair or interfere with parties’ freedom of contract ( id. , see also IPA Asset Mgmt., LLC , 79 Misc.3d at 825-26, 190 N.Y.S.3d 622 ).
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 LBR's renewed summary judgment motion.
Accordingly, it is hereby
ORDERED, that LBR's motion for leave to renew is granted, and upon renewal, LBR'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. This constitutes the Decision and Order of this Court.