U.S. Bank v. Speller

Full title: U.S. Bank National Association, etc., Plaintiff, v. Michael M. Speller…

Court: Supreme Court, Putnam County

Date published: Oct 31, 2023

2023 N.Y. Slip Op. 51153 (N.Y. Sup. Ct. 2023)

Opinion

Index No. 500088/2022

10-31-2023

U.S. Bank National Association, etc., Plaintiff, v. Michael M. Speller, Ellen M. Fitzsimmons, et al., Defendants.

Plaintiff is represented by Gross Polowy, LLC Defendant appeared Pro Se

Victor G. Grossman, J.

Unpublished Opinion

Plaintiff is represented by Gross Polowy, LLC

Defendant appeared Pro Se

Victor G. Grossman, J.

The following papers numbered 1 to 13 were read on Plaintiff's motion for summary judgment of foreclosure and an order of reference and Defendants' cross motion for dismissal and other relief:

Notice of Motion - Affirmation / Exhibits - Affidavit / Exhibits - Memorandum 1-4

Notice of Cross Motion - Affidavits (2) / Exhibits - Memorandum 5-8

Reply Affirmation / Exhibits 9

Supplemental Affidavit (Defendants) / Exhibits 10

Supplemental Affirmation - Supplemental Affidavit (Plaintiff) 11-12

Further Supplemental Affidavit (Defendant) 13

Upon the foregoing papers it is ORDERED that the motion is disposed of as follows:

This is a residential mortgage foreclosure action. Plaintiff U.S. Bank National Association (not in its individual capacity but solely as trustee for the RMAC Trust, Series 2016-CTT) moves for summary judgment of foreclosure and an order of reference. In opposition, Defendant homeowners Michael Speller and Ellen Fitzsimmons contend inter alia that Plaintiff lacks standing to foreclose, that Plaintiff failed to comply with the requirements of RPAPL §1304, and that by virtue of the application of the Foreclosure Abuse Prevention Act (FAPA) the action is barred by the Statute of Limitations.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Note and Mortgage

Defendant Michael Speller executed and delivered a Promissory Note dated July 28, 2005 to Wilmington Finance, a division of AIG Federal Savings Bank for the sum of $330,000 with interest on the unpaid balance thereof at the rate of 6.55 % per annum. Both Mr. Speller and his spouse, defendant Ellen Fitzsimmons, executed the associated Mortgage encumbering their home at 57 Eastwood Road, Brewster, New York. The Note states inter alia:

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that I owe on that amount.

Even if, at a time when I am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have the right to do so if I am in default at a later time.

(Note, p. 2, ¶6[C, D]) The Mortgage states inter alia:

Lender's Rights if Borrower Fails to Keep Promises and Agreements. [I]f all of the conditions stated in subsections (a), (b) and (c) of this Section 22 are met, Lender may require that I pay immediately the entire amount then remaining unpaid under the Note and under this Security Instrument. (Mortgage, p. 14, ¶22)

Even if Lender does not exercise or enforce any right of Lender under this Security Instrument or under Applicable Law, Lender will still have all of those rights and may exercise and enforce them in the future. Even if: (3) Lender accepts payments in amounts less than the amount then due, Lender will have the right under Section 22 elow to demand that I make Immediate Payment in Full of any amounts remaining due and payable to Lender under the Note and under this Security Instrument.

(Mortgage, p. 11, ¶12[b])

This is the fourth foreclosure action instituted in connection with the Defendants' mortgaged premises. Resolution of the issues presently before the Court requires a recitation of the history of all four proceedings.

B. The 2009 Foreclosure Action

HSBC Mortgage Services Inc. commenced a foreclosure action under Index No. 3313/2009 on November 13, 2009. The Note, with an allonge endorsed in blank by the original lender, was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of December 15, 2008 and accelerated the mortgage debt.

By letter dated November 5, 2009, HSBC Mortgage Services had advised Mr. Speller that his account "remains in default," but that HSBC "has options available that may prevent the possibility of losing your mortgaged property" and offered an "opportunity to work with you to get your account back on track." Mr. Speller produced a copy of this letter bearing his own handwritten notations, including the figures "$30,450.12" and "$7,612.53" and the words "11/27 called in wire confirm - F/C stopped effective Monday." Mr. Speller also produced a signed "Authorization to Wire Funds" dated 11/27/09, reflecting a transfer from the account of Ellen M. Speller (i.e., defendant Fitzsimmons) to HSBC Bank USA, N.A. in the amount of $7,612.53. As Mr. Speller acknowledges, bank records unambiguously reflect the fact that the payment of $7,612.53 was made pursuant to a "Repayment Plan" whereby (a) that sum was applied to the mortgage interest due on December 15, 2008, January 15, 2009, and February 15, 2009, and (b) interest in the amount of $17,227.80, due from February 15, 2009 to December 15, 2009, was deferred, creating a "deferred balance" of $17,227.80. "Unpaid/Deferred Interest" in the amount of $17,227.80 was thereafter reflected in a September 28, 2010 account statement, also produced by Mr. Speller.

Pursuant to its Repayment Plan arrangement with Mr. Speller, the foreclosure was stopped and the 2009 foreclosure action was discontinued. Affirmations by attorney Richard D. Fermano, Esq. accompanying the voluntary discontinuance of the action and cancellation of the lis pendens state:

On or about 12/01/09, the Defendant entered into a Repayment Plan, in order to reinstate plaintiff's mortgage and pay all costs associated with said action.

No parties appeared in this action, and thus no consent to the cancellation of the Lis Pendens and the discontinuance of the action is required.

C. The 2010 Foreclosure Action

HSBC Mortgage Services Inc. commenced a second foreclosure action under Index No. 02177/2010 on July 19, 2010. The Note, with the allonge endorsed in blank by the original lender, was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of January 15, 2010 and accelerated the mortgage debt. This action was voluntarily discontinued on March 12, 2013 "due to an issue with the default notification."

D. The 2015 Foreclosure Action

U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust commenced the third foreclosure action under Index No. 02137/2015 on December 9, 2015. The Note, with the allonge endorsed in blank by the original lender, was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of January 15, 2010 and accelerated the mortgage debt. By assignment dated May 31, 2016, the Mortgage was assigned to U.S. Bank National Association, not in its individual capacity but solely as trustee for the RMAC Trust, Series 2016-CTT (i.e., to the Plaintiff in the present action, hereinafter "U.S. Bank"). U.S. Bank acquired physical possession of the Note in October 2016. By Order dated November 29, 2018, U.S. Bank was substituted for U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust as the Plaintiff in the 2015 foreclosure action.

By Order dated February 27, 2020, the Hon. Sam D. Walker dismissed the action on account of the Plaintiff's failure to appear at a conference. The Order states:

The plaintiff having failed to appear as directed on January 23, 2020, it is hereby

ORDERED, that the above-captioned action is dismissed pursuant to section 202.27(b) and (c) of the Uniform Civil Rules for The Supreme Court and The County Court, without prejudice to move to vacate the dismissal upon a showing of good cause for the failure to appear, and it is further

ORDERED, that the County Clerk of the County of Putnam is hereby directed to cancel and discharge of record all Notices of Pendency filed in this action against the premises known commonly as 57 Eastwood Road, Brewster (Town of Patterson) County of Putnam and said Clerk is hereby directed to enter upon the margin of the record of the same, a notice of cancellation referring to this Order.

E. The 2022 Foreclosure Action

U.S. Bank commenced this, the fourth foreclosure action, under Index No. 500088/2022 on January 26, 2022. The Note, with the allonge endorsed in blank by the original lender, was annexed to the certificate of merit. The Note without the allonge was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of January 15, 2010 and accelerated the mortgage debt. U.S. Bank now seeks summary judgment of foreclosure.

II. PLAINTIFF'S STANDING TO FORECLOSE

The record shows that the Mortgage was assigned by written assignment dated May 31, 2016 to U.S Bank, and further, that U.S. Bank was in physical possession of the Note together with an Allonge endorsed in blank by the original lender as of October 2016 and at the time this action was commenced. Based on certain alleged discrepancies in the appearance of the Note as produced at various stages of the proceedings over the years, Mr. Speller contested U.S. Bank's claim that it was in physical possession of the original Note.

Accordingly, by Notice dated August 2, 2023, the Court directed U.S. Bank "to produce the original Note and Allonge in court on [August 22, 2023], together with an affidavit or affidavits accounting in detail for custody of the said original Note and Allonge during the period October 22, 2019 through and including January 26, 2022, the date this action was commenced." The original Note was duly produced, and inspection thereof obviated any issue as to whether the Note in U.S. Bank's possession is in fact the original. However, U.S Bank did not produce the original Allonge. Instead, it produced (i) an allonge bearing an endorsement from the original lender to HSBC Mortgage Services, Inc. (the plaintiff in the 2009 and 2010 foreclosure actions), (ii) an allonge bearing an endorsement from HSBC Mortgage Services, Inc. to the LSF8 Master Participation Trust (on whose behalf U.S. Bank Trust, N.A. commenced the 2015 foreclosure action), and (iii) an allonge bearing an endorsement in blank by the LSF8 Participation Trust. The accompanying affidavit of Anthony Younger does not account for the whereabouts of the Allonge endorsed in blank by the original lender, or for the provenance of the three different allonges produced in Court which, so far as appears from the record, were not in U.S. Bank's possession when this action was commenced.

"A plaintiff may demonstrate its standing in a foreclosure action through proof that it was in possession of the subject note endorsed in blank, or the subject note and a firmly affixed allonge endorsed in blank, at the time of commencement of the action." Wells Fargo Bank, N.A. v. Mitselmakher, 216 A.D.3d 1056, 1057 (2d Dept. 2023). U.S. Bank unquestionably possessed the original Note as well as an Allonge endorsed in blank when it commenced this action. However, the fact that the Allonge was not affixed to the Note annexed to the Complaint as well as the disparity between the Allonge proffered at the commencement of this action (and with the complaints in all three prior foreclosure actions) and the three allonges produced in court on August 22, 2023 gives rise to an unresolved question concerning U.S. Bank's standing herein.

III. RPAPL §1304

Defendants contend that (1) the Section 1304 90-day notice was not sent by a lender, lender's assignee or mortgage servicer as required by RPAPL §1304(1, 2); (2) the foreclosure action was not commenced within one year of the mailing of the 90-day notice as purportedly required by RPAPL §1304(4); (3) the 90-day notice was not composed in at least 14-point typeface as required by RPAPL §1304(1); and (4) the 90-day notice addressed to Ellen Fitzsimmons contained an erroneous bankruptcy advisory in violation of Section 1304. Defendants' contentions are all without merit.

The 90-day notice was mailed by an employee of Plaintiff's law firm on behalf of the Plaintiff's mortgage loan servicer. The Second Department has expressly held that this procedure comports with the requirements of RPAPL §1304. See, Flagstar Bank, FSB v. Mendoza, 139 A.D.3d 898, 900 (2d Dept. 2016).

RPAPL §1304(4) "stands for the proposition that where there are multiple defaults in [a] 12-month period, only one RPAPL 1304 notice is required." Deutsche Bank Natl. Trust Co. v. Webster, 142 A.D.3d 636, 639 (2d Dept. 2016). It does not require that the foreclosure action be commenced within 12 months of the Section 1304 notice. See, id.; U.S. Bank Trust N.A. v. Auxila, 189 A.D.3d 1514, 1516 (2d Dept. 2020).

The Section 1304 notices mailed to Defendants, copies of which the Plaintiff has proffered in support of its motion, quite clearly comply with the 14-point typeface requirements of RPAPL §1304(1).

Finally, the fact that the Section 1304 notices addressed to the Defendants contained a bankruptcy advisory that was only partially applicable to defendant Fitzsimmons (because she was not a signatory on the Note) does not render the otherwise compliant notice defective under Section 1304.

In Bank of America v. Kessler, 39 N.Y.3d 317 (2023), the Court of Appeals reversed the Second Department's decision in the underlying case and held that inclusion of a bankruptcy advisory in a Section 1304 notice does not violate the statute's "separate envelope" requirement. The Court reasoned:

[Bankruptcy advisories] are directly related to the [Section 1304] notice's subject matter and further the statutory purpose by informing certain borrowers of additional protections they may have beyond those identified in the statutory notice language. The paragraphs relate to and supplement the statutory language as applied to two distinct groups of borrowers, and thus make most sense and are most helpful when read together with the notice. In addition, the paragraph relating to bankruptcy proceedings may be particularly useful to avoid confusing borrowers who are subject to the automatic stay in bankruptcy court and to avoid potential violation of such stays by the lender [cit.om.]. The added language is specifically directed at that concern: it states that if the borrower is in bankruptcy, the Section 1304 notice "is for information only and is not an attempt to collect the debt, a demand for payment, or an attempt to impose personal liability for that debt." It thus functions as both a protection for lenders and an explanation to borrowers of additional rights they may have.

Id., 39 N.Y.3d at 326-327. The Court held that "[d]etermining whether additional language in a Section 1304 notice is permissible requires an objective facial determination of the language's relevance, truth, falsity, or potential to mislead or confuse." Id., 39 N.Y.3d at 327.

The 1304 notices addressed to the Defendants herein contained the following bankruptcy advisory, which makes three assertions (broken up for clarity of analysis) as follows:

[1] This communication is an attempt to collect a debt and any information obtained will be used for that purpose.

[2] However, if you have received a discharge of this debt in bankruptcy or are currently in a bankruptcy case, this notice is not intended as an attempt to collect a debt and,

[3] this company has a security interest in the property and will exercise its rights against the property.

So far as concerns defendant Michael Speller, this bankruptcy advisory is perfectly accurate in all respects and Defendants do not assert otherwise. Defendant Ellen Fitzsimmons claims that the advisory as to her is false because she was not personally liable on the Note. However, the advisory is essentially accurate as to defendant Fitzsimmons as well.

Concerning assertion No.1: RPAPL §1304(1) provides that the statutorily required notice must be given to the "borrower." The term "borrower" is not defined. However, the Second Department has repeatedly held that where, as here, a homeowner is not personally liable on the note but executes a mortgage wherein she is referred to as a "borrower", she is entitled to Section 1304 notice on the grounds that she" signed the mortgage as a 'borrower' and, in that capacity, agreed to pay the amounts due under the note" See, Wells Fargo Bank N.A. v. Carney, 2023 WL 5064824 at *1 (2d Dept., Aug. 9, 2023) (boldface emphasis added); HSBC Bank USA, N.A. v. Kalenborn, 215 A.D.3d 930, 932 (2d Dept. 2023); Deutsche Bank Nat'l Trust Co. v. Weininger, 206 A.D.3d 882, 883-884 (2d Dept. 2022); Wells Fargo Bank, N.A. v. Oziel, 196 A.D.3d 618, 621-622 (2d Dept. 2021). See generally, Bank of New York Mellon v. Forman, 176 A.D.3d 663, 666 (2d Dept. 2019). It is therefore perfectly appropriate for the lender to advise a mortgagor homeowner who did not execute the note that "[t]his communication is an attempt to collect a debt."

Concerning assertion #2: 11 U.S.C. §362(a) provides that the filing of a petition in bankruptcy operates as an automatic stay of, inter alia, "(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; (4) any act to create, perfect, or enforce any lien against property of the estate; (5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title." Were Defendant Fitzsimmons to file a petition in bankruptcy, her ownership interest in the mortgaged premises would constitute property of her bankruptcy estate, and U.S. Bank would in this proceeding be subject to the automatic stay provisions of 11 U.S.C. §362. Therefore, to advise Ms. Fitzsimmons of her rights and to protect itself against a potential violation of the automatic stay, it was perfectly appropriate for U.S. Bank to advise her that if she is "currently in a bankruptcy case, this notice is not intended as an attempt to collect a debt." Although the language "if you have received a discharge of this debt in bankruptcy" is not pertinent here because Defendant Fitzsimmons is not personally liable on the Note, this statement is made in the disjunctive, and the alternative -" or are currently in a bankruptcy case" - is applicable and renders the statement as a whole perfectly accurate.

Concerning assertion #3: The statement that U.S. Bank "has a security interest in the property" (i.e., by virtue of the Mortgage) is of course perfectly accurate, and the further statement that it "will exercise its rights against the property" is useful information for the Defendant which accords with both the statutorily required disclosure that "you are at risk of losing your home" (see, RPAPL §1304[1]) and the bankruptcy laws, which permit U.S. Bank as a secured creditor to move for relief from the automatic stay.

In view of the foregoing, there was no violation of RPAPL §1304.

IV. STATUTE OF LIMITATIONS

The statute of limitations governing mortgage foreclosure actions is six (6) years. See, CPLR §213(4); Lubonty v. U.S. Bank, N.A., 34 N.Y.3d 250, 261 (2019). Where the mortgage debt is payable in installments, a separate cause of action accrues for each unpaid installment, and the limitations period begins to run on the date each installment becomes due. See, Wells Fargo Bank, N.A v. Cohen, 80 A.D.3d 753, 754 (2d Dept. 2011). Once the mortgage debt is accelerated, the entire amount becomes due and the statute of limitations begins to run on the entire debt. See, EMC Mtge. Corp. v. Patella, 279 A.D.2d 604, 605 (2d Dept. 2001).

Defendants claim - based on accelerations of the mortgage debt that occurred in connection with the prior foreclosure actions commenced in 2009, 2010 and 2015 - that the six (6) year limitations period ran on the entire debt prior to the commencement of the present action on January 26, 2022. U.S. Bank asserts inter alia that (a) the acceleration of the mortgage debt effected by the 2009 foreclosure action was validly revoked, (b) the 2015 foreclosure action was thereafter commenced within six years after Defendants' January 15, 2010 default, and (c) after dismissal of the 2015 foreclosure action, the present action was (taking account of Covid-related tolling) timely commenced within the six-month "savings provision" of CPLR §205(a).

The parties' claims give rise to several issues pertaining to the 2009 revocation of the acceleration of mortgage debt, including:

(1) What in 2009 was the nature of a lender's right to revoke a prior acceleration of the mortgage debt?

(2) Was the acceleration effected by commencement of the 2009 foreclosure action validly revoked?

(3) Was the lender's right to revoke an acceleration of the mortgage debt impaired by the Foreclosure Abuse Prevention Act ("FAPA")?

(4) If so, did the Legislature intend that FAPA be retroactively applied?

(5) If so, would the retroactive application of FAPA in the circumstances presented here be unconstitutional?

A parallel set of questions pertains to U.S. Bank's invocation in 2022 of the six-month "savings provision" of CPLR §205(a) in connection with the commencement of the present action:

(6) Was CPLR §205(a) validly invoked after the dismissal of the 2015 foreclosure action?

(7) Was U.S. Bank's right to invoke the six-month "savings provision" impaired by FAPA?

(8) If so, did the Legislature intend that FAPA be retroactively applied?

(9) If so, would the retroactive application of FAPA in the circumstances presented here be unconstitutional?

V. THE 2009 REVOCATION OF ACCELERATION OF THE MORTGAGE DEBT

A. The Lender's Right to Revoke an Acceleration of the Mortgage Debt

The "lay of the land" with respect to mortgage foreclosure, "acceleration" of the mortgage debt, and "revocation" of a prior acceleration is succinctly set forth in Justice Miller's concurrence in Christiana Trust v. Barua, 184 A.D.3d 140 (2d Dept.), lv. denied 35 N.Y.3d 916 (2020):

In commencing an action to enforce the terms of a note, the holder must set forth the remedy it seeks for the alleged breach. Where the plaintiff is the holder of both the note and mortgage, it must first elect whether to proceed "at law in a suit on the debt as evidenced by the note [or] in equity to foreclose the mortgage" [cit.om.].

If the holder elects to foreclose the mortgage, it must choose whether to foreclose the entire mortgage debt or proceed with a "partial foreclosure" [cit.om.]. Partial fore-closure "permits a lender to recover unpaid installments that have become due, without accelerating the remaining portion of the debt" [cit.om.].

If the holder of a note and mortgage elects to foreclose a portion of the mortgage debt that has not yet come due, it must necessarily exercise its option to accelerate the maturity of that portion of the debt. Under such circumstances, proper service of a pleading setting forth an election to foreclose the entire mortgage debt will ordinarily be sufficient "to put the borrower on notice that the option to accelerate the debt has been exercised" [cit.om.]. Indeed, "[t]he commencement of an action on one of two or more theories has traditionally been considered the decisive act that constitutes [an] election" [cit.om.].

However, '[e]ven if the bringing of an action for one remedy is a manifestation of choice of that remedy, it does not preclude the plaintiff from shifting to another remedy as long as the defendant has not materially changed his position" [cit.om.]. Put another way, "a binding election occurs only where an estoppel is created" [cit.om.].

Accordingly, even after the holder of a note and mortgage has elected to accelerate the entire mortgage debt, the holder retains the right to "revoke its election to accelerate provided that there is no change in the borrower's position in reliance thereon" (Federal National Mortgage Assn. v. Mebane, 208 A.D.2d at 894; see Golden v. Ramapo Improvement Corp., 78 A.D.2d at 650; see also 1 Bergman on New York Mortgage Foreclosures §4.03[1]). The decision of whether to revoke an acceleration and seek an alternative remedy for the borrower's breach "is discretionary with the [holder]" (Golden v. Ramapo Improvement Corp., 78 A.D.2d at 650), and unless and until prejudice to the borrower is shown, the holder of a note and mortgage is "under no restraint in changing [its] mind" (id.).

Christiana Trust v. Barua, supra, 184 A.D.3d at 160-161 (boldface emphasis added).

Thus, as of 2009, it was the law of New York that "a lender may revoke its election to accelerate all sums due under an optional acceleration clause in a mortgage provided that there is no change in the borrower's position in reliance thereon." Federal National Mortgage Ass'n v. Mebane, 208 A.D.2d 892, 894 (2d Dept. 1994). It is only after the borrower's "change of position and assumption of legal obligations [as] the direct result of that election" to accelerate the mortgage debt that the election becomes final and irrevocable and the lender may not of its own accord revoke the acceleration. See, Kilpatrick v. Germania Life Ins. Co., 183 NY 163, 168 (1905); Ost v. Mindlin, 170 A.D. 558, 559 (1st Dept. 1915), aff'd 224 NY 668 (1918); Milone v. U.S. Bank N.A., 164 A.D.3d 145, 156 (2d Dept. 2018); Golden v. Ramapo Improvement Corp., 78 A.D.2d 648, 650 (2d Dept. 1980).

As the Second Department made clear in Milone v. U.S. Bank N.A., supra, the lender's right to revoke an acceleration of the mortgage debt is grounded in the contractual relationship between lender and borrower, and more specifically in an optional / discretionary acceleration provision of the kind present in the Note and Mortgage here. The Court wrote:

The plaintiff argues that while paragraph 6 of the note permits the lender to accelerate the full amount of the principal and interest upon the borrower's default, the note contains no provision permitting the lender to revoke any such acceleration and that a de-acceleration is therefore not contractually permitted. We disagree. Since the plain language setting forth the contractual right of the lender to accelerate the entire debt is discretionary rather than mandatory, U.S. Bank maintained the right to later revoke the acceleration (see Federal Natl. Mtge. Assn. v. Mebane, 208 A.D.2d 892, 894; Golden v. Ramapo Improvement Corp., 78 A.D.2d 648, 650).

Milone v. U.S. Bank N.A., supra, 164 A.D.3d at 155 (boldface emphasis added). That the right of revocation is firmly grounded in contract is also implicit in the Milone Court's holding that an entity must have the contractual authority or "standing" to validly revoke an election to accelerate. See, id. See also, Christiana Trust v. Barua, supra, 184 A.D.3d at 146, 162. ¹

1 Based on an unreported decision in HSBC Bank USA, NA v. Khemraj, 72 Misc.3d 1206 (A) (Sup. Ct. Westchester Co. 2021), FAPA's Senate Sponsor asserts that the lender lacks contractual authority to unilaterally revoke an acceleration of the mortgage debt. However, Khemraj is founded on a misrepresentation of the Court of Appeals' holding in Kilpatrick v. Germania Life Ins. Co., supra: Kilpatrick did not hold that an election to accelerate once made is final and not subject to change at the lender's option (see, Khemraj, at *4), but rather, that the election "became final and irrevocable after plaintiff's change of position and assumption of legal obligations, the direct result of that election." See Kilpatrick, supra, 183 NY at 168 (italics added). In other words, per Kilpatrick the lender does have contractual authority under a discretionary acceleration clause to revoke an election to accelerate, subject to the principles of equitable estoppel, and thus has Kilpatrick always been construed. See, Ost v. Mindlin, supra; Golden v. Ramapo Improvement Corp., supra; Federal National Mortgage Ass'n v. Mebane, supra; Milone v. U.S. Bank N.A., supra.

Accordingly, a long line of Second Department caselaw accorded lenders the right to unilaterally revoke an election to accelerate a mortgage debt by "an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action." R.J.T. Food and Restaurant, LLC v. Rescap Liquidating Trust, 186 A.D.3d 768, 769 (2d Dept. 2020). See, U.S. Bank Trust, N.A. v. Miele, 186 A.D.3d 526, 527 (2d Dept. 2020); Christiana Trust v. Barua, supra, 184 A.D.3d at 145; Deutsche Bank Nat'l. Trust Co. v. Adrian, 157 A.D.3d 934, 935 (2d Dept. 2018); MSMJ Realty, LLC v. DLJ Mtge. Capital, Inc., 157 A.D.3d 885, 887 (2d Dept. 2018); Milone v. U.S. Bank N.A., supra, 164 A.D.3d at 154; NMNT Realty Corp. v. Knoxville 2012 Trust, 151 A.D.3d 1068, 1069-70 (2d Dept. 2017); U.S. Bank N.A. v. Barnett, 151 A.D.3d 791, 793 (2d Dept. 2017); Kashipour v. Wilmington Sav. Fund Socy., FSB, 144 A.D.3d 985, 987 (2d Dept. 2016); UMLIC VP, LLC v. Mellace, 19 A.D.3d 684 (2d Dept. 2005); Clayton Natl. v. Guldi, 307 A.D.2d 982 (2d Dept. 2003); EMC Mtge. Corp. v. Patella, supra, 279 A.D.2d 604, 606 (2d Dept. 2001); Federal Nat. Mortg. Ass'n v. Mebane, 208 A.D.2d 892, 894 (2d Dept. 1994). The other three intermediate appellate courts concurred. See, Fed. Natl. Mtge. Assn. v. Rosenberg, 180 A.D.3d 401, 402 (1st Dept. 2020); U.S. Bank N.A. v. Creative Encounters LLC, 194 A.D.3d 1135, 1136 (3d Dept. 2021); Lavin v. Elmakiss, 302 A.D.2d 638, 639 (3d Dept. 2003), lv. denied 2 N.Y.3d 703 (2004); Fed. Natl. Mtge. Assn. v. Tortora, 188 A.D.3d 70, 76-77 (4th Dept. 2020).

The effect of a lender's election to revoke an acceleration of the mortgage debt - vis a vis the parties' rights and obligations and the statute of limitations - is succinctly described by the Court of Appeals in Freedom Mortgage Corp. v. Engel, 37 N.Y.3d 1 (2021):

[T]he noteholder's act of revocation (also referred to as a de-acceleration) returns the parties to their pre-acceleration rights and obligations - reinstating the borrowers' right to repay any arrears and resume satisfaction of the loan over time via installments, i.e., removing the obligation to immediately repay the total outstanding balance due on the loan, and provides borrowers a renewed opportunity to remain in their homes, despite a prior default. Thus, following a de-acceleration, a payment default could give rise to an action on the note to collect missed installments (an action with a six-year statute of limitations that runs on each installment from the date it was due). Or the noteholder might again accelerate the maturity of the then-outstanding debt, at which point a new fore-closure claim on that outstanding debt would accrue with a six-year limitations period.

Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d at 28 (boldface emphasis added).

B. The Lender and Borrowers Mutually Agreed to a Revocation of the 2009 Acceleration of the Mortgage Debt and Reinstatement of the Borrower's Right to Make Installment Payments on the Debt

Here, the record unambiguously shows that shortly after commencement of the 2009 foreclosure action, the parties entered into a Repayment Plan agreement pursuant to which Defendants paid the sum of $7,612.53, in consideration of which the plaintiff HSBC deferred the balance of the overdue interest, stopped the foreclosure, reinstated Defendants' right to make installment payments on the Mortgage, discontinued the action and vacated the lis pendens. There can be no dispute that those acts and circumstances evidence an affirmative act, plainly manifesting the plaintiff HSBC's election to revoke its prior acceleration of the mortgage debt, occurring during the six-year limitations period. See, e.g., DePalma v. Roundpoint Mortgage Servicing Corp., 197 A.D.3d 1145, 1147 (2d Dept. 2021) (modification agreement had effect of revoking acceleration of loan as it "evinced a clear intent by [the bank], with the [borrowers'] knowledge and consent," to revoke the prior election and reinstate borrowers' right to repay in monthly installments); Goshen Mortgage, LLC v. DePalma, 186 A.D.3d 1203 (2d Dept. 2020) (same); U.S. Bank Trust, N.A. v. Rudick, 172 A.D.3d 1430, 1431 (2d Dept. 2019) (same); U.S. Bank N.A. v. Szoffer, 58 Misc.3d 1220 (A) at *2 (Sup. Ct. Rockland Co. 2017), rev'd on other grounds 196 A.D.3d 666 (2d Dept. 2021) ("if the parties entered into a settlement wherein the loan was reinstated the loan would have been de-accelerated through the express or implied agreement of the parties"). See also, Emigrant Bank v. McDonald, 197 A.D.3d 453, 455 (2d Dept. 2021); Bank of New York Mellon v. Sakkal, 191 A.D.3d 830 (2d Dept. 2021).

Defendants object that the Repayment Plan agreement was invalid in the absence of a writing signed by them. ² Under the law as it existed in 2009, the argument is unavailing. The Repayment Plan agreement at the time it was made was valid and enforceable even though unsigned by Defendants. Assuming arguendo that the Agreement would otherwise have implicated the Statute of Frauds (see, G.O.L. §§ 5-703, 5-1103; Weiss v. Halperin, 149 A.D.3d 1143, 1144-45 [2d Dept. 2017]), its full performance by both parties took the agreement outside the Statute of Frauds. See, Montgomery v. Futuristic Foods, Inc., 66 A.D.2d 64, 66-68 (2d Dept. 1978); Guterman v. RGA Accessories, Inc., 196 A.D.2d 785, 785-786 (1st Dept. 1993); Myers v. Waverly Fabrics, 101 A.D.2d 777 (1st Dept. 1984), aff'd as modified 65 N.Y.2d 275 (1985); Banks, New York Contract Law §3:20. See generally, Rose v. Spa Realty Associates, 42 N.Y.2d 338, 343-344 (1977).

2 Defendants call the Repayment Plan agreement a "loan modification," contest U.S Bank N.A.'s denial that there was any loan modification and claim that the circumstances give rise to an issue of fact requiring denial of summary judgment. See, HSBC Bank U.S. v. Fortini, 189 A.D.3d 1373 (2d Dept. 2020) (question whether original note and mortgage were superseded by a loan modification required denial of summary judgment). However, caselaw recognizes a distinction between "repayment plans" and "loan modifications." See, e.g., Knox v. Countrywide Home Loans, Inc., 205 A.D.3d 792, 794 (2d Dept. 2022); GMAT Legal Title Trust 2014-1, U.S. Bank Nat'l Ass'n v. Wood, 192 A.D.3d 1285, 1287 (3d Dept. 2021); Warmhold v. Zagarino, 144 A.D.3d 672, 673 (2d Dept. 2016); Wells Fargo Bank Minnesota v. Perez, 41 A.D.3d 590 (2d Dept. 2007); Emigrant Mortgage Co., Inc. v. Markland, 37 Misc.3d 1230(A) at *1 (Sup. Ct. Kings Co. 2012). The documents here unambiguously show that the loan was not modified - the principal and interest due under the Note and Mortgage remained unchanged, there was only a repayment plan whereby Defendants' payment of 10 months' interest was deferred and the acceleration of the mortgage debt was revoked. The original Note and Mortgage remained in place, and the default notices and complaints in the 2010, 2015 and 2022 foreclosure actions correctly reflect the default date and the principal balance due calculated in accordance with the original Note and Mortgage and the Repayment Plan agreement. There is no triable issue of fact.

The effect, critically, is that from the point the parties made the Repayment Plan agreement and HSBC's acceleration of the mortgage debt was revoked, HSBC had no cause action to foreclose on the entire mortgage debt and hence the six (6) year statute of limitations on such claim was not running. As the Court of Appeals observed in Hahn Automotive, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765 (2012):

[W]here "the claim is for payment of a sum of money allegedly owed pursuant to a contract, the cause of action accrues when the [party making the claim] possesses a legal right to demand payment" (Minskoff Grant Realty & Mgt. Corp. v. 211 Mgr. Corp., 71 A.D.3d 843, 845 [2d Dept. 2010]; see also Kuo v. Wall St. Mtge. Bankers, Ltd., 65 A.D.3d 1089, 1090 [2d Dept. 2009]; Swift v. New York Med. Coll., 25 A.D.3d 686, 687 [2d Dept. 2006]; Kingsley Arms, Inc. v. Copake-Taconic Hills Cent. School Dist., 9 A.D.3d 696, 698 [3d Dept. 2004], lv dismissed 3 N.Y.3d 767 [2004]; Albany Specialties v. Shenendehowa Cent. School Dist., 307 A.D.3d 514, 516 [3d Dept. 2003]).

Hahn Automotive, Inc. v. American Zurich Ins. Co., supra, 18 N.Y.3d at 770-771 (boldface italics added). See also, Kassner v. City of New York, 46 N.Y.2d 544, 550 (1979) (City had no obligation to pay, and plaintiff therefore had no cause of action for breach of contract for failure to pay, until comptroller's audit was complete). Once Defendants bargained and paid consideration for the reinstatement of their rights under the mortgage, HSBC had no legal right to demand payment of the entire mortgage balance based on a pre-agreement default, wherefore no such claim had accrued and the statute of limitations was not running. In the event of a post-agreement default, HSBC "might again accelerate the maturity of the then-outstanding debt, at which point a new foreclosure claim on that outstanding debt would accrue with a six-year limitations period." Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d at 28.

Finally, General Obligations Law §17-105 as it existed in 2009 did not apply to the revocation of a discretionary acceleration of mortgage debt. The statute provided in pertinent part:

1. A waiver of the expiration of the time limited for commencement of an action to foreclose a mortgage of real property, or a waiver of the time that has expired, or a promise not to plead the expiration of the time limited, or not to plead the time that has expired, or a promise to pay the mortgage debt, if made after the accrual of a right of action to foreclose the mortgage and made, either with or without consideration, by the express terms of a writing signed by the party to be charged is effective, subject to any conditions expressed in the writing, to make the time limited for commencement of the action run from the date of the waiver or promise.

Except as provided in subdivision 5, no acknowledgment, waiver or promise has any effect to extend the time limited for commencement of an action to foreclose a mortgage for any greater time or in any other manner than that provided in this section, nor unless it is made as provided in this section.

5. This section does not change the requirements, or the effect with respect to the time limited for commencement of an action, of (a) a payment or part payment of the principal or interest secured by the mortgage, or (b) a stipulation made in an action or proceeding.

The Repayment Plan agreement was not by its terms a "waiver of the expiration of the time limited for commencement of an action to foreclose a mortgage of real property," or a "waiver of the time that has expired," or a "promise not to plead the expiration of the time limited, or not to plead the time that has expired," or a "promise to pay the mortgage debt." It was an agreement, bargained and paid for by the Defendants, whereby HSBC's 2009 foreclosure action was stopped and Defendants' pre-acceleration right to make monthly installment payments reinstated; in other words, as noted above, it wholly destroyed HSBC's right to immediate payment of the entire mortgage debt.

However, that does not end the analysis. In Deutsche Bank Natl. Trust Co. v. Flagstar Capital Markets Corp., 32 N.Y.3d 139 (2018), the Court of Appeals observed that "the public policy represented by the statute of limitations becomes pertinent where the contract not to plead the statute is in form or effect a contract to extend the period as provided by statute or to postpone the time from which the period of limitation is to be computed" (id., 32 N.Y.3d at 152 [italics in original][quoting Kassner v. City of New York, supra, 46 N.Y.2d at 551, quoting 1961 Rep of NY Law Rev Commn at 97-98]); and further, that "[t]he public policy represented by the statute of limitations, CPLR 201, and General Obligations Law §17-103 ³ would be effectively abolished if contracting parties could circumvent it by 'postponing the time from which the period of limitation is to be computed' (Kassner, 46 N.Y.2d at 551)." Id., at 153.

3 GOL §17-103, entitled "Agreements waiving the statute of limitations", parallels in significant respects GOL §17-105, the provision specifically applicable to mortgage foreclosure actions.

Accordingly, in Sotheby's, Inc. v. Mao, 173 A.D.3d 72 (1st Dept. 2019), the Appellate Division held that a lender's purported oral waiver of the borrower's accrued obligation to repay the entire loan balance upon its default under a revolving credit agreement containing an automatic acceleration provision implicated GOL §17-103 and thus effected no postponement of the accrual date of an action for breach of contract. See id., 173 A.D.3d at 76-81. By parallel reasoning, where a borrower fails to make a monthly mortgage payment, his default gives rise to an accrued cause of action for breach of contract with respect to that monthly payment obligation, and any attempt to postpone accrual or extend the six-year statute of limitations with respect to that particular payment would be subject to the provisions of the General Obligations Law.

Fundamentally different is the case, presented here, of a discretionary acceleration of the mortgage debt followed by a revocation of the lender's election to accelerate. Unlike in Sotheby's, Inc. v. Mao, supra, the borrower's obligation to pay the entire mortgage debt has not accrued upon default, wherefore the lender to foreclose must necessarily exercise its option to accelerate the maturity of debt as to which no cause of action had as yet accrued. See, Christiana Trust v. Barua, supra. Furthermore, the lender's act of revocation does not extend the statute of limitations on an accrued cause of action but instead" returns the parties to their pre-acceleration rights and obligations - reinstating the borrowers' right to repay any arrears and resume satisfaction of the loan over time via installments, i.e., removing the obligation to immediately repay the total outstanding balance due on the loan." Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d at 28 (emphasis added). In other words, revocation literally "de-accrues" the lender's cause of action to recover the entirety of the mortgage debt.

Although GOL §17-105 is specifically addressed to mortgage foreclosure actions and explicitly mentions "accrual" nothing in the statute as it existed in 2009 affects the requirements for a valid revocation of an acceleration of mortgage debt. The reason therefor is plain enough: as of 1963, when GOL §17-105 was enacted, and at least as far back as the Court of Appeals' decision in Kilpatrick v. Germania Life Ins. Co., supra, in 1905, it was clearly understood that where a mortgage contains a discretionary acceleration clause the lender has a contractual right to unilaterally revoke an election to accelerate mortgage debt; the consent of the borrower was not required. There is no indication that the Legislature in 1963 intended to overrule this longstanding doctrine sub silentio.

C. The Foreclosure Abuse Prevention Act Impairs Lenders' Contractual Rights

FAPA impairs lenders' contractual rights by eliminating altogether lenders' right to unilaterally revoke a prior acceleration of the mortgage debt and by erecting new procedural requirements for the "de-accrual" upon revocation of the cause of action to recover the entire mortgage debt.

CPLR §3217(e) was amended to read in pertinent part:

In any action upon [a note and mortgage], 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.

CPLR §3217(e) as amended overrides the holding of Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d 1 (2021), the decision which provoked the Legislature's ire. Prior to Engel, as discussed above, an "affirmative act of revocation" was required to revoke a prior acceleration and return the parties to their pre-acceleration rights and obligations. Whether or not the lender's voluntary discontinuance of a foreclosure action constituted an "affirmative act of revocation" was disputed by New York courts. In Engel, the Court of Appeals held:

[W]hen a bank effectuated an acceleration via the commencement of a foreclosure action, a voluntary discontinuance of that action - i.e., the withdrawal of the complaint - constitutes a revocation of that acceleration. In such a circumstance, the noteholder's withdrawal of its only demand for immediate payment of the full outstanding debt, made by the "unequivocal over act" of filing a foreclosure complaint, "destroy[s] the effect" of the election [cit.om.].A voluntary discontinuance withdraws the complaint and, when the complaint is the only expression of a demand for immediate payment of the entire debt, this is the functional equivalent of a statement by the lender that the acceleration is being revoked. Accordingly, we conclude that where acceleration occurred by virtue of the filing of a complaint in a foreclosure action, the noteholder's voluntary discontinuance of that action constitutes an affirmative act of revocation of that acceleration as a matter of law, absent an express, contemporaneous statement to the contrary by the noteholder.

Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d at 926. CPLR §3217(e) as amended provides directly contrary to Engel's specific holding that the voluntary discontinuance of a foreclosure action does not effect a revocation of a prior acceleration of the mortgage debt.

However, FAPA overrode not just the holding of Freedom Mortgage Corp. v. Engel but more than a century of caselaw holding that lenders by an affirmative act of revocation may unilaterally revoke their election to accelerate all sums due under an optional acceleration clause in a mortgage provided that there is no change in the borrower's position in reliance thereon. CPLR §203(h) was amended to read in pertinent part:

Once a cause of action upon [a note and mortgage] 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 an action and to interpose the claim, unless expressly prescribed by statute.

Section 203(h) as amended altogether destroys lenders' contractual right to unilaterally revoke an acceleration of the mortgage debt.

FAPA further impaired lenders' contractual rights by amending subdivisions "4" and "5" of GOL §17-105 as follows:

4. An acknowledgment, waiver, promise or agreement, express or implied in fact or in law, shall not, in form or effect, postpone, cancel, reset, toll, revive or otherwise extend the time limited for commencement of an action to foreclose a mortgage for any greater time or in any other manner than that provided in this section, unless it is made as provided in this section.

5. This section does not change the requirements or the effect with respect to the accrual of a cause of action, not the time limited for commencement of an action based upon either:

(a) a payment or part payment of the principal or interest secured by the mortgage, or

(b) a stipulation made inn an action or proceeding.

Comparing the original version of GOL §17-105 (see, pp. 18-19 above) with the statute as amended by FAPA, it is clear that (1) whereas the statute originally concerned the extension of the statute of limitation with respect to an accrued cause of action for mortgage foreclosure, (2) the intent and the effect of FAPA is to expand the applicability of the procedural requirements of the statute to encompass, in addition, matters relating to the accrual of the cause of action, and more specifically to the effect of revoking an acceleration of the mortgage debt.

The New York State Senate Introducer's Memorandum in Support asserts that FAPA

"amends subdivisions (4) and (5) of Section 17-105 of the General Obligations Law to clarify that these subdivisions that these subdivisions represent the exclusive means by which parties are enabled to effectuate a waiver, postponement, cancellation, resetting, tolling, revival or extension of time limited by statute for commencement of an action or proceeding and inter-position of a claim to foreclose a mortgage." (italics added)

Astonishingly, the Senate Sponsor implies that for 60 years the entire judiciary of the State of New York failed to understand that GOL §17-105 as enacted in 1963 always precluded the "cancelling" or "resetting" of the statute of limitations upon a cause of action to foreclose the entire mortgage debt by a lender's unilateral act of revocation. Since the Senate Sponsor's justification of this claim has a material bearing on the issues presented here, it is set forth at some length:

With its enactment of General Obligations Law 17-105 (L 1963, ch 576, §1), the Legislature provided the exclusive means by which parties to a mortgage may agree to waive, extend, postpone, or promise not to plead the statute of limitations. Yet, this provision has been largely ignored in practice, with lenders resorting to the voluntary dismissal or discontinuance of foreclosure actions (by stipulation, notice, or motion) or unilateral writings such as so-called "de-acceleration letters" to reset, and, in effect, extend the statute of limitations to foreclose a mortgage. These unilateral writings flout the requirements of the General Obligations Law.

In Engel, the Court held that, as a matter of law, a stipulation of discontinuance of a foreclosure action revokes the election to accelerate, absent the noteholder's contemporaneous statement to the contrary, and thus resets the statute of limitations (37 N.Y.3d at 19) Thus, the effect of a stipulation of discontinuance under Engel is to extend, postpone, and ultimately reset the accrual of the statute of limitations on an action to foreclose a mortgage. By interpreting a stipulation of discontinuance, which is silent to the statute of limitations and contains none of the language required by General Obligations Law 17-105, as a revocation of acceleration, the courts have permitted such revocation to "reset" the statute of limitations - meaning a claim for which the statute of limitations has already accrued, is then treated, in effect, as "de-accrued," after the fact, such that the statute of limitations is no longer running on the claim.

. . .

Stated simply, the same way personal injury plaintiffs cannot unilaterally reset or otherwise extend the applicable statute of limitations to interpose their claim by "un-injuring" and then "re-injuring" themselves, [amended CPLR 203(h)] makes clear that once a cause of action has accrued - meaning once an injury has been sustained, economic or otherwise - parties have no unilateral right or ability to declare themselves "un-harmed" and then "re-harmed" which, by design or happenstance, effectuates an unlawful extension of the time limited by law for interposition of the claim

. . .

A party to a contract may not, by waiving or extending the other party's accrued obligation to render a performance when due under the contract (but not the performance itself), extend its time under the statute of limitations to sue for breach without complying with Article 17 of the General Obligations Law.

. . .

"De-acceleration" is merely the lender's election to revoke its demand for full payment; it does not "de-accrue" the claim for statute of limitations purposes (italics added)

See, New York State Senate Introducer's Memorandum in Support, S5473D.

The flaw in the Senate Sponsor's reasoning is evident from his misguided analogy between a personal injury plaintiff and a lender exercising its option to accelerate the maturity of the mortgage debt. Quite obviously, a person who has in fact sustained physical injury cannot "un-injure" himself or declare himself to be uninjured. However, when a borrower fails to make a monthly payment on a mortgage, the only injury the lender sustains (in the absence of an automatic acceleration provision) is the loss of one month's principal and interest on the debt. (As to that injury, of course, the lender cannot declare itself "uninjured" to prevent the six-year limitations period from running on a claim to recover that monthly payment.) However, where a mortgage contains only a discretionary acceleration provision, the lender upon the borrower's failure to make a monthly payment has sustained no injury with respect to the balance of the mortgage debt; and thus, a discretionary acceleration and de-acceleration of the entire mortgage debt is purely a matter of the election of remedies. See, Christiana Trust v. Barua, supra, 184 A.D.3d at 160-161. The Senate Sponsor's statement that "once an injury has been sustained, economic or otherwise - parties have no unilateral right or ability to declare themselves 'un-harmed' and then re-harmed'" is correct so far as it goes but is simply inapplicable here because the lender sustained no injury with respect to the future balance due on the mortgage in the first place.

Thus, the judiciary of the State of New York universally, and correctly, understood that nothing in GOL §17-105 as enacted in 1963 precluded the cancelling or resetting of the statute of limitations on a claim to recover the entire mortgage debt upon the lender's revocation of its election to accelerate that debt. See, Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d at 28. In that regard, FAPA does not merely "clarify" existing law but makes a wholesale change overriding decades of New York case precedent. Accordingly, the New York State Assembly Memorandum in Support of Legislation frankly acknowledges that FAPA does not merely "clarify" Section 17-105 but makes" changings [sic] to the General Obligations Law to create clear limits on when a cause of action to foreclose a mortgage accrues." (italics added)

The impact of the FAPA amendments in the circumstances of the present case is as follows: The Repayment Plan agreement coupled with HSBC's discontinuance of the 2009 foreclosure action unquestionably effected a valid revocation of the prior acceleration of the mortgage debt under pre-FAPA law. Moreover, insofar as the Repayment Plan agreement reflects a bilateral agreement of both parties, and not just unilateral action by HSBC, to revoke the acceleration and restore the parties to their pre-acceleration rights and obligations, it passes muster even under CPLR §§ 3217(e) and 203(h) as amended by FAPA. However, since the Repayment Plan agreement - though fully performed by both parties - is not embodied in a writing signed by Defendants, applying GOL §17-105 as amended would have the incongruous effect of causing the statute of limitations to continue to run on a cause of action that no longer existed.

D. Did the Legislature Intend GOL §17-105 As Amended To Be Retroactively Applied in the Circumstances Presented Here?

"'For centuries our law has harbored a singular distrust of retroactive statutes' (Eastern Enterprises v. Apfel, 524 U.S. 498, 547 [1998 ]). The United States Supreme Court stated in Landsgraf v. USI Film Products that 'elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted' (511 U.S. 244, 265)." James Square Associates LP v. Mullen, 21 N.Y.3d 233, 246 (2013). Therefore, "[i]t is a fundamental canon of statutory construction that retroactive operation is not favored by courts and statutes will not be given such construction unless the language expressly or by necessary implication requires it [cit.om.]." Majewski v. Broadalbin-Perth Central School District, 91 N.Y.2d 577, 584 (1998). See, Matter of Gleason (Michael Vee, Ltd.), 96 N.Y.2d 117, 122 (2001).

In Regina Metropolitan Co., LLC v. NYS Div. of Housing and Community Renewal, 35 N.Y.3d 332 (2020), rearg denied 35 N.Y.3d 1079 (2020), the Court of Appeals provided a comprehensive framework for analyzing issues pertaining to the retroactivity of legislation. On the question whether, as a matter of statutory interpretation, the Legislature intended a newly enacted statute to be retroactively applied, the Court of Appeals' teaching in Regina was beautifully distilled by the Fourth Department in Ruth v. Elderwood at Amherst, 209 A.D.3d 1281 (4th Dept. 2022). The Court wrote:

When conducting a retroactivity analysis, a court must first assess whether applying the new law to conduct that occurred prior to its enactment "truly implicates the concerns historically associated with retroactive application of new legislation" ([ Regina ], 35 N.Y.3d 332, 365). In that regard, "application of a new statute to conduct that has already occurred may, but does not necessarily, have 'retroactive' effect upsetting reliance interests and triggering fundamental concerns about fairness" (id.). In determining whether legislation has retroactive effect, "'the court must ask whether the new provision attaches new legal consequences to events completed before its enactment'"(American Economy Ins. Co. v. State of New York, 30 N.Y.3d 136, 147 [2017]).

"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" ([ Regina ], 35 N.Y.3d at 365; see Landgraf v. USI Film Prods., 511 U.S. 244, 278-280 [1994]). Therefore, "the extent of a party's liability, in the civil context as well as the criminal, is an important legal consequence' in determining retroactivity" ([ Regina ]. 35 N.Y.3d at 367). "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" (id. at 365). Where legislation, "if applied to past conduct, would impact substantive rights and have retroactive effect, the presumption against retroactivity is triggered" (id. at 370).

When the presumption is triggered, "a statute is presumed to apply only prospectively" (id.). "This 'deeply rooted' presumption against retroactivity is based on '[e]lementary considerations of fairness [that] dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly'" (id.). "[C]areful consideration of retroactive statutes is warranted because '[t]he [l]egislature's unmatched powers allow it to sweep away settled expectations suddenly and without individualized consideration' and '[i]ts responsivity to political pressures poses a risk that it may be tempted to use retroactive legislation as a means of retribution against unpopular groups or individuals'" (id.).

"In light of these concerns, [i]t takes a clear expression of the legislative purpose to justify a retroactive application of a statute, which assures that [the legislative body] itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits' (id.); [cit.om.]. "The ultimate question, therefore, is one of statutory interpretation: whether the legislature has expressed a sufficiently clear intent to apply the [legislation] retroactively" ([ Regina ], 35 N.Y.3d at 370). "There is certainly no requirement that particular words be used - and, in some instances, retroactive intent can be discerned from the nature of the legislation" (id.). "But the expression of intent must be sufficient to show that the legislature contemplated the retroactive impact on substantive rights and intended that extraordinary result" (id. at 370-371).

Ruth v. Elderwood at Amherst, supra, 209 A.D.3d at 1284-86.

Here, for the reasons elucidated above, application of the newly enacted GOL §17-105 in U.S. Bank's 2022 mortgage foreclosure action so as to render the parties' Repayment Plan agreement ineffective, long after the fact, as a means to revoke HSBC's 2009 acceleration of the mortgage debt in a prior action, reinstate the parties' rights and obligations under the Mortgage and "de-accrue" HSBC's 2009 claim to recover the entire debt for purposes of the statute of limitations plainly has retroactive effect impairing contractual rights, upsetting reliance interests and triggering fundamental concerns about fairness. Thus, the circumstances here present give rise to a presumption against retroactivity based on elementary considerations of fairness dictating that individuals should have an opportunity to know what the law is and to conform their conduct accordingly. See, Regina Metropolitan Co., LLC v. NYS Div. of Housing and Community Renewal, supra; Ruth v. Elderwood at Amherst, supra. The question, then, becomes whether the Legislature expressed a clear intent to apply the legislation retroactively, i.e., an expression thereof sufficient to show that it contemplated the retroactive impact on substantive rights and intended that extraordinary result. See, id.

FAPA §10 provides that "[t]his act shall take effect immediately and shall apply to all actions commenced on [a note and mortgage] in which a final judgment of foreclosure and sale has not been enforced." The legislative history reveals that FAPA was enacted to remediate what the Legislature regarded as abusive litigation tactics by lenders, particularly in manipulating statutes of limitation to their advantage and to the detriment of homeowners. See, New York State Senate Introducer's Memorandum in Support, S5473D; New York State Assembly Memorandum in Support of Legislation, A7737B.

"Remedial legislation should be given retroactive effect in order to effectuate its beneficial purpose." Matter of Gleason (Michael Vee, Ltd.), supra, 96 N.Y.2d at 122. On the other hand, "[c]lassifying a statute as remedial does not automatically overcome the strong presumption of prospectivity since the term may broadly encompass any attempt to supply some defect or abridge some superfluity in the former law." Majewski v. Broadalbin-Perth Central School District, supra, 91 N.Y.2d at 584. See, Raparthi v. Clark, 214 A.D.3d 613 m 614 (1st Dept. 2023) (same).

"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 whether the enact-ment itself reaffirms a legislative judgment about what the law in question should be (see e.g., Brothers v. Florence, 95 N.Y.2d 290, 299)." Matter of Gleason (Michael Vee, Ltd.), supra. In Brothers v. Florence, supra, 95 N.Y.2d 290 (2000), the statute at issue, like FAPA here, was silent on the issue of retroactivity. As here, the statute was to "take effect immediately", which language the Court took to "evince a sense of urgency" in effectuating its remedial purposes. See, id. at 299-300. The Court continued, "[i]n an analysis of retroactive application, we have found it relevant when the legislative history reveals that the purpose of new legislation is to clarify what the law was always meant to say and do ", and key to the Court's holding of retro-activity was a finding that "it is clear from the legislative history that the purpose behind the statute was to rewrite a judicial interpretation of the nonmedical malpractice Statute of Limitations and to 'reaffirm' the original legislative intent" See, id. at 299.

An analysis of the relevant factors counsels against retroactive application of GOL §17-105 in the circumstances of this case.

While the provision in FAPA §10 that the statute take effect immediately and apply to pending cases so long as a judgment of foreclosure and sale had not been enforced undoubtedly evinces a sense of urgency in effectuating the statute's remedial purposes, FAPA is in fact silent on the issue of retroactivity and there is no indication whatsoever that the Legislature contemplated the statute's retroactive impact on lenders' substantive rights and intended the extraordinary impairment of those rights that retroactivity would in fact impose. That is demonstrably so in the case of the amendments to GOL §17-105, as the Senate Sponsor and the Assembly expressed flatly contrary views as to the meaning and effect of those amendments. The Senate Sponsor sought - erroneously, as demonstrated above - to portray FAPA as a mere clarification of Section 17-105 as enacted in 1963, while the Assembly Memorandum frankly acknowledged to the contrary that Section 17-105 was" chang[ed]" by FAPA to" create clear limits on when a cause of action to foreclose a mortgage accrues." Unlike in Brothers v. Florence, supra, then, it cannot be found here that the amendments to GOL §17-105 merely "reaffirmed" the original intent of Section 17-105 as enacted in 1963.

Furthermore, retroactive application of GOL §17-105 as amended would not meaningfully advance the remedial purposes of FAPA. Amended Section 17-105 was part of a package of amendments, including also amended CPLR §§ 3217(e) and 203(h), designed to inhibit unilateral action by lenders to manipulate statutes of limitation to their advantage and to the detriment of homeowners. Here, however, HSBC did not act unilaterally - HSBC and the Defendant borrowers mutually agreed to discontinue the pending foreclosure action and reinstate Defendants' rights under the mortgage.

In view of the foregoing, FAPA §10 is insufficient to overcome the presumption against retroactive enforcement of amended GOL §17-105 so as to destroy rights already accrued via compliance with pre-existing law. ⁴ However, assuming arguendo that FAPA was intended to be retroactively enforced despite manifest harm to lenders' substantive rights, the Court will go on to address the constitutionality of retroactive application in the circumstances presented here.

4 In a series of decisions dating back to GMAT Legal Title Trust 2014-1 v. Kator, 213 A.D.3d 915 (2d Dept. 2023), the Second Department has given FAPA's provisions retroactive effect without so much as mentioning the issue of "retroactivity" or conducting the analysis required by Regina Metropolitan Co., LLC v. NYS Div. of Housing and Community Renewal, supra, to determine whether the legislation is to be retroactively applied. See, U.S. Bank Nat'l Assn. v. Armand, 2023 WL 7007285 (2d Dept., Oct. 25, 2023); CIT Bank v. Byers, 2023 WL 6451880 (2d Dept., Oct. 4, 2023); UGH Mazing, LLC v. 21st Mortgage Corp., 2023 WL 6452079 (2d Dept., Oct. 4, 2023); Aspen Properties Group, LLC v. Preston, 219 A.D.3d 1475 (2d Dept. 2023); Bank of New York Mellon v. Norton, 219 A.D.3d 680 (2d Dept. 2023); ARCPE 1, LLC v. DeBrosse, 217 A.D.3d 999 (2d Dept. 2023); MTGLQ Investors, LP v. Singh, 216 A.D.3d 1087 (2d Dept. 2023); Bank of New York Mellon v. Stewart, 216 A.D.3d 720 (2d Dept. 2023). Given the Second Department's silence on that score, this Court does not regard the cited decisions as dispositive of the retroactivity issues presented and decided here. On the other hand, the Second Department has explicitly recognized that retroactive application of FAPA gives rise to issues of constitutional magnitude and remanded those cases for hearing and determination of the constitutional issues. See, Johnson v. Cascade Funding Mortgage Trust 2017-1, 2023 WL 7007035 (2d Dept., Oct. 25, 2023); U.S. Bank Nat'l Assn. v. Santos, 218 A.D.3d 827 (2d Dept. 2023); Deutsche Bank Nat'l Trust Co. v. Wong, 218 A.D.3d 742 (2d Dept. 2023); U.S. Bank Nat'l Assn. v. Simon, 216 A.D.3d 1041 (2d Dept. 2023). Accordingly, this Court proceeds to address the constitutional issues that would be raised by FAPA's retroactive application to the case at bar.

E. Retroactive Application of GOL §17-105 Would Violate the Constitutional Guarantee Against Impairment of the Obligation of Contracts

Article I, §10 of the United States Constitution provides: "No State shall pass any Law impairing the Obligation of Contracts." "The constitutional prohibition applies alike to both executory and executed contracts" Farrington v. Tennessee, 95 U.S. 679. 683 (1877).

In Melendez v. City of New York, 16 F.4th 992 (2d Cir. 2021), the Second Circuit traced the history of the Supreme Court's evolving jurisprudence concerning the Contracts Clause. In broad outline, a strict textualist view, embodied in Chief Justice Marshall's statement that the Contracts Clause "establishes a great principle, that contracts should be inviolable" (Sturges v. Crowninshield, 17 U.S. 122 [1819]), gradually gave way to the view that "the reservation of the reasonable exercise of the protective power of the state is read into all contracts", providing a basis for "rational compromise between individual rights and public welfare" (Home Building & Loan Ass'n v. Blaisdell, 290 U.S. 398, 442, 444 [1934]). Hence, Contracts Clause analysis now involves a balancing test. See, Melendez v. City of New York, supra, 16 F.4th at 1016-32 (citing Sveen v. Melin, 138 S.Ct. 1815 [2018]).

To determine whether a state law affecting pre-existing contracts violates the Contracts Clause, the Supreme Court in Sveen v. Melin, supra, instructs:

The threshold issue is whether the state law has "operated as a substantial impairment of a contractual relationship." Allied Structural Steel Co., 438 U.S., at 244 In answering that question, the Court has considered the extent to which the law undermines the contractual bargain, interferes with a party's reasonable expectations, and prevents the party from safeguarding or reinstating his rights. See id., at 246...; El Paso, 379 U.S., at 514-515; Texaco, Inc. v. Short, 454 U.S. 516, 531 (1982). If such factors show a substantial impairment, the inquiry turns to means and ends of the legislation. In particular, the Court has asked whether the state law is drawn in an "appropriate" and "reasonable" way to advance "a significant and legitimate public purpose." Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411-412 (1983).

Sveen v. Melin, supra, 138 S.Ct. at 1821-22.

1. Substantial Impairment

The inquiry whether a state law has "operated as a substantial impairment of a contractual relationship" involves three components: "whether there is a contractual relationship, whether a change in state law impairs that contractual relationship, and whether the impairment is substantial." See, General Motors Corp. v. Romein, 503 U.S. 181, 186 (1992).

There are two contracts at issue here: the Mortgage and the Repayment Plan agreement. Under pre-FAPA law:

Once Defendants bargained and paid consideration for the reinstatement of their rights under the mortgage, HSBC had no legal right to demand payment of the entire mortgage balance based on a pre-agreement default, wherefore no such claim had accrued and the statute of limitations was not running. In the event of a post-agreement default, HSBC "might again accelerate the maturity of the then-outstanding debt, at which point a new foreclosure claim on that outstanding debt would accrue with a six-year limitations period." Freedom Mortgage Corp. v. Engel, supra, 37 N.Y.3d at 28.

(see, p. 18, above). Retroactive application of FAPA, and particularly of GOL §17-105 as amended, would wholly destroy the lender's rights:

The Repayment Plan agreement coupled with HSBC's discontinuance of the 2009 foreclosure action unquestionably effected a valid revocation of the prior acceleration of the mortgage debt under pre-FAPA law. Insofar as the Repayment Plan agreement reflects a bilateral agreement of both parties, and not just unilateral action by HSBC, to revoke the acceleration and restore the parties to their pre-acceleration rights and obligations, it passes muster even under CPLR §§ 3217(e) and 203(h) as amended by FAPA. However, since the Repayment Plan agreement - though fully performed by both parties - is not embodied in a writing signed by Defendants, applying GOL §17-105 as amended would have the incongruous effect of causing the statute of limitations to continue to run on a cause of action that no longer existed.

(see, pp. 25-26, above).

In other words, by working a sea change in the law regarding a lender's right to revoke a prior acceleration of mortgage debt and the effect of such revocation upon the operation of the statute of limitations, FAPA would plainly undermine the parties' contractual bargain, interfere with their reasonable expectations under the law at the time those contracts were made, and wholly destroy the lender's rights under the Mortgage. That would unquestionably constitute a severe impairment of the contractual relationship.

2. Ends and Means Analysis

In Home Building & Loan Ass'n v. Blaisdell, supra, the U.S. Supreme Court upheld in the face of a Contracts Clause challenge a state mortgage moratorium enacted during the Great Depression which delayed mortgagees' ability to procure deficiency judgments and afforded mortgagors extended protection from foreclosure. In Melendez v. City of New York, supra, the Second Circuit summarized the holding of Blaisdell in the following terms:

In concluding that the state mortgage moratorium law achieved [a rational compromise between individual rights and public welfare], the Blaisdell majority identified five relevant factors. First, a genuine economic "emergency existed in Minnesota which furnished a proper occasion for the exercise of the reserved power of the state to protect the vital interests of the community." [cit.om.] Second, the challenged legislation protected "a basic interest of society" and "was not for the mere advantage of particular individuals." [cit.om.] Third, the relief afforded was "appropriate" to the emergency. [cit.om.] Fourth, the relief was granted "upon reasonable conditions." [cit.om.] Fifth, the law was "temporary in operation." [cit.om.] Moreover, the time period within which the law operated could be reduced by a court based on changed circumstances, thus ensuring that it was "limited to the exigency which called it forth." [cit.om.]

As to factors three and four in particular, the majority emphasized that extending the mortgage redemption period did not impair "the integrity of the mortgage indebtedness"; if the mortgagor failed to redeem within the extended period, the mortgagee's right "to title or to a deficiency judgment" remained. [cit.om.] And while the mortgagor was "not ousted from possession" during the extension period, he was obliged to compensate the mortgagee by paying "the rental value of the premises." [cit.om.] Thus, the Blaisdell majority concluded that the relief afforded paid due "regard to the interest of mortgagees as well as mortgagors[,] prevent[ing] the impending ruin of both." [cit.om.]

Melendez, supra, 16 F.4th at 1023. After reviewing Justice Sutherland's searing dissent in Blaisdell, the Melendez Court concluded:

[C]ritics - judicial and academic - have faulted this balancing approach to the Contracts Clause. But to the extent we are obliged to employ it on this appeal, it is important to note that the Blaisdell majority recognized limits to what a balancing principle could support:" This principle precluded a construction [of the Contracts Clause] which would permit the state to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them." [ Blaisdell ] at 439.

Melendez, supra, 16 F.4th at 1024 (italics added).

The Supreme Court in W. B. Worthen Co. v. Kavanaugh, 295 U.S. 56 (1935) held unconstitutional a law significantly postponing mortgagees' right to foreclose without establishing conditions (like those in Blaisdell) requiring the debtor to pay interest, taxes, or rent, or even to demonstrate an inability to pay. The Worthen Court, by Justice Cardozo, wrote:

To know the obligation of a contract we look to the laws in force at its making. [cit.om.] In the books there is much talk about distinctions between changes of the substance of the contract and changes of the remedy. [cit.om.] The dividing line is at times obscure. There is no need for the purposes of this case to plot it on the legal map. Not even changes of the remedy may be pressed so far as to cut down the security of a mortgage without moderation or reason or in a spirit of oppression. Even when the public welfare is invoked as an excuse, these bounds must be respected.A catalogue of the changes imposed upon this mortgage must lead to the conviction that the framers of the amendments have put restraint aside. With studied indifference to the interests of the mortgagee or to his appropriate protection they have taken from the mortgage the quality of an acceptable investment for a rational investor.

W. B. Worthen Co. v. Kavanaugh, supra, 295 U.S. at 60 (italics added).

In East New York Savings Bank v. Hahn, 326 U.S. 230 (1945), the Supreme Court in upholding the tenth extension of a state mortgage foreclosure moratorium reached what the Melendez Court called the "high-water mark" in the contraction of Contracts Clause protection (see, id., 16 F.4th at 1025), but nevertheless reaffirmed the continuing validity of W. B. Worthen Co. v. Kavanaugh, supra:

Unlike [ Worthen ], here there was no "studied indifference to the interests of the mortgagee or to his appropriate protection." Here the Legislature was not even acting merely upon the pooled general knowledge of its members. The whole course of the New York moratorium legislation shows the empiric process of legislation at its fairest: frequent reconsideration, intensive study of the consequences of what has been done, readjustment to changing conditions, and safeguarding the future on the basis of responsible forecasts. The New York Legislature was advised by those having special responsibility to inform it that "the sudden termination of the legislation which has dammed up normal liquidation of these mortgages for more than eight years might well result in an emergency more acute than that which the original legislation was designed to alleviate." New York Legislative Document (1942) No. 45, p.25.

East New York Savings Bank v. Hahn, supra, 326 U.S. at 234-235.

Later, in U.S. Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977) and Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978), the Supreme Court reaffirmed that the Contracts Clause affords constitutional protection for both public contracts (U.S. Trust Co., 431 U.S. at 21-22, 52-53) and private contracts (Allied Structural Steel, 438 U.S. at 242-244, 250) in accordance with the principles articulated in Blaisdell and Worthen. In Allied Structural Steel, the Court wrote:

[A]lthough the absolute language of the [Contracts] Clause must leave room for "the 'essential attributes of sovereign power," necessarily reserved by the States to safeguard the welfare of their citizens," [cit.om.], that power has limits when its exercise effects substantial modifications of private contracts. Despite the customary deference courts give to state laws directed to social and economic problems, "[l]egislation adjusting the rights and responsibilities of contracting parties must be upon reasonable conditions and of a character appropriate to the public purpose justifying its adoption."

Id., 438 U.S. at 244. It accordingly held violative of the Contracts Clause a Minnesota law that "did not effect simply a temporary alteration of the contractual relationships of those within its coverage, but worked a severe, permanent and immediate change in those relationships - irrevocably and retroactively." See id., at 250.

FAPA, if retroactively applied, would likewise work an unconstitutional impairment of mortgagees' contractual rights. Applying Blaisdell analysis: Assuming arguendo that abuse by mortgage lenders of the foreclosure process furnished a proper occasion for the exercise of the State's police power to protect the vital interests of the community (Factor 1) and that FAPA protects a basic interest of society in the due application of the statute of limitations (Factor 2), the Contracts Clause nevertheless forbids the State from pursuing its ends by adopting as its policy "the destruction of contracts or the denial of means to enforce them." However, that is precisely what FAPA (if retroactively applied) would do: by effectuating a sea change in the law regarding a lender's right to revoke a prior acceleration of mortgage debt and the effect of such revocation upon the operation of the statute of limitations, FAPA would erect a limitations barrier depriving lenders of a means to enforce contractual claims that were valid and timely under the law in force when they were interposed, thereby working a severe, permanent and irrevocable destruction of contractual rights. Such drastic relief cannot be deemed "appropriate" to the circumstances that occasioned FAPA's enactment (Factor 3), it was certainly not granted "upon reasonable conditions" (Factor 4), neither is it "temporary in operation" (Factor 5).

Moreover, per Worthen, FAPA (again, if retroactively applied) would utterly destroy the security of a mortgage with "studied indifference" to the interests of mortgagees and their appropriate protection. Concern for the interests of both mortgagors and mortgagees is a hallmark of the Supreme Court's Contract Clause jurisprudence, as witness both Blaisdell and Worthen. Yet here, the Legislature took no account of the fact that mortgage lenders - reasonably relying on the protections afforded by existing law - routinely incur substantial expenses to protect their liens by paying real estate taxes and insurance costs for defaulting homeowners who continue to reside "rent free" in their homes for years (in this case, since 2010) while the foreclosure process plays out. Indeed, it is noteworthy that FAPA was passed without any legislative hearings; there was nothing resembling the "empiric process of legislation" that justified the mortgage moratorium upheld in East New York Savings Bank v. Hahn, supra.

As Worthen teaches, invocation of the "public welfare" would not excuse such wanton destruction of the security of a mortgage without moderation or reason as retroactive application of FAPA would entail. Here, the parties, both lender and borrower, mutually agreed to discontinue the 2009 foreclosure action and reinstate the borrowers' right to pay the mortgage in installments. Under prevailing law at the time, the agreement was effective to revoke the lender's election to accelerate and "deaccrue" its claim to recover the entire mortgage debt. Insofar GOL §17-105 as amended by FAPA would invalidate the agreement and, after the fact, erect a statute of limitations bar to the foreclosure action now before the Court, the statute's retroactive application would effect an unconstitutional impairment of the obligation of contracts in violation of Article I, §10 of the U.S. Constitution.

VI. U.S. BANK'S 2022 INVOCATION OF THE CPLR §205-a SIX-MONTH "SAVINGS PROVISION"

A. The Chronology

Inasmuch as the Repayment Plan agreement and consequent discontinuance of the 2009 foreclosure action was effective to revoke the acceleration of the mortgage debt, the statute of limitations was no longer running on a claim to recover the entire mortgage debt. Instead, the six-year limitations period was running from the Defendants' January 15, 2010 default on individual monthly installment payments due under the Mortgage. The third foreclosure action was thus timely commenced by U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust on December 9, 2015, within six years of the January 15, 2010 default date.

By Order dated November 29, 2018, U.S. Bank was substituted as party Plaintiff in the 2015 foreclosure action. The action was thereafter dismissed on February 27, 2020 for the Plaintiff's failure to appear at a court conference. As that dismissal did not result in a revocation of the lender's election to accelerate the mortgage debt, the limitations period continued to run on the entire mortgage debt. Under the "savings provision" of CPLR §205-a, U.S. Bank was in effect afforded a sixmonth extension of the statute of limitations ("SOL") to recommence its action to foreclose the Mortgage and effectuate service of process. What happened was as follows:

• The SOL ran for a period of 22 days until March 20, 2020, when U.S. Bank was prohibited from filing a new action by virtue of Executive Order 202.8 and subsequent Covid-related Executive Orders.

• On account of the Covid-related Executive Orders, the running of the limitations period was suspended for a period of 228 days from March 20, 2020 through November 3, 2020. See, Bank of New York Mellon v. DeMatteis, 2023 WL 6853818 at *4 (2d Dept., Oct. 18, 2023); Brash v. Richards, 195 A.D.3d 582 (2d Dept. 2021).

• The SOL then continued running for a period of 104 days from November 4, 2020 until February 15, 2021, when Defendant Speller signed a Covid-19 Hardship Declaration.

• The effect of this Hardship Declaration, pursuant to the Covid-19 Emergency Eviction & Foreclosure Prevention Act of 2020, was to prevent the initiation of foreclosure proceedings until the expiration of the Act on January 15, 2022. CPLR §204(a) provides that "where the commencement of an action has been stayed by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced." On that account the SOL was thereby tolled for an additional period of 333 days from February 15, 2021 to January 15, 2022.

• The limitations period then continued to run for another 11 days until U.S. Bank's commencement of the present action on January 26, 2022.

• Defendant Ellen Fitzsimmons was personally served on February 1, 2022. Defendant Michael Speller was served pursuant to CPLR §308(2) on February 1, 2022, and service was complete on February 13, 2022. Hence, another 18 days elapsed until service of process was effectuated and completed on the Defendants.

Thus, excluding periods when the running of the SOL was suspended, no more than 155 days elapsed from the dismissal of the 2015 foreclosure action to the filing of, and completion of service on, the 2022 foreclosure action - well within the six months "savings provision" of CPLR §205(a) (and, for that matter, of CPLR §205-a(a), the amended FAPA savings provision).

B. The Evolution of CPLR §205-a

1. Section 205(a) Before the 2008 Amendment

The CPLR §205(a) "savings provision" in effect prior to July 7, 2008 provided in pertinent part as follows:

If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period.

The courts' interpretation of" dismissal of the complaint for neglect to prosecute the action" for purposes of Section 205(a) was summarized by the Second Department in Marrero v. Crystal Nails, 114 A.D.3d 101 (2d Dept. 2013):

[T]he Court of Appeals has expressly held that "dismissal of an action for failure to comply with discovery orders is a dismissal 'for neglect to prosecute the action' within the meaning of CPLR 205(a)" (Andrea v. Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, PC [Habiterra Assoc.], 5 N.Y.3d 514, 518 [2005]. The plaintiffs emphasize that in the order entered November 14, 2007, which dismissed the prior action, the Supreme Court stated that its dismissal was pursuant to 22 NYCRR 202.27 The plaintiffs maintain that a dismissal for failure to appear at a conference pursuant to 22 NYCRR 202.27(b) is not tantamount to a dismissal for neglect to prosecute, and, accordingly, the neglect-to-prosecute exception to the savings provision of CPLR 205(a) does not apply here. In Andrea, however, the Court of Appeals explained that a plaintiff may be precluded from invoking CPLR 205(a) "whenever neglect to prosecute is in fact the basis for dismissal" (Andrea, 5 N.Y.3d at 520 [emphasis added]). Accordingly, the dismissal of an action pursuant to 22 NYCRR 202.27(b) may, under appropriate circumstances, constitute a dismissal for neglect to prosecute (see generally Community Network Serv., Inc. v. Verizon NY, Inc., 48 A.D.3d 249, 250[2008]; Perez v. New York City Hous. Auth., 47 A.D.3d 505, 505-506 [2008]; Morris v. Start, 268 A.D.2d 787, 788 [2000]; cf. Burns v. Pace Univ., 25 A.D.3d 334, 335 [2006] [the dismissal of an action that is expressly premised only on a one-time failure to appear at a conference, without more, may not be characterized as a dismissal for neglect to prosecute, even if the record might reveal that the plaintiff engaged in additional conduct that could be characterized as neglect to prosecute]).

Marrero v. Crystal Nails, supra, 114 A.D.3d at 109-110.

Thus, prior to the amendment of CPLR §205(a) in 2008, the dismissal of an action pursuant to 22 NYCRR 202.27 for a one-time failure to appear at a conference could constitute a dismissal for neglect to prosecute and bar the plaintiff from invoking the "savings provision" to recommence the action.

2. The 2008 Amendment to CPLR §205(a)

Effective July 7, 2008, the Legislature amended Section 205(a) by adding the following language:

Where a dismissal is one for neglect to prosecute the action made pursuant to Rule 3216 of this chapter or otherwise, the judge shall set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation.

The Legislative Memoranda in Support of Legislation stated that this amendment "[e]stablishes a requirement that when a dismissal is one for neglect to prosecute an action the judge must set forth on the record the specific conduct constituting the neglect. The conduct specified must demonstrate a general pattern of delay in proceeding with the action before a neglect to prosecute dismissal is warranted." The Committee on Civil Practice Law and Rules (Hon. Stephen Crane, Chair) observed that the amendment "seeks to alter the substantive law regarding dismissal for want of prosecution" and that it appeared to overturn the Court of Appeals' holding in Andrea v. Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, PC, supra. However, in justification of the Bill, the Legislature stated:

This bill sets forth a resolution to a persistent problem within our courts regarding dismissal for neglect to prosecute the action. The intent of CPLR §205(a) has been misconstrued allowing for many cases to be dismissed on the basis of neglect to prosecute. The law is presently unclear with respect to what specifically constitutes a neglect to prosecute particularly where it falls outside Rule 3216. Amending CPLR §205(a) to provide uniformity would reestablish the original legislative intent of this chapter.

See, New York Bill Jacket, 2008 A.B. 750, Ch. 156.

New York courts duly gave effect to both prongs of the 2008 amendment. In Sokoloff v. Schor, 176 A.D.3d 120 (2d Dept. 2019), the Second Department squarely held that in the absence of an explanation in the order of dismissal itself describing the plaintiff's pattern of delay, the plaintiff is free to avail himself of the savings provision of CPLR §205(a). See, id., 176 A.D.3d at 133. Furthermore, the cases made clear that a dismissal pursuant to 22 NYCRR 202.27 due to the plaintiff's failure to appear at a conference does not constitute dismissal for neglect to prosecute within the meaning of Section 205(a). See, e.g., Wells Fargo Bank, N.A. v. Eitani, 148 A.D.3d 193, 198 (2d Dept.), appeal dismissed 29 N.Y.3d 1023 (2017); Bank of New York Mellon v. Slavin, 156 A.D.3d 1073, 1074 (3d Dept. 2017).

That was the state of the law in 2022 when U.S. Bank recommenced its foreclosure action in reliance on CPLR §205(a). U.S. Bank validly invoked Section 205(a) and timely commenced the present action within the statute's six-month savings provision.

3. FAPA: Newly Enacted CPLR §205-a

Effective December 31, 2022, the Legislature, without altering the substantive requirements of existing CPLR §205(a), enacted via FAPA a new version of the "savings provision" applicable only to mortgage foreclosure actions. Newly enacted CPLR §205-a(a) provides in pertinent part:

If an action upon [a note and mortgage] is timely commenced and is terminated in any manner other than a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for any form of neglect, including but not limited to those specified in subdivision three of Section 3126, Section 3215, Rule 3216 and Rule 3404 of this chapter, for violation of any court rules or individual part rules, for failure to comply with any court scheduling orders, or by default due to non-appearance for conference or at a calendar call, or by failure to timely submit any order or judgment, or upon a final judgment upon the merits, the original plaintiff may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months following the termination, provided that the new action would have been timely commenced within the applicable limitations period prescribed by law at the time of the commencement of the prior action and that service upon the original defendant is completed within such six-month period. For purposes of this subdivision:

1. a successor in interest or an assignee of the original plaintiff shall not be permitted to commence the new action, unless pleading and proving that such assignee is acting on behalf of the original plaintiff; and

2. in no event shall the original plaintiff receive more than one six-month extension.

The Senate Sponsor's Memorandum identifies and discusses in detail four (4) specific remedial elements incorporated in newly enacted CPLR §205-a. Three of the four have no bearing on the present case:

• Only the original plaintiff (or party acting on its behalf), and not that plaintiff's assignee or successor-in-interest, may benefit from the six-month savings provision. Inasmuch as U.S. Bank was by court order dated November 29, 2018 substituted as party plaintiff in the 2015 foreclosure action, it is the original Plaintiff.

• The benefit of the six-month savings provision applies only as against the original defendant. Defendants Michael Speller and Ellen Fitzsimmons are the original Defendants.

• The original plaintiff may receive no more than one six-month extension. U.S Bank's invocation of the CPLR §205(a) "savings provision" in connection with the commencement of the present action is the one and only six-month extension in the history of these proceedings.

The fourth element is squarely at issue here: newly enacted CPLR §205-a makes the six-month extension afforded the lender to recommence a foreclosure action following dismissal unavailable where the prior action was dismissed for any form of neglect or violation of court rules, including a "default due to non-appearance for conference"; and it deletes the statutory requirement that the judge specify in the order of dismissal conduct constituting "a general pattern of delay in proceeding with the litigation."

According to the Senate Sponsor, FAPA "clarifies" the pre-existing CPLR §205(a) by specifying that a dismissal "for any form of neglect" constitutes an exception to the "savings provision", and that "it is the dismissal based on the fact of neglect, itself, not the extent to which the court detailed the conduct constituting such neglect, that is determinative." See, New York State Senate Introducer's Memorandum in Support, S5473D. Quite plainly, FAPA did no such thing because it left existing Section 205(a) wholly intact and applicable to all cases except mortgage foreclosures. As the Assembly Memorandum frankly acknowledged, FAPA" creates a new 'savings' statute expressly for mortgage foreclosure cases " (see, New York State Assembly Memorandum in Support of Legislation, A7737B) by eliminating the signal requirements of the 2008 legislation that a plaintiff's conduct, as set forth in the order of dismissal, must demonstrate a general pattern of delay in proceeding with the action before it may be deemed a "neglect to prosecute" disabling the plaintiff from availing itself of the benefit of the statute of limitations "savings provision."

Application here of newly enacted CPLR §205-a(a) would render untimely an action that was timely commenced under the law prevailing at the time of commencement.

C. Newly Enacted CPLR §205-a(a) Impairs U.S. Bank's Substantial Rights

"CPLR 205(a) is a tolling provision governing the operation of the statute of limitations in recommenced actions." McKinney's Cons. Laws of New York, Practice Commentaries (Alexander) C205:5, p. 274 (2023). In Morris Investors, Inc. v. Commissioner of Finance of City of New York, 69 N.Y.2d 933 (1987), the Court of Appeals recognized that "CPLR 205(a), a remedial provision protecting the right of litigants who have given timely notice of the assertion of their claims, 'has its roots in the distant past' (Gaines v. City of New York, 215 NY 533, 537)." Id., 69 N.Y.2d at 935. In Gaines, Judge Cardozo traced Section 205(a)'s predecessor statute back to the English Limitation Act of 1623 (21 Jac. I, c. 16, §4), which was incorporated into New York law by statutes enacted in 1788 (L. 1788, c. 43) and 1801 (1 R.L. p. 186, §5), whence it passed into the Revised Statutes (2 R.S. p. 298, §33), was carried forward into the Code of Procedure (Section 84), amended in 1863 (L. 1863, c. 392) and codified in Section 405 of the Code of Civil Procedure. See, Gaines v. City of New York, supra, 215 NY 533 (1915). CPLR §205(a) was derived from the Code of Civil Procedure, 1876, §405. See, McKinney's Cons. Laws of New York, CPLR §205, Historical and Statutory Notes (2003).

"[T]he function of [CPLR 205(a)] is to ameliorate the potentially harsh effect of the Statute of Limitations in certain cases in which at least one of the fundamental purposes of the Statute of Limitations has in fact been served, and the defendant has been given timely notice of the claim being asserted by or on behalf of the injured party 'The important consideration is that by invoking judicial aid, a litigant gives timely notice to his adversary of a present purpose to maintain his rights before the courts' (Gaines v. City of New York, 215 NY 533, 539)." George v. Mt. Sinai Hospital, 47 N.Y.2d 170, 177-178 (1979). As the Second Circuit stated in Hakala v. Deutsche Bank AG, 343 F.3d 111 (2d Cir. 2003):

The purpose of §205(a) is to avert unintended and capricious unfairness by providing that if the first complaint was timely but was dismissed for such curable reasons, the suit may be reinstituted within six months of the dismissal. Given its remedial importance in guarding against capricious, unfair deprivation of a valuable claim, the Court of Appeals has cautioned that §205(a)'s "broad remedial purpose is not be frittered away by any narrow construction." Morris Investors, Inc. v. Comm'r of Finance, 69 N.Y.2d 933, 935 (1987).

Hakala v. Deutsche Bank AG, supra, 343 F.3d at 115 (emphasis added).

In sum, CPLR §205(a) codifies an injured party's venerable longstanding right not to be deprived of a valuable claim by a capricious, unfair application of the statute of limitations. Retroactive application of the newly enacted CPLR §205-a(a) to U.S. Bank's 2022 mortgage foreclosure action would plainly impair U.S. Bank's substantive rights by rendering untimely a cause of action that was timely commenced under the law prevailing when U.S. Bank acted.

In Gilbert v. Ackerman, 159 NY 118 (1899), the Court of Appeals held:

There is no question as to the power of the legislature to pass or to shorten statutes of limitation. A party has no more a vested interest in the time for the commencement of an action than he has in the form of the action. The only restriction upon the legislature in the enactment of statutes of limitation is that a reasonable time be allowed for suits upon causes of action theretofore existing. Rexford v. Knight, 11 NY 308; People v. Turner, 117 NY 227 The question of reasonableness, naturally and primarily, is with the legislature; and when the question is brought before the court the surrounding circumstances are regarded in determining whether the legislature, in prescribing a period of limitation, has erred to the prejudice of substantial rights. The right possessed by a person of enforcing his claim against another is property; and if a statute of limitations, acting upon that right, deprives the claimant of a reasonable time within which suit may be brought, it violates the constitutional provision that no person shall be deprived of property without due process of law.

Gilbert, supra, 159 NY at 124 (emphasis added). See, Merz v. Seaman, 265 A.D.2d 385, 388-389 (2d Dept. 1999) (statute effective "immediately" "cannot be applied retroactively to dismiss an action that was viable at the time it was filed. Such a result would impair vested rights and violate due process"); Ruffolo v. Garbarini & Scher, P.C., 239 A.D.2d 8, 12 (1st Dept. 1998) (same); Alston v. Transport Workers Union of Greater New York, 225 A.D.2d 424, 425 (1st Dept. 1996) (same, citing Gilbert, supra). See also, People v. Cohen, 245 NY 419, 421-422 (1927) ("statute of limitations intended as a retrospective law must give a person reasonable time to enforce a remedy available to him before the bar of the statute will apply"); Halsted v. Silberstein, 196 NY 1, 15 (1909) (same); Parmenter v. State of New York, 135 NY 154 (1892); Reid v. Board of Albany County Supervisors, 128 NY 364 (1891).

D. Did the Legislature Intend That CPLR §205-a(a) Be Retroactively Applied?

The discussion in Point V(D) above of the law pertaining to retroactive application of newly enacted legislation is incorporated by reference herein.

The threshold issue is whether CPLR §205-a(a) has "retroactive effect."

In determining whether legislation has retroactive effect, "'the court must ask whether the new provision attaches new legal consequences to events completed before its enactment'" (American Economy Ins. Co. v. State of New York, 30 N.Y.3d 136, 147 [2017]). "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" ([ Regina ], 35 N.Y.3d at 365; see Landgraf v. USI Film Prods., 511 U.S. 244, 278-280 [1994]).Where legislation, "if applied to past conduct, would impact substantive rights and have retroactive effect, the presumption against retroactivity is triggered" (id. at 370).

See, Ruth v. Elderwood at Amherst, supra, 209 A.D.3d at 1284-86. For the reasons shown in Point VI(C) above, retroactive application of the newly enacted CPLR §205-a(a) to U.S. Bank's 2022 mortgage foreclosure action would plainly impair U.S. Bank's substantive rights by rendering untimely a cause of action that was timely commenced under the law prevailing when U.S. Bank acted. There is, accordingly, a presumption against retroactivity. See, Regina Metropolitan Co., LLC v. NYS Div. of Housing and Community Renewal, supra; Ruth v. Elderwood at Amherst, supra.

The concerns underlying the presumption against retroactivity are powerfully implicated by the Legislature's treatment in FAPA of the statutory "savings provision."

When the presumption is triggered, "a statute is presumed to apply only prospectively" (id.). "This 'deeply rooted' presumption against retroactivity is based on '[e]lementary considerations of fairness [that] dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly'" (id.). "[C]areful consideration of retroactive statutes is warranted because '[t]he [l]egislature's unmatched powers allow it to sweep away settled expectations suddenly and without individualized consideration' and '[i]ts responsivity to political pressures poses a risk that it may be tempted to use retroactive legislation as a means of retribution against unpopular groups or individuals'" (id.).

Ruth v. Elderwood at Amherst, supra. To put the matter bluntly, newly enacted Section 205-a(a) applies only to mortgage foreclosure cases; existing Section 205(a) continues to apply in all other cases; consequently, only in the case of mortgage lender, and in that of no other injured plaintiff, is a dismissal resulting from the failure to appear at a single scheduled court conference deemed a "neglect to prosecute" causing a forfeiture of the benefit of the statutory "savings provision. There is no conceivable rational basis for that distinction: a single failure to appear evinces neglect to prosecute or it does not, but the answer does not vary according to the identity of the plaintiff. The specter that the Legislature bowed to political pressures and targeted mortgage lenders for retribution is palpable.

The question, then, becomes whether the Legislature expressed a clear intent to apply the legislation retroactively.

"It takes a clear expression of the legislative purpose to justify a retroactive application of a statute, which assures that [the legislative body] itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits' (id.); [cit.om.]. "The ultimate question, therefore, is one of statutory interpretation: whether the legislature has expressed a sufficiently clear intent to apply the [legislation] retroactively" ([ Regina ], 35 N.Y.3d at 370). "There is certainly no requirement that particular words be used - and, in some instances, retroactive intent can be discerned from the nature of the legislation" (id.). "But the expression of intent must be sufficient to show that the legislature contemplated the retroactive impact on substantive rights and intended that extraordinary result" (id. at 370-371).

Ruth v. Elderwood at Amherst, supra,

FAPA nowhere states that the law is to be applied "retroactively" and, construed in light of existing law, the directive in FAPA §10 that the law be applied immediately to pending actions cannot reasonably be taken to signify a legislative intent that elimination of Section 205(a)'s pre-existing procedural requirement that "the judge shall set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation" be retroactively enforced so as to destroy substantive rights already accrued.

"The procedure in an action is governed by the law regulating it at the time any question of procedure arises." Matter of Clayton v. Clement, 33 N.Y.2d 386, 390 (1974) (quoting Lazarus v. Metropolitan El. Ry. Co., 145 NY 581, 585 [1895]). Thus, where a matter is already pending, a legislatively mandated change in procedure is generally "applicable to the litigation in future steps and stages," but "inapplicable unless in exceptional conditions, where the effect is to reach backward, and nullify by relation the things already done." Simonson v. International Bank, 14 N.Y.2d 281, 289 (1964) (quoting Berkovitz v. Arbib & Houlberg, 230 NY 261, 270 [1921]). Courts are "not to presume a willingness that rights already accrued through actions lawfully initiated are to be divested or impaired." Berkovitz v. Arbib & Houlberg, supra, 230 NY at 273. Summarizing the law in Wade v. Byung Yang Kim, 250 A.D.2d 323 (2d Dept. 1998), the Second Department wrote:

Although "as a general rule, legislation must be construed as prospective only unless the language of the statute, expressly or by implication, requires retroactive application, there is an exception for remedial statutes, which are those intended to correct imperfections in prior law" (Matter of Hyson [Amer. Motors Sales Corp. - Chrysler Corp.], 164 A.D.2d 41, 48 [cit.om.]. "In such circumstances, the statute (or an amendment thereto) is construed to be retroactive and *** is deemed to apply to pending matters" (Auger v. State, [236 A.D.2d] at 179; [cit.om.]). However, procedural statutes "may not retroactively destroy rights already accrued" (McKinney's Consolidated Laws of NY, §55, supra, at 118). Accordingly, "when it is said that procedural statutes are generally retroactive, what is really meant is that they apply to pending proceedings, and even with respect to such proceedings, they only affect procedural steps taken after their enactment" (Charbonneau v. State of New York, 148 Misc. 891, 895, affd. 178 A.D.2d 815, affd. 81 N.Y.2d 721; see, McKinney's Consolidated Laws of NY, Book 1, Statutes §55, supra; Simonson v. International Bank, 14 N.Y.2d 281, 289-290).

Wade v. Byung Yang Kim, supra, 250 A.D.2d at 325 (emphasis added).

In view of the foregoing, this Court believes that FAPA §10 is insufficient to overcome the presumption against retroactive enforcement of procedural amendments so as to destroy rights already accrued under pre-existing procedural requirements. It is instructive in this regard to consider the Second Department's holding, in Marrero v. Crystal Nails, supra, that the 2008 amendment to CPLR §205(a) was not to be retroactively applied. The Court wrote:

The legislature did not explicitly state or clearly indicate, either in the amendment itself or in the materials contained in the bill jacket, that the 2008 amendment should apply retroactively. Accordingly, we presume at the outset that the amendment was to have prospective application.

According to the Senate Introducer's Memorandum in Support, the bill which resulted in the 2008 amendment "set[] forth a resolution to a persistent problem within our courts regarding dismissal for neglect to prosecute the action" [cit.om.]. That memorandum continued, "The intent of CPLR §205(a) has been misconstrued allowing for many cases to be dismissed on the basis of neglect to prosecute. The law is presently unclear with respect to what specifically constitutes a neglect to prosecute particularly where it falls outside Rule 3216" [cit.om.]. With respect to the justification for the bill, the memoran-dum concluded that "[a]mending CPLR §205(a) to provide uniformity would reestablish the original legislative intent of this chapter" [cit.om.].

Although the 2008 amendment certainly could be characterized as remedial in nature, and may be construed as correcting a certain unintended judicial interpretation, on the other hand, in addition to the presumption of prospective application, the legislature expressed no urgency whatsoever so as to support the case for retroactive applicability. Additionally, the amendment provided only that it was to "take effect immediately" [cit.om]; see McKinney's Cons Laws of NY, Book 1, Statutes §52, Comment at 102 ["an amendatory enactment will not be deemed retroactive unless, in exceptional cases, the Legislature so declares, and a provision in an amendatory statute that 'this act shall take effect immediately' has been held to exclude the idea that it should be retroactive" Taking into consideration all of the relevant factors, we conclude that the requirement added to CPLR 205(a) by the 2008 amendment is not to be applied retroactively, and thus has no applica-bility to this case.

Marrero v. Crystal Nails, supra, 114 A.D.3d at 112-113.

Comparing the 2008 amendment addressed in Marrero v. Crystal Nails to the FAPA amendment at issue here:

• In neither case did the Legislature state that the amendatory statute should be retroactively applied.

• In both cases the amendment was to "take effect immediately", which, per Marrero, excludes the idea that it should be retroactive.

• To be sure, the additional provision in FAPA that the amendments shall apply to all pending cases in which a final judgment of foreclosure and sale had not been enforced evinces an "urgency" above and beyond that inherent in the prescription that it "take effect immediately." However, as noted above, "where a matter is already pending, a legislatively mandated change in procedure is generally "applicable to the litigation in future steps and stages," but "inapplicable unless in exceptional conditions, where the effect is to reach backward, and nullify by relation the things already done." Simonson v. International Bank, 14 N.Y.2d 281, 289 (1964) (quoting Berkovitz v. Arbib & Houlberg, 230 NY 261, 270 [1921]).

• In both cases the amendment was designed to deal with what the Legislature regarded as a problem with judicial interpretation concerning what constitutes a dismissal for "neglect to prosecute." Although the 2008 amendment, per the Legislature, was intended to "reestablish the original legislative intent of this chapter" - a factor that would ordinarily militate in favor of retroactive application (see, Brothers v. Florence, supra, 95 N.Y.2d at 299) - the Marrero Court declined to apply the amendment retroactively to benefit the plaintiff. The case for retroactive application is much weaker here, where (1) as the Assembly Memorandum acknowledges, newly enacted CPLR §205-a(a)" creates a new 'savings' statute expressly for mortgage foreclosure cases" by eliminating the signal requirements of the 2008 legislation which had been designed to reestablish the original legislative intent, and (2) retroactive application would operate to deprive the plaintiff of substantive rights accrued under the pre-existing procedural requirements.

The Court accordingly finds that the Legislature did not intend the newly promulgated definition in CPLR §205-a(a) of what constitutes a dismissal for "neglect to prosecute" for the purpose of mortgage foreclosure cases only to be retroactively applied so as to deprive mortgage lenders of the benefit of the statutory "savings provision" acquired under CPLR §205(a). ⁵ However, assuming arguendo that FAPA was intended to be retroactively enforced despite manifest harm to lenders' substantive rights, the Court will go on to address the constitutionality of retroactive application in the circumstances presented here.

5 In U.S. Bank Nat'l Assn. v. Armand, supra, 2023 WL 7007285 (2d Dept., Oct. 25, 2023), the Second Department in dicta assumed that the newly promulgated definition in CPLR §205-a(a) of what constitutes a dismissal for "neglect to prosecute" is to be retroactively applied. See also, U.S. Bank Nat'l Assn. v. Fox, 216 A.D.3d 445 (1st Dept. 2023) (giving retroactive effect to CPLR §205-a[a]). Neither Armand nor Fox mentions the issue of "retroactivity" or conducts the analysis required by Regina Metropolitan Co., LLC v. NYS Div. of Housing and Community Renewal, supra, to determine whether the legislation is to be retroactively applied. (See, Point V[D] above). Neither do those decisions address the constitutionality of the statute's retroactive application.

E. Retroactive Application of CPLR §205-a(a) Would Violate U.S. Bank's Constitutional Right to Due Process of Law

[A]n unfair retroactive assessment of liability upsets settled expectations, and it thereby undermines a basic objective of law itself.

To find that the Due Process Clause protects against this kind of fundamental unfairness is to read the Clause in light of a basic purpose: the fair application of law, which purpose harkens back to the Magna Carta

Regina Metropolitan Co., LLC v. NYS Div. of Housing and Community Renewal, supra, 35 N.Y.3d at 388 (quoting Eastern Enterprises v. Apfel, 524 U.S. 498, 557 (1998) [Breyer, J., dissenting]). The Court of Appeals' decision in Regina supplies the analytical framework for assessing the constitutionality of retroactive legislation in light of the Due Process Clause. The Regina Court wrote:

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, 30 N.Y.3d at 157-158, citing General Motors Corp. v. Romein, 503 U.S. 181, 191 [1992]). Of course, 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 [cit.om.]. 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 retroactive application of the legislation is itself justified by a rational legislative purpose" (Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 730 [1984] [emphasis added]).

Because "[r]etroactive legislation presents problems of unfairness that are more serious than those posed by prospective legislation" (Romein, 503 U.S. at 191), "the justifi-cation for [prospective legislation] may not suffice for [the retroactive aspects]" (R.A. Gray & Co., 467 U.S. at 730). We have suggested that, in order to comport with due process, there must be a "persuasive reason" for the "potentially harsh" impacts of retroactivity (Holly S. Clarendon Trust v. State Tax. Comm., 43 N.Y.2d 933, 935 [1978]; [cit.om.].

. . .

In determining whether retroactive application of a statute is supported by a rational basis, the relationship between the length of a retroactivity period and its purpose is critical. Generally, there are two types of retroactive statutes that courts have found to be constitutional: those employing brief, defined periods that function in an administrative manner to assist in effectuating the legislation, and statutory retroactivity that - even if more substantial - is integral to the fundamental aim of the legislation.

Regina, supra, 35 N.Y.3d at 375, 376. However, the Regina Court noted that "there are limits on retroactive imposition of liability even when it is related to a rational statutory goal." Id., at 382. On the specific matter before it, the Court concluded:

The Legislature is entitled to impose new burdens and grant new rights in order to address societal issues and, in enacting the HSTPA, it sought to alleviate a pressing affordable housing shortage that it rationally deemed warranted action. But there is a critical distinction for purposes of due process analysis between prospective and retroactive legislation. As the Supreme Court has observed, retroactive legislation that reaches "particularly far" into the past and that imposes liability of a high magnitude relative to impacted parties' conduct raises "substantial questions of fairness" (Eastern Enters., 524 U.S. at 534 ). In the retroactivity context, a rational justification is one commensurate with the degree of disruption to settled, substantial rights and, in this instance, that standard has not been met.

Id., 35 N.Y.3d at 385-386 (emphasis added).

The United States Constitution and the New York State Constitution both provide that no person shall be deprived of property without due process of law. U.S. Const. Amend. XIV; NY Const. Art. I, §6. "The right possessed by a person of enforcing his claim against another is property" (Gilbert v. Ackerman, supra), and applying a statute effective "immediately" retroactively to dismiss an action that was viable at the time it was filed impairs vested rights and violates due process. See, id.; People v. Cohen, supra; Halsted v. Silberstein, supra; Parmenter v. State of New York, supra; Reid v. Board of Albany County Supervisors, supra; Merz v. Seaman, supra; Ruffolo v. Garbarini & Scher, P.C., supra; Alston v. Transport Workers Union of Greater New York, supra (collecting cases); Bloch v. Schwartz, supra. (See above, pp. 41-42)

Applying newly enacted CPLR §205-a(a) as Defendants would have the Court apply it here raises "substantial questions of fairness" in that it would reach back into the past to "impose[] liability of a high magnitude" - the complete loss of Plaintiff's vested right to enforce its claim on the note and mortgage - "relative to [its] conduct" - suffering a prior dismissal for the failure to appear at a single scheduled court conference which, under Section 205(a), the law prevailing at the time, quite clearly did not constitute a "neglect to prosecute" that would render it ineligible to invoke the statutory "savings provision." See, Eastern Enters. v. Apfel, supra, 524 U.S. at 534; Regina Metropolitan Co., LLC v. NYS Div. of Housing and Community Renewal, supra, 35 N.Y.3d at 385-386. So patently unfair an application of law could survive constitutional scrutiny, if at all, only upon a "rational justification commensurate with the degree of disruption to settled, substantial rights." See Regina, supra, at 386.

The Court perceives no such justification for retroactive application of CPLR §205-a(a).

In support of FAPA, the Legislature "found", without conducting any hearings or reviewing any evidence beyond a survey of caselaw the holdings of which the Legislature disapproves, that "there is an ongoing problem with abuses of the judicial foreclosure process exacerbated by court decisions which have given mortgage lenders and loan servicers opportunities to avoid strict compliance with remedial statutes and manipulate statutes of limitation to their advantage." To remedy that situation, the FAPA amendments would per the Legislature" ensure the laws of this state apply equally to all litigants, including those currently involved in mortgage foreclosure action, in order to ensure that parties purporting to sue on mortgage debt are bound by the same statues of limitations that bind all other litigants." See, New York State Senate Introducer's Memorandum in Support, S5473D; New York State Assembly Memorandum in Support of Legislation, A7737B (emphasis added).

However, U.S. Bank's invocation of the "savings provision" of CPLR §205(a) involved no "abuse" of the foreclosure process. U.S Bank, like all other similarly situated plaintiffs, was plainly entitled to that benefit under the 2008 amendment to Section 205(a). Indeed, it would qualify in all respects for that same benefit under FAPA except for Section 205-a(a)'s promulgation of an extraordinarily broad definition of what constitutes "neglect to prosecute" applicable only to mortgage lenders and to no other category of injured plaintiff. Ironically, then, retro-active application of CPLR §205-a(a) would not ensure "equal" application of the law to all litigants but instead subject U.S. Bank to harshly unequal treatment in derogation of its vested rights by causing dismissal of a claim that was viable under the law existing at the time this action was commenced.

The Court accordingly concludes that the retroactive application of CPLR §205-a(a) would violate U.S. Bank's constitutional right to due process of law.

VII. CONCLUSION

In view of the foregoing, the 2022 foreclosure action was timely commenced within the applicable statute of limitations. Consequently, Defendants' statute of limitations defense must be dismissed. The Court has considered the remaining issues raised by Defendants and finds them to be without merit.

It is therefore

ORDERED, that Plaintiff's motion for summary judgment is granted as to all issues except its standing to foreclose Defendants' Mortgage, and it is further

ORDERED, that a conference in this matter for the purpose of addressing any outstanding discovery issues relating to Plaintiff's standing and scheduling a bench trial on the said issue is scheduled for November ___, 2023 at ___ a.m. / p.m. in Courtroom 201 at the Putnam County Courthouse.

The foregoing constitutes the decision and order of the Court.