Article 13 LLC v. Central Mortgage Company, 686 F.Supp.3d 212

Background

Plaintiff Article 13, LLC seeks cancellation of a consolidated mortgage on 53 Van Buren St., Brooklyn, under RPAPL Article 15, alleging the six‑year foreclosure statute of limitations has expired.
In 2007 Central Mortgage Company (CMC), the loan servicer, commenced a foreclosure in Kings County; CMC voluntarily discontinued that action in 2017.
Dispute: whether CMC had authority/standing to accelerate the mortgage by commencing the 2007 foreclosure (if not, Plaintiff argued the six‑year clock still ran and now expired).
On December 28, 2022, the court denied both parties’ summary judgment motions, finding a genuine fact dispute about whether CMC was the holder of the note when it filed the 2007 foreclosure.
New York enacted the Foreclosure Abuse Prevention Act (FAPA) on December 30, 2022, overruling Engel by providing that voluntary discontinuances do not revoke acceleration and estopping defendants from asserting lack of valid acceleration unless a prior action was dismissed upon a timely defense with an express judicial determination.
The court granted Plaintiff’s Rule 54(b) reconsideration motion, held the FAPA is an intervening change of law that applies retroactively, rejected the due‑process challenge, and granted summary judgment to Plaintiff (directing entry of judgment and certification to the NY AG under Fed. R. Civ. P. 5.1).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did the FAPA constitute an intervening change of controlling law warranting reconsideration?	FAPA was enacted after the court’s prior order and alters the legal effect of voluntary discontinuances, so it is intervening law.	FAPA is not an intervening change that should alter the prior summary‑judgment disposition.	Court: FAPA is an intervening change likely to alter the prior conclusion; reconsideration warranted.
Does FAPA bar LaSalle from contesting that the 2007 foreclosure accelerated the debt?	Yes — FAPA estops a defendant from asserting no valid acceleration unless prior action was dismissed on a timely defense with an express judicial determination.	No — LaSalle says CMC lacked authority, so the 2007 filing did not effect valid acceleration.	Court: LaSalle is estopped; because it did not timely interpose a defense in the 2007 action, it cannot now deny valid acceleration.
Does the FAPA apply retroactively to this pending case?	Yes — FAPA expressly applies to pending actions where final judgment and sale have not been enforced.	No — Retroactive application would be improper and violate due process.	Court: FAPA applies retroactively to this case (no final enforced judgment existed).
Does retroactive application of FAPA violate due process?	Plaintiff: Retroactive application is supported by legitimate legislative purpose and is constitutional.	LaSalle: Retroactive effect would impair vested rights and violate due process.	Court: No due‑process violation; legislature had rational purpose and FAPA is economic/regulatory legislation; constitutional challenge rejected (certified to NY AG per Rule 5.1).

Key Cases Cited

Freedom Mtge. Corp. v. Engel, 169 N.E.3d 912 (N.Y. 2021) (held a lender could revoke acceleration by voluntarily discontinuing a foreclosure absent a contemporaneous contrary statement)
Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984) (retroactive economic legislation receives a presumption of constitutionality)
United States v. Carlton, 512 U.S. 26 (1994) (retroactive statutes must be supported by a legitimate legislative purpose and rational means)
Shrader v. CSX Transp., Inc., 70 F.3d 255 (2d Cir. 1995) (standard for district court reconsideration in its equitable discretion)
Virgin Atl. Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245 (2d Cir. 1992) (grounds justifying reconsideration: intervening change of controlling law, new evidence, or clear error)
Deutsche Bank Nat’l Tr. Co. v. Dagrin, 190 N.Y.S.3d 582 (N.Y. Sup. Ct. 2023) (applied FAPA to find voluntary discontinuance does not reset six‑year limitations)
HSBC Bank USA v. IPA Asset Mgmt., LLC, 190 N.Y.S.3d 622 (N.Y. Sup. Ct. 2023) (concluded FAPA’s retroactive application did not violate due process)