118 F.4th 488
2d Cir.2024Background
- East Fork Funding LLC purchased a condominium property in Queens, NY in 2016 after multiple foreclosure actions were commenced against the property’s original owners, Sean and Patricia Dros.
- Three foreclosure actions had been initiated on the property’s mortgage: in 2010 and 2011 (both voluntarily discontinued by the mortgagee), and a third in 2016 (leading to an amended judgment of foreclosure and sale in 2022).
- In 2020, East Fork filed a quiet title action seeking to discharge the mortgage, arguing the statute of limitations had expired or the mortgage's description did not match the property.
- While the quiet title action was pending, in December 2022, New York enacted the Foreclosure Abuse Prevention Act (FAPA), which bars voluntary discontinuance of foreclosure actions from resetting the statute of limitations.
- The district court granted summary judgment for East Fork, holding FAPA applied retroactively to the pre-enactment voluntary discontinuances and thus the statute of limitations expired.
- U.S. Bank appealed, leading the Second Circuit to certify to the New York Court of Appeals the question of whether FAPA’s provisions apply retroactively to voluntary dismissals that occurred before FAPA’s passage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FAPA apply retroactively to voluntary discontinuances before enactment? | Yes; statute and its history show intent. | No; statutory text and presumption against retroactivity. | Certified to NY Court of Appeals; unresolved. |
| Does retroactive application of FAPA violate constitutional protections? | No; retroactivity permissible and remedial. | Yes; violates Contracts, Takings, Due Process Clauses. | Not decided; depends on state-law question. |
| Did voluntary discontinuances under pre-FAPA law reset statute of limitations? | No, even pre-FAPA, resets did not occur. | Yes, valid discontinuances reset the clock per Engel. | Not reached; depends on certified issue. |
| Does prior state foreclosure judgment bar East Fork’s quiet title action? | No, due to alleged defects in judgment. | Yes, via res judicata against privies. | Not yet decided; noted for further review. |
Key Cases Cited
- Freedom Mortg. Corp. v. Engel, 37 N.Y.3d 1 (2021) (voluntary discontinuance of a foreclosure resets statute of limitations by deaccelerating the debt under pre-FAPA law)
- Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (sets out the framework for determining retroactivity of statutes)
- People ex rel. Spitzer v. Applied Card Sys., Inc., 11 N.Y.3d 105 (2008) (defines New York's res judicata principles)
- Allen v. McCurry, 449 U.S. 90 (1980) (federal courts must give state court judgments the same preclusive effect as state courts)