234 A.D.3d 818
N.Y. App. Div.2025Background
- In 2010, JP Morgan Mortgage Acquisition Corp. commenced a foreclosure action to accelerate a mortgage debt; the action was voluntarily discontinued in 2012.
- In 2017, FV-1, Inc. (plaintiff, as assignee) filed a new foreclosure action against Gustavia Home, LLC (defendant) over the same mortgage.
- Gustavia moved to dismiss the complaint as time-barred due to the six-year statute of limitations, but initial motions were denied at the trial court level.
- Key appellate decisions followed the evolution in the law regarding whether voluntary discontinuance of an action constituted revocation of mortgage acceleration (notably influenced by the Freedom Mtge. Corp. v Engel decision and subsequent legislative changes).
- The Foreclosure Abuse Prevention Act (FAPA) was enacted in December 2022, specifically addressing whether discontinuance revives or extends the statute of limitations in mortgage foreclosure cases.
- Gustavia successfully renewed its motion under FAPA, leading the trial court to dismiss FV-1’s claims as time-barred; the Appellate Division affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Retroactive application of FAPA | FAPA should not apply retroactively | FAPA is remedial, intended to apply to pending cases | FAPA applies retroactively |
| Effect of voluntary discontinuance | Discontinuance revoked prior acceleration | Discontinuance does not reset statute under FAPA | Discontinuance does not reset limitations |
| Constitutionality under Due Process | Retroactivity violates due process rights | FAPA serves a legitimate and rational legislative purpose | Retroactive FAPA does not violate due process |
| Contract Clause challenge | FAPA violates Contract Clause | No contractual right to revoke acceleration exists | No Contract Clause violation |
Key Cases Cited
- Freedom Mtge. Corp. v. Engel, 37 NY3d 1 (voluntary discontinuance can revoke mortgage acceleration; later abrogated by FAPA)
- Lubonty v. U.S. Bank N.A., 34 NY3d 250 (six-year statute of limitations for foreclosure)
- Matter of Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, 35 NY3d 332 (legislative retroactivity and due process)
- Genovese v. Nationstar Mtge. LLC, 223 AD3d 37 (application and purpose of FAPA)