On May 20, 2025, the New York Court of Appeals, New York’s highest court, granted leave to appeal on behalf of Defendant-Appellant, U.S. Bank, National Association (“U.S. Bank”), in Van Dyke v. US Bank, Mo. No. 2025-226. The Court is set to review the February 18, 2025 Order of the Appellate Division First Department (“First Department”) affirming a lower court holding that retroactively applied the Foreclosure Abuse Prevention Act (L 2022, ch. 821, eff. Dec. 30, 2022) (“FAPA”). The First Department held that the retroactive application of FAPA barred Appellant’s foreclosure because U.S. Bank was estopped from arguing that the statute of limitations to foreclose had not expired despite a Court-Ordered Stipulation of Discontinuance discontinuing the prior 2009 foreclosure action explicitly acknowledging plaintiff’s inability to establish its standing. Further, the First Department held that the retroactive application of FAPA was constitutional and did not violate Appellant’s contractual or due process rights. The New York Court of Appeals will now directly opine these issues and resolve once and for all whether the retroactive application of FAPA is constitutional. J. Robbin Law represents U.S. Bank in this matter.
On the same day, May 20, the Court also accepted certification from the Second Circuit in Article 13 LLC v. Lasalle National Bank Association, No. 23-7247-cv (Kearse, Raggi, and Kahn, J. Mar. 25, 2025). Specifically, the Second Circuit sought the Court of Appeals review of whether: (1) FAPA applies retroactively; and (2) the retroactive application of FAPA violates the New York Constitution, N.Y. Const., art. I, § 6.
The facts of Van Dyke and Article 13 LLC are similar. In Van Dyke, the prior foreclosure action was voluntarily discontinued via stipulation that was so-ordered by the lower court, stating that the plaintiff failed to establish its standing. In Article 13 LLC, the prior foreclosure action was voluntarily discontinued via motion granted by the lower court. In both cases, the lower courts determined that the retroactive application of FAPA barred the current actions because the plaintiff was estopped from arguing that the prior foreclosure actions were invalid to accelerate the mortgage; i.e., that their predecessors did not validly accelerate. Van Dyke has the additional factual issue that, in the prior foreclosure, there was an express judicial determination in the manner of a so-ordered stipulation of discontinuance in which the parties and court averred that the reason for the discontinuance was because the plaintiffs in the prior foreclosure actions were unable to prove standing.
In Van Dyke, the Court of Appeals now must issue a ruling as to whether
- FAPA applies retroactively;
- If it does apply retroactively, whether applying FAPA retroactively to expunge the mortgage on the basis that the statute of limitations to foreclose the mortgage as time-barred is unconstitutional under the Contracts Clause of the U.S. Constitution;
- If it does apply retroactively, whether applying FAPA retroactively to expunge the mortgage on the basis that the statute of limitations to foreclose is an unconstitutional violation of the substantive and procedural due process rights under the U.S. Constitution.
Article 13 LLC narrows the issue as to whether FAPA, too, violates the right to substantive and procedural due process under New York Constitution, N.Y. Cons., art. I, § 6.
Lenders, mortgage servicers and other financial institutions should take note of these cases, as the Court of Appeals’ decisions will resolve whether, and to what extent, FAPA applies retroactively to foreclosure actions that were commenced before the statute’s enactment. At the very least, it will resolve the issues as it relates to a voluntary discontinuance. A decision in favor of Appellant would, in turn, result in a significant victory for lenders with defaulted loans.
For additional information or assistance, contact – Jonathan.Robbin@Jrobbinlaw.com