Second Department Joins in FAPA Row and Unifies the Appellate Division's Position that Retroactive Application of FAPA is Not Unconstitutional!

Christmas came early to distressed homeowners situated within not just New York's largest appellate judicial department, but the country's busiest by volume of cases heard!

Indeed, on Christmas Eve, the Second Judicial Department of New York's Supreme Court, which is comprised of the 10 downstate counties of Richmond, Kings, Queens, Nassau, Suffolk, Westchester, Dutchess, Orange, Rockland, and Putnam, finally joined its sister departments (First, Second, and Third) in the FAPA fray by issuing decisions & orders in the matters of Deutsche Bank Natl. Trust Co. v Dagrin (____ AD3d ____, 2024 NY Slip Op 06623 [2d Dept 2024]) and 97 Lyman Ave., LLC v MTGLQ Invs., L.P. (____ AD3d ____, 2024 NY Slip Op 06611 [2d Dept 2024]).

In Dagrin, a mortgage foreclosure action, the appellate court unanimously determined that retroactive application of FAPA, particularly § 8 (CPLR 3217[e]), to actions where a final judgment of foreclosure and sale has not been enforced, does not violate: (i) a noteholder's due process rights; (ii) the Contracts Clause of the US Constitution; (iii) the Takings Clause of the US Constitution; nor (iv) the Bill of Attainder Clause of the US Constitution.

Anent 97 Lyman Ave., LLC, a quiet title action to discharge a mortgage as time barred pursuant to RPAPL 1501 (4), the majority of the court (Maltese, J., dissenting), similarly concluded that retroactive application of FAPA, particularly § 8 (CPLR 3217[e]), to actions where a final judgment of foreclosure and sale has not been enforced, does not violate a noteholder's due process rights nor the Contracts Clause of the US Constitution (see id. at *3 ["Contrary to our dissenting colleague's position that MTGLQ or its predecessor in interest implicitly retained the right to revoke the acceleration, the explicit terms of the mortgage agreement did not grant MTGLQ or its predecessor in interest the right to revoke the acceleration of the mortgage"]).

As a result, the doctrine of stare decisis compels the trial courts situated within the First, Second, and Third Judicial Departments of the Appellate Division of New York's Supreme Court (collectively covering 40 of NY's 62 counties) to apply FAPA, retroactively, in all cases where a final judgment of foreclosure and sale has been enforced, i.e., where the mortgaged property has not been sold at auction pursuant to a judgment of foreclosure and sale (Wilmington Sav. Fund Socy., FSB v Thomas, 226 AD3d 1064, 1067 [2d Dept 2024] ["It is true that enforcement of a judgment of foreclosure and sale is generally deemed complete when the sale is concluded"]).