DLJ Mortgage Capital, Inc. v. Meyer Adler et al.
Attorneys and Parties
Brief Summary
Mortgage foreclosure statute of limitations after loan acceleration; retroactive application of the Foreclosure Abuse Prevention Act (FAPA).
The motion court granted plaintiff's summary judgment and denied 56 West's statute-of-limitations cross-motion; later, it denied defendants' motion for leave to renew based on FAPA.
The denial of renewal was reversed; upon renewal, plaintiff's summary judgment was denied and 56 West's cross-motion to dismiss as time-barred was granted; prior appeals from the summary judgment order were dismissed as academic.
FAPA applies retroactively and Civil Practice Law and Rules (CPLR) 3217(e) [provides that the voluntary discontinuance of an action on a note or mortgage shall not, in form or effect, waive, postpone, cancel, toll, extend, revive or reset the statute of limitations] means GMAC's 2011 discontinuance did not revoke the 2009 acceleration. With a six-year period running from 2009, the 2018 foreclosure was time-barred. Renewal was proper due to the intervening change in law, and constitutional challenges to FAPA are foreclosed by Article 13 LLC v Ponce De Leon Federal Bank.
Background
In 2005, Meyer Adler executed a note and mortgage on 56 West 126th Street, later deeding the property to 56 West 126 Holding, LLC. In 2009, GMAC Mortgage LLC filed a foreclosure action and expressly accelerated the debt, then voluntarily discontinued in 2011 without stating that acceleration was revoked. Adler filed a 2016 declaratory action to cancel the note; in 2018, DLJ Mortgage Capital, Inc., GMAC's successor, filed this foreclosure. In 2021, the First Department held in Adler v DLJ Mortgage Capital, Inc. that under Freedom Mtge. Corp. v Engel, the 2011 discontinuance revoked acceleration. While plaintiff's 2021 summary judgment motion and 56 West's cross-motion were sub judice, New York enacted FAPA on December 30, 2022. The motion court later granted plaintiff summary judgment (August 12, 2024). Defendants moved to renew based on FAPA; the court denied renewal (September 27, 2024).
Lower Court Decision
The Supreme Court (New York County) granted plaintiff's summary judgment and denied 56 West's cross-motion to dismiss as time-barred, relying on pre-FAPA law submitted by January 2022. It then denied defendants' motion for leave to renew their opposition based on FAPA, noting the statute-of-limitations argument had not been fully articulated in the original papers.
Appellate Division Reversal
The Appellate Division reversed, granted leave to renew, and upon renewal denied plaintiff's motion and granted 56 West's cross-motion to dismiss as time-barred. FAPA (L 2022, ch 821, § 10) [takes effect immediately and applies to all foreclosure actions in which a final judgment of foreclosure and sale has not been enforced] governs this pending action; under CPLR 3217(e) [voluntary discontinuance does not affect the statute of limitations], GMAC's 2011 discontinuance did not deaccelerate the 2009 acceleration, so the six-year limitations period expired in 2015. The court held renewal proper due to the intervening change in law and rejected plaintiff's retroactivity and constitutional arguments, citing Article 13 LLC v Ponce De Leon Federal Bank and related First and Second Department authorities. Appeals from the August 12, 2024 order were dismissed as academic, and the Clerk was directed to enter judgment accordingly.
Legal Significance
Confirms in the First Department that FAPA applies retroactively to pending foreclosure actions without an enforced final judgment, superseding Engel’s deacceleration-by-discontinuance rule. Voluntary discontinuance no longer resets or revokes loan acceleration for limitations purposes, and lenders cannot rely on pre-FAPA law to avoid time bars. Motions to renew are an appropriate vehicle to apply FAPA after submission of earlier motion practice. Constitutional challenges to FAPA (Contracts Clause, due process, takings, bill of attainder) are rejected.
In New York mortgage foreclosures, once a loan is accelerated, the six-year limitations clock runs and is not reset by voluntary discontinuance under CPLR 3217(e). FAPA applies retroactively, so lenders must file within six years of acceleration or face dismissal; defendants can obtain renewal to apply FAPA to pending cases.