Motion for Summary Judgment in U.S. Bank Trust National Association, Not In Its Individual Capacity, But Solely As Trustee Of Lsf11 Master Participation Trust v. 215 19th Street, Llc, People Of The State Of New York, United States Of America Acting Through The Irs, John Doe| Trellis.Law

On September 09, 2021 a Motion-Secondary was filed involving a dispute between U.S. Bank Trust National Association, Not In Its Individual Capacity, But Solely As Trustee Of Lsf11 Master Participation Trust, and 215 19Th Street, Llc, John Doe, People Of The State Of New York, United States Of America Acting Through The Irs, for Real Property - Mortgage Foreclosure - Residential in the District Court of Kings County.

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FILED: KINGS COUNTY CLERK 06/16/2023 04:03 PM INDEX NO. 522945/2021
NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 06/16/2023

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS

U.S. BANK TRUST NATIONAL ASSOCIATION, Index No. 522945/2021
NOT IN ITS INDIVIDUAL CAPACITY, BUT
SOLELY AS TRUSTEE FOR LSF11 MASTER
PARTICIPATION TRUST,
Plaintiff,
-against-

215 19TH STREET, LLC; PEOPLE OF THE STATE OF
NEW YORK; UNITED STATES OF AMERICA
ACTING THROUGH THE IRS

JOHN DOE (Those unknown tenants, occupants, persons
or corporations or their heirs, distributees, executors,
administrators, trustees, guardians, assignees, creditors or
successors claiming an interest in the mortgaged
premises.),

Defendants.

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF’S
CROSS-MOTION TO STAY ACTION AND IN OPPOSITION TO DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT

Alfred W. J. Marks, Esq.
Joshua D. Katz, Esq.
DAY PITNEY LLP
605 Third Avenue
New York, NY 10158
Telephone: (212) 297-5800
Facsimile: (718) 764-4350
amarks@daypitney.com
jkatz@daypitney.com

Attorneys for Plaintiff U.S. Bank Trust, N.A.,
as Trustee for LSF11 Master Participation
Trust

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TABLE OF CONTENTS

Page(s)

INTRODUCTION .......................................................................................................................... 1
STATEMENT OF FACTS AND PROCEDURAL HISTORY...................................................... 2
I. Current Foreclosure Action..........................................................................................2
II. The Note, Mortgage, and Assignments ........................................................................3
III. Defendant’s Quiet Title Action ....................................................................................4
IV. Defendant Is Not The Record Owner Of The Mortgaged Premises ............................5
ARGUMENT .................................................................................................................................. 6
I. PLAINTIFF’S CROSS-MOTION FOR A STAY SHOULD BE GRANTED ...........6
II. DEFENDANT’S MSJ SHOULD BE DENIED ..........................................................7
A. Summary Judgment Standard .......................................................................... 7
B. This Action Should Not be Dismissed Based on the Default Judgment
and Discharge Orders ...................................................................................... 8
C. This Action Should Not be Dismissed Based on the Statute of
Limitations ....................................................................................................... 8
D. This Action Should Not be Dismissed Based on FAPA ............................... 10
1. FAPA Should Not Be Construed to Apply Retroactively .................... 10
2. Applying FAPA’s Effective Date Provision Retroactively
Would Violate U.S. Bank Trust’s Constitutional Rights ..................... 14
a.)
Applying FAPA Retroactively Constitutes A Taking Without
Just Compensation ........................................................................... 14
b.) Retroactive Application of FAPA Would Impair U.S. Bank
Trust’s Vested Rights to Litigate a Timely Action .......................... 17
c.) Applying FAPA Here Would Rewrite The Mortgage And,
Thus, Violate The Contract Clause .................................................. 18
CONCLUSION ............................................................................................................................. 19

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TABLE OF AUTHORITIES

Page(s)

Cases

Aguaiza v. Vantage Props., LLC,
69 A.D.3d 422 (1st Dep’t 2010) ..............................................................................................10

Am. Econ. Ins. Co. v. State,
30 N.Y.3d 136 (2017) ..............................................................................................................17

Armstrong v. United States,
364 U.S. 40 (1960) ...................................................................................................................15

Ass’n of Surrogates & Sup. Ct. Reps. v. State,
79 N.Y.2d 39 (1992) ................................................................................................................18

W.B. Worthen Co. ex rel. Bd. of Comm’rs of St. Improvement Dist. No. 513 v. Kavanaugh,
295 U.S. 56 (1935) .............................................................................................................15, 16

Belopolsky v. Renew Data Corp.,
41 A.D.3d 322 (1st Dep't 2007) .............................................................................................6, 7

Brothers v. Florence,
95 N.Y.2d 290 (2000) ..............................................................................................................18

Burch v Newbury,
10 N.Y. 374 (1852) ..................................................................................................................17

Bush N Stuy Corp. v. Bayview Loan Servicing, LLC,
215 A.D.3d 916 (2d Dep’t 2023) ...............................................................................................9

Chrysler Props. v. Morris,
23 N.Y.2d 515 (1969) ..............................................................................................................11

Deutsche Bank Nat’l Tr. Co. v. Feurtado,
No. 719810/2019, slip op. (N.Y. Sup. Ct. Queens Cnty. Mar. 31, 2023) ................................14

Dorfman v. Leidner,
76 N.Y.2d 956 (1990) ..............................................................................................................11

East Hampton Capital LLC v. Fergusson,
183 A.D.3d, 409 (1st Dep’t 2020) ...........................................................................................10

EMC Mortg. Corp. v. Patella,
279 A.D.2d 604 (2d Dep’t 2011) ...............................................................................................9

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Freedom Mortg. Corp. v. Engel,
37 N.Y.3d 1 (2021), reargument denied, 37 N.Y.3d 926 (2021) ..................................9, 16, 19

Holly S. Clarendon Tr. v. State Tax Comm’n,
43 N.Y.2d 933 (1978) ..............................................................................................................17

In re Hoops,
3 B.R. 635 (Bankr. D. Colo. 1980), aff’d, 642 F.2d 1193 (10th Cir. 1981),
aff’d, 459 U.S. 70 (1982) .........................................................................................................12

HSBC Bank USA, N.A. v. Besharat,
No. 500836/2021, 2023 WL 3555407 (N.Y. Sup. Ct. Putnam Cnty. May 19, 2023)..............13

Kuryak v. Adamczyk,
265 A.D.2d 796 (4th Dep’t 1999) ............................................................................................11

LeadingAge N.Y., Inc. v. Shah,
32 N.Y.3d 249 (2018) ..............................................................................................................13

Louisville Joint Stock Land Bank v. Radford,
295 U.S. 555 (1935) .....................................................................................................14, 15, 16

Lucas v. S.C. Coastal Council,
505 U.S. 1003 (1992) ...............................................................................................................16

Marrero v. Crystal Nails,
114 A.D.3d 101 (2d Dep’t 2013) .............................................................................................12

MTGLQ Invs., L.P. v. Gross,
No. 64020/2019, 2023 WL 2671011 (N.Y. Sup. Ct. Westchester Cnty. Mar. 16, 2023) ........13

Nestor I LLC v. Moriarty-Gentile, et al.,
No. 065328/2014, slip op. (N.Y. Sup. Ct. Suffolk Cnty. May 2, 2023) ..................................14

Newrez LLC v. Kalina,
No. 900386/2022, 2023 WL 2721698 (N.Y. Sup. Ct. Albany Cnty. Mar. 22, 2023)..............13

Overstock.com, Inc. v. N.Y. State Dep’t of Tax’n & Fin.,
20 N.Y.3d 586 (2013) ..............................................................................................................13

Penn Cent. Transp. Co. v. City of N.Y.,
438 U.S. 104 (1978) .................................................................................................................14

Phillips v. Hoffman,
No. 101277/2011, 2013 WL 6008849 (N.Y. Sup. Ct. N.Y. Cty. Nov. 12, 2013) .....................8

Regina Metro. Co., LLC v. N.Y. State Div. of Hous. & Cmty. Renewal,
35 N.Y.3d 332 (2020) ........................................................................................................11, 12

Simmons v. Trans Express, Inc.,
37 N.Y.3d 107 (2021) ..............................................................................................................10
iii

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United States v. Sec. Indus. Bank,
459 U.S. 70 (1982) .................................................................................................12, 13, 15, 17

Wade v. Kim,
250 A.D.2d 323 (2d Dep’t 1998) .............................................................................................11

Wells Fargo Bank, N.A. v. Meyers,
108 A.D.3d 9 (2d Dep’t 2013) .................................................................................................19

Winegrad v. N.Y. Univ. Med. Ctr.,
64 N.Y.2d 851 (1985) ................................................................................................................7

Zonghetti v. Jeromack,
150 A.D.2d 561 (2d Dep’t 1989) ...............................................................................................6

Statutes

11 U.S.C. § 522 ..............................................................................................................................12

L. 2022 ch. 821 § 10 ................................................................................................................10, 19

U.S. Const. amend V......................................................................................................................14

U.S. Const. Art. I, § 10, cl. 1..........................................................................................................18

Rules

CPLR 205.......................................................................................................................................10

CPLR 2201.......................................................................................................................................6

Other Authorities

Sponsor Memo, S5437D, L. 2022, ch. 821....................................................................................17

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INTRODUCTION

Plaintiff U.S. Bank Trust National Association, not in its individual capacity, but solely

as trustee for LSF11 Master Participation Trust (“Plaintiff” or “U.S. Bank Trust”) submits this

memorandum of law in support of its cross-motion to stay this action and in opposition to

Defendant 215 19th Street, LLC’s (“215 19th Street”) motion for summary judgment (“MSJ”).

Defendant’s MSJ relies heavily on default judgment and discharge orders from a quiet

title action in 2020 that extinguished the mortgage that is subject to this foreclosure action,

however, those orders were entered against the wrong party. That is because U.S. Bank Trust,

despite being the real party-in-interest, a necessary party, and holder of the subject note and

mortgage at the time the action was filed in 2019, was neither named in that Complaint nor

served with the Summons and Complaint. Instead, the court in that action entered default

judgment against Bank of America, which no longer had an interest in the note and mortgage.

The court entered default judgment also unaware that the U.S. District Court for the Eastern

District of New York, in another quiet title action from 2016, had granted summary judgment in

favor of Bank of America. On June 14, 2023, Plaintiff filed an Order to Show Cause seeking to

reopen, intervene, and vacate the default judgment and discharge orders in the 2019 quiet title

action (“Motion to Vacate”).

This case should be stayed because it would be a waste of judicial resources and risk

inconsistent decisions to proceed with summary judgment at this time. Further, a decision on the

pending Motion to Vacate in the 2019 quiet title action, which involves almost identical factual

and legal issues, will limit the issues in this action.

Defendant’s MSJ should also be denied for many of the same reasons. The default

judgment and discharge orders should not dictate the result of this action because they are being

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challenged, and the fact that there is an earlier determination from the Eastern District of New

York in favor of a prior holder of the note and mortgage indicates that this issue is rife with fact

issues. Defendant’s second argument, that the statute of limitations has expired on Plaintiff’s

ability to foreclose on the mortgage, is directly contradicted by the determination from the

Eastern District of New York establishing that the prior holder timely de-accelerated the subject

indebtedness. Finally, Defendant’s argument that Plaintiff’s claims should be barred by the

Foreclosure Abuse Prevent Act fails because the Act does not apply here.

For these reasons, this action should be stayed pending the outcome of U.S. Bank Trust’s

Motion to Vacate or, alternatively, Defendant’s MSJ should be denied.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

I. Current Foreclosure Action

On September 9, 2021, Plaintiff commenced this action to foreclose a mortgage (the

“Mortgage”) executed by Steven Greco (“Borrower”), with respect to real property located at

215 19th St., Brooklyn, NY 11232, Block 634, Lot 57 (the “Mortgaged Premises”). The

Mortgage secured a note (the “Note”) executed by Borrower in the amount of $970,000.00.

Affirmation of Alfred W.J. Marks in Support of Motion to Stay (“Marks Aff.”) ¶3, Ex. 1.

On October 18, 2021, Defendant filed a Verified Answer to the Complaint. Id. ¶12, Ex.

8. On April 7, 2023, Defendant filed the MSJ (Mot. Seq. #1) seeking dismissal of this action

based upon the allegations that the Mortgage has been judicially declared null and void, and the

instant action is barred by the statute of limitations and is precluded by the Foreclosure Abuse

Prevention Act. Id. ¶13 (NYSCEF Doc. Nos. 22-31). U.S. Bank Trust’s time to respond to the

MSJ has been extended on consent to June 16, 2023. Id. ¶14 (NYSCEF Doc. No. 35).

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II. The Note, Mortgage, and Assignments

On September 1, 2006, Borrower executed the Note in favor of Impac Funding

Corporation (“Impac”) in the amount of $970,000. Affidavit of Janet Gioello (“Gioello Aff.”),

¶8, Ex. B. The Note was secured by the Mortgage executed by Borrower on September 1, 2006,

in favor of Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for Impac,

which Mortgage was recorded with the Office of the City Register of the City of New York as

Document #2006000557356. Id., ¶9, Ex. C. On or about September 12, 2008, the Mortgage was

assigned by MERS as nominee for Impac to Indymac Federal Bank FSB (“Indymac”), which

assignment was recorded in the Office of the City Register of the City of New York on

September 24, 2008 at Document #2008000378068 (the “First Assignment”). Id., ¶10, Ex. D.

On or about March 30, 2011, the Mortgage was assigned by the Federal Deposit Insurance

Corporation, as receiver for Indymac to Bank of America, N.A., which assignment was recorded

in the Office of the City Register of the City of New York on April 12, 2011 at Document

#2011000132360 (the “Second Assignment”). Id. On or about February 3, 2018, the Mortgage

was assigned by Bank of America, N.A., by its attorney in fact Ocwen Loan Servicing, LLC

(“Ocwen”) to Bank of America, N.A., S/B/M Countrywide Bank, FSB, f/k/a Countrywide Bank,

N.A., f/k/a Treasury Bank, N.A. (“BOA”), which assignment was recorded in the Office of the

City Register of the City of New York on March 13, 2018 at Document #2018000086223 (the

“Third Assignment”). Id. On or about August 2, 2019, the Mortgage was assigned from BOA to

U.S. Bank Trust, through its attorney-in-fact, Caliber Home Loans, Inc. (“Caliber”), which

assignment was recorded in the Office of the City Register of the City of New York on August 9,

2019 at Document #2019000253403 (the “Fourth Assignment”). Id.

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III. Defendant’s Quiet Title Action

On or about October 19, 2018, Borrower transferred title to the Mortgaged Premises to

Defendant pursuant to a deed recorded in the Office of the City Register of the City of New York

on November 1, 2018 at Document #2018000364366. Id. ¶4, Ex. 2. On July 18, 2019,

Defendant commenced a quiet title action in this court under Index No. 515762/2019 against

BOA (the “Defendant’s Quiet Title Action”). Id. ¶5, Ex. 3. The Verified Complaint in

Defendant’s Quiet Title Action (1) sought a declaratory judgment that BOA was barred from

collecting upon the Note or foreclosing on the Mortgage, alleging that the statute of limitations

had expired, and (2) requested that the Mortgage be voided, canceled and discharged pursuant to

RPAPL 1501(4). Id. ¶6. Following BOA’s default in responding to the complaint, the Hon.

Richard J. Montelione, J.S.C., issued a Default Judgment Order entered on February 18, 2020

(the “Default Judgment Order”), and subsequently issued an Order entered on August 11, 2020

canceling and discharging of record the Mortgage (the “Discharge Order”). Id. ¶7, Ex. 4. BOA

was not the holder of the Note and Mortgage at the time Defendant commenced Defendant’s

Quiet Title Action. Id. ¶14. U.S. Bank Trust is the current holder of the Note and Mortgage and

it has been in possession of the Note since December 27, 2018. Id. ¶¶12, 14, Ex. E. Caliber, the

attorney-in-fact for U.S. Bank Trust at the time, sent a letter to Borrower dated January 14, 2019

notifying him that his loan had been sold to LSF11 Master Participation Trust. Id. ¶13, Ex. F.

Defendant’s Quiet Title Action was filed on July 18, 2019, almost seven months after U.S. Bank

Trust received possession of the Note and Mortgage. Despite being the real party-in-interest in

Defendant’s Quiet Title Action and the only party who had standing to enforce the Note and

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Mortgage, U.S. Bank Trust was not named or served with the Summons and Complaint and did

not receive notice of the action.1 Id. ¶14.

Moreover, it appears that Justice Montelione was not made aware that Borrower,

approximately four years before the court’s Default Judgment Order and Discharge Order,

commenced a quiet title action on the same grounds against Bank of America, N.A. in this court

under Index No. 504618/2016, which was removed to the United States District Court for the

Eastern District of New York on May 3, 2016 (the “Borrower’s Quiet Title Action”). Marks Aff.

¶9, Ex. 5. In a Memorandum and Order dated April 25, 2017, United States Magistrate Judge

Roanne L. Mann granted Bank of America, N.A.’s motion for summary judgment, which

dismissed Borrower’s Complaint to quiet title, and found that Borrower’s loan was timely de-

accelerated before the expiration of the six-year statute of limitations. Id. ¶10, Ex. 6.2

On June 15, 2023, Plaintiff filed the Motion to Vacate seeking, among other things, to

reopen, intervene, and vacate the Default Judgment and Discharge Orders and restore the

Mortgage to its original lien position against the Mortgaged Premises (the “Motion to Vacate”).

Id. ¶11, Ex. 7.

IV. Defendant Is Not The Record Owner Of The Mortgaged Premises

On or about February 23, 2023, Defendant transferred title to the Mortgaged Premises to

215 South Slope, LLC, which, contrary to the supporting affidavit of Jack LoCicero in support of

Defendant’s MSJ (see NYSCEF Doc. 24 at ¶5), is the record owner of the Mortgaged Premises

1
The assignment of the Mortgage to U.S. Bank Trust was recorded almost three weeks prior to Plaintiff’s service of
the Complaint on BOA. See Gioello Aff. ¶10, Ex. D.
2
As stated in the April 25, 2017 decision, on December 16, 2008, IndyMac Federal Bank FSB, one of the prior
holders of the Note and Mortgage, initiated a foreclosure action (the “2008 Foreclosure Action”) in this court against
Borrower. The 2008 Foreclosure Action was dismissed on December 3, 2013. See Marks Aff. ¶10, n. 1, Ex. 6 at 2.

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pursuant to a deed recorded in the Office of the City Register of the City of New York on March

6, 2023 at Document #2023000058044. Id. ¶15, Ex. 9.

ARGUMENT

I. PLAINTIFF’S CROSS-MOTION FOR A STAY SHOULD BE GRANTED

CPLR 2201 provides that “the court in which an action is pending may grant a stay of

proceedings in a proper case, upon such terms as may be just.” Where a related action is pending

elsewhere, the Court has “broad discretion to grant a stay in order to avoid the risk of

inconsistent adjudications, application of proof and potential waste of judicial resources.”

Zonghetti v. Jeromack, 150 A.D.2d 561, 563 (2d Dep’t 1989). Granting a stay furthers the goal

of judicial economy where there are “overlapping issues and common questions of law and fact

. . . and ‘the determination of the prior action may dispose of or limit issues which are involved

in the subsequent action.’” See Belopolsky v. Renew Data Corp., 41 A.D.3d 322, 322-23

(1st Dep’t 2007).

Plaintiff requests that the Court stay this action while U.S. Bank Trust seeks to vacate the

Default Judgment and Discharge Orders in Defendant’s 2019 Quiet Title Action. There is no

question that the Default Judgment and Discharge Orders extinguishing the Mortgage will

significantly impact Defendant’s MSJ. Plaintiff contends that such orders should be vacated

because, even though U.S. Bank Trust was the real party-in-interest at the time that Defendant’s

2019 Quiet Title Action was commenced, it was not named in the Complaint or served with the

Summons and Complaint. Gioello Aff. ¶14. U.S. Bank Trust never had an opportunity to set

forth its meritorious defenses, including the fact that approximately four years before the

Discharge Order was entered, the U.S. District Court for the Eastern District of New York

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decided on the merits that the statute of limitations had not expired on the time to commence a

foreclosure action.3

This is precisely the situation where a stay is necessary. In the event the court in

Defendant’s Quiet Title Action grants U.S. Bank Trust’s Motion to Vacate, that action and this

action will involve identical proofs. It would be a waste of judicial resources for both cases to

proceed simultaneously, as the facts and legal issues in Defendant’s Quiet Title Action overlap

with this action, and a decision in that action “may dispose of or limit issues” in this action.

See Belopolsky, 41 A.D.3d at 322-23. Further, this Court may not have to reconcile the fact that

there are already two inconsistent orders that bear on the MSJ.

Plaintiff respectfully requests that the Court stay further proceedings in this matter,

including Defendant’s MSJ, pending determination of U.S. Bank Trust’s Motion to Vacate in

Defendant’s Quiet Title Action and the disposition of any subsequent proceedings in that matter.

II. DEFENDANT’S MSJ SHOULD BE DENIED

Alternatively, in the event that the Court does not grant Plaintiff’s application to stay this

action, the Court should deny Defendant’s MSJ at this time.

A. Summary Judgment Standard.

The standards for summary judgment are well-settled. “The proponent of a summary

judgment motion must make a prima facie showing of entitlement to judgment as a matter of

law, tendering sufficient evidence to eliminate any material issues of fact from the case.”

Winegrad v. N.Y. Univ. Med. Ctr., 64 N.Y.2d 851, 853 (1985) (collecting authorities). Failure to

make such a showing requires denial of the motion, regardless of the sufficiency of the opposing

papers. Id. “When deciding a motion for summary judgment, the Court must view the evidence

3
Notably, Defendant’s MSJ does not even mention the existence of Borrower’s 2016 Quiet Title Action and order
from Judge Mann.

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in the light most favorable to the non-movant.” Phillips v. Hoffman, No. 101277/2011, 2013 WL

6008849, at *2 (N.Y. Sup. Ct. N.Y. Cty. Nov. 12, 2013).

B. This Action Should Not be Dismissed Based on the Default Judgment and
Discharge Orders.

Defendant’s MSJ rests in large measure on the existence of the Default Judgment and

Discharge Orders. As stated more fully in Section I, above, U.S. Bank Trust has filed a Motion

to Vacate seeking to vacate those orders. The legitimacy of the Default Judgment and Discharge

Orders is currently in doubt and presents an undeniable open issue of fact warranting denial of

Defendant’s MSJ on this basis alone. At the very least, the existence of a contrary order from the

Eastern District of New York in favor of U.S. Bank Trust’s position stating that the statute of

limitations has not expired on the time to commence a foreclosure action, presents another

substantial issue of fact as to the viability of the Default Judgment and Discharge Orders. The

issues surrounding those orders alone should provide ample basis for the Court to deny

Defendant’s motion.

C. This Action Should Not be Dismissed Based on the Statute of Limitations.

Defendant also contends that, notwithstanding the Default Judgment and Discharge

Orders, the statute of limitations has expired on U.S. Bank’s ability to foreclose on the Mortgage.

According to Defendant, the statute of limitations began running on December 16, 2008 when

the original holder of the Note and Mortgage commenced a foreclosure action against Borrower,

it continued running after the foreclosure action was dismissed on December 3, 2013, and the

statute of limitations expired on December 16, 2014. (See NYSCEF Doc. 23 at 5-6).

But Defendant’s motion conveniently omits any reference to Borrower’s Quiet Title

Action and U.S. Magistrate Judge Mann’s ruling in favor of the prior holder of the Note and

Mortgage. Indeed, as held by Magistrate Judge Mann, any alleged acceleration of Borrower’s

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indebtedness was properly and timely revoked by a de-acceleration letter sent within the

statutory limitations period. Marks Aff. ¶10, Ex. 6. Even if the commencement of the 2008

Foreclosure Action accelerated the subject indebtedness, the alleged acceleration was timely

revoked by an affirmative act taken within the statute of limitations, i.e., Bank of America,

N.A.’s mailing of a de-acceleration letter to Borrower on December 15, 2014. Gioello Aff. ¶15,

Ex. G.

“[O]nce a mortgage debt is accelerated, the entire amount is due and the Statute of

Limitations begins to run on the entire debt.” EMC Mortg. Corp. v. Patella, 279 A.D.2d 604,

605 (2d Dep’t 2011). Nonetheless, New York courts permit a mortgage lender to revoke its

election to accelerate all sums due “so long as the revocation is accomplished by an affirmative

act occurring within six years of the earlier acceleration.” Bush N Stuy Corp. v. Bayview Loan

Servicing, LLC, 215 A.D.3d 916, 918 (2d Dep’t 2023). Further, a “noteholder’s motivation for

exercising a contractual right is generally irrelevant” – thus a lender is not “barred from revoking

acceleration” even if “the motive of the revocation was to avoid the expiration of the statute of

limitations on the accelerated debt.” Freedom Mortg. Corp. v. Engel, 37 N.Y.3d 1, 36 (2021),

reargument denied, 37 N.Y.3d 926 (2021). A simple “statement by the lender that the

acceleration is being revoked,” without more, is sufficient to de-accelerate a note and mortgage.

Id. at 32.

Indeed, any alleged acceleration of Borrower’s indebtedness pursuant to the filing of the

2008 Foreclosure Action was revoked within the six-year statute of limitations. Prior to the

expiration of the statute of limitations, Ocwen, as servicer of the subject loan on behalf of Bank

of America, N.A., sent a de-acceleration letter to Borrower on December 15, 2014. Gioello Aff.

¶15, Ex. G. The de-acceleration letter expressly and unambiguously revoked the alleged prior

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acceleration of the loan: “[a]t this time, the lender hereby revokes it’s [sic] prior election to

accelerate all sums due and owing under the [September 1, 2006] loan documents.” Id.

Under these circumstances, as found by Magistrate Judge Mann in Borrower’s Quiet

Title Action, the mailing of the de-acceleration letter was an affirmative act occurring within the

applicable statute of limitations period that revoked the previous election to accelerate. See

Marks Aff. ¶10, Ex. 6. Defendant, as successor-in-interest to Borrower in the Property, is bound

that determination. East Hampton Capital LLC v. Fergusson, 183 A.D.3d, 409, 410 (1st Dep’t

2020). Therefore, Defendant’s allegations that the Mortgage should have been discharged are

erroneous, barred by res judicata, and contradicted by the documentary evidence.

D. This Action Should Not be Dismissed Based on FAPA.

Defendant’s final argument is that U.S. Bank Trust’s ability to foreclose on the Mortgage

is precluded by the Foreclosure Abuse Prevention Act (“FAPA”). However, FAPA should not

apply to this action.

1. FAPA Should Not Be Construed to Apply Retroactively

Section 10 of FAPA states that the new legislation will apply to all cases in which a

judgment of foreclosure and sale has not been enforced. This provision should be read to apply

in a prospective, not retroactive manner. Nothing in FAPA mandates it should be given

retroactive effect. In interpreting a statute, the first principle is to look to the plain meaning of

the words. E.g., Simmons v. Trans Express, Inc., 37 N.Y.3d 107, 112-13 (2021). FAPA’s

changes to CPLR 205(c) and CPLR 205-a use the verbs “shall” and “may,” and specifically state

that FAPA shall “take effect immediately.” Courts have repeatedly interpreted the “shall take

effect immediately” language in a statute to indicate the law has only a prospective effect. E.g.,

Aguaiza v. Vantage Props., LLC, 69 A.D.3d 422, 423 (1st Dep’t 2010) (“As a matter of statutory

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interpretation, where a statute by its terms directs that it is to take effect immediately, it does not

have any retroactive operation or effect.” (quotation marks and alteration marks omitted)).

Similarly, the use of the word “shall” also indicates prospective application of a statute. Kuryak

v. Adamczyk, 265 A.D.2d 796, 796 (4th Dep’t 1999). Applying this analysis to FAPA, the Court

should read the new subsections to mean future actions a plaintiff might take; they should not be

applied to past actions taken that pre-date FAPA’s enactment.

Giving only prospective effect to FAPA also follows from long-standing New York law

concerning the application of new statutes. In fact, “[s]tatutes are generally applied

prospectively in the absence of express or necessarily implied language allowing retroactive

effect.” Dorfman v. Leidner, 76 N.Y.2d 956, 959 (1990) (citing N.Y. Stat. Laws § 51(b)).

Retroactive legislation is viewed with “great suspicion.” Chrysler Props. v. Morris, 23 N.Y.2d

515, 521 (1969). “This ‘deeply rooted’ presumption against retroactivity is based on elementary

considerations of fairness that dictate that individuals should have an opportunity to know what

the law is and to conform their conduct accordingly.” Regina Metro. Co., LLC v. N.Y. State Div.

of Hous. & Cmty. Renewal, 35 N.Y.3d 332, 370 (2020) (quotation marks and alteration marks

omitted) (citing Landgraf v. USI Film Prods., 511 U.S. 244, 265 (1994)); see also Wade v. Kim,

250 A.D.2d 323, 325 (2d Dep’t 1998) (“[W]hen it is said that procedural statutes are generally

retroactive, what is really meant is that they apply to pending proceedings, and even with respect

to such proceedings, they only affect procedural steps taken after their enactment.” (quotation

marks omitted)).

In order for a statute to apply retroactively, the Legislature’s intent to have the statute so

construed must be unequivocal and express. The “expression of intent must be sufficient to

show that the legislature contemplated the retroactive impact on substantive rights and intended

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that extraordinary result.” Regina Metro., 35 N.Y.3d at 370-71. In analyzing the retroactivity of

a statute, the Court must search for this clear intent showing that the Legislature “has

affirmatively considered the potential unfairness of retroactive application and determined that it

is an acceptable price to pay for the countervailing benefits.” Id. at 370 (quotation marks

omitted).

Indeed, FAPA does not include any statement that it is intended to affect rights accrued

and exercised in the past. Consistent with this, the Second Department in Marrero v. Crystal

Nails, 114 A.D.3d 101, 111-13 (2d Dep’t 2013), held that a 2008 amendment to CPLR 205(a),

adding a requirement that the judge “set forth on the record the specific conduct constituting the

neglect,” did not retroactively apply to the dismissal of a previous action. While the amendment

was to “take immediate effect,” the “legislature did not explicitly state or clearly indicate, either

in the amendment itself or in the materials contained in the bill jacket, that the 2008 amendment

should apply retroactively.” Id. at 112.

This interpretation of FAPA is also consistent with how the U.S. Supreme Court

construed the Bankruptcy Code amendments in the 1970’s. One of the amendments, now

codified at 11 U.S.C. § 522(f)(2), allowed debtors to avoid liens on certain types of property

(e.g., property needed by the debtor to carry on a trade). United States v. Sec. Indus. Bank, 459

U.S. 70, 71 (1982). The Bankruptcy Reform Act, of which the lien avoidance provision was a

part, provided that it would go into effect on October 1, 1979. In re Hoops, 3 B.R. 635, 637

(Bankr. D. Colo. 1980), aff’d, 642 F.2d 1193 (10th Cir. 1981), aff’d, 459 U.S. 70 (1982). The

issue of whether the Bankruptcy Reform Act applied to liens in effect before that date went to

the U.S. Supreme Court, which first analyzed the constitutionality of retroactive application of

the statute and found it would “result in a complete destruction of the property right of the

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secured party.” Sec. Indus., 459 U.S. at 75. As a result, the Supreme Court noted its “substantial

doubt” that the statute, if applied retroactively, would survive Fifth Amendment scrutiny. Id. at

78. Rather than striking down the statute, the Supreme Court held that it was reasonable to

assume that, notwithstanding the broad language about the effective date of the Bankruptcy

Reform Act, the lien avoidance provision was not intended to effectively destroy pre-enactment

liens. Id. at 82.

Construing FAPA’s effective date as applying prospectively is also consistent with the

canon of statutory construction that statutes should be construed to avoid constitutional issues.

Overstock.com, Inc. v. N.Y. State Dep’t of Tax’n & Fin., 20 N.Y.3d 586, 593 (2013). That

principle requires a court “to select a narrower construction of the statute–perhaps even

artificially narrow–to avoid declaring the legislation unconstitutional.” LeadingAge N.Y., Inc. v.

Shah, 32 N.Y.3d 249, 281 (2018) (Wilson, J., dissenting) (citation omitted).

Indeed, at least four courts have already determined FAPA should not be applied

retroactively. HSBC Bank USA, N.A. v. Besharat, No. 500836/2021, 2023 WL 3555407, at *6

(N.Y. Sup. Ct. Putnam Cnty. May 19, 2023) (finding that “FAPA § 10 is insufficient to

overcome the presumption against retroactive enforcement of procedural amendments so as to

destroy rights already accrued via compliance with pre-existing procedural requirements”);

MTGLQ Invs., L.P. v. Gross, No. 64020/2019, 2023 WL 2671011, at *4 (N.Y. Sup. Ct.

Westchester Cnty. Mar. 16, 2023) (finding that FAPA does not apply retroactively because

“FAPA was not intended to be used as a means to reach back in the case history and bypass

determinations rendered by courts, who have evaluated the facts and evidence within an action,

and dismantle such determinations upon a discontinuance that previously had no bearing and

now alter the substantive rights of a party”); Newrez LLC v. Kalina, No. 900386/2022, 2023 WL

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2721698, at *2 (N.Y. Sup. Ct. Albany Cnty. Mar. 22, 2023); Deutsche Bank Nat’l Tr. Co. v.

Feurtado, No. 719810/2019, slip op. (N.Y. Sup. Ct. Que

Case Info

Judge

Lawrence Knipel Track Judge’s New Case

Case No.

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Document Filed Date

June 16, 2023

Case Filing Date

September 09, 2021

County

Parties

215 19TH STREET, LLC Defendant
COHEN, JONATHAN MARC Attorney for the Defendant
DESOCIO, JERALD J. Attorney for the Defendant
FOURTNER, TRACY MCKAY Attorney for the Plaintiff
GAZZO, NICOLE CAROL Attorney for the Plaintiff
GOLDBERG, BRIAN DAVID Attorney for the Plaintiff
HEANEY, ALEXANDRA ROSE Attorney for the Plaintiff
John Doe Defendant
KATZ, JOSHUA DAVID Attorney for the Plaintiff
MARKS, ALFRED W Attorney for the Plaintiff
PEOPLE OF THE STATE OF NEW YORK Defendant
POLOWY, AMY E. Attorney for the Plaintiff
PUSCHECK, KATHLEEN ELIZABETH Attorney for the Plaintiff
UNITED STATES OF AMERICA ACTING THROUGH THE IRS Defendant
U.S. BANK TRUST NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS TRUSTEE OF LSF11 MASTER PARTICIPATION TRUST Plaintiff
VARGAS, STEPHEN JOHN Attorney for the Plaintiff
JORGE VARGAS Attorney
NEIL KUPFERMAN Attorney
DAVID SOLOMON Attorneys for Plaintiffs
DENNIS SCHMELZER Attorneys for Plaintiffs
JAVIER VARGAS Attorney
JAMES FUCCIO Attorney
MICHAEL FIALKOFF Attorneys for Plaintiffs

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Motion-Secondary: U.S. Bank Trust National Association, Not In Its Individual Capacity, But Solely As Trustee Of Lsf11 Master Participation Trust v. 215 19th Street, Llc, People Of The State Of New York, United States Of America Acting Through The Irs, John Doe

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