FAPA Retroactivity Does Not Nullify Attorney-Executed Tolling Stipulations Made in a Foreclosure Action (CPLR 2104; GOL § 17-105[5][b])

I. Introduction

In HSBC Bank USA, N.A. v Nicholas (2026 NY Slip Op 01461 [1st Dept Mar. 17, 2026]), the Appellate Division, First Department addressed a recurring post-Foreclosure Abuse Prevention Act (“FAPA”) question: when a prior foreclosure action was voluntarily discontinued, can a separate stipulation executed in that action—subscribed by counsel—validly toll the statute of limitations for a later foreclosure action?

The plaintiff, HSBC Bank USA, N.A., as Indenture Trustee, filed a new foreclosure action in 2018, more than six years after it discontinued a 2008 foreclosure action that had accelerated the loan. The defendant, the estate administrator, moved to dismiss as time-barred under FAPA. The Supreme Court (New York County) dismissed, holding that (i) FAPA prevented the discontinuance from resetting limitations and (ii) the tolling stipulation was unenforceable because the borrower did not personally sign it under General Obligations Law (“GOL”) § 17-105.

The First Department reversed, reinstated the complaint, and remanded for a determination on plaintiff’s summary judgment motion.

II. Summary of the Opinion

  • The court held FAPA applies retroactively to this case, consistent with prior First Department authority and recent Court of Appeals confirmations.
  • Retroactivity, however, does not invalidate an explicit tolling stipulation made in the prior foreclosure action.
  • The 2011 stipulation tolled limitations from July 22, 2008 through June 1, 2013, and was enforceable because it complied with CPLR 2104 (a writing subscribed by a party or the party’s attorney).
  • GOL § 17-105(1)’s personal-signature requirement did not apply because GOL § 17-105(5)(b) (as amended by FAPA) expressly preserves the effect of a “stipulation made in an action or proceeding.”
  • The court rejected plaintiff’s constitutional challenges to FAPA’s retroactive application (Contract Clause, due process, Takings Clause), relying heavily on the Court of Appeals’ analysis.

III. Analysis

A. Precedents Cited

1. Genovese v Nationstar Mtge. LLC, 223 AD3d 37 (1st Dept 2023)

The First Department relied on Genovese for its prior determination that “the Legislature’s goal . . . was to see FAPA applied retroactively.” While the retroactivity point was largely settled by the time of this decision, Genovese served as the Department’s baseline: FAPA governs pending and older acceleration/discontinuance fact patterns unless an exception applies.

2. Van Dyke v US Bank, N.A., - NY3d —, 2025 NY Slip Op 06537 (2025)

Van Dyke played two central roles:

  1. Retroactivity confirmation: the Court of Appeals held that “FAPA’s text and legislative history plainly manifest the legislature’s intent” for retroactive effect. That eliminated any serious argument that retroactivity was merely implied or uncertain.
  2. Constitutional framework: the First Department adopted Van Dyke’s reasoning that FAPA is “sensibly tailored” to curb unilateral lender tactics and promote finality and predictability in a highly regulated field, defeating Contract Clause and substantive due process attacks. This decision extends Van Dyke’s logic to the specific context of CPLR 3217(e) as applied here.

3. Article 13 LLC v Ponce De Leon Fed. Bank, - NY3d —, 2025 NY Slip Op 06536 (2025)

The court cited Article 13 LLC primarily for procedural due process: because FAPA did not shorten the underlying six-year limitations period, no “grace period” is constitutionally required. This helped the court dispose of arguments that retroactive application unfairly deprived plaintiff of time to sue.

4. Bonnette v Long Is. Coll. Hosp., 3 NY3d 281 (2004)

Bonnette provided the interpretive anchor for CPLR 2104: a stipulation is enforceable if in writing and signed by the party or the attorney to be bound. That precedent directly undercut the motion court’s view that the borrower’s personal signature was necessary for the tolling stipulation to have effect.

5. American Economy Ins. Co. v State of New York, 30 NY3d 136 (2017), cert denied 584 US 1013 (2018) and General Motors Corp. v Romein, 503 US 181 (1992)

These cases supplied the substantive due process test for retroactive legislation: a legitimate legislative purpose furthered by rational means. The First Department applied that standard (as synthesized through Van Dyke) to conclude FAPA’s retroactive reach is rationally related to curbing abusive foreclosure practices and protecting borrowers.

6. Brothers v Florence, 95 NY2d 290 (2000)

Brothers addressed procedural due process concerns when a limitations period is newly created or shortened—requiring a reasonable time to sue before the bar takes effect. Here, the court held Brothers did not apply because FAPA did not change the six-year limitations period itself; it changed how certain acts (like discontinuance) affect that period.

7. US Bank N.A. v Calhoun, 236 AD3d 557 (1st Dept 2025), lv denied 43 NY3d 907 (2025) and Bank of N.Y. Mellon v Del Rio, 233 AD3d 529 (1st Dept 2024)

These First Department decisions were used to reject the Takings Clause theory: applying FAPA before entry of judgment is not an unconstitutional regulatory taking. By citing them, the court positioned its takings analysis as settled departmental law, consistent with the broader FAPA jurisprudence.

B. Legal Reasoning

1. The baseline FAPA rule: discontinuance does not “reset” limitations

The court accepted the general post-FAPA premise: a voluntary discontinuance ordinarily does not deaccelerate the debt or restart the six-year clock. Thus, absent an enforceable toll, the 2018 action (coming long after the 2008 acceleration) would be untimely.

2. The decisive distinction: an express tolling stipulation within the prior action

The court treated the 2011 document as two things at once: (i) a discontinuance stipulation and (ii) an explicit tolling agreement. The key was that the parties “agreed that the statute of limitations . . . is hereby tolled” for a defined period. That express toll provision—not the discontinuance itself—made the later filing timely.

3. Enforceability under CPLR 2104: attorney signatures are enough

The court held the stipulation complied with CPLR 2104 because it was a writing “subscribed by [a party] or his attorney.” Using Bonnette v Long Is. Coll. Hosp., the court rejected any rule requiring personal execution by the borrower where CPLR 2104 applies.

4. Why GOL § 17-105(1) did not bar the toll

The motion court relied on GOL § 17-105(1) to invalidate the tolling language because the borrower did not personally sign. The First Department reversed by pointing to the statute’s own carve-out: GOL § 17-105(5)(b), as amended by FAPA, provides that the section does not change the effect of “a stipulation made in an action or proceeding.”

The court characterized the 2011 agreement as plainly within that carve-out, making the personal-signature requirements of GOL § 17-105(1) inapplicable to this particular tolling device.

5. Harmonizing CPLR 3217(e) with party autonomy to stipulate

CPLR 3217(e), added/amended by FAPA, says that a voluntary discontinuance “on . . . stipulation” shall not “waive, postpone, cancel, toll, extend, revive or reset” the limitations period unless “expressly prescribed by statute.”

The court looked to the Senate Sponsor’s Memorandum to conclude the Legislature was targeting unilateral lender maneuvers (unilateral de-acceleration, unilateral tolling/extension), not negotiated, explicit tolling agreements reflected in a stipulation in an action. In effect, the court read CPLR 3217(e) as stopping “bare” discontinuances from having limitations effects, while leaving room for tolling where a statute preserves or authorizes that effect—here, via GOL § 17-105(5)(b)’s stipulation carve-out and CPLR 2104’s enforceability rules.

6. Constitutional challenges rejected under controlling authority

Plaintiff argued retroactive application violated due process, effected a taking, and impaired contracts. The court, following Van Dyke v US Bank, N.A. and related First Department precedent:

  • Contract Clause: any impairment is justified by significant public purposes (finality, predictability, curbing abusive practices) and is appropriately tailored.
  • Substantive due process: retroactivity is rationally related to the legitimate legislative goal of protecting borrowers from abusive foreclosure litigation practices.
  • Procedural due process: no grace period is required because the six-year limitations period was not reduced.
  • Takings: no unconstitutional regulatory taking occurs where FAPA is applied before any judgment is entered.

C. Impact

The practical rule emerging from HSBC Bank USA, N.A. v Nicholas is a clarifying one for post-FAPA foreclosure litigation:

  • FAPA retroactivity is not a blanket nullification device. Even in cases where discontinuance cannot deaccelerate or reset limitations, an express tolling stipulation made in the prior action can still preserve timeliness.
  • Stipulation drafting and filing will matter. Parties (and especially lenders/servicers) that negotiated tolls in earlier actions may rely on them—if the toll is explicit, time-bounded, and qualifies as a stipulation “made in an action or proceeding.”
  • Litigation focus will shift to the document. Post-Nicholas, timeliness disputes will likely turn less on acceleration/discontinuance mechanics and more on whether the prior stipulation: (i) is clear about tolling, (ii) was properly subscribed under CPLR 2104, and (iii) fits within GOL § 17-105(5)(b).
  • Borrower-side defenses remain viable where the stipulation is “bare.” If the discontinuance stipulation lacks explicit tolling language, CPLR 3217(e) continues to block arguments that the discontinuance itself altered the limitations period.

IV. Complex Concepts Simplified

Acceleration
A lender’s act of declaring the entire mortgage debt immediately due. In New York, acceleration typically starts the six-year clock for a foreclosure action on the accelerated debt.
Statute of limitations (six years)
The deadline to sue. Once the claim is time-barred, the court must dismiss if the defense is properly raised.
Voluntary discontinuance
Ending a lawsuit without a court decision on the merits. Post-FAPA, discontinuing a foreclosure action usually does not undo a prior acceleration or restart the limitations period.
Tolling
Pausing the running of the limitations clock for a specified period. Here, the parties agreed in writing that the clock would be tolled until June 1, 2013.
CPLR 2104 stipulation
A binding agreement made in the course of litigation, enforceable if in writing and signed by the party or the party’s attorney.
GOL § 17-105
A statute governing certain agreements affecting time limits. As applied here, its amended subsection (5)(b) preserves the effect of stipulations made in an action or proceeding, meaning the stricter personal-signature requirement in subsection (1) did not control this litigation stipulation.
FAPA
The Foreclosure Abuse Prevention Act (L 2022, ch 821), enacted to curb tactics that allowed noteholders to manipulate the limitations period—especially through unilateral acts and “bare” discontinuances.

V. Conclusion

HSBC Bank USA, N.A. v Nicholas reinforces two complementary principles in New York’s post-FAPA foreclosure landscape: (1) FAPA applies retroactively and generally prevents voluntary discontinuances from resetting the foreclosure statute of limitations; but (2) FAPA does not erase the legal effect of an explicit, attorney-executed tolling stipulation made in the prior action, enforceable under CPLR 2104 and preserved by GOL § 17-105(5)(b).

The decision is significant because it draws a bright line between prohibited unilateral manipulation (FAPA’s target) and negotiated, on-the-record litigation stipulations that expressly toll time. For future cases, it signals that the decisive evidence will often be the precise text and procedural posture of prior stipulations—not merely the fact of discontinuance after acceleration.