FAPA Retroactivity Upheld: No Federal Due Process, Contracts Clause, or Takings Clause Violation in Mortgage Quiet-Title Litigation

Article 13 LLC v. LaSalle Nat'l Bank Ass'n (2d Cir. May 13, 2026)

1. Introduction

This Second Circuit decision resolves the federal constitutional challenges to New York’s Foreclosure Abuse Prevention Act (“FAPA”) when applied retroactively in a quiet-title action. The plaintiff, Article 13 LLC (holder of a junior mortgage on Brooklyn property), sought to cancel a senior mortgage held by LaSalle National Bank Association (predecessor-in-interest to U.S. Bank), arguing the senior mortgage foreclosure claim became time-barred under New York’s six-year statute of limitations after a 2007 foreclosure action accelerated the debt.

The key litigation pivot was FAPA’s enactment shortly after the district court initially found a factual dispute about whether the 2007 foreclosing party had standing—an issue that, pre-FAPA, could prevent the statute of limitations from running from the 2007 filing. FAPA changed the playing field by largely estopping defendants in cancellation/discharge actions from arguing that an earlier acceleration was invalid, absent a narrow statutory exception.

After certifying state-law and state-constitutional questions to the New York Court of Appeals, the Second Circuit’s remaining task was strictly federal: whether FAPA’s retroactive application violates substantive due process, procedural due process, the Contracts Clause, or the Takings Clause of the U.S. Constitution.

2. Summary of the Opinion

3. Analysis

3.1 Precedents Cited

A. State-law framework and the certified decisions

• Article 13 LLC v. Ponce De Leon Fed. Bank, 132 F.4th 586 (2d Cir. 2025) (“Article 13 III”)
  The Second Circuit certified to the New York Court of Appeals: (i) whether FAPA § 7 (codified at N.Y. C.P.L.R. § 213(4)(b)) applies to actions commenced before enactment, and (ii) whether retroactivity violates due process under the New York Constitution. This certification posture is crucial: it narrows the 2026 Second Circuit merits review to federal constitutional claims.
• Article 13 LLC v. Ponce De Leon Fed. Bank, No. 96, 2025 WL 3272351 (N.Y. Nov. 25, 2025) (“Article 13 IV”)
  The New York Court of Appeals held FAPA applies retroactively and does not violate New York constitutional due process. It also endorsed an accrual/estoppel approach: unless the prior foreclosure was dismissed with an express judicial determination that acceleration was invalid, the limitations period runs from the commencement of that prior action. The Second Circuit treats these state determinations as authoritative and proceeds only to federal constitutional review.
• Van Dyke v. U.S. Bank, Nat'l Ass'n, No. 97, 2025 WL 3272341 (N.Y. Nov. 25, 2025) (“Van Dyke”)
  Issued the same day as Article 13 IV, Van Dyke is used as persuasive state high-court guidance on federal issues, including that retroactive FAPA does not violate the Contracts Clause and that, functionally, “it is the six-year statute of limitations, not FAPA itself,” that extinguishes stale foreclosure remedies.
• Freedom Mortgage Corp. v. Engel, 37 N.Y.3d 1 (2021)
  The opinion situates FAPA as a legislative response to the pre-FAPA environment shaped by Engel, under which lenders could sometimes “de-accelerate” and later “re-accelerate” to reset limitations—an approach New York later moved to curtail via FAPA.
• 53rd St., LLC v. U.S. Bank Nat'l Ass'n, 8 F.4th 74 (2d Cir. 2021)
  Cited for the six-year limitations baseline under N.Y. C.P.L.R. § 213(4) in the foreclosure context and the significance of acceleration to limitations accrual.
• New York intermediate authority on “invalid acceleration” arguments (used largely to show the asserted “settled right” was not deeply rooted and was contested):
  • MLB Sub I, LLC v. Grimes, 170 A.D.3d 992 (N.Y. App. Div. 2019)
  • Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d 980 (N.Y. App. Div. 2012)
  • Pryce v. Nationstar Mortg. LLC, 131 N.Y.S.3d 832 (Sup. Ct. 2020)
  • Secured Equities Invs., Inc. v. McFarland, 300 A.D.2d 1137 (N.Y. App. Div. 2002)
  • Bank of New York Mellon v. Cort, 171 A.D.3d 1275 (N.Y. App. Div. 2019)
  • Cap. One, N.A. v. Saglimbeni, 170 A.D.3d 508 (N.Y. App. Div. 2019)
  Collectively, these cases demonstrate that New York law contained competing lines on whether a prior foreclosure filed without standing triggers limitations, supporting the court’s conclusion that no “deeply rooted” entitlement existed to preserve late collateral challenges.

B. Federal constitutional standards and retroactivity doctrine

• Landgraf v. USI Film Products, 511 U.S. 244 (1994)
  Addressed and cabined: the court explains Landgraf’s presumption against retroactivity is an interpretive tool when a statute’s temporal reach is unclear. Because New York’s highest court already held FAPA applies retroactively, Landgraf does not decide the constitutional question.
• United States v. Salerno, 481 U.S. 739 (1987) and Dobbs v. Jackson Women's Health Org., 597 U.S. 215 (2022)
  Provide the substantive due process framing: only rights enumerated in the first eight amendments or “deeply rooted in history and tradition” qualify for heightened protection.
• E. Enters. v. Apfel, 524 U.S. 498 (1998), Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976), Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984)
  Supply the deferential rational-basis approach for retroactive economic legislation: retroactivity is permissible if supported by a legitimate legislative purpose furthered by rational means.
• Town of Castle Rock v. Gonzales, 545 U.S. 748 (2005), Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (1972), Chase Grp. All. LLC v. City of New York Dep't of Fin., 620 F.3d 146 (2d Cir. 2010)
  Establish procedural due process requirements: a protected property interest must come from an independent source (often state law), and deprivation requires notice and an opportunity to be heard.
• Terry v. Anderson, 95 U.S. 628 (1877) and Bros. v. Florence, 739 N.E.2d 733 (N.Y. 2000)
  Invoked by the bank for a “reasonable time”/grace-period concept when limitations are shortened. The court distinguishes Terry because FAPA did not shorten the six-year statute; it altered estoppel consequences tied to past accelerations.
• Contracts Clause test and deference: Sveen v. Melin, 584 U.S. 811 (2018), Energy Rsrvs. Grp., Inc. v. Kan. Power & Light Co., 459 U.S. 400 (1983), Sullivan v. Nassau Cnty. Interim Fin. Auth., 959 F.3d 54 (2d Cir. 2020), Sanitation & Recycling Indus., Inc. v. City of New York, 107 F.3d 985 (2d Cir. 1997), Sal Tinnerello & Sons, Inc. v. Town of Stonington, 141 F.3d 46 (2d Cir. 1998), Buffalo Tchrs. Fed'n v. Tobe, 464 F.3d 362 (2d Cir. 2006), Melendez v. City of New York, 16 F.4th 992 (2d Cir. 2021)
  These authorities structure the “substantial impairment / legitimate public purpose / reasonable and necessary means” inquiry and guide the court’s deference to legislative judgments where the state is not itself a contracting party.
• Takings analysis: United States v. Sec. Indus. Bank, 459 U.S. 70 (1982), Armstrong v. United States, 364 U.S. 40 (1960), Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005), Pa. Coal Co. v. Mahon, 260 U.S. 393 (1922), Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992), Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978), Connolly v. Pension Ben. Guar. Corp., 475 U.S. 211 (1986), Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), 1256 Hertel Ave. Assocs., LLC v. Calloway, 761 F.3d 252 (2d Cir. 2014)
  These cases frame the lien as a cognizable property interest in the abstract, but emphasize that not every regulation affecting economic interests is a taking. The court applies Penn Central’s factors to conclude FAPA’s retroactive operation is a non-compensable, broadly applicable economic regulation.

3.2 Legal Reasoning

A. Substantive due process: no deeply rooted right, and FAPA is rational economic legislation

The bank attempted to recast FAPA’s effect as the destruction of an entrenched right to argue that an earlier acceleration was invalid (due to lack of standing), thereby preventing limitations from accruing. The court rejects the premise at the threshold: substantive due process protects only enumerated rights or those “deeply rooted” in history and tradition (Dobbs v. Jackson Women's Health Org.), and the asserted right is, at most, a recent and contested feature of New York mortgage litigation.

Even assuming some protectable interest, the court applies the deferential standard for retroactive economic legislation: the statute stands if supported by a legitimate legislative purpose and rational means (Pension Ben. Guar. Corp. v. R.A. Gray & Co.; Usery v. Turner Elkhorn Mining Co.). It finds FAPA’s goals—curbing abusive foreclosure litigation tactics and stabilizing limitations rules after the foreclosure crisis—plainly legitimate, and the estoppel mechanism rationally related to those goals.

B. Procedural due process: no deprivation of a protected property interest, and no lack of notice/opportunity

Procedural due process requires a protected property or liberty interest and an inadequate process preceding deprivation. The court acknowledges that a mortgage lien is generally a property interest, but emphasizes the critical causal point: FAPA does not itself strip the lien; rather, “it is the six-year statute of limitations, not FAPA itself,” that extinguishes the foreclosure remedy (echoing Van Dyke).

What FAPA removes is the ability to mount a late collateral attack on a prior acceleration long after limitations have run—an interest the court does not treat as a protected entitlement under federal procedural due process doctrine. Moreover, the bank (or its predecessors) had ample opportunity during the limitations period to participate in, challenge, or refile foreclosure litigation.

The court distinguishes Terry v. Anderson because FAPA did not shorten the limitations period; therefore, the “grace period” concept does not apply in the same way. The bank’s loss flows from inaction during the existing six-year window, not from a sudden truncation of time to sue.

C. Contracts Clause: no substantial impairment attributable to FAPA; in any event, legitimate purpose and reasonable means

Applying the modern three-part Contracts Clause framework (substantial impairment; legitimate public purpose; reasonable and necessary means), the court holds that any impairment is not “substantial” in the constitutionally relevant sense because the bank’s foreclosure remedy lapsed due to its own failure to timely sue. Put differently, FAPA does not “destroy” the contract; it forecloses a particular litigation tactic for escaping limitations consequences.

Even if there were substantial impairment, FAPA serves a legitimate public purpose: addressing abuse of the foreclosure process and limitations manipulation (as described in Article 13 IV), which qualifies as remedying a broad social/economic problem (Sanitation & Recycling Indus., Inc. v. City of New York). The court also defers to legislative tailoring judgments where the state is not a contracting party (Energy Rsrvs. Grp., Inc. v. Kan. Power & Light Co.), and finds FAPA sensibly calibrated: it narrows successive collateral challenges and prevents unilateral limitations “resets.”

D. Takings Clause: no compensable taking under Penn Central

While liens can be “property” for takings purposes (United States v. Sec. Indus. Bank; Armstrong v. United States), the court frames FAPA’s effect as regulating litigation consequences and limitations accrual rules—not as appropriating property for public use. Evaluated as a regulatory taking, the court applies Penn Central Transp. Co. v. New York City:

• Economic impact: any loss stems from the bank’s failure to act within the limitations period.
• Investment-backed expectations: mortgage foreclosure has long been heavily regulated, and the rules were already in flux in the years leading to FAPA, undermining claims of settled expectations (Ruckelshaus v. Monsanto Co. rationale).
• Character of the action: FAPA is a broad public program adjusting benefits and burdens to promote the common good (Connolly v. Pension Ben. Guar. Corp.), aimed at curbing abusive practices and stabilizing limitations rules.

On balance, the Penn Central factors weigh against finding a taking; thus, no compensation is due.

3.3 Impact

• Federal constitutional “safe harbor” for FAPA retroactivity: After Article 13 IV established retroactivity under New York law, this decision substantially closes the door on federal constitutional attacks (due process, contracts, takings) in FAPA-governed quiet-title/cancellation litigation in the Second Circuit.
• Shift in litigation strategy for lenders/noteholders: The opinion underscores that noteholders must litigate standing/acceleration validity promptly—within the limitations window and within the foreclosure action itself—rather than rely on collateral, post-limitations challenges.
• Strengthening limitations finality in foreclosure-adjacent disputes: By validating FAPA’s estoppel rule against federal challenges, the decision promotes finality for homeowners and junior lienholders seeking to clear stale senior liens.
• Broader doctrinal signal: The court’s emphasis that economic retroactive legislation receives highly deferential review—especially where it adjusts burdens/benefits in a regulated field—may influence how litigants frame future retroactivity challenges beyond foreclosure law.

4. Complex Concepts Simplified

• Acceleration (of a mortgage debt): When a lender “accelerates,” it declares the entire loan balance immediately due (often by filing a foreclosure complaint). Acceleration typically triggers (or is argued to trigger) the statute of limitations for foreclosure.
• De-acceleration / limitations “reset”: Pre-FAPA doctrines (discussed in the background via Freedom Mortgage Corp. v. Engel) sometimes allowed lenders to revoke acceleration and later re-accelerate, potentially restarting the six-year clock. FAPA was designed to curb perceived manipulation of that dynamic.
• Quiet title / cancellation and discharge: A lawsuit seeking a judgment that removes (cancels) a mortgage lien from the property’s title—often based on arguments that the lien is unenforceable (e.g., time-barred).
• Estoppel (under FAPA § 7(b)): In this setting, it prevents a defendant-lender from arguing “the earlier acceleration was invalid so the clock never started,” unless the earlier case was dismissed with an express judicial determination (timely raised) that acceleration was invalid.
• Substantive vs. procedural due process: Substantive due process asks whether the government has invaded certain fundamental rights or acted irrationally; procedural due process asks whether the government deprived someone of a protected interest without fair procedures (notice and opportunity to be heard).
• Contracts Clause test (modern): Courts ask whether a law substantially impairs a contract; if so, whether it serves a legitimate public purpose; and whether the means are reasonable and necessary.
• Regulatory taking (Penn Central): Not every economic regulation is a “taking.” Courts consider economic impact, interference with reasonable investment-backed expectations, and the character of the government action.

5. Conclusion

Article 13 LLC v. LaSalle Nat'l Bank Ass'n cements a pivotal post-FAPA rule in federal court: once New York law makes FAPA retroactive, its retroactive application in quiet-title/cancellation actions survives federal constitutional scrutiny under substantive due process, procedural due process, the Contracts Clause, and the Takings Clause. The decision reinforces a practical and doctrinal message: in a heavily regulated foreclosure environment, courts will treat limitations finality and anti-abuse reforms as legitimate, rational economic legislation—and will place the consequences of stale enforcement primarily on the noteholder’s failure to timely act.