FAPA Section 2 Retroactively Eliminates RPAPL 1301(3) as a CPLR 204(a) Toll in Foreclosure-Related Limitations Disputes

1. Introduction

This First Department decision sits at the intersection of New York’s six-year limitations period for mortgage debt enforcement and the Legislature’s 2022 enactment of the Foreclosure Abuse Prevention Act (FAPA). Plaintiff-respondent Francoise Rouge, a Manhattan condominium owner, sought to clear title by cancelling a 2007 consolidated mortgage and note after having made no payments since 2010. Defendant-appellant U.S. Bank Trust National Association, as trustee, argued the limitations clock was tolled for years while a prior foreclosure action was pending.

The central issues were: (1) whether Rouge waived the statute of limitations defense in loan documents; (2) whether CPLR 204(a) tolled the limitations period because RPAPL 1301(3) purportedly barred a simultaneous action on the note during the foreclosure; (3) whether FAPA Section 2 (amending RPAPL 1301(3)) applies retroactively to defeat tolling; and (4) whether retroactivity violates due process or constitutes a taking.

2. Summary of the Opinion

The First Department unanimously affirmed summary judgment for Rouge declaring the note and mortgage cancelled. It held:

• A contractual “waiver” of limitations defenses made at the inception of liability is invalid.
• After FAPA, RPAPL 1301(3) no longer qualifies as a “statutory prohibition” that triggers tolling under CPLR 204(a).
• FAPA applies retroactively to pending matters where a final judgment of foreclosure and sale has not been enforced, and such retroactivity is constitutional.
• Accordingly, the note claim was time-barred and the mortgage could be discharged under RPAPL 1501(4), regardless of the unpaid balance.

3. Analysis

3.1. Precedents Cited

• NRZ Pass-Through Trust IV v Rouge, 199 AD3d 466 (1st Dept 2021)
  The prior foreclosure against Rouge was dismissed after a traverse hearing for lack of personal jurisdiction; the First Department had already affirmed denial of renewal/vacatur. That procedural history mattered because the lender’s “pending foreclosure” theory was the foundation for the claimed CPLR 204(a) toll.
• John J. Kassner & Co. v City of New York, 46 NY2d 544 (1979)
  Kassner supplies the rule that a party may not validly waive a statute of limitations defense “at the inception of liability.” The court applied Kassner to reject the bank’s argument that Rouge’s consolidation/extension/modification paperwork eliminated her RPAPL 1501(4) limitations argument.
• U.S. Bank N.A. v MAve Hotel Invs. LLC, 237 AD3d 512 (1st Dept 2025)
  Cited for RPAPL 1301(3)’s “election of remedies” principle: generally, a noteholder cannot simultaneously pursue foreclosure and a separate action to recover the mortgage debt. This set up the bank’s argument that RPAPL 1301(3) operated as a “statutory prohibition” under CPLR 204(a).
• Citimortgage, Inc. v Ramirez, 192 AD3d 70 (3d Dept 2020)
  A key pre-FAPA decision holding RPAPL 1301(3) could trigger CPLR 204(a) tolling during the pendency of a foreclosure action. Rouge treats Ramirez as emblematic of the pre-FAPA tolling landscape that FAPA was designed to change.
• US Bank N.A. v Calhoun, 236 AD3d 557 (1st Dept 2025), lv denied 43 NY3d 907 (2025)
  Calhoun is the First Department’s post-FAPA anchor: it recognized that, as amended by FAPA Section 2, RPAPL 1301(3) “no longer qualifies” as a statutory prohibition for CPLR 204(a) tolling purposes and rejected constitutional attacks on retroactivity. Rouge applies Calhoun directly to dispose of the lender’s tolling and due process/takings arguments.
• Article 13 LLC v Ponce De Leon Fed. Bank, 2025 NY Slip Op 06536 (2025)
  Used for two propositions: (1) legislative intent behind FAPA—responding to perceived manipulation of the statute of limitations; and (2) the constitutional permissibility and practical consequence of retroactivity, including extinguishing dormant claims “dating back years or even decades.” Rouge relies on Article 13 for the broader interpretive frame and for rejecting “vested right” arguments in a limitations regime.
• Freedom Mtge. Corp. v Engel, 37 NY3d 1 (2021)
  Engel held that voluntary discontinuance of a foreclosure action could de-accelerate the loan and reset the limitations period—an outcome the Legislature viewed as inviting strategic behavior and reviving stale cases. Rouge cites Engel not as governing law post-FAPA, but as a primary catalyst for FAPA’s overhaul.
• Matter of Gleason [Michael Vee, Ltd.], 96 NY2d 117 (2001)
  Cited for interpretive principles: retroactivity requires explicit or clearly indicated legislative preference, and courts may consider the “sense of urgency” in legislative history. Rouge uses Gleason to reinforce that FAPA’s structure and history reflect deliberate retroactive reach.
• Matter of Marino S., 100 NY2d 361 (2003), cert denied 540 US 1059 (2003)
  Cited for the “plainly manifested” intent standard and for grounding statutory reach in legislative purpose. Rouge uses Marino S. to support retroactive application of FAPA based on text, history, and the remedial objective.
• Van Dyke v U.S. Bank, N.A., 2025 NY Slip Op 06537 (2025)
  Paired with Article 13 as high-level authority that FAPA’s provisions apply retroactively and withstand constitutional scrutiny, including due process concerns about limitations-related changes.
• Brothers v Florence, 95 NY2d 290 (2000)
  Provides the procedural due process principle that when a statute shortens a limitations period, a “reasonable time” must be afforded to sue before the bar attaches. Rouge distinguishes Brothers on the ground that FAPA did not shorten the six-year period; it removed mechanisms lenders used to extend it.
• Bank of N.Y. Mellon v Del Rio, 233 AD3d 529 (1st Dept 2024)
  Cited to reject a regulatory takings theory: FAPA does not deprive a mortgage of “all value”; any loss stems from the existing statute of limitations, not a compensable taking.
• BSI, LLC v Raimo, 195 AD3d 590 (2d Dept 2021)
  Cited for the proposition that strict limitations rules in this context can compel time-bar outcomes “irrespective of the balance owed.” Rouge uses Raimo to emphasize that equity arguments about unpaid debt do not defeat a limitations bar.

3.2. Legal Reasoning

(a) No valid waiver of the statute of limitations defense

The bank first attempted to win on contract: Rouge allegedly waived limitations defenses in the consolidation extension and modification agreement. The court rejected this under John J. Kassner & Co. v City of New York, reasoning that a waiver “made at the inception of liability” is invalid as a matter of New York public policy. This preserves RPAPL 1501(4) as a borrower’s tool even where standard-form mortgage documents contain broad waiver language.

(b) Pre-FAPA tolling theory under CPLR 204(a) and RPAPL 1301(3)

The bank’s core argument was tolling: it claimed that from May 2011 through November 2021, while its foreclosure action was pending, it was barred by RPAPL 1301(3) from suing on the note; therefore, CPLR 204(a) tolled the limitations period because the note action was subject to a “statutory prohibition.” The opinion acknowledges that, before FAPA, courts had accepted this theory (citing Citimortgage, Inc. v Ramirez).

(c) FAPA Section 2: RPAPL 1301(3) is no longer a CPLR 204(a) “statutory prohibition”

The decisive move is statutory: FAPA Section 2 amended RPAPL 1301(3) so that it “no longer qualifies” as a statutory prohibition for CPLR 204(a) tolling. Applying US Bank N.A. v Calhoun, the court held the election-of-remedies provision cannot be used to manufacture additional limitations time while a foreclosure is pending.

(d) Retroactivity and constitutionality

The court treats retroactivity as textually commanded and purposively essential. It cites FAPA’s provision applying the Act to “all actions commenced . . . in which a final judgment of foreclosure and sale has not been enforced,” and, relying on Matter of Gleason [Michael Vee, Ltd.], Matter of Marino S., Article 13 LLC v Ponce De Leon Fed. Bank, and Van Dyke v U.S. Bank, N.A., finds a “plainly manifested” legislative intent that FAPA operates retroactively.

On constitutional defenses:

• Substantive due process: Retroactivity is rationally related to a legitimate purpose—curtailing abusive foreclosure litigation practices—so it stands (tracked through Calhoun, Article 13 LLC v Ponce De Leon Fed. Bank, and Van Dyke v U.S. Bank, N.A.).
• Property/vested rights theory: The bank had the benefit of a six-year limitations period and no vested right to extended tolls or a particular limitations framework (expressly relying on Article 13 LLC v Ponce De Leon Fed. Bank).
• Procedural due process/grace period: Under Brothers v Florence, a grace period is required when a limitations period is shortened. The court held FAPA did not shorten the six-year period; it curtailed extension devices, so no grace period was constitutionally required.
• Takings: Under Bank of N.Y. Mellon v Del Rio and Calhoun, any loss of value is attributable to expiration of the limitations period, not to a taking by FAPA.

3.3. Impact

• Limits tolling arguments based on “election of remedies”: Post-FAPA, mortgagees should not expect CPLR 204(a) tolling during prior foreclosures based on RPAPL 1301(3). This forecloses a once-powerful response to RPAPL 1501(4) discharge actions.
• Strengthens borrower quiet-title remedies: The decision reinforces RPAPL 1501(4) as an effective mechanism to cancel stale mortgage liens even where the borrower remains in default and the debt remains unpaid.
• Signals judicial deference to FAPA’s remedial design and retroactivity: By aligning with US Bank N.A. v Calhoun, Article 13 LLC v Ponce De Leon Fed. Bank, and Van Dyke v U.S. Bank, N.A., the First Department continues to treat FAPA as a legislative correction to perceived foreclosure “abuse,” not a mere procedural tweak—making constitutional challenges uphill.
• Transactional drafting limits: Boilerplate waivers of limitations defenses at loan origination will not defeat later limitations-based cancellation actions, reaffirming Kassner’s public-policy constraint.

4. Complex Concepts Simplified

• RPAPL 1501(4): A procedure allowing a property owner to ask the court to cancel a mortgage lien where the time to sue to foreclose (or to enforce the underlying debt) has expired—essentially a quiet-title remedy against stale liens.
• Statute of limitations (CPLR 213[4]): For mortgage foreclosure/debt enforcement, New York generally uses a six-year limitations period. If the claim is not brought in time, it becomes unenforceable in court.
• Tolling (CPLR 204[a]): A “pause” of the limitations clock when a party is legally prohibited from starting the action (for example, due to a stay or statutory bar).
• RPAPL 1301(3) (election of remedies): A rule designed to prevent a lender from simultaneously pursuing foreclosure and a separate action to recover the same mortgage debt.
• FAPA: The Foreclosure Abuse Prevention Act, enacted to prevent strategic use of procedural devices and doctrines that the Legislature believed allowed lenders to extend or manipulate the foreclosure limitations period.
• Traverse hearing: A hearing to determine whether a defendant was properly served with process; a lack of personal jurisdiction can require dismissal even if the merits favor the plaintiff.

5. Conclusion

Rouge v U.S. Bank Trust N.A. confirms a central post-FAPA rule in the First Department: as amended by FAPA Section 2, RPAPL 1301(3) cannot be treated as a “statutory prohibition” that tolls the limitations period under CPLR 204(a) during a pending foreclosure action, and that change applies retroactively without violating due process or takings principles. Combined with the invalidity of origination-stage waivers under John J. Kassner & Co. v City of New York, the decision materially strengthens borrowers’ ability to discharge time-barred mortgages under RPAPL 1501(4), even where the underlying debt remains unpaid.