Introduction

The case of The Bank of New York Mellon, as Trustee, Appellant, v. Terri Richards, Respondent, et al., Defendants (2024 N.Y. Slip Op. 6265) adjudicated by the Supreme Court of New York, Third Department, marks a significant development in the application of foreclosure laws under the Foreclosure Abuse Prevention Act (FAPA). This case addresses the critical issue of whether FAPA should be applied retroactively to foreclosure actions initiated before its enactment. The parties involved are The Bank of New York Mellon, acting as the trustee and appellant, against Terri Richards and other defendants, involving a dispute over the dismissal of a foreclosure action as time-barred under CPLR 205-a.

Summary of the Judgment

In January 2007, the plaintiff's predecessor in interest and defendant Terri Richards entered into a mortgage agreement secured by a note. The plaintiff initiated a foreclosure action in 2009 after accelerating the mortgage. Following procedural lapses, including failure to file for an order of reference, the initial action was administratively abandoned in 2013. After attempts to restore the action were denied, the plaintiff filed a new foreclosure action in July 2021. Defendant Richards moved to dismiss this action under CPLR 205-a, arguing it was time-barred. The Supreme Court granted the dismissal, a decision upheld by the appellate court.

The core issue revolved around whether CPLR 205-a, enacted under FAPA, should be applied retroactively to the 2021 foreclosure action. The plaintiff contended that FAPA should not apply retroactively, advocating for CPLR 205 (a) instead, which offers a narrower grace period for refiling dismissed actions. However, the court determined that FAPA does apply retroactively based on recent rulings, thereby mandating the application of CPLR 205-a (a). Consequently, the plaintiff could not benefit from the savings provision, leading to the dismissal of the foreclosure action as time-barred.

Analysis

Precedents Cited

The judgment references several recent appellate decisions affirming the retroactive application of FAPA. Notably:

• U.S. Bank v Lynch, 218 N.Y.S.3d 854 (3d Dept 2024)
• CitiMortgage, Inc. v Goldstein, 230 A.D.3d 1219 (2d Dept 2024)
• Maneri v Residential Funding Co., LLC, 227 A.D.3d 797 (2d Dept 2024)
• Genovese v Nationstar Mtge. LLC, 223 A.D.3d 37 (1st Dept 2023)
• U.S. Bank N.A. v Armand, 220 A.D.3d 963 (2d Dept 2023)

These cases collectively reinforced the stance that FAPA applies to foreclosure actions initiated prior to its enactment, thereby affecting the procedural timelines and requirements under CPLR 205-a.

Legal Reasoning

The court's reasoning hinged on the interpretation of FAPA's applicability to existing and new foreclosure actions. CPLR 205-a (a) provides mortgagees with a six-month grace period to refile dismissed foreclosure actions not terminated due to neglect. The plaintiff argued that because FAPA was not applicable at the inception of the original mortgage agreement and subsequent foreclosure actions, the older provisions under CPLR 205 (a) should prevail.

However, the court dismissed this argument by finding precedent that FAPA is retroactively applicable. This means that even for actions initiated before FAPA's enactment, the newer provisions of CPLR 205-a must be followed. The judgment emphasized that where FAPA applies, the plaintiff cannot benefit from the narrower grace period under CPLR 205 (a). Furthermore, the administrative dismissal of the original foreclosure action for any form of neglect barred the plaintiff from refiling, as CPLR 205-a (a) did not allow the application of the savings provision in this context.

Impact

This judgment sets a clear precedent that FAPA's provisions are to be applied retroactively across New York's appellate departments. Mortgagees must now adhere to the stricter timelines and conditions imposed by CPLR 205-a (a), irrespective of when the original foreclosure action was initiated. This enhances the protection for defendants in foreclosure proceedings by limiting the avenues and extending the statutory limitations under which plaintiffs can reinitiate foreclosure actions.

Future foreclosure actions will need to meticulously consider the timing and stipulations of FAPA to avoid dismissals on grounds of being time-barred. Additionally, mortgagees might need to reassess their foreclosure strategies and ensure compliance with FAPA's requirements to maintain the viability of their claims.

Complex Concepts Simplified

Foreclosure Abuse Prevention Act (FAPA)

FAPA is a legislative measure designed to prevent abusive practices in foreclosure proceedings. It establishes stricter guidelines and procedures that mortgagees must follow when attempting to foreclose on a property, thereby providing additional protections to borrowers.

CPLR 205-a vs. CPLR 205 (a)

- CPLR 205 (a): Provides mortgagees with a six-month period to refile a dismissed foreclosure action, but only if the dismissal was specifically for neglect to prosecute. It requires the court to document the reasons for dismissal.
- CPLR 205-a (a): Introduced under FAPA, this provision also offers a six-month grace period for refiling dismissed actions. However, its applicability is broader, encompassing any form of dismissal not strictly limited to neglect, thereby narrowing the circumstances under which the savings provision can be utilized.

Retroactive Application

The concept of retroactive application refers to the enforcement of new laws or legal principles on actions or events that occurred before the enactment of the law. In this context, it means that FAPA applies to foreclosure actions initiated before FAPA was enacted.

Conclusion

The appellate decision in The Bank of New York Mellon v. Terri Richards underscores a pivotal shift in the application of foreclosure laws under New York jurisdiction. By affirming the retroactive application of FAPA, the court has reinforced the protective measures for defendants against potentially time-barred foreclosure actions. This judgment not only clarifies the interplay between CPLR 205-a and CPLR 205 (a) but also ensures that mortgagees adhere to more stringent procedural requirements, thereby aligning foreclosure practices with contemporary legal standards aimed at preventing abuse.

Practitioners in the field must take heed of this precedent, adjusting their legal strategies to incorporate the retroactive scope of FAPA. The broader implication is a fortified framework that balances the interests of mortgagees and borrowers, fostering a more equitable foreclosure process.