Supreme Court, Suffolk County, October 6, 2023

Miller, Rosado & Algios, LLP, Garden City, for defendants.

Friedman Vartolo, LLC, Garden City, for plaintiff.

Upon the papers read on defendants' e-filed motion seeking renewal of the court's order dated April 18, 2022, denying defendants' cross-motion to dismiss, it is ordered that defendants' motion (mot seq No. 003) to renew is granted; and after reconsideration, again denying defendants' cross-motion for summary judgment on the second affirmative defense; and it is further ordered that plaintiff is directed to promptly serve defendants with a copy of this decision and order together with notice of entry.

The First Action

As relevant to the issues raised herein, a prior action to foreclose the same mortgage being foreclosed in this case was commenced (index No. 026224/2011) (the first action) when plaintiff's predecessor filed a complaint in 2011; the complaint accelerated the debt owed by defendants (NY St Cts Elec Filing [NYSCEF] Doc No. 88 ¶ 22). Plaintiff's predecessor moved in the first action for a default judgment and defendants cross-moved for dismissal pursuant to CPLR 3215 (c). The court held in the first action that defendants had waived their right to a dismissal under CPLR 3215 (c) but on December 23, 2020, the Appellate Division reversed and dismissed the case as abandoned. Relying on the "savings provision" contained in CPLR 205 (a), plaintiff timely commenced this action.

The Current Action

Within six months of the first action being dismissed, on June 4, 2021, Wilmington Trust, N.A., not in its individual{**81 Misc 3d at 685} capacity, but solely as trustee for MFRA Trust 2014-2 (plaintiff), again commenced this action (the current action) to foreclose its residential mortgage on property owned by defendants Edward Gawlowski, also known as Edward W. Gawlowski, and Victoria Gawlowski, also known as Victoria M. Gawlowski (defendants), located at 31 Harrison Drive, Shirley, New York 11967. The complaint alleges in the current action that defendants defaulted on the payments required under the mortgage that became due on August 14, 2011, and all payments thereafter.

Motion and Cross-Motion for Summary Judgment

In connection with the current action, plaintiff moved by notice of motion dated November 15, 2021 (mot seq No. 001), for summary judgment. By notice of cross-motion (mot seq No. 002) defendants cross-moved for summary judgment on their statute of limitations affirmative defense.

Motion sequences 001 and 002 were decided by order dated April 18, 2022 (the April 2022 order); this court (Rouse, A.J.S.C.) (NYSCEF Doc Nos. 106, 107) opined:[*2]

"The Plaintiff timely recommenced this action and the prior action had not been dismissed upon any of the exceptions to CPLR § 205 that bar a new action after termination of the previous action.

"Defendants contend that the court in Deutsche Bank Natl. Trust Co. v Brathwaite, 197 AD3d 557 (2d Dept 2021) held that an action dismissed pursuant to CPLR § 3215(c) was not entitled to the saving provision of CPLR § 205. That is incorrect. In Braithwaite, the court expressly held that a CPLR § 3215(c) dismissal was not on the merits and was not a dismissal with prejudice. The reference in CPLR § 205 to 'a dismissal of the complaint for neglect to prosecute the action' is a reference, as expressly made in CPLR § 205, to a dismissal pursuant to CPLR § 3216. Plaintiff's action was not dismissed pursuant to CPLR § 3216. Accordingly, the Defendants' cross motion to dismiss the present action pursuant to CPLR § 3212, upon their contention the action is barred by the statute of limitations, is denied." (2022 NY Slip Op 34671[U], *4 [Sup Ct, Suffolk County 2022] [emphasis added].)

By notice of motion dated January 9, 2023 (mot seq No. 003), defendants move under CPLR 2221 (e) (2) for an order granting renewal of this court's April 2022 order. Plaintiff opposes the motion.{**81 Misc 3d at 686}

"A motion for leave to renew is the appropriate vehicle for seeking relief from a prior order based on a change in the law." (Dinallo v DAL Elec., 60 AD3d 620, 621 [2d Dept 2009]; see CPLR 2221 [e] [2]; Opalinski v City of New York, 205 AD3d 917, 919 [2d Dept 2022].) However, "[a]fter entry of a final judgment, a motion for leave to renew pursuant to CPLR 2221 (e) (2) based upon 'a change in the law that would change the prior determination' must be made, absent circumstances set forth in CPLR 5015, before the time to appeal the final judgment has expired." (Matter of Eagle Ins. Co. v Persaud, 1 AD3d 356, 357 [2d Dept 2003], quoting CPLR 2221 [e] [2]; see Washington Mut. Bank, FA v Itzkowitz, 47 AD3d 923, 923 [2d Dept 2008]; Daniels v Millar El. Indus., Inc., 44 AD3d 895 [2d Dept 2007].)

Here, defendants explicitly argue that renewal is warranted because

"there has been a change effected by the New York Legislature in the law governing the statute of limitations in mortgage foreclosure actions that became effective on December 30, 2022 and which would clearly alter the determination in the Order that this action was timely commenced. Specifically, a new CPLR § 205-a . . . ." (See NYSCEF Doc No. 113 ¶ 2.)

It is undisputed that none of the circumstances set forth in CPLR 5015 are applicable to this case. It is also undisputed that defendants' motion for leave to renew was made after the entry of the final judgment and no appeal was taken. Indeed, the notice of entry was electronically filed on April 25, 2022; therefore the time to appeal (or to file a motion to renew) expired May 25, 2022. Defendants' motion to renew was not filed until January 9, 2023—over seven months after the deadline to appeal/move to renew. Inasmuch as defendants failed to file their motion for leave to renew based upon a change in the law prior to the entry of a final judgment or before the time to appeal fully expired, defendants' motion should be denied because the April 2022 order is a final and non-appealable order. That would have been the end of this issue but [*3]for Governor Hochul signing the Foreclosure Abuse Prevention Act effective December 30, 2022.{**81 Misc 3d at 687}

The Foreclosure Abuse Prevention Act of 2022 (hereafter FAPA) (L 2022, ch 821) amended six laws, i.e., CPLR 203, CPLR 205, CPLR 213, CPLR 3217, RPAPL 1301, and General Obligations Law § 17-105. It is not seriously disputed that but for the FAPA amendments, this case is not barred under New York's statute of limitations (CPLR 213 [4]). Prior to FAPA, this court found in the April 2022 order that dismissal of the first action was pursuant to CPLR 3215 (c), and was "not with prejudice" resulting in plaintiff being able to avail itself of the CPLR 205 (a) six months refiling savings clause. The April 2022 order was not appealed and is now final.^[FN1]

Defendants now seek to renew the April 2022 order (even though their motion was untimely), asserting that FAPA's amendments to CPLR 203 and 205 bar plaintiff from utilizing the six-month savings statute and FAPA's section 10 provision permits the new law to apply retroactively to the April 2022 final order.

Defendants assert in their application that FAPA brings section 3215 dismissals into the realm of ineligibility for the section 205 (a) savings clause because FAPA changed section 205 (a) to add that the savings clause is unavailable if the prior case was dismissed under CPLR 3215 (c). Premised thereon,{**81 Misc 3d at 688} defendants argue that the current action must be dismissed as violative of New York's six-year statute of limitations. This argument can only apply to the current action if FAPA's retroactive component applies.

The FAPA December 30, 2022 effective date postdates the April 2022 order which became "final" and no longer appealable as of May 25, 2022. However, section 10 of FAPA contains a rather unusual "retroactivity" provision which states:

"This act shall take effect immediately and shall apply to all actions commenced on an instrument described under subdivision four of section two hundred thirteen of the civil practice law and rules in which a final judgment of foreclosure and sale has not been enforced." (Emphasis added.)[*4]

I. Vested Rights Doctrine

Plaintiff challenges the constitutionality of FAPA's retroactive application to the final April 2022 order on substantive due process grounds under the United States and New York State Constitutions which is generally described as a "vested rights" theory.

The New York Court of Appeals has previously determined that any legislative act that retrospectively deprives a party of a "vested right" in property is forbidden by article I, § 6 of the New York State Constitution. (Germania Sav. Bank v Village of Suspension Bridge, 159 NY 362 [1899].) This case cites to Burch v Newbury (10 NY 374 [1852]) for the proposition that final judgments are vested rights. Article I, § 6 provides "[n]o person shall be deprived of life, liberty or property without due process of law." New York's due process constitutional requirement has been construed to be even broader and more protectively encompassing than the constitutional requirement of due process as detailed in the Fifth and Fourteenth Amendments of the United States Constitution. (See Walton v New York State Dept. of Correctional Servs., 18 Misc 3d 775 [Sup Ct, Albany County 2007], citing People v LaValle, 3 NY3d 88 [2004], and Sharrock v Dell Buick-Cadillac, 45 NY2d 152 [1978].)

In the mid-twentieth century, the Court of Appeals eroded the "bright-line" Germania Court "vested rights" doctrine. It instead introduced a "rational basis" balancing test when construing the constitutional validity of the "vested rights" doctrine. (See Matter of Chrysler Props. v Morris, 23 NY2d 515 [1969], citing Charles B. Hochman, The Supreme Court and the Constitutionality of Retroactive Legislation, 73 Harv L Rev 692{**81 Misc 3d at 689} [1960]; HSBC Bank USA, N.A. v IPA Asset Mgt., LLC, 79 Misc 3d 821 [Sup Ct, Suffolk County 2023].) It is interesting that although the Court of Appeals affirmed the "due process" rational basis balancing test again in 1987, it also affirmatively found that there exists a "final judgment" exception to the doctrine wherein res judicata was acknowledged to be a bar to the application of a legislative retroactivity clause. (Matter of Hodes v Axelrod, 70 NY2d 364 [1987], citing Matter of Reilly v Reid, 45 NY2d 24 [1978]; see also Ruffolo v Garbarini & Scher, 239 AD2d 8 [1st Dept 1998].)

While not expressly labeled as the "final order res judicata" doctrine, recent courts still find that the "vested property rights" doctrine is viable if the subject judgment is not reviewable by a higher court. (See Opalinski v City of New York, 205 AD3d 917 [2d Dept 2022]; U.S. Bank Trust, N.A. v Miele, 80 Misc 3d 839 [Sup Ct, Westchester County 2023], citing Matter of Boardwalk & Seashore Corp. v Murdock, 286 NY 494 [1941]; Matter of Atlantic Beach Towers Constr. Co. v Michaelis, 21 AD2d 875 [2d Dept 1964]; see MTGLQ Invs., L.P. v Gross, 79 Misc 3d 353 [Sup Ct, Westchester County 2023].) See also US Bank N.A. v Johns (2023 NY Slip Op 32683[U] [Sup Ct, NY County 2023]) for the proposition that FAPA's retroactivity clause is always unconstitutional as it "would destroy rights already accrued by the Plaintiff." (Id. at *3.)

As the instant case involves the final order exception, this court need not address the rational basis balancing test described in American Economy Ins. Co. v State of New York (30 NY3d 136 [2017]) except to note that a review of the relevant case law reveals few instances where courts did not find a rational legislative basis.^[FN2]

II. Separation of Powers and Res Judicata

The fundamental gravamen of the res judicata final order exception is the separation of powers doctrine. The United States Constitution creates three branches of government and{**81 Misc 3d at 690} vests each branch with a different type of power. (See art I, § 1; art II, § 1, cl 1; art III, § 1.) "To the legislative department has been committed the duty of making laws; to the executive the duty of executing them; and to the judiciary the duty of interpreting and applying them in cases properly brought before the courts." (Patchak v Zinke, 583 US —, —, 138 S Ct 897, 904 [2018], citing Massachusetts v Mellon, 262 US 447, 488 [1923]; see also Wayman v Southard, 10 Wheat [23 US] 1, 46 [1825, Marshall, Ch. J.] ["(T)he legislature makes, the executive executes, and the judiciary construes the law"].) By vesting each branch with an exclusive form of power, the framers kept those powers separate. (See INS v Chadha, 462 US 919, 946 [1983].) Each branch "exercise[s] . . . the powers appropriate to its own department," and no branch can "encroach upon the powers confided to the others." (Patchak, 583 US at —, 138 S Ct at 904-905, citing Kilbourn v Thompson, 103 US 168, 191 [1881].) This system prevents "[t]he accumulation of all powers, legislative, executive, and judiciary, in the same hands" (Madison, Federalist No. 47)—an accumulation that would pose an inherent "threat to liberty." (Clinton v City of New York, 524 US 417, 450 [1998].)

The separation of powers doctrine precludes the legislature from undertaking to readjudicate controversies that have been litigated in the courts and resolved by final judicial judgment. (16 Am Jur 2d, Constitutional Law § 300, Legislative interference in litigation.) FAPA's legislative memorandum in support (Assembly Mem in Support of 2021 NY Assembly Bill A7737B, enacted as L 2022, ch 821) ascribes that the legislation's purpose was to correct the Court of Appeals alleged incorrect decision in Freedom Mtge. Corp. v Engel (37 NY3d 1 [2021]). A legislative body violates the separation of powers doctrine by purporting to retroactively overrule a final judicial decision by a subsequent declaration of what the legislature originally intended. (16 Am Jur 2d, Constitutional Law § 300.) Similarly, legislation that targets an appellate court's final decision, seeking to reinterpret the meaning of a prior statute, constitutes a legislative adjudication of the case in contravention of the separation of powers doctrine. (See Ruiz v United States, 243 F3d 941 [5th Cir 2001].) For this reason, Congress is constitutionally forbidden to command federal courts to reopen final judgments. (Patchak v Zinke, 583 US —, 138 S Ct 897 [2018]; Ruiz v United States, 243 F3d 941 [5th Cir 2001].)

"It is the intention of the Constitution that each of the great co-ordinate departments of the government—the Legislative,{**81 Misc 3d at 691} the Executive and the Judicial—shall be, in its sphere, independent of the others." (United States v Klein, 13 Wall [80 US] 128, 147 [1872].) "Separation-of-powers principles . . . protect each branch of government from incursion by the others." (Bond v United States, 564 US 211, 222 [2011].) It is the judicial branch of government that decides private disputes arising under such constitutional or statutory dictates. (See Hernandez v Robles, 7 NY3d 338 [2006]; Walton v New York State Dept. of Correctional Servs., 18 Misc 3d 775 [Sup Ct, Albany County 2007].) It is the judiciary that determines whether the principle of "separation of powers" has been [*5]violated. (Baker v Carr, 369 US 186 [1962].) The United States Constitution prohibits the legislature from co-opting the judiciary's function. (Patchak v Jewell, 109 F Supp 3d 152 [D DC 2015], citing United States v Klein, 13 Wall [80 US] 128 [1872].)

The New York State Constitution also provides for a three-branch, equal and independent governmental system. One of the components of separation of powers derives from the notion that once a final judicial decision is made, it may not be legislatively countermanded. "[Once a court] judgment [is] final and unalterable, because no further right of appeal exist[s], then the judgment confer[s] a vested right . . . which . . . [cannot] be deprived by an act of the legislature." (Germania Sav. Bank v Village of Suspension Bridge, 159 NY 362, 368 [1899].) The "vested rights" retroactivity doctrine which has been previously discussed infra dates back to New York's colonial common law. (See generally Burch v Newbury, 10 NY 374 [1852].) Central to this doctrine concerning retroactive lawmaking was the Court of Appeals' repeated holding that the legislature could not annul an "existing [complete and final] judgment." (Id. at 393.) The Burch Court recognized that to hold otherwise would mean "no [judicial] judgment . . . can [ever] be 'rested upon as final.' " (Id. at 394.) See also Glicksman v Board of Educ./Cent. School Bd. of Comsewogue Union Free School Dist. (278 AD2d 364 [2d Dept 2000]) noting that otherwise the time to appeal is forever extended.

Despite introducing a "rational basis balancing test" into the "vested rights" doctrine, the Court of Appeals has never backed away from its position that "final order" vested rights can never be changed by legislative decree. To do so would violate the constitutional separation of powers as the legislature, theoretically speaking, would then be the potential final arbiter of "all" disputes. The judiciary's province would be co-opted and it would no longer be a coequal branch to government.{**81 Misc 3d at 692}

As the statute of limitations issue in this proceeding was conclusively litigated to a final, no longer appealable order, its judicial decree is not subject to retroactive relitigation. Normally, this court attempts to harmonize conflicting law so as to avoid constitutional infirmity. (See People v Felix, 58 NY2d 156 [1983], citing McKinney's Cons Laws of NY, Book 1, Statutes § 150.) However, it appears impossible to construe FAPA's section 10 language "final judgment of foreclosure and sale has not been enforced" in any manner which is compatible with res judicata's concept of "final order or judgment." Fortunately, FAPA does contain a "severability clause" and this court is authorized to sever the offending retroactivity clause.

The ease with which the legislature attempts to undermine judicial decision making—as shown by its proclamation in FAPA that the law "shall apply to all actions . . . in which a final judgment of foreclosure and sale has not been enforced"—is unconstitutional. Accordingly, the court declares FAPA's section 10 retroactivity clause to violate the New York and United States Constitutions in any proceeding, like here, involving relitigation of a final order. Defendants' application to renew is granted and, upon reconsideration, is again denied.