The setup in Article 13 LLC v. New York Attorney General, No. 23-7247 (May 13, 2026) is very “Second Circuity” (it involves government adopting a statute that thwarts the way that some mortgages are treated, and was applied retroactively) and is bit convoluted, so hang on while we get through it.
But we shall start with the U.S. Court of Appeals for the Second Circuit’s conclusion that a New York statute known as the Foreclosure Abuse Prevention Act did not result in a taking because the challenger does not have a property interest in “collaterally challeng[ing] the invalidity of a prior foreclosure action years after the limitations period expired[.]” Slip op. at 25. And even if that were a property right, this was not a Penn Central taking because any “negative economic impact … was the result of [the challenger]’s own inaction.” Id.
As we noted above, the facts are somewhat convoluted. The place to start is Article 13’s federal court quiet title complaint, where it sued U.S. Bank, the holder of the senior mortgage. Article 13 held a junior mortgage encumbering land in Brooklyn, and “sought to discharge and cancel U.S. Bank’s senior mortgage on that property as time-barred.” Slip op. at 4. Article 13 claimed the six-year statute of limitations for U.S. Bank to foreclose had expired. The triggering event was the loan provider accelerating the debt by commencing a foreclosure action in 2007. Thus, the argument went, U.S. Bank was SOL in 2013.
“Days after the district court’s ruling [denying cross motions for summary judgment] New York enacted the Foreclosure Abuse Prevention Act (‘FAPA’), which, in part, bars the defense of the invalidity of prior accelerations of mortgages in quiet title actions.” Slip op. at 5. Article 13 went back to the district court seeking recon of the court’s earlier denial of summary judgment. U.S. Bank opposed on the grounds that FAPA did not apply retroactively (but if it did, it subjected the statute to constitutional due process, Contracts Clause, and takings problems). Id.
The district court thought the statute applied retroactively and governed the Article 13/U.S. Bank quiet title action, and when the case reached the Second Circuit, that court certified the retroactivity question to New York’s highest court, the Court of Appeals (dun-dun). The Court of Appeals held that yes, FAPA applies retroactively and that doing so does not run afoul of the New York Constitution’s due process requirements.
This set up a return to the Second Circuit to resolve U.S. Bank’s federal constitutional arguments. Well, no surprise, that court held that no, there’s no violation of any of the Big Four constitutional claims: substantive and procedural due process, Contracts Clause, and Takings. We’ll let you read the opinion for yourself for the details, but here are the high (or low, depending on your perspective) points:
Substantive due process: there’s no “deeply rooted” right to wait until the limitations period expired to challenge the validity of an earlier foreclosure action. Slip op. at 13. You snooze, you lose. And with no property interest, there’s no claim that the government has acted arbitrarily and capriciously. And even if there were such a property interest, FAPA passes the very low bar of the rational basis test. Slip op. at 16.
Procedural due process: same “property” problem, and U.S. Bank could have availed itself of all the procedures available to someone who files a claim within the statute of limitations. Once again, you snooze you lose.
Contracts Clause: applying FAPA retroactively does not “substantially impair” the contract but rather, as above, “the inaction of U.S. Bank and its predecessors allows its right to foreclose on the Senior Mortgage to expire” that caused any impairment. Slip op. at 22. Yes again, you snooze you lose.
Takings: no property (although we object a bit to treating due process property with takings “private property”), so no taking. And even if there were a private property interest here, there’s no negative financial impact that can be attributed to FAPA, because, as you might guess, “we find that such was the result of its own inaction.” Slip op. at 26.
In the end, the Second Circuit fell back on the “you should have expected this” vibe:
This is not a case in which a legislative act destabilized a settled area of law that U.S. Bank and its predecessors detrimentally relied upon. Rather, U.S. Bank invested in an area “that has long been the source of public concern and government regulation.” Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1007 (1984). In such cases, a subsequent regulation clarifying the rules of estoppel and accrual “can hardly be called a taking.” Id. Finally, FAPA is a “public program” that adjusts “the benefits and burdens of economic life to promote the common good.” Connolly v. Pension Ben. Guar. Corp., 475 U.S. 211, 225 (1986). Specifically, FAPA seeks to redress abusive tactics in real property litigation that negatively impact New York homeowners and to end manipulation of the statute of limitations. As discussed previously, both of those interests are beneficial to society. See Buffalo Tchrs., 464 F.3d at 374; Gabelli, 568 U.S. at 448–49.
Slip op. at 27.
Article 13 LLC v. New York Attorney General, No. 23-7247 (2d Cir. May 13, 2026)