On July 16, 2025, the Appellate Division, Second Department declined to apply the Foreclosure Abuse Prevention Act (FAPA) to a mortgage foreclosure commenced prior to FAPA’s enactment, pursuant to the doctrine of judicial estoppel because Borrower’s bankruptcy plan proposed to release the property to mortgagee, and thereafter, the bankruptcy order confirmed that the property was to be released to, and liquidated by, mortgagee.
In Erickson, the mortgagee commenced the first foreclosure in June 2011, but voluntarily discontinued it in December 2011. In 2014, Borrower filed a Chapter 7 bankruptcy petition, which was subsequently converted to a Chapter 13 petition. The bankruptcy court confirmed the final Chapter 13 plan, which provided for Borrower’s release of the property to mortgagee for liquidation.
Subsequently, in 2019, the mortgagee commenced another action to foreclose the mortgage. Borrower answered and raised the statute of limitations as a defense. Mortgagee moved for summary judgment, and Borrower cross-moved for dismissal. The trial court granted mortgagee’s motion and denied Borrower’s cross-motion, holding that Borrower was judicially estopped from taking any position to impede mortgagee’s recovery of the property through foreclosure.
Despite this, when mortgagee moved for judgment of foreclosure and sale after the enactment of FAPA, Borrower cross-moved for leave to renew his opposition to mortgagee’s prior motion and his prior cross-motion based on FAPA. The trial court again granted mortgagee’s motion and denied Borrower’s cross-motion. Borrower then appealed.
The Court initially observed that “[i]n the context of a chapter 13 proceeding, 11 USC § 1325(a)(5)(C) provides, inter alia, that ‘the court shall confirm a plan if … with respect to each allowed claim provided for by the plan … the debtor surrenders the property securing such claim to such holder.’” Additionally, the Court noted that “the provisions of a confirmed plan bind the debtor and each creditor.” It concluded that the Bankruptcy Code clearly contemplates surrender of the property to the creditor, which “requires debtors to drop their opposition to a foreclosure action.”
Notably, the Second Department also found that “a debtor who promises to surrender property in bankruptcy court and then, once his or her debts are discharged, breaks that promise by opposing a foreclosure action in state court has abused the bankruptcy process.”
Thus, the Court concluded that the Borrower was “judicially estopped from asserting non-jurisdictional defenses” and affirmed the trial court’s denial of Borrower’s cross-motion to renew. Erickson shows that established legal doctrines may bar the retroactive application of FAPA and underscores the importance of providing business records to support the computation of the amount due.
