On September 8, the U.S. District Court for the Northern District of New York dismissed a putative class action challenging the constitutionality of New York’s Foreclosure Abuse Prevention Act (FAPA) (previously covered by InfoBytes here and here). The plaintiff, a trust that acquires and enforces mortgage loans secured by real property in New York, brought claims under 42 U.S.C. § 1983, alleging FAPA violated the Takings Clause of the Fifth and Fourteenth Amendments and the Contracts Clause of the U.S. Constitution. The trust argued FAPA retroactively altered the statute of limitations for mortgage foreclosure actions, rendering its mortgage unenforceable and depriving lenders and investors of vested contractual rights without just compensation. The court first dismissed all claims for money damages on sovereign immunity grounds, finding that New York had not consented to suit, Congress had not abrogated the state’s immunity through Section 1983, and the Takings Clause does not abrogate sovereign immunity where the state provides its own remedy.

The court also rejected the plaintiff’s attempt to avoid sovereign immunity defenses by invoking the Ex parte Young doctrine for prospective injunctive and declaratory relief, concluding that the named defendants — the governor and a state senator — lacked any role in FAPA’s enforcement beyond signing and sponsoring the legislation, which was insufficient to establish a connection to FAPA. The court further denied leave to amend, finding amendment would be futile because: (i) the state attorney general likewise lacked a sufficient enforcement connection to be a proper party; and (ii) the 2nd U.S. Circuit Court of Appeals’ May 2026 decision in Article 13 LLC v. Ponce De Leon Federal Bank expressly rejected the arguments that FAPA violates the Contracts Clause or interferes with a property interest under the Takings Clause, foreclosing the plaintiff’s claims on the merits.