Appeal from a judgment of the City Court of Yonkers, Westchester County (Charles D. Wood, J.), entered July 2, 2009.
Appellate Term, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.
Decided on March 28, 2012
PRESENT: LaCAVA, J.P., MOLIA and IANNACCI, JJ
The judgment, after a non-jury trial, insofar as appealed from, implicitly dismissed plaintiffs' claim to recover security deposits.
ORDERED that the judgment, insofar as appealed from, is reversed, without costs, and the matter is remitted to the City Court for a new trial with respect to plaintiffs' claim to recover security deposits.
In this small claims action, plaintiffs, the purchasers of a building from defendant John Ruggiero, seek to recover, among other things, the security deposits which the tenants in the building had paid upon the commencement of their leases. The evidence adduced at a non-jury trial established that, at the closing, Ruggiero had provided plaintiffs with an affidavit which stated that no security deposits existed. Plaintiffs later ascertained that the tenants had, in fact, provided security deposits. Ruggiero testified that he had stated in his affidavit that there were no security deposits because he had used the tenants' security deposits as setoffs against, among other things, the tenants' unpaid rent. The City Court awarded plaintiffs the sum of $1,270 for checks defendants had improperly cashed after closing, but declined to award plaintiffs any amount for the security deposits. Plaintiffs appeal from so much of the judgment as implicitly dismissed their claim to recover the security deposits.
As a security deposit remains the property of the tenant (see General Obligations Law § 7-103 ), Ruggiero improperly used the tenants' security deposits as setoffs against, among other things, unpaid rents. Upon his sale of the building to plaintiffs, Ruggiero was obligated, pursuant to General Obligations Law § 7-105 (1), to turn over the security deposits to plaintiffs and to notify the tenants of such transaction. Pursuant to the case of Gerel Corp. v Prime Eastside Holdings, LLC (12 AD3d 86, 92-93 ), plaintiffs, as successor landlords, were directly injured by Ruggiero's failure to turn over the security deposits and have standing to recover the security deposits from the prior owner under General Obligations Law § 7-105. Inasmuch as Ruggiero did not raise a valid defense to the uncontroverted fact that he had failed to turn over the security deposits to plaintiffs in violation of General Obligations Law § 7-105, plaintiffs were entitled to recover these deposits.
In view of the foregoing, substantial justice was not done between the parties according to the rules and principles of substantive law (see UCCA 1804, 1807; Ross v Friedman, 269 AD2d 584 ; Williams v Roper, 269 AD2d 125, 126 ). Consequently, the judgment, insofar as appealed from, is reversed and the matter is remitted to the City Court for a new trial at which the court shall determine the amount of the security deposits that were received by Ruggiero but which Ruggiero failed to turn over to plaintiffs, and shall award judgment to plaintiffs accordingly.
LaCava, J.P., Molia and Iannacci, JJ., concur.