DAN KLORES ASSOCIATES, INC. v. ABRAMOFF

Plaintiff's showing that defendants failed to give plaintiff written notice of the banking institution that held plaintiff's security deposit, in violation of General Obligations Law § 7-103(2), permitted an inference of commingling at the time of lease expiration, in violation of General Obligations Law § 7-103(1), that defendants failed to rebut (see, LeRoy v. Sayers, 217 A.D.2d 63, 68-69). As a result of such commingling, defendants forfeited any right they had to avail themsees of the security deposit "for any purpose", entitling plaintiff to its "immediate" return notwithstanding that plaintiff may itself have breached the lease (id., at 68). Thus, we reject defendants' argument that a tenant's right to a refund of a security deposit for commingling is subject to offset to the extent a landlord incurs justifiable repair costs after the tenant vacates. Plaintiff had a cause of action against defendants for conversion as soon as the deposit was placed in a commingled account, which cannot be defeated by defendants' post-lease use of the commingled deposit for repairs.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.