off the deposit against his individual claims is to treat the deposit as a debt and the landlord as a
debtor — precisely the situation which section 233 was enacted to change (Id.).
More recently, Courts have directed the immediate forfeiture of the commingled security
deposit and barred an offset in favor of the offending Landlord notwithstanding the fact the
tenant had breached the lease (See Dan Klores Assocs., Inc. v. Abramoff, 288 AD2d 121,
121-22, 733 NYS2d 388 (1st Dep't 2001) (holding that a landlord who commingled the security
deposit may not use the deposit to "offset . . . justifiable repair costs after the tenant
vacates); Kelligrew v. Lynch, 2 Misc 3d 135A, 784 NYS2d 921 [App. Term 9th & 10th Jud.
Dists. 2004] (holding that the "[t]enant's failure to comply with the terms of a lease is not a
defense to a landlord's breach of the duty not to commingle the [security] deposit with personal
funds"); Vidipax, LLC v. Brown Bear Realty Corp., 22 Misc 3d 1104A, 880 NYS2d 228 (NY
Sup. Ct. Jan. 7, 2009) ("[Where there is] commingling at the time of lease expiration . . .
defendant [Landlord] forfeited any right he had to avail himself of the security deposit for any
purpose entitling plaintiff to its immediate return notwithstanding that plaintiff may have
breached the lease") (internal citations omitted)).
In the instant matter, since it is undisputed that Mr. Leonard in his capacity as trustee
breached his duty to refrain from commingling Plaintiffs' security deposit, and further since
Defendant may not claim an exemption for his partner's breach of their fiduciary duty, an offset
by the Landlord against other monies due is not permissible.[FN2] Parenthetically, although Plaintiffs' counsel