Kamara v Pavia

[*1] Kamara v Pavia 2006 NY Slip Op 50172(U) [11 Misc 3d 1051(A)] Decided on February 6, 2006 Rochester City Ct Yacknin, J. 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 6, 2006
Rochester City Ct

Kolako Kamara, Plaintiff,

against

Jim Pavia, Defendant.



Amie Williams, Plaintiff, v

against

Jim Pavia, Defendant.



2005 SC 17672



Appearances (Kamara v. Pavia):Kolako Kamara, pro se, for plaintiff.

Boylan, Brown, Code Vigdor & Wilson, LLP (David K. Hou, Esq., of counsel), for defendant.

Appearances (Williams v. Pavia):Amie Williams, pro se, for plaintiff.

Boylan, Brown, Code Vigdor & Wilson, LLP (David K. Hou, Esq., of counsel), for defendant.

Ellen M. Yacknin, J.

INTRODUCTION [*2]

These actions involve two plaintiffs' separate claims against the same defendant. Both cases present the identical issue: whether a former tenant, who did not post the security deposit associated with his or her tenancy, has standing to sue his or her former landlord for the return of the security deposit. For the reasons discussed in this Decision, the answer is no. Nonetheless, defendant should not construe the Court's Decision as a license to retain the security deposits. Instead, as explained below, defendant is legally obligated to return the deposits to the depositor or to account for how he expended the funds.

PROCEDURAL BACKGROUND

Plaintiff Kolako Kamara

Plaintiff Kolako Kamara brought a Small Claims action to recover the $725.00 security deposit that was paid to his former landlord, defendant Jim Pavia. An arbitrator's decision was entered in Mr. Kamara's action on November 28, 2005. Following a party's demand, a trial de novo was commenced on January 23, 2006.

Plaintiff Amie Williams

Plaintiff Amie Williams brought this Small Claims action to recover the $700.00 security deposit that was paid to her former landlord, defendant Jim Pavia. An arbitrator's decision was entered in Ms. Williams' action on November 28, 2005. Following a party's demand, a trial de novo was commenced on January 27, 2006.

FACTS

Plaintiffs Kolako Kamara and Amie Williams and their respective families fled from their home countries and entered the United States as refugees. When they arrived in Rochester, New York, Catholic Family Center, a local not-for-profit agency, assisted their settlement into their new lives. Among other services, the Center helped them find housing in apartments owned by defendant Jim Pavia.

Defendant Pavia has worked with Catholic Family Center for years to provide rental housing to newly arrived refugees. To date, working in conjunction with the Center, defendant Pavia has rented apartments to dozens, if not hundreds, of refugees and their families.

In late summer 2004, Catholic Family Center found rental apartments owned by defendant Pavia for the Kamara and Williams' households. Plaintiff Kamara's family moved into an apartment in Rochester owned by defendant Pavia in early September 2004. Plaintiff Williams' family moved into an apartment in Rochester owned by defendant Pavia in early July 2004.

Like most refugees whom the Catholic Family Center helps, plaintiff Kamara and plaintiff Williams arrived in America with precious few resources. Neither plaintiff Kamara nor plaintiff Williams could afford to pay the one month security deposit that defendant Pavia required for their respective apartments. For that reason, as it does for many refugees, Catholic Family Center gave security deposits to defendant Pavia to secure plaintiffs' apartments: $725.00 for plaintiff Kamara's apartment and $700.00 for plaintiff Williams' apartment.

Plaintiff Kamara's family vacated its apartment on August 31, 2005. Although plaintiff Kamara requested the release of the $725.00 security deposit, defendant Pavia refused to give it to him. Instead, he retained the $725.00 security deposit that Catholic Family Center had given him.

Plaintiff Williams' family vacated its apartment on August 1, 2005. Although plaintiff [*3]Williams requested the release of the $700.00 security deposit, defendant Pavia refused to give it to her. Instead, he retained the $700.00 security deposit that Catholic Family Center had given him.

At the trial in plaintiff Williams' action, defendant Pavia testified that he has never returned a single security deposit given to him by the Center. By way of explanation, defendant Pavia stated that he has not done so because he has never been asked.

LEGAL DISCUSSION

Under NY General Obligations Law §7-103(1): [M]oney . . . deposited . . . on a contract . . . for the rental of real property as security for performance of the contract . . . shall continue to be the money of the person making such deposit . . . and shall be held in trust by the person with whom such deposit . . . shall be made.

(Emphasis added.) It is therefore incontrovertible that the security deposits defendant Pavia received in connection with plaintiff Kamara's and plaintiff Williams' apartments were not his to retain absent a showing that plaintiffs failed to comply with their obligations under their rental agreements. See Ideal Reliable Sundries, Inc. v. Greenpoint Terminal Warehouse, 49 AD2d 852 (1st Dep't 1975); Hayes v. White Oaks Group, LLC, 6 Misc 3d 1039(A), 2005 Westlaw 656128, *2 (Ossining Town Ct. 2005). Nonetheless, based on the facts in these cases, neither plaintiff Kamara nor plaintiff Williams is entitled to sue defendant Pavia for the return of the security deposits.

Before one party can sue another in court, he or she must have standing to sue. A plaintiff's standing to sue is a threshold issue in every lawsuit. "If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." Saratoga County Chamber of Commerce, Inc. v. Pataki, 100 NY2d 801, 812 (2003).

A plaintiff has standing to sue a defendant if the plaintiff is injured or aggrieved, either directly or indirectly, by something the defendant has done or threatens to do. A plaintiff must be involved in a genuine controversy with the defendant, and if the plaintiff were to prevail, he or she would benefit from the court's decision. If there is no genuine controversy between a plaintiff and a defendant, a plaintiff has no standing to sue, and the court cannot entertain the plaintiff's claims. See Saratoga Chamber of Commerce, Inc. v. Pataki, 100 NY2d at 812-13; Siegel, New York Practice §136, at 232 (4th ed.).

At his trial, plaintiff Kamara's undisputed testimony established unequivocally that Catholic Family Center paid the $725.00 security deposit to defendant Pavia to secure plaintiff Kamara's apartment. Plaintiff Kamara was unable to present any evidence demonstrating that Catholic Family Center had assigned its interest in the security deposit to him.[FN1]

Similarly, at her trial, plaintiff Williams' undisputed testimony established unequivocally that Catholic Family Center paid the $700.00 security deposit to defendant Pavia to secure plaintiff Williams' apartment. Plaintiff Williams, like plaintiff Kamara, was unable to present [*4]any evidence demonstrating that Catholic Family Center had assigned its interest in the security deposit to her.[FN2]

Pursuant to NY General Obligations Law §7-103(1), therefore, the $725.00 security deposit that Catholic Family Center gave to Mr. Pavia in connection with Mr. Kamara's tenancy, and the $700.00 security deposit that the Center gave to Mr. Pavia in connection with Ms. Williams' tenancy, remain the Center's funds. These security deposits did not become the property of either Mr. Kamara or Ms. Williams simply because they were Mr. Pavia's tenants. See Hayes v. White Oaks Group, LLC, 2005 WL 656128 at *2; Mancini v. DMJ Management Corp., 195 Misc 2d 656, 657 (Mt. Vernon City Ct. 2003); Wald v. Gold, 1 Misc 2d 756, 759 (NY County Sup. Ct. 1955).

Because Catholic Family Center owns the security deposits that were given to Mr. Pavia to secure the apartments rented by Mr. Kamara and Ms. Williams, Catholic Family Center is the only party that is injured by Mr. Pavia's allegedly illegal failure to return the security deposits. Accordingly, only Catholic Family Center has standing to sue Mr. Pavia for the return of the deposits. Conversely, because plaintiff Kamara and plaintiff Williams neither own nor are entitled to have the security deposits, neither has standing to sue Mr. Pavia for their return. See, e.g., Technology Outsource Solutions, LLC v. Eni Technology, Inc., 21 AD2d 1280, 1281 (4th Dep't 2005)(plaintiff that did not own receivables has no standing to sue defendant for the value of the receivables).

Defendant Pavia, however, should not construe this Court's holding as carte blanche to retain the security deposits Catholic Family Center gave to Mr. Pavia to secure plaintiff Kamara's and plaintiff Williams' apartments, not to mention the security deposits the Center gave him with respect to all other refugees who rented apartments from him. To the contrary, Mr. Pavia would be well-advised to take immediate steps to comply with his legal obligations with respect to all the security deposits he has received from, but has not returned to, Catholic Family Center.

Defendant Pavia is legally obligated to hold security deposits in trust for the person or entity that gave the deposits to him. See NY General Obligations Law §7-103(1); Glass v. Janbach Properties, Inc., 73 AD2d 106, 108 (2d Dep't 1980); McMaster v. Pearse, 9 Misc 3d 964, 965-66 (N.Y.C. Civil Ct. 2005). As a trustee, defendant Pavia has a duty of loyalty to those who provide him security deposits. See In re Morgan, 8 AD3d 789, 790 (3rd Dep't 2004); Frontier Excavating, Inc. v. Sovereign Construction Co., 30 AD2d 487, 490 (4th Dep't 1968).

Among his specific responsibilities as a trustee, defendant Pavia must maintain the security deposits he receives in a segregated account, and is prohibited from mingling the security deposits with his personal funds. See NY General Obligations Law §7-103(1). He must maintain records of the security deposits in his segregated account. See Frontier Excavating, Inc. v. Sovereign Construction Co., 30 AD2d at 490.[FN3] He must return the security deposits to the [*5]depositors when the apartments are vacated. See Cruz v. Diamond, 6 Misc 3d 134(A), 2005 Westlaw 416002 (App. Term, 9th & 10th Jud. Districts 2005). If defendant Pavia retains a security deposit as reimbursement for damages arising from a tenant's breach of the rental agreement, he must provide an accounting of how he spent the funds to the depositor. See Frontier Excavating, Inc. v. Sovereign Construction Co., 30 AD2d at 490.[FN4]

As a trustee, a landlord who unlawfully retains security deposits can be prosecuted for larceny. See People v. Lyon, 82 AD2d 516, 520 (2d Dep't 1981). Additionally, the Attorney General of the State of New York is explicitly authorized to institute a legal action to compel a landlord to comply with the mandates of NY General Obligations Law §7-103, and to return unlawfully held security deposits. See NY General Obligations Law §7-109; Gerel Corp. v. Prime Eastside Holdings, LLC, 12 AD3d 86, 89 (1st Dep't 2004).

It is evident from his testimony that defendant Pavia has flouted his legal obligations with respect to the security deposits he receives from Catholic Family Center, perhaps for years. Defendant Pavia testified that he has worked with the Center for years to rent apartments to refugees, and has received dozens, and perhaps hundreds, of security deposits from the agency to secure these apartments. According to defendant Pavia, until plaintiffs Kamara and Williams sued him, he "never had a problem" with the security deposits he received from Catholic Family Center. When asked to explain, defendant Pavia testified that he had never returned a single security deposit he received from Catholic Family Center, nor had he ever been asked to do so until now.

Defendant Pavia's apparent belief that he is automatically entitled to retain security deposits unless the depositor asks for its return is as disturbing as it is astounding. As a trustee of the security deposits he receives, it is defendant Pavia's duty "to know the source of the funds and to return them as otherwise appropriate to their source at the end of the lease term." Cruz v. Diamond, 2005 Westlaw 416002 at *1. The fact that a depositor may not ask for the return of a security deposit does not obviate his legal obligation to return it to the depositor when required to do so, or to provide an accounting of his expenditures to the depositor when he does not return the deposit.

Each year, Catholic Family Center provides assistance to thousands of disadvantaged families to help them "achieve independence with dignity." www.cfrochester.org. As a not-for-profit agency, the Center receives most of its funding from government sources, private grants, and individual donations. The Center uses these funds to give defendant Pavia the security deposits he requires when he rents apartments to refugees who are referred by the Center.

According to defendant Pavia, the Catholic Family Center has given him thousands of dollars in security deposits over the years, not a dollar of which he has ever returned. Had he [*6]done so, the Center would have had considerably more resources available to help more refugees obtain suitable housing, learn English, obtain employment, and receive counseling to enable them to survive successfully in their new country. It is no exaggeration to conclude that defendant Pavia's failure to return the Center's security deposits prevented the Center from providing desperately needed assistance to those in need.

Catholic Family Center is not without recourse to thwart defendant Pavia from unlawfully retaining its security deposits. The Center can monitor the security deposits it gives to defendant Pavia, make a formal request for each deposit's return when a family vacates one of defendant Pavia's apartments, and sue defendant Pavia as appropriate to compel the deposit's return. Alternatively, the Center can formally assign its right to a security deposit to the family that rents Mr. Pavia's apartment (or to anyone else, for that matter), and advise the family that when its tenancy ends, the family should request the return of the assigned security deposit. See Cantor Fitzgerald Inc. v. Cantor Fitzgerald Securities, 95 NY2d 919, 921 (2000); Mogul v. Kramer, 98 Misc 2d 1023 (NY County 1979). Doing so would not only help ensure that the Center's security deposits are returned, but would help ensure that funds that are intended to help needy families remain available to achieve their purpose.

CONCLUSION

For the reasons discussed above, plaintiff Kamara's and plaintiff Williams' claims against defendant Pavia are dismissed, without disbursements.

SO ORDERED.

Dated: February 6, 2006,

nunc pro tunc in

Kamara v. Pavia to ______________________________

January 23, 2006, andHon. Ellen M. Yacknin

in Williams v. Pavia toRochester City Court Judge

January 27, 2006 Footnotes

Footnote 1: Because of the Court's ruling based on plaintiff Kamara's testimony, the Court did not permit additional witnesses to testify.

Footnote 2: Because of the Court's ruling based on plaintiff Williams' and defendant Pavia's testimony, the Court did not permit additional witnesses to testify.

Footnote 3: A landlord forfeits his or her right to retain a security deposit when he or she fails to show that the security deposit has been maintained in a segregated account as mandated by NY General Obligations Law §7-103(1). See McMaster v. Pearse, 9 Misc 3d at 966-67; Hartzell v. Burdick, 91 Misc 2d 758, 760 (Albany City Ct. 1977).

Footnote 4: A landlord has a right to retain a portion or all of a security deposit as necessary to offset any damages incurred as a result of a tenant's breach of the terms of a lease, such as damages caused by a tenant that are beyond normal wear and tear. The landlord has the burden of showing the existence of such compensable damages. See Hayes v. White Oaks Group, LLC, 2005 Westlaw 656128 at *2; McCormack v. Moran, 182 Misc 2d 568, 569 (Watertown City Ct. 999).