[*4]
In World Realty Corp., the Appellate Term,
Second Department, refused to extend equitable jurisdiction to the Suffolk County District Court,
whose jurisdiction may not exceed the New York City Civil Court's jurisdiction. (2005 NY Slip
Op 51696[U], *2, 2005 WL 2683595, at *2, 2005 NY Misc. LEXIS, at *2.) The parties agreed to
settle a commercial nonpayment proceeding through a so-ordered stipulation. The stipulation
called for the landlord's attorney to return to the tenant funds held in escrow when the premises
were surrendered. The District Court found that the tenant's failure sufficiently to clean the
apartment materially breached the stipulation and awarded the escrow funds to the landlord. The
tenant appealed, claiming that the cleanliness of the apartment was, at most, a de minimis breach
and that the landlord breached the settlement stipulation. On appeal, the Appellate Term, Second
Department, found that "the tenant is limited to seeking to enforce the stipulation in a court that
has equitable jurisdiction or seeking money damages for breach of stipulation." (Id.)
The First and Second Departments are split on whether Civil Court has the jurisdiction to
release funds held in escrow. (See One York Property LLC v Vista Media Group Inc., 12
Misc 3d 1155[A], 2006 NY Slip Op 50899[U], *5, 2006 WL 1358464, at *5, 2006 NY Misc
LEXIS 1186, *5 [Civ Ct NY County, May 17, 2006] [discussing split between departments].)
The Appellate Term for the First Department held in Future 40th St. Realty, LLC v Mirage
Night Club, Inc., that Civil Court properly directed the release to the tenant of funds held in
escrow after the tenant complied with the terms of a settlement stipulation in a nonpayment
proceeding. (See 2002 NY Slip Op 50243[U], *1, 2002 WL 1448861, at *1, 2002 NY