Obligations Law] does not provide any specific penalty or sanction for its breach, it has been
uniformly held that a commingling constitutes a conversion and entitles the tenant to the
immediate recovery of his deposit or advances." LeRoy, 217 AD2d at 69. Therefore,
summary judgment is granted in favor of plaintiff against defendant Developer as to its first
cause of action for conversion, entitling plaintiff to the immediate return of $115,944.19 (the
amount sought by plaintiff in the complaint representing the total security deposit, less monies
plaintiff admits is owed to defendant for rent and other charges)[FN3], with interest at the statutory rate from the date
that the funds were converted, i.e. October 9, 2007, the date the Lease Agreement went into
effect.
Plaintiff's Motion for Summary Judgment with Respect to the Individual
Defendants
With regard to the individual defendants, plaintiff contends that they are also liable for
Developer's conversion. Plaintiff asserts that corporate officers and directors may be held
personally liable for fraudulent acts committed in the furtherance of company business.
As discussed above, "the legal relationship between landlord and tenant [changed] from
debtor-creditor to trustee-cestui que trust." Id. at 68 (internal quotations omitted). In this
case, defendant Developer, as landlord, owed plaintiff a fiduciary duty not to commingle the
funds. However, as regarding the members of Developer, "it is well settled that any one who
knowingly participates with a fiduciary in a breach of trust is liable for the full amount of the
damage caused thereby." Talansky v
Schulman, 2 AD3d 355, 359 (1st Dep't 2003) (internal citations and quotations omitted).