Schottenstein v. Axia Realty, LLC

2026 NY Slip Op 30948(U)

• Court: New York Supreme Court, New York County
• Decided: March 9, 2026
• Docket: Index No. 653907/2024
• Status: Unpublished
• Author: Phaedra F. Perry-Bond

Opinion

Schottenstein v Axia Realty, LLC 2026 NY Slip Op 30948(U) March 9, 2026 Supreme Court, New York County Docket Number: Index No. 653907/2024 Judge: Phaedra F. Perry-Bond Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

file:///LRB-ALB-FS1/Vol1/ecourts/Process/covers/NYSUP.6539072024.NEW_YORK.001.LBLX036_TO.html[03/20/2026 3:46:02 PM] FILED: NEW YORK COUNTY CLERK 03/10/2026 11:08 AM INDEX NO. 653907/2024 NYSCEF DOC. NO. 68 RECEIVED NYSCEF: 03/10/2026

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. PHAEDRA F. PERRY-BOND PART 35 Justice --------------------.X INDEX NO. 653907/2024 JONATHAN SCHOTTENSTEIN, NICOLE SCHOTTENSTEIN MOTION DATE 06/05/2025

Plaintiff, MOTION SEQ. NO. 001

-v- DECISION + ORDER ON AXIA REALTY, LLC, C/O ALDAD & ASSOCIATES PC, MOTION Defendant --------------------X

The following e-filed documents, listed by NYSCEF document number (Motion 001) 11, 12, 13, 14, 15, 16, 17, 18, 19,20,21,22,23,24,25,26,27,28,29,46,47,48,49,50,51,52,53,54,55,56,57,58,59, 60,61,62,63,65,67 were read on this motion to/for JUDGMENT-SUMMARY Upon the foregoing documents, Plaintiffs' motion for summary judgment is denied without

prejudice with leave to renew after further discovery.

I. Background

From May 15, 2023, through June 30, 2024, Plaintiffs leased (the "Lease") 40 East 72 nd

Street, Unit 6/PH, New York, New York (the "Penthouse") from Defendant Axia Realty, LLC

("Landlord") for $52,000.00 per month. Pursuant to the Lease, Plaintiffs provided Landlord with

a security deposit of one month's rent ($52,000.00). Prior to moving into the Penthouse, Plaintiffs

allegedly conducted a walk through and observed numerous damaged elements - including broken

doors, damages floors, damaged shelves, scuff marks, molding damage, a broken washer/dryer,

and leaking shower faucets (the "Existing Damage"). Plaintiffs allegedly complained to Landlord

and their broker about the Existing Damage to no avail. In June of 2023, Plaintiffs contacted the

Landlord's contractor (the "Contractor"), but the Contractor never completed any repairs.

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Landlord refutes this and claims it paid a contractor to make repairs to the items that Plaintiffs

complained about.

In November of 2023, the Contractor allegedly contacted Plaintiffs about a leak and

requested access to assess possible damage. In December of 2023, the Contractor opened the

bathroom ceiling to identify the source of the alleged leak, but the Contractor allegedly never

closed the ceiling hole in the bathroom. Plaintiffs vacated at the end of the Lease. But in July 2024,

Landlord sent Plaintiffs an itemized statement for repairs which cost over $62,000. As a result,

Plaintiffs brought this lawsuit seeking the return of their security deposit pursuant to General

Obligations Law § 7-103.

Landlord asserted several affirmative defenses and several counterclaims. Landlord asserts

the repairs were made were necessitated by damage caused during Plaintiffs' tenancy, and

Landlord to recover costs related to making those repairs, lost rent incurred by the delay in renting

the Penthouse caused by the repairs, and attorneys' fees. There appears to have been a limited

exchange of paper discovery, but there have not yet been any depositions, nor has there been a

preliminary conference, despite Plaintiffs filing their request for judicial intervention with a

request for a preliminary conference on November 26, 2024. In June of 2025, Plaintiffs moved for

summary judgment seeking dismissal of Landlord's affirmative defenses and counterclaims,

summary judgment on their first cause of action for return of the $52,000.00 security deposit, and

for attorneys' fees.

Landlord opposes 1 and proffers staging photographs taken before Plaintiffs occupied the

Premises which purportedly show a defect free Penthouse (NYSCEF Doc. 52). Landlord also relies

1 Landlord's prior attorneys moved to be relieved as counsel during the briefing of the instant motion. That application

was granted on August 21, 2025 and this matter was stayed for thirty days (NYSCEF Doc. 38). However, this motion's return date had already passed when Landlord's prior attorneys were granted leave to withdraw. Landlord's new attorneys appeared and filed opposition on October 31, 2025. Although technically late, given the circumstances, 653907/2024 SCHOTTENSTEIN, JONATHAN ET AL vs. AXIA REALTY, LLC, C/0 ALDAD & Page2 of7 ASSOCIATES PC, Motion No. 001

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on an invoice from August 27th , 2023, which purportedly shows repairs to the conditions Plaintiffs

complained about were made (NYSCEF Doc. 54). Landlord produced photographs of the

Penthouse post-occupancy which purportedly shows the damage caused by Plaintiffs (NYSCEF

Doc. 55). Landlord further produced an invoice dated July 4, 2024 which sets forth the costs to

repair the damage allegedly caused by Plaintiffs (NYSCEF Doc. 56), and photographs of some of

those repairs being conducted (NYSCEF Doc. 60). Landlord argues Plaintiffs failed to meet their

prima facie burden on summary judgment and the evidence produced in opposition raises issues

of fact. Finally, Landlord argues it complied with the law regarding retention of security deposits.

II. Discussion

A. Standard

"On a motion for summary judgment, the movant must make a prima facie showing by

submitting evidence that demonstrates the absence of any material issues of fact. Once that initial

showing has been made, the burden shifts to the opposing party to show there are disputed facts

requiring a trial" (Nellenback v Madison County, 44 NY3d 329, 334 [2025] [internal quotations

and citations omitted]). The movant's burden is heavy, and the facts must be viewed in the light

most favorable to the non-movant (Jacobsen v New York City Health and Hospitals Corp., 22

NY3d 824,833 [2014]).

"If the moving party fails to meet this initial burden, summary judgment must be denied

'regardless of the sufficiency of the opposing papers"' (Voss v Netherlands Ins. Co., 22 NY3d 728,

734 [2014] quoting Vega v Restani Constr. Corp., 18 NY3d 499,503 [2012]). "It is not the function

of a court deciding a summary judgment motion to make credibility determinations or findings of

because Plaintiffs had an opportunity file their reply, and in the interest of resolving cases on the merits, the Court considers the late opposition papers. 653907/2024 SCHOTTENSTEIN, JONATHAN ET AL vs. AXIA REALTY, LLC, C/O ALDAD & Page 3of7 ASSOCIATES PC, Motion No. 001

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fact" but rather the Court's function is to identify material triable issue of fact or point to the lack

thereof (Vega, supra at 505 [2012]).

B. Plaintiffs' Breach of Contract Claim

Plaintiffs' motion for summary judgment on the first cause of action for breach of contract

is denied, without prejudice, with leave to renew upon further discovery. To meet their prima facie

burden of demonstrating a breach of contract claim, Plaintiffs must show the existence of a

contract, Plaintiffs' performance, Landlord's breach, and resulting damages (see Markov v Katt,

176 AD3d 401 [1st Dept 2019]). To the extent Plaintiffs argue that Landlord breached by failing

to return their full security deposit based on an allegedly pretextual claim that Plaintiffs caused

significant damage to the Unit, issues of fact preclude a finding in favor of Plaintiffs on this

argument (14 East 4th Street Unit 509 LLC v Toporek, 203 AD3d 17, 24-26 [1st Dept 2022]).

Disputes over whether repairs were required, when the damage took place, and the reasonable cost

of rectifying those repairs cannot be resolved at this juncture without further discovery.

Although included under the "breach of contract" cause of action, Plaintiffs appear to be

seeking the return of their security deposit not due to a breach of contract but based on an alleged

violation of General Obligations Law § 7-103. In pertinent part, that statute reads as follows:

"1. Whenever money shall be deposited or advanced on a contract or license agreement for the use or rental of real property as security for performance of the contract or agreement or to be applied to payments upon such contract or agreement when due, such money, with interest accruing thereon, if any, until repaid or so applied, shall continue to be the money of the person making such deposit or advance and shall be held in trust by the person with whom such deposit or advance shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same ...

2. Whenever the person receiving money so deposited or advanced shall deposit such money in a banking organization, such person shall thereupon notify in writing each of the persons making such security deposit or advance, giving the name and address of the banking organization in which the deposit of security money is made, and the amount of such deposit .... "

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There is no dispute that Plaintiffs were provided notice that the security deposit was held

at a Chase Bank in New York, but that notice did not provide the address of the Chase Bank in

violation of General Obligations Law§ 7-103(2). The violation of General Obligations Law§ 7-

103(2) raises an inference that the security deposit was improperly commingled, but the inference

can be rebutted (Harlem Capital Center, LLC v Rosen & Gordon, LLC, 145 AD3d 579, 579-580

[1st Dept 2016]). In opposition to the motion, Landlord rebutted the inference of commingling.

Specifically, Antonia Milonas, the managing member of Landlord, swore under penalty of perjury

that Plaintiffs' security deposit was kept in a sealed envelope marked "SCHOTTENSTEIN

SECURITY DEPOSIT" which remained in Landlord's safe deposit box, and was only unsealed

and deposited into Landlord's operating account after Plaintiffs were provided a timely and

itemized list of damages pursuant to General Obligations Law§ 7-108(1-a)(e) (see also Finnerty

v Freeman, 176 Misc.2d 220, 221 [2d Dept. App Term 1998] [ keeping security deposit in sealed

envelope indicating it was tenants' security deposit, and retaining envelope among personal

possessions, constituted sufficient compliance with General Obligations Law § 7-103]). Moreover,

there is no requirement that the security deposit be placed in an interest-bearing account pursuant

to General Obligations Law§ 7-103(2-a) as there is no evidence that the rental property contained

six or more family dwelling units. Plaintiffs have not come forward with any evidence showing

Ms. Milonas' s affidavit is false.

Based on this record, without further discovery from Ms. Milonas and the methods through

which Plaintiffs' security deposit was held, the Court finds it premature to grant summary

judgment under General Obligations Law§ 7-103 (see also Brooklyn Industries LLC v Hudson

500 LLC, 2018 N.Y. Slip Op. 32714[U] at *2-3 [Sup. Ct., NY County 2018] [Lebovits, J.]).

Ultimately, if Landlord violated General Obligations Law§ 7-103, the costs expended on repairs

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to the Penthouse is no defense (23 E. 39th St. Mgt. Corp. v 23 E. 39th St. Dev., LLC, 134 AD3d 629,

631 [1st Dept 2015]). Moreover, on a future motion or at the time of trial, it will be Landlord's

burden to prove the security deposit was properly segregated. However, given unresolved issues

of fact based on Ms. Milonas' s sworn affidavit, and considering there has been little discovery and

no depositions, the motion for summary judgment based on the alleged violation of General

Obligations Law § 7-103 is denied without prejudice (Harlem Capital Ctr., LLC v Rosen &

Gordon, LLC, 145 AD3d 579, 580 [1st Dept 2016]). Because this branch of the motion is denied

as premature, the branch of the motion seeking attorneys' fees is likewise denied.

C. Dismissal of Counterclaims and Affirmative Defenses

The branch of the motion seeking dismissal of the counterclaims is denied. Although

Plaintiffs claim they inspected the Unit and complained about various defects, they also signed the

Lease which at ~ 29 stated that Plaintiffs had the opportunity to inspect the Unit and they accepted

the Unit "in its present condition 'as is"' (see NYSCEF Doc. 16).2 The photographs annexed on

Plaintiffs' motion in chief are also in black and white and it is almost impossible to see the alleged

defects claimed, and in any event there are issues of fact as to what the pre-existing defects

consisted of or whether they were repaired by Landlord prior to Plaintiffs vacating the Unit.

Plaintiffs failed to proffer any other particularized arguments for dismissal of the

counterclaims and affirmative defenses aside from a passing reference to General Obligations Law

§ 7-108(c), whose violation remains an issue of fact. Therefore, the Court finds the remainder of

Plaintiffs' motion, namely seeking dismissal of the numerous affirmative defenses, unavailing,

especially in the absence of any particularized arguments (Granite State Ins. Co. v Transatlantic

Reinsurance Co., 132 AD3d 479, 481 (1st Dept 2015] [plaintiffs burden on a CPLR 321 l(b)

2 It is worth noting the Lease is not for an ordinary residential rental unit where perhaps the tenant would have little

to no bargaining power. This Lease was for a luxury penthouse leasing for over $50,000 per month. 653907/2024 SCHOTTENSTEIN, JONATHAN ET AL vs. AXIA REALTY, LLC, C/O ALDAD & Page 6 of 7 ASSOCIATES PC, Motion No. 001

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motion is a heavy one]). Likewise, any arguments made for the first time on reply are disregarded

(see, e.g. Schirmer v Athena-Liberty Lofts, LP, 48 AD3d 223 [1st Dept 2008]). The Court declines

to grant Landlord's request to search the record and grant it summary judgment dismissing the

Complaint as improperly made and, in any event, precluded by the very same issues of fact which

prevent Plaintiffs from obtaining summary judgment.

Accordingly, it is hereby,

ORDERED that Plaintiffs' motion for summary judgment is denied, without prejudice,

with leave to renew upon further discovery; and it is further

ORDERED that the parties shall meet and confer immediately and shall submit a proposed

preliminary conference order to the Court via e-mail, but in no event shall the proposed preliminary

conference order be submitted any later than April 21, 2026. If there is a serious discovery dispute

the parties shall notify the Court via e-mail so an in-person conference can be scheduled; and it is

further

ORDERED that if the parties wish to resolve this dispute through the Court's sponsored

ADR program, they shall notify the Court so the appropriate referral order may be issued; and it

is further

ORDERED that within ten days of entry, counsel for Defendant shall serve a copy of this

Decision and Order, with notice of entry, on all parties via NYSCEF.

This constitutes the Decision and Order of the Court.

DATE HON. PHAEDRA F. PERRY-BOND, J.

~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED 0 DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

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