Soccer Company is Defeated; Court Decides Sub-Landlord Was Entitled to Keep Sub-Tenant’s Security Deposit Under Rider to Commercial Lease

In Urban Soccer Inc. v. Royal Wine Corp., 2016 WL 4187506 (Sup.Ct.NY Co., decided August 5, 2016), the court granted the sublessor’s motion to dismiss the sublessee’s claim that sublessor retained the sublessee’s $638,863.50 security deposit in violation of the lease.

The defendant, Royal Wine Corp. (“Royal”), leased a warehouse from the City of New York. The lease required the City’s consent for any sublets. Royal entered into sublease agreement with the plaintiff, Urban Soccer, Inc., in which Urban agreed to apply to the City for consent to sublease and use the warehouse for indoor soccer purposes. The sublease was amended in a rider to grant the plaintiff additional time to obtain the City’s consent on the condition that if the plaintiff was unable to obtain the City’s consent within five months, the defendant could terminate the sublease and retain the security deposit as consideration for not renting the space to another subtenant. When the City indicated that it would not consent to the sublease the defendant cancelled the lease and retained the security deposit in accordance with the terms of the rider.

The Court held that the terms of the rider were unambiguous and the defendant was entitled to retain the plaintiff’s security deposit.

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