South Pierre Associates v. Meyers
On May 24, 2006, in South Pierre Associates v. Meyers, Civ.Ct. N.Y.Co. Index No. 300023 TSN 2006, 2006 NY Slip Op 26208, 2006 N.Y.Misc. LEXIS 1278, the New York court issued a second important decision which should be of great interest to attorneys and non-attorneys. Earlier, the court awarded liability in plaintiffs’ favor on all five causes of action, including fraud, breach of the employee’s duties of loyalty to his employer, and negligence (the first decision, on Jan. 13, 2006, is discussed below). Subsequently, defendant attempted to obtain dismissal of the action by filing a CPLR 3212 motion which argued that a final judgment was not possible because allegedly there were no damages to support the prior liability award. On May 24, the trial court upheld KMWB’s arguments in response and denied defendant’s motion in its entirety. The court ruled that, as a disloyal employee, defendant may be “subject to severe penalties such as the forfeiture of all compensation plaintiffs paid for the period of his disloyalty . . . even if plaintiffs cannot prove any damage or loss arising out of Meyers’ admitted culpable conduct.” In practical terms, this would result in the employee’s disgorgement of the many thousands of dollars in wages he had accepted while acting illicitly in violation of his duties of loyalty to the employers paying those wages. The court also ruled that an award of punitive damages may be available against this employee based on the breach of fiduciary duty claim.