Summary
finding employees who organized competing business while still employed by plaintiff were not entitled to compensation during that period and owed damages for lost profits from diverted accounts
Summary of this case from Inflight Newspapers v. Magazines In-FlightOpinion
July 8, 1996
Appeal from the Supreme Court, Kings County (DeMatteo, J.H.O.).
Ordered that the judgment is affirmed, with costs.
It is well settled that one who owes a duty of fidelity to a principal and who is faithless in the performance of his or her services is generally not entitled to recover compensation, whether commissions or salary ( Feiger v. Iral Jewelry, 41 N.Y.2d 928, 929; see also, Lamdin v. Broadway Surface Adv. Corp., 272 N.Y. 133; Soam Corp. v. Trane Co., 202 A.D.2d 162; Bon Temps Agency v. Greenfield, 184 A.D.2d 280, 281; Maritime Fish Prods. v World-Wide Fish Prods., 100 A.D.2d 81). On this record it is apparent that the appellants Laurie McDonnell, Angel Ayala, and Anthony Lupo, Jr., failed to show the loyalty expected of trusted employees. While they were still in the plaintiff's employ, they surreptitiously organized a competing organization, and, utilizing the plaintiff's lists containing information regarding their customers' reservicing dates, and the prices offered to individual customers, secretly undersold their services to the plaintiff's customers. Accordingly, the Supreme Court properly determined that McDonnell, Ayala, and Lupo forfeited their right to compensation for services rendered from July 1, 1991, until their termination on December 6, 1991 ( see, Feiger v. Iral Jewelry, supra; Bon Temps Agency v. Greenfield, supra, at 281; Maritime Fish Prods. v. World Wide Fish Prods., supra, at 91).
Furthermore, while the plaintiff's act of terminating McDonnell, Ayala, and Lupo's employment on December 6, 1991, freed them to solicit Royal Carbo's clients, they were not free to use Royal Carbo's trade secrets in order to gain an unfair business advantage ( see, Garvin GuyButler Corp. v. Cowen Co., 155 Misc.2d 39). Accordingly, the court properly determined that the plaintiff was entitled to recover "the amount of loss sustained by it, including opportunities for profit on the accounts diverted from it through defendants' conduct" ( Jones Co. v. Burke, 306 N.Y. 172, 192; see also, Allan Dampf, P.C. v Bloom, 127 A.D.2d 719; McRoberts Protective Agency v. Lansdell Protective Agency, 61 A.D.2d 652). The court's limitation of recovery to three servicing opportunities was reasonable.
The defendants' remaining contentions are meritless. Bracken, J.P., Thompson, Krausman and Florio, JJ., concur.