On September 28, 2023, Justice Boddie of the Kings County Commercial Division issued a decision in Farro v. Schochet, 2023 NY Slip Op. 33394(U), holding that the faithless servant doctrine does not permit recoupment of income related to work untainted by the unfaithful misconduct, explaining:
As for whether Farro must return the distributions earned by him between 2007 and 2016, it is well established that the faithless servant doctrine holds 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 disentitled to recover his or her compensation, whether commissions or salary. However, courts have recognized the right of an agent who breaches his or her duty of loyalty to nonetheless receive compensation where the agent’s disloyalty with respect to other tasks neither tainted nor interfered with the completion of the tasks as to which the agent was loyal.
Here, although application of the faithless servant doctrine is not limited to an employer-employee context, defendants fail to establish as a matter of law that Farra’s overpayment to himself is sufficient to find that Farro should disgorge 100% of his distributions during the time requested by defendants. As such. defendants’ motion for summary judgment with respect to these damages is also denied.
(Internal quotations and citations omitted).