BARASCH MCGARRY PC v. MARCOWITZ (2023)

Order, Supreme Court, New York County (Louis L. Nock, J.), entered April 28, 2022, which denied defendant's motion for summary judgment dismissing the complaint and granted plaintiff's cross-motion for summary judgment, unanimously affirmed, with costs.  Appeal from order, same court and Justice, entered on or about January 11, 2023, which denied defendant's motion to reargue the summary judgment motions, unanimously dismissed, without costs, as taken from a nonappealable order.

Defendant's argument that factual issues should have precluded summary judgment is unavailing.  In their respective summary judgment motions, the parties represented that the case presented a solely legal question.  Defendant's attempt to manufacture factual issues on appeal is also not supported by the record.

Regardless, plaintiff was entitled to summary judgment as a matter of law.  The duty of loyalty, grounded in the faithless servant doctrine, is breached where the employee, “acting as the agent of the employer, unfairly competes with his employer, [and] diverts business opportunities to himself or others to the financial detriment of the employer” (Sullivan & Cromwell LLP v. Charney, 15 Misc.3d 1128[A], 2007 N.Y. Slip Op. 50889[U], *7, 2007 WL 1240437 [Sup. Ct., N.Y. County 2007];  see also Western Elec. Co. v. Brenner, 41 N.Y.2d 291, 295, 392 N.Y.S.2d 409, 360 N.E.2d 1091 [1977]).  Defendant does not dispute that he referred a matter to another law firm without plaintiff's knowledge or consent and collected more than $140,000 in referral fees.  A for-profit referral, without plaintiff's knowledge or consent, violates defendant's duty of loyalty and, at a minimum, entitles plaintiff to the referral fee (see Chun Ho Chung v. Williams Schwitzer & Assoc., P.C., 200 A.D.3d 514, 515, 157 N.Y.S.3d 465 [1st Dept. 2021]).

The court's denial of the motion to reargue is not appealable (see Alekna v. 207–217 W. 110 Portfolio Owner LLC, 212 A.D.3d 480, 179 N.Y.S.3d 902 [1st Dept. 2023]).