What did the court decide?

The appellate court affirmed the lower court's confirmation of an arbitration award that found the appellant acted disloyally and breached fiduciary duties, and denied his request to set aside the award.

Who is affected by this decision?

The corporate petitioners (MLN New York Inc. and related parties) and respondent-appellant Jinong Liu are directly affected; the decision enforces the arbitration award against Liu.

Why did the court reject the appellant's arguments?

Because multiple employee witnesses provided testimony supporting the arbitrator's findings of misreported hours, attempts to profit from induced lawsuits, and other disloyal conduct, and the appellant did not present controlling law to the arbitrator to show manifest disregard.

Can this decision be appealed further?

A further appeal to the Court of Appeals may be possible by permission, but the Appellate Division unanimously affirmed, which makes further review discretionary and subject to appellate rules and timelines.

Matter of MLN N.Y. Inc. v. Jinong Liu

Docket Index No. 651151/25|Appeal No. 6468|Case No. 2025-04132|

Court of record · Indexed in NoticeRegistry archive · AI-enriched for research

CivilAffirmed

Filed: Apr 23, 2026 · 1 week ago
Jurisdiction: New York
Court: Appellate Division of the Supreme Court of the State of New York
Type: Opinion
Case type: Civil
Disposition: Affirmed
Citation: 2026 NY Slip Op 02456
Docket numbers: Index No651151/25Appeal No6468Case No2025-04132

Appeal from a judgment confirming a final arbitration award and denying a cross-petition to set aside the award in favor of petitioners

Summary

The Appellate Division, First Department affirmed a Supreme Court judgment confirming a final arbitration award in favor of MLN New York Inc. and denying Jinong Liu's cross-petition to vacate the award. The court held that the arbitrator reasonably relied on testimony from multiple employee witnesses that Liu misreported hours, shifted blame to the majority shareholder, attempted to induce employees to sue the company for a kickback, and otherwise acted disloyally. The court found these facts supported findings that Liu was a faithless servant and breached fiduciary duties, and rejected Liu's manifest-disregard and insufficiency arguments.

Issues Decided

Whether the arbitration award should be vacated as irrational based on the record and witness testimony
Whether the arbitrator manifestly disregarded the law in finding respondent liable under the faithless servant doctrine and for breach of fiduciary duty
Whether evidence supported petitioners' claims for recoupment and damages under the faithless servant doctrine and breach of fiduciary duty

Court's Reasoning

The court concluded the arbitrator's decision was supported by testimony from multiple employees describing deliberate misreporting of hours, attempts to procure lawsuits for personal kickbacks, and other disloyal conduct. Because the faithless servant doctrine allows recoupment of compensation without separate proof of corporate damages, those findings alone supported liability and damages. The respondent failed to cite controlling law to the arbitrator when given the chance, so the manifest-disregard argument failed.

Authorities Cited

Matter of Goodwin Law Group P.C. v Zilong Wang226 AD3d 537 (1st Dept 2024)
Transparent Value, L.L.C. v Johnson93 AD3d 599 (1st Dept 2012)
Feiger v Iral Jewelry41 NY2d 928 (1977)
Yukos Capital S.A.R.L. v Feldman977 F3d 216 (2d Cir 2020)
Beach v Touradji Capital Mgt., LP144 AD3d 557 (1st Dept 2016)

Parties

Petitioner: MLN New York Inc.
Petitioners-Respondents: MLN New York Inc., et al.
Respondent-Appellant: Jinong Liu
Judge: Lyle E. Frank
Attorney: Michael Cassell (for appellant)
Attorney: Michael C. Mulé (for respondents)

Key Dates

Supreme Court judgment entered: 2025-06-25
Order granting petition entered: 2025-04-29
Appellate Division decision entered: 2026-04-23

What You Should Do Next

1
Consult counsel about further appellate options
If the appellant wishes to seek further review, consult an attorney promptly about applying for permission to appeal to the Court of Appeals and applicable deadlines.
2
Enforce the arbitration award
If you are the prevailing petitioner, consider steps to collect the award consistent with the judgment, such as post-judgment collection or execution proceedings.
3
Review compliance and employment practices
The corporation should review payroll and oversight procedures and consider corrective measures to prevent recurrence of the misconduct found by the arbitrator.

Frequently Asked Questions

What did the court decide?: The appellate court affirmed the lower court's confirmation of an arbitration award that found the appellant acted disloyally and breached fiduciary duties, and denied his request to set aside the award.
Who is affected by this decision?: The corporate petitioners (MLN New York Inc. and related parties) and respondent-appellant Jinong Liu are directly affected; the decision enforces the arbitration award against Liu.
Why did the court reject the appellant's arguments?: Because multiple employee witnesses provided testimony supporting the arbitrator's findings of misreported hours, attempts to profit from induced lawsuits, and other disloyal conduct, and the appellant did not present controlling law to the arbitrator to show manifest disregard.
Can this decision be appealed further?: A further appeal to the Court of Appeals may be possible by permission, but the Appellate Division unanimously affirmed, which makes further review discretionary and subject to appellate rules and timelines.

The above suggestions and answers are AI-generated for informational purposes only. They may contain errors. NoticeRegistry assumes no responsibility for their accuracy. Consult a qualified attorney before relying on them.

Full Filing Text

Matter of MLN N.Y. Inc. v Jinong Liu - 2026 NY Slip Op 02456

Matter of MLN N.Y. Inc. v Jinong Liu

2026 NY Slip Op 02456

April 23, 2026

Appellate Division, First Department

In the Matter of MLN New York Inc., et al., Petitioners-Respondents,

Jinong Liu, Respondent-Appellant.

Decided and Entered: April 23, 2026

Index No. 651151/25|Appeal No. 6468|Case No. 2025-04132|

Before: Manzanet-Daniels, J.P., Kennedy, González, Pitt-Burke, Rosado, JJ.

Hogan & Cassell, LLP, Jericho (Michael Cassell of counsel), for appellant.

Milman Labuda Law Group PLLC, Lake Success (Michael C. MulÉ of counsel), for respondents.

Judgment, Supreme Court, New York County (Lyle E. Frank, J.), entered June 25, 2025, in favor of petitioners, and bringing up for review an order, same court and Justice, entered on or about April 29, 2025, which granted the petition to confirm a final arbitration award and denied respondent's cross-petition to set aside the award, unanimously affirmed, with costs.

Respondent's argument for vacatur of the arbitration award as irrational is unavailing (
see Matter of Goodwin Law Group P.C. v Zilong Wang
, 226 AD3d 537, 538 [1st Dept 2024]). The award was predicated on the testimony of multiple witnesses who were employed at the time respondent was a 20% shareholder in petitioner corporation, the owner and operator of a restaurant. The testimony of the employee witnesses that respondent misreported employee hours, that he falsely blamed petitioner majority shareholder for the incomplete work hours reported, and that he tried to convince several employees to commence a lawsuit against the corporation to recover unpaid compensation provided he was paid a 20% kickback of any damage award resulting from such lawsuit, supports the arbitrator's finding that respondent was a faithless servant and that he breached his fiduciary duty to the corporation.

Respondent's further argument that the award should be vacated for its manifest disregard of the law is also unavailing (
see Transparent Value, L.L.C. v Johnson
, 93 AD3d 599, 601 [1st Dept 2012]). Respondent did not cite any controlling law on the issues raised when offered an opportunity by the arbitrator to do so. In any event, respondent's argument that the evidence failed to support a finding that petitioners had viable counterclaims for breach of fiduciary duty or under the faithless servant doctrine is unavailing. A claim under the faithless servant doctrine is viable even absent a showing of damages to the corporation (
see

Feiger v Iral Jewelry
, 41 NY2d 928, 928-929 [1977];
Yukos Capital S.A.R.L. v Feldman
, 977 F3d 216, 242 [2d Cir 2020]), and damages awarded on a faithless servant claim (i.e., recoupment of salary) can satisfy the damage element of a breach of fiduciary duty claim (
see

Beach v Touradji Capital Mgt., LP
, 144 AD3d 557, 563 [1st Dept 2016];
Yukos
, 977 F3d at 242). Further, there was evidence in the record that the corporation was damaged to the extent it had to settle its employees' wage compensation complaints following respondent's intentional underpayment of employees for their hours, and that such actions and other disloyal acts by respondent had caused discontent among the corporation's employees.

We have considered respondent's remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: April 23, 2026