Court Finds Faithless Servant Defense Precludes Executive From Recovering Equity Grants Under Warrant Agreement

Posted: February 18, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Category Breach of Contract

Court Finds Faithless Servant Defense Precludes Executive From Recovering Equity Grants Under Warrant Agreement

On February 5, 2026, Justice Joel M. Cohen issued a decision after non-jury trial that found, among other things, that an executive’s “effective abandonment” of his responsibilities to the company breached an employment agreement and gave rise to an “independent faithless servant defense” that precluded him from recovering equity grants. In Thomas O’Connor, et al., v. Society Pass Incorporated, Index No. 656938/2019, the plaintiff entered into an employment agreement to serve as Chief Marketing Officer, a role that included responsibility for securing additional investments and clients for the company. After falling out with the company’s then-CEO, plaintiff took unauthorized, months-long vacations and disparaged the CEO to potential investors.

The Court found these actions, among others, breached the duty plaintiff owed to the company, explaining:

The faithless servant doctrine provides that “[o]ne who owes a duty of fidelity to a principal and who is faithless in the performance of his services is generally disentitled to recover his compensation, whether commissions or salary” . . . . Here, SPI established its faithless servant defense by demonstrating that O’Connor engaged in disloyal conduct, which reached its peak on August 14, 2019. O’Connor made disparaging remarks about the company and its CEO in an unauthorized meeting with SPI’s lead prospective investor. Beyond that, he pitched an investment opportunity unrelated to SPI. Both of those were fundamentally inconsistent with his principal role of encouraging investment in SPI.

The attorneys at Schlam Stone & Dolan have extensive experience with employment agreements, compensation, duties, and disputes. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.