Key Points

  • The Appellate Division, First Department, unanimously reversed a judgment that had dismissed Jung Hoon Son's counterclaim for interference with prospective economic advantage and his setoff defense in Hai Po Sun's suit on a promissory note.
  • The court held that an email from pulseData's Director of People and Performance, and outside counsel's reference to Son's "personal debts," raised triable issues over whether Sun drove the company investigation and cease-and-desist letter as Son's personal creditor and out of malice.
  • The court held that a consent judgment in pulseData's separate action against Son released only the company, not Sun personally.
  • The court held that Sun's status as a corporate officer did not shield him at summary judgment, and that a corporate officer who participates in a tort may be held personally liable even if the participation benefited the corporation.
  • The setoff defense was reinstated because Son's alleged damages exceed the amount due on the note.

A New York appeals court on Nov. 10 revived a former employee's claim that a co-founder of his old company, who had lent him money, used a company investigation and a lawyer's cease-and-desist letter to derail his job prospect at another company over the unpaid debt.

A unanimous five-justice panel of the Appellate Division, First Department, reversed a lower court's grant of summary judgment to Hai Po Sun, a co-founder of pulseData Inc., in his suit against former employee Jung Hoon Son over a promissory note. The unsigned decision reinstated Son's counterclaim for interference with prospective economic advantage. It also restored Son's defense of setoff.

The ruling means Sun's collection suit will proceed with Son's accusations against him still in the case. The panel held that Sun's position as a corporate officer did not shield him at this stage, because evidence suggested he acted as Son's personal creditor rather than for the company. The court also held that a consent judgment resolving a separate suit pulseData brought against Son released only the company, not Sun.

Son worked at pulseData while Sun was the company's chief technology officer, according to the decision. Sun sued Son for breach of contract and unjust enrichment after Son failed to make the payments the note required. Son did not dispute that Sun had lent him the money.

In his counterclaim, Son alleged that Sun interfered with his employment opportunity at another company "because he was angry about defendant's failure to repay the loan." Son alleged that Sun started an investigation into his conduct at pulseData and directed the company's outside counsel to send a cease-and-desist letter to Son and to his potential employer, to pressure him into repaying. Son contended that, as a result, the other company ended his candidacy.

Justice Lyle E. Frank of Supreme Court, New York County, granted Sun's cross-motion for summary judgment in an order entered May 18, 2026. A judgment entered June 9 dismissed Son's counterclaim and his first affirmative defense of setoff.

The appellate panel, made up of Justices Webber, Moulton, Friedman, González and Chan, with Webber presiding, disagreed. "Supreme Court improperly granted plaintiff's cross-motion for summary judgment dismissing defendant's counterclaim and first affirmative defense," the court wrote. It held that Son had presented enough evidence to raise triable issues of fact, citing a 2004 decision, Carvel Corp. v. Noonan.

The court pointed first to an email from pulseData's Director of People and Performance. That email, the panel wrote, "permits the inference that plaintiff initiated the investigation into defendant's alleged misconduct and instructed the company's outside counsel to send the cease and desist letter to defendant and his potential employer."

The panel also found a factual dispute over whether Sun was acting in his personal capacity as Son's creditor when he started the investigation. Son stated that Sun reminded him of the debt five months before the investigation began. In an email sent the day after the cease-and-desist letter, pulseData's outside counsel referred to Son's "personal debts," the court noted.

The court further held that Sun's motive was in factual dispute. Son raised triable issues "as to whether out of malice, plaintiff wrongfully accused him of disclosing the company's trade secrets and had the company commence an action in federal court against defendant to interfere with his prospective job," the panel wrote, citing a 1986 decision, Alvarez v. Prospect Hosp.

Sun had argued that pulseData's investigation had nothing to do with the promissory note. He also argued that the consent judgment in pulseData's action against Son disposed of Son's claims. The panel called both arguments unavailing. It noted that the Director of People and Performance and the outside counsel had both referred to Son's personal debt, and it held that "the consent judgment did not release plaintiff personally, only the company."

The court then addressed Sun's role as an executive. "At this stage of the proceeding, plaintiff's status as a corporate officer does not shield him from liability for pulseData's wrongful conduct, if any," the panel wrote. Son had raised triable issues over whether Sun's conduct "was outside the scope of his authority and was based on defendant's personal debt rather than a corporate purpose," the court held, comparing a 2025 First Department decision in Young Adult Inst., Inc. v. Corporate Source, Inc.

The panel added a broader point. "In any event, a corporate officer who participates in the commission of a tort may be held personally liable even if the participation was for the corporation's benefit," the court wrote, citing its 2005 decision in Retropolis, Inc. v. 14th St. Dev. LLC.

The court reinstated the setoff defense on the strength of the revived counterclaim. Son's alleged damages, together with his alleged loss of equity participation in the potential employer's company and lost performance bonuses and other compensation, exceed the amount due on the note, the panel found. The decision does not state the size of the loan or name the potential employer.

Son represented himself on appeal. Sun was represented by Timothy J. Murtha of Murtha & Associates P.C. in Farmingdale.

The First Department vacated the June judgment, denied Sun's cross-motion and reinstated the counterclaim and the setoff defense, without awarding costs. It dismissed Son's separate appeal from the May order as subsumed in the appeal from the judgment. The decision is marked uncorrected and subject to revision before publication in the Official Reports.