Daniel Russo and Reilly Cavanaugh Versus Onpath Federal Credit Union

• Court: Louisiana Court of Appeal
• Decided: May 29, 2024
• Docket: 23-CA-537
• Status: Unknown

Opinion

DANIEL RUSSO AND REILLY CAVANAUGH NO. 23-CA-537

VERSUS FIFTH CIRCUIT

ONPATH FEDERAL CREDIT UNION COURT OF APPEAL

STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 840-579, DIVISION "C" HONORABLE JUNE B. DARENSBURG, JUDGE PRESIDING

May 29, 2024

TIMOTHY S. MARCEL JUDGE

Panel composed of Judges Jude G. Gravois, Scott U. Schlegel, and Timothy S. Marcel

AFFIRMED TSM JGG SUS COUNSEL FOR PLAINTIFF/APPELLANT, DANIEL RUSSO AND REILLY CAVANAUGH Michael E. Lillis Lawrence J. Centola, III

COUNSEL FOR DEFENDANT/APPELLEE, ONPATH FEDERAL CREDIT UNION Susan F. Desmond MARCEL, J.

In this suit arising from a Petition for Wages, Penalties, and Attorney’s Fees

Pursuant to La. R.S. 23:631 et seq. and an Alternative Petition for Damages,

plaintiffs Daniel Russo and Reilly Cavanaugh appeal a judgment of the trial court

dismissing their claims against their former employer, OnPath Federal Credit

Union. For the following reasons, we affirm the judgment of the trial court.

BACKGROUND

In January 2022, OnPath enacted a Commercial Lending Incentive Plan for

the four-member commercial lending team in order to grow OnPath’s commercial

loan portfolio during the 2022 fiscal year. Mr. Russo was leader of the four member

commercial lending team, which included Mr. Cavanaugh. Under this plan

proposed by Mr. Russo, the commercial lending team would receive incentive

payments at the close of the 2022 fiscal year if certain deliverables were met. The

plan was memorialized in a two-page document signed by both the Chief Executive

Officer, Jared Freeman, and the Chief Operating Officer, Kristen DeDual. This

document described the goals to be met for the team incentive to be payable, the

team incentive formula, and an illustrative example for calculating the team

incentive formula.

Over the course of 2022, the team grew OnPath’s portfolio and met and

exceeded the goals specified in the incentive plan. In November of 2022, Mr.

Russo engaged in conversations (both in person and via email) with Ms. DeDual

concerning the anticipated team incentive plan payment.1 Using the example

contained in the plan document, Mr. Russo calculated the anticipated payout to be

approximately $1,195,412.56 for the team or $298,853.14 for each of the four team

members. Ms. DeDual argued the example did not accurately apply the formula

1 Some of these conversations were recorded by Mr. Russo. Audio and transcripts of those conversations were introduced as evidence at the hearing.

1 recited in the plan document. According to Ms. DeDual calculations, the team

incentive payout for individual members would be closer to $50,000.00 each.

Later recalculations determined each team member would receive $31,279.09.

OnPath paid each commercial team member this amount, despite a written request

in January 2023 for each team member to be paid $298,853.14. On March 9,

2023, OnPath terminated Mr. Russo and two members of the commercial lending

team resigned, including Mr. Cavanaugh.

On May 10, 2023, Mr. Russo and Mr. Cavanaugh filed a Petition for Wages,

Penalties, and Attorney’s Fees pursuant to the Louisiana Wage Payment Statute,

La. R.S. 23:631, et seq. and, alternatively, a Petition for Damages alleging claims

for breach of contract, detrimental reliance, and unjust enrichment. Plaintiffs

elected to proceed on their claims for lost wages via summary proceedings, as is

permitted under La. R.S. 23:631(B). On May 11, 2023, the trial court issued a

Rule to Show Cause why plaintiffs’ Petition for Wages, Penalties, & Attorney’s

Fees Pursuant to La. R.S. 23:631 et seq. should not be granted.

A trial on the wages claims was held on July 10, 2023, which included

testimonial evidence from Mr. Russo, Ms. DeDual, and Mr. Freedman, as well as

documentary evidence. At the conclusion of arguments, the trial court found that

the amount in dispute was not an amount due under the terms of the Incentive Plan,

but rather it was an incentive amount that would only be paid if there was growth

and profit. On that basis, the trial court denied plaintiffs’ La. R.S. 23:631 claims

and also denied plaintiffs’ claims for breach of contract, detrimental reliance, and

unjust enrichment. Plaintiffs’ timely appeal followed.

On appeal, plaintiffs raise eight assignments of error. We consider these en

globo in our discussion below, with particular focus on the first two and most

significant assigned errors: whether the trial court erred in ruling the amounts owed

to Mr. Russo and Mr. Cavanaugh were not wages per La. R.S. 23:631, and whether

2 the trial court erred in its interpretation of the terms of the Incentive Plan

concerning the calculation of wages owed.

DISCUSSION

“Wages” under La. R.S. 23:631

The Louisiana Wage Payment Act, La. R.S. 23:631, et seq., is designed to

compel the prompt payment of earned wages upon an employee’s discharge or

resignation. Calamia v. Core Labs., LP, 17-635 (La. App. 5 Cir. 5/30/18), 249

So.3d 1038, 1042. La. R.S. 23:631 requires employers to pay employees the

amount then due under the terms of employment no later than fifteen days from the

date of the termination of employment. In the event the amount owed is disputed,

La. R.S. 23:631(B) specifically grants the employee the right to file an action to

enforce a wage claim and proceed via summary procedure under La. C.C.P. art.

2592. La. R.S. 23:632 states that employers who fail or refuse to comply with La.

R.S. 23:631 shall be liable to the employee for penalty wages. La. R.S. 23:632(B)

creates an exception to the payment of penalty wages for employers in situations

where the court finds that an employer’s dispute over the amount of wages due was

in good faith. When a bona fide dispute exists over the amount of wages due, an

employer’s failure to pay is not an arbitrary refusal and no penalties will be

awarded under the penalty wage statute. Kaplon v. Rimkus Consulting Grp., Inc. of

Louisiana, 09-1275 (La. App. 4 Cir. 4/28/10), 39 So.3d 725, 733, writ denied, 10-

1207 (La. 7/2/10), 39 So.3d 587. The burden of proof rests upon the employee to

show by a preponderance of the evidence the facts which establish his claim for

wages and penalties under La. R.S. 23:631 and 23:632. Calamia, supra.

Wages, though not defined in the statute, are equivalent to the amount then

due under the terms of employment. Boyd v. Gynecologic Associates of Jefferson

Par., Inc., 08-1263 (La. App. 5 Cir. 5/26/09), 15 So.3d 268, 272. Wages include

compensation that is earned during a pay period. Boudreaux v. Hamilton Med.

3 Grp., Inc., 94-879 (La. 10/17/94), 644 So.2d 619, 622. Whether a bonus

constitutes a “wage” under La. R.S. 23:632, et seq. is mixed question of law and

fact generally reviewed under the manifest error standard. Locke v. MADCON

Corp., 22-630 (La. App. 1 Cir. 12/22/22), 360 So.3d 519, 526, writ denied, 23-95

(La. 4/4/23), 358 So.3d 866. Bonuses paid as part of an incentive plan to

encourage longevity or production may be called “bonuses” but are more in the

nature of commissions and are considered wages. Kaplon, supra. Commissions

are considered wages for the purposes of La. R.S. 23:631-32. Jeansonne v.

Schmolke, 09-1467 (La. App. 4 Cir. 5/19/10), 40 So.3d 347, 358.2 If they are

unpaid, the employee has a right to recover them as they do any other wage.

Upon examination of the record before us, we find that the trial court

manifestly erred in determining that the payments owed under the Incentive Plan

were not wages for the purposes of La. R.S. 23:631. Review of OnPath Federal

Credit Union Commercial Lending Incentive Plan indicates that the team

incentives would be paid provided the minimum goals were met. It is undisputed

by the parties that the commercial lending team members, including plaintiffs, met

the minimum goals specified in the incentive plan and therefore earned incentive

payments. Under the definitions stated above, these payments are wages for the

purposes of La. R.S. 23:631.

Nevertheless, for reasons articulated more fully infra, we find no manifest

error in the trial court’s determination that no additional wages beyond those

already paid were owed to plaintiffs by OnPath under the terms of the Incentive

Plan.

Interpretation of the Incentive Plan

2 However, commissions generally are not to be used when determining an employee’s daily rate of pay for calculating penalty wages under La. R.S. 23:632. Harrelson v. UTC Labs., LLC, 23-64 (La. App. 5 Cir. 11/2/23), 376 So.3d 1038, 1043.

4 Plaintiffs’ claims for wages under La. R.S. 23:631 are inextricably linked to

their claims for breach of contract because the contract at issue, the Incentive Plan,

provides the basis for calculation of the wages owed. Whether the contract has

been breached or honored by OnPath depends on the interpretation of the terms

stated therein.

Interpretation of a contract is the determination of the common intent of the

parties. La. C.C. art. 2045. A contract or document is ambiguous when its written

terms are susceptible to more than one interpretation, there is uncertainty as to its

provision, or the parties’ intent cannot be ascertained from the language used. All

Am. Healthcare, L.L.C. v. Dichiara, 18-432 (La. App. 5 Cir. 12/27/18), 263 So.3d

922, 928 (citing Leftwich v. New Orleans Weddings Magazine, 14-547 (La. App. 5

Cir. 11/25/14), 165 So.3d 916, 921.) When the terms of a contract are susceptible

to more than one interpretation, there is uncertainty as to its provision, or the

parties’ intent cannot be ascertained from the language employed, parol evidence is

admissible to clarify the ambiguity or show the intention of the parties. First Bank

& Tr. v. Redman Gaming of Louisiana, Inc., 13-369 (La. App. 5 Cir. 12/12/13),

131 So.3d 224, 228. In this posture, determining the intent of the parties becomes,

in part, a question of fact. Id.

The contract between the parties states in relevant part:

Team incentive:

 5% of Net/ Net profitability to be paid out January of 2023 based on overall profitability at year end. Profitability ratios are calculated based on Weighted Average Rate net of Charge off, Operating Expense, Cost of Funds and Opportunity Cost o Goal is a minimum of 1.5% to earn incentive o Incentive calculated on 5% of the dollar amount over the 1.5% threshold

Example: As of June; Goal is 1.5% (goal to reach threshold) Incentive pad on any amount over the threshold at 5% net/net (currently 1.5% of the portfolio is $981,731.63, therefore the portfolio would have to be at $66,430,506 to reach 1.5% threshold) 5% of any amount over that would be paid annually split evenly with all members of the Commercial team. (if [sic] you end the year with $68,000,000 in the portfolio which is above the

5 threshold of $66,430,506, the team would earn 5% on the difference which =$1,569,493 which would yield $78,475 in incentive to be split. Split 4 ways currently with the staff we have would be a $19,619 bonus each.)

The terms in this contract are ambiguous in that they are susceptible to

different meanings that are conflicting. Because these terms are ambiguous and

not defined in the agreement, the trial court was correct to consider extrinsic

evidence from the parties concerning their meaning. The trial court considered

conflicting testimony from Mr. Russo and Ms. DeDual concerning what the parties

intended by using these terms in their agreement and made a factual determination

that the calculations articulated by Ms. DeDual and OnPath best reflected the intent

of the parties.

As noted above, this factual determination is subject to the manifest error

standard of review. Under this standard, the trial court’s finding of fact may not be

set aside unless that finding is clearly wrong in light of the record reviewed in its

entirety. Palmisano v. Ohler, 16-160 (La. App. 5 Cir. 12/7/16), 204 So.3d 1134,

1137. The issue to be resolved by this Court on review is not whether the judge

was right or wrong, but whether the judge’s fact-finding conclusion was a

reasonable one. Id. Upon review of the record, we find no manifest error in the

trial court’s determination regarding the parties’ intent under the terms of the

Incentive Plan. As the trier of fact, the trial court is in the best position to weigh

the credibility of the witnesses. See Granger v. Christus Health Central Louisiana,

12-1892 (La. 6/28/13), 144 So.3d 736, 756. As a consequence, we also affirm the

trial court’s decision to deny plaintiffs’ wages claims (because no additional wages

were owed) and to deny plaintiffs’ claims for breach of contract.

Detrimental Reliance and Unjust Enrichment

Claims for detrimental reliance are governed by La. C.C. art. 1967 under

which a party may be obligated by a promise when he knew or should have known

that the promise would induce the other party to rely on it to his detriment and the

6 other party was reasonable in so relying. To prove a claim for detrimental reliance,

the plaintiffs must prove: (1) a representation by conduct or word, (2) justifiable

reliance, and (3) a change in position to one’s detriment because of the reliance.

Uddo v. Jefferson Par. Hosp. Serv. Dist. No.2, 22-403 (La. App. 5 Cir. 4/12/23),

361 So.3d 1123, 1130, writ denied, 23-677 (La. 9/26/23), 370 So.3d 475. Claims

of detrimental reliance must be examined strictly and carefully. 625 LaBarre Rd.,

LLC v. Par. of Jefferson, 21-133 (La. App. 5 Cir. 11/3/21), 330 So.3d 1201, 1206.

Detrimental reliance is not favored under Louisiana law, and failure of a plaintiff

to prove each element of the claim will bar recovery. Luther v. IOM Co. LLC, 13-

353 (La. 10/15/13), 130 So.3d 817, 825. The evidence in the record does not

support the second element of plaintiffs’ claims; there is no indication that either

Mr. Russo or Mr. Cavanaugh justifiably relied on the representations made to their

detriment. We affirm the decision of the trial court dismissing these claims.

Unjust enrichment requires a person who has been enriched without cause at

the expense of another person to provide compensation to that person. La. C.C.

art. 2298. The remedy of unjust enrichment is subsidiary in nature, and shall not

be available if the law provides another remedy. Semco, LLC v. Grand Ltd., 16-

342 (La. App. 5 Cir. 5/31/17), 221 So.3d 1004, 1030, writ denied, 17-1291 (La.

11/6/17), 229 So.3d 475. Other adequate legal remedies are available in this case,

and therefore the trial court was correct to deny plaintiffs’ claims for unjust

enrichment.

Conclusion

For the foregoing reasons, we find that the payments owed under the

Incentive Plan are wages for the purposes of La. R.S. 23:631. Nevertheless, we

find no manifest error in the trial court’s determination that no additional payments

are owed under the Incentive Plan. Further, plaintiffs’ claims for detrimental

7 reliance and unjust enrichment were properly denied. Accordingly, the judgment

of the trial court is affirmed.

AFFIRMED

8 SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

SUSAN S. BUCHHOLZ FREDERICKA H. WICKER CHIEF DEPUTY CLERK JUDE G. GRAVOIS MARC E. JOHNSON STEPHEN J. WINDHORST LINDA M. WISEMAN JOHN J. MOLAISON, JR. FIRST DEPUTY CLERK SCOTT U. SCHLEGEL TIMOTHY S. MARCEL FIFTH CIRCUIT MELISSA C. LEDET JUDGES 101 DERBIGNY STREET (70053) DIRECTOR OF CENTRAL STAFF POST OFFICE BOX 489 GRETNA, LOUISIANA 70054 (504) 376-1400

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NOTICE OF JUDGMENT AND CERTIFICATE OF DELIVERY I CERTIFY THAT A COPY OF THE OPINION IN THE BELOW-NUMBERED MATTER HAS BEEN DELIVERED IN ACCORDANCE WITH UNIFORM RULES - COURT OF APPEAL, RULE 2-16.4 AND 2-16.5 THIS DAY MAY 29, 2024 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES NOT REPRESENTED BY COUNSEL, AS LISTED BELOW:

23-CA-537 E-NOTIFIED 24TH JUDICIAL DISTRICT COURT (CLERK) HONORABLE JUNE B. DARENSBURG (DISTRICT JUDGE) LAWRENCE J. CENTOLA, III (APPELLANT) MICHAEL E. LILLIS (APPELLANT) SUSAN F. DESMOND (APPELLEE)

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