MICHAEL B. REIS, JR. * NO. 2024-CA-0750
VERSUS * COURT OF APPEAL MANDY POHLMANN REIS * FOURTH CIRCUIT * STATE OF LOUISIANA *******
APPEAL FROM ST. BERNARD 34TH JUDICIAL DISTRICT COURT NO. 19-1318, DIVISION “E” Honorable Eric A. Bopp, ****** Judge Paula A. Brown ****** (Court composed of Judge Paula A. Brown, Judge Rachael D. Johnson, Judge Nakisha Ervin-Knott)
Stephanie A. Fratello 3017 21st Street Suite 211 Metairie, LA 70002
COUNSEL FOR PLAINTIFF/APPELLANT
Alan G. Bouterie, Jr. Jordan P. Guillot BOUTERIE LAW FIRM, APLC 2110 Pakenham Drive Chalmette, LA 70043
COUNSEL FOR DEFENDANT/APPELLEE
AFFIRMED APRIL 3, 2025 PAB RDJ NEK
This appeal arises out of the classification of an asset as separate or
community property following a divorce. Appellant, Michael B. Reis, Jr. (“Mr.
Reis”), seeks to appeal the district court’s August 12, 2024 judgment, which found
Outkast Industrial Group, LLC (“Outkast Industrial”) to be a community asset and
recognized as part of the community of acquets and gains1 between Mr. Reis and
Appellee, Mandy Pohlmann Reis (“Ms. Reis”). For the reasons that follow, we
affirm the district court’s judgment.
FACTS AND PROCEDURAL HISTORY
The parties were married on December 4, 2010, and subsequently divorced
on October 24, 2019. During their marriage, the parties formed Outkast
Environmental, LLC (“Outkast Environmental”), a company which specialized in
hazardous material disposal and various industrial cleaning services. Following
their divorce, the parties have engaged in litigation pertaining to child custody and
partition of community property. On January 9, 2020, the district court entered an
interim consent judgment, wherein the majority of the issues focused on child
1 See La. C.C. art. 2335 cited infra p. 9.
1 custody. However, the interim consent judgment also discussed Outkast
Environmental. Specifically, the district court ordered the following:
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that both parties shall remain in their current positions and salaries/hourly pay at Outkast Environmental LLC, unless otherwise agreed to in writing between the parties. In connection with those positions, the parties hereby agree not [to] purchase immovable property, cars, boats, or ATV[s] with funds belonging to Outkast Environmental LLC, unless otherwise agreed to in writing between the parties.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED the parties shall have equal access to any and all records, payroll, accounts, documents, etc., pertaining to any businesses, including but not limited to Outkast Environmental LLC, in which the parties and/or any community have an interest in. Further, the parties are to execute any and all documents necessary to ensure that [Mr. Reis’] payroll check is deposited into his own separate account.
Roughly one month after the consent judgment was issued, on February 12, 2020,
Mr. Reis formed Outkast Industrial, a company that performed nearly identical
functions to Outkast Environmental, such as cleaning and dredging oil spills. On
October 19, 2020, Ms. Reis filed a detailed descriptive list2 of all community assets
and liabilities known to her, which included Outkast Environmental. That same
day, Mr. Reis filed his own detailed descriptive list, wherein he included Outkast
Environmental’s banking and financial accounts. Notably, Mr. Reis’ list did not
include Outkast Environmental as a standalone asset, nor did it include Outkast
Industrial.
Nearly two years later, on September 2, 2022, Ms. Reis filed a Petition for
Judicial Partition of Community Property and Motion to File Descriptive Lists.
Thereafter, the district court ordered that each party file a detailed descriptive list
2 A detailed descriptive list is an inventory of all community property filed during a partition
proceeding, typically including the fair market value and location of the assets, as well as all community liabilities. See La. R.S. 9:2801.
2 of all community property. Ms. Reis filed an amended detailed descriptive list on
February 7, 2023, including, among other things, Outkast Environmental and
Outkast Industrial as community assets. In addition, on April 13, 2023, Ms. Reis
filed a Motion to Traverse Descriptive List (“motion to traverse”),3 wherein she
alleged that Mr. Reis’ descriptive list was deficient in multiple ways, including his
failure to list both Outkast Environmental and Outkast Industrial as community
assets. Specifically, Ms. Reis asserted that Outkast Industrial should have been
listed as community property because the company was started with community
funds. The motion to traverse, originally set for hearing on June 14, 2023, was
continued without date by mutual consent of the parties. During the pendency of
the motion, the parties agreed to bifurcate the proceeding, narrowing the scope of
the hearing to address the classification of assets.
The evidentiary hearing on the bifurcated motion to traverse proceeded on
July 29, 2024, and solely focused on the classification of Outkast Industrial as a
community or separate asset. Ms. Reis testified first. She explained that Outkast
Environmental was formed during the existence of the community with Mr. Reis as
a hazardous maintenance and cleaning business dealing with hazardous materials.
Ms. Reis was the office manager, whereas Mr. Reis was the field manager who
was in charge of the employees. Ms. Reis provided that she did not discover
Outkast Industrial’s existence until June of 2020, and that Mr. Reis was utilizing
materials and equipment that belonged to Outkast Environmental in his operation
of Outkast Industrial. According to Ms. Reis, Mr. Reis funded Outkast Industrial
with $40,000 that he had withdrawn from a joint account shared between the
3 A motion to traverse can be filed when an interested party believes that a detailed descriptive
list contains an error. In re Succession of Feingerts, 14-0140, p. 9 (La. App. 4 Cir. 3/18/15), 162 So.3d 1215, 1221.
3 parties on February 7, 2020. Ms. Reis further testified that Mr. Reis was operating
under the name and reputation of Outkast Environmental while profiting from
Outkast Industrial. In addition, Mr. Reis hired active employees of Outkast
Environmental to work for Outkast Industrial, while they were still being paid by
Outkast Environmental. Ms. Reis admitted that, when Outkast Environmental was
originally created in 2016, it was filed in her name as the registered agent with the
members listed as Channing Reis and Cory Reis—Mr. Reis’ sons from a previous
relationship. Ms. Reis confirmed that, at the time, Mr. Reis was under a non-
compete clause from his previous employer, so his name could not be listed as a
member of Outkast Environmental. In 2017, Cory Reis and Channing Reis were
removed from the Outkast Environmental documents, and Ms. Reis substituted
herself as the sole member while remaining the registered agent. Mr. Reis was
never added as a member of Outkast Environmental, even after his non-compete
clause expired.
Next, Mr. Reis testified. He provided that, on February 12, 2020, after his
divorce from Ms. Reis, he formed Outkast Industrial and was listed as the sole
member and owner of the company. Mr. Reis testified that he did not use any
money from his joint account with Ms. Reis to finance Outkast Industrial.
According to Mr. Reis, a friend of his, Barry J. Thibodaux (“Mr. Thibodaux”), lent
him $60,000—which was evidenced by a promissory note, dated February 13,
2020—to fund Outkast Industrial. From that $60,000, Mr. Reis testified that he
deposited $40,000 into the Outkast Industrial bank account to start the company
and kept the additional $20,000 from this loan for other miscellaneous expenses.
Mr. Reis further testified that he did not use any Outkast Environmental equipment
to operate Outkast Industrial, but instead rented equipment or used equipment
4 belonging to him or his employees personally. Mr. Reis admitted that he hired
employees for Outkast Industrial, despite those individuals still being employed
and paid by Outkast Environmental. Mr. Reis explained that Outkast
Environmental and Outkast Industrial are two totally distinct businesses. Outkast
Environmental performed regular confined space rescue, including tank cleaning
and pipeline cleaning in confined spaces, whereas Outkast Industrial performed
confined space high angle rescue, including cleaning and dredging oil spills.
According to Mr. Reis, high angle space rescues require different certifications
than regular confined space rescues.
Finally, Cory Reis (“Cory”) testified. He relayed that he began working for
Outkast Industrial as a manager in June of 2020. However, on cross-examination,
Cory testified that he began working in March of 2020, though specifying that
there was no payment from Outkast Industrial from March to June. He explicitly
provided that Outkast Industrial employees who had previously worked for
Outkast Environmental were not paid by Outkast Industrial while still employed by
Outkast Environmental. With regard to the use of equipment, Cory testified that
there was no use of Outkast Environmental equipment for Outkast Industrial jobs.
He specifically provided that he either used his own equipment, borrowed
equipment, or used equipment found on the job sites where Outkast Industrial was
contracted to perform work.
After hearing testimony and closing arguments from the attorneys, the
district court took the matter under advisement. On August 12, 2024, the district
court issued its judgment with incorporated reasons, wherein it found Outkast
Industrial to be a community asset and, therefore, part of the community of acquets
and gains existing between Mr. Reis and Ms. Reis. This timely appeal followed.
5 Motion to Dismiss
Prior to addressing the merits of this appeal, we will first address the Motion
to Dismiss Devolutive Appeal filed by Ms. Reis on November 27, 2024. Ms. Reis
asserts that Mr. Reis’ appeal should be dismissed because the judgment at issue in
this appeal pertains solely to the classification of a single asset, Outkast Industrial.
Thus, without any division of assets or liabilities between the parties, Ms. Reis
avers that the August 12, 2024 judgment is not a final appealable judgment.
“When a judgment only partially determines the merits of an action, it is a
partial judgment and is immediately appealable if authorized by La. C.C.P. art.
1915.” Glazer v. Glazer, 23-0502, p. 2 (La. App. 4 Cir. 4/3/24), 390 So.3d 765,
767 (citing Cent. Bldg. Servs., LLC v. St. Augustine High Sch., Inc., 18-0427, p. 2
(La. App. 4 Cir. 10/17/18), 258 So.3d 103, 105). Louisiana Code of Civil
Procedure article 1915(A) provides six different instances wherein a final
judgment may be rendered by the court despite that judgment not granting all of
the relief prayed for or adjudicating all of the issues in the case.4 Mr. Reis asserts
in his opposition to the motion to dismiss that La. C.C.P. art. 1915(A)(4) applies in
this matter, as the issues of classification of assets and valuation of those assets
have been bifurcated. However, bifurcation of these issues does not indicate that
4 The six instances found in La. C.C.P. art. 1915(A)(1)-(6) are:
(1) Dismisses the suit as to less than all of the parties, defendants, third party plaintiffs, third party defendants, or intervenors. (2) Grants a motion for judgment on the pleadings, as provided by Articles 965, 968, and 969. (3) Grants a motion for summary judgment, as provided by Articles 966 through 969, but not including a summary judgment granted pursuant to Article 966(E). (4) Signs a judgment on either the principal or incidental demand, when the two have been tried separately, as provided by Article 1038. (5) Signs a judgment on the issue of liability when that issue has been tried separately by the court, or when, in a jury trial, the issue of liability has been tried before a jury and the issue of damages is to be tried before a different jury. (6) Imposes sanctions or disciplinary action pursuant to Article 191, 863, or 864 or Code of Evidence Article 510(G).
6 there exists principal and incidental demands as defined in La. C.C.P. art. 1031(B),
which provides that “[i]ncidental demands are reconvention, cross-claims,
intervention, and the demand against third parties.” None of these types of
demands are present in this matter; instead, the issues of classification and
valuation have merely been separated into two separate trials. Moreover, La.
C.C.P. art. 1915(B)(1)-(2) provides:
(1) When a court renders a partial judgment or partial summary judgment or sustains an exception in part, as to one or more but less than all of the claims, demands, issues, or theories against a party . . . the judgment shall not constitute a final judgment unless it is designated as a final judgment by the court after an express determination that there is no just reason for delay. (2) In the absence of such a determination and designation, any such order or decision shall not constitute a final judgment for the purpose of an immediate appeal and may be revised at any time prior to rendition of the judgment adjudicating all the claims and the rights and liabilities of all the parties.
Our review of the August 12, 2024 judgment reflects that the district court only
found Outkast Industrial to be a community asset and did not reach the issue of
valuation. The district court also did not designate the judgment as final.
Considering the above-cited articles, we find that the August 12, 2024 judgment is
a non-appealable judgment.
Having reached this conclusion, we now consider whether Mr. Reis’ appeal
may be converted into an application for supervisory writ. “This Court is vested
with the discretionary power to convert an appeal of an interlocutory judgment into
an application for supervisory review.” Rieth v. Munguia, 23-0547, p. 3 (La. App.
4 Cir. 5/30/24), 391 So.3d 39, 44. “Because the proper procedural vehicle for
seeking review of an interlocutory judgment is ordinarily by application for
supervisory review, we can—when appropriate—convert the improper appeal to
7 such an application.” Glazer, 23-0502, p. 4, 390 So.3d at 768 (quoting Perry v.
F.H. Myers Constr. Corp., 23-0064, p. 5 (La. App. 4 Cir. 11/2/23), 377 So.3d 331,
335, writ denied, 23-01584, p. 1 (La. 2/6/24), 378 So.3d 749). “When confronted
with lack of appellate jurisdiction, we have converted the appeal to an application
for supervisory writ under the circumstances in which the appeals were filed within
the thirty-day period allowed for the filing of applications for supervisory review.”
Id. (citing Perry, 23-0064, pp. 5-6, 377 So.3d at 335).
Mr. Reis’ motion for appeal was filed on August 28, 2024, which is within
the thirty-day period allowed by La. Unif. R. Ct. App. 4-3.5 Therefore, we exercise
our discretion to convert Mr. Reis’ appeal of the August 12, 2024 judgment into an
application for supervisory review. As such, Ms. Reis’ motion to dismiss is
denied.
DISCUSSION
Mr. Reis raises multiple assignments of error for this Court’s review.6 The
core issue before this Court is whether Outkast Industrial, the entity formed by Mr.
5 The time to file an application for supervisory review is laid out in La. Unif. R. Ct. App. 4-3,
which provides, in pertinent part, that upon receiving a notice of intention, the district court judge “shall immediately set a reasonable return date within which the application shall be filed in the Court of Appeal. The return date in civil cases shall not exceed 30 days from the date of notice of the judgment . . . . ” 6 In his appellate brief, Mr. Reis raised the following three assignments of error:
1) Whether the district court erred in its failure to consider the proper classification statutes, namely, La.C.C. arts. 2338 and 2341, setting forth date of acquisition and source of funds, in a traversal trial specifically bifurcated to determine whether Outkast Industrial was the separate property of Mr. Reis, particularly in instances where an entity was formed after termination of the community and source of funds was not from the community.
2) Whether the district court erred in its application of the mismanagement statute and application of the findings and reasoning set forth in jurisprudence in classification of an asset as community or separate, particularly when there was
8 Reis after the termination of the community between the parties, was properly
classified as community property and therefore part of the community of acquets
and gains for the purposes of partitioning the parties’ property. We begin our
discussion by setting forth the standard of review and applicable law.
Standard of Review
“Determination of the separate or community nature of property is a factual
determination subject to manifest error review.” Huger v. Huger, 23-00117, p. 1
(La. 5/16/23), 360 So.3d 476, 477 (citing Ross v. Ross, 02-2984, p. 18 (La.
10/21/03), 857 So.2d 384, 395). The manifest error “standard ‘precludes the
setting aside of a district court’s finding of fact unless that finding is clearly wrong
in light of the record reviewed in its entirety.’” Reaver v. Degas House, L.L.C.,
22-0464, p. 3 (La. App. 4 Cir. 3/13/23), 359 So.3d 570, 573 (quoting Hall v.
Folger Coffee Co., 03-1734, p. 9 (La. 4/14/04), 874 So.2d 90, 98). “Errors of law
are reviewed de novo.” Westcott v. Westcott, 08-1339, p. 10 (La. App. 4 Cir.
4/17/09), 11 So.3d 45, 53 (citing Lasha v. Olin Corp., 625 So.2d 1002, 1006 (La.
1993)). “Appellate review of a question of law is simply a decision as to whether
the [district] court’s decision is legally correct or incorrect.” Id. (citing Miller v. S.
Baptist Hosp., 00-1352, p. 10 (La. App. 4 Cir. 11/21/01), 806 So.2d 10, 18).
never a filing against Mr. Reis for mismanagement or failure to preserve a community asset; and therefore, not before the district court.
3) The district court erred in finding that Mr. Reis had a duty to preserve and manage a former community asset, in violation of the mismanagement statute, and in violation of the reasoning set forth in jurisprudence, if he was not the spouse in possession or control of the former community asset and where his former spouse was in possession and control of that entity, evidenced by numerous judicial confessions made in the record of these proceedings and another proceeding.
9 Applicable Law
“Property of married persons is either community or separate . . . .” La. C.C.
art. 2335. Community property consists, in part, of “property acquired during the
existence of the legal regime through the effort, skill, or industry of either spouse;
[and] property acquired with community things or with community and separate
things, unless classified as separate property under Article 2341 . . . .” La. C.C. art.
2338. Conversely, separate property consists, in part, of “property acquired by a
spouse prior to the establishment of a community property regime; [and] property
acquired by a spouse with separate things or with separate and community things
when the value of the community things is inconsequential in comparison with the
value of the separate things used . . . .” La. C.C. art. 2341. “Things in the
possession of a spouse during the existence of a regime of community of acquets
and gains are presumed to be community, but either spouse may prove that they are
separate property.” La. C.C. art. 2340. “The spouse seeking to rebut the
presumption bears the burden of proving by a preponderance of the evidence that
property is separate in nature.” Durden v. Durden, 14-1154, p. 9 (La. App. 4 Cir.
4/29/15), 165 So.3d 1131, 1139 (citing Ross v. Ross, 02-2984, p. 9 (La. 10/21/03),
857 So.2d 384, 390). “Further, classification of property as either separate or
community is fixed at the time of its acquisition.” In re Succession of Firmin, 09-
0411, p. 7 (La. App. 4 Cir. 4/21/10), 38 So.3d 445, 449 (citation omitted).
Louisiana Civil Code article 2369.3 provides, in pertinent part, that “[a] spouse has
a duty to preserve and to manage prudently former community property under his
10 control in a manner consistent with the mode of use of that property immediately
prior to termination of the community regime.”
The district court, in its reasons for judgment, explained that Mr. Reis had
transferred the community’s interest in Outkast Environmental to Outkast
Industrial by creating a business which conducted the same type of work and used
several of the same employees. Specifically, the district court cited La. C.C. art.
2369.3, as well as the cases of Queenan v. Queenan, 492 So.2d 902 (La. App. 3
Cir. 1986), and Granger v. Granger, 06-1615 (La. App. 3 Cir. 9/26/07), 967 So.2d
540, for the proposition that spouses owe one another a duty to preserve former
community enterprises under their control. This led the district court to conclude
that when Mr. Reis transferred all of his efforts and resources from Outkast
Environmental to Outkast Industrial, despite a court order, he was no longer acting
in the best interest of Outkast Environmental. This transfer resulted in the district
court’s ultimate decision to classify Outkast Industrial as a community asset.
Mr. Reis argues that the district court erred in relying on La. C.C. art. 2369.3
and the cases of Queenan and Granger. He further asserts that the district court
erred in failing to consider the source of the funds used to create Outkast Industrial
at the time of its acquisition. Conversely, Ms. Reis argues that La. C.C. art. 2369.3
and the Queenan and Granger cases are not only relevant, but directly on point
with the matter at hand for the proposition that Outkast Industrial was a
continuation of Outkast Environmental, and that the district court properly applied
them in concluding that Outkast Industrial was a community asset. Regarding the
11 source of funds argument, Ms. Reis counters that Outkast Industrial was properly
found to be community property because Mr. Reis began the business with the
$40,000 she asserts he withdrew from their personal joint account.
Before examining the two cases discussed ad nauseum by the parties, we
note that in each case, the appellate court reached the issue of valuation of
community assets. While the matter sub judice stops at the issue of classification
of assets and valuation of those assets is not before this Court, we still find the
cases and analysis therein to be instructive. In Queenan, the parties obtained a
judgment of divorce on February 20, 1980, and their community property regime
terminated on November 13, 1979. 492 So.2d at 904. Included in their
community property were three corporations: Mike Queenan Equipment, Co., Inc.;
Queenan Development Co., Inc.; and Oak Meadow Water Works. Following the
termination of the community, Mr. Queenan continued managing these three
corporations. However, in May of 1980, Mr. Queenan personally purchased
“heavier and larger equipment in his own name.” Id. at 492 So.2d at 910.
Following those purchases, in the second half of 1981, Mr. Queenan formed a new
corporation—Mike Queenan Rigging, Inc.—and transferred his recently purchased
equipment to the ownership of the new corporation. Mr. Queenan operated the
new corporation out of the same office as the family businesses and, as noted by
both the district court and the appellate court, he led the new corporation to success
and prosperity at the expense of that of the family businesses. The appellate court
found that Mr. Queenan had breached his fiduciary duties regarding his control of
12 the family businesses. Although the new corporation was formed after termination
of the community, as a result of Mr. Queenan’s actions in forming a corporation
without necessity and to the detriment of the family businesses, the appellate court
decided “to treat the [new] corporation as if it were part and parcel of the
community regime insofar as allocation and accounting purposes are concerned.”
Id. at 492 So.2d at 913.
In Granger, the parties formed an oilfield pipe inspection company during
their marriage called Technical Tubular Inspection Services, Inc. (“Technical
Tubular”). 06-1615, p. 1, 967 So.2d at 542. Ms. Granger managed the office and
handled the financial side of the business, while Mr. Granger solicited business and
ran daily operations. In April of 1994, Ms. Granger filed a petition for divorce and
to partition the community property. In the interim between filing for divorce and
the granting of divorce in March of 1995, Mr. Granger was in control of Technical
Tubular. In 1993, the gross income for the company was roughly $918,000.
However, by June of 1995, the company’s sales were closer to $103,000.
Concerned by this downward trend, Ms. Granger requested and was subsequently
appointed as temporary receiver of the company. However, immediately after this
appointment, Mr. Granger abandoned Technical Tubular and formed a new
corporation called Tube-Tech, which “was staffed by former employees of
Technical Tubular, retained former clients of the community business and used a
similar name and logo.” Id. at p. 2, 967 So.2d at 542. The trial on the partition of
Technical Tubular did not occur until January of 2006, over a decade later. At that
13 point, Technical Tubular’s stock was considered worthless. The district court
noted that Mr. Granger had formed Tube-Tech shortly after Ms. Granger’s
appointment as receiver, as well as after Mr. Granger “was ordered not to dispose
of any property of Technical Tubular, nor to change the status of the affairs of
Technical Tubular to the injury of [Ms. Granger].” Id. The district court in
Granger relied on Queenan and found that each party owned a one-half interest in
Tube-Tech “as it is a substitute corporation for Technical Tubular due to [Mr.
Granger’s] action in taking all of the customers and employees of Technical
Tubular” and in acting against the court order enjoining him from changing the
status of affairs of Technical Tubular to Ms. Granger’s detriment. Id. at p. 2, 967
So.2d at 543. Upon review, the appellate court also relied on Queenan,
summarizing that the Queenan court had characterized that corporation, “though
technically [Mr. Queenan’s] separate property, as part of the community and
therefore subject to partition.” Id. at p. 3, 967 So.2d at 543. In following the same
line of reasoning as Queenan, specifically considering Mr. Granger’s hiring of the
same employees and calling upon the same customers, the Granger court affirmed
the district court, finding that there was no error in awarding Ms. Granger “one-
half of the value of Tube-Tech as her share in the community[-]owned business.”
Id. at p. 8, 967 So.2d at 546.
Mr. Reis proposes that these cases are inapplicable because each case
ultimately reached the issue of damages related to breach of duty owed to former
community property. As previously noted, while these two cases do in fact go
14 further than what we are being asked to consider in the instant matter, the court
was first required to make a determination as to whether the business formed after
the judgment of divorce and termination of the community was deemed to be
classified as a community asset. It is this analysis that we find to be instructive to
this Court in the instant case.
First, the matter sub judice consists of facts nearly analogous to the Granger
case. Beginning with the company names and logos, Outkast Industrial has not
differentiated itself from Outkast Environmental in a major way as it pertains to its
image to the public. As for the name, the first word of both Outkast Environmental
and Outkast Industrial is “Outkast,” with the same spelling. Further, the logos are
very similar, both including an American flag in the background with symbols for
hazardous materials printed on top, and matching vertical orientations of the
company names. We do not suggest that the logos are wholly identical. However,
the two are closely related and do not contain a meaningful differentiation between
them aside from the actual names themselves. As it relates to the business side of
Outkast Environmental, Mr. Reis served as the field manager and the party
responsible for employees, and Ms. Reis was the office manager with the main task
of organizing payroll. After the parties divorced, both were ordered by the district
court to remain in their current positions at Outkast Environmental without the
ability to unilaterally make large purchases, essentially maintaining the status quo
of the company. However, even with this order in place, the record reflects that
Mr. Reis sought business for Outkast Industrial from the same customers of
15 Outkast Environmental, and also hired employees for Outkast Industrial from
Outkast Environmental’s roster. Additionally, while the parties disputed the issue
of whether Outkast Environmental equipment was used by Outkast Industrial, the
district court ultimately placed more credibility on Ms. Reis’ testimony, finding
that Mr. Reis and Outkast Industrial employees had used Outkast Environmental
equipment, supplies and materials. “The [district] court sitting as trier of fact is in
the best position to evaluate the demeanor of the witnesses, and its credibility
determinations will not be disturbed on appeal absent manifest error.” Hill v.
Strickland, 24-0118, p. 2 (La. App. 4 Cir. 6/12/24), 391 So.3d 680, 682 (quoting
Patterson v. Charles, 19-0333, p. 9 (La. App. 4 Cir. 9/11/19), 282 So.3d 1075,
1082). We cannot say that the district court erred in finding Ms. Reis’ testimony to
be more credible in this instance. Lastly, while Outkast Environmental grossed
$2,042,711 in 2018 and $1,344,250 in 2019, its annual income had been greatly
diminished to grossing only $588,969 in 2020, and ultimately grossing $0 in 2021
and 2022. Considering the paralleled facts, we are persuaded by the Granger
court, and consider Outkast Industrial to merely be a “substitute corporation” for
Outkast Environmental. Further, we find that the district court’s consideration of
La. C.C. art. 2369.3 in reaching its conclusion is appropriate because it merely
illuminates: (1) Mr. Reis’ choice to ignore an order from the court by way of the
interim consent judgment; (2) his abandonment of the community enterprise of
Outkast Environmental; and (3) the ultimate draining of Outkast Environmental’s
assets and income to the immediate benefit of Outkast Industrial.
16 Lastly, we address Mr. Reis’ source of funds argument. This argument
hinges on the principle of real subrogration, which provides that “when a separate
asset of a spouse is utilized to obtain a new asset, that new asset remains the
spouse’s separate property.” Huger v. Huger, 21-0535, p. 5 (La. App. 4 Cir.
12/14/22), 367 So.3d 698, 701, rev’d per curiam, 23-00117, p. 1 (La. 5/16/23), 360
So.3d 476. Comment (c) to La. C.C. art. 2341 provides that “[t]he principle of real
subrogation is applicable to both separate and community property.” According to
Mr. Reis, he utilized his separate funds to fund Outkast Industrial. Based upon our
review of the record, the following evidence was adduced at trial:
• (1) On February 7, 2020, Mr. Reis withdrew $40,000 from a Capital One joint bank account shared with Ms. Reis. • (2) On February 12, 2020, Mr. Reis formed Outkast Industrial by filing with the Louisiana Secretary of State. • (3) On February 13, 2020, Mr. Reis executed a promissory note with Mr. Thibodaux in the amount of $60,000. The note does not contain any information as to the purpose of the loan. • (4) On February 14, 2020, Mr. Reis deposited $40,000 into the Outkast Industrial account with Hancock Whitney.
The record is unclear as to several facts surrounding the two alleged sources of
funds used to start Outkast Industrial. As to the $40,000 withdrawn from the joint
bank account, there is no indication where the money was subsequently deposited
or what Mr. Reis used it for if not to fund Outkast Industrial. As to the loan from
Mr. Thibodaux, it is unknown where the $60,000 was initially deposited, or what
Mr. Reis did with the remaining $20,000, assuming this loan was partially used to
fund Outkast Industrial. In fact, if we accept Mr. Reis’ narrative at face value,
$60,000 is still unaccounted for. In making a credibility determination based upon
17 the evidence presented at trial, the district court clearly did not find the testimony
provided by Mr. Reis as to source of funds to be credible, and thus did not afford
any weight to his argument in reaching its conclusion. “Credibility determinations,
including evaluating and resolving conflicting testimony, are factual findings
governed by the well-settled manifest error standard of review.” Young v.
Boudreaux, 23-0479, p. 5 (La. App. 4 Cir. 2/29/24), 384 So.3d 1052, 1056
(quoting Dixon v. Travelers Ins. Co., 02-1364, p. 8 (La. App. 4 Cir. 4/2/03), 842
So.2d 478, 484). “As the trier of fact, a trial court determines the credibility of the
witnesses and has the prerogative of accepting or rejecting some or all of the
witnesses’ testimony . . . .” Id. (quoting Gaspard v. Horace Mann Ins. Co., 17-
1140, p. 11 (La. App. 3 Cir. 5/9/18), 247 So.3d 778, 787). Further, where record
evidence so contradicts “the witness’s story, or the story itself is so internally
inconsistent or implausible on its face, that a reasonable fact finder would not
credit the witness’s story, the court of appeal may well find manifest error or clear
wrongness even in a finding purportedly based upon a credibility determination.”
Id. at p. 6, 384 So.3d at 1056 (quoting Rosell v. ESCO, 549 So.2d 840, 844-45 (La.
1989)). “Thus, ‘[t]he [district] court’s findings of fact, credibility evaluations, and
inferences of fact should not be disturbed on appeal if they are reasonable.’” Id.
(quoting Gaspard, 17-1140, p. 11, 247 So.3d at 787). Considering the wide
discretion given to district courts in making credibility assessments, we find that
the district court was not manifestly erroneous in reasoning that Outkast Industrial
18 should be considered a community asset and be recognized as part of the
community of acquets and gains between the parties.
DECREE
For the aforementioned reasons, we affirm the district court’s August 12,
2024 judgment.
AFFIRMED