Michael B. Reis, Jr. v. Mandy Pohlmann Reis

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.

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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

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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.

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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

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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

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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

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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

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