Donald F. Flores, Jr. Versus David B. Campbell; New Era Information Technologies, LLC; And Glen M. Feucht

DONALD F. FLORES, JR. NO. 21-CA-665

VERSUS FIFTH CIRCUIT

DAVID B. CAMPBELL; NEW ERA COURT OF APPEAL
INFORMATION TECHNOLOGIES, LLC;
AND GLEN M. FEUCHT STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT
PARISH OF JEFFERSON, STATE OF LOUISIANA
NO. 794-586, DIVISION "M"
HONORABLE ROBERT J. BURNS, JUDGE PRO TEMPORE,
JUDGE PRESIDING

July 06, 2022

SUSAN M. CHEHARDY
CHIEF JUDGE

Panel composed of Judges Susan M. Chehardy,
Fredericka Homberg Wicker, and Jude G. Gravois

JUDGMENT REVERSED IN PART,
AMENDED IN PART,
AND AFFIRMED IN PART
SMC
JGG

DISSENTS IN PART WITH REASONS
FHW

COUNSEL FOR PLAINTIFF/APPELLANT,
DONALD F. FLORES, JR., INDIVIDUALLY
AND ON BEHALF OF NEW ERA INFORMATION TECHNOLOGIES, LLC
Samuel Bradley Rhorer
Zachary S. Walker

COUNSEL FOR DEFENDANT/APPELLEE,
DAVID B. CAMPBELL
Albert J. Nicaud
Jeffrey M. Siemssen
Bret D. Guepet, Jr.

CHEHARDY, C.J.

Plaintiffs-appellants, Donald F. Flores, Jr., individually and on behalf of

New Era Information Technologies, LLC (“New Era”), filed a petition asserting

breach of contract, breach of fiduciary duties, and misappropriation against New

Era’s Chief Executive Officer (“CEO”), David B. Campbell. Plaintiffs allege that

Campbell received excessive compensation in violation of New Era’s Operating

Agreement (“OA”) confected in 2013 among the company’s three partners –

Flores, Campbell, and Glen Feucht, and that Campbell misused corporate funds to

pay his and Mrs. Campbell’s personal credit card expenses.1 In addition to

monetary damages, plaintiffs requested a declaratory judgment that would

enumerate their respective percentages of ownership; requested an injunction

prohibiting Campbell from allocating to himself more money than the members

had agreed upon, pursuant to the provisions of the OA; asked the court to tax costs

against the defendant; requested a formal accounting; and requested judicial

interest from the date of demand. The trial court awarded $208,295.00 in damages

to New Era on the excess-compensation claim, after determining that reasonable

fee-for-services compensation for Campbell was $200,000 per year, exceeding the

$60,000 fee-for-services compensation that the partners had agreed upon in 2013.

The judgment declined to award damages for the credit card payments, declined to

issue an injunction, denied the request for a formal accounting, and was silent as to

judicial interest.

For the reasons that follow, we: (1) reverse the portion of the judgment that

denied plaintiffs’ request for a formal accounting; (2) amend the trial court’s

damages award to increase the amount that Campbell must reimburse New Era for

unauthorized payments of excess compensation; (3) further amend the judgment to

1
David Campbell’s wife, Fran, is a CPA and served as New Era’s tax preparer.

21-CA-665 1

include judicial interest from the date of judgment; and (4) affirm the portions of

the judgment that (a) denied damages for the alleged misuse of New Era funds to

pay Campbell’s credit card bills, (b) denied injunctive relief, and (c) denied the

request to tax costs against defendants.

FACTS AND PROCEDURAL HISTORY

Plaintiff, Donald Flores, was a founding member of New Era, which began

in 2004.2 New Era is registered as a limited liability company with Louisiana’s

Secretary of State but files its taxes as a partnership. Flores manages software

development projects for New Era. New Era’s primary sources of income are the

service contracts it has won after successfully bidding on IT work in Jefferson

Parish, as well as IT work for other parish-related entities, in response to Jefferson

Parish’s various Requests for Proposals (RFPs).3

Campbell became an owner/member of New Era in 2012, at which time he

was allocated a 30% interest in the company. After other New Era members

resigned, New Era’s ownership was divided between the only remaining members,

Campbell and Flores. In 2013, Campbell and Flores recruited Glen Feucht and

each ceded 5% of their ownership interests to him, which resulted in the

percentages of ownership that the three members retain today: Campbell, 57.5%;

Flores, 32.5%, and Feucht, 10%.

When Feucht became a member, he asked Campbell and Flores to sign an

OA. Feucht located a standard operating agreement online, eliminated a few of the

provisions that he felt did not apply to New Era, and sent the revised OA to

Campbell and Flores for their review. Without further amendment, all parties

signed the OA on July 30, 2013.4 Around that time, Campbell was recognized as

2
Flores also founded Ultix, a software development firm, in 1989.
3
According to Flores’s testimony, New Era subcontracted with Ultix on New Era’s very first
RFP, and Ultix has been New Era’s primary software developer since New Era began.
4
Relevant provisions of the OA provide as follows:

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New Era’s CEO and given chief administrative responsibilities; he was also

responsible for maintaining the relationships with councilmembers and other

government employees to maintain and/or renew New Era’s IT contracts with the

local government entities.

Section 4.1 of the OA provides: “Any Member rendering services to the

Company shall be entitled to compensation commensurate with the value of such

services as all members unanimously agree upon.” When Campbell, Flores, and

Feucht signed the OA, Flores and Feucht both understood that Campbell’s

management fee was $60,000 per year. Flores, who was in charge of proposal

writing and supervised software development projects, received no management

fee, believing that he would be compensated through partnership profits. Feucht

initially worked part time for $36,000 per year, as he was also working for another

2.1 PROFITS/LOSSES. For financial accounting and tax purposes the
Company’s net profits or net losses shall be determined on an annual basis and shall
be allocated to the Members in proportion to each Member’s relative capital interest
in the Company, and as amended from time to time in accordance with Treasury
Regulation 1.704-1.
2.2 DISTRIBUTIONS. The Members shall determine and distribute available
funds annually or at more frequent intervals as they see fit. Available funds, as
referred to herein, shall mean the net cash of the Company available after
appropriate provision for expenses and liabilities, as determined by the Members.
3.1 MANAGEMENT OF THE BUSINESS. The management of the business
is invested in the Members. The members do appoint one Chief Executive Member.
The Chief Executive Member is the Member with the most responsibility and head
of operations of the business.
3.5 DISPUTES OF MEMBERS. Disputes among Members will be decided
by a majority vote. A member has the amount of votes according to the Members
percent of interest. (Example: 11% is 11 votes). There has to be a majority vote for
an action to take place. [Emphasis in original.]
3.8 COMPANY INFORMATION. Upon request, the Chief Executive
Member shall supply to any member information regarding the Company or its
activities. Each Member or his authorized representative shall have access to and
may inspect and copy all books, records and materials in the Chief Executive
Member[’]s possession regarding the Company or its activities. The exercise of the
rights contained in this ARTICLE 3.6 shall be at the requesting Member’s expense.
4.1 MANAGEMENT FEE. Any Member rendering services to the Company
shall be entitled to compensation commensurate with the value of such services as
all members unanimously agree upon.
4.2 REIMBURSEMENT. The Company shall reimburse the Members for all
direct out-of-pocket expenses incurred by them in managing the Company if
unanimously agreed upon by all members.

21-CA-665 3

company in Baton Rouge. In 2015, Feucht began working full time for New Era

and signed a contract with Campbell that provided Feucht an annual base “salary”

of $120,000, benefits, and the title of Chief Operating Officer (COO).

Both forensic accounting experts who testified at trial explained that in a

partnership, the partners are not employees of the company. Rather, they are self-

employed and may receive two types of income: (1) the partner’s share of the

company’s net profits (or losses), which are allocated to a partner’s capital account

according to his percentage of ownership, whether the partner takes a distribution

from his capital account or not; and (2) guaranteed payments, loosely equivalent to

an employee’s salary, which must be provided for in an operating agreement but

cannot be tied to the partner’s percentage of ownership.

New Era’s gross earnings steadily grew from approximately $1.5 million in

2013 to nearly $4 million in 2017. After 2013, and in light of New Era’s apparent

economic success, Campbell began increasing his compensation, reported as W-2

income. Again, this income is separate from Campbell’s partnership earnings (or

losses), which are calculated from the company’s net profit according to a partner’s

ownership share, and which are reported separately on a partner’s K-1, not a W-2.

Campbell’s W-2 for 2013 shows that he earned $60,000, while his K-1

partnership earnings for 2013 showed $155,821 in self-employment earnings and

$43,857 in distributions.5 Campbell agreed that in 2014, separate from any

partnership earnings, he raised his base compensation to $77,000 and also gave

himself a $50,000 bonus. In 2015, he paid himself $121,000 plus a $60,000 bonus.

In 2016, Campbell took $98,000 in fee-for-services compensation. In 2017,

Campbell paid himself $242,538.36 in fee-for-services compensation, even though

New Era’s tax return showed a net loss of $73,000 (and his K-1 reported $42,465

5
Campbell testified at trial that New Era wrote a letter to the IRS indicating that Campbell never
cashed the $60,000 check, thus, the 2013 W-2 is incorrect, but that letter is not part of the record.

21-CA-665 4

in lost self-employment earnings). In 2018, Campbell’s W-2 listed $264,230.64 in

compensation. Campbell’s W-2s for the years after 2018 were not included in the

record, but Campbell testified at trial that he paid himself $240,000 for 2019 and

$240,000 for 2020.

Campbell further testified at trial that he never told his partners that he raised

his fee-for-services compensation or that he awarded himself bonuses. Campbell

also never sought his partners’ input when issuing distribution checks or when

seeking reimbursement for business expenses. Nevertheless, trial testimony from

all three partners established that at least some of the charges on Campbell’s

personal credit cards were legitimate, reimbursable business expenses. All

members testified that each year Campbell himself would determine the dividend

distribution for each partner and would see that Flores and Feucht received checks.

In late 2017, Feucht emailed Campbell and Flores requesting a meeting to

discuss dividend distributions, because New Era had nearly $4 million in gross

earnings that year. Feucht sent a follow-up email in January 2018, noting that the

members never met at the end of 2017 to discuss dividend checks. After seeing

some off-cycle payroll transactions, Flores asked Campbell for bank statements

and credit card statements. In an August 12, 2018 email, Flores notified his

partners that from 2014 to 2018, New Era had paid $210,585.77 on four credit card

accounts. At that time, Flores believed that the charges had been made using New

Era’s credit cards, not Campbell’s personal credit cards.6

The members met on September 19, 2018, to discuss the possible renewal of

the Jefferson Parish IT contract as well as reimbursements for business expenses.

The September 19 meeting minutes refer to the OA provisions related to

Reimbursements, Profits/Losses, and Distributions. The minutes state that the

6
Flores indicated that two credit card statements were still missing, suggesting that the $210,000
in credit card payments was a preliminary amount.

21-CA-665 5

members will hold mandatory monthly financial meetings to discuss member

expense reports and other financial issues, and will discuss dividend distributions

at quarterly meetings.

Another meeting was held on November 2, 2018. The meeting minutes

indicate that all expense reports were approved by all members. The parties also

discussed a Whitney Bank payment of $1,066.02 to American Express, a

$3,889.00 payment to United Marine, and checks written from New Era to New

Era on the Whitney account for $10,000 on May 29, $50,000 on June 8, and

$50,000 on June 12, 2018. Campbell said that he could not remember what those

checks were for but that he would look into it. Flores followed up one week later

with an email to Campbell requesting more information about the $110,000 in

checks written from one New Era bank account and deposited into a different New

Era account. On November 11, 2018, Flores sent an email to Wanda Baroni, New

Era’s office manager, requesting information about out-of-cycle Paychex

transactions in January 2018 for $8,316.73, $53,588.14, and $71,489.69.

Flores and Feucht agreed to meet again on December 6, 2018, but Campbell

was not available. Flores later requested information about two more Paychex

transactions on December 28, 2018 for $81,788.08 and $70,866.92.

Having not received any of the requested information, Flores informed his

partners that he would be hiring a forensic accounting firm to audit New Era’s

books to ensure “complete financial transparency.” On February 1, 2019, Flores’s

attorney sent a letter to Campbell requesting a comprehensive inspection of New

Era’s financial information. On February 5, 2019, Campbell signed a Louisiana

Workforce Commission Separation Notice, which indicated that Flores had been

discharged from his position at the company. Campbell also evicted Flores from

New Era’s building. Finally, Ms. Baroni, the office manager, sent a letter to Flores

indicating that upon his February 5, 2019 termination, his health insurance would

21-CA-665 6

also be terminated. Campbell also attempted to change the percentage of

ownership that each partner held, reducing Flores’ share to approximately 18%,

and eliminating Feucht’s 10% ownership interest.

Flores filed suit personally and on behalf of New Era on April 25, 2019. On

January 13, 2021, a few months before trial, the trial court entered judgment

finding that all claims before April 25, 2016, are prescribed, based on La. R.S.

12:1328 and La. R.S. 12:1501 et seq.7 Plaintiffs did not seek review of that ruling.

Thus, Campbell’s W-2 income for 2014 and 2015 is excluded from consideration

in calculating Campbell’s excess compensation.

At the May 2021 bench trial, the trial court heard testimony from Campbell,

Flores, Feucht, Baroni, and the two forensic accounting experts, Mark Shirley and

John Theriot. Mr. Shirley, plaintiffs’ expert, testified as to the kinds of

compensation that the partners earned and explained his calculations for the

allegedly excessive compensation that Campbell paid himself.8 Campbell’s expert,

Mr. Theriot, agreed with Mr. Shirley’s description of the types of self-employment

compensation available to the partners, but he also testified at length regarding

what “reasonable compensation” for the CEO of an IT company in Louisiana

would be, finding that amount to be $209,560.00 per year. On cross-examination,

Mr. Theriot admitted that he failed to conduct a comparative analysis of the

partners’ respective duties, and that the information he used to reach this figure

was data collected from corporations, not partnerships. Theriot also agreed that

Campbell’s total compensation had two components – his fee-for-services

7
La. R.S. 12:1502 C states that no action for damages against a member for an unlawful
distribution or breach of fiduciary duty “shall be brought unless it is filed … within one year
from the date of the alleged act, omission, or neglect, or within one year from the date that the
alleged act, omission, or neglect is discovered or should have been discovered, but in no event
shall an action covered by the provisions of this Subsection be brought more than three years
from the date of the alleged act, omission, or neglect.”
8
Mr. Shirley calculated that Campbell had paid himself a total of $1,146,332.34 in excess fee-
for-services compensation after 2013.

21-CA-665 7

compensation (or guaranteed payment), and his partner share of the company’s net

profits.

At the conclusion of trial, the parties stipulated that the parties’ ownership

interests in New Era were: David B. Campbell, 57.5% interest; Donald F. Flores,

32.5% interest; and Glen M. Feucht, 10% interest, and the trial court granted

declaratory relief to that effect. Plaintiffs then requested a money judgment to

reimburse New Era $870,496.15, the alleged amount of compensation in excess of

$60,000 that Campbell paid himself in the three-year period before Flores filed

suit, and requested judicial interest from the date of demand. Plaintiffs also asked

the trial court to (i) order Campbell to reimburse New Era for credit card payments

in the amount of $125,596.03; (ii) order a formal accounting by an independent

accountant, because they have not seen complete records for 2019, 2020, or 2021;

(iii) enter an injunction prohibiting Campbell from taking more than $60,000 per

year in fee-for-services compensation without obtaining unanimous consent; and

(iv) tax costs against the defendant.

In oral reasons for judgment, the trial court determined that pursuant to the

Operating Agreement, Campbell’s fee-for-services compensation was set at

$60,000 per year; this compensation should not have been changed without a

unanimous agreement; and Campbell breached the agreement by compensating

himself each year above that amount.9 The court also pointed out that the

agreement indicated that compensation should be commensurate with the value of

the services as all members unanimously agreed upon. Based on the testimony of

Campbell’s expert, Mr. John Theriot, the trial court valued Mr. Campbell’s service

9
The trial court stated: “I believe there was a meeting of the minds regarding this Operating
Agreement. I believe they all understood including Campbell it was at the sum of $60,000, so
obviously in my view Campbell breached this Operating Agreement, but the question is what
damages were really caused to the company and to these parties.” Later in his oral reasons, the
trial court continued: “cookie cutter or not, [the Operating Agreement was] signed by the parties,
agreed to by the parties and the parties are bound by it.”

21-CA-665 8

to the company at $200,000 per year and awarded New Era the total of the

amounts above $200,000 for the years 2017, 2018, 2019, and 2020, which the trial

court found to be $208,295.00.10 The trial court denied plaintiffs’ claim for

reimbursement for Campbell’s alleged misuse of New Era funds to pay his

personal credit cards, finding that plaintiffs failed to meet their burden of proof

with any specificity. The trial court also denied plaintiffs’ request for a formal

accounting, denied the request for injunctive relief, and denied plaintiffs’ request

that costs be taxed against defendant.

Plaintiffs now appeal the trial court’s judgment and assert seven assignments

of error:

1. After finding that the contracting parties had agreed to an amount for
Campbell’s “fee for services” component of his compensation, the trial
court erred in using its determination of what was “reasonable”
compensation to calculate damages.
2. Even if the trial court were legally permitted to substitute its finding of
“reasonable” compensation for the agreement among the parties, the
court erred by ignoring distributable share of company income as a
component of Campbell’s compensation.
3. The trial court erred in denying damages for the amounts Campbell paid
for personal credit cards with the company’s funds, and incorrectly
imposed the burden of proof on plaintiff rather than on Campbell,
pursuant to La. R.S. 12:1314.
4. The trial court erred in denying plaintiff’s demand for a formal
accounting.
5. The trial court erred in denying plaintiff’s request to enjoin Campbell
from modifying the “fee for service” component of his own
compensation without unanimous consent.
6. The trial court erred in ordering plaintiffs to bear their own costs.
7. The trial court erred in failing to award judicial interest on the amount of
judgment.

10
Campbell’s W-2 for 2016 showed income of $98,000, well below the “reasonable” salary
determined by the trial court. It is not clear from the record how the trial court handled
compensation for this year.

21-CA-665 9

ANALYSIS

Assignments of Error 1 and 4 – excessive fee-for-services compensation and
request for a formal accounting

In their first assignment of error, plaintiffs point out that the trial court

correctly determined that Campbell breached the OA, but the court erroneously

determined what a “reasonable” fee for service amount would be rather than

adhering to the terms of the OA. In their fourth assignment of error, plaintiffs

request a formal accounting pursuant to La. R.S. 12:1319 B(3) and Section 3.8 of

the OA. As discussed below, we find merit in plaintiffs’ first and fourth

assignments of error.

An operating agreement is contractual in nature; thus, it binds the member of

the LLC as written and is interpreted pursuant to contract law. Risk Mgmt. Servs.,

L.L.C. v. Moss, 09-632 (La. App. 5 Cir. 4/13/10), 40 So.3d 176, 180, writ denied,

10-1103 (La. 9/3/10), 44 So.3d 683. An abuse-of-discretion standard applies when

reviewing an award of damages for breach of contract. Hernandez v. Martinez, 00-

1282 (La. App. 5 Cir. 2/28/01), 781 So.2d 815, 821. A manifest-error standard of

review applies to factual findings that are pertinent to the interpretation of a

contract. 2800 Associates, L.L.C. v. Eagle Equity Ltd. P’ship No. 3, 10-687 (La.

App. 5 Cir. 3/29/11), 64 So.3d 283, 290. When appellate review is not premised on

the trial court’s factual findings but is instead based on an independent review and

examination of the contract on its face, the appellate court reviews the issue as a

question of law to determine whether the trial court was legally correct or legally

incorrect. Id.

Section 4.1 of New Era’s operating agreement provides: “Any Member

rendering services to the Company shall be entitled to compensation

commensurate with the value of such services as all members unanimously agree

upon.” Although the OA does not specifically list Campbell’s compensation as

21-CA-665 10

$60,000 in Section 4.1, the record establishes, and the trial court found, that all

parties signed the OA in 2013 and, at that time, all parties understood that

Campbell would receive $60,000 per year in fee-for-services compensation.

Feucht and Flores both testified at trial that they believed Campbell was

making $60,000 per year in fee-for-services compensation and that Campbell did

not consult either partner about his decision to increase that amount. Campbell’s

own testimony corroborated Flores’ and Feucht’s testimony in this regard. Yet

Campbell believed that he was entitled to unilaterally increase his compensation

under Section 3.5 of the OA, which states that “disputes among Members will be

decided by a majority vote. A member has the amount of votes according to the

Member[’]s percent of interest.” Because Campbell owned 57.5% of the company,

he believed that he could outvote his partners if a dispute about his compensation

were to arise.

Under the present facts, we disagree with Campbell’s interpretation of the

OA and agree with the trial court’s finding that Campbell breached the OA when

he increased his fee-for-services compensation without consulting his partners.

Section 4.1 states that the partners should “unanimously agree upon” the value of a

partner’s services when setting a partner’s compensation; it does not provide that

the “value of such services” is determined independently, nor does it state that

compensation is based upon a “reasonable” value for the services provided. Even

though Campbell arguably could have outvoted his partners pursuant to Section 3.5

in the event of a dispute, that Section was never invoked because there was never a

dispute. By his own admission, Campbell did not discuss the issue with his

partners at all.

Campbell’s breach of the OA is magnified by two examples in which the

other partners’ compensation was negotiated. First, in 2015, when Feucht began

working for New Era full time, Campbell signed an employment contract with

21-CA-665 11

Feucht guaranteeing him $120,000 per year. As CEO, Campbell certainly could

have re-negotiated his own guaranteed compensation with his partners at that time.

Second, in 2016, Flores negotiated with Campbell and Feucht for an hourly rate for

writing bid proposals in response to RFPs. Flores testified that he drafted

approximately 24 proposals for free before asking New Era to pay him $60.00 per

hour for that work. The other two partners negotiated the hourly rate down to

$56.00 per hour. In 2018, however, the partners agreed to pay Flores $72.00 per

hour for drafting proposals, again the result of negotiations among partners.

Notably, Flores stated at trial that he probably would have approved an increase in

Campbell’s fee-for-services compensation if Campbell had asked.

A contract has the effect of law between the parties and may be dissolved

only through the consent of the parties or on grounds provided by law. La. C.C. art.

1983. Campbell’s majority ownership does not relieve him from adhering to

Section 4.1’s unanimous-approval requirement. Feucht testified that the OA was in

place to protect the minority partners’ interests. The unanimity requirement found

in Sections 4.1 and 4.2 exist in furtherance of that protection. Campbell’s unilateral

decision to increase his fee-for-services compensation also reduced all partners’

net profits. As contemplated in OA Section 2.2, partnership profit is determined

only after all expenses, including W-2 compensation, have been subtracted.

Campbell’s accounting expert, Mr. Theriot, agreed that if a partner takes a

guaranteed payment such as fee-for-services compensation in lieu of taking a

partnership distribution, this decreases each member’s partnership earnings.

The trial court correctly determined that New Era was entitled to restoration

of the excess compensation that Campbell collected in light of Campbell’s breach

of the OA. Yet the trial court erred as a matter of law when it decided to supplant

the New Era members’ decision-making authority—authorized by Section 4.1 of

the OA—with the court’s own judgment regarding reasonable compensation. “A

21-CA-665 12

court is not to be concerned with the wisdom or folly of a contract. [] Its duty is

confined to the ascertainment of the limits of the rights and obligations of the

contracting parties as they have defined it for themselves.” Color Stone Intern.,

Inc. v. Last Chance CDP, LLC, 08-35 (La. App. 5 Cir. 5/27/08), 986 So.2d 707,

712. Because the trial court erred as a matter of law in deciding that the excess

compensation award should be based on a “reasonable” salary for Campbell, we

review the trial court’s damages award de novo. See Advanced Medical Rehab,

L.L.C. v. Manton, 21-315 (La. App. 5 Cir. 2/23/22), -- So.3d --, 2022 WL 533885,

at *3.

The record contains testimony and evidence sufficient to recalculate the

amount of fee-for-services compensation in excess of $60,000 per year that

Campbell paid himself from 2016 to 2020. Campbell’s W-2s for 2016, 2017, and

2018 establish wages of $98,000, $242,538.36, and $264,230.64, respectively.

Moreover, Campbell testified at trial that he compensated himself $240,000 per

year for 2019 and 2020. Based on this evidence, we find that Campbell’s breach of

the OA resulted in excess fee-for-services compensation from 2016 to 2020 in the

amount of $784,769.00, and therefore amend the trial court’s judgment to reflect

that amount of damages.11

With regard to plaintiffs request for a formal accounting, plaintiffs contend

in their fourth assignment of error that they did not receive all financial records for

2019, 2020, and 2021, and they argue that Campbell should be ordered to produce

these documents pursuant to La. R.S. 12:1319. Under that statute, a member may

… “[d]emand a formal accounting of the limited liability company’s affairs

11
We recognize, without deciding, that some portion of the compensation that Campbell has
been ordered to return to New Era may be subject to potential redistribution to Campbell as
partnership profits.

21-CA-665 13

whenever circumstances render it just and reasonable.” La. R.S. 12:1319 B(3).

Additionally, Section 3.8 of the OA provides:

Upon request, the Chief Executive Member shall supply
to any member information regarding the Company or its
activities. Each Member or his authorized representative
shall have access to and may inspect and copy all books,
records and materials in the Chief Executive Member[’]s
possession regarding the Company or its activities. The
exercise of the rights contained in this ARTICLE 3.6 shall
be at the requesting Member’s expense.

Given the testimony that plaintiffs did not receive all of New Era’s records for

2019, 2020, and 2021, we find the trial court abused its discretion in refusing to

grant plaintiffs’ request for a forensic accounting. Accordingly, we reverse that

portion of the trial court’s ruling and permit plaintiffs to conduct a formal

accounting at Flores’s expense.

Assignment of Error 2 – calculating reasonable compensation

In their second assignment of error, plaintiffs contend that even if the trial

court were permitted to substitute a “reasonable” fee-for-services compensation in

calculating New Era’s damages, the trial court also should have considered the

amount of earnings Campbell received in partnership income, as he owns 57.5% of

the company. Because we have already determined that the trial court erred as a

matter of law in determining “reasonable” compensation before calculating New

Era’s damages caused by Campbell’s excess fee-for-services earnings, we need not

address this issue.

Assignment of Error 3 – burden of proof on credit card claim

The trial court denied any damages related to the allegations that Campbell

breached his fiduciary duty to the company when New Era paid Campbell’s

personal credit card bills, finding a lack of proof. Plaintiffs contend that pursuant to

La. R.S. 12:1314, the trial court erred because Campbell, not plaintiffs, had the

burden of proving that the payments New Era made to Campbell’s credit card

21-CA-665 14

companies were legitimate. Moreover, under Section 4.2 of the OA, the members

must unanimously agree to the reimbursement of a member’s out-of-pocket

expenses.

Under La. R.S. 12:1314 A(5), “a member … [s]hall account to the limited

liability company and hold as trustee for it any profit or benefit derived by him …

from any personal use by him of its property unless he proves under strict judicial

scrutiny the fairness of the transaction to the limited liability company.” La. R.S.

12:1314 E provides: “A person alleging a breach of the duty of diligence, care,

judgment, and skill owed by a member or manager under Subsection A has the

burden of proving the alleged breach of duty, … and, in a damage action, the

burden of proving that the breach was the legal cause of damage suffered by the

limited liability company.”

Notwithstanding the provisions of La. R.S. 12:1314 A(5), we find that

plaintiffs bore the initial burden of proving Campbell’s alleged breach of duty to

New Era by providing enough evidence to cast substantial doubt on New Era’s

payment of Campbell’s credit card bills. Campbell and the office manager, Ms.

Beroni, testified that New Era did not have its own credit card for some time and

that Campbell agreed to put certain New Era business expenses on his personal

credit cards. Although Flores stated that Campbell misappropriated New Era funds

to pay for a cruise, a beachfront vacation, numerous expensive meals, and other

allegedly unauthorized or non-business expenses, Campbell testified, and Flores

and Feucht essentially agreed, that the money Campbell spent to attend out-of-

town functions and to wine and dine prospective contractors were legitimate

business expenses. Approximately 90% of New Era’s income came from

government contracts, and when cross-examined, the partners tended to agree that

meals, campaign contributions, and the maintenance of Campbell’s relationship

with potential contractors were a cost of doing business.

21-CA-665 15

Flores also alleged that Campbell’s son, a New Era employee, charged Uber

and food expenses to his parents’ credit cards, which were then paid for by New

Era. Even though these allegations of misuse and unauthorized expenses may raise

a red flag, plaintiffs failed to submit sufficient, specific proof of the amounts that

Campbell or his family allegedly misspent. Plaintiffs offer only a total amount –

approximately $210,000 – and contend that $125,000 of those expenses were not

reimbursable business expenses and therefore should be refunded to New Era.

We find that the trial court did not abuse its discretion in refusing to order

Campbell to reimburse New Era for these credit card payments. The record is

devoid of evidence or testimony that points to specific, individual, unauthorized

transactions or their amounts. When questioned at trial about some of the credit

card charges that plaintiffs allege were unauthorized, Campbell explained, and

Feucht and Flores generally agreed, that they were legitimate business expenses.

And because New Era did not have its own credit card, Campbell charged those

expenses on his own card. Without additional information to establish the allegedly

unauthorized expenses with more specificity, this assignment of error lacks merit.

Accordingly, this portion of the trial court’s judgment is affirmed.

Assignment of Error 5 – request for injunctive relief

Appellants asked the trial court to enjoin Mr. Campbell “from drawing more

than $60,000” in fees for services per year, pursuant to the terms of the Operating

Agreement. The decision to grant or deny a request for injunctive relief shall not be

disturbed absent a clear abuse of discretion. Waste Management of La., L.L.C. v.

Consolidated Garbage Dist. No. 1 of Par. Of Jefferson, 12-444 (La. 5 Cir.

3/13/13), 113 So.3d 243, 248. “An injunction is a harsh, drastic, and extraordinary

remedy, and should only issue when the party seeking it is threatened with

irreparable loss or injury without adequate remedy at law.” Reasonover v.

Lastrapes, 09-1104 (La. App. 5 Cir. 5/11/10), 40 So.3d 303, 308.

21-CA-665 16

As this case demonstrates, Campbell’s actions of drawing more than

$60,000 per year in fee-for-services compensation has not resulted in irreparable

loss, and plaintiffs have an adequate remedy at law. Moreover, granting the

requested injunctive relief could interfere with the terms of the OA, which permit

the partners to modify Campbell’s compensation upon unanimous agreement.

Because there is no irreparable harm, we find no error in the trial court’s refusal to

grant the extraordinary remedy of injunctive relief, and this portion of the trial

court’s judgment is affirmed.

Assignment of Error 6 – costs of litigation

A trial court has the discretion to assess costs of a suit in any equitable

manner. Antill v. State Farm Mut. Ins. Co., 20-131 (La. App. 5 Cir. 12/2/20), 308

So.3d 388, 410. Plaintiffs argue that the trial court abused its discretion in ordering

the parties to bear their own costs. La. C.C.P. art. 1920 provides:

Unless the judgment provides otherwise, costs shall be
paid by the party cast, and may be taxed by a rule to show
cause.

Except as otherwise provided by law, the court may render
judgment for costs, or any part thereof, against any party,
as it may consider equitable.

Moreover, La. C.C.P. art. 2164 provides:

The appellate court shall render any judgment which is
just, legal, and proper upon the record on appeal. The court
may award damages, including attorney fees, for frivolous
appeal or application for writs, and may tax the costs of
the lower or appellate court, or any part thereof, against
any party to the suit, as in its judgment may be considered
equitable.

Both plaintiffs and defendants incurred substantial costs in this litigation. At trial,

Flores stated that he had already incurred approximately $150,000 in legal fees and

that he had paid between $30,000 and $35,000 for Mr. Shirley’s initial forensic

audit, which did not include Mr. Shirley’s subsequent preparation for trial and

testimony at trial. Though the trial court could have taxed costs against the

21-CA-665 17

defendant pursuant to La. C.C.P. art. 1920, we cannot say that the court’s refusal to

do so amounted to an abuse of its vast discretion on this issue. Accordingly, we

affirm this portion of the trial court’s judgment.

Assignment of Error #7 – judicial interest

The trial court’s judgment was silent on the issue of judicial interest. In their

final assignment of error, plaintiffs contend the trial court erred in refusing to

award interest on the judgment pursuant to La. C.C.P. art. 1921. We agree.

Article 1921 provides: “The court shall award interest in the judgment as

prayed for or as provided by law.” (Emphasis added). When a party prays for an

award of interest in a pleading seeking a monetary judgment, the court lacks

discretion to deny interest on the award.” In re Succession of Banks, 11-26 (La.

App. 5 Cir. 6/29/11), 71 So.3d 1086, 1098.

Plaintiffs’ petition clearly prayed for an award of monetary damages plus

interest, and plaintiffs’ counsel reiterated the request for judicial interest from the

date of demand at the conclusion of trial. Having awarded monetary damages in

plaintiffs’ favor, the trial court erred in failing to also award judicial interest.

However, we find that the interest on the damages awarded for breach of contract

should be awarded from the date of judgment rather than the date of demand. See

Elliott v. Normand, 07-569 (La. App. 5 Cir. 1/22/08), 976 So.2d 738, 742-43

(finding that damages for the breach of a repair contract did not qualify for pre-

judgment interest, which is reserved for actions in tort, not actions in contract).

Accordingly, the judgment is further modified to reflect that the award in favor of

plaintiff, New Era Information Technologies, LLC, and against defendant, David

Campbell, includes judicial interest from the date of judgment.

CONCLUSION

The portion of the trial court’s judgment denying plaintiffs’ request for a

formal accounting is reversed. The trial court’s award of damages against David B.

21-CA-665 18

Campbell and in favor of New Era Information Technologies, LLC, for breach of

contract is amended to award $784,769.00, plus judicial interest from the date of

judgment. The portions of the trial court’s judgment finding that plaintiffs failed to

meet their burden of proof on the claim for New Era’s credit card payments,

denying plaintiffs’ request for injunctive relief, and ordering the parties to bear

their own costs, are affirmed.

JUDGMENT REVERSED IN PART,
AMENDED IN PART,
AND AFFIRMED IN PART

21-CA-665 19

DONALD F. FLORES, JR. NO. 21-CA-665

VERSUS FIFTH CIRCUIT

DAVID B. CAMPBELL; NEW ERA COURT OF APPEAL
INFORMATION TECHNOLOGIES, LLC;
AND GLEN M. FEUCHT STATE OF LOUISIANA

J., WICKER DISSENTS IN PART WITH REASONS

I respectfully dissent from the majority opinion only insofar as it

affirms the trial court’s judgment ordering each party to bear its own costs

of these proceedings.

La. C.C. art. 1920 provides that “[e]xcept as otherwise provided

by law, the court may render judgment for costs, or any part thereof,

against any party, as it may consider equitable.” Generally, however,

the prevailing party is not assessed with costs, unless in some way he

incurred additional costs pointlessly or engaged in other conduct to

justify an assessment of costs against him. Westley v. Allstate Ins. Co.,

05-100 (La. App. 5 Cir. 5/31/05), 905 So.2d 1127, 1137.

A trial judge has great discretion in assessing costs and, in fact,

in some narrow circumstances, the best interests of justice are served

by casting a prevailing party with costs. In re Bass, 15-1680 (La. App.

1 Cir. 6/3/16), writ denied sub nom. In Int. of Bass, 16-1220 (La.

10/17/16), 207 So.3d 1065, and writ denied sub nom. In Int. of Bass,

16-01240 (La. 10/17/16), 207 So.3d 1066, citing Courtney v. Winn-

Dixie Louisiana, Inc., 447 So.2d 504, 510 (La. App. 5th 1984), writ

denied, 449 So.2d 1359 (La. 1984).

21-CA-665 1

However, while La. C.C. art. 1920 grants the trial court

discretion to assess costs as it may consider equitable, Flores

accurately points out in brief that there are no equitable considerations

in this case that would justify a deviation from the general prevailing

rule that that the prevailing party should not be assessed with costs.

Flores initiated this litigation on behalf of New Era to recover

compensation improperly taken by Campbell without agreement of

the other members. The evidence introduced at trial reflected that any

change in compensation as to the other members was discussed or

agreed upon but that Campbell increased his compensation without

discussion with other members and in violation of New Era’s

Operating Agreement. This litigation was necessitated by Campbell’s

improper actions and the evidence demonstrated no action by Flores

to pointlessly incur additional costs or any other conduct to justify

assessing costs against him. Moreover, the trial court in its extensive

oral reasons for judgment provided no articulable facts to support the

decision for each party to bear its own cost and I find no factual

evidence to support any finding that the “best interests of justice”

would be served in assessing costs against Flores under the facts of

this case.

21-CA-665 2

SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

MARY E. LEGNON
FREDERICKA H. WICKER
INTERIM CHIEF DEPUTY CLERK
JUDE G. GRAVOIS
MARC E. JOHNSON
ROBERT A. CHAISSON SUSAN S. BUCHHOLZ
STEPHEN J. WINDHORST
FIRST DEPUTY CLERK
HANS J. LILJEBERG
JOHN J. MOLAISON, JR. FIFTH CIRCUIT
MELISSA C. LEDET
JUDGES 101 DERBIGNY STREET (70053)
DIRECTOR OF CENTRAL STAFF
POST OFFICE BOX 489
GRETNA, LOUISIANA 70054 (504) 376-1400

(504) 376-1498 FAX
www.fifthcircuit.org

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
JULY 6, 2022 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES NOT
REPRESENTED BY COUNSEL, AS LISTED BELOW:

21-CA-665
E-NOTIFIED
24TH JUDICIAL DISTRICT COURT (CLERK)
HONORABLE MICHAEL P. MENTZ (DISTRICT JUDGE)
SAMUEL BRADLEY RHORER (APPELLANT) DANIEL R. MARTINY (APPELLEE) ALBERT J. NICAUD (APPELLEE)
JEFFREY M. SIEMSSEN (APPELLEE)

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