Galloway Jefcoat, LLP v. D. Patrick (Rick") Keating "

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

13-1069

GALLOWAY JEFCOAT, LLP

VERSUS

D. PATRICK (“RICK”) KEATING

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. C-20110985
HONORABLE JOHN DAMIAN TRAHAN, DISTRICT JUDGE

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JOHN D. SAUNDERS
JUDGE

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Court composed of John D. Saunders, Marc T. Amy, and J. David Painter, Judges.

AFFIRMED, AS AMENDED.

Leslie J. Schiff
Schiff, Scheckman & White LLP
P. O. Box 10
Opelousas, LA 70571-0010
(337) 942-9771
COUNSEL FOR DEFENDANT APPELLANT:
D. Patrick ("Rick") Keating

Lamont Paul Domingue
Hoai T. Hoang
Voorhies & Labbé
P. O. Box 3527
Lafayette, LA 70502-3527
(337) 232-9700
COUNSEL FOR PLAINTIFF APPELLANT:
Galloway Jefcoat, LLP

SAUNDERS, Judge.

This case involves a dispute over the division of attorney‟s fees between a

bankruptcy attorney and a firm. The bankruptcy attorney, with a practice

established prior to his employment with the firm, was later terminated by the firm

for what it deemed improper retention of fees collected by the attorney.

The firm filed suit against the attorney for recovery of the fees and its

damages suffered as a result of having to reallocate the time of salaried employees

to investigate the activities of the attorney in representing its clients. The attorney

reconvened against the firm for fees or for the monthly bonus that he contended

entitlement to under his employment agreement.

The trial court‟s judgment awarded the firm fees that it deemed were

improperly retained by the attorney, but involuntarily dismissed the firm‟s claim

for damages suffered for reallocation of the time of its salaried employees. Both

the attorney and the firm appeal. We amend the trial court‟s judgment to reflect

the attorney‟s entitlement to his percentage of the fees from one particular client as

mandated by the employment agreement. We affirm the trial court‟s judgment as

amended.

FACTS AND PROCEDURAL HISTORY:

This matter arises from the employment of D. Patrick “Rick” Keating

(Keating) with Galloway Jefcoat, LLP as an associate bankruptcy attorney from

October 1, 2007, through October 10, 2010. The relationship between Keating and

Galloway Jefcoat and how Keating was to be paid was governed by an

employment agreement.

After terminating Keating, Galloway Jefcoat filed suit against him

contending that he improperly converted attorney‟s fees. In addition to the return

of those fees, Galloway Jefcoat sought damages from Keating for the time its

salaried employees spent investigating this matter in lieu of performing their

typical job duties. Keating did admit to retaining the fees acquired from some of

the clients, but asserted that he did so either due to mistake or a belief that those

clients were part of his book of business that existed prior to his employment at

Galloway Jefcoat.

Prior to the trial pertinent to this appeal, a hearing was conducted by the

federal bankruptcy court in Lafayette, Louisiana. The purpose of that hearing was

to determine which fees held by the bankruptcy court would be disbursed to either

Galloway Jefcoat or Keating. The bankruptcy court divided a portion of the fees

based on the date of the confirmation order because it found that neither party

provided it with enough evidence to divide the fees using a quantum meruit basis.

Further, the bankruptcy court asserted that its division should have no weight in the

matter before the trial court.

During the pertinent trial, at the close of Galloway Jefcoat‟s presentation of

evidence, Keating moved for an involuntary dismissal of, inter alia, Galloway

Jefcoat‟s claims related to the damages sought for the time its salaried employees

spent investigating the matter. The trial court granted Keating‟s motion.

After hearing the remainder of the case, the trial court took the matter under

advisement. Thereafter, it rendered a judgment in favor of Galloway Jefcoat for

$53,147.68 on its main demand and in favor of Keating for $5,391.65 on his

reconventional demand. Keating filed a motion for a new trial. After hearing the

motion, the trial court modified its original judgment to increase the award to

Keating to $6,295.90. Both parties appealed, alleging the following assignments of

error, respectively.

KEATING’S ASSIGNMENTS OF ERROR:

I.
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The Trial Court erred in ordering Keating to compensate
Galloway Jefcoat, LLP for amounts received from Leonard Gachassin
($500.00) and OIS ($1,925.00). These amounts are accounts
receivable by Keating for work which he did before he joined the firm
as an employee. Therefore, there was no entitlement or any indication
of entitlement of Galloway Jefcoat to these fees.

II.

The Trial Court erred in failing to recognize the interest of
Keating in Bankruptcy funds held by the Chapter 13 Trustee, Keith
Rodriguez. As of the time of Keating‟s termination numerous
Chapter 13 bankruptcy cases had been completed. Under Chapter 13
rules, the Chapter 13 trustee continues to collect funds paid by the
Chapter 13 debtors included in which are fees due for the debtor‟s
attorney. Trustee Rodriguez held funds which were ordered by the
Bankruptcy Judge to be paid to Keating and to the firm. These funds
were ordered by Bankruptcy Judge Summerhays to be distributed
$47,777.50 to Galloway Jefcoat and $22,476.81 to Keating. The
division was made by Judge Summerhays on a case by case basis.
The Trial Court adopted the division made by Judge Summerhays.
Judge Summerhays clearly ruled that the division was not intended to
bind the State Court determination on entitlement of fees from these
Chapter 13 matters. Judge Trahan erred in accepting the division of
Judge Summerhays as his division without analyzing the issues
relating to entitlement as urged by Keating.

III.

In Construction Resources Link (CRL), a Chapter 11
proceeding and a GJ file, the work was completed before termination
of DPK. After termination, GJ received fees totaling $7,255.15. The
Trial Court erred in refusing to recognize DPK‟s entitlement to 75%
or $5,441.36 of the CRL fee.

IV.

The Trial Court erred in awarding fees claimed by Keating
derived from cases in his book of business to Galloway Jefcoat. The
cases in Keating‟s book of business were never acquired by Galloway
Jefcoat. There was no entitlement legally, ethically or otherwise to
those fees when the work was completed and the fees were paid to
Keating. Keating contends that he is solely entitled to those fees.
Judge Trahan erred in his ruling and judgment ordering Keating to
disgorge his book of business fees to Galloway Jefcoat. As an
alternative assignment of error, if the fees are to be disgorged, then
clearly a recalculation should be done because under the terms of
employment, even if these fees are determined by the Court to be
Galloway Jefcoat fees, Keating would be entitled to 50% of the fees

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under his employment agreement on Chapter 7 and Chapter 13
matters and 75% of the fees derived from Chapter 11 matters.

GALLOWAY JEFCOAT’S ASSIGNMENT OF ERROR:

The trial court erred in granting Involuntary Dismissal of
Galloway Jefcoat, LLP‟s investigative costs, particularly the time and
labor expense incurred by its employees in identifying, documenting
and establishing the wrongful acts of its former employee, D. Patrick
“Rick” Keating.

KEATING’S ASSIGNMENT OF ERROR NUMBER ONE:

Keating asserts that the trial court erred in ordering him to compensate

Galloway Jefcoat for amounts received from Leonard Gachassin and OIS. We

disagree.

The applicable standard of review for this assignment of error was not

addressed by Keating. He simply argued that the trial court erred because it was

his uncontradicted testimony that the payments from Gachassin and OIS were to

compensate him for work he performed prior to joining Galloway Jefcoat.

The standard of review was addressed by Galloway Jefcoat. It asserted that

the manifest error standard of review was applicable to this assignment of error

because the trial court ruled as it did based on a finding that Keating lacked

credibility.

In Ardoin v. Firestone Polymers, L.L.C., 10-245, pp. 6-7 (La. 1/19/11), 56

So.3d 215, 219, the supreme court stated:

[T]he fact-finder “should accept as true a witness‟s uncontradicted
testimony, although the witness is a party, absent „circumstances
casting suspicion on the reliability of this testimony.‟” [Bruno v.
Harbert Int’l, Inc., 593 So.2d 357,] at 361 [(La.1992)] (quoting [West
v. Bayou Vista Manor, Inc., 371 So.2d 1146, 1147 (La.1979)], and
citing Holiday v. Borden Chemical, 508 So.2d 1381, 1383 (La.1987)).
The fact-finder‟s determinations as to whether the worker‟s testimony
is credible and whether the worker has discharged his burden of proof
are, most certainly, factual determinations that should not be disturbed
on appellate review unless clearly wrong or manifestly erroneous. Id.
(citing Gonzales v. Babco Farm, Inc., 535 So.2d 822, 824 (La.App. 2d
Cir.), writ denied, 536 So.2d 1200 (La.1988)).
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In the assignment of error before us, Keating‟s testimony that Gachassin and

OIS were his clients and the checks received from them were solely for work he

performed prior to his employment at Galloway Jefcoat is uncontroverted.

However, the trial court found Keating to lack credibility on whether a client was a

Galloway Jefcoat client or his own. In its reasons for ruling, the trial court stated:

If Keating had treated all former clients and cases in a
consistent manner, the Court would be more inclined to accept
Keating‟s explanation . . . . There was, however, little consistency.
There are some clients that he had been working with over a long
period of time for whom he opened a G&J file and others for whom
he did not open files. If he kept fees, he would say that the case was
in his book of business. If confronted with a similar situation where
he did open a G&J file, he would say he made a mistake; the file
should have been a Keating file.

We find ample evidence in the record to support the trial court‟s finding that

Keating was not credible when asserting which clients were from his self-described

book of business prior to his employment with Galloway Jefcoat. The record

contains eleven clients where Keating filed Chapter 7 bankruptcies prior to his

employment with Galloway Jefcoat and later converted those Chapter 7

bankruptcies into Chapter 13 bankruptcies after he began his employment with

Galloway Jefcoat. Keating kept all the fees paid to him and did not open a

Galloway Jefcoat file for three of those eleven clients. His explanation was that

the three clients were in his book of business. At trial, Keating was asked why the

other eight clients had a file opened at Galloway Jefcoat and why the fee

arrangement between he and Galloway Jefcoat was applied to the fees paid by

those eight clients. Keating responded that a mistake was made in all eight of

those situations and none of those eight clients should have had a file opened at

Galloway Jefcoat.

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We, like the trial court, find Keating‟s explanation lacking. At various times

throughout his employment, those eight clients were listed by name on the monthly

report used to calculate whether Keating was entitled to his incentive bonus. Had

any of their files been opened mistakenly as Keating contends, he almost certainly

would have noticed the mistakes and requested that they be corrected.

As such, despite Keating‟s uncontroverted testimony that Leonard Gachassin

and OIS were clients in his book of business, the trial court was not manifestly

erroneous in finding that Keating‟s testimony lacked credibility in this regard.

Given the reasonableness of this finding, we will look to the record to review

whether it supports the trial court ordering Keating to compensate Galloway

Jefcoat for amounts received directly from Gachassin and OIS.

The check at issue from Gachassin was dated November 8, 2007, five weeks

after Keating began his employment with Galloway Jefcoat. Likewise, the check

from OIS was dated December 10, 2008, more than fourteen months after

Keating‟s employment with Galloway Jefcoat ensued. We acknowledge that the

work performed to acquire either of these checks may have occurred prior to

Keating commencing employment at Galloway Jefcoat, especially those from

Gachassin. However, we cannot say the trial court‟s order requiring Keating to

compensate Galloway Jefcoat for the amounts received directly from Gachassin

and OIS was unreasonable. Both checks were dated after Keating began working

for Galloway Jefcoat. The trial court found that Keating presented no credible

evidence that the work performed for Gachassin and/or OIS entitled him solely to

the fees. Likewise, Keating has pointed to no evidence in the record on this appeal,

other than his testimony, in furtherance of carrying his burden to prove that the

trial court was manifestly erroneous in ordering him to compensate Galloway

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Jefcoat for the fees he collected from Gachassin and OIS. Accordingly, we find

that this assignment of error is without merit.

KEATING’S ASSIGNMENT OF ERROR NUMBER TWO:

Next, Keating contends that the trial court erred in failing to recognize his

interest in bankruptcy funds held by the Chapter 13 bankruptcy trustee. We

disagree.

Neither party addresses the proper standard of review applicable to this

assignment of error. In Tran v. Williams, 10-1030 (La.App. 3 Cir. 2/9/11), 56

So.3d 1224, this court conducted a de novo review to address an argument made

by the appellant that the trial court failed to properly use the quantum meruit

approach as directed by the supreme court on rehearing in Saucier v. Hayes Dairy

Products, Inc., 373 So.2d 102 (La.1979), and by the supreme court in O’Rourke v.

Cairns, 95-3054 (La.11/25/96), 683 So.2d 697, to properly divide fees between

successive attorneys representing a client.

Here, like in Tran, some clients were represented by Keating while he was

employed by Galloway Jefcoat, and, thereafter, became the clients of Keating,

individually. Also, akin to Tran, Keating‟s argument is that the trial court erred by

using an improper method. However, unlike the appellant in Tran, Keating cites

no alternative method reasonably possible given the evidence in the record that

was mandated for the trial court to have used. Rather, he argues that the trial court

improperly relied upon the bankruptcy court‟s division of the fees held by the

Chapter 13 bankruptcy trustee because the bankruptcy court‟s division was never

intended to have any weight with the trial court. Thus, Keating‟s argument is that

the trial court erred in failing to disturb the fee division made by the bankruptcy

court. As such, in determining if this assignment of error has merit, we must

analyze the method used by bankruptcy court and whether the trial court gave
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improper weight to that method in determining that it would not disturb the

division of fees made by the bankruptcy court.

Prior to the proceedings in the bankruptcy court, the clients whose fees were

held by the Chapter 13 bankruptcy trustee were asked to select either Galloway

Jefcoat or Keating as a continuing counsel of record. The bankruptcy court

ordered the trustee to disburse any fees to Galloway Jefcoat where the client

selected Galloway Jefcoat as the continuing counsel of record. The bankruptcy

court stated that it did so based on its interpretation of Paragraph 2 of the

employment agreement. Paragraph 2 of the employment agreement is comprised

of the following language: “[a]ll cases garnered are to be considered cases of

Galloway & Jefcoat LLP and/or Bankruptcy Clinic of Acadiana.” The bankruptcy

interpreted this paragraph to extinguish any question whether there was a joint

venture between Keating and Galloway Jefcoat that gave Keating any rights over

and above whatever rights were in the employment agreement. After ruling on

these selection of cases, the bankruptcy court stated, “[t]o the extent that Mr.

Keating is entitled to any compensation under the employment agreement, based

on any of these fees that are generated on these cases; I believe that is a matter of

state law.”

Thereafter, the bankruptcy court addressed the cases where the clients

selected Keating as the continuing counsel of record. Like the bankruptcy court,

we observe that this situation is analogous to when a client is represented by

multiple, successive attorneys throughout the client‟s case and the fees earned from

the case must be divided. Here, we have a situation where the client has an

attorney who is obligated to share the fees earned with a firm, the attorney then

leaves the firm, and continues to represent the client and continues to earn fees,

individually.
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For clients situated as such, the bankruptcy court discussed various methods

to use when one lawyer takes over for another lawyer, including a quantum meruit

basis. The bankruptcy judge acknowledged that a basis of quantum meruit should

apply, but neither Keating nor Galloway Jefcoat provided evidence sufficient for it

to divide the fees using that method. Therefore, the bankruptcy court chose a

method where the date of the confirmation order was used to determine whether

the fees earned from a particular client were distributed fully to Keating or

Galloway Jefcoat. If the date of the confirmation order for a particular client was

while Keating was employed at Galloway Jefcoat, the entire fee earned from

representing that client was disbursed to Galloway Jefcoat. If the date of the

confirmation order was dated after Keating‟s employment with Galloway Jefcoat,

the entire fee was disbursed to Keating.

The bankruptcy court used the date of the confirmation order for two

specified reasons. First, according to the bankruptcy court, the overwhelming

majority of a bankruptcy attorney‟s fees have already been earned once a

confirmation order exists. Second, as stated above, the bankruptcy court found

insufficient evidence to divide the fees using a quantum meruit basis.

In analyzing the method using by the bankruptcy judge, we acknowledge

that it potentially fails to compensate Keating for the percentage of the fees that he

rightfully earned under his employment agreement while he was employed at

Galloway Jefcoat. However, the employment agreement specified that Keating‟s

guaranteed monthly salary and the expenses associated with Keating‟s practice at

Galloway Jefcoat, including any salary of Keating‟s office staff, had to be offset

prior to his ever receiving the funds acquired from a particular client.

Moreover, the bankruptcy court‟s division of the fees can also be to the

benefit of Keating depending of the date of the confirmation order. While the
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method used can fail to compensate Keating for the percentage of the fees that he

rightfully earned under his employment agreement, it fails to compensate

Galloway Jefcoat its percentage of the fees that it rightfully was entitled to under

the employment agreement for any work that Keating did on a client‟s case while

he was employed at Galloway Jefcoat.

Next, we consider whether the trial court gave improper weight to the

bankruptcy court‟s division of the fees. Contrary to Keating‟s assertions, our

review of the record indicates that the trial court‟s decision to adhere to the

division was not based on it finding that the bankruptcy court‟s division was

legally correct. Rather, the trial court found that the bankruptcy court‟s method

was necessitated by the failure of both parties to submit evidence of the quantum

meruit basis each had in the disputed fees.

Thereafter, like the bankruptcy court, the trial court found insufficient

evidence submitted by either party to conduct a distribution of the fees using a

quantum meruit basis. As such, the trial court, based on its finding that Keating‟s

testimony lacked credibility regarding which client was his as opposed to

Galloway Jefcoat‟s, chose to divide the fees based strictly on its interpretation of

the employment agreement. Once this choice was made, the trial court then

deferred to the bankruptcy court‟s knowledge regarding when the overwhelming

majority of a bankruptcy attorney‟s fees have already been earned, i.e., once a

confirmation order exists.

Keating‟s first argument in this assignment of error likens the trial court‟s

failure to disturb the bankruptcy court‟s division of fees to an endorsement of the

method used by the bankruptcy court, but the record indicates otherwise. We find

that the trial court chose to not disturb the bankruptcy court‟s division of fees

based more on Keating‟s failure to submit any evidence outside of his testimony to
10

support his claim for most of those fees. In fact, the trial court even acknowledged

that the division of fees by the bankruptcy judge was not intended to be given any

weight at trial.

Accordingly, we find that the trial court did not disturb the bankruptcy

court‟s division of the fees because Keating failed to provide any credible evidence

of the quantum meruit basis he had in the fees or any other evidence that the fees

should be disbursed differently than according to the language in the employment

agreement. As such, it is clear that the trial court did not improperly give weight to

the bankruptcy court‟s division of fees as Keating contends.

Keating‟s second argument that the trial court erred in adhering to the

bankruptcy court‟s division is that the result of the method used places a burden on

him to work an extra period of time in order to collect his earned, contractual

bonuses in violation of La.R.S. 23:634(A). We do not agree.

Louisiana Revised Statutes 23:634(A) states:

No person, acting either for himself or as agent or otherwise,
shall require any of his employees to sign contracts by which the
employees shall forfeit their wages if discharged before the contract is
completed or if the employees resign their employment before the
contract is completed; but in all such cases the employees shall be
entitled to the wages actually earned up to the time of their discharge
or resignation.

The trial court found that Keating‟s employment agreement defined his

compensation earned in calculating whether he was entitled to his monthly bonus

based on when fees were actually collected and not on when services were

provided entitling him to those fees. According to the trial court, basing a bonus

on when fees are collected as opposed to when the services are performed to entitle

one to those fees does not violate La.R.S. 23:634(A). In support of its finding, the

trial court cited Becht v. Morgan Buildings & Spas, Inc., 01-1091 (La.App. 1 Cir.

6/21/02), 822 So.2d 56, affirmed, 02-2047 (La. 4/23/03), 843 So.2d 1109, cert.
11

denied, 124 S.Ct. 289, 540 U.S. 878 (2003). Keating contends that the trial court‟s

reliance on Becht is improper because his case is distinguishable from Becht.

Keating points out that there were many factors tied to when the commission

was earned in Becht while there were no such factors tied to when his bonus is

earned in the language of his employment agreement with Galloway Jefcoat. It is

true that the employment agreement in Becht spelled out what factors were tied to

when a commission was earned while the employment agreement here does not.

However, we do not find that this distinction is dispositive.

Keating then asserts that a more appropriate case to consider is that of

Patterson v. Alexander & Hamilton, Inc., 02-1230 (La.App. 1 Cir. 4/2/03), 844

So.2d 412. According to Keating, Patterson stands for the proposition that when

the collection of a fee is outstanding and beyond the employee‟s control, the

employee has earned that fee and any commission tied to it. The context of that

proposition in Patterson that is cited by Keating is telling.

Just prior to the statement highlighted by Keating, the Patterson court quotes

the following language from Becht: “[w]hen commission sales are at issue, the

inquiry of whether a wage was actually earned focuses on what work associated

with the sale remained at the time of [termination].” Patterson, 844 So.2d at 416

(quoting Becht, 822 So.2d at 59) (second alteration in original). The Patterson

court went on to find that “[f]rom the evidence in the record, it appears that

collection of the contract amounts was the only outstanding work remaining to

complete the sales….” Patterson, 844 So.2d at 417. Contrarily, here, for nearly all

the clients, there is no evidence in the record, other than Keating‟s testimony,

pertaining to what outstanding work, if any, remained in order to earn the

attorney‟s fees. The trial court reasonably found that Keating‟s testimony lacked

12

credibility. Thus, here, unlike in Patterson, the evidence in the record does not

indicate what work was outstanding.

Further, we are not moved by Keating‟s criticism of the trial court‟s

application of Becht. Keating testified that the calculation of whether he was

entitled to the bonus was based on when the fees were collected, not when the

work was done to collect those fees, irrespective of the lack of specific factors

listed in his employment agreement that are tied to his entitlement to his monthly

bonus.

Accordingly, we find that Keating‟s assignment of error number two is

without merit. The trial court decision to leave the bankruptcy court‟s division of

the Chapter 13 bankruptcy fees undisturbed was not in error. Its decision was

based on finding that Keating failed to produced credible evidence that a different

division of those fees was necessitated. Further, the trial court‟s application of that

division does not violate La.R.S. 23:634(A).

KEATING’S ASSIGNMENT OF ERROR NUMBER THREE:

Keating, in his third assignment of error, contends that the Trial Court erred

in refusing to recognize his entitlement to 75% or $5,441.36 of the Construction

Resources Link fee for work that was completed prior to his termination. We

agree.

Unlike the situation in assignment of error number two, in this assignment of

error, there is evidence in the record other than Keating‟s testimony that supports

his position. Included in the record is an order granting the application for

compensation and reimbursement of expenses by attorney for the debtor. These

orders are dated during the period in which Keating was working for Galloway

Jefcoat and list Keating as the counsel of record for Construction Resources Link,

Inc. Also included in the record are copies of checks from Construction Resources
13

Link, Inc. that are dated after Keating‟s employment with Galloway Jefcoat. The

case number on those checks matches the case number referenced in the order

granting attorney‟s fees and reimbursement of expenses.

Further, it is clear from the date of these checks that when they were

received by Galloway Jefcoat, Keating did not have the burden of offsetting his

salary and expenses at Galloway Jefcoat as was required by the employment

agreement prior to his actually receiving these funds. The work to acquire the fees

was clearly done by Keating, and both the terms of the employment agreement and

the practice between Keating and Galloway Jefcoat was that those fees were not

deemed to have been earned until collected. This occurred after Galloway Jefcoat

ceased to incur any expenses in funding Keating‟s practice. Accordingly, we find

that Keating is entitled to his agreed upon percentage of those fees, and amend the

trial court‟s judgment to recognize that Keating is entitled to 75% or $5,441.36 of

the Construction Resources Link, Inc. fees.

KEATING’S ASSIGNMENT OF ERROR NUMBER FOUR:

Keating‟s final assignment of error is quite lengthy, but, in summary, argues

that the trial court erred in awarding fees to Galloway Jefcoat that Keating

contended were derived from cases in his preexisting book of business.

Alternatively, Keating argues that if these fees are to be disgorged, then the fees

should have been divided using the applicable percentages under the terms of his

employment agreement rather than fully awarded to Galloway Jefcoat. We

disagree with both the assigned error and the alternative argument asserted by

Keating.

Like assignment of error numbers one and two, Keating‟s testimony is his

entire basis for this assignment. Other than his testimony, Keating points to no

evidence in the record corroborating his assertions that many of the clients whose
14

fees were in dispute were contained in his book of business. In his alternative

argument, Keating points to no evidence in the record as to which month these fees

were earned and whether he would have actually received those fees by offsetting

the costs of his salary and the expenses of funding his practice. Accordingly, like

in assignments of error numbers one and two, our upholding of the trial court‟s

finding that Keating‟s testimony lacked credibility renders this assignment of error

to be without merit.

GALLOWAY JEFCOAT’S ASSIGNMENT OF ERROR:

Galloway Jefcoat, in its sole assignment of error, asserts that the trial court

erred by involuntarily dismissing its claim for its investigative costs, particularly

the time and labor expense incurred by its employees in identifying, documenting

an establishing Keating‟s wrongful acts. We find no merit to this assertion.

Louisiana Code of Civil Procedure Article 1672 dictates that the trial court

may dismiss the claim if, after considering and weighing the plaintiff‟s evidence, it

determines that the plaintiff has not met its burden of proof. Kite v. Carter, 03-378

(La.App. 3 Cir. 10/1/03), 856 So.2d 1271. Therefore, the grant of an involuntary

dismissal by a lower court is subject to a manifest error standard of review.

Gauthier v. City of New Iberia, 06-341 (La.App. 3 Cir. 9/27/06), 940 So.2d 915.

Louisiana Code of Civil Procedure Article 1672(B) states:

B. In an action tried by the court without a jury, after the plaintiff has
completed the presentation of his evidence, any party, without
waiving his right to offer evidence in the event the motion is not
granted, may move for a dismissal of the action as to him on the
ground that upon the facts and law, the plaintiff has shown no right to
relief. The court may then determine the facts and render judgment
against the plaintiff and in favor of the moving party or may decline to
render any judgment until the close of all the evidence.

Here, Galloway Jefcoat brought a claim to recover its expenses for the time

its employees worked to find what evidence it had against Keating that he had

15

improperly handled funds. The majority of the claim was an amount that

Galloway Jefcoat calculated using the hourly rate for the time spent researching the

matter by John M. Jefcoat, a managing partner of Galloway Jefcoat. The trial court

dismissed this claim upon Keating‟s motion after Galloway Jefcoat‟s presentation

of its evidence in support of its claim.

It is well established that costs incurred in anticipation of litigation are not

recoverable as damages. New Zion Baptist Church v. Mecco, Inc., 478 So.2d 1364

(La.App. 4 Cir. 1985); Holden v. Clearview Dodge Sales, Inc., 416 So.2d 335

(La.App. 4 Cir.), writs denied, 421 So.2d 248-49 (La.1982); Martin v. AAA Brick

Co., Inc., 386 So.2d 987 (La.App. 3 Cir. 1980); Liberto v. Villard, 386 So.2d 930

(La.App. 3 Cir. 1980); and Acme Steel Co. v. A. J. Warehouse, Inc., 212 So.2d 271

(La.App.4 Cir. 1968). However, Galloway Jefcoat cites the case of Smith v.

Burden Construction Co., 379 So.2d 1135 (La.App. 4 Cir. 1980), for the

proposition that an employer can recover damages from its former employee for its

costs associated with paying its salaried employees for repairing the damages

caused to it by that former employee. See also Louisiana Power & Light Co. v.

Smith, 343 So.2d 367 (La.App. 1977), and Rader v. Harper Aviation, Inc., 246

So.2d 362 (La.App. 4 Cir. 1971).

However, the Smith case cited by Galloway Jefcoat involved an employee

who had been found by the trial court to have embezzled from the employer, an

intentional tort. Additionally, the appellate court in Smith was upholding the

judgment of a lower court that was based on the lower court‟s finding that the

damages suffered by the employer were clearly established. Here, while Galloway

Jefcoat may contend that Keating behaved similarly, there is not a finding by the

trial court that Keating was intentionally tortious. In addition, we cannot say that

the trial court is manifestly erroneous in finding that the dismissed items in
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Galloway Jefcoat‟s claim were undertaken for litigation preparation purposes.

These are not recoverable as damages. Accordingly, we do not find any merit to

Galloway Jefcoat‟s assignment of error.

CONCLUSION:

D. Patrick “Rick” Keating raised four assignments of error. We find

substance in his assertion that the trial court erred in failing to recognize his

entitlement the contracted share of the fees earned in representing Construction

Resources Link, Inc. for work that was completed prior to his termination.

Therefore, we amend the trial court‟s judgment to reflect this finding. We find that

Keating‟s remaining assignments of error are without merit.

Galloway Jefcoat, LLP raised a single assignment of error. We find a

reasonable basis for the trial court to involuntarily dismiss the items that it did

from Galloway Jefcoat‟s claim. We assess the costs of these proceedings one half

to each Keating and Galloway Jefcoat.

AFFIRMED, AS AMENDED.

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