Galliano Marine Service, LLC v. Schumacher et al

Filing 76

ORDER AND REASONS: ORDERED that McDowell's 52 motion for summary judgment is GRANTED IN PART and that Galliano's claims for payment of a thing not owed and unjust enrichment are DISMISSED WITH PREJUDICE. FURTHER ORDERED that McDowell 9;s motion is DENIED IN PART with respect to Galliano's claims for breach of fiduciary duty/breach of a duty of loyalty, conversion, and civil conspiracy. FURTHER ORDERED that the discovery period is reopened and that the parties may engage in further discovery regarding Galliano's claims for breach of fiduciary duty/breach of a duty of loyalty, conversion, and civil 9/6/2018 unless the parties agree by mutual consent to extend the same or an extension is granted by the Court. FURT HER ORDERED that Galliano's 57 motion to strike the declaration of Captain Collin Gee is DENIED AS MOOT, as the Court was not required to consider such declaration in disposing of the instant motion. FURTHER ORDERED that, in light of the reopening of the discovery period, McDowell may amend his witness list to add Captain Collin Gee. Signed by Judge Lance M Africk on 8/6/2018. (blg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GALLIANO MARINE SERVICE LLC

CIVIL ACTION

VERSUS

No. 17-9868

KEVIN SCHUMACHER ET AL.

SECTION I

ORDER AND REASONS
Plaintiff Galliano Marine Service LLC (“Galliano”) asserts that defendants
Matthew McDowell (“McDowell”) and Kevin Schumacher (“Schumacher”) engaged in
a scheme whereby McDowell submitted more time for Schumacher in Galliano’s
payroll system than Schumacher actually worked, causing Galliano to pay
Schumacher over $450,000 for work that he did not actually perform and for which
McDowell knew Schumacher should not have been paid. 1 Galliano initiated the
instant lawsuit on September 29, 2017, alleging (1) payment of a thing not owed, (2)
conversion, (3) breach of fiduciary duty/breach of a duty of loyalty, (4) negligence, (5)
unjust enrichment, and (6) civil conspiracy. 2

3

Galliano has since abandoned its

R. Doc. No. 1. Galliano has settled its claims against Schumacher, and Schumacher
has been dismissed from the case with prejudice. R. Doc. Nos. 26, 27.
2 R. Doc. No. 1.
3 Both McDowell and Galliano acknowledge that civil conspiracy is not a standalone
claim under Louisiana law but one that must be based on an underlying tort. See R.
Doc. No. 52-4, at 15–16; R. Doc. No. 56-2, at 15; see also Butz v. Lynch, 97-2166 (La.
App. 1 Cir. 4/8/98); 710 So. 2d 1171, 1174 (“Civil Code article 2324 does not by itself
impose liability for a civil conspiracy. The actionable element in a claim under this
article is not the conspiracy itself, but rather the tort which the conspirators agreed
to perpetrate and which they actually commit in whole or in part.”). Accordingly,
McDowell and Galliano agree that Galliano’s claim for civil conspiracy does not relate
to its claim for payment of a thing not owed, which is quasi-contractual in nature.
See R. Doc. No. 52-4, at 15–16; R. Doc. No. 56-2, at 15.
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negligence claim. 4
McDowell now moves for summary judgment on Galliano’s remaining claims. 5
Additionally, Galliano moves to strike an exhibit to McDowell’s motion. 6 For the
following reasons, Galliano’s motion to strike is denied as moot, and McDowell’s
motion for summary judgment is granted in part and denied in part.
II.
A.
Summary judgment is proper when, after reviewing the pleadings, the
discovery and disclosure materials on file, and any affidavits, the court determines
that there is no genuine dispute of material fact. See Fed. R. Civ. P. 56. “[A] party
seeking summary judgment always bears the initial responsibility of informing the
district court of the basis for its motion, and identifying those portions of [the record]
which it believes demonstrate the absence of a genuine issue of material fact.” Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment
need not produce evidence negating the existence of material fact, but need only point
out the absence of evidence supporting the other party’s case. Id.; Fontenot v. Upjohn
Co., 780 F.2d 1190, 1195 (5th Cir. 1986).
Once the party seeking summary judgment carries its burden, the nonmoving
party must come forward with specific facts showing that there is a genuine dispute

R. Doc. No. 50.
Following a pretrial conference, the Court continued the trial date and permitted
McDowell to file an untimely motion for summary judgment in order to streamline
the issues to be heard at trial. R. Doc. No. 48.
6 R. Doc. No. 57.
4
5

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of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986). The showing of a genuine issue is not satisfied by creating “‘some
metaphysical doubt as to the material facts,’ by ‘conclusory allegations,’ by
‘unsubstantiated assertions,’ or by only a ‘scintilla’ of evidence.” Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Instead, a genuine issue
of material fact exists when the “evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). “Although the substance or content of the evidence submitted to support
or dispute a fact on summary judgment must be admissible . . ., the material may be
presented in a form that would not, in itself, be admissible at trial.” Lee v. Offshore
Logistical & Transp., LLC, 859 F.3d 353, 355 (5th Cir. 2017) (quotation omitted).
The party responding to the motion for summary judgment may not rest upon
the pleadings but must identify specific facts that establish a genuine issue.
Anderson, 477 U.S. at 248. The nonmoving party’s evidence, however, “is to be
believed, and all justifiable inferences are to be drawn in [the nonmoving party’s]
favor.” Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).
B.
i.
Under Louisiana law, “[a] person who has received a payment or a thing not
owed to him is bound to restore it to the person from whom he received it.” La. Civ.
Code art. 2299. “A thing is not owed when it is paid or delivered for the discharge of
an obligation that does not exist.” La Civ. Code art. 2300. Galliano insists that it can

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recover from McDowell for payment of a thing not owed.

The Court is not so

persuaded. 7
Galliano’s claim for payment of a thing not owed is precluded because it is
based on McDowell’s allegedly unlawful acts. As another section of this Court has
summarized:
[A] plaintiff cannot assert a claim for payment of a thing
not owed based on [a] defendant[’s] allegedly illegal . . .
activities. A claim for payment of a thing not owed sounds
in quasi-contract. In Fidelity & Deposit Co. of Maryland v.
Smith, 730 F.2d 1026 (5th Cir. 1984), the Fifth Circuit
ruled that an obligation is quasi-contractual only if “the
action giving rise to it was ‘lawful’ within the meaning of
Article 2293.” The former La. Civ. Code art. 2293 defined
a quasi-contract as the “lawful and purely voluntary act of
man, from which there results any obligation whatever to
a third person.” Article 2293 was “abrogated as
unnecessary” by 1995 La. Acts 1041 on the grounds that it
was “purely didactic.” In addition to citing article 2293,
Smith also relied on early Louisiana Supreme Court
authority and the civil law commentators. See Knoop v.
Blaffer, 6 So. 9, 11 (La. 1887) (“the act which gives rise to a
quasi contract is a lawful act, and therefore is permitted;
while the act which gives rise to an offense or quasi offense
is unlawful, and therefore is forbidden”); Saul Litvinoff, 5
La. Civ. L. Treatise, Law Of Obligations § 1.6 (2d ed. 1969)
(“Quasi-contracts are willful and lawful acts . . . but they
give rise to obligations without the concurrence of wills,
that is, without the agreement of the persons involved that
is necessary for the formation of a contract. Delicts and
quasi-delicts are unlawful acts that cause damage, and
their unlawfulness is the feature that distinguishes them
The Court notes that the plain text of these statutes does not appear to allow for the
type of claim Galliano seeks to assert. Galliano does not contend that it made any
undue payment directly to McDowell. Rather, Galliano alleges that McDowell
incorrectly inputted payroll information so as to cause Schumacher to be overpaid.
In a literal sense, then, McDowell is not a person who has received a payment of a
thing not owed to him from Galliano, nor was he paid by Galliano for the discharge
of an obligation that did not exist.
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from the two preceding sources.”). Article 2293 was not
abrogated on substantive grounds, and the principle stated
in Smith that a quasi-contract must be based on a lawful
act remains good law.
Plaintiff alleges that defendants’ . . . activities were
unlawful under the Louisiana statutes. Indeed, that
allegation forms the basis of plaintiff’s claim for payment
of a thing not owed. Under Smith, an unlawful act cannot
give rise to a quasi-contractual obligation. Thus, plaintiff
cannot state a cause of action for payment of a thing not
owed.
Carriere v. Jackson Hewitt Tax Serv., 750 F. Supp. 2d 694, 710–11 (E.D. La. 2010)
(Vance, J.).
In this case, Galliano alleges that McDowell’s conduct was unlawful under
Louisiana law. 8 Specifically, Galliano asserts that McDowell is liable for the illegal
conversion of its property. This allegation cannot give rise to a quasi-contractual
obligation. Galliano’s claim for payment of a thing not owed, therefore, fails. 9

See R. Doc. No. 60, at 23 (“Accordingly, [Galliano’s] conversion claim against
McDowell is not prescribed because McDowell ‘lulled [Galliano] into a course of
inaction in the enforcement of [its] right[s]’ by concealing his unlawful conduct.”); Id.
at 26 (“[Galliano] has direct evidence that Schumacher was paid for days he did not
work, i.e. he unlawfully converted [Galliano’s] property, and [Galliano] has presented
abundant circumstantial evidence—which is all that is required—demonstrating
McDowell assisted Schumacher in obtaining the overpayments by inaccurately and
dishonestly submitting time for days that Schumacher did not actually work.”).
9
Additionally, the case law on this particular issue, though sparse, suggests
that it is arguable at best as to whether McDowell can be held liable for payment of
a thing not owed. See Soileau v. ABC Ins. Co., 02-1301 (La. App. 3 Cir. 10/3/03); 844
So. 2d 108 (agreeing with the trial court that Article 2299 “does not apply when a
third party, who is not acting as the agent of either the giver or the receiver is the
conduit” but also that Article 2299 is “limited to the situation in which one person
gives something of value to another because of a perceived obligation to that other,
when in fact no obligation exists” and that “the direct relationship of two parties
interacting, one as the giver of a payment or thing and the other as the recipient of
the payment or thing” is an “essential element” of an Article 2299 claim); see also
8

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Gallo v. Gallo, 03-794 (La. 12/3/03); 861 So. 2d 168 (upholding the denial of a claim
for payment of a thing not owed where the defendant-mother was deemed not to have
received any payment from the plaintiff-father for child support payments that he
had made for a child that turned out not to be his and noting that “because the child
support payments were received by the child, through the mother, the mother was
not a person who received a payment not owed her, a requirement imposed by
[Article] 2299 for reimbursement to be made”); cf. Stewart v. Ruston La. Hosp. Co.
LLC, No. 14-83, 2016 WL 1715192, at *9 (W.D. La. Apr. 27, 2016) (James, J.) (finding
Article 2299 to be “inapplicable” because the defendant “did not receive any payment
whatsoever” from the plaintiffs).
Galliano cites American Cyanamid Co. v. Electrical Indus., Inc., 630 F.2d 1123
(5th Cir. 1980), for the proposition that a claim under Article 2299 is appropriate in
a case such as this. American Cyanamid involved an alleged kickback scheme.
Specifically, Galliano relies on dicta from a footnote regarding the district court’s
award of legal interest, which states that the underlying action could have been
characterized in various ways and “could be seen as one in quasi-contract for the
recovery of the payment of a thing not due.” Id. at 1129 n.4. This language, Galliano
contends, indicates that an Article 2299 claim may lie when a defendant receives
money in the form of a kickback from a third party, rather than directly from the
plaintiff.
The Court is not convinced that American Cyanamid extends as far as Galliano
might like. Notably, the underlying action in American Cyanamid was based on a
claim of conversion. The Fifth Circuit, therefore, did not analyze or address the
substantive requirements of a claim for recovery of payment of a thing not owed under
Louisiana law. In fact, the court only noted that the case could possibly be viewed as
such in service of its broader point that, had an alternative characterization of the
case been employed, the parties could have “avoid[ed] the [disputed legal issue]
altogether.” Id. Additionally, the court simply observed that the plaintiff company’s
claim could be seen as one in quasi-contract for the recovery of the payment of a thing
not due; it did not clarify whether such a claim could be pursued against the
defendant company, the plaintiff company’s employee who received the kickback, or
both.
Ultimately, the American Cyanamid court did not hold that the plaintiff
company’s employee was liable for payment of a thing not owed as a result of the
kickback he received from the defendant company. The panel merely hypothesized,
in a footnote, about a variety of other manners in which the plaintiff company’s
complaint could have been styled. The Court will, therefore, not read American
Cyanamid as endorsing the availability of Article-2299-style claims in all situations
involving alleged receipt of kickbacks.
6

ii.
A claim for unjust enrichment under Louisiana law consists of five elements:
“(1) an enrichment; (2) an impoverishment; (3) a connection between the enrichment
and the impoverishment; (4) an absence of justification or cause for the enrichment
or impoverishment; and (5) no other remedy at law.” Perez v. Util. Constructors, Inc.,
No. 15-4675, 2016 WL 5930877, at *1 (E.D. La. Oct. 12, 2016) (Africk, J.) (citing Baker
v. Maclay Props. Co., 94-1529 (La. 1/17/95); 648 So.2d 888). 10 Galliano pleaded unjust
enrichment in the alternative, contending that the Court need only address its claim
“in the unlikely event that it concludes that the facts of this case do not entitle
[Galliano] to relief under any other theory.” 11 The Court, however, reaches a different
conclusion: Galliano has other available remedies at law, and its claim for unjust
enrichment, therefore, must be dismissed.
As the Court has observed, “Sometimes alternative pleading of unjust
enrichment is permissible and sometimes it is not.” Id. at *2 n.5. “Where it is clear
that the plaintiff has or had at one point ‘another available remedy’ under Louisiana
law, then alternative pleading of an unjust enrichment claim is not allowed
regardless of whether the plaintiff pursues that remedy in litigation.” Id.
“Therefore, if a plaintiff has a valid claim under any legal theory, he may not
pursue a claim of unjust enrichment.” Main Iron Works LLC v. Rolls Royce Marine
N. Am., Inc., Nos. 14–1109, 14–2450, 2015 WL 3952709, at *2 (E.D. La. Jun. 29, 2015)

See also see also La. Civ. Code art. 2298 (codifying Louisiana’s doctrine of unjust
enrichment).
11 R. Doc. No. 50.
10

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(Milazzo, J.). “The mere fact that a plaintiff does not successfully pursue another
available remedy does not give the plaintiff the right to recover under the theory of
unjust enrichment.” Walters v. MedSouth Record Mgmt., 10-352 (La. 6/4/10); 38 So.
3d 241, 242. In other words, “[i]t is not the success or failure of other causes of action,
but rather the existence of other causes of action, that determine[s] whether unjust
enrichment can be applied.” Garber v. Badon & Ranier, 07-1497 (La. App. 3 Cir.
4/2/08); 981 So. 2d 92, 100 (emphasis in original).
Further, “the Louisiana courts of appeals have also made clear that an unjust
enrichment claim will not lie so long as the law provides a remedy for the enrichment
against anyone, not only the defendant against whom the unjust enrichment claim is
asserted.” Main Iron Works, 2015 WL 3952709, at *3. Hence, “a plaintiff is precluded
from bringing a claim for unjust enrichment even when he has a claim against
someone other than the enriched party.” Id.
Galliano has pleaded multiple viable claims against McDowell—one for breach
of fiduciary duty/breach of the duty of loyalty and two others sounding in conversion
and civil conspiracy. Additionally, Galliano pleaded several valid claims against
Schumacher, including a seemingly meritorious claim for payment of a thing not
owed. 12 Galliano, thus, has (or had) other remedies at law, and its unjust enrichment
claim must be dismissed.

Indeed, Galliano’s claims against Schumacher led to the consummation of a
settlement agreement with Schumacher and the dismissal of Schumacher from the
case.
12

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C.
With respect to Galliano’s remaining claims for breach of fiduciary duty/breach
of the duty of loyalty, conversion, and civil conspiracy, the Court finds that further
discovery is appropriate. The Court is cognizant of the fact that it previously denied
McDowell’s motion to extend the discovery and deposition deadlines as well as his
motion to extend the dispositive motion deadline. It is also aware that the United
States Magistrate Judge denied McDowell’s motion to compel on timeliness grounds.
As the Court has expressed to counsel on various occasions, all of this could have
easily been avoided had McDowell’s counsel been more diligent in preparing this case
for trial.
Nevertheless, trial has now been continued by several months, and McDowell
appears to lack certain pieces of discovery that could be critical to his defense. Thus,
in the interest of justice, the Court will permit the parties to engage in further
discovery regarding Galliano’s remaining claims so that they may be fairly and
efficiently heard by the Court at trial.
III.
For the foregoing reasons,
IT IS ORDERED that McDowell’s motion for summary judgment is
GRANTED IN PART and that Galliano’s claims for payment of a thing not owed
and unjust enrichment are DISMISSED WITH PREJUDICE.

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IT IS FURTHER ORDERED that McDowell’s motion is DENIED IN PART
with respect to Galliano’s claims for breach of fiduciary duty/breach of a duty of
loyalty, conversion, and civil conspiracy.
IT IS FURTHER ORDERED that the discovery period is reopened and that
the parties may engage in further discovery regarding Galliano’s claims for breach of
fiduciary duty/breach of a duty of loyalty, conversion, and civil conspiracy. Such
discovery is to be completed no later than SEPTEMBER 6, 2018 unless the parties
agree by mutual consent to extend the same or an extension is granted by the Court.
IT IS FURTHER ORDERED that Galliano’s motion to strike the declaration
of Captain Collin Gee is DENIED AS MOOT, as the Court was not required to
consider such declaration in disposing of the instant motion.
IT IS FURTHER ORDERED that, in light of the reopening of the discovery
period, McDowell may amend his witness list to add Captain Collin Gee.
New Orleans, Louisiana, August 6, 2018.

_______________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

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