Judge dismisses several claims in company's suit alleging payroll scheme by two employees

By Takesha Thomas | Aug 15, 2018

NEW ORLEANS – The U.S. District Court for the Eastern District of Louisiana recently agreed to toss out several claims by a Cut Off company that is suing two former employees in an alleged payroll scheme.

Galliano Marine Service (Galliano), based in Cut Off, filed suit in September 2017 claiming that Matthew McDowell and Kevin Schumacher submitted additional hours on Galliano's payroll system for Schumacher. According to court documents, Galliano then paid Schumacher more than $450,000 for work that "he did not actually perform and for which McDowell knew Schumacher should not have been paid." 

The company's suit alleged payment of a thing not owed, conversion, breach of fiduciary duty/breach of a duty of loyalty, negligence, unjust enrichment, and civil conspiracy. The negligence claim was later dropped.

McDowell then filed a motion for summary judgment regarding the remaining claims. 

In his Aug. 6 ruling on the motion, U.S. District Judge Lance Africk said McDowell was not obligated to pay the company back the more than $450,000 claimed to have been paid out to fellow employee Schumacher in the alleged scheme. 

The ruling noted that "Galliano does not contend it made undue payments directly to McDowell. Rather, Galliano alleges that McDowell incorrectly inputted payroll information so as to cause Schumacher to be overpaid. ... 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."

However, Africk reopened the discovery period regarding the claim of breach of fiduciary duty, ruling that both parties can submit further evidence in the case. Africk wrote in part, "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." He gave the parties until Sept. 6 to submit the evidence. 

Attorneys for Galliano had argued that the funds should be repaid based on Louisiana law regarding payment of a thing not owed. According to court documents, “(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.” Attorneys for Galliano had argued that it could recover from McDowell for payment of a thing not owed. 

However, in ruling against that claim, Africk wrote in part, "Galliano alleges that McDowell’s conduct was unlawful under Louisiana law. 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."

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