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

Summary

The Louisiana Supreme Court held that Outkast Industrial Group, LLC, formed after termination of the parties’ community property regime, was the separate property of Michael B. Reis rather than a community asset. The Court rejected the lower courts’ use of the “substitute corporation” theory and held that alleged mismanagement of former community property may support fiduciary-duty remedies but does not change the classification of a subsequently formed business entity. The judgment was reversed and the matter remanded.

Holdings

1. Outkast Industrial Group, LLC, formed approximately four months after termination of the parties' community regime, is Michael Reis's separate property; the presumption that property possessed during the community regime is community property does not apply.
2. Louisiana law does not recognize the concept of a 'substitute corporation,' and a newly formed business does not become community property merely because it is similar to, succeeds, or allegedly receives resources from a former community business.
3. Alleged mismanagement or breach of the duty to preserve former community property may support separate remedies, but it does not convert a separate entity formed after termination of the community into community property.

Questions Presented

1. Whether a business entity formed after termination of a community-property regime may be classified as community property merely because it performs functions similar to a former community business or allegedly uses community-business resources.
2. Whether Louisiana law recognizes a separate business formed after termination of the community as a 'substitute corporation' that becomes part of the former community property partition.
3. Whether alleged post-termination mismanagement or breach of fiduciary duty concerning former community property changes the separate-property classification of a newly formed entity.

Disposition

reversed_and_remanded