State Farm Life Insurance Company v. Murphy et al
ORDER granting 84 Motion to Dismiss for Failure to State a Claim; granting 89 Motion to Dismiss for Failure to State a Claim Signed by Honorable David C Norton on May 19, 2017.(span, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
STATE FARM LIFE INSURANCE
CANDICE MURPHY, personally and as
Personal Representative of the Estate of
John McMeeking, G.M.M., a minor born
January 26, 2005, and G.M.M., a minor
born December 11, 2006,
Defendants/Third Party Plaintiffs
GAIL WILLIAMSON and SHANNON
Third Party Defendants
This matter is before the court on third-party defendant Gail Williamson’s
(“Williamson”) motion to dismiss, ECF No. 84, and third-party defendant Shannon
Horning’s (“Horning”) motion to dismiss, ECF No. 89. The court grants both motions to
State Farm is an insurance company incorporated in the state of Illinois with its
principal place of business in Illinois. Candice Murphy (“Murphy”) is a resident of
Charleston County and is the mother of two minor children who are also residents of
Charleston County and who are named defendants in this action (collectively, the
“Murphy defendants”).1 The minor defendants were born on January 26, 2005 and
December 11, 2006 to Murphy and John McMeeking (“McMeeking”). Murphy and
McMeeking were married on May 27, 2006. State Farm issued a life insurance policy to
McMeeking on October 14, 2009 with a policy date of September 23, 2009. Compl., Ex.
A. Murphy was designated as beneficiary of $100,000.00 of the policy, and other
persons were designated beneficiaries for the remainder of the basic plan amount of the
policy. McMeeking and Murphy entered into a separation agreement on June 22, 2010,
which provided that both parties shall have life insurance of $100,000.00 “and shall
maintain these at this level for the benefit of the children.” Compl., Ex. B. On August 5,
2010, a family court judge issued a final order approving the agreement and adopting it as
the order of the court. Compl., Ex. C. The final order of divorce did not provide by its
express terms that McMeeking and Murphy’s divorce would not revoke McMeeking’s
prior designation of Murphy as to beneficiary of the life insurance process. On October
30, 2012, McMeeking signed a change of beneficiary form listing Murphy as beneficiary
of $100,000.00, Stuart McMeeking as beneficiary of $75,000.00, and Shannon Horning
as beneficiary of $75,000.00. See Compl., Ex. D. On March 17, 2014, a family court
judge issued a final order of divorce. See Compl., Ex. E. The final order of divorce did
not state that, notwithstanding Murphy and McMeeking’s divorce, Murphy was to remain
as beneficiary of $100,000.00 under the policy.
On August 2, 2015, McMeeking died. Murphy was appointed personal
representative of his estate on August 11, 2015. Murphy submitted a life insurance claim
Pursuant to Federal Rule of Civil Procedure 5.2, the minors are referred to by
their initials, G.M.M. The minors have the same initials and are therefore referenced by
their birthdates in addition to their initials.
form claiming benefits under the policy on August 18, 2015. Id. Ex. F. State Farm
provided written notice on October 15, 2015 to Murphy that she was not qualified from
receiving the $100,000 in life insurance proceeds under S.C. Code Ann. § 62-2-507,
which states in pertinent part:
Revocation by divorce, annulment, and order terminating marital property
rights . . .
(c) Except as provided by the express terms of a governing instrument, a
court order, or a contract relating to the division of the marital estate made
between the divorced individuals before or after the marriage, divorce or
annulment, the divorce or annulment of a marriage:
(1) revokes any revocable:
(i) disposition or appointment of property or beneficiary designation made
by a divorced individual to the divorced individual's former spouse in a
governing instrument; [.]
State Farm filed an interpleader action on December 1, 2015 against Murphy and GMM,
seeking guidance from the court on how to distribute the $100,000 portion of the
proceeds of the policy in light of the statutory restrictions of S.C. Code Ann. § 62-2-507.
On March 10, 2016 the court entered an order for interpleader directing State Farm to pay
$101,028.50 into the court. ECF No. 19. State Farm paid $101, 028.50 into the court on
March 10, 2016. ECF No. 21.
On June 3, 2016, the Murphy defendants initiated the instant third-party action
against third party defendant Gail Williamson (“Williamson”), a State Farm insurance
agent, and Shannon Horning (“Horning”), a beneficiary of the policy, for intentional
interference with a contractual relationship and civil conspiracy. ECF No. 33.
Williamson filed a motion to dismiss on January 19, 2017, ECF No. 84, to which Murphy
responded on February 2, 2017, ECF No. 90, and Williamson replied on February 9,
2017, ECF No. 92. Horning filed a motion to dismiss on February 2, 2017, ECF No. 89,
to which Murphy responded on February 16, 2017. ECF No. 94. The court held a
hearing on February 21, 2017. The motions have been fully briefed and are ripe for the
A Rule 12(b)(6) motion for failure to state a claim upon which relief can be
granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) 
does not resolve contests surrounding the facts, the merits of a claim, or the applicability
of defenses.”). To be legally sufficient, a pleading must contain a “short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
A Rule 12(b)(6) motion should not be granted unless it appears certain that the
plaintiff can prove no set of facts that would support his claim and would entitle him to
relief. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When
considering a Rule 12(b)(6) motion, the court should accept as true all well-pleaded
allegations and should view the complaint in a light most favorable to the plaintiff.
Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999). “To survive a motion to dismiss,
a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id.
Williamson and Horning move to dismiss Murphy’s third-party complaint in its
entirety. While Williamson and Horning filed separate motions to dismiss, the motions
are based on the same set of basic facts and include largely identical briefing. 2 Thus, the
court separates its analysis between the intentional interference with contract claim and
the civil conspiracy claim but otherwise analyzes the motions as one.
Intentional Interference with Contract
Murphy’s claim for intentional interference with contract centers on her assertion
that State Farm had a duty to pay the primary beneficiaries of the Policy, and it paid all
beneficiaries except Murphy. ECF No. 94 at 12.
Before proceeding to the interpleader action, the court notes that as an initial
matter while Murphy maintains that she has properly “alleged all elements” of the
intentional interference with contract claim, she seems to confuse a recitation of the
Both Williamson and Horning filed briefing that ignore the page restrictions set
out in Local Rule 7.05(B), which states that “[u]nless an exception is granted by the
court, no memorandum shall exceed: (1) Thirty-five double-spaced pages in the case of
an initial brief of any party . . .” Horning’s memorandum is support of his motion to
dismiss was 50 pages—the vast majority of which was identical to Williamson’s
memorandum. Williamson then filed a 37 page reply brief, in violation of Local Rule
7.05(B)(2) which limits reply briefs to “[f]ifteen double-spaced pages.” Neither
Williamson nor Horning filed a motion to file excess pages. During the hearing on this
motion, counsel for both Williamson and Horning agreed to pay $1 per word in excess of
the page limit. Horning’s motion, at fifteen pages and approximately 6,750 words over
the limit, would cost counsel $6,750. Williamson’s reply, at twelve pages and
approximately 5,400 words over the limit, would cost counsel $5,400. While this
exchange may have been in jest, the court takes this as an opportunity to remind counsel
about the importance of adhering to this district’s local rules.
elements of a claim with alleging facts sufficient to support a claim. Murphy is correct
that she is not required to establish every element of her claim, but statement such as
“both Horning and Williamson intentionally procured the breach of contract between
State Farm and Murphy” are inadequate to plead her cause of action under the Rule
12(b)(6) pleading standard. Even assuming that Murphy has alleged sufficient facts that
State Farm breached a contract by filing the interpleader action—which, the court notes,
she has not—this argument misunderstands the purpose of an interpleader action.
To state a claim for intentional interference with a contract, a plaintiff must prove:
“(1) the contract; (2) the wrongdoer’s knowledge thereof; (3) his intentional procurement
of its breach; (4) the absence of justification; and (5) damages resulting therefrom.”
DeBerry v. McCain, 274 S.E.2d 293, 296 (S.C. 1981). The third amended complaint fails
even the relatively lax pleading standard of Rule 12(b)(6) because, as a matter of law,
State Farm’s filing of an interpleader action does not constitute a breach of contract. The
goal of an interpleader action is to “[a]bsolve the stakeholder from the threat of multiple
liability by determining which of the claimants is entitled to the stake.” Equitable Life
Assurance Soc’y v. Jones, 679 F.2d 356, 358 n. 2 (4th Cir. 1982); see also 7 Wright,
Miller & Kane, Federal Practice and Procedure: Civil 2d § 1701 at 483 (1986) (noting
that interpleader was originally developed to protect against “double vexation upon a
single liability.”). “Were the defendants in an interpleader action permitted to carry
forward with counterclaims against the stakeholder based on the same interpleaded funds,
the very purpose of the interpleader action would be utterly defeated.” Commerce
Funding Corp. v. S. Fin. Bank, 80 F.Supp.2d 582, 585 (E.D. Va. 1999).
Whether Murphy is the rightful recipient of McKeeking’s life insurance is the
very question that the interpleader action seeks to answer. In similar cases, courts have
found that a valid interpleader action shields a stakeholder from liability with respect to
counterclaims that claimants to life insurance proceeds have brought. In ReliaStar Life
Ins. Co. v. Lormand, 2011 WL 900113, at *5 (E.D. Va. Mar. 11, 2011), the court
dismissed a breach of contract claim based on a life insurer’s filing of an interpleader
action, reasoning that “[plaintiff] contends she is likely entitled to Dr. Winkler’s death
benefit. Whether she is the rightful recipient of the death benefit is also the question the
interpleader action seeks to answer.” Similarly, in Prudential Insurance Company of
America v. Hovis, 553 F.3d 258 (3rd Cir. 2009) the court considered whether a valid
interpleader action shielded a stakeholder from liability for counterclaims. The Hovis
court found that since none of the counterclaims were “truly independent” of the
interpleader action seeking to resolve who was entitled to the life insurance proceeds, the
insurer’s bringing of the interpleader action protected it from liability. Id. at 264–65.
Faced with a similar situation, with defendants in an interpleader action asserting
counterclaims against the insurer based on the funds at issue in the interpleader action,
the court in Commerce Funding Corp. v. S. Fin. Bank, 80 F.Supp.2d 582, 585 (E.D. Va.
1999), held that “the very purpose of the interpleader action would be utterly defeated” if
the counterclaims were allowed to go forward.
Murphy attempts to distinguish these cases, arguing that in this case there is no
“uncertainly as to the primary beneficiary’s primary entitlement to insurance proceeds.”
ECF No. 94 at 13. However, a review of the third amended complaint demonstrates that
this is squarely the scenario that the court has before it. State Farm brought the
interpleader action because, in the aftermath of S.C. Code Ann. § 62-2-507, it was unable
to determine the proper recipient of the $100,000 designated for Murphy in McKeeking’s
life insurance policy. The court has already determined that the interpleader action was
proper because there was some question of law regarding the rightful beneficiary of the
$100,000 in life insurance proceeds. Although Murphy alleges that State Farm has
denied her payment under the Policy, this allegation ignores the purpose of State Farm’s
interpleader action—to resolve the uncertainly of whether the divorce decree expressly
reserves Murphy’s right to the life insurance proceeds. State Farm is in no way
attempting to retain the life insurance proceeds—indeed, State Farm is attempting to
return the money through this interpleader action once its true owners are determined.
Although the court acknowledges that Murphy’s intentional interference with contract
claim is against third-parties Williamson and Horning instead of against State Farm as the
insurer, like the counterclaims in Hovis, Commerce Funding Corp., and ReliaStar Life
Ins. Co., the claim is based entirely on the funds that State Farm has interpleaded. The
court will not allow Murphy to bring claims that depends on the assumption that State
Farm was required to pay Murphy the $100,000 that is interpleaded. To do so would
circumvent the very purpose of an interpleader action.
Since Murphy defendants have not adequately pleaded breach, an essential
element of an intentional interference with contract claim, the court need not analyze the
remaining elements of the intentional interference with contract claim. The court grants
the motion to dismiss as it relates to this claim.
Murphy’s second cause of action alleges a civil conspiracy among third-party
defendants Williamson and Horning. It fails as well.
Under South Carolina law, “[a] civil conspiracy . . . consists of three elements:
(1) a combination of two or more persons, (2) for the purpose of injuring the plaintiff,
(3) which causes him special damage.” Lee v. Chesterfield Gen. Hosp., Inc., 344 S.E.2d
379, 382 (S.C. Ct. App. 1986) (citations omitted). “A claim for civil conspiracy must
allege additional acts in furtherance of a conspiracy rather than reallege other claims
within the complaint.” Hackworth v. Greywood at Hammett, LLC, 682 S.E.2d 871, 874
(S.C. Ct. App. 2009). Moreover, because the essence of a civil conspiracy claim is the
special damage resulting to the plaintiff, the alleged damages must exceed the damages
alleged for the plaintiff’s other claims. Id.
Although somewhat unclear from the complaint, the court surmises that Murphy
is alleging that Horning and Williamson have formed a civil conspiracy by interfering
with Murphy’s attempts to obtain information and assets belonging to McKeeking’s
Estate. Murphy points to the following specific facts in support of her claim:
(1) Horning’s response to Murphy’s subpoena seeking copies of all correspondence
between him and Williamson regarding the Policy that he be paid $180.00 for the time
spent reviewing his emails; (2) Williamson’s initial denial of Murphy’s request for a copy
of the Policy; (3) Williamson’s initial response to Murphy’s subpoena seeking
communications between her and Horning that she was unable to locate or retrieve any
electronic correspondence related to the McKeeking file; and (4) Williamson’s request
that Murphy provide a copy of the divorce decree before proceeds from the Policy would
be paid. ECF No. 92 at 6. Murphy also seems to place significant emphasis on a series
of emails exchanged between Williamson and Horning concerning Horning’s submission
of his claim, arguing that these emails “exceed the bounds of a simple claim for proceeds
under a life insurance policy.” Id. at 7. All of these facts were already alleged in
Murphy’s claim for intentional interference with contract action against Williamson and
Murphy alleges that she has sustained special damages in the form of “loss of the
immediate use of the life insurance proceeds, loss of funds to pay debts of the estate,
attorneys’ fees and costs to defend an Interpleader action, potential fees and costs for a
Guardian ad litem to represent the minor children in the Interpleader action.” Am.
Compl. ¶ 64. All of these damages are associated with Murphy’s decision to bring suit
against State Farm for breach of contract and bad faith in connection with the interpleader
action as opposed to damages specific to bringing this civil conspiracy claim. Whether or
not there was a civil conspiracy between Williamson and Horning, Murphy would still
have incurred the costs associated with, for example, hiring a guardian ad litem for the
minor children in the interpleader action. Indeed, the court issued an order dated May 31,
2016 appointing a guardian ad litem for the minor children—months before Murphy even
filed the third-party complaint against Williamson and Horning. ECF No. 31.
Murphy has failed to allege special damages which arose specifically because of
the conspiracy itself, and that were not caused by the intentional interference with
contract claim. Pye v. Fox, 633 S.E.2d 505, 511 (S.C. 2006) (“Because the quiddity of a
civil conspiracy claim is the damage resulting to the plaintiff, the damages alleged must
go beyond the damages alleged in other causes of action.”). This alone means that her
civil conspiracy fails. See Hackworth, 682 S.E.2d at 875 (affirming the lower court’s
dismissal of the plaintiff’s civil conspiracy claim because the plaintiff “repeated verbatim
the same damages in its civil conspiracy claim as are alleged in its claim for breach of
contract accompanied by a fraudulent act”); Charleston Aluminum, LLC v. Samuel, Son
& Co., 2006 WL 2370292, at *3 (D.S.C. Aug. 15, 2006) (dismissing the plaintiff’s state
law civil conspiracy claim because “the damages pleaded by [the p]laintiff in the civil
conspiracy cause of action are duplicative of the damages asserted with respect to the
contract causes of action”).
Furthermore, a claim for civil conspiracy must allege “additional facts in
furtherance of the conspiracy” rather than restate facts supporting other claims. Todd v.
South Carolina Farm Bureau Mutual Ins. Co., 278 S.E.2d 607, 611 (S.C. 1981). Put
another way, Murphy cannot plead the same set of facts for the actionable wrong and the
civil conspiracy, then expect to recover damages for both. See id. In her claim for civil
conspiracy, Murphy has merely incorporated by reference the alleged acts of Williamson
and Horning in her intentional interference with contract claim and added conclusory
allegations that Williamson and Horning were engaged in a conspiracy. Where “[t]he
only alleged wrongful acts plead are those for which damages have already been sought,”
a claim for civil conspiracy fails. Id. Murphy’s allegations for the civil conspiracy claim
fail the “additional facts” test as set out in Todd.
Since Murphy has failed to plead special damages and her civil conspiracy claim
fails the “additional facts” test, the court grants the motion to dismiss as to the civil
Even assuming that Murphy had pleaded special damages, her civil conspiracy
claim would still fail. A review of cases where courts have found a viable civil
conspiracy claim is instructive in demonstrating the type of conduct needed to serve as a
justification for a civil conspiracy claim. In Integrity Worldwide, Inc. v. Int’l Safety
Access Corp., 2015 WL 1297823, at *3 (D.S.C. Mar. 23, 2015), the court held that where
plaintiff had pled that defendants “communicated with each other, drafted documents,
signed agreements” to create a fraudulent security interest with the purpose to defraud
creditors, there was a viable claim for civil conspiracy. Similarly, in James v. Pratt &
Whitney, 126 F. App’x 607 (4th Cir. 2005), the Fourth Circuit found that an aircraft
mechanic had stated acts in furtherance of a conspiracy where he alleged that the aircraft
engine manufacturer conspired and acted to harm him in retaliation for his refusal to
falsify maintenance records. None of those types of allegations are present here. Instead,
Murphy states that Williamson has been extremely hostile to Murphy in all of her
dealings with her, while “Williamson and Horning have a friendly relationship with one
another.” ECF No. 92 at 5. Where, as here, there are only vague, conclusory allegations
of conspiracy, the civil conspiracy claim fails at the threshold motion to dismiss stage.
See Connor v. Real Title Corp., 165 F.2d 291, 294 (4th Cir. 1947) (concluding that
conclusory allegations of “vicious conspiracy and collaboration” between three named
defendants were insufficient to state a claim for civil conspiracy).
For the reasons set forth above, the court grants both Williamson’s and Horning’s
motions to dismiss.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
May 19, 2017
Charleston, South Carolina
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