State Farm Life Insurance Company v. Murphy et al
ORDER denying 132 Motion for Reconsideration Signed by Honorable David C Norton on October 12, 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 Murphy’s motion to reconsider the court’s May
19, 2017 order dismissing Murphy’s amended third-party complaint. ECF No. 132. The
court denies Murphy’s motion for reconsideration.
State Farm is an insurance company incorporated in the state of Illinois with its
principal place of business in Illinois. Compl. ¶ 1. 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. 1 Id. ¶ 2. The minor defendants
were born on January 26, 2005 and December 11, 2006 to Murphy and John McMeeking
(“McMeeking”). Id. ¶¶ 5, 7. Murphy and McMeeking were married on May 27, 2006.
Id. ¶ 6. State Farm issued a life insurance policy to McMeeking on October 14, 2009
with a policy date of September 23, 2009. Id. ¶ 8; 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. Id.
¶ 10. 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.” Id. ¶ 9; see also 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
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.
On August 2, 2015, McMeeking died. Compl. ¶ 14. Murphy was appointed
personal representative of his estate on August 11, 2015. Id. ¶ 15. Murphy submitted a
life insurance claim 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
disqualified to receive 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 resrictions. 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. On March 10, 2016 State Farm paid $101,028.50 into the court. ECF No.
Murphy’s motion to reconsider is ripe for the court’s review.
Federal Rule of Civil Procedure 59(e) provides that “[a] motion to alter or amend
a judgment must be filed no later than 28 days after the entry of the judgment.” While
Rule 59(e) does not supply a standard to guide the court’s exercise of its power to alter or
amend, the Fourth Circuit has recognized that a court may grant a Rule 59(e) motion
“only in very narrow circumstances: (1) to accommodate an intervening change in
controlling law, (2) to account for new evidence not available at trial, or (3) to correct a
clear error of law or prevent manifest injustice.” Hill v. Braxton, 277 F.3d 701, 708 (4th
Cir. 2002). Rule 59(e) motions may not be used to make arguments that could have been
made before the judgment was entered. See Pac. Ins. Co. v. Am. Nat’l Fire Ins. Co., 148
F.3d 396, 403 (4th Cir. 1998). Moreover, “[a] party’s mere disagreement with the court’s
ruling does not warrant a Rule 59(e) motion, and such a motion should not be used to
rehash arguments previously presented or to submit evidence which should have been
previously submitted.” Sams v. Heritage Transp., Inc., 2013 WL 4441949, at *1 (D.S.C.
August 15, 2013).
Rule 59(e) provides an “extraordinary remedy that should be used sparingly.”
Pac. Ins. Co., 148 F.3d at 403 (internal citation omitted); Wright v. Conley, 2013 WL
314749, at *1 (D.S.C. Jan. 28, 2013). Whether to alter or amend a judgment under Rule
59(e) is within the sound discretion of the district court. Bogart v. Chapell, 396 F.3d 548,
555 (4th Cir. 2005).
Federal Rule of Civil Procedure 60(b) provides:
[o]n motion and just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding for the following
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not
have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an
earlier judgment that has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b). In order to obtain relief under Rule 60(b) the moving party must
“show (1) that the Rule 60(b) motion is timely; (2) that [the non-moving party] will not
suffer unfair prejudice if the default judgement is set aside; and (3) that that [the movant's
defense] is meritorious.” Westlake Legal Group v. Yelp, Inc., 599 F. App’x 481, 484
(4th Cir. 2015) (quoting Heyman v. M.L. Mktg. Co., 116 F.3d 91, 94 n. 3 (4th Cir.
1997)). When a moving party seeks relief under the catch-all provision of subsection
(b)(6), he must also show the existence of “extraordinary circumstances.” Murchison v.
Astrue, 466 F. App’x 225, 229 (4th Cir. 2012) (quoting Reid v. Angelone, 369 F.3d 363,
370 (4th Cir. 2004)). “[E]xtraordinary circumstances [are those] that create a substantial
danger that the underlying judgment was unjust.” Id. (alterations in original) (quoting
Margoles v. Johns, 798 F.2d 1069, 1073 (7th Cir. 1986)).
Murphy asks the court to reconsider its order filed May 19, 2017 (“the May
Order”) granting Williamson and Horning’s motions to dismiss, ECF Nos. 84 and 89.
ECF No. 132 at 1. Murphy contends that she has always been entitled to the insurance
proceeds at issue, and that because there were no adverse interests State Farm did not file
the interpleader action in good faith. Murphy brings no new facts or law before the court,
but takes this motion as an opportunity to relitigate the order on the motion to dismiss.
That is, of course, not the purpose of a motion to alter/amend or a motion to reconsider.
See Pac. Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998) (quoting 11 Wright, et al., Federal
Practice and Procedure § 2810.1, at 127–28 (2d ed. 1995) (holding that a Rule 59(e)
motion “may not be used to relitigate old matters, or to raise arguments or present
evidence that could have been raised prior to entry of judgment.”). Indeed,
reconsideration of a judgment after its entry is an “extraordinary remedy which should be
used sparingly.” TFWS, Inc. v. Franchot, 572 F.3d 186, 194 (4th Cir. 2009). Where a
party seeks reconsideration as Murphy does on the basis of “manifest error,” the Fourth
Circuit has held that the earlier decision cannot be “just maybe or probably wrong; it
must . . . strike us as wrong with the force of a five-week old, unrefrigerated dead fish.”
TFWS, Inc. v. Franchot, 572 F.3d 186, 194 (4th Cir. 2009) (internal quotations and
citations omitted). It may be, as Murphy claims, that as a consequence of the May Order
she cannot continue with her claims against Williamson and Horning. But a party’s
inability to litigate claims does not constitute “manifest injustice” as contemplated by
Rule 59(e), and certainly does not strike the court with the force of a “five-week old,
unrefrigerated dead fish.” The court discusses—and rejects—each of Murphy’s
arguments below. Murphy’s motion to reconsider is denied in full.
Valid Interpleader Action
First, Murphy argues that State Farm had no basis for filing the interpleader action
because Murphy was the only claimant, and there was no “actual threat of valid
competing claimants” to the $100,000. ECF No. 132 at 6. However, as the court
explained in its interpleader order, ECF No. 19, the order appointing a Guardian ad Litem
for the minor children, ECF No. 31, and the May Order, ECF No. 127, at the time that
State Farm filed this interpleader action it was unclear whether Murphy was entitled to
remain as the beneficiary of the $100,000. Specifically, as the court stated in its
interpleader order, under S.C. Code §62-2-507(c) “the divorce of a marriage revokes any
revocable beneficiary designation made by a divorced individual to the divorced
individual’s former spouse.” ECF No. 19 at 2. Because this statute was, at the time that
the funds were interpleaded, relatively new, State Farm was understandably in doubt
whether to issue payment of the life insurance proceeds to Murphy. The question of
whether S.C. Code §62-2-507(c) applied to bar Murphy as a beneficiary of the Policy is
the exact type of situation that the interpleader action was created to remedy. It is not, as
Murphy contends, like the interpleader actions that were comprised of “ethereal
gossamer” that Judge Murnaghan was concerned with in Equitable Life Assurance Soc’y
v. Jones, 679 F.2d 356, 358 n.2 (4th Cir. 1982).
To the extent that Murphy is arguing that it was “manifest injustice” that as a
result of State Farm’s “denial” of her claim to the $100,000 she did not immediately
receive her share of the Policy like Horning and Stuart McMeeking, this argument is
unavailing. As an initial matter, the court reminds Murphy that State Farm did not deny
her claim, it simply interpleaded the insurance proceeds into the court because it was in
doubt who to issue payment of the proceeds to and wanted to protect itself from multiple
liability. Indeed, a necessary component of an interpleader action is that the funds are not
immediately paid out to the competing claimants. Murphy also seems to take issue with
Horning and Stuart McMeeking being paid their designated share of the Policy proceeds
immediately. However, there was no question as to whether Horning and Stuart
McMeeking were entitled to their shares of the Policy—there was no analogous
ambiguity in the application of a recently enacted statute that would have led to State
Farm questioning whether these two parties should have received their designations from
the policy. Murphy argues that State Farm should have ordered Horning and Stuart
McMeeking to deposit their share of the Policy into the court, as it was always
understood that their shares of the proceeds were to benefit the minor children. While
this may have been “understood,” it was never memorialized in a writing such as the
agreement between Murphy and McMeeking to maintain $1000,000 in life insurance
proceeds for the minor children.
Since the applicability of S.C. Code §62-2-507(c) to bar Murphy as a beneficiary
of the $100,000 created a genuine question of who was entitled to the Policy proceeds,
the court finds—once again—that State Farm had a valid basis to file an interpleader
action. It denies Murphy’s motion to reconsider on this count.
Intentional Interference with Contract
Murphy then turns to the May Order’s dismissal of her intentional interference
with contract claims against Horning and Williamson. Murphy contends that the court
“summarily concluded” that State Farm’s filing of the interpleader action did not
constitute a breach of contract. ECF No. 132 at 8. As explained in the May Order, and
once again in Section III.1.A, State Farm had a valid basis to file this interpleader
action—namely, whether the recently enacted S.C. Code §62-2-507(c) barred Murphy as
a beneficiary of the $100,000. Accordingly, State Farm’s failure to pay the policy
proceeds immediately to Murphy does not constitute a breach of contract. See Prudential
Ins. Co. of Am. v. Hovis, 553 F.3d 258, 260 (3d Cir. 2009) (holding that insurer was
protected from potential beneficiary’s breach of contract claims related to insurer’s
failure to pay policy proceeds to potential beneficiary); ReliaStar Life Ins. Co. v.
Lormand, 2011 WL 900113 at *5 (E.D. Va.) (dismissing counterclaim for breach of
contract because stakeholder was protected from counterclaim based on the interpleaded
funds); Commerce Funding Corp., 80 F.Supp.2d at 586 (dismissing counterclaim for
breach of contract against stakeholder because party’s argument that stakeholder should
have turned over the funds to the party was “precisely the issue to be decided in the claim
Since an intentional interference with contract claim cannot proceed with a breach
of contract—and, as explained above State Farm’s filing of this interpleader action does
not constitute a breach of contract—Murpy’s motion to reconsider the intentional
interference with contract claims against Horning and Williamson is denied.
Finally, Murphy contends that the court should reconsider the dismissal of her
civil conspiracy claim against Williamson and Horning. The court declines to do so. The
court directs Murphy to the following footnote in the May Order that detailed the type of
conduct that courts have found to be sufficient for a civil conspiracy claim:
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).
State Farm Life Ins. Co. v. Murphy, 2017 WL 2216296, at *5 (D.S.C. May 19, 2017).
Furthermore, Murphy’s basis for the civil conspiracy claim against Horning and
Williamson is that “[t]ogether Williamson and Horning conspired with each other with
the purpose and intent of injuring Murphy and the minor children, and intentionally,
willfully, wrongfully and maliciously deprived them of the proceeds of the insurance
policy which were the subject of the Court Order to [ensure] support for the minor
children in the event of the Father’s death.” ECF No. 132 at 12. As explained at great
length in Section III.1.A and Section III.1.B, as well as in the May Order, State Farm’s
filing of this interpleader action delayed, but did not deprive, Murphy of the $100,000 in
insurance proceeds. Because of the ambiguity in whether S.C. Code §62-2-507(c) barred
Murphy as a beneficiary, State Farm had a valid basis for filing this interpleader action.
Therefore, no amount of allegations of any amount of emails or clandestine meetings
between Williamson and Horning would support Murphy’s civil conspiracy claim
because the underlying tort that Murphy appears to be alleging—intentional interference
with contract—fails. See Beasley v. FV-I, Inc., 2013 WL 1192018, at *5 (E.D. Va. Mar.
21, 2013) (“This Court has discussed Plaintiff’s failure to state a claim for fraud against
either Defendant, and will not further belabor the issue except to state that there does not
exist an actionable claim for the underlying alleged wrong of fraud, and thus there can be
no action for civil conspiracy based thereupon.”).
For the reasons set forth above, the court DENIES Murphy’s motion to
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
October 12, 2017
Charleston, South Carolina
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