DeBerry v. McCain

Citations: 274 S.E.2d 293; 275 S.C. 569; 1981 S.C. LEXIS 283Docket: 21368

Court: Supreme Court of South Carolina; January 11, 1981; South Carolina; State Supreme Court

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Ben T. DeBerry, an attorney, filed a lawsuit against Claude E. McCain, John G. Richards, V, and Robert E. McNair for tortious interference with his attorney-client and contractual relationship with the South Carolina Department of Insurance. The case, heard by the South Carolina Supreme Court, arose after DeBerry was employed by the Chief Insurance Commissioner to provide legal advice and manage insolvency proceedings against Atlantic and Gulf States Insurance Company. It is alleged that McCain, Richards, and McNair wrongfully interfered with this relationship, leading to the Commissioner negotiating a settlement without DeBerry's consent. Consequently, DeBerry's employment was terminated, resulting in claims for lost salary, fringe benefits, professional embarrassment, and damage to his reputation.

The circuit court's rulings on motions to strike, make more definite, and a demurrer were appealed by McCain and Richards. The Supreme Court found the demurrer should have been sustained, indicating that the complaint did not present sufficient facts to establish a cause of action against McCain and Richards. Relevant statutes concerning the structure and administration of the South Carolina Department of Insurance were reviewed, noting the role of the Chief Insurance Commissioner and the Insurance Commission's authority.

Section 38-3-60(3) mandates that the Commission collaborate with the Chief Insurance Commissioner on departmental operations, recommend changes to state insurance laws, and select a Chief Insurance Commissioner. Section 38-3-110 grants the Commissioner the authority to appoint or remove employees, including actuaries and clerks, at will and without cause. Sections 38-5-1510 and following address the processes for handling insolvent insurance companies, while Section 38-5-1560 allows the Commissioner to seek a court order for a receiver if a domestic insurance company faces insolvency, with the Commissioner acting as the receiver during rehabilitation or liquidation.

The plaintiff and Deputy Commissioner Richards were both employed under Section 38-3-110, meaning either could be removed without cause. The plaintiff’s role as attorney differs from a traditional attorney-client relationship, as he is a salaried employee of the state rather than being fee-based for specific legal tasks. The relationship is governed by statutory provisions rather than contractual terms. 

The plaintiff's complaint suggests that the Commissioner intervened in a lawsuit initiated by the plaintiff on the Commissioner's behalf. The Commissioner had several lawful options regarding the lawsuit, including directing the plaintiff to proceed with the hearing, withdrawing the action, or negotiating a settlement, which, while potentially disagreeable to the plaintiff, was an acceptable choice. Importantly, the complaint does not claim that the Commissioner discharged the plaintiff; it implies the plaintiff terminated his own employment. 

In South Carolina, wrongful interference with an attorney-client relationship has been recognized, but the specifics of this case differ due to the nature of their arrangement. The elements necessary to establish such a claim include the existence of a contract, knowledge of the contract by the wrongdoer, intentional breach, lack of justification, and resultant damages. Failure to meet any of these elements would result in sustaining a demurrer.

A demurrer is warranted when the pleadings, viewed favorably towards the nonmoving party, do not provide enough facts to establish a cause of action. The court assesses what inferences can be justifiably drawn from the pleadings, acknowledging that a demurrer accepts only the facts stated in the complaint, not the plaintiff's inferences or legal conclusions. In this case, the complaint lacks specific allegations implicating McCain or Richards in intentionally causing the plaintiff's discharge or acting unjustifiably. Both defendants had a right, if not an obligation, to consult with the Commissioner, and the plaintiff fails to show any exclusive right to control the litigation. The dispute appears to be between the plaintiff and the Commissioner regarding the management of a financially troubled insurance company. The plaintiff's legal conclusion of liability against McCain and Richards is unsupported by adequate allegations. Consequently, the demurrer is upheld against these defendants, while the case against McNair is not addressed. The ruling is reversed, with concurrence from Justices Lewis, Ness, Gregory, and Harwell.