United of Omaha v. Helms

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE
239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

United of Omaha Life Insurance Company,       
Respondent,

v.

Elaine Helms and Linda R. Cowart,       
Defendants,

Of Whom Elaine Helms is       
Respondent,

and Linda R. Cowart is the       
Appellant.

Appeal From Horry County

John L. Breeden, Jr., Circuit Court
Judge

Unpublished Opinion No. 2005-UP-098

Submitted February 1, 2005 – Filed February
10, 2005

AFFIRMED

E. Windell McCrackin, of Myrtle Beach, for Appellant.

Elaine Helms, of Lancaster, and Susan P. MacDonald, of Myrtle
Beach, for Respondent.

PER CURIAM:  In an action for life insurance
proceeds, Linda Cowart (“Cowart”) appeals the trial court’s grant of
interpleader and summary judgment in favor of United of Omaha Life Insurance
Company (“United of Omaha”) and its denial of Cowart’s summary judgment motion. 
We affirm. [1]   

FACTS

In 1999, United of Omaha issued a life
insurance policy in the amount of $30,000 on behalf of William B. Cowart.  According
to the policy terms, the owner of the policy is “(a) the Insured or, (b) the
applicant if a person other than the Insured applied for this policy, or (c)
the assignee of record in the case of an assignment of ownership.”  On the application
for the policy, Cowart, William’s wife, is listed as the primary beneficiary,
and the word “owner” is handwritten next to her name.
[2]   Other than this handwritten notation, no evidence suggests William
ever assigned ownership of the policy. 

After William became ill in November 2001, Cowart
moved out of the marital home and William moved in with his sister, Elaine Helms. 
Thereafter, William submitted a change of beneficiary form to United of Omaha
and designated Helms as the primary beneficiary.  United of Omaha in turn issued
a beneficiary endorsement effective January 5, 2002. 

After William died on
March 24, 2002, both Cowart and Helms submitted claims for the proceeds of the
policy.  In April 2002, Cowart made a written request to United of Omaha, asking
it not to pay the proceeds until a court could determine the matter.  Because
United of Omaha could only pay one beneficiary, it filed an interpleader action,
pursuant to Rule 22, SCRCP.  Cowart answered and counterclaimed against United
of Omaha, alleging breach of contract and bad faith for failure to pay the proceeds
to her.  Cowart also cross-claimed against Helms, alleging undue influence.  

Cowart filed a motion for summary judgment
as to her counterclaims.  United of Omaha moved to deposit the funds with the
clerk of court, to be dismissed from the case, and to dismiss Cowart’s counterclaims. 
The court denied Cowart’s motion for summary judgment.  The court determined
that United of Omaha was entitled to deposit the policy proceeds with the clerk
of court and to be relieved from liability pursuant to Rule 22, SCRCP.  The
court further found that United of Omaha was entitled to summary judgment as
to Cowart’s breach of contract and bad faith counterclaims.  Cowart appeals.

LAW/ANALYSIS

I.          Interpleader

Cowart argues the trial court
erred in granting interpleader to United of Omaha because United of Omaha was
not a neutral stakeholder.  We disagree.

In an appeal from a grant of
interpleader, this court examines whether the evidence before the trial court
was sufficient to support its grant of interpleader.  First Union Nat’l Bank
of South Carolina v. FCVS Communications, 321 S.C. 496, 499, 469 S.E.2d
613, 616 (Ct. App. 1997), rev’d in part, 328 S.C. 290, 494 S.E.2d 429
(1997) (dismissing as moot the writ of certiorari as to interpleader).  When
claims are such that a plaintiff is or may be exposed to double or multiple
liability, the claimaints may be joined as defendants and required to interplead. 
Rule 22(a), SCRCP.  “‘The historical and still the primary purpose of interpleader
is to enable a neutral stakeholder, usually an insurance company or a bank,
to shield itself from liability for paying over the stake to the wrong party.’” 
FCVS Communications, 321 S.C. at 499, 469 S.E.2d at 616 (quoting Indianapolis
Colts v. Mayor of Baltimore, 733 F.2d 484, 486 (7th Cir. 1984)).  Only the
potential for multiple claims is needed.  Id. at 499, 469 S.E.2d at 616.

In FCVS Communications,
First Union National Bank held the account for the partnership FCVS Communications. 
When it became unclear who had the authority to transact business on the account,
the bank filed an interpleader action against the partnership and individual
partners in order to clarify the competing claims.  This court upheld the trial
court’s grant of interpleader in light of the conflicting claims to the funds. 
FCVS Communications, 321 S.C. at 501, 469 S.E.2d at 617. 

Cowart argues that, unlike the
bank in FCVS Communications, United of Omaha is not a “neutral stakeholder”
because it is trying to shield itself from liability due to its actions in changing
the beneficiary.  Thus, she argues, its actions do not fit within the purpose
of Rule 22, SCRCP.

We find that United of Omaha,
like the bank in FCVS Communications, faced competing claims to the insurance
proceeds, thus exposing itself to double liability.  Here, both claims are arguably
valid.  This alone justifies an action for interpleader.  Rule 22(a), SCRCP
(“Persons having claims against the plaintiff may be joined as defendants and
required to interplead when their claims are such that the plaintiff is or may
be exposed to double or multiple liability.”).  Further, we conclude there is
no evidence that United of Omaha was not a “neutral stakeholder.”  United of
Omaha sought to pay the proceeds due under the policy, despite Cowart’s allegation
that United of Omaha inappropriately changed the beneficiary in this case. 
Whether or not the beneficiary was appropriately changed has no effect on United
of Omaha’s duty to pay; it merely affects to whom the proceeds are paid.  Thus,
United of Omaha was sufficiently neutral.

To further support her argument,
Cowart cites to Citizens Bank of Forsyth v. Middlebrooks, 72 S.E.2d 298
(Ga. 1952), in which the Georgia Supreme Court denied an institution’s action
for interpleader.  The Middlebrooks court found that a stakeholder was
not entitled to interpleader because the stakeholder was in possession of all
the facts and there was no reasonably debatable question of law.  Id.
at 332.  This case is not helpful to Cowart, however, because here, the question
of the owner of the policy as well as the appropriate beneficiary is indeed
a question of law that is reasonably debatable.  Thus, even pursuant to Middlebrooks,
the grant of interpleader in the present case was appropriate.

Because the evidence presented
to the trial court was sufficient to demonstrate United of Omaha was exposed
to multiple liability consistent with Rule 22, SCRCP, and South Carolina case
law, we find no error in its decision to grant interpleader.

II.              
Grant of Summary Judgment as to Cowart’s Counterclaims

Cowart argues the trial court
erred in granting summary judgment in favor of United of Omaha on her bad faith
and breach of contract claims because United of Omaha’s motion was made under
Rules 12 and 22, SCRCP.  She argues the trial court was precluded from granting
a motion for summary judgment because she was never given notice.  We disagree.

In reviewing the grant of a
summary judgment motion, the appellate court applies the same standard that
governs the trial court under Rule 56, SCRCP.  Nexsen v. Haddock, 353
S.C. 74, 77, 576 S.E.2d 183, 185 (Ct. App. 2002).  Summary judgment is appropriate
when no genuine issue of material fact exists and the moving party is entitled
to a judgment as a matter of law.  Id.  In ruling on a motion for summary
judgment, the evidence and the inferences that can be drawn therefrom should
be viewed in the light most favorable to the non-moving party.  George v.
Fabri, 345 S.C. 440, 452, 548 S.E.2d 868, 874 (2001). 

If a court considers matters
outside the pleadings when deciding on a motion to dismiss, the motion will
be treated as one for summary judgment pursuant to Rule 56, SCRCP, provided
the parties are given the requisite notice and opportunity to present outside
materials pertinent to a Rule 56, SCRCP, motion.  Rule 12(b)(6), SCRCP; Johnson
v. Dailey, 318 S.C. 318, 321, 457 S.E.2d 613, 615 (1995). 

In its December 16, 2002 reply
to Cowart’s counterclaims, United of Omaha moved to dismiss the counterclaims
generally pursuant to Rules 12 and 22, SCRCP.  On the same date, United of Omaha
filed a motion to be relieved from liability and moved to have the bad faith
counterclaim dismissed pursuant to Rule 12, SCRCP.  Nearly a year later, in
November 2003, Cowart filed a separate motion for summary judgment as to her
counterclaims, she submitted an affidavit, and a hearing was held on all the
motions.  United of Omaha filed the November 11, 2003 affidavit of Tom Groves,
with supporting exhibits, prior to the hearing, and it was submitted to the
trial court without objection. 

Cowart claims that
she did not have the requisite notice that the trial court intended to transform
United of Omaha’s motions to dismiss into motions for summary judgment until
she received the court’s order.  Although notice pursuant to Rule 56, SCRCP,
must be given when a trial court converts a motion to dismiss into one for summary
judgment, Cowart did not move before the trial court for reconsideration based
upon her lack of notice.  Because she did not complain about the conversion
and the lack of notice to the trial court, thus denying the court the opportunity
to rule upon the matter, her issue is not preserved for our review.  See
Staubes v. City of Folly Beach, 339 S.C. 406, 412, 529 S.E.2d 543, 546
(2000) (holding that matters not raised to and ruled upon by the trial court
are not preserved for appellate review); In re Estate of Timmerman, 331
S.C. 455, 460, 502 S.E.2d 920, 922 (Ct. App. 1998) (holding that when a party
receives an order granting certain relief not previously contemplated or presented
to the trial court, the aggrieved party must move pursuant to Rule 59(e), SCRCP,
to alter or amend the judgment in order to preserve the issue for appellate
review).  Further, Cowart was not caught by surprise at the hearing because
she was able to present outside materials at the hearing in support of her own
motion for summary judgment. 

Because Cowart failed to complain
to the trial court that conversion was improper and she was nevertheless able
to present her own materials, this issue has no merit.
[3]

CONCLUSION

The trial court did
not err in granting United of Omaha’s motion for interpleader.  Cowart’s issue
regarding the conversion of the motion to dismiss into one for summary judgment
is not preserved for appellate review.  Further, the denial of Cowart’s motion
for summary judgment is not appealable.  Accordingly, the order of the trial
court is

AFFIRMED.

ANDERSON, BEATTY, and SHORT, JJ., concur.

[1] Because oral argument would not aid the court in resolving the issues
on appeal, we decide this case without oral argument pursuant to Rule 215,
SCACR. 

[2] The policy itself refers to the application or endorsement for beneficiary
information.  

[3] Cowart also argues that the trial court erred in denying her motion
for summary judgment as to her contract counterclaim.  It is well-settled
that the denial of a motion for summary judgment is not appealable.  Olson
v. Faculty House of Carolina, Inc., 354 S.C. 161, 168, 580 S.E.2d 440,
444 (2003).  Thus, we decline to address Cowart’s argument on this issue.