762 S.E.2d 690
S.C.2014Background
- Decedent Robert L. Chamblee had client relationship agreements (CRAs) with Merrill Lynch that contained mandatory arbitration clauses.
- James Robert Malloy sued Swain Thompson and others, alleging Thompson, with assistance from Merrill Lynch, intentionally interfered with Chamblee’s estate plan and diverted assets to Thompson.
- Malloy’s claims against Merrill Lynch were labeled intentional interference with inheritance, aiding and abetting that interference, and civil conspiracy.
- Merrill Lynch moved to dismiss and compel arbitration, arguing Malloy is a non‑signatory whose claims derive from duties in the CRAs and therefore must arbitrate.
- The circuit court denied the motion, concluding common‑law theories binding non‑signatories to arbitration did not apply; Merrill Lynch appealed.
- The Supreme Court of South Carolina affirmed, holding Malloy’s tort claims do not arise from contractual duties in the CRAs and a non‑signatory cannot be compelled to arbitrate on that basis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Malloy sufficiently pled a valid cause of action for intentional interference with inheritance | Malloy alleged that Thompson and Merrill Lynch disrupted the estate plan and diverted assets, supporting intentional interference claims | Merrill Lynch argued the tort is not recognized in South Carolina and the complaint fails to state a claim | Court declined to decide on the merits because Merrill Lynch failed to preserve the issue below; did not adopt or reject the tort |
| Whether Malloy’s claims against Merrill Lynch are subject to arbitration | Malloy argued his claims sound in tort (duty not to interfere with inheritance), not in breach of the CRAs, so arbitration clauses in the CRAs don’t apply | Merrill Lynch argued any duty is derivative of duties under the CRAs and thus Malloy, as a non‑signatory, must arbitrate | Court held Malloy is not bound by CRAs’ arbitration clauses; tort duties alleged are independent of CRA contractual duties, so arbitration was not compelled |
Key Cases Cited
- Wilder Corp. v. Wilke, 330 S.C. 71 (discusses issue preservation requirements for appellate review)
- Douglass v. Boyce, 344 S.C. 5 (discusses the tort of intentional interference with inheritance)
- Pearson v. Hilton Head Hosp., 400 S.C. 281 (identifies common‑law theories for binding nonsignatories to arbitration)
- Int'l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411 (enumerates five common‑law bases for binding nonsignatories to arbitration)
- Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347 (recognizes that third‑party beneficiaries may, in some circumstances, be compelled to arbitrate)