Nautilus Insurance Company V. Fleming Et Al
Case Background
On April 22, 2022, Nautilus Insurance Company (“Nautilus”), an insurance company based in Scottsdale, Arizona, filed an insurance fraud lawsuit against Richard Alexander Murdaugh, his attorney Cory Fleming, and several other Defendants claiming it was owed damages because it paid an insurance claim on false pretenses.
The case was tried in the United States District Court, South Carolina (Charleston). Honorable Richard M. Gergel presided over this lawsuit. [Case Number: 2:22cv1307]
Cause
Nautilus issued a $5,000,000 umbrella policy to Richard Alexander Murdaugh, Sr., a licensed South Carolina attorney, for his Colleton County hunting lodge. Murdaugh filed a claim after his housekeeper, Gloria Satterfield, died on February 26, 2018, following a fall on February 2, 2018, at the property. Nautilus provided defense counsel and paid over $75,000 to settle claims by Satterfield’s estate.
In July 2021, Nautilus discovered irregularities involving Murdaugh, his attorney friend Cory Fleming, and others. After Satterfield’s death, Murdaugh arranged for Fleming’s firm, Moss & Kuhn, P.A. (MKF), to represent her family in a claim against Murdaugh, as part of a scheme to fraudulently obtain insurance funds from Nautilus to cover debts in a Ponzi scheme. Murdaugh and Fleming orchestrated the fraud by involving Chad Westendorf as the personal representative of the estate, removing the Satterfields from the process.
Funds from Nautilus were deposited into MKF’s trust account but were prematurely disbursed. Westendorf endorsed a $3.8 million check over to Fleming or MKF, who transferred it to a bank account controlled by Murdaugh under the name “Forge.” Despite instructions to hold the funds in trust, Fleming and MKF disbursed them improperly, violating fiduciary duties. The scheme continued, including a second payment in September 2020. Murdaugh and Fleming were suspended from law practice and criminally indicted. Nautilus filed this action after obtaining consent from court-appointed co-receivers managing Murdaugh’s assets.
Damages
Nautilus sought damages for fraud, conspiracy, negligence, breach of fiduciary duty, and unfair trade practices. The company argued that the Defendants’ actions uniquely harmed Nautilus and demanded punitive damages for their deceitful conduct.
Key Arguments and Proceedings
Legal Representation
- Plaintiff(s): Nautilus Insurance Company
- Counsel for Plaintiff(s): Clinton T Magill | Gregg Meyers | Jaan Gunnar Rannik
- Defendant(s): Richard Alexander Murdaugh, Sr [Terminated: 01/03/2025] | Cory Fleming | Moss & Kuhn, PA | Chad Westendorf [Terminated: 09/30/2024] | Palmetto State Bank [Terminated: 09/30/2024] |
- Counsel for Defendant(s): Amy LB Hill | Andrew Richard Hand | James Mixon Griffin | Margaret Nicole Fox | Phillip Donald Barber | Richard A Harpootlian | Christopher W Lempesis, Jr | Thomas A Pendarvis | Maryrose Pritchard Williamson | Robert H Hood, Jr | Christy Ford Allen | John Allen Massalon | George Trenholm Walker | James Whittington Clement | Thomas P Gressette, Jr
Key Legal Arguments and Counsel Remarks
Robert Hood, representing MKF, stated that the firm was only responsible for Fleming’s actions within the scope of his employment. Of the $3.8 million settlement in the Satterfield case, Fleming received $650,000 for his legal services. Hood argued that the other partners were unaware of Fleming’s role in misappropriating the payout. He emphasized that those actions were unrelated to Fleming’s work at the firm. Hood further asserted that none of the money earned from the case benefitted the firm, only Fleming.
Claims
Fraud and Conspiracy Allegations Against Murdaugh and Others
Nautilus Insurance accused Alex Murdaugh and his co-conspirators of orchestrating a deliberate scheme to defraud the company. Murdaugh repeatedly made false claims, asserting that insurance proceeds would benefit the Satterfield estate. Instead, he diverted the funds for personal use. For example, in March 2018, Murdaugh falsely claimed his dogs caused Gloria Satterfield’s fall, leading Nautilus to rely on this fabricated story. He also misrepresented Satterfield’s employment status, denying her eligibility for workers’ compensation.
By April 2019, Murdaugh convinced Nautilus to release settlement funds under the pretense they would go to the Satterfield estate. However, he redirected the money to himself and his associates, causing financial harm to Nautilus.
Additionally, Murdaugh and others conspired to stage a fraudulent lawsuit. They funneled settlement funds among themselves, concealing their illicit activities and compounding Nautilus’ losses.
Negligence and Breach of Fiduciary Duty by Palmetto Bank
Palmetto Bank allegedly enabled Murdaugh’s fraud by ignoring numerous red flags, such as suspicious loans and unexplained payments. Despite clear warning signs, the bank prioritized profits over compliance. Palmetto disbursed settlement funds without court approval, allowing Murdaugh to misuse them and obstruct Nautilus from uncovering the fraud.
Aiding and Abetting Fraud and Fiduciary Breach
Murdaugh, Fleming, MKF, Westendorf, and Palmetto knowingly participated in schemes to misappropriate insurance funds. They facilitated fraudulent transfers and concealed transactions, enabling Murdaugh’s actions. These efforts caused significant financial harm to Nautilus, making the Defendants liable.
Unjust Enrichment and Conversion
Nautilus paid $3.8 million, believing it would benefit the Satterfield heirs. Instead, Murdaugh misappropriated the funds, aided by Westendorf and Fleming. Nautilus demanded the return of these funds, citing procedural deficiencies and violations of their directives.
RICO Violations and Negligence
Nautilus accused Defendants of engaging in a long-running scheme involving fraud, embezzlement, and misuse of client funds. Defendants allegedly manipulated legal processes for personal gain, violating RICO provisions and harming Nautilus.
Defense
The Defendants individually filed answers against Nautilus’ second amended complaint. They denied the allegations levied and additionally, Defendant Palmetto State Bank filed a counterclaim of frivolous proceedings against Nautilus.
Moreover, in his defense, Cory Fleming’s lawyers argued that there were times and opportunities to investigate the claim, and Nautilus and its team never found proof it was a fake or false claim. Fleming’s defense centered on the claim that he did not know Murdaugh had lied about the reason for the Satterfield claim. He trusted Murdaugh, he explained during his testimony. Fleming recalled their long friendship, their shared work for Murdaugh’s father, and his relationship with Murdaugh’s wife and children.
Jury Verdict
By the time Nautilus’ lawsuit went to trial on January 6, Fleming and his former law firm were the only Defendants still in the case.
U.S. District Judge Richard Gergel ruled in June 2024 that Nautilus had no factual basis to bring its claims against Chad Westendorf, a Palmetto State Bank executive who served as the Satterfields’ personal representative in the claim. On January 2, 2025, Honorable Richard M. Gergel entered a default judgment in favor of Nautilus and against Defendant Murdaugh in the amount of $14,800,000.00
On January 8, the 10-member jury ruled in favor of Nautilus Insurance after finding former Beaufort attorney Cory Fleming liable for helping Alex Murdaugh file a fraudulent insurance claim to steal from the estate of Murdaugh’s longtime housekeeper.
Jurors deliberated for nearly four hours before deciding Fleming conspired with Murdaugh to defraud Nautilus. They concluded he knowingly participated in making the fraudulent claim and violated the South Carolina Unfair Trade Practices Act. However, the jury found Moss & Kuhn, Fleming’s former law firm, not liable for his actions as an employee.
The jury ordered Fleming to pay Nautilus $1.25 million in actual damages. They also imposed $50 in punitive damages, designed to discourage similar conduct in the future.
Court Documents:
Documents are available for purchase upon request at jurimatic@exlitem.com
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