Agape Senior Primary Care Inc v. Evanston Insurance Company

Filing 79

ORDER granting 42 Motion for Partial Summary Judgment by Agape on its claim against Evanston for breach of contract for failure to defend the Watts lawsuit and failure to indemnify the settlement paid in the Watts litigatio n ; granting 49 Motion for Summary Judgment by Evanston Insurance Company to Evanston on all remaining actions ; finding as moot 50 Motion to Compel by Agape Senior Primary Care; finding as moot 59 Amended Motion to Compel by Evanston Insuranc e Company; finding as moot 71 Motion to Strike by Evanston. The parties are directed to confer in an attempt to calculate prejudgment interest from the appropriate dates and report these calculations to the court within 21 days from the date of this order. The Clerk shall defer entering judgment until the court issues a final order including the interest calculation. Signed by Honorable Joseph F Anderson, Jr on 1/19/18.(mflo, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA

Agape Senior Primary Care, Inc.,
Plaintiff,
vs.
Evanston Insurance Company,
Defendant.
____________________________________

)
)
)
)
)
)
)
)
)
)

C/A: 3:16-1610-JFA

ORDER

Agape Senior Primary Care, Inc. (“Agape”), a conglomerate of nursing homes in
South Carolina, initiated this action against its insurance company, Evanston Insurance
Company (“Evanston”) for breach of contract and bad faith.
The claims arise out of Evanston’s conduct in several related tort claims against
Agape. This case is actually a sequel to an earlier declaratory judgment action before this
court, Evanston Ins. Co. v. Watts, 52 F. Supp. 3d 761 (2014) (the “declaratory judgment
action”). That case required the court to interpret and apply provisions of the Evanston
insurance policy to a unique set of facts arising out of Agape’s employment of an individual
who purported to be a licensed medical practitioner, but who, in reality, was an imposter
assuming the identity of a licensed physician.
Now before the court are the parties’ pivotal cross motions for summary judgment
(ECF Nos. 42, 49), together with various other procedural motions. On December 20, 2017,
oral argument was heard for the better part of the day on all pending motions. At the
conclusion of argument, the court took all motions under advisement. This Order shall serve
1

to memorialize the court’s rulings on the summary judgment motions.
I.

PROCEDURAL HISTORY
In 2012, patients of Agape brought claims against Agape after it was discovered that

Ernest Addo (“Addo”), one of Agape’s purported physicians, was not a licensed medical
doctor. Addo had fraudulently adopted the identity of Arthur Kennedy, M.D., a physician
licensed in the United States, and duped Agape into hiring him onto the medical staff.
Eventually, Addo’s fraudulent conduct came to light, prompting a class action lawsuit1 and
a variety of other tort claims against Agape.2
Evanston issued a policy of insurance to certain Agape health care providers,
including Dr. Kennedy, under insurance policy number MM-822351 (the “Policy”) for the
policy period August 1, 2012 to August 1, 2013. In connection with the issuance of the
Policy, Kennedy, along with other medical providers, was required to sign the insurance
application. Shortly after Addo’s fraudulent conduct came to light, Evanston initiated a
declaratory judgment action in this court, seeking a ruling that the Policy in question was
void ab initio because of Addo’s fraudulent misrepresentations. At the same time, Evanston
provided a defense to the underlying tort actions, reserving the right to discontinue in the
event it was successful in the declaratory judgment action.
After thorough briefing and argument, this court issued a ruling essentially providing

1

See Hanna v. Agape Senior, LLC, et al., No. 3:12-CV-02872-JFA, 2015 WL 247906 (D.S.C. Jan.
20, 2015).
2

The declaratory judgment action remained pending for some time because Addo had been indicted
for his conduct and asserted his 5th Amendment rights in refusing to be deposed. Accordingly, the case was
stayed until the criminal case was concluded.

2

a split decision. Specifically, the court ruled that the Policy was not void ab initio as to all
medical providers as a result of Addo’s misrepresentations. The court also ruled, however,
that certain claims asserted against Agape were not covered because of Addo’s misconduct.
Specifically, claims asserted against Addo in his individual capacity, as well as claims
against Agape, the corporation, under a theory of respondeat superior for Addo’s conduct,
were not covered under the Policy. Additionally, claims against Agape, the corporation, for
negligent hiring and retention of Addo were similarly not covered. Left in place by the
court’s ruling was coverage for all other medical professionals (i.e., doctors and nurses) of
Agape. This court’s determination of the coverage issue was affirmed by a panel of the
Fourth Circuit Court of Appeals. Evanston Ins. Co. v. Agape Sr. Primary Care, Inc., 636
F. App’x 871 (4th Cir. 2016).
Now before the court are claims by Agape against Evanston arising out of Evanston’s
conduct on several underlying tort claims against Agape. These claims involve Evanston’s
refusal to defend and indemnify Agape in the tort claims, as well as Evanston’s conduct in
changing defense counsel, and in participating in several mediation sessions. As will be
seen, the court has determined that Evanston breached its insurance contract when it refused
to continue its representation of Agape in what the parties have referred to as the “Watts
litigation” and refused to indemnify Agape for the settlement of that case.
The court will dismiss, however, the bad faith claim asserted in connection with the
Watts case, as well as all other bad faith claims. The court’s ruling on the cross motions for
summary judgment makes it unnecessary for the court to rule on all but one of the various

3

other procedural motions that have been filed. Thus, those motions are dismissed as moot.3
II.

LEGAL STANDARD
A.

SUMMARY JUDGMENT

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper
when there is no genuine dispute as to any material fact and the moving party is entitled to
judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A material
fact is one that “might affect the outcome of the suit under the governing law.” Spriggs v.
Diamond Auto Glass, 242 F.3d 179, 183 (4th Cir. 2001) (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)). A dispute of material fact is “genuine” if sufficient evidence
favoring the non-moving party exists for the trier of fact to return a verdict for that party.
Anderson, 477 U.S. at 248–49.
The moving party bears the initial burden of showing the absence of a genuine dispute
of material fact. Celotex, 477 U.S. at 323. If the moving party meets that burden and a
properly supported motion is before the court, the burden shifts to the non-moving party to
“set forth specific facts showing that there is a genuine issue for trial.” See Fed. R. Civ. P.
56(e); Celotex, 477 U.S. at 323. All inferences must be viewed in a light most favorable to
the non-moving party, but he “cannot create a genuine issue of material fact through mere
3

In light of the court’s ruling herein on the cross motions for summary judgment, a resolution of the
remaining motions is not necessary. The information sought in the cross motions to compel discovery (ECF
Nos. 50, 59) is not needed to decide the substantive motions. The parties agreed that Agape’s motion for
partial summary judgment on Count II of Evanston’s counterclaim (ECF No. 44) is moot. With regard to the
affidavit of Agape executive Scott Middleton’s and the proposed expert testimony of Arthur Bates, both of
which are subject to a motion to strike (ECF Nos. 43, 71), the court has been required to briefly review the
information contained in both of the disputed documents and finds that neither is helpful to the court in
resolving the summary judgment motions. Therefore, although the court heard considerable argument on all
of these additional motions, a resolution of them is not necessary.

4

speculation or the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213,
214 (4th Cir. 1985).
B.

BREACH OF CONTRACT

Under South Carolina law, a plaintiff seeking to establish breach of contract “must
establish three elements: (1) a binding contract entered into by the parties; (2) breach or
unjustifiable failure to perform the contract; and (3) damage as a direct and proximate result
of the breach.” Advanced Pain Therapies, LLC v. Hartford Fin. Servs. Group, Inc., No.
3:14-CV-0050-MGL, 2014 WL 4402800, at *2 (D.S.C. Sept. 3, 2014) (citing Bank v. How
Mad, Inc., No. 4:12-CV-3159-RBH, 2013 WL 5566038, at *3 (D.S.C. Oct. 8, 2013)).
C.

THE DUTY TO DEFEND AND TO INDEMNIFY

“Under South Carolina law, ‘the obligation of a liability insurance company to defend
and indemnify is determined by the allegations in the complaint.’” Liberty Mut. Fire Ins. Co.
v. General Info. Servs., Inc., 22 F. Supp. 3d 597, 600 (E.D. Va. 2014) (citing Collins Holding
Corp. v. Wausau Underwriters Ins. Co., 397 S.C. 573, 577, 666 S.E.2d 897, 899 (2008)). “If
the facts alleged in the complaint fail to bring a claim within the policy’s coverage, the
insurer has no duty to defend.” Id. “The insured must show that the underlying complaint
creates a ‘reasonable possibility’ of coverage under the insurance policy.” Id. at 600–01
(citing Gordon Gallup Realtors Inc. v. Cincinnati Ins. Co., 274 S.C. 468, 471, 265 S.E.2d 38,
40 (1980)). “The burden of proof is on the insured to show that a claim falls within the
coverage of an insurance contract,” and “[t]he insurer bears the burden of establishing
exclusions to coverage.” Id. at 601 (internal quotations omitted) (citing Sunex Int’l, Inc. v.

5

Travelers Indem. Co., 185 F. Supp. 2d 614, 617 (D.S.C. 2001)).
The duty to defend is triggered where the underlying complaint includes “any
allegation” that raises the possibility of coverage. Auto-Owners Ins. Co. v. Newsom, No.
4:12-CV-447-RBH, 2013 WL 3148334, at *4 (D.S.C. June 19, 2013). (“South Carolina law
requires that a triggered insurer with a duty to defend the policyholder in a suit must defend
the policyholder against all claims in that suit, even those claims that are not covered under
the policy.”). “In short, if there is even one aspect of the claim which must be defended, the
insurer must defend the entire suit.” Baran, Inc. v. Landmark Am. Ins. Co., No. 2:09-CV1556-PMD, 2010 WL 233861, at *4 (D.S.C. Jan. 14, 2010) (citing Isle of Palms Pest Control
Co. v. Monticello Ins. Co., 319 S.C. 12, 15, 459 S.E.2d 318, 319 (Ct. App. 1994)).
Finally, the duty to defend is broader than the duty to indemnify. Ross Dev. Corp. v.
Fireman’s Fund Ins. Co., 809 F. Supp. 2d 449, 457 (D.S.C. 2011).
D.

BAD FAITH

The Supreme Court of South Carolina has determined that “there is an implied
covenant of good faith and fair dealing in every insurance contract ‘that neither party will do
anything to impair the other’s rights to receive benefits under the contract.’” Tadlock
Painting Co. v. Maryland Cas. Co., 322 S.C. 498, 500, 473 S.E.2d 52, 53 (1996) (citing
Nichols v. State Farm Mut. Auto. Ins. Co., 279 S.C. 336, 339, 306 S.E.2d 616, 618 (1983)).
The court has also held that “if an insured can demonstrate bad faith or unreasonable action
by the insurer in processing a claim under their mutually binding insurance contract, he can
recover consequential damages in a tort action.” Nichols, 279 S.C. at 340, 306 S.E.2d at 619.

6

Moreover, South Carolina law provides for a recovery of attorneys’ fees where an insurer has
refused to pay a claim in bad faith. S.C. Code Ann. § 38-59-40 (West 2018).
III.

ANALYSIS AND APPLICATION
A.

THE WATTS LITIGATION

On December 4, 2015, the Estate of a former patient of Agape filed a lawsuit styled
“Vickie Watts, as Personal Representative of the Estate of Dorothy E. Jones v. Agape Senior
Primary Care, Inc., and Agape Nursing and Rehabilitation Center, Inc., in the Richland
County Court of Common Pleas, 2015-CP-40-5417 (the “Watts litigation”). Evanston
initially provided a defense to this state court litigation, under a reservation of rights. When
the Fourth Circuit Court of Appeals affirmed this court’s ruling on the critical coverage issue,
Evanston terminated its representation of Agape, contending that the claims asserted by the
Watts litigation were not covered under this court’s ruling.
Upon Evanston’s withdrawal, Agape employed its own counsel to continue defending
the case, expending $5,750 for defense costs and ultimately settled the case for $63,750.
Evanston’s conduct with regard to the Watts litigation has given rise to claims by Agape for
breach of contract, both in terms of Evanston’s failure to continue to defend and failure to
indemnify, as well as a bad faith claim in connection with Evanston’s abandonment of the
Watts litigation.
Evanston, on the other hand, contends that the claims asserted in the Watts litigation
were clearly not covered under this court’s earlier ruling and, therefore, it acted within its
contractual rights when it abandoned the litigation and denied coverage.

7

As noted previously, when determining an insurer’s duty to defend, the allegations of
the underlying complaint must be scrutinized in order to decide whether such a duty exists.
Liberty Life Ins. Co. v. Commercial Union Ins. Co., 857 F.2d 945, 949 (4th Cir. 1988); S.C.
Med. Malpractice Liab. Ins. Joint Underwriting Assoc. v. Ferry, 291 S.C. 460, 463, 354
S.E.2d 378, 380 (1987).
The court is thus required to carefully examine the Watts Complaint4 and see if any
of its allegations “raise a reasonable possibility that the insured may be held liable for some
act or omission covered by” the Policy. See Liberty, 857 F.2d at 949.
Unfortunately, the Watts Complaint at issue is, to be charitable, poorly drafted. After
approximately one page of allegations appearing under a subheading “PARTIES,
JURISDICTION AND VENUE,” there appears a series of paragraphs under the subheading
“FACTS.” See ECF No. 4-5 p. 6–9. Certain of these paragraphs can be construed to allege
misdeeds on the part of medical professionals employed at Agape other than Addo. The
three paragraphs that principally assert claims against other Agape employees are as follows:
15.

Two days later, an Agape nurse practitioner noted that Ms. Jones’s
Glucotrol needed to be changed, but nothing was done and Ms. Jones’s
Glucotrol remained suspended.

16.

On March 13 and 14, Ms. Jones’s blood sugar readings climbed as high
as 190 and 192, but no action was taken.

20.

***
The lab results received by Agape on March 14 indicate Ms. Jones was
suffering from an increased white blood cell count and acute kidney
failure consistent with severe dehydration. Ms. Jones’s sodium level

4

Specifically, this court examined the Watts plaintiff’s First Amended Complaint, which was
attached as Exhibit D to Evanston’s Motion to Dismiss filed in the present case. (ECF No. 4-5).

8

[sic] was elevated at 148, potassium level was elevated just below panic
levels at 6.4, creatinine level was elevated at 4.87, her blood urea
nitrogen (“BUN”) exceeded panic levels at more than 130, and her
glomerular filtration rate (“GFR”) was only an 8, which is indicative of
Stage V kidney failure. Additionally, Ms. Jones’s CO2 level was very
low (14 mEq/L), which is indicative of respiratory alkalosis or
metabolic acidosis. Furthermore, her anion gap level was 25.4,
indicating metabolic acidosis, which is often related to uncontrolled
diabetes.
Following these paragraphs, the First Amended Complaint sets out two specifically
delineated causes of action. The first one, appearing on page 5 of the Watts Complaint (ECF
No. 4-5 p. 9), begins as follows:
FIRST CAUSE OF ACTION
(Negligent, Careless, and/or Reckless Hiring,
Retention, and Supervision).
In the paragraphs following this subheading, it is clear that the Watts Complaint was
asserting a cause of action (i.e., negligent hiring of Addo, etc.) that was not covered under
this court’s ruling in the declaratory judgment action.
Thereafter follows a second cause of action, delineated as follows:
FOR A SECOND CAUSE OF ACTION
(Battery)
In the paragraphs that follow this subheading, it is clear that the claim being asserted
is one for battery. Specifically, each time Mr. Addo, the imposter, touched a patient, the
touching was done without the patient’s consent and constituted common law battery. This
cause of action is also not covered by virtue of the court’s earlier ruling.
In sum, therefore, the court is faced with construing a complaint that contains, in its
introductory paragraphs, allegations of misdeeds of Agape employees other than Mr. Addo,
9

which arguably would trigger coverage under the Policy. But when one comes to the portion
of the Watts Complaint where the causes of action are specifically denominated as such and
claims are asserted, the two claims therein are clearly not covered by this court’s declaratory
judgment ruling.5 As noted above, the Watts Complaint is inartfully drafted.6 It should also
be remembered that it was drafted before this court’s ruling on coverage was issued.
Nevertheless, the court is faced with the difficult task of determining whether the allegations
of the Watts Complaint, imperfect as they are, trigger coverage.
Viewed in this light, the Watts Complaint is a mishmash of allegations, including two
claims that are clearly barred by this court’s earlier ruling in the declaratory judgment case,
but also including claims of misdeeds by nurses and perhaps other medical professionals that
would be covered under the court’s ruling. As the South Carolina Supreme Court has noted,
“[i]n construing a complaint, . . . the court must review the entire pleading.” Doe v. Barnwell
School Dist., 369 S.C. 659, 663, 633 S.E.2d 518, 520 (Ct. App. 2006) (citing Smith v. Nelson,
83 S.C. 294, 300, 65 S.E. 261, 263 (1909). For this reason, the court concludes that Evanston
breached its contract by refusing to continue to defend the Watts lawsuit and by refusing to
indemnify Agape for the settlement paid.7 Accordingly, judgment will be entered in favor

5

The court notes, for what it is worth, that the initial allegation of each cause of action is a standard
sentence alleging: “Each of the foregoing paragraphs are incorporated herein.”
6

The relevant South Carolina pleading rule (Rule 8(a), S.C. Rules of Civil Procedure), is identical
to the federal rule, elegant in its simplicity. It requires that a complaint contain “(2) a short and plain
statement of the claim showing the pleader is entitled to relief . . . .” This Rule is disregarded on a regular
basis in complaints filed in both federal and state courts in South Carolina.
7

As noted previously, the duty to defend is broader than the duty to indemnify. Accordingly, the
decision on the indemnification question is a closer call than the duty to defend question. Nevertheless, after
(continued...)

10

of Agape, and against Evanston in the sum of $5,750 representing defense costs, and $63,750
representing indemnity costs. Prejudgment interest will be added to these two awards.
A determination by this court that Evanston breached the contract in regard the Watts
litigation does not mean, necessarily, that Evanston acted in bad faith in doing so. In other
words, not every refusal to provide coverage results in a legitimate bad faith claim.
The court’s determination that Evanston breached the contract by refusing to continue
its representation in the Watts litigation was not an easy one. Indeed, this court had to labor
long and hard over the provisions of a poorly drafted complaint and, ultimately, sided with
the insured to find that coverage existed for the claims asserted in the Watts litigation.
Because the call was so difficult for this court, it naturally follows that Evanston cannot be
held to have acted in bad faith or unreasonably when it refused coverage. As noted earlier,
Evanston dutifully provided a defense to the Watts state court litigation while the declaratory
judgment action was pending in this court, and, also while this court’s decision was on
appeal. It was only after the Fourth Circuit Court of Appeals affirmed this court’s decision
that Evanston abandoned the Watts litigation.
In sum, the decision on whether the Watts Complaint triggered coverage was a close
question. Reasonable minds could disagree. This court has ultimately disagreed with
Evanston on the coverage question and this court’s ruling will make Agape whole. It does
not follow, however, that the court’s ultimate conclusion means that Evanston acted in bad

7

(...continued)
close examination of the claims asserted and applying traditional South Carolina contract law principles, the
court has determined that Evanston owed Agape both a defense to, and indemnification for, the Watts
litigation.

11

faith. There must be some cases where the coverage issue is so close that a bad faith cause
of action does not arise as a matter of law. Surely the law cannot provide that every time a
carrier improperly denies coverage, it is guilty of acting in bad faith. Some cases present
such a close call that a bad faith claim fails as a matter of law. This is such a case.
As Judge Henry M. Herlong of this District has noted, in order to sustain a bad faith
claim in an insurance setting, the insured must show “there was no reasonable basis to
support the insurer’s decision to deny coverage under a mutually binding insurance contract.”
CRC Scrap Metal Recycling, LLC v. Hartford Casualty Ins. Co., No. 7:12-CV-146-HMH,
2012 WL 4903661, at *7 (D.S.C. Oct. 15, 2012) (citing Dowling v. Home Buyers Warranty
Corp., 303 S.C. 295, 297, 400 S.E.2d 143, 144 (1991). Here, Evanston’s decision regarding
coverage was incorrect, but this court is not prepared to say there was no reasonable basis
for its decision.
Accordingly, the court will grant summary judgment to Evanston on the bad faith
claim arising out the Watts litigation.
B.

REMAINING BAD FAITH CLAIMS

Agape contends that other conduct by Evanston in related litigation, apart from the
Watts lawsuit, gives rise to additional claims for bad faith and unreasonable conduct by
Evanston. These claims may be divided into two discrete parts.
First, Agape claims that Evanston improperly and unnecessarily decided to change
defense firms in the middle of the prior claims litigation, thereby increasing defense costs and
eroding benefits available to Agape under the Policy. Second, Agape contends that

12

Evanston’s behavior in several mediation sessions was improper and should give rise to bad
faith claims as well. Because they are independent of each other, the court will address these
claims seriatim.
1. The Changing of Defense Firms
Initially, Evanston hired the Columbia, South Carolina law firm of Turner Padget
Graham and Laney (“Turner Padget”) to undertake the defense of all litigation arising out of
Addo’s impersonation of a physician. At some point, Evanston made the decision to
discharge Turner Padget from further representation and hire another firm, Smith Whitley,
in place of Turner Padget. Because the litigation had been pending for some time, it was
necessary for Smith Whitley to expend additional resources to become familiar with the files
in the cases and be brought “up to speed” on the status of the litigation. The parties appear
to agree that this expenditure of time by Smith Whitley resulted in $47,996 additional billing
against the Policy. Although the relevant policy language clearly provides that Evanston has
the authority to employ the attorneys it deems most appropriate, and thereby had the
contractual right to change law firms, Agape contends that the additional expenditure of
money required by the substitution of law firms damaged it in view of the fact that the Policy
in question is an “eroding” policy. In other words, defense costs are subtracted from the
policy limits, and it is possible that coverage could be exhausted sooner because of the
change in law firms, to the ultimate detriment of Agape, the insured.
In addition to arguing that it had the unilateral right to switch law firms, Evanston
points out that it has agreed to not charge the $47,996 (incurred by Smith Whitley to become

13

familiar with the lawsuit) against the policy limits. In response, Agape contends that this
decision was not made until after the present litigation was brought, and so, at the very least,
Agape should be entitled to recover attorneys’ fees involved in bringing this law suit which
served as a catalyst to the concession made by Evanston.
The court has determined that no ruling on this question is appropriate at the present
time. Both parties agree that the policy coverage has not, in fact, been exhausted. It is well
established that federal courts do not issue advisory opinions. Erwin Chemerinsky, Federal
Jurisdiction, 46 (7th Ed. 2016). At this point, there is no way to know if the Policy will, in
fact, be depleted. Accordingly, the more prudent course of action is for the court to dismiss
this claim without prejudice, to be reasserted, if necessary, if and when the Policy coverage
is exhausted.
2. Evanston’s Participation in Various Mediation Sessions
Agape contends that Evanston engaged in bad faith practices in connection with its
participation in state-ordered mediation on the underlying prior claims. More specifically,
Agape contends that the attorney sent on behalf of Evanston to participate in the mediation
sessions, Paul Fields, was “the lead attorney then suing [Agape] on the coverage issue.” It
is argued that Fields’ entire purpose of attending the mediation sessions was to “check the
box” for participation and to engage in what amounted to meaningless mediation. It is
argued that Fields’ attendance violated South Carolina Mediation Rule 6(b)(4), which
requires the physical presence of “a representative of the insurance carrier who is not the
carrier’s outside counsel and who has full authority to settle the claim.”

14

The mediation sessions at issue consisted of what the parties describe as a “marathon”
session involving five or six (the exact number is not clear) individual lawsuits. They were
apparently mediated back-to-back and spanned two full days. Significantly, notwithstanding
Mr. Fields’ participation and suspect motivation, one of the cases settled at the mediation.
On the record before it, this court is compelled to conclude that no bad faith claims
arise from the conduct of mediation, even if that conduct is taken in the light most favorable
to the nonmoving party.
Implicit in the criticism of attorney Fields’ attendance at the mediation session is the
insinuation that some other attorney, free of Fields’ conflict of interest, could have been sent
to the mediation. The problem with this argument is that any attorney employed by Evanston
and directed to attend the mediation on its behalf would have labored under exactly the same
conflict of interest as Fields. Evanston was, at the time, defending Agape under a reservation
of rights, while, at the same time, litigating with Agape over the coverage issue. Such a
course of action is not unusual when tort litigation is brought against an insured and a
coverage dispute arises.
In short, Evanston was acting within its rights at the time of the mediation session.
Had it sent another attorney from Mr. Fields’ firm, another attorney from another firm, or inhouse counsel, the attorney so chosen would have been in the same situation as Fields: In
a room attempting to mediate and settle a case while the attorneys’ employer (Evanston) was
in active litigation with the insured (Agape). If there is blame to be ascribed here, it is the
South Carolina mediation rule that compels a party to mediate while there is a coverage

15

question pending in parallel litigation.8 Moreover, as noted previously, one of the cases did
settle at mediation with Fields’ participation.
Finally, in order to assert a bad faith claim, the plaintiff must prove, among other
things, damages flowing from the conduct at issue. Advanced Pain Therapies, LLC, 2014
WL 4402800, at *2. In the case of misbehavior at mediation (in terms of sending the
“wrong” attorney), the plaintiff would have to prove that the conduct complained of served
to somehow torpedo an otherwise favorable settlement. Such a conclusion would almost, of
necessity, rest on speculation.
Agape does not direct the court to any South Carolina decision recognizing a claim
for bad faith stemming from conduct at a mediation session, and this court has found none.
In sum, this court is not inclined to give birth to a new cause of action for misconduct
in mediation when the South Carolina courts have not recognized such a cause of action;
when any other attorney sent by Evanston would have been equally objectionable; when the
empirical facts (i.e., one case did settle) demonstrate that Fields’ participation did not
necessarily hinder a settlement; and when damages, if any from the bad faith claim, would
be speculative in the extreme.
IV.

CONCLUSION
For the foregoing reasons, the court grants summary judgment to Agape on its claim

against Evanston for breach of contract for failure to defend the Watts lawsuit and failure to
indemnify the settlement paid in the Watts litigation (ECF No. 42). These claims, which
8

It is to prevent situations such as this that this court does not include a one-size-fits-all, “drop dead”
mediation deadline in its scheduling orders. Sometimes unique circumstances compel a more flexible date.

16

involve undisputed amounts, are for $5,750 and $63,750, respectively, and judgment shall
be entered by the Clerk in favor of Agape on these claims.
Because the claims are for a liquidated amount, the court will award prejudgment
interest at the South Carolina statutory rate (8%), pursuant to S.C. Code Ann. § 34-31-20
(West 2018). The parties are directed to confer in an attempt to calculate prejudgment
interest from the appropriate dates9 and report these calculations to the court within twentyone (21) days from the date of this Order. The Clerk shall defer entering judgment in this
case until the court issues a final order including the interest calculation.
Summary judgment is granted to Evanston on all remaining actions (ECF No. 49),
except for the bad faith claim relating to the change in law firms, which is dismissed without
prejudice. The other pending motions relating to discovery, expert testimony, and affidavits
are all dismissed as moot. See (ECF Nos. 50, 59, 71).
IT IS SO ORDERED.

January 19, 2018
Columbia, South Carolina

9

Joseph F. Anderson, Jr.
United States District Judge

The dates that prejudgment interest begin to run do not appear in the record.

17