Allied World Surplus Lines Insurance Company et al v. Blue Cross and Blue Shield of South Carolina

Filing 30

ORDER AND OPINION DENYING 29 Plaintiffs' Motion for Reconsideration of the Court's order of August 1, 2017 Signed by Honorable Richard M Gergel on 8/23/2017.(sshe, )

IN THE UNITED STATES DISTRICT CO-roR'fflVFD CLERK'S OFFICE
DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
ZOil AUG 2Lt I A 7: 41

Allied World Surplus Lines Insurance
Company,formerly known as Darwin
Select Insurance Company and Allied
World Specialty Insurance Company,
formerly known as Darwin National
Assurance Company,
Plaintiffs,

v.
Blue Cross and Blue Shield of South
Carolina,
Defendant.

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ORDER AND OPINION

This matter is before the Court on Plaintiffs' motion for reconsideration of the Court's
order of August 1, 2017, which dismissed this action without prejudice. For the reasons set forth
below, the Court denies the motion.
I.

Background

Allied World seeks a declaratory judgment under the Federal Declaratory Judgment Act of
its obligations under policies of errors and omissions liability insurance and directors and officers
liability insurance sold to BCBS for underlying civil actions against BCBS, the Blue Cross Blue
Shield Association, and other Blue Plans. (Dkt. No. 1 118-9.) .
The insurance policies have an Alternative Dispute Resolution ("ADR") prov1S1on,
requiring the parties to arbitrate or to mediate "all disputes which may arise under or in connection
with this Policy," and allowing the parties to choose between arbitration and mediation. (Dkt. No.
5-4 at 23-24 (ADR requirement in errors and omissions policy); Dkt. No. 5-5 at 11-12 (ADR
requirement in directors and officers policy).) Where mediation occurs, the ADR requirement

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provides that no judicial proceeding shall be commenced until at least 120 days has elapsed since
the termination of mediation. The parties have engaged in mediation before retired Judge Layn R.
Phillips, but the parties dispute whether that mediation has satisfied the ADR provision.
BCBS moved to stay or to dismiss this action, arguing Allied World has not satisfied the
ADR requirement. After ordering supplemental briefing, the Court granted BCBS's motion and
dismissed the complaint without prejudice, ruling that where a mediation condition precedent to
litigation has not yet been satisfied but may be satisfied in the future the merits of the underlying
claim are not ripe for judicial review and that Allied World did not satisfy the criteria for
termination of mediation set forth in the Mediation Procedures of the American Arbitration
Association. On August 16, 2017, Allied World moved for reconsideration, arguing that the
mediation sessions the Court found had not terminated "are wholly unrelated to the coverage
dispute in this case."
II.

Legal Standard

In this Circuit, motions to reconsider are granted under a narrow set of circumstances: "(1)
to accommodate an intervening change in controlling law; (2) to account for new evidence not
available at trial; or (3) to correct a clear error of law or prevent manifest injustice." Hill v.
Braxton, 277 F.3d 701, 708 (4th Cir. 2002).

III.

Discussion

Plaintiffs' motion is without merit. If, as Plaintiffs claim, mediation regarding coverage
terminated nearly a year ago, it should be a simple matter to have the mediator say as much.
Plaintiffs could then proceed with litigation. But instead of asking the mediator to state that
mediation has ended, Plaintiffs ask this Court to inquire into the substance of the mediation
sessions and mediation communications in order to determine independently that mediation has
ended. Plaintiffs argue that the last relevant mediation session occurred in September 2016 and
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that no communications between the mediator and any party regarding coverage have occurred
since then. Defendants deny that. Plaintiffs therefore apparently would have the Court undertake
an evidentiary hearing, receiving testimony about the substance of matters discussed during
mediation of a dispute, which is presently ongoing and which may be the subject of future
litigation. Such a hearing would contradict the Federal Rules of Evidence and the local rules of
this Court regarding mediation sessions. See Fed. R. Evid. 408; Local Civil Rule 16.08(C) DSC.
Local Civil Rule 16.08(C) provides,
Communications during the mediation conferences shall be confidential. The
parties, their attorneys, and other persons present shall maintain the confidentiality
of the mediation and shall not rely on, introduce, or attempt to introduce as evidence
in any arbitral, judicial, or other proceeding, any event, document, or
communication relating in any way to the mediation.
The local rule technically governs only court-ordered mediation but this Court sees no reason why
it should direct litigants to violate the rule as to mediation that is an agreed condition precedent to
litigation in this Court. Thus, the Court in the order of August 1, 2017 stated, "this Court will not
inquire into the substance of the mediation sessions."

(Dkt. No. 27 at 6.)

In moving for

reconsideration of that ruling, Allied World fails to explain how it is "clear error" or "manifest
injustice" for this Court to decline to breach the traditional confidentiality of mediation and instead
leave it for the mediator to declare that mediation has ended. The Court therefore denies the motion
for reconsideration.

IV.

Conclusion
For the foregoing reasons, the Court DENIES Plaintiffs' motion for reconsideration.

AND IT IS SO ORDERED.

United States District Court Judge
August l..l, 2017
Charleston, South Carolina

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