A federal district court in South Carolina held that an insurer's less than vigorous participation in mediation did not constitute bad faith. Agape Senior Primary Care, Inc. v. Evanston Ins. Co., 2018 WL 490386 (D. S.C. Jan. 19, 2018).

An insurer was held to have breached its contract by refusing to continue to defend an underlying lawsuit and in refusing to indemnify the insured for a settlement that the insured paid. The insured asserted bad-faith claims against the insurer based on the insurer's refusal to defend and indemnify as well as the insurer's participation in mediation.

Regarding the insured's contention that the insurer's refusal to defend and indemnify the insureds constituted bad faith, the court determined that coverage was a close call, and that because the call on coverage was so difficult for this court, it naturally follows that the insurer cannot be held to have acted in bad faith or unreasonably when it refused coverage.

As to the bad-faith mediation claim, the insured argued that the insurer's participation in the mediation rendered the mediation "meaningless," particularly since the attorney sent on behalf of the insurer was the lead attorney then suing the insured on the coverage issue. The court refused to, in its words:

[G]ive 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 [the insurer] would have been equally objectionable; when the empirical facts (i.e., one case did settle) demonstrate that [the attorney's] participation did not necessarily hinder a settlement; and when damages, if any from the bad faith claim, would be speculative in the extreme.

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