Indemnity Insurance Company of North America v. WESTFIELD INSURANCE COMPANY and STAR INSURANCE COMPANY

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 21-1775, 21-1925 & 21-1926
INDEMNITY INSURANCE C OMPANY OF NORTH A MERICA ,
Plaintiff-Appellant, Cross-Appellee,
v.
WESTFIELD INSURANCE C OMPANY and STAR INSURANCE
C OMPANY,
Defendants-Appellees, Cross-Appellants.
____________________
Nos. 21-1776, 21-1927 & 21-1928
WESTFIELD INSURANCE C OMPANY and STAR INSURANCE
C OMPANY,
Plaintiffs-Appellees, Cross-Appellants,
v.
INDEMNITY INSURANCE C OMPANY OF NORTH A MERICA ,
Defendant-Appellant, Cross-Appellee.
____________________
Appeals from the United States District Court for the
Central District of Illinois.
Nos. 14-cv-03040 & 16-cv-03298 — Sue E. Myerscough, Judge.
____________________
A RGUED D ECEMBER 5, 2022 — D ECIDED J ANUARY 19, 2023
____________________

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2 Nos. 21-1775 et al.
Before BRENNAN, SCUDDER , and ST . EVE , Circuit Judges.
ST . EVE , Circuit Judge. Three insurance companies—In-
demnity Insurance Company of North America, Westfield In-
surance Company, and Star Insurance Company—dispute
their respective obligations to defend a swine farm in a state
court nuisance case. The underlying lawsuit has since con-
cluded with a verdict in favor of the swine farm, and now,
Westfield and Star seek reimbursement from Indemnity for
some or all of the costs that they incurred while defending the
farm during the litigation. To clarify Indemnity’s duty to
share in these defense costs, Indemnity and Westfield sepa-
rately filed declaratory judgment actions in federal court. Star
filed a counterclaim against Indemnity in Westfield’s action.
The cases were consolidated, and each insurer filed a motion
for summary judgment. The district court granted in part and
denied in part Westfield’s and Star’s motions and denied In-
demnity’s motion. For the following reasons, we reverse.
I. Background
A. Factual History
In 2007, Sandstone North, LLC and Sandstone South, LLC
(collectively, “Sandstone”) began operating large-scale swine
farms in Scott County, Illinois. One of the owners of Sand-
stone, Brian Bradshaw, also owned a business named Red
Oak Hills, LLC.
Indemnity, Westfield, and Star each provided commercial
general liability insurance to Sandstone at various times dur-
ing the disputed time period. Between April 2007 and No-
vember 2008, Westfield was the sole insurer of Sandstone.
Westfield’s policies were cancelled and replaced with policies
issued by Indemnity running from November 2008 to

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Nos. 21-1775 et al. 3
November 2009. Indemnity’s policies were renewed for an-
other year in November 2009. During the 2008–2009 time pe-
riod, Star provided commercial general liability insurance to
Red Oak Hills. Sandstone was named as an additional insured
under Star’s policy on August 2, 2009, thus providing cover-
age to Sandstone for losses due to the actions of Red Oak Hills
or someone acting on its behalf. Star renewed its policy with
Red Oak Hills for the 2009–2010 policy period.
In June 2010, certain of Sandstone’s neighbors in Scott
County—including Alvin F. Marsh, Beverly Marsh, and
Marsh Enterprises—brought private nuisance claims against
Sandstone in state court (“the Marsh action”). They alleged
that Sandstone negligently mismanaged its facilities by im-
properly handling hog waste, resulting in foul and offensive
odors and toxic gases. They further alleged that Sandstone
negligently allowed runoff of swine effluent, chemicals, anti-
biotics, and other hazardous substances to come onto their
properties and that Sandstone overused nearby roads, caus-
ing increased airborne dust.
On August 6, 2010, Sandstone sent letters to the three in-
surance companies informing them of the Marsh action. The
correspondence included forms titled “General Liability No-
tice of Occurrence/Claim” and copies of the original com-
plaint in the Marsh action. In the letter to Indemnity, Sand-
stone referenced the policies for both the 2008–2009 and 2009–
2010 policy periods.
Each of the insurers agreed to defend Sandstone in the
Marsh action subject to a reservation of rights. In its response
letters (one to Sandstone North and one to Sandstone South),
Indemnity informed Sandstone that its policies may not cover
the Marsh action based on a provision excluding coverage for

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4 Nos. 21-1775 et al.
“‘[b]odily injury’ or ‘property damage’ arising out of the ac-
tual, alleged or threatened discharge, dispersal, seepage, mi-
gration, release, or escape of ‘pollutants.’” Indemnity advised
Sandstone that it intended to file a declaratory judgment ac-
tion to have a court rule on the issue and that if it was “suc-
cessful with the Court declaring that there is no duty to de-
fend under the policy,” it would “seek reimbursement from
[Sandstone] for the defense costs and expenses incurred on
[its] behalf subject to this reservation of rights.” Significantly,
Indemnity’s response letters referenced only its 2008–2009
policy numbers and not its 2009–2010 policy numbers.
Just two weeks later, Indemnity filed a declaratory judg-
ment action in federal court, claiming that it had no duty to
defend Sandstone for several reasons, including that the
Marsh action was subject to its policies’ pollution exclusion.
Like its response letters, Indemnity’s complaint described
only its policies for the 2008–2009 period and not the 2009–
2010 period.
On November 2, 2010, Sandstone sent Indemnity a letter
withdrawing its tender of defense. It stated:
By this letter, Sandstone North [and] Sandstone South
… withdraw tender of their defense in the Underlying
Case to [Indemnity]. Although my Clients release [In-
demnity] from its obligation to provide a defense un-
der the Policies, they are not waiving any rights to in-
demnification under the Policies in relation to the Un-
derlying Case.
The withdrawal of the Clients’ tender of defense re-
solves all matters related to the Complaint for Declara-
tory Judgment, and we request that counsel for

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Nos. 21-1775 et al. 5
[Indemnity] in the declaratory judgment proceeding
provide us with a proposed agreed motion for dismis-
sal.
In the subject line of the letter, Sandstone listed only the
2008–2009 policy numbers.
Indemnity subsequently moved to dismiss its claim
without prejudice, and the district court granted the mo-
tion. Star and Westfield agreed to split the defense of Sand-
stone in the Marsh action.
In November 2013, an Illinois appellate court held that
odor claims involving a hog facility are not “traditional envi-
ronmental pollution” and are therefore not excluded under
insurance policy pollution exclusions. Country Mut. Ins. Co. v.
Hilltop View, LLC, 998 N.E.2d 950, 959 (Ill. App. Ct. 2013). This
decision foreclosed Indemnity’s earlier argument that its pol-
icies’ pollution exclusion provision excluded the Marsh action
from coverage. One month later, Sandstone sent Indemnity
two letters informing it of the Hilltop decision, updating the
insurer on the status of the Marsh action, and “request[ing]
that [Indemnity] agree to participate in the defense of its In-
sureds in [the Marsh action].” Both letters addressed only the
2008–2009 policies.
In response, Indemnity filed another declaratory judg-
ment action in federal court in February 2014. It sought a dec-
laration that it had no duty to defend Sandstone in the Marsh
action because (1) Sandstone withdrew its tender of defense
to Indemnity, and (2) Indemnity’s insurance was excess and
Star was obligated to provide primary coverage. Similar to its
2010 declaratory judgment suit, Indemnity’s original com-
plaint in the 2014 suit referenced only the 2008–2009 policies.

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6 Nos. 21-1775 et al.
The state court in the Marsh action authorized the plain-
tiffs to seek damages against Sandstone for injuries that oc-
curred up to and including November 15, 2013. Sandstone
subsequently sent another letter to Indemnity, tendering its
defense under its policies for the 2009–2010, 2010–2011, 2011–
2012, 2012–2013, and 2013–2014 policy periods. It again “re-
quest[ed] that [Indemnity] agree, in writing, to participate in
the defense of its Insureds in the underlying suit.”
Shortly after receiving this letter, Indemnity moved to
amend its complaint in the 2014 declaratory judgment action
to include all of its policies. The district court granted the mo-
tion, and Indemnity filed the amended complaint on April 24,
2014.
In May 2016, the Marsh action went to trial. The jury re-
turned a verdict in favor of Sandstone and against the Marsh
plaintiffs. Following the conclusion of the state court trial,
Westfield filed suit in federal court, seeking a declaratory
judgment that Indemnity was obligated to reimburse it for
some or all of the defense costs it paid in the Marsh action.
Star filed a counterclaim against Indemnity, also contending
that Indemnity owed it reimbursement for some or all of the
defense costs it paid.
B. Procedural History
The district court consolidated Indemnity’s and West-
field’s declaratory judgment actions for purposes of discovery
and the resolution of dispositive motions. The insurers sepa-
rately filed motions for summary judgment. In its motion, In-
demnity argued that it had no duty to defend Sandstone be-
cause (1) Sandstone deactivated Indemnity’s obligation to de-
fend in its November 2010 letter and (2) Indemnity’s policies

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Nos. 21-1775 et al. 7
were excess over Star’s, meaning that Indemnity had no duty
to defend Sandstone under its policies’ “other insurance” pro-
vision. Westfield and Star denied that either Sandstone or In-
demnity’s “other insurance” provision relieved Indemnity of
its duty to defend. On the second point, Westfield and Star
contended that Indemnity was estopped from asserting any
policy defenses because it breached its duty to defend under
the 2009–2010 policies.
The district court granted in part and denied in part West-
field’s and Star’s motions and denied Indemnity’s motion.
Although it found that Indemnity was not estopped from as-
serting its policy defenses to coverage, it concluded that the
“other insurance” provision did not relieve Indemnity of its
duty to defend Sandstone because the Marsh action included
losses that only Indemnity’s policy covered. Specifically, the
district court found that Indemnity “provided exclusive com-
mercial general liability coverage for losses [from November
2008 until August 2009]” and for losses stemming from “ac-
tions committed by Sandstone only, and not by Red Oaks
Hills or those acting on its behalf.” “Because the Underlying
Action Complaint alleged all these possibilities of covered
losses,” the district court concluded, “Indemnity had a duty
to defend Sandstone if Sandstone complied with the notice
provisions in the Indemnity Policies.”
The district court then turned to Indemnity’s contention
that Sandstone relieved it of any duty to defend in the No-
vember 2010 letter. The court first found that Sandstone’s let-
ter was a targeted tender under Illinois law, which recognizes
an insured’s “paramount right” to select certain insurers for
coverage when multiple policies cover the loss. Alcan United,
Inc. v. W. Bend Mut. Ins. Co., 707 N.E.2d 687, 692 (Ill. App. Ct.

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8 Nos. 21-1775 et al.
1999) (citation omitted). Nevertheless, the court concluded
that Indemnity had a duty to defend because Sandstone rea-
sonably “retendered … in light of the Hilltop View decision.”
The court rejected Indemnity’s argument that Sandstone’s de-
selection under the targeted tender doctrine was irrevocable.
Although no Illinois court had addressed the issue, the dis-
trict court concluded that the Illinois Supreme Court would
“decide that an insured should be able to change its position
and re-tender a defense to an insurer if the re-tender is rea-
sonable under the circumstances,” given its prior emphasis on
an insured’s right to choose its insurer. The district court
found that, under the circumstances, Sandstone’s retender
was reasonable, and therefore, Indemnity had a duty to de-
fend.
For these reasons, the district court held that “Indemnity
must pay a pro rata share of the defense costs for the Under-
lying Action under the Illinois doctrine of equitable contribu-
tion.” It concluded that Westfield and Star were also entitled
to “prejudgment interest accruing from December 17, 2013 on
all fees and costs paid by Westfield and Star prior to that date,
and prejudgment interest accruing from the dates Westfield
and Star paid additional defense costs and fees thereafter.”
The three insurance companies timely appealed the dis-
trict court’s decision.1 Indemnity argues that the district court
erred when it (1) found that the “other insurance” provision
1 The appeal numbers are as follows: No. 21-1775 (Indemnity appeal
of 2014 case); No. 21-1776 (Indemnity appeal of 2016 case); No. 21-1925
(Westfield appeal of 2014 case); No. 21-1926 (Star appeal of 2014 case); No.
21-1927 (Westfield appeal of 2016 case); and No. 21-1928 (Star appeal of
2016 case).

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Nos. 21-1775 et al. 9
did not apply and (2) determined that Sandstone could re-
tender its defense following its earlier withdrawal. Westfield
and Star contend that the district court wrongly rejected their
estoppel argument and that Indemnity owes them full repay-
ment for the Marsh action defense costs.
II. Analysis
This appeal concerns two issues. The first is whether the
“other insurance” provision in Indemnity’s policies relieves it
of any obligation to defend Sandstone in the Marsh action. As
part of this analysis, we must address Westfield’s and Star’s
contention that Indemnity is estopped from asserting this de-
fense because it breached its duty to defend under its 2009–
2010 policies. The second issue on appeal is whether Sand-
stone’s November 2, 2010, letter withdrawing its tender of de-
fense to Indemnity relieves Indemnity of its duty to defend
Sandstone in the Marsh action.
A. “Other Insurance” Provision
Each of Indemnity’s policies contains an “other insurance”
provision that reads as follows:
Other Insurance
If other valid and collectible insurance is available to
the insured for a loss we cover under Coverages A or
B of this Coverage Part, our obligations are limited as
follows:
a. Primary Insurance
This insurance is primary except when Paragraph b.
below applies. If this insurance is primary, our obliga-
tions are not affected unless any of the other insurance
is also primary. Then, we will share with all that other

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10 Nos. 21-1775 et al.
insurance by the method described in Paragraph c. be-
low.
b. Excess Insurance
(1) This insurance is excess over:
…
(b) Any other primary insurance available to
you covering liability for damages arising out of
the premises or operations, or the products and
completed operations, for which you have been
added as an additional insured by attachment of
an endorsement.
(2) When this insurance is excess, we will have no
duty under Coverages A or B to defend the insured
against any “suit” if any other insurer has a duty to
defend the insured against that “suit.” If no other
insurer defends, we will undertake to do so, but we
will be entitled to the insured’s rights against all of
those other insurers.
Indemnity contends that its insurance is excess over Star’s and
that under the terms of this provision, it has no obligation to
defend Sandstone in the Marsh action.
Star and Westfield each offer reasons that the “other insur-
ance” provision should not absolve Indemnity of its obliga-
tion to share the defense costs. They further contend that In-
demnity is estopped from asserting the defense because it did
not timely respond to Sandstone’s tender of defense with re-
spect to its 2009–2010 policies.

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Nos. 21-1775 et al. 11
1. Star’s Argument
Star begins by arguing that Indemnity’s “other insurance”
provision does not apply in this case. The provision applies
only “[i]f other valid and collectible insurance is available to
the insured for a loss [Indemnity] cover[ed].” Star argues that
this condition is not met here because the Marsh action in-
volved two categories of losses that were covered solely by
Indemnity’s policies. First, Indemnity’s policies provided ex-
clusive coverage to Sandstone between November 2008 and
August 2009—the period between the cancellation of West-
field’s policies and the addition of Sandstone on Red Oak
Hills’ policies. Second, because the Star policies covered only
losses involving the actions of Red Oak Hills, Indemnity pro-
vided sole coverage for injuries with no nexus to Red Oak
Hills during Indemnity’s policy terms.
Star’s argument is unavailing. As an initial matter, Star
misreads the language of the provision. The “other insur-
ance” provision does not require us to look for some abstract
loss that would be covered exclusively by Indemnity's policy.
What matters is whether there exists any loss in the Marsh ac-
tion that is covered under both insurers’ policies.2 And here,
Star admits that there is. Star concedes that “the allegations
[in the Marsh action] did not completely eliminate the poten-
tial that Red Oak may have had some involvement.”
2 We have not seen Illinois courts address excess versus primary in-
surance where an excess and a primary insurer have only partially con-
vergent coverage in both the time period and losses covered. So we as-
sume, but do not decide, that the rules apply the same both where the
insurer is fully excess and where the insurer is partially excess as to time
or coverage.

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12 Nos. 21-1775 et al.
Therefore, the injury alleged in the Marsh action constituted
a loss covered under both Star’s and Indemnity’s policies,
thereby triggering the “other insurance” provision.
Star attempts to circumvent its own admission by break-
ing the Marsh allegations into discrete parts—some that in-
volve Red Oak Hills, and so fall under both Indemnity’s and
Star’s policies, and some that are attributable solely to Sand-
stone, and so Indemnity alone must cover them. But such an
approach fails. The Marsh action alleged a single harm: a con-
tinuous nuisance spanning several years. And because the
Marsh plaintiffs did not prevail at trial, the jury did not make
any factual determinations regarding Red Oak Hills’ or Sand-
stone’s liability. We therefore do not know whether and for
what Star would have had to indemnify Sandstone had the
Marsh plaintiffs succeeded. See Sentinel Ins. Co. v. Walsh Con-
str. Co., 298 F. Supp. 3d 1165, 1170–71 (N.D. Ill. 2018) (citing
Travelers Ins. Co. v. Eljer Mfg., Inc., 757 N.E.2d 481, 492 (Ill.
2000)). Accordingly, we can look only to the face of the com-
plaint to determine Star’s potential liability. Because Star con-
cedes that, based on the complaint, its insurance covered a
loss that was also covered by Indemnity’s insurance, the
“other insurance” provision applies.
2. Westfield’s Arguments
Westfield argues that Indemnity cannot use its “other in-
surance” provision to deny Westfield contribution because
even if Indemnity’s policies are excess over Star’s, they are not
excess over Westfield’s. This argument, however, misunder-
stands the plain language of the “other insurance” provision.
By its express terms, the provision concerns an insurer’s obli-
gations to the insured, stating that “[w]hen this insurance is
excess, we will have no duty … to defend the insured against

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Nos. 21-1775 et al. 13
any ‘suit’ if any other insurer has a duty to defend the insured
against that ‘suit.’” It is thus irrelevant whether Indemnity’s
policies are excess over all other policies. As long as its insur-
ance is excess over any other policy, Indemnity does not have
a duty to defend Sandstone. And an insurer does not have a
duty to contribute to a defense if it does not have a duty to
defend. See Bituminous Cas. Corp. v. Royal Ins. Co. of Am., 704
N.E.2d 74, 79 (Ill. App. Ct. 1998) (“It is only when an insurer’s
policy is triggered that the insurer becomes liable for the de-
fense and indemnity costs of a claim and it becomes necessary
to allocate the loss among co-insurers.”).
Westfield also argues that Indemnity treats its policies as
if they were true excess policies when, in fact, they are only
excess by coincidence. But nowhere in its briefs does West-
field explain why this distinction matters, and the cases it cites
do not support its conclusion. In Kajima Construction Services,
Inc. v. St. Paul Fire & Marine Insurance Co., the Illinois Supreme
Court explained that true excess coverage “is purchased by
the insured in separate contracts that are written by design …
as excess coverage” and excess by coincidence coverage oc-
curs “when multiple primary insurance contracts apply to the
same loss.” 879 N.E.2d 305, 314 (Ill. 2007) (citations omitted).
This is all the court wrote about the difference between the
two kinds of policies. It said nothing to support Westfield’s
contention that a policy that is excess by coincidence cannot
be excess over one policy by being excess over another with
overlapping coverage. Id.
3. Estoppel
Both Star and Westfield argue that, in any event, Indem-
nity is estopped from raising a defense under its “other insur-
ance” provision. Illinois law treats an insurer’s duty to defend

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14 Nos. 21-1775 et al.
as so fundamental that an unreasonable delay in addressing
an insured’s notice of a claim is a breach of contract estopping
the insurer from asserting any policy defenses. See State Auto.
Mut. Ins. Co. v. Kingsport Dev., LLC, 846 N.E.2d 974, 987 (Ill.
App. Ct. 2006); Emps. Ins. of Wausau v. Ehlco Liquidating Trust,
708 N.E.2d 1122, 1134–1135 (Ill. 1999). “Where an insurer is
uncertain as to the extent its policy provides coverage, it has
two options.” Cent. Mut. Ins. Co. v. Kammerling, 571 N.E.2d
806, 809 (Ill. App. Ct. 1991). It can either “defend under a res-
ervation of rights” or “secure a declaratory judgment as to its
rights and obligations before trial or settlement of the under-
lying action.” Id.
Although Indemnity sent reservation of rights letters and
filed a declaratory judgment action after receiving Sand-
stone’s tender of defense, Westfield and Star contend that In-
demnity is estopped from asserting its “other insurance”
clause because Indemnity’s response focused on its 2008–2009
policies and did not address its 2009–2010 policies. Indemnity
does not dispute that it failed to refer to the 2009–2010 policies
in its reservation of rights letters and declaratory judgment
action. The first time it expressly addressed the 2009–2010
policies was three years and nine months after Sandstone ini-
tially notified it of the Marsh action. Indemnity nonetheless
argues that estoppel does not apply here because all the par-
ties understood its reservation of rights letters and declara-
tory judgment action as concerning all policies, despite the
lack of explicit reference to the 2009–2010 policies.
We agree with Indemnity. Because Indemnity’s policies
were identical, a single response would have been sufficient
to address a tender of defense under each of the policies. The
uncontested evidence demonstrates that the parties

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Nos. 21-1775 et al. 15
interpreted Indemnity’s reservation of rights letters and de-
claratory judgment action as a response under both the 2008–
2009 and 2009–2010 policies. Shortly after Indemnity filed the
declaratory judgment action, Sandstone sent Indemnity a let-
ter “withdraw[ing] tender of [its] defense” in the Marsh action
and “releas[ing] [Indemnity] from its obligation to provide a
defense under the Policies.” The letter stated that the “with-
drawal … resolve[d] all matters related to the Complaint for
Declaratory Judgment” and “request[ed] that counsel for [In-
demnity] … provide [Sandstone] with a proposed agreed mo-
tion for dismissal.” For three years after the dismissal of the
declaratory judgment action, Sandstone, Star, and Westfield
litigated the Marsh action without seeking involvement from
Indemnity. Sandstone did not ask Indemnity to provide a de-
fense under the 2009–2010 policies, and Westfield and Star did
not pursue Indemnity for any defense costs. Given these
unique circumstances, it is clear that the parties understood
Indemnity’s reservation of rights letters and declaratory judg-
ment action to refer to the identical 2008–2009 and 2009–2010
policies.3 We therefore find that Indemnity is not estopped
from asserting its “other insurance” provision defense.
3 The testimony that Star and Westfield cite is insufficient to create a
genuine dispute. During his deposition, Brian Bradshaw—owner of Sand-
stone and Red Oak Hills—testified that he understood Sandstone’s No-
vember 2010 letter to withdraw the tender of defense only under the 2008–
2009 policies and not the 2009–2010 policies. This unsupported testimony,
however, is inconsistent with all other evidence in the record and, without
more, is insufficient to defeat summary judgment. See Wheatley v. Factory
Card & Party Outlet, 826 F.3d 412, 420 (7th Cir. 2016) (holding that the
plaintiff’s unsupported testimony, alone, was insufficient to avoid sum-
mary judgment).

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16 Nos. 21-1775 et al.
B. The Targeted Tender Doctrine
The second issue on appeal is whether Sandstone’s letter
withdrawing its tender of defense to Indemnity relieves In-
demnity of its duty to defend Sandstone in the Marsh action.
This question involves numerous sub-issues, many of which
are unsettled under Illinois law. Indeed, we were unable to
find any Illinois state court cases addressing whether an in-
sured can retender its defense following a deselection and in
what circumstances an insured may do so. Illinois appellate
courts are also in disagreement over whether the targeted ten-
der doctrine applies to cases like this at all—namely those in-
volving consecutive, rather than concurrent, insurance poli-
cies. Compare Ill. School Dist. Agency v. St. Charles Comm. Unit
Sch. Dist. 303, 971 N.E.2d 1099, 1108 (Ill. App. Ct. 2012), and
Greenwich Ins. Co. v. John Sexton Sand & Gravel Corp., No. 1-15-
1606, 2016 WL 4035709, at *13 (Ill. App. Ct. Jun. 24, 2016), with
Richard Marker Assocs. v. Pekin Ins. Co., 743 N.E.2d 1078, 1078
(Ill. App. Ct. 2001). We need not address these unresolved is-
sues of state law, however, because we find that Indemnity’s
“other insurance” provision relieves it of any duty to defend
Sandstone. We therefore reverse on that ground alone.
III. Conclusion
Because its insurance is excess over Star’s and Star has a
duty to defend, Indemnity’s “other insurance” provision re-
lieves it of any duty to defend Sandstone in the Marsh action.
Indemnity is not estopped from asserting this defense be-
cause it promptly responded to Sandstone’s tender of defense
with reservation of rights letters and a declaratory judgment
action. The decision of the district court is therefore
REVERSED.

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