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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 16-1205

TELAMON CORPORATION,

Plaintiff-Appellant,

v.

CHARTER OAK FIRE INSURANCE COMPANY and

ST. PAUL FIRE AND MARINE INSURANCE COMPANY,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:15-cv-01446-RLY-DML

Richard L. Young, Judge.

____________________

No. 16-1815

TELAMON CORPORATION,

Plaintiff-Appellant,

v.

CHARTER OAK FIRE INSURANCE COMPANY AND

TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA,

Defendants-Appellees.

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
2 Nos. 16-1205 & 16-1815

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:13-cv-00382-RLY-DML

Richard L. Young, Judge.

___________________

ARGUED SEPTEMBER 29, 2016 — DECIDED MARCH 9, 2017

____________________

Before WOOD, Chief Judge, and RIPPLE and WILLIAMS, Circuit Judges.

WOOD, Chief Judge. Underlying this insurance dispute is a 

regrettably common tale of greed and dishonesty. Telamon, 

an Indiana telecommunications firm, engaged Juanita Berry 

to work for it from 2005 to 2011 as its Vice President of Major 

Accounts. Berry used that position to steal over $5 million 

from the firm. Upon discovering this loss, Telamon then 

turned to two insurance policies in an effort to recover its 

money: a crime insurance policy with Travelers Casualty & 

Surety (Travelers), and a commercial property policy with 

Charter Oak Fire Insurance (Charter Oak). At that point, Telamon crashed into a brick wall. Travelers denied coverage because Berry was not, legally speaking, an employee. And 

Charter Oak refused to pay because, in practice, she was. 

Telamon cried foul and filed a lawsuit in which it argued 

that Berry’s actions were covered under both policies and that 

the insurers had breached their duty of good faith. At the eleventh hour, it tried to add St. Paul Fire and Marine Insurance

(St. Paul) as a defendant. The court rejected the amendment, 

at which point Telamon filed a new action against St. Paul and 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
Nos. 16-1205 & 16-1815 3

Charter Oak. That case promptly found its way back to the 

same court and was dismissed as an impermissible effort to 

split the claim. Telamon appealed (case 16-1205). Later the 

court granted summary judgment in favor of the defendants

in the original case. Again, Telamon appealed (case 16-1815). 

We consolidated the appeals for disposition. Finding no error 

in either of the district court’s decisions, we affirm. 

I

We refer to the original suit against Charter Oak and Travelers as Telamon I, and the suit against Charter Oak and St. 

Paul as Telamon II. The critical background facts are the same 

for both cases. 

Berry worked for Telamon from 2005 to 2011. Her employment was governed by a series of Consulting Services Agreements (Agreements) between Telamon and J. Starr Communications, Berry’s one-woman company through which she provided her services. The terms of the Agreements remained 

largely unchanged during Berry’s six-year association with 

Telamon. Her role, however, did not. Berry’s responsibilities 

expanded well beyond those described in the Agreements, 

and she eventually became Telamon’s Vice President of Major

Accounts, making her the company’s senior manager in the 

New York and New Jersey region. In this capacity she oversaw Telamon’s AT&T Asset Recovery Program, which was 

supposed to remove old telecommunications equipment from

AT&T sites and sell it to salvagers. Berry removed the equipment and sold it, but she pocketed the profits. By the time the 

company realized something was amiss in 2011, it had suffered $5.2 million in losses. Telamon fired Berry and she was

later convicted in the District of New Jersey on federal charges 

of wire fraud and tax evasion; she was sentenced to 60 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
4 Nos. 16-1205 & 16-1815

months’ imprisonment and was assessed $3,440,885 in restitution payable to Telamon.

Berry’s misdeeds left Telamon with the problem of recouping its losses. Undoubtedly dubious that it would ever 

see much of the required restitution, it turned to two insurance policies for that purpose: its crime insurance policy with 

Travelers and its general commercial insurance policy with 

Charter Oak. These two insurers are subsidiaries of a larger 

Travelers entity, and so Telamon asked them to work together 

to avoid duplicative claims investigations. They obliged, but

in late 2012 they each gave Telamon the disappointing news 

that they were denying coverage. Telamon fought back by filing Telamon I, which started out in Indiana state court and 

landed in the federal court via removal. Telamon asserted that 

its loss was covered under both policies and that the insurers 

had acted in bad faith (a tort under Indiana law). The district 

court granted summary judgment for the insurers on the coverage issues in December of 2015, and dismissed the remaining bad faith claims the following April. 

Meanwhile, in June 2014, Telamon sought permission to 

amend its complaint in Telamon I to add another set of claims 

based on older policies issued by St. Paul and Charter Oak. 

Because this request came almost a year after the deadline for 

amending pleadings had expired, the court said no. At that 

point, Telamon filed Telamon II in Indiana state court, raising 

essentially the same claims. The insurers again removed, and 

in January 2016, the district court dismissed the suit as an impermissible attempt to split claims. 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
Nos. 16-1205 & 16-1815 5

II

As these cases rest on diversity jurisdiction, we resolve 

Telamon’s claims under Indiana law. See Native Am. Arts, Inc. 

v. Hartford Cas. Ins. Co., 435 F.3d 729, 731 (7th Cir. 2006). Indiana courts interpret insurance policies under “the same rules 

of construction as other contracts,” taking “the perspective of 

an ordinary policyholder of average intelligence.” Bradshaw v. 

Chandler, 916 N.E.2d 163, 166 (Ind. 2009). An insured has the 

burden of proving the existence of coverage, while the insurer 

must show that an exclusion applies. Nat'l Fire & Cas. Co. v. 

W. By & Through Norris, 107 F.3d 531, 535 (7th Cir. 1997); Home 

Fed. Sav. Bank v. Ticor Title Ins. Co., 695 F.3d 725, 732 (7th Cir. 

2012).

The analysis of an insurance policy proceeds in two steps.

First, the court examines whether the terms of a policy are unambiguous. If they are, then the court adopts the ordinary 

meaning of the words. Beam v. Wausau Ins. Co., 765 N.E.2d 524, 

528 (Ind. 2002); Allgood v. Meridian Sec. Ins. Co., 836 N.E.2d 243, 

246–47 (Ind. 2005) (referring to the dictionary). If there is ambiguity, the court advances to the second step, where it construes any ambiguity strictly against the insurer and in favor 

of coverage. Bradshaw, 916 N.E.2d at 166. A policy is ambiguous if “reasonable people would differ as to its meaning.” Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d 1171, 1176 (Ind. 2014). 

A

The Travelers policy at issue covers theft by “an Employee.” It defines “an Employee” to include “any natural 

person ... who is leased to the Insured under a written agreement between the Insured and a labor leasing firm, while that 

person is subject to the Insured’s direction and control and 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
6 Nos. 16-1205 & 16-1815

performing services for the Insured.” Berry is a natural person, and there was a written agreement between Telamon and 

J. Starr. To prevail, Telamon must show both that J. Starr was 

a “labor leasing firm” and that Berry was “subject to [Telamon’s] direction and control.” Failure to prove either of these 

is enough to defeat its claim.

Telamon argues that the plain meaning of a “labor leasing 

firm” is a company “in the business of placing its employees 

at client companies for varying lengths of time in exchange 

for a fee.” Pac. Emp’rs Ins. Co. v. Wausau Bus. Ins. Co., 2007 WL 

2900452, at *8 (M.D. Fla. Oct. 15, 2007); see also Scottsdale Ins. 

Co. v. Torres, 561 F.3d 74, 76, 78 (1st Cir. 2009) (adopting a similar interpretation). In other words, a “labor leasing firm” is a 

business concern that sells another person’s work for a specified time and for a specified fee. 

We will accept that definition for purposes of this opinion. 

Yet even so, we cannot conclude that J. Starr meets it. It is true 

that the Agreements were contracts between Telamon and J. 

Starr under which the former obtained the right to Berry’s labor. But J. Starr was not a firm in the business of leasing labor;

it was just Berry’s vehicle for providing her own services. To 

classify her corporate alter ego as a “labor leasing firm” would 

be to elevate form over substance. The cases Telamon cites to

support its position underscore our point. The “labor leasing 

firm” in Pacific Employers had multiple branches and specialized “in providing industrial clients with daily workers.” 

2007 WL 2900452, at *1–2. Similarly, the firm in Torres “hire[d] 

individuals and place[d] them with client companies for varying lengths of time,” including at least six with the company 

litigating its insurance coverage. 561 F.3d at 75–76. There is no 

way to squeeze J. Starr into the same box. Berry’s company 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
Nos. 16-1205 & 16-1815 7

was a legal convenience, and nothing more. Because it was not 

a “labor leasing firm,” she was not an “Employee” for purposes of the Travelers policy.

B

Telamon also claims that Berry’s theft is covered by its 

Charter Oak commercial property policy. That policy covers 

risks of direct physical loss, unless one of its exclusions applies. We can assume that Telamon suffered a loss covered by 

the policy. We thus turn to the exclusions, and in particular to 

the exclusion for any “[d]ishonest or criminal act by ... employees (including leased employees), directors, trustees, authorized representatives or anyone (other than a carrier for hire 

or bailee) to whom you entrust the property for any purpose.” (Emphasis added.) The parties agree that Berry committed a “dishonest or criminal act.” What they dispute is whether she falls 

into one of the specified personnel categories. If so, the exclusion applies, and coverage was properly denied.

We consider first whether Berry was an “authorized representative” of Telamon. Courts that have looked at this term 

in other cases dealing with the same policy language have 

concluded that it is unambiguous. See Stop & Shop Cos., Inc. v. 

Fed. Ins. Co., 136 F.3d 71, 75–76 (1st Cir. 1998); Stanford Univ. 

Hosp. v. Fed. Ins. Co., 174 F.3d 1077, 1085–86 (9th Cir. 1999) (interpreting same policy as Stop & Shop). We agree with them, 

and since Indiana has no case on point, we adopt Stop & Shop’s 

definition of “authorized representative” as “a person or company empowered to act on an entity’s behalf.” 136 F.3d at 74. 

This describes Berry’s relationship with Telamon well. Telamon authorized her to act on its behalf. She was its most senCase: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
8 Nos. 16-1205 & 16-1815

ior person in New York and New Jersey, and she had operational oversight over the company’s facilities in that area. She 

hired and fired employees, ran meetings, and signed contracts 

on Telamon’s behalf. Indeed, she was engaged in large part to 

be an “authorized representative.” Telamon arranged for her 

services in order to take advantage of her relationship with 

AT&T, one of its largest customers. Even Berry’s title, Vice 

President of Major Accounts, reflects this role: AT&T was a

“major account,” and she was in charge of managing it.

Telamon resists this conclusion. In its view, unless Berry 

was authorized to do the specific activity that gave rise to the 

theft, she was not an “authorized representative.” And since 

the Agreements did not expressly mention making contracts 

to sell equipment, it reasons that Berry lacked the requisite 

authorization. This view requires us to ignore reality. Even 

Telamon concedes that Berry’s actual role grew over time to 

reach matters far beyond the Agreements’ terms. It did not 

expect slavish adherence to the list of responsibilities in the 

Agreements, and so neither should we. Such an approach is 

inconsistent with the breadth of the list of exclusions. Moreover, even using the narrow definition of duties that Telamon 

prefers, it cannot prevail. Berry was spearheading the AT&T 

equipment removal program and was thus authorized to conduct the very activity that led to her crime. This also made her 

a person to whom Telamon “entrust[ed] the property for any 

purpose,” since she was entrusted with the equipment she 

stole. An ordinary reader would understand that Berry fell 

within the exclusion, and thus that the Charter Oak policy did 

not cover the losses for which she was responsible. 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
Nos. 16-1205 & 16-1815 9

III

We turn now to Telamon’s assertion that both insurers 

breached their duty of good faith, which is a standalone tort 

in Indiana. Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 

518–20 (Ind. 1993); Monroe Guar. Ins. Co. v. Magwerks Corp., 829 

N.E.2d 968, 975–76 (Ind. 2005). There are four well-established 

grounds for such a claim. Hickman, 622 N.E.2d at 519; Magwerks, 829 N.E.2d at 976. Telamon concedes that none of them 

applies to its case. It argues instead that the plaintiff should 

never have to establish the insurer’s ill will and that there 

should be a fifth ground for the tort—bad faith in handling an 

insurance claim—even though it knows that this court has no 

power to change Indiana law. Telamon predicts that Indiana’s 

courts are on the cusp of taking this step, however, and so it 

asks us to certify this case to the Supreme Court of Indiana. 

Certification to Indiana’s highest court is available if there 

is “an issue of state law that is determinative of the case and 

on which there is no clear controlling Indiana precedent.” Ind. 

R. App. P. 64. Although we have the authority to certify questions when we conclude that the state-law issue “will control 

the outcome of a case pending in the federal court,” Cir. R.

52(a), we do not take this step lightly. Telamon has not persuaded us that we should exercise our discretion here to do 

so. The principal cases on which it relied, Hickman and Magwerks, did leave open the possibility of expanding the grounds 

that would support the tort of an insurer’s breach of the duty 

of good faith. Hickman, 622 N.E.2d at 519; Magwerks, 829 

N.E.2d at 976. But it has been over 20 years since Hickman and 

over 10 since Magwerks, and the list has not expanded. We see 

no reason to ignore the Indiana Supreme Court’s apparent 

satisfaction with the status quo, especially given the fact that

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
10 Nos. 16-1205 & 16-1815

Magwerks explicitly refused to recognize the claim-handling 

ground for which Telamon advocates here. 829 N.E.2d at 976.

Against all this, Telamon points to two cases from the Indiana Court of Appeals: HemoCleanse, Inc. v. Phila. Indem. Ins.

Co., 831 N.E.2d 259 (Ind. Ct. App. 2005), and Klepper v. ACE 

Am. Ins. Co., 999 N.E.2d 86 (Ind. Ct. App. 2013). Neither one 

persuades us that Indiana’s courts have already taken the step 

for which Telamon argues, or that they are on the brink of doing so. A footnote in HemoCleanse cites Magwerks in support of 

an offhand remark that “an insurer may exhibit bad faith in, 

for example, its handling of the claim ... .” 831 N.E.2d at 264 

n.2. Yet that statement is incorrect—Magwerks expressly rejected that argument. Klepper is similarly unhelpful. After noting that Magwerks refused to recognize a claims-handling theory, the court again declined to do so in Klepper. See 999 

N.E.2d at 98 & n.11. In the 23 years since Hickman, no Indiana 

court has embraced Telamon’s theory. We certify questions 

only when the answer is unclear. That is not the case here.

Without a new exception, Telamon cannot succeed under 

this theory. We thus have no need to address its argument that 

its bad-faith claim does not require proof of ill will, or at least 

that Indiana law is unsettled on the point. We will comment 

only that this too looks like an uphill battle, in light of the observation in Magwerks that “[a]s a general proposition, a finding of bad faith requires evidence of a state of mind reflecting 

dishonest purpose, moral obliquity, furtive design, or ill will.” 

829 N.E.2d at 977 (internal quotation marks and alterations 

omitted). Nor does it matter whether, as Telamon argues, its 

evidence would permit a finding of ill will. Telamon finds it 

suspicious that Travelers determined in May 2012 that its loss 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
Nos. 16-1205 & 16-1815 11

was not covered, but it did not share its decision until November 29, 2012, by which time it was too late to sue under the 

policy. Telamon also sees ill will in the decision to delay disclosure until after the Travelers adjuster spoke to his Charter 

Oak counterpart (recall they are part of the same corporate 

entity). Even viewed in isolation, we doubt this is a sufficient 

showing of ill will. But it does not stand alone. Telamon omits 

the obvious explanation for the delay and communication: It 

asked the insurers to coordinate their investigations. No rational finder of fact could find bad faith on such a flimsy basis.

IV

The final question is whether the district court erred in dismissing Telamon II. The court rested this finding on claim preclusion principles. In deciding the preclusive effect of a federal-court judgment in a diversity case, the Supreme Court 

has adopted a two-part procedure. In principle, the effect to 

be given any federal judgment is a question of federal common law. See Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 

497, 508 (2001). But when the earlier judgment rested on diversity (or another area where state law furnishes the rule of 

decision), “the federal court should ... adopt as the federal 

common law rule of res judicata the rule of the state in which 

the court is located.” Allan Block Corp. v. Cnty. Materials Corp., 

512 F.3d 912, 915 (7th Cir. 2008). Since nothing that justifies 

departing from the general rule comes to mind, we thus look 

to Indiana law to see what effect we should give to Telamon I. 

Indiana bars parties from “split[ting] a cause of action, 

pursuing it in a piecemeal fashion and subjecting a defendant 

to needless multiple suits.” Hilliard v. Jacobs, 957 N.E.2d 1043, 

1048 (Ind. Ct. App. 2011) (citation omitted). Instead, “[m]ultiCase: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
12 Nos. 16-1205 & 16-1815

ple legal theories supporting relief on account of one transaction must be litigated at one go.” Erie Ins. Co. v. George, 681 

N.E.2d 183, 190 (Ind. 1997) (citation omitted). Hilliard is especially relevant, because it concerned insurance coverage. As in 

our case, the trial court rebuffed the plaintiff’s attempt to add 

more claims to her complaint, and the plaintiff later filed a 

new suit “asserting previously-stricken claims based on the 

same facts and transaction as the first lawsuit.” 957 N.E.2d at

1045. The Indiana Court of Appeals found that the second suit 

was barred by Indiana’s rule against claim splitting, because 

although “the legal theories advanced have changed, the facts 

being litigated and the ultimate goal have remained exactly 

the same.” Id. at 1048.

So too here. The claims in Telamon II are nearly identical to 

those the district court refused to permit Telamon to add to its 

complaint in Telamon I. That ruling was well within the district 

court’s discretion, and in any event is not challenged here. 

That was a wise decision: Telamon missed the deadline to 

amend by nearly a year. At this point, however, the reason 

why the new claims were not advanced in the earlier case has 

fallen by the wayside. Under Indiana law, Telamon was not at 

liberty to split its cause of action and subject the insurers to 

repetitious lawsuits. A quick look at the policies at issue in 

Telamon II reveals that they are materially indistinguishable 

from those in Telamon I, and they were being invoked to cover 

the same loss. The district court was thus correct to invoke the 

bar against claim splitting. 

V

Berry’s theft was not covered under either the Travelers or 

the Charter Oak policy. In addition, Telamon has not stated a 

claim for a breach of the duty of good faith. Finally, it was not 

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13
Nos. 16-1205 & 16-1815 13

entitled to bring a new lawsuit that did no more than add a 

few additional insurers and policies to its basic case. The judgments of the district court are AFFIRMED.

Case: 16-1205 Document: 48 Filed: 03/09/2017 Pages: 13