In the 

United States Court of Appeals 

For the Seventh Circuit ____________________

No. 18‐2205

LANDMARK AMERICAN INSURANCE COMPANY,

Plaintiff‐Appellee,

v.

DEERFIELD CONSTRUCTION, INC., and SHAWN GRAFF,

Defendants/Third Party Plaintiffs‐Appellants,

v.

ARTHUR J. GALLAGHER RISK MANAGEMENT SERVICES, INC.

Third Party Defendant‐Appellee.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 15 C 1785 — Rubén Castillo, Judge.

____________________

ARGUED MAY 28, 2019 — DECIDED AUGUST 12, 2019

____________________

Before WOOD, Chief Judge, and BAUER and EASTERBROOK,

Circuit Judges.

WOOD, Chief Judge. The question in this case is a simple

one: who must cover certain costs arising from an automobile
2 No. 18‐2205

accident involving an employee of Deerfield Construction,

Inc.: Deerfield, or its excess insurer, Landmark American In‐

surance Company? Deerfield’s primary insurer was on the

hook for the first $1 million, and in principle, Landmark

would cover any costs above that, up to $10 million. But Land‐

mark’s policy unsurprisingly made coverage contingent on

proper notice of the accident. Deerfield did not tell Landmark

anything about either the accident or the resulting lawsuit un‐

til seven years later, on the eve of trial. When the jury returned

a $2 million verdict in favor of the accident victim, Landmark

refused to cover the excess amount because it received such

late notice. Deerfield now asserts that its notice, despite the

timing, satisfied the policy. The district court found that the

undisputed facts entitled Landmark to summary judgment; it

dismissed all other parties. We affirm.

I

In reviewing a grant of either summary judgment or a mo‐

tion to dismiss, we view the facts in the light most favorable

to the nonmovant. We accept well pleaded factual allegations

as true in the case of a motion to dismiss, and for summary

judgment, we resolve factual disputes and draw reasonable

inferences in the nonmovant’s favor. See United States ex rel.

Berkowitz v. Automation Aids, Inc., 896 F.3d 834, 839 (7th Cir.

2018) (stating the standard for a motion to dismiss under Fed‐

eral Rule of Civil Procedure 12(b)(6)); Palmer v. Franz, 928 F.3d

560, 563 (7th Cir. 2019) (stating the standard for resolving a

motion for summary judgment). The following account of the

events in this case should be understood with that perspective

in mind.  

Deerfield Construction is a company specializing in con‐

struction projects for the telecommunications industry.
No. 18‐2205 3

Shawn Graff  is one of its employees. On January 16, 2008,

Graff  got into an automobile accident with Ryan Keeping.

That accident has to date spawned 11 years of litigation.  

Deerfield had a primary commercial automobile insur‐

ance policy through American States Insurance Company;

that policy covered it for up to $1 million in liability. It pro‐

cured the American States policy through its broker, Arthur J.

Gallagher Risk Management Services, Inc. (“Gallagher”). Gal‐

lagher also helped Deerfield obtain an excess insurance policy

from Landmark. That policy would kick in only after Deer‐

field’s liability exceeded $1 million; it covered loss up to $10

million.  

After Graff’s accident, Deerfield promptly informed

American States and Gallagher of the occurrence. It did so

through the offices of an intermediary company, Laurus Strat‐

egies. This was not its only business contact with Laurus.

Laurus often answered insurance‐related questions that arose

for Deerfield. No one, however, said anything about the Graff 

accident to Landmark—not Deerfield, not American States,

not Gallagher, and not Laurus—and the silence continued

even after Keeping filed a lawsuit against Graff and Deerfield.

The Keeping lawsuit proceeded apace. Pursuant to the

American States primary policy, American States assumed

the defense of the suit and hired David Olmstead, who

worked forthe Law Offices of Meachum, Starck, Boyle & Traf‐

man (“the Law Offices”), to represent Deerfield’s interests.

Even then, neither American States nor Olmstead informed

Landmark about the ongoing litigation.

Perhaps showing a gambler’s spirit, American States re‐

lied entirely on its own evaluation of Keeping’s lawsuit,
4 No. 18‐2205

which it thought lacked any merit. Throughout five years of

pre‐trial proceedings, it never offered the full $1 million value

of the policy to settle the suit. Indeed, it was not until the trial

was almost over and jury deliberations began that it even

came close. But American States and Olmstead were aware

that Keeping valued his lawsuit much more highly than they

did. In April 2013, more than a year before trial, Keeping

made a $1.25 million demand to settle the lawsuit. This de‐

mand was high enough to trigger Deerfield’s excess insurance

coverage, but still no one notified Landmark about the pend‐

ing case. Instead, American States counteroffered with

$75,000.

On December 5, 2014, about six weeks before trial, Land‐

mark finally found out about Keeping’s lawsuit—not from

American States or Deerfield, but from Gallagher. Landmark

was nonplussed. It issued a reservation of rights letter to Gal‐

lagher, but it did not send this letter to American States, Deer‐

field, or Laurus. Its claims adjuster evaluated the case as hav‐

ing a settlement value between $500,000 and $750,000. Be‐

cause this was lower than the American States primary pol‐

icy’s limits, Landmark reserved only $1.00 for its potential li‐

ability in its internal case tracking system; this was the mini‐

mum amount necessary to keep a case marked as open.

By the time trial commenced, Landmark was receiving

regular updates on the case. But it was largely a passive by‐

stander: at no point did Landmark attempt to alter American

States’s trial strategy, nor did it provide much substantive in‐

put. As the trial neared its end, the two sides came back to the

table for further settlement negotiations. Before Keeping’s

closing argument, the parties drew up a rough outline of a

high‐low settlement, which called for Keeping to receive at
No. 18‐2205 5

least $100,000 and at most $1 million, depending on the jury’s

verdict. But the parties ultimately backed away from a settle‐

ment because they could not agree on the “low” end: Keeping

wanted a $175,000 guarantee, and American States was not

ready to go above $100,000. American States apparently in‐

tended to counteroffer with a $150,000 low, but it ran out of

time: the jury returned with a verdict. Before the verdict was

formally announced, American States assumed that the jury

had sided with the defense and there was thus no reason to

resume settlement negotiations. Deerfield did not even know

that the high‐low negotiations were occurring, although

Olmstead was involved. Landmark did know. While the jury

was deliberating, American States’s attorney asked Landmark

whether it would be willing to contribute to the settlement. It

declined to do so. Landmark offered only the advice that

American States should settle the case for somewhere within

the primary policy limit of $1 million.  

On January 16, 2015, the jury announced that it had

reached a verdict of $2.368 million in Keeping’s favor. This

was ultimately remitted to approximately $2.3 million. On

January 29, 2015, Landmark notified Deerfield and Graff that

it was reserving its rights to deny coverage because of late no‐

tice.  

Landmark followed up with this lawsuit, in which it

sought a declaratory judgment that it did not have to cover

Deerfield and Graff’s loss because notice to it about the acci‐

dent and lawsuit was untimely. Deerfield and Graff  re‐

sponded with a third‐party complaint against American

States, Olmstead and the Law Offices, and Gallagher. Rela‐

tively early in the case, the district court granted Gallagher’s

motion to dismiss for failure to state a claim, because it found
6 No. 18‐2205

that Illinois law imposed no duty on an insurance broker to

provide notice of an insured’s claims. The case then pro‐

ceeded through discovery without Gallagher. Eighteen

months after Gallagher was dismissed, Deerfield sought to

amend its complaint to assert new claims against Gallagher,

as well as to name several related defendants in American

States’s corporate family. The district court denied that re‐

quest as untimely. After the close of discovery, the district

court granted summary judgment for Landmark, holding that

Deerfield’s notice was unreasonably late as a matter of law.

With that portion of the suit finished, the district court de‐

clined to continue to exercise supplemental jurisdiction over

the remainder of Deerfield’s third‐party complaint, as the par‐

ties were not completely diverse and there was little to no risk

of prejudice to the parties from having to litigate the claims in

state court.

Deerfield appealed all of these rulings. American States,

Olmstead, and the Law Offices cross‐appealed, but the cross‐

appeal was voluntarily dismissed before oral argument. See

FED. R. APP. P. 42(b).  

II

A

Under Illinois law, which all parties agree applies to this

case, whether an insured’s notice to its insurer was timely is

determined by the totality of the circumstances. See Country

Mut. Ins. Co. v. Livorsi Marine, Inc., 222 Ill. 2d 303, 312 (2006).

The Supreme Court of Illinois has identified five non‐dispos‐

itive factors to aid in this inquiry: “(1) the specific language of

the policy’s notice provision; (2) the insured’s sophistication

in commerce and insurance matters; (3) the insured’s
No. 18‐2205 7

awareness of an event that may trigger insurance coverage;

(4) the insured’s diligence in ascertaining whether policy cov‐

erage is available; and (5) prejudice to the insurer.” W. Am.

Ins. Co. v. Yorkville Nat. Bank, 238 Ill. 2d 177, 185–86 (2010).

Few, if any, of these factors favor Deerfield. The language

of Landmark’s policy states that the insured must give

“prompt” notice. Landmark identifies several older Illinois

intermediate appellate courts that have interpreted this lan‐

guage to require an insured to provide notice as soon as it

could. See, e.g., Gen. Cas. Co. v. Juhl, 283 Ill. App. 3d 376, 380

(1996). More recently, the Illinois Supreme Court drew the

line differently, contrasting policy language calling for “im‐

mediate” or “as soon as practicable” notice with that which

“identif[ied] a specific time frame for giving notice.” Yorkville,

238 Ill. 2d at 186. The former non‐specific modifiers require

only that an insured provide notice within a reasonable time.

Id. Because Landmark’s policy “does not identify a specific

time frame for giving notice,” the policy’s language is more

open‐ended. Nonetheless, we find it difficult to believe that

the state supreme court would regard notice that comes along

only after five to seven years as anywhere close to being either

“prompt” or “as soon as practicable.” This point, to the extent

it is useful, goes to Landmark.

Deerfield contends that the second factor—whether it was

“sophisticat[ed] in commerce and insurance matters”—favors

it because it never had an excess insurance claim before. But

that unnecessarily narrows the scope of the inquiry. Deerfield

is a 50‐plus employee company, and it “was savvy enough to

have both primary and excess ... coverage.” MHM Servs., Inc.

v. Assurance Co. of Am., 2012 IL App (1st) 112171, ¶ 64 (2012).

Deerfield had counsel to aid it in the Keeping lawsuit, and it
8 No. 18‐2205

could call on Laurus for help with insurance questions. As

Deerfield admits in its brief, “Laurus ... assisted Deerfield as

an intermediary for insurance related communications.”

Deerfield now says that its counsel was tortiously ineffective,

and that it believed that Laurus’s providing notice to Gal‐

lagher was the same as providing that notice to Landmark.

But neither of those contentions explains why Landmark—as

opposed to Laurus, the Law Offices, or perhaps Gallagher—

should be held responsible for the lateness of the notice. This

consideration too cuts in Landmark’s favor.

The third factor, whether the insured was aware of a trig‐

gering event, also plainly favors Landmark. At the latest,

Deerfield was aware that the Keeping lawsuit could trigger its

excess insurance coverage when Keeping made a $1.25 mil‐

lion demand in April 2013. Yet Landmark did not receive no‐

tice for another two years. Deerfield argues that Olmstead

never made it aware of this demand, but Illinois law is clear

that an attorney’s knowledge is imputed to her client, “not‐

withstanding whether the attorney has actually communi‐

cated such knowledge to the client.” Yugoslav‐Am. Cultural

Ctr., Inc. v. Parkway Bank and Trust Co., 289 Ill. App. 3d 728, 737

(1997).  

Under the fourth Yorkville factor, we must determine

“[w]hether the insured, acting as a reasonably prudent per‐

son, believed the occurrence or lawsuit was not covered by

the policy.” Yorkville, 238 Ill. 2d at 188. Deerfield contends that

this factor favors it because at multiple points people more

knowledgeable than it in the insurance field stated their belief

that Keeping’s lawsuit was “frivolous” and would not exceed

the American States primary policy limits.  
No. 18‐2205 9

But Deerfield misunderstands the inquiry. This factor is

not about Deerfield’s, or anyone else’s, ability accurately to

predict the potential outcome of a lawsuit. Instead, it is about

whether the facts underlying the incident are covered by the

policy’s terms. See, e.g., Grasso v. Mid‐Century Ins. Co., 181 Ill.

App. 3d 286, 290 (1989) (excusing a two‐year delay when in‐

sured did not reasonably believe that an accident in her boy‐

friend’s Jeep was covered by her father’s excess coverage in‐

surance policy); Brotherhood Mut. Ins. Co. v. Roseth, 177 Ill.

App. 3d 443, 449 (1988) (same when insureds did not reason‐

ably believe that an accidental shooting occurring outside

their home was covered by their homeowner’s policy). Unlike

the insureds in Grasso and Roseth, Deerfield and the people on

whom it supposedly relied all believed that the Landmark

policy would cover any loss from the Keeping lawsuit, pro‐

vided a jury returned a high enough verdict. Given the fact

that Deerfield never questioned the applicability of Land‐

mark’s policy, its failure to send even a cursory email to Land‐

mark cannot be described as the behavior of “a reasonably

prudent person.” Yorkville, 238 Ill. 2d at 188.

Finally, Illinois courts consider whether the insurer was

prejudiced by the insured’s late notice. Landmark’s argument

that Illinois does not require prejudice when the question is

one of “prompt notice” misses the point. The Supreme Court

of Illinois has stated multiple times that “the presence or ab‐

sence of prejudice to the insureris one factor to consider when

determining whether a policyholder has fulfilled any policy

condition requiring reasonable notice.” Livorsi Marine, 222 Ill.

2d at 317; see also Yorkville, 238 Ill. 2d at 185–86, 189. While the

lack of prejudice does not doom an insurer’s case, it is a rele‐

vant consideration.
10 No. 18‐2205

Landmark asserts that the delay inflicted prejudice on it

because it lost the chance to receive litigation updates until

shortly before trial, and because it would have encouraged

earlier settlement. As a general matter, an excess insurer is

prejudiced when it is “deprived of any meaningful participa‐

tion in the defense until the case was in the last possible

stage.” MHM Servs., Inc., 2012 IL App (1st) 112171, ¶ 76. We

recognize that this is not the strongest point for Landmark,

given its actions (or lack thereof) after it learned of the case.

In the current case, Landmark has conceded that it had no

criticism of how the Keeping case was handled. And when

Landmark was given the opportunity to facilitate settlement

during the trial, it declined. On the other hand, Landmark

learned about the underlying suit so late in the game that

many potential steps were no longer possible. Landmark may

have thought that the costs of a last‐minute overhaul of Amer‐

ican States’s trial strategy would outweigh the benefits.  

Landmark points to one place during the Keeping lawsuit

where its participation may have made a difference. Before

trial, the parties were scheduled to engage in mediation.

American States canceled that session because it viewed the

two sides’ demands as being too far apart. Landmark avers

that it would have attempted to facilitate the mediation,

thereby potentially ending the suit at a much lower cost to all

parties than the $2.3 million jury verdict. In the end, the prej‐

udice question is either a tie or slightly favors Landmark.  

Finally, although Yorkville sets out five points for courts to

consider when determining whether notice was proper, it

does not establish a closed set: the test remains one that re‐

quires an assessment of the totality of the circumstances.

When considering the totality of the circumstances, at some
No. 18‐2205 11

point common sense comes into play. Landmark did not re‐

ceive notice until seven years after Graff and Keeping’s acci‐

dent. This was not a case of a slowly developing tort, where

the parties could identify the genesis of the injury only years

after the harmful activity occurred. This was an automobile

accident. Deerfield could have emailed, mailed a letter, or per‐

haps just have called Landmark to tell it about the accident as

soon as it occurred (just as it did for American States), or it

could have taken any of those steps when it was served with

Keeping’s lawsuit. But it did not. The conclusion is irresistible

that Deerfield’s notice was untimely and unreasonable as a

matter of law.

B

Deerfield has two more arrows in its quiver; we address

them briefly. First, it argues that Landmark should be es‐

topped from asserting a late notice defense; second, it urges

that Gallagher was Landmark’s apparent agent, and thus that

the notice it immediately provided to Gallagher should be im‐

puted to Landmark. Neither argument wins the day.

1

Landmark argues that estoppel cannot apply to it in this

scenario because under Illinois law, insurers are subject to eq‐

uitable estoppel only when they breach their duty to defend.

It relies on North River Insurance Co. v. Grinnell Mutual Rein‐

surance Co., 369 Ill. App. 3d 563 (2006), which holds that “[i]t

is the duty to defend that gives rise to the duty to reserve

rights when defense of a claim is undertaken, and without

such a duty an insurer has no obligation to issue a reservation

of rights letter.” Id. at 570 (quoting Montgomery Ward & Co.,

Inc. v. Home Ins. Co., 324 Ill. App. 3d 441, 450 (2001)). But that
12 No. 18‐2205

reading of Illinois’s treatment of this equitable doctrine is too

broad.

As the state supreme court has noted, two versions of eq‐

uitable estoppel have developed in Illinois. The first is the one

identified by Landmark, which arises only when an insurer

breaches its duty to defend. The second is the more traditional

form of equitable estoppel, which asks the usual question

whether the potentially estopped party made a knowing mis‐

representation on which it intended its opposition detrimen‐

tally to rely. See Emp’rs Ins. of Wausau v. Ehlco Liquidating Tr.,

186 Ill. 2d 127, 151 (1999).

The proper focus here is not on any breach of Landmark’s

duty to defend, but instead on whether Landmark’s actions

meet the traditional criteria for equitable estoppel. Illinois has

a six‐part test for equitable estoppel, but here two are dispos‐

itive: whether Landmark “misrepresented or concealed mate‐

rial facts” and whether Deerfield “reasonably relied upon the

representations in good faith to [its] detriment.” First Mercury

Ins. Co. v. Ciolino, 2018 IL App (1st) 171532, ¶ 52 (2018). Deer‐

field contends that Landmark concealed the fact that it was

reserving its rights until after the jury verdict. Had it known

about the reservation of rights before the verdict, Deerfield

says that it would have been more active in the Keeping trial

and would have forced American States to settle within the

primary policy limits, perhaps by contributing to a potential

high‐low settlement.

Landmark’s minimal participation at the trial stage of the

Keeping case was not the type of “misrepresentation” that

gives rise to equitable estoppel. Indeed, it was not a misrepre‐

sentation at all. Landmark’s actions during trial were fully

consistent with an insurer that wishes to assert its right not to
No. 18‐2205 13

cover a loss. This explains why, when given the opportunity

to assist with settlement, Landmark declined.  

At no point did Landmark inform Deerfield that it was not

going to stand on its rights. When Gallagher first gave it no‐

tice of the Keeping lawsuit, Landmark told American States

that American States “has the coverage for this loss.” But

Deerfield and American States were and are separate entities.

American States may have defended the Keeping lawsuit, but

Deerfield had its own representation in that case through

Olmstead and the Law Offices. Deerfield has presented no ev‐

idence that American States later passed on Landmark’s state‐

ment to Deerfield or Olmstead, and so even if this statement

constituted a misrepresentation (and we are not saying it

was), Deerfield could not have relied on it. Landmark is not

equitably estopped from asserting a late notice defense.

2

Deerfield also has not pointed to facts suggesting that Gal‐

lagher was Landmark’s apparent agent. As our cases apply‐

ing Illinois law have explained, a broker does not become the

apparent agent of an insurer where, as here, it performs tra‐

ditional brokerage activities. See Mizuho Corporate Bank (USA)

v. Cory & Assocs., Inc., 341 F.3d 644, 655–56 (7th Cir. 2003);

Archer Daniels Midland Co. v. Hartford Fire Ins. Co., 243 F.3d

369, 373–74 (7th Cir. 2001). The tasks that Gallagher per‐

formed for Landmark, such as sending bills and collecting

payments, fall into the bucket of traditional brokerage activi‐

ties. Indeed, Andrew Hulett, who helped Deerfield get the

Landmark policy, called this set‐up the industry standard.

Language in the Landmark policy stating that notice can

be given to an “authorized representative” does not help
14 No. 18‐2205

Deerfield. Landmark never identifies who its “authorized

representative” is. While Deerfield points to one page of the

policy which states “Agent: Arthur J Gallagher Risk MGT,” it

is clear from context that this refers to Gallagher being an

agent for Deerfield, not for Landmark. Further down that

same page Landmark instructs the policyholder “to report all

newly hired employees to your agent during the year” (em‐

phasis added). Laurus may have told Deerfield that notice to

Gallagher was notice to Landmark. But it is only Landmark’s

actions, and not Laurus’s statements, that can create an appar‐

ent agency relationship between Gallagher and Landmark.

Landmark took no such actions here.  

III

Reversing course, Deerfield finally attempts to revive its

claims against Gallagher by arguing that Gallagher was not

Landmark’s agent, but its own. Under this theory, Deerfield

argues that Gallagher should be liable for its loss because Gal‐

lagher breached its fiduciary duty to Deerfield. But Illinois

law forecloses this claim. The Illinois Insurance Placement Li‐

ability Act, 735 ILCS 5/2‐2201, relieves an insurance broker of

a fiduciary duty when engaging in conduct “concerning the

sale, placement, procurement, renewal, binding, cancellation

of, or failure to procure any policy of insurance.” Id.

§ 2‐2201(b). The broker is liable only if negligent or when

dealing with the “wrongful retention or misappropriation” of

certain funds. Id. § 2‐2201(b), (d). In American Family Mutual

Insurance Co. v. Krop, 2018 IL 122556 (2018), the Illinois Su‐

preme Court stated that the Act “prevents any insurance pro‐

ducer [i.e. broker] from being held to the fiduciary standard,

except in a narrow set of circumstances” involving misman‐

agement of funds. Id. at ¶ 28. Because of that statute, it was
No. 18‐2205 15

“clear” that the insurance broker in that case “owed no fidu‐

ciary obligations to the Krops” and had “to exercise [only] or‐

dinary care.” Id. Given Krop’s broad reading of the liability

exception in section 5/2‐2201, we cannot read the Act to sug‐

gest that an insurance broker has a fiduciary duty that extends

beyond the performance of the limited brokerage actions

identified in that statute. See also M.G. Skinner & Assocs. Ins.

Agency, Inc. v. Norman‐Spencer Agency, Inc., 845 F.3d 313, 320

(7th Cir. 2017).

Deerfield’s negligence claim against Gallagher similarly

fails. Although the Act expressly states that it does not curb

negligence liability, 735 ILCS 5/2‐2201(d), liability attaches

only if a broker had a duty to perform the action it allegedly

performed negligently. Deerfield has identified no Illinois

cases establishing that insurance brokers have a duty to de‐

liver notice of claims on behalf of an insured, and so its negli‐

gence claim fails.

Deerfield belatedly argues that Gallagher voluntarily en‐

tered into an “affirmative undertaking” to provide notice, and

its undertaking created a duty to perform that act non‐negli‐

gently. See M.G. Skinner, 845 F.3d at 319–20. But Deerfield first

mentions this argument in its reply brief, and so it is waived.

Bernard v. Sessions, 881 F.3d 1042, 1048 (7th Cir. 2018).

Finally, the district court did not abuse its discretion in

denying Deerfield leave to amend. See Soltys v. Costello, 520

F.3d 737, 743 (7th Cir. 2008). On appeal, Deerfield attempts to

minimize how extensive its amendment would have been. It

not only wanted to bring Gallagher back into the case; it also

wanted to add two new defendants, Safeco and Liberty Mu‐

tual, corporate entities related to American States. Deerfield

attempted to do this about a week before the close of
16 No. 18‐2205

discovery, despite having the facts that might have supported

a case against the affiliates years earlier. As the district court

recognized, because the amendment came at the close of dis‐

covery, allowing Deerfield to amend would have necessitated

re‐opening discovery. It also would have prejudiced Gal‐

lagher, which had not participated in over a year of the par‐

ties’ discovery by that time. This is exactly the type of “undue

delay” that is a legitimate reason to deny amendment. See Bell

v. Taylor, 827 F.3d 699, 705 (7th Cir. 2016).

IV

The importance of punctuality differs across cultures. A

Japanese train conductor will apologize when the train leaves

20 seconds early. See Danielle Demetriou, Why is Japan so ob‐

sessed with punctuality?, THE TELEGRAPH (May 16, 2018),

https://www.telegraph.co.uk/travel/destinations/asia/

japan/articles/why‐japan‐so‐obsessed‐with‐punctuality/. By

contrast, on some days, Chicagoans and New Yorkers con‐

sider themselves lucky if their train comes at all. Despite these

differences, some cases are not close, and this is one of them.

Waiting five to seven years before telling an insurance com‐

pany that its policy may be implicated in a suit is too long. We

AFFIRM the judgment of the district court.