## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

____________ N o. 07

- 2831 RL I I NSURANCE C OMPAN Y, P la intif f-A pp ellee, v. C ONS EC O, I NC ., C ON S E CO S ERV ICES L .L .C ., R OLL I N D I CK, etal., D efend a nts-A pp ella nts.

____________ A pp eal from the United S t ates Di strictC our t fo r the S outhernDi stricto f Indian a, Indian apolisDiv isi on.

No . 04 C310

—L arry J . M cKinn ey, Judg e.

____________ A RG UE D F EB RU AR Y 14, 2008

— D ECI DE D S EP TE MBE R 9, 2008

____________
Befo re M A NI ON, R OV NER, a nd W I L L I A MS, C ircu it Judges. M A NI ON, C ircu it Judge. RL IInsurance Com pany ( “RLI” ) fi l ed a decl ar ato ryj ud gm ent a cti on s eek i ng a deter m i nati o n o fi ts obl i g at i o n, i fa ny, t o de fen d Co ns ec o , Inc . , a nd va r i o us i nd i v i du a lde fe nd a nt s ( c o l l e c t i v e l y “ Co ns e c o”) und era liab i l i ty i nsurance pol i cy RL Ii ssued to Conseco

. The dis tr i ct c ourtente re d sum m ar y j ud gm ent in f avo r of RL Ico ncl ud i ng tha t RLI w as re l eas ed fro m any du ty to2 N o. 07

- 2831 defe nd and enti tl ed to i nd em ni fi cation. Conseco appeal s, a n d w e a ffi r m.

I. I n A pr i l2 00 0, a g r o up o fpl aint i ff s su ed Con se co a nd so m e o fi ts o ffi ce r s an d di r ec to r s a ll egi ngs ec ur i ti es fr au d ( the “ Se curi ti es A cti on”)

. In th eir am ended com pla i nt, the pl ai nti ff s a l l ege d t h at “duri ng 19 99 and ear l y 2 000, C on se c o e n ga ge d in a va rie ty o fp r ac tic es to d elib er at ely m ani pu l ate the cre ditl oss as sum pti ons used to value i ts i nter est
- onl y s ecuri ti es and fa l sel y r epor t the va l ue o f these se curi ti es. ” The par ti es eve ntual l y se ttle d the ca se, and on A ugust 7, 20 02, t h e d i str i ct c ourtente re d final j u d g me n ta p p r o v i n gth e s e t t l e me n t
. T h e fi n a lj u dgment o r derinc o r po r at ed po r ti o ns o fthe s et tl ement, i nc l udi ng th atthe S ec ur i ti es Act i o n s et tl ementr el ea se d, a m o ng othe r thi ng s, any c l ai m s that a cl ass m em berev erhad or w il l ha ve th at are related to the con d uc t a l leged i n [the Secu riti es A ction], i ncl ud i ng, but not l i m i ted to ( I ) cla i m s which a ri se ou t o f a ny of th e facts, tran sact ions, even ts, occu rre n c es , ac ts or om iss ion s m en tio n ed or re fer re d to in th e C om p lain t o r ot h er m at te rs th at are or c ou ld have been setf or th, al l ege d, em bra ced oro th er w i se re fer re d to i n the A c tio n o r the Conso l i dated Cla ss A cti ons or w hi ch coul d hav e been brou gh t against D efe nd ants re l ate d to a Cl ass M em ber ’ s purchas e o r acqui si ti on o fCl ass S ecuri ti es. A di spute r ega rdi ng co ver age o fthe liti gat i on co sts re sul ti ng fro m the Se curi ti es A cti on a ro se b e twe e n Co ns ecoN o. 07

- 2831 3

an d se ve ra l of its ins u ra n c e c ar rie rs , in c lu d in g R L I. Con se co fi l ed a dec l ar at o r y j udg m en t ac ti o n i n Indi an a st at e co ur t cl ai m i ngtha t RL I o wed c o ve r ag e f o rthe Se curi ti es A cti on under a n exces s dir ecto rs and l i abi l i ty i ns ur an ce pol i cyRLIha d i ss ue d t o Co ns ec o . W hi l e th e S ec ur i ti es Act i o n was pe ndi ng, Co ns ec o , RLI, a nd the o th eri ns ur an ce c ar rie r s en te r ed i nt o a r el ea se a g r ee m en t ( “Ori gi nalA gr eem ent”) o n M ay 1 0, 20 02. RLI agr eed to pay $1 0 m i l l i on t ow ar d the s ett l em ent o fthe Se curi ti es Act i o n, b utr e s e r v e d i t s r i g htt o s e e kr e i mbu r s e men t
. R LI exer ci sed that ri ght by fi l i ng counter cl ai m s f orrest i tuti on o rr e i mb u r s e me n ti n C o n s e c o ’ s d e c l a r a t o r y j u d g men t case . On October25 , 20 02, afterthe d i str i ct c ourthad en te r ed fi na lj udg m en t i n the S ecuri ti es Act i o n, RLIa nd Con se co e nt er ed i nt o a S upplement alAgr ee m en t And M utual R e l eas e (“ Supplem e n t a l Ag r e e men t ” ) th r o ug h whi chRLIdi smi ss ed i ts c o unt er cl ai m s ee k i ng r ei m bur se m en t f o rthe $ 10 m i l l i o n i t co nt r ibut ed to the set tl em ent o fthe Se curi ti es A cti on. In exchange, Conseco i ss ue d RLIa g en er alrel ease , whi chpr o vi des i n r el ev an t part: 13. Genera lRel eas e As To R L I. The i nsured, and eac h o fthe m , and e ac h o fthe i rr es pec ti ve pa st, pr es en t an d future em plo yee s, ag ents, at torneys, dir ecto rs , o ffi cer s, shar ehol d ers, o w ners , r epres entat i ves, pre decesso rs , succes sor s, h eir s, es tat es, exec utor s, adm i ni str ato rs , trus te es , a ffi l i at es , pa r en ts , s ubs i di ar i es , a ss i g ns , a nd an y per so n a ct i ngo n the i rb eh al f( he r ea fte rthe “C ons eco R elated Parties”), he r e b y rel ease an d f orever d ischa rge RL Iand i ts p as t, pres en t, an d fut ure em plo yee s, ag ents, cl ai m s per sonnel, at torneys, di re c-4 N o. 07

- 2831
tor s, o ffi cer s, shar ehol ders, ow n er s, r epres entat i ves, predecessors, succe sso rs , hei rs , es tat es, exec utor s, ad m inistrator s , trust ees, affi li ates, pare nt s, su bsid iari es, as si gns, r ei nsurer s a nd any perso n acting o n thei r behal f(her eafterthe “RLI Rel ate d Parti es” ) fro m any a nd al lcl ai m s, act i ons, cause s o fact i on, r i ghts oro bl i gat i ons, wh etherkno w n orunknown , wh eth er co nt i ng en t o rl i qui dat ed, o fe ve r y k i nd, na tu r e an d descri pti on, thatthe Conseco Rel ate d Parti es now have orm ay have aga i nst the R LI Rel ate d Parti es base d on, ar i si ng o ut o f, o r i n any w ay re l ate d to: ( a) the De r i va ti ve a ct i o ns , the Se cur i ti es a ct i o n, the Cover age l i ti gat i on, o r the RLIExcess Pol i cy; ( b) the defense ofthe Deri vati ve acti ons, S ecuri ti es acti on, o r Cover age l i tig atio n i ncl ud i ng, but not l i m i ted to , al lat torney’ s fe es and expenses o r ex per t wi tn es s/ con su l ta ntfee s an d e xpe ns es i ncur r ed i n c o nne ct i o n wi ththa t l i ti g at i o n; ( c) any c lai m f orco ver age under anypol i cy of in su rance i ssued byRLI, i ncl ud i ng RLI Excess Pol i cy, bas ed on, ar ising out of, o r i n any w ay r el at ed to the Der i va ti ve a ct i o ns , S ec ur i ti es a ct i o n, o rCo ve r ag e Li ti g at i o n; (d ) an y no tic e of c laim or n ot ice of p ot en tia l cla im base d on, aris in g o ut o f, o r i n any w ay re l ate d to th e D erivative actions, Sec urities a ction, or C overag e Li ti g at i o n; ( e) RLI’ s handl i ng o fany cl ai m forcover age bas ed o n, a r i singo utof, o ri n a ny wayr el at ed to theN o. 07

- 2831 5 Deri vati ve acti ons, S ecuri ti es acti on, o r Cover age L itig at ion, in c lu d in g, b u t n otlim ite d to , an y c laim f orbad f ai th, f orany bre ach o fa d u ty o fgo od f ai th under the st atute , r egul ati ons, o r com m on l aw o fany sta te, o r f orany un f ai r ordecepti ve tr ade prac ti ces; o r ( f ) a n y c l ai m thatRLI’ s pol i cy l i m i ts have been re sto re d i n w hol e o r i n part, wh ether i n connecti on with [ the Or i gi nalRel eas e] o r othe rwis e. The gener alr el eas e s et f or th i n thi s par agr aph su p p l ants and expand s the r el eas e ter m s s et f or th i n parag ra phs 13 and 14 o fthe Ori gi nalA gr eem ent. T h e S u p p l e me n t a lA g r e e me n ta l s o p r o v i d e s f o ri n d e mni fi ca ti o n: T h e S e c u r i t y A c t i o n D e fe n d a n t s , a n d e a c h o fth e m, ag re e t o in d em n ify, d efe n d , an d h old h ar m les s . . . RL I

. . . fro m and aga i nst a ny and al lcl ai m s, dem ands, dam a g e s, l o s s e s, a c c o un t s, r e c k o ni ngs, debts , l i abi l i ti es, i nde m ni ti es, o bl i g at i o ns , a ct i o ns , c au se s o fa ct i o n, se tt l ementc o st s, a tt o r ne y ’ s fee s, c o ur t costs , a nd a ny o the rc o s t s or e xp e ns e s . . . b r o ughto rma de agains t .
. . RL I

. . . f or any a m ou nt s w hich heretofore or he r e a ft er m ay be claim ed by pe rson s w ho are i nsureds, cla i m to be i nsureds, o r cl ai m the ri ghts of i nsureds under the RLIExcess Pol i cy i n conn ecti on w i th the m att er s r el eas ed by .

. . C onse co . . . i ncl ud i ng, wi th o utl i m i ta ti o n, anyc l ai m made bya ny o fthe parti es to the Li ti gat i on o r th e C ove ra ge Lit i gat i on o r any c l a i m m a de b y a nyo the rp ut a t i v e i ns ur e d wit h re spect to
. . . the m att er s r el eas ed by the Conse co Rel ate d Parti es i n thi s a gr eem ent.6 N o. 07

- 2831 A ro und the sam e t i m e that Conse co an d RL Iente re d into the S up ple m entalA gr eem ent, Roder i ck W

. Rus se ll ( “Russel l ”) filed a pu tat i ve cl ass act i on s uitag ai nst Conseco and s eve ra l othe r defe nd ants al l eging violati ons ofEm plo ym ent Ret i re m ent Incom e S ecuri ty A ct (“E R I SA ”), 2 9 U

. S. C

. § 1132(a) ( “ R uss el l litiga tio n ”). R u ss ell asser te d thatbeg i nning i n 199 9 a nd thr ough 2 002 C o n s e c o ’ s fi l i n g s w i th th e S e c u r i t i e s a n d E x c h a n g e C o mm i ss i o n wer e m at er i al l y f al se , a nd tha t Con se co mis m an ag ed pl ana ss et s, f ai l ed t o m ak e r equi si te di sc l o su r es , a nd had divi ded l oya l ti es. In Decem ber20 02, Conseco fi l ed a m oti on t o dism i ss R uss el l

. B y th is p oint, h o w e ver, C on seco had fi l ed f orbank ruptcy, and the R uss el l l i ti gati o n was s ta y ed dur i ngthos e pr o ce eding s. Af te rthe sta y was l i fted, Russel lam ended h is com pla i nt o n M arch 22, 20 04. Conseco r enewed i ts m oti on t o dism i ss on J une 1, 20 04. The fi rs t line o fthe re new ed m oti on re ad: “Thi s ca se shoul d be di sm issed because i t has alr ea d y b ee n litiga te d .” T h e m ot ion c ite d th e p rior Sec u ritie s A c tio n st at in g t h at its s e t t lem en t in c lu d ed R u ss ell an d the pl ano n whose be ha l fRus se l lb r o ug hts ui t. The m oti on co nti nued , “S ett l em ent c l ass m em ber s a gr eed to re l eas e Conse co and anyone affi l i ate d wi th Co nseco ( w hi ch i n c l u d e s a l l th e p r e s e n t D e fe n d a n t s ) f r o m any c l a i ms ba se d o n any fa c ts that w er e a l l ege d, orthat co ul d h ave b e e n al l ege d, or t h at ar e related to th e c on d u c t a lleg ed , in the s ecuri ti es l i ti gat i on. ” The m oti on went on t o note th at th e e n tir e Se c u rit ies A c tio n rele as e w as inc lu d ed in th e fi na lj udg m en t ordera nd l i st ed spe ci fi c o ve r l apping al l eg at i o ns s etf o r thi n Ru ss el l ’ s am en d ed co m pl ainta nd th e amende d c o m pl aintfi l ed i n the Secu rit i es Act i o n.N o. 07

- 2831 7 Fol l owing the l i st, the m oti on co nc lu ded , “Because thes e u n d er lyi n g f a c t s in vo lve d in t h e t w o c as es are (ata m in im u m ) ‘rela te d ,’ th e c l a im s R u ss ell b rin gs h er e fa ll w ith in the defi ni ti on o fthe secur i ti es l i ti gat i on r el eas e. ” F i nal l y, Conseco sta ted thatbec ause the S ecuri ti es A cti on “ [ w ] as [ e ] n s h r i n e d i n a [ f ] i n a lj u d g me n t, [ ] th e [ r ] e l a t e d [ c ] l a i ms i n the [ a] m ended [ c] om pla i nt [ s] houl d [ b] e [d] i sm i sse d u n d er th e [d ]oc tr in e o f [r]es [j ]u d ica ta .” On J ul y 3 0, 2004, the di st r i ctc o ur t i n R uss el l gr anted Conseco’ s m oti on t o dism i ss noting tha t the pote nti al R uss el l cl as s m embe r s wer e cl as s m em be r s o fthe S ec ur i ti es Act i o n, Rus se l lwas i nclude d i n the s et tl ement i n the S ec ur i ti es Act i o n, a nd Co ns ec o w as a na m ed defen dant i n the Se curi ti es A cti on. The R uss el l co ur tc o nc l ud e d: The s et tl em en t o fthe [ S ec ur i ti es Act i o n] , whi chthe Court f ound incl ud ed [ Russel l ] , and plan par ti ci pants, f or ecl ose d the future c lai m s that [ Russel l ] at tem pts no w t o put ba ck at i ss ue i n th i s ca se . The r efore the ar g um en t th at[ Rus se l l ] make s i n a tt empti ngt o di st i ng ui shthe i ns ta ntc as e fr o m the 2 00 0 ca se b y i nc l udi ng a di ffer ent t em pora lco m ponent i s o fno m om ent. A s no ted abo ve, the set tl em ent o ft h e Se curi ti es A cti on in c lu d ed a rele as e of an y claim s aris in g ou t of th e S e c u r iti es A cti on r ega rdl ess o fte m pora lpro xi m i ty. W h ile R uss el l wa s s t i l lp e nd i ng, o n J a nu a r y 9 , 2 0 0 3, C onse co noti fi ed RL Iabo ut the R uss el l l i ti gat i on. A week l ate r, RLI re sp on d ed with a l ett eri n w hi ch i t r equeste d var i ous pl eadi ngs, sum m ary o fdi sco ver y, and other i nfo r mat i o n fr o m Co ns e c o f o rR LI’ s i nv e s t i g a t i o n. R LI note d that b ase d on di scussi ons w i th Conseco , the case8 N o. 07

- 2831

w as sta yed f orthr ee m onths, a n d RLI sta ted thati t was invest i gat i ng the cas e under a fulland com ple te re ser vat i o n o fr i g ht s . Sevenmo nths l a t e r, o n J ul y 1 5 , 2 0 0 3 , R LI w ro te Conseco noting that Conseco sti l l had not provide d RL Iw it h t h e inform ation req ue sted i n R L I ’s J anuary16 , 200 3, lett er . RLI furthernot ed that i t was con tinu ing its inve stigation of R uss el l and i ts re ser vati on ofr i ghts. I n ear l y J anuary20 04, Conseco not i fi ed RL Ithati t had ap p roach ed the p o lic y’s ded uc tible. A bou t a m ont h later, o n F eb r ua r y 1 3, 2 00 4, RLIr es po nde d t o Conse co i n a l etter catal ogui ng i ts i nvest i gat i on o fthe R uss el l l i ti gati on a nd i ts concl usi on that the S u p p lem entalRel eas e b arre d cove ra ge. The l ett erco ncl ud ed w i th RLI’ s be l i ef th at R L I ha d n o ob liga tio n to p ro v i d e c ov er ag e in R uss el l , but sta ted i t would fu nd Conseco ’ s R uss el l defe nse with a fullr ese rv ati on o fr i ghts. That sa m e day, RLI filed thi s decl ar ato ryact i on, l ate r am ending i ts com pla i nt o n M ar ch 30, 20 04. Conseco fi l ed counter cl ai m s a sse rt i ng cl ai m s ford ec l ar ato ryr el i eff or a duty t o defe nd and duty t o i nd em ni fy a s wel las b r e a c h o f d u t y o f g o o d f a i th a n d f a i r d e a l i n g c l a i ms. On Cons e c o ’ s mo t i o n, the di s t r i c tc o ur ts t a y e d thi s c a se w h i l e the R uss el l l i ti g at i o n pr o ce ede d. F o l l o wi ng th e li ft of th e s ta y, R L I f iled a th ird am en d ed co m p lain t in whi chi t a sser te d b r ea cho fc o nt r ac t cl ai m s ag ains t th e S u p p l e me n t a l Ag r e e me n t s i g n a t o r i e s f o r f a i l i n gt o i n d e mni fy RLIf o rthe c o ve r ag e cl ai m s i n c o nne ct i on w ith th e R uss el l l i ti gat i on. RLI al so soughtr est i tuti on. Conseco re new ed i ts counter cl ai m s.N o. 07

- 2831 9 On M ay 4, 20 06, Conseco fi l ed a m oti on forpart i al su m m ary j ud gm en t on its de claratory reli ef cl a im of a du ty to defe nd and on i ts cl ai m o fbr each o fduty t o defen d. Co ns ec o a ss er te d tha t unde rIndi an a l aw a nd RLI ’ s po l i cy, RLIha d a duty t o de fen d a g ains t a llpo te nt i a lc l a i ms a nd tha t RL I b r e a c he d tha tdu t y b y n o tp r o v i di ng Consec o w i th a prom pt and full d efense. RLI re sponded byfi l i ng a separ ate m oti on in w hi ch i t s et f or th i t s r e s p o n s e t o C o n s e c o ’ s mo t i o n a s wel l as i t s o wn re quest forp ar tial sum m ar y j ud gm ent. RLI re sponded th a ti th a d n o d u t y t o d e fe n d C o n s e c o i n R u sse ll bec ause the S up ple m entalA gr eem ent c ove re d the R uss ell l i ti gati o n b y e x t e n d i n gt o a n y c l a i ms i n a n y wa y r e l a t e d t o the Se curit i es A cti on. RLI al so note d that Conse co had succ es sful l y a rgued to the R uss el l co urt that R uss el l was b ar re d by th e s et tle m en t an d fin al j u d gm en t in th e Se c u ritie s A c t i on . For t h os e s am e re as on s, R L I ass er te d th at it w as en titl ed to su m m ary j ud gm en t in rel ation to C ons eco’s bre ach o fco venant ofgo od f ai th an d f ai r deal i ng cl ai m s. I n re sponse, Conseco as ser ted that t he S up ple m ental A gr eem ent did not apply to R uss el l be ca us e i t sa i d no th i ng about cl ai m s fro m the R uss el l l i t i g a t i o n a n d th e c l a i ms Conseco w as ass er ti ng now w er e r el ate d to cl ai m s for co ve r ag e i n R uss el l a nd no t i n a ny w ay re l at ed to the Se curi ti es A c tio n. Conseco co nti nued byar gui ng tha t “[e]ven i f th e un d erlyi ng f acts of R uss el l and the Se curi ti es ac ti o n a r e r el at ed, the t wo c as es a r e no t, a nd th us , the RL IRel ea se d oes notco verthe R uss el l cl ai m s. ” Conse co no te d tha t i n R uss el l the di st r i ctc o ur t was i nt er pr et i ng the r el eas e in the Se curi ti es A cti on’ s s ett l em ent a gr eem ent a nd not the re l eas e i n the S up ple m entalA gr eem ent.10 N o. 07

- 2831 C on se c o a lso as se rt ed th at th e d ist ric t c ou r t in R uss el l “nev erhel d that the R uss el l l i ti g at i o n ‘ r el at es t o ’ the S ec ur i ti es Act i o n. ” F i na l l y, Co ns ec o c o nt en ded th atthe Supplem entalRel eas e co ntai ned am bi guous l anguage , na me l y “ i n a n y wa y r e l a t e d , ” th e r e b y r e q u i r i n g th a tt he l a ngua g e u s e d in the dr a ft i ngo fthe r e l e a s e b e r e v i e we d. T he d i st r i ctc o ur t den i ed Con se co ’ s m o ti o n c o nc l udi ng that ther e was no am bi gui ty i n the Supplem entalA gr eemen t r e l e a s e a nd tha t i t c o v e r ed the R uss el l c as e. The d istri ct court also gran ted R L I ’s m otion fo r sum m ary j ud gm ent o n Con seco’ s co unterc l ai m thatRLI bre ached the c ove nant o fgood fa ith a nd f ai r deal i ng. In a s epara te or d er , th e d ist ric t c ou rtgra n te d R L I’s m ot ion for in d em n ifi cati on, i n part, co ncl ud i n g th at RL Iwas enti tl ed to r ec o ve r th e m o ne y i t adv an ce d i n R uss el l a nd fee s an d costs associated w ith d efend ing agains t th e cou nt ercl ai m s i n thi s ca se. The di str i ct c ourtdeni ed RL I ’ s m oti on i nsof aras i t s ought re cove ryo fco sts an d a tt or neys’ fees assoc iated w ith en forcing t h e Sup p lem en tal A greem en t’s i nd em ni fi cati on pro vi si on. The di str i ct cour t e nter ed j ud gm ent in f avo r ofRLI aga i nst Conse co f or$2 42, 038. 11 f ordefense cos ts advanced by RL Ii n the R uss el l l i ti gati on a nd $1 , 256, 961. 89 f orco sts RLI i ncurr ed i n defending the c ounter cl ai m s in thi s ca se. Conseco appeal s.

II. On app eal, Conseco ar gues that the S up ple m en tal A greem en t con tains a la t e nt am biguity, an d therefore the di str i c t co urt shoul d have co nsi dered the Ori gi nal A gr eem ent a nd the parti es’ nego tiati ons i n additi on t oN o. 07

- 2831 11 the S up ple m entalA greem ent in deci ding w hether R uss el l fell w ithi n the re l eas e in the Supplem entalA gr eem ent. W e a pp l y stat e l aw to subst anti ve i ssues i n case s b efo re u s o n d ive rs ity j u ris d ict ion

. B evo lo v. C a rter, 44 7 F. 3d 979, 98 2 ( 7th Ci r. 20 06)

. W hen nei therparty rai ses a c on f l i c t o f law iss u e in a d ive rs ity ca se , th e a p p lica b le law is th at of th e s ta te in w h ich th e fe d er al c ou rtsit s. Ind. Ins . Co. v. Pana Cm ty U ni t Sc h. D i s t. N o . 8 , 31 4 F

. 3d 895, 900 ( 7th Ci r. 20 02)

. Beca u se t he par ti es do not ra i se a conflict o fl aw i ssue and thi s ca se w as fi l ed i n a federa l co ur t i n Indi an a, we apply Indi an a l aw. UnderInd ia na l aw , co ntra cts ar e inter prete d to effectuat e t h e parti es’ in te n t a s e x p re ss ed in t h e a gr ee m en t. If th e la n gu ag e is un am biguou s, it shou ld be given i ts p la in and ordina ry m ea n in g. R eui ll e v. E
. E
. Brand enbe rg er C onstr
. , Inc. , 88 8 N

. E.2 d 770, 77 1 ( I nd

. 20 08). P ar ol, o r extr i nsi c ev i dence, i s i na dm i ss ibl e to ex pl ain o r va r y the c l ea ra nd un ambi g uou s t er m s o f a w rit te n ag re em en t. E va n v. P o e & A ssoc ., Inc ., 87 3 N

. E. 2d 92 , 1 01 ( I nd. Ct

. App. 2 00 7)

. Howev er, where the contr act l anguage i s a m bi guous, extr i nsi c ev i dence is p er m itt ed to as c er ta inth e p ar tie s’ in te n t. Hoos ev. D oody, 886 N

. E

. 2d 83, 90 (Ind

. Ct

. A p p . 2008). A n am bi gui ty d oes notar i se si m plybec ause the par ti es d isa gr ee on th e in te rp re ta tio n, bu t “ [r]a th er lan gu ag e is am bi guous onl y i fr eas onabl e peo ple co uld co m e t o differ ent c oncl usi ons about its m eani ng. ” Si m on Prop
. G roup, L.P. v. M ich. Sporti ng G ood s D is tr ib. , Inc. , 837 N

. E.2 d 1058 , 10 70 ( Ind

. Ct. A pp . 20 05)

. A n am b igu i ty m ay be pat en t o rl at en t. A p atenta m bi g ui tyi s “a ppar en t o n the f ace ofthe i nstr um ent a nd ar i ses fro m an i n c onsi ste ncy ori nherentuncer tainty o fl anguage used so that it ei ther12 N o. 07

- 2831

conve ys no defi ni te m eani ng o r a co nfuse d m eani ng. ” Id. a t 1 0 7 0

- 7 1 ( i n t e r n a l q u o t a t i o n a n d c i t a t i o n o mi t t e d )

. On th e o th erha nd, a laten t ambi g ui tya r i se s o nl y i n the c ou rs e o f im p lem en tin g t h e c on tr ac t. Id. at10 71. Conseco ass er ts that the dist ri ct courterr ed i n f ai l i ng to i nter pret the S up ple m entalA gr eem ent in conj uncti on w i th the Ori gi nalA gr eem ent a nd ev i dence ofthe parti es’ nego ti ati ons surr ounding these co ntra cts. In supp ort o f i ts po si ti o n o f l o o k i ngo ut si de th e f o urc o r ne r s o fthe S up pl e men t a lAg r e e men t, Co ns e c o a s s e r t s tha tthe S up ple m entalA gr eem ent c ontains a l ate nt am bi gu i ty “as shown bythe [ Ori gina l A gr eem ent] wh i ch shoul d have been consi dere d b y the di str i ct c ourtbec ause i t was express l y incor pora ted i nto th at a gr eem ent. ” Rathe r than fi r s ta t t e mpt i ngt o a pp l y l a ngua g e o fthe S up pl e m ental Rel eas e t o asce rt ai n w hetherther e i s a lat ent a m bi gui ty, Conseco sta rt s i ts i nter p re tat i on with the Ori gi nalA gr eem ent a nd then proce eds to the Supplem entalA gr eem ent, ar guing tha t the S up ple m entalA gr eem ent c ontains a lat en t a m b igu ity in t h e m ea n in g of “ inan y w ay rela te d .” Be f o re i mpl e men t i ngthe r e l e a s e l a ngua g e i n the S up pl e men t a lAg r e e men t, h o we v e r, we no t e tha tthe S up ple m entalA gr eem ent pr ovi des thatthe gener alr el eas e at i ssue i n thi s ca se “ supplants an d expand s the r el eas e ter m s set f or th i n parag ra phs 13 and 1 4 of the O ri gi nal A gr ee m en t.” (E m p h as is a d d ed .) Thu s, the l att err el eas e superse des o r set s a si de the rel eas e in the Ori gi nalA gr eem en t. See Hil b e r tv. Co n s e c o S e r vi c e s , L
. L
. C. , 83 6 N

. E.2 d 1001, 10 11 ( I nd. Ct

. App. 2 00 5) ( no tingtha t “s upe r se de” mean s to supp l ant o r setas i de). T h er efore, o nl y i fthe l anguage i n the S uppl ement al Agr ee m en t co nt ains a l at en t ambi g ui ty w i l lwe l oo k t o the Or i gi nalA gr eem ent.N o. 07

- 2831 13 I n ente ring the S up ple m en talA gr eem ent, the parti es each g ave val uabl e co nsi derat i on: RLI agr eed to r el eas e its cl aim to t h e $10 m il li on it cont ributed to Con seco’s defe nse in the Se curi ti es A ction a n d , i n re turn, Conseco agr eed to re l eas e RL I “fro m any and a l l cl ai m s, actio ns, ca us es o fa ct i o n” tha t Con se co ha d o r m ay ha ve “ ba se d o n, a r i s i n g o u t o f, o r i n a n y wa y re late d to

. . . the Se curi ti es ac ti o n . . . ; a ny c l ai m f o r co ve r ag e . . . i n a ny w a y rela ted to th e . . . Sec u rit ies ac tio n . . . .” T h i s c ou rt(as w ell as th e I nd iana C ou rt of A p p eals) ha s held that i n inte rpreting a contr act und erInd i ana l aw , “r el ated ” h as a com m on u nd erstan d ing and m ean ing an d “covers a very b ro ad ran ge of co n n ec tio n s, b ot h ca u sa l an d logic al.” Greg o ryv . Ho meIn s . Co. , 876 F.2d 602 , 606 (7th C ir. 1989). See A m . Ho m e A ssura nc e C o . v. Allen , 81 4 N

. E.2 d 662, 66 9 ( I nd. Ct

. App. 2 00 4)

. In oth er wor ds, i t m ea ns “ ha ving re l ati onshi p: co nnected byr eas on o fan e stab li shed or discove rabl e r el ati on. ” G rego ry, 87 6 F

. 2d at 606, n. 5 ( quotin g W eb st er ’s T h ird N ew Int ’l D ict i on ar y (1 98 1)). T h is re lea se lan gu ag e w h ich th e p ar tie s fre ely n eg ot iat ed is b r o a d , b u ti t s e x p a n s i v e n e s s d o e s n o tc r e a t e a n a mbi g ui ty, a nd the di st r i ctc ou rt di d no t er ri n c o nc l udi ng that ther e was no am bi gui ty i n the Supplem entalA gr eem ent a nd co nfini ng i ts i nter preta ti on t o the S up ple

m entalA gr eem ent. U n der the unam bi guous ter m s o fthe Supplem ental Agr ee m en t, f o rRLIt o b e r el ea se d on a ny duty t o de fen d C o ns ec o i n R uss el l , R uss el l m us t ha ve a r el at i o ns hi p or a connect i on with the Sec uri ti es A cti on. W e co ncl ud e that i t doe s. Conseco was a defendant i n bo th the Se curi ti es Acti o n a nd in Russell, and the R uss el l pl ai nti ffwas a14 N o. 07

- 2831

W e ag ree w ith th e d istrict cou rt tha t C on seco itself“sp ecifi- 1 c al l y a rg ued thatthe t wo m at t er s wer e re l at ed a s s uppor tf or thei r re quest f or [ the dist ri ctcourt] to dism is s the R u ss ell m att er. ” A s n o ted abov e, Conseco as se rt ed that the Securi ti es A ction ’ s “[s] ettlem en t class m em b ers ag reed to r e lease C o n s e c o . . . fr o m any cl aim s . . . thatare re l at ed to c ond uct all eged, in the s ecuri ti es act ion. ” C onsec o conte nd s that the d istrict cou rt erred in co nc lud ing tha t it w as jud icially estop p ed fro m arg u ing tha t R u ss ell was no tr elated t o the Securi ti es Acti on. W e dis agree with Consec o’ s charact eri zat i on ( i

. e. , j udi c i al e s t oppe l ) ofthe di s t ri c tc our t ’ s obs er vat i on. T he d istrict c ou rt d id no t ho ld tha t C on seco w as jud icially e st o p p e d , b u tr a th e r , a s w e d i d a b o v e , i n d e p e n d e n to f C o n se c o ’s shi fti ng argum ents , that the Supp le m ental Ag reem ent rele ase d R LI from any obligati on that itm ay hav e had un der i t s pol i c y t o de fen d Cons ec o i n R u ss ell

. p lain tiff in th e Se c u rit ies A c tio n a n d a p ar ty t o th e Se c u rit i e s Ac t i o n’ s s e t t l e men t
. As we n o t e d ab o v e , the s e ttl em en t to the S ec ur i ti es A cti o n r el ea se d a ny c l ai m s th atthe cl ass m em ber s, such a s the Ru s s e ll p laint iff, ever hado r woul d h avea r i s i n go u to fC o n s e c o ’ s ma n i p u l a t i o n o fa nd f al se re port i ng r ega rdi ng se curi ti es du ring 1999 and 2000. I t was the sa m e f al se re port ing a nd m ani pu l ati on a l l ege d i n the Se curi ti es acti on that pr eci pit ate d the R uss el l a ct i o n, thus the R uss el l a ct i o n i s “r el at ed to ” th e S ec ur i ti es Act i o n. I t was R uss el l ’ s ver y connecti on w i th the S ecuri ti es A cti on that preci pit ate d i ts dism i ssa l

. A ccor dingl y, RLI did not h a v e a d u t y t o d e fe n d C o n s e c o i n R u ssel l bec ause i t was a “c l ai m f o rc o ve r ag e . . . i n anywayr el at ed to
. . . the Sec uri ti es acti on” as setf or th in the Supplem entalA gr eem ent. 1N o. 07

- 2831 15

Co nsec o als o chall enges the dist ri ctcourt’ s grant ofs um m ary 2 jud g m en t to R L I on C on seco ’ s claim s that R L I b rea ch ed its duty ofgoo d f ai th and f ai r dea l i ng. C ons ec o in voke s the “m en d the hold” do ct ri ne. A ccording to the “m end the hold” doctri ne, a c ont ra c tpar t y i s no tp erm i t t ed “ t o c han ge i t s pos i t i on on the m eaning ofthe contr a ct i n the m idd le ofl it igat ion over it

. ” Ut i c a M ut
. Ins . Co

. v . Vig o Co a l Co

. , Inc . , 3 9 3 F. 3d 707, 716 ( 7th Ci r. 20 04 )

. C ons ec o, how eve r, d i d notas s er tthe “m en d the ho ld ” d octr ine b efore th e d istrict cou rt, the reb y w aiv ing its a rg u m en t o n ap p ea l. M etzger, 519 F. 3d at 682. Conseco al so ass er ts that the di str i ct c ourt ’ s inter p re tati on r esul ted i n so m e S upp l em entalA gr eem ent l an guage b e c o mi ngs ur plusa g e a nd tha te xt r i ns i c e v i de nc e i s a dm i ssibl e be cause the S upp l em entalA gr eem en t i s no t a n i ntegr ate d contr act. Because Conseco did notrais e ei ther of these argu m en ts bef o r e the d istri ct cou rt, they are w aiv ed on ap p ea l. M etzger v. Il li no is StatePo li ce, 51 9 F.3d 677, 682 (7th C ir. 2008). Conseco al so chal l enges the dist ri ct c ourt ’ s g ra nt o f s u mma r y j u d g me n t i n f a v o r o f R L I o n i t s c l a i m fo ri n d e mni fi cati on a nd r ei m burse m ent. In appeal in g thi s j ud gm en t, Co ns ec o r el i es upo n the a r g um en ts c ha l l en g i ng the di str i ct c ourt ’ s inter preta ti on o fthe Supplem ental Rel eas e. Because the di str i c t courtpro perl y inter prete d th e Sup p lem en tal Release, w e affirm the d istri c t cou rt’s aw ard of ind em nifi cation and rei m b urs em en t of attorn ey s’ fe es an d co st s t o R L I. 216 N o. 07

- 2831 III

. The di stri ct cour t di d no t er ri n i ts i nt er pr et at i o n o fthe S uppl ement alAgr ee m en t be ca us e th er e w as no l at en t ambi g ui ty
. M o r eo ve r, RLIdi d notha ve a duty t o de fen d Con se co i n R uss el l bec ause R uss el l w as a “claim f or coverag e . . . i n any w ay re l ate d to

. . . the Se curi ti es acti on.” T h e r e f o r e , R L Iw a s e nt i t l e d t o i n d e mn i fi c a t i o n a n d r e i mb ur s e ment. Fina l l y, Co ns e c o wa i v e d i t s “ men d the h o l d” chal l enge to the di str i ct c ourt ’ s deni alo fits br each o f goo d fa i th and f ai r deal i ng cl ai m . W e A FFIRM
.

9- 9- 08