In the 

United States Court of Appeals 

For the Seventh Circuit ____________________

Nos. 19‐2300, 19‐3122, & 19‐3235

STERLING NATIONAL BANK,

Plaintiff/Counterclaim Defendant‐ 

Appellant/Cross‐Appellee,

v.

BERNARD N. BLOCK, et al.,

Defendants/Counterclaim Plaintiffs‐ 

Appellees/Cross‐Appellants.

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:16‐cv‐09009 — Harry D. Leinenweber, Judge.

____________________

ARGUED SEPTEMBER 23, 2020 — DECIDED JANUARY 5, 2021

____________________

Before SYKES, Chief Judge, and HAMILTON and ST. EVE, Cir‐

cuit Judges.

HAMILTON, Circuit Judge. In 2015, plaintiff  Sterling Na‐

tional Bank purchased the Damian Services Corporation from

its prior owners (the defendant Sellers). The stock purchase

agreement set up an escrow of two million dollars available

to resolve disputes that might arise after the purchase. The
2 Nos. 19‐2300, 19‐3122, & 19‐3235

parties dispute here the right to the escrowed money. The is‐

sues are governed by the elaborate Stock Purchase Agreement

in which the parties set up a comprehensive, custom‐tailored

set of rights, obligations, remedies, and procedures for resolv‐

ing disputes.

Shortly after the purchase, a disgruntled former Damian

employee called some of Damian’s clients to tell them of a bill‐

ing practice that the Sellers had instituted years earlier. When

Sterling learned of the situation, it investigated with the help

of a law firm and forensic accountant. After several months,

Sterling concluded that under the Sellers’ management,

Damian had overcharged its clients by over one million dol‐

lars. Sterling refunded these overpayments to each of its cur‐

rent clients, but not to any former clients.

Sterling then demanded indemnification from the escrow.

Sterling claimed that the Sellers had misrepresented

Damian’s liabilities and vulnerability to litigation. The Sellers

refused, leading to this lawsuit. The district court granted

summary judgment to the Sellers on the theory that Sterling

missed the seemingly strict deadline for claiming indemnifi‐

cation under the stock purchase agreement. The district court

then denied the Sellers’ request for statutory pre‐ and post‐

judgment interest on the escrow money. Both sides have ap‐

pealed.

We reverse summary judgment for the Sellers. Whether

Sterling’s demand for indemnification was late depends at

best on disputed facts. Even if the demand was late, however,

the agreement’s elaborate terms provide that any delay could

be held against Sterling only “to the extent that [Sellers] irrev‐

ocably forfeit[] rights or defenses by reason of such failure.”

Undisputed facts show that the Sellers have not irrevocably
Nos. 19‐2300, 19‐3122, & 19‐3235 3

forfeited any claims or defenses, so the timing of Sterling’s de‐

mand does not matter. We decline both sides’ invitations to

decide the merits of Sterling’s claims as a matter of law in the

first instance. We agree with the district court’s denial of pre‐ 

and post‐judgment interest. We remand to the district court

for further proceedings on the merits.

I. Factual and Procedural Background

A. Damian’s Billing Practices

The Damian Services Corporation provides various ad‐

ministrative and payroll services to independent temporary

staffing companies (“temp agencies”). To explain the parties’

dispute, we must explain how Damian serves and bills its cli‐

ents. The baseline level of service, offered to “money‐only”

clients, is that Damian provides short‐term payroll funding to

pay the temp agencies’ employees. Damian offers other ser‐

vices to “full service” clients. Although Damian contracted

with its temp agency clients, it invoiced the end‐user compa‐

nies that hired the temporary workers. The end‐user employ‐

ers would then pay Damian, which would, in turn, send the

payments to the temp agencies after taking its cut as a fee for

its services.  

Damian encourages its client staffing agencies to obtain

prompt payment from the end‐user employers. If the end‐

user employers pay quickly, then the temp agencies can pay

Damian faster and will be eligible for a discount. If an end‐

user waits too long and payment to Damian is delayed,

Damian assesses a late fee to its client. The parties agree that

Damian negotiated these discounts and fees (including tim‐

ing) with every client temp agency. Despite variations in rates
4 Nos. 19‐2300, 19‐3122, & 19‐3235

and other terms, however, the underlying client contracts al‐

ways pegged these discounts and late fees to the invoice date.

The parties dispute the exact contours of Damian’s billing

and invoice‐dating practices before the 2009 change. In broad

brushstrokes, Damian would generally wait until it had re‐

ceived all the necessary information about each temporary

employee’s hours and rates before issuing an invoice. The in‐

voice would thus be issued and dated some time after the

workweek had ended—generally on a Friday, five business

days after the preceding Sunday. Damian marketed this delay

in processing payment as a benefit to potential clients.  

In 2009, however, Damian began dating its invoices as of

the last day of the workweek, that is, Sunday. The date listed

on an invoice was thus earlier than not just the generation and

remission of the invoice, but also, in some cases, even

Damian’s receipt of the information needed to generate it.

This change gave Damian’s clients a narrower window to re‐

ceive early‐payment discounts and a larger chance of being

hit with late‐payment fees. Sterling refers to this practice as a

“backdating” scheme. For the sake of neutrality, we refer to it

more blandly as “the 2009 change.”

There is evidence that Damian took steps to hide the 2009

change from its clients. Damian never publicized the change,

although it had previously alerted its clients to other changes

in business practices that could affect them. There is also evi‐

dence that Damian developed a script for its employees to fol‐

low if a client ever complained. Employees were instructed to

tell the complaining client that they would “look into it,”

would seek approval for a “change back” to the previous bill‐

ing scheme, and, if a change were approved, would refund

fees and tell the client that Damian would have caught the
Nos. 19‐2300, 19‐3122, & 19‐3235 5

(deliberate) dating change by the end of the quarter. Several

clients noticed and complained, but dozens of other did not.

B. Sale, Investigation, and Indemnification Demand

More than five years later, on February 27, 2015, the Sellers

sold Damian to Sterling for a little over $25 million. Under

what we call “the Agreement,” the Stock Purchase Agreement

at the center of these appeals, Sterling deposited two million

dollars of the purchase price in an escrow account. If no dis‐

putes arose by December 31, 2015, one million dollars would

be released to the Sellers, and the rest would be released in

August 2016, eighteen months after closing.  

In July 2015, soon after the closing, a former Damian em‐

ployee began contacting Damian clients to expose the 2009

change. Sterling, which says it had not known before about

the 2009 change, quickly investigated. It retained the law firm

Wachtell, Lipton, Rosen & Katz to investigate. Sterling also

placed an internal hold on all documents relevant to the in‐

vestigation and told Damian’s temp agency clients that it had

uncovered a billing discrepancy. By August 11, 2015, Wachtell

Lipton had prepared a preliminary memorandum on poten‐

tially fraudulent billing practices. The next day, Wachtell Lip‐

ton discussed its initial findings in a telephone call with the

U.S. Attorney’s Office in the Northern District of Illinois as a

potential case of corporate fraud. Sterling also hired a forensic

accounting firm, AlixPartners, which calculated that if the

2009 change had not occurred, Damian’s clients would have

saved $1,289,916 in discounts and avoided late fees.  

As Wachtell Lipton wrapped up its investigation, it

drafted another memorandum, dated November 27, and pre‐

sented it to the U.S. Attorney’s Office on December 2. The
6 Nos. 19‐2300, 19‐3122, & 19‐3235

prosecutors declined to take up the case. Nine days later, on

December 11, 2015, Sterling sent the Sellers a formal notice

demanding indemnification under the Agreement. Before the

Sellers responded, Sterling contacted each of Damian’s then‐

current clients that it had determined had been overcharged

and offered full refunds on the overcharges.

The Sellers rejected Sterling’s demand. They said that the

thirty‐page demand did not provide sufficient detail on how

the total amount was computed. The Sellers refused to partic‐

ipate in the Agreement’s process for resolving indemnifica‐

tion claims. As a result of the dispute, no escrow funds have

been released.

C. Procedural History

Sterling filed this suit in September 2016 seeking indemni‐

fication under the Agreement. Sterling’s claims arise under

state law; federal jurisdiction rests on diversity of citizenship.

The operative complaint alleges that the Sellers’ failure to dis‐

close the 2009 change and its consequences breached the

Sellers’ representations and warranties in the Agreement, and

that the Sellers breached the Agreement by refusing to indem‐

nify Sterling. The Sellers counterclaimed for, among other

things, a declaratory judgment holding that Sterling is not en‐

titled to indemnification and that the Sellers are entitled to

pre‐ and post‐judgment interest at 12% on the money in es‐

crow.  

Sterling and the Sellers filed cross‐motions for summary

judgment. Sterling argued that undisputed facts showed that

the Sellers are liable for breaching warranties and representa‐

tions in the Agreement. The Sellers argued that Sterling failed
Nos. 19‐2300, 19‐3122, & 19‐3235 7

to follow the Agreement’s procedures for demanding indem‐

nification. In the alternative, the Sellers argued that the 2009

change of invoice dates did not actually breach any underly‐

ing client contracts, so that no representations or warranties

were breached.  

The district court granted summary judgment for the

Sellers on the narrow procedural ground that Sterling’s in‐

demnification notice was too late and that the delay preju‐

diced the Sellers. Sterling appealed. After some confusion

about whether any counterclaims remained pending, the dis‐

trict court reopened the case and then denied the Sellers’ mo‐

tion for pre‐ and post‐judgment interest. Although the district

court did not issue an amended Rule 58 judgment, both sides

appealed.

II. Appellate Jurisdiction

We must first consider whether these appeals are properly

before us. The lack of a separate, final Rule 58 judgment

makes the appellate jurisdiction picture messier than neces‐

sary. The district court noted in its summary judgment opin‐

ion that neither side had addressed all of the Sellers’ counter‐

claims but still entered judgment for the Sellers pursuant to

Rule 58. The court later reopened the case because some

claims had not yet been resolved. The Sellers then voluntarily

dismissed two of their counterclaims and explained that the

only remaining issues were whether they were entitled to pre‐ 

and post‐judgment interest and their costs. The court ruled on

those outstanding motions without issuing an amended Rule

58 judgment.  

Rule 58 requires: “Every judgment and amended judg‐

ment must be set out in a separate document . . . .” Fed. R. Civ.
8 Nos. 19‐2300, 19‐3122, & 19‐3235

P. 58(a). This “‘separate document’ requirement is important

because it keeps jurisdictional lines clear.” Wisconsin Central

Ltd. v. TiEnergy, LLC, 894 F.3d 851, 854 (7th Cir. 2018). This

formality is not, however, a “prerequisite to appealing. The

losing party can appeal a judgment ... before the entry of the

Rule 58 judgment order if ... the judgment really is final

within the meaning of 28 U.S.C. § 1291.” Borrero v. City of Chi‐

cago, 456 F.3d 698, 699–700 (7th Cir. 2006). We may exercise

appellate jurisdiction without an amended Rule 58 judgment

“if the district court has otherwise indicated its intent to fi‐

nally dispose of all claims.” Wisconsin Central, 894 F.3d at 854.  

When a district court grants declaratory relief, the court

“must declare specifically and separately the respective rights

of the parties, not simply state in a memorandum opinion, mi‐

nute order, or a form prescribed for judgment in a civil case

that a motion has been granted or denied.” Calumet River

Fleeting, Inc. v. Int’l Union of Operating Engineers, Local 150,

AFL‐CIO, 824 F.3d 645, 651 (7th Cir. 2016) (cleaned up),

quoted in INTL FCStone Financial Inc. v. Jacobson, 950 F.3d 491,

502 (7th Cir. 2020). But “we may nevertheless have jurisdic‐

tion if the practicalities weigh heavily toward a common sense

conclusion that the district court intended to enter a final

judgment.” Id.1

Here, the district court’s opinions and orders show it in‐

tended to dispose of all claims. See Sterling National Bank v.

1 In a civil case where the district court has failed to render a Rule 58

judgment, “we treat judgment as entered 150 days after the entry of the

judgment or order on the civil docket.” Calumet River Fleeting, 824 F.3d at

650, citing Fed. R. Civ. P. 58(c)(2)(B) and Fed. R. App. P. 4(a)(7)(A)(ii).

Judgment here was effectively entered no later than March 8, 2020, 150

days after the district court resolved the last pending issues.
Nos. 19‐2300, 19‐3122, & 19‐3235 9

Block, 2019 WL 5085715 (N.D. Ill. Oct. 10, 2019) (“Sterling II”)

(ruling on costs and pre‐ and post‐judgment interest); Sterling

National Bank v. Block, Case No. 16‐cv‐9009, Dkt. 182 (“The

case will not terminate until the Court issues a ruling on costs

and pre‐  and post‐judgment interest.”); see also Dkt. 206

(transcript of hearing memorialized by Dkt. 182). We expect a

more thorough accounting of each party’s respective rights

and obligations at the conclusion of an action seeking declar‐

atory relief. Still, we are confident that the district court in‐

tended to enter a final judgment here, especially since it de‐

nied the Sellers’ declaratory claim in full. See Calumet River

Fleeting, 824 F.3d at 651. Finally, the Sellers’ acknowledgment

at oral argument that they had withdrawn their remaining

counterclaims with prejudice assures us that the district court

disposed of all the claims before it. See Wetzel v. Glen St. An‐

drew Living Community, LLC, 901 F.3d 856, 867 (7th Cir. 2018)

(accepting similar concession). We therefore have jurisdiction

over these appeals.

III. Summary Judgment Standard

“We review a district court’s summary judgment ruling de

novo and consider the facts and draw all inferences in the

light most favorable to the nonmoving party.” Henry v. Hulett,

969 F.3d 769, 776 (7th Cir. 2020) (en banc); see also Black Earth

Meat Market, LLC v. Village of Black Earth, 834 F.3d 841, 847 (7th

Cir. 2016) (considering cross‐motions for summary judgment

“one at a time, construing all facts and drawing all reasonable

inferences in favor of the non‐moving party”). “Summary

judgment is appropriate when ‘there is no genuine dispute as

to any material fact and the movant is entitled to judgment as

a matter of law.’” Henry, 969 F.3d at 776, quoting Fed. R. Civ.
10 Nos. 19‐2300, 19‐3122, & 19‐3235

P. 56(a). The parties agree that Illinois law applies to their

claims.

“The primary objective in construing a contract is to give

effect to the intent of the parties,” which is best shown by the

language of the contract itself. Gallagher v. Lenart, 226 Ill. 2d

208, 232–33, 314 Ill. Dec. 133, 148, 874 N.E.2d 43, 58 (2007). “If

the words in the contract are clear and unambiguous, they

must be given their plain, ordinary and popular meaning.”

Thompson v. Gordon, 241 Ill. 2d 428, 441, 349 Ill. Dec. 936, 944,

948 N.E.2d 39, 47 (2011), quoted in Soarus LLC v. Bolson Mate‐

rialsInt’l Co., 905 F.3d 1009, 1011 (7th Cir. 2018). With contracts

with substantial stakes, negotiated between commercially so‐

phisticated parties, we interpret contracts “literally” because

such parties “know how to say what they mean and have an

incentive to draft their agreement carefully.” Bank of America,

N.A. v. Moglia, 330 F.3d 942, 946 (7th Cir. 2003) (applying Illi‐

nois law); see also West Bend Mut. Ins. Co. v. Procaccio Painting

& Drywall Co., 794 F.3d 666, 680 (7th Cir. 2015) (applying Illi‐

nois law and refusing to ignore contract’s plain meaning: the

“sophisticated contract partner[] [] easily could have included

the terms” it wanted to read into the contract); Central Illinois

Light Co. v. Home Ins. Co., 213 Ill. 2d 141, 156, 290 Ill. Dec. 155,

164, 821 N.E.2d 206, 215 (2004) (“[S]ophisticated business en‐

tities [] can be assumed to have specialized knowledge of the

contractual terms they employ.”).  

All portions of a contract should be “construed as a whole,

viewing each part in light of the others.” Gallagher, 226 Ill. 2d

at 233, 314 Ill. Dec. at 148, 874 N.E.2d at 58. We also try to give

meaning to every provision of the contract and avoid render‐

ing any provisions superfluous. Land of Lincoln Goodwill In‐

dus., Inc. v. PNC Financial Servs. Grp., 762 F.3d 673, 679 (7th
Nos. 19‐2300, 19‐3122, & 19‐3235 11

Cir. 2014) (applying Illinois law). At the same time, we should

also recognize that drafters of contracts, like drafters of stat‐

utes, may “intentionally err on the side ofredundancy to ‘cap‐

ture the universe.’” See Abbe R. Gluck & Lisa Schultz Bress‐

man, Statutory Interpretation from the Inside—an Empirical

Study of Congressional Drafting, Delegation, and the Canons: Part

I, 65 Stan. L. Rev. 901, 934 (2013); see also Continental Casualty

Co. v. MidStates Reinsurance Corp., 388 Ill. Dec. 214, 219, 24

N.E.3d 122, 127 (Ill. App. 2014) (accepting that drafters of con‐

tract took the proverbial “belt and suspenders” approach ra‐

ther than straining to find different meanings).

IV. Compliance with Indemnification Procedures

The district court granted summary judgment to the

Sellers on the ground that the Agreement does not require in‐

demnification if the notice is too late and the delay causes ir‐

revocable harm. The court reasoned that Sterling’s notice was

late and left the Sellers without any way to challenge Ster‐

ling’s offers to reimburse Damian’s clients or its six‐figure in‐

vestigation budget.  

On appeal, Sterling argues that the court made three er‐

rors. First, Sterling defends its notice as timely. Second, Ster‐

ling argues that even if its notice was late, any delay should

have no consequence because the Sellers have not irrevocably

forfeited any rights or defenses. Under the parties’ elaborate

Agreement, we conclude that the Sellers have not shown that

Sterling’s demand was late. Also, undisputed facts show that

even if Sterling’s demand had been late, the Sellers have not

irrevocably forfeited any rights or defenses by reason of any

delay. We need not reach Sterling’s third argument, that fac‐

tual disputes about the extent of any prejudice to the Sellers

preclude summary judgment.
12 Nos. 19‐2300, 19‐3122, & 19‐3235

Section 8.05(c) of the Agreement provides the following

procedures for indemnification claims between the parties:

Direct Claims. Any Action by an Indemnified

Party on account of a Loss which does not result

from a Third Party Claim (a “Direct Claim”)

shall be asserted by the Indemnified Party giv‐

ing the Indemnifying Party reasonably prompt

written notice thereof, but in any event not later

than ten (10) days after the Indemnified Party

becomes aware of such Direct Claim. The failure

to give such prompt written notice shall not,

however, relieve the Indemnifying Part of its in‐

demnification obligations, except and only to

the extent that the Indemnifying Party irrevoca‐

bly forfeits rights or defenses by reason of such

failure. Such notice by the Indemnified Party

shall describe the Direct Claim in reasonable de‐

tail, shall include copies of all material written

evidence thereof and shall indicate the esti‐

mated amount, if reasonably practicable, of the

Loss that has been or may be sustained by the

Indemnified Party.

Late Notice?

We are not persuaded that Sterling’s demand was actually

late, or at least that the undisputed facts show it was late. The

Agreement required notice within ten days, but only after a

party became “aware of” the claim, and it required a demand

with “reasonable detail.” This combination makes for an am‐

biguous mess, at least as applied to this dispute. The parties

disagree about just how much Sterling needed to know before

being “aware of” its claim against the Sellers and whether a
Nos. 19‐2300, 19‐3122, & 19‐3235 13

precise trigger is needed to start the ten‐day clock for notice.

According to Sterling, it did not become “aware of” its claim

until Wachtell Lipton completed its investigation, especially

since the Sellers contended that even the thirty‐page demand

that Sterling presented was not detailed enough to count as a

proper demand under the Agreement. The Sellers, on the

other hand, counter that Sterling became “aware of” the claim

no later than August 2015, when Sterling and Wachtell Lipton

first presented the basic facts surrounding the 2009 change to

the U.S. Attorney’s Office.

Section 8.05(c) of the Agreement built in inherent tension

between the need to investigate a Direct Claim before making

a demand and the need to make a demand within just ten

days after becoming “aware of” it. We have studied the

Agreement’s definitions of Direct Claims and Actions and the

need to support a demand forindemnification with a “reason‐

able” but uncertain quantum of evidence. We conclude that

whether Sterling’s demand came more than ten days after it

became “aware of” its Direct Claim cannot be decided in favor

of the Sellers as a matter of law. We also conclude that we need

not decide whether Sterling is entitled to summary judgment

on the issue. As we explain next, Sterling is entitled to sum‐

mary judgment on the notice issue on a different basis. Even

if its demand was late, the undisputed facts show that the

Sellers did not irrevocably forfeit any rights or defenses by

reason of the timing of Sterling’s demand.

B. Irrevocable Forfeiture?

Section 8.05(c) of the Agreement requires prompt notice of

a Direct Claim. Delay is excused, however, unless the Sellers

“irrevocably forfeit[] rights or defenses by reason of such fail‐

ure.” The Sellers claim that Sterling’s supposed delay caused
14 Nos. 19‐2300, 19‐3122, & 19‐3235

them to forfeit three rights: (1) the right to settle the underly‐

ing claims with overcharged clients; (2) the right to litigate the

underlying breach‐of‐contract claims with overcharged cli‐

ents, including raising certain defenses; and (3) the right to

investigate as granted by the Agreement. The Sellers cannot

show, however, that they have irrevocably forfeited any of

these rights. Under § 8.05(c), therefore, the timing of Sterling’s

indemnification demand could not relieve the Sellers of a

duty to indemnify. See Dkt. 135, at *14–15 (Sterling’s request

for summary judgment on this issue); Dkt. 136, ¶ 66.

First, the Sellers have not irrevocably forfeited the right to

settle the underlying claims because they never had that right

to begin with. The Sellers argue that Sterling’s premature set‐

tlements of these claims with current clients for one hundred

cents on the dollar deprived them of their right to drive

harder bargains. The Sellers cite cases applying Illinois law in

the insurance context that have required notice to head off in‐

sureds’ incentives to overpay when playing with someone

else’s money.

The problem for the Sellers is that this case does not di‐

rectly involve any of Damian’s clients or temporary employ‐

ment payroll contracts. To use the Agreement’s terms, Ster‐

ling has asserted a Direct Claim, not a Third Party Claim: Ster‐

ling has sued the Sellers for concealing these potential liabili‐

ties. Whether Sterling actually paid refunds to Damian’s cli‐

ents or not does not tell us whether it was required to do so.

The key liability issue for indemnification is whether the

Sellers misrepresented anything in the Agreement. To be sure,

if a temp agency had ever sued or threatened to sue Damian

for the 2009 change after the 2015 purchase, that would have

been a Third Party Claim. Such a claim would have required
Nos. 19‐2300, 19‐3122, & 19‐3235 15

the parties to consult before any settlement. See § 8.05(b)

(“Settlement of Third Party Claims”). But that is not what hap‐

pened. The cooperation clauses in § 8.05(b) simply do not ap‐

ply.

Moreover, the fact that the Agreement expressly requires

the parties to cooperate on Third Party Claims implies that

there is no such duty on Direct Claims, for which the Agree‐

ment says nothing about cooperation. See Land of Lincoln

Goodwill, 762 F.3d at 679 (“[W]e attempt to ... avoid a con‐

struction that would render a provision superfluous.”); Rick‐

her v. Home Depot, Inc., 535 F.3d 661, 668 (7th Cir. 2008), dis‐

cussing Drexel State Bank of Chicago v. O’Donnell, 344 Ill. 173,

183, 176 N.E. 348, 352 (1931) (Illinois courts use expressio unius

canon as a rule of construction, but do not allow it to override

a contract’s unambiguous terms).

The Sellers’ citations to insurance cases miss the mark.

Many of those cases applied contract language expressly re‐

quiring cooperation during litigation or settlement. The par‐

ties here drafted their elaborate Agreement without requiring

cooperation for Direct Claims. Compare § 8.05(c), with Waste

Management, Inc. v. Int’l Surplus Lines Ins. Co., 144 Ill. 2d 178,

192, 161 Ill. Dec. 774, 779, 579 N.E.2d 322, 327 (1991) (“The co‐

operation clause in this case imposes upon insureds the duty

to assist insurers in the conduct of suits and in enforcing any

right to contribution or indemnity against persons potentially

liable to insureds.”); Country Mut. Ins. Co. v. Livorsi Marine,

Inc., 358 Ill. App. 3d 880, 882, 885, 295 Ill. Dec. 665, 666, 668,

833 N.E.2d 871, 872, 874 (2004) (distinguishing “notice of oc‐

currence” and “notice of lawsuit” cases because the contract

in question gave the insurer “the right and duty to defend any

suit” orto “settle any claim or suit”) (internal quotation marks
16 Nos. 19‐2300, 19‐3122, & 19‐3235

omitted); American Country Ins. Co. v. Bruhn, 289 Ill. App. 3d

241, 244, 224 Ill. Dec. 805, 807, 682 N.E.2d 366, 368 (1997) (no‐

tice provision required insured to “[c]ooperate with [insurer]

in the investigation, settlement or defense of any claim or

suit”).  

To be sure, some cases applying Illinois law have gone be‐

yond contractual texts to find implied remedies for lack of no‐

tice in contracts to give full effect to notice provisions. See,

e.g., Kerr v. Illinois Central R.R. Co., 283 Ill. App. 3d 574, 581–

82, 219 Ill. Dec. 81, 87, 670 N.E.2d 759, 765 (1996) (construing

notice provision to include implied remedy where excess in‐

surer did not reserve right to participate in defense of claim,

lest insurer “be called on simply to write the check”); see also

AU Electronics, Inc. v. Harleysville Grp., Inc., 82 F. Supp. 3d 805,

814 (N.D. Ill. 2015) (explaining rationale of Illinois insurance

rules as applied to contracts that “entitle the insurers to con‐

trol the insured’s defense against a covered claim and negoti‐

ate a settlement”).  

The principal‐agent problems motivating the unusual,

non‐textual finding of an implied duty to cooperate in Kerr

are less relevant here because the underlying alleged contract

breaches were not with strangers but with Damian’s clients.

And apart from policy arguments, the Sellers’ contention that

the notice requirement implicitly granted the Sellers a right to

bargain independently with their former clients is not

supported by the text of the sophisticated parties’ elaborate

Agreement. Nothing in the language of the Agreement

required Sterling to involve the Sellers in any settlement

negotiations or to allow the Sellers to settle the claims

themselves. It would seem odd to give the Sellers the ability

to poison the relationship between Damian and its clients.
Nos. 19‐2300, 19‐3122, & 19‐3235 17

Odd enough, anyway, not to find an implied right to do so.

Any exception that might be gleaned from Kerr does not

apply here, so any supposed delay in giving notice of the

indemnification claim did not cause the Sellers to lose a right

secured by the Agreement.  

Second, the Sellers also have not irrevocably forfeited the

right to litigate the underlying contract claims. They are in

fact litigating the merits of those claims in this case. They can

still assert contract defenses, and the merits of Sterling’s claim

hinge on whether the underlying hypothetical contract claims

against Damian would have had any merit. That is, even

though the temp agency clients are not parties to this litiga‐

tion, Sterling must still show that Damian was liable to them.

The Sellers can litigate these claims now.

The Sellers counter that this reading unduly narrows their

rights to litigate the claims. Their theory seems to be that they

will have a more difficult time proving damages now that

some but not all clients have already been reimbursed. But the

parties here are commercially sophisticated. They wrote their

Agreement to nullify an indemnification demand for delay

only if and to the extent the delay resulted in “irrevocable for‐

feiture” of a claim or defense. That’s a high bar. If they had

wanted the Agreement to bar indemnification if late notice

merely impeded or weakened a claim or defense, they could

have said so. E.g., Procaccio Painting, 794 F.3d at 680.

Third, the Sellers have not irrevocably forfeited any inves‐

tigation rights. The relevant provisions of § 8.05(c) are in some

tension on this point:
18 Nos. 19‐2300, 19‐3122, & 19‐3235

The Indemnified Party shall allow the Indemni‐

fying Party and its professional advisors to in‐

vestigate the matter or circumstance alleged to

give rise to the Direct Claim, and whether and

to what extent any amount is payable in respect

of the Direct Claim and the Indemnified Party

shall assist the Indemnifying Party’s investiga‐

tion by giving such information and assistance

(including access to the Company’s premises

and personnel and the right to examine and

copy any accounts, documents orrecords) as the

Indemnifying Party or any of its professional

advisors may reasonably request.

The Sellers claim that this language gave them a right to par‐

ticipate in Sterling’s internal, pre‐claim investigation, which

they say was irrevocably lost when Sterling investigated on

its own. The Sellers also contend that they have lost the right

to conduct their own timely investigation because (a) infor‐

mation about the settlement value of the underlying claims is

now unobtainable, (b) any subsequent investigation would be

rendered a nullity because Sterling paid the clients already,

and (c) Sterling unfairly blocked third‐party discovery in this

case.

The Sellers’ arguments assert rights not granted by the

Agreement. Section 8.05(c) of the Agreement is ambiguous in

important respects, but it quite plainly assumes that Sterling

would need to conduct some investigation of its own before

giving notice of a Direct Claim for indemnification. The

Agreement required Sterling, in giving formal notice, to “de‐

scribe the Direct Claim in reasonable detail, [] include copies
Nos. 19‐2300, 19‐3122, & 19‐3235 19

of all material written evidence thereof and [] indicate the es‐

timated amount ... of the Loss.” § 8.05(c). Sterling could not

have met that requirement without a substantial pre‐demand

investigation.

The Sellers’ asserted right to investigate must be consistent

with these requirements. Nothing in the Agreement granted

the Sellers a right to conduct a contemporaneous investiga‐

tion even before Sterling gave notice of its demand. Perhaps,

as the Sellers suggest, it was unreasonable for Sterling to run

up $650,000 in investigation costs. If so, that issue would affect

only whether the professional fees were indemnifiable

“Losses,” not whether one can find an implied (and illogical)

right for an indemnifying party to conduct its own investiga‐

tion even before a demand is made.  

The Agreement refers to the “Indemnifying Party’s inves‐

tigation,” not to the “Indemnifying Party’s participation in the

Indemnified Party’s investigation,” which would make little

sense. After demand is made, according to the Agreement, the

Sellers had a limited right of access to documents and person‐

nel. The Sellers had that right whether the notice was late or

timely, but they did not have a right to do more earlier.

The Sellers also complain about being denied the right to

depose certain clients of Damian under the Federal Rules of

Civil Procedure in this action. The Sellers’ argument on this

point is difficult to follow. Nothing in the Agreement itself

provides—or could provide—the right to subpoena third par‐

ties through the parties’ private dispute‐resolution proce‐

dures. The Federal Rules of Civil Procedure apply in this case,

of course, but on appeal, the Sellers have not challenged any

case‐management limits on depositions. On remand, the dis‐
20 Nos. 19‐2300, 19‐3122, & 19‐3235

trict court may of course choose to revisit the scope of discov‐

ery, but nothing about this dispute relieves the Sellers of any

otherwise valid claim for indemnification.

The Sellers’ original response to the indemnification de‐

mand underscores that any right to investigate is far more

limited than they argue now. As noted, the Sellers objected to

Sterling’s thirty‐page demand for indemnification on the

ground that it did not provide enough detail. That is, the

Sellers claimed the demand was insufficient under the Agree‐

ment unless and until Sterling provided the kinds of docu‐

mentation that could have come only from an investigation

that would have been even more thorough than the one that

the Sellers now argue took too long and was too expensive.  

Along those lines, the Sellers also argue that the right to

investigate was lost because Sterling prematurely settled any

outstanding claims by customers. We reject this attempt to re‐

cast the first two arguments within the framework of the in‐

vestigation for the reasons above. The Agreement simply did

not grant the Sellers a right to negotiate with third parties in

addressing a Direct Claim like this. And even if the Sellers lost

the ability to learn exactly what each current client might have

accepted as a settlement offer for purposes of computing

damages in this lawsuit, they have not lost access to Damian’s

former clients, who have not yet been paid. The Sellers have

not irrevocably lost any opportunity to investigate the

amounts for which temp agencies would settle.2

2 We need not resolve Sterling’s back‐up argument that disputed facts

about the extent to which the Sellers were harmed require remand fortrial.

Section 8.05(c) relieves the Sellers of a duty to indemnify only “to the ex‐

tent that the Indemnifying Party irrevocably forfeits rights or defenses.”

Our conclusion that the extent of irrevocable harm was zero resolves this
Nos. 19‐2300, 19‐3122, & 19‐3235 21

V. Directing Summary Judgment on Other Grounds?

Looking beyond the notice issues, both sides also contend

that they should prevail as a matter of law on issues the dis‐

trict court did not address. Their arguments focus on the mer‐

its of the underlying contract disputes that Damian’s clients

might have raised based on the 2009 change in dating in‐

voices.

We are not convinced that either side should prevail as a

matter of law on the merits of those hypothetical claims for

breach of contract. To highlight just two of our concerns, the

underlying client contracts did not include specific language

on how invoices should be dated. That silence may make it

impossible to decide with one stroke whether the 2009 change

did or did not breach all of those contracts. The evidence of

the Sellers’ misleading script for calming any restless clients

supports an inference that the Sellers knew the 2009 change

was not authorized and could lead to unhappy clients and

even litigation. On the other hand, the fact that no clients ever

sued and that most apparently never noticed the 2009 change

supports an inference that it was not a significant concern to

them.3

issue. In any event, the district court’s grant of judgment as a matter of

law would have been erroneous even if the Sellers had demonstrated some

irrevocable harm because they did not show that, taking all the evidence

in the light most favorable to Sterling, the Sellers had forfeited their entire

case, that is, that the extent of forfeiture was complete.

3 The Sellers’ brief argues that the client contracts required Damian to

“render” the invoices promptly at the end of the workweek and that these

provisions implicitly also required dating the invoices as of the end of the

workweek. But at oral argument, the Sellers conceded that they did not
22 Nos. 19‐2300, 19‐3122, & 19‐3235

To the extent that either side relies on a course of dealing

or other evidence beyond the inconclusive text of the client

contracts themselves, it may be impossible to decide the mer‐

its of those hypothetical claims without a close look at

Damian’s dealings with each client. That course would be a

poor candidate for summary judgment, let alone an appellate

decision in the first instance. See International Financial Servs.

Corp. v. Chromas Technologies Canada, Inc., 356 F.3d 731, 740

(7th Cir. 2004) (refusing to direct summary judgment on issue

that “depends on a host of considerations that this court is ill‐

positioned to weigh as a matter of first impression”).   

VI. Pre‐judgment Interest Under the Agreement

The district court held that the Sellers were entitled to the

two million dollars in escrow but were not entitled to pre‐

judgment interest on the funds. Sterling II, 2019 WL 5085715,

at *6.  We must set aside the ruling that the Sellers are entitled

to the escrow funds, but the issue of pre‐judgment interest is

likely to arise on remand. Those funds will eventually need to

be distributed to someone. We agree with the district court

that, under the terms of the parties’ Agreement, pre‐judgment

interest is not available.

As a general matter, in a contract dispute like this one, pre‐

judgment interest may be awarded under state law as a matter

of statute or contract. See Procaccio Painting, 794 F.3d at 680

(turning to state law); Kouzoukas v. Retirement Board of Police‐

men’s Annuity & Benefit Fund of City of Chicago, 234 Ill. 2d 446,

“render” the invoices until after the invoice date. Because the client con‐

tracts did not speak to dating and the only arguably relevant contract lan‐

guage is inapposite, we cannot decide this case based on only the “render”

language.
Nos. 19‐2300, 19‐3122, & 19‐3235 23

474, 334 Ill. Dec. 924, 940, 917 N.E.2d 999, 1015 (2009) (“As a

general rule, prejudgment interest is recoverable only where

authorized by the agreement of the parties or by statute.”).

The Sellers argue they were entitled to pre‐judgment in‐

terest under the Illinois Interest Act, 815 ILCS 205/2, which

authorizes interest awards for “all moneys after they become

due on any bond, bill, promissory note, or other instrument

of writing” and “money withheld by an unreasonable and

vexatious delay of payment.” Sterling counters that the

Agreement expressly waived prejudgment interest outside of

the indemnification framework and that the Sellers failed to

comply with the indemnification procedures in seeking inter‐

est.  

Several Agreement provisions are relevant. First, Section I

identifies “interest” as a form of “Losses.” The Agreement

also has an expansive “Exclusive Remedies” provision in

which “the parties acknowledge and agree that their sole and

exclusive remedy with respect to any and all claims (other than

claims arising from ... intentional misconduct ...) for any

breach of any representation, warranty, covenant, agreement

or obligation set forth herein or otherwise relating to the sub‐

ject matter of this Agreement shall be pursuant to the indem‐

nification provisions . . . .” § 8.09 (emphasis added). Likewise,

“each party [] waives, to the fullest extent permitted under

Law, any and all rights, claims and causes of action for any

breach of any representation, warranty, covenant, agreement

or obligation set forth herein or otherwise relating to the sub‐

ject matter of this Agreement it may have against the other

parties hereto ... except pursuant to the indemnification pro‐

visions.” Id.
24 Nos. 19‐2300, 19‐3122, & 19‐3235

Section 8.03 explains when the Sellers may seek indemni‐

fication: for “any and all Losses incurred or sustained by, or

imposed upon the Seller Indemnitees based upon, arising out

of, with respect to or by reason of[] ... any breach or non‐ful‐

fillment of any covenant, agreement or obligation to be per‐

formed by Buyer pursuant to this Agreement.”  

The Agreement required that two million dollars be de‐

posited into the escrow account at closing, with one million to

be released to the Sellers on December 31, 2015, and the rest

to be released eighteen months after closing, in August 2016.

§ 2.02(b). These funds, however, were not to be released “in

the event one or more claims have been asserted by Buyer

against Seller” pursuant to the indemnity provisions. Id. In

that case, Sterling was to “reasonably estimate the amount of

Losses that could reasonably be incurred by [Sterling] if such

Asserted Claims were successful (the ‘Reserve’).” Id. In the

event Sterling makes a claim, the Reserve may not be released.

The parties also signed a separate Escrow Agreement, which

included provisions allowing the parties to agree to move the

escrow funds to alternate interest‐bearing investment ac‐

counts. See generally Dkt. 20‐2. The Agreement also included

a custom‐tailored provision for post‐judgment interest, calling

for interest to accrue at 12%, but not starting until five busi‐

ness days after an agreement to pay or a “final, non‐appeala‐

ble adjudication.” § 8.06(a).

The Sellers have not shown that they complied with the

indemnification procedures described above to demand inter‐

est. They became aware of Sterling’s Direct Claim on Decem‐

ber 11, 2015 and responded by the end of that month, yet it is

not clear that they ever provided proper notice of a claim for
Nos. 19‐2300, 19‐3122, & 19‐3235 25

interest. The parties had plenty of opportunities to put the es‐

crowed funds in an interest‐bearing account, yet they never

did so.

Apart from the Sellers’ ironic failure to follow the same in‐

demnification notice procedures that they insist Sterling

failed to follow, neitherthe Agreement nor the Illinois Interest

Act provides for pre‐judgment interest here. The Agreement

acknowledges that interest may be available as a Loss, but it

funnels all claims through the indemnification provisions.

Those terms allow the Sellers to recoup Losses only for

breaches of the Agreement. Here, the Agreement did not re‐

quire the release of funds that “could be reasonably incurred

by [Sterling] if such Asserted Claims were successful.” Im‐

portantly, “reasonably” modifies the dollar value of the

claims if successful, not the probability of victory on any

claims.

Sterling’s demand for the entire two million dollars may

or may not succeed in the end, but it was not unreasonable as

a matter of law for Sterling to make the demand. A forensic

accounting firm estimated that Damian overcharged its cli‐

ents by almost $1.3 million, and Wachtell Lipton and the fo‐

rensic accountant billed hundreds of thousands of dollars.

The costs of enforcing the indemnification provision were also

uncertain. If Sterling did not breach the Agreement by de‐

manding indemnification, the Agreement bars pre‐judgment

interest.

To avoid this logic, the Sellers cite Katzman v. Helen of Troy

Texas Corp., 2013 WL 1496952 (S.D.N.Y. Apr. 11, 2013), in

which a district court held that a similarly broad waiver of

non‐indemnification remedies did not foreclose statutory in‐
26 Nos. 19‐2300, 19‐3122, & 19‐3235

terest. The court reasoned that the contract did not “ever an‐

ticipate[] a controversy of this nature” (restraint of funds in

an escrow account) so that the contract could not have waived

pre‐judgment interest. Id. at *5.  

We do not disagree with Katzman, but that case differs

from this one in decisive ways. First, this contract is subject to

Illinois law, which uses only a presumption of pre‐judgment

interest in some cases, while Katzman applied New York law,

which generally requires prejudgment interest. Compare, e.g.,

Santa’s Best Craft, LLC v. Zurich American Ins. Co., 408 Ill. App.

3d 173, 191, 346 Ill. Dec. 733, 941 N.E.2d 291, 307–08 (2010)

(trial court’s decision to award pretrial interest is discretion‐

ary and subject to prudential concerns), and Kouzoukas, 234

Ill. 2d at 476, 234 Ill. Dec. at 942, 917 N.E.2d at 1017 (“Statutes

permitting the recovery of interest ... must be strictly con‐

strued.”), with Katzman, 2013 WL 1496952, at *2 (“A long line

of case law has held that prejudgment interest is mandatory.”)

(collecting cases applying New York law).

Second, although the waiver provisions in the Agreement

here and the Katzman contract are similar, the overall contracts

are not. The Agreement here expressly contemplated that

funds could be held in escrow past eighteen months if Sterling

brought a Direct Claim. That’s exactly what happened. Noth‐

ing in the Agreement suggests that holding funds in escrow

because of an ongoing dispute would breach the Agreement.

That’s the point of the escrow fund. Thus, unlike in Katzman,

the parties here did “anticipate a controversy of this nature”

and excluded it from the definition of indemnifiable Losses.

The Sellers further argue that the Exclusive Remedies pro‐

vision does not apply here because Sterling’s request for in‐

demnification qualified as “intentional misconduct” in three
Nos. 19‐2300, 19‐3122, & 19‐3235 27

ways. None is convincing. First, they claim that it was miscon‐

duct for Sterling to seek indemnification for funds it has not

yet paid to former clients. But indemnifiable “Losses” in‐

cludes “liabilities,” an ambiguous word that can referto a case

such as this, where “society is not yet commanding perfor‐

mance, but it will so command if the possessor of the power

does some operative act.” Black’s Law Dictionary (11th ed.

2019), quoting William R. Anson, Principles of the Law of

Contract 9 (Arthur L. Corbin ed., 3d Am. Ed. 1919). The

Sellers’ reading of this provision would also present Sterling

with a Catch‐22: the Sellers say both that demanding indem‐

nification for as‐yet unpaid funds is intentional misconduct,

but also that paying refunds before an indemnification de‐

mand was a breach that caused the Sellers irrevocable harm.

Second, the Sellers claim that Sterling committed inten‐

tional misconduct in seeking attorneys’ fees. The definition of

Losses in Section 1 is internally contradictory. It both includes

and excludes attorneys’ fees: “Losses means all ... out of

pocket third party costs or expenses of whatever kind, includ‐

ing reasonable attorneys’ fees ... provided, however, that

‘Losses’ shall not include ... attorneys’ fees and expenses.” Re‐

gardless of how this issue might ultimately be resolved, we

cannot see how arguing one side of this “classically ambigu‐

ous” contradiction could be intentional misconduct. See Uni‐

versal Guaranty Life Ins. Co. v. Coughlin, 481 F.3d 458, 464 (7th

Cir. 2007).

Third, the Sellers claim that even if hypothetical future

payments and attorneys’ fees are included, Sterling’s itemized

Losses did not add up to two million dollars, so that it was

misconduct to ask for more than Sterling would be entitled to.
28 Nos. 19‐2300, 19‐3122, & 19‐3235

But Losses also include “the cost of enforcing any right to in‐

demnification,” which the parties have now been litigating for

four years.4

Even if the Agreement did not waive claims to pre‐judg‐

ment interest, it is not clear that the Illinois Interest Act would

apply. The Act allows for pre‐judgment interest for “money

due on a” document or “vexatious refusal to pay.” Money was

not due on the Agreement because it expressly granted Ster‐

ling the right to reserve escrow funds. Although the district

court did not directly address the “vexatious” prong, itrightly

noted that a “faulty reading” of the Agreement differs from

willful misconduct. Sterling II, 2019 WL 5085715, at *6. Re‐

gardless of who prevails at the end of this lawsuit, it is hard

to see on this record how the district court’s refusal to award

pre‐judgment interest here could be an abuse of discretion.

See Twenhafel v. State Auto Prop. & Casualty Ins. Co., 581 F.3d

625, 630–31 (7th Cir. 2009).  

The conclusion that pre‐judgment interest is unavailable

here is bolstered by the fact that the Agreement explicitly re‐

quires post‐judgment interest in certain circumstances. The

parties’ choice to write around the indemnification require‐

ments for one specific exception further underscores that they

did not intend to do so for all cases. See Rickher, 535 F.3d at

668 (explaining that Illinois courts use expressio unius canon as

an interpretive tool).

Finally, we address two remaining issues that may resur‐

face on remand: the district court’s refusal to award post‐

4 We decide here that requesting attorneys’ fees as Losses did not

amount to intentional misconduct, but we do not decide here whether at‐

torneys’ fees are in fact Losses.
Nos. 19‐2300, 19‐3122, & 19‐3235 29

judgment interest at the higher contractual rate and its award

of certain costs for duplicating electronically stored infor‐

mation.  

A federal statute calls for post‐judgment interest on

money judgments at a formula tied to the market for one‐year

Treasury bills. 28 U.S.C. § 1961. The Sellers want to collect

12% post‐judgment interest based on a provision in the

Agreement imposing that higherrate where the indemnifying

party fails to make full payment within five business days of

a “final, non‐appealable adjudication.” See § 8.06(a). The dis‐

trict court correctly observed that the Agreement’s 12% inter‐

est rate does not apply until after a judgment becomes final

and non‐appealable. Again, that’s what the parties bargained

for, and that’s the rule that applies.

Regarding costs, the circuits disagree under 28 U.S.C.

§ 1920(4) about the outer boundary of reimbursable copying

costs for electronically stored information. See Colosi v. Jones

Lang LaSalle Americas, Inc., 781 F.3d 293, 297–98 (6th Cir. 2015),

discussing CBT Flint Partners, LLC v. Return Path, Inc., 737 F.3d

1320 (Fed. Cir. 2013), and Race Tires America, Inc. v. Hoosier

Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012); see also United

States ex rel. Long v. GSDMIdea City, LLC, 807 F.3d 125, 131–32

(5th Cir. 2015) (“Courts have not uniformly addressed which

electronic discovery costs are recoverable under the most re‐

cent version of § 1920(4).”); but see Hecker v. Deere & Co., 556

F.3d 575, 591 (7th Cir. 2009) (concluding without elaboration

that “the costs [] for converting computer data into a readable

format ... are recoverable under 28 U.S.C. § 1920”). If the par‐

ties wish to press this issue on remand, they may want to pay

close attention to these differences. Some of the requested

copying costs here may lie beyond the outer limits of some or
30 Nos. 19‐2300, 19‐3122, & 19‐3235

all of the circuits’ tests. Compare Race Tires, 674 F.3d at 167,

citing Hecker, 556 F.3d at 591 (excluding from taxable costs

“collecting and preserving ESI; processing and indexing ESI;

[and] keyword searching of ESI for responsive and privileged

documents”), with Dkt. 176 at *59 (requesting costs for quality

control and communicating with Sellers); *63 (requesting

costs for time spent verifying password).

The judgment in favor of the Sellers is REVERSED and this

case is REMANDED for further proceedings consistent with

this opinion.