                              In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 06-1050
BCS INSURANCE COMPANY,
                                                  Plaintiff-Appellant,
                                  v.

GUY CARPENTER & CO.,
INCORPORATED,
                                                 Defendant-Appellee.
                          ____________
             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
           No. 04 C 3808—Samuel Der-Yeghiayan, Judge.
                          ____________
     ARGUED OCTOBER 19, 2006—DECIDED JUNE 18, 2007
                          ____________


  Before RIPPLE, MANION and ROVNER, Circuit Judges.
  RIPPLE, Circuit Judge. This case arises out of reinsurance
agreements between BCS Insurance Company (“BCS”) and
a third party, Insurance Specialists, Inc. (“ISI”). These
reinsurance agreements were negotiated by BCS’ former
reinsurance intermediary Guy Carpenter & Company,
Inc. (“Guy Carpenter”). In a six-count complaint, BCS
sued Guy Carpenter, alleging that Guy Carpenter had
failed to obtain adequate reinsurance for BCS. BCS argues
that Guy Carpenter’s actions resulted in an arbitration
award against BCS and in favor of BCS’ reinsurers. The
2                                                No. 06-1050

parties filed cross-motions for summary judgment, and the
district court ruled in favor of Guy Carpenter. For the
reasons set forth in this opinion, we affirm in part and
reverse in part the judgment of the district court.


                              I
                     BACKGROUND
                             A.
  Guy Carpenter, through its predecessor in interest, H.S.
Fox, introduced BCS to ISI. ISI sold extended warranty
programs to a variety of businesses around the country
for products including automobiles, recreational vehicles,
computers and appliances. ISI itself was not an insurer and
therefore needed to affiliate with a company licensed to
provide insurance for the warranties it sold. The ISI
program was a “fronting” program. An insurance company
(here, BCS) issued insurance policies to customers, acting
as the “front,” but was reinsured for the risk of loss associ-
ated with the program. BCS insured certain service con-
tracts administered by ISI. Guy Carpenter served as the
reinsurance intermediary; its responsibility was to secure
reinsurance for BCS on the ISI program.
  In 1992, BCS and ISI entered into a management agree-
ment which governed this fronting relationship. This
agreement established ISI as BCS’ agent in connection
with the administration of the ISI program, giving ISI the
authority to negotiate, underwrite, decline and accept risk.
It also granted ISI the authority to consent to premium
rates on behalf of BCS.
  BCS had no experience in the extended warranty busi-
ness. During these negotiations with ISI, Guy Carpenter
No. 06-1050                                               3

acted as BCS’ exclusive reinsurance intermediary, and
in that capacity, was responsible for procuring reinsurance
for BCS. Therefore, BCS, the insurance company, was
reinsured against risks that it incurred as insurer for the
ISI program. Under this arrangement, ISI would submit
claims in connection with the ISI program to BCS; BCS
would pay those claims and then seek reimbursement from
the reinsurers. From 1992 to 1995, BCS, through Guy
Carpenter, reinsured the program domestically and
retained a portion of the “underwriting risk” associated
with the program; BCS could incur liability despite the
fact that it was reinsured.
  In 1995, BCS notified Guy Carpenter of its intention to
terminate its participation in the ISI program at the end of
the 1995 reinsurance treaty year because the ISI program
had been performing poorly. Guy Carpenter encouraged
BCS to continue fronting the ISI program and stated that
the reinsurance for the program was to move to the
London market. The parties agreed then that BCS would
continue its participation in the program. This agreement
became known as the 1996 reinsurance treaty. However,
unlike the previous arrangement, Guy Carpenter repre-
sented that the program would be 100% reinsured by a
group of London-based reinsurers (the “London reinsur-
ers”). Therefore, BCS would no longer have any risk
whatsoever associated with the program. Guy Carpenter
further stated that it would procure this reinsurance on
behalf of BCS. Guy Carpenter was never in privity with ISI.
  BCS alleges that Guy Carpenter in fact never properly
procured reinsurance for the ISI program. The London
reinsurers consistently reimbursed BCS on all of its
claims until 2000. However, apparently without the
knowledge of BCS, the London reinsurers had sent a
4                                                  No. 06-1050

reservation of rights letter to Guy Carpenter. This reserva-
tion of rights letter preserved the reinsurers’ right to raise
coverage issues at some unspecified time in the future.
  The ISI program continued to perform poorly and,
ultimately, disputes arose as to who bore responsibility
for the losses under the program. In 2000, after a monthly
accounting, the London reinsurers refused to make any
additional payments to BCS and demanded arbitration to
rescind the reinsurance agreements or to obtain com-
pensation from BCS for various losses. In order to toll the
statute of limitations on any claims BCS had against Guy
Carpenter, the parties entered into a tolling agreement on
February 15, 2001.
  BCS entered into arbitration with the London reinsurers
seeking compensation for losses allegedly sustained by
BCS. The London reinsurers brought a recision claim, on
which the arbitrators found for BCS.1 The London reinsur-
ers, however, prevailed in arbitration on two other claims.
The arbitration panel found that BCS, rather than the
reinsurers, was responsible for losses incurred as a result
of the ISI program. The arbitration panel also found that
contracts related to the ITT Lyndon business2 had not been
ceded properly to the reinsurers and thus that business
should be excluded from the reinsurance agreements.


1
  This particular ruling is not contested or addressed on appeal
to this court.
2
  During this arbitration, the London reinsurers claimed, for
the first time, according to BCS, that a block of business re-
ferred to as “ITT Lyndon” was in fact not part of the 1996
reinsurance treaty. BCS claims that Guy Carpenter had repre-
sented continuously that ITT Lyndon was in fact covered by
the reinsurance agreement.
No. 06-1050                                                 5

  The arbitration panel ruled that the London reinsurers
should recover $4,816,769. BCS paid this amount, and
claims to have incurred over three million dollars in
expenses and legal fees associated with the arbitration
proceeding. BCS claims that the liability it owes to the
London reinsurers is due to Guy Carpenter’s misrepresen-
tation and general failure to procure properly reinsurance.


                             B.
  BCS then brought this action against Guy Carpenter. The
action included six counts: breach of contract (Count I),
breach of implied contract (Count II), professional negli-
gence (Count III), implied indemnity (Count IV), breach of
fiduciary duty (Count V) and negligent misrepresenta-
tion (Count VI). On September 2, 2005, both parties moved
for summary judgment.
  The court held that the two year statute of limitations
established by the Insurance Producers Limitations Act,
735 ILCS 5/13-214.4 (“IPLA”), applied to reinsurance
intermediaries such as Guy Carpenter. After examining
the authorities, the court decided that “reinsurance was
subsumed within the statutory scheme of the Illinois
Insurance Act and, therefore, reinsurance companies
should be considered insurance producers for the purposes
of the statute of limitations in Section 13-214.4.” R.82, Ex.A
at 7.
  Having determined that the IPLA applied to reinsurance
intermediaries such as Guy Carpenter, the district court
held that the claims in Counts I, II, III, V and VI of BCS’
complaint fell within the purview of that statute. In order
to determine whether the claims were barred by the
statute’s two-year statute of limitations, the district court
undertook an analysis of when the claims accrued.
6                                                No. 06-1050

  The court held that the claims for breach of contract,
breach of implied contract, professional negligence and
negligent misrepresentation were claims arising out of a
contractual relationship and thus accrued at the time the
contract was breached. That breach occurred, held the
court, at the end of 1998, when Guy Carpenter failed to
negotiate and procure proper reinsurance from the London
reinsurers. Therefore, the district court concluded, these
claims were barred by the two-year statute of limitations
because this period had expired before the parties en-
tered into the tolling agreement in 2001.
  The court then turned to the claim for breach of fiduciary
duty. It first determined that the discovery rule, which tolls
the statute of limitations until “ ‘the plaintiff knows or
reasonably should know that he has been injured and that
his injury was wrongfully caused,’ ” applies to claims for
breach of fiduciary duty. Id. at 10 (quoting Jackson Jordan,
Inc. v. Leydig, Voit & Mayer, 633 N.E.2d 627, 630-31 (Ill.
1994)). The district court then determined that this claim
accrued on June 5, 1998, when BCS was placed on notice
that there were potential problems with the ISI program
for which BCS could be held liable by the London rein-
surers. Because the two-year statute of limitations would
have expired before the parties entered into the tolling
agreement, the district court found BCS’ claim for breach
of fiduciary duty to be time-barred.
 Therefore, the district court granted summary judg-
ment in favor of Guy Carpenter on Counts I, II, III, V and
VI of BCS’ complaint.
  The district court next addressed BCS’ claim for implied
indemnity. The court first noted that the tolling agreement
was executed in February 2001, before the arbitration in
question, and thus the statute of limitations did not bar
No. 06-1050                                               7

BCS’ implied indemnity claim. BCS alleged that Guy
Carpenter should be required to indemnify it for costs it
incurred as a result of the arbitration panel’s award to the
London reinsurers. The court concluded that BCS had
not established that its liability to the London reinsurers
was based solely on its legal relationship with Guy Carpen-
ter. Rather, BCS was held liable to the London reinsurers
because it was ISI’s principal. Because BCS was unable to
show it was derivatively liable in the arbitration for Guy
Carpenter’s actions, the district court granted Guy Car-
penter’s motion for summary judgment on BCS’ Count IV
for implied indemnity.


                            II
                      DISCUSSION
   We review the district court’s grant of summary judg-
ment de novo. Magin v. Monsanto Co., 420 F.3d 679, 686 (7th
Cir. 2005). In doing so, we must construe all facts and make
all reasonable inferences in favor of the non-moving
party. Id. Summary judgment is proper if “the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as matter of law.”
Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986)).


                            A.
  We first address whether the IPLA’s two-year statute of
limitations applies to reinsurance intermediaries such as
Guy Carpenter. The IPLA requires any action “against
8                                                  No. 06-1050

insurance producers, limited insurance representatives, or
registered firms” concerning “any policy of insurance” be
brought within two years of when the claim accrued. 735
ILCS 5/13-214.4.
  Because this topic necessarily addresses an important
issue of statutory construction in the governance of the
insurance industry in the State of Illinois, we invited the
Attorney General of Illinois to submit a brief as amicus
curiae to address this issue. The Attorney General accepted
our invitation3 and, after consulting with the Illinois
Department of Financial and Professional Regulation,
Division of Insurance, concluded that the reinsurance
agreement that is the subject of BCS’ claims against Guy
Carpenter is not a “policy of insurance” within the mean-
ing of the IPLA; furthermore, in the Attorney General’s
view, the IPLA does not apply to parties acting as reinsur-
ance intermediaries such as Guy Carpenter. Amicus
Curiae’s Br. at 2.
  Although we bear ultimate responsibility for the deter-
mination of the content of state law in diversity cases
properly before us, see Salve Regina College v. Russell, 499
U.S. 225, 231 (1991), when we are faced with an area of
particular importance to the state, we may seek the advice
of the state officer charged with the administration of that
state statute to aid in our determination, Lachmund v. ADM
Investor Services, Inc., 191 F.3d 777, 787 n.15 (7th Cir. 1999).
When that state officer accepts our invitation to participate
as amicus curiae, our work is aided significantly, and the
chance of a misinterpretation on our part is reduced


3
  The court expresses its thanks to the Illinois Attorney General
for having accepted our invitation to file a brief as amicus
curiae and for having rendered assistance to the court.
No. 06-1050                                                   9

significantly. See generally Dolores K. Sloviter, A Federal
Judge Views Diversity Jurisdiction Through the Lens of Fed-
eralism, 78 Va. L. Rev. 1671 (1992). Consequently, we give
some deference to the state officer’s interpretation of the
statute in question. See, e.g., Fidelity & Cas. Co. of New York
v. Tillman Corp., 112 F.3d 302, 305 (7th Cir. 1997) (“A federal
court dealing with a federal agency would respect the
agency’s view under the Chevron doctrine; at least that
degree of respect is appropriate when principles of fed-
eralism are in play.”).
   The Attorney General noted that in In re Liquidations of
Reserve Insurance Co., 524 N.E.2d 538, 540 (Ill. 1988), the
Supreme Court of Illinois stated that “the terms ‘insurance’
and ‘reinsurance’ have distinct and separate meanings.” Id.
In the Attorney General’s view, “[t]he Illinois Supreme
Court’s analysis in Reserve Insurance should be applied
here with the same result—just as a reinsurance agree-
ment is not an ‘insurance policy’ . . . it is also not a ‘policy
of insurance.’ ” Amicus Curiae’s Br. at 3. The Attorney
General submits that reinsurance agreements are different
in form and substance from policies of insurance and are
accorded different treatment under the Illinois Insurance
Code; this difference, the Attorney General continues,
reflects the different roles of the two arrangements in the
insurance market. The Attorney General further notes
that a reinsurance intermediary is not considered an
insurance producer under the IPLA. That act incorporates
the definitions of insurance producer, registered firm and
limited insurance representative from Article XXXI of the
Insurance Code. The IPLA applies only to insurance
producers, limited insurance representatives or registered
firms, and thus it is not properly applied to reinsurance
intermediaries such as Guy Carpenter. On reflection, we
10                                             No. 06-1050

believe that the Attorney General’s position is a well-
reasoned and persuasive explanation of Illinois’ regulatory
scheme. Accordingly, we also conclude that the IPLA
does not apply to reinsurance intermediaries and there-
fore does not govern the disputed agreements between BCS
and Guy Carpenter.
  The district court granted summary judgment in favor
of Guy Carpenter on Counts I, II, III, V and VI because,
in its view, the IPLA rendered these claims time-barred.
We have concluded that the IPLA does not apply to
reinsurance intermediaries. Therefore, we must reverse the
ruling of the district court granting summary judgment
in favor of Guy Carpenter on these claims.
   Because the IPLA two-year statute of limitations does not
apply to any of the claims set forth in BCS’ complaint,
it becomes necessary to determine the duration of the
statutes of limitations that do apply to those claims. The
question of the proper statutes of limitations where the
IPLA does not apply was not briefed before the district
court. For that reason, we remand to that court for a
determination of the statutes of limitations applicable to
BCS’ claims. However, because BCS’ claim for implied
indemnity arises out of the arbitration hearing that oc-
curred after the parties entered into a tolling agree-
ment, the statute on that claim has been tolled. We shall
therefore turn to a discussion of the district court’s dis-
missal of BCS’ claim for implied indemnity.


                            B.
  BCS submits that Guy Carpenter should be required to
indemnify BCS for the fees, costs and losses it incurred as
a result of the arbitration panel’s decision to hold BCS
No. 06-1050                                                 11

liable to the London reinsurers for damages arising out of
the poor performance of the ISI program. Under Illinois
law, implied indemnity is available to a principal who,
through no fault of its own, is held liable for its agent’s
negligent tort against a third party. Jinwoong, Inc. v.
Jinwoong, Inc., 310 F.3d 962, 965 (7th Cir. 2002). Further-
more, implied indemnity is applied in situations where
“the indemnitee, although without fault in fact, has been
subjected to liability solely because of the legal relationship
with the plaintiff or a nondelegable duty arising out of
common or statutory law.” Frazer v. A.F. Munsterman, Inc.,
527 N.E.2d 1248, 1252 (Ill. 1988) (emphasis added). The
ultimate purpose of indemnification is to “shift[ ] the
entire responsibility from the party who has been com-
pelled to pay the plaintiff’s loss to another who actually
was at fault.” Kerschner v. Weiss & Co., 667 N.E.2d 1351,
1355 (Ill. App. Ct. 1996). To prevail on a claim for implied
indemnity, a plaintiff must establish: (1) that there was a
pre-tort relationship between the indemnitor and the
indemnitee, and (2) that the indemnitee was held deriva-
tively liable for the acts of the indemnitor. Id. at 1356. The
liability must be wholly derivative, resulting solely out
of the agent’s actions. Id. at 1358.
  The arbitration panel’s grant of relief was a result of ISI’s
negligence. In fact, the panel stated it granted the “request
for relief relating to ISI’s payment of uncovered claims, late
reported claims, and unreported premium and lost invest-
ment income.” R.A. 93-3, Ex.2 at ¶ 61. The ISI program had
performed badly and as a result BCS incurred losses. BCS
submits that these losses were due entirely to the failure
of Guy Carpenter to procure properly reinsurance.
  In connection with the ISI program, BCS and ISI entered
into a Management Agreement to govern the relationship
12                                             No. 06-1050

between the parties. This Management Agreement clearly
established that ISI was to serve as BCS’ agent for purposes
of administration of the program. Id., Ex.8 at Art. 1 ¶ 1.
Because the ISI program performed badly, BCS and the
London reinsurers suffered monetary losses. BCS was
forced to pay the London reinsurers a large sum of money
to compensate for these losses. However, these losses
were due, in the first instance, to the poor performance of
the ISI program. The record does not support a finding
that BCS’ losses solely were due to Guy Carpenter’s failure
to properly procure reinsurance. The ISI program per-
formed poorly irrespective of the existence (or non-exis-
tence) of any reinsurance agreements. Therefore, the
ultimate loss cannot be said to be wholly derivative of any
wrongdoing on the part of Guy Carpenter. Because BCS
has failed to demonstrate that its liability resulted solely
from the actions of Guy Carpenter, BCS fails to state a
claim for implied indemnity.


                       Conclusion
   For the foregoing reasons, the judgment of the district
court is affirmed in part and reversed and remanded in
part. We reverse the ruling of the district court on Counts
I (Breach of Contract), II (Breach of Implied Contract),
III (Professional Negligence), V (Breach of Fiduciary Duty)
and VI (Negligent Misrepresentation). We affirm the
judgment of the district court dismissing Count IV (Implied
Indemnity). BCS may recover its costs in this court.
                                   AFFIRMED in part and
                         REVERSED and REMANDED in part
No. 06-1050                                          13

A true Copy:
      Teste:

                     _____________________________
                     Clerk of the United States Court of
                       Appeals for the Seventh Circuit




               USCA-02-C-0072—6-18-07
