                                    In the

        United States Court of Appeals
                      For the Seventh Circuit
                          ____________________
No. 16-1669
SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA,
                                      Plaintiff-Appellant,

                                       v.

TARGET CORPORATION,
                                                       Defendant-Appellee.
                          ____________________

             Appeal from the United States District Court for the
               Northern District of Illinois, Eastern Division.
              No. 13-cv-5910 — Elaine E. Bucklo, District Judge.
                          ____________________

  ARGUED NOVEMBER 4, 2016 — DECIDED DECEMBER 29, 2016
                          ____________________

   Before FLAUM and KANNE, Circuit Judges, and MAGNUS-
STINSON, District Judge. ∗
    MAGNUS-STINSON, District Judge. Plaintiff-Appellant Selec-
tive Insurance Company of South Carolina (“Selective”) filed
a declaratory judgment action, asking the district court to de-
clare that it owed no duty to defend or indemnify Defendant-


∗ Of   the Southern District of Indiana, sitting by designation.
2                                                   No. 16-1669

Appellee Target Corporation (“Target”) in a lawsuit initiated
by customer Angela Brown, who sued Target after a fitting
room door fell on her. The district court granted summary
judgment in favor of Target, finding that Target was an addi-
tional insured on a commercial general liability insurance pol-
icy (the “Policy”) that the door supplier, Harbor Industries,
Inc. (“Harbor”), had with Selective. The district court further
held that Selective had both a duty to defend and indemnify
Target for the entire cost Target incurred settling the Brown
litigation. Selective appealed the district court’s decision and,
for the reasons that follow, we affirm.
                        I. Background
     On December 17, 2011, Angela Brown was injured at a Tar-
get store in Gurnee, Illinois, when a fitting room door came
off its hinges and fell on her. She sued Target in Illinois state
court on February 14, 2012, and Target removed the case to
federal court. In her complaint, Ms. Brown alleged that Target
was negligent for failing to maintain and repair the fitting
room door and failing to warn her that the fitting room door
was in an unreasonably dangerous and hazardous condition.
Target filed a third-party complaint against Harbor—the com-
pany that Target had contracted to supply the fitting rooms at
the Gurnee store—seeking contribution and indemnification.
Discovery during the Brown litigation revealed that the same
fitting room door fell on another Target customer approxi-
mately one week before it fell on Ms. Brown. Ultimately, both
Target and Harbor settled with Ms. Brown.
    Target tendered its defense of Ms. Brown’s lawsuit to Se-
lective on May 7, 2012, claiming that it was an additional in-
sured on Harbor’s Policy with Selective because of a contract
with Harbor. On July 30, 2013, Selective filed the underlying
No. 16-1669                                                        3

declaratory judgment action against Target in Illinois state
court, and Target removed it to federal court on the basis of
diversity jurisdiction.
    The parties filed cross-motions for summary judgment,
and the district court granted summary judgment to Target
after finding in its favor on three issues. First, the district court
found that Target was an additional insured on Harbor’s Pol-
icy with Selective because of the interaction between a Sup-
plier Qualification Agreement (“Supplier Agreement”) that
required Harbor to designate Target as an additional insured
and their Program Agreement for the fitting rooms. Second,
the district court found that Selective had a duty to defend
Target because Ms. Brown’s allegations fell within the scope
of the Policy, since they could reasonably be read to assert a
bodily injury caused in whole or in part by Harbor’s product.
Third, the district court found that Target had settled the law-
suit with Ms. Brown in reasonable anticipation of liability
and, thus, Selective had a duty to indemnify Target for costs
incurred defending and settling the Brown litigation. Final
judgment was entered in favor of Target in the total amount
of $714,450.24. Selective now appeals.
                           II. Analysis
    Summary judgment is appropriate where there are no
genuine issues of material fact and the movant is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). We review
de novo a district court’s decision on cross-motions for sum-
mary judgment. Calumet River Fleeting, Inc. v. Int’l Union of
Operating Eng’rs, Local 150, AFL-CIO, 824 F.3d 645, 647 (7th
Cir. 2016) (citations omitted). “The general standards for sum-
mary judgment do not change: with cross summary judgment
4                                                     No. 16-1669

motions, we construe all facts and inferences therefrom in fa-
vor of the party against whom the motion under considera-
tion is made.” Id. at 647-48 (citations and quotations omitted).
Because we are only considering whether it was proper for
the district court to grant summary judgment in favor of Tar-
get, we resolve any factual disputes in Selective’s favor.
    Our subject matter jurisdiction over this dispute is based
on the parties’ diversity of citizenship. 28 U.S.C. § 1332. Fed-
eral courts deciding state law claims under diversity jurisdic-
tion apply the forum state’s choice of law rules to select the
applicable state substantive law. McCoy v. Iberdrola Renewables,
Inc., 760 F.3d 674, 684 (7th Cir. 2014) (citations omitted). If no
party raises a choice of law issue to the district court, “the fed-
eral court may simply apply the forum state’s substantive
law.” Id. Although Selective correctly points out that there is
a Minnesota choice-of-law provision in one of the contracts at
issue, it admits that Target and Selective have both argued the
insurance coverage issues under Illinois law. Thus, we will
continue to apply Illinois law to this case.
    A. The Contracts at Issue
   Three contracts are relevant to addressing the parties’ ar-
guments—Target and Harbor’s Supplier Agreement, which
was executed in April 2001; Target and Harbor’s Program
Agreement for the fitting rooms, which was executed in April
2009; and Harbor and Selective’s Policy, which was in effect
when Ms. Brown was injured on December 17, 2011.
  Target and Harbor executed the Supplier Agreement in
April 2001. It provides, in relevant part, that it
       shall apply to and control and shall be deemed
       incorporated into all agreements relating to the
No. 16-1669                                                   5

       purchase of non-retail (not for resale) goods
       and/or services from [Harbor] by Target, includ-
       ing, but not limited to, any program agreement
       (or other agreement specific to the goods or ser-
       vices to be provided) entered into by the parties
       (Program Agreement)… . In the event of any
       conflict between this Agreement and the spe-
       cific Order or Program Agreement, the terms of
       the Order or Program Agreement shall govern.
The Supplier Agreement requires Harbor to maintain com-
mercial general liability (“CGL”) insurance “in full force and
effect during the term of this Agreement” and to “designate
Target as an additional insured by endorsement acceptable to
Target.” The Supplier Agreement provides that it “shall re-
main in effect until terminated as provided herein.” It is un-
disputed that neither Target nor Harbor has terminated the
Supplier Agreement pursuant to that provision.
    In April 2009, Target and Harbor entered into the Program
Agreement for Harbor to supply fitting rooms to Target. The
Program Agreement incorporates the terms and conditions of
the Supplier Agreement and provides that as long as Harbor
complies with certain criteria, “Target agrees to purchase
from [Harbor] all of Target’s needed supply of the Goods [Fit-
ting Rooms] during the Term of this Program Agreement.” It
identifies specific parts to be provided, including fitting room
doors. It further provides that “[t]his Program Agreement
shall begin on the Effective Date and end on July 1, 2010
(through the July 2010 cycle) unless otherwise terminated.”
    Harbor’s Policy with Selective that was in effect on the
date of Ms. Brown’s injury provides, in relevant part, that Se-
lective “will pay those sums that the insured becomes legally
6                                                     No. 16-1669

obligated to pay as damages because of ‘bodily injury’ or
‘property damage’ to which this insurance applies.” The Pol-
icy specifically provides “[p]roducts-completed operations
hazard” coverage that “[i]ncludes all ‘bodily injury’ and
‘property damage’ occurring away from premises you own or
rent and arising out of ‘your product.’” An endorsement to
the Policy provides as follows:
       WHO IS AN INSURED is amended to include
       as an additional insured any person or organi-
       zation whom you have agreed in a written con-
       tract, written agreement or written permit to
       add as an additional insured on your policy.
       Such person or organization is an additional in-
       sured only with respect to liability for “bodily
       injury” or “property damage” or “personal and
       advertising injury” caused, in whole or in part,
       by … “your product” … .
    B. The Additional Insured Provision of the Selective Policy
    The parties dispute whether Target was an additional in-
sured on Harbor’s Policy with Selective. Specifically, the par-
ties dispute the interaction between Target and Harbor’s Sup-
plier Agreement and Program Agreement and whether the
term provisions in those contracts conflict.
   Under Illinois law, the goal of contract interpretation is to
ascertain the parties’ intent and, in doing so, we first look to
“the plain and ordinary meaning” of the contract language.
Aeroground, Inc. v. CenterPoint Properties Trust, 738 F.3d 810,
813 (7th Cir. 2013) (quoting Gallagher v. Lenart, 874 N.E.2d 43,
58 (Ill. 2007)). We must construe the contract “as a whole,
viewing each part in light of the others.” Aeroground, 738 F.3d
No. 16-1669                                                 7

at 813 (citing Gallagher, 874 N.E.2d at 58). We also must seek
to give effect to each clause and word used, without rendering
any terms meaningless. Aeroground, 738 F.3d at 813 (citing
Hufford v. Balk, 497 N.E.2d 742, 744 (Ill. 1986)).
   There is no dispute that the Program Agreement for Har-
bor to supply Target with the fitting rooms terminated in July
2010 before Ms. Brown’s injury. The parties dispute, however,
whether the Supplier Agreement remained in effect when Ms.
Brown was injured, such that it could be a “written contract”
rendering Target an additional insured on Harbor’s Policy
with Selective. Selective argues that although the term of the
Supplier Agreement was open ended, that provision directly
conflicts with the Program Agreement’s July 2010 termination
date, and the Supplier Agreement expressly states that the
Program Agreement controls if there is a conflict. Target dis-
agrees with this interpretation, emphasizing that the Supplier
Agreement was a broad agreement that even now has not
been terminated.
    We agree with the district court that applying the plain
and ordinary meaning of the contract language, the Supplier
Agreement is a broad agreement governing the overarching
relationship between Target and Harbor. It contemplates dis-
crete purchases by Target from Harbor to be governed by the
provisions set forth in future program agreements. One of
those future agreements was the Program Agreement exe-
cuted by Target and Harbor eight years after the Supplier
Agreement. That Program Agreement required Target to pur-
chase fitting rooms from Harbor until July 2010 if Harbor met
the conditions specified therein. Although that obligation
ended in July 2010, the language in the more general Supplier
Agreement makes it clear that the parties did not intend for
8                                                             No. 16-1669

the Supplier Agreement to terminate when specific program
agreements terminated. For example, the Supplier Agreement
states that Harbor must maintain “[p]roducts and completed
operations liability coverage,” and it also requires Harbor to
provide Target with a certificate of insurance evidencing the
required coverage “upon each renewal of such policies.”
These provisions confirm the parties’ intent for the insurance
requirement set forth in the Supplier Agreement to survive
the expiration of specific program agreements entered into
between Target and Harbor. Additionally, this understanding
of the relationship between the Supplier Agreement and the
Program Agreement construes both contracts as a whole, ren-
ders no terms or clauses in either meaningless, and applies the
plain and ordinary meaning of the language in each contract
to ascertain the parties’ intent as to the relationship between
the two. 1 For these reasons, we agree with the district court
that the Supplier Agreement is a “written contract” requiring
Harbor to designate Target as an additional insured on the
Policy.
   But the inquiry does not end there. The Policy specifically
limits additional insured coverage such that, in relevant part,
Target is “an additional insured only with respect to liability

1 Selective argues that Target concedes that the Supplier Agreement and
the Program Agreement were a single contract. Selective cites Target’s
third-party complaint in the Brown litigation to support this position be-
cause Target attached the contracts as a single exhibit to its pleading and
referred to them as one. Selective’s position ignores the reality that the two
contracts were executed eight years apart and were not one contract. Cf.
Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007) (“We further note the long-
standing principle that instruments executed at the same time, by the
same parties, for the same purpose, and in the course of the same transac-
tion are regarded as one contract … ”).
No. 16-1669                                                              9

for ‘bodily injury’ … caused, in whole or in part, by … ‘[Har-
bor’s] product’ … .” Accordingly, we must also determine
whether liability for Ms. Brown’s claim was caused by Har-
bor’s product before we can conclude that Target was an ad-
ditional insured.
     It is beyond dispute that the fitting room door that fell on
Ms. Brown was Harbor’s product. The Program Agreement
between Harbor and Target explicitly states that the “prod-
uct” at issue in the agreement is “fitting rooms,” and it specif-
ically identifies “fitting room door” as a component to be pur-
chased. 2 Ms. Brown’s complaint alleged that she sustained
bodily injury after being struck by a fitting room door that
was in “an unreasonably hazardous and dangerous condi-
tion.” We readily conclude that Ms. Brown’s claim for “bodily
injury” was “caused, in whole or in part,” by Harbor’s “prod-
uct.” (Emphasis added.) Thus, we agree with the district court
that Target was an additional insured under the Selective Pol-
icy.
    C. Selective’s Duty to Defend Target
    The parties dispute whether Selective owed Target a duty
to defend it in the Brown litigation. Specifically, the parties
dispute whether the allegations in Ms. Brown’s complaint
against Target were sufficient to trigger Selective’s duty to de-
fend. The parties also dispute whether the allegations in Tar-
get’s third-party complaint against Harbor can be considered
in determining whether Selective had a duty to defend Target.


2We reject Selective’s specious argument that a fitting room may have
goods or products in it but that it is not a “product” entitled to coverage
under the Policy. The Program Agreement unequivocally provides other-
wise.
10                                                    No. 16-1669

    The duty to defend is broader than the duty to indemnify.
Health Care Indus. Liab. Ins. Program v. Momence Meadows Nurs-
ing Ctr., Inc., 566 F.3d 689, 693 (7th Cir. 2009). As a general rule
under Illinois law, the duty of an insurance company to de-
fend against a suit “is determined by the allegations of the
complaint in that suit rather than by what is actually proved.”
Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co., 796 F.3d 717,
724 (7th Cir. 2015). To determine whether an insurer has a
duty to defend, we compare the factual allegations of the un-
derlying complaint to the language of the insurance policy.
Amerisure Mut. Ins. Co. v. Microplastics, Inc., 622 F.3d 806, 810
(7th Cir. 2010). If the facts alleged fall within or potentially
within the policy’s coverage, the insurer’s duty to defend
arises. Id. “Both the policy terms and the allegations in the
underlying complaint are liberally construed in favor of the
insured, and any doubts and ambiguities are resolved against
the insurer.” Id. at 811 (citations omitted). The general rules
that favor the insured, however, must “yield to the paramount
rule of reasonable construction which guides all contract in-
terpretations.” Id.
   When an insurer tries to deny coverage without seeking a
declaratory judgment or defending under a reservation of
rights, our inquiry is necessarily limited to the allegations in
the underlying complaint. See Landmark Am. Ins. Co. v. Hilger,
838 F.3d 821, 824 (7th Cir. 2016) (citing MFA Mut. Ins. Co. v.
Crowther, Inc., 458 N.E.2d 71, 73 (Ill. App. Ct. 1983) (“An in-
surer may not justifiably refuse to defend an action against its
insured unless it is clear from the face of the complaint that
the allegations fail to state facts which bring the claim within,
or potentially within, the policy’s coverage.”)). When an in-
surer seeks a declaratory judgment, however, that limitation
No. 16-1669                                                   11

does not apply. Landmark Am., 838 F.3d at 824. In fact, the Illi-
nois Supreme Court has emphasized that “‘[t]he trial court
should be able to consider all the relevant facts contained in
the pleadings, including a third-party complaint, to deter-
mine whether there is a duty to defend. After all, the trial
court need not wear judicial blinders and may look beyond
the complaint at other evidence appropriate to a motion for
summary judgment.’” Pekin Ins. Co. v. Wilson, 930 N.E.2d
1011, 1020 (Ill. 2010) (emphasis omitted) (quoting Am. Econ.
Ins. Co. v. Holabird & Root, 886 N.E.2d 1166, 1179 (Ill. App. Ct.
2008)). “The only time such evidence should not be permitted
is when it tends to determine an issue crucial to the determi-
nation of the underlying lawsuit.” Pekin Ins., 930 N.E.2d at
1020 (citation omitted); see also Landmark Am., 838 F.3d at 824-
25 (“[W]hen an insurer has elected to either defend under a
reservation of rights or file a declaratory judgment action, …
the insurer may present evidence beyond the underlying
complaint, so long as it does not tend to determine an ultimate
issue in the underlying proceeding.”) (citation omitted). A
crucial issue is “one that would collaterally estop the plaintiff
in the underlying lawsuit from raising a theory of recovery or
be crucial to the insured’s liability.” Landmark Am., 838 F.3d at
825.
    Bearing in mind that we must construe the Policy liberally
in favor of coverage when determining the duty to defend, we
agree with the district court that the allegations in Ms.
Brown’s complaint against Target were sufficient to trigger Se-
lective’s duty to defend. Ms. Brown alleged that she was a
business invitee at Target’s store in Gurnee when the fitting
room door fell off its hinges and injured her. While Selective
emphasizes that Ms. Brown’s legal claims focused on Target’s
negligence, Illinois law gives little weight to the legal label a
12                                                    No. 16-1669

party uses to characterize the underlying allegations. Santa’s
Best Craft, LLC v. St. Paul Fire & Marine Ins., 611 F.3d 339, 346
(7th Cir. 2010) (citing Lexmark Int’l, Inc. v. Transp. Ins. Co., 761
N.E.2d 1214, 1221 (Ill. App. Ct. 2001)). Instead, if “the alleged
conduct arguably falls within at least one of the categories of
wrongdoing listed in the policy,” a duty to defend arises.
Santa’s Best, 611 F.3d at 346 (citing Lexmark, 761 N.E.2d at
1221).
    As we have concluded, Target is an additional insured on
the Policy because the allegations in Ms. Brown’s complaint
can reasonably be read to fall within the Policy’s coverage for
bodily injury caused in whole or in part by Harbor’s product.
The parties do not dispute that the Policy provides liability
coverage for bodily injury arising out of Harbor’s product
within the “products-completed operations hazard” provi-
sion. This triggered Selective’s duty to defend. See Amerisure,
622 F.3d at 810 (“If the facts alleged in the underlying com-
plaint fall within, or potentially within, the policy’s coverage,
the insurer’s duty to defend arises.”). Illinois law rejects Selec-
tive’s argument that it can avoid this duty simply because of
legal labels Ms. Brown used in her complaint. See Santa’s Best,
611 F.3d at 346 (citing Lexmark, 761 N.E.2d at 1221).
    Alternatively, even if the facts alleged in Ms. Brown’s com-
plaint were insufficient to trigger Selective’s duty to defend,
the allegations in Target’s third-party complaint against Har-
bor certainly were enough. We can consider the allegations of
Target’s third-party complaint because Selective sought a de-
claratory judgment and does not argue that considering them
will determine an issue crucial to the determination of the un-
derlying lawsuit. Landmark Am., 838 F.3d at 824. In its third-
party complaint, Target alleged that it contracted with Harbor
No. 16-1669                                                             13

for Harbor to design and provide materials for the construc-
tion of the Gurnee fitting rooms. Target also alleged that Har-
bor’s negligence in doing so caused Ms. Brown’s injuries.
Again, these allegations squarely fall within the Policy’s cov-
erage. Thus, we agree with the district court that Selective had
a duty to defend Target in the Brown litigation.
    D. Selective’s Duty to Indemnify Target
    The parties disagree whether Selective had a duty to in-
demnify Target for costs it incurred while defending and set-
tling the lawsuit with Ms. Brown. On appeal, Selective em-
phasizes that it is impossible to reasonably conclude that Tar-
get’s entire settlement payment represented damages for a
covered loss. 3
    The duty to indemnify “is determined once liability has
been affixed.” Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co.,
796 F.3d 717, 724 (7th Cir. 2015). If an insured settles an under-
lying claim before trial, “it must show that it settled an other-
wise covered loss in reasonable anticipation of liability” for
the duty to indemnify to apply. Caterpillar, Inc. v. Great Am. Ins.
Co., 62 F.3d 955, 966-67 (7th Cir. 1995) (citing United States Gyp-
sum Co. v. Admiral Ins. Co., 643 N.E.2d 1226, 1244 (Ill. App. Ct.
1994)); see also Rosalind Franklin Univ. of Med. & Sci. v. Lexington
Ins. Co., 8 N.E.3d 20, 39 (Ill. App. Ct. 2004) (“When an insured
settles an underlying claim, it must show that the settlement
was made in reasonable anticipation of liability for an other-
wise covered loss.”).




3 Selective does not challenge the reasonableness of the amount of Target’s

settlement.
14                                                   No. 16-1669

    There is no evidence in the record that Target allocated its
settlement with Ms. Brown into covered and uncovered
claims. We have previously predicted how Illinois courts
would handle this situation in the context of the duty to in-
demnify:
       Consistent with the Illinois policy that a cover-
       age action should not require the insureds to
       conclusively establish their own liability in the
       interest of promoting settlement, we think the
       proper inquiry is whether the claims were not
       even potentially covered by the insurance pol-
       icy. A competing policy interest is equity—it is
       inequitable to require an insurer to pay for a set-
       tlement that is clearly not within the terms of its
       policy. Consequently, our prediction is that Illi-
       nois courts, in cases in which it is possible that
       none of the settlement was attributable to the
       dismissal of claims for damage covered by the
       insurer’s policy, would evaluate whether a “pri-
       mary focus” of the claims that were settled was
       a potentially covered loss (burden on the in-
       sured). Conversely, if it can be established that
       the claims were not even potentially covered
       (burden on the insurer), then the insurer is not
       required to reimburse the settlement.
Santa’s Best, 611 F.3d at 351-52. After Santa’s Best, the Illinois
Appellate Court followed our predicted approach. See
Rosalind, 8 N.E.3d at 40 (“In cases where an insured enters into
a settlement that disposes of both covered and non-covered
No. 16-1669                                                                 15

claims, the insurer’s duty to indemnify encompasses the en-
tire settlement if the covered claims were ‘a primary focus of
the litigation.’”) (citing Santa’s Best, 611 F.3d at 352).
    Based on this precedent, the first question is whether Tar-
get settled an otherwise covered loss in reasonable anticipa-
tion of liability. If so, the second question is whether the cov-
ered claims were a primary focus of the litigation.
    We conclude that Target settled an otherwise covered loss
in reasonable anticipation of liability in the Brown litigation.
Ms. Brown testified that she carried an article of clothing into
Target’s fitting room, she closed the fitting room door behind
her and latched it, she tried on the clothing, and then she un-
latched the fitting room door and it fell on her. Discovery in
that case revealed that the same fitting room door fell on an-
other Target patron on December 9, 2011—approximately one
week before it fell on Ms. Brown. This establishes a covered
loss because it shows that Ms. Brown sought damages from
Target for a bodily injury “arising out of” Harbor’s “prod-
uct”—the fitting room door. Thus, we conclude that Target
settled an otherwise covered loss in reasonable anticipation of
liability to Ms. Brown. 4
   Turning to the second question, Selective argues that it
does not have a duty to indemnify Target for the entire
amount of its settlement because at least some of Ms. Brown’s


4 Target submitted an affidavit from counsel to the district court to sup-
port its position, but Selective objected to its admissibility and the district
court did not consider it. We agree with the district court that even with-
out considering counsel’s affidavit, the cited evidence is sufficient to con-
firm that Target settled an otherwise covered loss in reasonable anticipa-
tion of liability.
16                                                   No. 16-1669

claims against Target were based on premises liability, which
would not be covered by the Policy. This argument requires
us to determine whether the covered claims were “a primary
focus of the litigation.” See Rosalind, 8 N.E.3d at 40 (“In cases
where an insured enters into a settlement that disposes of
both covered and non-covered claims, the insurer’s duty to
indemnify encompasses the entire settlement if the covered
claims were ‘a primary focus of the litigation.’”) (citing Santa’s
Best, 611 F.3d at 352). While neither the district court nor the
parties addressed the primary focus standard in analyzing Se-
lective’s duty to indemnify Target, it is clear from the evidence
that the district court cited in analyzing the duty to indemnify
that covered claims were a primary focus of the litigation.
Specifically, the Brown litigation focused on the injuries Ms.
Brown sustained when Harbor’s fitting room door fell on her,
and Selective’s counsel admitted at oral argument that Selec-
tive defended Harbor in the Brown litigation and also settled
with her for the injuries she sustained. For these reasons, we
conclude that Selective had a duty to indemnify Target for the
entire cost it incurred settling the Brown litigation.
                          III. Conclusion
    For the foregoing reasons, we AFFIRM the judgment of the
district court.
