                              In the

United States Court of Appeals
                For the Seventh Circuit
                           ____________

No. 07-2831

RLI INSURANCE C OMPANY,
                                                   Plaintiff-Appellee,
                                  v.

C ONSECO , INC., C ONSECO S ERVICES L.L.C.,
R OLLIN D ICK, et al.,
                                     Defendants-Appellants.
                       ____________
              Appeal from the United States District Court
      for the Southern District of Indiana, Indianapolis Division.
               No. 04 C 310—Larry J. McKinney, Judge.
                           ____________

   A RGUED F EBRUARY 14, 2008—D ECIDED S EPTEMBER 9, 2008
                           ____________



  Before M ANION, R OVNER, and W ILLIAMS, Circuit Judges.
   M ANION, Circuit Judge. RLI Insurance Company (“RLI”)
filed a declaratory judgment action seeking a determina-
tion of its obligation, if any, to defend Conseco, Inc., and
various individual defendants (collectively “Conseco”)
under a liability insurance policy RLI issued to Conseco.
The district court entered summary judgment in favor of
RLI concluding that RLI was released from any duty to
2                                                No. 07-2831

defend and entitled to indemnification. Conseco appeals,
and we affirm.


                              I.
  In April 2000, a group of plaintiffs sued Conseco and
some of its officers and directors alleging securities fraud
(the “Securities Action”). In their amended complaint,
the plaintiffs alleged that “during 1999 and early 2000,
Conseco engaged in a variety of practices to deliberately
manipulate the credit loss assumptions used to value its
interest-only securities and falsely report the value of
these securities.” The parties eventually settled the case,
and on August 7, 2002, the district court entered final
judgment approving the settlement. The final judgment
order incorporated portions of the settlement, including
that the Securities Action settlement released, among
other things, any claims that a class member ever had
or will have that are
    related to the conduct alleged in [the Securities Action],
    including, but not limited to (I) claims which arise
    out of any of the facts, transactions, events, occur-
    rences, acts or omissions mentioned or referred to in
    the Complaint or other matters that are or could
    have been set forth, alleged, embraced or otherwise
    referred to in the Action or the Consolidated Class
    Actions or which could have been brought against
    Defendants related to a Class Member’s purchase or
    acquisition of Class Securities.
  A dispute regarding coverage of the litigation costs
resulting from the Securities Action arose between Conseco
No. 07-2831                                                3

and several of its insurance carriers, including RLI.
Conseco filed a declaratory judgment action in Indiana
state court claiming that RLI owed coverage for the
Securities Action under an excess directors and liability
insurance policy RLI had issued to Conseco. While the
Securities Action was pending, Conseco, RLI, and the
other insurance carriers entered into a release agreement
(“Original Agreement”) on May 10, 2002. RLI agreed to
pay $10 million toward the settlement of the Securities
Action, but reserved its right to seek reimbursement. RLI
exercised that right by filing counterclaims for restitution
or reimbursement in Conseco’s declaratory judgment
case. On October 25, 2002, after the district court had
entered final judgment in the Securities Action, RLI and
Conseco entered into a Supplemental Agreement And
M utual Release (“Supplemental Agreement”)
through which RLI dismissed its counterclaim seeking
reimbursement for the $10 million it contributed to the
settlement of the Securities Action. In exchange, Conseco
issued RLI a general release, which provides in relevant
part:
    13. General Release As To RLI. The insured, and each
    of them, and each of their respective past, present and
    future employees, agents, attorneys, directors, officers,
    shareholders, owners, representatives, predecessors,
    successors, heirs, estates, executors, administrators,
    trustees, affiliates, parents, subsidiaries, assigns, and
    any person acting on their behalf (hereafter the
    “Conseco Related Parties”), hereby release and for-
    ever discharge RLI and its past, present, and future
    employees, agents, claims personnel, attorneys, direc-
4                                                No. 07-2831

    tors, officers, shareholders, owners, representatives,
    predecessors, successors, heirs, estates, executors,
    administrators, trustees, affiliates, parents, subsidiar-
    ies, assigns, reinsurers and any person acting on
    their behalf (hereafter the “RLI Related Parties”) from
    any and all claims, actions, causes of action, rights
    or obligations, whether known or unknown, whether
    contingent or liquidated, of every kind, nature and
    description, that the Conseco Related Parties now
    have or may have against the RLI Related Parties
    based on, arising out of, or in any way related to:
        (a) the Derivative actions, the Securities action, the
        Coverage litigation, or the RLI Excess Policy;
        (b) the defense of the Derivative actions, Securities
        action, or Coverage litigation including, but not
        limited to, all attorney’s fees and expenses or
        expert witness/consultant fees and expenses in-
        curred in connection with that litigation;
        (c) any claim for coverage under any policy of
        insurance issued by RLI, including RLI Excess
        Policy, based on, arising out of, or in any way
        related to the Derivative actions, Securities action,
        or Coverage Litigation;
        (d) any notice of claim or notice of potential claim
        based on, arising out of, or in any way related to
        the Derivative actions, Securities action, or Cover-
        age Litigation;
        (e) RLI’s handling of any claim for coverage based
        on, arising out of, or in any way related to the
No. 07-2831                                                 5

       Derivative actions, Securities action, or Coverage
       Litigation, including, but not limited to, any claim
       for bad faith, for any breach of a duty of good
       faith under the statute, regulations, or common
       law of any state, or for any unfair or deceptive
       trade practices; or
       (f) any claim that RLI’s policy limits have been
       restored in whole or in part, whether in connec-
       tion with [the Original Release] or otherwise.
The general release set forth in this paragraph supplants
and expands the release terms set forth in paragraphs 13
and 14 of the Original Agreement.
  The Supplemental Agreement also provides for indem-
nification:
   The Security Action Defendants, and each of them,
   agree to indemnify, defend, and hold harmless . . .
   RLI . . . from and against any and all claims, demands,
   damages, losses, accounts, reckonings, debts, liabilities,
   indemnities, obligations, actions, causes of action,
   settlement costs, attorney’s fees, court costs, and any
   other costs or expenses . . . brought or made
   against . . . RLI . . . for any amounts which heretofore
   or hereafter may be claimed by persons who are
   insureds, claim to be insureds, or claim the rights of
   insureds under the RLI Excess Policy in connection
   with the matters released by . . . Conseco . . . including,
   without limitation, any claim made by any of the
   parties to the Litigation or the Coverage Litigation or
   any claim made by any other putative insured with
   respect to . . . the matters released by the Conseco
   Related Parties in this agreement.
6                                                No. 07-2831

  Around the same time that Conseco and RLI entered
into the Supplemental Agreement, Roderick W. Russell
(“Russell”) filed a putative class action suit against
Conseco and several other defendants alleging viola-
tions of Employment Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1132(a) (“Russell litigation”). Russell
asserted that beginning in 1999 and through 2002
Conseco’s filings with the Securities and Exchange Com-
mission were materially false, and that Conseco misman-
aged plan assets, failed to make requisite disclosures, and
had divided loyalties. In December 2002, Conseco filed
a motion to dismiss Russell. By this point, however,
Conseco had filed for bankruptcy, and the Russell litiga-
tion was stayed during those proceedings. After the
stay was lifted, Russell amended his complaint on
March 22, 2004. Conseco renewed its motion to dismiss
on June 1, 2004. The first line of the renewed motion
read: “This case should be dismissed because it has
already been litigated.” The motion cited the prior Securi-
ties Action stating that its settlement included Russell
and the plan on whose behalf Russell brought suit. The
motion continued, “Settlement class members agreed to
release Conseco and anyone affiliated with Conseco (which
includes all the present Defendants) from any claims
based on any facts that were alleged, or that could have
been alleged, or that are related to the conduct alleged, in
the securities litigation.” The motion went on to note
that the entire Securities Action release was included in
the final judgment order and listed specific overlapping
allegations set forth in Russell’s amended complaint and
the amended complaint filed in the Securities Action.
No. 07-2831                                                 7

Following the list, the motion concluded, “Because these
underlying facts involved in the two cases are (at a mini-
mum) ‘related,’ the claims Russell brings here fall within
the definition of the securities litigation release.” Finally,
Conseco stated that because the Securities Action “[w]as
[e]nshrined in a [f]inal judgment, [ ] the [r]elated [c]laims
in the [a]mended [c]omplaint [s]hould [b]e [d]ismissed
under the [d]octrine of [r]es [j]udicata.”
  On July 30, 2004, the district court in Russell granted
Conseco’s motion to dismiss noting that the potential
Russell class members were class members of the
Securities Action, Russell was included in the settlement
in the Securities Action, and Conseco was a named defen-
dant in the Securities Action. The Russell court concluded:
    The settlement of the [Securities Action], which the
    Court found included [Russell], and plan participants,
    foreclosed the future claims that [Russell] attempts
    now to put back at issue in this case. Therefore the
    argument that [Russell] makes in attempting to distin-
    guish the instant case from the 2000 case by including
    a different temporal component is of no moment.
As noted above, the settlement of the Securities Action
included a release of any claims arising out of the Securi-
ties Action regardless of temporal proximity.
  While Russell was still pending, on January 9, 2003,
Conseco notified RLI about the Russell litigation. A week
later, RLI responded with a letter in which it requested
various pleadings, summary of discovery, and other
information from Conseco for RLI’s investigation. RLI
noted that based on discussions with Conseco, the case
8                                              No. 07-2831

was stayed for three months, and RLI stated that it was
investigating the case under a full and complete reserva-
tion of rights. Seven months later, on July 15, 2003, RLI
wrote Conseco noting that Conseco still had not pro-
vided RLI with the information requested in RLI’s
January 16, 2003, letter. RLI further noted that it was
continuing its investigation of Russell and its reservation
of rights.
  In early January 2004, Conseco notified RLI that it had
approached the policy’s deductible. About a month later,
on February 13, 2004, RLI responded to Conseco in a
letter cataloguing its investigation of the Russell litiga-
tion and its conclusion that the Supplemental Release
barred coverage. The letter concluded with RLI’s belief
that RLI had no obligation to provide coverage in
Russell, but stated it would fund Conseco’s Russell
defense with a full reservation of rights.
  That same day, RLI filed this declaratory action, later
amending its complaint on March 30, 2004. Conseco filed
counterclaims asserting claims for declaratory relief for
a duty to defend and duty to indemnify as well as
breach of duty of good faith and fair dealing claims. On
Conseco’s motion, the district court stayed this case
while the Russell litigation proceeded. Following the lift
of the stay, RLI filed a third amended complaint in
which it asserted breach of contract claims against the
Supplemental Agreement signatories for failing to indem-
nify RLI for the coverage claims in connection with the
Russell litigation. RLI also sought restitution. Conseco
renewed its counterclaims.
No. 07-2831                                                9

   On May 4, 2006, Conseco filed a motion for partial
summary judgment on its declaratory relief claim of a
duty to defend and on its claim of breach of duty to
defend. Conseco asserted that under Indiana law and
RLI’s policy, RLI had a duty to defend against all poten-
tial claims and that RLI breached that duty by not provid-
ing Conseco with a prompt and full defense. RLI re-
sponded by filing a separate motion in which it set forth
its response to Conseco’s motion as well as its own
request for partial summary judgment. RLI responded
that it had no duty to defend Conseco in Russell because
the Supplemental Agreement covered the Russell litiga-
tion by extending to any claims in any way related to the
Securities Action. RLI also noted that Conseco had suc-
cessfully argued to the Russell court that Russell was
barred by the settlement and final judgment in the Securi-
ties Action. For those same reasons, RLI asserted that it
was entitled to summary judgment in relation to Conseco’s
breach of covenant of good faith and fair dealing claims.
In response, Conseco asserted that the Supplemental
Agreement did not apply to Russell because it said nothing
about claims from the Russell litigation and the claims
Conseco was asserting now were related to claims for
coverage in Russell and not in any way related to the
Securities Action. Conseco continued by arguing that
“[e]ven if the underlying facts of Russell and the Securities
action are related, the two cases are not, and thus, the
RLI Release does not cover the Russell claims.” Conseco
noted that in Russell the district court was interpreting
the release in the Securities Action’s settlement agree-
ment and not the release in the Supplemental Agreement.
10                                                 No. 07-2831

Conseco also asserted that the district court in
Russell “never held that the Russell litigation ‘relates to’ the
Securities Action.” Finally, Conseco contended that the
Supplemental Release contained ambiguous language,
namely “in any way related,” thereby requiring that the
language used in the drafting of the release be reviewed.
  The district court denied Conseco’s motion concluding
that there was no ambiguity in the Supplemental Agree-
ment release and that it covered the Russell case. The
district court also granted RLI’s motion for summary
judgment on Conseco’s counterclaim that RLI breached
the covenant of good faith and fair dealing. In a separate
order, the district court granted RLI’s motion for indemni-
fication, in part, concluding that RLI was entitled to
recover the money it advanced in Russell and fees and
costs associated with defending against the counter-
claims in this case. The district court denied RLI’s motion
insofar as it sought recovery of costs and attorneys’ fees
associated with enforcing the Supplemental Agreement’s
indemnification provision. The district court entered
judgment in favor of RLI against Conseco for $242,038.11
for defense costs advanced by RLI in the Russell litiga-
tion and $1,256,961.89 for costs RLI incurred in de-
fending the counterclaims in this case. Conseco appeals.


                              II.
  On appeal, Conseco argues that the Supplemental
Agreement contains a latent ambiguity, and therefore
the district court should have considered the Original
Agreement and the parties’ negotiations in addition to
No. 07-2831                                                11

the Supplemental Agreement in deciding whether
Russell fell within the release in the Supplemental Agree-
ment. We apply state law to substantive issues in cases
before us on diversity jurisdiction. Bevolo v. Carter, 447
F.3d 979, 982 (7th Cir. 2006). When neither party raises
a conflict of law issue in a diversity case, the applicable
law is that of the state in which the federal court sits. Ind.
Ins. Co. v. Pana Cmty Unit Sch. Dist. No. 8, 314 F.3d 895,
900 (7th Cir. 2002). Because the parties do not raise a
conflict of law issue and this case was filed in a federal
court in Indiana, we apply Indiana law. Under Indiana
law, contracts are interpreted to effectuate the parties’
intent as expressed in the agreement. If the language is
unambiguous, it should be given its plain and ordinary
meaning. Reuille v. E.E. Brandenberger Constr., Inc., 888
N.E.2d 770, 771 (Ind. 2008). Parol, or extrinsic evidence,
is inadmissible to explain or vary the clear and unambigu-
ous terms of a written agreement. Evan v. Poe & Assoc., Inc.,
873 N.E.2d 92, 101 (Ind. Ct. App. 2007). However, where
the contract language is ambiguous, extrinsic evidence
is permitted to ascertain the parties’ intent. Hoose v. Doody,
886 N.E.2d 83, 90 (Ind. Ct. App. 2008).
  An ambiguity does not arise simply because the parties
disagree on the interpretation, but “[r]ather language is
ambiguous only if reasonable people could come to
different conclusions about its meaning.” Simon Prop.
Group, L.P. v. Mich. Sporting Goods Distrib., Inc., 837 N.E.2d
1058, 1070 (Ind. Ct. App. 2005). An ambiguity may be
patent or latent. A patent ambiguity is “apparent on the
face of the instrument and arises from an inconsistency
or inherent uncertainty of language used so that it either
12                                                No. 07-2831

conveys no definite meaning or a confused meaning.” Id.
at 1070-71 (internal quotation and citation omitted). On
the other hand, a latent ambiguity arises only in the
course of implementing the contract. Id. at 1071.
   Conseco asserts that the district court erred in failing to
interpret the Supplemental Agreement in conjunction
with the Original Agreement and evidence of the parties’
negotiations surrounding these contracts. In support of
its position of looking outside the four corners of the
Supplemental Agreement, Conseco asserts that the Sup-
plemental Agreement contains a latent ambiguity “as
shown by the [Original Agreement] which should have
been considered by the district court because it was
expressly incorporated into that agreement.” Rather than
first attempting to apply language of the Supplemental
Release to ascertain whether there is a latent ambiguity,
Conseco starts its interpretation with the Original Agree-
ment and then proceeds to the Supplemental Agreement,
arguing that the Supplemental Agreement contains a
latent ambiguity in the meaning of “in any way related.”
Before implementing the release language in the Sup-
plemental Agreement, however, we note that the Sup-
plemental Agreement provides that the general release
at issue in this case “supplants and expands the release
terms set forth in paragraphs 13 and 14 of the Original
Agreement.” (Emphasis added.) Thus, the latter release
supersedes or sets aside the release in the Original Agree-
ment. See Hilbert v. Conseco Services, L.L.C., 836 N.E.2d 1001,
1011 (Ind. Ct. App. 2005) (noting that “supersede” means
to supplant or set aside). Therefore, only if the language
in the Supplemental Agreement contains a latent ambigu-
ity will we look to the Original Agreement.
No. 07-2831                                                13

   In entering the Supplemental Agreement, the parties
each gave valuable consideration: RLI agreed to release
its claim to the $10 million it contributed to Conseco’s
defense in the Securities Action and, in return, Conseco
agreed to release RLI “from any and all claims, actions,
causes of action” that Conseco had or may have “based on,
arising out of, or in any way related to . . . the Securities
action . . . ; any claim for coverage . . . in any way related
to the . . . Securities action . . . .” This court (as well
as the Indiana Court of Appeals) has held that in inter-
preting a contract under Indiana law, “related” has a
common understanding and meaning and “covers a very
broad range of connections, both causal and logical.”
Gregory v. Home Ins. Co., 876 F.2d 602, 606 (7th Cir. 1989).
See Am. Home Assurance Co. v. Allen, 814 N.E.2d 662, 669
(Ind. Ct. App. 2004). In other words, it means “having
relationship: connected by reason of an established or
discoverable relation.” Gregory, 876 F.2d at 606, n.5 (quot-
ing Webster’s Third New Int’l Dictionary (1981)). This
release language which the parties freely negotiated is
broad, but its expansiveness does not create an am-
biguity, and the district court did not err in concluding
that there was no ambiguity in the Supplemental Agree-
ment and confining its interpretation to the Supple-
mental Agreement.
   Under the unambiguous terms of the Supplemental
Agreement, for RLI to be released on any duty to defend
Conseco in Russell, Russell must have a relationship or a
connection with the Securities Action. We conclude that
it does. Conseco was a defendant in both the Securities
Action and in Russell, and the Russell plaintiff was a
14                                                   No. 07-2831

plaintiff in the Securities Action and a party to the Securi-
ties Action’s settlement. As we noted above, the settle-
ment to the Securities Action released any claims that the
class members, such as the Russell plaintiff, ever had or
would have arising out of Conseco’s manipulation of and
false reporting regarding securities during 1999 and 2000.
It was the same false reporting and manipulation alleged
in the Securities action that precipitated the Russell action,
thus the Russell action is “related to” the Securities Action.
It was Russell’s very connection with the Securities Action
that precipitated its dismissal. Accordingly, RLI did not
have a duty to defend Conseco in Russell because it was
a “claim for coverage . . . in any way related to . . . the
Securities action” as set forth in the Supplemental Agree-
ment.1



1
   We agree with the district court that Conseco itself “specifi-
cally argued that the two matters were related as support for
their request for [the district court] to dismiss the Russell
matter.” As noted above, Conseco asserted that the Securities
Action’s “[s]ettlement class members agreed to release
Conseco . . . from any claims . . . that are related to conduct
alleged, in the securities action.” Conseco contends that
the district court erred in concluding that it was judicially
estopped from arguing that Russell was not related to the
Securities Action. We disagree with Conseco’s characteriza-
tion (i.e., judicial estoppel) of the district court’s observation.
The district court did not hold that Conseco was judicially
estopped, but rather, as we did above, independent of Conseco’s
shifting arguments, that the Supplemental Agreement re-
leased RLI from any obligation that it may have had under
its policy to defend Conseco in Russell.
No. 07-2831                                                    15

  Conseco also asserts that the district court’s interpreta-
tion resulted in some Supplemental Agreement language
becoming surplusage and that extrinsic evidence is ad-
missible because the Supplemental Agreement is not an
integrated contract. Because Conseco did not raise either
of these arguments before the district court, they are
waived on appeal. Metzger v. Illinois State Police, 519
F.3d 677, 682 (7th Cir. 2008).
  Conseco also challenges the district court’s grant of
summary judgment in favor of RLI on its claim for indem-
nification and reimbursement. In appealing this judg-
ment, Conseco relies upon the arguments challenging
the district court’s interpretation of the Supplemental
Release. Because the district court properly interpreted
the Supplemental Release, we affirm the district court’s
award of indemnification and reimbursement of attor-
neys’ fees and costs to RLI.2




2
   Conseco also challenges the district court’s grant of summary
judgment to RLI on Conseco’s claims that RLI breached its
duty of good faith and fair dealing. Conseco invokes the “mend
the hold” doctrine. According to the “mend the hold” doctrine,
a contract party is not permitted “to change its position on
the meaning of the contract in the middle of litigation over
it.” Utica Mut. Ins. Co. v. Vigo Coal Co., Inc., 393 F.3d 707, 716
(7th Cir. 2004). Conseco, however, did not assert the “mend the
hold” doctrine before the district court, thereby waiving its
argument on appeal. Metzger, 519 F.3d at 682.
16                                              No. 07-2831

                             III.
  The district court did not err in its interpretation of the
Supplemental Agreement because there was no latent
ambiguity. Moreover, RLI did not have a duty to defend
Conseco in Russell because Russell was a “claim for cover-
age . . . in any way related to . . . the Securities action.”
Therefore, RLI was entitled to indemnification and reim-
bursement. Finally, Conseco waived its “mend the hold”
challenge to the district court’s denial of its breach of
good faith and fair dealing claim. We A FFIRM .




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