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

Nos. 02-1126 & 02-1210
MIZUHO CORPORATE BANK (USA),
                                                Plaintiff-Appellee,
                                v.

CORY & ASSOCIATES, INC.,
        Defendant-Third Party Plaintiff-Cross-Appellant,
                                v.

SWETT & CRAWFORD OF ILLINOIS, INC. (f/k/a INSURANCE
BROKERS SERVICE, INC.),

                           Third-Party Defendant-Appellant,

                                v.

TRAVELERS INDEMNITY COMPANY,
                     Third-Party Defendant-Cross-Appellee.
                         ____________
          Appeals from the United States District Court
      for the Northern District of Illinois, Eastern Division.
           No. 97 C 5827—Ronald A. Guzmán, Judge.
                         ____________
  ARGUED DECEMBER 5, 2002—DECIDED AUGUST 29, 2003
                   ____________
2                                      Nos. 02-1126 & 02-1210

 Before BAUER, DIANE P. WOOD, and WILLIAMS, Circuit
Judges.
  DIANE P. WOOD, Circuit Judge. Insurance is meant to
cushion the blow caused by a disaster; it is supposed to be
part of the solution, not part of the problem. In this case,
however, the contest is over who was responsible for inad-
equacies in the insurance policy itself, and who must bear
the uncovered losses. In general terms, this litigation arose
out of the bankruptcy proceeding of the under-insured par-
ty, Cyberstar and Caribbean Communications (CCC). One
of CCC’s creditors (International Bank of Japan, or IBJ1)
sued the retail insurance broker (Cory & Associates, or
Cory) that had procured the policy, and it in turn impleaded
the wholesale broker (Insurance Broker Services, Inc., or
IBSI) and the ultimate insurer (Travelers Indemnity
Company, or Travelers). One of the issues we are con-
sidering on appeal concerns the effect of a settlement
between IBJ and Cory in the main action on the eve of trial.
The district court ruled that this settlement resolved all
issues conclusively with respect to Cory’s alleged responsi-
bility for the expensive mishap, and it therefore limited the
trial to the question whether there was a fiduciary relation-
ship between Cory and IBSI. The jury decided that there
was, and thus stuck IBSI with the responsibility of paying
the entire amount (some $20 million) reached in the set-
tlement agreement. IBSI has appealed, claiming that this
was error. The district court should not have so restricted
the trial, and we therefore remand for further proceedings.
The second major point concerns the correctness of the
district court’s decision to grant summary judgment in favor


1
  After the arguments in this case, International Bank of Japan
changed its name to Mizuho Corporate Bank. For convenience,
this opinion will continue to refer to this party as International
Bank of Japan, or IBJ.
Nos. 02-1126 & 02-1210                                      3

of Travelers. We affirm the court’s ruling that Travelers
was entitled to summary judgment.


                              I
  At the heart of this case is a simple but expensive com-
munication failure. In early 1995, CCC retained Cory to set
up insurance coverage in connection with CCC’s impending
purchase of a cable television operation in the U.S. Virgin
Islands. Cory initially attempted to arrange coverage di-
rectly, but ultimately it turned the placement over to IBSI,
which it thought would be better able to make sophisticated
placements of the sort CCC needed. IBSI, which had a long-
standing relationship with Travelers under a “Wholesale
Broker Agreement,” immediately identified Travelers as one
potential underwriter for the requested coverage. Under
that agreement, IBSI was authorized to undertake a variety
of tasks on behalf of Travelers, including the solicitation of
applications, the collection of premiums, and the holding of
funds on behalf of and as a fiduciary of Travelers. Further-
more, the agreement provided for the payment of commis-
sions to IBSI. The agreement did not, however, authorize
IBSI to issue insurance binders and specifically disavowed
any agency relationship between the two entities.
  Over the course of several months, Cory and IBSI nego-
tiated the terms and conditions of the requested coverage
with at least two different insurance carriers, including
Travelers. IBSI obtained several price quotations, and the
parties passed the information up and down the chain of
command. Thus, the price quotations issued by Travelers
went first to IBSI, then to Cory, and finally to CCC. Ulti-
mately, CCC assented to the terms of the Travelers policy
and, speaking through Cory, gave IBSI instructions to bind.
IBSI, after consultation with Travelers, responded with
copies of a placement note.
  The coverage negotiated by IBSI and Travelers became
4                                   Nos. 02-1126 & 02-1210

effective on July 31, 1995. Six weeks later, Hurricane
Marilyn swept through the U.S. Virgin Islands and did sub-
stantial damage to CCC’s newly purchased cable facilities.
When CCC attempted to recover from Travelers for the
damage to the Caribbean facilities, a critical misunder-
standing came to light. CCC thought that Cory, on its be-
half, had entered into an insurance contract with Travelers
with coverage of nearly $8 million; Travelers took the posi-
tion that the IBSI-brokered policy set a cap on coverage at
$2.5 million. Travelers ultimately paid CCC $2.5 million;
the more than $5 million shortfall forced CCC into bank-
ruptcy. A liquidation followed in April 1996, in which all
CCC stock and claims were assigned to IBJ, one of CCC’s
principal lenders.
  Although a detailed post-mortem of the coverage dispute
is unnecessary for the purposes of the present appeal, an
understanding of the possible reasons for the miscommun-
ication may help to shed light on the analysis to come. One
possible source of the problem was that Cory and IBSI ne-
gotiated the terms and conditions of the Travelers coverage,
but at no point did CCC, Cory, or Travelers communicate
directly with one another. Instead, IBSI remained the mid-
dleman throughout. In addition, at critical points IBSI took
documents prepared by Travelers and incorporated their
substance into its own documents, which it then used
to communicate terms and conditions to Cory. As a result,
the critical terms and conditions of the insurance coverage
moved up and down the chain in different document for-
mats. Finally, Travelers did not deliver the final paper
policy to CCC until several weeks after the hurricane. In
short, the parties were not, either literally or figuratively,
on the same page. Another possible reason for the miscom-
munication was that the postponement of CCC’s acquisition
of the Caribbean-based cable facilities necessitated two
separate rounds of bids from prospective insurers. Prior to
the delay in the facilities acquisition, a competing insurer
Nos. 02-1126 & 02-1210                                     5

had quoted a premium of $100,000 for $5 million in cover-
age. The ISBI-communicated premium from Travelers of
$115,005 might have seemed to reflect coverage of the
nearly $8 million that Cory thought it had requested and
that CCC thought it was getting.
  In August 1997, IBJ filed suit against Cory on behalf of
all lender banks as assignee of CCC, claiming negligence,
breach of fiduciary duty, breach of contract, and negligent
misrepresentation. In turn, Cory filed third-party com-
plaints against IBSI and Travelers. The portion of the
third-party complaint that was directed against IBSI closely
resembled IBJ’s amended complaint against Cory. The first
three of the five IBSI counts were specifically labeled
“contribution” and included theories of negligence (Count I),
breach of fiduciary duty (Count II), and negligent misrepre-
sentation (Count III). The remaining two counts against
IBSI contained no such labels and included theories of
breach of fiduciary duty (Count IV) and breach of contract
(Count V). The portion of the third-party complaint directed
against Travelers sought reformation (Count VI) and raised
theories of breach of contract (Count VII), tortious breach
of contract (Count VIII), and negligence based on agency
principles and respondeat superior (Count IX).
  After more than a year of litigation, Travelers moved un-
der FED. R. CIV. P. 12(b)(6) to dismiss the remaining claims
Cory was asserting against it. The district court granted the
motion with respect to the reformation claim, but it denied
at that time to resolve the breach of contract and respondeat
superior theories. Travelers had better luck more than two
years later when it moved for summary judgment on the
remaining counts. At that point, in an order dated May 10,
2001, the court granted summary judgment in favor of
Travelers, reasoning that Cory lacked the requisite stand-
ing for the breach of contract claims because it could not
plausibly claim status as a third-party beneficiary of the
6                                   Nos. 02-1126 & 02-1210

Travelers-CCC insurance contract and that there was no
agency relationship between IBSI and Travelers that could
support a theory of respondeat superior liability.
   On May 18, 2001, with trial rapidly approaching, IBJ and
Cory reached an agreement settling IBJ’s claims. The
settlement agreement fixed the total amount of IBJ’s claims
at $20,367,519. It contained a complicated formula for the
satisfaction of that claim by Cory, whereby a graduated
percentage of the money recovered by IBJ from IBSI would
be allocated back to Cory as a credit against the $4 million
it had agreed to pay to IBJ under the settlement agreement,
up to a maximum of $4,375,000. Under the terms of this
agreement, a large recovery by IBJ against IBSI would
actually produce a net gain to Cory of $375,000. It is this
part of the settlement that IBSI has labeled a “kickback”
provision.
  IBSI objected to the settlement on reasonableness
grounds and moved to dismiss the claims assigned to IBJ by
Cory as part of the settlement agreement for failure to state
a claim. The district court granted partial relief in a June
6 order, which dismissed all but two claims. The court first
noted that Cory had not pursued Counts I and III, which it
concluded were both barred anyway by the Illinois Joint
Tortfeasor Contribution Act, 740 ILCS 100/1 et seq. As for
Count II, there was no problem under the Joint Tortfeasor
Act because as a breach of fiduciary duty claim it did not
fall under that statute. The court found in IBSI’s favor,
however, because the Illinois Insurance Placement Liability
Act (IPLA), 735 ILCS 5/2-2201(b), which applies to fiduciary
duty claims against all insurance “producers,” barred the
claim. This necessarily entailed a finding that Count II
stated a claim for indemnity and that it arose after the
January 1, 1997, effective date of the IPLA.
  The district court found that the IPLA bar did not apply
to Count IV, because it was not really an indemnity claim.
Nos. 02-1126 & 02-1210                                        7

This implied that the Count IV claim accrued prior to the
effective date of the IPLA and thus had to be tried, as did
Count V. The court concluded that both Counts IV and V
of Cory’s third-party complaint were proper under FED. R.
CIV. P. 14(a), since the rule permits the defendant-third-
party plaintiff (here, Cory) to assert a claim against some-
one (i.e., IBSI) who is or may be liable for “all or part of the
plaintiff’s claim against the third-party plaintiff.” The court
rejected IBSI’s claim that only Cory’s professional liability
insurer, as subrogee of Cory’s claims, could bring the third-
party complaint at issue. The court thus upheld the overall
settlement agreement and dismissed Cory from the action
with prejudice.
  IBJ and IBSI proceeded to trial on the breach of fiduciary
duty and breach of contract theories. But the trial was not
what IBSI had expected. At the final pre-trial conference,
the court decided that the issues of Cory’s fault, proximate
cause, and damages were no longer open to contest. A proxi-
mate cause instruction, according to the district court, was
not necessary because “there is an indemnification type of
relationship here.” The district court ruled that damages
would be fixed at $20,367,519, as stipulated in the IBJ-Cory
settlement agreement. Asked only to find whether a fidu-
ciary relationship existed between Cory and IBSI, the jury
returned a verdict in favor of IBJ, as Cory’s assignee. The
court then entered judgment for IBJ on December 17, 2001,
in the precise amount of the settlement. This appeal fol-
lowed.


                              II
  Our resolution of the IBJ-IBSI portion of this case hinges
on the characterization question that has dogged the pro-
ceedings throughout: after the settlement between IBJ and
Cory, was the only remaining question in the case the issue
8                                   Nos. 02-1126 & 02-1210

of IBSI’s duty to indemnify Cory for its (implicit) payment
to IBJ, or was the question whether IBSI had breached any
fiduciary duty to IBJ’s predecessor CCC still open to con-
test?
  The consequences of the choice between these two alter-
natives are enormous. First, it determines when the claim
arose. Depending on when the claim accrued, Cory and IBSI
are either entitled or not entitled to protection under IPLA,
which explicitly immunizes insurance producers like IBSI
and Cory from fiduciary duty claims arising after its
effective date. And most importantly, the proper character-
ization defines what issues should have been submitted to
the jury. We take those points in turn.
  Under Illinois law, a general (i.e., non-indemnity) claim
accrues when all elements are present and a party can
invoke the aid of the court. See Draper v. Frontier Ins. Co.,
638 N.E.2d 1176, 1180 (Ill. App. Ct. 1994). Cory claimed
that it incurred legal fees and expenses in defense of IBJ’s
claims as early as the fall of 1995 and thus its claim ac-
crued at that time. IBJ and Cory did not settle their part of
the dispute until May 18, 2001. Indemnity claims, in con-
trast, do not accrue until the main action has been resolved
via judgment or settlement. See Anixter Bros. v. Cent. Steel
& Wire Co., 463 N.E.2d 913, 918 (Ill. App. Ct. 1984).
  IBJ argues that the Anixter Bros. rule was modified by
the later Illinois Supreme Court decision in Gerill Corp. v.
Jack L. Hargrove Builders, Inc., 538 N.E.2d 530 (Ill. 1989).
There, the Illinois Supreme Court stated that an indemnifi-
cation claim accrues when “the indemnitee either has had
a judgment entered against him for damages, or has made
payments or suffered actual loss.” Id. at 539 (emphasis
added). Under that test, according to IBJ, Cory’s claim
accrued in 1995 regardless of how we characterize Count
IV, so long as Cory can prove that it incurred costs at that
time. But the Illinois Supreme Court itself has had more to
Nos. 02-1126 & 02-1210                                        9

say since Gerill Corp. was decided. In Guzman v. C.R.
Epperson Construction, Inc., 752 N.E.2d 1069, 1075 (Ill.
2001), it cited with approval the exact language used in
Anixter that places the time of accrual of an indemnity
claim at the point at which a judgment or settlement
occurs. Moreover, the Guzman court noted that allowing an
indemnity claim to accrue prior to settlement or judgment
would have the perverse effect of requiring third-party
complainants to “file numerous anticipatory claims well
before they are sued, even if such litigation might later be
unnecessary because the original plaintiff does not sue.” Id.
at 1075 (internal quotation marks and citations omitted). If,
therefore, Count IV is properly viewed as an indemnity
claim (and no one doubts that it is governed by Illinois law),
then it accrued in May 2001.
  That late accrual date would be enough to dispose of IBJ’s
assigned claim altogether. IPLA took effect on January 1,
1997. That statute explicitly immunizes insurance providers
such as IBSI and Cory from “civil liability under standards
governing the conduct of a fiduciary or a fiduciary relation-
ship . . . .” 735 ILCS 5/2-2201(b). But the Act is of no help to
IBSI if IBJ is correct that the claim accrued earlier than
1997.
  We turn, therefore, to the central point: the proper char-
acterization of Count IV. We begin with the language of the
complaint, following the rule that the plaintiff is the master
of its own litigation. Reading Cory’s third-party complaint
as a whole, we see that it specifically applied the label
“Contribution” to each of the first three counts, but not to
Count IV or the other remaining theories. Count IV is
entitled simply, “Breach of Fiduciary Duty to Cory—IBSI.”
Taking Cory at its word, therefore, it was apparently rais-
ing only a normal claim of a breach of fiduciary duty. See,
e.g., Indiana Ins. Co. v. Machon & Machon, Inc., 753 N.E.2d
442, 446 (Ill. App. Ct. 2001) (refusing to re-characterize a
10                                  Nos. 02-1126 & 02-1210

claim as an indemnity claim where the word “indemnity”
was “[c]onspicuously absent” from the complaint, save in
the ad damnum clause in each count of the complaint).
  Beyond this, as the district court noted, a separate part of
the third-party complaint (Count II) much more clearly
raised a claim for indemnification. There is no reason to
think that Cory was raising a completely redundant theory
of indemnification in Count IV, rather than pleading in the
alternative under the related breach of fiduciary duty con-
cept. This is so even though there is an obvious factual and
legal overlap between the two theories. Cory has asserted
throughout that it acted at the direction of IBSI, or in re-
liance on misrepresentations made by IBSI, and that it
(Cory) believed throughout that it was acting properly.
There is generally nothing wrong with alternative pleading,
which is all that this complaint has done.
  We conclude, as the district court did, that Count IV was
exactly what Cory said it was: a general claim for breach of
fiduciary duty. We also agree with the district court that
the claim accrued in the fall of 1995, well before the effec-
tive date of the IPLA, when Cory hired counsel to defend
against the original complaint brought by IBJ. The court
explained that Cory could have sued IBSI at that time for
breach of contract and fiduciary duty once legal fees and
expenses were incurred. IBSI’s principal response is that
there is no record evidence that Cory in fact incurred at-
torney’s fees or expenses in 1995. But the record points to
enough evidence of earlier expenses to support the district
court’s decision on this point. For example, Cory offered at
a pre-trial hearing to call Patrick Jean-Baptiste (of Cory) to
testify that Cory did in fact hire investigators and a lawyer
in 1995 and 1996. The district court declined the invitation,
noting that it did not “see the need to establish actual
damages [in]curred at that point.” IBJ’s opposition to IBSI’s
motion for judgment as a matter of law also mentions the
Nos. 02-1126 & 02-1210                                     11

retention of investigators and counsel, putting the informa-
tion before the district court, albeit in a post-trial motion.
The breach of fiduciary duty claim accrued prior to the ef-
fective date of the IPLA, and IBSI is thus not entitled to the
automatic exemption from liability for breaches of fiduciary
duty afforded by that statute.
  The point at which we diverge from the district court is
whether it was correct to allow the jury to decide only
whether a fiduciary duty existed and to keep from it the
issues of Cory’s own fault, proximate cause, and damages.
In coming to its decision that the settlement agreement
between IBJ and Cory conclusively resolved all issues in the
IBSI litigation except for the question whether IBSI owed
a fiduciary duty to Cory, the district court went astray by
relying on a line of cases that is rooted in the insurance or
indemnity context. The critical fact in those cases was the
insurer’s breach of a duty to defend and the consequences
that flowed from that breach. See, e.g., Platinum Tech., Inc.
v. Fed. Ins. Co., 282 F.3d 927 (7th Cir. 2002) (insured
software company brought suit against its insurer for
breach of duty to defend and indemnify after the insurer
refused to reimburse the insured for the cost of its settle-
ment in a trademark infringement suit); Vitkus v. Beatrice
Co., 127 F.3d 936 (10th Cir. 1997) (employee lawsuit
against a former employer, self-insured for D&O liability
insurance, for refusal to defend); United States Gypsum Co.
v. Admiral Ins. Co., 643 N.E.2d 1226 (Ill. App. Ct. 1994)
(insured asbestos manufacturer sought declaratory judg-
ment as to policy coverage by insurer); St. Paul Fire &
Marine Ins. Co. v. Michelin Tire Corp., 298 N.E.2d 289 (Ill.
App. Ct. 1973) (indemnification claim by retailer against
manufacturer of tire that caused vehicular accident). Here,
we have nothing of the sort: IBSI owed no duty to defend
either Cory or IBJ. All three parties were instead ordinary
adversaries in ordinary litigation.
12                                   Nos. 02-1126 & 02-1210

  Furthermore, even if Cory’s fiduciary duty claim might be
susceptible to characterization as an implied indemnity
claim (and, in turn, even if the claim was somehow not
barred by IPLA), Illinois law would not have regarded the
IBJ/Cory settlement as precluding IBSI’s ability to prove
Cory’s fault. This is because Cory and IBSI were at all rel-
evant times merely brokers working under a contract to
provide brokerage services to Travelers and CCC and never
stood in an insurer-insured relationship to one another.
This means that any indemnity claim Cory brought against
IBSI would have to be an implied indemnity claim rather
than a pure indemnity claim.
  Implied indemnity claims arise where the parties have
failed to include an indemnity provision in an agreement,
and there is reason for a court to read such a provision into
the agreement. Jinwoong, Inc. v. Jinwoong, Inc., 310 F.3d
962, 965 (7th Cir. 2002); see also Am. Nat’l Bank & Trust
Co. v. Columbus-Cuneo-Cabrini Med. Ctr., 609 N.E.2d 285,
287-88 (Ill. 1992). “The underlying principle is that the
party that is in the better position to avoid liability is given
an incentive to do so by being made responsible for the con-
sequences.” Jinwoong, 310 F.3d at 965; see also McMunn v.
Hertz Equip. Rental Corp., 791 F.2d 88, 91 (7th Cir. 1986);
Hillier v. S. Towing Co., 714 F.2d 714, 720 (7th Cir. 1983).
But while insurance and pure indemnity claims frequently
center on the insurer’s duty to defend, implied indemnity
actions lie only where one party is in some sense “at fault,”
and the other party is blameless though liable—typically
because of strict liability, respondeat superior, implied war-
ranty, or some other legal principle that imposed liability
regardless of fault. See Jinwoong, 310 F.3d at 965. A claim
of implied indemnity under Illinois law arises only where
the indemnitee (here, Cory) was guiltless with respect to
the underlying tort. See Columbus-Cuneo-Cabrini Med.
Ctr., 609 N.E.2d at 287-88; Frazer v. A.F. Munsterman, 527
N.E.2d 1248, 1251 (Ill. 1988); Kerschner v. Weiss & Co., 667
Nos. 02-1126 & 02-1210                                     13

N.E.2d 1351, 1355-56 (Ill. App. Ct. 1996). By its nature, the
settlement agreement between IBJ and Cory could not have
established Cory’s blamelessness vis à vis IBSI, a stranger
to that agreement.
   Finally, IBJ suggests that the truncated trial proceedings
can be justified by reference to traditional principles of
issue preclusion. But for a variety of reasons this is wrong.
Perhaps the most obvious is that issue preclusion applies,
under the law of Illinois, only to questions that were “act-
ually litigated,” see La Preferida, Inc. v. Cerveceria Modelo,
S.A. de C.V., 914 F.2d 900, 905 (7th Cir. 1990); DuPage
Forklift Serv., Inc. v. Material Handling Servs., Inc., 744
N.E.2d 845, 849 (Ill. 2001); Am. Family Mut. Ins. Co. v.
Savickas, 739 N.E.2d 445, 451 (Ill. 2000), and settlements
do not count as “actual litigation,” see Rockford Mut. Ins.
Co. v. Amerisure Ins. Co., 925 F.2d 193, 198 (7th Cir. 1991).
Furthermore, principles of preclusion are not pertinent un-
til the first lawsuit has been concluded and a second, sep-
arate proceeding is underway. Within a particular suit, the
correct doctrine to consider is law of the case. Even from
that perspective, however, there was no judicial determina-
tion about Cory’s responsibility.
  Our decision with respect to the proper treatment of
Count IV makes it unnecessary for us to consider IBSI’s
objection to the original settlement between Cory and IBJ.
Because a jury will decide on remand whether IBSI is liable
to Cory, and if so to what extent, any ultimate judgment
will not be affected by the amount or the terms of the set-
tlement.




                             III
  We next address Cory’s cross-appeal from the summary
judgment in favor of Travelers on its breach of contract and
14                                   Nos. 02-1126 & 02-1210

respondeat superior negligence claims. We review the dis-
trict court’s grant of summary judgment de novo, viewing
the record in the light most favorable to Cory and drawing
all reasonable inferences in its favor. Amadio v. Ford Motor
Co., 238 F.3d 919, 921 (7th Cir. 2001).
  With respect to the contract claim, the district court ruled
that Cory did not have a legally cognizable interest in the
insurance agreement between Travelers and CCC. As a
third party, Cory could recover only if “the contract [was]
undertaken for the plaintiff’s direct benefit and the contract
itself . . . affirmatively make[s] this clear.” Caswell v. Zoya
Int’l, Inc., 654 N.E.2d 552, 554 (Ill. App. Ct. 1995) (internal
quotation marks and citation omitted). We agree that Cory
had to show that Travelers and CCC intended in their con-
tract to confer a benefit on Cory.
  The insurance contract between Travelers and CCC does
not even mention Cory, let alone affirmatively state that it
was undertaken for Cory’s direct benefit. Cory argues,
however, that this court’s decision in Prince v. Royal
Indemnity Co., 541 F.2d 646 (7th Cir. 1976), would allow it
to recover. But Prince is easily distinguished from Cory’s
situation. Prince stands for the proposition that an insured
who tries to assign a property insurance policy to a third
party, but fails to complete the assignment because it did
not get the insurer’s consent, retains an insurable interest
in the property sufficient to recover under the policy. See id.
at 650. The relationship between a retail and a wholesale
broker, and each of their connections with the insured party
and the insurer, are entirely different. Cory was never an
insured or even a potential insured under the policy issued
by Travelers, and thus it cannot rely on Prince to support
its case. The district court properly dismissed Cory’s breach
of contract claim against Travelers, because it had no legal
interest in the terms of the ultimate insurance agreement.
  Cory next contends that the district court erred in find-
Nos. 02-1126 & 02-1210                                      15

ing that IBSI and Travelers lacked the necessary agency
relationship to obtain relief under a respondeat superior
theory of liability. In Cory’s view, the record would support
a finding that Travelers deliberately used IBSI to communi-
cate with CCC and that Travelers, pursuant to the Whole-
sale Broker Agreement, authorized IBSI to engage in vari-
ous agent-like activities on its behalf. These facts, in turn,
Cory argues, are enough to establish vicarious liability un-
der Illinois law.
   The district court relied on a four-part test that the
Illinois courts have created for determining whether an
insurance broker is acting on behalf of the insured, the in-
surer, or both, under which it must consider (1) who called
the intermediary into action; (2) who controls its actions; (3)
who pays the intermediary; and (4) whose interests the in-
termediary represents. See Moone v. Commercial Cas. Ins.
Co., 112 N.E.2d 626, 629 (Ill. App. Ct. 1953); see also A&B
Freight Line, Inc. v. Ryan, 576 N.E.2d 563, 566 (Ill. App. Ct.
1991); Krause v. Pekin Life Ins. Co., 551 N.E.2d 395, 399
(Ill. App. Ct. 1990); Roby v. Decatur Steel Erectors, Inc., 375
N.E.2d 1355, 1359 (Ill. App. Ct. 1978). Another Illinois case
mentions factors such as “an agent’s fixed and permanent
relationship to the company he represents, conduct incon-
sistent with an agency relationship with a client, whether
the client first approached the person, and whether the per-
son dealt directly with the insurance company.” Northtown
Warehouse & Transp. Co. v. Transamerica Ins. Co., 507
N.E.2d 189, 192 (Ill. App. Ct. 1987). Using the four-part
test, the district court found that there was no agency rela-
tionship between IBSI and Travelers.
  We agree. The record shows that it was Cory that initially
approached IBSI and called IBSI “into action” by giving
IBSI instructions to secure a quote from various insurers,
among them Travelers. Cory also controlled IBSI both by
directing IBSI to secure the initial price quotes from
16                                  Nos. 02-1126 & 02-1210

insurers and by giving final instructions to IBSI to procure
the actual policy from Travelers. It would be absurd to say
that Travelers controlled IBSI, since IBSI remained free to
the very end to negotiate with other insurers and to
recommend other insurers to Cory and CCC. IBSI repre-
sented the interests of Cory and not Travelers. In fact, IBSI
was explicitly attempting to wrest from Travelers the
lowest possible price quote to take back to Cory and CCC.
True, the existence of a commission relationship between
IBSI and Travelers suggests that there were countervailing
incentives in terms of price competition, but this is not
enough standing alone to establish an agency relationship.
See Golden Rule Ins. Co. v. Michely, 555 N.E.2d 1047, 1050-
51 (Ill. App. Ct. 1990) (finding no agency relationship where
broker-insurer agreement provided, among other things, for
payment of commissions for placements); 12 AM. JUR. 2D
BROKERS § 42 (stating that the rendering of a commission
alone is not enough to establish agency).
  Assuming, therefore, that Moone represents the author-
itative Illinois law on the subject, the district court prop-
erly found that IBSI was a broker that sought out price
quotes for clients by canvassing a range of possible insur-
ers, rather than an agent with an “fixed and permanent
relationship” to any particular insurer. Perhaps recognizing
this, Cory argues in the alternative that the Moone test
does not preclude recourse to traditional agency principles,
and that its claims come within two established exceptions
to Moone.
  Illinois courts have found that the Moone test is inappli-
cable where there is an agency agreement that explicitly
grants a broker the power to bind the insurer—in short,
where there exists actual (express) authority. In Zannini v.
Reliance Ins. Co., 590 N.E.2d 457 (1992), the Illinois Su-
preme Court held that the existence of an agency agree-
ment that gave the broker the authority to bind the insurer
rendered unnecessary resort to the four-part test in Moone.
Nos. 02-1126 & 02-1210                                      17

Id. at 463. The agreement in Zannini explicitly provided
that the broker was an “agent” and had the authority to
“bind coverage and execute contracts in accordance with the
guidelines furnished from time to time by the Company
or as authorized by the Company with respect to specific
risks.” Id. at 463. Under Zannini, Cory cannot prevail. The
Wholesale Broker Agreement that governed the relations of
IBSI and Travelers granted IBSI authority to do a variety
of things—solicit applications for insurance, collect premi-
ums, be paid commissions by Travelers, and hold funds in
behalf of and as fiduciary of Travelers—but expressly with-
held from IBSI the authority to bind Travelers. Thus, the
first exception to the Moone test on which Cory attempts to
rely is inapposite.
   A second context in which Illinois courts have departed
from Moone is where an insurer uses a broker to perform
particular services and thereby vests the broker with ap-
parent authority to act on behalf of the insurer. In such
situations, an insurance company may be estopped to deny
the agency of the broker. See Empire Fire & Marine Ins. Co.
v. Faith Truck Lines, Inc., 533 N.E.2d 441, 443-44 (Ill. App.
Ct. 1988); Ledbetter v. Crudup, 449 N.E.2d 265, 267 (Ill.
App. Ct. 1983). That, however, is not our case. The Illinois
Supreme Court’s decision in State Security Insurance Co. v.
Burgos, 583 N.E.2d 547 (Ill. 1991), provides a useful
contrast. There, an insurer tried to deny a claim from an
insured because the insured had submitted its claim notice
to the insurer’s broker, rather than the insurer itself. The
Illinois Supreme Court found for the plaintiff and held that
the insurer had vested the broker with apparent authority
based on a course of dealing. Id. at 552, 554. The Court
rested its decision on at least three aspects of the insurer-
broker relationship, including the insurer’s use of the bro-
ker as a “conduit” for delivering policies, the billing and col-
lection of premiums, and the mailing of notices regarding
cancellation, renewals, or premium changes. Id. at 549-50,
18                                  Nos. 02-1126 & 02-1210

552. The Court also seized upon language on the declara-
tions page of the actual paper policy designating the broker
as the insurer’s “representative” and including the words
“Agent or Broker—,” as well as deposition testimony from
an employee of the insurer who stated that he had received
notice of claims from both insureds and brokers alike in the
past. Id. at 552-54.
  In the present case, although Travelers relied exclusively
on IBSI for communication of policy information during the
negotiation phase, it did no more. Unlike the Burgos sit-
uation, where the intermediary role played by the broker
continued long after the procurement process was com-
pleted, IBSI’s role was far more limited. Under Illinois law,
as Burgos makes clear, procurement—which presumably
includes price quotations and the sort of go-between com-
munication provided by IBSI—cannot establish agency
through apparent authority and a course of dealing. A deci-
sion on the facts of Cory’s case would represent, at a mini-
mum, a vast expansion of Burgos, and one that we believe
would be inconsistent with the lines the Illinois courts have
drawn. Such an outcome would transform all brokering into
an agency relationship and all provision of brokerage
services into a source of respondeat superior liability. We
respectfully leave such a major change in the law to Illinois
courts.
  Last, Cory tries to save its case by arguing that Travel-ers
ratified the statements of the IBSI representatives and that
Travelers and CCC entered into an oral contract of insur-
ance with liability limits of $7,667,000. Neither theory has
merit. In order for a ratification to occur, Travelers must
have known of the miscommunication or otherwise reviewed
the placement note as executed by IBSI, believed it was
ambiguous or otherwise unclear, and yet did nothing to
correct or clarify the misleading language. Here, the record
shows that the documents reaching Travelers consistently
Nos. 02-1126 & 02-1210                                    19

set a $2.5 million cap on liability. The record evidence thus
can support only the conclusion that whatever misunder-
standing created the shortfall in coverage was internal to
the communication between IBSI, Cory, and CCC, and that
Travelers believed from start to finish that it was providing
a policy with a coverage cap of $2.5 million. Accordingly,
Travelers could not have ratified the mistaken internal
communication between the brokers because all of the
documents that passed from Travelers to IBSI and from
IBSI to Cory correctly stated the relevant liability limits.
  Cory’s final attempt at establishing liability on the part
of Travelers is to argue that Travelers and CCC entered
into an oral contract of insurance with liability limits
of $7,667,000. We are perplexed by this argument. Cory
is putting the cart before the horse. Because Travelers
never communicated directly with Cory or CCC, there can-
not have been any oral contract unless IBSI was an agent
of Travelers. But, if the necessary agency relationship ex-
isted between IBSI and Travelers, then Cory’s oral contract
argument is irrelevant because Cory could proceed under its
respondeat superior theory of liability. Thus, Cory’s ar-
gument about the alleged formation of an oral contract is
unavailing and would be redundant if it was not.


                            IV
  It is regrettable in a case of this complexity to require
yet more proceedings, but as we have explained, IBSI was
entitled to a full trial on the breach of fiduciary claim, as
opposed to the abbreviated proceeding it received. On the
other hand, for the reasons we have explained, Travelers
was entitled to summary judgment on the breach of con-
tract and respondeat superior negligence claims. The judg-
ment of the district court is AFFIRMED in part and VACATED
in part, and the case is REMANDED to the district court for
further proceedings consistent with this opinion. Costs on
20                                Nos. 02-1126 & 02-1210

appeal shall be assessed against IBJ and Cory.




A true Copy:
      Teste:

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




                  USCA-02-C-0072—8-29-03
