Atlanta Gas Light Company v. Navigators Insurance Company

In the

United States Court of Appeals

For the Seventh Circuit

____________________

Nos. 24-2888 & 24-2889

ATLANTA GAS LIGHT COMPANY and SOUTHERN COMPANY GAS,

Plaintiffs-Appellees, Cross-Appellants,

v.

NAVIGATORS INSURANCE COMPANY,

Defendant-Appellant, Cross-Appellee.

____________________

Appeals from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:20-cv-2441 — James P. Hanlon, Judge.

____________________

ARGUED SEPTEMBER 5, 2025 — DECIDED JANUARY 22, 2026

____________________

Before ST. EVE, JACKSON-AKIWUMI, and LEE, Circuit Judges.

LEE, Circuit Judge. Atlanta Gas Light Company and South-

ern Company Gas (collectively, “AGL”) hired United States

Infrastructure Corporation (“USIC”) to locate and mark gas

lines that AGL owned throughout Georgia. Unfortunately,

USIC failed to mark a gas line in Homerville, Georgia, and, in

2018, a boring company struck it, leading to an explosion that

severely injured three women. The victims threatened suit,

and, in 2019, they, AGL, and USIC participated in a presuit

2 Nos. 24-2888 & 24-2889

mediation to resolve the dispute. Through this process, the

victims arrived at a settlement with USIC but were unable to

come to terms with AGL. Eventually, however, AGL too set-

tled with the victims, but only after they sued AGL in Georgia

state court (the “Underlying Suits”).

AGL’s service agreement with USIC required USIC to ob-

tain primary and excess liability insurance coverage that in-

cluded AGL as an additional insured. And, because USIC’s

settlement with the victims exhausted its primary policy, AGL

tendered the defense and indemnification of the Underlying

Suits to USIC’s excess insurer, Navigators Insurance Com-

pany (“Navigators”). Navigators, however, denied the re-

quests on the ground that AGL was not an “additional in-

sured” under the excess policy because, in its view, the Un-

derlying Suits were premised solely on the conduct of AGL,

not USIC.

Based on Navigators’s failure to defend AGL at the medi-

ation as well as its rejection of AGL’s requests, AGL sued the

excess insurer, alleging breach of contract, breach of fiduciary

duty, and breach of its duty to deal with AGL in good faith.

In response, Navigators filed a motion to dismiss, which the

district court granted, but only as to AGL’s claims premised

on the insurer’s failure to attend the mediation. Navigators

subsequently requested summary judgment as to the remain-

ing claims, which the district court granted in part; it dis-

missed AGL’s breach of fiduciary duty and bad faith claims

but not the breach of contract claim.

When assessing the contract claim, the court concluded

that AGL in fact was an “additional insured” under the excess

policy. This led AGL and Navigators to jointly seek the entry

of a final judgment in AGL’s favor as to the breach of contract

Nos. 24-2888 & 24-2889 3

claim, reserving the right to appeal the court’s “additional in-

sured” determination as well as the other summary judgment

rulings. Finding no error in the district court’s analysis, we

affirm.

I

A. The Policy

AGL owns gas lines throughout Georgia and had a service

agreement with USIC to locate and mark them when neces-

sary.

The service agreement required USIC to maintain primary

and excess liability insurance coverage that included AGL as

an “additional insured.” Dkt. 113-2 at 19. 1 USIC’s primary

policy was issued by Zurich Insurance Company (the “Pri-

mary Policy”). Its excess policy was issued by Navigators (the

“Umbrella Policy”).

As relevant here, the Umbrella Policy provides that:

1. We will pay on behalf of the insured and in excess of

“underlying limits” those sums the insured becomes legally

obligated to pay as damages for “loss” to which this insur-

ance applies. This insurance applies only if:

a. the “loss” is caused by an “event” that takes place in

the coverage territory;

b. the “loss” occurs during the “policy period;” and

c. the “controlling underlying insurance” applies to the

“loss.”

1 “Dkt.” refers to the docket number in the district court record.

4 Nos. 24-2888 & 24-2889

Dkt. 19-6 at 5 (emphasis added).

The term “insured” in the Umbrella Policy is taken from

the Primary Policy, which defines “the insured” to include, in

relevant part:

[A]ny person or organization whom you are required to

add as an additional insured on this policy under a written

contract or written agreement. Such person or organiza-

tion is an additional insured only with respect to liability for

“bodily injury”, “property damage” or “personal and ad-

vertising injury” caused, in whole or in part, by:

1. Your acts or omissions; or

2. The acts or omissions of those acting on your behalf, in

the performance of your ongoing operations or “your

work” as included in the “products-completed operations

hazard”, which is the subject of the written contract or

written agreement.

Dkt. 19-7 at 2 (emphases added).

B. The Explosion

In August 2018, USIC failed to properly mark one of AGL’s

gas lines in Homerville, Georgia. A pipeline-boring company

struck the gas line, causing the release of natural gas into a

neighboring sewer line. This led to an explosion at a nearby

café, severely injuring three women (the “Injured Parties”).

C. The Mediation

The Injured Parties participated in a mediation with USIC

and AGL in November 2019 before filing suit. Through that

process, they reached a settlement with USIC that exhausted

the limits of USIC’s Primary Policy (“USIC Settlement”). As

Nos. 24-2888 & 24-2889 5

part of the settlement, the Injured Parties agreed to release

USIC and its insurers from any and all liability with respect

to the accident, including “any vicarious liability that could

arise from USIC’s conduct, including any vicarious liability

that may be imputed to AGL.” Dkt. 36-1 at 2. Notably, this

release carved out “any claim against AGL with respect to

AGL’s own conduct, including but not limited to any acts,

omissions, or negligence of AGL.” Id.

Unlike USIC, AGL was unable to come to an agreement

with the Injured Parties during the mediation. Navigators did

not attend the mediation, although AGL had requested it to

do so.

D. The Underlying Suits

In December 2019, the Injured Parties sued AGL in Geor-

gia state court. The Underlying Suits focused on AGL’s own

conduct, including its alleged failure to de-pressurize the gas

lines. AGL tendered the Underlying Suits to Navigators for

defense and indemnification.

Familiar with the claims and parties from the mediation,

USIC’s outside counsel, Traci Martinez, reached out to Navi-

gators to “discuss any questions” and “to offer assistance …

to the extent that would be helpful.” Dkt. 89-1 at 7. Ultimately,

Martinez prepared the denial letter that Navigators sent to

AGL.

In the letter, Navigators stated that AGL would qualify as

an “additional insured” under the Umbrella Policy only “with

respect to liability for ‘bodily injury’ … caused in whole or in

part by [USIC’s] acts or omissions.” Dkt. 36-2. Because, in

Navigators’s view, the Underlying Suits were “based solely

and exclusively upon AGL’s own conduct,” without

6 Nos. 24-2888 & 24-2889

“alleg[ing] any wrongdoing by USIC,” it had no obligation to

defend or indemnify AGL. Id. (emphases in original).

E. Procedural History

That brings us to this lawsuit. In September 2020, AGL

sued Navigators, alleging that the insurer breached the Um-

brella Policy, violated its fiduciary duty to AGL, and acted in

bad faith. In support, AGL pointed to Navigators’s failure to

attend the mediation as well as its refusal to defend and in-

demnify AGL. Ruling on Navigators’s motion to dismiss, the

district court dismissed the claims to the extent they were

based on Navigators’s conduct prior to the USIC Settlement

but otherwise denied the motion. It reasoned that, because the

Primary Policy had not been exhausted prior to the settle-

ment, Navigators’s duties toward AGL had not yet arisen.

Eventually, Navigators moved for summary judgment as

to the remaining claims as well. The district court ruled in its

favor as to AGL’s fiduciary duty and bad faith claims, noting

the lack of evidence that Navigators had acted with ill will

when denying coverage. As to AGL’s breach of contract claim,

however, the district court concluded that AGL did qualify as

an “additional insured” under the Umbrella Policy and de-

nied the motion. The parties then settled this action, each re-

serving its right to appeal the rulings against it. Pursuant to

the settlement, the district court entered final judgment in fa-

vor of AGL for $13.8 million.

AGL now appeals the dismissal of its claims that were

premised on Navigators’s conduct pre-USIC Settlement. AGL

and Navigators cross-appeal their respective losses in the

summary judgment order.

Nos. 24-2888 & 24-2889 7

II

As a threshold matter, the district court held that Indiana

law governs this action, and neither party disputes this on ap-

peal. Accordingly, “our role is to apply Indiana law as we pre-

dict the Indiana Supreme Court would today.” Mesco Mfg.,

LLC v. Motorists Mut. Ins. Co., 145 F.4th 705, 708 (7th Cir. 2025)

(quoting AXIS Ins. Co. v. Am. Specialty Ins. & Risk Servs., 111

F.4th 825, 830 (7th Cir. 2024)). Thus, before we dive into the

particular claims in question here, a review of the governing

Indiana law is in order.

A. Breach of Contract

“Under Indiana law, the interpretation of an insurance

policy is a legal question that turns on traditional principles

of contract interpretation.” Circle Block Partners, LLC v. Fire-

man’s Fund Ins. Co., 44 F.4th 1014, 1018 (7th Cir. 2022) (citing

Ebert v. Ill. Cas. Co., 188 N.E.3d 858, 863–64 (Ind. 2022)). In In-

diana, an unambiguous insurance policy is given “its plain

and ordinary meaning” and “must be enforced according to

its terms, even if those terms limit an insurer’s liability.” Ebert,

188 N.E.3d at 864, 865 (citing Sheehan Constr. Co. v. Cont’l Cas.

Co., 935 N.E.2d 160, 169 (Ind.), modified, 938 N.E.2d 685 (Ind.

2010)).

“Typically, an insurer has a duty to defend its insured

against suits alleging facts that might fall within the cover-

age.” Fed. Ins. Co. v. Stroh Brewing Co., 127 F.3d 563, 566 (7th

Cir. 1997) (applying Indiana law). “Whether an insurer has a

duty to defend a particular lawsuit is determined by examin-

ing the nature of the underlying complaint.” Ebert, 188 N.E.3d

at 865 (citing Transamerica Ins. Servs. v. Kopko, 750 N.E.2d 1283,

1285 (Ind. 1991)). To carry out this inquiry, the “insurer must

8 Nos. 24-2888 & 24-2889

look to the allegations in the complaint coupled with the facts

known to the insurer after reasonable investigation.” Smith v.

Progressive Se. Ins. Co., 150 N.E.3d 192, 202 (Ind. Ct. App. 2020)

(citing Am. States Ins. Co. v. Aetna Life & Cas. Co., 379 N.E.2d

510, 518 (Ind. Ct. App. 1978)). 2 And, like many other states,

Indiana law recognizes that “[a]n insurer’s duty to defend is

broader than its duty to indemnify.” Ebert, 188 N.E.3d at 865

(citing Seymour Mfg. Co., Inc. v. Com. Union Ins. Co., 665 N.E.2d

891, 892 (Ind. 1996)).

That said, “[n]o defense is required if the pleadings or in-

vestigation indicate that a claim is outside coverage limits or

excluded under the policy.” Smith, 150 N.E.3d at 202 (citing

Trisler v. Ind. Ins. Co., 575 N.E.2d 1021, 1023 (Ind. Ct. App.

1991)). “When the nature of the claim is obviously not covered

by the policy of insurance, there is no duty to defend.” Kopko,

570 N.E.2d at 1285 (citing Cincinnati Ins. Co. v. Mallon, 409

N.E.2d 1100 (Ind. Ct. App. 1980)).

2 Indiana law as to whether “the nature of the underlying complaint”

means only the complaint or includes facts otherwise reasonably known

to the insurer is not a model of clarity. As we have recounted else-

where, “[a] much-criticized (but never overruled) decision by the Indiana

Supreme Court states that the ‘duty to defend is determined solely by the

nature of the complaint.’ … This could be interpreted to mean that the

insurance company only has to read the complaint. But that interpretation

is not inevitable; ‘nature of the complaint’ might refer to the allegations of

the complaint plus additional facts known or reasonably ascertainable by

the insurer. This interpretation has support in Indiana law … reflecting

the ‘modern trend’ in insurance law.” Hayes Lemmerz Int’l, Inc. v. Ace Am.

Ins. Co., 619 F.3d 777, 781 (7th Cir. 2010) (citations omitted). Here, con-

sistent with this reasoning, the parties agree that the “nature of the com-

plaint” includes both the complaint and the facts known to the insurer af-

ter reasonable investigation.

Nos. 24-2888 & 24-2889 9

B. Breach of Fiduciary Duty

Under Indiana law, a claim for breach of fiduciary duty

requires proof of three elements: “(1) the existence of a fiduci-

ary relationship; (2) a breach of the duty owed by the fiduci-

ary to the beneficiary; and (3) harm to the beneficiary.” Jaffri

v. JPMorgan Chase Bank, N.A., 26 N.E.3d 635, 639 (Ind. Ct. App.

2015) (quoting Farmers Elevator Co. of Oakville v. Hamilton, 926

N.E.2d 68, 79 (Ind. Ct. App. 2010)).

Whether an insurer owes a fiduciary duty to its insured

depends on the nature of the dispute. For example, when an

insured asserts a first-party claim against the insurer, the re-

lationship is “adversarial,” and no fiduciary duty applies. Erie

Ins. Co. v. Hickman, 622 N.E.2d 515, 518 (Ind. 1993). But, when

an insurer has a duty to defend the insured against the claims

brought by a third party, the former owes a fiduciary duty to

the latter. See Posterity Scholar House, LP v. FCCI Ins. Co., 205

N.E.3d 1018, 1022 (Ind. Ct. App. 2023). And, of course, the ex-

istence of a duty is a prerequisite for a breach of fiduciary duty

claim. See McAdams v. Dorothy Edwards Realtors, Inc., 604

N.E.2d 607, 612 (Ind. 1992) (“Absent a duty, there can be no

breach … or liability based upon the breach of duty.”) (citing

Wilson v. Haimbaugh, 482 N.E.2d 486, 487 (Ind. Ct. App. 1985)).

C. Breach of Good Faith

Indiana law recognizes “a legal duty, implied in all insur-

ance contracts, for the insurer to deal in good faith with its

insured.” Freidline v. Shelby Ins. Co., 774 N.E.2d 37, 40 (Ind.

2002) (citing Hickman, 622 N.E.2d at 518, and Vernon Fire &

Cas. Ins. Co. v. Sharp, 349 N.E.2d 173, 181 (Ind. 1976)). An in-

surer can breach that duty by, for example, “(1) making an

unfounded refusal to pay policy proceeds; (2) causing an

10 Nos. 24-2888 & 24-2889

unfounded delay in making payment; (3) deceiving the in-

sured; and (4) exercising any unfair advantage to pressure an

insured into a settlement of his claim.” Hickman, 622 N.E.2d at

519. 3 Put another way, “[a]s a general proposition, ‘[a] finding

of bad faith requires evidence of a state of mind reflecting dis-

honest purpose, moral obliquity, furtive design, or ill will.’”

Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 977

(Ind. 2005) (quoting Colley v. Ind. Farmers Mut. Ins. Grp., 691

N.E.2d 1259, 1261 (Ind. Ct. App. 1998)).

To successfully assert a claim alleging a bad faith denial of

coverage, the insured must establish, by clear and convincing

evidence, that the insurer had knowledge that there was no

legitimate basis for denying liability. Freidline, 774 N.E.2d at

40 (citing Ind. Ins. Co. v. Plummer Power Mower & Tool Rental,

Inc., 590 N.E.2d 1085, 1093 (Ind. Ct. App. 1992)). This is be-

cause not all claim denials give rise to claims of bad faith.

Hickman, 622 N.E.2d at 520. For example, “a good faith dis-

pute about whether the insured has a valid claim will not sup-

ply the grounds for recovery in tort for the breach of the obli-

gation to exercise good faith.” Freidline, 774 N.E.2d at 40 (cit-

ing Hickman, 622 N.E.2d at 520). By contrast, “an insurer

which denies liability knowing that there is no rational, prin-

cipled basis for doing so has breached its duty” to deal in

good faith. Hickman, 622 N.E.2d at 520.

3 AGL correctly notes that Hickman did not limit the duty of good faith

to only those four scenarios. See Monroe Guar. Ins. Co. v. Magwerks Corp.,

829 N.E.2d 968, 976 (Ind. 2005) (“In Hickman we specifically declined to

determine the precise extent of an insurer’s duty to deal in good faith.”).

But in Monroe, the Indiana Supreme Court declined to expand the extent

of this duty, including to the “manner of handling the claim.” Id.

Nos. 24-2888 & 24-2889 11

III

A. Motion to Dismiss

The district court granted Navigators’s motion to dismiss

AGL’s breach of contract, breach of fiduciary duty, and

breach of good faith claims to the extent they were grounded

in Navigators’s failure to defend AGL at the mediation. In

short, the district court agreed with Navigators that it owed

AGL no duties until the exhaustion of the Primary Policy,

which only took place after the execution of the USIC Settle-

ment.

We review the district court’s dismissal of these claims de

novo, “accepting plaintiffs’ well-pleaded factual allegations as

true and drawing all reasonable inferences in their favor.”

Smykla v. Molinaroli, 85 F.4th 1228, 1234 (7th Cir. 2023) (citing

Kuebler v. Vectren Corp., 13 F.4th 631, 634–35 (7th Cir. 2021)). In

addition to the allegations, we may consider documents in-

corporated into the complaint by reference and matters of

which a court may take judicial notice. Id. (citations omitted).

“[T]o defeat a motion to dismiss, a plaintiff must allege

‘only enough facts to state a claim to relief that is plausible on

its face.’” Orr v. Shicker, 147 F.4th 734, 740 (7th Cir. 2025) (quot-

ing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This

standard requires that a complaint offer “factual content that

allows the court to draw the reasonable inference that the de-

fendant is liable for the misconduct alleged,” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009), or, put another way, “a story that

holds together,” Swanson v. Citibank, N.A., 614 F.3d 400, 404

(7th Cir. 2010).

12 Nos. 24-2888 & 24-2889

Here, the Umbrella Policy states, in relevant part:

2. If an aggregate limit of “controlling underlying insur-

ance” [here, the Primary Policy] is exhausted by the pay-

ment of judgments or settlements to which this insurance

applies, … this insurance will apply in place of the “con-

trolling underlying insurance” until we have paid our ap-

plicable Limits of Insurance.

3. When paragraph 2. above applies, ending the “control-

ling underlying insurance” obligations to investigate and

settle claims or defend suits against the insured, we have

the right and duty to investigate claims and defend suits

which seek damages to which this insurance applies.…

4. When paragraph 2. above does not apply, we have the

right, but not the duty, to participate in the investigation or set-

tlement of any claim or the defense of any suit against any in-

sured.

Dkt. 19-6 at 5 (emphases added).

Simply put, the Umbrella Policy is triggered only after the

limits of the Primary Policy are exhausted. Until that time, the

Umbrella Policy provided Navigators with the right, but not

the duty, to investigate and participate in the mediation pro-

cess. Here, AGL does not contend that the Primary Policy was

exhausted at the time it requested Navigators’s assistance in

the mediation. Therefore, under the plain and unambiguous

text of the Umbrella Policy, Navigators had no duty to grant

that request.

AGL contends that the policy’s text is beside the point be-

cause, in its view, Indiana law imposes a duty of care on the

insurer when it is on notice that the underlying primary

Nos. 24-2888 & 24-2889 13

policy limits would be exhausted. And, given the severity of

the Injured Parties’ injuries, AGL argues, Navigators knew or

should have known that Primary Policy’s limit of $2 million

would quickly be exhausted if the parties were able to reach

a settlement at the mediation, thereby requiring Navigators’s

attendance. In support, AGL relies on PHICO Insurance Co. v.

Aetna Casualty & Surety Co. of America, 93 F. Supp. 2d 982, 993

(S.D. Ind. 2000), but that case is readily distinguishable.

In PHICO, the excess insurer sued the primary insurer to

recover sums that the excess insurer had paid in an underly-

ing lawsuit against the insured because the primary insurer

had negligently defended the insured. Id. at 986–88. The ques-

tion before the court was whether the excess insurer could

maintain an action against the primary insurer, id. at 990,

which it answered in the negative because the excess insurer

had waived its claims by acquiescing to the primary insurer’s

litigation strategy, id. at 993. It was in this context that the dis-

trict court held that the excess insurer had a “duty to speak

up to protect its own interests and that of the insured if it ob-

jected to that strategy,” and that once it was on notice that the

primary insurer’s policy limits would be exhausted, the ex-

cess insurer had a “duty of care if not a duty to defend.” Id.

Thus, the “duty” that the PHICO court addressed was be-

tween the excess insurer and primary insurer and not be-

tween the excess insurer and the insured.

Furthermore, any argument that an excess insurer owes a

duty of care to the insured prior to exhaustion of the primary

insurer’s limits is foreclosed by Allstate Insurance Co. v. Dana

Corp., where the Indiana Supreme Court unequivocally held

that “the liability of the insurer under an excess insurance

clause arises only after the limits of the primary policy are

14 Nos. 24-2888 & 24-2889

exhausted.” 759 N.E.2d 1049, 1062 (Ind. 2001) (emphasis

added) (quoting Ryder Truck Lines, Inc. v. Carolina Cas. Ins. Co.,

385 N.E.2d 449, 452 (Ind. 1979)). Because Navigators owed no

duties to AGL until after the USIC Settlement, AGL’s contract

and fiduciary duty claims were properly dismissed.

As for the bad faith claim, AGL insists that Navigators’s

duties prior to the USIC Settlement cannot be segregated from

its duties post-settlement because AGL is challenging Navi-

gators’s alleged improper handling of the claim as a whole.

But the complaint asserts that Navigators acted in bad faith

“when it … failed to respond to AGL’s request for defense and

indemnification” leading up to the mediation, when it “failed

to attend said mediation,” and when it “failed to offer any

monies, in advance of, or at the mediation to settle all claims.”

Dkt. 1 ¶ 39. And, as already explained, Navigators’s duty to-

wards AGL did not arise until after the USIC Settlement.

Therefore, Navigators’s refusal to attend the mediation can-

not be held against it.

B. Summary Judgment

Turning to AGL’s remaining claims, Navigators appeals

the district court’s determination that AGL was an “addi-

tional insured” under the excess policy. In turn, AGL appeals

the district court’s order granting Navigators’s motion for

summary judgment as to what remained of AGL’s breach of

fiduciary duty and bad faith claims.

We review the district court’s summary judgment rulings

de novo, “construing all conflicts in the evidence and drawing

reasonable inferences for the nonmovant.” Kluge v. Browns-

burg Cmty. Sch. Corp., 150 F.4th 792, 804 (7th Cir. 2025) (citing

McDaniel v. Syed, 115 F.4th 805, 821–22 (7th Cir. 2024)).

Nos. 24-2888 & 24-2889 15

Summary judgment is appropriate where there are no mate-

rial facts in dispute, and the moving party is entitled to judg-

ment as a matter of law. Fed. R. Civ. P. 56(a). “A factual dis-

pute is ‘genuine’ if the evidence is such that a reasonable jury

could return a verdict for the nonmoving party.” Christensen

v. Weiss, 145 F.4th 743, 751 (7th Cir. 2025) (quoting Whiting v.

Wexford Health Sources, Inc., 839 F.3d 658, 661 (7th Cir. 2016)).

1. Breach of Contract Claim

We first consider Navigators’s argument that AGL does

not qualify as an “additional insured” under the Umbrella

Policy, which would be fatal to AGL’s breach of contract

claim. Pointing to the definitions of “insured” and “additional

insured” in the relevant policies, Navigators contends that, in

order for AGL to be an additional insured, its liability must be

based on the acts or omissions of USIC or those acting on

USIC’s behalf. But, here, Navigators points out, the Underly-

ing Suits were directed at AGL’s own conduct rather than

USIC’s.

The Umbrella Policy states that its coverage applies to “the

insured,” which includes any person or entity insured under

the Primary Policy. Dkt. 19-6 at 5. In turn, the Primary Policy

defines “the insured” as the named insured and “additional

insureds.” Dkt. 19-7 at 2. It then goes on to explain who would

qualify as an “additional insured”:

[A]ny person or organization whom you are required to

add as an additional insured on this policy under a written

contract or written agreement. Such person or organiza-

tion is an additional insured only with respect to liability for

“bodily injury”, “property damage” or “personal and ad-

vertising injury” caused, in whole or in part, by:

16 Nos. 24-2888 & 24-2889

1. Your acts or omissions; or

2. The acts or omissions of those acting on your behalf,

in the performance of your ongoing operations or “your

work” as included in the “products-completed operations

hazard”, which is the subject of the written contract or

written agreement.

Id. (emphases added).

Neither party argues that this text is ambiguous. And, un-

der Indiana law, the word “cause[]” in this context means

proximate cause. See Scottsdale Ins. Co. v. Harsco Corp., 199

N.E.3d 1210, 1215–16 (Ind. Ct. App. 2022).

Thus, for AGL to qualify as an “additional insured,” the

liability the Underlying Suits seek to impose upon it must

stem from injuries proximately caused “in whole or in part”

by USIC’s conduct. That is precisely what we have here. In-

deed, in its own motion for summary judgment, Navigators

acknowledged that “USIC … failed to locate and mark all of

AGL’s gas lines within the boring company’s intended exca-

vation path.” Dkt. 108 at 4. 4 Because USIC’s “acts or omis-

sions” “caused, in whole or in part” the gas explosion, which

harmed the Injured Parties, AGL is an “additional insured”

for the purposes of the Umbrella Policy.

Resisting this straightforward reading, Navigators argues

that, because the Settlement Agreement released USIC of any

liability, USIC’s acts and omissions cannot have been the

4 Navigators argues this statement was not an admission. We are not

persuaded. Navigators included this sentence in its own motion under the

heading “Statement of Material Facts Not in Dispute.”

Nos. 24-2888 & 24-2889 17

“cause” of the harm for which AGL was sued. In a similar

vein, Navigators contends that, because the Underlying Suits

against AGL do not mention USIC at all, USIC’s acts or omis-

sions cannot be the proximate cause of the harm that is the

subject of the lawsuits. Neither is persuasive.

Navigators’s first argument confuses the release of USIC’s

liability with a determination that USIC did not proximately

cause the injury that is the subject of the Underlying Suits. As

we noted in Apex Mortgage Co. v. Great Northern Insurance Co.,

a “[s]ettlement does not create a judicial ruling. Nor does it

vindicate a plaintiff’s theory of liability. Parties can settle for

any number of reasons and the obligation to pay comes from

the settlement itself (an agreement), not from one party’s lia-

bility.” 972 F.3d 892, 898 (7th Cir. 2020). As in Apex, the Settle-

ment Agreement merely released USIC from any claims of li-

ability; it did not determine one way or the other whether

USIC had proximately caused the harm to the Injured Parties.

Navigators’s reliance on Scottsdale and Employees Mutual

Casualty Co. v. Shivam Trading, Inc., 709 F. App’x 663 (11th Cir.

2018), is similarly misplaced. Both cases rested on a judicial

determination that the primary insured owed no coverage.

No such determination has been made here.

Second, Navigators is correct that the complaints in the

Underlying Suits do not mention USIC by name. But, when

assessing its duty to defend, the “insurer must look to the al-

legations in the complaint coupled with the facts known to the

insurer after reasonable investigation.” Smith, 150 N.E.3d at 202

(emphasis added) (citing Am. States Ins. Co., 379 N.E.2d at

518). Here, it is undisputed that USIC’s failure to mark the gas

line was, at least, a partial cause of the resulting gas explosion.

And, although AGL’s conduct may have been a contributing

18 Nos. 24-2888 & 24-2889

factor, “[t]here can be multiple proximate causes of a resulting

event.” Funston v. Sch. Town of Munster, 849 N.E.2d 595, 600

(Ind. 2006). Indeed, the policy recognizes this, requiring only

that the relevant injury be caused “in whole or in part” by

USIC.

The crux of both arguments appears to be Navigators’s be-

lief that AGL can only be an “additional insured” so long as

USIC faces some liability for its actions in the Georgia law-

suits. But the policy is devoid of such language, and we will

not “supply omitted terms while professing to construe the

contract.” Knapp v. Est. of Wright, 76 N.E.3d 900, 907 (Ind. Ct.

App. 2017) (quoting Johnson v. Sprague, 614 N.E.2d 585, 588

(Ind. Ct. App. 1993)). 5

In sum, the Underlying Suits seek to hold AGL liable for

injuries that were proximately caused (at least, in part) by

USIC’s conduct. Accordingly, AGL is an “additional insured”

as that term appears in the Umbrella Policy.

2. Breach of Good Faith Claim

Turning to AGL’s appeal, AGL raises several challenges to

the district court’s order granting summary judgment to

5 It is for this same reason Navigators’s reliance on the Additional In-

sured Endorsement’s clause, which provides that coverage “[w]ill not be

broader than that which you are required by the written contract or writ-

ten agreement to provide such additional insured,” is unpersuasive. Un-

der the Additional Insured Endorsement, Navigators is not required to

defend and indemnify AGL “for losses or damages caused by the sole neg-

ligence of [AGL], its agents or employees.” And, as Navigators has already

conceded, the harm to the Injured Parties was not caused solely by AGL.

Nos. 24-2888 & 24-2889 19

Navigators as to AGL’s claim that Navigators breached its

duty of good faith.

First, AGL argues that Navigators intentionally violated

the Umbrella Policy’s Separation of Insureds clause, which

provides that “this insurance applies … separately to each in-

sured against whom claim is made or suit is brought.” Dkt.

19-6 at 9. According to AGL, Navigators violated this provi-

sion by assigning a single claim number and a single adjuster

to its and USIC’s insurance claims. But the Separation of In-

sureds clause simply states that each insured is covered sepa-

rately in the event of a claim or lawsuit. Nowhere does the

text require Navigators to assign separate claim numbers or

adjusters to the claims. And AGL has failed to cite any author-

ity for this proposition.

Second, AGL contends that Navigators’s failure “to do an-

ything at any time to protect AGL’s interests” constitutes bad

faith. But Navigators’s internal notes and correspondence

with USIC indicate that it genuinely believed (as it still does

today) that AGL was not an additional insured under its Um-

brella Policy. And an insurer’s denial of a claim (even if incor-

rect) is not sufficient, on its own, to establish a breach of the

duty to exercise good faith. See Hickman, 622 N.E.2d at 520;

Monroe, 829 N.E.2d at 976 (A good faith dispute can exist

“even if it is ultimately determined that the insurer breached

its contract.”).

Undeterred, AGL cites to the claim file and insists that

Navigators staunchly refused to communicate with AGL de-

spite communicating regularly with USIC and its counsel. But

nothing in the claim file supports the theory that Navigators

purposefully ignored AGL once the Primary Policy was ex-

hausted. For example, AGL offers no evidence that AGL

20 Nos. 24-2888 & 24-2889

attempted to contact Navigators after the mediation or that

Navigators intentionally avoided such contact.

Lastly, AGL argues that Navigators acted in bad faith by

working with USIC’s counsel to prepare the letter that it

would send to AGL denying coverage. The timeline of events

is worth reviewing.

On November 25, 2019, USIC’s counsel, Traci Martinez, re-

ported the result of the mediation to Zurich and Navigators.

On February 4, 2020, Martinez wrote to Navigators and Zur-

ich, “I wanted to connect us in an email as both Navigators

and Zurich received identical letters from AGL requesting de-

fense/indemnification…. I thought we could get on a call to

discuss any questions you have and to offer assistance with

drafting Zurich’s and Navigators’s responses to the extent

that would be helpful.” Dkt. 89-1 at 7. The next day, another

counsel for USIC, David Helms, chimed in writing, “Here, the

operative complaints filed against AGL quite clearly are based

solely upon AGL’s conduct. That fact alone renders AGL’s

claims baseless and likely should be the first point.” Id. at 8.

Then, on February 7, 2020, Martinez sent draft denial letters

to the insurers, writing, “Per our call yesterday, see attached

draft to assist you in your response.” Id. at 9. Finally, on Feb-

ruary 10, 2020, the Navigators claims adjuster generated a

note reading, in part: “AGL now trying to tender the suits

against them to USIC again via their counsel Thompson Hine.

I spoke to USIC counsel and Zurich and we drafted identical

denials.” Dkt. 89-1 at 4.

AGL claims that these emails amount to evidence that

USIC, Zurich, and Navigators actively colluded to deny AGL

coverage. But AGL does not point to anything in these emails

from which a reasonable factfinder could find that Navigators

Nos. 24-2888 & 24-2889 21

acted with “a state of mind reflecting dishonest purpose,

moral obliquity, furtive design, or ill will.’” Monroe, 829

N.E.2d at 977 (quoting Colley, 691 N.E.2d at 1261). Nor does

AGL provide any authority that coordinating denial letters in

this manner constitutes bad faith under Indiana law.

What remains then is Navigators’s nonfrivolous (albeit,

incorrect) belief that given the USIC Settlement and the alle-

gations in the Underlying Suit, AGL was not an “additional

insured.” 6 But, as discussed above, even an incorrect denial,

without more, cannot be a basis for bad faith. Accordingly,

summary judgment as to AGL’s bad faith claim was appro-

priate.

3. Breach of Fiduciary Duty

Finally, AGL challenges the district court’s grant of sum-

mary judgment in favor of Navigators as to its breach of fidu-

ciary duty claim. To survive summary judgment, AGL must

point to facts from which a reasonable jury could find the ex-

istence of a fiduciary relationship between it and Navigators,

a breach of that duty, and harm. Jaffri, 26 N.E.3d at 639 (quot-

ing Farmers Elevator, 926 N.E.2d at 79). Here, AGL premises its

claim entirely upon its contention that Navigators acted in

bad faith after AGL notified it of the Underlying Suits. But, for

the reasons discussed, no reasonable jury could find that this

was the case.

6 AGL cites an expert report opining that Navigators acted in bad

faith. The district court struck this report as irrelevant and conclusory. See

Atlanta Gas Light Co. v. Navigators Ins. Co., No. 1:20-cv-02441-JPH-TAB,

2023 WL 9058615, *6 n.5 (S.D. Ind. Sept. 22, 2023). Because AGL does not

challenge this holding on appeal, it plays no role in our consideration.

22 Nos. 24-2888 & 24-2889

* * *

For the foregoing reasons, the judgment of the district

court is AFFIRMED.