The seventh-circuit reversed the district court’s judgment in favor of Consolidated Chassis Management LLC and Chicago-OHio Valley Consolidated Chassis Pool LLC regarding their claims for declaratory relief and breach of contract, while affirming the judgment in favor of Northland Insurance Company on Consolidated’s claim for penalties under § 155 of the Illinois Insurance Code. The court held that under Illinois law, an insured is not entitled to independent counsel at the insurer’s expense solely based on adverse interests between codefendants or a temporary reservation of rights; rather, such a right arises only when there is a serious, actual conflict of interest directly between the insurer and the insured. The court applied the standard that the insurer’s general right to control the defense of its insured yields only in narrow circumstances where the insurer’s interests are fundamentally at odds with the insured’s, such as when coverage depends on factual issues contested in the underlying suit or when the insurer has an incentive to pursue a less vigorous defense. The court found no such conflict existed here because Northland withdrew its reservation of rights before the defense began, and the policy covered all claims of negligence regardless of how liability was apportioned among the insureds. Consequently, the mere risk of an excess judgment or the filing of crossclaims for contribution between codefendants did not create a “diametrically opposed” conflict sufficient to override the insurance policy’s terms granting Northland control over the defense. Because Northland fulfilled its duty to defend without breaching the contract or engaging in vexatious conduct, Consolidated was not entitled to reimbursement for independent counsel fees nor statutory penalties under § 155 of the Illinois Insurance Code. As a practical consequence, the judgment is reversed as to the breach of contract and declaratory relief claims, meaning Consolidated must return any award previously granted for independent counsel costs, and affirmed as to the § 155 claim, leaving Northland free from penalties. The case returns to the district court to enter judgment consistent with this opinion, effectively ending Consolidated’s attempt to recover legal fees from Northland.