Britz Fertilizers, Inc. v. Bayer Corp. (665 F. Supp. 2d 1142, 2009)

MEMORANDUM DECISION AND ORDER RE: (1) DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION (DOC. 106); AND (2) DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION (DOC. 112)

OLIVER W. WANGER, District Judge.

I. INTRODUCTION

Before the court are two motions both jointly filed by Defendants Bayer Corporation and Bayer CropScience LP (collectively, “Bayer”). In the first motion, Bayer moves for summary judgment or, in the alternative, summary adjudication on the seven claims asserted by Plaintiff Britz Fertilizers, Inc. (“Britz”) in its Amended Complaint (Doc. 40), one of which is for breach of a “Contract to Indemnify.” In a second, separate motion, Bayer moves for summary adjudication on the issue of whether a particular distribution agreement, i.e., the “Aventis Distribution Agreement,” applies to Britz’s claim for breach of a Contract to Indemnify. Britz opposes both motions. The following background facts are taken from the parties’ submissions in connection with the motions and other documents on file in this case.

II. BACKGROUND

A. The Parties

Britz is a distributor of agricultural chemical products. (Doc. 38 at 7.) Britz is a California corporation with its principal place of business in Fresno, California. Bayer Corporation is an Indiana Corporation with its principal place of business in Pittsburgh, Pennsylvania. Defendant Bayer CropScience LP is a Delaware limited partnership with its principal place of business in North Carolina. The partners of Bayer CropScience LP are entities which are citizens of Delaware, Indiana, and Germany, and none of them are incorporated or have a principal place of business in California. Jurisdiction is undisputably premised on diversity of citizenship. 28 U.S.C. § 1332.

B. Ahmad Skouti And The Chemical “Ethrel”

In 2002, one of Britz’s customers was Ahmad Skouti (“Skouti”), a grape grower in Fresno and Madera County. Britz considered Skouti one of its “full-service” customers meaning that, in addition to selling chemicals to Skouti, Britz, through its Pest Control Advisor, Buck Hedman, monitored Skouti’s vineyards, provided recommendations to Skouti as to which chemicals to apply, and offered advice as to how to apply those chemicals. Britz distributed a chemical to Skouti known as “Ethrel,” a growth regulator that is supposed to hasten a grape’s ripening process and increase its sugar content.

C. Ethrel And Britz’s Distribution Agreements

Initially, Britz purchased Ethrel from the agricultural company known as Aventis with whom Britz had a distribution agreement. Aventis (i.e., Aventis CropScience) and Britz entered into a distribution agreement effective January 1, 2000, through October 31, 2000 (“Aventis Distribution Agreement”). Exhibit “A” to the Aventis Distribution Agreement specifically includes the distribution of “ETHREL.” Through written amendments, Britz and Aventis twice extended the term of the Aventis Distribution Agreement from November 1, 2000, to October 31, 2001, and then from November 1, 2001, to October 31, 2002. Each amendment contained Exhibit “A” which specifically includes the distribution of “ETHREL.” Britz acknowledges that it executed the original of and the amendments to the Aventis Distribution Agreement, and that it included the distribution of Ethrel.

In addition to the Aventis Distribution Agreement, on or about January 1, 2002, Britz entered into a distribution agreement with Bayer Corporation for the period of January 1, 2002, through December 31, 2002 (“Bayer Distribution Agreement”). The Bayer Distribution Agreement does not specifically mention “Ethrel.” In June 2002, however, after the Bayer Distribution Agreement commenced and before it expired, Bayer acquired Aventis.

D. Bayer Acquires Aventis

In June 2002, a division of Bayer acquired Aventis, which resulted in the creation of “Bayer CropScience.” A press release, dated June 3, 2002, announced Bayer’s acquisition of Aventis and the emergence of “Bayer CropScience.” In part, the press release states:

Leverkusen, June 3, 2002 — The new Bayer CropScience subgroup, formed through the merger of Bayer’s Crop Protection Business Group with Aventis CropScience SA, will begin operating on June 4, 2002. The industry’s new number two company is thus being given the green light following a thorough examination by the antitrust authorities. The European Commission approved the acquisition in April and the United States Federal Trade Commission ... gave the go-ahead on May 30. Closing of the EUR 7.25 billion deal on June 3, marks the biggest acquisition in Bayer’s history.[]

According to the President of Britz, David A. Britz, he saw this press release on or about June 3, 2002.

E. Ethrel And Damage To Skouti’s Vineyards

In or about July 2002, Britz sold some Ethrel to Skouti. Along with other agricultural chemicals in a “tank mix,” Skouti applied the Ethrel to certain vineyards he owned in Fresno and Madera County, and to a vineyard he leased in Fresno County from Walter Johnsen (collectively, the “Vineyards”). After Skouti applied the Ethrel in the tank mix, the Vineyards sustained damage.

Britz claims that, as with nearly all of the Ethrel it purchased in 2002, Britz purchased the Ethrel it sold to Skouti, which Skouti then applied to the Vineyards, from “Bayer” and not from Aventis. For argument purposes only, “Bayer is willing to concede this point with the caveat that the billing statements [for the Ethrel sold to Britz at this time] stated ‘Bayer CropScience’ and not ‘Bayer Corporation.’ ” (Doc. 138 at 4.) In other words, Bayer is conceding, for argument purposes, that Britz purchased the Ethrel at issue from Bayer, but not that Ethrel was a product of “Bayer Corporation.” Bayer claims that Ethrel was a product of “Bayer CropScience.”

F. The September 10, 2002, Letter From Bayer To Britz

In response to an inquiry by Britz, Bayer Vice President and Assistant General Counsel, William G. Ferguson, wrote David Britz a letter dated September 10, 2002. In the letter, Ferguson advised Britz that he was not aware of many details regarding a potential claim by Skouti, but that Bayer would defend and indemnify for losses caused by its products in a situation where the “distributor [Britz] acted as a purely ‘pass through entity.’ ” The September 10, 2002, letter, which contains the subject line “Ethrel Claim (Grapes)— Mr. Ahmad Skouti,” reads in pertinent part as follows:

I understand that you are concerned that the subject individual may file a lawsuit against Bayer CropScience and/or Britz Fertilizer with respect to the use of the (former Aventis) product Ethrel on grapes.

Although I do not have many details on this claim, I understand that you request clarification of Bayer’s position with respect to the defense of such a lawsuit.

In reply, I would refer to you to your current Distributor Agreement with Aventis CropScience, specifically to the section dealing with ‘Indemnification.’ As you will note, it would be Bayer’s position that it would defend and indemnify any claim related to its product in a situation where the distributor acted as a purely ‘pass through’ entity. That is, where there were no claims and/or proof of independent negligence or acts on the part of the distributor, e.g., making recommendations off-label, improper storage, handling or transportation, etc. Were such independent acts alleged, the distributor would be expected to defend them, since those would be theories of liability independent of any actions of Bayer, and the distributor would be in the best position to know the facts involved.

With respect to being named in a lawsuit, of course, as you may know given the current state of litigation in the United States, neither Bayer nor anyone else can control who might be named in a particular lawsuit, or which allegations might be made. This would be purely up to the plaintiff and his attorney, hopefully on some allegedly factual basis rather than a ‘shot gun’ approach.

(Smith Decl. Ex. D.) At the time Skouti applied the Ethrel to the Vineyards in or about July 2002, and at the time of Ferguson’s September 10, 2002, letter, the Aventis Distribution Agreement had not yet expired — it was set to expire on October 31, 2002. The “Indemnification” provision in the Aventis Distribution Agreement states, in relevant part, that “Aventis CropScience shall indemnify, defend, and hold DISTRIBUTOR [Britz] harmless from any third party claims, losses, damages and expenses, including reasonable attorneys fees, arising out of or resulting from Aventis CropScience’s negligence, breach of warranty or defective product.” (Schrimp Decl. Ex. C.)

The Bayer Distribution Agreement, which was in effect at the time of Ferguson’s September 10, 2002, letter, also contains an “Indemnity” provision. This provision states, in relevant part, that “Bayer Corp. will indemnify Distributor against all claims for property damage or personal injury suffered by third persons caused by goods supplied to Distributor hereunder whether arising in warranty, negligence or otherwise, except to the extent the claims are based on any one of the following: a) The negligence of Distributor ____” (Schrimp Decl. Ex. D) (emphasis added).

G. Skouti’s Action

On or about December 18, 2002, Skouti and lessor Johnsen filed a lawsuit against Britz in the Fresno County Superior Court (Case No. 02-CECG0450-MWS) to recover damages allegedly sustained to the Vineyards as a result of applying the tank mix (the “Skouti action”). Skouti and Johnsen named Britz as the only defendant in the Skouti action and alleged the tank mix caused damage to the Vineyards. The state-court complaint against Britz alleges causes of action for breach of contract, “negligence,” products liability, breach of the implied warranty of merchantability, breach of the implied warranty of fitness and declaratory relief. The complaint does not mention “Ethrel.”

In January 2003, Britz’s insurance carrier, Farmland Insurance, retained Theodore W. (Tad) Hoppe of Fresno, California, to represent Britz in the Skouti action. On March 7, 2003, Hoppe, on behalf of Britz, filed a cross-complaint against Bayer for declaratory relief and indemnification.

On May 14, 2003, James Moore, Esq., of the law firm of Baker & Hostetler in Houston, Texas, outside counsel for Bayer, wrote to Hoppe about defending and indemnifying Britz with respect to the Skouti action. Moore wrote:

You have provided to Bayer CropScience (‘Bayer’) a copy of a complaint that does not mention Bayer or any Bayer product. The complaint alleges, among other things, that Britz Fertilizers, Inc. (‘Britz’) acted as a consultant for the plaintiff and performed negligently in this capacity. The information provided to Bayer indicates that Bayer has no duty to defend or indemnify Britz Fertilizers in this case.

However, because of Bayer’s relationship with Britz, Bayer agrees to defend Britz Fertilizers, Inc. at this time. Bayer will not pay past attorneys fees or costs in this case. Bayer will retain Jim Rushford of Rushford & Bonotto in Sacramento, to defend this matter with you. If there is any evidence in this case of negligence or fault on the part of Britz (whether credible or not), Bayer may at its option withdraw from the defense of this case. In the event that Bayer withdraws from the case, Britz agrees to waive any conflict and allow attorneys retained by Bayer in this matter to continue to represent Bayer if Bayer is included as a party.

Britz agrees that it will cooperate fully with Bayer in connection with the defense of this case. Both Bayer and Britz reserve the issue of indemnity until a later date.

(Schrimp Decl. Ex. II.) Hoppe, with the approval of Britz, sent Moore a letter dated May 27, 2003, agreeing on behalf of Britz to the terms proposed by Moore in his May 14, 2003, correspondence. (Schrimp Decl. Ex. C of Ex. B.) Hoppe also stated, “please have Mr. Rushford contact the undersigned [Hoppe] and we will associate him in as counsel of record.” (Id.) On May 30, 2003, Rushford e-mailed Hoppe and stated: “Bayer has retained me to assist in the defense of Britz in the above matter [Skouti v. Britz ].... I would like to get together with you, in Fresno, at your earliest convenience to discuss this case. I look forward to working with you [Hoppe] towards a favorable resolution of this matter.” (Smith Decl. Ex. L.)

On June 3, 2006, Britz, through counsel, filed a request for dismissal in the Skouti action in which Britz requested dismissal of Britz’s indemnity cross-complaint against Bayer. The state court entered the dismissal on June 11, 2003. On or about June 18, 2003, Rushford became co-counsel with Hoppe for Britz. Over a year and four months later, Rushford withdrew as Britz’s co-counsel from the Skouti action.

On October 25, 2004, Moore sent a letter to Hoppe which discussed, among other things, Rushford’s withdrawal:

Bayer CropScience LP will agree to contribute $100,000 to a CCP § 998 offer to compromise of $500,000.

As we stated at the beginning of this suit, it is the view of Bayer CropScience that it has no duty to defend or indemnify Britz Fertilizers, Inc., in this case. Bayer CropScience LP has agreed to pay your fees up to now as a goodwill gesture to Britz Fertilizers, Inc., because of the business relationship between Bayer and Britz. Bayer will continue to pay your fees and expenses provided you sign this letter affirming that Britz will not assert that Bayer is responsible for any liability of Britz in this case under a collateral estoppel doctrine or other doctrine or theory related to or based upon this gesture. Bayer does not want its goodwill gesture of paying for the defense to be held against it by Britz in this matter or a subsequent case.

Also, Jim Rushford will withdraw from this case shortly. He has not been actively involved in defending this case, which has been defended by you. He may still attend some proceedings and will defend any Bayer witness who testifies at trial or in a deposition.

Please sign this letter indicating the acceptance of Britz to the contents of the letter and return it to me as soon as possible.

(Schrimp Decl. Ex. EE.) Hoppe signed the letter. (Id.) The parties agree that Rush-ford announced his intention to withdraw as counsel for Britz on October 25, 2004. The Withdrawal of Counsel form was signed by Hoppe and Rushford, and filed on November 22, 2004.

Bayer paid Rushford’s fees through his withdrawal and continued to pay Hoppe’s attorney’s fees and litigation costs through the Skouti trial, which commenced on February 28, 2005. After three weeks of the Skouti trial, Britz admitted liability for its negligence and contested only the amount of damages. Robert Glassman, Britz’s CFO who made the admission on the witness stand, substituted in as a trial attorney for Britz in the Skouti action. Glassman made the admission before the testimony of Britz’s expert witnesses.

At the trial, on March 28, 2005, Glassman testified, on direct examination, as follows when being questioned by Hoppe:

Q. You’ve had a chance to listen to the evidence being presented; correct?

A. Yes.

Q. And based upon what you’ve heard, you have revised your position on the denial of this claim.

A. Yes.

Q. And how have you revised it, sir?

A. The two issues of liability and damages, we agree that that tank mix had some impact and caused the damage and we’ll take some liability on that. We don’t know whether it was alone or with other things, but we’ll accept that liability-

Q. How about damages, sir?

A. No we totally disagree with the damages and have for years.

Q. So you contest the amount of the damages that are being presented.

A. Yes, that’s what our defense is about.

(Trial Transcript 6:6-17; 6:28-7:2.) After this admission, opposing counsel, James B. Betts, cross-examined Glassman. In pertinent part, the cross-examination went as follows:

Q. Did you participate at Britz in the decision to admit liability in this case?

A. Yes.

Q. And you’ve seen a lot of different photographs. I’ll touch base on those in a minute. Let me just go through a couple of elements that I have in mind.

As part of your admission of liability, sir, are you agreeing that Britz Fertilizer had a duty of care, a duty to provide services within a reasonable standard of conduct to Ahmad Skouti and to Walter Johnsen?

A. Yes.

Q. And are you admitting that Britz Fertilizer in making the recommendations that were utilized in 2002 acted below the standard of care and breached its duty to plaintiffs?

A. I’m saying that that is a plausible alternative, enough so that we should admit it.

Q. Are you admitting that Britz breached its duty to the plaintiffs in this case?

A. Yes, we made the sale.

Q. Do you admit, sir, that the defendant’s breach caused the plaintiffs’ damage? Whatever that damage may be.

A. Yes.

CId. at 9:22-10:15; 10:24-26.) After the admission, the jury awarded substantial damages to plaintiffs, totaling $7,596,247.00. On or about April 14, 2005, the court entered judgment against Britz for that amount plus costs. Britz appealed, but the judgment was affirmed. See Skouti v. Britz Fertilizers, Inc., No. F048298, 2007 WL 1954089 (Cal.Ct.App. July 6, 2007). Britz exhausted all of its appeal rights and paid the judgment amount.

At his later deposition, Glassman stated that his admission of liability at the Skouti action “was a method of damage control on the damages,” and he “thought that [it] would help” in that regard. (Glassman Dep. 78:21-24.) Glassman further stated that, at the time he made the admission, “he knew what” the Britz defense experts “were going to say” at the Skouti trial, but he did not believe that they were going to be effective. (Glassman Dep. 81:18.)

Britz has demanded that Bayer indemnify Britz for the judgment rendered in the Skouti action, and for the post-judgment attorney’s fees and costs incurred by Britz. Bayer has refused and claims that the admitted negligence of Britz in the Skouti action bars any claim for indemnification.

H. The Present Lawsuit

On March 14, 2006, Britz filed a federal complaint against Bayer (Case No. 1:06-cv-0287-OWW-SMS) for indemnity and declaratory relief, and for damages for fraud, negligent misrepresentation and false promise (“Britz I”). On June 11, 2007, Britz filed another federal complaint against Bayer for damages (Case No. 07-cv-0846-OWW-SMS) asserting claims for negligence, gross negligence and negligent supervision (“Britz II ”).

In Britz II, Britz filed a first amended complaint for damages on June 18, 2007, alleging claims for negligence, gross negligence, and breach of contract. On July 17, 2007, Bayer filed a Rule 12(b)(6) motion to dismiss the first amended complaint in Britz II, attacking all claims and arguing that the action duplicated Britz I. Bayer’s motion was granted in part: the negligence and gross negligence claims were dismissed, but the contract claim survived. (See Britz II, Doc. 38.) In addition, Britz I and II were ordered consolidated for all purposes including trial and Britz was given time to file a consolidated complaint.

In its consolidated complaint, i.e., its Amended Complaint (Doc. 40), Britz asserts seven claims: (1) breach of a “Contract to Defend”; (2) breach of the implied covenant of good faith and fair dealing; (3) breach of a “Contract to Indemnify”; (4) declaratory relief; (5) fraud; (6) negligent misrepresentation; and (7) false promise.

In its first claim for breach of a Contract to Defend, Britz asserts that the May 14, 2003, letter from Moore constitutes an enforceable contract between Britz and Bayer to defend Britz in the Skouti action. Britz asserts that Bayer breached this agreement. Britz’s second claim for breach of the implied covenant of good faith and fair dealing is also based on the May 14, 2003, letter. Britz asserts that Bayer breached the covenant of good faith and fail dealing implied in the Contract to Defend.

In its third claim for breach of a Contract to Indemnify, Britz asserts that it is contractually entitled to indemnification for the full amount of the judgment in the Skouti action, notwithstanding Britz’s admission of liability for its own breach of duty. Britz also claims is it contractually entitled to indemnification for the post-judgment interests, attorney’s fees and costs incurred by Britz post-verdict in the trial court and on appeal in the Skouti action. Britz asserts that Bayer’s failure to indemnify for these matters constitutes a breach of the indemnification provision in the Bayer Distribution Agreement (not the Aventis Distribution Agreement). Britz claims that the deficient performance and failures of Rushford placed Britz in a position where it proceeded to trial “with an inadequate defense” and “had little choice but to admit liability and contest damages.”

In its fourth claim for declaratory relief, Britz seeks three declarations: (1) that Bayer was obligated to furnish Britz with an “adequate defense in the Skouti action, not merely to pay the fees of [Britz’s] attorneys”; (2) that Bayer is “obligated to indemnify [Britz] for the judgment against [Britz] in the Skouti [a]ction, and for post-judgment interest and costs”; and (3) that Bayer is “obligated to indemnify [Britz] for [Britz’s] attorney fees and costs post-verdict and on appeal in the Skouti [a]ction.”

Britz fifth claim for fraud asserts that Bayer made false representations to Britz in Ferguson’s September 10, 2002, letter. Britz asserts that Bayer falsely represented in that letter that “it would defend and indemnify any claim related to its product in a situation where the distributor acted as a purely ‘pass through’ entity.” Britz asserts that, at all relevant times, it was a “pass through” entity as that term is used in Ferguson’s letter and yet it was not indemnified.

In its sixth claim for negligent misrepresentation, Britz asserts that Ferguson, on behalf of Bayer, made a negligent misrepresentation in his September 10, 2002, letter. Ferguson allegedly had “no reasonable ground for believing” the statements in the September 10, 2002, letter to be true.

Britz’s seventh claim for false promise is also based upon the September 10, 2002, letter. Britz asserts that in Ferguson’s September 10, 2002, he promised Britz that Bayer would defend and indemnify Britz in the Skouti action.

I. Bayer’s Motions

In Bayer’s first motion for summary judgment or, in the alternative, summary adjudication, Bayer substantively attacks all of Britz’s claims. For Britz’s Contract to Indemnify claim, Bayer assumes, arguendo, that the indemnity provision in the Bayer Distribution Agreement controls, as Britz contends.

If Britz’s contractual indemnity claim survives Bayer’s first motion, Bayer advances a separate motion for summary adjudication that the Aventis Distribution Agreement, along with its indemnity provision, controls. If so, Britz’s indemnity claim, based on the Bayer Distribution Agreement, fails as a matter of law.

III. SUMMARY JUDGMENT/AD JUDICATION STANDARD

“The standards and procedures for granting partial summary judgment, also known as summary adjudication, are the same as those for summary judgment.” Mora v. Chem-Tronics, Inc., 16 F.Supp.2d 1192, 1200 (S.D.Cal.1998). Summary judgment is appropriate when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The movant “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal quotation marks omitted).

Where the movant will have the burden of proof on an issue at trial, it must “affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir.2007). With respect to an issue as to which the non-moving party will have the burden of proof, the movant “can prevail merely by pointing out that there is an absence of evidence to support the non-moving party’s case.” Id. at 984.

When a motion for summary judgment is properly made and supported, the nonmovant cannot defeat the motion by resting upon the allegations or denials of its own pleading, rather the “non-moving party must set forth, by affidavit or as otherwise provided in Rule 56, ‘specific facts showing that there is a genuine issue for trial.’ ” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). “Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment.” Id. Likewise, “[a] non-movant’s bald assertions or a mere scintilla of evidence in his [or her] favor are both insufficient to withstand summary judgment.” FTC v. Stefanchik, 559 F.3d 924, 929 (9th Cir.2009).

“[S]ummary judgment will not lie if [a] dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505. In ruling on a motion for summary judgment, the district court does not make credibility determinations; rather, the “evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255, 106 S.Ct. 2505.

IV. DISCUSSION AND ANALYSIS

A. Bayer’s First Motion

1. Breach Of A Contract To Indemnify

The alleged Contract to Indemnify is the indemnity provision in the Bayer Distribution Agreement. This indemnity provision specifies: “Bayer Corp. will indemnify Distributor [Britz] against all claims for property damage or personal injury suffered by third persons caused by goods supplied to Distributor hereunder whether arising in warranty, negligence or otherwise, except to the extent the claims are based on ... [t]he negligence of Distributor.” (Schrimp Decl. Ex. D) (emphasis added.) Bayer argues that Britz’s admitted negligence at the Skouti trial precludes Britz’s claim for indemnity.

Britz, through its officer and attorney, Mr. Glassman, conceded Britz’s negligence (breach of duty) in the Skouti action and the jury returned a verdict against Britz. Glassman admitted liability believing it would help Britz’s position on damages. Britz does not suggest that Glass-man testified untruthfully when he, while on the witness stand and being questioned by plaintiffs’ counsel, admitted Britz’s duty to the plaintiffs, Britz’s breach of that duty, and that the breach caused the damages sustained to the Vineyards. The jury fixed the amount at over $7 million dollars. The Skouti action was “based” on Britz’s “negligence” within the meaning of the Contract to Indemnify and no reasonable trier of fact could conclude otherwise. Britz has not attempted to apportion fault, nor has the product been characterized as itself, inherently defective. Britz’s admission of its own negligence in the Skouti action bars the Contract to Indemnify claim.

To avoid the “negligence” language of the indemnity agreement, in response to Bayer’s separate statement of undisputed material facts, Britz claims that “Glassman admitted liability, not negligence.” This one-sentence contention (not repeated in Britz’s opposition brief) is specious. “Negligence” was specifically alleged against Britz in the Skouti complaint. In addition, on the witness stand, Glassman specifically admitted, in response to focused questions, the elements of negligence' — duty, breach, and causation, resulting in damage. Glass-man only disputed the amount of damages. Given that the state-court complaint specifically alleged a negligence cause of action against Britz and Glassman’s explicit testimony admitting each element of negligence, Britz cannot seriously contend that Glassman did not admit negligence or that his testimony does not establish Britz’s negligence for purposes of the indemnity provision. Glassman’s testimony was unqualified, he referred to Britz only, not Bayer, or the product.

Britz argues that “Bayer cannot rely on Britz’s admission of liability as excusing compliance with the indemnity provision because Britz relied to its detriment on Bayer’s promise that it would defend Britz in the Skouti action.” Quoting the Restatement (Second) of Contracts § 90(1), and citing Division of Labor Law Enforcement v. Transpacific Transportation Co., 69 Cal.App.3d 268, 275-76, 137 Cal.Rptr. 855 (1977), Britz argues that “promissory estoppel” precludes Bayer from relying on the negligence provision in the indemnity agreement. According to the Restatement (Second) of Contracts § 90(1): “A promise which the promisor should reasonably expect to induce action on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.”

“Promissory estoppel ... is based upon the equitable doctrine that a promisor is bound when he should reasonably expect a substantial change of position (act or forbearance) in reliance on his promise if injustice can be avoided only by the enforcement of the promise.” Transpacific Transp., 69 Cal.App.3d at 275, 137 Cal. Rptr. 855. “Promissory estoppel is a doctrine which employs equitable principles to satisfy the requirement that consideration must be given in exchange for the promise sought to be enforced.” US Ecology, Inc. v. California, 129 Cal.App.4th 887, 901-02, 28 Cal.Rptr.3d 894 (2005). “[P]romissory estoppel is an equitable doctrine to allow enforcement of a promise that would otherwise be unenforceable.” Id.

Because the doctrine of promissory estoppel is a consideration substitute, it is wholly inapplicable here. Bayer’s promise to defend Britz in the Skouti action is not otherwise “unenforceable” absent the application of promissory estoppel — the parties do not dispute that Bayer’s agreement to defend is an enforceable contract. Britz cannot invoke promissory estoppel to prevent Bayer from invoking and relying on the express negligence language in the indemnity provision, to which Britz agreed in writing. There is no argument or evidence that Bayer promised not to invoke or rely upon the negligence language in the indemnity provision, let alone that Britz relied upon such a promise to its detriment. Nor is there any argument or evidence that Bayer promised Britz that if Britz admitted liability in the Skouti action, that this strategic choice would help reduce Britz’s damages or otherwise work to Britz’s advantage.

Bayer did not recommend this strategy to Britz. Rather, this was an independent choice by Britz. Britz did not notify or seek Bayer’s consent to Britz’s trial strategy. Aside from promissory estoppel, which is unavailing, Britz has advanced no other legal theory under which Bayer’s promise to defend precludes Bayer’s reliance on and enforcement of the express negligence language in the indemnity agreement.

In its effort to avoid summary judgment, Britz also focuses on Ferguson’s September 10, 2002, letter that states “it would be Bayer’s position that it would defend and indemnify any claim related to its product in a situation where the distributor acted as a purely ‘pass through’ entity.” According to Britz, there is a triable issue as to what constitutes a “pass through” entity and whether it qualified as a “pass through” entity in the Skouti action. There are several problems with Britz’s new indemnity theory.

First, Britz never pleaded any indemnity claim based on Ferguson’s September 10, 2002, letter. Britz’s claim for breach of a Contract to Indemnify is explicitly premised on the Bayer Distribution Agreement. Having failed to plead an indemnity claim premised on the September 10, 2002, letter, Britz cannot advance this claim for the first time on summary judgment. See Pickern v. Pier 1 Imps. (U.S.), Inc., 457 F.3d 963, 968-69 (9th Cir.2006) (refusing to allow the plaintiff to advance new theories “presented for the first time in [the plaintiffs] opposition to summary judgment”); Wasco Prods., Inc. v. Southwall Techs., Inc., 435 F.3d 989, 992 (9th Cir.2006) (“Simply put, summary judgment is not a procedural second chance to flesh out inadequate pleadings”) (internal quotation marks omitted); see also Gonzalez v. City of Federal Way, 299 Fed.Appx. 708, 710 (9th Cir.2008) (affirming the district court’s refusal to consider a claim not in the complaint and “raised for the first time on summary judgment”). Britz’s failure to allege this theory of indemnity liability and its effort to raise this theory for the first time at summary judgment is fatal.

Second, Ferguson’s letter specifically defines what he meant by “pass through” entity. He stated “it would be Bayer’s position that it would defend and indemnify any claim related to its product in a situation where the distributor acted as a purely ‘pass through’ entity. That is, where there were no claims and/or proof of independent negligence or acts on the part of the distributor, e.g., making recommendations off-label, improper storage, handling or transportation, etc. Were such independent acts alleged, the distributor would be expected to defend them, since those would be theories of liability independent of any actions of Bayer, and the distributor would be in the best position to know the facts involved.” Based on Ferguson’s detailed explanation as to what Bayer meant by “pass through” entity, there is no dispute by contrary evidence from Britz as to what constitutes a “pass through” entity as defined in the letter. No evidence has been identified by Britz that would qualify it as a “pass through” entity.

Britz was more than a pass through distributor in the distribution chain. It was an agricultural chemical service consultant and dealer to Skouti. On the witness stand, Britz, through Glassman, admitted its own breach of its own duty that it owed to the plaintiffs, contesting only the amount of damages. Glassman did so strategically, based on his interpretation, it would improve Britz’s position on reducing damages. Britz has not claimed that Glassman testified untruthfully when he admitted duty, breach, and causation resulting in Skouti’s damage. In the Skouti action, Britz was not merely a “pass through” entity as defined by Ferguson’s letter. No reasonable trier of fact could conclude otherwise from the undisputed facts and admission of Britz. For all these reasons, Britz’s reliance on the September 10, 2002, letter is misplaced.

Britz’s admission of its liability for negligence, duty, breach, and causation resulting in damage, in the Skouti action bars its claim for indemnity. Summary judgment is GRANTED in favor of Bayer on Britz’s claim for breach of a Contract to Indemnify-

2. Breach Of A Contract To Defend

The alleged “Contract To Defend” is the May 14, 2003, letter from Moore to Hoppe. No party disputes that the May 14, 2003, letter constitutes an enforceable agreement to defend Britz in the Skouti action. Bayer argues that it performed all the terms actually agreed upon by the parties. Both Bayer and Britz set out the express substantive terms of the agreement:

1) Bayer agrees to defend Britz Fertilizers, Inc. at this time; 2) Bayer will not pay past attorney’s fees or costs in this case; 3) Bayer will retain Jim Rushford of Rushford & Bonotto in Sacramento, to defend this matter with you; 4) If there is any evidence in this case of negligence or fault on the part of Britz (whether credible or not), Bayer may at its option withdraw from the defense of this case; 5) In the event that Bayer withdraws from the case, Britz agrees to waive any conflict and allow attorneys retained by Bayer in this manner to continue to represent Bayer if Bayer is included as a party; 6) Britz agrees that it will cooperate fully with Bayer in connection with the defense of this case; and, 7) Both Bayer and Britz reserve the issue of indemnity until a later date.

In making the argument that it performed the express terms of the Contract to Defend, Bayer quotes the following passage from the Memorandum Decision on Bayer’s Rule 12(b)(6) motion, which dealt, in part, with the Contract to Defend:

Contract terms one and three, above, simply require Defendants to defend Britz ‘at this time’ and to provide Rush-ford to do so. Defendants are sellers of agricultural products. Defendants could only provide a defense to Britz by providing and paying counsel. The payment of Hoppe’s fees (term two) and providing Rushford to assist with Britz’s defense (term three) explained how Defendants would defend Britz.

(See Britz II, Doc. 38 at 29.) Bayer contends that it complied with the Contract to Defend because it supplied Rushford, paid for his attorney’s fees through his consensual withdrawal, and paid Hoppe’s attorney’s fees and litigation costs through trial. In addition, at the Skouti trial, Britz admitted its liability which, according to Bayer, constitutes “any evidence ... of negligence or fault ... credible or not” and thus justified Bayer’s non-payment of any attorney’s fees or costs on appeal. Accordingly, Bayer contends it complied with all the express terms of the Contract to Defend.

In opposition, Britz does not dispute that Bayer did all of these things, i.e., that Bayer supplied Rushford, and that Bayer paid Rushford’s and Hoppe’s attorneys’ fees and the litigation costs through the Skouti trial. Nor does Britz dispute that it admitted liability in the Skouti action. Instead, Britz argues that Bayer did not fulfill all of its obligations under the Contract to Defend.

As far as can be discerned, according to Britz, Bayer breached the express terms of the agreement in two respects: (1) Bayer did not honor its agreement to “defend” Britz in the Skouti case; and (2) Bayer was required and failed to furnish Britz with a replacement counsel upon Rush-ford’s withdrawal. With respect to the latter theory, according to Britz, Rush-ford’s withdrawal was not premised on evidence of Britz’s negligence or fault, and based on the timing of Rushford’s withdrawal, the express terms of the Contract to Defend obligated Bayer to provide Britz with replacement counsel. This obligation, according to Britz, continued up until the point that Bayer withdrew completely, which was not until after the jury verdict.

In addition to these alleged breaches of express terms, Britz contends that the Contract to Defend contains an “implied” term to “adequately” defend Britz in the Skouti action. Britz’s argues that given California case law on implied terms, and California Civil Code §§ 1655 and 1656 governing implied terms, an obligation to “adequately” defend Britz in the Skouti action is properly read into the agreement.

Bayer rejoins that it satisfied its obligation to “defend” Britz, that Britz had no right to replacement counsel, and even if it did, Britz waived this contractual right. Bayer further argues that no implied term to “adequately” defend Britz can be read into the agreement.

The contract theories raise several issues: (1) did Bayer breach its obligation to “defend” Britz; (2) did Britz have a contractual right to replacement counsel and, if so, did it waive this right; and (3) can an implied term to “adequately” defend Britz be read into the agreement.

When Glassman admitted liability on the stand in the Skouti action, this constituted “any evidence ... of negligence or fault ... credible or not” on the part of Britz. No reasonable jury could conclude otherwise. To the extent Britz’s Contract to Defend claim is based on Bayer’s alleged non-payment of any attorney’s fees or costs on appeal, or any alleged failure to supply counsel on appeal, summary adjudication is GRANTED on this claim in favor of Bayer. This does not end the inquiry.

a. Alleged Breaches Of Express Terms

i. The Agreement To “Defend”

No party disputes that Bayer agreed to “defend” Britz. Rather, the parties dispute whether Bayer performed its obligation to “defend.” Implicit in Britz’s breach theory is the premise, which Bayer vigorously disputes, that paying Hoppe’s fees and retaining Rushford did not completely satisfy Bayer’s obligation to “defend” Britz under the Contract to Defend. According to Britz, something more was required. As stated by Britz in its opposition:

The fact that a contract to defend exists between the parties is not in dispute, but the meaning of the contract is. Britz contends that ‘to defend’ means what it says. ‘To defend’ is all-inclusive term— whatever may be necessary for that purpose.

At the heart of Britz’s contract claim is the notion Bayer did not do enough to defend it in the Skouti action.

The threshold question raised by the parties’ briefing is whether Bayer’s express promise to “defend” can be interpreted, as Britz suggests, to impose some continuing defense obligation on Bayer over and above its obligation to pay Hoppe’s fees and to retain Rushford for Britz pretrial? If so, the second question is what is the nature and extent of the defense obligation? Third, does a material dispute exist as to its breach? The answer to the first question is “yes,” the answer to the second question is found in the plain language of the agreement, and the answer to the third question is “yes.”

Both parties apply California law to the interpretation of the agreement. “Under California law, the interpretation of a written contract is a matter of law for the court even though questions of fact are involved.” Southland Corp. v. Emerald Oil Co., 789 F.2d 1441, 1443 (9th Cir.1986). “It is solely a judicial function to interpret a written contract unless the interpretation turns upon the credibility of extrinsic evidence, even when conflicting inferences may be drawn from uncontroverted evidence.” Hess v. Ford Motor Co., 27 Cal.4th 516, 527, 117 Cal.Rptr.2d 220, 41 P.3d 46 (2002) (internal quotation marks omitted).

“The basic goal of contract interpretation is to give effect to the parties’ mutual intent at the time of contracting.” Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc., 109 Cal.App.4th 944, 955, 135 Cal.Rptr.2d 505 (2003). “When a contract is reduced to writing, the parties’ intention is determined from the writing alone, if possible.” Id. Unless the words in a contract are used in a technical manner or are defined in the contract, Superior Dispatch, Inc. v. Ins. Corp. of N.Y., 176 Cal.App.4th 12, 30, 97 Cal.Rptr.3d 533 (2009), “[t]he words of a contract are to be understood in their ordinary and popular sense,” Newport Beach Country Club, Inc., 109 Cal.App.4th at 955, 135 Cal.Rptr.2d 505. When interpreting a contract, “[t]he whole of a contract is to be taken together” with “each clause helping to interpret the other.” Cal.Civ.Code § 1641. In addition, a court “may not read the contract in a manner that leads to an absurd result.” Kassbaum v. Steppenwolf Prods., Inc., 236 F.3d 487, 491 (9th Cir.2000) (applying California law).

“If a contract is capable of two different reasonable interpretations, the contract is ambiguous.” Oceanside 81, Ltd. v. Fidelity Fed. Bank, 56 Cal.App.4th 1441, 1448, 66 Cal.Rptr.2d 487 (1997). A court, however, “will not strain to create an ambiguity.” Kashmiri v. Regents of the Univ. of Cal., 156 Cal.App.4th 809, 842, 67 Cal.Rptr.3d 635 (2007) (internal quotation marks omitted). “The fact that a term is not defined in the [contract] does not make it ambiguous. Nor does [disagreement concerning the meaning of a phrase, or the fact that a word or phrase isolated from its context is susceptible of more than one meaning.” Muzzi v. Bel Air Mart, 171 Cal.App.4th 456, 462-63, 89 Cal.Rptr.3d 632 (2009) (alterations in original) (internal quotation marks omitted). “[L]anguage in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract.” Powerine Oil Co., Inc. v. Superior Court, 37 Cal.4th 377, 391, 33 Cal.Rptr.3d 562, 118 P.3d 589 (2005) (internal quotation marks omitted).

“Extrinsic evidence is admissible to interpret the instrument, but not to give it a meaning to which it is not reasonably susceptible.” Parsons v. Bristol Dev. Co., 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839 (1965). “If the trial court decides, after receiving the extrinsic evidence, the language of the contract is reasonably susceptible to the interpretation urged, the evidence is admitted to aid in interpreting the contract.” Newport Beach Country Club, Inc., 109 Cal.App.4th at 955, 135 Cal.Rptr.2d 505. “When no extrinsic evidence is introduced, or when the competent extrinsic evidence is not in conflict, the ... court independently construes the contract.” Id. No party has offered extrinsic evidence to explain what the parties meant when they agreed that Bayer would “defend” Britz, beyond its plain meaning.

Under California contract principles, Bayer’s agreement to “defend” must be interpreted in the context of the instrument as a whole and cannot be interpreted in the abstract. Bayer agreed to “defend” Britz and then explained two means by which it would do so — by paying Hoppe’s fees and by retaining Rushford “to defend” the Skouti action with Britz. In other words, as part of its agreement to “defend” Britz, Bayer agreed that it would pay Britz’s attorney, Hoppe’s fees, and would supply another attorney, Rushford, who would “defend” the Skouti matter “with you” (Britz). The only way Bayer could “defend” the Skouti action is by providing legal representation for the defendant.

As to what “defend” means, to determine the common meaning of a word “a court typically looks to dictionaries.” Lockyer v. R.J. Reynolds Tobacco Co., 116 Cal.App.4th 1253, 1263, 11 Cal.Rptr.3d 317 (2004). The dictionary definition of the word “defend” includes “to act as attorney for” and “to deny or oppose the right of a plaintiff in regard to (a suit or a wrong charged).” See Merriam-Webster’s Online Dictionary, http://www.merriamwebster.com (last visited Oct. 14, 2009). Similarly, the Black’s Law Dictionary defines the word “defend” as “to deny, contest, or oppose (an allegation or claim)” and “[t]o represent (someone) as an attorney.” Black’s Law Dictionary 450 (8th ed. 2004).

Applying the common meaning of the word “defend” to the agreement, Bayer agreed that it would oppose the Skouti action. As part of that agreement, Bayer promised that it would supply an attorney, Rushford, who would oppose the Skouti action with Britz’s attorney. If Rushford failed to perform legal services to oppose the Skouti action claims or failed to perform as an attorney for Britz to deny, contest or oppose the Skouti litigation, a material issue of fact exists whether Bayer performed or breached its promise to “defend” the Skouti action by providing Britz with an attorney who would assist in defending. The agreement does not expressly delineate the nature or extent of defense work to be provided, nor the role of the assigned defense lawyer, i.e., lead, second chair, or monitoring counsel. No authority is provided as to which party is in control of the defense or who makes final decisions on matters of defense. This lack of specificity does not preclude a reasonable trier of fact from determining whether Rush-ford and Bayer failed to “defend” the Skouti action with Britz under the common meaning of the word “defend.”

Generally, whether a party has performed as required by a contract, or breached it, is a question of fact. See Stonebrae, L.P. v. Toll Bros., Inc., No. C08-0221 EMC, 2009 WL 1082067, at *5 (N.D.Cal. Apr. 22, 2009) (“Ordinarily, whether a party has performed as required under a contract is a question of fact for a jury, not a judge, to decide.”); 23 Richard A. Lord, Williston on Contracts § 63:15 (4th ed. updated May 2009) (“[G]enerally whether there was a breach of the terms of a contract is a question of fact.”) (footnote omitted). Here, there is a genuine issue as to whether Bayer breached its promise that an attorney, Rushford, would “defend” the Skouti action with Britz.

Despite Bayer’s promise that it would defend Britz in the Skouti action and that Rushford would defend the Skouti matter with Britz, Plaintiffs evidence suggests that Rushford did not take an active role in defending the Skouti action. Moore’s October 2004 correspondence states Rush-ford: “has not been actively involved in defending this case.” Instead of actively participating in the defense, there is evidence that Rushford was serving another principal — he was monitoring the case for Bayer.

Britz points out, and Bayer does not dispute, that at the time Bayer agreed to defend Britz in the Skouti litigation and supply Rushford, Bayer had a pre-existing attorney-client relationship with Rushford, which neither Bayer nor Rushford disclosed to Britz. During the Skouti litigation, according to Rushford, he understood he was reporting to Bayer:

Q. Was it your understanding that you were supposed to be monitoring the Skouti versus Britz case and reporting— for Bayer and reporting to Bayer?

A. Yes.

(Rushford Dep. 147:11-15.) Bayer’s outside counsel, Moore, also acknowledged that “[t]he reason he [Rushford] was hired was because at the time if — our thinking was that if Ethrel got involved in the case — it appeared at the time of the complaint Ethrel was not mentioned, but if that changed and Ethrel became involved, Rushford’s role was going to be to defend the product of Ethrel.” (Moore Dep. 46:1-6.) During the Skouti litigation, Rushford sent e-mails to Moore (only) updating him on the progress of the case, which included some discussion of the Ethrel product and Ethrel’s potential responsibility for the alleged Vineyard damage. (See Schrimp Dep. Exs. KK, LL, NN.) Bayer concedes that “Rushford was monitoring the litigation in case Bayer was named, which at that point he would be able to defend Bayer.” (Doc. 143-1 at 21.)

Viewing the evidence in a light most favorable to Britz, Rushford’s undisclosed prior relationship with Bayer, his “monitoring” of the Skouti litigation for Bayer, coupled with his undisclosed communications to Bayer, and his potential role as counsel for Bayer if Bayer was brought into the litigation, raise a question whether Rushford was defending the Skouti litigation for or with Britz or whether he was solely “defending” Bayer’s interests. Whether Bayer used Rushford only as a monitor, not to “defend” the case, must be decided by the jury.

In addition, Britz raises several arguments about Rushford conduct in the Skouti litigation. For example, Rush-ford, who had prior experience in agricultural chemical cases, and who was aware of the use of field trials in such cases, did not recommend that Britz conduct field trials of the tank mix at issue in the Skouti litigation. Bayer does not dispute that from 2002 to the present time, it had at its disposal scientific expertise and resources, including research facilities and scientific staff qualified and capable to conduct field trials of its products. Nor does Bayer dispute that it then had the capability to conduct, and in the past has conducted, field trials in which it attempted to replicate a problem with one of its products, as reported by the grower. Rushford did not invoke Bayer’s resources and recommend field trials. After the Skouti litigation, Britz retained its own expert, conducted a field trial with the tank mix, and found that it did not cause crop damage.

There is also evidence that Rushford had concerns about the adequacy of Hoppe’s representation, yet Rushford did not report those concerns to Britz (only to Bayer). In an e-mail to Moore, and only Moore, Rushford stated:

We are supposed to have expert depos next week but, scheduling has not been reliable. I do not think this case is being worked up well for the defense. I don’t think our farming expert has done the work we suggested and for some reason, Hoppe did not list the Farm Advisor Leavette as an expert. I also think Hoppe is intimidated by Skouti’s counsel.

(Schrimp Dec. Ex. LL.) Bayer concedes “that it did not share Rushford’s concerns with Britz.” (Doc. 143-2 at 25.) Rather than share these concerns with Britz, and take an active role in the Skouti litigation, Rushford withdrew from the Skouti litigation before the trial began.

This circumstantial evidence all bears on the existence of a triable issue of fact as to whether Bayer breached its commitment to defend. Bayer’s motion for summary adjudication on the ground that it did not breach any express term of the Contract to Defend is DENIED,

ii. The Alleged Agreement To Provide Replacement Counsel

Britz argues that a material dispute of fact exists as to whether Bayer was obligated under the express terms of the Contract to Defend to furnish replacement counsel upon Rushford’s withdrawal and whether Bayer breached that obligation. In support of its position, Britz quotes a passage from the Memorandum Decision on Bayer’s Rule 12(b)(6) motion which dealt, in part, with the Contract to Defend:

The agreement specifically states Bayer will defend Britz ‘at this time’ and will retain Rushford to do so in the Skouti Lawsuit. The parties do not dispute that Defendants paid Hoppe’s fees and that Rushford represented Britz for approximately seventeen months and then withdrew from representation several months before the Skouti Lawsuit went to trial. The record does not show why Rushford withdrew from [his] representation of Britz. Term four, above, expressly reserves the right to withdraw from the defense of this case in the event of any negligence by Britz. There is no provision that Bayer was further obligated to provide a defense or counsel to Britz. Defendants’ failure to provide replacement counsel for Britz after Rushford withdrew may or may not have breached terms number one and three in view of the temporal limitation ‘at this time, ’ which introduces material ambiguity into the extent and length of the defense commitment.

(Britz II, Doc. 38 at 28-29) (emphasis added). Quoting this passage, Britz argues that the court has already recognized that the Contract To Defend can be interpreted, as Britz reads it, to impose an obligation on Bayer to provide replacement counsel.

Bayer rejoins that no express term of the Contract to Defend obligated Bayer to provide replacement counsel upon Rush-ford’s withdrawal. Bayer further notes that the agreement to provide Rushford is a personal services contract which cannot be specifically enforced. In addition, Bayer suggests that the term “at this time” does not create ambiguity. According to Bayer, “at this time” means that Bayer could stop paying attorney fees and costs when “there is any evidence in this case [the Skouti action] of negligence or fault on the part of Britz (whether credible or not).” In the alternative, Bayer argues that even if it had an obligation, as Britz contends, to provide replacement counsel for Rushford, Britz waived this right.

The Contract to Defend is susceptible of the interpretation that Bayer agreed to defend Britz “at this time.” That term is wholly ambiguous as it leaves open the duration of the promise to defend Britz. When does the time and defense end? Bayer promised “to defend” not just pay attorney fees and costs until “there is any evidence in this case [the Skouti action] of negligence or fault on the part of Britz (whether credible or not).” Implicit in the obligation “to defend” is an obligation to pay for or to furnish an attorney “to defend.” Bayer could not otherwise defend Britz except by providing legal representation. Given the ambiguity, whether Bayer was obligated to provide replacement counsel upon Rushford’s withdrawal cannot be resolved on summary judgment. See Alexander v. Codemasters Group Ltd., 104 Cal.App.4th 129, 147, 127 Cal.Rptr.2d 145 (2002) (“[T]he phrase appears ambiguous on the record before us and, as such, presents a question to be resolved by the trier of fact.”). Bayer drafted the agreement and created the ambiguity. The ambiguity is construed against Bayer. Cathay Bank v. Lee, 14 Cal.App.4th 1533, 1541, 18 Cal.Rptr.2d 420 (1993) (recognizing that “the usual rule [is] that ambiguities are construed against the drafter”).

Bayer did not tell Britz it would no longer “defend” Britz, it only attained Britz’s consent to Rushford’s withdrawal. Bayer’s argument that a personal services contract cannot be specifically enforced is misplaced. The issue is whether the Contract to Defend obligated Bayer to provide replacement counsel for Rushford or arrange for a defense, not whether Britz could have specifically enforced the defense agreement for Rushford personally.

Whether Britz waiver its claimed right to replacement counsel creates a triable issue of fact. “Waiver is the intentional relinquishment of a known right after knowledge of the facts.” Waller v. Truck Ins. Exch., Inc., 11 Cal.4th 1, 31, 44 Cal. Rptr.2d 370, 900 P.2d 619 (1995). “[W]aiver may be either express, based on the words of the waiving party, or implied, based on conduct indicating an intent to relinquish the right.” Id. Britz did not expressly waive its right to replacement counsel. At most, Britz agreed to Rush-ford’s withdrawal, but Britz did not expressly agree that Bayer owed no further obligation to provide replacement counsel for Rushford. Whether Britz impliedly waived its right to replacement counsel “is ordinarily a question of fact.” Oakland Raiders v. Oakland-Alameda County Coliseum, Inc., 144 Cal.App.4th 1175, 1191, 51 Cal.Rptr.3d 144 (2006). Implied waiver “may be determined as a matter of law where the underlying facts are undisputed, or the evidence is susceptible of only one reasonable conclusion.” Oakland Raiders, 144 Cal.App.4th at 1191, 51 Cal.Rptr.3d 144 (internal citations omitted). That standard is not met here.

To the extent Bayer moves for summary judgment as to Britz’s claim that Bayer was obligated but failed to provide replacement counsel for Rushford, Bayer’s motion is DENIED.

b. Alleged Breach Of An Implied Term of Adequate Defense

Britz argues, and Bayer disputes, that “implied” in the Contract to Defend is a term that Bayer would provide an “adequate” defense. According to Britz, Bayer breached this implied term. Britz cites case law, including Ben-Zvi v. Edmar Co., 40 Cal.App.4th 468, 473, 47 Cal.Rptr.2d 12 (1995), and California Civil Code §§ 1655-56, to support its implied term argument. Neither source, however, justifies reading an implied obligation to provide an “adequate” defense into the Contract to Defend.

In Bem-Zvi the court explained when implied terms may be read into a contract:

Under limited circumstances, the court may find that a contract includes an implied term or covenant. To effectuate the intent of the parties, implied covenants will be found if after examining the contract as a whole it is so obvious that the parties had no reason to state the covenant, the implication arises from the language of the agreement, and there is a legal necessity.

A term can only be implied ... upon grounds of obvious necessity.

40 Cal.App.4th at 473, 47 Cal.Rptr.2d 12 (internal citation and quotation marks omitted) (emphasis added). Contrary to Britz’s argument, an implied term that Bayer would provide an “adequate” defense in the Skouti action is not “so obvious that the parties had no reason to state the covenant.”

There is no language in the agreement remotely related to the nature or quality of the performance to be provided by counsel that Bayer furnished. Bayer is a business entity that sells agricultural products, it is not a legal services