ORDER

INTRODUCTION

The following motions are before the court: (1) Fireman’s Fund’s motion for summary judgment on its complaint and partial summary judgment on CoBank’s counterclaim; (2) Federal Insurance Company’s motion for summary judgment on its complaint and partial summary judgment on CoBank’s counterclaim; (3) Interstate’s motion for summary judgment; (4) CoBank’s motion for partial summary judgment against Fireman’s Fund.

For the reasons explained below: (1) Fireman’s Fund’s, Federal’s, and Interstate’s motions are GRANTED; and (2) CoBank’s motion is DENIED.

BACKGROUND

Fireman’s Fund commenced this action against National Bank for Cooperatives, successor-in-interest to the Texas Bank for Cooperatives (hereinafter “CoBank”), seeking declaratory relief to determine whether it is obligated to pay an arbitration award in favor of CoBank against its policyholder, a dissolved corporation known as XLS, Inc., the successor-in-interest to Lawrence Systems, Inc. Three insurance companies intervened. Those companies are Interstate, National Union, and Federal. CoBank filed a counterclaim'.

In 1986, Lawrence Systems entered a Certified Inventory Control Service agreement (“Agreement”) with Aldus Marketing Association and CoBank. The Agreement required Lawrence to bond the fidelity and diligence of Aldus employees who issued certificates to CoBank certifying the quantity of certain inventory on Aldus’s premises or otherwise under Aldus’s control. The Agreement also obligated Lawrence to compensate CoBank for losses not to exceed $5,000,000 sustained as a result of CoBank’s reasonable reliance upon a material inaccurate representation in the last outstanding certificate.

The Agreement required CoBank to furnish Lawrence with written instructions pertaining to the issuance of Inventory Certificates. The Agreement also obligated Co-Bank to use reasonably prudent efforts to liquidate the available collateral securing Al-dus’s loans, with proceeds of such a liquidation to be applied directly to the collateral-ized loans, before making or prosecuting any claims against Lawrence. By amendment dated June 1, 1987, Lawrence’s bonding obligation under the Agreement was increased to a maximum of $10,000,000.

The certificates issued by Lawrence to Co-Bank pursuant to the Agreement were issued weekly and all certificates expressly canceled and superseded the previous certificate issued.

On January 13, 1992, Paul F. Miller, counsel for CoBank, wrote to James L. Jennings, President of Lawrence. His letter demanded $10,000,000 from Lawrence pursuant to the Agreement. In the letter, Mr. Miller stated that CoBank had:

(Exhibit A attached to Declaration of James Jennings in Support of Fireman’s Fund’s Motion).

On February 20, 1993, Mr. Miller wrote another letter to Mr. Jennings. Mr. Miller stated, in part:

(Exhibit D to Jennings Declaration.)

On or about April 2,1992, CoBank filed an arbitration demand with the American Arbitration Association (“AAA”) against XLS. CoBank’s demand for arbitration stated: “Nature of Dispute: Claims for Breach of Contract; Negligence; Negligent Supervision; Deceit by Bank Fraud; Unfair & Deceptive Trade Practices.” (Exhibit A to Declaration of Paul Miller In Support of Co-Bank’s Motion to Dismiss.) The arbitration was held in San Francisco on June 24 and June 25, 1992.

XLS informed the arbitrators that it would not appear at the hearing or be represented by counsel and XLS did not appear at the hearing. No party defended in the arbitration. The arbitration resulted in an award in favor of CoBank and against XLS for $10,-000,000 plus costs and interest. In their Award of June 30,1992, the arbitrators made the following relevant findings and conclusions:

The arbitration award was reduced to judgment by the United States Bankruptcy Court for the Northern District of California in orders dated July 20, 1992 and August 21, 1992. (Exhibit A to Barnes Declaration in Support of Fireman’s Fund’s Motion, Exhibit 13 to Miller Declaration). That court was presiding over XLS’s bankruptcy.

DISCUSSION

A. The Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) provides for summary judgment where no genuine issue exists as to any material fact and where the moving party is entitled to judgment as a matter of law. The burden falls on the moving party to establish that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 , 106 S.Ct. 2548, 2552-53 , 91 L.Ed.2d 265 (1986). The moving party may meet this burden by presenting evidence which, if uneontradicted, would entitle it to a directed verdict at trial. Once it has done so, the burden shifts to the non-moving party to present specific facts showing that contradiction is possible. Brit ish Airways Board v. Boeing Co., 585 F.2d 946, 950-952 (9th Cir.1978), cert. denied, 440 U.S. 981 , 99 S.Ct. 1790 , 60 L.Ed.2d 241 (1979). It is not required, however, that the plaintiff prove the non-existence of facts to support the non-moving party’s case. Summary judgment may be entered “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322-23 , 106 S.Ct. at 2552 .

A party opposing summary judgment must set forth, by affidavits or other admissible evidence, specific facts demonstrating the existence of an actual issue for trial. A mere “scintilla” of evidence will not suffice; the non-moving party must show that the fact-finder could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 , 106 S.Ct. 2505, 2512 , 91 L.Ed.2d 202 (1986). “If the evidence is merely colorable ... or is not significantly probative, summary judgment may be granted.” Eisenberg v. Ins. Co. of North America, 815 F.2d 1285, 1288 (9th Cir.1987) (citing Anderson, 477 U.S. at 249-50 , 106 S.Ct. at 2511 ). In making this determination, the court must take the non-moving party’s evidence as true and all inferences are to be drawn in the light most favorable to the non-moving party. Eisenberg, 815 F.2d at 1289 .

“The insurer bears the burden of proving that a potential claim covered by the duty to defend falls within an exclusionary clause.” Olympic Club v. Those Interested Underwriters at Lloyd’s London, 991 F.2d 497 , 502 (9th Cir.1993). However, “[wjhere the scope of the basic coverage itself is at issue, the insured has the burden of showing that the event is a claim within the scope of the— basic coverage.” Hartford Fire Ins. Co. v. Karavan Enterprises, Inc., 659 F.Supp. 1075, 1076 (N.D.Cal.1986), accord Olympic Club, 991 F.2d at 502-03, Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1364 (9th Cir.1991).

B. Fireman’s Fund’s Motion for Summary Judgment

Fireman’s Fund was the general liability insurer of Lawrence from 1984 until 1991. It insured Lawrence under six policies:

Fireman’s Fund argues that CoBank’s claims were and are not covered by Fireman’s Fund’s policies because the claims did not allege any of the four types of injury covered by the insuring clause—property damage, bodily injury, personal injury, and advertising injury. Property damage and advertising injury are the topics of most dispute.

1. Property Damage

The question is whether the loss suffered by CoBank constitutes “property damage” within the meaning of the policies. The court finds that it does not.

The first three Fireman’s Fund policies defined “property damage” as follows: “Property damage” means

The later policies defined “property damage” as follows:

(Reardon Declaration, Exhibits G at 5 and J at 8.)

As is apparent from Mr. Miller’s correspondence with Mr. Jennings and from the arbitration award, CoBank was damaged because its loans to Aldus were uncollectible and there was inadequate collateral to secure the loans. The cause of this damage, as alleged by CoBank and found by the arbitration panel, was CoBank’s reliance on inaccurate Inventory Certificates provided by Lawrence. For example, in his first letter to Mr. Jennings, Mr. Miller stated: “This loss resulted from reliance upon misrepresentations of both the quantity and value of inventory as reported on the Inventory Certificates ...,” and the arbitration panel held: “The panel finds that the damages for these claims resulted from a failure to provide the services specified in the agreement.”

CoBank emphasizes, however, that the peanuts at issue were not worth the values they had been assigned because they were rotten, rancid, or otherwise deteriorated. Because the peanuts were physically damaged, they could not be used as collateral (or were worth much less as collateral), thus impairing the loans to Aldus.

Fireman’s Fund argues that the loss to CoBank was a purely economic loss, not property damage covered by the policies. The court agrees. This case is directly analogous to Safeco Ins. Co. of America v. Andrews, 915 F.2d 500 (9th Cir.1990), in which the Ninth Circuit held that misrepresentations about the quality (and therefore value) of real property did not constitute “property damage.” In Safeco, Andrews sold real property improved with a home to Kuehl. Kuehl sued Andrews alleging, inter alia, misrepresentation and negligent failure to inspect the property and inform Kuéhl of defects in the property. The complaint alleged failure to discover and inform Kuehl of

Safeco, 915 F.2d at 501. Andrews was insured by Safeco under a policy requiring it to defend Andrews (and pay damages) in suits against him “for damages because of ... property damage caused by an occurrence to which” the coverage applies. Id. The policy defined “property damage” as “physical injury to or destruction of tangible property, including loss of use of this property.” Safeco, 915 F.2d at 502. Safeco brought suit against Andrews for a declaration that it owed no duty to defend because, inter alia, the suit did not allege “property damage” within the meaning of the policy. The court agreed with Safeco. In a passage directly applicable to this case, the Ninth Circuit stated:

CoBank’s claims do not constitute “property damage” within the meaning of Fireman’s Fund’s policies for the same reasons. As CoBank alleges, Lawrence failed to report the correct value and/or quantity of the peanuts: it failed to report that the peanuts were rancid or otherwise physically damaged. The cause of CoBank’s injury, however, was not the defects in .the peanuts but Lawrence’s alleged misrepresentations regarding the peanuts. CoBank’s claims did not and do not expose Lawrence to liability for any damage to tangible property, but rather for economic loss resulting from Lawrence’s alleged failure to report the peanuts’ correct value. Thus, CoBank does not have a claim for “property damage” within the meaning of Fireman’s Fund’s policies. Co-Bank suffered only economic loss.

Similarly, in Fresno Economy Import Used Cars, Inc. v. United States Fidelity & Guaranty Co., 76 Cal.App.3d 272 , 142 Cal. Rptr. 681 (5th Dist.1977), an automobile dealer brought suit against its insurer for a declaration that the insurer had to defend certain underlying suits against the dealer. In the underlying suits, the dealer was alleged to have misrepresented the physical condition of cars it had sold and leased. The dealer claimed that the underlying suits fell within the “property damage” coverage of its comprehensive general liability policy. In rejecting that claim, the court stated:

Fresno, 76 Cal.App.3d at 279 , 142 Cal.Rptr. at 685 . Again, the same reasoning applies here. CoBank’s loss does not constitute “property damage” within the meaning of Fireman’s Fund’s policies.

In its current papers, CoBank argues that Lawrence somehow caused the physical deterioration of the peanuts and thus caused the property damage. See, e.g., CoBank’s Objections to Interstate’s Motion for Summary Judgment at 6 and Appendix A to CoBank’s Objection to Interstate’s Motion for Summary Judgment at 1, 2, and 4. Co-Bank claims, apparently, that Lawrence failed to inform CoBank that the peanuts were stored in such a manner that they would deteriorate. Also, CoBank has submitted affidavits by Mr. Cash and Mr. Morton (filed originally in this court) in which they declare that the peanuts and other commodities suffered physical damage. (Exhibits 14 and 15 to Miller Declaration in Support of CoBank’s Objections.)

There is no finding in the arbitration award, however, that even remotely suggests that Lawrence caused the peanuts to deteriorate; in fact, the arbitration award does not even mention there having been any physical problem with any commodity. Yet, it is on the basis of that arbitration award that Co-Bank seeks to recover on the insurance policies. Since nothing in the arbitration award indicates that XLS caused property damage or that XLS caused the loss of use of property (as opposed to merely failing accurately to report the condition or value of the peanuts), XLS’s insurers cannot be liable for property damage. Similarly, nothing in CoBank’s de mand letters sent to Mr. Jennings of Lawrence or in CoBank’s demand for arbitration sent to the American Arbitration Association even remotely suggested that Lawrence caused property damage. Thus, there was no indication to anyone reading those documents that CoBank was claiming or would later claim that Lawrence caused property damage. There was therefore no duty to defend based on the potential of a claim within the property damage coverage of Fireman’s Fund’s policies. The duty to defend will be discussed in more detail, infra.

In Rafeiro v. American Employers’ Ins. Co., 5 Cal.App.3d 799 , 85 Cal.Rptr. 701 (1st Dist.1970), a judgment creditor of a contractor brought suit against the contractor’s insurer to recover under the contractor’s insurance policy. The judgment the creditor had secured was for faulty workmanship and not diminution in the value of the remainder of her property. The insurance contract excluded coverage for faulty workmanship but would have covered the diminution in value of the remainder of the property. In the suit against the insurer, the creditor submitted a declaration to establish that her property had diminished in value as a result of the contractor’s acts. The court held:

Rafeiro, 5 Cal.App.3d at 805 , 85 Cal.Rptr. at 705-06 (citations omitted). Similarly, this court is to determine whether the judgment obtained by CoBank against XLS is covered by the insurance policies. Since nothing in the judgment indicates that XLS caused any property damage, CoBank may not recover for property damage under Fireman’s Fund’s policy. The Cash and Morton declarations are irrelevant to this suit. For the foregoing reasons, the court finds that CoBank’s damages do not constitute “property damage” within the meaning of Fireman’s Fund’s policies.

2. Bodily Injury

In the first two Fireman’s Fund policies, bodily injury is defined as “bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.” The other policies define “bodily injury” as “bodily injury, sickness or diseases sustained by a person, including death resulting from any of these at any time.” CoBank has no claim for bodily injury.

3. Personal Injury

The first two Fireman’s Fund policies define “personal injury” as follows:

The other policies defined personal injury in a similar manner. CoBank has no claim for personal injury.

4. Advertising Inpiry

The first two Fireman’s Fund policies define advertising injury as follows:

The other Fireman’s Fund policies define it as:

CoBank’s claims clearly do not arise out of an advertising injury caused by Lawrence. Nonetheless, CoBank argues “[h]ad Fireman’s Fund not abandoned its insured, it would have discovered that ... the claim for unfair and deceptive trade practices was a claim for advertising injury as described in the insurance policies....” Objection to Fireman’s Fund Motion at 16. Assuming this to be true, CoBank’s claim that its loss resulted from advertising injury must fail since the arbitrators held that CoBank “has not sustained its burden of proof to support a finding of unfair and deceptive trade practices.”

Additionally, CoBank did not even potentially have a claim for advertising injury so there was no duty to defend arising out of the unfair and deceptive trade practices claim. In Keating v. National Union Fire Ins. Co., 995 F.2d 154 (9th Cir.1993), the Ninth Circuit addressed the meaning of “unfair competition” in coverage for advertising injury. The question was whether claims by investors against Charles Keating for securities fraud were claims for “unfair competition” within the advertising injury coverage of certain National Union policies. The court relied on the California Supreme Court’s recent decision in Bank of the West v. Superior Court, 2 Cal.4th 1254 , 10 Cal.Rptr.2d 538 , 833 P.2d 545 (1992), in holding that the claims were not for unfair competition within the meaning of the policies.

In Bank of the West , the California Supreme Court rejected expansive definitions of “unfair competition” and held that in policies that provide damages for unfair competition, unfair competition does not include claims that might be brought under the Unfair Business Practices Act, which provides only for restitution, not damages. Id., 2 Cal.4th at 1271-1274 , 10 Cal.Rptr.2d at 549-51 , 833 P.2d at 856-59 ; Keating, 995 F.2d at 155. While not expressly limiting claims for unfair competition to ones based on the common law tort of unfair competition, the California Supreme Court intimated its approval of the majority line of cases that do limit claims of unfair competition to common law claims. Bank of the West, 2 Cal.4th at 1262-65 , 10 Cal.Rptr.2d at 543-545 , 833 P.2d at 550 .

In Keating, the Ninth Circuit stated:

Keating, 995 F.2d at 155-56. CoBank’s claim is not one for “unfair competition” within the meaning of Fireman’s Fund’s policies for the same reasons; CoBank was not a competitor of Lawrence. Also for the same reasons, there was no duty to defend based on the policies’ coverage of advertising injuries.

The , California Supreme Court also held that when the policy provides coverage for advertising injury occurring “in the course of the ... insured’s advertising activities,” the claimant’s injury must be causally related to the insured’s advertising activities. Bank of the West, 2 Cal.4th at 1275-77 , 10 Cal.Rptr.2d at 551-53 , 833 P.2d at 559-61 . For those policies at issue that provided that the advertising injury had to occur in the course of the insured’s advertising activities, this is another, independent, reason why no coverage existed for CoBank’s claims. Co-Bank’s claims were not causally related to Lawrence’s advertising activities.

CoBank (in both its opposition papers signed by Mr. Miller and its own moving papers signed by Jill E. Barwick of Hines & Rendleman) makes argument that there was a duty to defend because the Court of Appeal’s opinion in Bank of the West (which was reversed by the California Supreme Court) allegedly was still good law at the time Co-Bank filed its demand for arbitration. Co-Bank is incorrect. First of all, the lower court opinion was not valid at the time Co-Bank filed for arbitration because the California Supreme Court accepted review of the case in March of 1991, the year prior to CoBank’s arbitration demand. Under California Rules of Court 976(d) and 977(a), opinions superseded by a grant of review shall not be published and opinions not ordered published may not be cited or relied upon. It therefore would have been improper to rely on the Appellate Court’s decision (and it is improper to rely on it here).

Moreover, the Supreme Court’s opinion held that at the time of contracting, the insured could not have had objectively reasonable expectations that the advertising injury coverage would apply to the sort of claim made. Bank of the West, 2 Cal.4th at 1265 , 10 Cal.Rptr.2d 545 , 833 P.2d at 552 . Similarly, at the time of contracting, Lawrence could not reasonably have believed that claims like CoBank’s would be covered as advertising injury. Furthermore, as the California Supreme Court expressly noted:

Bank of the West, 2 Cal.4th at 1262-63 , 10 Cal.Rptr.2d at 543 , 833 P.2d at 550 (emphasis added). There could therefore be no reasonable expectation of possible coverage based on the Court of Appeal’s opinion.

C. Additional Arguments of CoBank in Opposition to Fireman’s Fund’s Motion for Summary Judgment

CoBank makes five additional arguments in opposition to Fireman’s Fund’s motion for summary judgment. The court rejects them all.

1. Collateral Estoppel

CoBank states:

(CoBank’s Objection to Fireman’s Fund’s Motion for Summary Judgment at 9-10, accord id., at 16.) The statement that the issue of insurance coverage was before the arbitrators and that they decided it is patently false. In his brief submitted to the arbitrators, Mr. Miller stated:

(Miller Declaration, Exhibit 6 at 3.) This statement of hope that Lawrence was covered by insurance does not mean that the issue of insurance was before the arbitrators — it was not. Moreover, the arbitrators would have been beyond their jurisdiction had they addressed the issue.

CoBank also argues that collateral estoppel or res judicata should apply to the issue of property damage because there is causation between liability of the insured and the physical destruction of tangible property. However, Lawrence’s liability in the arbitration proceeding was for failure to fulfill its contractual obligations. It is not a necessary inference from the arbitrator’s decision that Lawrence caused property damage. Moreover, Fireman’s Fund was not a party to the arbitration proceedings (and could not have been under the terms of the policy. (Exhibit G at 3 attached to Reardon Declaration)).

2. Waiver

CoBank argues that Fireman’s Fund has waived its claim of non-coverage because it did not reserve any rights to deny coverage. Since Fireman’s Fund did reserve its rights (and, moreover, did not defend XLS in the arbitration proceeding), waiver is not applicable.

3. Contractual Liability Coverage

CoBank argues that coverage is provided by the broad form endorsement to the “6058” policy which adds additional coverage for liability assumed in an “incidental contract,” which is any contract or agreement, oral or written, relating to the conduct of the named insured’s business. CoBank is incorrect.

As insurance cases uniformly hold (including those cited by CoBank), contractual liability coverage provides coverage only for the tort liabilities of third parties assumed by the insured by contract, not for contractual liabilities of the insured resulting from a contract with a third party. See, International Surplus Lines Ins. Co. v. Devonshire Coverage Corp., 93 Cal.App.3d 601, 608-11 , 155 Cal.Rptr. 870, 873-75 (2d Dist.1979), Fireman’s Fund Ins. Co. v. City of Turlock, 170 Cal.App.3d 988, 994-95 , 216 Cal.Rptr. 796, 799-800 (5th Dist.1985), Loyola Marymount Univ. v. Hartford Accident and Indemnity Co., 219 Cal.App.3d 1217, 225-26 , 271 Cal.Rptr. 528, 532-33 (2d Dist. 1990). The contract among Lawrence, Al dus, and CoBank was not an “incidental contract.” An “incidental contract” is one “collateral to and independent of the principal agreement....” Globe Indemnity Co. v. California, 43 Cal.App.3d 745, 753 , 118 Cal.Rptr. 75, 81 (5th Dist.1974)). The contract at issue here was the principal agreement.

Additionally, this provision is inapplicable because CoBank claims Lawrence is liable for its own acts, not those of a third party. An incidental contract does not cover liability the insured may incur due to its breach of a contract to perform a job in a workman-like manner. Moreover, the liability under contractual liability coverage merely extends the coverage provided directly to the insured (e.g., for property damage and bodily injury) to acts by third parties for which the insured has ■ agreed to indemnify the third party. Since CoBank does not have a claim for property damage (or any other type of injury covered in the policies), the contractual liability coverage is no help to CoBank.

4. Completed Operations Coverage

CoBank argues that its claims are covered by Fireman’s Fund’s policies’ completed operations coverage, that is, coverage for liabili- . ty that arises after the insured completes its work and after the work is accepted by a third party. Fireman’s Fund does not dispute that it covered property damage arising out of completed operations. The problem with CoBank’s argument is that CoBank does not have a claim for property damage (or any other type of covered injury). When liability arose, therefore, is irrelevant.

5. Dishonesty Coverage

CoBank argues that it is entitled to recover as the assignee of Lawrence under the dishonesty coverage provided by Fireman’s Fund’s “3825” policy. CoBank is incorrect. That' policy provides:

CoBank does not have a claim within the dishonesty coverage since there is no evidence that any employee committed dishonest acts in connection with the inventory control agreement with the manifest intent to (1) cause Lawrence to sustain loss and (2) obtain financial benefit for the employee or another person. It is therefore irrelevant whether CoBank is the assignee of Lawrence. The arbitration award was for Lawrence’s deception of CoBank, not for the deception of Lawrence by one of its employees. CoBank’s claim does not come within the dishonesty coverage of Fireman’s Fund’s policy.

For the foregoing reasons, the court GRANTS summary judgment to Fireman’s Fund on its complaint. Fireman’s Fund also seeks summary judgment on those portions of CoBank’s counterclaim which relate to it. Fireman’s Fund seeks: (1) a ruling that it has no duty to pay the judgment because the judgment is not for property damage, bodily injury, personal injury or advertising injury, (2) a ruling that it had no duty to defend Lawrence against CoBank’s claims because there is no duty to defend an action which does not seek covered damages, (3) summary judgment in its favor on those portions of CoBank’s counterclaim which relate to Co-Bank’s claims against Lawrence, and (4), as a catch-all, summary judgment on CoBank’s counterclaim to the extent it relates to Fireman’s Fund’s handling of the CoBank-Law-rence dispute. The duty to defend is discussed more fully below. For the reasons stated above and the reasons stated below regarding the duty to defend, the court also GRANTS these motions.

6.Duty to Defend

CoBank vigorously asserte that there was still a duty to defend and Fireman’s Fund is therefore liable for the fall amount of CoBank’s claim even if its claims are not covered by Fireman’s Fund’s policies, CoBank is incorrect.

The insurer’s duty to defend is broader than its duty to indemnify. “The insurer’s duty to defend is determined on the basis of the potential of liability as derived from facts contained in the complaint or other sources available to the insurer at the time the defense is tendered.” Allstate Ins. Co. v. Gilbert, 852 F.2d 449, 453 (9th Cir.1988). “[T]he duty to defend is measured at the outset of the litigation....” Dykstra v. Foremost Ins. Co., 14 Cal.App.4th 361 , 17 Cal.Rptr.2d 543, 546 (4th Dist.1993) (quoting Devin v. United Services Auto Ass’n, 6 Cal. App.4th 1149, 1157 , 8 Cal.Rptr.2d 263 (1992)). Mere speculation that the plaintiff in the underlying action will allege new facts, however, does not create a duty to defend. Olympic Club, 991 F.2d at 503.

Fireman’s Fund incorrectly argues that CoBank has not provided evidence that Co-Bank received an assignment of Lawrence’s rights to sue for failure to defend. Although CoBank was remiss in not citing the evidence to support its current motion, the assignment is contained in Exhibit B to Mr'. Miller’s Declaration in support of CoBank’s opposition to Fireman’s Fund’s motion to enjoin later-filed actions. The assignment, however, is to no avail.

There are two independent reasons why Fireman’s Fund is not liable to CoBank for failing to defend Lawrence. The first reason is that the information available at the outset of the arbitration did not reveal the potential for coverage. In the sources of information available to Fireman’s Fund, CoBank never claimed or even hinted that Lawrence had caused property (or other covered) damage or that there was even any property damage. CoBank’s demand letters and arbitration demand revealed only that CoBank claimed that Lawrence had misrepresented the value of the inventory. That information did not reveal potential liability for causing property damage. Thus, there was no duty to defend.

Assuming Fireman’s Fund wrongfully failed to defend Lawrence, Fireman’s Fund would still not be liable to CoBank for that failure even though CoBank received an assignment of Lawrence’s rights. Fireman’s Fund could not be liable for failing to defend Lawrence because Lawrence could not have been harmed by the arbitration proceedings or the entry judgment on the arbitration award against it. .

Prior to the arbitration proceeding, the Bankruptcy Court entered an injunction prohibiting CoBank from seeking to satisfy any judgment resulting from the arbitration proceeding from XLS’s assets or those of its creditors; enjoined CoBank from seeking a judgment against XLS’s creditors or seeking to use XLS’s assets to satisfy the judgment except before the Bankruptcy Court and held that the Bankruptcy Court would not honor or recognize any of the proceedings in, or results of, the arbitration. (Exhibit. B attached to Declaration of Cecily Talbert in Support of Fireman’s Fund’s Motion).

Because XLS could not have been harmed in any way by the arbitration proceedings and its resulting judgment, no harm could have resulted from the failure to defend. There was therefore no breach of the duty to defend. There is a directly analogous principle in the context of claims of breach of the implied covenant of good faith and fair dealing for failing to settle insurance claims. In Shapero v. Allstate Ins. Co., 14 Cal.App.3d 433 , 92 Cal.Rptr. 244 (2d Dist.1971), the Court held that there was no breach of the implied covenant when the insured had no assets that could be exposed to a judgment in excess of the policy’s limits, since the purpose of the implied covenant is to protect the insured from being exposed to financial risk. There can be no breach of the implied covenant of good faith and fair deal ing when the insured has no stake in the outcome of the suit against it. Similarly, there can be no breach of the duty to defend when the insured has no stake in the outcome of the suit against it. Lawrence, and therefore CoBank, has no claim for failure to defend.

D. Interstate’s Motion for Summary Judgment

Interstate issued Commercial Umbrella Liability Policies to Lawrence from June 18, 1986 through June 18, 1988. The policies provided limits of liability of $4 million per occurrence and $4 million in the aggregate. Interstate’s policies obligated it to pay all sums which the insured became legally obligated to pay as damages for “personal injury,” “property damage,” or “advertising liability” caused by an occurrence. Damages were also limited to those in excess of the damages covered by Fireman’s Fund’s underlying policies.

The definitions of “personal injury,” “property damage,” and “advertising injury” in Interstate’s policies are not materially different from those in the Fireman’s Fund policies. For the reasons stated in granting Fireman’s Fund’s motion for summary judgment, the court GRANTS summary judgment in favor of Interstate. Discussed below are arguments by Interstate and CoBank that pertain only to the Interstate policies.

1. Tangible Property Exclusion

Interstate seeks to rely on a “tangible property exclusion” which excluded coverage in certain circumstances for “loss of use of tangible property which has not been physically injured or destroyed.... ” That exclusion is not applicable since CoBank claims that the peanuts were destroyed.

2. Notice

Interstate’s policies required Lawrence to give Interstate notice of claims against Lawrence and to cooperate in defending claims against Lawrence. Interstate was not notified of CoBank’s claims until September 28, 1992, after CoBank’s claim had been arbitrated and reduced to judgment. Interstate argues that is was prejudiced by not receiving notice and therefore CoBank’s claims are not covered. As explained below, however, Interstate has conflicting policy provisions concerning notice, one of which was satisfied. Since conflicting provisions create ambiguities and ambiguities are construed against the insurer, Interstate is deemed to have received notice.

The policies state:

On the front of the policy, however, it states: “[i]n the event of any loss insured by this policy you should IMMEDIATELY contact your agent or broker or wire this company collect.” . CoBank argues that these two statements create ambiguities that must be interpreted against the insurer.

As demonstrated by CoBank’s exhibit 10, XLS, through its counsel, gave notice to a company called Johnson & Higgins, which appears to be Lawrence’s agent (broker) but it is not clear whose agent it is. Johnson & Higgins provided notice to at least some of the other insurers but not to Interstate. In the letter to Johnson & Higgins, XLS’s counsel stated:

No mention is' made in that letter of putting Interstate on Notice. Generally, an insurance broker is the agent of the insured, not the insurer. California Insurance Code § 33 provides: “ ‘Insurance broker’ means a person who, for compensation and on behalf of another person, transacts insurance other than life with, bitt not on behalf of, an insurer.” (Emphasis added.) While this is the general rule, there are exceptions in which the “broker” is actually an agent of the insurance company. Fraser-Yamor Agency, Inc. v. County of Del Norte, 68 Cal.App.3d 201, 213 , 137 Cal.Rptr. 118, 126 (1st Dist.1977). Neither party has addressed whether Johnson & Higgins was, in fact, an agent of Interstate. The court need not address it either.

CoBank is correct in its assertion that the policy is ambiguous regarding notice. In the policy under the heading “Notice of Occurrence,” it states “[wjritten notice thereof shall be given to the company or any of its authorized agents.” (Emphasis added.) However, as CoBank notes, the cover of the policy states “[i]n the event of any loss insured by this policy you should IMMEDIATELY contact your agent or broker or wire this company collect.” This is a clear indication that notice to the insured’s agent is sufficient notice. While it is in conflict with the notice provision within the policy, ambiguities are to be interpreted against the insurer. Hollingsworth v. Commercial Union Ins. Co., 208 Cal.App.3d 800, 805 , 256 Cal.Rptr. 357, 359 (2d Dist.1989). The conflict creates an ambiguity. Lawrence’s notice to Johnson & Higgins therefore was sufficient, regardless of whether Johnson & Higgins was Lawrence’s or Interstate’s agent. The court need not address whether Interstate was prejudiced by its lack of notice because it is deemed to have received notice.

3. Cooperation

With regard to cooperation of the insured, Interstate’s policies provide:

XLS’s failure to defend against the claim is clearly a failure to cooperate. Moreover, assuming Interstate would otherwise be obligated to pay CoBank’s claim, Interstate clearly was prejudiced by XLS’s failure to cooperate since a judgment in excess of $10,-000,000 was obtained against XLS despite XLS’s belief that it was not liable. (Exhibit B to Declaration of James L. Jennings in Support of Fireman’s Fund’s Motion for Summary Judgment).

CoBank asserts that Interstate was not prejudiced because XLS was dissolved and had no officers, directors, employees, or stockholders and XLS was at all times represented by McCutchen, Doyle. This has no bearing on whether Interstate was prejudiced. CoBank states that McCutchen controlled the defense. CoBank’s reference to McCutchen, Doyle is apparently a reference to CoBank’s frequently repeated, yet always frivolous, argument that McCutchen represented Fireman’s Fund in the underlying proceedings because McCutchen represented Fireman’s Fund in a completely unrelated matter. Moreover, McCutchen did not defend in the arbitration proceeding and McCutchen did not represent Interstate.

CoBank also argues that there is no evidence that XLS could have cooperated in light of the fact that it was dissolved. As CoBank notes, however, McCutchen repre sented XLS. Although XLS (either through itself or its counsel) did not attend the arbitration of the substantive issues, it did participate in preliminary matters in the arbitration. XLS then made a decision not to defend in the substantive arbitration proceedings. All evidence points to the conclusion that XLS (through McCutchen) could have defended had it wanted to do so. Interstate was prejudiced because XLS failed to defend. The prejudice to Interstate is an independent reason why Interstate is not obligated to pay CoBank’s claim.

4. Interstate’s Attack on the Arbitration Award

Interstate argues that the arbitration award is not supported by the evidence and that the evidence shows that CoBank was not injured at all by Lawrence’s performance under the inventory agreement. The essence of Interstate’s argument is that Co-Bank claims that $2,179,472 was recouped upon liquidation of Aldus’ inventory, said amount being offset against Aldus’ outstanding loans. (Exhibit “A.”) The last inventory certificate issued by Lawrence, on October 14, 1988, reported inventory valued at $1,995,933. (Exhibit “C”.) Since Aldus’ inventory was liquidated for more than the value of the last certificate, it is apparent that Lawrence ... satisfied its bonding obligations as promised.

While there is much appeal to Interstate’s argument that the arbitrators were wrong, Interstate fails to cite any legal authority that would permit this court to reverse the findings of fact and conclusions of law of the arbitrators. Review of arbitration awards is extremely limited. Local Joint Executive Bd., Culinary Workers Union, Local 226 v. Riverboat Casino, Inc., 817 F.2d 524 (9th Cir.1987).

5. Conclusion Regarding Interstate’s Motion

The court GRANTS Interstate’s motion for summary judgment for the grounds stated with regard to Fireman’s Fund’s motion and because of Lawrence’s failure to cooperate in its defense.

E. Federal Insurance Company’s Motion for Summary Judgment

Federal Insurance Company seeks summary judgment declaring that it has (and had) no duty to defend or indemnify Lawrence for CoBank’s claim and partial summary judgment on the third counterclaim in CoBank’s Amended Counterclaim and Cross-Claims for Declaratory Relief and Damages. The court GRANTS Federal’s motion.

Federal issued a commercial excess umbrella policy over Fireman’s Fund’s policy from June 18, 1988 to June 18,1989. Federal’s policy contained both excess insurance (Coverage A) and umbrella insurance (Coverage B). Federal joins Fireman’s Fund’s arguments regarding Fireman’s Fund’s “6698” policy, of which Federal was the excess carrier.

Federal’s policy covered property damage, bodily injury, personal injury, and advertising injury. For the reasons stated above, the court finds that CoBank’s claim is not covered by Federal’s policy and Federal had no duty to defend. Additional grounds for Federal’s motion are addressed below.

Federal’s policy had two types of coverage, Coverage A and Coverage B. Coverage A was an “excess follow form liability over claims made or occurrence coverage,” and Coverage B was an “umbrella occurrence based liability Coverage over retained limit.” Coverage A provides, in part:

Coverage B provides, in part:

Pursuant to Endorsement #3, “property damage” is defined as:

With regard to notice and cooperation, the policy provides:

The policy also had a General Professional Exclusion in Endorsement #8:

Federal argues that Lawrence’s wrongful acts were not “occurrences” or “offenses” within the meaning of the policy. The arbitrators found Lawrence liable for “negligence, negligent supervision, and deceit.” Citing Keating v. National Union Fire Ins. Co., 754 F.Supp. 1431 (C.D.Cal.1990) as “controlling,” CoBank argues that’ allegations that an insured corporation’s officers had negligently supervised other employees who made false and misleading statements constitute allegations of “accident” within the meaning of the primary liability policy’s definition of “occurrence.” The district court opinion in Keating is far from controlling, both because it is a district court opinion and because it was reversed (on other grounds) and remanded by the Ninth Circuit, 995 F.2d 154 , 157 (9th Cir.1993), although the Ninth Circuit did not reach the “occurrence” issue. Nonetheless, the court agrees with CoBank’s analysis of the term “occurrence.”

Federal relies on Chatton v. National Union Fire Ins. Co., 10 Cal.App.4th 846, 860-61 , 13 Cal.Rptr.2d 318 (1st Dist.1992), for the proposition that fraudulent and negligent misrepresentation do not constitute an “occurrence” because they are deemed purposeful rather than accidental and therefore are not occurrences. Chatton , however, specifically distinguished the district court opinion in Keating because in Keating the complaint alleged “negligent supervision,” which does not require intent and therefore can qualify as an “accident.” Chatton, 13 Cal.Rptr.2d at 328 . Similarly, in Westfield Ins. Co. v. TWT, Inc., 723 F.Supp. 492, 495 (N.D.Cal.1989), Judge Legge stated:

The court agrees with Judge Legge’s reasoning and rejects Federal’s argument that CoBank’s claim is not an for an “occurrence,” since the arbitration award was for negligent supervision (an accident) as well as for intentional misconduct.

2.Professional Services Exclusion

Federal argues that there is no coverage for CoBank’s claim because of Endorsement number 8’s exclusion of liability for claims arising out of acts, errors, omissions, or mistakes by or on behalf of the insured in rendering or failing to render services or advice of a professional nature. Federal is correct.

The arbitration panel found that “the damages for these claims resulted from a failure to provide the services specified in the agreement.” Thus, the damages resulted from acts, etc., committed in Lawrence’s rendering of professional services. CoBank argues that the endorsement is ambiguous. It is not. See Hollingsworth, 208 Cal.App.3d at 807 , 256 Cal.Rptr. at 360 (professional services “generally signifies an activity done for remuneration as distinguished from a mere pastime.”). Endorsement number 8 excludes any coverage that might otherwise have been afforded by Federal’s policy.

3. Notice

Notice of CoBank’s claim was not given to Federal until August 3, 1992, long after the arbitration award was issued. Federal does not pursue the legal analysis of whether the lack of notice precludes coverage and has not listed the lack of notice as one of the grounds for its motion, but the issue is deemed before the court since both parties have addressed the factual question of notice.

CoBank argues that notice to Fireman’s Fund was sufficient notice to Federal under Federal’s “71-66” excess follow form policy. CoBank is incorrect. Federal’s policy specifically provides that the insured must notify Federal: “[The insured] MUST see to it that we and your Scheduled Underlying insurers: (a) are notified as soon as possible.” (emphasis added). Moreover, to the extent that CoBank otherwise has a claim within the coverage of Federal’s policy, Federal clearly was prejudiced by the lack of notice since no one defended in the arbitration proceeding. The lack of notice to Federal is an additional reason why coverage is not available under its policy.

4. Insured Contract

CoBank counters that its claim is covered under the “insured contract” provision of Federal’s coverage B. CoBank is incorrect. Moreover, assuming the insured contract provision did apply, no coverage would be available because of Endorsement number 8 and the lack of notice.

“Insured Contract” is defined as: “Any written or oral agreement entered into by the insured in the usual course of the business operations of the insured in which the insured assumes tort liability of another to pay damages because of bodily injury, personal injury, property damage, or advertising injury to a third person or organization.” Lawrence did not assume the liability of another in the Inventory Agreement and the arbitration award is not for liabilities of another. The damages assumed by Lawrence and found by the arbitrators are for liability arising out of Lawrence’s own services. The “insured contract” provision is inapplicable.

5. Conclusion Regarding Federal’s Motion

For the foregoing reasons, the court GRANTS Federal’s motion for summary judgment on its complaint and against Co-Bank on CoBank’s third counterclaim for declaratory relief.

F. Cobank’s Notion for Partial Summary Judgment

CoBank moves for partial summary judgment against Fireman’s Fund on its “6058” and “4878” policies. For the reasons stated above, the court DENIES CoBank’s motion.

CONCLUSION

1. Fireman’s Fund’s motion for summary judgment on its complaint and partial summary judgment on CoBank’s counterclaim is GRANTED.

2. Federal Insurance Company’s motion for summary judgment on its complaint and partial summary judgment on CoBank’s counterclaim is GRANTED.

3. Interstate’s motion for summary judgment is GRANTED.

4. CoBank’s motion for partial summary judgment against Fireman’s Fund is DENIED.

IT IS SO ORDERED.

. National Union has not moved for summary judgment. The parties have submitted many objections to the evidentiary submissions, including plaintiffs’ objection to Mr. Miller’s declarations and exhibits in their entirety because they are not sworn to in the proper manner. The court need not rule on the objections because the material objected to does not change the outcome of the motions. . The description of this agreement is taken from the portions of Interstate’s statement of undisputed material facts which CoBank has adopted. . Fireman’s Fund's complaint raises many other grounds for why its policies do not cover Co-Bank’s claims, including the allegation that it was not give the opportunity to participate in the arbitration and that CoBank’s damage does not result from an "occurrence." Those issues, however, are not bases of Fireman's Fund’s motion. . CoBank did not mention such physical damage to the peanuts in its demand letters to Mr. Jennings or in its brief filed with the arbitration panel and it was not mentioned in the arbitrator’s award. CoBank asserts that the arbitration award is res judicata. Nonetheless, for the purpose of these motions, the court assumes that the peanuts were rancid, rotten or otherwise physically deteriorated, as asserted in the Cash and Morton affidavits submitted by CoBank. CoBank also asserts that its predecessor suffered "property damage” in that the bad loans harmed the bank, causing it to fire employees and merge with CoBank, thus constituting the loss of use of property not physically destroyed, the third definition of property damage. Mercifully, CoBank does pursue this ridiculous argument. . Again, no mention of such rancidity or physical deterioration was made in the demand letters, demand for arbitration or arbitration award. The first communication to the insurers of Co-Bank's allegation of such physical damage was during the proceedings before this court. There is no evidence before the court that the allegation of physical damage was ever communicated to Lawrence/XLS. . The Cash affidavit reports damaged property in at least one location (Germany) that was not covered by the. Inventory Agreement. . In the underlying judgment, the court had specifically deleted a proposed finding of diminution in value. Rafeiro, 5 Cal.App.3d at 803 , 85 Cal.Rptr. at 704 . The court did not make a finding that there was no diminution in value, however. . CoBank asserts that it made a claim for passing off of goods or services as those of another. Assuming it did make such a claim, Keating clearly forecloses coverage for it because Co-Bank's claims are not based on injury to Lawrence's competitors. . Mr. Miller's continued disregard of his requirements under Rule 11 of the Federal Rules of Civil Procedure is deeply troubling. . Ironically, CoBank would necessarily lose this case were CoBank’s frivolous argument regarding collateral estoppel and insurance coverage issues to be accepted. The arbitrators made no affirmative finding that CoBank’s claims were covered by the insurance policies and the arbitrators held that ”[a]ll other claims of the National Bank for Cooperatives are denied." If Co-Bank’s argument that insurance coverage was at issue before the arbitrators were accepted, therefore, collateral estoppel would preclude a finding of coverage. . CoBank also makes a ridiculous argument premised on the rule that if a liability insurer, with knowledge of a ground of forfeiture or non-coverage under a policy, assumes and conducts the defense of an action brought against the insured without disclaiming liability and giving notice of a reservation of rights, the insurer is thereafter precluded in an action upon the policy from setting up such ground of forfeiture or non-coverage. CoBank fails to note that Fireman’s Fund (1) did give notice of its reservation of rights and (2) did not assume and conduct the defense. In fact, as Mr. Miller is well-aware, no one assumed or conducted the defense. . Assuming Fireman's Fund were liable for failing to defend, its liability would be for much less than $10,000,000. Its liability would be limited to its policy limits plus attorney fees and costs. Hogan v. Midland Nat'l Ins. Co., 3 Cal.3d 553, 565-66 , 91 Cal.Rptr. 153, 160-61 , 476 P.2d 825, 832-33 (1970). As the court held in its most recent order, Fireman’s Fund is not liable for bad faith failure to settle because its insured was judgment proof. . CoBank’s arguments regarding the duly to defend under the advertising injury coverage are discussed (and rejected) supra. . CoBank also states: "Interstate took great pains at concealing the identity of Johnson & Higgins as its authorized agent by (1) obliterating the Johnson & Higgins advertisement from page 1 of the insuring agreement and the Johnson & Higgins advertisement from the commercial umbrella liability cover sheet.” (CoBank’s Objection to Interstate’s Motion at 11-12.) CoBank does not explain what it is referring to regarding concealing the identity of Johnson & Higgins. . CoBank argues that the "First Dollar Defense” amendment to Interstate’s policy provides that the insured had to cooperate only in those suits in which Interstate had a duty to defend. CoBank's argument is patently frivolous. The assistance and cooperation provisions in the First Dollar Defense amendment are in addition to, not in the place of, the other cooperation requirements. . In opposition to CoBank's motion, Fireman's Fund also argues that it is not liable because deceit is intentional wrongdoing and therefore not an "occurrence” and because it is illegal to insure a party against his own intentional wrongdoing. ■ . Federal’s counsel was remiss in failing to bring to the court’s attention the portion of Chat-ton that undermines Federal’s reliance on Chat-ton, particularly since CoBank failed to address it. . Endorsement number 8 applies not only to acts committed by the insured but to acts, etc., committed "on behalf" of the insured.