Filed 10/10/19
                 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                  SECOND APPELLATE DISTRICT

                            DIVISION SIX


TARGET CORPORATION,                           2d Civil No. B279995
                                           (Super. Ct. No. NC059999)
     Plaintiff and Appellant,                (Los Angeles County)

v.

GOLDEN STATE INSURANCE
COMPANY LIMITED et al.,

     Defendants and Respondents.



      This appeal involves complex issues in the interpretation of
indemnification/defense clauses and additional insured
endorsements. Target Corporation (retailer) appeals from the
judgment entered in favor of respondents Golden State Insurance
Company Limited (carrier) and its insured, McKesson
Corporation (supplier), which had distributed a pharmaceutical
product to retailer. Supplier’s contract with retailer included a
clause requiring supplier to indemnify and defend retailer.
Retailer was named as an additional insured on the policy that
carrier had issued to supplier.
      A customer purchased from retailer the pharmaceutical
product distributed by supplier. She had an adverse reaction to
the product that resulted in serious bodily injury. Customer sued
retailer, but supplier and carrier refused to defend it. Retailer
brought the present action against supplier and carrier seeking
to compel them to defend it. The trial court granted supplier’s
and carrier’s motion for summary adjudication because
customer’s lawsuit was based not on a defective product
distributed by supplier, but on retailer’s alleged mislabeling of
the product and failure to warn of possible adverse reactions to
the product.
       We conclude that the indemnification/defense clause in
supplier’s contract with retailer and the additional insured
endorsement do not require supplier and carrier to defend
retailer against customer’s lawsuit. Accordingly, we affirm.
                   Factual and Procedural Background
       Supplier distributes prescription drugs, in bulk, to
retailers. It does not manufacture drugs. Supplier and retailer
entered into a Pharmaceutical Supply Agreement (the
Agreement). The Agreement contained a broad indemnification
clause requiring supplier to “indemnify, hold harmless, and
defend [retailer] . . . against any and all actions [or] claims . . .
relating to or arising out of . . . Products purchased by [retailer]
from [supplier], . . . provided however, that the foregoing
indemnity shall not apply to any claims . . . arising out of or due
to the negligence or willful misconduct or omission of
[retailer] . . . .” The Agreement said that “[supplier] shall obtain
and maintain . . . commercial general liability insurance . . . ,
including products liability/completed operations . . . [and]
coverage for contractual indemnification obligations.” The policy
will “provide that [retailer] is included as an additional insured.”




                                  2
The Agreement stated that it “shall be governed by and construed
in accordance with the laws of the State of Minnesota.”
       Carrier issued a commercial general liability insurance
policy designating supplier as the named insured and retailer as
an additional insured. The additional insured endorsement
provided that coverage applies “only with respect to ‘bodily injury’
or ‘property damage’ arising out of ‘your products’ [supplier’s
products] . . . which are distributed or sold in the regular course
of the vendor’s business [retailer’s business].” There is a key
exception to the general coverage provision: Additional insured
coverage does not apply to “[r]epackaging” of products or
“[p]roducts which, after distribution or sale by you [supplier]
have been labeled or relabeled.” The endorsement defined “[y]our
products” as “[a]ny products of the named insured [supplier].”
(Bold omitted; see infra pp. 8-9.)
       In August 2012 customer “filed products liability and
professional negligence claims against [retailer and supplier]
after developing a rare skin reaction . . . that she believes was
caused by her ingestion of a prescription drug product . . . (a
generic form of Septra DS [also known as Bactrim DS])
(hereinafter, the ‘Product’) she purchased at [retailer’s]
pharmacy” in Northridge, California. Supplier had distributed
the Product to retailer. Retailer “tendered the defense of the
Underlying Action to [supplier],” which “accepted [retailer’s]
tender.”
       Customer’s second amended complaint (customer’s
complaint) consisted of six causes of action against retailer and
supplier. The complaint alleged, “The bottle containing the
Product supplied to [customer] instructed her to ‘Finish All Of
This Medicine Unless Otherwise Directed By Your Doctor.’”




                                 3
Customer contended that the label was “misleading and
defective” because it did not contain “the FDA-approved” warning
that the Product “should be discontinued at the first appearance
of skin rash or any sign of adverse reaction.” (Bold and
capitalization omitted.) Retailer and supplier allegedly “gave
[customer] written instructions and literature regarding the
description and use of the Product . . . which [she] relied upon,
[and] which was inaccurate.”
       According to customer’s complaint, in October 2011 her
“skin began to peel off all over her body. As a result, she was
transferred to the burn unit at the University of Utah’s hospital
where she remained in critical care for approximately 7 1/2 weeks
after being diagnosed with Stevens-Johnson Syndrome and Toxic
Epidermal Necrolysis . . . .” Retailer and supplier “failed . . . to
provide adequate warnings to [customer] regarding the potential
serious danger and proper use of the Product.”
      At customer’s request, in January 2014 her action against
supplier, but not against retailer, was dismissed without
prejudice pursuant to an agreement between customer and
supplier. In June 2015 the action against supplier was dismissed
with prejudice.
      In October 2014 retailer filed a motion for summary
judgment. In opposition to the motion, customer stated: “Here,
the evidence is that [retailer] did not use due care in labeling the
medication.” [Customer] is not attempting to hold [retailer] liable
on the basis that [it] dispensed a defectively designed drug.”
“[Retailer] failed to properly warn [her] regarding the
prescription for [the Product it] filled. [Retailer’s] failures were
ones of both omission and commission. [It] not only omitted to
provide warnings of side effects and adverse reactions that




                                 4
should have been given, the instructions and warnings [it] did
give were wrong. Following the instructions and not being
properly warned, [customer] suffered the serious adverse reaction
of having much of her skin burn off of her body.”
       In its January 2015 ruling denying retailer’s motion for
summary judgment, the trial court said, “[Customer’s] basis for
her claims is . . . failure to warn.” The court concluded: “The
breach of warranty and strict liability claims survive because
[retailer] designed and provided the labeling for the drug it
dispensed, changing the FDA-approved labeling. The retailer
thus was not providing the drug as it was given by the
manufacturer. [Customer] claims that this constitutes a
mislabeling, which is providing a product.” “The negligence
causes of action survive because of the allegations that [retailer]
negligently represented that the warnings and directions were
adequate and ‘negligently failed to disclose . . . important safety
and injury information’ about the drug.”
       In February 2015 carrier and supplier terminated their
defense of retailer. In April 2015 retailer brought the present
action for “the wrongful denial of a defense under contractual
indemnity clauses by . . . [supplier] and under an insurance policy
issued by . . . [carrier].” The complaint consists of three causes of
action. The first cause of action is for declaratory relief. It seeks
a declaration that supplier and carrier must defend retailer and
“pay for those amounts which [retailer] incurs to satisfy any
settlement of or judgment in [customer’s] action.” The second
cause of action alleges that carrier and supplier breached their
contractual obligations and an implied covenant of good faith and
fair dealing “by terminating their defense of [retailer].” The third
cause of action seeks indemnity and contribution against supplier




                                 5
for (1) fees and costs incurred by retailer in defending against
customer’s action, and (2) any sums paid by retailer to customer.
       In November 2015 carrier and supplier filed a motion for
summary adjudication as to the first and second causes of action.
They argued that supplier has no duty to defend retailer because
customer’s “claims against [retailer] arise directly out of its own
alleged mistakes in labeling the medication.” Carrier also has no
duty to defend retailer because customer’s “claims actually
identify [retailer’s] label as the relevant product, and the
additional insured coverage only applies to claims arising out of
supplier’s products.”
       In January 2016 customer “resolved her claims against
[retailer].” In March 2016 the trial court granted carrier’s and
supplier’s motion for summary adjudication as to the first and
second causes of action of retailer’s lawsuit. In September 2016
retailer voluntarily dismissed without prejudice its third cause of
action for indemnity and contribution against supplier.
Judgment was subsequently entered in carrier’s and supplier’s
favor.
                          Standard of Review
       “A motion for summary adjudication shall be granted . . . if
it completely disposes of a cause of action . . . .” (Code Civ. Proc.,
§ 437c, subd. (f)(1).) “Summary adjudication motions are
‘procedurally identical’ to summary judgment motions.
[Citation.]” (Serri v. Santa Clara University (2014) 226
Cal.App.4th 830, 859.)
       “The purpose of the law of summary judgment is to provide
courts with a mechanism to cut through the parties’ pleadings in
order to determine whether, despite their allegations, trial is in
fact necessary to resolve their dispute. [Citation.]” (Aguilar v.




                                  6
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) A motion for
summary judgment “shall be granted if all the papers submitted
show that there is no triable issue as to any material fact and
that the moving party is entitled to a judgment as a matter of
law.” (Code Civ. Proc., § 437c, subd. (c).)
       “[W]e independently review the record that was before the
trial court when it ruled on [carrier’s and supplier’s] motion.
[Citations.] In so doing, we view the evidence in the light most
favorable to [retailer] as the losing part[y], resolving evidentiary
doubts and ambiguities in [its] favor. [Citation.]” (Martinez v.
Combs (2010) 49 Cal.4th 35, 68.) “We must presume the
judgment is correct . . . .” (Jones v. Department of Corrections
and Rehabilitation (2007) 152 Cal.App.4th 1367, 1376.) “‘As with
an appeal from any judgment, it is the appellant’s [retailer’s]
responsibility to affirmatively demonstrate error . . . .’” (Claudio
v. Regents of the University of California (2005) 134 Cal.App.4th
224, 230.)
               The Trial Court Did Not Err in Granting
            Carrier’s Motion for Summary Adjudication
       The issue here is one of pure law because it involves the
interpretation of carrier’s additional insured endorsement.
“‘When determining whether a particular policy provides a
potential for coverage . . . , we are guided by the principle that
interpretation of an insurance policy is a question of law.
[Citation.]’ [Citation.] [¶] ‘The insurer is entitled to summary
adjudication that no potential for indemnity exists . . . if the
evidence establishes as a matter of law that there is no coverage.
[Citation.] . . .’ [Citations.]” (Powerine Oil Co. v. Superior Court
(2005) 37 Cal.4th 377, 390.)




                                 7
        The additional insured coverage applies “only with respect
to ‘bodily injury’ or ‘property damage’ arising out of ‘your
products,’” i.e., supplier’s products. “California courts have
consistently given a broad interpretation to the terms ‘arising out
of’ or ‘arising from’ in various kinds of insurance provisions. It is
settled that this language does not import any particular
standard of causation or theory of liability into an insurance
policy. Rather, it broadly links a factual situation with the event
creating liability, and connotes only a minimal causal connection
or incidental relationship.” (Acceptance Ins. Co. v. Syufy
Enterprises (1999) 69 Cal.App.4th 321, 328, italics added.)
        There is no “minimal causal connection or incidental
relationship” between the Product distributed by supplier and
customer’s injury. (Acceptance Ins. Co. v. Syufy Enterprises,
supra, 69 Cal.App.4th at p. 328.) Customer claimed that her
injury arose not from a defective product, but from retailer’s
failure to warn of the risks and possible side effects of the
Product. Supplier did not distribute or have any role in
preparing the information about the Product that retailer
provided to customer. Retailer acknowledges: “Suppliers of
medications to retail pharmacies never supply those medications
in a form suitable for simply handing over the drug to the retail
customer. Those medications always are transferred [by the
retailer] from bulk containers to individual ones, with labels
individually prepared [by the retailer] for each customer.”
        Moreover, the additional insured endorsement does not
apply to “[r]epackaging” of products or “[p]roducts which, after
distribution or sale by [supplier] have been labeled or relabeled.”
Retailer repackaged the Product and labeled it before customer
purchased it. Retailer notes that in the trial court “[carrier]




                                  8
contended that [retailer’s] action of taking the medication from
the bulk container in which it was sold by [supplier] and placing
it in an individual container for [customer], with a label on that
container provided by [retailer] itself, came within the exclusions
of [the additional insured] [e]ndorsement . . . for repackaging and
labeling and relabeling.” We agree with carrier because
customer’s claim was based on retailer’s mislabeling of a product
that was not defective. (See SDR Co., Inc. v. Federal Ins. Co.
(1987) 196 Cal.App.3d 1433).
              The Trial Court Did Not Err in Granting
           Supplier’s Motion for Summary Adjudication
       Retailer argues: “If [carrier’s] interpretation of [the
additional insured endorsement] is accurate, then [supplier]
breached its contractual obligation to obtain insurance coverage
that actually provided [retailer] with the insurance protection it
had bargained for.” Therefore, the trial court erroneously
granted supplier’s motion for summary adjudication as to the
second cause of action for breach of contract.
       We disagree. The second cause of action did not allege that
supplier had breached its contractual obligation to obtain
additional insured coverage for retailer. It alleged that supplier
had “breached [its] obligation[] to [retailer] under the . . .
Agreement[] . . . by terminating [its] defense of [retailer].”
       In any event, there is no evidence that supplier failed to
obtain the required insurance. The Agreement did not impose on
supplier a duty to provide additional insured coverage that would
protect retailer from customer’s claim that it had mislabeled the
medication and had failed to warn of possible adverse reactions
and side effects.




                                 9
       Supplier agreed to “indemnify, hold harmless, and defend
[retailer] . . . against any and all actions [or] claims . . . relating to
or arising out of . . . Products purchased by [retailer] from
[supplier], . . . provided however, that the foregoing indemnity
shall not apply to any claims . . . arising out of or due to the
negligence or willful misconduct or omission of [retailer] . . . .”
       Supplier’s obligation to defend retailer is broader than
carrier’s obligation. Supplier has a duty to defend as to claims
“relating to or arising out of” its products, while carrier has a
duty to defend only as to claims “arising out of” [not relating to]
supplier’s products. (Italics added.) (See Rice v. Downs (2016)
248 Cal.App.4th 175, 186, concerning the interpretation of
arbitration clauses [“clauses requiring arbitration of a claim . . .
‘arising out of’ an agreement, i.e., excluding language such as
‘relating to this agreement’ . . . , are ‘generally considered to be
more limited in scope than would be . . . a clause agreeing to
arbitrate “‘any controversy . . . arising out of or relating to this
agreement’”’”].)
       Carrier and supplier argue that the indemnification clause
“unambiguously bars [retailer’s] claim for indemnity [against
supplier] where, as here, [customer’s] claim [against retailer] was
based solely on [retailer’s] own negligence.” Retailer replies:
“[Supplier’s] reading of the indemnification provision of the
Agreement[] would deprive [retailer] of a defense and of
indemnification merely because of the allegation of negligence,
regardless whether there was any merit to that allegation.” “The
only reasonable reading of the exception to [supplier’s] duty to
defend and indemnify is that it applies to situations where in
fact [retailer] was negligent and where the ‘claims . . .’ in fact
arose out of or were due to that negligence on the part of




                                   10
[retailer.] [¶] Thus, in order for [supplier] to obtain summary
adjudication of the issue of whether it continued to owe [retailer]
a duty to defend and indemnify, it was not enough for it merely to
show that the pending allegations in the lawsuit at issue involved
an allegation of [retailer’s] negligence and a claim that
[customer’s] injuries arose from that negligence. [Supplier] had
to establish as undisputed that [retailer] was in fact negligent,
and that [customer’s] claimed injuries in fact arose from that
negligence. But [supplier] did not even attempt to make such a
showing.” “Since [supplier] did not show that fact to be
undisputed as part of its motion for summary adjudication, that
motion should not have been granted.”
       We look to Minnesota law because the Agreement specifies
that it shall be construed in accordance with Minnesota law.
“‘[T]he primary goal of contract interpretation is to determine
and enforce the intent of the parties.’” (Staffing Specifix, Inc. v.
TempWorks Management Services, Inc. (Minn. 2018) 913 N.W.2d
687, 692.) “[T]he court must give all terms their plain, ordinary
and popular meaning so as to effect the intent of the parties.
 [Citation.] The parties’ intent should be determined, ‘not by a
process of dissection in which words or phrases are isolated from
their context, but rather from a process of synthesis in which
words and phrases are given a meaning in accordance with the
obvious purpose of the . . . contract as a whole.’” (Davis by Davis
v. Outboard Marine Corp. (Minn.Ct.App. 1987) 415 N.W.2d 719,
723.)
       Retailer is claiming that supplier must defend it unless
supplier establishes that customer’s claim of negligence is in fact
meritorious. This is contrary to Minnesota law concerning an
insurer’s obligation to defend. We recognize that supplier is an




                                11
indemnitor, not an insurer, but insurance law is pertinent. “An
insurer’s obligation to defend its named insured does not depend
on the merits of the claim asserted but on whether the
allegations of the complaint against the insured state a cause of
action within the coverage afforded by the policy.”
(Meadowbrook, Inc. v. Tower Ins. Co. (Minn. 1997) 559 N.W.2d
411, 419; see also Wooddale Builders, Inc. v. Maryland Casualty
Co. (Minn. 2006) 722 N.W.2d 283, 302 [“the duty to defend exists
regardless of the merits of the underlying claims”].) “In addition
to looking at the complaint, the insurer can look to facts outside
the complaint to determine whether coverage exists.” (Haarstad
v. Graff (Minn. 1994) 517 N.W.2d 582, 584.)
       Thus, in determining whether an insurer has a duty to
defend, Minnesota courts consider the nature of the claim against
the insured and whether that claim is covered by the policy, not
whether the claim is meritorious. If the claim is within the
policy’s coverage, the duty to defend is triggered. It is not
triggered if the claim falls outside the policy’s coverage.
       There is no reason why the rule should be different where
the duty to defend arises not under an insurance policy, but
under an indemnification clause in an agreement between a
pharmaceutical distributor and a vendor that purchases drugs
from the distributor. The distributor is not required to defend
the vendor until, as retailer maintains, it “‘establish[es] as
undisputed that [the vendor] was in fact negligent, and that [the
plaintiff’s] claimed injuries . . . arose from that negligence.’” It is
doubtful that the distributor would be able to establish this until
the issue was resolved by the trial court or a jury. Moreover, it is
the plaintiff’s obligation, not the distributor’s, to prove
negligence. The practical effect of retailer’s theory is that the




                                  12
distributor would have to defend the vendor until a final
judgment was entered in the negligence action. This would
render meaningless the exception to the Agreement’s duty to
defend. “The law requires us to construe a contract as a whole so
as to harmonize all provisions, if possible, and to avoid a
construction that would render one or more provisions
meaningless.” (Stiglich Const., Inc. v. Larson (Minn.Ct.App.
2001) 621 N.W.2d 801, 803.)
                            Disposition
       The judgment is affirmed. Carrier and supplier shall
recover their costs on appeal.
       CERTIFIED FOR PUBLICATION.


                                               YEGAN, J.

We concur:

             GILBERT, P. J.


             TANGEMAN, J.




                               13
                     Ross M. Klein, Judge

             Superior Court County of Los Angeles

                ______________________________

     Manning & Kass, Ellrod, Ramirez, Trester, John M.
Hochhausler and Steven J. Renick; Resnick & Louis and Martin
D. Holly for Plaintiff and Appellant.

      Farella Braun Martel, Erica Villanueva and Shanti Eagle
for Defendants and Respondents.
