Under § 1698(d), a written contract may be orally modified by the common law principles of waiver and estoppel.

Arthur Fulton, the principal of Diamond, testified credibly that the Harrisons, either personally or through their representatives, authorized Diamond to drill to the depth of four hundred thirty feet on the first well and, when the first well failed to produce sufficient water flow, to drill a second well to a depth of five hundred fifty feet. Fulton also testified that the Harrisons authorized the use of odex casing on the wells. He further testified that the modifications to the written contract were made based on the Harrisons' representations that Diamond would be compensated for their services, including the services performed after Diamond became aware of the debtors' petition.

Based on the evidence introduced at trial, the Court concludes that the parties orally modified the terms of the written contract to authorize Diamond to drill to the depths specified. Because the Harrisons induced Diamond to provide the additional services with representations that it would be paid, and because Diamond relied on those representations, the debtors are estopped from asserting that the oral modifications are unenforceable. See Wagner v. Glendale Adventist Medical Center, 216 Cal. App. 3d 1379, 1388 (1989). The doctrine of waiver also applies in this case, and the Harrisons' conduct constitued a waiver of the provision in the contract that required modifications to be in writing. See Bardeen v. Commander Oil Co., 40 Cal. App. 2d 341, 347 (1940). Diamond is entitled to damages against the estate and the Harrisons for breach of contract in the total amount of $30,693.62 as pled, plus pre-judgment interest at the legal rate of ten percent (10%). Cal. Civ. Code §§ 3287, 3289.

Finally, Diamond also asserts that it is entitled to attorneys' fees and costs associated with enforcing the contract. Cal. Civ. Code § 1717 provides that the prevailing party in an action on a contract shall be entitled to attorneys' fees and costs if the contract specifically so provides. The subject contract between Diamond and the Harrisons provides in paragraph 10 of the General Conditions that the prevailing party in a contract action shall be entitled to an award of attorneys' fees and costs. The total amount of Diamond's unsecured claim shall include its costs and attorneys' fees. The reasonable amount of attorneys' fees shall be determined in a subsequent hearing.

CONCLUSION

For the reasons set forth in this Memorandum Opinion, Diamond shall be allowed an unsecured claim against the estate in the amount of $30,693.62, plus pre-judgment interest, attorneys' fees and costs. The reasonable amount of attorneys' fees shall be determined in a separate hearing on notice to creditors by Diamond. A judgment shall also be issued against the Harrisons holding them personally liable for damages for breach of the contract with Diamond. The plaintiffs shall submit proper forms of judgments against the estate and the Harrisons.

Good cause appearing, IT IS SO ORDERED.

1. 
   

   28 U.S.C. § 157(b) provides in pertinent part as follows:
   

   (1)Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11 . . . and may enter appropriate orders and judgments, subject to review under section 158 of this title.
   

   (2)Core proceedings include, but are not limited to -
   

   (A)matters concerning the administration of the estate;

   (B)allowance or disallowance of claims against the estate or exemptions from property of the estate, and estimation of claims or interests for the purposes of confirming a plan under chapter 11, 12, or 13 of title. . .

   (C)counterclaims by the estate against persons filing claims against the estate. . .

   (K)determinations of the validity, extent, or priority of liens. . .

   (O)other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or equity security holder relationship. . . .
   

2. 
   

   See fn. 1 supra.
   

3. 
   

   Fed. R. Civ. P. 15(b) provides in pertinent part:
   

   When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.
   

4. 
   

   See fn. 1 supra.

5. 
   

   Cal. Civ. Code § 1698 provides in pertinent part:

   (a)A contract in writing may be modified by a contract in writing.

   (b)A contract in writing may be modified by an oral agreement to the extent that the oral agreement is executed by the parties.

   (c)Unless the contract otherwise expressly provides, a contract in writing may be modified by an oral agreement supported by new consdieration. . . .

   (d)Nothing in this section precludes in an appropriate case the application of rules of law concerning estoppel, oral novation and substitution of a new agreement, rescission of a written contract by an oral agreement, waiver of a provision of a written contract, or oral independent collateral contracts.

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