Filed 3/14/24 Axis Surplus Ins. Co. v. Aletheia Research and Management CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions 

not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion 

has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

AXIS SURPLUS INSURANCE 

COMPANY,

Plaintiff, CrossDefendant, and Appellant,

v.

ALETHEIA RESEARCH AND 

MANAGEMENT, INC.,

Defendant, CrossComplainant, and Appellant.

 B314925

 (Los Angeles County

 Super. Ct. No. BC485198)

APPEALS from a judgment of the Superior Court of Los 

Angeles County, Elizabeth R. Feffer, Judge. Affirmed in part, 

dismissed in part.

Clyde & Co US, Kim W. West, Alec H. Boyd, Douglas J. 

Collodel and Roxana Sadeghi, for Plaintiff, Cross-Defendant, and 

Appellant.
2

Baker, Keener & Nahra and Phillip A. Baker; BG Law, 

Steven T. Gubner and Jason B. Komorsky, for Defendant, CrossComplainant, and Appellant.

_____________________________

I. INTRODUCTION

In this appeal from a stipulated judgment in favor of 

plaintiff and cross-defendant AXIS Surplus Insurance Company 

(AXIS), defendant and cross-complainant Aletheia Research and 

Management, Inc. (Aletheia) challenges certain of the trial court’s

legal rulings following a bench trial and on motions in limine. 

We affirm.

1

1 In its respondent’s brief, AXIS argues that even if we were 

to disagree with the rulings challenged on appeal, we should 

affirm the judgment because the trial court erred in denying its 

motion for summary adjudication. We will affirm the judgment 

based on the court’s rulings at the bench trial and on the motions 

in limine and therefore need not consider AXIS’s alternative 

argument.

AXIS has also filed a cross-appeal from the court’s denial of 

its summary adjudication motion. As the prevailing party in the 

judgment, however, AXIS is not aggrieved by the court’s rulings. 

We will therefore dismiss AXIS’s cross-appeal. (See Code Civ. 

Proc., § 902 [only aggrieved party may appeal]; Serrano v. Stefan 

Merli Plastering Co., Inc. (2008) 162 Cal.App.4th 1014, 1026 [“A 

party who has an interest recognized by law that is adversely 

affected by the judgment or order is an aggrieved party”].)
3

II. BACKGROUND

A. The Parties

Peter J. Eichler, Jr., Roger Peikin, Patricia Barnes, and 

Bruce Lee were directors (the Directors) of Aletheia, an 

investment management firm.

AXIS was an insurance company that sold to Aletheia a 

directors and officers’ excess liability insurance policy (the AXIS 

Policy).

B. The Insurance Policies

1. The Houston Policy

Houston Casualty Company (Houston) issued to Aletheia a 

primary directors and officers’ liability insurance policy, for the 

policy period of March 1, 2009, through April 30, 2010 (the 

Houston Policy). The Houston Policy was a “‘claims made and 

reported’” policy,2 which provided for $5,000,000 in limits and 

specified that it “[DID] NOT PROVIDE FOR ANY DUTY OR 

2 A “claims made and reported” policy “specifically limits 

coverage to claims made against the insured and reported to the 

company during the policy period [or within the reporting period 

pursuant to the policy’s terms]. ‘Such policies only cover claims 

reported to the insurer during the policy [or reporting] period. 

Timely reporting of the claim is thus the event triggering 

coverage; this condition is enforceable according to its terms.’” 

(KPFF, Inc. v. California Union Ins. Co. (1997) 56 Cal.App.4th 

963, 972.)
4

OBLIGATION ON THE PART OF THE INSURER TO DEFEND 

ANY INSURED(S).”

Provision I.A.(3) of the Houston Policy provided that: “The 

Insurer shall pay on behalf of the Insured Adviser Loss which the 

Insured Adviser pays as indemnification to the Insured Person(s)

arising from a Claim first made during the Policy Period for any 

Wrongful Act(s).” Under the terms of the Houston Policy, 

“Insured Adviser” was defined as Aletheia, and “Insured 

Person(s)” was defined as the Directors. The policy defined a 

“Claim” as “any civil . . . proceeding (including any appeal 

therefrom) commenced by the service of a complaint or similar 

pleading and initiated against the Insured(s)[.]” And, it defined 

“Loss” as “damages, judgments, settlements, and Costs, Charges 

and Expenses incurred by the Insured(s),” with exceptions not 

applicable here. “Costs, Charges and Expenses” was defined as 

“reasonable and necessary legal fees and expenses (including 

expert fees) and cost of attachment or similar bonds incurred by 

the Insured(s) in defense of any Claim . . . .” (Emphasis 

removed.)

2. The AXIS Policy

The AXIS Policy provided for coverage of $5,000,000 in 

excess of the limits provided by the Houston Policy. The AXIS 

Policy stated that “[AXIS] shall provide the Insureds with 

insurance during the Policy Period excess of all applicable 

Underlying Insurance. Except as specifically set forth in the 

provisions of this Policy, the insurance afforded hereunder shall 

apply in conformance with the provisions of the applicable 

Primary Policy and, to the extent coverage is further limited or 
5

restricted thereby, to any other applicable Underlying Insurance. 

In no event shall this Policy grant broader coverage than would 

be provided by the most restrictive policy constituting part of the 

applicable Underlying Insurance.” (Emphasis removed.) The 

“Underlying Insurance” and “Primary Policy” was the Houston 

Policy. “Insureds” referred to Aletheia and the Directors.

C. The Proctor Action and the Houston Coverage Action

On February 4, 2010, Aletheia filed suit against Proctor 

Investment Managers LLC, Proctor Investment Distributors 

LLC, National Bank of Canada Financial, Inc., James C. Coley II, 

Mona Aboelnaga, and Gregory Meredith (collectively Proctor) in 

Los Angeles County Superior Court (the Proctor Action).

On February 16, 2010, Proctor filed suit against Aletheia in 

New York Supreme Court (the New York Action).

On June 14, 2010, Aletheia submitted a copy of the New 

York Action to Houston, tendering it for coverage under the 

Houston Policy. On August 16, 2010, Houston denied coverage 

on the grounds that the New York Action fell under a prior 

Houston insurance policy, the limits of which had been exhausted 

by other claims. (Aletheia Research & Mgmt. v. Houston Cas. Co. 

(C.D.Cal. 2011) 831 F.Supp.2d 1210, 1216 (Aletheia).)

On September 15, 2010, the New York Action was 

dismissed on forum non conveniens grounds. On 

January 18, 2011, Proctor refiled the action as a cross-complaint 

against Aletheia and other defendants in the Proctor Action. On 

March 10, 2011, Proctor filed an amended cross-complaint,

alleging a breach of fiduciary duty claim against Aletheia and the 

Directors.
6

On April 8, 2011, Aletheia filed a complaint against 

Houston in the United States District Court for the Central 

District of California, seeking to establish its rights to insurance 

coverage (Houston Coverage Action).

In November 2011, Aletheia’s counsel sent two letters to 

AXIS, tendering the amended cross-complaint in the Proctor 

Action for coverage.

On December 19, 2011, the federal district court granted 

Aletheia’s motion for summary adjudication against Houston, 

finding that the claim fell within the 2009–2010 period. 

(Aletheia, supra, 831 F.Supp.2d at p. 1225.)

D. The AXIS Coverage Action

On December 23, 2011, AXIS denied Aletheia’s tender, 

based on what it deemed to be late notice of the claim.

On January 11, 2012, Aletheia’s counsel sent a letter to 

AXIS’s coverage counsel, contending, among other things, that 

Aletheia had “substantially complied with the reporting 

requirement” and timely tendered the claim to Houston.

On May 23, 2012, AXIS filed the complaint in the case on 

appeal. AXIS sought declaratory relief, namely, a declaration 

that it had complied with all of its obligations under the AXIS 

Policy and was not required to provide coverage to Aletheia for 

any costs, attorney fees, or interest paid in connection with the 

Proctor Action.

On June 1, 2012, Aletheia advised AXIS that the Houston 

Policy was nearing exhaustion; and, on June 21, 2012, Aletheia 

advised AXIS that the Houston Policy coverage was exhausted by 
7

the payment of defense expenses incurred by Aletheia and the 

Directors.

On July 16, 2012, Aletheia cross-complained against AXIS, 

alleging breach of contract and bad faith denial of insurance. 

Aletheia sought declaratory relief that AXIS had a duty to 

defend, to pay reasonable defense costs, and to indemnify in 

connection with the Proctor Action.

On August 20, 2012, AXIS demurred to Aletheia’s crosscomplaint, asserting that because Aletheia provided late notice of 

the Proctor Action, AXIS owed Aletheia no coverage.

E. Aletheia’s Bankruptcy and the Proctor Settlement

On November 11, 2012, Aletheia filed a petition for 

bankruptcy, which automatically stayed the Proctor Action.

3 On 

July 30, 2013, Director Lee filed with the bankruptcy court a 

proof of claim, seeking reimbursement for defense costs he paid 

during the Proctor Action.

On January 15, 2013, Jeffrey Golden was appointed as 

trustee for the bankruptcy estate of Aletheia (Trustee).

4

3 Aletheia filed a petition for Chapter 11 bankruptcy, which

the bankruptcy court subsequently converted to a Chapter 7 

bankruptcy. “‘[C]hapter 7 of the Bankruptcy Code . . . embodies 

two ideals: (1) giving the individual debtor a fresh start, by 

giving him a discharge of most of his debts; and (2) equitably 

distributing a debtor’s assets among competing creditors.’” 

(Burkart v. Coleman (In re Tippett) (9th Cir. 2008) 542 F.3d 684, 

689; 11 U.S.C. § 701 et seq.)

4 “‘Under the Bankruptcy Code the trustee stands in the 

shoes of the bankrupt corporation and has standing to bring any 
8

On May 5, 2014, the Trustee entered into a settlement 

agreement with Proctor (Proctor Settlement Agreement), and 

agreed to grant Proctor an “allowed, non-subordinated, nonpriority, general unsecured [creditor’s] claim against the Aletheia 

estate in an amount equal to the greater of (i) $21,775,000; and

(ii) 60 [percent] of the total pool of non-subordinated, nonpriority, general unsecured claims finally allowed in the 

[b]ankruptcy [c]ase . . . .” For this and other consideration, 

Proctor released its claims against Aletheia. The Proctor 

Settlement Agreement specified, however, that Proctor did not 

release and did not intend to release “claims, causes of action, 

liability or demands that were brought or could have been 

brought against Eichler, Barnes, or Peikin . . . .” The agreement 

also recited that Proctor had separately settled its claim against 

Lee and dismissed its claim against Lee with prejudice.

F. Denial of Summary Judgment Motions

On July 13, 2018, Aletheia filed a summary adjudication 

motion, and AXIS filed a motion for summary judgment, or in the 

alternative, summary adjudication on Aletheia’s cross-complaint.

On January 11, 2019, the trial court denied AXIS’s motion, 

ruling that AXIS was not entitled to summary judgment on its 

late notice defense. The court also found that AXIS failed to meet 

its initial burden of demonstrating that it owed no coverage to 

suit that the bankrupt corporation could have instituted had it 

not petitioned for bankruptcy. [Citations.]’” (Shaoxing County 

Huayue Import & Export v. Bhaumik (2011) 191 Cal.App.4th 

1189, 1197.) We will refer to “Aletheia” and “Trustee” 

interchangeably throughout the remainder of the opinion.
9

Aletheia.5 Finally, the court denied Aletheia’s summary 

adjudication motion.

G. Bench Trial

On February 21, 2019, the trial court ordered the parties to 

a bench trial to resolve certain legal issues prior to the 

commencement of the jury trial. Following the filing of trial 

briefs and supporting documents, and the parties’ oral argument, 

the court took the bench trial matters under submission.

On April 30, 2019, the trial court issued its rulings. As 

relevant here, the court found:

“[U]nder the [Houston Policy], [AXIS’s] obligation to pay 

attached only after Aletheia paid the Directors indemnity for 

legal expenses for covered Loss that they incurred, and not when 

the liability was itself incurred. . . . [¶] . . . The question of 

whether Aletheia paid indemnification for its Directors for 

covered losses is an issue for resolution by the jury at the second 

phase of the trial.”

The trial court continued: “As an aside, it is noted that 

[AXIS] argues that the Trustee will have to demonstrate that 

Aletheia complied with Corporations Code[] section 317. This 

section grants corporations the power to indemnify their agents; 

it is not, however, exclusive of any additional rights to 

5 AXIS moved for summary adjudication on the issue of 

whether AXIS had a duty to defend. Aletheia admitted there was 

no such duty and the court granted the motion on this issue. The 

court also granted AXIS’s motion on the grounds that AXIS did 

not owe coverage to Aletheia pursuant to any provisions, other 

than provision I.A.(3), in the Houston Policy. Altheia does not 

challenge the court’s rulings on these issues.
10

indemnification to which such individuals are entitled ‘under any 

bylaw, agreement, vote of shareholders or disinterested directors, 

or otherwise, to the extent the additional rights to 

indemnification are authorized in the articles of the corporation.’

(Corp. Code, § 317, subd. (g).) Although the Trustee will bear the 

initial burden to establish these Directors’ right to 

indemnification, the Trustee need not demonstrate compliance 

with [Corporations Code] section 317 unless Aletheia claims that 

the Directors were entitled to indemnification on this basis.” 

(Italics added.)

The trial court also determined that during the jury trial 

phase, “the Trustee will bear the burden to demonstrate that it 

has paid indemnification for the relevant Directors, including 

demonstrating it complied with all statutory requirements or 

that it was excused from compliance, and not simply that 

Aletheia paid legal fees incurred in a common defense.”

Next, the trial court considered AXIS’s argument that the 

Proctor Settlement Agreement did not impose an obligation on 

Aletheia to indemnify the Directors. The court agreed, reasoning:

“Although, a triable issue exists as to whether Aletheia 

indemnified its Directors, and whether [AXIS] therefore became 

liable to indemnify Aletheia for the amounts that were paid, the 

Directors’ claims were expressly excluded from the scope of the 

[Proctor Settlement Agreement]. Because the Directors’ claims 

were excluded from the [Proctor Settlement Agreement] between 

the Trustee and Proctor, the amounts incurred for the [Proctor 

Settlement Agreement] also fall outside of the scope of Aletheia’s 

claims against [AXIS] for insurance bad faith for denial of 

indemnification for the Directors. Accordingly, the Trustee is not 
11

entitled to claim the amounts owed under the [Proctor Settlement

Agreement] . . . to Proctor as damages against [AXIS].”

Finally, the trial court addressed the Trustee’s argument 

that pursuant to Insurance Code section 11580, “the [AXIS] 

Policy [was] deemed to provide that Aletheia’s bankruptcy [did] 

not release [AXIS] from its obligations to pay damages sustained 

or loss occasioned during the life of the policy.” The court 

rejected the Trustee’s argument, finding that: “[W]hile Insurance 

Code[] section 11580 would not appear to apply to the claims at 

hand, the policy itself would appear to allow recovery if the 

Settlement Amount were recoverable as losses or damages. The 

Trustee, however, does not establish that the relevant provision 

is for loss or damage resulting from liability for injury suffered by 

another person. (Ins. Code, § 11580, subd. (a)(1).) The policy 

provision of Subdivision (A)(3) indemnifies the company for 

payments made as indemnification. The Trustee also does not

demonstrate that Aletheia qualifies as a ‘person’ for purposes of 

this section.”

H. Motions In Limine

On February 21, 2020, the trial court issued its rulings on 

certain motions in limine. Aletheia challenges the court’s rulings 

on AXIS’s motions in limine Nos. 2, 15, and 16.

In motion in limine No. 2, AXIS sought to preclude 

testimony or argument that AXIS’s denial of coverage caused 

Aletheia to file for bankruptcy. AXIS argued that Eichler’s 

declaration, submitted in support of Aletheia’s bankruptcy filing, 

demonstrated that Aletheia filed for bankruptcy because of the 
12

existence of an income tax lien, and not because of AXIS’s denial 

of coverage.

The trial court granted AXIS’s motion in limine, but not on 

the grounds raised by AXIS. Instead, the court ruled that 

evidence regarding the causes for Aletheia’s bankruptcy filing 

was excludable pursuant to Evidence Code section 352. In the 

court’s view, there was a substantial likelihood that the 

admission of such evidence would confuse the issues at trial and 

result in an undue consumption of time. Moreover, the relevance 

of such evidence was “questionable.”

In motion in limine No. 15, AXIS sought to exclude 

evidence or argument that it had engaged in bad faith by failing 

to settle the Proctor Action. In motion in limine No. 16, AXIS 

sought to exclude evidence and argument regarding the Proctor

Settlement as irrelevant, based on the trial court’s prior bench 

trial ruling. The trial court granted both motions.

I. Stipulation to Judgment

The parties subsequently filed a stipulation that stated:

“as a result of the [c]ourt’s rulings on (1) the parties’ motions for 

summary judgment, (2) the bench trial, and (3) AXIS’s motions in 

limine, the parties agree that Aletheia’s claimed damages will not 

be recoverable at the time of trial” and “the parties further agree 

that commencing a jury trial would be a waste of judicial 

resources[.]” The parties therefore agreed that “[j]udgment shall 

be and hereby is entered in favor of AXIS and against Aletheia on 

each cause of action of Aletheia’s [c]ross-[c]omplaint.”
13

On June 7, 2021, the trial court entered the judgment;

6

and, on June 8, 2021, the court ordered AXIS’s complaint 

dismissed without prejudice.7 On July 6, 2021, AXIS served a 

Notice of Entry of Judgment. On August 31, 2021, Aletheia filed 

its notice of appeal.

8

6 We reject AXIS’s argument that there was no entry of 

judgment because the signed judgment document did not bear a 

filed stamp. The signed judgment was an exhibit attached to a 

document entitled “STIPULATION TO ENTRY OF JUDGMENT” 

(Stipulation). The first page of the Stipulation bears a filed

stamp of June 7, 2021. And, AXIS has pointed to no authority 

which requires that the judgment document itself be filed

stamped in order to be considered filed under these 

circumstances. Thus, we construe the stipulated judgment as

having been entered on June 7, 2021.

7 On August 25, 2023, the trial court entered a judgment of 

dismissal effective June 8, 2021, nunc pro tunc. The June 8, 

2021, judgment is the final judgment for purposes of appeal. (See 

Angell v. Superior Court (1999) 73 Cal.App.4th 691, 698 

[complaint and cross-complaint between same parties must be 

resolved before judgment is final].)

8 Aletheia’s notice of appeal states that it appeals from a 

judgment dated “July 6, 2021.” California Rules of Court, “[r]ule 

8.100(a)(2)’s liberal construction requirement reflects the longstanding ‘“law of this state that notices of appeal are to be 

liberally construed so as to protect the right of appeal if it is 

reasonably clear what [the] appellant was trying to appeal from, 

and where the respondent could not possibly have been misled or 

prejudiced.”’” (K.J. v. Los Angeles Unified School Dist. (2020) 8 

Cal.5th 875, 882.) “While the timely filing of a notice of appeal is 

an absolute jurisdictional prerequisite [citations], technical 

accuracy in the contents of the notice is not.” (Id. at pp. 882–
14

III. DISCUSSION

A. Bench Trial

The Trustee challenges several of the trial court’s bench 

trial rulings. “‘We review questions of law de novo . . . .’” (Rojas 

v. HSBC Card Services Inc. (2023) 93 Cal.App.5th 860, 872–873.)

1. Indemnity Policy

The Trustee first contends that the trial court erred when it 

interpreted provision I.A.(3) of the Houston Policy as an 

indemnification, rather than a liability, contract. “In a liability 

contract, the insurer agrees to cover liability for damages. If the 

insured is liable, the insurance company must pay the damages. 

In an indemnity contract, by contrast, the insurer agrees to 

reimburse expenses to the insured that the insurer is liable to 

pay and has paid.” (Okada v. MGIC Indem. Corp. (9th Cir. 1986) 

823 F.2d 276, 280.)

As noted, provision I.A.(3) provides that “[AXIS] shall pay 

on behalf of [Aletheia] Loss which [Aletheia] pays as 

indemnification to the [Directors] arising from a Claim first made 

during the Policy Period for any Wrongful Act(s).” According to 

the Trustee, notwithstanding the provision’s reference to the 

883.) Here, although the June 7, 2021, judgment is not a final 

judgment, neither party has indicated it was misled or prejudiced

by the notice of appeal. Additionally, the only judicial act 

occurring on July 6, 2021, was the notice of entry of judgment, 

which included as an attachment the signed June 7, 2021, 

judgment. Accordingly, we deem Aletheia’s notice of appeal 

sufficient for purposes of appeal.
15

term “indemnification,” the provision is ambiguous because the 

term “[AXIS] shall pay on behalf of [Aletheia]” is contrary to an 

indemnification agreement as “an insurer cannot pay an 

obligation on behalf of its insured if the insured is required to 

first pay that obligation.” The Trustee further argues that this

purported ambiguity must be construed against AXIS. We 

disagree.

“‘[L]anguage in a contract must be interpreted as a whole, 

and in the circumstances of the case, and cannot be found to be 

ambiguous in the abstract . . . . Courts will not strain to create 

an ambiguity where none exists.’” (Inns-by-the-Sea v. California 

Mutual Ins. Co. (2021) 71 Cal.App.5th 688, 698.) Because there 

are few California appellate decisions dealing with director and 

officer policies, “‘California courts often look to decisions of 

California federal courts and out-of-state cases in resolving 

coverage issues and interpreting policy provisions.’” (August 

Entertainment, Inc. v. Philadelphia Indemnity Ins. Co. (2007) 146 

Cal.App.4th 565, 577.)

Pan Pacific Retail Properties, Inc. v. Gulf Ins. Co. (9th Cir. 

2006) 471 F.3d 961 (Pan Pacific) is instructive. The coverage 

provision in that case was included in a section of the agreement

entitled “Company Reimbursement,” and provided for “coverage 

where the insurer agreed to ‘pay on behalf of the Company Loss 

for . . . which the Company has, to the extent permitted or 

required by law, indemnified the Directors and Officers, and 

which the Directors and Officers have become legally obligated to 

pay as a result of a Claim . . . where such Claim is first made 

during the Policy Period . . . against the Directors and Officers 

. . . for a Wrongful Act which takes place during or prior to the 

Policy Period.’” (Id. at p. 972.) The Ninth Circuit concluded that 
16

“[t]he requirement that the Company ‘has indemnified’ its 

directors and officers appears to require that the Company must 

in fact make payments on behalf of its officers and directors. A 

requirement that the Company make actual payments on behalf 

of its directors and officers agrees with the caption ‘Company 

Reimbursement,’ which is typically considered to require an outof-pocket loss by the party seeking reimbursement.” (Ibid.)

Similarly, here, provision I.A.(3) is part of a section entitled 

“INSURED ADVISER PROFESSIONAL AND MANAGEMENT 

LIABILITY INSURANCE AND CORPORATE 

REIMBURSEMENT.” “Reimbursement” “typically . . . require[s] 

an out-of-pocket loss by the party seeking reimbursement.” (Pan 

Pacific, supra, 471 F.3d at p. 972.) Indeed, “reimburse” means “to 

pay back to someone.” (Meriam-Webster Dict. online, 

<http://www.merriam-webster.com/dictionary/reimburse> [as of 

Mar. 13, 2024], archived at < https://perma.cc/JW88-9ENC>.) 

Further, provision I.A.(3) requires payment only for “Loss which 

[Aletheia] pays as indemnification” to its Directors. Accordingly, 

the trial court did not err when it interpreted provision I.A.(3) as 

creating an indemnity policy. (See also Civ. Code, § 2778 [“In the 

interpretation of a contract of indemnity, the following rules are 

to be applied, unless a contrary intention appears: [¶] . . . [¶] 

Upon an indemnity against claims, or demands, or damages, or 

costs, expressly, or in other equivalent terms, the person 

indemnified is not entitled to recover without payment 

thereof”].)9

9 In arguing that the trial court’s interpretation of provision 

I.A.(3) is unreasonable, the Trustee submits that the court’s 

interpretation differed from that of the district court in the 

Houston Coverage Action. According to the Trustee, the district 
17

2. Proctor Settlement Agreement’s Exclusion of

Claims against Directors

The Trustee next contends the trial court prejudicially 

erred when it ruled that the funds the Trustee agreed to pay to 

Proctor under the terms of the Proctor Settlement Agreement fell 

outside the scope of Aletheia’s claimed damages against AXIS. 

According to the Trustee, the court’s ruling violated its 

constitutional right to a jury trial on certain factual issues.

As we explained above, provision I.A.(3) of the Houston 

Policy created an indemnity policy, which obligated AXIS to pay 

Aletheia any damages, judgments, settlements, costs, charges, 

and expenses, which Aletheia “pa[id] as indemnification to [the 

Directors].” The trial court found that the funds Aletheia agreed 

to pay under the terms of the Proctor Settlement Agreement were 

not covered by the AXIS Policy. In the court’s view, such 

payments could not be construed as an indemnification of the 

Directors because the claims against the Directors were expressly 

excluded from the Proctor Settlement Agreement.

court “ordered [Houston] to pay defense fees as incurred by 

Aletheia in the Proctor Litigation, not reimbursed to Aletheia 

after it paid said fees.” (Emphasis original.) Even assuming that 

the district court’s ruling, which considered the different issue of 

whether the claim fell within the 2009–2010 coverage period, 

could be construed as interpreting the Houston Policy as a 

liability, rather than an indemnity, policy, federal district court 

opinions are not binding on Courts of Appeal. (Markow v. Rosner

(2016) 3 Cal.App.5th 1027, 1043, fn. 8.) Moreover, the district 

court ruling would not be binding on AXIS because AXIS was 

neither a party to the case nor in privity with Houston. (See 

Dawson v. Toledano (2003) 109 Cal.App.4th 387, 394.)
18

A party is entitled to a jury trial on certain factual issues. 

(Code Civ. Proc., § 592.) “All questions of law (including but not 

limited to questions concerning the construction of statutes and 

other writings, the admissibility of evidence, and other rules of 

evidence) are to be decided by the court.” (Evid. Code, § 310, 

subd. (a); Code Civ. Proc., § 591 [“An issue of law must be tried by 

the court”].) “A settlement agreement is interpreted according to 

the same principles as any other written agreement. [Citation.] 

It must be interpreted to give effect to the mutual intent of the 

parties as it existed at the time, insofar as that intent can be 

ascertained and is lawful. [Citations.] If the language of the 

agreement is clear and explicit and does not involve an absurdity, 

determination of the mutual intent of the parties and 

interpretation of the contract is to be based on the language of 

the agreement alone. [Citations.]” (Leeman v. Adams Extract & 

Spice, LLC (2015) 236 Cal.App.4th 1367, 1374.) Additionally, 

“[t]he court generally may not consider extrinsic evidence of any 

prior agreement or contemporaneous oral agreement to vary or 

contradict the clear and unambiguous terms of a written, 

integrated contract. (Code Civ. Proc., § 1856, subd. (a); Cerritos 

Valley Bank v. Stirling (2000) 81 Cal.App.4th 1108, 1115–1116; 

Principal Mutual Life Ins. Co. v. Vars, Pave, McCord & Freedman

(1998) 65 Cal.App.4th 1469, 1478 [parol evidence may not be 

used to create a contract the parties did not intend to make or to 

insert language one or both parties now wish had been included].)

Extrinsic evidence is admissible, however, to interpret an 

agreement when a material term is ambiguous.” (Wolf v. Walt 

Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 

1126.)10

10 Aletheia conceded during oral argument that neither party 
19

The Proctor Settlement Agreement provided that Proctor 

would “fully and completely release, acquit and forever discharge, 

Aletheia . . . from any and all claims, causes of action, liabilities,

obligations, debts, attorneys’ fees, [and] indemnities . . . .” It then 

specified: “For the avoidance of doubt, [the Proctor] Released 

Claims do not and are not intended to include claims, causes of 

action, liability, or demands that were brought or could have been 

brought against Eichler, Barnes or Peikin and nothing in this 

Agreement shall be deemed to release any claims that [Proctor] 

ha[s] against Eichler, Peikin or Barnes.” Moreover, the Proctor 

Settlement Agreement included a recital that “on March 27, 

2013, Proctor dismissed with prejudice its claim against Lee in 

the Aletheia/Proctor Action pursuant to a settlement that Proctor 

entered into with Lee . . . .” Finally, Proctor agreed to dismiss 

with prejudice its claims against Aletheia, but it dismissed 

without prejudice its claims against Eichler, Peikin, and Barnes

(the unreleased Directors). The settlement with Lee outside of 

the Proctor Settlement Agreement, the refusal to release the 

unreleased Directors, and the dismissal without prejudice of the 

claims against those Directors, demonstrate a clear intent by 

Proctor and the Trustee to resolve Proctor’s claims against 

Aletheia but not against the Directors.

The Trustee nonetheless contends that the Proctor 

Settlement Agreement resolved Proctor’s breach of fiduciary duty 

claim against the Directors. The Trustee interprets the terms of 

the Proctor Settlement Agreement as dismissing Proctor’s claims 

against the Directors with prejudice because those claims would 

be time-barred if refiled; and, if “Proctor sought to resurrect the 

covered breach of fiduciary duty claim, it would have triggered 

presented extrinsic evidence on the meaning of provision I.A.(3).
20

Aletheia’s indemnification obligation and, thus, breached the 

release in the Proctor Settlement [Agreement] given to Aletheia.”

The Trustee’s proffered interpretation is contrary to the 

plain language of the Proctor Settlement Agreement. “If a 

contract’s language is clear and unambiguous, intent is 

determined solely by the language within the four corners of the 

contract.” (Filtzer v. Ernst (2022) 79 Cal.App.5th 579, 584.) 

Proctor and the Trustee were the only parties to the Proctor 

Settlement Agreement, and, Aletheia’s indemnification 

obligations to the unreleased Directors, if any, are outside the 

scope of that agreement. Moreover, the Proctor Settlement

Agreement expressly excluded from the release Proctor’s claim 

against the Directors. Thus, the Directors’ liability for the breach 

of fiduciary duty claim remained unresolved by the Proctor 

Settlement Agreement and the Trustee’s obligation under that 

agreement cannot be deemed a payment in indemnification to the 

Directors.

Accordingly, we find the trial court did not err by finding, 

as a matter of law, that the funds the Trustee agreed to pay to 

Proctor under the Proctor Settlement Agreement was not a

covered Loss under provision I.A.(3) of the Houston Policy. And, 

the Trustee therefore was not denied its right to a jury trial.11

11 Because we affirm this ruling, we need not discuss the 

Trustee’s arguments that it did not have to prove the Proctor 

Settlement was a covered claim.
21

3. Corporations Code section 317

According to the Trustee, “[t]he [t]rial court erred in ruling 

that Aletheia must establish it complied with California 

Corporations Code section 317, or that it was excused compliance, 

to establish coverage under [provision I.A.(3)].” (Original 

capitalization and boldface omitted.) The Trustee’s argument, 

however, misinterprets the trial court’s order. The court rejected 

AXIS’s argument that the Trustee was required to demonstrate it 

complied with Corporations Code section 317, “unless Aletheia 

claims that the Directors were entitled to indemnification on this 

basis.” In so ruling, the court expressly acknowledged that 

Corporations Code section 317 was not the exclusive means by 

which a corporation could indemnify its directors. Thus, 

Aletheia’s complaint about the court’s ruling on the applicability 

of Corporations Code section 317 is meritless.

Moreover, we reject as inapposite Aletheia’s contention that 

“[t]he evidence at trial will demonstrate that Aletheia 

indemnified . . . Directors against their costs to defend the 

Proctor Litigation by providing them a joint defense with 

Aletheia, which Aletheia incurred fees and paid for.” By 

foregoing trial and consenting to a judgment against it, the 

Trustee has forfeited any argument about what the evidence at 

trial would have shown. (See Villano v. Waterman Convalescent 

Hospital, Inc. (2010) 181 Cal.App.4th 1189, 1200 (Villano) [in

appeal of stipulated judgment, “the appellant has ‘“the burden of 

showing reversible error by an adequate record.” [Citation.] One 

aspect of that burden requires that the appellant develop the 

fullest possible evidentiary record before seeking review’”].)
22

To the extent the Trustee contends the trial court erred by 

finding it would “bear the burden to demonstrate that it has paid 

indemnification for the relevant Directors, including 

demonstrating it complied with all statutory requirements or 

that it was excused from compliance, and not simply that 

Aletheia paid legal fees incurred in a common defense,” the 

Trustee has failed to cite any legal authority for the proposition

that payments made in violation of relevant statutory authority 

are recoverable. It therefore has not satisfied its burden on 

appeal. (See Villano, supra, 181 Cal.App.4th at p. 1200

[appellant has burden to show prejudice in appeal from 

stipulated judgment].)

4. Insurance Code section 11580

The Trustee next contends that the trial court erred by 

finding that provision I.A.(3) is not subject to Insurance Code 

section 11580. The Trustee, however, does not articulate how it 

has been prejudiced by this ruling. The record on appeal 

demonstrates that AXIS asserted in its trial brief that the 

“allowed claim in bankruptcy does not constitute [a] Loss 

resulting from a Wrongful Act” under provision I.A.(3). The 

Trustee responded that Insurance Code section 11580 applied

and required AXIS to cover Aletheia’s damages, regardless of 

Aletheia’s bankruptcy, including its obligations under the Proctor 

Settlement Agreement. The trial court ruled that “while 

Insurance Code[] section 11580 would not appear to apply to the 

claims at hand, the policy itself would appear to allow recovery if 

the Settlement Amount were recoverable as losses or damages.”

Accordingly, the court’s ruling did not prevent the Trustee from 
23

proving at trial that, despite the bankruptcy proceedings, it was 

entitled to recover appropriate damages against AXIS. The 

Trustee therefore has failed to demonstrate that it was 

prejudiced by any assumed error by the court. (Villano, supra, 

181 Cal.App.4th at p. 1200.)

B. Motions in Limine

Finally, we address the Trustee’s arguments concerning the 

trial court’s rulings on AXIS’s motions in limine. “The trial court 

enjoys ‘broad authority’ over the admission and exclusion of 

evidence. [Citation.] We review a trial court’s ruling on a motion 

in limine to exclude evidence for an abuse of discretion. 

[Citations.] The trial court’s authority is particularly broad ‘with 

respect to rulings that turn on the relevance of the proffered 

evidence.’ [Citation.] Furthermore, ‘[i]t is for the trial court, in 

its discretion, to determine whether the probative value of 

relevant evidence is outweighed by a substantial danger of undue 

prejudice. The appellate court may not interfere with the trial 

court’s determination . . . unless the trial court’s determination 

was beyond the bounds of reason and resulted in a manifest 

miscarriage of justice.’ [Citation.]” (McCoy v. Pacific Maritime 

Assn. (2013) 216 Cal.App.4th 283, 295–296.)

“We review claims of evidentiary error for prejudice 

applying the ‘“miscarriage of justice”’ or ‘reasonably probable’

harmless error standard. [Citations.] Thus, an erroneous 

evidentiary ruling requires reversal only if ‘“there is a reasonable 

probability that a result more favorable to the appealing party 

would have been reached in the absence of the error.”’ 
24

[Citation.]” (D.Z. v. Los Angeles Unified School Dist. (2019) 35 

Cal.App.5th 210, 231.)

For motion in limine No. 2, the Trustee asserts that the 

trial court’s ruling, excluding evidence about the cause of

Aletheia’s bankruptcy, violated the Trustee’s right to “a ‘full and 

fair opportunity to state all the facts in its favor.’” The Trustee 

cites in support Amtower v. Photon Dynamics, Inc. (2008) 158 

Cal.App.4th 1582, 1595, which held that a trial court’s use of the 

in limine process to dispose of a case or cause of action is 

reviewed like a grant of nonsuit motion after opening statement. 

We disagree with the Trustee. Evidence about the cause of 

Aletheia’s bankruptcy would, at best, demonstrate the extent of 

damages that the Trustee could recover for its claim of bad faith 

denial of insurance coverage. The court’s exclusion of such 

evidence did not preclude the Trustee from proving its claim at 

trial. Moreover, on this record, we find the court did not abuse its 

discretion by concluding the probative value of evidence about the 

cause of Aletheia’s bankruptcy was marginal and substantially 

outweighed by the probability that such evidence would confuse 

the issues and necessitate undue consumption of time.

As to the trial court’s rulings on motions in limine Nos. 15 

and 16, the basis for the Trustee’s arguments on appeal is that 

the court erred by finding that the Proctor Settlement Agreement

was not a covered claim under provision I.A.(3). Because we 

affirm the court’s ruling as to the Proctor Settlement Agreement, 

we find the Trustee was not prejudiced by the court’s in limine 

orders.
25

IV. DISPOSITION

The judgment is affirmed and AXIS’s cross-appeal is 

dismissed. AXIS is awarded costs on Aletheia’s appeal and 

Aletheia is awarded costs on AXIS’s cross-appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KIM, J.

We concur:

BAKER, Acting P. J.

LEE, J.*

* Judge of the San Bernardino Superior Court, assigned by 

the Chief Justice pursuant to article VI, section 6 of the 

California Constitution.