Court Opinion

ID: 9950805
Source: CourtListenerOpinion
Date Created: 2024-03-14 20:03:05.386297+00
Date Added: 2024-06-11T14:36:47.799326
License: Public Domain

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   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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                                       B314925
COMPANY,
                                                             (Los Angeles County
     Plaintiff, Cross-                                       Super. Ct. No. BC485198)
Defendant, and Appellant,

         v.

ALETHEIA RESEARCH AND
MANAGEMENT, INC.,

    Defendant, Cross-
Complainant, and Appellant.

      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.
     Baker, Keener & Nahra and Phillip A. Baker; BG Law,
Steven T. Gubner and Jason B. Komorsky, for Defendant, Cross-
Complainant, 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”].)

                                 2
                      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.)

                                 3
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

                                4
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.

                                 5
      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

                                  6
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 cross-
complaint, 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

                                 7
       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, non-
priority, 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, non-
priority, 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.

                                 8
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.

                                 9
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

                                10
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

                                 11
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.”

                                 12
      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 long-
standing ‘“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–

                                 13
                       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.

                                 14
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

                                  15
“[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 out-
of-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

                                  16
      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.)

                                 17
       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

                                 18
      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).

                                  19
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.

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      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’”].)

                                 21
       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

                                22
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.”’

                                23
[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.

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                        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.

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