American Master Lease v. Idanta Partners CA2/7 ( 2014 )


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  • Filed 2/25/14 American Master Lease v. Idanta Partners CA2/7
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 SEVEN
    AMERICAN MASTER LEASE LLC,                                           B244689
    Plaintiff and Respondent,                                   (Los Angeles County
    Super. Ct. No. BC367987)
    v.
    IDANTA PARTNERS, LTD. et al.,
    Defendants and Appellants.
    APPEAL from a judgment and an order of the Superior Court of Los Angeles
    County, Ramona G. See, Judge. Affirmed in part and reversed in part with directions.
    Lathrop & Gage, John Shaeffer, Jeffrey Grant and Emily Birdwhistell for
    Defendants and Appellants.
    Mayer Brown, Donald Falk; Mayer Brown, Neil M. Soltman and Germain D.
    Labat for Plaintiff and Respondent.
    ____________________
    INTRODUCTION
    Defendants Idanta Partners, Ltd., David J. Dunn, Steven B. Dunn, and the Dunn
    Family Trust appeal from a judgment on a jury verdict in favor of plaintiff American
    Master Lease LLC and from an order denying their motion for judgment notwithstanding
    the verdict. The jury found defendants liable for aiding and abetting breach of fiduciary
    duty and awarded restitution in the amount of approximately $5.8 million. Defendants
    argue that the judgment must be reversed because they cannot be liable for aiding and
    abetting breach of fiduciary duty in the absence of a duty owed directly to the plaintiff,
    and because the aiding and abetting claim is barred by the applicable statute limitations.
    We find no merit in these contentions, but we do conclude that defendants are entitled to
    a new trial on the amount of defendants’ unjust enrichment. We therefore affirm in part
    and reverse in part for a new trial on the amount of restitution.
    FACTUAL AND PROCEDURAL BACKGROUND1
    A.     American Master Lease LLC (AML)
    Neal Roberts formed AML in 1998 for the purpose of investing in real estate. He
    observed that there were people his age who owned real property but were reaching a
    point in their lives where they wanted to retire and did not want to continue actively
    managing their real estate investments. Roberts’ idea was to allow these investors to sell
    their real estate to a larger entity and then buy interests in the larger entity as tenants in
    common, which would allow them to avoid adverse tax consequences associated with the
    sale of the real estate. This investment vehicle became known as a 1031 FORT, where
    1      “We state the facts in the light most favorable to the jury’s verdict, resolving all
    conflicts and indulging all reasonable inferences to support the judgment.” (Green Wood
    Industrial Co. v. Forceman Internat. Development Group, Inc. (2007) 
    156 Cal.App.4th 766
    , 770, fn. 2.)
    2
    1031 referred to the section of the Internal Revenue Code applicable to real estate
    exchanges and FORT stood for Fractionalized Ownership in Real estate Tax deferred.
    AML initially had seven members. Roberts and three trusts that he set up for his
    wife, his son, and his daughter owned 75 percent of AML. Jim Andrews, the Roberts
    family lawyer, Charles “Duke” Runnels (Runnels), and Michael Franklin owned the
    remaining 25 percent. Andrews, Runnels, and Franklin had participated in a company
    Roberts formed prior to AML, and Roberts wanted them involved in AML. Roberts was
    the managing member of AML.
    The AML Operating Agreement included an agreement not to compete.
    Paragraph 3.9 provided: “The Members agree that the business of the LLC, either to sell
    AML Products[2] . . . directly to purchasers or to sell AML Products indirectly through an
    accommodator as part of a tax-exempt transaction, is unique. . . . No Member, Principal
    of a Member or holder of an Economic Interest of a Member, may have any interest,
    directly or indirectly, in any business that offers to sell or exchange AML Products or is
    otherwise competitive with [AML], nor may any such Member, Principal or Economic
    Interest holder be employed by, or act as a consultant to, any such competitive business
    without the approval of a Majority In Interest of the Class A and Class B Members,
    voting as a Class. . . .”
    B.      The Dunns and Idanta Partners, Ltd. (Idanta)
    David J. Dunn was the founder and managing general partner of Idanta, a venture
    capital firm that for over 40 years had specialized in helping entrepreneurs create and
    finance new companies. David Dunn was also the sole trustee of the Dunn Family Trust,
    which held the bulk of his assets. David Dunn’s son, Steven, worked for Idanta for about
    two-and-a-half years and was a partner in Idanta for some of that time. Steven left Idanta
    in 1987 or 1988.
    2      Paragraph 1.4 of the Operating Agreement defines “AML Products” as “direct or
    indirect tenancy-in-common interests in real property.”
    3
    David Dunn and the other active partners owned about 20 percent of Idanta.
    Members of the Bass family, a wealthy Texas family engaged in the oil business, owned
    the other 80 percent as limited partners. The Bass family invested $7 or $8 million in
    Idanta.
    C.    AML Seeks Investment Partners
    AML needed an investment partner to provide funding to purchase commercial
    properties. The first partner, in the late 1990’s, was Ethan Penner and an entity he
    created for that purpose, T-Rex. Roberts knew about and approved the joint venture with
    T-Rex. The joint venture was supposed to pay the salaries of Runnels and Franklin, and
    Roberts contributed money to the joint venture to help pay for their compensation.
    Before the joint venture could complete any transactions, however, Penner withdrew for
    financial reasons, and the joint venture was dissolved in 1999.
    In January 2000 Roberts, Andrews, Runnels, and Franklin entered into a
    management agreement with AML. While Roberts remained the managing member and
    Chairman of the Board, Andrews, Runnels, and Franklin agreed to function as the
    operational management of AML (collectively the Operating Group). In addition, their
    interests in AML increased to 13-1/3 percent each, while Roberts’ interests decreased to
    60 percent. The management agreement also required Runnels and Franklin to use their
    best efforts to find a new investment partner.
    In July 2000 the Operating Group identified CB Richard Ellis as a potential
    investment partner. Again with Roberts’ knowledge and approval, AML entered into a
    relationship with the newly formed CB Richard Ellis Investors 1031 (CBREI). In
    December 2001 AML entered into an exclusive license agreement with CBREI for FORT
    transactions. During the course of the relationship CBREI grossed $86 million and paid
    AML $500,000.
    In the summer of 2003 CBREI lost its financing after its funding source refused to
    fund the transactions. That fall, Roberts told the Operating Group that they should
    4
    consider terminating AML’s relationship with CBREI and searching for a new
    investment partner.3
    At a November 7, 2003 AML board meeting, the Operating Group suggested two
    possibilities for a new investment partner: Idanta and Warburg-Pincus. A dispute arose
    at the meeting, however, between the Operating Group and Roberts. Roberts was
    concerned about protecting AML’s business method, while the Operating Group wanted
    to proceed with finding a new investment partner. Roberts vetoed the Operating Group’s
    proposal to pursue a new investment partner. Roberts then presented the Operating
    Group with an amendment to AML’s Operating Agreement, signed by him and the
    trustee of the three trusts. The purpose of the amendment was to make it “absolutely
    clear that no deal could get done without the approval of the majority interest in the
    company.”
    D.       Idanta and AML Explore the Possibility of a Relationship
    Steven Dunn played tennis with Tyler Runnels, Charles Runnels’ brother. In the
    fall of 2003 Tyler Runnels had Steven Dunn introduce him to David Dunn to discuss a
    loan to AML. Charles Runnels and Franklin were looking for a loan for a FORT
    transaction in conjunction with the CBREI joint venture. David Dunn initially refused to
    provide a loan commitment. At some point, however, he provided a loan commitment of
    $5.1 million in exchange for $177,000, but he never had to make the loan. David Dunn
    later tried to put together a joint venture between Idanta and CBREI but was
    unsuccessful.
    In January 2004 David Dunn proposed a transaction that would not include
    CBREI. Idanta would form and finance a new company in which Idanta would own 80
    percent, Runnels and Franklin would own 15 percent and manage the company, and
    3      In December 2003 AML converted CBREI’s exclusive license to a nonexclusive
    license and gave CBREI time to find new financing or face termination of the agreement
    with AML.
    5
    AML would own 5 percent. This proposal was unacceptable to Roberts because Runnels
    and Franklin would be “getting far too much of the deal when, in fact, it’s an AML
    deal . . . .” Roberts also objected to the interest rate Idanta wanted to charge for loans to
    the new company, and he did not want to grant the new company an exclusive license to
    engage in FORT transactions.4
    On January 13, 2004 David Dunn met with Runnels to discuss the situation. He
    told Runnels that he was “still interested” in the transaction. He gave Runnels “a lot of
    good reasons why he [was] better off with an independent entity like Idanta as opposed to
    being tied to a major realty firm” like CBREI.
    By the end of January 2004 the relationship between Roberts and the Operating
    Group was strained. Roberts and the Operating Group retained separate legal counsel.
    Roberts was allowed to speak with representatives of Idanta only if Franklin introduced
    him and was present at the meeting.
    On February 5, 2004 Franklin wrote to Roberts to set up a meeting with Steven
    Dunn. He urged Roberts to review the paperwork, “which shows that the IDANTA offer
    has an approximate value of $26.5 Million to AML with the majority of that coming from
    FORT sales activity. . . . You seem willing to ‘bet the farm’ on potential licensing
    revenue when we certainly have an excellent opportunity to be in business immediately,
    producing FORT’s, generating income and creating value.”
    On February 10, 2004 Andrews, Runnels, and Franklin sent Roberts a compromise
    proposal regarding the proposed new company. Under this proposal, “AML [would]
    accept the Idanta proposal and issue it an exclusive license of the AML business
    method . . . .” The agreement not to compete would be eliminated from AML’s
    4      At the time AML had granted exclusive licenses to T-Rex and CBREI, no one else
    was engaging in FORT transactions. According to Roberts, “by the time we get to 2004,
    there’s a whole bunch of companies that seemed to be stealing our ideas that you could
    have gone after who were doing billions of dollars of business, and so I wasn’t about to
    give that to some venture capital entity to take care of because I didn’t think they knew
    anything about it.”
    6
    Operating Agreement. The November 2003 amendment to the Operating Agreement
    would be rescinded, and any future amendments would require the approval of the
    Operating Group.
    On February 19, 2004 Roberts presented the Operating Group with his
    counterproposal. His “central policy issue” was the protection of AML’s intellectual
    property. He proposed entering into a joint venture with Idanta, with AML having at
    least a 20 percent interest in the new company. AML would grant the new company a
    nonexclusive license to use the AML business method. The Operating Group sent
    Roberts’ proposal to Steven Dunn, who forwarded it to David Dunn.
    In late February 2004 Roberts met with Steven Dunn. Roberts told Steven Dunn
    that he did not approve of David Dunn’s proposal and that they “had to work out a way to
    go forward that was acceptable to the controlling members, . . . majority in interest in”
    AML. Roberts told Steven Dunn about disputes with the Operating Group and “that I
    controlled the company. And I also specifically told him—I think I used the phrase ‘dirty
    linen,’ that we would attempt to clean up the ‘dirty linen’ if we were going to proceed.”
    E.     The Operating Group Forms a New Company and Grants It a License;
    Idanta and the Dunns Buy Into It
    In approximately mid-March 2004 Runnels incorporated FORT Properties, Inc.
    (FPI), with himself and Franklin as FPI’s owners. David Dunn had already negotiated
    with Runnels and Franklin an ownership interest in FPI for himself, the Dunn Family
    Trust, and Idanta. Initially, Runnels and Franklin owned 100 percent of the shares of
    FPI. In April 2004 defendants purchased preferred shares in FPI for $2.3 million, which
    gave defendants an 85 percent ownership interest in FPI. The Operating Group, on
    behalf of AML, then granted FPI a nonexclusive license to use AML’s business method.
    Runnels signed the licensing agreement on behalf of FPI; Andrews, Runnels, and
    Franklin signed on behalf of AML.
    On March 15, 2004 David Dunn wrote to Sid Bass, one of Idanta’s partners, about
    the deal. David Dunn expressed his belief that “we are involved with first-rate
    7
    professionals who have an opportunity to build a very large strongly financed business.”
    David Dunn further stated that “once we have done a couple of successful transactions
    and, again, this management has done successful transactions, we will be able to increase
    the number of deals we do through obtaining additional layers of capital. We also believe
    that if we become the major player in the industry, we will have a very attractive vehicle
    for a public offering.” David Dunn explained that Runnels and Franklin “finally lost
    patience with CBRE” due to the failure to provide the promised financing. While “the
    majority holder” of AML’s business method (i.e., Roberts) wanted to go after infringers,
    Runnels and Franklin were not interested in pursuing this course of action. They
    intended to draft a non-exclusive license for FPI to use the business method. Andrews,
    Runnels, and Franklin, “as the operating people (non-employees) of AML will inform the
    majority . . . holder of their action sending him copies of the FORT Property license and a
    copy of the deposited check” for the license.
    Runnels and Franklin wrote to Roberts on March 17, 2004 that his February 19
    proposal “misse[d] the mark.” They explained: “Your opposition to any exclusive
    license arrangement is noted, and as a result we have been actively seeking parties in
    addition to CBREI who are willing to enter into nonexclusive licenses. In this regard, the
    Operating Group has granted a nonexclusive license to [FPI], a newly formed entity.”
    The royalty rate was the same as the royalty rate paid by CBREI, and FPI paid an
    advance against royalties of $50,000. Runnels and Franklin stated that they “believe[d]
    the license agreement with FPI is fair and reasonable and can provide a launching pad for
    the AML licensing operation.”
    Runnels and Franklin also stated that Roberts’ proposal that they work for the
    proposed venture between AML and a new company was unacceptable. They pointed
    out that they “have never been employees of AML and do not plan to be in the future.”
    They also stated that they had been informed by counsel that paragraph 3.9 of the AML
    Operating Agreement was “an unenforceable attempt to restrict employment under
    California law.” They notified Roberts that “[Runnels] has decided to join FPI as its
    8
    President with a view to bringing it into the 1031 TIC[5] business. [Runnels] and other
    management personnel will purchase an equity interest in FPI. [Franklin] will likely also
    accept an offer for employment and affiliate himself with FPI.”
    Roberts received the letter on March 22, 2004. He researched FPI and discovered
    that Runnels was its the sole incorporator. He sent an email to Runnels and Franklin
    stating that he was “obviously disheartened” to learn of their conclusion that his proposal
    “‘misse[d] the mark’ but [was] hopeful that your comments about moving forward to
    protect the Company’s intellectual property and generate revenue can lead to an
    agreement in that sphere.” He also stated his belief that Runnels and Franklin were
    “bound by the non-compete provisions of the operating agreement and that you have
    never had the authority to make exclusive or non-exclusive licenses on behalf of the
    company . . . .”
    Runnels forwarded the email to David Dunn. David Dunn was aware that the
    authority of Runnels and Franklin to enter into the license agreement was questionable,
    but he let his son Steven, who knew about licenses, deal with the issue. Having read the
    email, however, David Dunn did not believe that Roberts had vetoed the license
    agreement. Franklin later reported to David Dunn that he had met with Roberts and
    given him the $50,000 check for the advance against royalties. After discussing the
    matter, Roberts said, “‘I don’t know whether this is the best thing that ever happened to
    us or whether I’ve been f’d.’ And [Franklin] said he told him it was the best thing that
    ever happened to him.”
    F.     Roberts Objects
    On September 28, 2004 Roberts’ attorney, Neil M. Soltman, wrote to Steven
    Dunn. He stressed that Roberts and his family owned a majority interest in AML, and
    that AML owned a business method for performing tax-deferred real estate exchanges.
    5      Tenant in common.
    9
    “The 1998 Operating Agreement . . . specifically provides that without the approval of a
    majority in interest of AML’s owners, no member of AML may have any interest,
    directly or indirectly, in any business that offers to sell or exchange AML products or is
    otherwise competitive with AML, nor may any member be employed by or act as a
    consultant to any such competitive business. Neither the 2003 Amendment to the
    Operating Agreement nor any side agreement signed by some of the members of the
    company in any way changed these provisions.” Soltman noted that Roberts had learned
    that Runnels had formed FPI “and that three members of AML ([Andrews, Runnels, and
    Franklin]) who do not collectively own a majority in interest in AML have executed a
    document which purports to grant a non-exclusive license of the AML [business method]
    to FPI. At no time has the majority in interest of AML’s owners approved of that
    license.” Having learned of the investment in FPI by Idanta and the Dunns, Soltman
    informed them that the license was not authorized. Soltman advised: “If the actions of
    the three individuals are, as we are now of the opinion, in breach of their duties under the
    AML Operating Agreement and their fiduciary duties to AML . . . , it then follows that all
    compensation that they receive of any type . . . does and will continue to belong to AML.
    Since at least one of the three individuals formed FPI and executed the license on behalf
    of FPI and AML, FPI is on notice that all such compensation is to be held in trust for the
    benefit of AML. [¶] In addition, if FPI knowingly infringes the AML [business method],
    FPI will be liable to AML for all proceeds from the enterprise and for all available
    damages and remedies under the patent laws of the United States and similar state and
    federal laws or decisions.” Steven Dunn sent Soltman’s letter to David Dunn, who now
    understood that Roberts was objecting to the transaction.
    On October 25, 2004 counsel for Idanta responded to the letter and stated that
    “Steve Dunn is not affiliated with Idanta Partners. Furthermore, the investment that you
    mentioned by Idanta Partners in Fort Properties, Inc. has been concluded. [¶] Since it
    appears that the matters you raise in your letter concern disputes between Neal Roberts
    and the other members of AML . . . , Idanta partners believes it is appropriate for those
    10
    parties to resolve those matters among themselves without the involvement of Idanta
    Partners.”
    G.     FPI’s FORT Transactions
    Within a month after Soltman sent his letter, FPI cancelled the license agreement
    with AML. FPI engaged in several FORT transactions without AML, with its first FORT
    transaction closing in November 2004. Idanta and the Dunn Family Trust provided
    financing for these transactions in the amount of $2.5 million “[p]lus a commitment to
    put in up to 25 million for subordinated loans on [each] individual [FORT] transaction.”
    FPI paid Idanta and the Dunn Family Trust $2,450,000 in interest on total loans of
    approximately $74 million, at prime plus 8 percent.
    H.     Roberts Institutes Arbitration Proceedings Against Andrews, Runnels,
    and Franklin
    At some point Roberts commenced arbitration proceedings against Andrews,
    Runnels, and Franklin. On December 4, 2008 the arbitrator issued a final arbitration
    award, finding that some of the conduct by Runnels and Franklin constituted a breach of
    their fiduciary duties to AML, and some of it did not. “[T]he Arbitrator found [that] the
    appropriate remedy was an equitable remedy of requiring Runnels and Franklin to
    transfer a certain percentage of the [FPI] shares to Roberts based on his 60% ownership
    in AML.” Roberts filed a petition to confirm the arbitration award, but the parties to the
    arbitration settled their disputes and Roberts dismissed the petition. (Roberts v. Andrews
    (Super. Ct. L.A. County, 2009, No. BS120091).)
    I.     Idanta and the Dunn Family Trust End Their Relationship With FPI
    On March 15, 2007 AML filed this action against Idanta, the Dunn Family Trust,
    David Dunn and Steven Dunn, and Jonathan Huberman,6 one of Idanta’s partners. AML
    6      Huberman is not a party to this appeal.
    11
    alleged causes of action for aiding and abetting breach of fiduciary duty, inducing breach
    of contract, conspiracy to induce breach of contract, interference with contractual
    relations, conspiracy to interfere with contractual relations, unfair competition, and unjust
    enrichment.
    A few months later, in June 2007, FPI agreed to pay Idanta and the Dunn Family
    Trust $5.8 million for the preferred stock they had purchased in April 2004 for $2.3
    million. The initial payment for the repurchase of the stock was $2.9 million, with the
    payment of another $2.9 million after closing.7 FPI made the first $2.9 million payment,
    and then paid $300,000 towards the second $2.9 million payment. Idanta and the Dunn
    Family Trust agreed to accept an additional $100,000 in lieu of the remaining $2.6
    million owed on the second payment. From March 2004 through December 2009 FPI
    experienced a net loss of about $600,000 to $700,000.
    J.     The Litigation
    1.     Rulings on the Pleadings
    On July 5, 2007 defendants filed a demurrer to AML’s first amended complaint.
    They argued in part that AML could not state a claim for aiding and abetting a breach of
    fiduciary duty because they did not owe a fiduciary duty to AML. The trial court, Hon.
    Edward Ferns, sustained the demurrer with leave to amend. The court ruled that while a
    7       It is unclear from the record whether the second payment from FPI to defendants
    was a fixed $2.9 million or some percentage of FPI’s profits that may have been valued at
    $2.9 million. AML’s expert, Kelly Melle, testified that there was a “closing payment” of
    $2.9 million and a “post closing payment” of another $2.9 million. During discussions
    with the court over the jury instructions, however, counsel for AML stated that the terms
    of defendants’ sale of their stock back to FPI had “a cash component” (presumably the
    first $2.9 million payment) and a “retained . . . future profit interest” in FPI of “25
    percent of [FPI’s] profits,” and that Melle was going to value this “25 percent profit
    interest” at over $2 million. Neither side points to any direct evidence of the terms of this
    transaction, and the copy of Melle’s demonstrative exhibit that might shed light on this
    issue is illegible. For purposes of this appeal, we assume that the June 2007 transaction
    between defendants and FPI contemplated two $2.9 million payments.
    12
    defendant must owe an independent duty to the plaintiff in order to be liable for
    conspiracy to breach that duty (Applied Equipment Corp. v. Litton Saudi Arabia Ltd.
    (1994) 
    7 Cal.4th 503
    , 510-511), a defendant need not owe an independent duty to the
    plaintiff in order to be liable for aiding and abetting a breach of that duty (Casey v. U.S.
    Bank Nat. Assn. (2005) 
    127 Cal.App.4th 1138
    , 1144). In other words, the court ruled that
    aiding and abetting is an independent tort even though conspiracy is not. The court
    nevertheless sustained the demurrer to AML’s aiding and abetting cause of action on the
    ground AML had failed to plead sufficient facts to state a cause of action for aiding and
    abetting a breach of fiduciary duty by Andrews, Runnels, and Franklin. Specifically, the
    court ruled that AML had not sufficiently alleged that defendants knew the conduct of
    Andrews, Runnels, and Franklin constituted a breach of fiduciary duty, or that defendants
    gave the three of them substantial assistance or encouragement.
    On June 27, 2008 AML filed its fourth amended complaint alleging causes of
    action for aiding and abetting a breach of fiduciary duty, interference with contract,
    unfair competition, and unjust enrichment. The trial court sustained defendants’
    demurrer to the causes of action for unfair competition and unjust enrichment without
    leave to amend. The court ruled that although the conduct of Andrews, Runnels, and
    Franklin “in unfairly competing with [AML] may be considered” unfair competition,
    AML was not entitled to injunctive relief or disgorgement under “California’s unfair
    competition law.”
    2.     Defendants’ Motion for Summary Judgment
    On June 26, 2009 defendants filed a motion for summary judgment or in the
    alternative summary adjudication. They argued that the arbitrator’s ruling on AML’s
    breach of fiduciary duty claim was collateral estoppel on AML’s claim in this action, and
    that the arbitrator’s equitable remedy gave Roberts “complete satisfaction.” Defendants
    also argued that they could not be liable for interference with contract because
    paragraph 3.9 of the AML Operating Agreement, the agreement not to compete, was void
    and unenforceable. The trial court denied the motion on the grounds the parties in this
    13
    case were not the same as the parties in the arbitration and that the unconfirmed
    arbitration award was not binding. The court did not address the validity of the non-
    competition agreement.
    3.     Evidence of the Unjust Enrichment
    After multiple continuances, the trial finally began on June 13, 2012 before Judge
    Ramona See.8 During the trial, AML’s expert, Melle, testified that he was “asked to
    compute the dollar amount of the benefit that the defendants received [as of June 13,
    2012] from a revolving loan agreement and a preferred stock sale.”9 Melle calculated
    that defendants earned $2,328,892 interest on loans to FPI between 2004 and 2007, and
    that with prejudgment interest the total amount of this benefit was $3,399,287. The jury
    did not award this amount.
    Melle also “did an analysis of the benefits [defendants] received” from the June
    2007 sale of their FPI stock. The “sale called for a payment of 2.9 million dollars and
    then following the closing, other payments of another 2.9 million, for a total of 5.8
    million dollars or 5,808,826 dollars.” Adding interest through June 13, 2012, Melle
    calculated that the total amount of this benefit was $7,075,891.
    Melle acknowledged that shortly after he had performed his calculations, “there
    were payments of about 300,000 dollars,” and that defendants subsequently “took
    100,000 dollars instead of [the remaining] 2.6 million.” Melle’s calculations, however,
    did not take into account the fact that defendants did not receive all of the second $2.9
    8     On February 27, 2012 the parties stipulated to a waiver of the five-year period in
    which to commence trial. (See Code Civ. Proc., §§ 583.310, 583.330, subd. (a).)
    9       Defendants had filed a motion in limine seeking to exclude evidence of “any
    alleged damage sustained by [AML] based upon the purported ‘benefits’ defendants
    received from” interest on the loan to FPI and the sale of FPI stock. Defendants argued
    that these amounts were not damages proximately caused by the tortious conduct alleged
    in the complaint. The trial court denied the motion as a “failed motion[] for summary
    adjudication.”
    14
    million payment and therefore did not receive the entire $5.8 million. Nor did Melle take
    into account defendants’ initial investment of $2.3 million to acquire the FPI stock. He
    stated that he did not take these facts into account because his task was to calculate the
    (gross) benefits defendants received “at the time they closed the deal,” not “profits.”
    4.      Jury Instructions
    The court and counsel had several discussions, some before trial and some in the
    middle of trial, about the parties’ proposed CACI and special jury instructions. AML
    objected to CACI No. 3900, “Introduction to Damages,” because it instructed the jury on
    traditional tort damage theories, while AML sought restitution based on disgorgement
    and constructive trust. AML had drafted special instructions to cover its restitution
    theories. Defendants objected to AML’s special instruction Nos. 3 and 4 regarding unjust
    enrichment and constructive trust, arguing that the trial court had previously sustained
    their demurrer to AML’s cause of action for unjust enrichment and that there was nothing
    over which a constructive trust could be imposed. Defendants also objected to AML’s
    special instruction Nos. 7 and 8 regarding the calculation of the amount of disgorgement
    and the imposition of a constructive trust with respect to the date as of which the
    restitution amounts should be calculated. Defendants argued that these instructions failed
    to include any offset for amounts paid by defendants. The trial court took the matter of
    the jury instructions under submission.
    During Melle’s testimony, counsel for defendants attempted to question him on
    cross-examination about whether he had included any offsets in his calculations. Counsel
    for AML objected, pointing out that there was “an approved jury instruction, special
    number 8, which says the jury can’t take that into account.” After considering the matter
    the trial court ruled that it was going to modify this instruction to refer to “profit” rather
    than “economic benefit,” because “[d]isgorgement deals with profit. And profit by its
    15
    very definition is calculated less expenses.” The record reflects, however, that the trial
    court ultimately did not give this instruction.10
    5.     Motion for Nonsuit
    Following the conclusion of AML’s case-in-chief defendants moved for a
    judgment of nonsuit “as to both claims on the basis that they are barred by the statute of
    limitations and as to the second cause of action for interference with contract on the basis
    that there has not been proof offered of a valid and enforceable contract.” The trial court
    denied the motion and ruled that the limitations period for AML’s cause of action for
    aiding and abetting a breach of fiduciary duty was four years pursuant to Code of Civil
    Procedure section 343 and In re Brocade Communications Systems, Inc. Derivative
    Litigation (N.D. Cal. 2009) 
    615 F.Supp.2d 1018
    , 1037. The trial court stated that the
    limitations period for interference with contract was two years. The court found,
    however, that “[a]lthough it appears that all aspects of the claims that are the subject of
    this lawsuit were known at the time of the September 28, 2004 letter sent by Neil
    Soltman to Steven Dunn . . . , there remain issues of fact for the jury to decide regarding
    the effect of a subsequent response letter from Idanta dated October 4, 2004 and the
    meaning of the word ‘concluded’ within that letter.”
    On the issue of the existence of a valid contract, the court noted that the ruling on
    defendants’ summary judgment motion was that they “did not meet their burden of
    proof . . . , not that the defense or claims asserted by Defendants lacked merit.” When
    defendants raised the issue again in a motion in limine, the trial court denied the motion
    “on the grounds that it was a disguised motion for summary judgment not that the
    substance of the motion lacked merit.”
    10     The court reporter did not transcribe the trial court’s reading of the instructions to
    the jury. This particular instruction does not appear in the set of written instructions
    included as given in the record on appeal.
    16
    6.      Deliberations
    The trial court instructed the jury, pursuant to CACI No. 3900, that if it found
    AML had proved its claims against defendants, the jury then had to decide how much
    money would reasonably compensate AML for the “harm.” The court instructed the jury
    pursuant to special instruction No. 3 that “[t]he elements of an unjust enrichment claim
    are (1) the receipt of a benefit from another; and (2) the unjust retention of the benefit at
    the expense of another,” and that if the jury found that defendants were unjustly enriched
    at AML’s expense, then it could “award [AML] the amount by which Defendant has been
    unjustly enriched.”
    During deliberations, the jury sent the court a note asking the court to define
    “harm” and “benefit.” Counsel noted that there were no instructions defining “harm.”
    Special instruction No. 4, Calculation of Disgorgement of Defendants’ Benefits, referred
    to “profit,” but the word “benefit” did not appear in the instruction. Over defendants’
    objection, the trial court instructed the jury, “These words are to be used in their plain and
    ordinary meaning. You are to read these words in the context of the instructions in which
    they are used.”
    7.      Jury Verdict
    On July 3, 2012 the jury returned a special verdict. On the cause of action for
    interference with contract, the jury found that Idanta, David Dunn, Steven Dunn, and the
    Dunn Family Trust knew about the non-competition agreement, paragraph 3.9 of the
    AML Operating Agreement; they acted with the intent to disrupt the performance of
    paragraph 3.9; their conduct prevented the performance of paragraph 3.9 or made its
    performance more expensive or difficult; and their conduct was a substantial factor in
    causing harm to AML. On the cause of action for aiding and abetting a breach of
    fiduciary duty, the jury found that Andrews, Runnels, and Franklin knowingly acted
    against AML’s interests, and without AML’s informed consent, in forming FPI, and, as
    to Runnels and Franklin, working for and owning shares in FPI. The jury also found that
    defendants knew that Andrews, Runnels, and Franklin were going to breach their
    17
    fiduciary duties to AML; that defendants gave substantial assistance to Andrews,
    Runnels, and Franklin; and that defendants’ conduct was a substantial factor in causing
    harm to AML.
    The jury rejected defendants’ affirmative defenses of estoppel, laches, waiver,
    consent, and ratification. The jury found for defendants, however, on their claim that
    AML’s cause of action for interference with contract was barred by the two-year statute
    of limitations, finding that defendants proved that AML had suffered harm before March
    15, 2005, and that AML had not proven that it did not discover facts leading a reasonable
    person to suspect defendants’ wrongful conduct until after March 15, 2005.
    The jury awarded AML restitution (although it was called “damages” on the
    verdict form) in the amount of $7,075,891. This was the exact figure AML’s expert,
    Melle, had calculated as “the benefits [defendants] received” from the June 2007 sale of
    their FPI stock, plus interest. The jury also found that AML was not entitled to punitive
    damages.
    8.     Motion for Judgment Notwithstanding the Verdict and New Trial
    On August 9, 2012 defendants filed motions for judgment notwithstanding the
    verdict and for a new trial, arguing that the award of damages was excessive and not
    supported by substantial evidence. In particular they argued that Melle’s testimony was
    without foundation and that the jury instructions were confusing, as evidenced by the
    jury’s question regarding the definitions of “harm” and “benefit.”11 On September 21,
    2012 the trial court denied both motions. The court rejected defendants’ contentions of
    evidentiary and instructional error and found “that the jury’s verdict is supported by
    11    Defendants also submitted a declaration from one of the jurors regarding the
    confusion, but the trial court properly ruled it inadmissible. (See Evid. Code, § 1150.)
    18
    substantial evidence in the form of testimony and admitted exhibits.” On October 18,
    2012 defendants timely filed a notice of appeal.12
    DISCUSSION
    A.     Aiding and Abetting a Breach of Fiduciary Duty
    Defendants challenge the trial court’s ruling that a defendant can be liable for
    aiding and abetting a breach of fiduciary duty, even if the defendant does not owe the
    plaintiff a fiduciary duty. Defendants argue that there is no sound policy reason to
    distinguish between liability for conspiracy to breach a fiduciary duty and liability for
    aiding and abetting a breach of fiduciary duty by requiring that a conspirator but not an
    aider and abettor owe a fiduciary duty to the plaintiff. AML argues that defendants
    cannot make this argument on appeal, and that, even if they can, on the merits it is legally
    incorrect.
    1.     Standing and Invited Error
    AML asserts that defendants lack standing to challenge the trial court’s ruling on
    demurrer because the court sustained their demurrer and therefore they are not aggrieved
    parties. AML also asserts that because the trial court gave defendants’ jury instruction on
    aiding and abetting, which did not include a requirement that they owe a fiduciary duty,
    the doctrine of invited error precludes defendants’ claim of error on appeal.
    Only an aggrieved party may appeal. (Code Civ. Proc., § 902; United Investors
    Life Ins. Co. v. Waddell & Reed, Inc. (2005) 
    125 Cal.App.4th 1300
    , 1304.) “It is true
    that, as a general rule, a party is not aggrieved and may not appeal from a judgment or
    order entered in its favor. [Citation.] However, a party which has not obtained all of the
    relief it requested in the trial court is aggrieved and may appeal. [Citations.]” (Friends of
    12     The trial court subsequently denied AML’s motion for attorneys’ fees. AML’s
    appeal from that order is pending.
    19
    Aviara v. City of Carlsbad (2012) 
    210 Cal.App.4th 1103
    , 1108; see Roa v. Lodi Medical
    Group, Inc. (1985) 
    37 Cal.3d 920
    , 925, fn. 4 [plaintiffs could challenge award of
    attorneys’ fees in their favor on the ground that the statutory limitation on such fees was
    invalid]; Archer v. United Rentals, Inc. (2011) 
    195 Cal.App.4th 807
    , 811, fn. 2 [fact that
    plaintiffs received cash payments did not preclude their appeal of denial of class
    certification].)
    Here, although the trial court sustained defendants’ demurrer with leave to amend,
    the court ruled against defendants on the legal issue of whether AML could maintain a
    cause of action for aiding and abetting a breach of fiduciary duty in the absence of a
    fiduciary duty on their part. The trial court sustained the demurrer only because the
    complaint lacked sufficient factual allegations of aiding and abetting. After amending its
    complaint AML proceeded and ultimately prevailed on this cause of action. Defendants
    did not obtain all of the relief they requested and thus were aggrieved by the court’s
    ruling and have standing to challenge it on appeal.
    AML also argues that defendants “successfully proposed an aiding and abetting
    jury instruction, but only one that omitted the independent duty element it claims on
    appeal should be imposed. Having invited the supposed error, [defendants] forfeited
    [their] right to appeal the issue.” The doctrine of invited error does not apply here.
    “Under the doctrine of invited error, when a party by its own conduct induces the
    commission of error, it may not claim on appeal that the judgment should be reversed
    because of that error. [Citations.] But the doctrine does not apply when a party, while
    making the appropriate objections, acquiesces in a judicial determination. [Citation.] As
    this court has explained: ‘“An attorney who submits to the authority of an erroneous,
    adverse ruling after making appropriate objections or motions, does not waive the error in
    the ruling by proceeding in accordance therewith and endeavoring to make the best of a
    bad situation for which he was not responsible.”’ [Citations.]” (Mary M. v. City of Los
    Angeles (1991) 
    54 Cal.3d 202
    , 212-213; see Norgart v. Upjohn Co. (1999) 
    21 Cal.4th 383
    , 403 [invited error does not apply where “a party may be deemed to have induced the
    commission of error, but did not in fact mislead the trial court in any way—as where a
    20
    party ‘“‘endeavor[s] to make the best of a bad situation for which [it] was not
    responsible’”’”].)
    Here, the trial court had already rejected defendants’ argument that aiding and
    abetting a breach of fiduciary duty requires that the aider and abettor owe the plaintiff a
    fiduciary duty. Defendants did not forfeit the right to challenge that ruling by proposing
    a jury instruction that was consistent with the trial court’s ruling. The doctrine of invited
    error does not apply where, as here, the party submits a jury instruction pursuant to or
    consistent with a prior adverse court ruling. (See Gillan v. City of San Marino (2007)
    
    147 Cal.App.4th 1033
    , 1052 [“[d]efendants did not invite the error by proposing . . .
    instructions” on two causes of action “after their unsuccessful attempts to defeat those
    counts by demurrer and summary adjudication”]; Horsemen’s Benevolent & Protective
    Assn. v. Valley Racing Assn. (1992) 
    4 Cal.App.4th 1538
    , 1555 [“[w]hen an appellant
    offers instructions on irrelevant matter only after an unsuccessful attempt to remove it
    from the case, he may attack the relevancy on appeal”]; Quigley v. Pet, Inc. (1984) 
    162 Cal.App.3d 877
    , 894, fn. 6 [no invited error in submitting instruction on issue where
    “from the beginning in law and motion, and thereafter through the motion for new trial,
    defendants objected” to the issue].) Defendants did not forfeit their right to challenge the
    trial court’s ruling on this issue.
    2.     Civil Conspiracy and Aiding and Abetting
    Civil conspiracy is “a legal doctrine that imposes liability on persons who,
    although not actually committing a tort themselves, share with the immediate tortfeasors
    a common plan or design in its perpetration. [Citation.] By participation in a civil
    conspiracy, a coconspirator effectively adopts as his or her own the torts of other
    coconspirators within the ambit of the conspiracy. [Citation.] In this way, a
    coconspirator incurs tort liability co-equal with the immediate tortfeasors.” (Applied
    Equipment Corp. v. Litton Saudi Arabia Ltd., 
    supra,
     7 Cal.4th at pp. 510-511.) “By its
    nature, tort liability arising from conspiracy presupposes that the coconspirator is legally
    capable of committing the tort, i.e., that he or she owes a duty to plaintiff recognized by
    21
    law and is potentially subject to liability for breach of that duty.” (Id. at p. 511.)
    Following Applied Equipment Corp., this court held in Kidron v. Movie Acquisition Corp.
    (1995) 
    40 Cal.App.4th 1571
     that “[a] nonfiduciary cannot conspire to breach a duty owed
    only by a fiduciary.” (Id. at p. 1597; accord, Everest Investors 8 v. Whitehall Real Estate
    Limited Partnership XI (2002) 
    100 Cal.App.4th 1102
    , 1109.)
    Some courts, noting the close relationship between conspiracy and aiding and
    abetting, have suggested that the law should treat conspiracy to breach a fiduciary duty
    and aiding and abetting a breach of fiduciary duty similarly. For example, in In re
    County of Orange (Bankr. C.D.Cal. 1996) 
    203 B.R. 983
    ,13 citing Applied Equipment
    Corp. and Kidron, the court stated that it saw “no reason for treating the vicarious tort of
    aiding and abetting breach of a fiduciary duty differently from that of conspiracy to
    breach a fiduciary duty. ‘Conspiracy is a concept closely allied with aiding and abetting.
    A conspiracy generally requires agreement plus an overt act causing damage. Aiding and
    abetting requires no agreement, but simply assistance. The common basis for liability for
    both conspiracy and aiding and abetting, however, is concerted action.’” (Id. at p. 999,
    quoting Janken v. GM Hughes Electronics (1996) 
    46 Cal.App.4th 55
    , 78.) In Howard v.
    Superior Court (1992) 
    2 Cal.App.4th 745
     the issue was whether a client attempting to
    plead a cause of action for aiding and abetting against an attorney had to comply with
    former Civil Code section 1714.10, which required the plaintiff to obtain a court order
    before pleading such a civil conspiracy claim. The court noted that “[i]n the abstract,
    there may be a distinction between an aiding and abetting cause of action and one for
    civil conspiracy,” but held that because the alleged conduct fell “within the ambit” of the
    statute, the statute applied to the plaintiff’s aiding and abetting claim. (Id. at p. 749, fn.
    omitted.) And in K & S Partnership v. Continental Bank, N.A. (8th Cir. 1991) 
    952 F.2d 971
    , the court stated, “[k]nowing participation in a breach of fiduciary duty ‘is analogous
    to a cause of action . . . for aiding and abetting a securities fraud,’ where the primary
    13    Reversed in part on other grounds in In re County of Orange (Bankr. C.D.Cal.
    1997) 
    245 B.R. 138
    .
    22
    violation involves a breach of fiduciary duty. [Citation.] Likewise, liability for civil
    conspiracy is in substance the same thing as aiding and abetting liability. Civil
    conspiracy requires an agreement to participate in an unlawful activity and an overt act
    that causes injury, so it ‘does not set forth an independent cause of action’ but rather is
    ‘sustainable only after an underlying tort claim has been established.’ [Citations.]” (Id.
    at p. 980.)
    California law, however, does not treat conspiracy to breach a fiduciary duty and
    aiding and abetting a breach of fiduciary duty similarly. In Casey v. U.S. Bank Nat.
    Assn., supra, 
    127 Cal.App.4th 1138
    , on which the trial court relied, a trustee in
    bankruptcy sued three banks, alleging that they aided and abetted the fiduciaries of the
    bankrupt corporation in a scheme to divert funds from the corporation. One of the causes
    of action was aiding and abetting a breach of fiduciary duty. (Id. at pp. 1141-1142.)
    Citing this court’s opinion in Saunders v. Superior Court (1994) 
    27 Cal.App.4th 832
    ,
    846, the court in Casey observed that “California has adopted the common law rule for
    subjecting a defendant to liability for aiding and abetting a tort. ‘“Liability may . . . be
    imposed on one who aids and abets the commission of an intentional tort if the person (a)
    knows the other’s conduct constitutes a breach of duty and gives substantial assistance or
    encouragement to the other to so act or (b) gives substantial assistance to the other in
    accomplishing a tortious result and the person’s own conduct, separately considered,
    constitutes a breach of duty to the third person.” [Citations.]’ [Citation.]” (Casey, supra,
    at p. 1144.)14 The trustee in Casey attempted to allege liability under the first theory, and
    14      California courts have consistently followed and applied the two part alternative
    test for civil aiding and abetting liability in Saunders and Casey. (See, e.g., Das v. Bank
    of America, N.A. (2010) 
    186 Cal.App.4th 727
    , 741, 744-745; Berryman v. Merit Property
    Management, Inc. (2007) 
    152 Cal.App.4th 1544
    , 1559; Austin B. v. Escondido Union
    School Dist. (2007) 
    149 Cal.App.4th 860
    , 879; Richard B. LeVine, Inc. v. Higashi (2005)
    
    131 Cal.App.4th 566
    , 574; Fiol v. Doellstedt (1996) 
    50 Cal.App.4th 1318
    , 1325-1326;
    River Colony Estates General Partnership v. Bayview Financial Trading Group, Inc.
    (S.D.Cal. 2003) 
    287 F.Supp.2d 1213
    , 1225; see also Wood v. Greenberry Financial
    Services, Inc. (D.Hawai‘i 2012) 
    907 F.Supp.2d 1165
    , 1181-1182 [adopting Casey]; El
    23
    the banks challenged the sufficiency of the allegations of “‘substantial assistance.’” (Id.
    at p. 1145.) The court noted “that liability for aiding and abetting depends on proof the
    defendant had actual knowledge of the specific primary wrong the defendant
    substantially assisted.” (Ibid.) The court concluded that the trustee had failed to allege
    facts showing that the banks knew the fiduciaries were misappropriating corporate funds.
    Thus, the trustee failed to state a cause of action for aiding and abetting a breach of
    fiduciary duty. (Id. at p. 1153.)
    Citing Casey, Saunders, and the Restatement Second of Torts, the court in Berg &
    Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 
    131 Cal.App.4th 802
    explained: “Despite some conceptual similarities, civil liability for aiding and abetting
    the commission of a tort, which has no overlaid requirement of an independent duty,
    differs fundamentally from liability based on conspiracy to commit a tort. [Citations.]
    ‘“[A]iding-abetting focuses on whether a defendant knowingly gave ‘substantial
    assistance’ to someone who performed wrongful conduct, not on whether the defendant
    agreed to join the wrongful conduct.” [¶] . . . [W]hile aiding and abetting may not
    require a defendant to agree to join the wrongful conduct, it necessarily requires a
    defendant to reach a conscious decision to participate in tortious activity for the purpose
    of assisting another in performing a wrongful act. . . .’ The aider and abetter’s conduct
    need not, as ‘separately considered,’ constitute a breach of duty. [Citations.]” (Id. at
    p. 823, fn. 10.)
    In Neilson v. Union Bank of California, N.A. (C.D.Cal. 2003) 
    290 F.Supp.2d 1101
    ,
    the court thoroughly reviewed California case law and concluded that under California
    law a defendant can be liable for aiding and abetting a breach of fiduciary duty in the
    absence of an independent duty owed to the plaintiff. (Id. at p. 1135.) After noting that
    conspiracy and aiding and abetting “are closely allied forms of liability,” the court found
    that “[n]o California case, however, holds that a party must owe the plaintiff a duty
    Camino Resources, Ltd. v. Huntington Nat. Bank (W.D.Mich. 2010) 
    722 F.Supp.2d 875
    ,
    905 [same].)
    24
    before he or she can be held liable as an aider and abettor. Rather, California cases
    outlining the elements of aiding and abetting liability have consistently cited the elements
    of the tort as they are set forth in the Restatement (Second) of Torts, § 876, and have
    omitted any reference to an independent duty on the part of the aider and abettor. Under
    this formulation, liability may properly be imposed on one who knows that another’s
    conduct constitutes a breach of duty and substantially assists or encourages the breach.”
    (Id. at p. 1133.)
    The Neilson court explained why this is so: “Unlike a conspirator, an aider and
    abettor does not ‘adopt as his or her own’ the tort of the primary violator. Rather, the act
    of aiding and abetting is distinct from the primary violation; liability attaches because the
    aider and abettor behaves in a manner that enables the primary violator to commit the
    underlying tort. . . . Because aiders and abettors do not agree to commit, and are not held
    liable as joint tortfeasors for committing, the underlying tort, it is not necessary that they
    owe plaintiff the same duty as the primary violator. Conspirators, by contrast, are held
    liable for the tort committed by their co-conspirator. [Citation.] Because liability is
    premised on the commission of a single tort, it is logical that all conspirators must be
    legally capable of committing the wrong.” (Id. at pp. 1134-1135, fn. omitted.)
    “Additionally, causation is an essential element of an aiding and abetting claim, i.e.,
    plaintiff must show that the aider and abettor provided assistance that was a substantial
    factor in causing the harm suffered. [Citations.] . . . This difference too demonstrates
    the distinction between the forms of liability, and argues in favor of a rule that permits
    the imposition of aider and abettor liability in the absence of a duty owed directly to the
    plaintiff.” (Id. at p. 1135; see Simi Management Corp. v. Bank of America, N.A.
    (N.D.Cal. 2013) 
    930 F.Supp.2d 1082
    , 1099, fn. 15 [“‘liability for aiding and abetting may
    exist even where the defendant’s conduct does not independently breach a duty to the
    plaintiff’”]; Villains, Inc. v. American Economy Ins. Co. (N.D.Cal. 2012) 
    870 F.Supp.2d 792
    , 795 [“‘[t]he differences between conspiracy and aiding and abetting are not merely
    semantic’ and . . . ‘[t]hese differences have led several courts . . . to recognize that a non-
    fiduciary can aid and abet a breach of fiduciary duty’”]; Granewich v. Harding (Or.
    25
    1999) 
    985 P.2d 788
    , 793-794 [“[l]egal authorities . . . virtually are unanimous in
    expressing the proposition that one who knowingly aids another in the breach of a
    fiduciary duty is liable to the one harmed thereby,” and “[n]one of those authorities even
    implies that liability for participants in the breach of fiduciary duty is confined to those
    who themselves owe such duty”]; see also Heckmann v. Ahmanson (1985) 
    168 Cal.App.3d 119
    , 127 [third party greenmailer purchasers of corporation’s shares in
    takeover attempt can be liable for aiding and abetting breach of fiduciary duty of
    corporation’s directors who authorized corporation’s purchase of the third parties’ shares
    at a premium]; accord, Feinberg Testamentary Trust v. Carter (S.D.N.Y. 1987) 
    652 F.Supp. 1066
    , 1083.)
    3.     Application to This Case
    Thus, there are two different theories pursuant to which a person may be found
    liable for aiding and abetting a breach of fiduciary duty. One theory, like conspiracy to
    breach a fiduciary duty, requires that the aider and abettor owe a fiduciary duty to the
    victim and requires only that the aider and abettor provide substantial assistance to the
    person breaching his or her fiduciary duty. (Casey v. U.S. Bank Nat. Assn, supra, 127
    Cal.App.4th at p. 1144; Coffman v. Kennedy (1977) 
    74 Cal.App.3d 28
    , 32.) On this
    theory, California law treats aiding and abetting a breach of fiduciary duty and conspiracy
    to breach a fiduciary duty similarly. Courts impose liability for concerted action that
    violates the aider and abettor’s fiduciary duty. (See Janken v. GM Hughes Electronics,
    supra, 46 Cal.App.4th at p. 78; In re County of Orange, supra, 203 B.R. at p. 999.) The
    second theory for imposing liability for aiding and abetting a breach of fiduciary duty
    arises when the aider and abettor commits an independent tort. (See Casey, supra, at p.
    1144; Saunders v. Superior Court, supra, 27 Cal.App.4th at p. 846.) This occurs when
    the aider and abettor makes “‘a conscious decision to participate in tortious activity for
    the purpose of assisting another in performing a wrongful act.’” (Berg & Berg
    Enterprises, LLC v. Sherwood Partners, Inc., supra, 131 Cal.App.4th at p. 823, fn. 10;
    accord, Central Bank v. First Inter. Bank (1994) 
    511 U.S. 164
    , 181.)
    26
    AML proceeded on the second theory of aiding and abetting liability. AML
    pleaded and proved that defendants had actual knowledge of the fiduciary duties
    Andrews, Runnels, and Franklin owed to AML, that defendants provided the three
    fiduciaries with substantial assistance in breaching their duties, and that defendants’
    conduct resulted in unjust enrichment. Thus, the court below did not err in ruling, on
    demurrer and in connection with the jury instructions,15 that defendants could be liable
    for aiding and abetting a breach of fiduciary duty even though they did not owe a
    fiduciary duty to AML.
    B.     Statute of Limitations for Aiding and Abetting a Breach of Fiduciary Duty
    Defendants also argue that AML’s cause of action for aiding and abetting a breach
    of fiduciary duty was barred by the two-year statute of limitations applicable to a cause of
    action for interference with contract, and that the trial court erred by not instructing the
    jury that this two-year limitations period applied to AML’s breach of fiduciary duty
    claim.16 AML argues that the four-year statute of limitations of Code of Civil Procedure
    15      Pursuant to defendants’ special instruction No. 4, the trial court instructed the jury
    that defendants could be held liable for aiding and abetting a breach of fiduciary duty if:
    “(1) Runnels, Franklin, and/or Andrews breached their fiduciary duties to [AML];
    [¶] (2) Defendants had actual knowledge that Runnels, Franklin, and/or Andrews were
    breaching their fiduciary duties to [AML]; [¶] (3) Defendants gave substantial assistance
    or encouragement to Runnels, Franklin, and/or Andrews in breaching their fiduciary
    duties; [¶] (4) Defendants acted with the intent to participate in the breach of fiduciary
    duty by Runnels, Franklin, and/or Andrews for the purpose of assisting them in
    performing the breach of their fiduciary duties; and [¶] (5) That the conduct of
    Defendants was a substantial factor in causing harm to [AML].”
    16      Defendants asked the trial court to instruct the jury that the limitations period for
    both of AML’s claims was “two years from the time [AML] knew or should have known
    of the loss or damage it claims to have suffered.” The trial court instructed the jury
    “[w]ith regard to AML’s claim for interference with contract only, Defendants contend
    that AML’s lawsuit was not filed within the time set by law. To succeed on this defense,
    Defendants must prove that AML’s claimed harm occurred before March 15, 2005 unless
    AML proves that before March 15, 2005 it did not discover, and did not know facts that
    27
    section 343, the “catchall provision,” applies to its aiding and abetting breach of fiduciary
    duty claim. We conclude that the three-year statute of limitations applies, and that
    because there is no dispute that AML filed this action less than three years after accrual,17
    AML’s aiding and abetting claim is not barred by the statute of limitations.
    The statute of limitations for a cause of action for aiding and abetting a tort
    generally is the same as the underlying tort. (See Vaca v. Wachovia Mortgage Corp.
    (2011) 
    198 Cal.App.4th 737
    , 743-744 & fn. 4 [aiding and abetting fraud]; River Colony
    Estates General Partnership v. Bayview Financial Trading Group, Inc., supra, 287
    F.Supp.2d at p. 1220 [aiding and abetting fraud]; see also Marketxt Holdings Corp. v.
    Engel & Reiman, P.C. (S.D.N.Y. 2010) 
    693 F.Supp.2d 387
    , 393 [“statute of limitations
    for each aiding and abetting claim is determined by the underlying tort”].) Thus, the
    statute of limitations for aiding and abetting a breach of fiduciary duty is the same as the
    statute of limitations for breach of fiduciary duty. (See In re Brocade Communications
    Systems, Inc. Derivative Litigation, supra, 615 F.Supp.2d at pp. 1036-1037 [because
    aiding and abetting breach of fiduciary duty is “most akin to a breach of fiduciary duty
    claim,” the four-year statute of limitations applies].)
    The statute of limitations for breach of fiduciary duty is three years or four years,
    depending on whether the breach is fraudulent or non-fraudulent. (See Fuller v. First
    Franklin Financial Corp. (2013) 
    216 Cal.App.4th 955
    , 963 [“limitations period is three
    years . . . for a cause of action for breach of fiduciary duty where the gravamen of the
    claim is deceit, rather than the catchall four-year limitations period that would otherwise
    apply”]; William L. Lyon & Associates, Inc. v. Superior Court (2012) 
    204 Cal.App.4th 1294
    , 1312 [“[b]reach of fiduciary duty not amounting to fraud or constructive fraud is
    would have caused a reasonable person to suspect, Defendants’ wrongful act or
    omission.”
    17      As noted above, Roberts learned that the Operating Group had granted FPI a
    license on March 17, 2004. AML filed this action on March 15, 2007. Defendants do
    not argue that AML’s aiding and abetting claim is barred by a three-year statute of
    limitations.
    28
    subject to the four-year ‘catch-all statute’ of Code of Civil Procedure section 343”];
    Thomson v. Canyon (2011) 
    198 Cal.App.4th 594
    , 606-607 [same]; City of Vista v. Robert
    Thomas Securities, Inc. (2000) 
    84 Cal.App.4th 882
    , 889 [four-year statute of limitations
    applies to breach of fiduciary duty, unless the gravamen of the claim is actual or
    constructive fraud, in which case the statute of limitations is three years].) Because
    defendants do not dispute that AML filed this action within three years of accrual, it does
    not matter whether the breach of fiduciary duty was fraudulent or non-fraudulent. Either
    way, the claim is timely.
    In some circumstances, the statute of limitations for a breach of fiduciary duty
    claim can be less than three years. For example, in Hydro-Mill Co., Inc. v. Hayward,
    Tilton & Rolapp Ins. Associates, Inc. (2004) 
    115 Cal.App.4th 1145
    , the court held that
    because the claim of breach of fiduciary duty “amount[ed] to a claim of professional
    negligence,” the two-year statute of limitations for professional negligence applied, and
    the plaintiff could not “prolong the limitations period by invoking a fiduciary theory of
    liability.” (Id. at p. 1159.) Here, defendants argue that the two-year statute of limitations
    for interference with contract applies because “interference with contract is the gravamen
    of [AML’s] aiding and abetting claim in this case.” Defendants argue that “since a
    contractual agreement [i.e., the AML Operating Agreement] created the underlying
    fiduciary obligation (owed by third parties), AML’s claim is for interfering with [the
    three Operating Group members’] obligations to AML, and is logically akin to other
    interference torts and should be subject to the two-year limitations period of section 339
    of the Code of Civil Procedure.”
    The fiduciary duties of Andrews, Runnels, and Franklin, however, were not
    created exclusively or even primarily by the Operating Agreement, but were imposed by
    law on them as members and managers of AML. (See Corp. Code, § 17704.09,
    subds. (b)(2), (b)(3) [members owe fiduciary duties of loyalty and care to the limited
    liability company, including the duties to “refrain from dealing with a limited liability
    company in the conduct or winding up of the activities of a limited liability company as
    or on behalf of a party having an interest adverse to a limited liability company” and to
    29
    “refrain from competing with a limited liability company”], subd. (d) [“[a] member shall
    discharge the duties to a limited liability company and the other members under this title
    or under the operating agreement and exercise any rights consistent with the obligation of
    good faith and fair dealing”];18 Huong Que, Inc. v. Luu (2007) 
    150 Cal.App.4th 400
    , 410
    [“[t]he duty of loyalty arises not from a contract but from a relationship”]; Manok v.
    Fishman (1973) 
    31 Cal.App.3d 208
    , 213 [although “[a]n express agreement between the
    parties may govern their relationship, . . . to the extent that their respective rights and
    duties are not spelled out in an express agreement, the law imposes obligations arising
    out of the nature of their fiduciary relationship”]; see also Federal Deposit Ins. Corp. v.
    McSweeny (S.D.Cal. 1991) 
    772 F.Supp. 1154
    , 1157 [“a cause of action for breach of
    fiduciary duty is its own ‘right sued on’ and cannot be compartmentalized into another
    rubric for time-bar purposes”].)
    Moreover, AML did not allege that defendants aided and abetted by interfering
    with a contract. AML’s fourth amended complaint mentioned a contractual provision,
    paragraph 3.9 of the Operating Agreement, and alleged that it formed the basis for
    AML’s (ultimately unsuccessful) cause of action for interference with contract, but AML
    did not allege that the Operating Agreement was the basis of the aiding and abetting
    claim. Instead, the gravamen of AML’s cause of action for aiding and abetting breach of
    fiduciary duty was that defendants provided substantial assistance for Andrews, Runnels,
    and Franklin in breaching their duties of loyalty as members and managers of AML.
    AML alleged that defendants acted with Andrews, Runnels, and Franklin “to: a).
    18      Corporations Code sections 17704.07 and 17704.09, effective January 1, 2014,
    distinguish between a manager-managed limited liability company and a member-
    managed limited liability company, with the default as member-managed unless the
    operating agreement provides otherwise. The Operating Agreement for AML named
    Roberts as the managing member, but provides that the members “may determine that
    there should be more than one Manager.” The January 2000 management agreement
    gave Andrews, Runnels, and Franklin control over AML’s “operational decisions” and
    responsibility at “both the senior management (operational) level as well as the board-
    level (leadership) level.”
    30
    wrongfully acquire rights to the AML patent for less than full value; b). hire Runnels and
    Franklin to execute the AML Business Method; and c). otherwise cause Runnels and
    Franklin to breach their fiduciary duties to AML without seeking or obtaining the
    requested permission of AML and Roberts, its majority owner and manager.” AML
    alleged that in February 2004 Andrews, Runnels, and Franklin “were secretly aligned
    with the Defendants and had already commenced negotiating with Defendants,”
    “surreptitiously forwarded [AML’s] strategic negotiating points” to defendants, received
    financial incentives from defendants “to breach their duties of loyalty to AML and its
    other member,” and “incorporate[d] [FPI] for the unlawful purpose of using [FPI] as an
    operating company to exploit the patented AML Business Method without receiving
    valid authorization from AML and without adequately compensating AML.”19 AML
    also alleged that Runnels engaged in a classic example of a breach of the duty of loyalty
    by signing an unauthorized and undervalued licensing agreement on behalf of both
    contracting parties, AML and FPI. The fact that one of the breaches of fiduciary duty
    may also have been a breach of a provision of the Operating Agreement does not mean
    the three defalcating fiduciaries only breached a provision of the Operating Agreement.
    Thus, the gravamen of AML’s aiding and abetting breach of fiduciary duty claim
    was not interference with a provision of the Operating Agreement. The two-year statute
    of limitations for interference with contract did not apply.
    C.     Remedies for Aiding and Abetting a Breach of Fiduciary Duty
    Defendants argue that the trial court erred in allowing the jury to make an award
    based on unjust enrichment, disgorgement, and constructive trust, because equitable
    remedies available for breach of fiduciary duty are not available for aiding and abetting a
    19     The district court in Fort Properties Inc. v. American Master Lease, LLC (C.D.
    Cal. 2009) No. SACV07-365 AG, invalidated AML’s business patent. The Court of
    Appeals affirmed the district court’s decision invalidating AML’s patent in Fort
    Properties, Inc. v. American Master Lease LLC (Fed. Cir. 2009) No. 2009-1242.
    31
    breach of fiduciary duty. We agree with AML that the restitutionary remedies of unjust
    enrichment and disgorgement are available for aiding and abetting breach of fiduciary
    duty.
    “We begin with the law of restitution. An individual is required to make
    restitution if he or she is unjustly enriched at the expense of another. [Citations.] A
    person is enriched if the person receives a benefit at another’s expense. [Citation.]
    Benefit means any type of advantage. [Citations.] [¶] The fact that one person benefits
    another is not, by itself, sufficient to require restitution. The person receiving the benefit
    is required to make restitution only if the circumstances are such that, as between the two
    individuals, it is unjust for the person to retain it. [Citation.]” (First Nationwide Savings
    v. Perry (1992) 
    11 Cal.App.4th 1657
    , 1662-1663; see City of Chula Vista v. Gutierrez
    (2012) 
    207 Cal.App.4th 681
    , 686; Unilogic, Inc. v. Burroughs Corp. (1992) 
    10 Cal.App.4th 612
    , 627.)
    Disgorgement as a remedy is broader than restitution or restoration of what the
    plaintiff lost. (County of San Bernardino v. Walsh (2007) 
    158 Cal.App.4th 533
    , 542;
    Feitelberg v. Credit Suisse First Boston, LLC (2005) 
    134 Cal.App.4th 997
    , 1013.) There
    are two types of disgorgement: restitutionary disgorgement, which focuses on the
    plaintiff’s loss, and nonrestitutionary disgorgement, which focuses on the defendant’s
    unjust enrichment. (Feitelberg, supra, at p. 1013.)20 “Typically, the defendant’s benefit
    and the plaintiff’s loss are the same, and restitution requires the defendant to restore the
    plaintiff to his or her original position.” (County of San Bernardino, supra, at p 542.)
    However, “[m]any instances of ‘liability based on unjust enrichment . . . do not involve
    20      The cases cited by defendants that involve restitution under the unfair competition
    law are inapplicable “[b]ecause restitution in a private action brought under the unfair
    competition law is measured by what was taken from the plaintiff” (Clark v. Superior
    Court (2010) 
    50 Cal.4th 605
    , 614-615), rather than by the defendant’s unjust enrichment.
    (Ibid.; Korea Supply Co. v. Lockheed Martin Corp. (2003) 
    29 Cal.4th 1134
    , 1149; Cortez
    v. Purolator Air Filtration Products Co. (2000) 
    23 Cal.4th 163
    , 177-178; Peterson v.
    Cellco Partnership (2008) 
    164 Cal.App.4th 1583
    , 1593-1594.)
    32
    the restoration of anything the claimant previously possessed . . . includ[ing] cases
    involving the disgorgement of profits . . . wrongfully obtained . . . .’ [Citation.] ‘[T]he
    public policy of this state does not permit one to “take advantage of his own wrong”’
    regardless of whether the other party suffers actual damage. [Citation.] Where ‘a benefit
    has been received by the defendant but the plaintiff has not suffered a corresponding loss
    or, in some cases, any loss, but nevertheless the enrichment of the defendant would be
    unjust . . . the defendant may be under a duty to give to the plaintiff the amount by which
    [the defendant] has been enriched.’ [Citation.]” (Ibid; see Feitelberg v. Credit Suisse
    First Boston, LLC, supra, 134 Cal.App.4th at p. 1013.)
    Moreover, “‘“[i]t is not essential that money be paid directly to the recipient by the
    party seeking restitution. . . .”’ [Citations.] The emphasis is on the wrongdoer’s
    enrichment, not the victim’s loss. In particular, a person acting in conscious disregard of
    the rights of another should be required to disgorge all profit because disgorgement both
    benefits the injured parties and deters the perpetrator from committing the same unlawful
    actions again. [Citations.] Disgorgement may include a restitutionary element, but it
    ‘“may compel a defendant to surrender all money obtained through an unfair business
    practice . . . regardless of whether those profits represent money taken directly from
    persons who were victims of the unfair practice.”’ [Citation.] Without this result, there
    would be an insufficient deterrent to improper conduct that is more profitable than lawful
    conduct.” (County of San Bernardino v. Walsh, supra, 158 Cal.App.4th at pp. 542-543.)
    Disgorgement based on unjust enrichment is an appropriate remedy for aiding and
    abetting a breach of fiduciary duty. For example, in County of San Bernardino v. Walsh,
    supra, 
    158 Cal.App.4th 533
    , the defendant, the vice president of a waste management
    company, was negotiating a new contract with the county. He and the former county
    administrative officer (CAO) agreed to bribe the current CAO to award the contract to the
    waste management company, along with an additional consulting agreement that would
    benefit the former CAO and the defendant. (Id. at pp. 538-539.) When the county
    discovered the bribery scheme, the county sued the current CAO, the former CAO, and
    the defendant. Affirming the trial court’s decision finding them liable for breaching or
    33
    inducing a breach of the current CAO’s fiduciary duty, fraud, unfair competition, and
    unjust enrichment, the Court of Appeal held: “Disgorgement of profits is particularly
    applicable in cases dealing with breach of a fiduciary duty, and is a logical extension of
    the principle that public officials and other fiduciaries cannot profit by a breach of their
    duty. Where a person profits from transactions conducted by him as a fiduciary, the
    proper measure of damages is full disgorgement of any secret profit made by the
    fiduciary regardless of whether the principal suffers any damage. [Citations.]” (Id. at
    p. 543.) Even though the defendant was not in a fiduciary relationship with the county,
    the court held that his “[a]ctive participa[tion] in the breach of fiduciary duty by another
    [rendered him] accountable for all advantages [he] gained thereby . . . .” (Ibid; see
    Chicago Park Dist. v. Kenroy, Inc. (Ill. 1980) 
    402 N.E.2d 181
    , 186 [“[i]t is a fundamental
    rule in the law of restitution that ‘[a] third person who has colluded with a fiduciary in
    committing a breach of duty, and who obtained a benefit therefrom, is under a duty of
    restitution to the beneficiary’”]; Rest.3d Restitution, § 43, com. g [“[b]enefits derived
    from a fiduciary’s breach of duty may . . . be recovered from third parties, not themselves
    under any special duty to the claimant, who acquire such benefits with notice of the
    breach,” and “[a] fortiori, one who actively participates in another’s breach of fiduciary
    duty will be liable to disgorge the profits realized thereby”].)
    Defendants assert that “nonrestitutionary disgorgement is purely equitable and
    only for the court to decide.” Defendants do not argue, however, that the trial court erred
    by submitting the issue of unjust enrichment to the jury. Indeed, as the court in Jogani v.
    Superior Court (2008) 
    165 Cal.App.4th 901
     explained, “‘[t]he fact that equitable
    principles are applied in the action does not necessarily identify the resultant relief as
    equitable. [Citations.] Equitable principles are a guide to courts of law as well as of
    equity. [Citations.]’ [Citations.]” (Id. at p. 909.) Where liability is definite and damages
    may be calculated without an accounting, the action is legal. (Id. at pp. 909-910; see
    Lectrodryer v. SeoulBank (2000) 
    77 Cal.App.4th 723
    , 728 [plaintiff entitled to jury trial
    on claim for unjust enrichment seeking restitution of money unjustly retained by bank,
    “even when equitable principles are applied”]; Martin v. County of Los Angeles (1996) 51
    
    34 Cal.App.4th 688
    , 694 [“‘law courts now recognize and apply many equitable principles
    and grant relief based thereon where . . . legal relief is sought in the form of a judgment
    for a specific amount’”]; see also Holson Inv. Co. v. Villelli (N.D.Ill. 1998) 
    1998 WL 312107
     at p. 5 [“the amount of the restitution is a question of fact for the jury”].)
    As part of their argument that restitution is not available for aiding and abetting a
    breach of fiduciary duty, defendants contend that the trial court erred by instructing the
    jury on constructive trust. The court gave a special instruction, requested by AML and
    entitled “disgorgement/constructive trust,” that defined a constructive trust, set forth the
    requirements for imposing a constructive trust, and told the jurors that if they found the
    existence of the elements of a constructive trust then they could award AML the profit
    defendants derived from their investment in FPI.21 This hybrid instruction essentially
    asked the jury to determine whether AML had proven entitlement to a constructive trust,
    but did not ask the jury to actually impose one; it only asked the jury to award
    21     The trial court instructed the jury pursuant to Special Instruction No. 2: “A
    constructive trust is an involuntary equitable trust created by operation of law as a
    remedy to compel the transfer of property from the person wrongfully holding it to the
    rightful owner. A constructive trust may only be imposed where the following three
    conditions are satisfied: (1) the existence of property or a property interest; (2) the right
    of the Plaintiff to that property or property interest; and (3) some wrongful acquisition or
    detention of that property or property interest by Defendants.
    “If you find that (1) a property interest existed in the proceeds of any sale by
    Defendants of their interests in FORT and/or the interest on any loans made by Idanta
    Partners, Ltd. To FORT; (2) Plaintiff had a right to the proceeds of any sale by
    Defendants of their interests in FORT and/or the interest on any loans made by Idanta
    Partners, Ltd. To FORT; and (3) Defendants wrongfully acquired the proceeds of any
    sale by Defendants of their interest in FORT and/or the interest on any loans made by
    Idanta Partners, Ltd. to FORT, then you may award Plaintiff the profit that Defendants
    have derived from their acquisition of the proceeds of any sale by Defendants of their
    interests in FORT and/or the interest on any loans made by Idanta Partners, Ltd. to
    FORT. However, if you find that Plaintiff never had a right to the proceeds of any sale
    by Defendants of their interest in FORT and/or the interest on any loans made by Idanta
    Partners, Ltd. to FORT, then you should not award Plaintiff any damages under the
    theory of constructive trust or disgorgement.”
    35
    disgorgement. Nevertheless, to the extent that the instruction asked the jury to decide
    whether to impose a constructive trust, the instruction was erroneous.
    “A constructive trust is an involuntary equitable trust created by operation of law
    as a remedy to compel the transfer of property from the person wrongfully holding it to
    the rightful owner. [Citations.] The essence of the theory of constructive trust is to
    prevent unjust enrichment and to prevent a person from taking advantage of his or her
    own wrongdoing. [Citation.]” (Communist Party v. 522 Valencia, Inc. (1995) 
    35 Cal.App.4th 980
    , 990.) Imposition of “[a] constructive trust is an equitable remedy to
    compel the transfer of property by one who is not justly entitled to it to one who is.
    [Citation.]” (Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 
    175 Cal.App.4th 1306
    , 1332; accord, Farmers Ins. Exchange v. Zerin (1997) 
    53 Cal.App.4th 445
    , 457.) It is not “a substantive claim for relief.” (PCO, Inc. v. Christensen, Miller,
    Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 
    150 Cal.App.4th 384
    , 398; see
    Embarcadero Mun. Improvement Dist. v. County of Santa Barbara (2001) 
    88 Cal.App.4th 781
    , 793 [“[a] constructive trust is not a substantive device but merely a
    remedy”].) The issue of whether to impose a constructive trust is an equitable issue for
    the court. (See Fowler v. Fowler (1964) 
    227 Cal.App.2d 741
    , 747 [“it is for the trial
    court to decide whether” the plaintiff has proven entitlement to a constructive trust].)
    The trial court erred by submitting the issue of whether to impose a constructive trust to
    the jury.
    The error, however, was not prejudicial. “‘A judgment may not be reversed for
    instructional error in a civil case “unless, after an examination of the entire cause,
    including the evidence, the court shall be of the opinion that the error complained of has
    resulted in a miscarriage of justice.” [Citation.]’ [Citation.] Instructional error in a civil
    case is prejudicial ‘“where it seems probable”’ that the error ‘“prejudicially affected the
    verdict.”’ [Citation.] ‘[W]hen deciding whether an [instructional] error . . . was
    prejudicial, the court must also evaluate (1) the state of the evidence, (2) the effect of
    other instructions, (3) the effect of counsel’s arguments, and (4) any indications by the
    jury itself that it was misled.’ [Citation.]” (Turman v. Turning Point of Central
    36
    California, Inc. (2010) 
    191 Cal.App.4th 53
    , 61; Daum v. SpineCare Medical Group, Inc.
    (1997) 
    52 Cal.App.4th 1285
    , 1313-1314.) The appellant has the burden on appeal of
    showing that an instructional error was prejudicial and resulted in a miscarriage of
    justice. (Boeken v. Philips Morris, Inc. (2005) 
    127 Cal.App.4th 1640
    , 1678; Logacz v.
    Limansky (1999) 
    71 Cal.App.4th 1149
    , 1161.)
    Defendants’ statement, without more, that the instruction on constructive trust was
    “plainly prejudicial to [them], given the Jury’s monetary verdict,” is insufficient to meet
    their burden of showing prejudice. (See Scheenstra v. California Dairies, Inc. (2013)
    
    213 Cal.App.4th 370
    , 403.) “Prejudice from an erroneous instruction is never presumed;
    it must be affirmatively demonstrated by the appellant. [Citations.]” (Wilkinson v. Bay
    Shore Lumber Co. (1986) 
    182 Cal.App.3d 594
    , 599; see Brokopp v. Ford Motor Co.
    (1977) 
    71 Cal.App.3d 841
    , 853-854.) Defendants have not demonstrated that the
    measure or award of restitution would have been any different had the instruction focused
    on disgorgement only, without any mention of constructive trust. Defendants have not
    shown how a more favorable verdict would have been reasonably probable had the
    instruction excluded the theory of constructive trust. Therefore, any error was not
    prejudicial.
    D.      Award of Restitution
    Defendants first contend that one who aids and abets a breach of fiduciary duty
    may be liable for the fiduciary’s unjust enrichment, but cannot be liable for more than the
    fiduciary’s unjust enrichment. Thus, defendants contend that even if they can be liable
    for aiding and abetting the breach of fiduciary duty by Andrews, Runnels, and Franklin,
    they cannot be liable for more than any profit Andrews, Runnels, and Franklin obtained.
    Defendants, however, cite no authority for this contention. Moreover, the Restatement
    distinguishes between those who are subject to disgorgement because they have breached
    a fiduciary duty and those who are subject to disgorgement because they are other
    “conscious wrongdoer[s],” such as aiders and abettors: “The object of restitution . . . is to
    eliminate profit” of the “conscious wrongdoer, or . . . defaulting fiduciary without regard
    37
    to notice or fault . . . .” (Rest.3d Restitution & Unjust Enrichment, § 51(4).) Indeed,
    “[t]he object of the disgorgement remedy—to eliminate the possibility of profit from
    conscious wrongdoing—is one of the cornerstones of the law of restitution and unjust
    enrichment,” and “[t]he profit for which the wrongdoer is liable by the rule of §51(4) is
    the net increase in the assets of the wrongdoer, to the extent that this increase is
    attributable to the underlying wrong.” (Id., com. e.)22 As independent wrongdoers under
    the second theory of aiding and abetting liability based on the commission of an
    independent tort (see Casey v. U.S. Bank Nat. Assn., supra, 127 Cal.App.4th at p. 1144;
    Saunders v. Superior Court, 
    supra,
     27 Cal.App.4th at p. 846.), defendants were subject to
    disgorgement of the profit or “net increase in the assets” they obtained, not merely those
    that Andrews, Runnels, and Franklin obtained.
    Defendants next contend that even if AML is entitled to an award based on unjust
    enrichment or disgorgement, the jury instructions were erroneous and the amount of
    restitution in the verdict is inconsistent with controlling law and not supported by
    substantial evidence. We agree that the trial court committed prejudicial instructional
    error. Therefore, the award must be reversed.
    As noted above, subsection (4) of section 51 of the Restatement Third of
    Restitution and Unjust Enrichment provides that “the unjust enrichment of a conscious
    wrongdoer, or of a defaulting fiduciary without regard to notice or fault, is the net profit
    attributable to the underlying wrong . . . . Restitution remedies that pursue this object are
    often called ‘disgorgement’ or ‘accounting.’” The amount of restitution to be made is
    sometimes described as the “benefit” received by the defendant. (Rest., Restitution, § 1,
    com. a.) This was the term the trial court used here in Special Instruction No. 3.
    22      In Uzyel v. Kadisha (2010) 
    188 Cal.App.4th 866
    , the court relied on section 51(4)
    of the Restatement Third of Restitution and Unjust Enrichment, although then still in
    draft form, and “deem[ed it] applicable under California law to a trustee who has
    committed a breach of trust . . . .” (Id. at p. 894; see Ghirardo v. Antonioli (1996) 
    14 Cal.4th 39
    , 51 [relying on the Restatement of Restitution definition of unjust
    enrichment].)
    38
    Subsection (5) of section 51 of the Restatement Third of Restitution and Unjust
    Enrichment explains that “[i]n determining net profit the court may apply such tests of
    causation and remoteness, may make such apportionments, may recognize such credits or
    deductions, and may assign such evidentiary burdens, as reason and fairness dictate,
    consistent with the object of restitution as specified in subsection (4). . . .” The
    Restatement further explains that “[p]rofit includes any form of use value, proceeds, or
    consequential gains [citation] that is identifiable and measurable and not unduly remote.”
    (Id., subsec. (5)(a).) In addition, a “conscious wrongdoer or a defaulting fiduciary may
    be allowed a credit for money expended in acquiring or preserving the property or in
    carrying on the business that is the source of the profit subject to disgorgement. . . .” (Id.,
    subsec. (5)(c).) Comment a explains that “[t]he principal focus of § 51 is on cases in
    which unjust enrichment is measured by the defendant’s profits, where the object of
    restitution is to strip the defendant of wrongful gain [citations]. . . .” (Id., com. a.)
    In measuring the amount of the defendant’s unjust enrichment, the plaintiff may
    present evidence of the total or gross amount of the benefit, or a reasonable
    approximation thereof, and then the defendant may present evidence of costs, expenses,
    and other deductions to show the actual or net benefit the defendant received. As the
    court in Uzyel v. Kadisha, supra, 
    188 Cal.App.4th 866
     stated, “[t]he party seeking
    disgorgement ‘has the burden of producing evidence permitting at least a reasonable
    approximation of the amount of the wrongful gain,’” and the “‘[r]esidual risk of
    uncertainty in calculating net profit is assigned to the wrongdoer.’ [Citation.]” (Id. at
    p. 894.) The court in Uzyel adopted this formulation from the Restatement, which
    explains that the “traditional formula, inherited from trust accounting and enshrined in
    the Copyright Act (
    17 U.S.C. § 504
    (b)), states that the claimant has the burden of proving
    revenues and the defendant has the burden of proving deductions.” (Rest.3d Restitution
    & Unjust Enrichment, § 51, com. i.) The new Restatement, however, “adopts a more
    modern and generally useful rule that the claimant has the burden of producing evidence
    from which the court may make at least a reasonable approximation of the defendant’s
    unjust enrichment,” and “the defendant is then free (there is no need to speak of ‘burden
    39
    shifting’) to introduce evidence tending to show that the true extent of unjust enrichment
    is something less.” (Ibid.) Thus, “[a]s a general rule, the defendant is entitled to a
    deduction for all marginal costs incurred in producing the revenues that are subject to
    disgorgement. Denial of an otherwise appropriate deduction, by making the defendant
    liable in excess of net gains, results in a punitive sanction that the law of restitution
    normally attempts to avoid.” (Id., com. h.) Of particular relevance here, comment h of
    the Restatement Third of Restitution and Unjust Enrichment, section 51, states:
    “Disloyal fiduciaries are uniformly reimbursed for the purchase price of property
    acquired in conscious breach of their duty of loyalty.”
    The trial court instructed the jury pursuant to Special Instruction No. 7, entitled
    “Calculation of Disgorgement of Defendants’ Benefits—Effective Date”: “If you decide
    to award [AML] any profit made or to be made by Defendants as a result of [FPI’s]
    existence, you must consider the value of those benefits at the time they were acquired by
    Defendants. You may not reduce the value of those benefits by any events occurring
    after they were first acquired, including any later decision by Defendants to accept less
    for the benefits they received than their value on the date they received them.” The trial
    court further instructed the jury pursuant to Special Instruction No. 4, entitled
    “Calculation of Disgorgement of Defendants’ Benefits—No Offset”: “In awarding
    [AML] any profit made or to be made by Defendants as a result of [FPI’s] existence, you
    must disregard what Defendants might have earned had they not created [FPI]. Instead,
    you must only focus on the profit received or to be received by Defendants as a result of
    their actual conduct in this case.”
    These special jury instructions, requested by AML, were erroneous. Special
    Instruction No. 7 incorrectly told the jury that it had to consider the value of the benefits
    defendants received at the time of acquisition of the benefits. Defendants acquired shares
    of FPI stock for $2.3 million in April 2004, which “at the time” probably, although not
    necessarily, had a value of $2.3 million (because that is what defendants paid for the
    stock). Assuming that defendants had not negotiated a discount, or that defendants had
    not otherwise underpaid or overpaid, there was no benefit yet to defendants because they
    40
    had only exchanged $2.3 million in cash for $2.3 million in stock. Defendants held the
    stock, which in June 2007 may have had a value of $5.8 million, giving defendants a
    potential benefit of $3.5 million. Sometime later, defendants’ FPI stock had a value of at
    least $3.3 million ($2.9 million plus $300,000 plus $100,000), and perhaps more,
    depending on the value of defendants’ contractual right to the second $2.9 million,
    discounted by the prospects of FPI’s finances, risk of insolvency, and ability to pay the
    balance due. Both sides were entitled to present evidence, including expert testimony, on
    these issues. The trial court’s instruction to consider only the value of the benefits “at the
    time they were acquired” improperly instructed the jury on valuing the defendants’
    enrichment.
    Special Instruction No. 7 also incorrectly told the jury that it could not reduce the
    value of the benefits defendant received “by any events occurring after they were first
    acquired, including any later decision by Defendants to accept less for the benefits they
    received than their value on the date they received them.” As noted above, an unjust
    enrichment defendant may introduce evidence that its enrichment was reduced by costs,
    expenses, and other factors. Defendants may have received only a total of $400,000 out
    of the second $2.9 million payment because (as AML argued) defendants engaged in a
    sham transaction to minimize AML’s damages claims in this litigation, or because (as
    defendants argued) of “the failure of the real estate market . . . in September of 2009.”
    Either way, defendants were entitled to present evidence of this transaction, AML was
    entitled to challenge the transaction’s legitimacy, and the jury was entitled to hear this
    evidence and determine the value of defendants’ remaining interest in FPI. As counsel
    for defendants acknowledged to the trial court, if counsel for AML “want to argue that
    they should get $5.8 million even though the defendants never got $5.8 million, I suppose
    they can argue that.” Counsel for defendants just wanted the corresponding ability to
    argue that defendants did not get $5.8 million. Special Instruction No. 7 deprived them
    of this ability by erroneously precluding the jury from considering defendants’
    acceptance of $400,000 for its right to receive the remaining $2.9 million when
    41
    determining the unjust enrichment defendants obtained as a result of the sale of their FPI
    stock.23
    Special Instruction No. 4 compounded the problem by instructing the jury that it
    “must only focus on the profit received or to be received by Defendants . . . .” There is
    no difference between the benefit or “profit” defendants received and the benefit or
    “profit” defendants were to receive in the future. Defendants received one benefit, an
    equity interest in FPI. There may have been a dispute about how to value this benefit, but
    both sides were entitled to present evidence of its value, and the jury was entitled to
    determine how much it was really worth. The 2004 value of $2.3 million and the 2007
    values of $3.5 million and $400,000 were evidence of the value of the unjust enrichment
    defendants obtained as a result of their wrongful conduct, but none of these values was
    conclusive, and the jury was entitled to “focus” on any or all of them.
    In support of Special Instruction No. 7, AML cited section 51 of the Restatement
    Third of Restitution and Unjust Enrichment, section 202 of the Restatement Second of
    Restitution, and Elliott v. Elliott (1964) 
    231 Cal.App.2d 205
    . None of these authorities
    supports an instruction that AML was entitled to recover the full contract price of
    defendants’ stock rather than the amount defendants actually received for the stock, or
    that in determining the value of defendants’ profits from the sale of its FPI stock the jury
    should not consider defendants’ subsequent decision to accept less than the contract
    amount. As noted above, section 51 focuses on the defendant’s net benefit. Section 202
    concerns imposition of a constructive trust, not restitution based on unjust enrichment.
    And the court in Elliott held that in valuing an asset subject to a constructive trust, the
    trier of fact should consider the actual value of the asset, including issues such as
    collectability and solvency. (See Elliott, supra, at p. 213 [failure to make findings on
    23     AML argues that defendants forfeited their challenge to Special Instruction No. 7
    by withdrawing their objection to the instruction. AML directs us to a portion of the
    record where counsel for defendants withdrew an objection to the use of the word
    “benefits” in the instruction. We do not construe this stipulation to one word in the
    instruction as a waiver of all objections to the instruction.
    42
    whether the note was collectable and whether the maker of the note was insolvent was
    reversible error].)
    Finally, these instructional errors were prejudicial. As noted above, the “uniform
    test for civil instructional error” (Soule v. General Motors Corp. (1994) 
    8 Cal.4th 548
    ,
    581, fn. 11) is whether “it is reasonably probable the error affected the verdict.” (Ted
    Jacob Engineering Group, Inc. v. The Ratcliff Architects (2010) 
    187 Cal.App.4th 945
    ,
    962). In assessing the likelihood that instructional error prejudicially affected the verdict,
    “‘[t]the reviewing court should consider not only the nature of the error . . . but [also] the
    likelihood of actual prejudice as reflected in the individual trial record, taking into
    account “(1) the state of the evidence, (2) the effect of other instructions, (3) the effect of
    counsel’s arguments, and (4) any indications by the jury itself that it was misled.”
    [Citation.]’” (Viner v. Sweet (2004) 
    117 Cal.App.4th 1218
    , 1226, fn. 8, quoting
    Rutherford v. Owens-Illinois, Inc. (1997) 
    16 Cal.4th 953
    , 983, and Soule v. General
    Motors Corp., supra, at pp. 580-581.) Here, the evidence was that defendants obtained a
    net benefit from the sale of their FPI stock of approximately $1 million ($600,000 from
    the first $2.9 million payment, plus $400,000), not the $5.8 million the jury awarded.
    Moreover, as noted above, the other jury instructions on restitution simply made matters
    worse. And although counsel for AML asked the jury to award Franklin’s estimated
    value of AML’s interest in a potential joint venture with defendants, $26,462,188, the
    joint venture never materialized and the jury’s award was not close to this amount.
    Finally, the jury gave a very clear and unequivocal indication it was misled or at least
    confused by asking a question during deliberations about the meaning of “harm” and
    “benefit” and how to calculate defendants’ unjust enrichment. The instructional error
    was prejudicial because in all probability it “misled the jury and affected [the] verdict.”
    (Krouse v. Graham (1977) 
    19 Cal.3d 59
    , 72; see Code Civ. Proc., § 475; Veronese v.
    Lucasfilm Ltd. (2012) 
    212 Cal.App.4th 1
    , 32 [“instructional error will be prejudicial if it
    is ‘reasonably probable that instructions . . . actually misled the jury’”], quoting
    Kinsman v. Unocal Corp. (2005) 
    37 Cal.4th 659
    , 682.) Therefore, we conclude that
    43
    defendants are entitled to a new trial on the amount of unjust enrichment they should pay
    in restitution to AML.
    On remand, the trial court should instruct the jury that the amount by which
    defendants were unjustly enriched “is the net profit attributable to the underlying wrong.”
    (Rest.3d Restitution & Unjust Enrichment, § 51(4).) In calculating the net profit
    attributable to the underlying wrong, the jury will need guidance on how to evaluate three
    important numbers in this case: (1) the $2.3 million defendants paid for the FPI stock in
    April 2004, (2) the value of the FPI stock defendants received when they purchased the
    stock in April 2004, and (3) the value of defendants’ right to receive the second $2.9
    million payment when they sold the stock in June 2007. On the first issue, the trial court
    should instruct the jury that it should give defendants “credit for money expended in
    acquiring or preserving the property or in carrying on the business that is the source of
    the profit subject to disgorgement.” (Rest.3d Restitution & Unjust Enrichment,
    § 51(5)(c); accord, Uzyel v. Kadisha, supra, 188 Cal.App.4th at p. 894; see Carrey v.
    Boyes Hot Springs Resort, Inc. (1966) 
    245 Cal.App.2d 618
    , 622 [“in calculating the net
    profit of a business all of the costs of producing the gross income should be deducted”].)
    On the second issue, the trial court should instruct the jury it should consider the
    face value of the benefits at the time defendants received them (i.e., the $2.3 million
    defendants paid for the FPI stock), as well as evidence that the benefits were worth more
    or less than what defendants paid for them. (See Knudsen v. Hill (1964) 
    227 Cal.App.2d 639
    , 640, 642 [in a damages case involving conversion of a “pledged promissory note,”
    measure of damage is “value at time of conversion and, although the rule is variously
    expressed, face value of the bill or note is, prima facie, its true value,” although
    “[e]vidence is admissible to establish that actual value is a lesser sum than face value”];
    St. Paul Fire & Marine Ins. Co. v. Compaq Computer Corp. (8th Cir. 2008) 
    539 F.3d 809
    , 818 [“[w]hile the contract price is evidence of the value of an item, it is not
    conclusive”].)
    On the third issue, the trial court should instruct the jury that in determining
    whether defendants have met their burden of proving any deductions or discount from the
    44
    right to receive the second $2.9 million, the jury may consider defendants’ ability to
    collect the full contract price for the sale of their stock and FPI’s solvency (Elliott v.
    Elliott, supra, 231 Cal.App.2d at p. 213; cf. Medi-Cen Corp. v. Birschbach (1998) 
    123 Md.App. 765
    , 778-779 [
    720 A.2d 966
    , 972-973] [discussing the effect of doubtful
    collectability on the value of a converted asset], or even evidence that defendants
    intentionally chose not to collect the full amount due for the sale of their FPI stock in
    order to minimize their liability in this litigation. (See Elliott, supra, at p. 212;
    Janiszewski v. Behrmann (1956) 
    345 Mich. 8
    , 29 [
    75 N.W.2d 77
    , 93] [court will not
    “permit the tortious taker to escape by paying only the give-away price at which he sold,
    regardless of fair value”].)
    Finally, the trial court should instruct the jury, consistent with the Restatement,
    that “‘[w]here a person is entitled to a money judgment against another because by fraud,
    duress or other consciously tortious conduct the other has acquired, retained or disposed
    of his property, the measure of recovery for the benefit received by the other is the value
    of the property at the time of its improper acquisition, retention or disposition, or a higher
    value if this is required to avoid injustice where the property has fluctuated in value . . . .’
    (Rest., Restitution, § 151, p. 598.)” (Colgan v. Leatherman Tool Group, Inc. (2006) 
    135 Cal.App.4th 663
    , 698-699;24 see Gerstle v. Gamble-Skogmo, Inc. (E.D.N.Y. 1969) 
    298 F.Supp. 66
    , 100-101 [“the restitutional basis of recovery is the value of the property at the
    time the sale was consummated or a higher value at a subsequent time if the value of the
    property has thereafter fluctuated”].) Such an instruction will assist the jury in deciding
    24     Colgan v. Leatherman Tool Group, Inc. involved claims under the false
    advertising law, Business and Professions Code section 17500, and the unfair
    competition law, Business and Professions Code section 17200. (Colgan v. Leatherman
    Tool Group, Inc., 
    supra,
     135 Cal.App.4th at p. 672.) As noted above, nonrestitutionary
    disgorgement is not available for these claims. (Id. at pp. 696-697; see footnote 20 ante.)
    The issue of how to value an asset that fluctuates in value or that trades in a limited
    market, however, arises whether the plaintiff is seeking restitutionary disgorgement based
    on what the plaintiff lost or nonrestitutionary disgorgement based on what the defendant
    gained.
    45
    how to value the second $2.9 million payment, which defendants essentially claim
    decreased to $400,000. “Where the subject matter is of fluctuating value, and where the
    person deprived of it might have secured a higher amount for it had he not been so
    deprived, justice to him may require that the measure of recovery be more than the value
    at the time of deprivation. This is true where the recipient knowingly deprived the owner
    of his property or where a fiduciary in violation of his duty used the property of the
    beneficiary for his own benefit. In such cases the person deprived is entitled to be put in
    substantially the position in which he would have been had there not been the
    deprivation, and this may result in granting to him an amount equal to the highest value
    reached by the subject matter within a reasonable time after the tortious conduct.” (Hutt
    v. Dean Witter Reynolds, Inc. (D.Mass. 1990) 
    737 F.Supp. 128
    , 134; see Roxas v. Marcos
    (1998) 89 Hawai‘i 91, 152 [
    969 P.2d 1209
    , 1270] [amount of damages for conversion of
    gold “is the highest value of the gold between—and including—the date of conversion
    and a reasonable time thereafter”]; American General Ins. Co. v. Equitable General
    Corp. (E.D.Va. 1980) 
    493 F.Supp. 721
    , 765 [for purposes of rescission, court valued
    stock “at the highest value attained within a reasonable time” after announcement of
    merger].)
    46
    DISPOSITION
    The judgment is reversed as to the amount of defendants’ unjust enrichment. In
    all other respects, it is affirmed. The order denying defendants’ motions for judgment
    notwithstanding the verdict and new trial is reversed to the extent it denies a new trial on
    the issue of the amount of defendants’ unjust enrichment, and in all other respects it is
    affirmed. The trial court is directed to grant a new trial on the issue of the amount of
    defendants’ unjust enrichment only. The parties are to bear their own costs on appeal.
    SEGAL, J.*
    We concur:
    PERLUSS, P. J.
    ZELON, J.
    *       Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
    article VI, section 6 of the California Constitution.
    47