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American Master Lease LLC v. Idanta Partners, Ltd.

Court of Appeal of California, Second Appellate District, Division Seven

May 5, 2014, Opinion Filed

B244689

Opinion

 [**553]  SEGAL, J.3

INTRODUCTION

In this appeal we consider the questions (1) whether a defendant can be liable for aiding and abetting breach of fiduciary duty without owing the plaintiff a fiduciary duty, (2) what is the statute of limitations for aiding and abetting breach of fiduciary duty, (3) whether the restitutionary remedy of disgorgement is available for aiding and abetting breach of fiduciary duty, and (4) what is the measure of restitution for aiding and abetting breach  [***2] of fiduciary duty. We answer these questions (1) yes, (2) three or four years (depending whether the breach is fraudulent or nonfraudulent), (3) yes, and (4) the net profit attributable to the wrong.

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  [**554]  Master Lease LLC (AML) 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 plaintiff, and because the aiding and abetting claim is barred by the applicable statute of 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. After having granted a petition for rehearing [*1459]  by AML in order to give the parties an opportunity to file supplemental briefs on the valuation timing issue  [***3] for restitution, we affirm in part and reverse in part for a new trial on the amount of restitution.

FACTUAL AND PROCEDURAL BACKGROUND4

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225 Cal. App. 4th 1451 *; 171 Cal. Rptr. 3d 548 **; 2014 Cal. App. LEXIS 402 ***; 2014 WL 1761583

AMERICAN MASTER LEASE LLC, Plaintiff and Respondent, v. IDANTA PARTNERS, LTD., et al., Defendants and Appellants.

Subsequent History: Modified by American Master Lease LLC v. Idanta Partners, Ltd., 2014 Cal. App. LEXIS 460 (Cal. App. 2d Dist., May 27, 2014)

Prior History:  [***1] APPEAL from a judgment and an order of the Superior Court of Los Angeles County, No. BC367987, Ramona G. See, Judge.

Am. Master Lease LLC v. Idanta Partners, Ltd., 2014 Cal. App. Unpub. LEXIS 1317 (Cal. App. 2d Dist., Feb. 25, 2014)

Disposition: Affirmed in part and reversed in part with directions.

CORE TERMS

aiding and abetting, breach of fiduciary duty, unjust enrichment, trial court, restitution, defendants', disgorgement, fiduciary duty, constructive trust, stock, cause of action, operating agreement, calculated, fiduciary, statute of limitations, benefits, conspiracy, special instruction, instruct a jury, license, limited liability company, parties, transactions, equitable, percent, profits, aider and abettor, prejudicial, instructional error, business methods

Civil Procedure, Appeals, Reviewability of Lower Court Decisions, Adverse Determinations, Standards of Review, Harmless & Invited Errors, Invited Errors Doctrine, Business & Corporate Law, Causes of Action & Remedies, Breach of Fiduciary Duty, General Overview, Torts, Multiple Defendants, Concerted Action, Civil Aiding & Abetting, Civil Conspiracy, Elements, Governments, Legislation, Statute of Limitations, Time Limitations, Procedural Matters, Statute of Limitations, Limited Liability Companies, Management Duties & Liabilities, Member Duties & Liabilities, Contracts Law, Remedies, Equitable Relief, Restitution, Business Torts, Unfair Business Practices, Remedies, Preliminary Considerations, Equity, Relief, Trials, Jury Trials, Province of Court & Jury, Estate, Gift & Trust Law, Trusts, Constructive Trusts, Harmless Error Rule, Jury Instructions, Objections, Prejudicial Errors, Evidence, Burdens of Proof