Court Opinion

ID: 4701530
Source: CourtListenerOpinion
Date Created: 2021-07-06 19:06:34.39768+00
Date Added: 2024-06-11T08:06:18.440999
License: Public Domain

Filed 7/6/21 Hillair Capital Investments v. West CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION TWO

HILLAIR CAPITAL                                                 B299897
INVESTMENTS LP et al.,
                                                                (Los Angeles County
         Plaintiffs and Appellants,                              Super. Ct. No. BC614374)

         v.

KIM KARDASHIAN WEST et al.,

         Defendants and Respondents.

     APPEAL from a judgment of the Superior Court of
Los Angeles County. Richard L. Fruin, Jr., Judge. Affirmed.

     Fayer Gipson, Gregory A. Fayer, Elliot B. Gipson and
Michelle K. Millard for Plaintiffs and Appellants.

     Kinsella Weitzman Iser Kump & Aldisert, Michael J.
Kump, Jonathan P. Steinsapir and Nicholas C. Soltman for
Defendants and Respondents.

                               _________________________
       This case arises primarily out of disputes over licensing
royalties, indemnity obligations, and promotional duties between
the owners and affiliates of a cosmetics company and Kim
Kardashian West, Kourtney Kardashian, Khloe Kardashian,
Kimsaprincess Inc., 2Die4Kourt, and Khlomoney Inc. (collectively
the Kardashians).1
       The cosmetics company was originally operated by Boldface
Licensing + Branding (Boldface) pursuant to a licensing
agreement (Licensing Agreement) with the Kardashians.
Boldface developed a cosmetics line with the brand name Khroma
Beauty but later rebranded it as Kardashian Beauty. Haven
Beauty, Inc. (Haven), a company affiliated with Hillair Capital
Investments LP (HCI) and Hillair Capital Management LLC
(HCM) (collectively appellants), eventually acquired all of
Boldface’s assets from a receiver, including its rights under the
Licensing Agreement.
       Though Haven attempted to continue the cosmetics line,
the relationship between appellants and the Kardashians soon
degraded. HCI and HCM sued the Kardashians for, inter alia,
breaching their obligations to promote the cosmetics line. The
Kardashians, in turn, initiated arbitration pursuant to
arbitration clauses in two agreements, the Licensing Agreement
and the mutual releases (Releases) signed by the parties just
prior to the time Haven acquired Boldface’s assets. In their

1     Kimsaprincess Inc., 2Die4Kourt and Khlomoney Inc. are
loan out companies for, respectively, Kim Kardashian West,
Kourtney Kardashian, and Khloe Kardashian. For ease of
reference, we equate the three companies with the corresponding
individuals.

                               2
demand for arbitration, the Kardashians asserted claims against
appellants for Haven’s failure to pay royalties. Additionally, they
asserted a claim for indemnity based on Haven’s failure to pay
the attorney fees associated with prior litigation in which the
Kardashians were sued for trademark infringement over
Boldface’s use of the brand name Khroma. The trial court
compelled HCI and HCM to arbitrate their claims against the
Kardashians, and the arbitration panel (Panel)2 determined that
it had jurisdiction over certain claims asserted by the parties
against each other. The Panel awarded the Kardashians over
$11 million against appellants for, among other things, Haven’s
failure to pay royalties and indemnity. The trial court confirmed
the arbitration award, and it denied appellants’ contemporaneous
petition for vacatur.
       On appeal, appellants seek review of the orders compelling
arbitration, confirming the arbitration award, and denying
appellants’ petition for vacatur.
       We affirm the judgment.
                              FACTS3
The Licensing Agreement Between Boldface and the
Kardashians
       In 2012, the Kardashians and Boldface executed the
Licensing Agreement to allow Boldface to use the Kardashians’

2     The Panel was comprised of three arbitrators.

3     We have incorporated the Panel’s factual findings into our
statement of facts. The appellate record does not contain a
transcript from the arbitration, and the Panel’s factual findings
are not subject to review for sufficiency of the evidence.
(Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362,
367, fn. 1. (AMD).)

                                 3
trademarks, images, and likenesses for the development,
manufacture, production, distribution, advertisement, promotion
and sale of specified cosmetic products. The Kardashians were
entitled to an advance of $1 million plus an 8 to 10 percent
royalty on the wholesale price of products (sales royalty) or,
alternatively, guaranteed minimum royalty payments for various
contract periods and an optional renewal period for a total of
$5,206,900.4 They agreed to provide ancillary services, which
included making marketing and production appearances, taking
photographs for promotional material and product packaging,
wearing products, and providing design input.
       Boldface agreed to defend, indemnify and hold each of the
Kardashians harmless from and against claims by third parties
based on the development, manufacture, distribution, and sale of
its products.
       The Licensing Agreement contained an arbitration clause
providing that all “claims, disputes and other matters arising out
of or relating to this Agreement shall be submitted to, and
determined by, binding arbitration in accordance with Judicial
Arbitration and Mediation Services [(JAMS)] . . . and . . . in
accordance with its Commercial Rules[.]”
HCI and HCM
       HCM “manages the investment funds of[,] and is the
investment advisor to[,]” HCI. HCI invests in small-cap publicly-
traded companies and in other business opportunities. HCM and

4     Contract period one was from May 9, 2012, to
November 30, 2013; contract period two was from December 1,
2013, through November 30, 2014; contract period three was from
December 1, 2014, through November 30, 2015; contract period
four was from December 1, 2015, through November 30, 2016;
and the renewal period was 18 months.

                                4
HCI act primarily through Sean McAvoy (McAvoy) and Neal
Kaufman (Kaufman).
Trademark Infringement Litigation; HCI’s Loan to
Boldface; the Kardashians’ Forbearance
       Boldface publicly announced that its new line of cosmetic
products would be called Khroma Beauty. At the time, Lee
Tillett, Inc. held a federally registered “Kroma” mark used in
connection with the sale of its own cosmetics products. In
October 2012, Lee Tillett, Inc. sued Boldface and the Kardashians
for trademark infringement in Florida, and Boldface later filed a
competing declaratory relief action in California (collectively the
Tillett litigation).
       Boldface borrowed money from HCI to fund the litigation as
well as its cosmetics operation, and it released cosmetic products
under the new brand name Kardashian Beauty. Due to the
money they invested in Boldface, HCI and/or HCM had the
leverage to select John LaBonty (LaBonty) to serve as Boldface’s
new chief executive officer (CEO).
       To assist Boldface in coping with its financial distress and
the demands of the Tillett litigation, the Kardashians agreed to
forbear payment of sales royalties and guaranteed minimum
royalties due throughout 2013 and 2014. The Tillett litigation
settled and a judgment was entered against Boldface and the
Kardashians.
The July 31, 2014, Term Sheet
       By July 2014, Boldface was descending into insolvency.
HCI and/or HCM discussed a cooperative relationship with the
Kardashians to keep Kardashian Beauty afloat. On July 31,
2014, HCM and the Kardashians executed a term sheet (Term
Sheet) identifying them as investors in a company called Newco

                                5
Beauty Company (Newco). Per the Term Sheet, HCI would
acquire Boldface’s assets in an insolvency proceeding with a $2
million credit bid. Also, HCI would invest equity and pay the
judgment in the Tillett litigation. While HCI would own
51 percent of Newco, the Kardashians would own 40 percent and
unrelated parties would own 9 percent. The Term Sheet set forth
various conditions, including: “[Newco] shall have obtained free
and clear title to the Licens[ing] Agreement;” and it “shall have
been amended by [the Kardashians] and [Newco] to provide for
the elimination of minimum required payments[.]”
       The parties negotiated for several months but they did not
agree on an amendment to the Licensing Agreement. Many other
terms in the Term Sheet went unfulfilled.
The Releases
       On August 26, 2014, HCM and the Kardashians executed
the Releases. The Kardashians released “any and all Claims”
which could have been asserted against HCM and its affiliates
“in connection with (a) the Licens[ing] Agreement and the subject
matter thereof, (b) Boldface and its business, and/or (c) the
[Tillett litigation settlement] and the subject matter thereof,
including without limiting the generality of the foregoing, any
Claims and Obligations which were, might or could have been
asserted in connection with [HCM’s] involvement or investment
in Boldface and its business.” Appellants released their claims
against the Kardashians in commensurate fashion.
       The Releases stated that any “dispute, claim or controversy
arising out of or relating to this Agreement or the breach,
termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this
agreement to arbitrate, shall be determined by arbitration”

                                6
administered by JAMS “pursuant to its Comprehensive
Arbitration Rules and Procedures.” Subdivision (b) of the JAMS
Comprehensive Arbitration Rules & Procedures, Rule 11
provided that “[j]urisdictional and arbitrability disputes,
including disputes over the formation, existence, validity,
interpretation or scope of the agreement under which Arbitration
is sought, and who are proper Parties to the Arbitration, shall be
submitted to and ruled on by the Arbitrator. The Arbitrator has
the authority to determine jurisdiction and arbitrability issues as
a preliminary matter.”
The Asset Purchase Agreement; Bill of Sale; Instrument of
Transfer and Assignment
        To accomplish the acquisition of Boldface, HCI and/or HCM
sued Boldface as a secured creditor. The trial court placed
Boldface into receivership. HCI and/or HCM made a credit bid
on all of Boldface’s assets.
        The receiver in possession of Boldface’s assets executed an
Asset Purchase Agreement (APA) with Newco. The APA was
dated October 15, 2014. It stated that the receiver would
transfer various assets, including all rights under the Licensing
Agreement. Further, it stated that Newco would assume all
Boldface’s liabilities for transaction taxes, and “all liabilities and
obligations arising on or after the Closing Date, relating to or
arising out of the Acquired Assets.” Under the APA, Newco was
not “assuming any other liability or obligation” and specified that
“[a]ll such other liabilities and obligations shall be retained by
and remain liabilities and obligations of Boldface[.]”
        Newco and the receiver executed a bill of sale dated
October 22, 2014, as well as an Instrument of Transfer and
Assignment.

                                  7
Haven; Negotiations Between the Kardashians and
HCI/HCM
       HCI/HCM formed Haven to hold the former assets of
Boldface. Haven took Newco’s place and acquired the assets on
October 17, 2014. Boldface’s CEO, LaBonty, continued on as the
CEO of Haven.
       LaBonty dedicated much of the next year looking for an
investor-partner to replace HCI/HCM and to fund Haven’s capital
through a relaunch and coordinated his efforts with McAvoy and
Kaufman on behalf of HCI/HCM, and Todd Wilson on behalf of
the Kardashians.
       As 2015 wore on, the parties realized that no investor was
prepared to buy out HCI/HCM’s interests in the Licensing
Agreement. HCI/HCM terminated LaBonty as CEO. On
December 5, 2015, McAvoy and Kaufman spoke to the
Kardashians’ representatives about entering a long-term
licensing agreement. The Kardashians were interested, but only
if HCI/HCM would commit to investing sufficient capital in
Kardashian Beauty to adequately fund development, production,
marketing and sales. HCI/HCM submitted a proposal that
offered debt financing at levels the Kardashians deemed
inadequate.
Notice of Breach
       By the beginning of 2016, the Kardashians were
increasingly disenchanted with the idea of continuing their
relationship with Haven and HCI/HCM. They had not received
any royalties due from Boldface or Haven except for the advance
payment of $1 million.
       On February 26, 2016, the Kardashians sent appellants a
letter stating that they had breached the Licensing Agreement by

                               8
failing to pay $3,043,625 in royalties and failing to indemnify the
Kardashians for $767,259.73 in legal fees and costs incurred in
the Tillett litigation.
HCI and HCM’s Complaint for Breach of Contract and
Various Torts
        HCI and HCM sued the Kardashians for breach of the
Term Sheet, breach of its covenant of good faith and fair dealing,
breach of fiduciary duty, fraud, negligent misrepresentation, and
promissory estoppel. They alleged: “The essence of the [Term
Sheet] was that [HCI/HCM] would put up millions of dollars to
fund the continued distribution of [the Kardashians’ makeup]
line, and [the Kardashians] would continue to be the faces of the
line and actively promote, market and support the line, while
making certain concessions under their existing deal with
Boldface.” The Kardashians’ “support was . . . absolutely
essential to the success of the Kardashian-branded line[.]” While
HCI/HCM “upheld its end of the bargain, [the Kardashians] did
not. After the parties executed the [T]erm [S]heet and
[HCI/HCM’s] money was committed, [the Kardashians] almost
immediately stopped marketing, promoting and supporting the
line and began courting new potential investors to buy out
[HCI/HCM’s] stake.” The Kardashians’ “wrongful conduct
. . . destroyed any opportunity for [HCI/HCM] to obtain the
benefit of its bargain under the [T]erm [S]heet.” As a result,
HCI/HCM “suffered significant damages, including the loss of
approximately $10,170,000 in invested funds, as well as the loss
of the value of [HCI/HCM’s] equity interest in the company that
distributes the Kardashian Beauty line, valued at between” $64
and $180 million.

                                 9
The Kardashians’ Demand for Arbitration
       The Kardashians filed a demand for arbitration of claims
against appellants for breach of the Licensing Agreement, breach
of the Term Sheet, breach of the implied covenant of good faith
and fair dealing of both contracts, promissory fraud and
declaratory relief. The Kardashians sought damages for
appellants’ failure to pay about $3.4 million in guaranteed
minimum royalties as well as $809,502.325 in indemnity related
to the legal fees and costs the Kardashians incurred in the Tillett
litigation. They additionally sought damages for appellants’
unauthorized uses of their images. In the prayer, they sought
recovery of attorney fees.
Petition to Compel Arbitration of the Breach of Contract
and Tort Claims in HCI and HCM’s Complaint
       The Kardashians filed a petition to compel HCI and HCM
to arbitrate the breach of contract and tort claims in their
complaint, citing the arbitration clauses set forth in the Releases
and the Licensing Agreement. The trial court granted the
petition. In its written ruling, it stated:6
       “a) Plaintiffs concede that under the parties’ agreements,
‘the arbitrator determines the question of arbitrability with
respect to the [Releases].

5     The amount of the requested indemnity increased over
time. The reasons are not relevant to this opinion.

6     In the ruling, the trial court referred to “Plaintiffs” and
“HILLAIR.” While it is clear that “Plaintiffs” refers to HCI and
HCM, it is unclear whether “HILLAIR” is a reference to HCI and
HCM or perhaps just HCM. We have therefore preserved these
references in our quote of the ruling.

                                10
       “b) Plaintiffs’ causes of action raise common questions of
law or fact re the issues to be arbitrated under the [Releases]. It
is undisputed that, under [the Releases] HILLAIR released the
Kardashians from ‘any and all claims and obligations,’ etc., and
that in the instant complaint, Plaintiffs seek to recover monies
from the Kardashians that Plaintiffs alleged[ly] ‘invested in
Boldface and its business . . . .’ Such claims, regardless of
whether they are asserted as breaches of the ‘Term Sheet,’
necessarily ‘relate to the [Releases] or its breach, termination,
enforcement, interpretation or validity thereof’ and must
therefore be resolved in arbitration per the parties’ agreement.
       “c) The non-signatories can be compelled to arbitration
where, as here, the claims are ‘dependent upon or inextricably
intertwined with the obligations imposed by the contract
containing the arbitration clause.’
       “d) The question of arbitrability under the Licens[ing]
Agreement should also be decided by the arbitrator. Here,
Plaintiffs’ objections to arbitration are either already under
consideration, or will be referred to the arbitration panel by
JAMS.
       “e) Plaintiffs are estopped from denying the arbitrability of
claims under the Licens[ing] Agreement, having sued pursuant to
that agreement. . . .
       “f) For purposes of determining arbitrability, HILLAIR is
the ‘alter ego’ of HAVEN—at least, that’s a question for the
arbitrator to decide.”
Further Notice of Breach
       On June 22, 2016, the Kardashians sent a letter notifying
appellants of “certain breaches” and stated that appellants failed
to pay required indemnification of $815,747.20 plus 8 percent of

                                11
royalties on sales. The purpose of the letter was to give
appellants an opportunity to cure these breaches within 10
business days. It stated that notice of these breaches was not
intended to waive any breaches detailed in prior letters or the
demand for arbitration.
The Termination Letter; The Kardashians’ Federal Action
for Injunctive Relief; The Federal Court’s Ruling on
Arbitration
      The Kardashians sent a letter on July 8, 2016, terminating
the Licensing Agreement. After Haven continued using the
Kardashians’ names and images, the Kardashians filed a
complaint against appellants, Kaufman, and McAvoy for
injunctive relief in federal court under the Lanham Act (15
U.S.C. § 1051 et seq.) and California law to enjoin appellants’
alleged infringement of the Kardashians’ trademarks and state
rights of publicity. The Kardashians obtained a preliminary
injunction to prevent Haven from releasing the Kardashian
Beauty products and using the Kardashians’ names and images
without their permission.7
      The Kardashians requested that the federal court compel
appellants, Kaufman and McAvoy to arbitrate. The federal court
issued an order to show cause but then later denied the request
as to HCI, HCM, Kaufman and McAvoy because they were not
signatories to the Licensing Agreement, and because equitable
estoppel could not be used to compel nonsignatories to arbitrate
their defenses to contract claims. The federal court noted that

7     Appellants represent that once the preliminary injunction
was in force, Haven “immediately ceased distributing products
and wound down its business.”

                               12
the Kardashians and Haven agreed that their dispute was
subject to arbitration.
Appellants’ Objection to Arbitral Jurisdiction; the Panel’s
Order Regarding Jurisdiction and Arbitrability
      Appellants objected to the Panel’s arbitral jurisdiction
under the Releases, contending they have “nothing whatsoever to
do with the claims in this action. The Releases are irrelevant as
they predate any of the claims at issue.” (Bolding omitted.) They
also argued: “[T]he claims herein do not arise out of the
[Releases], nor are they related in any way to the [Releases]. The
[Releases are] utterly irrelevant to this dispute.” Alternatively,
they argued that to the extent any claims were arbitrable under
the Releases, that would mean they had been released and
should be dismissed. Appellants also objected to the Panel’s
arbitral jurisdiction under the Licensing Agreement with respect
to the claims asserted by HCI and HCM against the
Kardashians. According to appellants, (a) the trial court had to
decide whether HCI and HCM, as nonsignatories to the Licensing
Agreement, could be compelled to arbitrate based on equitable
estoppel or an alter ego theory, and (b) the facts did not support a
finding that equitable estoppel or an alter ego theory were
applicable.
      Aside from a narrow exception, the Panel determined that
it had subject matter and personal jurisdiction over all claims,
defenses and parties in the arbitration based on the Releases and
Licensing Agreement.
Arbitration Proceedings
      In the arbitration, parties asserted their claims against
each other. As for the Kardashians, they sought damages for
breach of the Licensing Agreement by HCI, HCM and Haven;

                                13
intentional interference with contractual relations by HCI and
HCM; and infringement by Haven of the Kardashians’ trademark
and right to publicity.
       Denial of Appellants’ Motion for a Continuance
       Appellants filed a motion to continue the arbitration
hearing, and the Kardashians opposed. The Panel denied the
motion.
       Trial Briefs
       The Kardashians submitted a trial brief and argued that
they were entitled to guaranteed minimum royalties or,
alternatively, sales royalties. They also claimed they were
entitled to be indemnified for the attorney fees they incurred in
the Tillett litigation. With respect to Haven, the Kardashians
sought damages for trademark infringement and violation of
their right to publicity. They also sought an award of attorney
fees under the Lanham Act in conjunction with their federal
action to enjoin Haven from infringing on their trademarks and
right of publicity.
       In appellants’ trial brief, they argued in favor of their
affirmative claims. They also argued that the parties intended
that the Releases have no effect on the parties’ obligations under
the Term Sheet.
       The Merits Hearing
       The Panel conducted a nine-day arbitration hearing from
February 20, 2018, through March 2, 2018.
       Postarbitration Briefs
       The Kardashians submitted a postarbitration brief in
which they requested an award of $6,280,750 in guaranteed
minimum royalties. In the alternative, they requested $342,498
in sales royalties that were due. Also, the Kardashians requested

                               14
an award of $1,027,854 to indemnify them for their defense in the
Tillett litigation.
       Appellants submitted a postarbitration brief and argued
that they had been damaged by the Kardashians’ conduct in
multiple respects, including their failure to promote the
Kardashian Beauty cosmetics line. Regarding the Kardashians’
claims, appellants argued that they did not breach the Licensing
Agreement, Haven did not infringe on any trademarks or
publicity rights, and HCI and HCM did not breach the Term
Sheet. Appellants did not argue that the Kardashians’ claims
had been released by the Releases and should be dismissed.
       The Merits Orders
       The Panel issued two merits orders.
       In the first merits order, it noted that the Kardashians
“seek recovery jointly and severally from Hillair and Haven of
$6,280,750 in [guaranteed minimum royalties] . . . accrued but
unpaid during the term of the Licens[ing Agreement]. If the
Panel finds that [guaranteed minimum royalties] are not
available, [the Kardashians] seek recovery from Hillair of
$342,498, representing 8% of total net sales of $4,281,234 during
relevant Haven Contract Periods. The Kardashians also seek
recovery of $1,027,854 in attorney’s fees” related to the Tillett
litigation.
       The Panel proceeded to find that Haven breached the
Licensing Agreement by (a) failing to make the sales royalty
payments to the Kardashians as demanded on July 22, 2016, and
(b) failing to indemnify the Kardashians for legal fees that they
incurred defending themselves in the Tillett litigation. Based on
these breaches, the Kardashians’ “termination of the Licensing
Agreement was warranted[.]” Next, the Panel found that HCI,

                               15
HCM and “Haven are jointly and severally liable for damages
caused by their breaches of the Licensing Agreement. Haven is a
wholly-owned subsidiary of [HCI/HCM], and Haven’s only
function was to serve as the agent of [HCI/HCM]. All dealings
between Haven and the Kardashians were conducted by
[HCI/HCM] through [McAvoy] or [Kaufman]. To the extent
Haven’s CEO, LaBonty, interacted with the Kardashians, he was
under the direction and control of McAvoy or Kaufman. [¶] The
principal members of [HCI/HCM] also were the principal
members of Haven and controlled the conduct of LaBonty
throughout their mutual relationship with the Kardashians.
[HCI/HCM] controlled the most important decisions of Haven in
its dealings with the Kardashians under the Licensing
Agreement. Under the circumstances, Haven served as the agent
of [HCI/HCM].”8 The Panel also concluded that “it would be
inequitable” for HCI/HCM to avoid liability after “ensuring that
Haven would have inadequate funds to pay” any judgment
against it.
       The Panel rejected appellants’ argument that “the
receivership proceedings extinguished the Kardashians’ rights to
indemnification under . . . the Licensing Agreement. Here[,] the
[r]eceiver took the assets of Boldface subject to all liens, defenses,
and equities[.]” Also, the APA, Bill of Sale and Instrument of
Transfer and Assignment clearly provided that the assets of
Boldface were conveyed as is. “That this also was the
understanding of Haven and [HCI/HCM] was confirmed by the

8    To support its agency finding, the Panel cited Sonora
Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523
(Sonora Diamond).

                                 16
testimony of [LaBonty], former CEO of both Boldface and Haven,
and Haven’s [chief financial officer], Jeanene Morgan [(Morgan)],
by email communications between [Kaufman], [LaBonty],
[Morgan], and Todd Wilson.”
      Shifting from liability to damages, the Panel determined
that the “Licensing Agreement provides substantial guidance on
how these damages should be calculated.” “The Panel finds that
the most reasonable and readily quantifiable measure of the
Kardashians’ damages for unpaid royalties is the sum of the
guaranteed minimum royalties that were due. Section 5.A. of the
Licensing Agreement specifies that the Kardashians are to
receive a Guaranteed Minimum Royalty of $4,686,125 for the
original 54 months of the Licensing Agreement from May 9, 2012,
to November 30, 2016.” The Panel explained that Haven gave
written notice of extending the term of the Licensing Agreement
by an additional 18 months through May 30, 2018. Thus, the
Kardashians “contend they are entitled to an additional
[guaranteed minimum royalty] of $2,594,625[,] bringing the total
[guaranteed minimum royalty] to which they are entitled to
$7,280,750, less the $1,000,000 advance payment, for a total
[guaranteed minimum royalty] due to the Kardashians of
$6,280,750.”
      Appellants argued that the Kardashians should be
equitably estopped from recovering guaranteed minimum
royalties “because the Term Sheet provided for their elimination
upon execution of an amended Licensing Agreement.” Because
the Licensing Agreement was never amended, the Panel rejected
this argument.
      The Panel awarded a total of $1,027,854 for attorney fees
incurred in the Tillett litigation. Next, it determined that

                               17
because Haven infringed on the Kardashians’ trademark and
publicity rights, and because the Kardashians obtained an
injunction, the Lanham Act (15 U.S.C. § 1117(a)) entitled the
Kardashians to recover their related attorney fees and costs. The
order specified that the Kardashians could file a petition for
attorney fees and costs. Finally, it determined that the
Kardashians were entitled to interest at 18 percent per annum
and instructed the parties to confer and agree on a computation
of the interest to be included in the award.
       All of appellants’ claims against the Kardashians were
rejected.
       In the second merits order, the Panel awarded the
Kardashians preaward and postaward interest.
       The Interim Award
       The Panel issued an interim award consistent with the
merits orders. It added that the Kardashians were entitled to
$254,673 in attorneys’ fees and costs, and HCI/HCM were
entitled to a $54,986.40 offset based on an award of sanctions
against the Kardashians for spoliation of evidence.9 Per the
interim award, the parties were ordered to confer concerning the
form and content of the final award, and to serve the Panel with
“a joint report with agreed and non-agreed corrections and
suggestions for inclusion in a final award, which must be
consistent with the determinations set forth in [the] Interim
Award[.]”
       Appellants’ Letter Brief; Further Briefing
       On December 14, 2018, appellants submitted a letter. They
argued that Haven was not the agent of HCI and HCM so they

9     Appellants claimed that the Kardashians intentionally
deleted their e-mails.

                               18
could not be liable for its breaches, and that the Releases
extinguished the Kardashians’ claims for guaranteed minimum
royalties and indemnity.
       The Panel issued an order stating that the parties could
submit briefing.
       In response, the Kardashians defended the Panel’s
imposition of agency liability. Regarding the Releases, they
posited that appellants’ “arguments are too little, too late. First,
for strategic reasons, Hillair knowingly waived any argument
that the [Releases were an affirmative defense to the
Kardashians’ claims for] damages. Hillair was obviously
concerned that the . . . Release[s] would jeopardize its alleged
claim for millions of dollars in damages based on its ‘lost
investments’ in Boldface. Having chosen to ignore [whether the
Releases were an affirmative defense] to the Kardashians’ claims
in its over 120 pages of pre-trial and post-trial briefing,
[appellants] must live with the consequences of that choice. In
any event, even if the Panel chooses to reach the merits of
[appellants’] waived Release[s] arguments, the Kardashians in
August 2014 could not have, and did not, release Hillair from
liability for future conduct. Because the Panel’s liability and
damages award is based on conduct occurring after August 2014,
the Release[s] ha[ve] no effect whatsoever on the viability of the
Kardashians’ claims.” They cited law for the proposition that the
failure to raise an issue prior to a ruling on the merits functions
as a waiver.
       Order Re Requested Modifications of Interim Award; The
Final Award
       In an order regarding requested modifications of the
interim award, the Panel stated, “Certain modifications to which

                                 19
the parties have agreed or to which no objection has been made
have been incorporated into the final award, which is rendered
contemporaneously with this Order. To the extent other
requested modifications have not been included, the Panel has
determined those modifications to be unnecessary and/or
inappropriate. Accordingly, the Panel expressly [denies] any
request for modification that has not been incorporated into the
Final Award.”
      The final award was consistent with the interim award
except that the indemnity award was increased from $1,027,854
to $1,070,714.
The Competing Petitions to Confirm and Vacate the
Arbitration Award
      The Kardashians petitioned to confirm the arbitration
award and appellants petitioned to set it aside. The trial court
confirmed the award, denied the petition to set aside the award,
and entered judgment against HCI, HCM and Haven for
$11,243,772.03. Haven was ordered to pay the additional sum of
$254,673.
      This appeal followed.
                           DISCUSSION
      Appellants challenge the order compelling arbitration,
claiming:
      (1) The trial court improperly made substantive
determinations regarding arbitrability that were reserved for the
Panel in the arbitration clause in the Releases.
      (2) The trial court improperly permitted the Panel to
decide whether HCI and HCM, as third parties to the Licensing
Agreement, had to arbitrate under that agreement’s arbitration
clause.

                               20
       (3) Insofar as the trial court stated that HCI and HCM
were equitably estopped as third parties from denying
arbitrability under the Licensing Agreement, that statement was
nonbinding dicta.
       (4) If the trial court made a binding ruling based on
equitable estoppel that HCI and HCM, as third parties, must
arbitrate based on the arbitration clause in the Licensing
Agreement, it erred.
       (5) Even if the trial court properly compelled HCI and HCM
to arbitrate their contract claims under the Licensing Agreement
based on equitable estoppel, it erred when it compelled them to
arbitrate their tort claims based on that same doctrine.
       Next, appellants contend that the trial court abdicated its
role and failed to address many of the urged grounds for vacatur
of the arbitration award. Appellants challenge the orders
confirming the arbitration award and denying vacatur of the
arbitration award as follows:
       (1) “The Panel failed to decide a necessary issue: whether
the Releases, pursuant to which the Panel took jurisdiction over
HCI and HCM, released any of the claims at issue.”
       (2) “The arbitrators ‘exceeded their powers’ by. . .[:]”
               (a) “awarding $6,280,750 as a ‘proxy’ remedy for
       Haven’s failure to pay a fixed and undisputed amount of
       $342,498 due under the License;”
               (b) “awarding [guaranteed minimum royalties] and
       indemnity amounts that [r]espondents repeatedly
       relinquished;”
               (c) “imposing joint and several liability on HCI and
       HCM for Haven’s breaches of a contract to which they were
       not parties;”

                                21
              (d) “improperly awarding attorneys’ fees under the
       Lanham Act;” and
              (e) deciding issues beyond the scope of their
       jurisdiction.
       (3) “Appellants were substantially prejudiced by the
arbitrators’ denial of Appellants’ well-founded request for a first
continuance of the final hearing.”
I. Standards of Review.
       Orders compelling arbitration are subject to independent
review on appeal when the trial court’s interpretation of the
arbitration agreement does not involve conflicting extrinsic
evidence. (Cortez v. Doty Bros. Equipment Co. (2017) 15
Cal.App.5th 1, 12.) The same standard applies to orders
confirming arbitration awards and denying their vacatur.
(Lindenstadt v. Staff Builders, Inc. (1997) 55 Cal.App.4th 882,
892, fn. 7.; SWAB Financial, LLC v. E*Trade Securities, LLC
(2007) 150 Cal.App.4th 1181, 1198 (SWAB).)
II. Up Front Resolution of Certain Issues.
       Though appellants raise many arguments attacking the
underlying court orders, the lead dominoes in this appeal are:
(1) whether the final award is subject to judicial review for errors
of fact or law, (2) whether the Panel determined its own
jurisdiction under the arbitration clause in the Releases,
(3) whether the Panel’s determination of its own jurisdiction
under the Releases is subject to judicial review, (4) whether the
Panel’s determination of its own jurisdiction under the Releases
was wholly groundless, and (5) whether the Kardashian’s claims
against appellants should have been dismissed because those
claims were released.

                                 22
      The first issue impacts whether we can question the Panel’s
legal and factual findings.
      The second, third and fourth issues streamline matters
because if the Panel had jurisdiction over all the claims based on
the Releases, it does not matter whether they had jurisdiction
based on the Licensing Agreement.
      Finally, the second through fifth issues are pivotal because
the Kardashian’s claims were arbitrable, if at all, only under the
Releases. If they were not arbitrable, then the portion of the final
award awarding damages to the Kardashians should have been
vacated. While equitable estoppel was a viable theory for
compelling appellants to arbitrate their claims under the
Licensing Agreement, equitable estoppel was not available as a
vehicle for compelling appellants to arbitrate their defenses to
the Kardashians’ claims because appellants were not signatories
to the Licensing Agreements and the doctrine cannot be invoked
against nonsignatory defendants. (Jensen v. U-Haul Co. of
California (2017) 18 Cal.App.5th 295, 306–307 [plaintiffs can be
equitably estoppel from denying arbitrability when they seek the
benefits of contracts containing an arbitration clause]; JSM
Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222,
1239–1240 [same].)
      A. In General, We Cannot Review Errors of Fact or Law.
      Unless an arbitration clause specifically requires
arbitrators to act in conformity with rules of law, an arbitrator
can base his or her decision upon broad principles of justice and
equity. Arbitrators may expressly or impliedly reject a claim that
a party might successfully have asserted in a judicial action.
(Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10–11
(Moncharsh).) Generally, arbitration awards are immune from

                                23
judicial review. “More specifically, courts will not review the
validity of the arbitrator’s reasoning. [Citations.] Further, a
court may not review the sufficiency of the evidence supporting
an arbitrator’s award. [Citations.]” (Id. at p. 11.) With narrow
exceptions, “an arbitrator’s decision cannot be reviewed for errors
of fact or law.” (Ibid.)
       Despite Moncharsh, appellants contend that when the
Federal Arbitration Act (FAA) applies, an arbitrator’s errors of
law are subject to judicial review.
       The FAA applies to written agreements to arbitrate if they
evidence “a transaction involving commerce.” (9 U.S.C. § 2) The
Licensing Agreement and Term Sheet fall within that definition
because they contemplated the sale of cosmetics, an endeavor
that affects commerce. (Shepard v. Edward Mackay Enterprises,
Inc. (2007) 148 Cal.App.4th 1092, 1097 [“‘“involving commerce”’”
means “‘“affecting commerce,”’” “a term of art that ordinarily
signals the broadest permissible exercise of Congress’s commerce
clause power”].) But the “FAA’s procedural provisions are not
controlling, and the determinative question is whether [the
California Arbitration Act (CAA)] procedures conflict with the
FAA policy favoring the enforcement of arbitration agreements.
[Citation.]” (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44
Cal.4th 1334, 1352 (Cable Connection).)
       Based on Cable Connection, appellants argue that we
should find that the CAA is preempted to “the extent that it
affords more restricted review than the FAA.” There are some
federal courts that will find that an arbitrator exceeded his or her
powers when the arbitration award evinces a manifest disregard
of the law. (Comedy Club, Inc. v. Improv West Assocs. (9th Cir.
2009) 553 F.3d 1277, 1290; Comerica Bank v. Howsam (2012) 208

                                24
Cal.App.4th 790, 830 [noting that federal courts are split as to
whether manifest disregard of the law remains grounds for
vacatur].) Appellants request that we apply that standard. But
precedent establishes that an “arbitrator’s [alleged] manifest
disregard of the law is not a ground for vacatur under California
law.” (Ibid.) Cable Connection does not countermand this rule.
When California courts refrain from reviewing arbitration
awards for errors of law, that logically leads to confirmation of
those awards out of deference. A rule that leads to confirmation
of arbitration awards helps to enforce arbitration agreements.
There is no basis to find preemption.
       We conclude that our review of the arbitration award is
broadly controlled by Moncharsh.
       B. The Panel Decided its Own Jurisdiction Under the
Arbitration Clause in the Releases.
       Some arbitration clauses grant arbitrators the unusual
power of deciding their own jurisdiction. (Patchett v. Bergamot
Station, Ltd. (2006) 143 Cal.App.4th 1390, 1397 [arbitrator could
decide his own jurisdiction when the parties agreed that
controversies of whatever nature in relation to the interpretation
of the agreement, including the arbitrability of any claim, would
be settled by arbitration].)
       The arbitration clause in the Releases state that all
controversies arising out of or relating to the agreement,
including interpretation and determination of the scope or
applicability of the arbitration clause shall be determined by
JAMS pursuant to its Comprehensive Arbitration Rules and
Procedures. Those rules gave the arbitrator final say on
jurisdiction and arbitrability. In their reply brief, appellants
state that they “do not dispute that the Panel had the power to

                                25
determine whether the claims at issue were arbitrable pursuant
to the Releases[.]”
       We conclude that the Releases gave the Panel the power to
decide its own jurisdiction. The question presented is whether it
in fact decided its own jurisdiction. While appellants agree that
the Panel had the power to do so, they contend that the trial
court, not the Panel, decided arbitral jurisdiction. Because a trial
court cannot make determinations on substantive issues of
arbitrability that are reserved for arbitrators (Sandquist v. Lebo
Automotive, Inc. (2016) 1 Cal.5th 233, 261), appellants argue that
we must reverse the final award.
       To tackle these issues, we must interpret (1) the trial
court’s order compelling arbitration of HCI and HCM’s claims
and (2) the Panel’s order on jurisdiction over HCI and HCM’s
claims and the Kardashians’ claims.
             1. The Trial Court’s Order Refrained from Deciding
Substantive Issues of Arbitrability Regarding HCI and HCM’s
Claims and Instead Referred Those Issues to the Eventual
Arbitrators.
       “The meaning of a court order or judgment is a question of
law within the ambit of the appellate court. [Citation.] ‘. . . In
construing orders they must always be considered in their
entirety, and the same rules of interpretation will apply in
ascertaining the meaning of a court’s order as in ascertaining the
meaning of any other writing. If the language of the order be
in any degree uncertain, then reference may be had to the
circumstances surrounding, and the court’s intention in the
making of the same.’ [Citations.]” (In re Ins. Installment Fees
Cases (2012) 211 Cal.App.4th 1395, 1429–1430.)

                                26
       The trial court determined that HCI and HCM’s claims
based on the Term Sheet necessarily related to the breach,
termination, enforcement, interpretation or validity of the
Releases and, on that basis, it referred them to arbitration
because HCI and HCM sought to recover money that they
invested in Boldface and its business. At the same time, it stated
that the parties “concede that under the parties’ agreements, ‘the
arbitrator determines the question of arbitrability with respect’”
to the Releases, and the “question of arbitrability under the
Licens[ing] Agreement should also be decided by the
arbitrato[rs][.]” In context, we interpret the trial court’s order to
mean that the parties had to litigate all issues—including the
scope of arbitration—before the eventual arbitrators. The trial
court left it for the Panel to decide what issues fell within its
arbitral jurisdiction.
              2. The Panel Decided its Own Jurisdiction.
       The Panel’s jurisdictional order stated: “The Panel has
determined that it has subject matter and personal jurisdiction
over all claims, defenses and parties in and to this arbitration—
including all state court claims asserted by the Hillair parties,
which have been determined to be arbitrable, based on [the
Releases] and the Licens[ing] Agreement—except for the narrow
exception carved out by [the federal court] . . . .” The Panel then
added that it “decided to accord respect and thus defer to . . . [the
trial court’s] determinations of equitable estoppel as a basis for
[its] order . . . compelling arbitration of Hillair’s state court
claims.”
       In a footnote, the Panel stated that it determined that
appellants’ “contentions and argument that its claims were
neither released nor releasable under the [Releases] is an

                                 27
invitation to put the ‘cart-before-the-horse,’ which the Panel has
declined to do, instead determining that—regardless of their
ultimate resolution by the Panel—the claims are subject to the
arbitration provision of the [Releases].”
       Whether it was right or wrong, the Panel determined that
it had jurisdiction over all claims except those it expressly
excluded.
       Pushing back, appellants take the position that the
jurisdictional order was preliminary, and that the Panel failed to
make a final decision on jurisdiction by deciding whether the
Releases in fact released the claims at issue. There was nothing
preliminary about the language in the jurisdictional order. Even
if it was preliminary, the final award implicitly resolved all
jurisdictional issues. After all, by ruling on the various claims,
the Panel was expressing its belief that it had the authority to
issue those rulings.10
       C. The Panel’s Determination of Its Own Jurisdiction Must
be Upheld Unless it Was Wholly Groundless.
       Greenspan v. LADT, LLC (2010) 185 Cal.App.4th 1413,
1439 (Greenspan) held that a court can review “whether the
arbitrator’s decision on arbitrability was ‘wholly groundless.’
[Citations.]” (Id. at p. 1443.)
       Greenspan relied on a federal case and two state cases
holding that a trial court should honor a party’s claim that a
dispute is arbitrable unless that claim is wholly groundless.

10    Appellants contend that the final award was not final
because the Panel did not decide the necessary issue of whether
any claims were released. They seek to conflate that issue with
whether the Panel determined that it had jurisdiction under the
Releases. We view these as separate issues. Whether the Final
Award was final is analyzed in part IV.A. post, of the Discussion.

                                28
(Greenspan, supra, 185 Cal.App.4th at p. 1443.) That federal
case, Qualcomm, Inc. v. Nokia Corp. (Fed.Cir. 2006) 466 F.3d
1366, was overruled by Henry Schein, Inc. v. Archer & White
Sales, Inc. (2019) 139 S.Ct. 524, 531 (Schein), which held that
there is no “‘wholly groundless’” exception to the power of an
arbitrator to decide his or her own jurisdiction. The Supreme
Court explained that when “the parties’ contract delegates the
arbitrability question to an arbitrator, the courts must respect
the parties’ decision as embodied in the contract.” (Schein, supra,
at p. 531.) Because California courts often look to federal law
with respect to arbitration matters, the Kardashians suggest that
Greenspan may no longer be good law in light of Schein. But
Greenspan sets forth state law, and it has not been overruled.
We opt to follow it.
       D. Appellants Failed to Show That the Panel’s Exercise of
Jurisdiction Was Wholly Groundless.
       Appellants did not raise the “wholly groundless” issue in
their opening brief. The Kardashians, however, raised it in their
respondents’ brief, and argued it. In the reply brief, appellants
argue: “So while [the Kardashians] are correct that a challenge
to an arbitrator’s jurisdictional ruling is ordinarily governed by a
‘wholly groundless’ standard, the Panel never made this crucial
jurisdictional ruling as to the ‘scope or applicability’ of the
Releases to the claims. There was thus no jurisdictional ruling
on this issue for the Court to evaluate under a ‘wholly groundless’
standard.” Alternatively, they argue: “Even applying the ‘wholly
groundless’ standard that [the Kardashians] advocate, the
Panel’s decision to rule on the merits of claims that it treated as
unreleased and, thus, untouched by the Releases—and which
therefore bore no conceivable relation to the Releases [citation]—

                                29
was the very definition of ‘wholly groundless.’” This one sentence
argument in the reply brief assumes that there is no conceivable
relation between any of the claims and Releases but offers no
analysis. Elsewhere in appellants’ briefs, and in connection with
their discussion of whether the Panel failed to decide a necessary
issue, they posit that if the Panel found a relationship between
the Releases and the Kardashians’ claims, that finding “would
produce an absurd result because then every conceivable
unreleased claim would be ‘related’ to the Releases[.]”
       The subject matter of the Releases was claims that could
have been asserted in connection with the Licensing Agreement,
Boldface and its business, the Tillett litigation, and HCM’s
involvement with or investment in Boldface and its business.
The parties were required to arbitrate any dispute related to the
Releases. The word “related” is a broad concept meaning
associated or connected. All the claims arose out of the Licensing
Agreement, the Tillett litigation, and HCM’s involvement with or
investment in Boldface and its business. Even if those claims
postdated the Releases, they involved the same or similar
subjects, parties and legal issues, and it was not wholly
groundless for the Panel to conclude that their subject matter
was related to the Releases. This analysis is circumspect and
thereby avoids the result of every conceivable unreleased claim
being related to the Releases.
       E. Whether the Kardashians’ Claims Should Have Been
Dismissed is Not Reviewable.
       Appellants posit that the Kardashians’ claims accrued
before the Releases were executed and should have been
dismissed by the Panel accordingly. But appellants are

                                30
essentially arguing that the Panel made either an error of fact or
an error of law. Neither are reviewable.
III. Challenges to the Order Compelling HCI and HCM to
Arbitrate the Contract and Tort Claims in Their
Complaint.
      A trial court cannot make determinations on substantive
issues of arbitrability that are reserved for arbitrators.
(Sandquist v. Lebo Auto., Inc. (2016) 1 Cal.5th 233, 261.)
Appellants contend that the trial court violated this rule when it
compelled arbitration under the Releases. But as we explained in
part II.B.1., ante, of the Discussion, the trial court did not decide
any substantive issues of arbitrability, which undermines
appellants’ position. It referred substantive issues of
arbitrability to the arbitrators.
      Next, appellants lodge a series of objections to the trial
court’s order compelling them to arbitrate under the Licensing
Agreement based on an equitable estoppel theory. Those issues
are moot given that appellants were required to arbitrate under
the Releases.
IV. Challenges to the Orders Confirming the Arbitration
Award and Denying Vacatur.
      A. First Argument (The Panel Failed to Decide a Necessary
Issue: Whether the Releases, Pursuant to Which the Panel Took
Jurisdiction Over HCI and HCM, Released Any of the Claims at
Issue).
      Appellants argue that the final award did not determine
the necessary issue of whether any claims were extinguished by
the Releases. This leads them to claim that the arbitration
award was not subject to confirmation because it was not final.
This argument fails.

                                 31
        Code of Civil Procedure section 1283.411 provides: “[An
arbitration] award shall be in writing and signed by the
arbitrators concurring therein. It shall include a determination
of all the questions submitted to the arbitrators the decision of
which is necessary in order to determine the controversy.” If an
arbitration award does not meet these requirements, it is not a
final award and cannot be confirmed. (Kaiser Foundation Health
Plan, Inc. v. Superior Court (2017) 13 Cal.App.5th 1125, 1131
(Kaiser).)
        It is for the arbitrators to decide what is necessary to the
ultimate decision. (Cothron v. Interinsurance Exchange (1980)
103 Cal.App.3d 853.) “An award is valid if its settles the entire
controversy and there is no general rule that an arbitrator must
either find facts [citation], detail the process by which the result
was reached [citations], or give the reasons behind the award.
[Citation.] It is not the finding on issues that is required; it is the
determination thereof when ‘necessary in order to determine the
controversy.’” (Id. at p. 860.) Thus, an award “need not . . . set
forth findings of facts or a statement of reasons. The award is
valid as long as it serves to settle the entire controversy and
simply state that one party pay the other a sum of money.
[Citation.]” (Severtson v. Williams Construction Co. (1985) 173
Cal.App.3d 86, 92.)
        The final award determined whether the parties proved
their claims and stated the sums that appellants were required to
pay the Kardashians for damages, interest and attorney fees.
That was sufficient to make it valid. The law did not require the
arbitration award to include a determination on whether any

11    All further references are to the Code of Civil Procedure
unless otherwise indicated.

                                  32
claims had been released or, alternatively, whether appellants
waived their affirmative defense based on the releases due to
their failure to sufficiently assert the issue until after the Panel
issued its interim award.
       Appellants argue that reversal is dictated by Banks v.
Milwaukee Ins. Co. (1966) 247 Cal.App.2d 34 (Banks). In that
case, the plaintiff received an award of special damages in
arbitration but not an award of general damages. He petitioned
the trial court to correct or vacate the award. In a declaration
submitted to the trial court, the arbitrator declared that through
inadvertence, mistake and/or excusable neglect, he failed to make
an award for general damages. (Id. at pp. 35–37.) The defendant
sought confirmation of the award. After a hearing, the trial court
denied the plaintiff’s petition and confirmed the award. On
appeal, the court noted, “If the record actually shows that the
issue of general damages had been submitted to the arbitrator,
and that he had totally failed to consider it, the [trial] court could
and should have vacated the award.” (Id. at p. 38.) Because the
record showed that the arbitrator failed to consider the element
of general damages, the court concluded the arbitrator violated
section 1283.4. (Banks, supra, at p. 39.) Banks is
distinguishable. In that case, the arbitrator failed to rule on an
issue of damages. That did not happen here.
       Kaiser, supra, 13 Cal.App.5th 1125 also offers appellants no
aid. There, an arbitration panel issued a partial final award
regarding certain claims but not others. (Id. at p. 1130.) The
court concluded that the partial final award was not final under
section 1283.4 and could not be confirmed. (Kaiser, supra, at
p. 1131.) Unlike in Kaiser, the arbitration award here resolved
all the parties’ claims.

                                 33
       B. Second Argument (The Panel Exceeded Its Powers).
              1. Relevant Law.
       Section 1286.2, subdivision (a)(4) establishes that an
arbitration award can be vacated if a court determines that the
arbitrators exceeded their powers. An arbitrator “‘exceeds his
powers . . . when he acts without subject matter jurisdiction,
decides an issue that was not submitted to arbitration [citations],
arbitrarily remakes the contract [citation], upholds an illegal
contract [citation], issues an award that violates a well-defined
public policy [citation], issues an award that violates a statutory
right [citation], fashions a remedy that is not rationally related to
the contract [citation], or selects a remedy not authorized by law
[citations].’” (O’Flaherty v. Belgum (2004) 115 Cal.App.4th 1044,
1055–1056.) If an arbitration clause defines the issues to be
arbitrated and describes the limits of the arbitrators’ review
authority and the available remedies, arbitrators exceed their
authority if they stray beyond those limits. (Cal. Faculty Ass’n. v.
Superior Court (1998) 63 Cal.App.4th 935, 953 (California
Faculty).)
       In AMD, our Supreme Court sought “a meaningful,
workable and properly deferential framework for reviewing an
arbitrator’s choice of remedies” for breach of contract. (AMD,
supra, 9 Cal.4th at pp. 366, 381.) It held: “[I]n the absence of
more specific restrictions in the arbitration agreement, the
submission or the rules of arbitration, the remedy an arbitrator
fashions does not exceed his or her powers if it bears a rational
relationship to the underlying contract as interpreted, expressly
or impliedly, by the arbitrator and to the breach of contract
found, expressly or impliedly, by the arbitrator.” (Id. at p. 367.)
AMD explained that “[a]rbitrators are not obliged to read

                                 34
contracts literally, and an award may not be vacated merely
because the court is unable to find the relief granted was
authorized by a specific term of the contract. [Citation.]” (AMD,
supra, 9 Cal.4th at p. 381.) An award “will be upheld so long as it
was even arguably based on the contract; it may be vacated only
if the reviewing court is compelled to infer the award was based
on an extrinsic source. [Citations.]” (Ibid.)
              2. Second Argument, Part (a) (The Panel Exceeded
its Powers by Awarding $6,280,750 as a Proxy Remedy for
Haven’s Failure to Pay a Fixed and Undisputed Amount of
$342,498 Due Under the Licensing Agreement).
       In a civil court, an award cannot be based on an estimate
when the contract provides a readily ascertainable basis for
calculating damages. (El Centro Mall, LLC v. Payless
ShoeSource, Inc. (2009) 174 Cal.App.4th 58, 64.) Based on
appellants’ reading of the final award, the Panel violated this
rule by using guaranteed minimum royalties as an estimate (or a
proxy) for sales royalties due under the Licensing Agreement
even though it provided a readily ascertainable basis for
calculating sales royalties. Thus, they claim that the Panel
exceeded its powers when it awarded $6,280,750 in guaranteed
minimum royalties instead of the readily ascertainable amount of
$342,498 in sales royalties. This leads them to also claim that
the award was not rationally related to the Licensing Agreement
and a breach. (AMD, supra, 9 Cal.4th at p. 378.) But the Panel
expressly stated that the Licensing Agreement entitled the
Kardashians to either sales royalties or guaranteed minimum
royalties, and it stated that guaranteed minimum royalties “were
due.” It implicitly found that the Licensing Agreement required
those payments and that appellants were in breach of that term.

                                35
Thus, the award was not based on an estimate of sales royalties
due, it was based on the guaranteed minimum royalties that
were due. Consequently, it was rationally related to the
Licensing Agreement and a breach, and it passes the low hurdle
necessary to escape court oversight.
       Shifting to a different argument, appellants suggest that
the Panel exceeded its authority by awarding guaranteed
minimum royalties because the Kardashians’ June 22, 2016,
letter demanded payment of only the sales royalties. This
argument is infirm. First, as stated above, the test is whether
the award bears a rational relationship to the Licensing
Agreement and a breach. Second, the June 22, 2016, letter made
clear that the Kardashians were not waiving the demands for
guaranteed minimum royalties set forth in the February 26,
2016, letter and the demand for arbitration. More importantly,
we cannot second guess the Panel’s determination of the issues to
be decided in arbitration.
             3. Second Argument, Part (b) (The Panel Exceeded
its Powers by Awarding Guaranteed Minimum Royalties and
Indemnity Amounts That the Kardashians Repeatedly
Relinquished).
       Appellants assert that the Releases relinquished the
Kardashians’ claims related to the Licensing Agreement, the
Term Sheet called for the parties to amend the Licensing
Agreement to eliminate guaranteed minimum royalties, and the
APA stated that Boldface retained liabilities predating the APA.
Based on these contracts, appellants argue that they had
defenses to the Kardashians’ claims for guaranteed minimum
royalties and indemnity under the Licensing Agreement. They
bundle all this together and argue that the awards of guaranteed

                               36
minimum royalties and indemnity did not bear a rational
relationship to the Release, Term Sheet and APA and therefore
the Panel exceeded its authority.
       Appellants’ argument finds no support in the law. AMD
only requires us to consider if an award is rationally related to
the underlying contract. It does not require us to consider
whether the awards were rationally related to contracts
providing affirmative defenses. The cases cited by appellants do
not establish otherwise. (See California Faculty, supra, 63
Cal.App.4th at p. 953 [holding that the arbitrator failed to
conform to the specific restrictions of the parties’ agreement and
therefore made decisions outside the scope of his authority]; Blue
Cross of California v. Jones (1993) 19 Cal.App.4th 220, 228
[holding that an award that exceeded financial limits imposed in
insurance policies exceeded the arbitrators’ authority]; Bonshire
v. Thompson (1997) 52 Cal.App.4th 803, 811 [an award exceeded
the arbitrator’s authority because it was based on a contractual
term provided by extrinsic evidence that the arbitration clause
prohibited the arbitrator from considering].)
            4. Second Argument, Part (c) (The Panel Exceeded
its Powers by Imposing Joint and Several Liability on HCI and
HCM for Haven’s Breaches of a Contract to Which they were not
Parties).
       The Panel held HCI and HCM liable for Haven’s breaches
based on an agency theory. Alternatively, it found that it would
be inequitable to permit HCI and HCM to avoid liability after

                                37
ensuring Haven was insolvent. This alternative ruling suggested
an alter ego theory of liability.12
       Appellants argue that the “agency remedy” bears no
rational relationship to the Licensing Agreement and Haven’s
breaches.13 They cite no law establishing that the AMD rational
relationship test applies to an arbitrator’s decision to impose
agency liability on a principal. We conclude that the imposition
of agency liability is not reviewable under AMD. Whether a

12     The Panel did not expressly hold HCI and HCM liable on
an alter ego theory. But it did rule that it would be inequitable to
allow them to escape liability after ensuring that Haven did not
have adequate funds to pay a judgment, and it cited Toho-Towa
Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217
Cal.App.4th 1096, 1108, a case that cited and then applied the
alter ego doctrine. Under the alter ego doctrine, the corporate
veil can be pierced when (1) there is a unity of interest between
the corporation and the owners such that they are not separate,
and (2) there would be an inequitable result if the acts in
question are treated as those of the corporation alone. (Curci
Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 221
(Curci).) “Evidence of inadequate capitalization is . . . merely a
factor to be considered by the trial court in deciding whether or
not to pierce the corporate veil.” (Associated Vendors, Inc. v.
Oakland Meat Co. (1962) 210 Cal.App.2d 825, 841–842.)
13     Appellants cite Postal Instant Press, Inc. v. Kaswa Corp.
(2008) 162 Cal.App.4th 1510, 1522 for the proposition that agency
is a court-created remedy. But that case stated that “[t]raditional
piercing of the corporate veil is justified as an equitable remedy
when the shareholders have abused the corporate form to evade
individual liability, circumvent a statute, or accomplish a
wrongful purpose. [Citations.]” Whether agency is a “remedy”
does not impact our analysis.

                                38
principal should be held liable for an agent’s breach of contract is
wholly separate from whether the contract damages award is
rationally related to the agent’s breach. As an aside, we wish to
point out that the “agency doctrine may bind a parent to the
contracts of its subsidiary where, in addition to owning the
subsidiary, the parent company exercises ‘sufficient control over
the [subsidiary’s] activities’ such that the subsidiary becomes a
‘mere agen[t] or “instrumentality” of the parent.’ [Citations.]”
(Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31
Cal.App.5th 840, 862.) The Panel found that HCI and HCM
owned and controlled Haven, and that Haven’s only role was to
serve as their agent. These are findings of fact that we cannot
second guess.
      Appellants offer other arguments, each of which fails. We
discuss them in the order they are offered.
                   a. Argument that the Award Conflated HCI
and HCM and Evinced No Rational Basis for Piercing the Veil as
to Each Separately.
      Appellants state that the Kardashians “did not argue,
adduce evidence, or even take discovery attempting to prove that
HCI or HCM was the alter ego or agent of the other;” the
Kardashians and the Panel improperly lumped HCI and HCM
together and treated them as one entity; the Kardashians had the
burden to prove some basis for piercing the veil as to HCI and
HCM separately; and they submitted no evidence and made no
attempt to prove any alter ego relationship between any of the
appellants at the final hearing.
      These statements boil down to two ideas. Imposing liability
on HCI and HCM was contrary to the law, and it was contrary to
the evidence. But the Panel was permitted to base its decision on

                                39
broad principles of justice and equity, and we cannot review the
Panel’s reasoning or the sufficiency of the evidence.
                    b. Argument that Controlling Parent-
Subsidiary Agency Law Precludes a Joint and Several Remedy
Under These Circumstances.
       Appellants maintain that Sonora Diamond—the case cited
by the Panel in support of its decision to impose liability on HCI
and HCM based on agency—establishes that there was
insufficient evidence that Haven was the agent of either HCI or
HCM. But as we already stated, we cannot review the agency
finding, which ends our analysis.
                    c. Argument that Vacatur is Also Warranted
Under Statutory Right and Public Policy Exceptions.
       Appellants contend that the Panel’s decision violated
statutory rights and well-defined public policies related to
shielding shareholders from liability. (Sargon Enterprises, Inc. v.
Browne George Ross LLP (2017) 15 Cal.App.5th 749, 765–769
[arbitrator misinterpreted an arbitration agreement and violated
a party’s absolute statutory right to initiate litigation in court by
finding that when the party sued in court, it breached the
arbitration agreement]; Corp. Code, §§ 200 [separate existence of
corporations], 409 [limited shareholder liability], 17701.04
[limited liability for the debts and other obligations of limited
liability companies].) This argument is moot because the Panel
expressly premised HCI’s and HCM’s liability on agency, and
that ruling is not impacted by appellants’ argument. But even if
we entertained the notion that the Panel ruled exclusively based
on an alter ego theory, HCI and HCM’s challenge would fail as a
matter of law. Unlike in Sargon, this case does not involve the
undisputed violation of an absolute statutory right. As noted in

                                 40
Curci, a company’s corporate veil can be pierced under certain
circumstances. Thus, the only way that HCI’s and HCM’s
statutory rights could have been conceivably violated by the
Panel is if there was insufficient evidence to support an alter ego
theory. That issue was beyond the purview of the trial court, and
it is beyond ours, so there would be no basis to conclude that the
Panel exceeded its authority.
               5. Second Argument, Part (d) (The Panel Exceeded
its Powers by Improperly Awarding Attorney Fees under the
Lanham Act).
        The Lanham Act provides that when “a violation of any
right of the registrant of a mark registered in the Patent and
Trademark Office . . . shall have been established in any civil
action arising under this Act, the plaintiff shall be entitled . . . to
recover . . . the costs of the action. . . . The court in exceptional
cases may award reasonable attorney fees to the prevailing
party.” (15 USC § 1117(a).)
        The Panel awarded attorney fees after concluding that title
15 United States Code section 1117(a) was triggered because the
Kardashians obtained an injunction to prevent Haven from
infringing on their trademark and publicity rights.
        Appellants contend that the attorney fee award based on
the trademark infringement claim cannot stand because it bears
no rational relationship to the Licensing Agreement or the breach
of it, and because this was not an exceptional case. These
arguments miss the mark. Trademark infringement sounds in
tort (Mission Imports, Inc. v. Superior Court (1982) 31 Cal.3d
921, 931) and the attorney fee award was based on the Lanham
Act. AMD does not apply because it imposes a limitation on
remedies for breach of contract. As for whether this is an

                                  41
exceptional case, that issue relates to the sufficiency of the
evidence. Moncharsh prohibits us from examining the evidence
to determine its sufficiency.
      Taylor v. Van-Catlin Construction (2005) 130
Cal.App.4th 1061 bolsters our conclusion. The arbitrator in that
case awarded attorney fees to the prevailing party based on a
Civil Code section. On appeal, the losing party objected, arguing
that the arbitrator exceeded his powers. The court rejected the
argument, holding that even if the arbitrator failed to apply the
law properly, “it would have amounted to an error of law, not an
act exceeding his powers. The award therefore was not subject to
judicial review[.]” (Id. at pp. 1067–1068.)
             6. Second Argument, Part (e) (The Panel Decided
Issues Beyond the Scope of its Jurisdiction).
      Appellants argue that the Panel lacked arbitral jurisdiction
over all the claims. Presumably, they mean that it lacked subject
matter jurisdiction. “[T]he subject matter jurisdiction of an
arbitrator is purely a product of contract [citation], which by
definition turns on the parties’ mutual consent [citation].”
(Douglass v. Serenivision, Inc. (2018) 20 Cal.App.5th 376, 385.)
The question, then, is whether the claims presented by the
parties were subject to being arbitrated.
      Because the Panel’s exercise of jurisdiction under the
arbitration clause in the Releases was not wholly groundless, we
are required to defer to the Panel’s determination of its own
jurisdiction. It determined that it had jurisdiction over all the
claims that it decided.

                               42
       C. Third Argument (Appellants were Substantially
Prejudiced by the Arbitrators’ Denial of Appellants’ Well-Founded
Request for a First Continuance of the Final Hearing).
       “The neutral arbitrator may adjourn the hearing from time
to time as necessary. On request of a party to the arbitration for
good cause, or upon his own determination, the neutral arbitrator
may postpone the hearing to a time not later than the date fixed
by the agreement for making the award[.]” (§ 1282.2, subd. (b).)
       An arbitration award can be vacated if “the rights of the
party were substantially prejudiced by the refusal of the
arbitrators to postpone the hearing upon sufficient cause being
shown[.]” (§ 1286.2, subd. (a)(5).) When arbitrators exercise
their discretion to deny a continuance, a court must consider
whether the arbitrators abused their discretion in determining
whether there was sufficient cause, and whether the moving
party suffered substantial prejudice. (SWAB, supra, 150
Cal.App.4th at p. 1198.) As noted before, our review of the denial
of a petition to vacate is de novo. “However, we apply the
substantial evidence test to the trial court’s ruling to the extent it
rests upon a determination of disputed factual issues.
[Citations.]” (Id. at p. 1196.)
       An abuse of discretion occurs when a decisionmaker
exceeds the bounds of reason, all of the circumstances before it
being considered. The burden is on the party complaining to
establish an abuse of discretion. (Denham v. Superior Court
(1970) 2 Cal.3d 557, 566.)

                                 43
             l. Relevant Facts.14
       Appellants moved to continue the February 20, 2018, final
arbitration hearing on multiple grounds.
       The Panel denied the motion. It’s ruling detailed the
following: The Panel entered an order on March 3, 2017,
establishing certain discovery deadlines and setting a hearing on
the merits to take place during a two-week period starting
February 19, 2018. On November 8, 2017, appellants filed a
motion for a continuance of the discovery deadlines and the
merits hearings, claiming: the Kardashians failed to produce
substantial quantities of documents; discovery from third parties
had not been obtained; there had been massive spoliation of the
Kardashians’ e-mails; designation of experts and expert witness
discovery had not been undertaken; attorney-client issues raised
by the Kardashians’ business manager/attorney had to be
resolved; an attorney recently left the firm representing
appellants; and appellants’ lead counsel had a conflict due to a
trial scheduled in January 2018. The Kardashians objected to a
continuance but agreed to adjust the discovery schedule.
       Per the ruling, the Panel indicated that it had considered
whether a continuance would prejudice the Kardashians, and it
noted that the arbitration would be pending for almost two years
when the merits hearing commenced. It then stated: “The core
issues of the parties’ claims, which are now presented in or
related to this arbitration, have been in federal and state courts
even longer. While the Panel does not doubt that the state
court’s [decision to set a] . . . trial for mid-January 2018

14    In their opening brief, appellants do not offer a summary of
their motion or the Kardashians’ opposition. We decline to
summarize them on our own.

                                44
. . . caused [appellants’] counsel consternation, both sides’ lack of
preparation for the close-in-time scheduled Merits Hearing in
this arbitration—despite the . . . repeated[] strong
encouragement to both sides to get moving—was of their own
making.”
         Moving on, the Panel explained that it “approved a revised
discovery schedule, including the scheduling of party witnesses
throughout the month of December, and [it] established other
discovery deadlines relating to expert discovery.” Starting in
November 2018, the chair of the Panel made himself available to
conduct weekly discovery hearings, and he agreed to attend
depositions, including one that would raise attorney-client
privilege issues.
         Finally, the Panel determined that a continuance was not
necessary. It noted that the Kardashians claimed that they had
produced all requested documents, and they had no documents
relating to dealings with third parties. And it added: “When
pressed during the November 30 hearing regarding what expert
discovery is needed . . . , [appellants acknowledged] it would
likely be limited to a single damages expert. [The Kardashians]
stated they would call no experts, except a rebuttal damages
expert, if deemed necessary. The spoliation issue relating to the
alleged deletion of emails by the Kardashians[] can be addressed
at their depositions scheduled in the next two weeks and can be
addressed by the Panel during the Merits Hearing, according to
proof. Similarly, as noted above, the attorney-client privilege
issue relating to the Kardashians’ business manager/attorney
. . . also can be readily addressed by the Chair during [the
applicable] deposition.”

                                 45
            2. Third Argument, Part (a) (The Panel Abused its
Discretion).
       In the opening brief, appellants do not expressly argue that
the Panel abused its discretion, but they imply as much when
they state, “[T]here is no dispute that [appellants’] briefing and
sworn declarations established ‘sufficient cause’ supporting their
request for a brief first continuance of the final hearing.” They do
not explain why they believe that the issue is undisputed. They
merely cite to the trial court’s order denying the petition to
vacate the arbitration award. Then, in the reply brief, appellants
state, “Neither [the Kardashians], nor the Panel, contest[ed] that
[appellants] [had] made the necessary showing on the first
prong.”
       This assertion does not hold up.
       At no point did the trial court’s order state that there was
sufficient cause for a continuance. Rather, it explained the trial
court’s reasoning as follows: “[Appellants] do not, in their
motion, argue that they were not ready to proceed with the Final
Merits Hearing. They do not make a claim, nor demonstrate a
factual basis to argue, that their counsel, because the . . . [P]anel
did not grant their motion for a hearing continuance, was unable
to effectively present their claims and defenses at the Final
Merits Hearing. [¶] [Appellants] make several arguments that
are unrelated to the . . . [P]anel’s denial of their motion to
continue the Final Merits Hearing. They advise they were
blindsided when, after the . . . [P]anel had approved discovery
subpoenas to be served on third-parties, the Ninth Circuit ruled
(in an unrelated case) that . . . the FAA did not authorize pre-
trial discovery against non-parties. . . . [Appellants], therefore,
were not able to enforce their discovery subpoenas against third

                                 46
parties (the parties’ arbitration agreement adopted the FAA), but
they could [have], of course, serve[d] hearing subpoenas on those
parties. Any ruling that the . . . [P]anel made with respect to
[appellants’] discovery subpoenas against third parties complied
with the law and is not a ground to vacate the arbitration award.
[¶] [Appellants] also complain because some of the Kardashian
defendants had deleted their emails for the relevant of time
period. [Appellants] refer to this conduct as spoliation of
evidence. The [P]anel did address this issue in its
decision. . . . Any remedy for the conduct that [appellants]
complain of was within [the] province of the [P]anel. [¶] The
Court finds no basis to vacate the arbitration award under the
arguments advanced by” appellants. (Bolding omitted.)
       The Panel determined that a continuance was not
necessary, and in their brief, the Kardashians state in a heading,
“The Panel Did Not Abuse Its Discretion in Denying the Motion
for a Continuance.” (Bolding omitted.)
       Appellants’ argument is deficient. We conclude that they
failed to demonstrate that it was undisputed that the Panel
abused its discretion or that the Panel exceeded the bounds of
reason. “It is not our responsibility to develop an appellant’s
argument. [Citation.]” (Alvarez v. Jacmar Pacific Pizza Corp.
(2002) 100 Cal.App.4th 1190, 1206, fn. 11.)
               3. Third Argument, Part (b) (Appellants Were
Substantially Prejudiced).
       Because appellants failed to demonstrate an abuse of
discretion, the issue of substantial prejudice does not have to be
reached. Nonetheless, we have examined their prejudice
argument and deem it lacking.
       Appellants argue that they are prejudiced in three ways.

                                47
      First, they contend they were deprived of the opportunity to
discover and present third-party documents and testimony to
which the Panel had already ruled they were entitled. They
contend that this discovery was “important.” Their argument
devolves into a discussion suggesting that even though third-
party discovery subpoenas are not authorized under the FAA, the
Panel could have concluded that the CAA governed. This leads
appellants to state that they “were thus forced to forego this
important evidence and testimony in its entirety in order to avoid
the specter of taking live testimony and/or getting a document
dump from hostile parties in the midst of the final hearing
without knowing what the testimony or evidence would be.”
Because they do not explain why the discovery was important, we
cannot analyze why they would be prejudiced if they did not
obtain it.
      Second, appellants contend they were forced to conduct the
hearing with virtually none of the Kardashians’ relevant e-mails
because they were destroyed. Appellants do not explain the
relevance of these e-mails, nor do they explain why a continuance
would have changed the situation if the e-mails had been
destroyed. We are left grasping at straws to understand why
appellants suffered prejudice.
      Third, appellants argue that “when the Panel refused to
continue the merits hearing, it simultaneously forced [them] to
take virtually the entirety of discovery after the long-established
discovery cutoff, during precisely the period in which [their] lead
counsel had repeatedly informed the Panel . . . [he] would be
unavailable to take discovery due to a conflict with another
scheduled trial. [Citation.] As a result, [they] were forced to hire
new co-counsel with no prior background on the case, and were

                                48
deprived of their counsel of choice during this crucial period of
discovery and trial preparation.” The problem for appellants is
that they make no attempt to quantify the impact of not having
their chosen counsel during discovery and trial preparation.
Rather, they simply cite a Florida case for the proposition that an
arbitrator’s refusal to postpone a hearing after withdrawal of
counsel lacked a reasonable basis. Here, appellants’ counsel did
not withdraw.
       Simply put, appellants have not established prejudice.15
       All other issues are moot.
                           DISPOSITION
       The judgment is affirmed. The Kardashians shall recover
their costs on appeal.
       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

                              __________________________, J.
                                    ASHMANN-GERST
We concur:

_____________________________, P. J.
           LUI

____________________________, J.
           CHAVEZ

15    To the degree appellants raise new arguments in their
reply brief to establish they were substantially prejudiced by not
being granted a continuance, we deem those arguments waived.
(Wurzl v. Holloway (1996) 46 Cal.App.4th 1740, 1755, fn. 1 [“‘a
point not presented in a party’s opening brief is deemed to have
been abandoned or waived’”].)

                                49