Porch.com v. Kandela CA2/7, B326289

Background

Porch.com acquired the assets of Kandela, LLC in 2019, with a purchase agreement including a $6 million performance-based earnout in Porch.com stock conditioned on Kandela meeting specific revenue targets.
The agreement prohibited Porch from sabotaging Kandela’s chance to meet these targets but excluded revenue from Updater, a competitor, from the earnout calculation.
Following the acquisition, Kandela alleged Porch undermined its ability to reach revenue targets, prompting Kandela to file claims for fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing.
The dispute was submitted to binding arbitration per the parties' contract, resulting in the arbitrator finding for Porch and awarding nearly $1.4 million in fees and costs.
Kandela later sought to amend its arbitration claims to add fraudulent inducement, but the arbitrator denied the request as untimely according to JAMS rules.
The trial court confirmed the arbitration award; Kandela appealed, claiming the arbitrator failed to decide all submitted issues and erred in denying amendment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Arbitrator failed to decide all submitted issues (fraudulent inducement claim)	Kandela argued its fraudulent inducement claim was included and not decided, requiring vacatur.	Porch argued Kandela did not properly submit this claim for arbitration; it was raised too late and in violation of arbitration rules.	The court held Kandela did not provide a sufficient record showing the claim was submitted; the arbitrator did not err.
Arbitrator abused discretion by denying amendment to add claims	Kandela claimed denial of its amendment (to add fraudulent inducement) was an abuse of discretion and not prejudicial to Porch.	Porch contended 18 months of discovery/prep focused on original claims; late claims prejudiced its ability to defend.	The court found no abuse since JAMS rules were followed, and due process was not violated.
Arbitrator failed to hear material evidence	Kandela argued refusal to consider pre-closing fraud evidence was grounds for vacatur.	Porch maintained this evidence was tied to a claim not properly presented and thus rightly excluded.	The court held the arbitrator properly limited his review to submitted claims.
Standard for judicial review of arbitration awards	Kandela sought broader review, implying error in the arbitration process justified reversal.	Porch cited law limiting judicial review to narrow statutory grounds and deference to arbitrators.	The court reaffirmed the narrow scope of review and upheld the confirmation of the award.

Key Cases Cited

Moncharsh v. Heily & Blase, 3 Cal.4th 1 (Cal. 1992) (judicial review of arbitration awards is extremely limited)
Richey v. AutoNation Inc., 60 Cal.4th 909 (Cal. 2015) (arbitral finality and limited review under the California Arbitration Act)
Advanced Micro Devices, Inc. v. Intel Corp., 9 Cal.4th 362 (Cal. 1994) (arbitrator’s determination of substantive scope/jurisdiction is entitled to deference)
Heimlich v. Shivji, 7 Cal.5th 350 (Cal. 2019) (failure to decide submitted claims can be grounds for vacating an arbitration award)