Hume Street Management etc. v. Beverly Hills Acquisition CA2/8
B329336
| Cal. Ct. App. | Nov 14, 2025|
Check TreatmentFiled 11/14/25 Hume Street Management etc. v. Beverly Hills Acquisition CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 EIGHT
HUME STREET B329336
MANAGEMENT
CONSULTANTS, LIMITED, (Los Angeles County
Super. Ct. No. 22SMCV02646)
Plaintiff and Respondent,
v.
BEVERLY HILLS
ACQUISITION LLC,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County. Edward B. Moreton, Jr., Judge. Affirmed.
Latham & Watkins, Marvin S. Putnam and Jessica
Stebbins Bina for Defendant and Appellant.
Munger, Tolles & Olson, Brad D. Brian, Laura D. Smolowe,
Craig Jennings Lavoie and Rachel G. Miller-Ziegler for Plaintiff
and Respondent.
_______________________
Beverly Hills Acquisition LLC (BHA) appeals the denial of
its motion to compel Hume Street Management Consultants
Limited (Hume) to arbitrate its claims against BHA. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Hume alleges it is owed millions of dollars in fees for
services it provided at The Maybourne Beverly Hills, a hotel
owned by BHA. According to Hume’s complaint, over the course
of two years it managed the hotel’s day-to-day operations,
rebranded it, navigated local government planning and
permitting requirements for its redevelopment, and designed and
oversaw that redevelopment, but was not compensated for this
work. Hume sued BHA and others, asserting claims for breach of
contract, account stated, quantum meruit, promissory estoppel,
and unjust enrichment.
BHA moved to compel arbitration of the dispute based on
an arbitration provision included in a December 10, 2020 Hotel
Management Agreement (Agreement) between BHA and
Maybourne Hotels, Limited (MHL), which established MHL as
the managing entity for the hotel. Hume was not a party to the
contract. Neither Hume nor its principal, Patrick McKillen,
signed the Agreement. However, the director of MHL who signed
the Agreement on MHL’s behalf, Liam Cunningham, was also a
director of Hume at the time the Agreement was signed.
BHA contended that even though Hume was not a party to
the Agreement, it should be bound by the Agreement’s
arbitration provision because the provision stated that all claims
related to the management and development of the hotel are
subject to arbitration. BHA argued that because Cunningham
signed the Agreement while he was a director of Hume in
addition to MHL, and because McKillen “was intimately involved
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with MHL at the time” and was appointed a director of MHL the
following year, Hume was equitably estopped from denying that
the Agreement’s arbitration provision required its claims to be
arbitrated.
The trial court denied the motion to compel arbitration,
finding that because Hume was not a signatory to the Agreement
and was not attempting to recover damages under the
Agreement, it could not be bound by the Agreement’s arbitration
clause. BHA appealed.
DISCUSSION
“Federal and California law treat valid arbitration
agreements like any other contract and favor their enforcement.”
(Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 492.) Because arbitration is a matter of contract, “[t]he general rule is that one must be a party to an arbitration agreement either to be bound by or to invoke it.” (Ford Motor Warranty Cases (2025)17 Cal.5th 1122
, 1128 (Ford).) There is, however, no policy compelling parties to accept arbitration of controversies they have not agreed to arbitrate. (Ibid.; Victoria v. Superior Court (1985)40 Cal.3d 734, 744
.)
“ ‘Given that arbitration agreements are simply contracts,
“ ‘[t]he first principle that underscores all of our arbitration
decisions’ is that ‘[a]rbitration is strictly a matter of consent.’ ”
[Citations.] Arbitration is “a way to resolve those disputes—but
only those disputes—that the parties have agreed to submit to
arbitration.” [Citation.] Consequently, the first question in any
arbitration dispute must be: What have these parties agreed to?’ ”
(Ford, supra, 17 Cal.5th at p. 1129, quoting Coinbase, Inc. v.
Suski (2024) 602 U.S. 143, 148.) Here, as in Ford, the answer is
nothing. Hume and BHA did not agree to arbitrate any dispute
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between themselves: there is no written contract between these
two parties. The arbitration clause on which BHA seeks to rely
here is included in the Agreement between BHA and MHL to
which Hume was not a signatory.
“[B]oth California and federal courts have recognized
limited exceptions to [the general rule that one must be a party to
an arbitration agreement to be bound by or to invoke it], allowing
nonsignatories to an agreement containing an arbitration clause
to compel arbitration of, or be compelled to arbitrate, a dispute
arising within the scope of that agreement.” (DMS Services, LLC
v. Superior Court (2012) 205 Cal.App.4th 1346, 1353 (DMS).)
The exception at issue here, equitable estoppel, arises when a
party’s claims are “ ‘ “intimately founded in and intertwined
with” ’ a contractual provision.” (Ford, supra, 17 Cal.5th at
p. 1126.)
The requirement that claims be intimately founded in and
intertwined with a contractual provision before a nonsignatory
may be bound to arbitrate a dispute “comports with, and indeed
derives from, the very purposes of the [equitable estoppel]
doctrine.” (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th
209, 221.) Equitable estoppel “rests on a fairness rationale” (Ford, supra, 17 Cal.5th at p. 1133), and is intended to prevent the unfair situation in which party tries to have it both ways: “to vindicate contractual provisions beneficial to them yet avoid an agreement to arbitrate.” (Ibid; see alsoDMS, supra,
205 Cal.App.4th at p. 1354
[“The reason for this equitable rule is
plain: One should not be permitted to rely on an agreement
containing an arbitration clause for its claims, while at the same
time repudiating the arbitration provision contained in the same
contract”].)
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Therefore, “[w]hen [a nonsignatory] plaintiff is suing on a
contract—on the basis that, even though the plaintiff was not a
party to the contract, the plaintiff is nonetheless entitled to
recover for its breach, the plaintiff should be equitably estopped
from repudiating the contract’s arbitration clause.” (JSM
Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222,
1239–1240.) In Ford, which presented the inverse of JSM
Tuscany with a nonsignatory defendant attempting to compel
arbitration based on the arbitration provision in a contract
between the plaintiffs and a third party, the California Supreme
Court stated that “ ‘unless a party to an arbitration agreement
has used the substantive terms of that agreement as the
foundation for his claims against a nonsignatory, there is no
reason in equity why he should be forced to arbitrate his claims
against the nonsignatory.’ ” (Ford, supra, 17 Cal.5th at p. 1137.)
In Ford, the California Supreme Court considered when
claims are intimately founded in and intertwined with
contractual terms so as to warrant the application of equitable
estoppel. There, the court declined to apply equitable estoppel to
compel arbitration because the plaintiffs’ claims did not flow from
the contract with the arbitration provision and therefore were not
intimately founded in or intertwined in that contract. (Ford,
supra, 17 Cal.5th at p. 1126.) The Ford court emphasized that
the plaintiffs’ “causes of action against Ford do not depend on or
invoke any of the terms of the sales agreements with the dealers,
nor can they be construed to seek any benefit from those sales
contracts.” (Id. at p. 1133.) Unlike the primary cases applying
equitable estoppel, in which the “essential disputes . . . involved
allegations that the defendants themselves were liable for a
breach of contract terms,” the obligations at issue in Ford were
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not derived from the contracts with the arbitration provisions.
(Id. at pp. 1135–1136.) It was not enough that the parties’
dispute presupposed the existence of the contract or referred to
it—the “ ‘substantive terms of that agreement’ ” had to be “ ‘the
foundation for [the] claims.’ ” (Id. at p. 1137.) In Ford, the court
concluded, “[P]laintiffs’ claims flow not from the contracts but
from separate statutory requirements and conventional fraud
theories. They are not intimately founded in and intertwined
with the contractual terms.” (Id. at p. 1138.)
Here BHA contends Hume’s claims are inextricably
intertwined with the Agreement because the duties Hume claims
to have performed pursuant to its oral and implied in fact
contract with BHA “overlap” the duties assigned to MHL in the
Agreement. BHA also dubiously contends that the Agreement’s
integration clause will have to be interpreted in the course of this
dispute.
We do not agree with BHA’s contentions. Hume’s claims
are not founded on an allegation that the Agreement between
BHA and MHL was breached. Rather, they are based on BHA’s
alleged breach of its contract with Hume: Hume’s complaint
alleges claims based on its separate and preexisting oral and
implied in fact agreement with BHA providing that it would
manage and redevelop the hotel in exchange for compensation.
Just as in Ford, the claims made by Hume here do not seek to
“enforce any contractual term [in the contract containing the
arbitration provision]. Indeed, plaintiffs’ claims would be the
same even if there were no . . . contract.” (Ford, supra, 17 Cal.5th
at p. 1136.) Therefore, Hume “did not make use of a contract
provision while attempting to avoid their own obligation in the
same contract upon which they rely.” (Id. at p. 1138.) In the
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absence of claims based on the Agreement between BHA and
MHL, the fundamental rationale of the equitable estoppel
doctrine does not apply here, and there is no equitable reason to
subject Hume to an arbitration clause to which it did not agree,
in a contract to which it was not a party.
Detailing a number of prior contracts that included
arbitration provisions, BHA argues the “long-lasting and
preexisting business relationship between Hume Street, its
principals (McKillen and Cunningham), MHL, Beverly Hills
Acquisition, the other defendants, and parties affiliated with the
defendants,” and in particular the relationship between MHL and
Hume, warrants the application of equitable estoppel here. The
kind of relationship that merits extending an arbitration clause
to a nonsignatory asserting claims founded on that contract is
one that “generally gives the party to the agreement authority to
bind the nonsignatory. Examples of the preexisting relationship
include agency, spousal relationship, parent-child relationship
and the relationship of a general partner to a limited
partnership.” (Crowley Maritime Corp. v. Boston Old Colony Ins.
Co. (2008) 158 Cal.App.4th 1061, 1070(Crowley).) In Ford, the Supreme Court gave other examples: a nonsignatory company seeking to enforce an arbitration agreement entered into by its subsidiary (Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003)109 Cal.App.4th 1705, 1717
); a party explicitly authorized as a subcontractor in the agreement with the arbitration clause and whose subcontract incorporated that contract (Turtle Ridge Media Group, Inc. v. Pacific Bell Directory (2006)140 Cal.App.4th 828
, 833–834); and plaintiff
employees assigned to nonsignatory employers by employers that
had agreed to arbitrate (Boucher v. Alliance Title Co., Inc. (2005)
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127 Cal.App.4th 262, 271–273; Garcia v. Pexco, LLC (2017)11 Cal.App.5th 782
, 787–788). (Ford, supra, 17 Cal.5th at
p. 1137.)
No equivalent relationship exists here. BHA has neither
shown that MHL had the authority to bind Hume nor that an
agency relationship existed between them. Hume is not alleged
to be the parent or subsidiary of MHL. The Agreement does not
mention Hume, let alone authorize it as a subcontractor, and
Hume is not alleged to be a successor of either party, a third-
party beneficiary, or to have been assigned any obligations or
benefits by the contract. The connections identified by BHA—
prior business dealings involving contracts with arbitration
provisions; Cunningham’s status as a director of both MHL and
Hume at the time he signed the Agreement on behalf of MHL;
McKillen’s later service as a director of MHL; and the assertion
that the Agreement is “identical” to other contracts Cunningham
signed while acting in his role as a director of Hume—none of
these establish that MHL had any authority to bind Hume to
contract provisions or demonstrate the kind of preexisting
relationship that Crowley and Ford describe.
Moreover, Cunningham signed various contracts two times,
once for Hume and once for another entity, indicating the parties’
understanding that an individual signs a contract on behalf of
specific, identified organizations rather than binding all
organizations with which the signer is affiliated with a single
signature.
Therefore, on our independent review (Daniels v. Sunrise
Senior Living, Inc. (2013) 212 Cal.App.4th 674, 680), we conclude
that equitable estoppel does not apply here, and the trial court
did not err when it denied the petition to compel arbitration.
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DISPOSITION
The order denying the motion to compel arbitration is
affirmed. Respondent shall recover its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, P. J.
We concur:
WILEY, J.
RUBIN, J.*
* Retired Presiding Justice of the California Court of Appeal,
Second District, assigned by the Chief Justice pursuant to article
VI, section 6 of the California Constitution.
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