Frank Dufour v. Robert Allen, 2:14-cv-05616

Background

Plaintiff DuFour sued defendants (including Robert Allen and Prosper entities) alleging a fraudulent real estate investment course and undisclosed conflicts leading to bad investments; operative pleading was the Fourth Amended Complaint.
Prosper filed a cross-complaint for breach of an Enrollment Agreement; DuFour filed a “Cross‑Cross‑Complaint” (CCC) later dismissed by the district court.
Court granted summary judgment for the Prosper Defendants and entered judgment; plaintiff appealed to the Ninth Circuit.
The district court earlier found Prosper entitled to attorneys’ fees under the Enrollment Agreement indemnity clause and directed Prosper to submit a supplemental fee request documenting hours, rates, and reasonableness.
Prosper submitted billing for 2,168.05 hours and sought $469,244.87; DuFour opposed recovery (and sought reductions) on multiple grounds, including enforceability of the Enrollment Agreement, mediation/arbitration requirements, appellate fees, block/mixed billing, and specific categories of time.
The court (Snyder, J.): approved the reasonableness of hourly rates, found DuFour estopped from denying the Enrollment Agreement, rejected DuFour’s mediation/arbitration defense (waiver), and directed Prosper to resubmit a proposed order excluding appellate-related fees, mixed entries, and certain billing/coverage entries while allowing recovery for other challenged categories where reasonable.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Entitlement to fees under Enrollment Agreement indemnity	DuFour: Agreement not proven/enforceable	Prosper: DuFour is estopped from denying and indemnity covers defense of claims arising from course activities	Court: DuFour estopped; indemnity covers broader defense of plaintiff’s claims arising from the Agreement
Mediation/arbitration requirement in Agreement	DuFour: Prosper failed to mediate, so cannot claim fees	Prosper: DuFour waived mediation/arbitration by litigating	Court: DuFour waived mediation/arbitration; cannot rely on it to deny fees
Reasonableness of hourly rates and lodestar	DuFour: Rates/hours excessive	Prosper: Rates consistent with community; documented hours	Court: Hourly rates reasonable; lodestar approach applies but hours must be documented and may be reduced for unrecoverable items
Appellate attorneys’ fees	DuFour: Fees for appeal should be excluded	Prosper: Seeks recovery for all work in defending case	Court: District court lacks authority to award appellate fees not requested in Ninth Circuit; Prosper must exclude appellate fees and costs and refile segregated entries
Block/mixed billing and administrative/billing time	DuFour: Mixed/block entries and billing communications are nonrecoverable	Prosper: Such time is part of defense	Court: Exclude billing/coverage communications; mixed/block entries must be excluded or segregated because they prevent allocation
Specific challenged tasks (reinstating corporation, unfiled arbitration petition, voluntarily dismissed cross-complaint, reviewing sanctions motions)	DuFour: These items are not recoverable	Prosper: Each was reasonably related to defense strategy	Court: Reinstating corporate status recoverable; fees for unfiled motion and voluntarily dismissed cross-complaint recoverable when reasonably related; reviewing co-defendants’ sanctions filings recoverable

Key Cases Cited

Hensley v. Eckerhart, 461 U.S. 424 (fee applicant must document hours and rates; lodestar method)
Gates v. Deukmejian, 987 F.2d 1392 (burden on opposing party to rebut fee evidence; lodestar presumption)
Camacho v. Bridgeport Financial, Inc., 523 F.3d 973 (lodestar adjustments and Kerr factors)
Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (factors for adjusting lodestar)
Moreno v. City of Sacramento, 534 F.3d 1106 (reasonable hourly rate = forum community standard)
Cummings v. Connell, 402 F.3d 936 (appellate fees must be sought in Ninth Circuit under Rule 39-1.6)
Twentieth Century Fox Film Corp. v. Entertainment Distributing, 429 F.3d 869 (affirming district award of appellate-related fees in a later panel)
Natural Resources Defense Council, Inc. v. Winter, 543 F.3d 1152 (discussing Cummings/Twentieth Century conflict; EAJA statutory exception)
Welch v. Metropolitan Life Ins. Co., 480 F.3d 942 (block billing undermines documentation burden)
Mendez v. County of San Bernardino, 540 F.3d 1109 (block billing can justify reductions)
Cox v. Ocean View Hotel Corp., 533 F.3d 1114 (factors for waiver of arbitration under California law)
Saint Agnes Medical Center v. PacifiCare of California, 82 P.3d 727 (Cal. 2003) (same test for arbitration waiver)