A federal judge in Florida recently denied an accounting firm’s attempt to recover fees from lenders who participated in the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The firm argued these PPP lenders were required to pay them agent fees, pursuant to the PPP and its implementing regulation. However, the judge disagreed and dismissed the complaint, finding that the firm had no legal or equitable claim to the fees PPP lenders had received from the SBA.
In its amended complaint, the firm brought a claim for declaratory relief, conversion, unjust enrichment, and contract implied in law. The declaratory relief and conversion claims assumed that the PPP and it’s implementing regulation, SBA’s interim final rule (IFR), required lenders to pay agent fees irrespective of an agreement. While the unjust enrichment and contract implied in law claims were premised on the PPP lenders knowing of or benefiting from the firm’s work.
The judge dismissed the declaratory relief claim because PPP lenders were not legally required to pay agents absent an agreement. The CARES Act provided a limit on the amount of fees an agent could collect from a lender, but was silent on the issue of who, if anyone, would pay those fees. Similarly, there was no mandate under the IFR for lenders to pay agent fees. If agent fees were paid, the IFR required that they come from the fees lenders receive from the SBA, and it capped them based on loan amounts. Additionally, lenders and agents had to enter into an agreement, pursuant to SBA regulations.
Because the firm had no right to any portion of the fees the lenders received from the SBA, the judge ruled that it could not move forward with its conversion claim. For the remaining claims – unjust enrichment and contract implied in law – the judge, finding that they were one and the same, dismissed them because the firm did not directly confer a benefit to the lenders. The loan processing the firm completed was merely an incidental benefit to the PPP lenders. The firm is one of many agents across this country to file a case of first impression seeking fees from lenders who participated in the PPP under the CARES Act.