Court filing

Exhibit A — Agent Fee Litigation (Dkt. 98.3)

Summary

An exhibit filed June 10, 2020 as Document 98-3 under MDL No. 2950 and labeled Exhibit A. It reproduces the ECF civil docket sheet for James Quinn et al v. JPMorgan Chase Bank, N.A. et al, Case No. 1:20-cv-04100-JSR, in the U.S. District Court for the Southern District of New York before Judge Jed S. Rakoff, opened May 28, 2020 with a stated demand of $5,000,000 and listing entries through June 10, 2020, including two objections to a statement of relatedness. It then reproduces the amended complaint, a class action by agents seeking the agent share of lender compensation for processing Paycheck Protection Program loans under the CARES Act. The complaint states that Congress authorized up to $349 billion and later added $310 billion, and that lenders receive 5% on loans under $350,000. The exhibit runs 34 pages.

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Full text

Case MDL No. 2950 Document 98-3 Filed 06/10/20 Page 1 of 34

EXHIBIT A
Case MDL No. 2950 Document 98-3 Filed 06/10/20 Page 2 of 34

ECF
U.S. District Court
Southern District of New York (Foley Square)
CIVIL DOCKET FOR CASE #: 1:20−cv−04100−JSR

James Quinn et al v. JPMorgan Chase Bank, N.A. et al Date Filed: 05/28/2020
Assigned to: Judge Jed S. Rakoff Jury Demand: Plaintiff
Demand: $5,000,000 Nature of Suit: 190 Contract: Other
Related Cases: 1:20−cv−04144−JSR Jurisdiction: Diversity
1:20−cv−04145−JSR
Cause: 28:1332df Diversity−Contract Default
Plaintiff
James Quinn represented by Elaine Simek Kusel
TERMINATED: 06/04/2020 McCune Wright Arevalo, LLP
doing business as 3281 E. Guasti Road, Suite 100
Q Financial Services Ontario, CA 91761
TERMINATED: 06/04/2020 909−557−1250
Fax: 909−557−1275
Email: esk@mccunewright.com
ATTORNEY TO BE NOTICED

Plaintiff
Fahmia, Inc. represented by Elaine Simek Kusel
(See above for address)
ATTORNEY TO BE NOTICED

Plaintiff
Prinzo & Associates, LLC represented by Elaine Simek Kusel
individually and on behalf of all others (See above for address)
similarly situated ATTORNEY TO BE NOTICED

Plaintiff
James Quinn represented by Elaine Simek Kusel
(See above for address)
ATTORNEY TO BE NOTICED

V.
Defendant
JPMorgan Chase Bank, N.A. represented by Sylvia E. Simson
doing business as Greenberg Traurig, P.A
Chase Bank 200 Park Ave
New York, NY 10166
212−801−9200
Email: simsons@gtlaw.com
ATTORNEY TO BE NOTICED

Defendant
JPMorgan Chase & Co. represented by Sylvia E. Simson
(See above for address)
ATTORNEY TO BE NOTICED

Defendant
DOES 1 through 100
inclusive

Miscellaneous
Case MDL No. 2950 Document 98-3 Filed 06/10/20 Page 3 of 34

Citibank, N.A.

Miscellaneous
CitiGroup Inc.

Miscellaneous
MUFG Americas Holdings Corp.

Miscellaneous
MUFG Union Bank, N.A.

Date Filed # Docket Text
05/28/2020 1 COMPLAINT against DOES 1 through 100, inclusive,, JPMORGAN CHASE BANK,
N.A., d/b/a CHASE BANK, JPMorgan Chase & Co.. (Filing Fee $ 400.00, Receipt
Number ANYSDC−20023784)Document filed by JAMES QUINN d/b/a Q
FINANCIAL SERVICES, PRINZO & ASSOCIATES, LLC, individually and on
behalf of all others similarly situated, FAHMIA, INC...(Kusel, Elaine) (Entered:
05/28/2020)
05/28/2020 2 CIVIL COVER SHEET filed..(Kusel, Elaine) (Entered: 05/28/2020)
05/28/2020 3 REQUEST FOR ISSUANCE OF SUMMONS as to JPMorgan Chase Bank, N.A., re:
1 Complaint,. Document filed by FAHMIA, INC., JAMES QUINN d/b/a Q
FINANCIAL SERVICES, PRINZO & ASSOCIATES, LLC, individually and on
behalf of all others similarly situated..(Kusel, Elaine) (Entered: 05/28/2020)
05/28/2020 4 REQUEST FOR ISSUANCE OF SUMMONS as to JPMorgan Chase & Co., re: 1
Complaint,. Document filed by FAHMIA, INC., JAMES QUINN d/b/a Q
FINANCIAL SERVICES, PRINZO & ASSOCIATES, LLC, individually and on
behalf of all others similarly situated..(Kusel, Elaine) (Entered: 05/28/2020)
05/29/2020 CASE OPENING INITIAL ASSIGNMENT NOTICE: The above−entitled action is
assigned to Judge Jed S. Rakoff. Please download and review the Individual Practices
of the assigned District Judge, located at
https://nysd.uscourts.gov/judges/district−judges. Attorneys are responsible for
providing courtesy copies to judges where their Individual Practices require such.
Please download and review the ECF Rules and Instructions, located at
https://nysd.uscourts.gov/rules/ecf−related−instructions..(pne) (Entered: 05/29/2020)
05/29/2020 Magistrate Judge Ona T. Wang is so designated. Pursuant to 28 U.S.C. Section 636(c)
and Fed. R. Civ. P. 73(b)(1) parties are notified that they may consent to proceed
before a United States Magistrate Judge. Parties who wish to consent may access the
necessary form at the following link:
https://nysd.uscourts.gov/sites/default/files/2018−06/AO−3.pdf. (pne) (Entered:
05/29/2020)
05/29/2020 Case Designated ECF. (pne) (Entered: 05/29/2020)
05/29/2020 ***NOTICE TO ATTORNEY REGARDING PARTY MODIFICATION. Notice
to attorney Elaine Simek Kusel. The party information for the following
party/parties has been modified: James Quinn, Fahmia, Inc., Prinzo &
Associates, LLC, JPMorgan Chase Bank, N.A., DOES 1 through 100. The
information for the party/parties has been modified for the following
reason/reasons: party name was entered in all caps; party text was entered
incorrectly; alias party information was entered incorrectly. (pne) (Entered:
05/29/2020)
05/29/2020 ***NOTICE TO ATTORNEY REGARDING CIVIL CASE OPENING
STATISTICAL ERROR CORRECTION: Notice to attorney Elaine Simek Kusel.
The following case opening statistical information was erroneously
selected/entered: County code New York. The following correction(s) have been
made to your case entry: the County code has been modified to XX Out of State.
(pne) (Entered: 05/29/2020)
Case MDL No. 2950 Document 98-3 Filed 06/10/20 Page 4 of 34

05/29/2020 5 ELECTRONIC SUMMONS ISSUED as to JPMorgan Chase Bank, N.A...(pne)
(Entered: 05/29/2020)
05/29/2020 6 ELECTRONIC SUMMONS ISSUED as to JPMorgan Chase & Co...(pne) (Entered:
05/29/2020)
06/02/2020 7 FILING ERROR − DEFICIENT PLEADING − FILER ERROR − AMENDED
COMPLAINT amending 1 Complaint, against DOES 1 through 100, JPMorgan Chase
& Co., JPMorgan Chase Bank, N.A. with JURY DEMAND.Document filed by James
Quinn, Prinzo & Associates, LLC, Fahmia, Inc.. Related document: 1
Complaint,..(Kusel, Elaine) Modified on 6/3/2020 (pne). (Entered: 06/02/2020)
06/02/2020 8 FILING ERROR − WRONG EVENT TYPE SELECTED FROM MENU −
REQUEST FOR ISSUANCE OF SUMMONS as to JPMorgan Chase Bank, N.A., re:
7 Amended Complaint,. Document filed by Prinzo & Associates, LLC, James
Quinn..(Kusel, Elaine) Modified on 6/3/2020 (pne). (Entered: 06/02/2020)
06/02/2020 9 FILING ERROR − WRONG EVENT TYPE SELECTED FROM MENU −
REQUEST FOR ISSUANCE OF SUMMONS as to JPMorgan Chase & Co., re: 7
Amended Complaint,. Document filed by Fahmia, Inc., Prinzo & Associates, LLC,
James Quinn..(Kusel, Elaine) Modified on 6/3/2020 (pne). (Entered: 06/02/2020)
06/03/2020 ***NOTICE TO ATTORNEY REGARDING DEFICIENT PLEADING. Notice
to Attorney Elaine Simek Kusel to RE−FILE re: Document No. 7 Amended
Complaint,. The filing is deficient for the following reason(s): all of the parties
listed on the pleading were not entered on CM ECF; party name has been
modified on pleading caption; 'JAMES QUINN' must be added to the case as a
new party without an alias ; the wrong filer/filers were selected for the pleading.
Docket the event type Add Party to Pleading found under the event list
Complaints and Other Initiating Documents.. Re−file the pleading using the event
type Amended Complaint found under the event list Complaints and Other
Initiating Documents − attach the PDF − select the individually named filer/filers
− select the individually named party/parties the pleading is against. (pne)
(Entered: 06/03/2020)
06/03/2020 ***NOTICE TO ATTORNEY REGARDING DEFICIENT REQUEST FOR
ISSUANCE OF SUMMONS. Notice to Attorney Elaine Simek Kusel to RE−FILE
Document No. 8 Request for Issuance of Summons, 9 Request for Issuance of
Summons. The filing is deficient for the following reason(s): the wrong event type
was used to file the request for issuance of summons; summonses have already
been issued for these parties; the summons requests were not processed due to the
deficient pleading; re−file your summons requests after you have properly
re−filed your pleading. Re−file the document using the event type Request for
Issuance of AMENDED Summons found under the event list Service of Process −
select the correct filer/filers − and attach the summons form PDF. (pne) (Entered:
06/03/2020)
06/03/2020 10 FILING ERROR − FILING ERROR − AMENDED COMPLAINT amending 7
Amended Complaint, against DOES 1 through 100, JPMorgan Chase & Co.,
JPMorgan Chase Bank, N.A. with JURY DEMAND.Document filed by James Quinn.
Related document: 7 Amended Complaint,..(Kusel, Elaine) Modified on 6/3/2020
(jgo). (Entered: 06/03/2020)
06/03/2020 11 AMENDED COMPLAINT amending 1 Complaint, against DOES 1 through 100,
JPMorgan Chase & Co., JPMorgan Chase Bank, N.A. with JURY
DEMAND.Document filed by Prinzo & Associates, LLC, Fahmia, Inc., James Quinn.
Related document: 1 Complaint,..(Kusel, Elaine) (Entered: 06/03/2020)
06/03/2020 12 REQUEST FOR ISSUANCE OF AMENDED SUMMONS as to JPMorgan Chase
Bank, N.A., re: 11 Amended Complaint,. Document filed by Fahmia, Inc., Prinzo &
Associates, LLC, James Quinn..(Kusel, Elaine) (Entered: 06/03/2020)
06/03/2020 13 REQUEST FOR ISSUANCE OF AMENDED SUMMONS as to JPMorgan Chase &
Co., re: 11 Amended Complaint,. Document filed by Fahmia, Inc., Prinzo &
Associates, LLC, James Quinn..(Kusel, Elaine) (Entered: 06/03/2020)
06/04/2020 14 ELECTRONIC AMENDED SUMMONS ISSUED as to JPMorgan Chase & Co...(jgo)
(Entered: 06/04/2020)
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06/04/2020 15 ELECTRONIC AMENDED SUMMONS ISSUED as to JPMorgan Chase Bank,
N.A...(jgo) (Entered: 06/04/2020)
06/04/2020 16 OBJECTION TO STATEMENT OF RELATEDNESS Statement by Third−Parties
Citibank, N.A. and Citigroup Inc. in Opposition to Plaintiff Fahmia, Inc.'s Related
Case Statement. Document filed by Citibank, N.A., CitiGroup Inc.. (Attachments: # 1
Exhibit A, # 2 Exhibit B).(Houpt, Christopher) (Entered: 06/04/2020)
06/05/2020 17 OBJECTION TO STATEMENT OF RELATEDNESS Statement by Interested Parties
MUFG Americas Holdings Corp. and MUFG Union Bank, N.A., in Opposition to
Plaintiff Fahmia, Inc.s Related Case Statement. Document filed by MUFG Americas
Holdings Corp., MUFG Union Bank, N.A.. (Attachments: # 1 Exhibit A − Related
Case Statement, No. 20−cv−4155, # 2 Exhibit B − Order Declining Transfer,
20−cv−4036 (CD Cal.)).(Nicholson, Michael) (Entered: 06/05/2020)
06/08/2020 18 REPLY re: 16 OBJECTION TO STATEMENT OF RELATEDNESS, 17
OBJECTION TO STATEMENT OF RELATEDNESS, . Document filed by Fahmia,
Inc., Prinzo & Associates, LLC, James Quinn. (Attachments: # 1 Exhibit 1, # 2 Exhibit
2).(Kusel, Elaine) (Entered: 06/08/2020)
06/09/2020 19 NOTICE OF APPEARANCE by Sylvia E. Simson on behalf of JPMorgan Chase &
Co., JPMorgan Chase Bank, N.A...(Simson, Sylvia) (Entered: 06/09/2020)
06/09/2020 20 NOTICE OF COURT CONFERENCE: Initial Conference set for 6/23/2020 via
teleconference, at 11:00 AM before Judge Jed S. Rakoff, with the following dial−in
information: − USA Toll−Free: (888) 363−4735 − USA Caller Paid/International Toll:
(215) 446−3657 − Access Code: 1086415, and as further set forth in this order.
(Signed by Judge Jed S. Rakoff on 6/9/2020) (jwh) (Entered: 06/09/2020)
06/10/2020 21 WAIVER OF SERVICE RETURNED EXECUTED. JPMorgan Chase Bank, N.A.
waiver sent on 6/9/2020, answer due 8/10/2020. Document filed by Prinzo &
Associates, LLC; Fahmia, Inc.; James Quinn..(Kusel, Elaine) (Entered: 06/10/2020)
06/10/2020 22 WAIVER OF SERVICE RETURNED EXECUTED. JPMorgan Chase & Co. waiver
sent on 6/9/2020, answer due 8/10/2020. Document filed by Prinzo & Associates,
LLC; Fahmia, Inc.; James Quinn..(Kusel, Elaine) (Entered: 06/10/2020)
06/10/2020 23 RULE 7.1 CORPORATE DISCLOSURE STATEMENT. No Corporate Parent.
Document filed by Fahmia, Inc...(Kusel, Elaine) (Entered: 06/10/2020)
06/10/2020 24 RULE 7.1 CORPORATE DISCLOSURE STATEMENT. No Corporate Parent.
Document filed by Prinzo & Associates, LLC..(Kusel, Elaine) (Entered: 06/10/2020)
Case
Case MDL No. 2950 Document
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IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

James Quinn; Fahmia, Inc.; and Prinzo &
Associates, LLC, individually and on behalf of all
others similarly situated,

Plaintiffs, 20-cv-4100
v. AMENDED COMPLAINT

JPMorgan Chase Bank, N.A., doing business as
Chase Bank; and JPMorgan Chase & Co., Does 1
through 100, inclusive,

Defendants.

Plaintiffs James Quinn; (“Quinn”), Fahmia, Inc. (“Fahmia”) and Prinzo & Associates, LLC

(“Prinzo”) (collectively, “Plaintiffs”) bring this Class Action Complaint and Demand for Jury Trial

against Defendant JPMorgan Chase Bank, N.A., doing business as Chase Bank (“Chase Bank”) and

JPMorgan Chase & Co. (“JPMorgan” and together with Chase Bank, “Defendants”) Does 1 through

100, inclusive, seeking compensation from Defendants, who refuse to comply with the CARES Act that

requires them to pay out of the compensation it received for processing PPP loans, for services Plaintiffs

and a large number of other agents rendered on behalf of recipients of Small Business Administration

(“SBA”) emergency loans. Plaintiffs allege as follows upon personal knowledge as to themselves and

their own acts and experiences, and, as to all other matters, upon information and belief.

CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL
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NATURE OF THE ACTION

1. In response to the shut-down of virtually every business across all non-essential

industries due to COVID-19, the federal government has raced over the past few months to ease the

impact of the shut-down on the U.S. economy. In order to keep afloat small businesses, and to

encourage those businesses to avoid massive worker layoffs and furloughs further damaging the

economy, Congress decided to create an economic relief program to distribute money to small

businesses.

2. In order to distribute the money swiftly to small businesses, Congress decided to utilize

the nation’s financial institutions to take applications and distribute the funds that would be fully

guaranteed by the federal government. However, in order to avoid delay, Congress decided that the

financial institutions would not be required to verify the accuracy of the applications. Instead, the

burden to provide accurate information was put directly and solely on the small businesses submitting

applications.

3. The applications would need to be simple and the amount of the economic relief would

be based on historical payroll information with specific limitations. However, as the lenders would not

be verifying the information, there would need to be a number of representations and certifications, and

specific warnings because that failure to provide true and accurate information could subject the small

business owner to five years in prison and a $250,000 fine.

4. In order for these small businesses to be able to make timely, truthful and accurate

applications, Congress understood that small businesses would need assistance from the nation’s

professional accountants, tax preparers, financial advisors, attorneys, and other such agents normally

relied upon by small businesses.

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5. On March 27, 2020, Congress passed the SBA’s Paycheck Protection Program (“PPP”)

which initially authorized up to $349 billion in forgivable loans to small businesses to cover payroll and

other expenses (PPP I). After the initial funds quickly dried up, Congress added $310 billion additional

dollars to the program (PPP II).

6. The PPP was designed to be fast and straightforward, allowing business to apply through

SBA-approved lenders and await approval. Once approved, lenders would be compensated in the form

of a generous origination fee paid by the federal government, with the requirement that the lender would

be responsible for paying the fee owed to the loan applicant’s agent (e.g., attorney or accountant).

However, the PPP did not require nor layout any specific form or process to be followed between the

lender and the agent for the agent to qualify to receive their portion of the compensation. Any such

requirement would lead to delays as the lender and agent negotiated and entered into an agreement. This

kind of delay is exactly the type that would cause unacceptable devastating results for the borrowers.

Not only would this potentially cause a dangerous delay in the lending, it created the unacceptable

incentive for the lenders to prioritize applications without agent fees over those with agent fees. It was

antithetical to the whole purpose of the PPP to allow conflict over fees between the agent and the lender

to slow down or eliminate funds that were vital for both the small business owner AND the employees

and consumers that relied on the small business for income.

7. Both the lender and the agents were specifically forbidden by the PPP from charging the

small business borrower any amounts for the loan or the assistance in preparing the application for the

loan. The amount of the total compensation and the allocation between the lender and the agents

assisting the borrowers in preparing the application was specifically set out in the PPP. For the majority

of loans (those under $350,000), the lender would receive an amount equal to 5% of the loan as

compensation, and if the borrower used an agent such as a CPA or accountant, the lender was to pay an

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amount equal to 1% of the loan amount to the agent. In other words, compensation from the federal

government to the lender and the borrower’s agent was allocated as 80% to the lender and 20% to the

CPA or attorney assisting the small business borrower.

8. Defendants are the largest national banking entities in the country and are headquartered

in Manhattan, New York City. They have more than 5,100 branches and specialize in consumer and

commercial banking. Defendant reported that it approved 239,000 applications totaling over $29 billion

in borrowed funds, securing more funding for small businesses than any other lender. 1 The average PPP

loan approved by Defendants was approximately $121,339. Assuming a conservative average fee of

four percent, they have, accordingly, been allocated over $870 million in origination fees, from which

they were required to pay the agents who assisted the borrowers in submitting applications.

9. However, Defendants apparently decided that they do not need to complete the final step

of the process and based on information and belief have refused to pay the agents who assisted PPP loan

recipients with their applications. This practice seemed to be a deliberate scheme from the beginning as

even though they were required to pay agents that assisted in the application process, Defendants did not

set up a structure or ask any questions to determine whether borrowers utilized an agent in completing

applications. It appears that this scheme was to claim ignorance of the existence of the agent as an

excuse not to pay the agent its share of the compensation. This refusal is harming accountants,

attorneys, and other agents who dropped everything (in the midst of tax season) to assist their customers

in filling out these vital loan applications correctly and in compliance with the PPP, and who were

specifically only allowed to be paid for these services out of the compensation paid to the lender. The

1 See Paycheck Protection Program and Chase Business Bank: Frequently Asked Questions, available at
https://recovery.chase.com/cares1/ppp-faqs1 (last visited May 26, 2020).

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Defendants’ failure to pay agents is in blatant violation of PPP regulations stating that agent fees “will

be paid by the lender out of the fees the lender receives from SBA.”

10. These agents, including Plaintiffs, have no other recourse for collecting fees for assisting

borrowers on PPP loan applications because the PPP regulations delegate the responsibility for paying

agents to the lenders alone. And yet, Defendants have disregarded the regulations and refused to pay

agents who assisted small businesses in receiving PPP funds.

11. Plaintiffs have been harmed by Defendants’ practice. As CPA firms that do payroll and

other small business support functions, Plaintiffs assisted small business clients who submitted

applications to Defendants and was then funded through the PPP program. Based on information and

belief, Defendants have received the 1%, 3% or 5% compensation related to these loans based upon the

amount of the loan, but have not paid Plaintiffs their 1%, 0.50%, or 0.25% agent fee related to the loan.

12. As a result of Defendants’ acts and omissions, Plaintiffs and a large number of others like

them have been deprived of payment for their critical work in supporting their clients’ PPP loan

applications. As such, Plaintiffs bring this Class Action Complaint and Demand for Jury Trial in order

to vindicate their rights and those of agents everywhere who are similarly situated, and to force

Defendants to account for their blatant violation of the PPP and to pay agents their portion of the

compensation.

PARTIES

13. Plaintiff James Quinn is a retired accountant with its principal place of business located

in Marco Island, Florida.

14. Plaintiff FAHMIA, INC. is a CPA firm incorporated in California, with its principal place

of business located in Torrance, California.

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15. Plaintiff Prinzo & Associates is a CPA firm organized in Pennsylvania, with its principal

place of business located in McMurray, Pennsylvania.

16. Defendant JPMorgan Chase Bank, N.A., is a company and subsidiary of JPMorgan Chase

& Co., with its principal place of business located at 1111 Polaris Parkway, Columbus, Ohio 43240.

Chase Bank conducts substantial business throughout this District and the State of New York, and

throughout the United States.

17. JPMorgan Chase & Co. is a Delaware corporation whose primary place of business is

270 Park Avenue, New York City, New York 10017.

18. In this Complaint, references made to any act of any Defendants shall be deemed to mean

that officers, directors, agents, employees, or representatives of the Defendants named in this lawsuit

committed or authorized such acts, or failed and/or omitted to adequately supervise or properly control

or direct their employees while engaged in the management, direction, operation or control of the affairs

of the Defendants and did so while acting within the scope of their employment or agency.

19. Plaintiffs are unaware of the names, identities or capacities of the Defendants sued as

Doe Defendants 1 through 100, but is informed and believes and thereon alleges that such fictitiously-

named defendants are responsible in some manner for the damages and unfair business practices and

violation of rights as described herein. Plaintiff will amend this Complaint to state the true names,

identities, or capacities of such fictitiously-named Defendants when ascertained.

JURISDICTION AND VENUE

20. This Court has subject matter jurisdiction over this action under the Class Action Fairness

Act, 28 U.S.C. § 1332(d), because, as to the proposed Class and Subclasses, (a) at least one member of

the proposed Class, which consists of at least 100 members, is a citizen of a different state than

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Defendants; (b) the claims of the proposed Class Members exceed $5,000,000 in the aggregate,

exclusive of interest and costs, and (c) none of the exceptions under that subsection apply to this action.

21. Personal jurisdiction over Defendants is proper because Defendants transact business in

the State of New York, and a substantial number of the events giving rise to the claims alleged herein

took place in New York.

22. This Court has jurisdiction to grant declaratory relief under 28 U.S.C. § 2201 because an

actual controversy exists between the parties as to their respective rights and obligations under 85 Fed.

Reg. 20816 § (4)(c) (hereinafter, the “PPP regulations”).

23. Venue is proper in this judicial District pursuant to 28 U.S.C. § 1391(b)(2) because a

substantial part of the events, acts or omissions giving rise to the claim occurred in this judicial District,

including work performed by Plaintiffs on behalf of business clients within this District. Further,

Defendants are headquartered in this judicial District.

FACTUAL BACKGROUND

24. The spread of COVID-19 was declared a pandemic by the World Health Organization

(“WHO”) on March 11, 2020.

25. On March 13, 2020, President Donald Trump issued the Coronavirus Disease 2019

(COVID-19) Emergency Declaration, which declared that the pandemic was of “sufficient severity and

magnitude to warrant an emergency declaration for all states, territories and the District of Columbia.”

26. The Federal Government expressly recognized that with the COVID-19 emergency,

“many small businesses nationwide are experiencing economic hardship as a direct result of the Federal,

State and local public health measures that are being taken to minimize the public’s exposure to the

virus.” 2

2
See Business Loan Program Temporary Changes; Paycheck Protection Program, 13 CFR Part 120, Interim Final
Rule (“SBA PPP Final Rule”).

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27. The economic fallout from COVID-19, and the national response to it, was immediate

and enormous. As “stay at home” issues were ordered by states across the nation, countless businesses

were forced by law to overhaul their business models, scale back their business dramatically, or shutter–

either temporarily or permanently. Business were further harmed as the public began to avoid all public

spaces. Furloughs and layoffs were rampant in the private sector.

28. On March 25, 2020, in response to the economic damage caused by the COVID-19 crisis

and to overwhelming public pressure, the U.S. Senate passed the Coronavirus Aid, Relief, and

Economic Security Act, or the CARES Act. The CARES Act was passed by the House of

Representatives the following day and signed into law by President Trump on March 27, 2020.

Amounting to approximately $2 trillion, the CARES Act was the single-largest economic stimulus bill

in American history.

29. Critically, the CARES Act created a $659 billion loan program for business with fewer

than five hundred employees, called the “Paycheck Protection Program” (“PPP”) 3. The goal of the PPP

was to provide American small businesses with eight weeks of cash-flow assistance, with a certain

percentage forgivable if utilized to retain employees and fund payrolls. The loans are fully federally

guaranteed and administered by the Small Business Administration (“SBA”). 4

30. Basically, PPP loans operate more like grants if the recipient follows certain rules,

including that at least 75 percent of the loan goes toward payroll. 5 Businesses that follow the rules are

permitted to submit a request to their SBA lender for total forgiveness. Otherwise, the loan matures in

two years and carries a one percent interest rate. 6

3
The first phase of the PPP was for $349 billion, and when that quickly ran out, a second phase was funded for $310
billion.
4
Small Bus. Admin., Docket No. SBA-2020-0015, 13 CFR Part 120, Paycheck Protection Program 3245-AH34,
Interim Final Rule, 85 Fed. Reg. 20814 § (2)(o) (Apr. 15, 2020).
5
85 Fed. Reg. 20812 § (2)(e); id. at 20813 § (2)(o).
6
Id. at 20813 § (2)(j).

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31. The SBA was charged with creating the PPP implementing regulations. It issued the first

interim final rule (“Initial Rule”) on April 2, 2020, allowing businesses to begin applying for PPP loans

with all SBA lenders on April 3, 2020.

32. An important piece of the PPP was that applications were to be processed and funded on

a “first-come, first-served” basis—that is, the SBA was to process applications and distribute funds

based on the order in which they were received. This made the SBA’s list of approved lenders key

gatekeepers in this process, which the lenders certainly understood. Because the PPP was to be

administered only through SBA-approved lenders, and because applicants were applying for funds from

the single pot allocated for the program, submitting an accurate application for a loan through the SBA-

approved lender as quickly as possible was critical.

33. Congress added an incentive for the SBA-affiliated lenders, knowing they would face a

crush of PPP loan applications: for each loan processed and approved, the bank would receive an

origination fee of five percent for loans up to $350,000; three percent for loans between $350,000 and

$2 million; and one percent for loans between $2 million and $10 million. 7

34. With similar incentives in mind, Congress and the SBA also carved out a specific benefit

for the countless accountants, attorneys, and advisors who would need to lead or assist their clients in

preparing and filing PPP loan applications. These individuals and entities are referred to as “agents” in

the CARES Act and PPP implementing regulations.

35. As explained in an Information Sheet provided for “lenders,” the SBA states that ‘[a]n

‘Agent’ is an authorized representative and can be: an attorney; an accountant; a consultant; someone

who prepares an applicant’s application for financial assistance and is employed and compensated by the

applicant; someone who assists a lender with originating, disbursing, servicing, liquidating, or litigating

7
Id.

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SBA loans; a loan broker; or any other individual or entity representing an applicant by conducting

business with the SBA.” 8

36. In addition, the SBA Regulations provide that “Agent fees will be paid out of lender fees.

The lender will pay the agent. Agents may not collect any fees from the applicant. The total amount

that an agent may collect from the lender for assistance in preparing an application for a PPP” loan is as

follows (“Agent Fees”): one percent (1%) for loans up to $350,000; 0.50% for loans between $350,000

and $2 million; and 0.25% for loans between $2 million and $10 million. 9

37. Within this context, Congress and the SBA set up a straightforward system for the

disbursement of PPP loan funds where the applicant is assisted by an agent: (i) the agent prepares the

application and/or necessary supporting documents for the client’s application; (ii) the client applies for

the PPP loan through the lender; (iii) the lender submits the application to the SBA; (iv) the SBA

approves the loan and sends the client the money, through the lender, and eventually pays the lender’s

origination fee; and (v) the agent submits the request for fee payment to the lender with the agent’s fee

based upon (a) the work performed for the client and (b) the caps on agent fees provided by the SBA’s

PPP regulations.

38. Congress and the SBA did not set up a process or requirements to be followed by either

the lender or the agent for the agent to qualify to receive the agency portion of the fee. That would have

had devastating consequences to the ability of the program to fulfill its mission to small business owners

and their consumer employees. Based on information and belief, consistent with the understanding that

there was not any particular process required of agents to get paid, Defendants did not include a request

8
U.S. Dep’t of Treasury, Paycheck Protection Program (PPP) Information Sheet Lenders,
https://home.treasury.gov/system/files/136PPP%20%Lender%20Information%20Fact%20Sheet.pdf (last accessed May 25,
2020).
9
85 Fed. Reg. 20816 § (4)(c).

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for agent information in the application process or provide any systematic mechanism or process for the

borrower to list that an agent had assisted them in the preparation of the application.

39. Unfortunately, Defendants are refusing to pay the fees of agents for their assistance in

providing an accurate and truthful application for funding.

40. Upon information and belief, this refusal is a company-wide policy. Further, the fact that

Defendants set up the application process without even asking the borrower if they utilized the

assistance of an agent, suggests that the Defendants did not want to have any record of the agent

information in their files.

41. This policy of refusal to pay to agents “Agent Fees” that are due, and that only the lenders

are authorized to pay, stands as an immediate threat to these agents’ abilities to receive payment. In the

midst of an unprecedented economic/pandemic crisis, this policy represents short-sighted profit-padding

at best, and blatantly illegal conduct, at worst.

42. This policy stands in stark contrast to Defendants’ promise on their website, that “[i]f an

agent assists the borrower, the lender will compensate the agent out of the fee it receives from the SBA,

at a rate of 0.25%-1% of the loan amount, depending on its size.” 10

43. That is not the case. Defendants are wholly refusing to pay the fees of agents who have

timely contacted them requesting to be reimbursed, or requesting information on how to seek

reimbursement.

44. Refusing to pay Agent Fees is also inconsistent with agreements Defendants made in

order to become approved PPP lenders. Specifically, based on information and belief, Defendants were

10
J.P. Morgan Private Bank, Small Business Owners: CARES Act FAQ (May 14, 2020),
https://privatebank.jpmorgan.com/gl/en/insights/planning/small-business-owners-cares-act-faq (last visited May 26, 2020).

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required to fill out and sign the “CARES Act Section 1102 Lender Agreement” for each loan. 11 This

submission requires each putative PPP lender to certify, under penalty of perjury, that it (i) “is in

compliance and will maintain compliance with all applicable requirements of the [PPP], and PPP Loan

Program Requirements[,]” (ii) will “service and liquidate all covered loans made under the Paycheck

Protection Program in accordance with PPP Loan Requirements[,] and (iii) will “close and disburse each

covered loan in accordance with the terms and conditions of the PPP Authorization and PPP Loan

Requirements.”

45. To the extent Defendants had to certify, at any point, that they would follow the PPP’s

regulations in making PPP loans, they were not being truthful. Defendants’ policy to refuse to pay

Agent Fees directly violates the PPP’s implementing regulations.

46. It is pursuant to these representations that Chase Bank has been allowed to process well

over 200,000 PPP loan applications since the beginning of April 2020, securing approximately $29

billion in funding for loan recipients. Defendants’ average loan was approximately $121,339. Even at

an average 4% compensation for these loans, Chase Bank has or will receive eligible to receive over $1

billion in origination fees, from which they were required to pay agents approximately $200 million.

47. Knowing that they were required to pay agents a percentage of PPP loan origination fees

if an agent assisted an applicant in preparing and submitting the application, Defendants elected not to

ask borrowers whether they utilized an “agent” to assist them in the application process and have not

paid Plaintiff or similarly situated agents compensation from funded PPP loans.

11
U.S. Small Bus. Admin., CARES Act Section 1102 Lender Agreement,
https://www.sba.gov/sites/default/files/2020-04/PP--Agreement-for-New-Lenders-Banks-Credit-Unions-FCS-w-seal-
fillable.pdf (last accessed May 25, 2020).

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PLAINTIFF JAMES QUINN’S EXPERIENCE

48. Plaintiff James Quinn is retired accountant located in Marco Island, Florida, and he has

provided accounting, financial and financing consulting services to clients in the New York area for over

thirty (30) years.

49. Plaintiff Quinn provided accounting, financial and financing consulting services to a

group of small businesses. He was requested by five such clients who was located in New York City,

NY to assist them with the preparation and filing of the PPP loan applications with JPMorgan Chase

Bank. These PPP loans were critical to the clients’ business. As a result of Plaintiff Quinn’s work on

behalf of these New York City, NY clients, the clients collectively received PPP funding of $1,525,494.

50. Based on the SBA Regulations, Plaintiff Quinn understood that he was not allowed to

charge clients a fee relating to the application process. The agents were only allowed to receive

compensation from the agents’ share of the estimated $20 billion in fees that the Federal Government

paid the Lenders for originating the PPP loans.

51. For his clients, Plaintiff Quinn had the primary role in calculating the payroll information

needed for the application, and providing the clients’ accounting information, advice, documentation in

support of the PPP loan application. Mr. Quinn personally assisted each client and, due to his twenty-

year experience as a financial advisor and transactional treasurer assisting middle market companies in

acquiring financing, he prepared the application and financing package in such a way to allow Chase

Bank to easily verify the necessary company financial data, thereby expediting the clients’ loans.

Plaintiff Quinn also signed the clients’ PPP loan applications as the “authorized representative” of all

five clients and indicated “Financial Advisor/CPA” on the title line. Additionally, the financial

packages submitted with each clients’ PPP loan application to Chase Bank was on Plaintiff’s letterhead.

Plaintiff Quinn also submitted an agency letter with each application submitted to Chase Bank.

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52. Plaintiff Quinn will also have ongoing responsibility for advising clients on the

forgiveness of the PPP loan.

53. As of May 22, 2020, Plaintiff Quinn’s loan amount and fee analysis is as follows:

Borrower Loan Chase Fee Chase % Quinn’s Quinn’s %
Awarded Agency Fee
No. 1 $1,329,515 $39,885.45 3 $6,647.58 0.5

No. 2 $102,472 $5,123.60 5 $1,024.72 1.0

No. 3 $53,542 $2,677.10 5 $535.42 1.0

No. 4 $13,610 $680.00 5 $136.10 1.0

No. 5 $26,355 $1,317.75 5 $263.55 1.0

TOTAL $1,525,494 $49,683.90 3.26% $8,607.37 0.56%

54. Pursuant to PPP regulations, Defendants would be entitled to receive $49,683.90 from the

SBA in origination fees, of which 0.56% of the total awarded loans would have to be paid to Plaintiff

Quinn for his work as an agent on the PPP loan applications. Thus, Plaintiff Quinn was –and remains—

owed $8,607.37 for his work.

55. Plaintiff Mr. Quinn was thrilled that its clients received their loans from the SBA.

Thereafter, he demanded payment of its agency fees from Defendants because SBA regulations

prohibited Plaintiff from collecting from its clients.

56. Accordingly, Plaintiff Quinn reached out to Ivan Santos, Vice President of Business

Relationship Manager, Chase Bank, White Plains, New York, and Paul Harrison, Vice President of

Architecture at Chase Bank, both of whom are the Chase Bank relationship managers for his clients’

PPP applications, about how to obtain its agent fees. However, he was told by Paul Harrison that

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“Chase Bank does not pay fees.” After requesting to speak to Mr. Harrison’s supervisors, Mr. Quinn

was ignored and continues to be ignored.

57. Therefore, Plaintiff Mr. Quinn sent a letter addressed to Ms. Jennifer Roberts, CEO of

Chase Business Banking, 383 Madison Avenue, New York City, New York, dated May 22, 2020.

Within this letter, Mr. Quinn quoted the pertinent provisions of the CARES Act which entitles agents

like him to compensation, as well as the SBA fee schedule, and attached those excerpts to his letter.

Plaintiff Mr. Quinn also highlighted the fact that “agent letters” were provided to Chase Bank and

emphasized that it was documented through the agent letter, the applications, and the financial packages,

that Quinn was executing the PPP loan applications as the financial advisor/CPA to each client. To

date, Plaintiff Quinn has not received a follow-up response from Chase Bank.

58. Thus, Defendants have enacted a company-wide policy—and discussed it on a call from a

Vice President to Plaintiff Mr. Quinn, that “Chase does not pay fees” and therefore are entitled to

nothing and will receive nothing.

59. To date, Plaintiff Quinn has not received a penny for his substantial work on his clients’

PPP loan applications. And if it is up to Defendants, he never will. All of the potential routes for

payment –his clients, Defendants, PPP funds, SBA—have been closed off.

PLAINTIFF FAHMIA, INC.’S EXPERIENCE

60. Plaintiff Fahmia, Inc. is a California CPA firm which has provided financial services to

clients in the Southern California Area for over 30 years, including bookkeeping, taxation, payroll

services, financial planning and consulting for small businesses and individuals. In March, Plaintiff

became aware that the CARES Act had been signed into law. Plaintiff, knowing that the COVID-19

crisis would significantly impact clients’ businesses, sought to obtain PPP loans through various SBA-

approved lenders on behalf of clients.

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61. Plaintiff Fahmia’s professionals spent considerable time familiarizing themselves with

the Act and the related SBA Regulations, in particular, (a) Section 1102, which permits the SBA to

guarantee 100% of Section 7(a) loans under the PPP and (b) Section 1106 of the Act, which provides

forgiveness of up to the full principal amount of qualifying loans guaranteed under the PPP.

62. In or about March, April, and May, 2020, Plaintiff Fahmia assisted many clients in the

gathering and analysis of their documents, as well as the calculations and preparation of the loan

applications.

63. Based on the SBA Regulations, Plaintiff Fahmia understood that it was not allowed to

charge clients a fee relating to the application process. The agents were only allowed to receive

compensation from the agents’ share of the estimated $20 billion in fees that the Federal Government

paid the Lenders for originating the PPP loans.

64. For its clients, Plaintiff Fahmia had the primary role in calculating the payroll

information needed for the application, and providing the clients’ accounting information, advice,

documentation in support of the PPP loan application. Plaintiff Fahmia will have ongoing responsibility

for advising clients on the forgiveness of the PPP loan.

65. Plaintiff Fahmia provided all of these services to two clients who obtained a PPP loans

from Chase Bank in the combined amount of $118,156. Based on information and belief, Chase Bank

was paid or will be paid, an origination fee of $5,907.80, of which Plaintiff Fahmia is entitled to

$1,1181.56 (1% of total loan amount) of that fee for its work as the agent of the borrowers in submitting

the application and documentation.

66. Defendants did not comply with the SBA Regulations because they have not paid

Plaintiff the agent fees to which it is entitled despite awarding PPP loans to Plaintiff Fahmia’s clients for

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whom Plaintiff Fahmia acted as a PPP agent. Instead, Defendants retained all of the Agent Fees for

themselves.

67. As a result of Defendants’ unlawful and unfair actions, Plaintiff Fahmia and the Class

have suffered financial harm by being deprived of the statutorily mandated compensation for the

professional services provided to clients in assisting them with obtaining PPP loans.

PLAINTIFF PRINZO & ASSOCIATES’ EXPERIENCE

68. Plaintiff Prinzo & Associates is a Pennsylvania CPA firm which has provided financial

services to clients in sixteen different states and four different countries since 1991, including

bookkeeping, taxation, payroll services, financial planning and consulting for small businesses and

individuals. In March, Plaintiff Prinzo became aware that the CARES Act had been signed into law.

Plaintiff Prinzo, knowing that the COVID-19 crisis would significantly impact clients’ businesses,

sought to obtain PPP loans through various SBA-approved lenders on behalf of clients.

69. Plaintiff Prinzo’s professionals spent considerable time familiarizing themselves with the

Act and the related SBA Regulations, in particular, (a) Section 1102, which permits the SBA to

guarantee 100% of Section 7(a) loans under the PPP and (b) Section 1106 of the Act, which provides

forgiveness of up to the full principal amount of qualifying loans guaranteed under the PPP.

70. In or about March, April, and May, 2020, Plaintiff Prinzo assisted many clients in the

gathering and analysis of their documents, as well as the calculations and preparation of the loan

applications.

71. Based on the SBA Regulations, Plaintiff Prinzo understood that it was not allowed to

charge clients a fee relating to the application process. The agents were only allowed to receive

compensation from the agents’ share of the estimated $20 billion in fees that the Federal Government

paid the Lenders for originating the PPP loans.

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72. For its clients, Plaintiff Prinzo had the primary role in calculating the payroll information

needed for the application, and providing the clients’ accounting information, advice, documentation in

support of the PPP loan application. Plaintiff Prinzo will have ongoing responsibility for advising clients

on the forgiveness of the PPP loan.

73. Plaintiff Prinzo provided those services to one client who obtained a PPP loan from

Chase Bank in the amount of $45,097. Based on information and belief, Chase Bank was paid or will be

paid, an origination fee of $2,254.85, of which Plaintiff Prinzo is entitled to $450.97 (1% of total loan

amount) of that fee for its work as the agent of the borrower in submitting the application and

documentation.

74. Defendants did not comply with the SBA Regulations because they have not paid

Plaintiff Prinzo the agent fees to which it is entitled despite awarding PPP loans to Plaintiff Prinzo’s

clients for whom Plaintiff Prinzo acted as a PPP agent. Instead, Defendants retained all of the Agent

Fees for themselves.

75. As a result of Defendants’ unlawful and unfair actions, Plaintiff Prinzo and the Class

have suffered financial harm by being deprived of the statutorily mandated compensation for the

professional services provided to clients in assisting them with obtaining PPP loans.

CLASS ALLEGATIONS

76. Plaintiffs brings this action on behalf of itself and all others similarly situated as a

nationwide Class, defined as follows:

All persons and businesses who served as an agent in relation to, and provided
assistance to a client in relation to, the preparation and/or submission of a client’s
PPP loan application to Chase Bank which resulted in a loan being funded under
the PPP. Plaintiff further brings this action on behalf of a subclass of individuals
defined as follows:

New York Subclass. All persons and businesses in New York who served as an
agent in relation to, and provided assistance to a client in relation to, the

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preparation and/or submission of a client’s PPP loan application to Chase Bank
which resulted in a loan being funded under the PPP.

77. Excluded from this Class and Subclass (hereinafter “the Class” unless otherwise

indicated) are: (1) any Judge or Magistrate presiding over this action and members of their families; (2)

Defendants, Defendants’ subsidiaries, parents, successors, predecessors, and any entity in which

Defendants or its parents have a controlling interest and its current or former employees, officers and

directors; (3) persons who properly execute and file a timely request for exclusion from the Class; (4)

persons whose claims in this matter have been finally adjudicated on the merits of otherwise released;

(5) Plaintiffs’ counsel and Defendants’ counsel; and (6) the legal representatives, successors, and assigns

of any such excluded persons.

78. Plaintiffs reserve the right to expand, limit, modify, or amend this Class definition,

including the addition of one or more subclasses, in connection with Plaintiffs’ motion for class

certification, or any other time, based upon new facts obtained during discovery.

79. Numerosity: The Class is composed of hundreds of Agents (“Class Members”) whose

joinder in this action would be impracticable. The disposition of their claims through this class action

will benefit all Class Members, the parties, and the courts.

80. Commonality and Predominance: There is a commonality in questions of law and fact

affecting the Class. These questions of law and fact predominate over individual questions affecting

individual Class Members, including, but not limited to, the following:

a. Whether Defendants’ conduct violates the CARES Act and/or its implementing

regulations;

b. Whether Defendants are required to compensate Plaintiffs out of the origination fees

obtained from SBA through the PPP;

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c. Whether Plaintiffs are entitled to compensation by Defendants for its work assisting in its

client’s PPP loan application;

d. Whether Defendants’ conduct was willful and knowing;

e. Whether Defendants submission of completed Form 2484 constituted an agreement;

f. Whether Defendants breached that agreement;

g. Whether Defendants’ conduct was pursuant to a company-wide policy or policies;

h. Whether Defendants’ conduct violates Gen. Bus. Law § 349(a); and

i. Whether Defendants’ conduct constitutes unjust enrichment.

81. Superiority: This case is also appropriate for class certification because class

proceedings are superior to all other available methods for the fair and efficient adjudication of this

controversy given that joinder of all parties is impracticable. The damages suffered by the individual

members of the Class will likely be relatively small, especially given the burden and expense of

individual prosecution of the complex litigation necessitated by Defendants’ actions. Thus, it would be

difficult and not economical for the individual members of the Class to obtain effective relief from

Defendants’ misconduct. Even if members of the Class could sustain such individual litigation, it would

still not be preferable to a class action, because individual litigation would increase the delay and

expense to all parties due to the complex legal and factual controversies presented in this Compliant. By

contrast, a class action presents far fewer management difficulties and provides the benefits of single

adjudication, economy of scale, and comprehensive supervision by a single court. Economies of time,

effort and expense will be fostered and uniformity of decisions ensured.

82. Typicality: Plaintiffs’ claims are typical of, and are not antagonistic to, the claims of all

Class Members, in that Plaintiffs and members of the Class sustained damages arising out of

Defendants’ uniform wrongful conduct.

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83. Adequacy: Plaintiffs will fairly and adequately represent and protect the interests of the

Class and has retained counsel with substantial experience in litigating complex cases, including

consumer fraud and class actions. Plaintiffs’ claims are representative of the claims of the other

members of the Class. That is, Plaintiffs and members of the Class sustained damages as a result of

Defendants’ uniform conduct. Plaintiffs also have no interests antagonistic to those of the Class, and

Defendants have no defenses unique to Plaintiffs. Both Plaintiffs and their counsel will vigorously

prosecute this action on behalf of the Class and have the financial ability to do so. Neither Plaintiffs nor

counsel have any interest adverse to other Class Members.

84. Ascertainability: Plaintiffs are informed and believe that Defendants keep extensive

computerized records of their loan applications through, inter alia, computerized loan application

systems and federally-mandated record-keeping practices. Defendants have one or more databases

through which all of the borrowers may be identified and ascertained, and it maintains contact

information, including electronic mail and mailing address. From this information, the existence of the

Class Members (i.e., borrowers’ Agents) can be determined, and thereafter, a notice of this action can be

disseminated in accordance with due process requirements.

85. Defendants have acted, and refused to act, on grounds generally applicable to the Class,

thereby making appropriate final equitable relief with respect to the Class as a whole.

CAUSES OF ACTION

COUNT I – DECLARATORY RELIEF

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86. Plaintiffs incorporate by reference each preceding and succeeding paragraph as though

fully set forth at length herein.

87. Plaintiffs and the Class represent individuals who are “agents” as defined by the SBA

regulations for the PPP.

88. Plaintiffs and the putative Class have assisted clients with the process of preparing

applications, and applying for, PPP loan funds. Defendants, despite the clear command of the SBA’s

PPP regulations, have refused to make these payments. An actual controversy has arisen between

Plaintiff and the Class, on one hand, and Defendants on the other, wherein Defendants deny by their

refusal to pay that they are obligated to pay Plaintiffs’ and the Class’s “agent” fees pursuant to PPP

regulations.

89. Plaintiffs and the Class seek a declaration, in accordance with SBA regulations and

pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, that Defendants are obligated to set aside

money to pay, and pay third-party agents –within the SBA-approved limits—for the work performed on

behalf of a client in relation to the preparation and/or submission of a PPP loan application that resulted

in a funded PPP loan.

COUNT II – BREACH OF CONTRACT, THIRD PARTY BENEFICIARY

90. Plaintiffs incorporate by reference each preceding and succeeding paragraph as though

fully set forth at length herein.

91. Based on information and belief, Defendants entered into an agreement with the SBA in

connection with the loans funded in the PPP.

92. The agreements required that Defendants would adhere to all PPP rules and regulations

and incorporate these requirements by reference. Defendants and the SBA understood that agents

involved in the preparation and submission of PPP loan applications would need to be compensated.

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93. The SBA’s PPP regulations specifically require that PPP lenders pay the fees of any

“agent” that assists with the PPP loan application process, within limits.

94. Defendants understood that Plaintiffs and the Class were intended beneficiaries in this

agreement. Nevertheless, Defendants have refused to live up to their end of the bargain, and have

uniformly refused to pay agent fees to Plaintiffs and the Class.

95. By refusing to pay agent fees in accordance with SBA regulations, Defendants are

violating the terms of their agreement, thereby damaging Plaintiffs and the Class. Plaintiffs and the

Class thus ask this Court to award them damages sufficient to make them whole, and compensate them

for work they did in preparing clients’ PPP loan application for loans that were funded, consequential

damages, and all other damages available at law.

COUNT III – VIOLATIONS OF NEW YORK GBL § 349

96. Plaintiffs incorporate by reference each preceding and succeeding paragraph as though

fully set forth at length herein.

97. Plaintiffs and the Class are “persons” within the meaning of Gen. Bus. Law § 349(h).

98. Gen. Bus. Law § 349(a) states: “Deceptive acts or practices in the conduct of any

business, trade or commerce or in the furnishing of any service in this state are hereby declared

unlawful.”

99. As alleged herein, Defendants engaged in deceptive acts and practices in the form of

misrepresentations on their website, that “[i]f an agent assists the borrower, the lender will compensate

the agent out of the fee it receives from the SBA, at a rate of 0.25%-1% of the loan amount, depending

on its size.” 12 However, upon request of payment by Plaintiffs and the members of the Class, Chase

Bank expressed its system-wide refusal to pay any agent fees owed as a result of agents’ work in

12
J.P. Morgan Private Bank, Small Business Owners: CARES Act FAQ (May 14, 2020),
https://privatebank.jpmorgan.com/gl/en/insights/planning/small-business-owners-cares-act-faq (last visited May 26, 2020).

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assisting clients in obtaining their PPP loans. Such misrepresentations and omissions during the conduct

of business in and from New York violates Gen. Bus. Law § 349(a).

100. Defendants knew or should have known that their acts, practices, statements, policies,

correspondence and representations, as discussed above, were false and likely to deceive and mislead

Plaintiff and the Class members.

101. Plaintiffs and the Class members have been injured as a result of Defendants’ violations

of Gen. Bus. Law § 349(a), as they have been deprived to agent fees to which they are entitled.

102. Defendants’ deceptive and misleading acts and practices have directly, foreseeably, and

proximately caused damages and injury to Plaintiffs and the other members of the Class and has had a

broader impact on consumers and the public at large. The agency fees to which Plaintiffs and the Class

are entitled are paid directly from the income taxes of New Yorkers, and the public at large. Thus, the

refusal of Chase Bank to pay agent fees for their assistance in obtaining PPP loans in accordance with

SBA regulations for their clients during an economic crisis is a matter of public interest of tax-payers.

Specifically, the public had an expectation that the PPP funds were allocated for the assistance of

struggling small businesses, including Plaintiffs and the Class, but instead, Chase Bank has been

unjustly enriched at the expense of agents by Chase Bank’s failure to pay the agents their mandated

agent fees.

103. Thus, Plaintiffs and the Class are entitled to pursue claims against Defendants pursuant to

Gen. Bus. Law § 349 (h) to redress Defendants’ violations of Gen. Bus. Law § 349(a).

104. Plaintiffs and the Class thus ask this Court to award them equitable relief, restitution,

civil penalties, punitive damages, attorney fees, consequential damages, and all other damages available

at law.

COUNT IV – UNJUST ENRICHMENT

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105. Plaintiffs incorporate by reference each preceding and succeeding paragraph as though

fully set forth at length herein.

106. Unjust enrichment, or restitution, may be alleged where a Defendant unjustly obtains and

retains a benefit to the Plaintiffs’ detriment, where such retention violates fundamental principles of

equity, justice, and good conscience.

107. Here, Defendants have obtained millions of dollars in benefits in the form of PPP loan

origination fees. A portion of those fees were to be paid to agents, like and including Plaintiffs, who

assisted in their clients’ PPP loan applications. But Defendants are refusing to pay those fees, in

contravention of PPP regulations.

108. Principles of justice, equity, and good conscience demand that Defendants not be allowed

to retain these agent fees. Defendants have fallen short in their duties as lenders, and during a crisis no

less. As a result, Plaintiffs and the putative Class have been unable to obtain the agent fees due to them.

109. Accordingly, Defendants must disgorge the portion of any and all PPP origination fees

that they have retained to the extent they are due to Plaintiffs and the putative Class in their capacities as

agents.

COUNT V – CONVERSION

110. Plaintiffs incorporate by reference each preceding and succeeding paragraph as though

fully set forth at length herein.

111. Under the SBA regulations, Plaintiffs and the Class, as PPP agents, have a right to agent

fees that must be paid from the amount of lender fees provided to Defendants for processing the funded

PPP loan applications of Plaintiffs’ client and the Class’s clients.

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112. The SBA regulations state that “[a]gent fees will be paid out of lender fees” and provide

guidelines on the amount of agent fees that should be paid to the PPP agent, based upon the size of the

PPP loan.

113. Additionally, the SBA regulations require that lenders, not loan recipients, pay the agent

fees. The SBA regulations unequivocally state that “[a]gents may not collect fees from the applicant.”

114. Plaintiffs and the Class assisted clients with applying for PPP loans, including gathering

and curating information necessary for completing PPP loan applications that were subsequently funded.

Due to Plaintiffs’ and the Class’s efforts, their clients were awarded PPP loans, through applications

made with Defendants. As such, Plaintiffs have a right to immediate possession of the agent fees.

115. Although Plaintiffs are entitled to agent fees under the SBA regulations, Defendants have

refused to provide those fees to Plaintiffs and the class, thus keeping the agent fees that were paid to it

for purposes of being passed on to the agents. By withholding these fees, Defendants have maintained

wrongful control over Plaintiffs’ property inconsistent with Plaintiffs’ entitlements under the SBA

regulations.

116. Defendants committed civil conversion by retaining monies owed to Plaintiffs and Class

members.

117. Plaintiffs and the Class have been injured as a direct and proximate cause of Defendants’

misconduct. Plaintiffs, as such, seek recovery from Defendants in the amount of the owed agent fees,

and all other relief afforded under the law.

DEMAND FOR JURY TRIAL

118. Plaintiffs demand a trial by jury on all issues to the fullest extent permitted under

applicable law

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PRAYER FOR RELIEF

WHEREFORE, Plaintiffs James Quinn, Fahmia, Inc. and Prinzo & Associates,

individually and on behalf of the Class, respectfully pray for the following relief:

(a) An order certifying the Class as defined above, appointing Plaintiffs as the

representatives of the Class, and appointing their counsel as Class Counsel;

(b) An order declaring that Defendants’ actions, as set out above, constitute

unjust enrichment, conversion, breach of contract on behalf of third-party beneficiary, and violate Gen.

Bus. Law § 349(a), and violate the SBA’s PPP regulations;

and punitive damages available under the law and caused by Defendants’ conduct, including without

limitation, actual damages for past, present and future expenses caused by Defendants’ misconduct, lost

time and interest, and all other damages suffered, including any damages likely to be incurred by Plaintiffs

and the Class;

(d) An award of reasonable litigation expenses and attorneys’ fees;

(e) An award of pre- and post-judgment interest, to the extent allowable;

(f) The entry of an injunction and/or declaratory relief as necessary to protect the interests

of the Plaintiffs and the Class; and

(g) Such other further relief that the Court deems reasonable and just.

Dated: June 2, 2020 Respectfully submitted,

MCCUNE WRIGHT AREVALO LLP

By: /s/ Elaine S. Kusel
Elaine S. Kusel
Michele M. Vercoski
Richard D. McCune
Tuan Q. Nguyen
MCCUNE WRIGHT AREVALO LLP

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18565 Jamboree Road, Suite 550
Irvine, California 92612
Telephone: (909) 557-1250
Facsimile: (909) 557-1275
Email: esk@mccunewright.com
mmv@mccunewright.com
rdm@mccunewright.com
tqn@mccunewright.com
Attorney for Plaintiffs and Putative Class

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JURY DEMAND
Plaintiffs, on behalf of themselves and the putative Class, demands a trial by jury on all issues so
triable.
MCCUNE WRIGHT AREVALO LLP

By: /s/ Elaine S. Kusel
Elaine S. Kusel
Michele M. Vercoski
Richard D. McCune
Tuan Q. Nguyen
MCCUNE WRIGHT AREVALO LLP
18565 Jamboree Road, Suite 550
Irvine, California 92612
Telephone: (909) 557-1250
Facsimile: (909) 557-1275
Email: esk@mccunewright.com
mmv@mccunewright.com
rdm@mccunewright.com
tqn@mccunewright.com

Attorney for Plaintiffs and Putative Class

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Exhibit A — Agent Fee Litigation (Dkt. 98.3)

Summary

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