First amended class action complaint — Byrnes v. Fountainhead

Record facts

U.S. District Court, Central District of California · No. 2:20-cv-04149-DDP-RAO · Doc. 19 · 2020-07-17 · Docket on CourtListener

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FIRST AMENDED CLASS ACTION COMPLAINT 
  
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 Joshua H. Haffner, SBN 188652 
(jhh@haffnerlawyers.com) 
Graham G. Lambert, Esq. SBN 303056 
gl@haffnerlawyers.com 
HAFFNER LAW PC 
445 South Figueroa Street, Suite 2625 
Los Angeles, California 90071 
Telephone: (213) 514-5681 
Facsimile: (213) 514-5682 
 
Bart I. Ring, SBN: 126235 
(bart@bartringlaw.com)  
THE RING LAW FIRM APLC 
5550 Topanga Canyon Blvd., Suite 200 
Woodland Hills, California 91367 
Telephone: (818) 587-9292 
 
Attorneys for Plaintiff Elizabeth M. 
Byrnes, Inc., and all others similarly 
situated 
 
UNITED STATES DISTRICT COURT 
CENTRAL DISTRICT OF CALIFORNIA 
 
ELIZABETH M. BYRNES, INC., a 
corporation, on behalf of itself and all 
others similarly situated, 
 
Plaintiff, 
 
v. 
 
FOUNTAINHEAD COMMERCIAL 
CAPITAL, LLC; and DOES 1 
through 10, inclusive, 
 
Defendant. 
 
Case No.  2:20-cv-04149-DDP (RAOx) 
 
FIRST AMENDED CLASS ACTION 
COMPLAINT FOR: 
1. FRAUDULENT 
CONCEALMENT; 
 
2. UNFAIR BUSINESS 
PRACTICES; 
 
3. FALSE ADVERTISING. 
 
DEMAND FOR JURY TRIAL 
 
 
 
 
 
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Plaintiff Elizabeth M. Byrnes, Inc. (“Plaintiff”) is informed and believe, and 
on that basis allege, as follows:   
NATURE OF THE ACTION 
1. 
This is a California state-wide class action for fraudulent concealment, 
unfair business practices, and false advertising arising out of Defendants 
Fountainhead Commercial Capital, LLC and Fountainhead SBF LLC’s scheme to 
enrich themselves at the expense of small businesses in connection with the federal 
government’s Paycheck Protection Program (“PPP”), enacted to ameliorate the 
financial impact on small businesses from the coronavirus crisis.   
2. 
As more fully alleged herein, Defendants solicited PPP loan 
applications despite knowing they were not licensed to make these loans in 
California, and did not have adequate funding in place to make the loans.  Further, 
although PPP funding was intended to be processed on a first come, first served 
basis, and Defendant represented that it would process and prioritize loans as 
received in a “queue,” Defendant had a secret priority system, whereby it shuffled 
the queue, and prioritized for processing high value PPP loans, or loans from 
favored customers, that earned Defendants larger fees.   
3. 
As a result, Plaintiff and many other class members who did not meet 
Defendants’ prioritization criteria, did not receive PPP funding through Defendant.   
4. 
Plaintiff seeks among other things, compensatory damages, 
restitutionary disgorgement, punitive damages, and injunctive relief.   
PARTIES 
5. 
Plaintiff Elizabeth M. Byrnes, Inc. was, at all relevant times, a 
corporation and small business operating in Los Angeles, California. 
6. 
Defendant Fountainhead Commercial Capital, LLC  is a non-bank 
lender, including for Small Business Administration (“SBA”) loans, and is  
actually conducting business in the State of California.  Defendant Commercial 
Capital, LLC designates its main office in Florida.  
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7. 
 Defendant Fountainhead SBF LLC is a non-bank lender, including 
for SBA loans, and is actually conducting business in the State of California.  
Defendant Fountainhead SBF LLC designates its main office in Florida.  
8. 
Defendant Fountainhead Commercial Capital, LLC  and Defendant 
Fountainhead SBF LLC are related companies, with the same or similar ownership, 
and a unity of interest, such that they are alter egos, and it would work a fraud or 
injustice to not so recognize.  Additionally and alternatively, Defendant 
Fountainhead Commercial Capital, LLC  and Fountainhead SBF LLC were joint 
venturers in connection with the PPP lending program alleged herein.  Defendants 
Fountainhead Commercial Capital, LLC  and Fountainhead SBF LLC will be 
collectively referred to as “Defendant FCC.” 
9. 
Plaintiff is currently ignorant of the true names and capacities, 
whether individual, corporate, associate, or otherwise, of the Defendants sued 
herein under the fictitious names Does 1 through 10, inclusive, and therefore sue 
such Defendants by such fictitious names.  Plaintiff will seek leave to amend this 
complaint to allege the true names and capacities of said fictitiously named 
Defendants when their true names and capacities have been ascertained.  Plaintiff 
is informed and believes and thereon alleges that each of the fictitiously named 
Defendants is legally responsible in some manner for the events and occurrences 
alleged herein, and for the damages suffered by the Class. 
10. 
Plaintiff is informed and believes and thereon alleges that all 
Defendants, including the fictitious Doe Defendants, were at all relevant times 
acting as actual agents, conspirators, ostensible agents, alter egos, partners and/or 
joint venturers and/or employees of all other Defendants, and that all acts alleged 
herein occurred within the course and scope of said agency, employment, 
partnership, and joint venture, conspiracy or enterprise, and with the express and/or 
implied permission, knowledge, consent authorization and ratification of their co-
Defendant; however, each of these allegations are deemed “alternative” theories 
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whenever not doing so would result in a contradiction with other allegations. 
JURISDICTION AND VENUE 
11. 
This Court has jurisdiction over the entire action by virtue of the fact 
that this is a civil action wherein the matter in controversy, exclusive of interest 
and costs, exceeds the jurisdictional minimum of the Court.  The acts and 
omissions complained of in this action took place in part in the State of California. 
At least one Defendant is a citizen of a state outside of California, and federal 
diversity jurisdiction exists and/or jurisdiction under the Class Action Fairness Act 
(“CAFA”).  The class amount at issue exceeds $5,000,000 and the jurisdictional 
minimum of this Court under CAFA.  Venue is proper because this is a class 
action, the acts and/or omissions complained of took place, in whole or in part 
within the venue of this Court. 
FACTUAL ALLEGATIONS 
12. 
In or about March 2020, the coronavirus outbreak emerged as a 
nationwide crisis in the United States.  On March 19, 2020, the Governor of 
California issued a stay at home order for all Californians in order to slow the 
spread of the coronavirus.  The impact on small business of the coronavirus 
outbreak, social distancing, and the stay at home order, was devastating.    
13. 
On March 27, 2020, in response to the economic fallout of the 
coronavirus crisis, the Coronavirus Air, Relief, and Economic Security (“CARES”) 
Act was signed into law.   
14. 
As part of the CARES Act, the federal government created an initial 
allocation of $349 billion program, called the Paycheck Protection Program 
(“PPP”), for small businesses.  The PPP program initially made these funds 
available for loans originated through June 30, 2020. The PPP loans are backed by 
the SBA, but administered by private lenders.  The PPP loans provide for loan 
forgiveness if certain criteria are met, including not laying off employees during 
the crisis.   
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15. 
Defendant FCC advertises itself as the largest non-bank SBA lender in 
the United States.  Immediately upon the CARES Act became law, Defendant FCC 
began advertising on its website, social media and elsewhere that it was one of the 
few nonbank lenders licensed to make PPP loans, and that it would process PPP 
loan applications and make such loans for small businesses.  Defendant FCC 
encouraged small businesses through advertisements to apply with it for PPP loans, 
and to act fast. 
16. 
Defendant FCC failed to disclose, however, that at the time they were 
representing to the public they could accept and process PPP loans, they were in 
fact not licensed to do so in California.   
a. 
As to Defendant Fountainhead Commercial Capital, LLC, its 
license to conduct business as a finance lender in California was 
revoked by The California Department of Business Oversight, on April 
3, 2019, for violations of Financial Code 22159.  Defendant 
Fountainhead Commercial Capital, LLC’s California license has not 
been reinstated.  
b. 
With respect to Fountainhead SBF LLC, it was first licensed by 
the State of California as a finance lender on April 21, 2020. 
c. 
Because neither Defendant Fountainhead Commercial Capital, 
LLC or Defendant Fountainhead SBF LLC were licensed to conduct 
lending activities in California, their advertising to Californians that 
they would accept applications, and process their loans was false and 
misleading. Defendants’ conduct in acting as lenders in California 
without a license violated California Financial Code §22100(a). 
17. 
On March 27, 2020, at approximately 1:56 p.m., Chris Hurn, 
Defendant FCC’s founder and president tweeted, on the media platform Twitter, 
the following information:   
 
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“#CARESAct SIGNED INTO LAW.  We will soon be 
tackling the loan inquiries lined up in our queue, providing 
business owners with capital they need within days.” 
18. 
On March 31, 2020, at approximately 7:13 a.m., Mr. Hurn tweeted, on 
the media platform Twitter, the following information: 
“The SBA simply won’t be able to process the 
#PaymentProtectLoans as quickly as the private sector.  Our 
team at @Fountainhead504 is ready to help your 
#smallbusiness.  I dive more into the benefit of private lending 
here:  glob.com/2020/03/31/sma  
19. 
In his tweet at 7:13 a.m. on March 31, 2020, Mr. Hurn also referred 
to, and included in his tweet, a link that leads the reader to an article on 
GlobeSt.net, entitled SBA Leans on Private Sector for Influx of Distressed 
Borrowers. The article quotes Chris Hurn, who is identified in the article as the 
CEO and founder of Fountainhead, and contains the following passages: 
 
• Fountainhead is able to approve loans within a few hours, 
 
• Banks, however, will not be able to process loans quickly, 
 
• Which is why small business owners should explore the private sector, 
Hurn said. 
20. 
On March 31, 2020, at approximately 1:29 p.m., Mr. Hurn tweeted the 
following information: 
“Starting to receive regulations from the SBA regarding 
#PaycheckProtectionProgram… if you’re not already in our 
queue, apply today, we hope to make these loans within days. 
..  
21. 
 On April 1, 2020, at approximately 8:24 a.m., Mr. Hurn tweeted the 
following information: 
“The best thing you can do for your business today is get your 
documents together and apply to get in our queue.  I say this 
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with urgency, as the longer you wait, the longer it will take to 
receive funds. . .” 
22. 
The representation that Fountainhead is able to approve loans within a 
few hours, quickly, and is ready to help were false, fraudulent, and omitted 
material information.  In fact, neither Defendant Fountainhead Commercial 
Capital, LLC, or Defendant Fountainhead SBF LLC were licensed by the State of 
California at the time.  Moreover, at the time, Defendants had no access to any 
credit or funding facility to actually fund the loans they were soliciting.   
23. 
In submitting PPP loan applications, time was of the essence.  The 
SBA regulations for the PPP program required that funds be distributed under a 
first come, first serve basis.  Specifically, SBA Interim Final Rule §2m, states that 
the answer to the question “Is the PPP ‘first-come, first-served?’” is “Yes.” 
24. 
On April 3, 2020, at approximately 1:30 p.m., Defendants FCC’s 
company Twitter account, tweeted out the following information: 
“Apply with us. . . We require not prior relationship, no 
special (money-making) criteria, and are processing first 
come, first serve . . . no prioritization.” 
25. 
Plaintiff is informed and believes, and on that basis alleges, that there 
was, in essence, a line or queue to obtain PPP loans, and your position in the line 
would be determined by when your PPP application was submitted to the SBA. 
26. 
Plaintiff is informed and believes, and on that basis alleges, that 
Defendant FCC, using the PPP loan applications it had obtained, finally obtained 
$25,000,000 in funding from a third-party financial institution for PPP loans for 
the first time on or about April 21, 2020.  However, by that time Defendant had 
accepted PPP loan applications seeking funding far in excess of $25,000,000.  
27. 
Because of their inadequate funding, Defendants FCC could not fulfill 
their promise to fund many of the loans they accepted, and had no way of honoring 
its promise to “approve loans within a few hours.”  Rather, Defendants FCC 
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prioritized which of its PPP applicants received loan funding, picking the higher 
value loans or businesses that Chris Hurn, or others with Defendant FCC favored, 
like prior borrowers with a pre-existing relationship with Chris Hurn and/or 
Defendant FCC. 
28. 
Plaintiff submitted a PPP loan application to Defendant FCC on 
March 28, 2020.  Plaintiff’s PPP application was for less than $25,000. That same 
day, March 28, 2020, Defendant FCC responded with an email stating, among 
other things, “We’ve received your loan app and you are in the queue!” and “Help 
is on the way Elizabeth!”  On March 29, 2020, Defendant FCC sent Plaintiff an 
email thanking her for the “Paycheck Protection Loan Program submission with 
Fountainhead!”, and stating that “we’re committed to helping as many small to 
mid-size businesses as possible to recover from the effects the coronavirus has had 
on their operations and financial condition.”  Defendant FCC’s March 29 email 
asked Plaintiff to gather certain documentation, and stated “You can expect an 
invitation to a secure portal for document upload within the next 48 business 
hours.”  Defendant FCC failed to provide the portal link to upload documents 
within that 48-hour time-frame.   
 
28. On April 9, 2020, Plaintiff wrote to Defendant FCC inquiring about 
the status of her application, specifically asking “will you please confirm my 
business is in the PPP loan queue.”  On April 9, 2020, Defendant FCC responded 
“Yes” and further stated “you will soon be receiving an email which provides a 
link to register for and access our borrower portal.  Once you have registered,  you 
will be given the opportunity to upload required documents. . .  We will be 
distributing the portal registration emails over the next 24-48 hours.” 
 
29. On April 13, 2020, Defendant FCC sent an email to Plaintiff with the 
subject heading “PPP links being sent,” and stating “We ask for your patience with 
us . . . as we process your requests as quickly and responsibly as we can. Should 
you feel the need to remove yourself from our loan queue and join another lender’s 
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list, kindly let us know . . . so we may continue to prioritize our list.” 
 
30. In reliance on Defendant FCC’s representation it would process her 
loan and she was in the queue, Plaintiff gathered the requested documents, waited 
for the link to upload them, made personnel and strategic business decisions, did 
not then seek funding through an alternative PPP lender, and took other steps to 
manage her business. Plaintiff incurred costs and lost money, including copying 
and printing costs, gathering and preparing the documents to submit for her PPP 
loan.   
 
31. Defendant FCC later received additional funding from another third 
party financial institution, in or about the first week of May 2020, but it was still 
inadequate to fund all PPP loans that had applied for funding to date.  Defendants 
FCC never returned to the earlier applicants such as Plaintiff who had not been 
funded to process their loans once the additional funding came in.  Instead, 
Defendant FCC prioritized loans of high value or with a favorable connection.   
 
32. Plaintiff is informed and believes, and on that basis alleges, that 
Defendant FCC received thousands of PPP loan applications.  Plaintiff is further 
informed and believes, and on that basis alleges, that because Defendant did not 
have adequate funding for the PPP loan applications, it decided to prioritize which 
of the applicants would receive PPP funding.  Defendants, therefore, chose to 
prioritize higher loans that would yield higher fees for Defendant FCC, and loans 
from favored customers.  Defendant FCC did not disclose to the public that it was 
prioritizing loans not on a first come, first served basis, but on criteria relating to 
the value of the loan and whether the business had a favorable relationship with 
Defendants FCC.   
 
33. Plaintiff is informed and believes, and on that basis alleges, that 
Defendant FCC failed to disclose and knowingly concealed from the public their 
unlawful practice of prioritizing higher value loans, or loans from favored 
customers, in order to benefit itself.  Plaintiff is informed and believes, and on that 
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basis alleges, that because of Defendant’s undisclosed criteria for prioritizing 
loans, Plaintiff and Class members’ loans were not processed by Defendant FCC. 
 
34. Plaintiff is informed and believes, that Defendant FCC has now 
suspended its program processing applications for and making PPP loans. 
 
35. Plaintiff is informed and believes, and on that basis alleges, that 
Defendant FCC knew it had received more PPP loans applications than it would be 
able to process or fund, but concealed that from the public. 
 
36. Plaintiff and the Class reasonably relied on Defendant FCC’s 
representations, communications and advertising in making the choice to apply for 
their PPP loan through Defendant FCC, not knowing that, contrary to its 
representations, Defendant FCC was not licensed, did not have funding, would 
prioritize large or favored borrowers, all to the detriment of Plaintiff and other 
small business owners.  As a result of their reliance on Defendant FCC’s 
representations and omissions, Plaintiff and the Class suffered economic harm.  
Had Plaintiff and class known Defendant FCC’s prioritization practice, they could 
have applied for a loan with a different lender.   
 
37. As a direct and proximate result of Defendant FCC’s wrongful 
conduct, Plaintiff and the Class have suffered financial harm including, but not 
limited to, loss of the time value of PPP funds. 
CLASS DEFINITIONS AND CLASS ALLEGATIONS 
 
38. Plaintiff brings this action on behalf of herself, and on behalf of all 
others similarly situated, and as a member of the Class defined as follows: 
All businesses in the State of California who applied to 
Defendant FCC, either directly or through a broker, for PPP 
funding, who met the SBA’s criteria for PPP loan eligibility, 
and whose applications were not processed and funded by 
Defendant FCC. 
 
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39. 
Plaintiff reserves the right to amend or otherwise alter the sub-class 
definitions presented to the Court at the appropriate time, or to propose or 
eliminate sub-classes, in response to facts learned through discovery, legal 
arguments advanced by Defendant or otherwise. 
40. 
This action has been brought and may be properly maintained as a 
class action pursuant to California Code of Civil Procedure § 382 and other 
applicable law, as follows: 
41. 
Numerosity of the Class:  Members of the Class are so numerous 
that their individual joinder is impracticable.  The precise number of Class 
members and their addresses are known to Plaintiff or will be known to Plaintiff 
through discovery.  Class members may be notified of the pendency of this action 
by mail, electronic mail, the Internet, or published notice. 
42. 
Existence of Predominance of Common Questions of Fact and 
Law:  Common questions of law and fact exist as to all members of the Class. 
These questions predominate over any questions affecting only individual Class 
members. These common legal and factual questions include: 
a. Whether Defendant failed to process loan applications on a first come, 
first serve basis; 
b. Whether Defendant prioritized higher value loans; 
c. Whether Defendant prioritized loans from favored customers; 
d. Whether Defendants were licensed to act as lenders in California during 
the appropriate time; 
e. Whether Defendant had sufficient funding available to process the loans 
they accepted; 
f. Whether Defendant failed to disclose that it prioritized higher value 
loans; 
g. Whether Defendant failed to disclose that it prioritized loans for favored 
customers; 
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h. Whether Defendant complied with SBA regulations in processing 
applications for PPP loans; 
i. Whether Defendants engaged in an unfair business practice in violation 
of Business & Professions Code §17200, et seq. 
j. Whether Defendants engaged in false advertising in violation of 
Business & Professions Code §17500, et seq. 
k. Whether Defendants fraudulently concealed they were prioritizing 
higher value PPP loans;  
l. The nature and extent of class-wide injury and the measure of damages 
for the injury. 
 
43. Typicality: Plaintiff’s claims are typical of the claims of the members 
of the subclasses they represent because Plaintiff, as a mortgage consultant for 
Defendant, was exposed and subjected to the same unlawful business practices as 
other mortgage salespersons employed by Defendant during the liability period.  
Plaintiff and the members of the class she represents sustained the same types of 
damages and losses. 
 
44. Adequacy: Plaintiff is an adequate representatives of the Class they 
seeks to represent because their interests do not conflict with the interests of the 
members of the subclasses Plaintiff seeks to represent.  Plaintiff has retained 
counsel competent and experienced in complex class action litigation and Plaintiff 
intends to prosecute this action vigorously.  The interests of members of each 
Class will be fairly and adequately protected by Plaintiff and their counsel. 
 
45.   Superiority and Substantial Benefit: The class action is superior to 
other available means for the fair and efficient adjudication of Plaintiff and the 
Class members’ claims. The violations of law were committed by Defendant in a 
uniform manner and class members were exposed to the same unlawful practices.  
The damages suffered by each individual Class member may be limited.  Damages 
of such magnitude are small given the burden and expense of individual 
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prosecution of the complex and extensive litigation necessitated by Defendant’s 
conduct.  Further, it would be virtually impossible for the Class members to 
redress the wrongs done to them on an individual basis. Even if members of the 
Class themselves could afford such individual litigation, the court system could 
not.  Individualized litigation increases the delay and expense to all parties and the 
court system, due to the complex legal and factual issues of the case.  By contrast, 
the class action device presents far fewer management difficulties, and provides 
the benefits of single adjudication, economy of scale, and comprehensive 
supervision by a single court. 
 
46. The Class should also be certified because: 
a. The prosecution of separate actions by individual members of the Class 
would create a risk of inconsistent or varying adjudications with respect 
to individual Class members which would establish incompatible 
standards of conduct for Defendant; 
b. The prosecution of separate actions by individual members of the Class 
would create a risk of adjudication with respect to them, which would, as 
a practical matter, be dispositive of the interests of the other Class 
members not parties to the adjudications, or substantially impair or 
impede their ability to protect their interests; and   
c. Defendant has acted or refused to act on grounds generally applicable to 
the Class, and/or the general public, thereby making appropriate final 
and injunctive relief with respect to the Classes as a whole. 
FIRST CAUSE OF ACTION 
FRAUDULENT CONCEALMENT 
(Violation of California’s Unfair Competition Law, Bus. & Prof. Code §§ 
17500 et seq.) 
 
47. Plaintiff re-alleges and incorporates all preceding paragraphs as if 
fully set forth herein. 
 
48. In March and April 2020, Defendant represented to the public through 
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its website and advertisements that it would process PPP loan applications for 
small businesses.  Defendant represented via email, when persons submitted an 
application that they were in the “queue” with respect to prioritizing PPP loan 
application processing.  Defendant made these representations to Plaintiff via email 
March 28, 2020, April 9, 2020, and April 13, 2020.  Each of these emails came 
from email address info@fountainheadcc.com.  The March 28, 2020 and April 13, 
2020, stated they were from Chris Hurn, who Plaintiff is informed and believes, 
and on that basis alleges, is Defendant FCC’s founder and CEO.  The April 9, 2020 
email from defendant FCC did not identify an author.   
 
49. Defendant had a duty to disclose material information related to the 
transaction, including its lack of licensing, funding, and practice of prioritizing 
high value or favored loans.  Among other things, a duty to disclose existed 
because (a) Defendant has exclusive knowledge of material information relating to 
its licensure status, its available funding, and its PPP loan application process, 
including that it was not prioritizing on a first come, first serve basis, and instead 
prioritizing high value or favored customer loans; (b) The law required that 
Defendant FCC be licensed, adequately funded, and that loans be processed on a 
first-come first serve basis, and Defendant had a legal duty to disclose practices 
inconsistent with these regulations; and (c) Defendant’s made representations 
regarding its ability to accept and process applications, Plaintiff and Class 
members need to act quickly to submit PPP applications, that there was a queue 
and that help was on the way which were, at best, misleading half-truths that 
required disclosure of Defendants FCC’s licensure status, lack of adequate 
funding, and prioritizing practice. 
 
50. Defendants omitted, failed to disclose, and fraudulently concealed 
material information, specifically that Defendant was not licensed, was not 
adequately funded, and was prioritizing large or favored loans for PPP loan 
processing and submission to the SBA.   
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51. Plaintiff and the Class justifiably, reasonably, and actually relied on 
Defendants fraudulent concealment by submitting PPP loan applications through 
Defendant FCC, paying for copies of requested loan documents, waiting for  a link 
to upload loan documents, not at that time submitting applications with another 
PPP lender, and other acts, as alleged herein.   
 
52. As a result of Defendants’ fraudulent concealment, Plaintiff and the 
Class have suffered economic harm, including but not limited to, loss of use of 
money. 
 
53. On the basis of all of the facts alleged hereinabove, Defendants’ 
conduct and actions were despicable, and were done maliciously, oppressively 
and/or fraudulently, with a willful and conscious disregard of Plaintiffs’ rights, 
entitling plaintiff to punitive damages under California Civil Code Section 3294.  
As to all Defendants, the officers, directors and managing agents were personally 
involved in the decision-making process with respect to the misconduct alleged 
herein and to be proven at trial.  As to the conduct engaged in by representatives of 
the Insurer Defendants, their officers, directors and managing agents authorized 
and ratified each and every act on which Plaintiffs’ allegations of punitive damages 
herein are based. 
SECOND CAUSE OF ACTION 
UNFAIR BUSINESS PRACTICES 
(Violation of California’s Unfair Competition Law, Bus. & Prof. Code §§ 
17200 et seq.) 
 
54. Plaintiff re-alleges and incorporates all preceding paragraphs as if 
fully set forth herein. 
 
55. Section 17200 of the California Business and Professions Code (the 
“UCL”) prohibits any unlawful, unfair, or fraudulent business practices. 
 
56. Through its actions alleged herein, Defendant has engaged in unfair 
competition within the meaning of the UCL.  Defendant’s conduct, as alleged 
herein, constitutes unlawful, unfair, and/or fraudulent business practices under the 
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UCL. 
 
57. Defendant’s unlawful conduct under the UCL includes, but is not 
limited to, violating: (a) California Financial Code §22100(a), acting as lender 
without a license; (b) 15 U.S.C. §52(a), with false advertisements, as alleged 
herein; and (c) SBA regulations governing PPP funds, specifically 13 CFR Part 
120, Docket No. SBA-2020-0015, RIN 3245-AH34, Business Loan Program 
Temporary Changes; Paycheck Protection Program, §2m, requiring that PPP loans 
be processed and funded on first come, first served basis. 
 
58. Defendant’s fraudulent conduct includes, but is not limited to, 
representing that it would process PPP applications, that Plaintiff and class 
members were in the queue for priority, and that help was on the way, without 
disclosing that Defendants were not licensed to do these loans, did not have 
adequate capitalization, and were prioritizing high value or favored PPP loans. 
 
59. Defendant’s unfair conduct includes, but is not limited to, failing to 
disclose there lack of a license or a funding facility, and that they were prioritizing 
large or favored loans, to enrich itself, at the expense of smaller businesses getting 
timely PPP loan funding. 
 
60. Plaintiff has standing to assert this claim because it has suffered injury 
in fact and has lost money as a result of Defendant’s conduct, including but not 
limited to, copying costs and use of PPP funds. 
 
61. Plaintiff and the Class seek restitutionary disgorgement from 
Defendant, and an injunction prohibiting them from engaging in the unlawful, 
unfair, and/or fraudulent conduct alleged herein. 
THIRD CAUSE OF ACTION 
FALSE ADVERTISING 
(Violation of California’s Unfair Competition Law, Bus. & Prof. Code §§ 
17500 et seq.) 
 
62. Plaintiff re-alleges and incorporates all preceding paragraphs as if 
fully set forth herein. 
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63. This cause of action is brought by Plaintiff and the Class under 
California Business & Professions Code §17500.  Pursuant to California Business 
& Professions Code §17500, et seq., it is “unlawful for any person to make or 
disseminate or cause to be made or disseminated before the public in this state,…in 
any advertising device...or in any other manner or means whatever,…any 
statement, concerning…personal property or services…which is untrue or 
misleading and which is known, or which by the exercise of reasonable care should 
be known, to be untrue or misleading.” 
 
64. As described herein, Defendants committed acts of false advertising, 
as defined by §17500 by making or disseminating, or causing to be made or 
disseminated, before the public in this State, untrue or misleading statements in 
connection with the sale of goods or services, that Defendants knew or should have 
known were untrue or misleading. 
 
65. Plaintiff was aware of and reasonably relied on Defendant’s 
statements. 
 
66. Plaintiff and the Class have lost money or property as a result of 
Defendants’ false advertising because they would not have incurred copying costs 
for loan documents required by Defendants, would not have applied for PPP 
funding through Defendant, and would have received PPP funding sooner. 
 
67. Pursuant to section 17535 of the California Civil Code, Plaintiff, on 
behalf of itself and the Class, seeks restitution, a Court order enjoining Defendants 
from such future conduct and any other such orders as may be necessary to rectify 
Defendants’ false advertising, including requiring Defendants to cease using 
misleading statements and to fully disclose the terms of the agreement. 
PRAYER 
WHEREFORE, Plaintiff, on behalf of itself and all others similarly situated 
and also on behalf of the general public, pray for judgment against Defendant as 
follows: 
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A. An order that this action may proceed and be maintained as a class 
action; 
B. Awarding Plaintiff and Class members damages, including special 
and consequential damages; 
C. Awarding Plaintiff and Class members compensatory damages in an 
amount according to proof at trial; 
D. Public injunctive relief enjoining Defendants unfair business practices 
or false advertising; 
E. Awarding restitution from Defendants to Plaintiff and the Class; 
F. Punitive damages; 
G. Attorney’s fees and costs; 
H. For such other relief the Court deems just and proper. 
DATED:  July 17, 2020 
HAFFNER LAW PC 
 
 
 
 
 
 
By: 
   /s/ Joshua H. Haffner  
 
 
 
 
 
 
   Joshua H. Haffner 
 
 
 
 
 
 
   Attorneys for Plaintiff and others 
 
 
 
 
 
 
   Similarly situated 
 
 
 
 
 
 
 
 
 
 
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DEMAND FOR JURY TRIAL 
Plaintiff demands a trial by jury for itself and the Class members on all 
claims so triable. 
DATED:  July 17, 2020 
HAFFNER LAW PC 
 
 
 
 
 
 
By: 
   /s/ Joshua H. Haffner 
 
 
 
 
 
 
   Joshua H. Haffner 
 
 
 
 
 
 
   Attorneys for Plaintiff and others 
 
 
 
 
 
 
   Similarly situated 
 
 
 
 
 
 
 
 
 
    
 
Case 2:20-cv-04149-DDP-RAO   Document 19   Filed 07/17/20   Page 19 of 19   Page ID #:113

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