Reply brief in support of motion to dismiss — Carr v. Kabbage

Record facts

U.S. District Court for the Northern District of Georgia, Atlanta Division · No. 1:22-cv-01249-VMC · Doc. 20 · 2022-07-25 · Docket on CourtListener

Full text

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF GEORGIA 
ATLANTA DIVISION 
JASON CARR, VICKI LEMASTER, 
EDWARD FORD SERVICES LLC, 
CARLTON MORGAN, 365 SUN LLC, 
and CANDICE WORTHY, individually 
and on behalf of others similarly 
situated, 
 
 
Plaintiffs, 
v. 
KABBAGE, INC., d/b/a K SERVICING, 
 
Defendant. 
CIVIL ACTION 
NO. 1:22-cv-01249-VMC 
 
 
 
DEFENDANT KABBAGE, INC., D/B/A KSERVICING’S  
REPLY IN FURTHER SUPPORT OF ITS MOTION TO DISMISS 
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TABLE OF CONTENTS 
Page 
I. 
LEGAL ARGUMENT..................................................................................... 2 
A. 
Plaintiffs Cannot Maintain a Private Cause of Action Under the 
CARES Act, Requiring Dismissal of All Claims. ................................ 2 
B. 
Plaintiffs’ Claims Brought Pursuant to California, Michigan, 
North Carolina, and Florida Statutes Should Be Dismissed 
Because Georgia Law Governs. ............................................................ 6 
C. 
Plaintiffs’ State Law Claims Fail Procedurally and Substantively 
and Should Be Dismissed. ..................................................................... 8 
1. 
Plaintiffs’ California Statutory Claims Fail. ............................... 8 
2. 
Plaintiffs’ Michigan Statutory Claims Fail. ..............................11 
3. 
Plaintiffs’ North Carolina Statutory Claims Fail. .....................12 
4. 
Plaintiffs’ Florida Statutory Claims Fail. ..................................12 
5. 
Plaintiffs’ Georgia Statutory Claims Fail. ................................13 
D. 
Plaintiffs Carr, Edward Ford Services LLC and Morgan’s Claims 
Should 
Be 
Dismissed 
for 
Failure 
to 
Exhaust 
Their 
Administrative Remedies. ...................................................................14 
II. 
CONCLUSION ..............................................................................................15 
 
 
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TABLE OF AUTHORITIES 
 
Page(s) 
Cases 
Alexander v. Sandoval, 
532 U.S. 275 (2001) .............................................................................................. 2 
Am. Video Duplicating, Inc. v. City Nat'l Bank II, 
No. 220CV04036JFWJPR, 2020 WL 6882735 (C.D. Cal. Nov. 20, 
2020) ..................................................................................................................... 3 
Ashcroft v. Iqbal, 
556 U.S. 662 (2008) .............................................................................................. 2 
B&Z Auto Enters. v. Autotrader, 
No. 1:16-CV-2313-MHC, 2017 U.S. Dist. LEXIS 229130 (N.D. 
Ga. Mar. 13, 2017) ................................................................................................ 7 
Barnes v. AstraZeneca Pharm. LP, 
253 F. Supp. 3d 1168 (N.D. Ga. 2017) ............................................................... 14 
Bell Atl. Corp. v. Twombly, 
550 U.S. 544 (2007) .............................................................................................. 2 
Bishop's Prop. & Investments, LLC v. Protective Life Ins. Co., 
597 F. Supp. 2d 1354 (M.D. Ga. 2009) ................................................................ 8 
Blassingame v. Governor of Ohio, 
No. 1:21-cv-375, 2021 U.S. Dist. LEXIS 144612 (S.D. Ohio Aug. 
3, 2021) ................................................................................................................. 4 
Bonilla v. United States, 
652 F.App’x 885 (11th Cir. 2016) ............................................................ 2, 13, 16 
Diagnostic Affiliates of Northeast Hous. LLC v. United Healthcare 
Services, Inc., 
No. 2:21-cv-00131, 2022 WL 214101 (S.D. Tex. Jan. 18, 2022) ........................ 4 
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Dowis v. Mud Slingers, Inc., 
279 Ga. 808 (2005) ............................................................................................... 8 
Frazier v. HSBC Mortg. Servs., Inc., 
No. 8:08–CV–2396, 2009 WL 4015574 (M.D. Fla. Nov. 19, 2009), 
aff'd on other grounds, 401 Fed.Appx. 436 (11th Cir.2010) .............................. 10 
Hines v. MidFirst Bank, 
No. 1:14-cv-00505, 2014 U.S. Dist. LEXIS 189295 (N.D. Ga. 
Nov. 26, 2014) .................................................................................................... 15 
Hubbert v. Dell Corp., 
359 Ill. App. 3d 976, 296 Ill. Dec. 258, 835 N.E.2d 113 (2005) .......................... 8 
Johnson v. JPMorgan Chase Bank, N.A., 
488 F. Supp. 3d 144, 157 (S.D.N.Y. 2020), appeal withdrawn sub 
nom. Quinn v. JPMorgan Chase Bank, N.A., No. 20-3588, 2021 
WL 161730 (2d Cir. Jan. 14, 2021) ...................................................................... 3 
Kabbage, Inc. d/b/a KServicing v. Customers Bank, 
No. 1:22-cv-02101 (N.D. Ga.) .............................................................................. 5 
Lewis v. Navient Corp., 
No. 1:20-cv-0572, 2020 U.S. Dist. LEXIS 256377 (N.D. Ga. Apr. 
2, 2022) ............................................................................................................... 10 
Lopez v. Bank of Am., N.A., 
505 F. Supp. 3d 961, 974 (N.D. Cal. 2020) .......................................................... 3 
Mescall v. United States Dep’t of Justice, 
No. 2:20-CV-13364, 2021 WL 199277 (E.D. Mich. Jan. 19, 2021) .................... 3 
Meyer v. Uber Techs., Inc., 
868 F.3d 66 (2d Cir. 2017) ............................................................................... 7, 8 
Moore-Davis Motors, Inc. v. Joyner, 
252 Ga. App. 617, 556 S.E.2d 137 (2001) ......................................................... 14 
Murphy Med. Assocs., LLC v. Cigna Health & Life Ins. Co., 
No. 3:20cv1675(JBA), 2022 WL 743088 (D. Conn. Mar. 11, 2022) .................. 3 
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Noggles v. Battle Creek Wrecking, Inc., 
153 Mich. App. 363, 395 N.W.2d 322, 1986 Mich. App. LEXIS 
2791 (Mich. Ct. App. 1986) ................................................................................ 12 
PDC Labs., Inc. v. Hach Co., 
No. 09-1110, 2009 U.S. Dist. LEXIS 75378 (C.D. Ill. Aug. 24, 
2009) ..................................................................................................................... 8 
Perry v. Stewart Title Co., 
756 F.2d 1197 (5th Cir.1985) ............................................................................. 10 
Profiles, Inc. v. Bank of Am. Corp., 453 F. Supp. 3d 742, 748 (D. Md. 
2020), appeal dismissed, No. 20-1438, 2020 WL 6042036 (4th Cir. 
May 28, 2020) ....................................................................................................... 3 
Saloojas, Inc. v. Aetna Health of California, Inc., 
No. 22-CV-01696-JSC, 2022 WL 2267786 (N.D. Cal. June 23, 
2022) ..................................................................................................................... 3 
Sanchez, PC v. Bank of S. Tex., 
No. CV-20-00139, 2020 WL 6060868 (S.D. Tex. Oct. 14, 2020) ....................... 3 
Shehan v. United States, 
No. 1:20-cv-00500, 2020 U.S. Dist. LEXIS 244022 (S.D. Ohio 
Dec. 29, 2020) ....................................................................................................... 3 
Tectonics, Inc. v. Castle Constr. Co., 
753 F.2d 957 (11th Cir. 1985) .............................................................................. 2 
Statutes 
California Business & Professions Code § 17200 ..................................................... 9 
California Civil Code § 1788.2(e) ..................................................................... 11, 12 
Florida Statute § 501.20 ........................................................................................... 13 
Georgia Code Annotated § 10-1-373(a) .................................................................. 14 
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Michigan Compiled Laws Annotated 
§ 445.901 ............................................................................................................. 12 
§ 445.902(g) ........................................................................................................ 12 
North Carolina General Statutes § 75-54 ................................................................. 13 
Rules and Regulations 
Federal Rule of Civil Procedure Rule 12(b)(6) ......................................................... 2 
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Plaintiffs have failed to address the legal deficiencies in their Complaint 
identified by Defendant Kabbage Inc. d/b/a KServicing (“KServicing”) in its 
Memorandum of Law in Support of its Motion to Dismiss (“Motion to Dismiss”).  
Unable to refute the clear inadequacy of their pleading, Plaintiffs instead have 
engaged in an irrelevant (and inaccurate) digression regarding their disapproval of 
the fact that KServicing—like every other private participant—sought to make a 
profit on the services it provided under the Paycheck Protection Program (“PPP”).   
Plaintiffs’ claims are clearly intended to enforce provisions of the CARES 
Act, despite their protestations, and those claims fail because there is no private right 
of action under that statute.  Plaintiffs note with apparent approval that the House of 
Representatives and Department of Justice have launched an investigation into PPP 
loans.1 Plaintiffs however go on to argue the legally untenable position that such 
investigations somehow provide a basis for their otherwise impermissible claims to 
proceed.  (See Opp. at 12, n. 1.)  There is no legal authority for their assertion.  Iqbal 
 
1 Plaintiffs tellingly omit that the congressional investigation was launched because 
applicants submitted fraudulent information in support of their loan applications, 
and not because the government determined KServicing administered PPP loans in 
a fraudulent manner, as Plaintiffs repeatedly imply. (See Opp. at 11-13; id. 12 n. 1 
(citing Letter from Chairman James Clyburn, House of Representatives Select 
Subcommittee on the Coronavirus Crisis to Rob Frohwein, May 27, 2021)).  Indeed, 
the citations to congressional activities surrounding PPP borrower fraud supports 
that lender decisions to request substantiating documents from applicants is neither 
fraudulent, self-interested, nor inconsistent with SBA guidance or public policy. 
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and Twombly are clear: a court must dismiss a complaint pursuant to Federal Rule 
of Civil Procedure 12(b)(6) if the facts alleged do not entitle the plaintiff to relief.  
See e.g. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2008); Bell Atl. Corp. v. Twombly, 550 
U.S. 544, 570 (2007). 
Plaintiffs’ theory, as characterized in their opposition, (Opp. at 12-14), is the 
very definition of what the Eleventh Circuit has called “[c]onclusory allegations, 
unwarranted deductions of facts or legal conclusions masquerading as facts” that 
will not prevent dismissal.” Bonilla v. United States, 652 F.App’x 885, 889 (11th 
Cir. 2016) (citation omitted). What Plaintiffs have not done in their opposition is 
meaningfully address the legal arguments KServicing raised in the Motion to 
Dismiss, or established they have pled facts supporting the essential elements of their 
claims.  Accordingly, this Court should dismiss Plaintiffs’ Complaint in its entirety.     
I. 
LEGAL ARGUMENT 
A. 
Plaintiffs Cannot Maintain a Private Cause of Action Under the 
CARES Act, Requiring Dismissal of All Claims. 
Plaintiffs cannot escape the fact that no private right of action exists to enforce 
the CARES Act.  See Alexander v. Sandoval, 532 U.S. 275, 286 (2001) (“[P]rivate 
rights of action to enforce federal law must be created by Congress.”); Tectonics, 
Inc. v. Castle Constr. Co., 753 F.2d 957, 960 (11th Cir. 1985) (finding no private 
right of action under Small Business Act, which was amended by CARES Act).  
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Plaintiffs cannot and do not address the numerous court decisions that have 
concluded  the newly enacted CARES Act does not provide a private right of action.2  
Indeed, courts have already rejected the same arguments raised by Plaintiffs and 
expressly held that disgruntled PPP loan borrowers cannot seek relief from the court.  
See e.g. Shehan v. United States, No. 1:20-cv-00500, 2020 U.S. Dist. LEXIS 
244022, at *28, 33 (S.D. Ohio Dec. 29, 2020) (“the [c]ourt lack[s] subject matter 
jurisdiction” because “[n]othing in the text of § 1102 in particular or the CARES Act 
in general states that a potential borrower whose PPP application was declined may 
bring a claim in federal court.”). 
Plaintiffs seek to simply ignore this sea of authority in purported reliance on 
Diagnostic Affiliates of Northeast Hous. LLC v. United Healthcare Services, Inc., 
No. 2:21-cv-00131, 2022 WL 214101, at **8-9 (S.D. Tex. Jan. 18, 2022), an 
 
2 See e.g. Saloojas, Inc. v. Aetna Health of Cal., Inc., No. 22-CV-01696, 2022 WL 
2267786, at *4 (N.D. Cal. June 23, 2022); Murphy Med. Assocs., LLC v. Cigna 
Health & Life Ins. Co., No. 3:20cv1675, 2022 WL 743088, at *2–6 (D. Conn. Mar. 
11, 2022); Am. Video Duplicating, Inc. v. City Nat'l Bank, No. 220CV04036, 2020 
WL 6882735, at *5 (C.D. Cal. Nov. 20, 2020); Juan Antonio Sanchez, PC v. Bank 
of S. Tex., 494 F. Supp. 3d 421, 432 (S.D. Tex 2020); Profiles, Inc. v. Bank of Am. 
Corp, 453 F. Supp. 3d 742, 748 (D. Md. 2020), appeal dismissed, No. 20-1438, 2020 
WL 6042036 (4th Cir. May 28, 2020); Johnson v. JPMorgan Chase Bank, N.A., 488 
F. Supp. 3d 144, 157 (S.D.N.Y. 2020), appeal withdrawn sub nom. Quinn v. 
JPMorgan Chase Bank, N.A., No. 20-3588, 2021 WL 161730 (2d Cir. Jan. 14, 
2021); Mescall v. U.S. Dep’t of Just., No. 2:20-CV-13364, 2021 WL 199277, at *2 
(E.D. Mich. Jan. 19, 2021); Lopez v. Bank of Am., N.A., 505 F. Supp. 3d 961, 974 
(N.D. Cal. 2020).   
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inapposite decision finding an implied private cause of action for COVID testing 
centers to enforce the provision of the Families First Coronavirus Response Act and 
the CARES Act’s “reimbursement requirement” based on the mandatory nature of 
the reimbursement right in the statute.  (Opp. at 23).  This exception is premised on 
the mandatory nature of the reimbursement requirement.  There is no similar 
mandatory provision in the CARES Act that would permit the claims here to 
proceed.  To the contrary, here, the SBA set forth regulations, and specifically 
established an administrative review process for borrowers that are dissatisfied with 
partial approval forgiveness decisions issued by their PPP Lenders.  (See SBA 
Procedural Notice Control No. 5000-827666 n. 1.)  The SBA administrative process 
sets forth the vehicle by which Plaintiffs should address their alleged concerns.  
Moreover, the narrow ruling in Diagnostic is inconsistent with the reasoning 
of the majority of courts finding no private right of action whatsoever exists under 
the CARES Act.  (See infra. at 3 n. 2, 5; see also Opp. at 24 (citing decisions 
dismissing complaints because no right of action exists under the CARES Act)). 
Plaintiffs argue alternatively they are “not seeking to enforce any provisions 
of either statute,”  (Opp. at 21),  but such a position is contrary to the allegations pled 
in the Complaint.  Plaintiffs expressly, and repeatedly, cite KServicing’s purported 
failure to comply with the terms of the CARES Act or SBA Act as the basis for each 
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count of their asserted state law claims.  (Compl. ¶¶ 243-244, 262, 264, 274, 278, 
284, 297-298.)  The arguments in Plaintiffs’ opposition are a transparent attempt to 
recast their claims as something other than what they are on their face—a challenge 
to KServicing’s performance in administering the CARES Act requirements. 
That Plaintiffs argue their claims are not specifically raised as violations of 
the CARES Act does not save their defective pleading.3  (Opp. at 20.)  Numerous 
courts have dealt with plaintiffs’ attempts to circumvent prohibitions on private 
rights of actions by simply renaming causes of action and outright rejected those 
efforts. (See Doc. 12-1 at 18-20); see Lopez v. Bank of Am., N.A., 505 F. Supp. 3d 
961, 974 (N.D. Cal. 2020) (holding the plaintiff’s state law claims must fail because 
they are predicated on theory that he is entitled to an agent fee under the CARES 
Act and the SBA Rule, and there is no private right of action under the CARES Act).  
 
3 Plaintiffs go so far as to incorrectly assert that an unrelated Complaint, filed by 
KServicing, somehow supports their attempt to circumvent settled law proscribing 
a private cause of action where none exists.  (Opp. at 19-20.)  As the allegations in 
the Kabbage, Inc. d/b/a KServicing v. Customers Bank, No. 1:22-cv-02101 (N.D. 
Ga.) complaint make clear, KServicing filed suit against Customers Bank (“CUB”) 
because CUB breached the parties’ processing agreement (“PSA”). (No. 1:22-cv-
02101, Doc. 1 ¶  9) (“This action arises out of Customers failure to pay KServicing 
amounts owed for those services pursuant to the parties’ agreements.”)  Thus, 
KServicing filed suit because CUB breached the parties’ contract, not because CUB 
violated a provision of the CARES Act.  KServicing made no allegation regarding a 
breach of the CARES Act.  Plaintiffs here do the opposite.  (Compl. ¶¶ 243-244, 
262, 264, 274, 278, 284, 297-298.)   
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Plaintiffs conveniently ignore these decisions and seek to rescue their claims 
by arguing that the “SBA does not completely preempt all state causes of action that 
implicate standards created by the SBA.” (Opp. at 21.)  The three decisions cited by 
Plaintiffs, however, are inapposite and easily distinguishable.  None address 
preemption as it relates to the newly enacted CARES Act, or the SBA regulations 
that seek to enforce the CARES Act.  (See id.)  As noted above, the specific question 
of preemption and the CARES Act has been analyzed by courts nationwide and those 
courts have held that plaintiffs are precluded from bringing such claims.  (Supra at 
3, 5.)  This Court should do the same.  
B. 
Plaintiffs’ Claims Brought Pursuant to California, Michigan, 
North Carolina, and Florida Statutes Should Be Dismissed Because 
Georgia Law Governs. 
Plaintiffs’ claims brought under California, Michigan, North Carolina, and 
Florida law should be dismissed because the dispute is governed by Georgia law.  
Plaintiffs do not dispute that the Terms of Service are valid and enforceable, or that 
a contractual choice-of-law provision bars actions brought under another state’s law. 
(See Opp. at 26-28.) Instead, Plaintiffs incorrectly claim the choice-of-law provision 
does not govern because KServicing has not established Plaintiffs agreed to, or were 
on actual or constructive notice of the Terms of Service. (Opp. at 26-27.)   
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Plaintiffs at minimum had constructive notice of the website’s terms and 
conditions because the bolded link to KServicing’s Terms of Service is accessible 
from every page of KServicing.com, including the borrower sign-in page. 4 See e.g. 
PDC Labs., Inc. v. Hach Co., No. 09-1110, 2009 U.S. Dist. LEXIS 75378, at *8 
(C.D. Ill. Aug. 24, 2009) (“It is undisputed that the Terms were hyperlinked on three 
separate pages of the online Plate order process in underlined, blue, contrasting text. 
This contrasting text is sufficient to be considered conspicuous under Hubbert, even 
though the Terms are only linked three times instead of five times, because it is not 
the repetition of the display of a term that is determinative but the contrast of a 
term.”); Hubbert v. Dell Corp.,  835 N.E.2d 113, 121 (Ill. App. Ct. 2005) (holding 
Texas law applied because the terms and conditions of sales contained a choice of 
 
4 KServicing’s Terms of Service are an example of a browsewrap agreement. 
Browsewrap agreements are agreements that generally post terms and conditions on 
a website via a hyperlink at the bottom of the screen.  B&Z Auto Enters. v. 
Autotrader, No. 1:16-CV-2313, 2017 U.S. Dist. LEXIS 229130, at *23 n.10 (N.D. 
Ga. Mar. 13, 2017).  Browsewrap agreements “do[] not require the user to manifest 
assent to the terms and conditions expressly. Meyer v. Uber Techs., Inc., 868 F.3d 
66, 75 (2d Cir. 2017).  “A party instead gives his assent simply by using the website.”  
B&Z Auto Enters., 2017 U.S. Dist. LEXIS 229130, at *23 n.10 (quoting Sw. Airlines 
Co., 2007 U.S. Dist. LEXIS 96230).  “[T]he determination of the validity of the 
browsewrap contract depends on whether the user has actual or constructive 
knowledge of a website's terms and conditions.” Id.  Indeed, “[t]hat the Terms of 
Service were available only by hyperlink does not preclude a determination of 
reasonable notice.”  Meyer v. Uber Techs., Inc., 868 F.3d 66, 78 (2d Cir. 2017).  As 
the Second Circuit explained, “clicking [a] hyperlinked phrase is the twenty-first 
century equivalent of turning over the cruise ticket.”  Id. 
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law provision and the terms and conditions of sales was an enforceable agreement 
because the hyperlink’s contrasting blue type makes it conspicuous).  Plaintiffs’ do 
not argue otherwise. 
Even if the Terms of Service are limited in the manner Plaintiffs claim, under 
Georgia law, the doctrine of lex locus delictus would still bar all non-Georgia claims.  
Lex locus delictus applies when addressing conflict of laws issues in tort cases.  
Dowis v. Mud Slingers, Inc., 279 Ga. 808 (2005).  Under lex locus delictus the 
substantive law of the place where the alleged wrong occurred should govern—i.e. 
Georgia, where KServicing purportedly failed to diligently process the loans.  See 
Bishop's Prop. & Inves., LLC v. Protective Life Ins. Co., 597 F. Supp. 2d 1354, 1359 
(M.D. Ga. 2009) (“Under the rule of lex loci delicti, tort cases are governed by the 
substantive law of the state where the tort was committed.”) (citation omitted). 
Therefore, Plaintiffs cannot maintain causes of actions brought under 
California, North Carolina, Michigan, and Florida law because Georgia law governs.  
C. 
Plaintiffs’ State Law Claims Fail Procedurally and Substantively 
and Should Be Dismissed. 
1. 
Plaintiffs’ California Statutory Claims Fail. 
Plaintiffs have not pled a cognizable claim under California’s UCL. Plaintiffs 
allege that KServicing violated Cal. Bus. & Prof. Code § 17200 which prohibits 
“unfair competition.”  The opposition confirms Plaintiffs have not and cannot 
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sufficiently plead “fraudulent” or “unfair” conduct within the meaning of the 
California statute.  
Plaintiffs broadly assert they have plausibly alleged fraudulent conduct but do 
not identify the specific factual allegations supporting the purportedly fraudulent  
statements.  (Opp. at 36.)  Plaintiffs’ conclusory assertion that a statement is false 
will not suffice.  For example, Plaintiffs complain that KServicing’s website 
contains the following allegedly false statement: 
“borrowers with loans under $150,000 who qualify to use the new Form 
3508S may not need to submit any supporting documentation,” but continuing 
to demand thousands of customers with loans under this threshold continue 
submitting unnecessary documentation. 
 
(Compl. ¶ 297) (emphasis added); (Opp. at 36.)  This is a non-binary statement and 
cannot support a finding of falsity.  The above statement merely says, it is possible 
that borrowers with loans under $150,000 will not be required to submit supporting 
documentation.  Accordingly, Plaintiffs’ allegation that KServicing requested 
supporting 
documentation 
from 
Plaintiffs 
cannot 
support 
a 
fraud 
or 
misrepresentation claim.  
Additionally, California’s Rosenthal Act is inapplicable to the parties 
relationship and transactions for multiple reasons. First, KServicing is not a debt 
collector within the meaning of the FDCPA.  Contrary to Plaintiffs’ assertion, 
because KServicing is a PPP loan servicer (see, e.g. Compl. at 1, 5 n.1, 16; id. ¶¶ 3, 
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6, 10, 14, 214-219), operating akin to a mortgage servicing company, it does not fall 
within the meaning of a FDCPA debt collector.  See e.g. Lewis v. Navient Corp., No. 
1:20-cv-0572, 2020 U.S. Dist. LEXIS 256377, 19, n. 7 (N.D. Ga. Apr. 2, 2022) (“the 
FDCPA cannot succeed under the facts alleged, which expressly show that 
Defendant was the servicer on Plaintiff’s loans, and not a debt collector.”).   
Further, the Rosenthal Act does not apply to the alleged misconduct because 
it governs “consumer credit transaction[s]”—i.e. “a transaction between a natural 
person and another person in which property, services, or money is acquired on 
credit by that natural person from the other person primarily for personal, family, or 
household purposes.” Cal. Civ. Code § 1788.2(e) (emphasis added).  It is undisputed 
that PPP loans are loans for small businesses, and not “primarily for personal, family, 
or household purposes.”  (Opp. at 38.)  In an effort to circumvent the clear mandate 
of the statute, Plaintiffs assert they are “natural persons” and their “use the loan funds 
for ‘rent, utilities and interest mortgage’ qualifies the PPP loans” as “credit consumer 
transaction.”  (Id.)  Not so.  First, Plaintiffs expressly allege that they are “small 
businesses.” (See, e.g. Compl. ¶ 20).  Independently, as the FDCPA and Rosenthal 
Act make clear, the transaction must occur between two natural persons.  See Cal. 
Civ. Code § 1788.2(e) (The term “consumer credit transaction” relates to “a 
transaction between a natural person and another person in which property, services, 
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or money is acquired on credit by that natural person from the other person primarily 
for personal, family, or household purposes.”)  Therefore, even if Plaintiffs qualify 
as natural persons within the statute, KServicing does not.  
Finally, the PPP loans are administered to business owners for their respective 
businesses.  Plaintiffs’ purported use of the PPP loans for “rent, utilities and interest 
on mortgage” cannot transform the transaction to one which is “primarily for 
personal, family or household purposes,” as required under California law.  See Cal. 
Civ. Code § 1788.2(e).  Plaintiffs can plead no set of facts that would bring their PPP 
loan claims within the purview of the FDCPA or the Rosenthal Act.5 
2. 
Plaintiffs’ Michigan Statutory Claims Fail. 
Plaintiffs likewise have not pled a legally cognizable claim under Michigan’s 
Consumer Protection Act, Mich. Comp. Laws Ann. § 445.901, (“MCPA”).   
Plaintiffs argue that KServicing was engaged in “trade or commerce” pursuant to § 
445.902(g) of the MCPA. But, like the California consumer protection statutes, the 
MCPA was enacted to protect consumers in purchases of goods that are primarily 
used for personal, family or household purposes, regardless of the character of the 
seller’s business.  Noggles v. Battle Creek Wrecking, Inc., 395 N.W.2d 322, 323-24 
 
5 Plaintiffs not only fail to allege unlawful, unfair, or deceptive conduct, but 
completely ignore that KServicing’s alleged misconduct with respect to pre-
populated loan forgiveness applications followed SBA guidance. (Doc. 12-1 at 25.)   
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(Mich. Ct. App. 1986).  As discussed above, the loans that are the subject of 
Plaintiffs’ claims do not relate to personal, family, or household purposes, but rather 
are business loans for small businesses.  (Supra at 10-11.)  Thus, Plaintiffs cannot 
allege conduct falling within the MCPA. 
3. 
Plaintiffs’ North Carolina Statutory Claims Fail. 
Plaintiffs have similarly failed to plead a valid claim under North Carolina’s 
Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-54  (“UDTPA”).  
Rather than respond individually or substantively to KServicing’s arguments 
in support of dismissing the North Carolina UDTPA claims, Plaintiffs make the 
conclusory assertion that KServicing’s conduct “related to the pre-populated loan 
forgiveness application is an unfair and deceptive act or practice.”  (Opp. at 35-36.)  
Plaintiffs provide no authority to support this statement and such conclusory labels 
cannot save this claim from dismissal. Bonilla, 652 F.App’x at 889. 
4. 
Plaintiffs’ Florida Statutory Claims Fail. 
Plaintiffs also have not pled a legally cognizable claim under Florida’s 
Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.20 (“FUDTPA”).  
Plaintiffs’ own allegations claim that  KServicing  is attempting to collect on 
Plaintiffs’ loans (Compl. ¶¶ 163; 203.) yet the FUDTPA contains a debt collector 
exemption.  Plaintiffs simply ignore this fatal inconsistency specifically addressed 
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in the Motion to Dismiss and simply assert, that they nonetheless have sufficiently 
pleaded their claims.  (Opp. at 39.)  Plaintiffs’ assertion is not only unavailing, but 
Plaintiffs’ failure to address KServicing’s argument constitutes a waiver of the 
claim.  See Barnes v. AstraZeneca Pharms. LP, 253 F. Supp. 3d 1168, 1171 (N.D. 
Ga. 2017) (“When an argument is raised upon  [a] motion to dismiss that a claim is 
subject to dismissal, and the non-moving party fails to respond to such an argument, 
such claims are deemed abandoned and subject to dismissal.”) (citations omitted). 
5. 
Plaintiffs’ Georgia Statutory Claims Fail. 
Plaintiffs correctly note that KServicing referred to the Georgia Fair Business 
Practices Act (“FBPA”), rather than the Georgia Uniform Deceptive Trade Practice 
Act (“GUDTPA”) in its Motion to Dismiss.  Notwithstanding this mistake, 
Plaintiffs’ GUDTPA claim still fails.  “Unlike the FBPA, which permits a recovery 
of damages, the sole remedy available under the [G]UDTPA is injunctive relief.” 
Moore-Davis Motors, Inc. v. Joyner, 556 S.E.2d 137, 140 (Ga. Ct. App. 2001).  But, 
Plaintiffs did not plead any unique injunctive relief in support of their GUDTPA 
claim. (See Compl. ⁋ 279.)  As Plaintiffs have only asserted a claim for injunctive 
relief in Count 1—which is impermissibly rooted in a purported violation of the 
CARES Act, Plaintiffs cannot prevail on their GUDTPA claim. 
Case 1:22-cv-01249-VMC   Document 20   Filed 07/25/22   Page 19 of 23

 
14 
D. 
Plaintiffs Carr, Edward Ford Services LLC and Morgan’s Claims 
Should Be Dismissed for Failure to Exhaust Their Administrative 
Remedies. 
Plaintiffs Carr, Edward Ford Services LLC and Morgan’s claims should be 
dismissed for failure to exhaust administrative remedies. It is undisputed that the 
SBA promulgated a Procedural Notice outlining the “process being implemented by 
SBA to allow [PPP] borrowers to request an SBA loan review of partial approval 
forgiveness decisions issued by their PPP Lenders.”  See Procedural Notice Control 
No. 5000-827666 n. 1.  Plaintiffs now seek to circumvent the exhaustion requirement 
by asserting that they “contacted SBA regarding their loans and their forgiveness 
status, [and] they were told to contact [], their loan provider.”  (Opp. at 44-45.)   
As an initial matter, Plaintiffs’ attempt to allege new facts in their opposition 
is improper and these statements should not be considered by the Court.  See Hines 
v. MidFirst Bank, No. 1:14-cv-00505, 2014 U.S. Dist. LEXIS 189295, at 36 (N.D. 
Ga. Nov. 26, 2014) (“it is improper for Plaintiff to supplement or augment a 
complaint in response to a motion to dismiss”) (citing Huls v. Llabona, 437 Fed. 
Appx. 830, 832 n.5 (11th Cir. Aug. 15, 2011) (argument not properly raised where 
plaintiff asserted it for the first time in response to defendant's motion to dismiss, 
instead of seeking leave to file an amended complaint.) 
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15 
Even if Plaintiffs had included the aforementioned allegation in their 
Complaint, the allegation does not support dispensing with the exhaustion 
requirement.  Plaintiffs’ purported inquiries regarding their respective forgiveness 
status does not equate to an attempt to seek an SBA loan review. Accordingly, this 
Court should disregard Plaintiffs’ unsupported conclusory assertion regarding the 
purported “impossibility of obtaining relief from the SBA,” and require exhaustion. 
See Bonilla, 652 F.App’x at 889 (“[c]onclusory allegations, unwarranted deductions 
of facts or legal conclusions masquerading as facts will not prevent dismissal.”). 
II. 
CONCLUSION 
For the foregoing reasons, Plaintiffs claims are insufficient as a matter of law. 
Accordingly, Defendant KServicing respectfully requests that this Court dismiss the 
complaint in its entirety with prejudice and award KServicing all such other relief to 
which it is justly entitled.  See Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 
(11th Cir. 1999) (affirming denial of leave to amend as futile because the claims the 
plaintiff sought to add “were insufficient as a matter of lawˮ).   
Dated:  July 25, 2022 
Respectfully submitted, 
DENTONS US LLP 
/s/ Uchenna Ekuma-Nkama 
Uchenna Ekuma-Nkama 
Georgia Bar No. 957861 
Case 1:22-cv-01249-VMC   Document 20   Filed 07/25/22   Page 21 of 23

 
16 
Alizé D. Mitchell 
Georgia Bar No. 349963 
303 Peachtree Street, N.E. 
Suite 5300 
Atlanta, GA  30308 
Telephone:  (404) 527-4000 
Facsimile:    (404) 527-4198 
uchenna.ekuma-nkama@dentons.com 
alize.mitchell@dentons.com 
 
Drew W. Marrocco 
(pro hac vice forthcoming) 
Virginia Bar No. 38955/D.C. Bar No. 53205 
1900 K Street NW 
Washington, DC 20006 
Telephone: (202) 496-7500 
Facsimile: (202) 496 7756 
drew.marrocco@dentons.com 
 
Tomasita L. Sherer 
(pro hac vice forthcoming)      
New York Bar No. 3033859            
1221 Avenue of the Americas 
New York, NY 10020 
Telephone: (212) 768-6700 
Facsimile: (212) 768 6800 
 
Counsel for Defendant Kabbage, Inc. d/b/a 
KServicing 
 
 
Case 1:22-cv-01249-VMC   Document 20   Filed 07/25/22   Page 22 of 23

 
17 
UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF GEORGIA 
ATLANTA DIVISION 
JASON CARR, VICKI LEMASTER, 
EDWARD FORD SERVICES LLC, 
CARLTON MORGAN, 365 SUN LLC, 
and CANDICE WORTHY, individually 
and on behalf of others similarly 
situated, 
 
 
Plaintiffs, 
v. 
KABBAGE, INC., d/b/a KSERVICING, 
 
Defendant. 
CIVIL ACTION 
NO. 1:22-cv-01249-VMC 
 
 
 
CERTIFICATE OF SERVICE AND COMPLIANCE 
 
I certify that on July 25, 2022, I filed the foregoing DEFENDANT’S REPLY 
IN FURTHER SUPPORT OF ITS MOTION TO DISMISS with the Clerk of 
Court using the CM/ECF system, which will automatically send e-mail notification 
of such filing to all counsel of record. I also certify that the foregoing was prepared 
in accordance with N.D. Ga. L.R. 5.1, using Times New Roman font, 14 point.  
/s/ Uchenna Ekuma-Nkama 
Uchenna Ekuma-Nkama 
Case 1:22-cv-01249-VMC   Document 20   Filed 07/25/22   Page 23 of 23

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