Response in Opposition re 46 Motion to Dismiss for Lack — Marshall v. Prestamos CDFI, LLC (Dkt. 49, E.D. Pa. No. 5:21-cv-04337)

Record facts

U.S. District Court for the Eastern District of Pennsylvania · No. 5:21-cv-04337-JMG · Doc. 49 · 2022-06-17 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF PENNSYLVANIA 
 
Alicia Marshall, et al., individually and on 
behalf of all others similarly situated, 
 
 
 
 
Plaintiffs, 
 
 
 
v. 
 
Prestamos CDFI, LLC and Chicanos Por La 
Causa, Inc., 
 
 
 
 
Defendants. 
 
 
 
Civil Action No. 5:21-cv-04337-JMG 
 
 
 
 
 
 
 
 
Plaintiffs’ Brief In Opposition To Defendants’ Motion To Dismiss 
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Table of Contents 
 
Introduction ..................................................................................................................................... 2 
Statement of Facts ........................................................................................................................... 2 
Argument ........................................................................................................................................ 4 
A. 
Plaintiffs Have Standing ......................................................................................... 5 
B. 
Plaintiffs’ Claims Are Not Preempted or Precluded ............................................... 7 
C. 
Plaintiffs Sufficiently Allege Alter Ego Claims Against CPLC ........................... 10 
D. 
Plaintiffs Sufficiently Allege Breach of Contract Claims ..................................... 12 
E. 
Plaintiffs’ Claims Are Not Released ..................................................................... 15 
F. 
Plaintiffs Sufficiently Allege State Law Consumer Protection Claims ................ 16 
Conclusion .................................................................................................................................... 20 
 
 
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Introduction 
Plaintiffs have standing because defendant Prestamos CDFI, LLC’s (“Prestamos”) failure 
to fund their U.S. Small Business Administration (“SBA”) approved Paycheck Protection 
Program (“PPP”) loans hurt their businesses and committed them to pay money back to 
Prestamos, with interest, on loan proceeds they never received. Plaintiffs’ state law claims are 
sufficiently alleged and not preempted or precluded. Defendant Chicanos Por La Causa, Inc. 
(“CPLC”) controlled Prestamos’s PPP lending and obtained the PPP loan fees which states a 
classic alter ego claim. The Court should therefore deny Defendants’ motion to dismiss.  
Statement of Facts 
On March 27, 2020, Congress passed the Coronavirus Aid, Relief and Economic Security 
Act (“CARES Act”) to assist individuals, families and businesses amid the outbreak of Covid. 
¶¶ 38-39.1 An integral part of the CARES Act was the PPP. PPP loans are guaranteed by the 
SBA and are designed to be completely forgiven. ¶ 41. To ensure that businesses received their 
PPP loan proceeds quickly, the SBA delegated lending to authorized private PPP lenders and 
required PPP loans to be funded within ten days of SBA approval. ¶¶ 45, 51. In return, the SBA 
paid PPP lenders fees for each loan made. ¶¶ 45-48.  
While Prestamos was an SBA-authorized PPP lender, CPLC was not. In 2020, Prestamos 
booked only 935 PPP loans totaling less than $27 million for fees of $1.3 million. ¶ 6. In late 
2020, the PPP loan fee structure was increased to 50% or $2,500.00, whichever is less, for PPP 
loans up to $50,000.00 to encourage PPP loans to minority, underserved, veteran, women-owned 
and other small businesses like Plaintiffs. ¶¶ 46-47. Defendants seized an opportunity to exploit 
 
1 Unless otherwise noted, all paragraph references are to paragraphs in Plaintiffs’ Second 
Amended Complaint (ECF 42); all page cites are to the ECF page number; all emphases are in 
the original; and all internal quotation marks, alterations, footnotes and citations are omitted. 
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that market. As a result, Prestamos committed to fund 494,415 PPP loans in 2021 for over $7.6 
billion, or more PPP loans than any other lender in 2021, and more than Bank of America, PNC 
Bank, TD Bank and Wells Fargo combined, and obtained nearly $1.2 billion in fees. ¶¶ 9-10. 
To enable PPP lending, the Federal Reserve advanced the funds to Prestamos through 
term loans secured by PPP loans. ¶ 86. PPPLF advances could only be secured by SBA-
guaranteed PPP promissory notes, and the principal amount advanced equaled the principal 
amount of the PPP loan pledged to secure the advance. ¶ 90. In total, Prestamos received 
$7,144,136,133.27 from the PPPLF to fund PPP loans. ¶ 94. 
Defendants say that Plaintiffs do not “allege that Prestamos spent or misappropriated any 
money it received from SBA” (ECF 46-1 at 10). But they omit that, despite Plaintiffs’ repeated 
and ongoing efforts (ECF 22, 30, 34) including for an accounting (ECF 36) and Prestamos’s 
clear obligation as a PPP lender to properly maintain and readily access the data (ECF 36-1 at 6-
7), Defendants have fiercely resisted producing any information regarding the status and 
whereabouts of those proceeds. ECF 27, 31, 35, 38. Plaintiffs instead responsibly and narrowly 
allege that they “are unaware whether Prestamos has retained or spent or disbursed any such 
funds” (¶ 229), although Defendants’ continued resistance to producing that vitally important 
information gives rise to an inference of further serious malfeasance.2  
Plaintiffs are sole proprietors engaged in healthcare, food catering, hair care, real estate, 
construction, janitorial, clothing upholstery and delivery businesses. ¶¶ 15-25. Plaintiffs all 
timely applied for PPP loans in 2021 to help with their businesses; had their PPP loans approved 
by the SBA; signed and returned to Prestamos all required Loan Documents (¶ 101; ECF 42 at 
 
2 Defendants do repeat that Prestamos owed interest to the Federal Reserve on the PPP advances 
Prestamos obtained. ECF 46-1 at 10, 15. But they don’t say whether Prestamos actually paid any 
such interest or, more fundamentally, what it did with the principal. 
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77-90); and failed to ever receive their PPP loan proceeds despite Defendants’ absurd position 
that Plaintiffs’ claim is for mere “alleged delay” in funding. ECF 46-1 at 5.  
Plaintiffs further allege that CPLC owned Prestamos and controlled and directed its PPP 
lending and was its alter ego; caused it to upstream to CPLC PPP lending fees; placed its 
President and CEO, David Adame, CFO Alicia Nunez and EVP Max Gonzales, as the sole 
members of Prestamos’s Board of Directors; had its EVP Jose Martinez sign the Loan 
Documents (ECF 42 at 86) while also serving as President of Prestamos (¶ 66); and held the 
companies out publicly as one. ¶¶ 11-12, 35, 62, 65-68.  
Defendants argue that the Note releases them from liability (ECF 46 at 34-36) but 
contradictorily contend that Prestamos was not contractually obligated to fund the loans. That 
contention is belied by the Loan Documents (¶¶ 101, 243-47) and by applicable PPP rules which 
require lenders to disburse the loans. See, e.g., 86 Fed. Reg. 3692, 3710 (“The lender must make 
a one-time, full disbursement of the PPP loan within ten calendar days of loan approval”) 
(emphasis added).  
Prestamos refused to fund despite numerous follow-up efforts by Plaintiffs to get funded. 
See, e.g., ¶¶ 107-10, 150-53, 200-01. As a result, Plaintiffs were deprived of funds to which they 
were contractually entitled (¶¶ 243-48) and reliant exclusively on Prestamos to fund (¶¶ 54, 119, 
255-57), and are obligated to pay back to Prestamos loan proceeds they never received plus 
interest (¶ 121; ECF 42 at 78) and unable to properly apply for loan forgiveness. ¶ 122. The 
Amended Complaint details similar complaints by numerous other approved but unfunded 
borrowers. See ¶¶ 226(a)-(g); 227(a)-(xx).  
Argument 
The Court should “view the facts presented in the pleadings and the inferences to be 
drawn therefrom in the light most favorable to the nonmoving party” (Allstate Prop. & Cas. Ins. 
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Co. v. Dynamic Sols. Worldwide, LLC, 2020 WL 6940884, at *2 (E.D. Pa. Nov. 25, 2020)), “and 
then determine whether they plausibly give rise to an entitlement for relief.” Santiago v. 
Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). Defendants cite Mortensen v. First Fed. 
Sav. & Loan Ass’n, 549 F.2d 884, 896 (3d Cir. 1977), but that court reversed dismissal, holding 
that Rule 12(b)(1) motions “prior to giving the plaintiff ample opportunity for discovery should 
be granted only sparingly.”  
A. 
Plaintiffs Have Standing 
Plaintiffs are among those Congress designed the PPP to help. Plaintiffs were reliant on 
Prestamos and deprived of funds to assist their businesses, and are obligated to repay with 
interest loans they never received and precluded from lawfully applying for forgiveness. Far 
from being “too speculative” as Defendants claim (ECF 46-1 at 16 n.5), these allegations clearly 
allege cognizable injury fairly traceable to Prestamos’s failure to fund. See Talbert v. Am. Water 
Works Co., 538 F. Supp. 3d 471, 482 (E.D. Pa. 2021) (Gallagher, J.) (the injury-in-fact element 
of standing “is ‘very generous to claimants, demanding only that the claimant allege[ ] some 
specific, identifiable trifle of injury’ … ‘Monetary harm is a classic form of injury-in-fact’”).   
Further, issues as to causation and the extent of damages should not be resolved at this 
procedural stage. See PetroChoice Holdings, Inc. v. Orobono, 2022 WL 138008, at *8 (E.D. Pa. 
Jan. 14, 2022) (Gallagher, J.) (“Whether causation has been established in a breach of contract 
action … is normally a question of fact for the jury ….”); Mielo v. Steak ‘n Shake Operations, 
Inc., 897 F.3d 467, 479 (3d Cir. 2018) (“our standing inquiry must avoid any consideration of the 
merits beyond a screening for mere frivolity”); Davis v. Wells Fargo, 824 F.3d 333, 348 (3d Cir. 
2016) (“when a factual challenge to jurisdiction attacks facts at the core of the merits of the 
underlying cause of action, the proper procedure for the district court is to find that jurisdiction 
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exists and to deal with the objection as a direct attack on the merits of the plaintiff’s case”); CNA 
v. United States, 535 F.3d 132, 145 (3d Cir. 2008) (courts should “not prematurely grant Rule 
12(b)(1) motions to dismiss claims in which jurisdiction is intertwined with the merits and could 
be established, along with the merits, given the benefit of discovery”).  
Although there is no evidence in the record that Prestamos is still considering voluntarily 
funding the loans, improper delay itself can also be actionable. See, e.g., Pontes v. Rowan Univ., 
2021 WL 4145119, at *4 n.5 (3d Cir. Sept. 13, 2021) (a “temporary loss of use of money is itself 
a sufficiently concrete injury to establish standing”).  
Defendants improperly rely on Pinehurst Neuropsychology, PLLC v. First-Citizens Bank 
& Tr. Co., 2021 WL 4460273, at *3 (M.D.N.C. Sept. 29, 2021) and Profiles, Inc. v. Bank of Am. 
Corp., 453 F. Supp. 3d 742, 746 (D. Md. 2020), to argue that Plaintiffs lack standing. But those 
cases involve PPP loan applicants who could have gone elsewhere for PPP loans, not 
contractually-entitled, SBA-approved but unfunded borrowers bound to the lender by 
enforceable Loan Documents. See also Elizabeth M. Byrnes, Inc. v. Fountainhead Com. Cap., 
LLC, 2021 WL 5507225, at *4 (C.D. Cal. Nov. 24, 2021) (“It is far from certain that Plaintiff 
suffered any injury, as she does not allege that she was unable to obtain a loan from another 
source or how much of a delay she suffered as a result of Fountainhead’s conduct.”).  
Plaintiffs also have standing to assert their nationwide breach of contract claims. The 
Third Circuit, this Court and other courts have repeatedly held that, “[i]n the class action context, 
our standing inquiry focuses solely on the class representative(s).” Mielo, 897 F.3d at 478. 
Accord In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 634 (3d Cir. 
2017); Neale v. Volvo Cars of North Am., 794 F.3d 353, 362 (3d Cir. 2015); Bombin v. Sw. 
Airlines Co., 529 F. Supp. 3d 411, 418-19 (E.D. Pa. 2021) (Gallagher, J.) (citing Horizon); 
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Bodor v. Maximus Fed. Servs., Inc., 2021 WL 4941503, at *2 (E.D. Pa. Oct. 22, 2021). 
(Gallagher, J.). 
Rather than acknowledge controlling precedent, Defendants’ other cases largely pre-date 
it, and raise differences in state law not present here. See In re Wellbutrin XL Antitrust Litig., 260 
F.R.D. 143, 156 (E.D. Pa. 2009) (disputing plaintiffs’ standing under “various state statutes”); 
Lauren v. PNC Bank, N.A., 296 F.R.D. 389, 390 (W.D. Pa. 2014) (decided before Mielo); In re 
Ductile Iron Pipe Fittings Indirect Purchaser Antitrust Litig., 2013 WL 5503308, at *8-*9 
(D.N.J. Oct. 2, 2013) (state antitrust and consumer protection law claims); In re Niaspan 
Antitrust Litig., 2015 WL 8150588, at *3 (E.D. Pa. Dec. 8, 2015) (collecting cases). Only 
Talbert, 538 F. Supp. 3d at 489, is recent by comparison. And unlike this case which involves a 
standard-form contract and nationwide alleged breaches that, if proven, would uniformly result 
in liability under the laws of every jurisdiction, the plaintiffs in Talbert did “not attach any 
contract or identify any essential terms of a contract” but instead alleged contaminants in their 
respective two residential water supplies only in Pennsylvania and New Jersey.   
B. 
Plaintiffs’ Claims Are Not Preempted or Precluded  
Defendants do not contend that the CARES Act expressly preempts Plaintiffs’ state law 
claims or that Plaintiffs’ claims conflict with the CARES Act, nor reasonably could they. See 
Rolon v. Metro. Life Ins. Co., 2022 WL 35609, at *4 (E.D. Pa. Jan. 4, 2022) (Gallagher, J.) 
(“Under the principles of implied conflict preemption, a state law is preempted when it conflicts 
with a federal law such that dual compliance is impossible or when it stands as an obstacle to the 
federal statute’s objective.”). Instead, Defendants claim field preemption on the premise that “the 
CARES Act and related rules already provide a robust enforcement scheme” (ECF 46-1 at 19). 
But robust federal enforcement does not result in preemption. Rather, field preemption is found 
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only “if federal law so thoroughly occupies a legislative field ‘as to make reasonable the 
inference that Congress left no room for the States to supplement it.’” Cipollone v. Liggett 
Group, Inc., 505 U.S. 504, 516 (1992).  
Defendants cite nothing in the CARES Act suggesting that Congress left no room for 
state law. To the contrary, section 7 of the standard form Note affirmatively incorporates state 
law into the parties’ agreement (ECF 42 at 81), and even precludes borrowers from claiming 
against the SBA that federal law preempts state law. Id.  
This Court’s ruling in Rolon, 2022 WL 35609, is spot on although Defendants do not 
even cite it despite Plaintiffs’ prior discussion of it. ECF 29 at 15-16. Rolon, 2022 WL 35609, at 
*1, involved disputed life insurance proceeds created under a federal program which, like the 
SBA and PPP lending, tasked a federal agency to implement that, in turn, retained private firms 
to administer “in accordance with the requirements and conditions of FEGLIA, the OPM’s 
regulations and the FEGLI Contract.” Defendant argued that plaintiffs’ claims were expressly 
and impliedly preempted. The Court held that “neither of these arguments is persuasive because 
Plaintiffs’ breach of contract claim is entirely consistent with the FEGLI Contract and FEGLIA 
itself” (id. at *3) and that “the whole purpose of a breach of contract claim is to enforce a 
contract’s provisions, not to alter them.” Id. at *4. Likewise here, there is no inconsistency 
between Plaintiffs’ state law claims and federal law, and the purpose of Plaintiffs’ state law 
claims is to enforce federally-created PPP lending obligations, not alter or interfere with them.   
Further, a section of the CARES Act protecting healthcare workers actually preempts 
state law. See 15 U.S.C. § 3215(c)(1). This further evidences Congressional intent for the 
CARES Act to not otherwise displace state law. See Adams v. McMaster, 851 S.E.2d 703, 712 
(S.C. 2020).  
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The absence of a private right of action in the CARES Act also does not preclude 
Plaintiffs’ state law claims. See Bukowski v. Wells Fargo Bank, N.A., 757 F. App’x 124, 128-29 
(3d Cir. 2018) (reversing dismissal; “As the Seventh Circuit explained in Wigod [v. Wells Fargo 
Bank, N.A., 673 F.3d 547, 581 (7th Cir. 2012)], ‘[t]he absence of a private right of action from a 
federal statute provides no reason to dismiss a claim under a state law just because it refers to or 
incorporates some element of the federal law.’”); Scott v. Gate Gourmet, Inc., 2021 WL 677897, 
*10 (C.D. Cal. Feb. 22, 2021) (citing Wigod; “the Court similarly finds that the absence of a 
private right of action from the CARES Act, which does not expressly prohibit state law claims, 
does not require dismissal of plaintiffs’ common law claims”). 
Defendants cite no case holding that the CARES Act preempts or precludes state law. 
Instead, they cite cases for the undisputed point that the CARES Act and other statutes do not 
contain a private right of action (see ECF 46-1 at 19 n.7; Gibbs v. SLM Corp., 336 F. Supp. 2d 1, 
16-17 (D. Mass. 2004) (federal education act); Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 
59, 67 (3d Cir. 2008) (federal tax statute); Mankodi v. Trump Marina Assocs. LLC, 525 F. App’x 
161, 166 (3d Cir. 2013) (state statute)), and cases involving PPP applicants or agents who, unlike 
here, lacked any binding contract with PPP lenders. See Johnson v. JPMorgan Chase Bank, N.A., 
488 F. Supp. 3d 144, 149 (S.D.N.Y. 2020); Profiles, 453 F. Supp. 3d at 750-751; Radix Law 
PLC v. JPMorgan Chase Bank, N.A., 508 F. Supp. 3d 515, 520 (D. Ariz. 2020). And also as in 
Rolon, 2022 WL 35609, at *4, the absence of a federal private right of action in the CARES Act 
renders state law enforcement here more important. 
Defendants also cite Astra USA, Inc. v. Santa Clara Cnty., 563 U.S. 110 (2011). But that 
case involved comprehensive pharmaceutical pricing regulation that “‘centralized enforcement in 
the government’” and no claim that the defendants “violated any independent substantive 
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obligation” to plaintiff. Id. at 119. Here, Plaintiffs allege independent and direct state law claims 
in their own right as counterparties to the Loan Documents.  
C. 
Plaintiffs Sufficiently Allege Alter Ego Claims Against CPLC  
Plaintiffs sufficiently allege that CPLC was Prestamos’s alter ego. See ¶¶ 11-12, 35, 62, 
65-68. Indeed, Defendants spend over eight pages in their brief trying to refute the merits of 
those allegations. ECF 46-1 at 24-32. That alone demonstrates the claim is sufficiently alleged. 
Castillo v. Johnson, 2019 WL 4222289, at *8 (D. Ariz. Sept. 15, 2019) (alter ego allegation 
sufficient where corporate defendant was “collecting millions in management fees in exchange 
for no consideration”); Slep-Tone Entm’t Corp. v. Brophy, 2014 WL 11498396, at *2 (D. Ariz. 
June 4, 2014) (allegation sufficient that the individual defendant was sole manager of the LLC 
defendant); Gatecliff v. Great Republic Life Ins. Co., 821 P.2d 725, 728 (Ariz. 1991) (denying 
summary judgment where key executive served two defendants).  
Further, Defendants ignore that they have not produced any discovery and that courts, 
including in virtually all the cases they cite, overwhelmingly allow discovery rather than dismiss 
alter ego claims under Rule 12. See, e.g., PSC Info Group v. Lason, Inc., 2008 WL 4660943, *7 
(E.D. Pa. Oct. 21, 2008); Powervar, Inc. v. Power Quality Scis., Inc., 2021 WL 2986417, at *6 
(E.D. Pa. Jul. 15, 2021); Gladstone Tech. Partners, LLC v. Dahl, 222 F. Supp. 3d 432, 439 & 
n.23 (E.D. Pa. 2016); Pimal Prop., Inc. v. Capital Ins. Group, Inc., 2012 WL 608392, at *4 (D. 
Ariz. Feb. 27, 2012) (“[a]lter ego determinations are highly fact-based”). 
Accordingly, Prestamos’s PPP lending activities in Pennsylvania are imputed to CPLC 
and the Court therefore has jurisdiction over CPLC. Shuker v. Smith & Nephew, PLC, 885 F.3d 
760, 781 (3d Cir. 2018) (“the alter ego theory … instructs that, if a subsidiary is merely the agent 
of a parent corporation, or if the parent corporation otherwise controls the subsidiary, then 
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personal jurisdiction exists over the parent whenever personal jurisdiction … exists over the 
subsidiary”); Deardorff v. Cellular Sales of Knoxville, Inc., 2020 WL 5017522, at *7 (E.D. Pa. 
Aug. 25, 2020) (quoting Shuker). 
The Court also has jurisdiction over CPLC directly given the loan fees it obtained even 
though it was not the SBA-approved lender. SBA data reflect that Prestamos committed to fund 
13,672 loans totaling $208,677,578 to Pennsylvania borrowers in 2021. See 
https://bit.ly/3O4XmW4 (public_up_to_150k_10_220403.csv). Those loans resulted in the 
payment of at least $34,180,000 in fees assuming a fee of at least $2,500.00 for each such loan. 
And, if there was any question the Court may exercise jurisdiction over CPLC, Plaintiffs 
should be afforded discovery for further details concerning the relationship between the 
Defendants and their contacts here, including via Blueacorn and any other agent they used for 
PPP lending. See, e.g., Shuker, 885 F.3d at 781-82; Rocke v. Pebble Beach Co., 541 Fed. App’x. 
208, 212-13 (3d Cir. 2013); Deardorff, 2020 WL 5017522, at *8; Trett Texas LLC v. Pitney 
Road Partners, LLC, 2015 WL 5737571, at *2 (E.D. Pa. Sept. 30, 2015). Discovery is 
particularly called for here given CPLC’s failure to put any relevant evidence of its own in the 
record. Coles v. Hawks’ Towing & Recovery, LLC, 2005 WL 8177264, at *1 (E.D. Pa. June 23, 
2005) (allowing discovery in “the conspicuous absence of any denial that [defendant] conducts 
business in Pennsylvania”). 
Defendants’ merits arguments are also inapt. For example, even if the term 
“Organization” refers collectively to CPLC and its subsidiaries as Defendants claim (ECF 46-1 
at 26), the financial statement also states that “[t]he Organization is the sole member of seven 
limited liability companies.” See ProPublica, Chicanos Por La Causa Inc., at 15 (available at 
https://bit.ly/3NBsPiY) (emphasis added). That reference can logically be only to CPLC alone. 
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And the use of “one consolidated financial statement and annual report for the whole [corporate] 
family” weighs in favor of personal jurisdiction over a corporate defendant in any event. 
Williams v. OAO Severstal, 2019 WL 4888570, at *9 (Pa. Super. Oct. 3, 2019).  
None of Defendants’ cases dictate a different result. Several were decided after trial (see, 
e.g., United States v. Bestfoods, 524 U.S. 51, 58 (1998); In re Blatstein, 192 F.3d 88, 105 (3d Cir. 
1999)), or on summary judgment. See, e.g., Pearson v. Component Tech. Corp., 247 F.3d 471 
(3d Cir. 2001); Lieberman v. Corporacion Experienca Unica, S.A., 226 F. Supp. 3d 451 (E.D. 
Pa. 2016). The courts in others allowed jurisdictional discovery. See, e.g., Reynolds v. Turning 
Point Holding Co., LLC, 2020 WL 953279, at *2 (E.D. Pa. Feb. 26, 2020). And the corporate 
defendant in Cheatham v. ADT Corp., 161 F. Supp. 3d 815, 823 (D. Ariz. 2016), filed two 
affidavits detailing its thorough lack of involvement in the events that precipitated the case. 
Defendants here have proffered nothing. 
D. 
Plaintiffs Sufficiently Allege Breach of Contract Claims 
Defendants’ argument that Prestamos was not contractually bound to fund the PPP loans 
ignores the terms of the Loan Documents, basic principles of contract construction, the PPP rules 
and Defendants’ own actions confirming -- and reaping the benefits of -- Plaintiffs’ approved 
loans. Defendants admit the Loan Documents are binding by affirmatively pledging them as 
collateral to obtain PPPLF loan advances and PPP loan fees and by seeking to enforce the release 
in the Note. Defendants cannot now change their position that the Notes are supported by 
adequate consideration and enforceable.   
Section 1 of the Note states that the consideration for the borrower’s agreement is “the 
Loan” and that “[i]n return for the Loan, Borrower promises to pay to the order of the Lender” 
the principal amount plus interest unless forgiven (ECF 42 at 78) (emphasis added); identifies 
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Prestamos as the “Lender” and each Plaintiff as the SBA-approved “Borrower” and the SBA 
loan number and amount, terms, the lender’s rights and other provisions (id at 78-83); and was 
signed by each borrower and accepted by Prestamos. Id. at 83, 86. The Additional Agreement 
states that “[i]n consideration of Prestamos … making the above loan …” and contains other 
conditions including “that Lender is relying upon this agreement in making the above loan ….” 
Id. at 90 (emphasis added). The Information form identifies the Plaintiff borrower’s account to 
disburse the loan. Id. at 90. Prestamos also signed and delivered to Plaintiffs the Notice – No 
Oral Agreement which defines “Loan Agreement” and also evinces Prestamos’s agreement to 
fund. Id. at 86. See also ¶¶ 243-47.  
Further, a central purpose of the Loan Documents is to fund Plaintiffs’ loans. “When 
interpreting a contract, the court’s paramount goal is to ascertain and give effect to the intent of 
the parties as reasonably manifested by the language of their written agreement.” Doe v. Univ. of 
the Scis., 961 F.3d 203, 212 (3d Cir. 2020). Accord Gallagher v. Upper Darby Twp., 539 A.2d 
463, 467 (Pa. Commw. 1988) (“where an obligation was within the contemplation of the parties 
when making the contract or is necessary to carry out their intention, the law will imply that 
obligation and enforce it”); Bombin, 529 F. Supp. 3d at 420 (“We must construe the contract 
‘from a utilitarian standpoint bearing in mind the particular business activity sought to be served 
and will avoid when possible and proper a construction which is unreasonable, inequitable, and 
oppressive.’”); Azer Sci. Inc. v. Quidel Corp., 2021 WL 5918655, at *4 (E.D. Pa. Dec. 15, 2021) 
(Gallagher, J.) (“‘It is by now hornbook law that the test for enforceability of an agreement is 
whether both parties have manifested an intention to be bound.’”). 
The PPP rules and framework also support Prestamos’s binding commitment to fund. 
Contrary to Defendants, funding was not voluntary but mandatory as “[t]he lender must make a 
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one-time disbursement of the PPP loan within ten calendar days of loan approval” and receipt of 
Plaintiffs’ signed Loan Documents. 86 Fed. Reg. 3692, 3710 (emphasis added). A lender would 
be relieved of its obligation to fund only if a borrower did not sign and submit loan documents. ¶ 
52. Prestamos’s obligation to fund was incorporated into the Loan Documents. Oto Analytics, 
Inc. v. Capital Plus Fin. LLC, 2022 WL 1488441, at *6 (N.D. Tex. May 11, 2022) (“the Court 
looks to the context provided by the SBA regulations, statutes, and traditional dictionaries to 
determine” whether PPP loan fees may be owed to agent); First Nat’l Bank v. Flanagan, 528 
A.2d 134, 137-38 (Pa. 1987) (“substantive laws in effect when the parties enter into a contract 
are implicitly incorporated into it”); Willisch v. Nationwide Ins. Co. of Am., 852 F. Supp. 2d 582, 
607-08 (E.D. Pa. 2012) (accord). PPP lenders were required to make PPP loans “under the 
criteria, terms, and conditions” set by the SBA and the CARES Act. 15 U.S.C. § 9008(g). 
Defendants’ argument that Plaintiffs’ contract claims rely on an agreement between Prestamos 
and the SBA is a red herring. Plaintiffs sufficiently allege that Prestamos’s failure to fund within 
ten days, or at all, was in breach of the Loan Documents. See ¶¶ 252-54.   
In obtaining nearly $1.2 billion in fees and over $7 billion in PPPLF advances by 
pledging Plaintiffs’ and other borrowers’ loans as collateral, Prestamos also reaped the benefits 
of, and misrepresented, its agreement to fund Plaintiffs’ loans. Prestamos could not properly 
secure PPPLF advances on loans it would not fund, and falsely reported to the SBA that it had 
funded class members’ loans to obtain the fees. Although Prestamos’s failure to fund also 
implicates other serious violations, that does not mean Plaintiffs lack their own independent state 
law claims.  
Defendants are also estopped from maintaining that Prestamos had not agreed to fund the 
loans. See Robb-Fulton v. Robb (In re Robb), 23 F.3d 895, 898 (4th Cir. 1994) (“‘[Q]uasi-
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estoppel forbids a party from accepting the benefits of a transaction or statute and then 
subsequently taking an inconsistent position to avoid the corresponding obligations or effects.’”); 
In re Guterl Special Steel Corp., 316 B.R. 843, 856 (Bankr. W.D. Pa. 2004) (“The doctrine 
applies where it would be unconscionable to permit a person to maintain a position inconsistent 
with one in which he acquiesced or where he accepted a benefit.”).  
Defendants’ cases are not to the contrary. Most concern loan agreements that could not 
be enforced for reasons irrelevant here, and none considers the incorporation of PPP rules into 
the contracts binding the parties here. See, e.g., Krebs v. FDIC, 851 F. Supp. 430, 435 (M.D. Fla. 
1994) (holding that the FDIC was entitled by law to repudiate a contract); Brook v. Amaximis 
Lending, L.P. (In re Vickers), 275 B.R. 401, 406 (Bankr. M.D. Fla. 2001) (involving an unsigned 
loan agreement); Mark Andrew of the Palm Beaches, Ltd. v. GMAC Commercial Mortg. Corp., 
265 F. Supp. 2d 366, 381 (S.D.N.Y. 2003) (accord); Jericho All-Weather Opportunity Fund, LP 
v. Pier Seventeen Marina & Yacht Club, LLC, 207 So. 3d 938, 941-42 (Fla. Dist. Ct. App. 2016) 
(involving summary judgment, not a motion to dismiss, and the plaintiff borrower intentionally 
excluded the binding contract from its allegations).  
E. 
Plaintiffs’ Claims Are Not Released  
Defendants’ contention that Plaintiffs released their claims is also meritless. First, a 
release cannot immunize a party who, as alleged here, breached the parties’ contract. See, e.g., 
Horne v. Elec. Eel Mfg. Co., 987 F.3d 704, 718 (7th Cir. 2021) (“a party in material breach may 
not enforce a provision of a contract that is favorable to him, such as an exculpatory clause”). 
Second, the release explicitly applies only to alleged acts and omissions “on or prior to 
the date hereof.” ECF 42 at 82. Prestamos’s commitment to fund the PPP loans extended, by 
definition, 10 days after the date Plaintiffs’ notes were executed and returned to Prestamos. ¶ 51.  
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Defendants ask the Court to ignore this plain language. They claim in a footnote that “it 
would defy all logic to read the release to subject Prestamos to liability … occurring at the stroke 
of midnight the night the Note was signed, but not that occurring before.” ECF 46-1 at 36 n.10. 
Logical or not (and although Defendants have it backward, as the release purports to operate 
before not after that stroke of midnight), that is exactly what the release says. See Bowersox 
Truck Sales & Serv, Inc. v. Harco Nat’l Ins. Co., 209 F.3d 273, 279, 280 (3d Cir. 2000) (releases 
should be “strictly construed”; “the general words of the release will not be construed so as to 
bar the enforcement of a claim which has not accrued at the date of release”); Neman Bros. & 
Assoc., Inc. v. Interfocus, Inc., 2022 WL 266049, at *6, *8 n.8 (C.D. Cal. Jan. 11, 2022) 
(releasing defendant for “activity that occurred prior to the execution” of the agreement); Custer 
v. Penn State Geisinger Health Sys., 102 F. App’x 758, 760 (3d Cir. 2004) (“[P]arties may 
choose to relinquish even those claims that accrued after the signing of a release so long as that 
intention is clearly expressed in the agreement.”) (emphasis added); Zuber v. Boscov’s, 871 F.3d 
255, 258 (3d Cir. 2017), (“[a] long line of Pennsylvania cases has held that a release covers only 
those matters which may be fairly said to have been within the contemplation of the parties when 
the release was given”).  
F. 
Plaintiffs Sufficiently Allege State Law Consumer Protection Claims  
The California Subclass: A violation of a federal law may serve as a predicate for a 
UCL claim. See, e.g., Smith v. Wells Fargo Bank, N.A., 135 Cal. App. 4th 1463, 1480, 38 Cal. 
Rptr. 3d 653, 669 (2005), as modified on denial of reh’g (Jan. 26, 2006). This encompasses 
Prestamos’s failure to fund. See, e.g., Sandoval v. PharmaCare US, Inc., 145 F. Supp. 3d 986, 
994 (S.D. Cal. 2015) (“Plaintiff [properly] alleges a violation of FDA regulations … and a 
resulting violation of the unlawful prong of the UCL.”); Harris v. Bank of Am. Corp., 2014 WL 
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1116356, at *12 (C.D. Cal. Mar. 17, 2014) (rejecting dismissal of a UCL claim alleging 
“behavior … which violates the public policy undergirding the HAMP”). 
Plaintiffs Marshall and Townsend sufficiently allege, only in the alternative to their 
contract claim (¶ 276), that Defendants’ conduct is both unlawful and unfair under the UCL. See 
¶¶ 262-75. The fact that the CARES Act and SBA regulations do not provide for a private right 
of action is again irrelevant. See LegalForce RAPC Worldwide P.C. v. UpCounsel, Inc., 2019 
WL 160335, at *13 (N.D. Cal. Jan. 10, 2019) (“California courts have repeatedly stated that a 
plaintiff may bring a UCL claim even when the conduct alleged to constitute unfair competition 
violates a statute that does not provide a private right of action.”). 
Defendants’ argument that their conduct was “permitted by the rules and guidance 
governing the PPP” (ECF 46-1 at 37) is wrong and premature. See Ellsworth v. U.S. Bank, N.A., 
908 F. Supp. 2d 1063, 1089 (N.D. Cal. 2012) (rejecting argument defendant “did nothing more 
than what was authorized by statute” since that “is a fact question to be answered in discovery, 
not the basis for a motion to dismiss”). Defendants’ cases involving compliance with relevant 
statutes or permissible commerce are therefore likewise irrelevant. See Loeffler v. Target Corp., 
324 P.3d 50, 76-77 (Cal. 2014); Lopez v. World Sav. & Loan Ass’n, 105 Cal. App. 4th 729, 741-
42 (2003); Kunert v. Mission Fin. Servs. Corp., 110 Cal. App. 4th 242, 265 (2003); Chavez v. 
Whirlpool Corp., 93 Cal. App. 4th 363, 374-75 (2001).  
Plaintiffs also sufficiently allege equitable relief (¶ 276) and, again only in the alternative 
(¶ 305), unjust enrichment. ¶¶ 304-13. Defendants cite Sonner v. Premier Nutrition Corp., 971 
F.3d 834, 842–44 (9th Cir. 2020), to argue that “federal courts must follow federal law that 
equitable relief is only available where the plaintiff establishes they [sic] lack an adequate 
remedy at law.” ECF 46-1 at 39. But neither Sonner nor Defendants’ statement of its holding 
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address what is required at the pleading stage. For that reason, Ninth Circuit courts have 
repeatedly held that Sonner has no bearing at the pleading stage. See, e.g., Jeong v. Nexo Fin. 
LLC, 2022 WL 174236, at *27 (N.D. Cal. Jan. 19, 2022) (citing cases); Nacarino v. Chobani, 
LLC, 2022 WL 344966, at *10 (N.D. Cal. Feb. 4, 2022). See also Pierre v. Healthy Beverage, 
LLC, 2022 WL 596097, at *14 (E.D. Pa. Feb. 28, 2022) (“When it remains unclear whether legal 
remedies will prevail, there is no need to dismiss an alternatively pleaded” claim for equitable 
relief); Preston Grp., LLC v. Customers Bank, 2021 WL 3562893, at *8 (E.D. Pa. Aug. 12, 2021) 
(a “plaintiff may plead both” breach of contract and equitable relief claims). 
Defendants’ arguments that Plaintiffs have no vested interest in the loan proceeds and 
that the SBA paid the fees ignore the Loan Documents and the PPP. And Kivett v. Flagstar Bank, 
FSB, 506 F. Supp. 3d 749, 763 (N.D. Cal. Dec. 10, 2020), held that “[t]he concept of restoration 
or restitution, as used in the UCL, is not limited only to the return of money or property that was 
once in the possession of that person.” Accord Korea Supply Co. v. Lockheed Martin Corp., 63 
P.3d 937, 947 (Cal. 2003) (“[u]nder the UCL, an individual may recover profits unfairly obtained 
to the extent that these profits represent monies given to the defendant or benefits in which the 
plaintiff has an ownership interest”); In re Processed Egg Products Antitrust Litig., 851 F. Supp. 
2d 867, 897 (E.D. Pa. 2012) (denying dismissal of UCL claim that relied on payments to 
defendants from non-parties).  
The Illinois Subclass: Defendants contend that plaintiff Ahmadou’s ICFA claim 
duplicates his breach of contract claim. ¶ 279. But plaintiff Ahmadou alleges that Prestamos 
induced him to enter into the Loan Agreement, absent any intention of fulfilling the overriding 
purpose of it, by accepting plaintiff’s application and the SBA’s approval and thereby locking 
plaintiff into relying exclusively on Prestamos for his loan. ¶ 280. These allegations are 
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sufficient. See, e.g., Bakopoulos v. Mars Petcare US, Inc., 2021 WL 2915215, at *5 (N.D. Ill. 
July 12, 2021) (“defendants who knowingly induce consumers to enter contracts can support an 
[ICFA] claim”); Powell v. Subaru of Am., Inc., 502 F. Supp. 3d 856, 890 (D.N.J. 2020) (accord).  
Defendants’ cases did not involve alleged misconduct apart from the contract. See Turner 
v. Orthopedic & Shoulder Ctr., S.C., 82 N.E.3d 801, 807 (Ill. Ct. App. 2017); Avery v. State 
Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 843 (Ill. 2005); Cafferty Clobes Meriwether & 
Sprengel, LLP v. XO Communs. Servs., 190 F. Supp. 3d 765, 772 (N.D. Ill. 2016). 
Defendants’ contention that Rule 9(b) applies is wrong because the ICFA also provides 
redress for unfair business practices as alleged here (see, e.g., ¶ 286) to which Rule 9(b) does not 
apply. Vanzant v. Hill’s Pet Nutrition, Inc., 934 F.3d 730, 738-39 (7th Cir. 2019) (defining 
unfairness under the ICFA). And plaintiff sufficiently alleges that Prestamos’s actions in locking 
him in to the exclusion of other PPP lenders was “unfair” even if there is an element of deception 
in those actions. See, e.g., Newman v. Metro. Life Ins. Co., 885 F.3d 992, 1002 (7th Cir. 2018) 
(reversing dismissal; plaintiff alleged that “MetLife engaged in a bait-and-switch strategy, which 
(if proven) would offend Illinois’s public policy”); Saika v. Ocwen Loan Servicing, LLC, 357 F. 
Supp. 3d 704, 717-18 (N.D. Ill. 2018) (denying motion to dismiss; “[a]n [ICFA] unfairness claim 
may … rest on violations of administrative directives … that themselves do not permit private 
enforcement”); Saccameno v. Ocwen Loan Servicing, LLC, 372 F. Supp. 3d 609, 631 (N.D. Ill. 
2019) (“Here, “a jury could reasonably have concluded that Ocwen’s conduct left Saccameno 
with a lack of meaningful choice.”).  
The Ohio Subclass: Defendants argue that plaintiff Stalnaker fails to allege “the kind of 
commercial injury necessary to state a claim under the ODTPA.” ECF 46-1 at 43. But Ohio Rev. 
Code Ann. § 4165.01(D) provides that “‘Person means an individual … or any other legal or 
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20 
commercial entity,” and Ohio Rev. Code Ann. § 4165.03(A)(2) provides, in turn, that “[a] person 
who is injured by a person who commits a deceptive trade practice … may commence a civil 
action to recover actual damages from the person who commits the deceptive trade practice.” 
Even Defendants’ own case is in accord. See Torrance v. Rom, 157 N.E.3d 172, 188 (Ohio App. 
2020) (“an individual may bring suit under the ODTPA in his or her ‘capacity as a participant in 
commercial activity’”).  
Plaintiff Stalnaker did not “artfully” omit the word “consumer” from her ODPTA count 
(ECF 46-1 at 44), but instead alleges a claim entirely consistent with the words of the statute. 
Nor can there be any reasonable dispute that PPP loans qualify as commercial activity. See 
Torrance, 157 N.E.3d at 188 (specifying the elements of a ODTPA claim). Like the ICFA claim, 
plaintiff Stalnaker sufficiently alleges Prestamos induced and bound her and other Ohio 
borrowers to enter into the Loan Documents without intending to perform. ¶ 299. Those actions 
sufficiently allege the first three elements of Defendant’s ODTPA violation. See, e.g., He v. Rom, 
2016 WL 5682012, at *4 (N.D. Oh. Oct. 3, 2016) (allegations that defendants’ “service was not 
as the Defendants represented it to be” sufficient to confer standing). Prestamos’s failure to fund 
the loans also constitutes the requisite injury. Defendants’ case, JP Morgan Chase Bank, N.A. v. 
Safeco Ins. Co. of Am., 2012 WL 1945604, at *4-5 (N.D. Ohio May 30, 2012), by contrast, 
turned on plaintiff’s failure to present “evidence that Safeco had any intent … to breach the 
contract, or any knowledge that the representations contained in the contract documents would 
turn out to be false.” 
Conclusion 
For the foregoing reasons, the Court should deny Defendants’ motion to dismiss in full. 
Alternatively, if the Court is inclined to dismiss any of Plaintiffs’ claims, the Court should do so 
without prejudice and grant Plaintiffs discovery and leave to file an amended complaint. 
Case 5:21-cv-04337-JMG     Document 49     Filed 06/17/22     Page 21 of 23

 
 
Dated: June 17, 2022 
Bailey & Glasser LLP 
 
By: /s/ Lawrence J. Lederer 
 
Lawrence J. Lederer (Pa. ID 50445) 
Bart D. Cohen (Pa. ID 57606) 
1622 Locust Street 
Philadelphia, PA 19103 
T.: 202.463-2101 
F.: 202.463-2103 
llederer@baileyglasser.com 
bcohen@baileyglasser.com  
 
Bailey & Glasser LLP 
Michael L. Murphy (admitted pro hac vice)  
1055 Thomas Jefferson Street NW, Suite 540 
Washington, DC 20007 
T.: 202.463-2101 
F.: 202.463-2103 
mmurphy@baileyglasser.com  
 
 
 
and 
 
Nolan Heller Kauffman LLP 
Justin A. Heller (admitted pro hac vice) 
Matthew M. Zapala (admitted pro hac vice)  
80 State Street, 11th Floor 
Albany, NY 12207 
T.: 518.449.3300 
F.: 518.432.3123 
jheller@nhkllp.com  
mzapala@nhkllp.com 
 
Attorneys for Plaintiffs and the  
Proposed Class and Subclasses 
 
Case 5:21-cv-04337-JMG     Document 49     Filed 06/17/22     Page 22 of 23

 
 
Certificate of Service 
I hereby certify that, on June 17, 2022, I caused Plaintiffs’ Brief in Opposition to 
Defendants’ Motion to Dismiss to be filed on the Court’s CM/ECF system and for service of 
same on all counsel of record.  
 
 
/s/ Lawrence J. Lederer            
Lawrence J. Lederer 
 
 
Case 5:21-cv-04337-JMG     Document 49     Filed 06/17/22     Page 23 of 23

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