Brief — Marshall v. Prestamos CDFI, LLC (Dkt. 157-1, 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. 157-1 · 2025-05-07 · Docket on CourtListener

Full text

IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF PENNSYLVANIA 
 
ALICIA MARSHALL, et al., 
 
Plaintiffs, 
 
v. 
 
PRESTAMOS CDFI, LLC, 
 
 
Defendant. 
 
 
 
 
 
 
 
 
Case No. 5:21-cv-04337-JMG 
 
 
 
 
 
 
 
 
BRIEF IN SUPPORT OF DEFENDANT’S MOTION FOR SUMMARY JUDGMENT 
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TABLE OF CONTENTS 
Page 
I. 
INTRODUCTION .............................................................................................................. 1 
II. 
STATEMENT OF UNDISPUTED FACTS ....................................................................... 2 
A. 
The PPP Regulations............................................................................................... 2 
B. 
The PPP Loans at Issue ........................................................................................... 4 
III. 
PROCEDURAL HISTORY................................................................................................ 6 
A. 
Initial Pleadings and Motion Practice ..................................................................... 6 
B. 
Class and Merits Discovery .................................................................................... 7 
C. 
Class Certification Decision ................................................................................... 8 
IV. 
ARGUMENT ...................................................................................................................... 8 
A. 
The Plain Language of the Loan Documents Precludes Plaintiffs’ Claim ............. 9 
B. 
Plaintiffs’ Interpretation of the Loan Documents is Commercially 
Unreasonable......................................................................................................... 12 
C. 
Plaintiffs Failed to Meet Conditions Precedent to the Loan Documents .............. 15 
D. 
Prestamos Did Not Cause Any Damages to Plaintiffs .......................................... 18 
E. 
The Court Should Reject Plaintiffs’ Effort to Sidestep the Contract by 
Reference to Unrelated Documents ...................................................................... 19 
V. 
CONCLUSION ................................................................................................................. 19 
 
 
 
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TABLE OF AUTHORITIES 
 
Page(s) 
Cases 
Alt. Aviation Servs., Inc. v. Meggitt (UK) Ltd., 
207 F. App’x 506 (6th Cir. 2006) ............................................................................................14 
Andrichyn v. TD Bank, N.A., 
93 F. Supp. 3d 375 (E.D. Pa. 2015) .........................................................................................13 
Asherson v. JP Morgan Chase Bank, N.A., 
2024 U.S. Dist. LEXIS 238909 (C.D. Cal. Oct. 23, 2024) ..........................................10, 11, 12 
Atkins v. City of Reading, 
2024 U.S. Dist. LEXIS 133065 (E.D. Pa. July 29, 2024) ......................................................8, 9 
Burton v. Nationstar Mortg. LLC, 
2013 U.S. Dist. LEXIS 75467 (E.D. Cal. May 28, 2013)........................................................15 
Cave v. Saxon Mortg. Servs., 
2016 U.S. Dist. LEXIS 141033 (E.D. Pa. Oct. 11, 2016) ..................................................15, 16 
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ................................................................................9 
Clinton Plumbing & Heating of Trenton, Inc. v. Ciaccio, 
2010 U.S. Dist. LEXIS 113215 (E.D. Pa. Oct. 22, 2021) ........................................................13 
Daniels v. Sch. Dist. of Phila., 
776 F.3d 181 (3d Cir. 2015).......................................................................................................9 
DiCicco v. Citizens Fin. Grp., Inc., 
2015 U.S. Dist. LEXIS 120798 (E.D. Pa. Sept. 10, 2015) ......................................................18 
Leica Geosystems, Inv. v. L.W.S. Leasing, Inc., 
872 F. Supp. 2d 1191 (D. Colo. 2012) ...............................................................................12, 14 
Logan v. Mirror Printing Co., 
600 A.2d 225 (Pa. Super. 1991) ...............................................................................................18 
M.P. v. Penn-Delco Sch. Dist., 
2015 U.S. Dist. LEXIS 157000 (E.D. Pa. Nov. 20, 2015).........................................................9 
Pierce Assocs., Inc. v. Nemours Found., 
865 F.2d 530 (3d Cir. 1988).....................................................................................................19 
Shipp v. Marsh, 
2024 U.S. Dist. LEXIS 45843 (W.D. Pa. Mar. 15, 2024) .......................................................12 
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Shovel Transfer & Storage, Inc. v. Pa. Liquor Control Bd., 
739 A.2d 133 (Pa. 1999) ..........................................................................................................15 
Smith v. Saxon Mortg. Servs., 
2013 U.S. Dist. LEXIS 66101 (E.D. Pa. May 9, 2013) ...........................................................16 
Steuart v. McChesney, 
444 A.2d 659 (Pa. 1982) ............................................................................................................9 
Trans Penn Wax Corp. v. McCandless, 
50 F.3d 217 (3d Cir. 1995).......................................................................................................18 
Vinculum, Inc. v. Goli Techs, LLC, 
310 A.3d 231 (Pa. 2024) ............................................................................................................9 
In re Welded Construction, L.P., 
605 B.R. 35 (Bankr. D. Del. 2019) ..........................................................................................12 
Wembelton Dev. Co. v. Travelers Ins. Co., 
206 N.W.2d 222 (Mich. Ct. App. 1973) ..................................................................................12 
Zylbert v. Beddingfield, 
2021 Cal. Super. LEXIS 158456 (Cal. Sup. Ct. Aug. 12, 2021) .............................................18 
Other Authorities 
86 FR 3692–3712 (Jan. 14, 2021) .......................................................................................... passim 
86 FR 13149–13156 (Mar. 8, 2021) ..............................................................................................17 
Fed. R. Civ. P. 23 .............................................................................................................................8 
Fed. R. Civ. P. 56 .............................................................................................................................8 
Nacha, ACH Payments Fact Sheet, available at 
https://www.nacha.org/content/ach-payments-fact-sheet (last visited Apr. 29, 
2025) ........................................................................................................................................13 
Restatement 2d of Contracts, § 202(a) (1981) ...............................................................................10 
Restatement 2d of Contracts, § 224 (1981) ...................................................................................15 
11 Williston on Contracts § 32:11 (4th ed. 2024) ..........................................................................12 
 
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I. 
INTRODUCTION 
This is a one-count breach of contract case involving loans under the Paycheck Protection 
Program (the “PPP”).  Following the Court’s denial of class certification, Plaintiffs now consist 
of ten individuals, and the case is ripe for summary judgment to be decided in favor of Defendant 
Prestamos CDFI, LLC (“Prestamos” or “Defendant”).  It is undisputed that Prestamos disbursed 
the loans to the bank accounts each Plaintiff selected.  It is also undisputed that those banks 
returned the disbursements for reasons outside of Prestamos’s control, such as Plaintiffs’ own 
errors or the banks’ anti-fraud measures.  Thus, this entire case hinges on a legally unsupportable 
and wholly illogical theory:  that when Plaintiffs’ banks rejected PPP loans disbursed by 
Prestamos, Prestamos was nonetheless contractually obligated figure out how to get the loan 
funds to Plaintiffs through some other means. 
Plaintiffs point to no contract language obligating Prestamos to guarantee they would 
receive PPP loan funds rejected by their banks—because none exists.  And it would be 
commercially unreasonable to interpret the loan agreement to impose such an obligation because, 
as Plaintiffs’ experts conceded, Prestamos could not, consistent with applicable banking rules 
and practices or with PPP regulations, force the Plaintiffs’ banks to accept loan funds Prestamos 
disbursed.  Nor should the Court countenance an argument that, following the borrower banks’ 
rejections of Prestamos’s transfer of loan funds, Prestamos was required to get Plaintiffs those 
funds by using prepaid debit cards.  No contract language establishes such an obligation, and it 
would defy fairness and common sense to reward a borrower for his or her own bank’s rejection 
of a loan by requiring the lender to undertake efforts that were not contractually or legally 
required. 
In addition, Plaintiffs failed to meet two prerequisites imposed by the PPP regulations— 
identification of an appropriate bank account into which PPP loan funds could be deposited and 
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submission of sufficient documentation to establish eligibility for a PPP loan.  In contractual 
terms, these prerequisites were conditions precedent to Prestamos’s obligation to lend the 
Plaintiffs money, and Plaintiffs’ failure to satisfy them excused Prestamos from performance of 
its obligation, however broadly defined.   
And even assuming Prestamos breached an obligation, Prestamos caused no cognizable 
economic harm to the Plaintiffs.  To the contrary, any supposed damages sustained by any 
Plaintiff’s failure to receive loan proceeds resulted from the rejections of those loans by the 
Plaintiffs’ own banks, over which Prestamos had no control. 
Finally, the Court should reject any argument by Plaintiffs to bolster their claim with 
reference to Prestamos’s submission of Form 1502s to the Small Business Administration (the 
“SBA”).  The Form 1502 was not a contract between Prestamos and any borrower and is 
therefore irrelevant to Plaintiffs’ breach of contract claim. 
In sum, the Court should grant summary judgment to Prestamos and put an end to this 
litigation.  
II. 
STATEMENT OF UNDISPUTED FACTS 
A. 
The PPP Regulations 
Self-employed persons were eligible for a PPP loan under the Coronavirus Aid, Relief, 
and Economic Security Act (“CARES Act”) if, among other things, they were operating 
businesses on February 15, 2020, had self-employment income, filed an IRS Form 1040 
Schedule C (“Schedule C”), and submitted documentation demonstrating the same.  Def.’s 
Statement of Undisputed Material Facts (“SMF”) ¶ 1; 86 FR 3692, 3695–96 (Jan. 14, 2021).  
Borrowers were also required to certify in their applications “that the information provided in 
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this application and the information provided in all supporting documents and forms is true and 
accurate in all material respects.”  SMF ¶ 2; 86 FR at 3706; see also Ex. 1, Def_Appx_003.1 
After a lender and the SBA approved a borrower’s application, the SBA would issue an 
SBA Loan Number.  The regulations then required a lender to “disburse” the PPP loan funds to 
the borrower within a prescribed timeframe but provided that “lenders are not responsible for 
delays in disbursement attributable to a borrower’s failure to timely provide required Loan 
Documentation[.]”  SMF ¶ 3; 86 FR at 3710.  The Federal Reserve maintained a credit facility 
from which PPP lenders could borrow funds to issue PPP loans.  SMF ¶ 4; Ex. 5, 
Def_Appx_0030, ¶ 21.  Prestamos utilized credit advances from this facility.  SMF ¶ 5; Ex. 5, 
Def_Appx_0031, ¶ 28. 
The regulations did not require a lender to ensure that a borrower received and could 
draw upon the PPP loan funds.  SMF ¶ 6; 86 FR 3692.  And other rules that govern fund 
transfers prevent a lender from accomplishing this result even if it wanted to.  Specifically, under 
the National Automated Clearinghouse Association Operating Rules (the “Nacha Rules”), once 
the lender (known as the Originating Depository Financial Institution or “ODFI”) initiates an 
Automated Clearinghouse (“ACH”) transfer, the borrower’s bank (known as the Receiving 
Depository Financial Institution or “RDFI”) takes total control of the ultimate disposition of the 
transfer.2  SMF ¶ 7; Ex. 2, Def_Appx_007, ¶¶ 4–6 (identifying familiarity with and purpose of 
                                                 
1  
All references to “Ex.” are to the exhibits annexed to the Appendix, and include citations to 
Bates numbers (with prefix “Def_Appx”) pursuant to the Court’s Policies and Procedures.  
Exhibits 1–9 are in Volume 1 of the Appendix.  Exhibits 10–17 are in Volume 2.   
2  
Prestamos is subject to the Nacha Rules as an Originator, which has a relationship with its 
bank, an ODFI.  As part of this relationship, Prestamos must agree to be bound by the Nacha 
Rules. See Nacha R. § 2.2.2.1(b). 
 
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Nacha Rules); id., Def_Appx_0010 (“An RDFI may return Entries for any reason, except as 
otherwise provided in Article Three”).  It is therefore not surprising that Plaintiffs’ own SBA 
“experts,” both of whom held top-level SBA positions that included management of the PPP, 
conceded that it was impossible for a lender to force a borrower’s bank to accept a disbursement 
of funds.  SMF ¶ 8; Ex. 3, Def_Appx_0017, 90:20–23 (“You, as Prestamos . . . cannot force a 
bank to take money.”); Ex. 4, Def_Appx_0022–23, 86:6–87:9, Def_Appx_0025–26, 96:24–
97:10 (agreeing that lender could not force bank to accept disbursed funds, and could only “try 
and rectify the situation”).   
B. 
The PPP Loans at Issue  
Each Plaintiff executed a promissory note (the “Note”) and provided the Note and related 
documents to Prestamos (collectively, the “Loan Documents”), including an account number at 
the borrower’s bank so Prestamos would know where to disburse the funds.  SMF ¶ 9; Pls.’ 
App’x in Supp. of Pls.’ Mot. for Class Cert. (“Pls.’ App’x”), Exs. 1–10, ECF Nos. 139-2–139-
11.  In the account certification portion of the Loan Documents, the borrower “certif[ied] that the 
account information provided below is true and accurate in all material respects.”  SMF ¶ 10; 
ECF 108 at 117 (Third Amended Complaint, Ex. A).  Consistent with the Loan Documents, 
Prestamos disbursed the approved amount of PPP funds to each Plaintiff at his or her designated 
bank account, but as shown below each Plaintiff’s bank returned the funds.   
Plaintiff 
Date 
Returned 
ACH 
Return 
Code 
ACH Return Code Official Title 
Bradley Smith, Sharon 
6/11/2021 
R03 
No Account/Unable to Locate Account 
Henderson, Kristina 
5/13/2021 
R03 
No Account/Unable to Locate Account 
Horne, Jahbrael 
6/7/2021 
R03 
No Account/Unable to Locate Account 
Johnson, Alyshia 
6/2/2021 
R16 
Account Frozen 
Jones, Jamie 
6/20/2021 
R23 
Credit Entry Refused by Receiver 
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Marshall, Alicia 
5/13/2021 
R23 
Credit Entry Refused by Receiver 
Martin, John 
5/26/2021 
R17 
File Record Edit Criteria 
Marvel, Lametria 
5/28/2021 
R23 
Credit Entry Refused by Receiver 
Townsend, Paris 
6/16/2021 
R23 
Credit Entry Refused by Receiver 
 
SMF ¶ 11; Ex. 6, Def_Appx_0041.3  None of the Loan Documents imposes an obligation on 
Prestamos to undertake alternative methods to fund a loan if a Plaintiff’s self-designated bank 
rejects the disbursement from Prestamos. 
The SBA and the U.S. Secret Service issued guidance authorizing a borrower’s bank (the 
RDFI to return to the lender any PPP disbursements that the RDFI believed “w[ere] initiated due 
to fraud.”  SMF ¶ 13; Ex. 7, Def_Appx_0042–43.  The guidance directed RDFIs to use certain 
ACH return codes for suspicious PPP activity.  SMF ¶ 14; Ex. 7, Def_Appx_0042–43.  
Similarly, RDFIs that accepted disbursements of PPP funds for borrowers they suspected were 
ineligible sometimes contacted Prestamos and the SBA seeking to return these funds.  SMF ¶ 15; 
Ex. 8, Def_Appx_0049–50; see also, e.g., Ex. 9, Def_Appx_0085–176.    
In such instances, the SBA required that Prestamos take prompt action to “investigat[e] 
the potential fraud on these loans,” and “take action immediately to recover on these loans.”  
SMF ¶ 16; Ex. 7, Def_Appx_0048; see also Ex. 10, Def_Appx_0177  (email from SBA to 
Prestamos identifying fraudulent PPP loan disbursed from Prestamos to a Citizens’ Bank account 
and directing Prestamos to “work with Citizens to have those funds returned.”).  If fraud was 
                                                 
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Gregory Lloyd’s designated financial institution initially accepted the disbursement of funds 
(via ACH transfer), but did not let Mr. Lloyd access the funds for over a year based on 
suspected fraud.  SMF ¶ 12; Ex. 13, Def_Appx_0327.  After a year, the financial institution, 
Capital One, moved the funds into an escrow account and, ultimately, returned the funds to 
Prestamos.  Id.   
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flagged, SBA directed Prestamos as follows:  “[p]lease DO NOT disburse these funds until the 
investigation has been completed.”  SMF ¶ 17; Ex. 11, Def_Appx_0179.   
When a borrower’s bank returned a disbursement of PPP funds, Prestamos worked with 
its loan service provider to conduct enhanced due diligence on the borrower’s loan file by 
requesting additional document(s) from the borrower to confirm eligibility, including a full 
federal tax return from 2019 or 2020.  SMF ¶ 18; Ex. 16, Def_Appx_0429; Ex. 5, 
Def_Appx_0033–34, ¶¶ 39–45.  Notably, nothing in the Loan Documents obligated Prestamos to 
conduct this enhanced due diligence review.   
Each of the ten Plaintiffs submitted documents that were either incomplete, inaccurate, or 
confirmed Plaintiff’s ineligibility for a PPP loan.  SMF ¶ 19; Ex. 12, Def_Appx_0181–85.  
Prestamos subsequently canceled Plaintiffs’ loans.  SMF ¶ 20; Ex. 5, Def_Appx_0034, ¶ 47.  In 
September 2021—before Plaintiffs filed this case—Prestamos returned the credit advances from 
the Federal Reserve for Plaintiffs’ loans to the federal government.  SMF ¶ 21; Ex. 5, 
Def_Appx_0035, ¶ 51. 
III. 
PROCEDURAL HISTORY 
A. 
Initial Pleadings and Motion Practice 
Plaintiffs filed their initial class action complaint on October 1, 2021.  See ECF No. 1.  
Plaintiffs subsequently filed two amended complaints, and this Court docketed the Second 
Amended Complaint (“SAC”) on May 20, 2022.  See ECF No. 42.  Plaintiffs’ SAC alleged four 
causes of action against Prestamos:  Breach of Contract (Count I); and Violation of California, 
Illinois, and Ohio Consumer Protection Laws (Counts II – IV).  SAC ¶¶ 241–313.   
Prestamos moved to dismiss Plaintiffs’ SAC on June 3, 2022.  See ECF No. 46.  On 
March 30, 2023, the Court issued an order granting Plaintiffs’ motion to dismiss Counts II–V, 
but permitted Plaintiffs to continue pursuing their breach of contract claim (Count I) on the 
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ground that key parts of the purported contracts between Prestamos and the putative class 
members were “ambiguous.”  See ECF No. 56 at 21, 35–36.  On May 2, 2024, Plaintiffs filed a 
Third Amended Complaint (“TAC”) alleging a single cause of action for breach of contract 
against Prestamos.  See ECF No. 108, ¶¶ 418–36. 
B. 
Class and Merits Discovery 
The Court bifurcated discovery into a class phase and a merits phase.  ECF 102.  During 
the class phase (Phase I), Plaintiffs’ counsel voluntarily dismissed twelve of the original twenty-
two class representatives based on deficiencies and inconsistencies in their loan files and/or their 
lack of cooperation with discovery.  Although Plaintiffs intimate that these dismissals were a 
product of Prestamos’s allegedly “onerous discovery demands,” Pls.’ Br. in Supp. of Mot. for 
Class Cert. at 11, ECF No. 139, the facts tell a different story.  One dismissed class 
representative was not SBA-approved and did not sign the Loan Documents.  Ex. 14, 
Def_Appx_0371.  Another applied for multiple PPP loans.  Id.  Two received their PPP funds 
and spent them.  Id.  And one received his PPP funds and withdrew some before his bank froze 
his account, only to return the withdrawn funds to his bank and request that his bank return the 
funds to Prestamos.  Id.   
Also during discovery, Defendants requested that Plaintiffs produce copies of their 
federal income tax returns and bank statements (among other documents relating to the existence 
and historical financial results of Plaintiffs’ purported sole proprietorships), to determine whether 
Plaintiffs provided accurate information to Prestamos and the SBA regarding their eligibility for 
PPP loans.  Noting the paucity of the documents Plaintiffs produced, the Court ordered them to 
produce these documents for the years 2019–2021 or, in the alternative, to “provide written 
certifications that, following a diligent search on behalf of Plaintiffs and counsel, Plaintiffs 
possess no responsive documents in their care, custody, or control.”  ECF 125.  Each of the ten 
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Plaintiffs remaining in the case submitted a certification indicating that he or she was unable to 
produce responsive documents that could demonstrate their eligibility for PPP loans.  Ex. 15, 
Def_Appx_0386–97.   
On September 6, 2024, Plaintiffs moved for class certification.  ECF Nos. 138, 139.  On 
October 4, 2024, Prestamos timely filed an opposition to Plaintiffs’ motion for class certification 
(the “Opposition”), as well as a motion to exclude Plaintiffs’ class certification experts.  ECF 
Nos. 142, 143. 
On February 28, 2025, just a few weeks before the merits discovery deadline, Plaintiffs 
served Requests for Admission (“RFAs”) and noticed depositions.  Prestamos timely responded 
to Plaintiffs’ RFAs on March 31, 2025.  Plaintiffs deposed David Castillo, Prestamos’s Senior 
Credit Officer, on April 4, 2025, and Jose Martinez, Prestamos’s President, on April 9, 2025.   
C. 
Class Certification Decision 
On April 30, 2025, the Court denied Plaintiffs’ motion for class certification, holding that 
Plaintiffs could not establish commonality and typicality required by Fed. R. Civ. P. 23(a) or 
predominance required by Fed. R. Civ. P. 23(b) principally because the Plaintiffs’ banks returned 
Prestamos’s disbursements for reasons specific to each Plaintiff.  See ECF 152 at 14–15 (“Given 
these varying circumstances, the central question will have different answers on the many 
possible reasons why each Plaintiff’s loans were returned.  This defeats commonality.”). 
Following the Court’s denial of class certification, the Plaintiffs consist of ten individual 
borrowers, and Prestamos seeks summary judgment against all of them. 
IV. 
ARGUMENT 
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, a “court shall grant summary 
judgment if the movant shows that there is no genuine dispute as to any material fact and the 
movant is entitled to judgment as a matter of law.”  Fed. R. Civ. P. 56(a).  As such, “[t]he party 
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moving for summary judgment must ‘identify those portions of the pleadings, depositions, 
answers to interrogatories, and admissions on file, together with the affidavits, if any, which it 
believes demonstrate the absence of a genuine issue of material fact.’”  Atkins v. City of Reading, 
2024 U.S. Dist. LEXIS 133065, at *7–8 (E.D. Pa. July 29, 2024) (alteration incorporated) 
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).  In response, the non-moving party 
must “designate specific facts showing that there is a genuine issue for trial.”  Celotex Corp., 477 
U.S. at 324 (internal quotation marks omitted).  “The mere existence of a scintilla of evidence in 
support of the nonmovant’s position will be insufficient, there must be evidence on which the 
jury could reasonably find for the nonmovant.”  Atkins, 2024 U.S. Dist. LEXIS 133065, at *8 
(alterations incorporated) (quoting Daniels v. Sch. Dist. of Phila., 776 F.3d 181, 192 (3d Cir. 
2015)).  As explained below, these established standards support entry of summary judgment for 
Prestamos. 
A. 
The Plain Language of the Loan Documents Precludes Plaintiffs’ Claim 
The single-count TAC alleges that, by way of the Loan Documents, “defendant 
Prestamos entered into a binding agreement with each of the Plaintiffs and the members of the 
proposed Classes to fund their respective PPP loans.”  TAC ¶ 425.  Plaintiffs further contend, 
without citing to any specific provision in the Loan Documents, that “Prestamos breached its 
obligations to fund Plaintiffs’ and Class members’ PPP loans under the Loan Documents by 
failing to fund the loans within 10 days of the SBA’s approval of the loans and assignment of 
loan numbers.”  Id. ¶ 429.   
But the plain language of the Loan Documents, which undeniably governs here, requires 
no such thing.  See, e.g., M.P. v. Penn-Delco Sch. Dist., 2015 U.S. Dist. LEXIS 157000, at *8 
(E.D. Pa. Nov. 20, 2015) (“Where the language of the contract is clear and unambiguous, a court 
is required to give effect to the plain language.”); Vinculum, Inc. v. Goli Techs., LLC, 310 A.3d 
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231, 247 (Pa. 2024) (“this Court is not permitted to deviate from the plain language of an 
unambiguous contract”); Steuart v. McChesney, 444 A.2d 659, 661 (Pa. 1982) (“It is well 
established that the intent of the parties to a written contract is to be regarded as being embodied 
in the writing itself, and when the words are clear and unambiguous the intent is to be discovered 
only from the express language of the agreement.” (citations omitted)); see also Restatement 2d 
of Contracts, § 202(a) (1981) (“where language has a generally prevailing meaning, it is 
interpreted in accordance with that meaning”).   
The Loan Documents that Prestamos used were standard SBA forms.  See TAC, Ex. A 
(SBA Form 147); Ex. 3, Def_Appx_0016, 66:8–18 (“Prestamos used the standard form note”).  
Specifically, the Note, which sets forth the “payment terms” for the loan, includes language 
obligating the “Borrower . . . to pay to the order of Lender . . . interest on the unpaid principal 
balance,” explains how a borrower may default on the loan, and spells out the lender’s rights if 
there is a default.  TAC, Ex. A.  The Note also requires the borrower to identify the bank that 
will receive the loan proceeds, and the borrower’s account number at that bank.  Each of the 
Plaintiffs identified a bank and an account, but as discussed above, those banks did not accept the 
loan proceeds.  See Pls.’ App’x, Exs. 1–10.  Strikingly absent from the Loan Documents is any 
language requiring Prestamos to ensure that loan funds reach Plaintiffs in a final, irrevocable 
manner, let alone when Plaintiffs’ own banks rejected the transactions due to fraud concerns or 
Plaintiff’s errors.   
In an analogous case against a lender alleging failure to fund a PPP loan, the court in 
Asherson v. JP Morgan Chase Bank, N.A., 2024 U.S. Dist. LEXIS 238909, at *1–2 (C.D. Cal. 
Oct. 23, 2024), dismissed the borrower’s breach of contract claim with prejudice.  In that case, a 
law firm and its partners sued a lender for allegedly miscalculating the firm’s PPP loan amount 
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and failing to process its loan forgiveness application.  Rejecting the plaintiffs’ contention that 
the defendant bank was responsible for calculating the PPP loan amount, the court reasoned that 
the “[p]laintiffs point to no provisions in the promissory note obligating [the defendant bank] to 
calculate a loan amount, much less ‘properly’ to calculate an amount that would be fully 
forgiven.”  Id. at *14 (citations omitted).  It further explained that “the promissory note reflects 
that it is a unilateral contract governing only [the defendant bank’s] loan to [the] [p]laintiffs in 
exchange for repayment on the agreement’s terms—not a calculation of the loan amount.”  Id. at 
*16.  Moreover, this was by design:  “The promissory note goes out of its way to ensure that 
[the defendant bank] will not be held liable for its role in this rapidly deployed program 
that sought to get money to businesses in need as quickly as possible.”  Id. (emphasis added).   
Similar to Asherson, the Loan Documents do not impose the obligations upon which 
Plaintiffs purport to rely.  As shown above, the banks designated by each Plaintiff in his or her  
Loan Documents rejected Prestamos’s ACH transfer of the PPP loan funds.  It is undisputed that 
Prestamos disbursed these loan funds, and nothing in the Loan Documents required Prestamos to 
do more.  Stated another way, Prestamos had no contractual duty to ensure that Plaintiffs’ banks 
accepted the disbursement of PPP loan funds.   
Nor did Prestamos have a duty to use other methods for sending loan funds, such as 
prepaid debit cards, after Plaintiffs’ banks rejected the ACH transfers.  Indeed, requiring 
Prestamos to issue money to a debit card in order to bypass the borrower’s bank rejection based 
on ineligibility or fraud would make no sense.  To the contrary, faced with ACH return entries 
from Plaintiffs’ own banks that signaled borrower ineligibility and/or fraud, Prestamos subjected 
these Plaintiffs’ applications to an enhanced due diligence process referred to as “reverification,” 
even though the Loan Documents did not require Prestamos to give borrowers a do-over.  See 
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Ex. 12, Def_Appx_0181–326; Ex. 17, Def_Appx_0433–434, 60:10–61:3 (describing 
Prestamos’s process when it received ACH return entries).  Only if a borrower satisfied that 
process would Prestamos issue a prepaid debit card as a courtesy to a borrower.  Ex. 2, 
Def_Appx_0007, ¶ 7.   
In sum, because Plaintiffs “have not demonstrated that the contract with [Prestamos] 
included the promises that they allege were breached,” and “cannot show that [Prestamos] failed 
to do something that the contract required it to do,” Asherson, 2024 U.S. Dist. LEXIS 238909, at 
*18 (citation omitted), Prestamos is entitled to judgment as a matter of law.  
B. 
Plaintiffs’ Interpretation of the Loan Documents is Commercially 
Unreasonable 
Even if Plaintiffs could point to some language in the Loan Documents that might raise a 
question regarding Prestamos’s contractual obligations to control the ultimate destination of PPP 
loan proceeds, which they have not done, the Court should still grant summary judgment to 
Prestamos.  It is well-established that contracts should not be interpreted to produce results that 
are absurd, commercially unreasonable, or contrary to the reasonable expectations of the parties 
to the contract.  See Shipp v. Marsh, 2024 U.S. Dist. LEXIS 45843, at *12 (W.D. Pa. Mar. 15, 
2024); Leica Geosystems, Inc. v. L.W.S. Leasing, Inc., 872 F. Supp. 2d 1191, 1206 (D. Colo. 
2012); see also In re Welded Constr., L.P., 605 B.R. 35, 40 (Bankr. D. Del. 2019).  Further, 
courts consistently refuse to interpret contracts to impose impossible conditions on any party 
involved.  See 11 Williston on Contracts § 32:11 (4th ed. 2024) (“[I]nterpretations which render 
the contract valid or its performance possible are preferred to those which render it invalid or its 
performance impossible.”); cf. Wembelton Dev. Co. v. Travelers Ins. Co., 206 N.W.2d 222, 225 
(Mich. Ct. App. 1973) (“Courts will not interpret a contract in a manner which would impose an 
absurd or impossible condition on one of the parties.”);  
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This principle of interpretation is especially relevant here given the need to facilitate the 
quick and seamless disbursement of the huge volume of loan funds being made under the 
“rapidly deployed” PPP program.  See 86 FR 3692–01, 3710 (noting disbursement must occur 
within ten calendar days of loan approval).  In order to meet these program goals, Prestamos and 
other PPP lenders used ACH transfers to distribute loan proceeds, which in turn required these 
lenders to follow the rules governing such transfers.  
 “The ACH is a national network of banks and financial institutions which transfers funds 
electronically to and from bank customers’ accounts.”  Clinton Plumbing & Heating of Trenton, 
Inc. v. Ciaccio, 2010 U.S. Dist. LEXIS 113215, at *28 (E.D. Pa. Oct. 22, 2021).  It “is the 
backbone of the U.S. financial system” through which 90.6% of American workers received their 
pay and 99% of Social Security Payments are made.  Nacha, ACH Payments Fact Sheet, 
available at https://www.nacha.org/content/ach-payments-fact-sheet (last visited May 7, 2025).  
In fact, “[t]he ACH Network reaches all U.S. bank and credit union accounts,” and, in 2024, the 
network processed 33.6 billion payments.  Id.   
Banks that make or receive ACH transfers must follow the Nacha Rules, which “establish 
the contractual obligations between the parties to ACH transactions.”  Ciaccio, 2010 U.S. Dist. 
LEXIS 113215, at *28; see also Andrichyn v. TD Bank, N.A., 93 F. Supp. 3d 375, 381 (E.D. Pa. 
2015) (explaining that “[t]he ACH Network is operated by the Electronic Payments Association, 
known as ‘NACHA’ . . . [that] promulgates a set of operating rules which provide the legal 
foundation for the ACH Network”); Ex. 2, Def_Appx_0008 (“A Participating [Depository 
Financial Institution (“DFI”)] must comply with these Rules and warrants that it is legally able to 
comply with all applicable requirements of these Rules.”).   
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Under the Nacha Rules, once Prestamos initiated the fund transfer via the ACH, it had no 
control over the final destination of that transfer, which was entirely up to the financial 
institution receiving the transfer.  See Ex. 2, Def_Appx_0010 (“An RDFI [such as the banks 
identified by Plaintiffs in their Loan Documents] may return Entries for any reason, except as 
otherwise provided in Article Three”); id., Def_Appx_0008 (Restrictions on RDFI’s Right to 
Transmit Return Entries). 
Critically for purposes of this case, the Nacha Rules do not authorize Prestamos to 
require the RDFI to accept the ACH transfer by overriding the return entry or otherwise.  Id., 
Def_Appx_0008.  As a result, there is no “commercially reasonable” reading of the Loan 
Documents that would require the obligation that undergirds Plaintiffs’ breach of contract claim 
without imposing an “impossible condition” on Prestamos.  See Alt. Aviation Servs., Inc. v. 
Meggitt (UK) Ltd., 207 F. App’x 506, 512 (6th Cir. 2006) (it is unreasonable to interpret a 
contract to as obligating a party to do something it “could not possibly promise”); Leica 
Geosystems, Inc., 872 F. Supp. 2d at 1206 (same). 
It bears emphasis that Plaintiffs have failed to identify any provision that even arguably 
supports such an obligation.  To the contrary, it is undisputed that Prestamos complied with the 
PPP regulations and Nacha Rules by disbursing the funds to the bank accounts designated by 
each Plaintiff for receiving PPP loan funds.  86 FR 3692–01, 3710; Ex. 6, Def_Appx_0041; 
Ex.13, Def_Appx_0327–370.  And despite Prestamos’s efforts, the recipient banks—chosen by 
each Plaintiff—rejected (or otherwise refused to release) the PPP loans for reasons outside of 
Prestamos’s control.  The banks’ rejection of PPP loans was consistent with the Nacha Rules and 
regulatory guidance, including a document jointly issued by the SBA and the U.S. Secret Service 
regarding return entries in the PPP based on suspicions of borrower fraud.  See Ex. 7, 
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Def_Appx_0042–43 (SBA and Secret Service guidance informing PPP lenders and borrowers’ 
banks to return to the lender any PPP disbursements that the bank believed “w[ere] initiated due 
to fraud”).    
In sum, Plaintiffs seek to impose upon Prestamos an obligation that appears nowhere in 
the Loan Documents and that expressly conflicts with the rules governing Prestamos’s transfer of 
any loan proceeds.  It is no surprise that even Plaintiffs’ own experts conceded that Prestamos 
could not do this.  See Ex. 3, Def_Appx_0017, 90:20–23 (“You, as Prestamos . . . cannot force a 
bank to take money.”); Ex. 4, Def_Appx_0022–23, 86:6–87:9, Def_Appx_0025–26, 96:24–
97:10 (agreeing that lender could not force bank to accept disbursed funds, and could only “try 
and rectify the situation”). 
C. 
Plaintiffs Failed to Meet Conditions Precedent to the Loan Documents 
Even if Plaintiffs could identify language somewhere in the Loan Documents arguably 
supporting their breach of contract claim, summary judgment would still be appropriate because 
the borrowers failed to satisfy two conditions precedent to receive loan proceeds and these 
failures excused Prestamos from an obligation to fund the loan.  See Shovel Transfer & Storage, 
Inc. v. Pa. Liquor Control Bd., 739 A.2d 133, 139 (Pa. 1999) (“Where a condition has not been 
fulfilled, the duty to perform the contract lays dormant and no damages are due for non-
performance.”); Burton v. Nationstar Mortg. LLC, 2013 U.S. Dist. LEXIS 75467, at *16 (E.D. 
Cal. May 28, 2013) (“A contract is unenforceable if a condition precedent is not met.” (citations 
omitted)); Restatement 2d of Contracts, § 224 (“A condition is an event, not certain to occur, 
which must occur, unless its non-occurrence is excused, before performance under a contract 
becomes due.”).  
Cave v. Saxon Mortgage Services, 2016 U.S. Dist. LEXIS 141033 (E.D. Pa. Oct. 11, 
2016), illustrates this principle in a factual context similar to this case.  In Cave, the plaintiffs 
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brought a putative class action under a federal program that provided relief to borrowers due to a 
national economic downturn, similar to the PPP.  The district court denied class certification 
because some of the named plaintiffs failed to meet conditions precedent.  See, e.g., id. at *64 
(named plaintiff “failed to satisfy the second condition precedent of being granted a permanent 
modification” and that “makes him atypical of the . . . [c]lass since he was never actually 
eligible”); id. at *71–72 (“Whether a borrower submitted accurate financial information to [the 
defendant] is a condition precedent to receiving a permanent modification under the terms of 
the” federal loan program, and because questions about that issue did not predominate, class 
certification was improper); see also Smith v. Saxon Mortg. Servs., 2013 U.S. Dist. LEXIS 
66101, at *15 (E.D. Pa. May 9, 2013) (identifying conditions precedent to loan program 
eligibility). 
Like the federal loan program in Cave, the PPP imposed two conditions precedent on the 
borrower.  First, the PPP required the borrower to designate an appropriate bank account to 
receive the PPP funds by providing an executed Information and Bank Account Certification and 
Authorization (“Bank Account Form”).  Pls.’ App’x, Exs. 1–10.  That form required each 
borrower to “certify in good faith to the below information to be the rightful and correct owner 
of the account and” and also provided that each borrower was “responsible for the accuracy and 
information provided below and authorize[d] the lender or its affiliates or partners to deposit the 
loan proceeds on the company’s behalf.”  See e.g., ECF 139-2 at 14.  Moreover, on the Bank 
Account Form, each Plaintiff “further certif[ied] that the account information provided below is 
true and accurate in all material respects.”  Id.  As the owners of sole proprietorships, Plaintiffs 
were uniquely situated to provide information about their own bank accounts into which 
Prestamos could transfer the PPP loan funds.   
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For each Plaintiff, Prestamos attempted to transfer the loan funds via ACH, and in each 
case the Plaintiff’s bank rejected the funds, and ultimately issued return entries, preventing the 
PPP loan funds from being deposited into the designated accounts.  As noted above, under the 
Nacha Rules, Ex. 2, Def_Appx_0008, and as conceded by Plaintiffs’ experts, Ex. 3, 
Def_Appx_0017, 90:20–23; Ex. 4, Def_Appx_0022–23, 86:6–87:9, Def_Appx_0025–26, 96:24–
97:10, Prestamos could not force Plaintiffs’ designated financial institutions to accept PPP loan 
funds.    
A second condition precedent required the borrower to comply with the documentation 
requirements created by the SBA to establish eligibility for a PPP loan.  86 FR 13149, 13151 
(Mar. 8, 2021) (setting forth use of Schedule C in PPP loans); 86 FR 3692, 3704 (listing 
requirements, including lender’s application form and payroll documentation); Ex. 4, 
Def_Appx_0021, 50:3–6 (a borrower applying for a PPP loan had to submit required 
documents); Ex. 3, Def_Appx_0015, 52:3–6 (same).  The PPP program guidelines required a 
borrower to provide specific documents, including a Schedule C to substantiate the PPP loan 
amount, a bank statement or record proving self-employment, and a full federal tax return.  86 
FR 13149, 13151.   
Plaintiffs have acknowledged that providing all required Loan Documents was a 
condition precedent to Prestamos’s disbursement obligation, Pls.’ Mot. for Class Cert. at 1–2, 
ECF No. 138, but no Plaintiff provided a complete and accurate set of documents, as required by 
the SBA regulations.  As detailed in Exhibit 12, each Plaintiff’s Loan Documents were 
inaccurate, incomplete, or contradicted by the Plaintiff’s other submissions.  For example:  
Plaintiff Sharon Bradley Smith’s gross income on her 2020 Schedule C, submitted with her PPP 
loan application, does not match the gross income on the 2020 federal tax return she produced 
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during discovery in this matter; Jahbrael Horne submitted a 2020 Schedule C with his PPP loan 
application, but only the first two pages of his full 2020 federal tax return during reverification; 
Jamie Jones did not provide any Schedule C or any information about gross income from 
operating a business; Gregory Lloyd submitted two different versions of his 2019 federal tax 
return; and Paris Townsend submitted a 2019 Schedule C with a gross income amount different 
than what was listed in the 2019 federal tax return she submitted during reverification.  Ex. 12, 
Def_Appx_0181–85.  The failure of each Plaintiff to submit necessary documentation—either 
with their applications or during the reverification process Prestamos voluntarily engaged in to 
give Plaintiffs a second opportunity to receive their PPP loans—forecloses Plaintiffs’ breach of 
contract claim.   
In sum, Plaintiffs’ failure to meet one or both conditions precedent—designation of an 
appropriate bank account and submission of required documentation—excused Prestamos from 
any obligation to disburse funds, however defined.         
D. 
Prestamos Did Not Cause Any Damages to Plaintiffs 
For the myriad reasons explained above, Plaintiffs cannot, as a matter of law, establish 
that Prestamos breached any contract.  But even assuming arguendo that they could do so, they 
still could not show that this breach caused them any damages.  It is well established that, to 
recover damages on a breach of contract claim, “the plaintiff must show a causal connection 
between the breach and the loss.”  Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 231 (3d 
Cir. 1995) (quoting Logan v. Mirror Printing Co., 600 A.2d 225, 226 (Pa. Super. 1991)). 
The claimed damages here result from Plaintiffs’ failure to obtain the loan proceeds.  But 
it is undisputed that this resulted from the actions of the Plaintiffs’ own banks, not Prestamos.  
There is no causal connection between Prestamos’s alleged actions and Plaintiffs’ alleged 
damages.  See DiCicco v. Citizens Fin. Grp., Inc., 2015 U.S. Dist. LEXIS 120798, at *26–27 
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(E.D. Pa. Sept. 10, 2015) (“breach of contract damages must be damages that actually resulted 
from the defendant’s breach”); Zylbert v. Beddingfield, 2021 Cal. Super. LEXIS 158456, at *15 
(Cal. Sup. Ct. Aug. 12, 2021) (noting that the defendant “establish[ed] the existence of a 
superseding cause preventing [the d]efendant from being liable for any breach of contract”).  
E. 
The Court Should Reject Plaintiffs’ Effort to Sidestep the Contract by 
Reference to Unrelated Documents 
In an effort to circumvent their inability to identify relevant contractual language 
supporting their claim, Prestamos anticipates that Plaintiffs will continue to make baseless and 
irrelevant allegations about statements Prestamos made on the Form 1502s it filed with the SBA 
concerning the funding of Plaintiffs’ loans.  
The Court should reject such an argument out of hand because a party’s relationship with 
a third party entirely separate from the relevant contract has no bearing on the objective terms of 
the contract or any potential breach thereof.  Pierce Assocs., Inc. v. Nemours Found., 865 F.2d 
530, 536 (3d Cir. 1988).  The Form 1502 is just such a document.  It governs the relationship 
between Prestamos and the SBA, not the relationship between either entity and the Plaintiffs.  
Any claim invoking Form 1502 is therefore inapposite.   
V. 
CONCLUSION 
For the foregoing reasons, the Court should grant Prestamos’s motion and enter summary 
judgment in its favor.  
 
 
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Dated: May 7, 2025 
Respectfully submitted, 
BALLARD SPAHR LLP 
By: /s/ Marcel S. Pratt 
Marcel S. Pratt (Pa. ID 307483) 
Edward D. Rogers (Pa. ID 69337) 
Thomas J. Gallagher IV (Pa. ID 316269) 
J. Chesley Burruss (Pa. ID 331521) 
Travis W. Watson (Pa. ID 330753) 
1735 Market Street, 51st Floor 
Philadelphia, PA  19103 
T: 215-665-8500 
prattm@ballardspahr.com 
rogerse@ballardspahr.com 
gallaghert@ballardspahr.com  
burrussc@ballardspahr.com 
watsontw@ballardspahr.com 
 
 
 
 
 
 
Counsel for Defendants 
 
HERRERA ARELLANO LLP 
Roy Herrera (admitted pro hac vice) 
Daniel A. Arellano (admitted pro hac vice) 
Jillian Andrews (admitted pro hac vice) 
Austin T. Marshall (admitted pro hac vice) 
Jane Ahern (admitted pro hac vice) 
1001 North Central Avenue, Suite 404 
Phoenix, AZ  85004 
T: 602-567-4820 
Roy@ha-firm.com 
Daniel@ha-firm.com 
Jillian@ha-firm.com 
Austin@ha-firm.com 
Jane@ha-firm.com 
 
Beatriz Aguirre (admitted pro hac vice) 
600 Pennsylvania Avenue, Suite 300 
Washington, DC 20003 
T: 202-798-6488 
Beatriz@ha-firm.com 
 
 
 
 
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