Court filing
Complaint — E.D. Realty, Inc. v. United States of America (Dkt. 1, W.D. Pa.)
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A complaint by E.D. Realty, Inc., d/b/a the Historic Summit Inn, against the United States, the Small Business Administration and Administrator Kelly Loeffler, Civil Action No. 2:26-cv-2212, in the U.S. District Court for the Western District of Pennsylvania, filed October 9, 2026 as Document 1. It states that the SBA approved the inn's Restaurant Revitalization Fund application on May 20, 2021 and awarded a grant of $995,751.51. It challenges an April 2026 Rescission Letter that seeks to rescind the award, nearly five years later, on eligibility criteria it says Congress did not impose, including concern about a shared EIN. The complaint asks the court under 5 U.S.C. §706 to set aside the SBA's determination.
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Filed October 9, 2026 in E.D. Realty, Inc. v. United States of America; one of 1 filings from this case.
Record facts
| Court | U.S. District Court for the Western District of Pennsylvania |
|---|---|
| Filed | 2026-10-09 |
Cite this document
“Complaint — E.D. Realty, Inc. v. United States of America (Dkt. 1, W.D. Pa.).”
U.S. District Court for the Western District of Pennsylvania, No. 2:26-cv-02212, Doc. 1, filed 2026-10-09. Archived at Pandemic Darlings, https://pandemicdarlings.com/court-filings/full-docket-united-states-of-america-pawd-74944526/2026-10-09-gov-uscourts-pawd-74944526-1-0-doc-1/
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Case 2:26-cv-02212 Document 1 Filed 10/09/26 Page 1 of 21
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
E.D. Realty, Inc., d/b/a the Historic Summit Inn )
)
Plaintiff, ) Civil Action No. 2:26-cv-2212
)
vs. ) COMPLAINT
)
UNITED STATES OF AMERICA, )
SMALL BUSINESS ADMINISTRATION, )
and KELLY LOEFFLER, in her official )
capacity as administrator of the United )
States Small Business Administration, ) ELECTRONICALLY FILED
)
Defendants. )
COMPLAINT
E.D. Realty, Inc., d/b/a the Historic Summit Inn alleges its complaint against Defendants
United States of America, Small Business Administration, and Kelly Loeffler, in her official
capacity as administrator of the United States Small Business Administration (“Defendants”), as
follows:
INTRODUCTION
1. Under Section 5003 of the American Rescue Plan Act (“ARPA”), enacted in
March 2021, Congress created the Restaurant Revitalization Fund (“RRF”), to be administered
by Defendants through the Small Business Administration (“SBA”). This fund provided relief
for certain eligible entities impacted by the COVID-19 pandemic, including specifically “inns.”
2. This case concerns the SBA’s unlawful attempt, nearly five years after awarding
Plaintiff an RRF grant, to rescind that award based on eligibility criteria that Congress did not
impose and that the SBA did not disclose when it administered the RRF.
Case 2:26-cv-02212 Document 1 Filed 10/09/26 Page 2 of 21
3. Congress expressly included an “inn” among the businesses eligible to receive
RRF grants under Section 5003 of the ARPA. 15 U.S.C. § 9009c(a)(4)(A).
4. The SBA’s contemporaneous RRF materials likewise expressly identified “Inns”
as eligible entities and, to qualify for funds, required inns only to provide documentation
showing that onsite sales of food and beverage to the public comprised at least 33% of gross
receipts in 2019.
5. Plaintiff E.D. Realty, Inc., d/b/a the Historic Summit Inn (the “Summit Inn” or
“Plaintiff”) is an “inn” under the SBA’s RRF materials because it satisfied that requirement and
provided the SBA with documentation demonstrating that approximately 48% of its 2019 gross
receipts came from food and beverage sales.
6. Nearly five years later, the SBA notified Plaintiff that it was ineligible and
demanded repayment of the entire grant. The SBA’s shifting rationales for the eligibility
determination not only do not appear in the statute, the application, or the SBA’s
contemporaneous program guidance at the time of award but are plainly inconsistent with all of
the SBA’s pre-award guidance.
7. The SBA’s decision rendering the Summit Inn ineligible should be set aside under
the Administrative Procedure Act (“APA”) as it is arbitrary and capricious, ultra vires, and
improperly relies on additional, unstated retroactive eligibility criteria.
PARTIES
8. E.D. Realty, Inc., d/b/a the Historic Summit Inn is a Pennsylvania corporation
with its principal place of business in Farmington, Pennsylvania.
9. Defendant United States of America, Small Business Administration (“the SBA”)
is an agency of the United States Government.
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10. Defendant Kelly Loeffler (“Loeffler”) is the Administrator of the SBA. Under
Section 5003 of ARPA, Defendant Loeffler is responsible for administering the RRF. She is sued
in her official capacity only.
JURISDICTION AND VENUE
11. This Court has jurisdiction over this complaint under 28 U.S.C. § 1331, 28 U.S.C.
§2201, and 5 U.S.C. §702, because this case presents a substantial question of federal law
regarding the interpretation of Section 5003 of ARPA, where the Summit Inn is seeking a
declaration of its rights and a review of agency action.
12. This Court also has authority to issue a declaratory judgment and to order any
other relief that is necessary and proper pursuant to 28 U.S.C. §§2201 and 2202.
13. A substantial part of the events giving rise to this claim occurred in this district
and the Plaintiff resides in this district. Venue is therefore appropriate in this district under 28
U.S.C. § 1391(e)(1).
FACTUAL AND PROCEDURAL ALLEGATIONS
14. The Summit Inn was built beginning in 1904 and opened in 1907 and is a
longstanding historic mountaintop destination located in southwestern Pennsylvania. The
Summit Inn is listed by the Department of the Interior on the National Register of Historic Places
based on its longstanding operation as an inn.
15. E.D. Realty, Inc. is the sole owner and operator of the Historic Summit Inn, and it
has been owned and operated continuously by the Shoemaker/Voithofer family since 1964.
16. The Summit Inn is a full-service inn that offers a broad range of amenities and
services to the public, including on-site dining, bar service, weddings, banquets and event
catering, and lodging accommodations.
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17. Consistent with the nature of its operations as an inn, food and beverage represent
the largest percentage of the Summit Inn’s annual gross receipts.
18. Like many hospitality businesses, the Summit Inn experienced significant revenue
losses as a direct result of the COVID-19 pandemic and the related restrictions imposed on
dining and event operations.
19. To help offset these losses, the Summit Inn submitted an application to the SBA
on May 3, 2021 for grant assistance under the RRF.
20. “Inns” like the Summit Inn are expressly contemplated for awards under the
ARPA.
21. The ARPA defines an “eligible entity” broadly to include:
(4) ELIGIBLE ENTITY.—The term “eligible entity”—
…
(A) means a restaurant, food stand, food truck, food cart, caterer, saloon, inn,
tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise
of a beverage alcohol producer where the public may taste, sample, or purchase
products, or other similar place of business in which the public or patrons
assemble for the primary purpose of being served food or drink…
15 U.S.C. § 9009c(a)(4) (emphasis added).
22. Moreover, the SBA’s RRF Program Guide adopts the ARPA’s definition and adds
a limited, category-specific requirement applicable to inns: “Inns: To be eligible, these
businesses must provide documentation with their application that on-site sales of food and
beverage to the public comprised at least 33% of gross receipts in 2019” (the “33% Food and
Beverage Sales Threshold”). A true and correct copy of the RRF Program Guide, attached as
hereto Exhibit A.
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23. The RRF Program Guide also expressly addresses the statutory “primary purpose”
phrase. In a Note beginning at the bottom of page 3, the Guide states: “To satisfy the statutory
requirement for ‘place of business in which the public or patrons assemble for the primary
purpose of being served food or drink,’ an eligible entity must have at least 33% in 2019 on-site
sales to the public.” See Ex. A, RRF Program Guide at 3.
24. In its application to the SBA for RRF funds, the Summit Inn checked the
applicant box for “Inn.” A true and correct copy of this SBA Application is attached hereto as
Exhibit B.
25. The RRF application form notes that an “Inn” must have “onsite sales of food and
beverage to the public comprising at least 33% of gross receipts” in order to be eligible for the
RRF program and required additional supporting documentation for “applicants that are an Inn”
to demonstrate that the business met the 33% Food and Beverage Sales Threshold.
26. To demonstrate that it met the 33% Food and Beverage Sales Threshold, the
Summit Inn attached the required information including a financial statement regarding Summit
Inn’s revenues for 2019 showing that 48% of its revenue was generated from food and beverage
sales. See Ex. A, RRF Program Guide at 3; see also id. at 17 (“For Applicants that are an Inn: In
addition to the documents in (1) above, documents evidencing that onsite sales of food and
beverage to the public comprise at least 33% of gross receipts for 2019. These may include
internally created revenue reports or accounting reports.”).
27. The statute does not define an “inn” by reference to the number of guest rooms, a
particular NAICS code, the existence of a separate restaurant entity, or the use of a separate
Employee Identification Number (“EIN”).
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28. Nor does Section 5003 expressly impose a separate “primary purpose”
requirement on an entity that independently qualifies as an “inn.” Rather, the phrase “primary
purpose of being served food or drink” appears in the statute as part of the catchall category
covering an “other similar place of business.” And to the extent the “primary purpose” phrase
bears on eligibility at all, the SBA itself defined it in the RRF Program Guide as the 33% on-site
sales test—a test the Summit Inn satisfies, with 48% of its 2019 gross receipts derived from food
and beverage sales.
29. The SBA’s contemporaneous RRF materials did not state that an inn must have a
separate EIN from its restaurant or bar operations.
30. The SBA’s contemporaneous RRF materials did not impose a maximum number
of guest rooms on an inn.
31. The SBA’s contemporaneous RRF materials did not state that an inn must derive
a majority of its revenue from food and beverage operations.
32. Congress directed the SBA, in accepting RRF applications, to prioritize
applicants’ ability to use their existing business identifiers rather than requiring other forms of
registration or identification. 15 U.S.C. § 9009c(c)(2)(B). The statutory scheme therefore did not
condition eligibility on the creation or maintenance of separate EINs for component operations.
33. On September 19, 2023, well after the Award, the SBA, through separate
correspondence in the RRF Portal, specifically asked Summit Inn whether the restaurant
operated under its own EIN or the same EIN as the Inn, to which Summit Inn timely and
truthfully responded: “The Inn and Restaurant are the same business in the same building under
the same EIN.” SBA personnel acknowledged the response (“Thank you very much for your
prompt response”) and raised no objection or request for clarification regarding the shared-EIN
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structure, and the SBA offered no additional guidance or correspondence on the subject. A true
and correct copy of this exchange is attached hereto as Exhibit C.
34. Thus, by no later than September 19, 2023, the SBA knew that Summit Inn
operated as a single integrated business under one EIN. Yet the SBA raised no concern about the
shared-EIN structure for years after learning of it, until it issued the April 2026 Rescission
Letter. A true and correct copy of the letter is attached hereto as Exhibit D.
35. After reviewing the application and supporting documentation, the SBA approved
the application on May 20, 2021 and awarded the Summit Inn an RRF grant in the amount of
$995,751.51. A true and correct copy of the SBA’s May 20, 2021 email notifying E.D. Realty
that its Restaurant Revitalization Fund application had been approved and that it had been
awarded $995,751.51 in grant funding is attached hereto as Exhibit E.
36. The Summit Inn used the grant to cover eligible expenses during the COVID-19
pandemic and continue operations.
37. Five years later, on April 17, 2026, the SBA notified Summit Inn that it had
identified an eligibility issue that required repayment of the Award in full (the “April 2026
Rescission Letter”). Specifically, the SBA asserted that the Summit Inn was an “ineligible
entity” on the grounds that:
Hotels and motels are not eligible entities. A restaurant within a hotel/motel must
have a separate Tax Identification Number. (Hotels and motels are not considered
‘Inns’ for the purpose of the RRF program). Because the restaurant/bar and hotel
share the same EIN, the entities cannot be separated for eligibility consideration.
Therefore, the business does not meet the definition of an eligible entity under the
Restaurant Revitalization Fund Program. As a result, funds awarded must be
returned.
See Ex. D, April 2026 Rescission Letter.
38. The parenthetical sentence in the April 2026 Rescission Letter mirrors an article
on an SBA Zendesk help-desk knowledge base page (the “Zendesk FAQ”). The Zendesk FAQ is
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not a statute, a regulation, the RRF Program Guide, or the application; it is an undated help-desk
knowledge base page.
39. The relevant Zendesk FAQ article consists of a single sentence: “No. Hotels and
motels are not considered ‘Inns’ for the purpose of the RRF program.” It defines none of those
terms and provides no criteria for distinguishing an inn from a hotel or motel.
40. The Summit Inn applied for its RRF grant on May 3, 2021, and the SBA approved
the application on May 20, 2021—both before the July 15, 2021 “last updated” date carried by
the Zendesk FAQ articles.
41. The April 2026 Rescission Letter also sets out escalating interest rates and
penalties that could be assessed if the $995,751.51 was not returned.
42. As reconsideration requests to the agency were the only available avenue for
appeal listed in the April 2026 Rescission Letter, the Summit Inn timely submitted a Request for
Reconsideration of the April 2026 Rescission Letter on May 15, 2026. The Request for
Reconsideration explained that the Summit Inn is not a hotel or motel and is an eligible “inn”
under the RRF.
43. The SBA subsequently advised that it had reopened the matter for further review.
44. On May 21, 2026, the SBA responded by email, asserting for the first time that
“[h]otels are not eligible to receive RRF Awards,” that Summit Inn “ha[d] 94 guest rooms,” and
that its tax return reflected NAICS code 721110—the code assigned to hotels and motels—while
reiterating that a restaurant located within a hotel is ineligible absent a separate EIN. A true and
correct copy of this exchange is attached hereto as Exhibit F.
45. None of these grounds—NAICS classification or room count—appears in the
Application, or in the April 2026 Rescission Letter or in any governing RRF guidance.
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46. Nor does the Summit Inn have a restaurant located within a hotel or motel. The
Summit Inn is an inn.
47. The Summit Inn requested a meeting with SBA staff to better understand the
agency’s position, and on June 2, 2026, the SBA responded by reiterating its hotel/motel and
shared-EIN rationale and invoking, for the first time, what it described as a “primary purpose”
requirement under which eligibility requires that “the primary purpose of the entity must be to
serve prepared food and beverages”—a standard the SBA characterized as applying “in addition
to the 33% food/drink sales standard.” See Ex. F, May 21, 2026 email.
48. The “in addition to the 33% food/drink sales standard” formulation appears only
in the SBA’s June 2, 2026 email and in no published RRF program document. The SBA first
articulated it in correspondence in 2026, five years after the Award.
49. The June 2, 2026 email’s “primary purpose” standard also contradicts the SBA’s
own definition of that phrase. The RRF Program Guide provides that an entity satisfies the
statutory “primary purpose” requirement if it has at least 33% in 2019 on-site sales to the
public—a test the Summit Inn satisfies at 48%. The June 2, 2026 email applies a different,
unpublished standard.
50. On June 5, 2026, the Summit Inn, through counsel, provided a detailed response
setting forth its high-level positions that it is eligible and seeking clarification of the SBA’s
ruling. A true and correct copy of Summit Inn’s June 5, 2026 email is attached hereto as Exhibit
G.
51. The Summit Inn also requested a meeting to discuss the SBA’s position and a
ninety-day deferral of any collection or repayment efforts to permit a meaningful exchange of
information. Id.
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52. The SBA did not substantively respond to the arguments raised in Summit Inn’s
June 5, 2026 email and did not grant Summit Inn’s request for a meeting or a temporary deferral
of collection.
53. Instead, on July 1, 2026, the SBA issued a second rescission letter (the “July 2026
Rescission Letter”), reaffirming the April 2026 Rescission Letter and making another demand
that the Summit Inn repay the Award in full. A true and correct copy of the July 2026 Recission
Letter is attached hereto as Exhibit H.
54. The July 2026 Rescission Letter did not address the NAICS-code, room-count, or
“primary purpose” theories the SBA had raised in its intervening correspondence, did not
respond to the historical and factual showing in Summit Inn’s June 5, 2026 letter, and did not act
on Summit Inn’s requests for a meeting or a temporary deferral of collection.
55. The July 2026 Rescission Letter also sets out escalating interest rates and
penalties that could be assessed if the $995,751.51 was not returned.
56. As reconsideration requests to the agency again were the only available avenue
for appeal listed in the July 2026 Rescission Letter, the Summit Inn timely submitted a Second
Request for Reconsideration of the July 2026 Rescission Letter on July 30, 2026.
57. The second reconsideration request demonstrated again that the Summit Inn
satisfies all eligibility criteria as an “Inn,” specifically contemplated for an award in the ARPA
and having more than 33% of its revenue from 2019 derived from food and beverage service.
58. The second reconsideration request argued, among other things, that the Summit
Inn is an eligible entity under the ARPA and all applicable, contemporary guidance.
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59. The SBA’s own guidance draws no distinction between inns and hotels based on
room count or NAICS classification, and adopting such a distinction would write inns with any
lodging component out of the RRF statute altogether.
60. The Summit Inn is not an inn as a branding effort; it satisfies every historical and
common understanding of the term. Built along the National Road in 1907, with its original
horse-and-carriage stables, masonry fireplaces, ground-floor tavern and bar, and guest rooms
above its public rooms, the Summit Inn is a paradigmatic inn: a business offering “a hearth, a
meal, and a bed.”
61. There is no “primary purpose” standard under the statute and guidance as “inns”
are expressly eligible if they satisfy the 33% gross receipts for food and beverage rule.1
62. The SBA responded to the Second Reconsideration Request with an email,
repeating that the Summit Inn was not an eligible entity because “Hotels and Motels” are not
eligible for RRF grants, that only “eligible businesses” could use the 33% rule, and that “SBA
policy is that the restaurant must have it [sic] own separate EIN.” A true and correct copy of this
email exchange is attached hereto as Exhibit I.
63. The SBA’s post-award RRF recovery campaign followed SBA Office of
Inspector General (“OIG”) Report 24-09, dated March 26, 2024 (the “OIG Report”). According
to the July 2026 Rescission Letter, the SBA identified the asserted eligibility issue during its
1
Assuming arguendo that the SBA’s new post-award, retroactive requirement that an “inn” must meet some second
primary purpose test in addition to the 33% threshold, which is plainly inconsistent with the ARPA, the application,
the SBA’s prior award, and the contemporaneous guidance at the time of the award, there is nothing in the
administrative record demonstrating that the SBA performed any analysis to support its conclusion that the Summit
Inn failed this standard. The SBA simply noted the existence of guest rooms and a NAICS code, without evaluating
the Summit Inn’s actual operations, revenue composition, staffing, or patronage. Even if this new, inconsistent
retroactive standard applied or could apply, the Summit Inn still would be eligible because the largest portion of the
Summit Inn’s revenue, employees, and day-to-day operations is devoted to providing food and beverage service to
the public. Its food and beverage revenue (approximately 48%) exceeded its lodging revenue (approximately 43%),
and approximately 75% of Summit Inn’s staff support its food and beverage operations.
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review of the Summit Inn’s Post Award Report. Recommendation 3 of the OIG Report directs
the SBA to: “Review the 3,443 applicants awarded funds totaling $376,583,100 that self-
certified as a brewery or inn, to determine if they met the 33 percent onsite sales eligibility
requirement and recover any funds from applicants that did not meet the requirement.” In its
written response to the OIG Report, the SBA committed to reviewing whether inns “met the 33
percent onsite sales requirement.” The words “hotel,” “motel,” “resort,” “NAICS,” and “tax
identification” do not appear anywhere in the OIG Report. The Summit Inn met the 33 percent
onsite sales requirement—the only test the OIG named—at 48 percent. The OIG recommended
the review, the SBA committed in its own response to determining whether inns “met the 33
percent onsite sales requirement,” and the recovery effort followed. Yet as applied to the Summit
Inn, the SBA never applied the test its Inspector General identified and that the SBA’s guidance
directed should apply. See Ex. H, July 2026 Rescission Letter.
64. By notice on SBA Form 1201 (Rev. Aug. 2025) dated September 28, 2026, and
received by the Summit Inn on October 2, 2026 (the “September 2026 Notice”), the SBA issued
its final agency decision. A true and correct copy of the September 2026 Notice and
accompanying statement is attached hereto as Exhibit J.
65. The September 2026 Notice accompanied a statement showing $995,751.51 now
due on loan number 4881509002, with a payment due date of July 31, 2026. The September
2026 Notice states that it is “official notice” that the SBA intends to refer the debt to the U.S.
Department of the Treasury (“Treasury”) for offset and other collection actions, and it warns:
“THIS IS THE ONLY NOTICE YOU WILL RECEIVE BEFORE YOUR DELINQUENT
DEBT IS SENT TO TREASURY.” The September 2026 Notice gives the Summit Inn 60 days
from the notice to pay the debt, agree to a repayment plan, or present evidence that the debt is
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not past due or not legally enforceable. It also references an optional hearing before the SBA’s
Office of Hearings and Appeals (“OHA”) under 13 C.F.R. Parts 134 and 140 concerning
administrative and salary offset, to be requested within 15 days of receipt.
66. The July 2026 Rescission Letter states that a penalty of 6 percent will be added
once the debt is more than 90 days past due. Measured from the July 31, 2026 payment due date,
that penalty would attach on or about October 29, 2026.
67. The September 2026 Notice states that the SBA intends to refer the debt to
Treasury for administrative offset and other collection actions after the 60-day period expires on
or about November 27, 2026. On information and belief, the SBA has referred other disputed
RRF recovery debts to Treasury within approximately three months of the initial notice.
68. On information and belief, the SBA is already using disputed RRF recovery debts
to deny affected businesses other federal benefits. If the disputed debt is treated as a delinquent
federal debt, the Summit Inn faces a real risk of denial of other federal assistance. Those harms
could not be undone by a later judgment in the Summit Inn’s favor.
ADMINISTRATIVE RECORD
69. The administrative record includes, at a minimum, Plaintiff’s RRF application and
supporting documentation, the SBA’s approval of the Award, the parties’ communications
concerning Plaintiff’s business structure and EIN, Plaintiff’s post-award submissions, the April
2026 Rescission Letter, Plaintiff’s first Request for Reconsideration, the SBA’s subsequent
correspondence, Plaintiff’s June 5, 2026 submission and supporting materials, the July 2026
Rescission Letter, Plaintiff’s Second Request for Reconsideration, the SBA’s response thereto,
the September 2026 Notice and accompanying statement, and all materials considered by the
agency in reaching its final determination.
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70. To the extent the SBA contends that additional materials, analyses, policies,
guidance, or records support its determination, Plaintiff requests that those materials be included
in the administrative record and produced in accordance with applicable procedures governing
review of agency action.
COUNT I – VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT
(5 U.S.C. § 706)
71. The Summit Inn re-alleges and incorporates by reference all prior paragraphs as
though fully set forth herein.
72. Defendant SBA accepted the Summit Inn’s application, granted the funds in
question, accepted the Summit Inn’s post-award report, and has not disputed its statements that
more than 33% of the revenue received at the Summit Inn was derived from the sales of food and
beverages.
73. Despite this, Defendant SBA now asserts, without explanation, that the Summit
Inn is not in fact an “Inn” for purposes of the RRF program, but is instead a “hotel/motel,” while
refusing to provide any definition of the difference between these two terms (other than the fact
that an “Inn” is an eligible entity, while a “hotel/motel” is not).
74. The SBA’s determination that the Summit Inn was ineligible for the grant and its
demand for return of grant funds have been described by the SBA as a final decision, were
consummated by the September 2026 Notice announcing the SBA’s intent to refer the debt to
Treasury for offset and other collection actions, and constitute final agency action.
75. For the reasons set forth above and in the correspondence between the parties, the
Summit Inn was an eligible entity (i.e., an “Inn”) that met all known requirements as set forth in
the SBA’s Application, RRF Program Guide, and other program materials.
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76. The SBA’s determination of ineligibility is based on shifting, novel claims that an
inn that provides both lodging and food/beverage services, with at least 33% of its revenue from
the food/beverage services must meet additional, unstated eligibility requirements imposed years
after the award including (a) it must consist of two independent businesses with their own EINs
is contrary to the plain language of the program guidance, and is not supported by any statute or
regulation; (b) it must not have an NAICS code for a hotel/motel; (c) it may not have guest
rooms; and (d) it must also satisfy a “primary purpose” standard “in addition to”: the 33% Food
and Beverage Sales threshold—a standard that appears only in the SBA’s June 2, 2026 email and
in no published program document.
77. The RRF Program Guide contains the statutory “primary purpose” phrase and
defines it: an entity satisfies the “primary purpose” requirement if it has at least 33% in 2019 on-
site sales to the public. The Summit Inn satisfies that test, with 48% of its 2019 gross receipts
derived from food and beverage sales. The SBA’s June 2, 2026 email applies a different,
unpublished standard that contradicts the agency’s own definition.
78. There is no rational basis for the distinction in light of the ARPA statute, the SBA
Program Guide, and the FAQ Guidance, which provide the relevant criteria for an “inn” (the
33% Food and Beverage Sales Threshold) without defining a methodology for distinguishing an
inn from a hotel. Nor does the Zendesk FAQ supply any such methodology: it is an undated SBA
help-desk knowledge base page whose one-sentence hotel/motel article defines none of its terms,
and no Internet Archive capture shows what it said, or whether it existed, during the application
window in which the Summit Inn applied (May 3, 2021) and was approved (May 20, 2021).
79. The SBA’s position that the existence of overnight accommodations necessarily
transforms an inn into a hotel cannot be reconciled with the guidance at the time of award, the
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ordinary meaning of the term, or Congress’s decision to include “inns” among the categories of
businesses eligible for RRF assistance. By definition, inns provide lodging. If the mere presence
of guest rooms were sufficient to disqualify an establishment as an inn, then virtually every inn
would be excluded from the program, rendering Congress’s inclusion of inns as eligible entities
superfluous, violating the canon that statutes should be construed to give effect to every word.
80. The SBA’s final determination that the Summit Inn was ineligible for the RRF
grant was arbitrary, capricious, an abuse of discretion, and not in accordance with applicable law.
81. The SBA’s rescission and recovery action is also in excess of statutory
jurisdiction, authority, or limitations, and short of statutory right, within the meaning of 5 U.S.C.
§ 706(2)(C). An agency has only the powers Congress confers on it, and Section 5003 of ARPA
confers no general power to claw back RRF grants after they have been awarded, disbursed, and
spent.
82. Section 5003 of ARPA directed the SBA to award grants to eligible entities,
including inns, 15 U.S.C. § 9009c(a)(4)(A), and specified the uses to which those grants may be
applied. Congress addressed the return of grant funds in only two narrow circumstances: where
an eligible entity fails to use all of its grant funds for allowable expenses, or permanently ceases
operations, on or before the last day of the covered period. In either case, the entity must return
only those funds it did not use for allowable expenses. 15 U.S.C. § 9009c(c)(6).
83. Neither circumstance applies here. The Summit Inn did not cease operations; it
remains open and operating today. The Summit Inn used its grant for eligible expenses,
submitted a Post Award Report accounting for the award, and the SBA accepted that report. The
SBA has never alleged that the Summit Inn misused any portion of the grant, failed to account
for it, or spent it outside the permitted categories.
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Case 2:26-cv-02212 Document 1 Filed 10/09/26 Page 17 of 21
84. By expressly providing for the return of funds in those two limited circumstances,
Congress excluded others. Congress did not authorize the SBA to rescind a fully disbursed and
properly spent grant years after the covered period ended on the basis of a post hoc
reclassification of the recipient’s business type, and nothing in Section 5003 authorizes the SBA
to convert such a grant into a debt owed to the United States.
85. Nor has the SBA identified any statute or regulation authorizing its recovery
effort. None of the April 2026 Rescission Letter, the SBA’s May 21 and June 2, 2026 emails, the
July 2026 Rescission Letter, the SBA’s response to the Second Request for Reconsideration, or
the September 2026 Notice cites any statutory or regulatory source of authority to rescind the
Award or demand its repayment.
86. Because the SBA lacks statutory authority to rescind the Award and demand its
return, its determination and repayment demand, and every collection, offset, referral, and debt-
reporting action premised on them, should be held unlawful and set aside under 5 U.S.C. §
706(2)(C).
87. The SBA failed to properly apply the eligibility regulations to the Summit Inn’s
circumstances or explain its rationale for determining that the Summit Inn was not an eligible
“Inn” under the RRF program, and its demand for return of all grant funds is based on its
erroneous determination of ineligibility.
88. The SBA’s recovery action against the Summit Inn also departs from the review
the SBA committed to undertake. The OIG Report directed the SBA to determine whether inns
“met the 33 percent onsite sales eligibility requirement” and to recover funds only from
applicants that did not meet it. In its response, the SBA committed to conduct exactly that
review. The Summit Inn met that requirement at 48 percent, yet the SBA never applied that test
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Case 2:26-cv-02212 Document 1 Filed 10/09/26 Page 18 of 21
and instead relied on hotel/motel, NAICS, room-count, and tax-identification criteria that appear
nowhere in the OIG Report.
89. The SBA failed to consider and respond to the relevant evidence and arguments
presented by Summit Inn during the reconsideration process, including Summit Inn’s detailed
submissions and its requests for a meeting.
90. The SBA’s failure to meaningfully engage with the evidence and arguments
presented during the reconsideration process constitutes a separate procedural deficiency under
the APA.
91. The SBA’s imposition of novel eligibility criteria, including a “primary purpose”
test applied to enumerated inns, a room-count limitation, NAICS-code-based disqualification,
and a separate EIN requirement for inns, constitutes the adoption of new substantive rules or
policy that were not promulgated through notice-and-comment rulemaking procedures required
by 5 U.S.C. § 553.
92. These criteria were not articulated in the ARPA, the RRF Program Guide, the
SBA’s published FAQs, the application materials, or any other contemporaneous guidance, and
their retroactive application to previously approved awards are inconsistent with the APA’s
requirements for agency rulemaking.
93. The Summit Inn has exhausted its available remedies with the SBA, and the
SBA’s action in demanding the return of all grant funds is final agency action for which there is
no other adequate remedy.
94. The September 2026 Notice concludes the SBA’s eligibility determination. The
OHA hearing referenced in the September 2026 Notice concerns only the mechanics of Treasury
offset under 13 C.F.R. Parts 134 and 140. It is not a review of the RRF eligibility determination,
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Case 2:26-cv-02212 Document 1 Filed 10/09/26 Page 19 of 21
and it is not mandated by statute or regulation as a prerequisite to judicial review of that
determination.
95. The SBA’s eligibility determination marks the consummation of the agency’s
decision-making process, determines the Summit Inn’s rights and obligations, and gives rise to
legal consequences, including the threatened referral of the debt to Treasury. It is therefore final
agency action.
96. Pursuant to 5 U.S.C. §706, the SBA’s agency action should be held unlawful and
set aside.
COUNT II – DECLARATORY RELIEF
97. The Summit Inn re-alleges and incorporates by reference all prior paragraphs as
though fully set forth herein.
98. The SBA has sent the April 2026 Rescission Letter, the July 2026 Rescission
Letter, and the September 2026 Notice demanding the return of all of the grant funds the Summit
Inn received, with significant and escalating consequences if the demand is not met, including
the threatened referral of the debt to Treasury for offset and other collection actions.
99. There exists an actual controversy between the parties regarding the Summit Inn’s
eligibility for the RRF grant it was awarded.
100. The controversy is of sufficient immediacy to warrant declaratory relief, and a
judicial declaration will resolve the dispute over the Summit Inn’s eligibility.
101. For the reasons set forth above, the Summit Inn requests a declaratory judgment
confirming the Summit Inn's status as an “eligible entity” under the RRF program and
determining that the demand for return of grant funds received by the Summit Inn was invalid
and unlawful.
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Case 2:26-cv-02212 Document 1 Filed 10/09/26 Page 20 of 21
PRAYER FOR RELIEF
WHEREFORE, the Summit Inn respectfully requests that this Court:
1. Enter an order pursuant to 5 U.S.C. §706 setting aside Defendant SBA's
determination that the Summit Inn was ineligible for the RRF grant as arbitrary, capricious, an
abuse of discretion, and not in accordance with law;
2. Enter a declaratory judgment against Defendant pursuant to 28 U.S.C, §2201 that
the Summit Inn was eligible for the RRF grant under applicable law and program guidance, and
that the demand for a return of those funds was invalid and unlawful;
3. Stay any accrual of interest or penalties and enjoin Defendants, and anyone acting
in concert with them, from collecting or attempting to collect the RRF grant funds, including by
assessing interest, penalties, or administrative costs, referring the debt to Treasury or any other
agency for offset or collection, or treating the asserted debt as delinquent for purposes of any
federal loan, grant, benefit, or program, pending final resolution of this action;
4. For such other and further relief as the Court deems proper.
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Case 2:26-cv-02212 Document 1 Filed 10/09/26 Page 21 of 21
DATED this 9th day of October, 2026.
By: s/ Daniel P. Wolfe
Daniel P. Wolfe
Pa. I.D. No. 326406
REED SMITH LLP
(Firm I.D. No. 234)
225 Fifth Avenue
Pittsburgh, PA 15222
Telephone: 412-288-3131
Email: dwolfe@reedsmith.com
Daniel Z. Herbst (pro hac vice forthcoming)
REED SMITH LLP
1301 K Street, N.W.
Suite 1000 - East Tower
Washington, D.C. 20005-3373
Telephone: 202-414-9200
Email: dherbst@reedsmith.com
Counsel for Plaintiff
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