Order on Motion to Dismiss — Hand Up Ministries Inc. v. U.S. Small Business Administration (W.D. Okla.)

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U.S. District Court for the Western District of Oklahoma · No. 5:23-cv-01009-SLP · Doc. 17 · 2024-04-09 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT FOR 
THE WESTERN DISTRICT OF OKLAHOMA 
 
HAND UP MINISTRIES INC.,  
 
     Plaintiff, 
 
      v. 
 
U.S. SMALL BUSINESS 
ADMINISTRATION, 
 
     Defendant. 
 
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            Case No. CIV-23-1009-SLP 
               
 
 
O R D E R 
 
Before the Court is the Motion to Dismiss with Brief in Support [Doc. No. 10] filed 
by Defendant U.S. Small Business Administration (“SBA”).  Plaintiff Hand Up Ministries, 
Inc. filed a response, see [Doc. No. 10], to which the SBA replied, see [Doc. No. 12].  For 
the following reasons, the Motion is GRANTED. 
I. 
Background1 
Plaintiff Hand Up Ministries, Inc. is an Oklahoma-based company.  At some point 
prior to January 5, 2022, someone fraudulently used Plaintiff’s information to apply for a 
$500,000 Economic Injury Disaster Loan (“EIDL”).  Plaintiff contacted the SBA after 
receiving a repayment reminder.  Plaintiff explained that it neither applied for the loan nor 
collected any EIDL funds.  The SBA gave Plaintiff information on how to report identity 
theft related to the EIDL loan, and Plaintiff began that process.  Plaintiff eventually 
requested “information to determine who made this loan, where the funds were deposited, 
 
1 Unless otherwise noted, the following facts are taken from Plaintiff’s Complaint [Doc. No. 1]. 
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and any other details that may help them learn who was involved and how this loan was 
created in their name.”  [Doc. No. 1] ¶ 11.   
Before the SBA completed its investigation into the fraudulent loan, Plaintiff filed 
the instant lawsuit.  As set forth in the Complaint, Plaintiff seeks (1) an order “enjoin[ing] 
the Defendant from requesting or forcing repaying of this alleged loan by Plaintiff,” id. 
¶ 15; (2) an order requiring the SBA “to expeditiously provide Plaintiff with the details and 
information of this alleged loan so that Plaintiff may perform and complete [its] own 
internal investigation,” id. ¶ 18, and; (3) a declaratory judgment confirming the loan is void 
and preventing the SBA from “tak[ing] any further action against Plaintiff to collect 
repaying of this alleged loan, or initiat[ing] any negative credit reporting and adverse 
actions on Plaintiff as a result of this fraudulent loan,” id. ¶¶ 24–25. 
After Plaintiff filed its Complaint, the SBA “determined that [Plaintiff’s officer] 
neither applied for this loan nor received any benefit from the fraudulent loan application.” 
[Doc. No. 10-1] at 1.2  The SBA then “notified [Plaintiff’s officer] that it would take action 
to disassociate the loan from his identity and that of his business and would not take any 
action to collect this loan from him or his business.”  Id.  Plaintiff declined to voluntarily 
dismiss the action, see [Doc. No. 10] at 2 n.2, so the SBA moved to dismiss pursuant to 
Federal Rule of Civil Procedure 12(b)(1).  The SBA claims the Court lacks jurisdiction 
because (1) Plaintiff has not established a valid waiver of sovereign immunity, and (2) 
 
2 As explained below, the Court may consider the Declaration of Rebecca S. Raye [Doc. No. 10-
1] without converting the Motion to Dismiss into a summary judgment motion.  
 
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Plaintiff’s claims are moot.   
II. 
Governing Standard  
The SBA moves to dismiss this action under Federal Rule of Civil Procedure 
12(b)(1) for lack of subject matter jurisdiction.3  Federal courts are courts of limited 
jurisdiction, so they “may only hear cases when empowered to do so by the Constitution 
and by act of Congress.”  Gad v. Kansas State Univ., 787 F.3d 1032, 1035 (10th Cir. 2015) 
(quoting Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1225 (10th Cir. 2004)).  To 
avoid dismissal under Rule 12(b)(1), the party invoking jurisdiction—here, the Plaintiff—
bears “the burden of alleging the facts essential to show jurisdiction and supporting those 
facts with competent proof.”  United States ex rel. Stone v. Rockwell Int’l Corp., 282 F.3d 
787, 797–98 (10th Cir. 2002) (quotation marks and citation omitted).  This burden must be 
met by a preponderance of the evidence.  Id. at 797.  
The party seeking dismissal may advance either a facial or factual attack.  A facial 
attack challenges the sufficiency of the complaint’s allegations and requires the Court to 
“accept the allegations in the complaint as true.”  Holt v. United States, 46 F.3d 1000, 1002 
(10th Cir. 1995), abrogated on other grounds by Cent. Green Co. v. United States, 531 
U.S. 425, 437 (2001).  A factual attack, on the other hand, “may go beyond allegations 
contained in the complaint and challenge the facts upon which subject matter jurisdiction 
depends.”  Id. at 1003.  A factual attack gives the Court “‘wide discretion to allow 
 
3 In its Response, Plaintiff erroneously cites the legal standard under Federal Rule of Civil 
Procedure 12(b)(6).  See [Doc. No. 11] at 2, 6–7.  Because the SBA does not move for dismissal 
for failure to state a claim, the Rule 12(b)(6) standard is inapposite.  
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affidavits, other documents, and a limited evidentiary hearing to resolve disputed 
jurisdictional facts’” without “convert[ing] the motion into a Rule 56 motion.”  Stuart v. 
Colorado Interstate Gas Co., 271 F.3d 1221, 1225 (10th Cir. 2001) (quoting Holt, 46 F.3d 
at 1003).   When analyzing a factual attack, the Court does “not presume the truthfulness 
of the complaint’s factual allegations.”  Holt, 46 F.3d at 1003. 
III. 
Discussion 
a. Mootness  
The SBA claims this action is moot because the parties agree Plaintiff is not 
responsible for the fraudulent EDIL loan.  “Mootness is a threshold issue because the 
existence of a live case or controversy is a constitutional prerequisite to federal court 
jurisdiction.”  Rio Grande Silvery Minnow v. Bureau of Reclamation, 601 F.3d 1096, 1109 
(10th Cir. 2010) (quoting Disability L. Ctr. v. Millcreek Health Ctr., 428 F.3d 992, 996 
(10th Cir. 2005)).  Even if there was “an actual and justiciable controversy at the time the 
litigation is commenced, once that controversy ceases to exist, the federal court must 
dismiss the action for want of jurisdiction.”  Jordan v. Sosa, 654 F.3d 1012, 1023 (10th 
Cir. 2011) (quoting 15 James W. Moore & Martin H. Redish, Moore’s Federal Practice 
§ 101.90, at 101–237 (3d ed. 2010)).  Because the SBA’s mootness argument advances a 
factual attack on the Court’s subject matter jurisdiction, the Court may consider evidence 
outside the Complaint without converting the Motion to Dismiss into a Rule 56 motion.  
Cf. Davis v. Schmidt, No. 5:18-CV-03107-HLT, 2021 WL 956524, at *3 (D. Kan. Feb. 26, 
2021), aff’d, No. 21-3050, 2021 WL 6102096 (10th Cir. Dec. 23, 2021).   
The SBA argues that Plaintiff’s requests to “(1) have the Court enjoin SBA from 
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requesting or forcing repayment of the loan, and (2) declare that Plaintiff is free from any 
and all obligations associated with the loan” are both moot.  Id. at 9.  Plaintiff appears to 
concede these points, claiming the SBA “has [] addressed some, but not all, of the 
Plaintiff’s claims and harms.”  [Doc. No. 11] at 7 (emphasis in original).  
The Court agrees that these two requests are moot.  Plaintiff’s Complaint asks the 
Court “to enjoin the Defendant from requesting or forcing repaying of this alleged loan by 
Plaintiff.”  [Doc. No. 1] ¶ 15.  The SBA has submitted a sworn declaration that it will “not 
take any action to collect this loan from [Plaintiff’s officer] or his business.”  [Doc. No. 
10-1] at 1.  Accordingly, there is no longer a live controversy with respect to this claim.   
Similarly, Plaintiff asks the Court to enter a declaratory judgment “confirming the 
loan is void and preventing the SBA from “tak[ing] any further action against Plaintiff to 
collect repaying of this alleged loan, or initiat[ing] any negative credit reporting and 
adverse actions on Plaintiff as a result of this fraudulent loan.”  [Doc. No. 1] ¶¶ 24–25.  The 
SBA has presented evidence that it does not intend to seek repayment from Plaintiff, and 
that it will “take action to disassociate the loan from [Plaintiff’s officer’s] identity and that 
of his business.”  [Doc. No 10-1] at 3.  Because the Court’s ruling would have no real-
world effect, this issue is also moot.  See Schell v. OXY USA Inc., 814 F.3d 1107, 1114 
(10th Cir. 2016) (“In the declaratory-judgment context, the mootness inquiry looks to 
whether the requested relief will actually alter the future conduct of the named parties.”). 
Plaintiff contends its final request for injunctive relief—an order requiring the SBA 
“to expeditiously provide Plaintiff with the details and information of this alleged loan” 
[Doc. No. 1] ¶ 18—is still a live controversy because the SBA has clarified that it will not 
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provide this information.  See [Doc. No. 11] at 7–8.  Because this final request is subject 
to dismissal under the doctrine of sovereign immunity, however, the Court need not decide 
whether it is also moot.  
b. Sovereign Immunity 
“The United States is immune from suit unless it has consented to be sued ‘and the 
terms of its consent to be sued in any court define that court’s jurisdiction to entertain the 
suit.’”  Hart v. Dep’t of Lab. ex rel. U.S., 116 F.3d 1338, 1339 (10th Cir. 1997) (quoting 
United States v. Mitchell, 445 U.S. 535, 538 (1980)).  “Absent a waiver, sovereign 
immunity shields the Federal Government and its agencies from suit.”  F.D.I.C. v. Meyer, 
510 U.S. 471, 475 (1994).  “A waiver of the Federal Government’s sovereign immunity 
must be unequivocally expressed in statutory text, and will not be implied.”  Iowa Tribe of 
Kan. & Neb. v. Salazar, 607 F.3d 1225, 1236 (10th Cir. 2010) (quoting Lane v. Pena, 518 
U.S. 187, 192 (1996)).   
Plaintiff argues that the “sue-and-be-sued” clause of the SBA’s enabling 
statute waives sovereign immunity in this case.  That statute provides:  
In the performance of, and with respect to, the functions, powers, and duties 
vested in him by this chapter the [SBA] Administrator may . . . sue and be 
sued . . . in any United States district court, and jurisdiction is conferred upon 
such district court to determine such controversies without regard to the 
amount in controversy; but no attachment, injunction, garnishment, or other 
similar process, mesne or final, shall be issued against the Administrator or 
his property. 
 
15 U.S.C. § 634(b)(1).  “[S]ue-and-be-sued clauses are ‘liberally construed,’” but “it is not 
[the Court’s] right to extend the waiver of sovereign immunity more broadly than has been 
directed by Congress.”  Imaginarium LLC v. U.S. Small Bus. Admin., 618 F. Supp. 3d 1225, 
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1229–30 (D. Utah 2022) (first quoting United States v. Nordic Vill., Inc., 503 U.S. 30, 34 
(1992); and then quoting United States v. Shaw, 309 U.S. 495, 502 (1940)) (second 
alteration in original). 
Section 634(b)(1) excludes “injunction[s]” from its scope.  And, as previously 
explained, Plaintiff’s only remaining claim seeks injunctive relief.  See Compl. [Doc. No. 
1] ¶ 18.  Although Plaintiff concedes “[c]laims for injunction against the S.B.A. are 
seemingly disallowed under §634 (b)(1),” it argues that “this is a unique case.”  [Doc. No. 
11] at 5.  Plaintiff elaborates that “[i]t is a very serious federal issue when the S.B.A claims 
they are owed $500,000.00 and they do not substantiate their documentation or respond to 
the Plaintiff until a lawsuit is filed.”  Id. at 6.  But Plaintiff provides no legal authority 
suggesting these facts permit departure from the plain language of § 634 (b)(1).4  
Plaintiff’s remaining arguments are similarly unavailing with respect to the waiver 
of sovereign immunity.  Plaintiff makes a fleeting reference to the Administrative 
Procedure Act, 5 U.S.C. § 702, arguing it constitutes a limited waiver of sovereign 
immunity.  See [Doc. No. 11] at 3.  But the APA’s limited “waiver does not apply where 
any other statute that grants consent to suit expressly or impliedly forbids the relief which 
is sought.”  Normandy Apartments, Ltd. v. U.S. Dep’t of Hous. & Urb. Dev., 554 F.3d 1290, 
 
4 Plaintiff’s Response includes the following language in a footnote: “The Plaintiff is not seeking 
to direct the SBA to grant [it] a loan through an injunction, it was pled as trying to have the SBA 
explain how the Plaintiff was liable to the SBA.  If the Court does not appreciate that nuance, then 
Plaintiff would ask for leave to amend [its] claims to re-cast [its] injunction claim to one more 
germane.”  [Doc. No. 11] at 5 n.1.  Setting aside the fact that this is not a proper request for leave 
to amend, see LCvR 7.1(c), 15.1, the plain language of the statute prohibits the Court from 
enjoining the SBA administrator.  Thus, any attempt to amend the Complaint to include a “more 
germane” request for injunction would be futile.    
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1295 (10th Cir. 2009) (quoting Robbins v. U.S. Bureau of Land Mgmt., 438 F.3d 1074, 
1080 (10th Cir. 2006)).  And, as the SBA points out, “Congress has explicitly declined to 
waive immunity as to injunctions against the SBA Administrator or his property.”  [Doc. 
No. 12] at 4 (citing 15 U.S.C. § 634(b)(1)).   
In its Complaint, Plaintiff claims this Court has jurisdiction “under The CARES 
Act, 15 U.S.C. 9009 and 28 U.S.C. § 1331 as this matter presents a federal question under 
the Act; and The Declaratory Judgment Act under 28 U.S.C. §§ 2201 and 2202.”  [Doc. 
No. 1] ¶ 4 (punctuation and capitalization in original).  But none of these three purported 
bases of jurisdiction waive sovereign immunity.  It is well-established that statutes 
conferring general jurisdiction, like § 1331, do not waive sovereign immunity.  Fostvedt v. 
United States, 978 F.2d 1201, 1203 (10th Cir. 1992).  Similarly, the Declaratory Judgment 
Act does not itself function as a waiver of sovereign immunity.  Amalgamated Sugar Co. 
v. Bergland, 664 F.2d 818, 822 (10th Cir. 1981) (“It is settled that 28 U.S.C. [§] 2201 does 
not itself confer jurisdiction on a federal court where none otherwise exists.”).  Finally, 15 
U.S.C. § 9009 is the section of the Coronavirus Aid, Relief, and Economic Security 
(“CARES”) Act addressing EIDL grants.  In its Response, Plaintiff quotes the portion of 
the statute establishing a ten-year statute of limitations for “any criminal charge or civil 
enforcement action alleging that a borrower engaged in fraud,” 15 U.S.C. § 9009(e)(9), but 
fails to explain how this provision waives sovereign immunity.  Thus, Plaintiff has failed 
to demonstrate that § 1346(a)(2) confers jurisdiction in these circumstances.  See James v. 
United States, 970 F.2d 750, 753 (10th Cir. 1992) (“The party bringing suit against the 
United States bears the burden of proving that sovereign immunity has been waived.”). 
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In its Response, Plaintiff cites 28 U.S.C. § 1346(a)(2), which grants district courts 
concurrent jurisdiction over any “civil action or claim against the United States, not 
exceeding $10,000 in amount, founded either upon the Constitution, or any Act of 
Congress, or any regulation of an executive department, or upon any express or implied 
contract with the United States.”  Plaintiff reasons: “Here some contract and application 
for the EIDL loan is seemingly both express and implied.”  [Doc. No. 11] at 3.  But, as the 
SBA explains, Plaintiff did not apply for the EIDL loan, so it is not a party to any contract 
with the United States.  Even if it was, the value of the loan—$500,000—far exceeds the 
$10,000 limit set forth in § 1346(a)(2).  Thus, Plaintiff has not established a waiver of 
sovereign immunity pursuant to § 1346(a)(2). 
Finally, Plaintiff claims “[t]he application and distribution of federal funds can be 
[a] valid express waiver of immunity.”  [Doc. No. 11] at 3.  But Plaintiff cites cases that 
stand for the propositions that states may waive their sovereign immunity by accepting 
federal funds.  See, e.g., Robinson v. Kansas, 295 F.3d 1183, 1190 (10th Cir. 2002) (“[B]y 
accepting federal financial assistance as specified in 42 U.S.C. § 2000d–7, states and state 
entities waive sovereign immunity from suit.”); Brockman v. Wyo. Dep’t of Fam. Servs., 
342 F.3d 1159, 1168 (10th Cir. 2003) (“[B]y accepting Rehabilitation Act monies, the State 
of Wyoming has made itself amenable to suit.”).  None of Plaintiff’s cited authorities 
support the contention that federal agencies waive sovereign immunity by accepting 
federal funds.  Thus, Plaintiff’s final claim is subject to dismissal pursuant to Rule 12(b)(1). 
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IV. 
Conclusion 
IT IS THEREFORE ORDERED that the SBA’s Motion to Dismiss with Brief in 
Support [Doc. No. 10] is GRANTED.  This action is DISMISSED without prejudice. 
IT IS SO ORDERED this 9th day of April, 2024. 
 
 
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