Opinion and Order — Dante Hyndman v. Small Business Administration (S.D.N.Y.)

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U.S. District Court for the Southern District of New York · No. 7:22-cv-04973-PMH · Doc. 36 · 2024-01-22 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
DANTE HYNDMAN, 
Plaintiff, 
-against- 
SMALL BUSINESS ADMINISTRATION; 
ISABEL GUZMAN, in her official capacity as 
Administrator of the Small Business 
Administration; JANET YELLEN, in her official 
capacity as Secretary of the Treasury; and the 
UNITED STATES OF AMERICA, 
Defendants. 
        OPINION AND ORDER 
 
         22-CV-4973 (PMH) 
 
PHILIP M. HALPERN, United States District Judge: 
Plaintiff Dante Hyndman (“Plaintiff”), proceeding pro se and in forma pauperis, brings 
this action against the Small Business Administration (“SBA”); Isabel Guzman, the Administrator 
of the SBA; Janet Yellen, the Secretary of the Treasury; and the United States of America 
(collectively, “Defendants”), under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 702, 
703, seeking review of the SBA’s decision to deny him a COVID-19 Economic Injury Disaster 
Loan (“EIDL”), a program created by the Coronavirus Aid, Relief, and Economic Security 
(“CARES”) Act. (Doc. 2, “Compl.”).  Plaintiff alleges that the SBA acted in an arbitrary and 
capricious manner in processing and reviewing his EIDL application for his business and seeks 
mandamus relief, including compelling Defendants to declare him eligible for the loan. (Id.).  
Defendants filed a motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 
12(b)(6) on April 7, 2023. (Doc. 29; Doc. 31; Doc. 30, “Def. Br.”). Plaintiff filed opposition on 
May 15, 2023 (Doc. 34, “Pl. Br.”), and Defendants’ motion to dismiss was fully briefed with the 
filing of their reply memorandum of law on May 25, 2023. (Doc. 35). 
For the reasons set forth below, Defendants’ motion to dismiss is GRANTED. 
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BACKGROUND 
Plaintiff alleges that as a direct result of the COVID-19 pandemic, Plaintiff’s business was 
“negatively impacted and suffered substantial economic injury.” (Compl. ¶ 10). On or about March 
14, 2020, Plaintiff updated his banking information with the IRS so as to receive stimulus 
payments. (Id. ¶ 11). On April 1, 2020, he applied for an EIDL, but on June 13, 2020, his 
application was “‘[d]enied due to economic injury not substantiated.’” (Id. ¶ 12). Shortly after the 
denial, Plaintiff suffered COVID-19 symptoms, had to quarantine with family members, the city 
shut down, and he was unable to amend his 2019 tax return until July 1, 2021, at which time, he 
also filed his 2020 tax return. (Id. ¶ 13). Throughout 2020 and 2021, Plaintiff reapplied to the EIDL 
program 12 times, but his applications were denied. (Id. ¶ 14).  The stated reason was that “‘[t]he 
applicant business is not eligible because there are significant discrepancies between the 
information [Plaintiff] provided in [his] application and the information [the SBA] received from 
the IRS.’” (Id. ¶ 14).  
Plaintiff informed the SBA that his 2019 amended return had not been processed by the 
IRS and to wait before ordering transcripts. (Id.).  The SBA nonetheless ordered the transcripts 
which led to another denial of Plaintiff’s EIDL application on August 19, 2021. (Id.). Plaintiff 
appealed the denial. (Id. ¶ 15). While the appeal was pending, on November 5, 2021, the IRS fully 
processed Plaintiff’s tax return. (Id. ¶ 16). On December 14, 2021, “an inexperienced 24-year-old 
loan specialist,” who was “newly out of college,” denied Plaintiff’s appeal because of “identified 
discrepancies with other applications submitted, [and] no tax transcripts for other businesses on 
applications submitted by Plaintiff.” (Id. ¶ 18).  
Plaintiff alleges that “[u]pon information and belief,” the SBA never processed the original 
application. (Id. ¶ 19.) After the appeal was denied, Plaintiff requested to speak with a supervisor, 
and he was assigned a new loan officer. (Id. ¶ 20). He also contacted the manager of the local SBA 
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office, who sent an email on Plaintiff’s behalf concerning the denied appeal. (Id. ¶ 21). On 
December 21, 2021, Plaintiff uploaded all the required documents to the SBA portal. (Id. ¶ 22). 
On February 9, 2022, the congressional loan specialist informed him that the legal review team 
had identified multiple discrepancies with his file, including tax documents that appeared to have 
been filed only to obtain a loan; no evidence that Plaintiff’s business was operational before the 
disaster date; the filing of 12 applications with varying information and that seem to be for different 
businesses; and the use of 7 different bank accounts throughout the applications. (Id. ¶ 25). The 
review team also found Plaintiff’s explanation for the duplicate applications insufficient. (Id.).  
Plaintiff attempted to explain that all of the applications were submitted for the same 
business, that only one application needed to process, and that the multiple bank account 
information was given so that the SBA could update the bank account from the original application. 
(Id. ¶ 26). Plaintiff believes that “the SBA dragged [his] files through a fake legal review process 
that was kept secret until 2022.” (Id. ¶ 29). Plaintiff’s file was “flagged for fraud” with an agency’s 
hold for “discretionary reasons.” (Id. ¶ 31). He spent weeks going back and forth with the SBA 
about his file, constantly providing explanations on how his business operated, how he generated 
income, the filing of his tax documents, why he opened a business bank account in August 2021, 
and other discrepancies. (Id.). On March 29, 2022, the SBA lifted the hold on Plaintiff’s file, and 
on April 1, 2022, the legal review process of the file was completed, and Plaintiff was informed 
that he now had to wait on the “congressional high priority team.” (Id. ¶¶ 34-35).  
On April 9, 2022, the SBA requested partial transcripts from the IRS. (Id. ¶ 36). Plaintiff 
immediately informed the SBA that the full transcripts were needed, not partials, and that he had 
twice submitted the full transcripts. (Id.). On April 11, 2022, the file was sent for final 
reconsideration. (Id. ¶ 37). Two days later, Plaintiff called to confirm that the SBA had all the 
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necessary documents and the “team lead” of the congressional loan specialists confirmed that 
everything was ready to go. (Id. ¶ 38). On April 28, 2022, however, the SBA denied Plaintiff’s 
appeal, stating “‘that Plaintiff will not get a second appeal due to late filing of taxes,’ despite 
Plaintiff completing the legal review process on April 1st and rectifying that same discrepancy.” 
(Id. ¶ 39). On May 5, 2022, the SBA announced that the EIDL program was ending and that all 
portals would go down on May 16, 2022. (Id. ¶ 40). Shortly after the announcement, Plaintiff 
called the SBA to confirm that his file was still awaiting processing by congressional high priority, 
and he was told yes. (Id. ¶ 41).  
On May 11, 2022, Michael Lipari (“Lipari”), a representative from the Office of Disaster 
Assistance, placed the funding on hold for Plaintiff’s file because of “suspected EIDL fraud.” (Id. 
¶ 42). Lipari also stated that Plaintiff had filed his tax returns “for purposes of the loan.” (Id.). 
Plaintiff contacted Katherine Crane (“Crane”), a high priority specialist and Lipari’s supervisor, 
and ask her to review the file. (Id. ¶ 43). Crane informed Plaintiff that Lipari worked for the legal 
review team. (Id.). Plaintiff surmised that Lipari “disregarded the consensus reached by the legal 
review department” and “flagged [][his] file for something that was already resolved.” (Id.).  
Plaintiff contends that no matter what happens with a file, even if all documents are 
provided, all discrepancies are resolved through legal review, the SBA has an internal policy to 
deny at any means necessary and/or to delay a file any way possible until the SBA can shut the 
program down. (Id. ¶ 44). Plaintiff also asserts that 15 U.S.C.§ 9009(d)(2) “did not give the SBA 
the discretion to create additional ‘entity eligibility criteria’” for approval of EIDL applications. 
(Id. ¶ 45). 
 
 
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STANDARD OF REVIEW 
I. Federal Rule of Civil Procedure 12(b)(1) 
“Federal courts are courts of limited jurisdiction, and Rule 12(b)(1) requires dismissal of 
an action ‘when the district court lacks the statutory or constitutional power to adjudicate 
it.’” Schwartz v. Hitrons Sols., Inc., 397 F. Supp. 3d 357, 364 (S.D.N.Y. 2019) (quoting Makarova 
v. United States, 201 F.3d 110, 113 (2d Cir. 2000)).1 “The party invoking the Court’s jurisdiction 
bears the burden of establishing jurisdiction exists.” Hettler v. Entergy Enters., Inc., 15 F. Supp. 
3d 447, 450 (S.D.N.Y. 2014) (citing Conyers v. Rossides, 558 F.3d 137, 143 (2d Cir. 2009)). When 
deciding a motion to dismiss under Rule 12(b)(1) at the pleadings stage, “the Court ‘must accept 
as true all material facts alleged in the complaint and draw all reasonable inferences in the 
plaintiff’s favor.’” Id. (quoting Conyers, 558 F.3d at 143); see also Doe v. Trump Corp., 385 F. 
Supp. 3d 265, 274 (S.D.N.Y. 2019). 
II. Federal Rule of Civil Procedure 12(b)(6) 
On a Rule 12(b)(6) motion, a court may dismiss a complaint for “failure to state a claim 
upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a 
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 
Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the ple[d] factual 
content allows the court to draw the reasonable inference that the defendant is liable for the 
misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin 
to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant acted 
 
1 Unless otherwise indicated, case quotations omit all internal citations, quotation marks, footnotes, and 
alterations. 
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unlawfully.” Id. The factual allegations pled “must be enough to raise a right to relief above the 
speculative level.” Twombly, 550 U.S. at 555. 
“When there are well-ple[d] factual allegations, a court should assume their veracity and 
then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. 
Thus, the court must “take all well-ple[d] factual allegations as true, and all reasonable inferences 
are drawn and viewed in a light most favorable to the plaintiff[].” Leeds v. Meltz, 85 F.3d 51, 53 
(2d Cir. 1996). The presumption of truth, however, “‘is inapplicable to legal conclusions,’ and 
‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory 
statements, do not suffice.’” Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556 
U.S. at 678 (alteration in original)). Therefore, a plaintiff must provide “more than labels and 
conclusions” to show entitlement to relief. Twombly, 550 U.S. at 555. 
A complaint submitted by a pro se plaintiff, “however inartfully ple[d], must be held to 
less stringent standards than formal pleadings drafted by lawyers.” Estelle v. Gamble, 429 U.S. 97, 
106 (1976) (quoting Haines v. Kerner, 404 U.S. 519, 520-21 (1972) (internal quotation marks 
omitted)). Because pro se plaintiffs “‘are often unfamiliar with the formalities of pleading 
requirements,’ courts must apply a more flexible standard in determining the sufficiency of a pro 
se [complaint] than they would in reviewing a pleading submitted by counsel.’” Smith v. U.S. Dep’t 
of Just., 218 F. Supp. 2d 357 (W.D.N.Y. 2002) (quoting Platsky v. Cent. Intelligence Agency, 953 
F.2d 26, 28 (2d Cir. 1991)). While “[p]ro se complaints are held to less stringent standards than 
those drafted by lawyers, even following Twombly and Iqbal . . . dismissal of a pro se complaint 
is nevertheless appropriate where a plaintiff has clearly failed to meet minimum pleading 
requirements.” Thomas v. Westchester Cty., No. 12-CV-6718, 2013 WL 3357171, at *2 (S.D.N.Y. 
July 3, 2013) (internal citations omitted); see also Chavis v. Chappius, 618 F.3d 162, 170 (2d Cir. 
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2010) (“Even in a pro se case . . . although a court must accept as true all of the allegations . . . in 
a complaint, that tenet is inapplicable to legal conclusions, and threadbare recitals of the elements 
of a cause of action, supported by mere conclusory statements, do not suffice.” (internal quotation 
marks omitted)). 
Therefore, while the Court must “draw the most favorable inferences that [a plaintiff’s] 
complaint supports, [it] cannot invent factual allegations that [a plaintiff] has not pled.” Chappius, 
618 F.3d at 170. The Court also has a duty to interpret “the pleadings of a pro se plaintiff liberally 
and interpret them ‘to raise the strongest arguments that they suggest.’” McPherson v. Coombe, 
174 F.3d 276, 280 (2d Cir. 1999) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994)). 
ANALYSIS 
I. 
Federal Rule of Civil Procedure 12(b)(1): Subject-Matter Jurisdiction 
Defendants argue, in support of the branch of their motion brought under Rule 12(b)(1), 
that Plaintiff’s request for injunctive and mandamus relief is barred by sovereign immunity and 15 
U.S.C. § 634(b)(1). (Def. Br. at 13-18). “Issues of federal sovereign immunity implicate a court’s 
subject-matter jurisdiction . . . and, as such, are usually threshold issues that must be decided before 
proceeding to the merits of a given case. Springfield Hosp., Inc. v. Guzman, 28 F.4th 403, 415-16 
(2d Cir. 2022). But “there is a distinct difference between jurisdictional questions of a statutory 
nature and jurisdictional questions of a constitutional nature.” Id. at 416. Accordingly, “the 
question of the SBA’s sovereign immunity under Section 634(b)(1), related to the issue of the 
availability of injunctive relief, is not a threshold question [this Court] must decide before” 
considering the merits, “especially . . . where, as here, the plaintiff[ ] seek[s] other forms of relief, 
such as . . . declaratory relief . . .” Id. at 416-17.  
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Because, as discussed infra, this Court concludes that Plaintiff’s claims fail on the merits, 
it “decline[s] to address whether the SBA has sovereign immunity from injunctive relief under 
Section 634(b)(1).” Id. at 415. 
II. 
Federal Rule of Civil Procedure 12(b)(6): Failure to State a Claim for Relief  
Plaintiff’s claims are brought under the APA, alleging that the SBA acted in an arbitrary 
and capricious manner in processing and reviewing his EIDL application for his business and 
seeking, inter alia, an order compelling Defendants to declare him eligible for the loan. (See 
Compl.). The APA does not permit a review of agency actions which are “committed to agency 
discretion by law.” 5 U.S.C. § 701(a)(2); see Weyerhaeuser Co. v. U.S. Fish & Wildlife Serv., 139 
S. Ct. 361, 370 (2018). This exception applies “where the relevant statute is drawn so that a court 
would have no meaningful standard against which to judge the agency’s exercise of discretion.” 
Weyerhaeuser, 129 S. Ct. at 370 (citation omitted).  
Under the Small Business Act, the SBA makes loans as it “may determine to be necessary 
or appropriate.” 15 U.S.C. § 636(b)(2) (emphasis added). The “word ‘may’ clearly connotes 
discretion,” Biden v. Texas, 142 S.Ct. 2528, 2541 (2022), and the allocation of lump-sum 
appropriations is typically considered a discretionary act, see Lincoln v. Vigil, 508 U.S. 182, 192 
(1993) (“The allocation of funds from a lump-sum appropriation is another administrative decision 
traditionally regarded as committed to agency discretion. After all, the very point of a lump-sum 
appropriation is to give an agency the capacity to adapt to changing circumstances and meet its 
statutory responsibilities in what it sees as the most effective or desirable way.”); see also 
Weyerhaeuser, 129 S. Ct. at 370 (explaining that the “few cases in which we have applied the § 
701(a)(2) exception involved agency decisions that courts have traditionally regarded as 
unreviewable, such as the allocation of funds from a lump-sum appropriation”); Copake Lake Dev. 
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Corp. v. U.S. Gov’t, 490 F. Supp. 386, 389 (E.D.N.Y. 1980) (“[T]he decision concerning the 
granting of a loan by the SBA is one firmly committed to agency discretion, and other courts that 
have considered the question are uniformly in agreement on this point.”).  
The CARES Act, as amended, provides that the SBA “may use information from the 
Department of the Treasury to confirm that (A) an applicant is eligible to receive such a loan; or 
(B) the information contained in an application for such a loan is accurate.” 15 U.S.C. § 9009(d)(2) 
(emphasis added). This amendment allowing consideration of information from the IRS took place 
before Plaintiff’s EIDL application was denied on reconsideration and appeal in late 2021 and 
2022 due to “significant discrepancies between the information [Plaintiff] provided in [his] 
application and the information [the SBA] received from the IRS.” (See Compl. ¶ 14; see also id. 
¶¶ 18, 25, 27, 31). The language in the CARES Act providing that the SBA may consider tax 
information to confirm applicant eligibility and the accuracy of information in a loan application, 
15 U.S.C. § 9009(d)(2), provides “no meaningful standard against which to judge the agency’s 
exercise of discretion.” Weyerhaeuser, 129 S. Ct. at 370. 
This Court agrees with the many district courts that have considered this issue of the SBA’s 
decisions concerning EIDLs and concluded that the SBA’s actions were committed to agency 
discretion by law and therefore unreviewable. See, e.g., Shumaker v. Guzman, No. 21-CV-00477, 
2022 WL 2902843, at *7 (S.D. Tex. Apr. 4, 2022) (decision to increase or advance EIDL loan is 
“committed to agency discretion by law”); Brennan v. United States, No. 20-CV-00505, 2020 WL 
3980001, at *9 (E.D. Ark. July 14, 2020) (“[T]he CARES Act vests the Administrator with 
discretion.”); LIT Ventures, LLC v. Carranza, 457 F. Supp. 3d 906, 910 (D. Nev. 2020) (“Congress 
therefore granted the SBA discretion to determine what EIDLs were ‘necessary and 
appropriate.’”); see also Keita v. U.S. Small Bus. Admin., No. 07-CV-04958, 2010 WL 395980, at 
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*3 (E.D.N.Y. Feb. 3, 2010) (“Here, the Court lacks guidance to adjudge the SBA’s exercise of its 
discretion because Keita seeks review of the individual economic judgments that comprised the 
SBA’s decision that his loans were not ‘necessary or appropriate.’”). Accordingly, Plaintiff’s 
claims fail as a matter of law. 
In any event, Plaintiff fails to plausibly allege that the SBA acted in disregard of any right 
or in violation of any duty imposed by the Small Business Act or the CARES Act. Plaintiff’s 
allegations of the existence of an “internal policy” to “delay a file any way possible until SBA can 
shut the program down” is belied by the other allegations in his pleading that the SBA timely 
reviewed his multiple applications. (Compare Compl. ¶¶ 12, 14, 16-18, with id. ¶¶ 29, 44). Plaintiff 
also speculates that the SBA “never processed the original application” and that the SBA “didn’t 
need other applications to be considered” (id. ¶¶ 19, 26); but he specifically alleges that he initially 
applied for EIDL in April 2020 and that this application was denied in June 2020 (id. ¶ 12).  
Moreover, Plaintiff’s allegations that the EIDL denial was in contravention of law because 
the SBA considered information from the IRS, and otherwise repeatedly denied his application 
without cause due to discrepancies between his EIDL application and the information received 
from the IRS, are not facially plausible. (See id. ¶¶ 14-45). As discussed supra, the SBA was 
statutorily permitted to review that information, including specifically for the purpose of 
identifying such discrepancies.  
Plaintiff’s contention in his opposition brief that the SBA denied his application based on 
a secret or unpublished regulation requiring that 2019 federal tax returns have been timely filed in 
2020 is unsupported by the facts alleged in his pleading. (Pl. Br. at 6-9). Despite his 2019 tax return 
not being filed until July 2021, after which the SBA noted additional discrepancies, Plaintiff 
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specifically alleges that the SBA continued to consider his applications through at least April 2022. 
(See id. ¶¶ 14-39). 
Accordingly, the Complaint fails to state a claim upon which relief can be granted. 
CONCLUSION 
Based upon the foregoing, Defendants’ motion to dismiss is GRANTED and Plaintiff’s 
Complaint is dismissed with prejudice. While “[d]istrict courts should frequently provide leave to 
amend before dismissing a pro se complaint . . .  leave to amend is not necessary when it would 
be futile.” Reed v. Friedman Mgt. Corp., 541 F. App’x 40, 41 (2d Cir. 2013) (citing Cuoco v. 
Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000)). For all the reasons described herein, Plaintiff’s claims 
are dismissed with prejudice as any amendment would be futile.  
The Clerk of the Court is respectfully directed to terminate the pending motions (Doc. 29, 
Doc. 31) and to close this case.  
 
SO ORDERED: 
 
Dated: White Plains, New York 
 
January 22, 2024 
 
____________________________ 
 
 
 
 
 
 
 
 
Philip M. Halpern 
 
 
 
 
 
 
 
 
United States District Judge 
 
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