Memorandum of Law in Support of Motion to Dismiss — Koziara v. Wells Fargo (M.D.N.C.)

Record facts

U.S. District Court for the Middle District of North Carolina · No. 1:20-cv-00588-UA-LPA · Doc. 15 · 2020-09-15 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
MIDDLE DISTRICT OF NORTH CAROLINA 
T.C. KOZIARA, PLLC, FAHMIA, INC., 
individually and on behalf of all others 
similarly situated, 
Plaintiffs, 
v. 
WELLS FARGO & CO., WELLS FARGO 
BANK, N.A., and DOES 1 through 100, 
inclusive, 
Defendants. 
Case No. 1:20-cv-00588 
MEMORANDUM OF LAW IN SUPPORT OF 
WELLS FARGO & CO. AND WELLS FARGO BANK, 
N.A.’S MOTION TO DISMISS PLAINTIFFS’ COMPLAINT 
September 15, 2020 
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QUESTION PRESENTED 
This action is one of dozens filed across the country by putative “agents” claiming 
that they are entitled to fees from lenders that provided loans to small businesses through 
the Paycheck Protection Program (“PPP”).  Each action presents the same dispositive 
question:  Are agents who claim that they helped a borrower apply for a PPP loan entitled 
to payment of a fee from lenders when the lenders never promised or agreed to pay them?  
As the only court to address this issue has concluded:  “The short answer is ‘no.’”  Sport 
& Wheat, CPA, PA v. ServisFirst Bank, Inc., 2020 WL 4882416, at *1 (N.D. Fla. Aug. 17, 
2020). 
NATURE OF THE MATTER 
Plaintiffs’ Complaint is premised on a single, flawed theory:  that one line in the 
Small Business Administration’s (“SBA”) regulation implementing the PPP created a new, 
mandatory obligation for participating lenders to compensate agents, despite the absence 
of any such requirement in the statute itself.  It is clear, however, that the SBA’s regulation 
did no such thing.  Plaintiffs’ theory is refuted by the existing statutory and regulatory 
framework, the Congressional testimony of the Secretary of the Treasury, and common 
sense.  The regulation “does not require that lenders share their fees” but “simply explains 
that, if an agent is to be paid a fee, the fee must be paid by the lender from the fee it receives 
from the SBA.”  Sport & Wheat, 2020 WL 4882416, at *3.  Because Plaintiffs have no 
entitlement to payment under the SBA’s regulation, their claims fail as a matter of law and 
should be dismissed. 
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Plaintiffs’ claims also fail for other, independent reasons, including because 
Plaintiffs lack a private right of action and fail to plead necessary elements of their state 
law claims.  Plaintiffs therefore fail to state any claim for relief, and their Complaint should 
be dismissed in its entirety. 
STATEMENT OF FACTS 
The CARES Act and the PPP 
On March 27, 2020, the federal government created the PPP as part of the 
Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136 (“CARES Act”).  
The PPP is part of the SBA’s “Section 7(a)” lending program, id. § 1102, and is 
administered in partnership with the Department of the Treasury.  PPP loans are made by 
private lenders such as Defendants, not the federal government, but are forgivable and fully 
guaranteed by the SBA.  15 U.S.C. §§ 636(a)(36), 9005(b). 
To encourage lenders to participate in the PPP, Congress provided that the SBA 
“shall reimburse a lender” for processing and issuing PPP loans at fixed percentage rates.  
Id. § 636(a)(36)(P)(i) (emphasis added).  In contrast, the CARES Act does not provide that 
lenders “shall” pay agents or include any other provision mandating such payments.  
Rather, consistent with the SBA’s established practice of regulating — but not requiring 
— the use and payment of agents, the CARES Act states only that agents assisting 
borrowers with their PPP loan applications “may not collect a fee in excess of the limits 
established by the [SBA].”  Id. § 636(a)(36)(P)(ii) (emphasis added). 
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The SBA’s Existing Loan Programs and Statutory and Regulatory Framework 
The SBA administers small business loan programs, including the Section 7(a) 
program of which the PPP is a part.  15 U.S.C. § 636.  Although the SBA contemplates the 
possible use of “agents” in the loan application process for these programs,1 the SBA in no 
case requires the use of an agent.  13 C.F.R. § 103.2(a) (borrowers and lenders may 
“conduct business with SBA without a representative”). 
To prevent fraud and other abuse, the SBA carefully regulates the relationship 
between agents, lenders, and borrowers, including when and how agents are paid.  (See 
Ex. 12 at 166-67, 170-71 (requiring disclosure of agent fee agreements to ensure fees are 
not “unreasonable or impermissible”).)  The SBA requires that the agent “execute and 
provide to SBA a compensation agreement” that “governs the compensation charged for 
services rendered or to be rendered to the Applicant or lender in any matter involving SBA 
assistance.”  13 C.F.R. § 103.5(a).  A loan applicant “must” also identify to the SBA the 
name of each agent “that helped [it] obtain the loan, describing the services performed, and 
disclosing the amount of each fee paid or to be paid by the applicant to the [a]gent” for 
those services.  Id. § 120.195.  These disclosures are mandated by Congress, which 
1
An “Agent” is “an authorized representative, including an attorney, accountant, 
consultant, packager, lender service provider, or any other individual or entity representing 
an Applicant or Participant by conducting business with SBA.”  13 C.F.R. § 103.1(a). 
2
All exhibits are attached to the Declaration of Jason D. Evans, dated September 15, 
2020.  The Court “may take judicial notice of public documents and government 
documents.”  Shore v. Charlotte-Mecklenburg Hosp. Auth., 412 F. Supp. 3d 568, 573 
(M.D.N.C. 2019). 
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provided in the Small Business Act that “[n]o loan shall be made” unless the applicant 
certifies the names of any agent working on its behalf and the fees to be paid to the agent.  
15 U.S.C. § 642. 
To that end, the SBA provides Form 159 for all compensation agreements governing 
payment of fees to an agent.  (See Ex. 2 at 1.)  Form 159 documents the agreement for the 
agent’s services and the compensation for those services and must be completed by both 
the lender and the applicant and submitted to the SBA.  (Id.; Ex. 1 at 171.)   
Implementation of the PPP 
On April 2, 2020, the SBA issued an Interim Final Rule (“IFR”) to implement the 
PPP.  85 Fed. Reg. 20811.  Among many other aspects of the program, the IFR briefly 
addresses agent fees.  Consistent with Congress’s instruction that the SBA set limits on the 
fees an agent may collect, the IFR states in Section III.4.c: 
c. Who pays the fee to an agent who assists a borrower? 
Agent fees will be paid by the lender out of the fees the lender receives from 
SBA.  Agents may not collect fees from the borrower or be paid out of the 
PPP loan proceeds.  The total amount that an agent may collect from the 
lender for assistance in preparing an application for a PPP loan (including 
referral to the lender) may not exceed: 
i. One (1) percent for loans of not more than $350,000; 
ii. 0.50 percent for loans of more than $350,000 and less than $2 million; and 
iii. 0.25 percent for loans of at least $2 million. 
The Act authorizes the Administrator to establish limits on agent fees. The 
Administrator, in consultation with the Secretary, determined that the agent 
fee limits set forth above are reasonable based upon the application 
requirements and the fees that lenders receive for making PPP loans. 
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85 Fed. Reg. at 20816 (emphasis added).  Treasury also published an information sheet for 
lenders that includes nearly identical language.  (Ex. 3.) 
The next day, on April 3, thousands of lenders, including Wells Fargo, began 
accepting PPP loan applications or expressions of interest.  To apply for a PPP loan, an 
eligible small business needed only complete a two-page application with basic 
information about the business, including average payroll expenses, and submit that 
application to a participating lender.  (See Ex. 4 (SBA Form 2483).)  By August 8, 2020, 
participating lenders had, in partnership with the SBA and Treasury, issued over 
5.2 million loans totaling $525 billion dollars to American small businesses.  (See Ex. 5 
(SBA PPP Report) at 2.)3
Putative Agents, Including Plaintiffs, Claim Entitlement to Fees 
Plaintiffs commenced this putative class action to obtain a percentage of the fees set 
aside for Wells Fargo.  This action is only one in a wave of class-action complaints filed 
in more than 25 District Courts across the country by entities and persons claiming to be 
agents.  As in the other agent-fee actions, Plaintiffs here rely entirely on Section III.4.c of 
the IFR.  Plaintiffs contend that this provision — which sets limits on the fees that agents 
can collect — mandates that lenders pay agents fees, regardless of whether the lenders 
actually agreed to do so and regardless of whether the agents have complied with 
3
Wells Fargo also pledged not to retain the lender fees mandated by Congress and is 
donating them to non-profits working to further help small businesses recover from the 
economic crisis.  (Ex. 6.) 
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longstanding SBA regulations intended to prevent fraud and abuse.  Plaintiffs do not (and 
cannot) point to the language of the CARES Act or any other statute or regulation, or other 
indicia of intent by Congress or the SBA, to create this novel entitlement to agent fees.4
To the contrary, the Secretary of the Treasury stated in testimony before Congress:  “What 
our guidance did say is that banks could pay agent fees out of the fees that they received 
[from the SBA], [and] that was intended to be based upon a contractual relationship 
between the agent and the bank.”  (Ex. 8 at 34 (emphasis added).)  Plaintiffs allege no 
“contractual relationship” with Wells Fargo. 
Instead, based on an implausible and self-serving interpretation of a single section 
of the IFR, Plaintiffs allege that their unilateral decision to assist borrowers in preparing 
PPP loan applications requires Wells Fargo to foot the bill for their purported services.  
(See Compl. ¶ 52.)  Plaintiffs then go even further and contend that they and putative class 
members are entitled to the maximum amount allowed under Section III.4.c of the IFR.  
(See id. ¶ 6.)  Plaintiffs’ theory is the basis for each of its causes of action — a request for 
declaratory relief, breach of contract, violations of the North Carolina Unfair and Deceptive 
Trade Practices Act (“UDTPA”) and California Unfair Competition Law (“UCL”), unjust 
enrichment, and conversion.  (See id. ¶¶ 64-103.) 
4
Plaintiffs’ own industry group issued a notice in response to the IFR recognizing 
that agents may not be paid for their services and advising agents to “discuss this issue with 
clients and the banks to ensure that there is an understanding, preferably in writing, as to 
how and when any fees will be paid.”  (Ex. 7 at 3.) 
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ARGUMENT 
To avoid dismissal, “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).  A complaint that fails to “state a valid legal cause of action” or “allege 
sufficient facts to support a legal cause of action” is properly dismissed.  Kearney v. Blue 
Cross & Blue Shield of N.C., 233 F. Supp. 3d 496, 505 (M.D.N.C. 2017). 
I.
THE CARES ACT AND IFR DO NOT CREATE AN ENTITLEMENT TO 
AGENT FEES. 
According to Plaintiffs, a single line in a section of the IFR that sets limits on agent 
fees supposedly upended the SBA’s existing regulatory framework and long-standing 
regulation of agent fees by creating a new, blanket entitlement for any agent to obtain fees 
from a PPP lender, at the maximum allowable rate, simply by claiming to have assisted a 
borrower and regardless of whether the lender ever endorsed that work or ever agreed to 
pay for it.  The IFR says no such thing, and none of the SBA, Treasury, or Congress has 
ever suggested that it intended to create any new entitlement to agent fees.  To the contrary, 
the Secretary of the Treasury expressly disclaimed that interpretation in Congressional 
testimony.  Unsurprisingly, the only court to have addressed this issue rejected Plaintiffs’ 
theory.  Sport & Wheat, 2020 WL 4882416.   
A.
The IFR Does Not Create an Entitlement to Agent Fees. 
Contrary to Plaintiffs’ claims, nothing in Section III.4.c of the IFR mandates that 
lenders pay fees to agents.  That provision only implements Section 636(a)(36)(P)(ii) of 
the CARES Act and provides that (i) “[a]gent fees will be paid by the lender out of the fees 
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the lender receives from the SBA,” and not “from the borrower” or “out of the PPP loan 
proceeds”; and (ii) the “total amount an agent may collect from the lender for assistance in 
preparing an application for a PPP loan” cannot exceed the stated maximums.  85 Fed. Reg. 
at 20816.  The regulation directs how an agent can be paid, and the maximum payment 
allowed, but it nowhere mandates that a lender must pay an agent any fees in the first place.  
See Sport & Wheat, 2020 WL 4882416, at *3 (“This language does not require that lenders 
share their fees.”).  In other words, the IFR contemplates circumstances where a lender and 
an agent already have reached an agreement that the agent will assist in facilitating a PPP 
loan, and then “simply explains that [related] fee[s] must be paid by the lender from the 
fee it receives from the SBA” and cannot exceed the limits set by the rule.  Id.5
Indeed, the SBA’s existing regulations specifically contemplate that an agent and 
the lender or applicant will independently agree to agent services and compensation, the 
terms of which must be set forth in a “compensation agreement” submitted to the SBA.  
13 C.F.R. § 103.5(a).  As in the PPP context, the SBA’s regulations only serve to limit the 
possible amount of compensation.  See id. § 103.5(b).  The actual obligation to pay an agent 
fees, therefore, has always arisen, like any ordinary obligation to pay compensation, from 
5
Plaintiffs’ reliance on Treasury’s “Information Sheet” is also misplaced.  (Compl. 
¶ 33.)  The document merely repeats the language in the IFR.  (See Ex. 3.)  And the 
Secretary of the Treasury has expressly disclaimed Plaintiffs’ contention.  (See Ex. 8 at 34.) 
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a contractual arrangement between the lender and the agent, and not from the SBA’s 
regulations.6
The SBA did not abandon this framework for the PPP in promulgating the IFR.  The 
compensation agreement and disclosure requirements are still in place, and they apply to 
“any matter involving SBA assistance,” including the PPP.  13 C.F.R. § 103.5(a); see Ex. 2 
at 1 (Form 159 applies to SBA’s “7(a) . . . Loan Programs,” of which the PPP is a part).  
The disclosure to the SBA of an agreement to pay an agent, furthermore, is specifically 
required by statute.  See 15 U.S.C. § 642.  The Secretary of the Treasury has confirmed as 
much in testimony before Congress:  “What [the PPP] guidance did say is that banks could
pay agent fees out of the fees that they received,” and these payments were “intended to be 
based upon a contractual relationship between the agent and the [lender].”  (Ex. 8 at 34 
(emphasis added).)  None of this is surprising, because agencies, like Congress, do not 
“alter the fundamental details of a regulatory scheme in vague terms or ancillary 
provisions—[they] do[] not, one might say, hide elephants in mouseholes.”  Whitman v. 
Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001). 
The SBA’s PPP forms and other guidance further confirm that Plaintiffs’ theory is 
incorrect.  The PPP Borrower Application Form (SBA Form 2483) that applicants must 
submit to participating lenders nowhere asks whether the applicant received assistance 
6
That the obligation to pay for services rendered arises from manifestations of assent 
is also a foundational principle under the common law.  See Restatement (Second) of 
Agency § 441 cmt. c (1958) (“[O]ne has no duty to pay for services officiously rendered 
without request although resulting in benefit to him.”). 
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from an agent, let alone for information that would enable a lender to document the services 
performed and determine the fees due.  (See Ex. 4.)7  By contrast, the Lender Application 
Form (SBA Form 2484), which a lender must complete for each approved loan submitted 
to the SBA, specifically asks whether a third party was used “to assist in the preparation of 
the loan application or application materials, or to perform other services in connection 
with th[e] loan.”  (Ex. 10 at 2.)  That is because, in circumstances where a third-party agent 
helps facilitate a PPP loan, the lender is the party that will have agreed to compensate that 
third party.  And thus the lender, rather than the borrower, is in a position to disclose that 
information to the SBA as required under the regulations.  Absent an agreement with the 
agent, a lender could not accurately complete Form 2484. 
Ignoring all of this, Plaintiffs insist that the IFR created a new obligation for lenders 
to pay fees to agents in connection with PPP loans regardless of whether the lenders agreed 
to do so, and that all agents are automatically entitled to the maximum amount permitted 
under the IFR.  This position is nonsensical.  Unlike lender processing fees, which 
Congress expressly mandated (“shall” receive) at set amounts, 15 U.S.C. 
§ 636(a)(36)(P)(i), the SBA set only maximum amounts that an agent could receive in 
circumstances where the lender agreed in advance to compensate the agent.  See 85 Fed. 
Reg. at 20816 (fees an agent may collect “may not exceed” set percentages (emphasis 
7
That omission can only be regarded as intentional.  SBA Form 1919, which small 
businesses submit to apply for a traditional Section 7(a) loan, expressly asks whether an 
applicant has or intends to use an agent to assist in preparing the application and related 
materials.  (Ex. 9 at 2.)
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added)).  Setting a maximum fee makes no sense if, as Plaintiffs contend, the SBA intended 
for agents always to receive that amount.  In that event, the SBA simply would have 
specified the amounts agents were to receive, as Congress and the SBA did for PPP lenders.  
The IFR’s imposition of fee caps (at the statute’s direction) indicates that the SBA intended 
for lenders and agents to negotiate compensation amounts up to the maximums, which 
would be included in the compensation agreement and disclosed to the SBA — which is 
precisely what is required under existing regulations. 
The only court to have considered Plaintiffs’ theory has rejected it.  Like Plaintiffs 
here, the plaintiff in Sport & Wheat brought claims premised on the same assertion that the 
IFR created an entitlement to agent fees.  The court disagreed, determining that the 
plaintiff’s reading “finds no support in the plain language of the [CARES Act] or the 
[IFR].”  2020 WL 4882416, at *2.  The court concluded, consistent with the existing 
regulatory framework, that, absent an independent “agreement[] with [lenders] regarding 
payment for the work [an agent] performed in assisting borrowers in obtaining PPP loans 
through [the lenders],” those lenders “have no legal obligation” to pay the agent fees.  Id.
at *4. 
B.
Plaintiffs’ Interpretation of the IFR Would Invite Fraud and Abuse. 
Plaintiffs’ theory that purported agents can simply show up after the fact and claim 
agent fees would lead to a system that is ripe for fraud and abuse.  According to Plaintiffs, 
agents could demand compensation at the regulatory maximums, and lenders would have 
no opportunity to assess the value of any services, negotiate a reasonable rate, or ensure 
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the services were adequately performed.  Lenders also would have no ability to meet their 
statutory and regulatory disclosure requirements, depriving the SBA of its ability to 
monitor agents’ conduct and fees and ensure that agents are in good standing with the SBA.  
See 13 C.F.R. § 103.3 (authority to suspend agents); Ex. 1 at 170-72 (disclosure 
requirements for fees and conduct).  These are not idle concerns:  a recent report by the 
SBA’s Office of the Inspector General identified “a pattern of fraud by loan packagers and 
other for-fee agents in the 7(a) Loan Program.”  (Ex. 11 at 8.) 
Nor is a regulatory entitlement to agent fees necessary to quickly get PPP funds to 
small businesses.  First, as the SBA has recognized, the vast majority of Section 7(a) 
borrowers do not use agents to prepare their loan applications.  See 85 Fed. Reg. 7622, 
7630 (Feb. 10, 2020) (only 2.78% of approved loans over five-year period reported that an 
agent assisted the applicant).  And the application process for a traditional Section 7(a) loan 
is far more complex than the two-page PPP loan application.  (Compare Ex. 4 with Ex. 9.)  
Second, third parties can assist applicants — whether by providing advice or preparing 
ordinary-course business documentation — without acting as an “agent” as that term is 
defined under SBA regulations.  See 13 C.F.R. § 103.1(a), (b) (agent is one who 
“conduct[s] business with SBA,” as defined therein); see also 61 Fed. Reg. 2679, 2680 
(Jan. 29, 1996) (explaining that the definition of “agent” only captures those who “actually 
prepare or submit” an application and that the SBA “does not intend to regulate [agents] 
who simply supply information that is used in the preparation of an application”).  In that 
capacity, third parties are allowed to seek fees directly from borrowers, and thus will have 
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an incentive to offer their services to borrowers that need them.  Third, as has long been 
the practice, third parties that intend to perform “agent” services could contact lenders to 
negotiate reasonable compensation for those services within the limitations set by the SBA. 
C.
The CARES Act Confirms That the IFR Does Not Create an Entitlement 
to Fees. 
Even if the SBA, as Plaintiffs insist, had provided in the IFR that all agents who 
assisted PPP borrowers automatically are entitled to a portion of lenders’ processing fees 
equal to the maximum permissible amount, Plaintiffs’ claims nevertheless should be 
rejected because such a regulatory entitlement would directly conflict with the express 
language of the CARES Act.  Congress mandated that the SBA “shall reimburse a lender” 
for making PPP loans at fixed percentages of the loan amount.  15 U.S.C. 
§ 636(a)(36)(P)(i).  But under Plaintiffs’ reading of the IFR, the SBA has controverted that 
mandate and instead decided to apportion some of the fees that Congress allocated for 
lenders, without the lenders’ consent, to agents.  An agency “has no power to ‘tailor’ 
legislation to bureaucratic policy goals by rewriting unambiguous statutory terms . . . ; they 
must always ‘give effect to the unambiguously expressed intent of Congress.’”  Util. Air 
Regulatory Grp. v. EPA, 573 U.S. 302, 325-36 (2014). 
For the reasons set forth above, however, the Court need not conclude that the SBA 
exceeded its statutory authority by creating an entitlement to agent fees under the IFR 
because the plain language of the regulation does no such thing.  Rather, consistent with 
Congress’s instruction, the SBA’s IFR simply regulates the payment of fees to agents that 
lenders have independently agreed to pay.  (See supra Section I.A.) 
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II.
PLAINTIFFS’ DECLARATORY RELIEF AND COMMON LAW CLAIMS 
FAIL BECAUSE PLAINTIFFS LACK A PRIVATE RIGHT OF ACTION. 
Even assuming (implausibly) that the IFR had created a new agent fee entitlement, 
Plaintiffs cannot seek a declaratory judgment or assert a common law claim based on a 
violation of the CARES Act and its attendant regulation because neither the CARES Act 
nor the Small Business Act, which the CARES Act supplements, provides a private right 
of action. 
The Declaratory Judgment Act does not create an independent cause of action, 
CGM, LLC v. BellSouth Telecomms., Inc., 664 F.3d 46, 55 (4th Cir. 2011), and instead 
“presupposes the existence of a judicially remediable right,” Schilling v. Rogers, 363 U.S. 
666, 677 (1960).  Indeed, a “request for declaratory relief is barred to the same extent that 
the claim for substantive relief on which it is based would be barred.”  CGM, 664 F.3d 
at 55-56.  Accordingly, without a private right of action under the CARES Act, Plaintiffs 
cannot obtain the declaratory judgment they seek.8
“Like substantive federal law itself, private rights of action to enforce federal law 
must be created by Congress.”  Alexander v. Sandoval, 532 U.S. 275, 286 (2001).  There 
can be no dispute that the CARES Act does not provide an express private right of action.  
Profiles, Inc. v. Bank of Am. Corp., 2020 WL 1849710, at *4 (D. Md. Apr. 13, 2020).  
8
To the extent Plaintiffs’ declaratory judgment claim is based on its state law claims, 
it fares no better.  Requests for declaratory judgment that are wholly duplicative of other 
claims should be dismissed, see Sprint Commc’ns Co., L.P. v. FairPoint Commc’ns, Inc., 
2017 WL 2919015, at *6 (W.D.N.C. July 7, 2017), and for the reasons explained below 
(see infra Section IV), those state law claims fail in any event. 
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Plaintiffs must therefore identify an implied private right of action, which is a “stringent” 
requirement, “given the Court’s generally ‘restrictive attitude,’ toward creating implied 
rights of action.”  Reg’l Mgmt. Corp. v. Legal Servs. Corp., 186 F.3d 457, 461-62 (4th Cir. 
1999). As the Supreme Court explained, Plaintiffs must demonstrate Congress’s intent to 
imply both a private right of action and a private remedy through “clear and unambiguous 
terms.”  Gonzaga Univ. v. Doe, 536 U.S. 273, 290 (2002).  Plaintiffs can point to no clear 
and unambiguous manifestation of intent here, for several reasons. 
First, nothing in the text of the CARES Act contemplates enforcement by private 
litigants.  Rather, the Small Business Act specifically provides a comprehensive 
enforcement scheme by the SBA, and there is a “particularly strong” presumption against 
finding implied causes of action “where ‘Congress has enacted a comprehensive legislative 
scheme including an integrated system of procedures for enforcement.’”  Trejo v. Ryman 
Hosp. Props., Inc., 795 F.3d 442, 450 (4th Cir. 2015); see 15 U.S.C. § 650(c) (providing 
the SBA authority to institute civil actions for violations of the statute); Profiles, 2020 WL 
1849710, at *6 (“[T]he view that Congress did not intend to create a separate private right 
of action [is] bolstered by the criminal and civil enforcement regime codified in the [Small 
Business Act].”).  Second, before enactment of the CARES Act, courts have uniformly held 
that the Small Business Act does not include an implied right of action, and the CARES 
Act’s amendments do not alter that clear Congressional intent.  See Profiles, 2020 WL 
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1849710, at *6-7 & n.5.9 Third, the only claim Plaintiffs have to a judicially remediable 
right arises from a regulation, and “it is most certainly incorrect to say that language in a 
regulation can conjure up a private cause of action that has not been authorized by 
Congress.”  Sandoval, 532 U.S. at 291.  And even if it could, there is certainly no “clear 
and unambiguous,” Gonzaga, 536 U.S. at 290, statement of intent to create a private 
enforceable right in the IFR, which only mentions the SBA’s “enforcement” authority, 85 
Fed. Reg. at 20816. 
In the only decision to address whether the PPP provisions of the CARES Act 
provide a private right of action, a court in this Circuit concluded in a thorough and 
well-reasoned opinion that they do not.  See Profiles, 2020 WL 1849710, at *4-7.10  Indeed, 
in that case, the plaintiff was a potential small business borrower bringing claims under 
the CARES Act — a statute designed for the explicit purpose of assisting small businesses 
— but the court determined that the CARES Act did not “evidence[] the requisite 
congressional intent to create a private of action” for PPP loan applicants.  Id. at *7.  There 
is no basis to reach a different conclusion with respect to putative agents, who are only 
briefly mentioned in the CARES Act, and then only to limit their compensation. 
9
See also Bulluck v. Newtek Small Bus. Fin., Inc., 808 F. App’x 698, 701-02 (11th 
Cir. Mar. 27, 2020); Aardwoolf Corp. v. Nelson Capital Corp., 861 F.2d 46, 48 (2d Cir. 
1988); Royal Servs., Inc. v. Maintenance, Inc., 361 F.2d 86, 92 (5th Cir. 1966). 
10  
The Fourth Circuit denied the plaintiff’s request for emergency injunctive relief 
pending appeal of the district court’s decision. See Order, Profiles Inc. v. Bank of Am. 
Corp., No. 20-1438 (4th Cir. May 1, 2020). The plaintiff voluntarily dismissed its action 
soon thereafter. 
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Similarly, this Court should dismiss Plaintiffs’ state common law claims because 
they too are an impermissible end run around the lack of a private right of action to enforce 
the CARES Act or its regulations.  Courts have repeatedly rejected similar attempts to 
“trump the standard inquiry whether a federal statute creates a private right of action” by 
instead asserting “state-law claim[s].”  Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 59, 
66 (3d Cir. 2008) (rejecting “attempts to use state common law to circumvent the absence 
of a private right of action”); see also Valelly v. Merrill Lynch, Pierce, Fenner & Smith 
Inc., 2020 WL 2907676, at *7 (S.D.N.Y. June 3, 2020) (“Plaintiff cannot circumvent the 
lack of a private right of action [] merely by recasting her claim as a violation of a common 
law duty.”); Lil’ Man In the Boat, Inc. v. City & Cty. of S.F., 2018 WL 4207260, at *4 
(N.D. Cal. Sept. 4, 2018) (plaintiff “cannot argue around [the lack of a private right of 
action] by bootstrapping her cause of action onto [a] claim based on the same statute”). 
III.
PLAINTIFFS FAIL TO PLEAD REQUIRED ELEMENTS OF THEIR 
STATE LAW CLAIMS. 
Plaintiffs’ state law claims are all expressly premised on their unsupported 
contention about the IFR and therefore fail for that reason, as well as several other 
independent reasons. 
A.
Plaintiffs Fail to State a Breach of Contract Claim. 
Plaintiffs assert, on “information and belief,” that Wells Fargo “entered into an 
agreement with the SBA in connection with the loans funded in the PPP,” that Plaintiffs 
were “intended [third-party] beneficiaries” of this agreement, and that Wells Fargo 
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breached the agreement by failing to “adhere to all PPP rules.”  (Compl. ¶¶ 69-72.)   This 
novel breach-of-contract claim fails for at least three reasons.  
First, and as noted above (supra Section II), a plaintiff cannot use a third-party 
beneficiary contractual claim to “bootstrap a private right of action onto a violation of [a 
federal] regulation[].”  Bojorquez-Moreno v. Shores & Ruark Seafood Co., 92 F. Supp. 3d 
459, 468 (E.D. Va. 2015); see also Astra USA, Inc. v. Santa Clara Cty., 563 U.S. 110, 114 
(2011) (explaining that “[i]f [plaintiffs] may not sue under the statute,” then “it would make 
scant sense to allow them to sue on a form contract implementing the statute, setting out 
terms identical to those contained in the statute”).  That is exactly what Plaintiffs seek to 
do through their contractual claim here. 
Second, Plaintiffs have not identified a contract between Wells Fargo and the SBA 
of which they are a third-party beneficiary.  Plaintiffs do nothing “to overcome [the] 
presumption that the contracting parties did not intend to confer a legally enforceable 
benefit” on third parties.  Fen-Phen Series 2005-01 v. Farrin, 2010 WL 1740521, at *3 
(M.D.N.C. Apr. 28, 2010).  Indeed, there is no indication whatsoever that Wells Fargo and 
the SBA intended to “direct[ly]” benefit Plaintiffs without ever mentioning them in any of 
their agreements.  Hospira Inc. v. Alphagary Corp., 671 S.E.2d 7, 13 (N.C. Ct. App. 2009). 
Finally, Plaintiffs’ alleged breach of contract is expressly based on a breach of “PPP 
rules” (Compl. ¶ 70), but, as discussed (supra at Section I.A), Plaintiffs fail to plead that 
Wells Fargo in any way violated those rules.  
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B.
Plaintiffs Fail to State a UDTPA Claim. 
Plaintiffs assert that Wells Fargo violated the UDTPA by “failing to disclose 
material information” regarding a “fail[ure] to adhere to the PPP’s rules and regulations.”  
(Compl. ¶ 81.)  Once again, this claim relies entirely on the erroneous premise that the IFR 
required Wells Fargo to pay agent fees, and therefore fails as a matter of law. 
Even if Wells Fargo had been required to pay agent fees, however, “‘failure to pay 
a debt’ [is] not considered [a] deceptive trade practice[] within the scope of the [UDTPA], 
unless accompanied by ‘some type of egregious or aggravating circumstances.’”  McClean 
v. Duke Univ., 376 F. Supp. 3d 585, 608 (M.D.N.C. 2019).  Plaintiffs make no effort to 
plead any such circumstances.  Nor could they, given that Wells Fargo’s reasonable (and 
correct) interpretation of the IFR is supported by, among other things, the Secretary of the 
Treasury’s Congressional testimony. 
Further, “courts have refused to apply the UDTPA to matters” “where there already 
exists an extensive regulatory regime to address the violations.”  Champion Pro Consulting 
Grp. v. Impact Sports Football, LLC, 845 F.3d 104, 110 (4th Cir. 2016).  The Small 
Business Act contains a comprehensive enforcement scheme (see supra at 15), and thus a 
UDTPA claim is not “necessary.”  Champion, 845 F.3d at 110. 
C.
Plaintiffs Fail to State a California UCL Claim. 
Plaintiffs assert, but fail to plead, claims under the California UCL’s “unlawful” and 
“unfair” prongs.  (Compl. ¶ 85.)  As a threshold matter, Plaintiffs fail to show that they are 
entitled to any relief available under the UCL.  Private claimants may obtain only equitable 
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relief under the statute; damages are unavailable.  See Korea Supply Co. v. Lockheed 
Martin Corp., 63 P.3d 937, 943 (Cal. 2003).  But to be entitled to equitable relief, Plaintiffs 
must demonstrate that they “lack[] an adequate remedy at law.”  Sonner v. Premier 
Nutrition Corp., 2020 WL 4882896, at *7 (9th Cir. June 17, 2020).  Plaintiffs do not even 
attempt to make such a showing here, nor could they, given that any legally cognizable 
injury would be fully compensable through money damages.  Further, despite Plaintiffs’ 
cursory request that Wells Fargo be “enjoined from further refusing to pay … agent fees” 
(Compl. ¶ 90), the PPP has now concluded, and thus there is no future conduct to enjoin.  
Nor are Plaintiffs entitled to restitution.  Plaintiffs never possessed the fees that Wells Fargo 
was paid by the SBA.  See Korea Supply, 63 P.3d at 944.  And for the reasons explained 
(supra Section I), Plaintiffs do not have any “ownership interest in” those fees.  Id. 
For that same reason, Plaintiffs fail to allege any predicate wrongful conduct.  The 
only purportedly “unfair” or “unlawful” business practice that Plaintiffs identify is Wells 
Fargo’s alleged refusal to pay agents fees.  (Compl. ¶¶ 87-88.)  But again, nothing in the 
CARES Act or the IFR entitles Plaintiffs to such fees.  Absent an entitlement, there are 
simply no allegations of “unfair” or “unlawful” conduct at all. 
D.
Plaintiffs Fail to State an Unjust Enrichment Claim. 
To state an unjust enrichment claim, Plaintiffs must plead that (i) they conferred a 
benefit on Wells Fargo, (ii) Wells Fargo consciously accepted the benefit, and 
(iii) Plaintiffs did not confer the benefit gratuitously.  Se. Shelter Corp. v. BTU, Inc., 572 
S.E.2d 200, 206 (N.C. Ct. App. 2002).  At the outset, Plaintiffs fail to state an unjust 
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enrichment claim because “a party cannot maintain a claim for unjust enrichment where an 
adequate remedy at law exists.”  Thompkins v. Key Health Med. Sols., Inc., 2015 WL 
1292228, at *10 (M.D.N.C. Mar. 23, 2015).  Plaintiffs obviously have an adequate remedy 
at law if they actually had a legally cognizable injury:  money damages to compensate them 
for the fees they claim they are owed.  
Regardless, Plaintiffs’ conclusory assertion that Wells Fargo obtained “benefits in 
the form of PPP loan origination fees” and that “[a] portion of those fees were to be paid 
to agents” (Compl. ¶ 93) fails to support an unjust enrichment claim.  The alleged benefits 
were conferred on Wells Fargo by the SBA, not by Plaintiffs.  The only purported benefits 
Plaintiffs conferred were the services they provided to their clients, not Wells Fargo.  See 
Sport & Wheat, 2020 WL 4882416, at *5 (unjust enrichment claim fails because any 
benefit from agents’ services to lenders was merely “incidental”).  Plaintiffs also fail to 
plead any facts whatsoever to show that Wells Fargo was contemporaneously aware of, 
much less consciously accepted, Plaintiffs’ purported services. 
E.
Plaintiffs Fail to State a Conversion Claim. 
To state a claim for conversion, the plaintiff must show “ownership in the plaintiff 
and wrongful possession or conversion by the defendant.”  Variety Wholesalers, Inc. v. 
Salem Logistics Traffic Servs. LLC, 73 S.E.2d 744, 747 (N.C. 2012).  Plaintiffs plead 
neither element.   
First, as explained above (supra Section I), Plaintiffs have no right to agent fees 
from Wells Fargo and thus cannot establish the requisite “ownership.”  See Sport & Wheat, 
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2020 WL 4882416, at *4 (plaintiff could not state a claim for conversion because it “had 
no legal right to any portion of the fee [the lenders] received from the SBA”).  Second,
Wells Fargo’s lender fees are not “wrongful[ly]” received, Variety Wholesalers, 73 S.E.2d 
at 747 — to the contrary, they are statutorily mandated.  (See supra at 2.) 
CONCLUSION 
For the foregoing reasons, the Court should dismiss all of Plaintiffs’ claims.  
Dated: September 15, 2020 
/s/  Jason D. Evans 
Jason D. Evans (NC Bar No. 27808) 
TROUTMAN PEPPER HAMILTON SANDERS LLP
301 S. College Street 
Suite 3400 
Charlotte, NC 28202 
(704) 916-1502 
jason.evans@troutman.com 
Brendan P. Cullen  (ECF Registration 
Submitted and Notice of Special Appearance 
Forthcoming) 
SULLIVAN & CROMWELL LLP 
1870 Embarcadero Road 
Palo Alto, CA 94303-3308 
(650) 461-5600 
cullenb@sullcrom.com 
Christopher M. Viapiano  (Appearing by 
Special Appearance) 
SULLIVAN & CROMWELL LLP 
1700 New York Ave., N.W., Suite 700 
Washington, DC 20006 
(202) 956-7500 
viapianoc@sullcrom.com 
Attorneys for Defendants Wells Fargo & Co. 
and Wells Fargo Bank, N.A. 
Case 1:20-cv-00588-UA-LPA     Document 15     Filed 09/15/20     Page 23 of 25

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CERTIFICATE OF COMPLIANCE WITH LR 7.3(d) 
I certify that the foregoing Memorandum of Law in Support of Wells Fargo & Co. 
and Wells Fargo Bank, N.A.’s Motion to Dismiss Plaintiffs’ Complaint complies with the 
word-count limit in LR 7.3(d).  
By:   /s/ Jason D. Evans                            
 Jason D. Evans 
Case 1:20-cv-00588-UA-LPA     Document 15     Filed 09/15/20     Page 24 of 25

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CERTIFICATE OF SERVICE 
I certify that on September 15, 2020, all counsel of record are being served with a 
copy of this document via the Court’s CM/ECF system. 
By:  
/s/ Jason D. Evans                                
 Jason D. Evans 
Case 1:20-cv-00588-UA-LPA     Document 15     Filed 09/15/20     Page 25 of 25

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