Court filing
Order No. 8 on Motion for Reconsideration (Exhibit 14) — OTO Analytics v. Benworth (N.D. Cal. No. 3:24-cv-03975)
Filed February 21, 2024 in Oto Analytics v. Benworth; one of 111 filings from this case.
Record facts
| Court | U.S. District Court for the Northern District of California |
|---|---|
| Filed | 2024-02-21 |
U.S. District Court for the Northern District of California · No. 4:24-cv-03975-AMO · Doc. 1-15 · 2024-02-21 · Docket on CourtListener
Full text
EXHIBIT 14
Case 4:24-cv-03975-AMO Document 1-15 Filed 07/01/24 Page 1 of 9
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JAMS ARBITRATION CASE REFERENCE NO.
Oto Analytics d/b/a Womply,
Claimant,
and
Benworth Capital Partners LLC,
Respondent.
___________________________________________________________________________
I.
Introduction
On December 21, 2023, the Arbitrator issued an Interim Award finding that the contracts
between Claimant/Counter-Respondent Oto Analytics, Inc. d/b/a Womply (“Womply”) and
Respondent/Counter-Claimant Benworth Capital Partners, LLC (“Benworth”) were valid and
enforceable, that Benworth breached those contracts by failing to pay Womply fees and finance
charges that were due and owing, that none of Benworth’s affirmative defenses absolve Benworth
of its obligation to pay Womply, and that Benworth’s counterclaims based on the purported
illegality of Womply’s fees are without merit. In addition, in the Interim Award, the Arbitrator
awarded Womply $86,299,892 plus applicable finance charges, costs of collection, and interest.
On December 28, 2023, Benworth submitted a Motion for Reconsideration. In its Motion,
Benworth argues that the Interim Award should be reconsidered because (1) it lacks language
prohibiting Womply from misusing the Interim Award in the court proceedings in Puerto Rico; (2)
it should not have denied Benworth’s Counterclaim I on the issue of whether Womply must provide
Benworth with electronic copies of all loan files related to Womply-referred loans, and instead,
Benworth should have been granted relief on this issue; and (3) the Arbitrator either misapplied or
misinterpreted the SBA rules, regulations, and SOPs when deciding whether the 1% Agent Fee
Cap applies to Womply’s Technology Services, whether Womply is a lender service provider, and
whether SBA regulations and SOPs, and in turn, the Agreements, preclude Womply’s recovery of
additional Referral Fees and Technology Fees.
AND FURTHER PROCEEDINGS - ORDER NO. 8
ORDER RE BENWORTH'S MOTION FOR RECONSIDERATION
Case 4:24-cv-03975-AMO Document 1-15 Filed 07/01/24 Page 2 of 9
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Womply submitted its Response to Benworth’s Motion for Reconsideration on January 2,
2024, and on January 8, 2024, Benworth submitted its Reply.
In addition, on January 5, 2024, in accordance with the Arbitrator’s rulings in the Interim
Award, the parties submitted a Joint Statement regarding the issues still to be resolved in this
arbitration as well as proposed procedures and schedules for doing so. The parties were unable to
agree on the issues still to be resolved or on the proposed schedule and procedure.
On January 18, 2024, a status conference was held to preliminarily address some of the
issues raised by Benworth’s Motion for Reconsideration and to address some procedural and
scheduling issues. The parties were represented by counsel and the proceedings were reported. At
the conference, the Arbitrator issued oral rulings on some of the issues raised by Benworth’s
Motion for Reconsideration and ordered the parties to meet and confer and to submit a written
joint statement addressing the outstanding procedural and scheduling issues. On January 29, 2024,
the parties filed a joint statement in which each side set forth its position with respect to the
outstanding issues; however, the parties failed to achieve any agreement concerning those issues.
The oral rulings made at the January 18 status conference are stated below.
II.
Discussion
A. Benworth’s Motion for Reconsideration
Benworth’s Motion for Reconsideration makes the following assertions:
1. The Interim Award lacks language prohibiting Womply from misusing the
Interim Award in the court proceedings in Puerto Rico.
Benworth contends that the Arbitrator provided assurances at the September 26, 2023
hearing that he would include language in the Interim Award that would bar Womply from using
the Interim Award in the court proceedings in Puerto Rico. Specifically, Womply asks the
Arbitrator to include language in the Interim Award stating that the Interim Award cannot be taken
to any court for any purpose.
Benworth’s position misconstrues the record of the September 26, 2023 proceeding where,
in fact, no such assurances were ever made. Moreover, Benworth has cited no law or other legal
precedent that gives the Arbitrator the power to tell a Federal Court what to do with his Interim
Award or that allows the Arbitrator to restrict Womply from pursuing its rights in the court
following the issuance of his decision. The court, not the Arbitrator, has jurisdiction over these
issues. Benworth’s Motion for Reconsideration on these grounds is therefore DENIED.
Case 4:24-cv-03975-AMO Document 1-15 Filed 07/01/24 Page 3 of 9
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2. The Interim Award should not have denied Benworth’s Counterclaim I on
the issue of whether Womply must provide Benworth with electronic copies
of all loan files related to Womply-referred loans, and instead, Benworth
should have been granted relief on this issue.
Counterclaim I states, in relevant part:
3. A further actual controversy has arisen and now exists between
Benworth and Womply concerning their respective rights and duties
under the Referral Agreement, in that Benworth is entitled to have
its access to Womply’s technology platform reinstated or receive
electronic copies of borrowers’ loan files within 30 days of Womply
terminating the Referral Agreement, whereas Womply disputes
these contentions and contends it has no obligation to reinstate
Benworth’s access to the technology platform or otherwise turn over
the loan files.
4. Benworth seeks a determination and declaration . . . (iv) that
Womply is obligated to promptly reinstate Benworth’s access to
Womply technology platform or otherwise transmit electronic
copies of borrowers’ loan files.
(Counterclaim, ¶¶3, 4(iv).)
Section 4.3 of the Referral Agreement obligates Womply to deliver Benworth all loan files
relating to a Womply-referred loan. Specifically, section 4.3 states:
Upon [Benworth’s] receipt of a Notice of Termination, [Benworth]
may request from Womply, and Womply shall reasonably provide
to [Benworth], a plan for transmitting to [Benworth] electronic
copies of loan files in its possession that relate to the Referred Loans,
to the extent not otherwise in the possession of [Benworth]. Womply
will not unreasonably withhold its cooperation in such selection and
transmission. Both parties shall agree upon a data format and
method of transmission. Womply shall reasonably provide such
requested information to [Benworth] no later than thirty (30) days
following the termination of this Agreement.
(Referral Agreement, §4.3.)
Case 4:24-cv-03975-AMO Document 1-15 Filed 07/01/24 Page 4 of 9
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Based on this explicit language in the Referral Agreement, Benworth is entitled to the
declaration that it seeks. Indeed, in the January 29, 2024 joint statement, Womply consents to
declaratory judgment being entered. Thus, the Arbitrator’s December 21, 2023 Interim Award
shall be amended to reflect that Benworth’s Counterclaim 1, as it pertains to the transmission of
loan records, is GRANTED and the Final Award will reflect this ruling. Womply is obligated to
promptly transmit electronic copies of Benworth’s borrowers’ loan files to Benworth, or, if such
transmission is not possible, Womply shall reinstate Benworth’s access to Womply technology
platform so Benworth can access those files independently. There is no need for the record to be
reopened to grant this relief in light of Womply’s concession and the clear language of Section 4.3
of the Referral Agreement.
At the hearing and in its briefs, Benworth asserts that it may wish to seek damages from
Womply for its purported failure to comply with section 4.3, and it may seek future damages if
Womply does not comply with the Arbitrator’s mandate.1 Any such potential request for damages
is not presently before the Arbitrator, since, pursuant to Counterclaim 1, Benworth is merely asking
for the aforementioned declaratory relief. Benworth does not also seek damages in its
Counterclaim, and the Arbitrator is bound by the pleadings.
3. The Arbitrator either misapplied or misinterpreted the SBA rules,
regulations, and SOPs in the following ways.
Before addressing Benworth’s arguments, it is worth noting that in its Motion, Benworth
merely rehashes the same arguments it previously made. Any discussion of those arguments and
the Arbitrator’s resolution of them in the Interim Award herein is therefore done mainly to clarify
the Arbitrator’s prior reasoning. As a general rule, however, nothing in Benworth’s Motion papers
justifies reversal of any of the Arbitrator’s prior decisions.
Indeed, under both the JAMS rules and California law, both of which apply to this
arbitration pursuant to the parties’ agreements, reconsideration is only granted when the party
seeking reconsideration can point to new or different facts, circumstances, or law, or in the case of
1 Those damages, according to Benworth, would be based on its assertion that, because of missing loan files, the SBA
has denied the guaranteed purchase of thousands of Womply-referred loans totaling more than $51 million, and it may
deny an additional $68 million more. Thus, according to Benworth, if the SBA ultimately does not buyback these
loans, Benworth will have to refund the principal loan amounts that the Federal Reserve advanced to Benworth for
funding PPP loans. Benworth maintains that the bulk of the funds available to repay the Federal Reserve are the fees
that the Arbitrator has ordered Benworth to pay Womply, and it asserts that Womply’s recovery should therefore be
offset by the amount that Benworth is ultimately required to repay, if anything. However, this position, including its
request for an offset has not been pleaded or otherwise asserted in the Benworth Counterclaim.
Case 4:24-cv-03975-AMO Document 1-15 Filed 07/01/24 Page 5 of 9
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a Final Award, to correct any computational, typographical or other similar error. (See
Cal.Civ.Proc. §1008; JAMS Comprehensive Arbitration Rules & Procedures, Rule 24(j).)
Benworth’s arguments in its Motion do not address any of these requirements and the Motion to
Reconsider can be denied on this basis alone.
a. Deciding that the 1% Agent Fee Cap does not apply to Womply’s
Technology Services
In its Motion, Benworth predominantly takes issue with the Arbitrator’s refusal to accept
its overly broad application of the 1% Agent Fee Cap to “any tasks related to preparing or referring
PPP loan applications.” This issue was fully briefed by the parties and argued at the arbitration
hearing, and the Arbitrator addressed it in detail at pages 35-40 of the Interim Award. Benworth
has not noted any new or different facts, circumstances, or law. Its Motion for Reconsideration of
this conclusion by the undersigned is therefore DENIED.
b. Deciding that Womply is not a lender service provider
Again, this issue was fully briefed by the parties and argued at the arbitration hearing, and
the Arbitrator addressed it in detail at pages 41-44 of the Interim Award. Benworth has not noted
any new or different facts, circumstances, or law. For these reasons alone, Benworth’s Motion for
Reconsideration is DENIED.
In addition, the Arbitrator notes that Benworth is incorrect that the Arbitrator disregarded
language from the relevant SOPs (as cited at page 13 of the Motion papers) and that he failed to
find those SOPs in conflict with any SBA rule or regulation when he refused to apply them. Indeed,
having reviewed the SOP provisions upon which Benworth relies, the undersigned was (and
continues to be) convinced that application of those SOPs would be in direct conflict with the
structure and language of the SBA regulations. For example, one of the SOP provisions upon which
Benworth relies states that an LSP “provide[s] services for the purposes of obtaining Federal
financial assistance that include[s] interaction with the Applicant either in-person or through the
use of technology . . . .” As written, if this SOP were to be applied to the various entities involved
in the PPP program, then practically every individual or entity involved in the program would be
considered an LSP. This result would be absurd and would be in direct conflict with the SBA rules
and regulations that specifically define and differentiate between the different types of providers
and agents.
Benworth’s Motion for Reconsideration on these grounds is therefore DENIED.
Case 4:24-cv-03975-AMO Document 1-15 Filed 07/01/24 Page 6 of 9
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c.
Deciding that the SBA regulations and SOPs, and in turn, the
Agreements, do not preclude Womply’s recovery of additional Referral
Fees and Technology Fees
Again, this issue was fully briefed by the parties and argued at the arbitration hearing, and
the Arbitrator addressed it in detail at pages 44-47 of the Interim Award. Benworth has not noted
any new or different facts, circumstances, or law. For these reasons alone, Benworth’s Motion for
Reconsideration is DENIED.
In addition, Benworth’s Motion for Reconsideration is premised on the faulty assumption
that Womply was an LSP when, as discussed above, the undersigned has already concluded that
Womply was not. Thus, Benworth’s argument that Womply is not entitled to any compensation (1)
because it was an LSP; (2) because LSPs are required to submit agreements to the SBA in order to
get paid, and (3) because Womply failed to submit the Agreements to the SBA, is of no
consequence. The Arbitrator was not applying “his own rough sense of justice,” as Benworth
contends. Instead, he applied the specific terms of the parties’ Agreements to the controlling SBA
rules and regulations.
B. Further Proceedings
As the parties have not been able to agree on a procedure or a schedule for the next phase
of these proceedings, the following orders will address those issues:
1. A Hearing of no more than three days shall take place in March 2024, via Zoom. The
parties and the Arbitrator will select dates in March that are convenient for all
concerned. Once the date for the Hearing is established, a schedule will be set for the
submittal of briefs, declarations and supporting documents.
2. All direct testimony offered to support the parties’ respective positions shall be
submitted by written declaration under oath. At the request of the opposing party, the
witness will be made available for cross examination at the Hearing. If a party believes
that a witness’s direct testimony must be presented live at the Hearing it may file a
formal request to present the witness live. Such a request shall set forth a summary of
the anticipated testimony, a statement of why the testimony is relevant to one or more
of the remaining issues and an explanation concerning why the witness’s direct
testimony cannot be presented by declaration.
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4. The parties are hereby reminded and instructed that they shall limit the testimony of
any witness called by declaration or otherwise to testimony pertaining only to issues
currently pending before the Arbitrator. Those issues include, and are explicitly limited
to: (1) Counterclaim 1, if any issues found within the current pleadings remain
undecided; (2) attorneys’ fees and costs; (3) finance charges; and (4) interest.
5. On February 1, 2024, Benworth filed a Request to Issue Subpoena, seeking subpoenas
for two SBA employees, Martin Anderson and Vanessa Piccioni. On February 7, 2024,
Womply filed an opposition to Benworth’s Request and on February 13, 2024,
Benworth filed a Reply. In view of the ruling on Counterclaim 1, which granted
Benworth the declaration it was seeking, that Request is DENIED without prejudice.
If Benworth believes that the testimony of one or both of these witnesses is still relevant
to any remaining issue, it can renew its Request. Any renewed or future Request shall
provide a summary of the anticipated testimony and a statement of why the testimony
is relevant to any remaining issue.
III.
Conclusion
Benworth’s Motion for Reconsideration is DENIED with regard to its request to add
language to the Interim Award prohibiting Womply from misusing the Interim Award in the court
proceedings in Puerto Rico.
Benworth’s Motion for Reconsideration is GRANTED and the Interim Award shall be
modified with regard to Benworth’s Counterclaim 1 as follows: The Arbitrator has determined and
hereby declares that Womply is obligated to promptly transmit electronic copies of Benworth’s
borrowers’ loan files to Benworth, or, if such transmission is not possible, Womply shall reinstate
Benworth’s access to Womply technology platform so Benworth can access those files
independently.
Benworth’s Motion for Reconsideration is DENIED with regard to Benworth’s contention
that the Arbitrator either misapplied or misinterpreted the SBA rules, regulations, and SOPs when
deciding whether the 1% Agent Fee Cap applies to Womply’s Technology Services, whether
3. The parties are ordered to meet and confer to reach agreement on dates for the Hearing,
briefing and the submission of declarations. The parties shall file a joint statement
of these issues by no later than February 26, 2024.
Case 4:24-cv-03975-AMO Document 1-15 Filed 07/01/24 Page 8 of 9
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Alexander L. Brainerd
Arbitrator
Womply is a lender service provider, and whether SBA regulations and SOPS, and in turn, the
Agreements, preclude Womply’s recovery of additional Referral Fees and Technology Fees.
IT IS SO ORDERED.
DATE: February 20, 2024
_____________________________
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