Court filing

Motion to Dismiss and Supporting Memorandum — Sport & Wheat v. ServisFirst (N.D. Fla.)

Filed June 17, 2020 in Sport Wheat v. Servisfirst; one of 6 filings from this case.

Record facts

Court	U.S. District Court for the Northern District of Florida, Pensacola Division
Filed	2020-06-17

U.S. District Court for the Northern District of Florida, Pensacola Division · No. 3:20-cv-05425-TKW-HTC · Doc. 49 · 2020-06-17 · Docket on CourtListener

Full text

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF FLORIDA
PENSACOLA DIVISION

SPORT & WHEAT CPA PA
)

)

Plaintiff,
)

)
v.

) Case No. 3:20-cv-05425-TKW-HTC

)
SERVISFIRST BANK,
)
SYNOVUS BANK, THE FIRST,
)
and TRUIST BANK,
)

)

Defendants.
)

DEFENDANT SERVISFIRST BANK’S
MOTION TO DISMISS THE AMENDED COMPLAINT
AND SUPPORTING MEMORANDUM OF LAW

In March of this year, Congress passed the Coronavirus Aid, Relief, and
Economic Security Act, Pub. L. No. 116- 136 (the “CARES Act” or the “Act”).
Prominent in the Act was the Paycheck Protection Program (the “PPP”), which
was designed to get money into the hands of small businesses so that they could
continue to pay their employees during the economic downturn created by the
COVID-19 pandemic. To accomplish that goal, the PPP authorized loans to
small businesses—loans to be made by lenders like the defendants here and to be
guaranteed by the Small Business Administration (“SBA”). In recognition of the
important role of lenders in the PPP program and the efforts that would be
required of them to process these loans, Congress directed the SBA to
Case 3:20-cv-05425-TKW-HTC Document 49 Filed 06/17/20 Page 1 of 30

“reimburse” lenders for their efforts, and Congress set specific amounts for that
“reimbursement.” See 15 U.S.C. § 636 (a)(36)(P) (directing that “[t]he
Administrator shall reimburse a lender” in specified amounts and further
directing that the “reimbursement … shall be made not later than 5 days after the
disbursement of the covered loan.”).
Plaintiff Sport & Wheat CPA PA (“S&W”) now asks the Court to ignore
this clear Congressional directive and divert millions of dollars of statutorily-
mandated fees to unknown third parties. On behalf of all “agents,” S&W
demands that lenders pay everyone who claims to have helped a borrower obtain
a PPP loan—regardless of whether the “agent” had any agreement with a lender.
There is no legal basis for this demand. Accordingly, pursuant to Federal Rule
of Civil Procedure 12(b)(6), the Amended Complaint should be dismissed with
prejudice.
STATEMENT OF FACTS

I.
The CARES Act and the PPP

On March 27, 2020, President Trump signed the CARES Act into law.
The Act established a new SBA loan program, the PPP, and directed the SBA to
reimburse lenders participating in the program in specific amounts. The Act
provides:
(P) Reimbursement for processing
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(i) In general
The Administrator shall reimburse a lender
authorized to make a covered loan at a rate, based
on the balance of the financing outstanding at the
time of disbursement of the covered loan, of –

(I)
5 percent for loans of not more than
$350,000;

(II) 3 percent for loans of more than
$350,000 and less than $2,000,000;
and

(III) 1 percent for loans of not less than

$2,000,000.

15 U.S.C. § 636(a)(36)(P)(i).

In contrast to this clear and specific Congressional direction that lenders
be paid certain amounts to reimburse them for their efforts in processing PPP
loans, Congress did not direct that agents involved in the PPP process be paid
anything. Instead, Congress authorized the SBA to limit the amount of any fee
that could be collected by an agent for assisting a borrower in preparing a PPP
loan application. See 15 U.S.C. § 636(a)(36)(P)(ii) (“An agent that assists an
eligible recipient to prepare an application for a covered loan may not collect a
fee in excess of the limits established by the Administrator.”).
On April 15, 2020, the SBA promulgated the First Interim Final Rule, 85
Fed. Reg. at 20,811 (“IFR” or “First IFR”), by which, among other things, it
established limits on agent fees. The First IFR states:
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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 [of the SBA] to
establish limits on agent fees. The Administrator, in
consultation with the Secretary [of the Treasury],
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.

85 Fed. Reg. at 20,816.
The First IFR does not state that lenders must pay agent fees regardless of
whether the agent has been authorized by the lender. Rather, it speaks to what an
agent “may collect from the lender.” Id. (emphasis added).
On April 22, 2020, shortly after the First IFR was released, the American
Institute of Certified Public Accountants (“AICPA”) released a special report on
the PPP confirming that interpretation of the IFR. See Ex. A, AICPA, Small
Business Loans Under the Paycheck Protection Program: Issues Related to CPA
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Involvement (Apr. 22, 2020) (“AICPA Report”). The report advised that “CPAs
should note, that even though the Treasury has outlined guidelines related to
agency fees, there is a possibility that you will not be paid for your services, even
when noting you are an agent to the application. . . . It is important to discuss this
issue with clients and the banks to ensure there is an understanding, preferably in
writing, as to how and when any fees will be paid.” Id. at 3 (emphasis added).
In the Act and the First IFR, Congress and the SBA were focused on
putting a cap on agents’ fees and ensuring that borrowers did not pay them—that
is all, as the AICPA report implicitly acknowledges.
II.
S&W Claims It Helped Its Client Apply for a PPP Loan and Is
Therefore Entitled to Part of ServisFirst’s Fee

S&W alleges that, on April 2, 2020, it was asked by one of its small
business clients, “Borrower R,” to assist it in applying for a PPP loan. Am.
Compl. ¶ 81. It also alleges that “Each Borrower agreed to pay Sport & Wheat—
its longtime accounting firm on other matters—for the value of its time spent in
PPP transactions.” Id. at ¶ 68.
S&W alleges further that “[b]etween April 2, 2020 and April 7, 2020, Sport
& Wheat prepared, signed as PPP Agent, hand-delivered, and e-mailed to
Borrower R and ServisFirst different iterations of the PPP loan application and
supporting documents.” Id. at ¶ 86. On that basis, S&W alleges that ServisFirst
was aware that Borrower R was working on the application.” Id. at ¶ 87.
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S&W alleges that ultimately, on April 7, 2020, “Borrower R filed its PPP
loan application through ServisFirst’s portal using the information and
documents that Sport & Wheat had prepared.” Id. at ¶ 88. And, on or about
April 10, 2020, ServisFirst funded the requested loan for Borrower R. Id. at ¶
89.
S&W contends that, because ServisFirst was aware that it was assisting
Borrower R in making a PPP loan application, once the loan was funded,
ServisFirst was required to pay it a portion of its statutory reimbursement fee.
Id. at ¶ 91. Importantly, however, S&W does not allege that it sought
authorization from ServisFirst to do any work, that ServisFirst authorized it to
do any work, or that ServisFirst agreed to compensate it for doing any work.
LEGAL STANDARD
“[T]o 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.’” Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010)
(quoting Bell Atl. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals
of the elements of a cause of action, supported by mere conclusory statements,”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), or a “formulaic recitation of the
elements of a cause of action,” Twombly, 550 U.S. at 555, are insufficient.
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When plaintiffs “have not nudged their claims across the line from conceivable
to plausible, their complaint must be dismissed.” Id. at 570.
ARGUMENT

This Court should dismiss the Amended Complaint because it contradicts
the plain language of the CARES Act. Under 15 U.S.C. § 636 (a)(36)(P)(i),
ServisFirst is entitled to a fee, in the amount of $4,708.25, see id. at ¶ 90, as
reimbursement for its efforts in processing the PPP loan of Borrower R.
ServisFirst has no duty to share that fee with anyone, and S&W is not entitled to
any portion of it. S&W cannot escape this reality no matter what legal label it
puts on its assertion. S&W is not entitled to declaratory relief (Count Four)
because the plain language of the CARES Act does not require a lender to pay
agent fees, and even if it did, there is no private right of action for failure to do
so. Further, S&W’s unjust enrichment claim (Count One), contract implied in
law claim (Count Two), and conversion claim (Count Three) all fail to state a
claim under Florida law.
I.
The CARES Act and Its Regulations Create No Affirmative
Entitlement for Agents That Assist PPP Applicants.1

1 In this and the following section of its Motion and Memorandum, ServisFirst has
adopted the arguments put forth in Defendant Synovus Bank’s Motion to Dismiss
the Amended Complaint and Memorandum of Law in Support Thereof. See Doc.
46.
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The plain language of the CARES Act bars S&W’s claims. See Lamie v.
United States Tr., 540 U.S. 526, 534 (2004) (“It is well established that when the
statute’s language is plain, the sole function of the courts . . . is to enforce it
according to its terms.”). This is because the Act creates a reimbursement fee for
lenders, in specific amounts depending on the loan size, and it says nothing about
lenders being required to share that fee with anyone else. Conversely, the Act
merely directs the SBA to establish a limit on agent fees. The deliberate difference
in statutory language between what lenders “shall [be] reimburse[d]” and what
agents “may not collect” is striking. See In re Failla, 838 F.3d 1170, 1176–77
(11th Cir. 2016) (“The presumption of consistent usage instructs that ‘[a] word or
phrase is presumed to bear the same meaning throughout a text’ and that ‘a
material variation in terms suggests a variation in meaning.’” (quoting Antonin
Scalia & Bryan A. Garner, Reading Law 170 (2012)). While S&W would like the
Act to say that “agents shall be compensated by lenders,” it does not, and S&W
cannot rewrite the statute to create an entitlement that Congress rejected.
B.
The First IFR Does Not Create an Entitlement to Agent
Fees.
1.
The Plain Language of the First IFR Creates No
Entitlement to Agent Fees.

Unable to find any support in the CARES Act itself, S&W contends that the
First IFR “entitled [it] to fees” paid by lenders, even absent lender authorization.
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Am. Compl. ¶¶ 112, 189. In short, it does not. Rather, the First IFR (1) sets out a
schedule of maximum fees “an agent may collect” for assistance in preparing an
application for a PPP loan, and (2) states that if such fees are paid, they are to be
paid out of the fees the lender receives from the SBA. 85 Fed. Reg. 20,815
(emphasis added). Nothing in the rule requires a lender to pay agents’ fees. It is
only a limitation on the amount and source of agent fees.
Moreover, the First IFR cannot create an entitlement that does not exist in
the Act itself. See Love, 310 F.3d at 1352–53; see also Lyng v. Payne, 476 U.S.
926, 937 (1986) (“[A]n agency’s power is no greater than that delegated to it by
Congress.”). Instead, the rule must be read in a way that is consistent with its
empowering statute. See Sec’y of Labor, Mine Safety & Health Admin. v. W. Fuels-
Utah, Inc., 900 F.2d 318, 320 (D.C. Cir. 1990). Here, neither the Act nor the
informal rule creates an entitlement to agent fees.
2.
Existing SBA Regulations Confirm There Is No
Entitlement to Agent Fees.

Existing SBA regulations confirm there is no entitlement to agent fees. The
First IFR makes clear that the 7(a) background regulations are applicable, see id. at
20,815, and S&W agrees that the PPP regulations must be read in the context of
the existing 7(a) regulatory scheme. See Am. Compl. ¶¶ 43, 65–67.
The SBA does not require borrowers or lenders to use agents in connection
with 7(a) loans. Indeed, borrowers and lenders may “conduct business with SBA
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without a representative.” 13 C.F.R. § 103.2(a). But when agents are used, the
SBA regulations dictate who may pay the fee. The background regulations
governing the 7(a) loan program recognize three categories of agents: (1) lender
service providers, who work for the lender and are paid by the lender; (2)
“packagers,” “who prepare[] the Applicant’s application for financial assistance
and [are] employed and compensated by the Applicant”; and (3) loan brokers, who
intermediate between lenders and borrowers and can be paid by either the lender or
the borrower, but not both. See 13 C.F.R. § 103.1(a).
The agents referred to in the CARES Act and the First IFR are akin to the
“packagers” who are, by preexisting regulation, “compensated by the Applicant.”
See id. To be sure, the First IFR varies that rule by requiring such agents to be
paid, if at all, by the lenders. And just as § 103.1(a) does not create an affirmative
obligation of borrowers to use or pay “packagers,” the First IFR imposes no such
obligation on lenders.
Section 103.1(a) also requires that an agent, whether of a lender or a
borrower, be an “authorized representative.” Id. As S&W concedes, ServisFirst
clearly communicated that it was not compensating agents, id. at ¶ 93, and did not
enter into any agreement authorizing S&W to serve as an agent on a PPP
application. Therefore, S&W was never “authorized” under § 103.1(a) as required.
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S&W’s theory that an agent is entitled to compensation by the lender so long as the
borrower “agrees to hire a PPP agent,” id. ¶ 65, has it exactly backwards.2
S&W’s claim of entitlement to fees is also contrary to 7(a) loan program
agent certification requirements. To ensure that agents are properly authorized and
have performed the services claimed, agents must disclose and certify their
services to the SBA. See 13 C.F.R. § 103.5(a). This certification is embodied in
SBA Form 159, the “Fee Disclosure and Compensation Agreement,” which “must
be completed and signed by the SBA Lender and Applicant whenever an Agent is
paid by either the Applicant or the SBA Lender in connection with the SBA loan
application.” SBA Form 159 (rev. Apr. 2018).3 Form 159 also requires the lender
to certify that “representations of services rendered and the amounts charged as
identified in this form are reasonable and satisfactory to it.” Id.; see also 13 C.F.R.
§ 103.5(b) (requiring that total compensation charged by an agent be reasonable).
S&W agrees that Form 159 “must” be submitted as a precondition to agent
compensation. See Am. Compl. ¶ 65. But S&W does not allege that the form was

2 Reading the First IFR as S&W suggests would upend long-established agency
law which does not recognize “involuntary agency.” An agency relationship can
only arise where the principal “manifests assent” through words or conduct that
an agent can act on its behalf. See Restatement (Third) of Agency §§ 1.01, 1.03
(2006).

3 Available at https://www.sba.gov/document/sba-form-159-fee-disclosure-
compensation-agreement.

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ever submitted here, or that ServisFirst certified its services. S&W’s contention
that lenders must compensate unauthorized agents is at odds with the lender’s
obligation to certify that the agent’s services were “reasonable and satisfactory.”
See id.; see also 13 C.F.R. § 103.5(b).
3.
Explicit Agreements Between Lenders and Agents
Are Necessary to Address Contingencies Associated
with SBA Payments.
An explicit agreement between lender and agent, as contemplated by the
authorization requirement in the 7(a) regulations, is also necessary to address
contingencies specific to the SBA’s review of PPP applications and the potential
clawback of lenders’ processing fees. The SBA may review any PPP loan at any
time in its discretion. See Loan Review Procedures IFR, 85 Fed. Reg. at 33,012.
In connection with that review, the SBA may claw back the lender processing fee
if it determines the borrower is ineligible. See id. at 33,014. The SBA may also
claw back the processing fee if the lender fails to abide by PPP rules. See id.
Absent an explicit agreement between lenders and agents addressing such
contingencies, lenders would have no ability to recover an agent fee paid out of
funds clawed back by the SBA—even in circumstances where the agent is
responsible for the borrower’s ineligibility. Neither Congress nor the SBA could
have intended such an inequitable result.

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4.
S&W’s Interpretation of the First IFR Would Lead to
Fraud and Abuse.

Automatic payment by lenders to any agent that claims to have assisted a
borrower would lead to fraud and abuse. If a lender is required to compensate an
agent, regardless of clear statutory language to the contrary and regardless of
whether the lender has certified in Form 159 that the services were “reasonable and
satisfactory,” there is no control over the quality of the services rendered or the
appropriateness of the fee charged—or even whether the purported services were
provided at all. S&W’s apparent contention that the agent may certify its own
services, Am. Compl. ¶ 65, makes no sense and runs counter to the SBA’s long-
held concerns about agent-fee fraud and the fact that SBA has consistently pointed
to Form 159 as a safeguard against such fraud. See, e.g., SBA, Off. of the
Inspector Gen., Report on the Most Serious Management and Performance
Challenges Facing the Small Business Administration in Fiscal Year 2019, at 8, 9
(Oct. 11, 2018) (“OIG investigations have revealed a pattern of fraud by loan
packagers and other for-fee agents in the 7(a) Loan program, involving hundreds of
millions of dollars.”).4

4 Available at https://www.sba.gov/sites/default/files/2019-08/SBA-OIG-Report-
19- 012.pdf.

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Such a scheme would also upend the typical SBA practice of permitting
lenders to choose the agents with whom they wish to associate, again, in part, to
guard against fraud. See SBA Info. Notice No. 9000-1793, SBA, Off. of the
Inspector Gen. (Apr. 7, 2009) (outlining lender guidelines “[t]o protect against a
potentially corrupt loan agent”).5 In sum, the notion that lenders must simply
accept and compensate any demand for payment by anyone who claims to have
been an agent is contrary to the regulatory scheme and the SBA’s historical
concerns about agent fraud.
5.
The Common Law Confirms there is No Entitlement
to Agent Fees.

Finally, mandating payment of all claimed agent fees would upend settled
common law. By expressly requiring a written agreement, the SBA makes agent
compensation a question of contract. It is well-established that “[t]here can be
no contract without the mutual assent of the parties.” Utley v. Donaldson, 94 U.S.
29, 47 (1876); see Restatement (Second) of Contracts § 17 (1981) (“[T]he
formation of a contract requires a bargain in which there is a manifestation of
mutual assent to the exchange and a consideration.”). The agreement is what
creates the payment obligation: “it is inferred that a person promises to pay for

5 Available at https://www.sba.gov/document/information-notice-9000-1793-
detecting- fraud-small-business-administration-lending-programs.
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services which he requests or permits another to perform for him as his
agent.” Restatement (Second) of Agency § 441 (emphasis added).
By contrast, “one has no duty to pay for services officiously rendered
without request although resulting in benefit to him.” Id.; accord Restatement
(First) of Restitution § 2 (1937). “A person is not required to deal with another
unless he so desires.” Id. Thus, “ordinarily, a person should not be required to
become an obligor unless he so desires.” Id.
The SBA’s preexisting regulations reflect these common law principles. As
discussed above, the SBA generally recognizes three kinds of agents: (1) lender
service providers, who work for and are paid by the lender; (2) “packagers,” who
are “employed and compensated by the Applicant”; and (3) loan brokers, who
“may be employed and compensated by either the Applicant or the SBA
Lender.” 13 C.F.R. § 103.1(a). In each case, the payor requests or agrees to the
agent’s services.
S&W has not shown—and cannot show—that the CARES Act or any related
regulations displace these common law rules. The Supreme Court has required
that “[i]n order to abrogate a common-law principle, the statute must ‘speak
directly’ to the question addressed by the common law.” United States v. Texas,
507 U.S. 529, 534 (1993). Even then, courts construe statutes in derogation of the
common law strictly and narrowly. See Inland Dredging Co. v. Panama City Port
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Auth., 406 F. Supp. 2d 1277, 1283 (N.D. Fla. 2005) (holding that statutes that are
in derogation of the common law must be strictly construed).
There is no language in the CARES Act that “speaks directly” to common
law rules. Instead, it simply directs the SBA to establish “limits” on agent fees.
See 15 U.S.C. § 636(a)(36)(P)(ii). And the regulations, for their part, merely
provide that PPP agents will be paid, if at all, by lenders. Thus, under settled
common law and the pre-existing regulations, the only PPP agents entitled to
compensation are those who lenders have agreed to pay.
II.
The CARES Act Does Not Provide a Private Right of Action.

Even if the S&W claims did not conflict with the plain language of the
CARES Act, the Act provides neither an express nor implied right of action for
private parties to bring suit. “[P]rivate rights of action to enforce federal law must
be created by Congress.” Alexander v. Sandoval, 532 U.S. 275, 286 (2001).
Absent “[s]tatutory intent” to create a private remedy, “a cause of action does not
exist and courts may not create one.” Id.
S&W does not allege that the CARES Act contains an express private right
of action, nor could it. See Profiles, Inc. v. Bank of Am. Corp., No. SAG-20-0894,
2020 WL 1849710, at *7 (D. Md. Apr. 13, 2020) (“[T]he CARES Act does not
expressly provide a private right of action.”). The Amended Complaint concedes
this by seeking a ruling under the Declaratory Judgment Act. See Am. Compl. ¶
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187. But the Declaratory Judgment Act does not create a private right of action
either. See, e.g., Rebuild Nw. Fla., Inc. v. Fed. Emergency Mgmt. Agency, No.
3:17-cv-441-MCR-CJK, 2018 WL 7351690, at *1 (N.D. Fla. July 12, 2018) (citing
Musselman v. Blue Cross & Blue Shield of Ala., 684 F. App’x 824, 829 (11th Cir.
2017)). Because no express private right of action exists under the CARES Act,
“the burden rests with [plaintiff] to establish that an implied private right of action
exists.” McCulloch v. PNC Bank Inc., 298 F.3d 1217, 1221 (11th Cir. 2002).
S&W fails to meet that burden. In fact, it does not even allege an implied
private right of action. This is likely because the Eleventh Circuit has repeatedly
held that the Small Business Act, which the CARES Act amends in limited part,
does not confer a private right of action. See United States v. Fid. Capital Corp.,
920 F.2d 827, 838 n.39 (11th Cir. 1991); Bulluck v. Newtek Small Bus. Fin., Inc.,
2020 WL 1490702, at *3 (11th Cir. Mar. 27, 2020).6 Nothing in the CARES Act
changes this analysis, and the only court to address whether the CARES Act itself
creates a private right of action has held that it does not. See Profiles, 2020 WL
1849710, at *7.7

6 Accord Crandal v. Ball, Ball & Brosamer, Inc., 99 F.3d 907, 909 (9th Cir. 1996);
Searcy v. Houston Lighting & Power Co., 907 F.2d 562, 563–64 (5th Cir. 1990).

7 See also Order, Profiles, No. 20-1438 (4th Cir. May 1, 2020), ECF No. 27
(denying plaintiff’s request for an emergency injunction pending appeal).

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Courts have sometimes looked to four factors to determine the existence of
an implied private right of action.8 See, e.g., McDonald v. S. Farm Bureau Life Ins.
Co., 291 F.3d 718, 722 (11th Cir. 2002). The “central inquiry,” however, is
“whether Congress intended to create, either expressly or by implication, a private
cause of action.” Id. (quoting Sandoval, 532 U.S. at 286). “[T]he Supreme Court
has gradually receded from its reliance on [the other] three . . . factors,” which
“remain relevant only insofar as they provide evidence of whether Congress
intended to create a private right of action.” Love v. Delta Air Lines, 310 F.3d
1347, 1351–52 (11th Cir. 2002) (emphasis in original); see also Hernandez v.
Mesa, 140 S. Ct. 735, 751 (2020) (Thomas, J., concurring) (noting that Sandoval
rejected the Court’s previous “freewheeling approach” to implying private rights of
action).
“[T]he bar for showing legislative intent is high.” Love, 310 F.3d at 1352.
(quotation omitted). “Congressional intent to create a private right of action will
not be presumed,” and “[t]here must be clear evidence of Congress’s intent to

8 The four factors are: (1) whether “the statute create[s] a federal right in favor of
the plaintiff”; (2) whether there is “any indication of legislative intent, explicit or
implicit, either to create such a remedy or to deny one”; (3) whether it “is
consistent with the underlying purposes of the legislative scheme to imply such a
remedy for the plaintiff”; and (4) whether “the cause of action [is] one traditionally
relegated to state law.” McDonald, 291 F.3d at 722 (quoting Cort v. Ash, 422 U.S.
66, 78 (1975)).
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create a cause of action.” McDonald, 291 F.3d at 722 (quoting Baggett v. First
Nat’l Bank of Gainesville, 117 F.3d 1342, 1345 (11th Cir. 1997)).
S&W cannot clear that high bar. The entirety of the section of the CARES
Act at issue here, captioned “FEE LIMITS,” provides: “An agent that assists an
eligible recipient to prepare an application for a covered loan may not collect a fee
in excess of the limits established by the Administrator.” 15 U.S.C. §
636(a)(36)(P)(ii). Neither this text nor the rest of the statute evince any intent to
create a private right of action in favor of PPP agents.
First, the relevant statutory provision does not contain “[r]ights-creating
language” which confers rights “directly” on PPP agents. See Love, 310 F.3d at
1352 (quoting Cannon v. Univ. of Chicago, 441 U.S. 677, 690 n.3 (1979)).
Rather than creating rights in the agents’ favor, the fee-cap provision prohibits
certain conduct by agents. A private right of action will not be inferred where, as
here, the plaintiff is not the intended beneficiary of the statute. See Armstrong v.
Exceptional Child Ctr., Inc., 575 U.S. 320, 332 (2015) (“We doubt . . . that
providers are intended beneficiaries . . . of the Medicaid agreement, which was
concluded for the benefit of the infirm whom the providers were to serve, rather
than for the benefit of the providers themselves.”). Indeed, the CARES Act does
not even confer a private cause of action to small business borrowers, who are the
intended beneficiaries. See Profiles, 2020 WL 1849710, at *7.
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Second, as the recent Profiles decision notes, “the view that Congress did
not intend to create a separate private right of action in the CARES Act is further
bolstered by the criminal and civil enforcement regime codified in the SBA.” 2020
WL 1849710, at *6; see 15 U.S.C. § 650(a)(2), (c) (conferring enforcement
authority upon the SBA Administrator). Because Congress “provide[d] a
discernable enforcement mechanism,” that mechanism should not be disturbed by
implying a private right of action. Love, 310 F.3d at 1353.
Finally, the First IFR does not and cannot create a private right of action.
“[I]f examination of a statute’s text, structure, and history does not yield the
conclusion that Congress intended it to confer a private right and a private
remedy, . . . such a right may not be created or conferred by regulations
promulgated to interpret and enforce it[.]” Id. at 1353. In other words,
“[l]anguage in a regulation may invoke a private right of action that Congress
through statutory text created, but it may not create a right that Congress has not.”
Sandoval, 532 U.S. at 291. Because the CARES Act clearly does not reflect
Congressional intent to confer a private right of action, that ends the inquiry. For
this reason alone, Count Four of the Amended Complaint must be dismissed.
III. S&W Fails to State a Claim for Unjust Enrichment or Contract
Implied in Law.

S&W’s claims for unjust enrichment (Count One) and contract implied in
law (Count Two) are duplicative, and both fail. Under Florida law, there is no
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difference between claims for unjust enrichment and contract implied in law. See
Monahan v. WHM, LLC, No. 09-80198-CIV, 2010 WL 11504336, at *4 (S.D. Fla.
Mar. 18, 2010). “To the extent Plaintiffs allege a contract implied in law, such
contracts must be pled in the same way as unjust enrichment claims[.]” Resnick v.
AvMed, Inc., 693 F.3d 1317, 1325 n.2 (11th Cir. 2012).
There are four elements to an unjust enrichment claim (or contract implied
in law) under Florida law: (1) the plaintiff has conferred a direct benefit on the
defendant; (2) the defendant has knowledge of the benefit; (3) the defendant has
accepted or retained the benefit; and (4) the circumstances are such that it would be
inequitable for the defendant to retain the benefit. Am. Safety Ins. Serv. v. Griggs,
959 So. 2d 322, 331 (Fla. 5th DCA 2007). Other than threadbare recitals of the
elements of the cause of action, which are not entitled to the assumption of truth,
see Iqbal, 556 U.S. at 679, the Amended Complaint fails to plausibly allege
elements (1), (3), and (4) of an unjust enrichment claim. Moreover, as a matter of
law, element (4) cannot be met.
A.
S&W Does Not Allege It Conferred a Direct Benefit on
ServisFirst.
Florida courts strictly adhere to the requirement that the plaintiff confer a
direct benefit on the defendant. See Donoff v. Delta Air Lines, Inc., 2020 WL
1226975, at *12 (S.D. Fla. Mar. 6, 2020); see GVB MD, LLC v. United Healthcare
Case 3:20-cv-05425-TKW-HTC Document 49 Filed 06/17/20 Page 21 of 30

Ins. Co., 2019 WL 5260274, at *4 (S.D. Fla. Aug. 14, 2019) (applying direct
benefit requirement to claim for unjust enrichment and contract implied in law).
Here, the Amended Complaint does not allege that S&W conferred a direct
benefit on ServisFirst. Rather, it alleges that Borrower R asked S&W for
assistance, Borrower R hired S&W, and Borrower R received S&W’s services.
Am. Compl. ¶¶ 81-84. Thus, if S&W conferred a direct benefit on anyone, it is
Borrower R, not ServisFirst. See A & E Auto Body, Inc. v. 21st Century
Centennial Ins. Co., 2015 WL 12867010, at *5– 6 (M.D. Fla. Jan. 22, 2015) (auto
repair shop’s work for customers did not confer benefit on insurer, which merely
incurred an obligation to pay by virtue of its contract with the customers).
Instead, it is clear from the Amended Complaint that it is the SBA who has
or will confer a direct benefit on ServisFirst by paying the fee authorized and set
by Congress to reimburse ServisFirst for its efforts in processing Borrower R’s
loan. Accordingly, there being no plausible allegation of any direct benefit
conferred on ServisFirst by S&W, the first element of its unjust enrichment and
implied contract claims cannot be met and those claims should be dismissed. See
Johnson v. Catamaran Health Sol., LLC, 687 F. App’x 825, 830 (11th Cir. 2017)
(dismissing claim where plaintiff paid membership fees to a third party that in turn
paid a premium to defendant); Peoples’ Nat’l Bank of Commerce v. First Union
Nat’l Bank of Fla., N.A., 667 So. 2d 876, 879 (Fla. 3d DCA 1996) (claim failed
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where the alleged payments in which plaintiff claimed an interest were made by a
third party, not plaintiff); Extraordinary Tile Servs., LLC v. Fla. Power & Light
Co., 1 So. 3d 400, 403 (Fla. 3d DCA 2009) (dismissing unjust enrichment claim
based on attenuated relationship between plaintiff and defendant).
B.
S&W Has Not Plausibly Alleged That ServisFirst Accepted
Any Benefit Conferred by S&W.

Additionally, S&W has failed to plausibly allege that ServisFirst ever
accepted any benefit that S&W allegedly conferred on ServisFirst. In Coffee Pot
Plaza Partnership v. Arrow Air Conditioning and Refrigeration, Inc., for example,
the court reversed a judgment premised on a theory of unjust enrichment because
the defendant had not accepted the benefit allegedly conferred. 412 So. 2d 883
(Fla. Dist. Ct. App. 1982). In that case, the defendant landlord leased space to a
tenant and allowed the tenant to use certain refrigeration equipment. The tenant
hired the plaintiff to repair the equipment, but the tenant never paid for the
work. When the defendant landlord regained the premises upon the tenant’s
default, the plaintiff sued the landlord on an unjust enrichment theory, arguing that
the landlord should pay the repair bill.
Following a judgment in favor of the repair company, the defendant landlord
appealed, and the appellate court reversed on the basis that the defendant did not
accept the benefit of the repair work from the plaintiff. See id. at 884. The court
reasoned, “Here, [the defendant landlord] did not request that Arrow repair and
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install the refrigeration equipment. Moreover, it cannot be said that [the
defendant] knowingly and voluntarily accepted the benefits of Arrow’s work since
it did not come into control of the equipment until after Arrow had completed the
work and only then because it was forced to terminate [the tenant’s] lease. . . .
Arrow contracted with [the tenant] to do the work, and it must look to [the tenant]
for payment.” Id.
The same analysis applies here to S&W’s threadbare allegations. S&W’s
relationship, if any, was with its client, Borrower R. S&W concedes that it did not
have a contract with ServisFirst, and S&W has failed to allege that ServisFirst
knowingly and voluntarily accepted the benefit of S&W’s work. S&W alleges
only that it did work and ServisFirst allegedly received a benefit from that work,
and therefore, ServisFirst should pay S&W. That is not enough to establish a
plausible claim for unjust enrichment.
C.
ServisFirst’s Actions Are Not Inequitable.
Plaintiff’s unjust enrichment claim also fails because ServisFirst’s actions
are not inequitable as a matter of law. This is true for at least two reasons.
First, Congress explicitly directed that the SBA “shall reimburse a lender
authorized to make a covered loan . . . .” a specific amount depending on the size
of the loan. 15 U.S.C. § 636(a)(36)(P)(i) (emphasis added). The word
“reimburse” has a clear meaning, one that is consistent with the dictionary
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definition of it. Merriam-Webster defines reimburse as “to pay back to someone”
or “to make restoration or payment of an equivalent to.” Reimburse, MERRIAM-
WEBSTER, https://www.merriam-webster.com/dictionary/reimburse (last visited
June 16, 2020). Similarly, the Cambridge Dictionary defines reimburse as “the act
of paying back money to someone who has spent it for you or lost it because of
you.” Reimburse, CAMBRIDGE DICTIONARY, https://dictionary.cambridge.org/us/
dictionary/english /reimburse (last visited June 16, 2020). As a matter of law, it
would not be inequitable and ServisFirst cannot be unjustly enriched by retaining a
fee, the payment of which was directed by Congress for the purpose of paying it
back for its efforts in processing PPP loans.
Second, S&W has not and cannot allege that it had a reasonable expectation
that ServisFirst would pay it any portion of its fee. Indeed, “[a] claim for unjust
enrichment . . . requires examination of . . . the expectations of the parties to
determine whether an inequity would result or whether their reasonable
expectations were met.” Porsche Cars N. Am., Inc. v. Diamond, 140 So. 3d 1090,
1100 (Fla. 3rd DCA 2014) (emphasis added) (citations omitted). S&W has no
right to payment of fees under the CARES Act and thus could not have reasonably
expected that ServisFirst, with whom it had no agreement, would pay it. For this
reason, too, S&W’s unjust enrichment claim fails as a matter of law.

IV. S&W Fails to State a Claim for Conversion.
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For its conversion claim, S&W alleges that “[a] portion of the origination fee
each Defendant received was the rightful property of [S&W].” Am. Compl. ¶ 183.
It alleges elsewhere in the Amended Complaint that the fees are “paid directly to
lenders by the SBA,” id. ¶ 9, 49, and then any agent fees “will be paid” to the agent
“by the lender.” Id. ¶ 12. These allegations do not amount to conversion, but
merely a claimed monetary obligation. Conversion is an “act of dominion
wrongfully asserted over another’s property inconsistent with his ownership
therein.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1270 (11th Cir. 2009)
(emphasis added).
Money is rarely the proper subject of a conversion claim. It is only when the
claim is for “specific money capable of identification,” such as a “sum of money
sealed in an addressed envelope [that was] misdelivered,” Zagar, 243 So. 2d at
648, which is obviously not the case here.
A traditional monetary obligation, like the one claimed here, never gives rise
to a conversion claim under Florida law. Kee v. Nat’l Reserve Life Ins. Co., 918
F.2d 1538, 1541–42 (11th Cir. 1990); Neelu Aviation, LLC v. Boca Aircraft Maint.,
LLC, 2019 WL 3532024, at *8 (S.D. Fla. 2019); Belford Trucking Co. v. Zagar,
243 So. 2d 646, 648 (Fla. Dist. Ct. App. 1970) (“A mere obligation to
pay money may not be enforced by a conversion action.”).
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For these reasons, the conversion claim in Count Three should also be
dismissed.
CONCLUSION

Based on the foregoing, and pursuant to Federal Rule of Civil Procedure
12(b)(6), Defendant ServisFirst Bank respectfully requests that the Court dismiss
Plaintiff’s Amended Complaint with prejudice.
Respectfully submitted this 17th day of June, 2020.
/s/ Logan T. Matthews

Logan T. Matthews
Florida Bar No. 1002506
LIGHTFOOT, FRANKLIN & WHITE, LLC
The Clark Building
400 20th Street North
Birmingham, Alabama 35203
Telephone: (205) 581-0700
Facsimile: (205) 581-0799
One of the Attorneys for Defendant
ServisFirst Bank

OF COUNSEL:
Sara Anne Ford (admitted pro hac vice)
sford@lightfootlaw.com
R. Ashby Pate (admitted pro hac vice)
apate@lightfootlaw.com
Logan T. Matthews (Florida Bar No. 1002506)
lmatthews@lightfootlaw.com
LIGHTFOOT, FRANKLIN & WHITE, LLC
The Clark Building
400 20th Street North
Birmingham, Alabama 35203
Telephone: (205) 581-0700
Facsimile: (205) 581-0799

Case 3:20-cv-05425-TKW-HTC Document 49 Filed 06/17/20 Page 27 of 30

Case 3:20-cv-05425-TKW-HTC Document 49 Filed 06/17/20 Page 28 of 30

LOCAL RULE 7.1(F) WORD LIMIT CERTIFICATION

Pursuant to Northern District of Florida Local Rule 7.1(F), I certify that this
Motion to Dismiss the Amended Complaint and Memorandum of Law in Support
Thereof is in compliance with the Court’s word limit. According to the word
processing program used to prepare this motion and memorandum, the document
contains 6,259 words, exclusive of the case style, signature block, and this
certification.
/s/ Logan T. Matthews

One of the Attorneys for Defendant
ServisFirst Bank

Case 3:20-cv-05425-TKW-HTC Document 49 Filed 06/17/20 Page 29 of 30

CERTIFICATE OF SERVICE

I hereby certify that on this 17th day of June, 2020, I electronically filed the
foregoing with the Clerk of the Court using the CM/ECF system which will send
electronic notification of such filing to all counsel of record.
/s/ Logan T. Matthews

One of the Attorneys for Defendant
ServisFirst Bank

Case 3:20-cv-05425-TKW-HTC Document 49 Filed 06/17/20 Page 30 of 30

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Motion to Dismiss and Supporting Memorandum — Sport & Wheat v. ServisFirst (N.D. Fla.)

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