Complaint for Declaratory Relief — Cornerstone First Mortgage, LLC v. ERTC Funding, LLC
Summary
A complaint for declaratory relief filed June 4, 2025, by Cornerstone First Mortgage, LLC against ERTC Funding, LLC, American Arbitration Association, Inc. and Does 1-50, in the U.S. District Court for the Southern District of California, Case 3:25-cv-01422-LL-MMP. It alleges that the signature of Cornerstone's principal, Sean Cahan, on a contingent fee contract for employee retention tax credit consulting was forged, and that ERTC Funding claims more than $300,000 under it although the credits were processed by Cornerstone's professional employer organization. The complaint states that the AAA concluded it has jurisdiction over ERTC Funding's arbitration claim. It seeks a judgment that Cornerstone need not arbitrate and a stay of the arbitration. Michael W. Vivoli signs /s/; a civil cover sheet and the contract follow.
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“Complaint for Declaratory Relief — Cornerstone First Mortgage, LLC v. ERTC Funding, LLC.”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/1-complaint-cornerstone-v-ertc-funding-with-exhibits-976328ab3c/
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Case 3:25-cv-01422-LL-MMP Document 1 Filed 06/04/25 PageID.1 Page 1 of 7
1 MICHAEL W. VIVOLI (Bar No. 184366)
mvivoli@vivolilaw.com
2 VIVOLI SACCUZZO, LLP
3 3104 Fourth Avenue
San Diego, California 92103
4 (619) 744-9992 (Tel)
(619) 744-9994 (Fax)
5
6 Attorneys for Plaintiff,
7 CORNERSTONE FIRST MORTGAGE, LLC,
formerly known as Cornerstone First Mortgage, Inc.
8
9 UNITED STATES DISTRICT COURT
10 SOUTHERN DISTRICT OF CALIFORNIA
11
CORNERSTONE FIRST MORTGAGE, ) Case No.: '25CV1422 LL MMP
12 LLC, a Delaware limited liability )
13 company, formerly known as ) COMPLAINT FOR
14 Cornerstone First Mortgage Inc., ) DECLARTORY RELIEF
)
15 Plaintiff, )
16 )
vs. )
17 )
18 ERTC FUNDING, LLC, a New Jersey )
limited liability company; AMERICAN )
19
ARBITRATION ASSOCIATION, )
20 INC., a New York corporation; and )
21 DOES 1-50, inclusive, )
)
22 Defendants. )
23 _________________________________ )
24
25 Plaintiff, CORNERSTONE FIRST MORTGAGE, LLC, formerly known as
26 Cornerstone First Mortgage, Inc., a converted entity (“Cornerstone”), alleges as
27 follows:
28 ////
1
COMPLAINT FOR DECLARATORY RELIEF
Case 3:25-cv-01422-LL-MMP Document 1 Filed 06/04/25 PageID.2 Page 2 of 7
1 1. Cornerstone is a limited liability company duly formed and currently
2 existing under the laws of Delaware. Cornerstone formerly did business as
3 Cornerstone First Mortgage, Inc., a Delaware corporation, before converting out
4 into a Delaware limited liability company. At all times relevant herein,
5 Cornerstone’s primary place of business was located within San Diego County
6 within the State of California.
7 2. Defendant ERTC Funding LLC (“ERTC”) is a limited liability
8 company that claims to be a limited liability company formed under the laws of the
9 State of New Jersey, where it asserts citizenship. This Court has jurisdiction over
10 ERTC because the controversy in question arises from ERTC’s attempt to enforce
11 a contract against a California company, Cornerstone, that disputes it ever signed
12 the contract in question and a petition to compel arbitration thereunder would be
13 required to be filed in the Southern District Court of California, where Cornerstone
14 maintains its primary place of business, in order to enforce that asserted obligation.
15 3. American Arbitration Association, Inc. (“AAA”) is a corporation
16 formed under the laws of the State of New York, where it maintains its citizenship
17 and primary place of business at 120 Broadway, 21st Floor, New York, New York,
18 10271.
19 4. Cornerstone is ignorant of the true names and capacities of defendants
20 DOES 1 through 50, inclusive, and by reason thereof sues said Defendants by their
21 fictitious names. Cornerstone will obtain leave of court, if necessary, to amend this
22 complaint to allege the true names and capacities of these fictitiously-named
23 Defendants when their identities are fully and finally ascertained.
24 SUBJECT MATTER JURISDICTION AND VENUE
25 5. This Court has subject matter jurisdiction over the claims in this
26 action pursuant to 28 U.S.C. § 1332(a) because the action involves a controversy
27 involving citizens of different states and the amount in controversy exceeds
28 $75,000. Venue is proper in this Court because a petition to compel arbitration
2
COMPLAINT FOR DECLARATORY RELIEF
Case 3:25-cv-01422-LL-MMP Document 1 Filed 06/04/25 PageID.3 Page 3 of 7
1 would be required to be filed in whichever court would have jurisdiction in an
2 action involving that dispute, and that would be the District Court in which
3 Cornerstone maintains its primary place of business. (See Code of Civil Procedure
4 section 1292; 28 U.S.C. § 1391(b).) Furthermore, under the Federal Arbitration
5 Act (“FAA”), venue on a motion to compel arbitration would be proper in “any
6 United States District court which, save for [the alleged arbitration] agreement,
7 would have jurisdiction under title 28” of the United States Code. (9 U.S.C. § 4.)
8 6. Here, ERTC has asserted, in a proceeding initiated before AAA, that
9 Cornerstone is obligated to arbitrate an alleged contract before the AAA despite
10 the fact Cornerstone contends it never signed the contract in question, and that is
11 alleged “signature” was forged. Although well-settled California law makes clear
12 the issue of arbitrability under a forged contract is to be decided by the court and
13 not the arbitrator, AAA has announced its “conclusion” that it has jurisdiction to
14 arbitrate the dispute and that Cornerstone is required to arbitrate before it, even
15 though Cornerstone contests that a valid contract to arbitrate exists. As such, this
16 Court has venue over the dispute, which arises from ERTC’s assertion that
17 Cornerstone is required to arbitrate before AAA, and to pay exorbitant fees to
18 AAA, under an agreement that Cornerstone asserts it never signed, and on which
19 its signature was forged, with ERTC’s knowledge, a fact about which Cornerstone
20 has made both ERTC and AAA aware many, many times.
21 NATURE OF THE DISPUTE
22 7. This action arises from a contingent fee contract 1 that ERTC alleges
23 Cornerstone signed, purportedly engaging ERTC to perform “consulting services”
24 associated with Cornerstone’s right to recover employee retention tax credits
25 following the Covid-19 pandemic and various emergency laws enacted as a result
26
1
27 Separately, Cornerstone is informed the IRS has issued a circular advising that
“contingent” fee ERTC contracts such as Exhibit “A” are illegal. Cornerstone asserts that
28 issue, too, must be resolved by a court, and not an arbitrator.
3
COMPLAINT FOR DECLARATORY RELIEF
Case 3:25-cv-01422-LL-MMP Document 1 Filed 06/04/25 PageID.4 Page 4 of 7
1 of the pandemic. Attached hereto as Exhibit “A” is a true and correct copy of the
2 “contract” ERTC contends Cornerstone signed. Pursuant to Exhibit “A,”
3 Cornerstone is informed and believes that ERTC contends it is entitled to be paid
4 more than $300,000 as a “contingent fee” given Cornerstone’s receipt of employee
5 retention tax credits received by it as a result of forms processed on its behalf not
6 by ERTC, but by Cornerstone’s own payroll company.
7 8. Cornerstone, by and through its principal, Sean Cahan, did not sign
8 Exhibit “A.” Instead, his signature was forged by an as-yet unknown employee of
9 ERTC. Moreover, ERTC forged Mr. Cahan’s signature only after informing Mr.
10 Cahan that ERTC could not process the employee retention tax credits to which
11 Cornerstone was entitled because Cornerstone was already represented, at all
12 relevant times, by a professional employer organization (“PEO”), and that its PEO
13 was the only entity that could pursue the tax credits involved on behalf of
14 Cornerstone. In fact, it was Cornerstone’s PEO, using the forms prepared by its
15 PEO and the calculations performed by that PEO (not ERTC), that it processed to
16 recover the retained employee tax credits from which ERTC now seeks to recover
17 a “contingent fee” against, despite the fact it admitted to Cornerstone that ERTC
18 could not pursue the credits on its behalf given Cornerstone had already engaged a
19 PEO, who performed those services for it as part of its existing role as
20 Cornerstone’s PEO.
21 9. Despite Cornerstone’s assertion that it did not sign Exhibit “A,”
22 ERTC initiated an arbitration proceeding before AAA. In response to that
23 proceeding, Cornerstone informed both ERTC and AAA that its signature on
24 Exhibit “A” was forged, and that Cornerstone disputed any obligation to arbitrate
25 before AAA. In addition, Cornerstone repeatedly informed AAA and ERTC that,
26 under California and federal law, the issue of arbitrability is an issue to be decided
27 by the courts, not the arbitrator where, as here, the party resisting arbitration asserts
28 that the agreement to arbitrate was itself forged, since there exists no assent to
4
COMPLAINT FOR DECLARATORY RELIEF
Case 3:25-cv-01422-LL-MMP Document 1 Filed 06/04/25 PageID.5 Page 5 of 7
1 arbitrate under a forged contract. (See, e.g., Bruni v. Didion (2008) 160
2 Cal.App.4th 1272 and Sargon Enterprises, Inc. v. Browne George Ross LLP
3 (2017) 15 Cal.App.5th 749.)
4 10. Despite Cornerstone’s assertion it never signed Exhibit “A,” and that
5 it never agreed to submit any dispute under Exhibit “A” to arbitration before AAA
6 or anyone else, AAA has advised Cornerstone it has “considered and rejected”
7 Cornerstone’s assertions, and has concluded, in the absence of any evidence or any
8 jurisdiction for so holding, that AAA has jurisdiction over Cornerstone despite the
9 fact Cornerstone never agreed to submit to its jurisdiction. Further, AAA has
10 proceeded to appoint an arbitrator (a retired judge in Texas) who has informed
11 Cornerstone that in order to dispute AAA’s jurisdiction, it is incumbent upon
12 Cornerstone to first obtain an appropriate court order preventing the arbitration
13 proceeding before AAA from going forward, despite Cornerstone’s assertion AAA
14 has no jurisdiction over it.
15 11. Cornerstone disputes the foregoing assertion, and contends that absent
16 an order compelling Cornerstone to arbitrate ERTC’s claims, it has no obligation to
17 do so and that AAA has no jurisdiction over it, but given AAA’s assertions and
18 that of the arbitrator, Cornerstone risks a judgment of “default award” if it refuses
19 to participate in the arbitration proceeding initiated by ERTC and AAA over
20 Cornerstone’s objections. Issuance of such a “default award” would then subject
21 Cornerstone to further court proceedings in any future petition to confirm AAA’s
22 award as a judgment, at which Cornerstone stands to be irreparably prejudiced by
23 an award entered without its participation given it was not obligated to participate.
24 12. By virtue of the foregoing, there presently exists a ripe, justiciable
25 controversy between the parties that requires resolution by this Court, in order to
26 preserve and protect Cornerstone’s constitutional right to a trial by jury on the
27 bogus claims ERTC seeks to pursue before an arbitrator and arbitration service
28 before whom Cornerstone never consented to appear, and to whose jurisdiction
5
COMPLAINT FOR DECLARATORY RELIEF
Case 3:25-cv-01422-LL-MMP Document 1 Filed 06/04/25 PageID.6 Page 6 of 7
1 Cornerstone never agreed to submit. To the contrary, ERTC forged Cornerstone’s
2 signature to an illegal contingent fee contract for services ERTC is not properly
3 licensed to perform.
4 FIRST CAUSE OF ACTION
5 For Declaratory Relief
6 (Against ERTC and AAA)
7 13. Plaintiff realleges and incorporates by reference each and every
8 allegations set forth above in Paragraphs 1 through 12.
9 14. As set forth above, an actual controversy has arisen and there now
10 exists a ripe, justiciable controversy between Cornerstone, on the one hand, and
11 ERTC and AAA, on the other hand, concerning Cornerstone’s asserted obligation
12 to arbitrate ERTC’s claims before AAA. That dispute centers on the assertion by
13 ERTC and AAA that Cornerstone is not only obligated submit to an arbitration
14 proceeding before AAA and a retired judge, sitting in Texas, over a dispute arising
15 from a contract Cornerstone contends it never signed, but to pay AAA exorbitant
16 fees for the privilege of doing so; all over Cornerstone’s objections.
17 15. But for declaratory relief by this Court, preventing Cornerstone from
18 having to submit to arbitration of a proceeding it never agreed to arbitrate under a
19 contract it never signed, Cornerstone stands to be irreparably prejudiced by having
20 to later fight entry of a judgment on an arbitration award entered in its absence,
21 since Cornerstone contends it has no obligation to arbitrate under a “contract” on
22 which its signature was forged.
23 16. Cornerstone has no other means of preventing the irreparable
24 prejudice that it stands to incur as a result of the ripe, justiciable controversy set
25 forth below.
26 17. By virtue of the foregoing, a judicial determination is necessary and
27 appropriate at this time under the circumstances in order that the parties may
28 ascertain their rights and duties as aforementioned. Said controversy is incapable
6
COMPLAINT FOR DECLARATORY RELIEF
Case 3:25-cv-01422-LL-MMP Document 1 Filed 06/04/25 PageID.7 Page 7 of 7
1 of resolution without judicial adjudication given ERTC and AAA have failed and
2 refused to follow California and federal law by having a court resolve the issue of
3 the assertedly forged nature of Exhibit “A” attached hereto. Accordingly,
4 Cornerstone has no plain, speedy, and adequate remedy at law, and thus requests a
5 declaratory judgment, adjudging that Cornerstone has no obligation to arbitrate
6 before AAA, and that ERTC is required to litigate any issues involving Exhibit
7 “A” before this District Court, subject to Cornerstone’s right to a jury trial given
8 Cornerstone never validly waived its right to such a proceeding.
9 PRAYER FOR RELIEF
10 WHEREFORE, Cornerstone prays for relief as follows:
11 1. For a judgment that Cornerstone has no obligation to arbitrate ERTC’s
12 claims before AAA, absent a determination, first, by this Court that
13 Cornerstone validly agreed to arbitrate any disputes between it and
14 ERTC before AAA, and/or that Cornerstone’s signature on Exhibit
15 “A” was not forged, as Cornerstone contends;
16 2. For preliminary injunctive relief pending issuance of the judgment
17 prayed for above, including such orders as may be required to enjoin
18 and stay AAA and/or ERTC from proceeding with an arbitration
19 proceeding in Cornerstone’s absence before there has been any
20 judicial determination concerning Cornerstone’s asserted obligation to
21 arbitrate ERTC’s claims before AAA, or any other arbitration service;
22 3. For costs incurred herein; and
23 4. For such other and further relief as this Court deems just and proper.
24 Dated: June 4, 2025 VIVOLI SACCUZZO, LLP
25 By: /s/ Michael W. Vivoli
26 MICHAEL W. VIVOLI
Attorneys for Plaintiff,
27
CORNERSTONE FIRST MORTGAGE,
28 LLC, f/k/a Cornerstone First Mortgage, Inc.
7
COMPLAINT FOR DECLARATORY RELIEF
JS 44 (Rev. 03/24) Case 3:25-cv-01422-LL-MMP Document
CIVIL 1-1 Filed
COVER SHEET06/04/25 PageID.8 Page 1 of 1
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as
provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the
purpose of initiating the civil docket sheet. (SEH INS71WC110NS ON NEXT PAGH OF THIS FORM.)
I. (a) PLAINTIFFS DEFENDANTS
Cornerstone First Mortgage, LLC ERTC Funding, LLC, et al.
(b) County of Residence of First Listed Plaintiff San Diego, CA County of Residence of First Listed Defendant Ocean County, NJ
(HXCEPl" IN U.S. PLAINltFF CASHS) (IN U.S. l'l.AIN'l'll·F CASl:'S ONl,Y)
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.
( C) Attorneys (Fmr, Name, Addres.,. and 'li!frphrme N1m1hcr) Attorneys (I/Known)
Michael W. Vivoli, Esq. (619) 744-9992
VIVOLI SACCUZZO, LLP '25CV1422 LL MMP
3104 Fourth Ave .. San Dieao. CA 92103 D
II. BASIS OF JURISDICTION (/'lace a11 "X" in One Box Only) Ill. CITIZENSHIP OF PRINCIPAL PARTIES fl'lm·e an ''X"" m One Hox_(t,r l'lamlt/J
(For Diversity Cases Only) wul One Hox for l)efe11da111J
D1 U.S. Government 03 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Gm·emment Not a /'arty) Citizen of This Stale D I D Incorporated or Principal Place D 4 D 4
of Business In This State
D2 U.S. Govemment 04 Diversity Citizen of Another State IE] 2 IE] 2 Incorporated and Principal Place D 5 Os
Defendant (Indicate Clli:enship of l'arllcs in hem lll) of Business In Another State
Citizen or Subject of a 03 D 3 Foreign Nation D 6 06
Foreign Country
IV. NATURE OF SUIT (Place an "X" in One Box On~v) Click here for: Nature
~
110 Insurance PERSONAL INJURY 625 Drug Related Seizure 422 Appeal 28 USC 158 375 False Claims Act
120 Marine 3 IO Airplane D 365 Personal Injury • of Property 21 USC 881 423 Withdrawal 376 Qui Tam (31 USC
l30MillerAct 315 Airplane Product Product Liability 690 Other 28 USC 157 3729(a))
140 Negotiable Instrument Liability D 367 Health Care/ INTELLECfUAL 400 State Reapponionment
I SO Recovery of Overpayment 320 Assault, Libel & Phannaceutical 1:·=·~:'-:.;::P.;::R;.;O:.::P:.;:E=R.::,;TY:..:..::,;:R.::,;IG::.:H;:.T.::,;S::--f.~ 410 Antitrust
& Enforcement of Judgment Slander Personal Injury
B
820 Copyrights 430 Banks and Banking
I 51 Medicare Act 330 Federal Employers' Product Liability 830 Patent 450 Commerce
152 Recovery of Defaulted Liability D 368 Asbestos Personal 835 Patent. Abbreviated 460 Deponation
Student Loans 340 Marine Injury Product New Drng Application 470 Racketeer Innuenced and
(Excludes Veterans) 345 Marine Product Liability 840 Trademark Cormpt Organizations
D I 53 Recovery of Overpayment
of Veteran's Benefits
Liability
350 Motor Vehicle B PERSONAL PROPERTY
370 Other Fraud
~~~;;;:~:f;~~~~=~::;::J~Cj 880 Defend Trade Secrets
Act of2016
480 Consumer Credit
(15 USC 1681 or 1692)
D 160 Stockholders' Suits 355 Motor Vehicle 371 Truth in Lending 485 Telephone Consumer
0 190 Other Contract Product Liability D 380 Other Personal 720 Labor/Management l'.,~;\;i\".'!,r~JS:,,O~e::::,'"'IA"'1 0;;"';""S""E'==C:::::,UR=1ni:"',.""."',;-.T"~.,::-:, i.~ Protection Act
B 195 Contract Product Liability
196 Franchise
360 Other Personal
Injury
362 Personal Injury·
D
Property Damage
385 Property Damage
Product Liability
Relations
740 Railway Labor Act
75 I Family and Medical
861 HIA ( I 395fl)
862 Black Lung (923)
490 Cable/Sat TV
850 Securities/Commodities/
863 DIWC/DIWW (405(g)) Exchange
Medical Malpractice Leave Act 864 SSID Title XVI 890 Other Statutory Actions
1-,,.,.,.~-R=E:.:A:::;L,.::.·P.:;.R:;:O:;.:P.;;. E:::R. :TY.a.::,~---~.-·.,_C;;;,IVI;.;,:;L:.;Rl.;:,::G;;:,H;,;T~S;.,.··--4-P::.:R;;:l:::S;,::O:::NE~R;;.;P:.;.'E;;,;Tl;;.;:.:;T.:;IO;;,;N:.:;S;;.;..·1=1790 Other Labor Litigation 865 RSI (405(g)) 891 Agricultural Acts
210 Land Condemnation 440 Other Civil Rights Habeas Corpus: 791 Employee Retirement 893 Environmental Matters
220 Foreclosure 441 Voting 463 Alien Detainee Income Security Act 895 Freedom of lnfonnntion
§ 230 Rent Lease & Ejectment
240 Tons to Land
245 Ton Product Liability
442 Employment
443 Housing/
Accommodations
510 Motions to Vacate
Sentence
530 General
or Defendant)
71 IRS-Third Pany
Act
896 Arbitration
899 Administrative Procedure
D 290 All Other Real Propeny 445 Amer. wfDisabilities • 535 Death Penalty 26 USC 7609 Act/Review or Appeal of
Employment Other: 462 Naturalization Application Agency Decision
446 Amer. w/Disabilities • 540 Mandamus & Other 465 Other Immigration 950 Constitutionality of
Other 550 Civil Rights Actions State Statutes
448 Education 555 Prison Condition
560 Civil Detainee -
Conditions of
Confinement
V. ORIGIN (Place an "X" in011eBox011ly)
01 Original 02 Removed from 03 Remanded from D 4 Reinstated or □ S Transferred from D 6 Multidistrict D 8 Multidistrict
Proceeding State Court Appellate Court Reopened Another District Litigation - Litigation •
(specify) Transfer Direct File
Cite the U.S. Civil Statute under which you are filing (Do not c/tejurlsdlct/011al statutes unless diversity):
VI. CAUSE OF ACTION i::2e::. u:;.;·;;,;s.~c.;.::s~ec::.;;:io;,;;.n. ;;13;.;;:3=.:2<:;,:a)_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Brief description of cause:
1) for Declaratory Relief
VII. REQUESTED IN 0 CHECK IF THIS IS A CLASS ACTION DEMANDS CHECK YES only if demanded in complaint:
COMPLAINT: UNDER RULE 23, F.R.Cv.P. Declaratory Relief JURY DEMAND: OYes (!]No
VIII. RELATED CASE(S)
IF ANY rsee i11.v1n1womJ:
JUDGE DOCKET NUMBER
DATE SIGNATl/RE OF ATTORNEY OF RECORD
June 4, 2025 /s/ Michael W. Vlvoli
FOR OFFICE USE ONLY
RECEIPT# AMOUNT APPL YING IFP JUDGE MAG.JUDGE
Case 3:25-cv-01422-LL-MMP Document 1-2 Filed 06/04/25 PageID.9 Page 1 of 7
Exhibit "A"
(ERTC Consulting Services Agreement)
Case 3:25-cv-01422-LL-MMP Document 1-2 Filed 06/04/25 PageID.10 Page 2 of
7
~RTC
FUI\IDII\IG
ERTC Consulting Services Agreement
This ERTC Consulting Services Agreement (the "Agreement") is made by and between ERTCFunding LLC,
with an address at 1815 Lakewood Rd, Toms River, NJ 08755 ("Consultant") and Corny ~¼M. J:,r~.\- ~t~~°''.Sl-
wlth an address at "26~ ~ C°"""'"o ))?.\ \<ta µ ,."'\ ~ °', 1'lG& ("Client"). Consultant and Client
1
may be referred to herein each fndividually as a "Party" and collectively as the "Partf es."
WHEREAS, Consultant provides consulting services to eligible employers who wish to claim the
Employee Retention Tax Credit ("ERTC") from the U.S. Department ofTreasury, and wishes to provide its
consulting services to Client;
AND, WHEREAS, Client believes itself to be lawfully eligible to claim the ERTC and wishes to
obtain Consultant's consulting services;
NOW, THEREFORE, In consideration of the foregoing and the mutual cove11ants contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby enter into this Agreement and agree to the following terms, Intending
to be legally bound:
1. Services. Consultant will assist Client in computing the dollar amount of ERTCs that Client can
legally claim for all quarters ended prior to the Effective Date hereof or prior to December 31,
2021, whichever is earlier, based on the documentary evidence provided by Client. The Parties
acknowledge that the Services are performed subject to the American Institute of Certified
Public Accountants {AICPA)'s Statement on Standards for Consulting Services. The consulting
services provided by Consultant will include the following procedures (collectively, the
"Services"):
• Consider any other entities owned by Client for purposes of applying the aggregation rules
subject to Section 52(b) of the Internal Revenue Code of 1986.
• Determine and document Client's eligibility to claim ERTCs for all employees as a small
employer based on maximum full-time employee count of 100 for 2020 and 500 for 2021
during the applicable period In 2019.
• Determine and document for which calendar quarters, If any, Client is eligible based on a
decline in Gross Receipts from the relevant comparison period.
• Determine and document for which calendar quarters, if any, Client is eligible to claim ERTCs
based on full or partial closure due to governmental orders.
• Apply safe harbor provisions to maximize available credits and reduce the risk of an adverse
determination with respect to eligible calendar quarters.
• Compute the qualifying wages paid to each employee and during each calendar quarter for
which eligibility has been determined and documented.
• Optimize the allocation of ERTCs across eligible calendar quarters while considering:
► Qualifying wage caps of$10,000 In 2020 {50% credit to equal $5,000 per employee) &
$10,000 per calendar quarter (70% credit to equal $7,000 per employee) in 2021.
► Allocating PPP loan forgiveness based on wages during the Covered Period.
Case 3:25-cv-01422-LL-MMP Document 1-2 Filed 06/04/25 PageID.11 Page 3 of
7
Upon execution of this Agreement, Consultant wlll begin the computations for all applicable
quarters up to and Including the calendar quarter ended September, 2021. Upon the completion
of future calendar quarters, Client may request that Consultant extend the Services to those
quarters as well, which Consultant may or may not agree to in Consultant's sole discretion. In
the event that credits should be adjusted In future periods based on the final approval of PPP
forgiveness, upon request from Client, Consultant will provide the amended values for inclusion
in Form 941-X and bill Client therefor at Consultant's then-current hourly or fixed rate.
Consultant will not prepare any tax documents on behalf of Client other than Form 941 or 941-X
with respect to each applicable quarter. Consultant will not submit any Information to any state
tax authorities and will not represent Client before any state or federal tax authorities. Client is
hereby ~dvised to consult with Its tax advisors regarding any other returns or amendments that
might need to be filed as a result of receiving any ERTCs.
2. Payment.
a. On the Effective Date of this Agreement, and prior to the Services being rendered, Client
shall remit to Consultant an upfront deposit In the amount of $3,000 ("Deposit''). The
Services will not begin until the Deposit has been paid. In the event that (a) Consultant
declines to process Client's ERTC claim; (b) the Internal Revenue Service (11 IRS") disallows
Client's ERTC claim; or (c) Client's maximum ERTC claim is estimated by Consultant as less
than the Deposit, then the Services can be cancelled at Client's request with no financial
obligation (and the Deposit refunded). However, if any of the aforementioned conditions
arise as a result of fraud, negligence, dishonesty, fault or error on the part of Client,
including but not limited to cases where Client fails to disclose all relevant facts to
Consultant prior to paying the Deposit, then Consultant shall be entitled to retain the
Deposit in addition to any other remedies that may be available to Consultant. Other than
as provided In this subsection, the Deposit shall be non-refundable.
b. Upon the approval or funding of Client's claim by the IRS, Client shall remit to Consultant
20% of the total funded ERTC amount ("Contingency Fee"), towards which the Deposit will
be credited. The Contingency Fee Is due at such time as Client has experienced a cash inflow
of at least the amount of the Contingency Fee, either as a refund check from the IRS or as an
offset to quarterly employer taxes paid. Client expressly agrees to notify Consultant
immediately, but In no event more than seven (7) days, after receiving the refund or credit
related to an ERTC claim. The Contingency Fee shall be due fourteen (14) days after the date
on which Client receives or realizes an ERTC benefit In at least the amount of the
Contingency Fee.
c. A Deposit or Contingency Fee not paid within 30 days of becoming due will incur an Interest
charge of 1.5% per month, beginning on the applicable due date.
d. In any dispute Involving monies owed to Consultant, Consultant shall be entitled to all costs
of collectlon, Including reasonable attorneys' fees and Interest, at 18% per annum or the
highest rate allowed by law, whichever Is less.
e. Upon execution of this Agreement, Client shall simultaneously execute an ACH Transfer
Authorization Form authorizing Consultant to withdraw funds from Client's account In the
event that a Deposit or Contingency Fee becomes due and authorizing Client's bank to
transfer such funds to Consultant, In the amount of the applicable Deposit or Contingency
Fee agreed to hereunder, without further notice to or consent from Client.
f. Notwithstanding anything to the contrary In this Agreement, the Parties agree that
Consultant has the Irrevocable right to verify at any time whether a Contingency Fee has
become due hereunder. Accordingly, Client expressly agrees that If Consultant requests a
Case 3:25-cv-01422-LL-MMP Document 1-2 Filed 06/04/25 PageID.12 Page 4 of
7
screenshot, screencap, photograph and/or copy of the webpage In Client's IRS account
demonstrating the status of Client's ERTC application, Client shall provide such record to
Consultant within two (2) business days of the request (including date and time stamp).
There shall be no limit on the number of such requests that may be made; provided,
however, that Consultant may not request such records within two (2) weeks of a previously
fulfilled request. Client additionally agrees to take any action reasonably required by
Consultant to evidence or verify whether Client has realized or received an ERTC benefit.
g. Except as otherwise specified In section 2(a) hereof, the Parties agree that the Deposit shall
serve as the minimum total fee owed to Consultant hereunder, even In the event that the
total fees required to be paid by Client hereunder would otherwise be calculated to be less
than the Deposit amount.
3. Audits. Upon the completion of the Services, Consultant will provide Client with the
spreadsheets and documentation available to support Client's ERTC claims in the event of an
audit by the Internal Revenue Service (IRS) relating to Form 941 or Form 941-X. In the event of
such an audit, Client may request that Consultant prepare additional documentation supporting
Client's ERTC claims and/or to provide Client's payroll department or payroll service with the
necessary support to file its Form 941 and/or amended Form 941-X, which request may be
granted or denied in Consultant's sole discretion. In no event will Consultant represent Client
before the IRS or before any other governmental or non-governmental body. In the event that
Consultant provides consulting support requested by Client In the course of an audit, Consultant
will Invoice Client for these additional services at its then-current hourly or fixed rate.
4. Records and Access. In order to provide the Services, Consultant will need to gather facts about
Client's business operations in relation to determining Client's eligibility for the ERTC and
computing the dollar amount of ERTCs that Client can legally claim for each eligible calendar
quarter. This fact-gathering will include both financial data such as gross receipts per quarter as
compared to 2019 and the wages of full and part time employees per quarter, as well as non-
financial data. Client agrees to timely provide all documentation and data requested by
Consultant. Consultant will request source documents where practical, in order to reduce the
workload on Client and so that Client will not have to spend unnecessary time reproducing
reports for Consultant's use. However, Consultant will not audit Client or verify the accuracy or
legitimacy of any documents or data provided by Client. Consultant may require access to key
individuals to further its understanding of financial and non-financial reports used to support its
computations, in which case Client shall promptly make such individuals available to Consultant.
Client agrees to provide all financial and non-financial data requested in a timely manner, and to
provide access to key individuals as needed.
s. Limitations of Engagement. No attestation services are being provided by Consultant, and no
opinion is being expressed as to the validity or accuracy of underlying financial records, non-
financial records, or evidential matter. Client agrees to provide a representation letter, signed by
an authorized officer of Client under penalty of perjury, asserting the validity, completeness, and
accuracy of all underlying reports and Information transmitted or shared by Client, whether
written or oral, that are used by Consultant In computing or determining Client's ERTC claims.
Consultant's procedures are not designed to Identify or detect errors or irregularities In Client's
financial statements. Consultant's procedures are not designed to Identify or detect deficiencies
In Client's Internal controls. This engagement Is limited to gathering Client-provided data,
Case 3:25-cv-01422-LL-MMP Document 1-2 Filed 06/04/25 PageID.13 Page 5 of
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applying the Coronavlrus Aid, Relief, and Economic Security (CARES) Act, the Consolidated
Appropriations Act (CAA) and the Internal Revenue Code as modified by the American Rescue
Plan Act of 2021 and Interpreted by the Internal Revenue Service, computing the ERTC claims of
Client based on the Information provided, and providing Client with documentation to support
Client's ERTC claims. Consultant makes no representation as to the outcome of any claim for
ERTC credits. Consultant shall not assume any responsibility or have any liability for any
materials or information provided or failed to be provided by Client. Client acknowledges that
Consultant is not a CPA firm, does not offer tax or legal advice, and wlll not represent Client
before any federal or state tax authorities. Any final determination of Client's ERTC eligibility
rests solely with the Internal Revenue Service ("IRS"). Further, IRS guidance regarding ERTCs and
associated eligibility rules are evolving and subject to change at any time.
6. Representations and Warranties. Each Party represents and warrants to the other that Its
representative whose signature Is set forth at the end hereof has been duly authorized by all
necessary action, and throughout the term hereof shall retain the full right, power and authority,
to enter into this Agreement and to perform its obligations.
Client represents and warrants that all materials and information provided to Consultant are
accurate and complete and acknowledges that Consultant will, without Independent verification,
rely on them for the purpose of providing the Services. Client represents tt.,at it has the right to
supply such Information to Consultant and that the supply of such information by Client and Its
use by Consultant for the purposes of the provision of the Services will not infringe any rights
held by any third party, involve the unauthorized use of confidential Information belonging to a
third party, or result in the breach by Client or Consultant of any law, regulation, fiduciary duty,
Intellectual property right, or third-party agreement.
7. Term and Termination. This Agreement is effective as of the date of Its full execution by the
Parties (the "Effective Date"). The Services shall encompass all applicable calendar quarters of
2020 and 2021, including those prior to the Effective Date. Consultant reserves the right to
terminate this Agreement or the Services at any time, with or without cause. In the event that
Consultant terminates without cause prior to the completion of the Services, Consultant shall
refund the Deposit to Client. Upon termination, all workpapers remain property of Consultant.
Consultant invests significant resources into this engagement prior to completion of the final
deliverables. Therefore, if Client terminates this Agreement or the Services without cause prior
to completion of the Services, Client shall pay to Consultant, In addition to the Deposit, 20% of
the dollar amount of any Employee Retention Tax Credits that are ultimately claimed by
Client.
8. Data Sharing. Client agrees that Consultant may share any of Client's documents and data,
including but not limited to application Information and tax returns, with Consultant's partners
and affiliates at Consultant's discretion.
9. Limitation of Llablllty. Consultant Is relying on financial and non-financial data provided by
Client. Any erroneous computations or ERTC claims made as a result of invalid, Inaccurate, non-
contextuallzed, Incomplete or fraudulent data provided by Client are not the responsibility of
Consultant. Consultant applies ERTC computations based on:
• Consultant's understanding of the CARES Act, the CAA, and the American Rescue Plan Act of
2021 as passed by Congress and signed Into law by the President.
• Review of recent authoritative guidance from the Internal Revenue Service such as FAQs and
Notices 2021-20, 2021-23, and 2021-49.
Case 3:25-cv-01422-LL-MMP Document 1-2 Filed 06/04/25 PageID.14 Page 6 of
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• Contextual definitions supported In the tax code but not explicitly stated in current guidance
as it relates to the American Rescue Plan Act of 2021.
The Internal Revenue Service Is continually evolving its interpretations of provisions specified In
the Cares Act, CAA, and the American Rescue Plan Act of 2021 and publishing authoritative
guidance as needed. We anticipate that additional authoritative guidance may develop over
time, some of which could change the computation of your legal ERTC claims. If these changes
require additional amendment, Consultant will update (upon Client's request) the computation
and documentation to reflect those changes and will invoice Client for such additional services
at its then-current hourly or fixed rate.
Client agrees that Consultant shall have no liability of any nature, whether in contract or tort or
otherwise, for any loss or damage incurred by Client arising directly or indirectly as a result of or
in connection with the Services and/or this Agreement, except where such losses are the result
of fraud or dishonesty on the part of Consultant or to the extent that such .liability cannot
lawfully be excluded or limited. In the event that the ERTC amount approved by the Internal
Revenue Service differs from Consultant's findings, Consultant will have no liability to Client.
Notwithstanding the foregoing, in the event of a liability finding against Consultant by a tribunal
of competent jurisdiction due to an adverse determination by the Internal Revenue Service, the
extent of Consultant's liability will be limited to any Interest or penalties imposed on Client by
the Internal Revenue Service. The Parties agree that In any event that Consultant Is found to
have liability to Client in relation to the Services or the Agreement, Client's maximum remedy at
law or In equity shall be limited to twice the actual fees paid by Client to Consultant for the
Services. This limitation is an essential element of the bargain agreed to by the Parties, without
which Consultant would not have entered into this Agreement.
10. Indemnification. Client shall Indemnify Consultant and hold Consultant harmless against any
cost, loss, expense or llabtlity which may be suffered or Incurred by Consultant and/or by Client
as a result of the performance of Consultant's obligations under this Agreement, including,
without limitation, those arising from any misrepresentation, misconduct, negligence or
dishonesty on the part of any third party or errors on the part of Consultant, except to the
extent that the cost, loss, expense or liability Is due to fraud, bad faith or dishonesty on the part
of Consultant or to the extent that such liability cannot lawfully be excluded or limited.
11. Assignment. No Party may assign or otherwise transfer its rights, obligations, and/or duties
under this Agreement without the prior written consent of the other Party, except that
Consultant may assign some or all of its duties hereunder to a subsidiary, affiliate and/or
subcontractor.
12. Dispute Resolution/ Arbitration. Should any dispute between the Parties arise at any time out
of any aspect of this Agreement and/or the Services provided hereunder, without limitation, the
Parties will confer in good faith to promptly resolve such dispute. In the event that the Parties
are unable to resolve their dispute, and should either Party desire to pursue a claim against the
other Party, the Parties agree to have the dispute resolved by mandatory, final, and binding
arbitration ("Arbitration"). The Arbitration shall be conducted by an arbltrator(s) provided by an
Impartial third-party arbitration provider, the American Arbitration Association (AAA) (the
"Arbitrator''), and be subject to the Arbitrator's Rules and Procedures and Fee Schedule In effect
at the time the claim Is filed with the Arbitrator. The Parties agree that the Arbitration shall be
held In Ocean County, New Jersey, or where otherwise prescribed by the Arbitrator. All
Case 3:25-cv-01422-LL-MMP Document 1-2 Filed 06/04/25 PageID.15 Page 7 of
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previously unasserted claims arising underfederal, state or local statutory or common law and
all disputes relating to the validity of this Agreement, as well as this Arbitration provision, shall
be decided by final and binding Arbitration. The Parties acknowledge that they are hereby
waiving their respective rights to a trial by Jury in the event of any dispute arising from this
Agreement or the Services hereunder. Any award of the Arbitrator shall be final and binding,
and may be entered as a judgment In any court of competent jurisdiction.
13. Governing Law. This Agreement shall be construed in accordance with and governed for all
purposes by the laws of the State of Texas, and any Arbitration award granted pursuant to
section 12 hereof may be entered as a judgment in the courts of the State of Texas.
14. Savings Clause; No Hardship. The Parties acknowledge and agree that the provisions of this
Agreement are reasonable. If any tribunal of a competent jurisdiction finds that any such
provision is unenforceable but would be enforceable if some part or parts of it were deleted or
modified, or if the period or area of application were reduced, then such provision shall apply
automatically with such modification as Is necessary to make It enforceable, and otherwise this
Agreement shall continue in full force and effect. Each Party has reviewed this Agreement
carefully and has had the opportunity to review this Agreement with its respective attorney(s).
15. Entire Agreement; No Modification. This Agreement supersedes any and all prior agreements
between the Parties, whether written or oral. This Agreement may not be changed, modified,
released, discharged, abandoned, or otherwise amended, in whole or in part, except by an
instrument in writing signed by both Parties. Those provisions which by their nature or design
are intended to survive termination of the Agreement shall so survive.
IN WITNESS WHEREOF, each of the Parties has executed this Agreement and agreed to all of Its terms as
of the Effective Date.
ERTCFunding LLC Cor "(.\'">~~ n< ~.\-- N\or½o.s~
Name:._ _ _ _ _ _ __ Name: Seo." • ("'~°'""--
Title:_ _ _ _ _ _ __ ntle: C. E:. 0
Signature:. _ _ _ _ _ __ Signature:~
Date: _ _ _ _ _ _ _ __ Date: I
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