Joint Status Report: WOMPLY v. CAPITAL PLUS FINANCIAL, LLC,
Summary
A joint status report filed January 25, 2022 as Document 33 in Oto Analytics, Inc. d/b/a Womply v. Capital Plus Financial, LLC, Civil Action No. 3:21-cv-2636-B, in the U.S. District Court for the Northern District of Texas, Dallas Division. The parties state that counsel conferred remotely on January 13, 2022 under Rules 16(b) and 26(f) of the Federal Rules of Civil Procedure. Womply's position statement describes a dispute over fees the Small Business Administration paid to lenders under the PPP, alleges that it provided loan referral and technology services to Capital Plus and Blueacorn without being paid, and lists claims for tortious interference, breach of contract and fraud. The defendants' position statement asserts that SBA rules prohibit paying the fees, that the court lacks personal jurisdiction over the Blueacorn defendants and that the claims belong in arbitration.
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Case 3:21-cv-02636-B Document 33 Filed 01/25/22 Page 1 of 13 PageID 368
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
OTO ANALYTICS, INC. d/b/a WOMPLY §
§
Plaintiff, §
§
v. § Civil Action No. 3:21-cv-2636-B
§
CAPITAL PLUS FINANCIAL, LLC, §
CROSSROADS SYSTEMS, INC., ERIC §
DONNELLY, BA FIN ORION, LLC d/b/a §
BLUEACORN, and BARRY CALHOUN §
§
Defendants. §
JOINT STATUS REPORT
Pursuant to Federal Rules of Civil Procedure 16(b) and 26(f), and this Court’s January 4
and 6, 2022 Orders (ECF Nos. 27, 29), counsel for Oto Analytics, Inc. d/b/a Womply (“Womply”),
Capital Plus Financial, LLC (“Capital Plus”), Crossroads Systems, Inc. (“Crossroads”), Eric
Donnelly (“Donnelly”), BA Fin Orion, LLC d/b/a Blueacorn (“Blueacorn”), and Barry Calhoun
(“Calhoun”; collectively, the “Parties”) conferred remotely on January 13, 2022. As outlined by
the Court’s Order, the Parties hereby submit the following Joint Status Report:
1. A brief statement of the nature of the case, including the contentions of the parties.
Plaintiff Womply’s Position:
This case concerns a dispute related to fees paid by the United States Small Business
Administration (“SBA”) to lenders under the Paycheck Protection Program (“PPP”). Womply is
a technology company. Womply alleges that it provided PPP loan referral and technology services
to Capital Plus and Blueacorn. Blueacorn and Capital Plus used the technology services Womply
provided to review, approve, and service the PPP loans Womply referred. Capital Plus received
fees from the SBA for funding the Womply-referred PPP loans, but neither Capital Plus nor
Case 3:21-cv-02636-B Document 33 Filed 01/25/22 Page 2 of 13 PageID 369
Blueacorn has paid any fees to Womply for the referral services or the technology services
Womply provided. Womply also alleges that Capital Plus and Blueacorn made false statements
to Womply to induce it to enter into agreements to provide these services. Womply seeks a
declaratory judgment that SBA rules do not limit the technology fees Blueacorn agreed to pay
Womply under these agreements. Womply also brings claims (i) against Capital Plus, Crossroads,
and Donnelly (the “Capital Plus Defendants”) for tortious interference with contracts, promissory
estoppel, unjust enrichment, quantum meruit; (ii) against Blueacorn for breach of contract;
(iii) against Capital Plus and Blueacorn for breach of contract; and (iv) against all defendants for
fraud, negligent misrepresentation, and civil conspiracy.
Womply opposes Defendants’ motions to dismiss. Contrary to the Capital Plus
Defendants’ assertions, Womply’s agreements with Blueacorn comply with all applicable SBA
rules, and Womply complied with the terms of these agreements. Contrary to Blueacorn’s and
Calhoun’s (the “Blueacorn Defendants”) assertions, the arbitration provisions in Womply’s
agreements with Blueacorn were procured by fraud and are therefore unenforceable, this Court has
personal jurisdiction over the Blueacorn Defendants because they purposefully conducted
activities in Texas, and Womply’s Amended Complaint adequately pleaded each claim alleged
against the Blueacorn Defendants. Womply will respond in full to these arguments in accordance
with the operative case schedule.
Defendants’ Position:
Defendants dispute these allegations. The Capital Plus Defendants allege that Capital Plus
and Blueacorn are prohibited by SBA rules from paying Womply the fees, and that the agreements
between Womply and Blueacorn are therefore unenforceable, rendering all of Womply’s claims
meritless. The Capital Plus Defendants further allege in the alternative that to the extent there was
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an agreement between Capital Plus and Womply (which the Capital Plus Defendants deny),
Womply materially breached such agreement, including without limitation by failing to provide
required documentation. To the extent the agreement between Blueacorn and Womply is
enforceable, the Capital Plus Defendants allege that Womply breached such agreement, including
without limitation by failing to provide required documentation. The Capital Plus Defendants
expect to file a motion to dismiss for failure to state a claim on these bases and others. Should the
Court deny the motion to dismiss, the Capital Plus Defendants suspect that discovery will reveal
Womply materially breached the relevant agreements by failing to perform its obligations before
referring loans to Blueacorn.
The Blueacorn Defendants argue that this Court lacks personal jurisdiction over them,
necessitating dismissal. In the alternative, the Blueacorn Defendants argue that Womply’s claims
should be dismissed in favor of arbitration pursuant to the arbitration clause in the parties’
agreements. Finally, although the issues need not be reached because of these procedural bars, the
Blueacorn Defendants argue that Womply’s causes of action would need to be dismissed anyway
for failure to state a claim because, among other things: (i) Womply’s tort claims center around a
supposed representation made to Womply on a phone call during contract negotiations that does
not appear anywhere in the subsequently executed written contracts, and the written contracts
contain an express provision that the contracts contain the parties’ entire agreement and supersede
any prior communications; (ii) as to Womply’s breach-of-oral-contract claim, even as alleged by
Womply, the substance that was supposedly discussed on the one phone conversation could not
have formed an oral contract, because it had none of the elements of a contract and such an oral
contract would be barred by the parol evidence rule in light of the execution of detailed, written
contracts; and (iii) as to Womply’s claim for breach of the written contracts, Womply’s exclusive
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claim of breach (since no payment is yet due from Blueacorn to Womply) is that Blueacorn has
breached the contracts’ implied covenant of good faith and fair dealing by not suing Capital Plus
for fees, but the implied covenant of good faith and fair dealing cannot impose such a substantive
duty on Blueacorn where it is not part of the written agreement.
2. Any challenge to jurisdiction or venue, including any procedural defects in the
removal.
Womply and the Capital Plus Defendants agree that this Court has subject-matter
jurisdiction over this action under 28 U.S.C. § 1331. (ECF Nos. 1, 17, 30.) The Capital Plus
Defendants also contend that this Court has subject-matter jurisdiction under 28 U.S.C.
§ 1442(a)(1). The Blueacorn Defendants have moved to dismiss for lack of personal jurisdiction
under Federal Rule of Civil Procedure 12(b)(2), or in the alternative, to compel Womply’s claims
to arbitration under the Federal Arbitration Act. (ECF No. 31.) Womply opposes Defendants’
motions and will file memoranda of law in opposition to them in accordance with the operative
case schedule.
3. Any pending motions.
On January 24, 2022, the Blueacorn Defendants moved to dismiss for lack of personal
jurisdiction, or, alternatively, to dismiss and compel Womply’s claims to arbitration, or,
alternatively, to dismiss for failure to state a claim. (ECF No. 31.) Womply’s opposition is due
February 14, 2022, and the Blueacorn Defendants’ reply is due February 28, 2022.
On January 4, 2022, this Court set the following briefing schedule for the Capital Plus
Defendants: (i) the Capital Plus Defendants’ answer, pleading, or motion in response to Womply’s
Amended Complaint is due January 31, 2022, and (ii) Womply’s answer or motion in response to
any such pleading or opposition to any such motion is due March 14, 2022. (ECF No. 26.)
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4. Any matters which require a conference with the court.
None at this time.
5. Likelihood that other parties will be joined or the pleadings amended.
On December 16, 2021, Defendant Crossroads, Capital Plus’ parent corporation,
announced that it entered into an agreement in principle to acquire Fountainhead SBF LLC
(“Fountainhead”) and Fountainhead Commercial Capital. Womply has commenced arbitration
against Fountainhead for failure to pay fees. Womply is concerned that Crossroads’ planned
acquisition may impair Capital Plus’, Crossroads’, and/or Fountainhead’s ability to satisfy any
judgments against them in this action and/or in the pending arbitration. Womply is continuing to
investigate these concerns, which may require Womply to amend the pleadings and, if necessary,
add additional parties.
The Capital Plus Defendants have not yet filed a responsive pleading or motion to
Womply’s Amended Complaint. They anticipate filing a motion to dismiss. Depending on the
outcome of their motions to dismiss, Defendants may file counter-claims, including claims arising
from Womply’s role in reviewing and referring any loans to Blueacorn.
6. (a) An estimate of the time needed for discovery, with reasons, (b) a specification of
the subjects on which discovery may be needed, and (c) whether discovery should be
conducted in phases or be limited to or focused upon particular issues.
Plaintiff Womply’s Position:
(a) Womply estimates that fact discovery can be completed in one year and expert
discovery can be completed in four months. This action involves complex factual issues, such as
the technology services that Womply provided to Blueacorn and Capital Plus, and will require
considerable written discovery, document production and review, and depositions.
(b) Womply intends to conduct discovery regarding, inter alia, (i) communications
among Womply, Blueacorn, and/or Capital Plus regarding entering into agreements; (ii) a May 11,
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2021 telephone call among Donnelly, Calhoun, and Womply’s CEO; (iii) contract negotiations
between Womply and Blueacorn; (iv) arbitration issues; (v) communications and agreements
between Blueacorn and Capital Plus; (vi) the services Womply provided to Blueacorn and Capital
Plus and their use of those services; (vii) Capital Plus’ and Blueacorn’s payment of fees; (viii) SBA
regulations; and (ix) damages.
(c) Womply does not believe discovery should be stayed, phased, or limited to
particular issues. Womply initially filed this action on September 9, 2021, more than four months
ago, but has not yet taken any discovery. Many of the disputed factual issues in this action took
place in May 2021, more than eight months ago. Continued delay will result in memories fading
and witnesses potentially becoming unavailable. It will also permit the Capital Plus Defendants
to continue holding more than $76 million that rightfully belongs to Womply. Accordingly,
Womply opposes staying discovery, conducting discovery in phases, or imposing other limitations
beyond those set forth in the Federal Rules of Civil Procedure, Federal Rules of Evidence, and
Local Rules of this Court.
At 2 PM ET on January 25, 2022, the same day this Joint Status Report was due by this
Court’s Order, the Blueacorn Defendants added the paragraph of legal argument and citations in
subsection 6(c) below. Womply asked the Blueacorn Defendants to remove these last-minute
citations as inappropriate, particularly in a Joint Status Report, but they refused to do so. Capital
Plus stated that it did not object to the last-minute addition. To the extent any Defendants seek to
stay discovery, they should bring a motion to this Court, which Womply will have the opportunity
to review and oppose. See Local Civ. R. 7.1(h) (requiring a brief for a motion to stay).
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Defendants’ Position:
(a) Defendants agree that fact discovery can be completed in one year but believe that
expert discovery should be completed in the three months after fact discovery has closed.
(b) In the event the Court denies Defendants’ motions to dismiss, they intend to
conduct discovery regarding, inter alia, (i) communications among Womply, Blueacorn, and/or
Capital Plus regarding entering into agreements; (ii) communications and agreements between
Womply and Blueacorn; (iii) communications and agreements between Womply and its other
customers for similar services; (iv) Womply’s agreements with its suppliers and vendors and the
scope of the services they provided to Womply; (v) Womply’s communications with prospective
borrowers; (vi) the services Womply provided to Blueacorn; (vii) SBA regulations; and
(viii) damages.
(c) Defendants ask the Court to stay or phase discovery pending the Court’s rulings on
(i) the Capital Plus Defendants’ likely motion to dismiss and (ii) the Blueacorn Defendants’
motion to dismiss and/or to compel arbitration. Bell v. Koch Foods of Miss., 358 F. App'x 498,
501 (5th Cir. 2009) (affirming denial of pre-arbitration discovery, including because it would
“defeat the FAA’s requirement of summary and speedy disposition of motions and petitions to
enforce arbitration clauses”); Petrus v. Bowen, 833 F.2d 581, 583 (5th Cir. 1987) (“[T]he district
court properly deferred discovery while deciding whether the defendants were proper parties to
the action.”); Shaver v. Barrett Daffin Frappier Turner & Engel, L.L.P., 593 F. App’x 265, 274(5th
Cir. 2014) (“It is not uncommon to stay discovery pending a decision on a motion to dismiss,
insofar as a Rule 12(b)(6) motion to dismiss focuses on the adequacy of the pleadings, while
discovery helps a plaintiff obtain enough evidence to succeed on the merits.”). Womply
acknowledges that its written agreement was with Blueacorn (not Capital Plus), raising causation
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issues that have led other federal courts to dismiss claims against other lenders in Capital Plus’s
position. Blueacorn, in turn, has moved to dismiss and to compel arbitration. These motions go
to the jurisdiction and venue of this case—considerations that typically warrant a stay of discovery.
Should this Court compel arbitration of the claims against Blueacorn, discovery on the remainder
of Womply’s claims against the Capital Plus Defendants would be more limited in scope. It would
be unjust to require the Capital Plus Defendants to expend resources attending depositions and
reviewing or responding to discovery between Womply and Blueacorn, only for those claims to
be resolved elsewhere—without the Capital Plus Defendants.
7. Any issues related to disclosure or discovery of electronically stored information,
including the form or forms (i.e., TIF, PDF, or native; with or without metadata;
searchable or not) in which it should be produced.
None at this time. The Parties intend to enter into an ESI stipulation as part of conducting
discovery.
8. Any issues relating to claims of privilege or of protection as trial-preparation
material, including—if the parties agree on a procedure to assert such claims after
production—whether they will be asking the Court to include their agreement in an
order.
None at this time. The Parties intend to enter into a proposed protective order as part of
conducting discovery, which they will submit to this Court for approval.
9. What changes, if any, should be made in the limitations on discovery imposed under
the Federal rules or by local rule, and what other limitations should be imposed.
Plaintiff Womply: None at this time.
Defendants: See responses to #6.
10. Any other orders that should be entered by the Court under Rule 26(c) or Rule 16(b)
and (c).
See responses to #8 and #11.
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11. Proposed deadlines with specific dates that limit the time to (a) join other parties and
to amend the pleadings; (b) file motions, including summary judgment and other
dispositive motions; (c) complete discovery; and (d) designate expert witnesses and
make the expert disclosures required by Rule 26(a)(2).
Plaintiff Womply proposes the following schedule:
Deadline to join other parties and amend the
May 30, 2022
pleadings without leave of Court
Complete fact discovery September 1, 2022
Deadline to designate expert witnesses on
August 1, 2022
issue on which party bears the burden of proof
Deadline to designate rebuttal experts September 1, 2022
Complete expert discovery December 1, 2022
Move for summary judgment February 1, 2023
Womply proposes this schedule based on the commencement of discovery on January 13,
2022. See Fed. R. Civ. P. 26(d)(1). If discovery is stayed or conducted in phases, a different
schedule may be required.
Defendants propose the following schedule:
Discovery stayed or phased pending resolution
Stayed
of motions to dismiss and to compel arbitration
Deadline to join other parties and amend the Six months following resolution of motions to
pleadings without leave of Court dismiss and to compel arbitration
Complete fact discovery One year following resolution of motions to
dismiss and to compel arbitration
Deadline to designate expert witnesses on One year following resolution of motions to
issue on which party bears the burden of proof dismiss and to compel arbitration
Deadline to designate rebuttal experts Thirty days following designation of expert
witnesses
Complete expert discovery Three months after close of fact discovery
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Move for summary judgment Two months after close of expert discovery
12. Requested trial date, estimated length of trial, and whether jury has been demanded.
Womply requests a jury trial in May 2023. Defendants ask the Court to stay or phase
discovery pending the Court’s rulings on the motions to dismiss and to compel arbitration.
Defendants will request a trial date, if necessary, once the Court has ruled on the motions to
dismiss.
The Parties estimate that a trial would last approximately two weeks.
13. Whether the parties will consent to trial (jury or non-jury) before a United States
Magistrate Judge per 28 U.S.C. § 636(c).
The Parties do not consent to a trial before a United States Magistrate Judge.
14. Progress made toward settlement, and the present status of settlement negotiations.
This must be a detailed report. Do not submit a generic recitation that settlement was
discussed but was unsuccessful.
The Parties began preliminary discussions regarding a potential resolution in July 2021. In
November 2021, Womply and the Capital Plus Defendants exchanged initial settlement offers, but
did not reach an agreement. Capital Plus has made two settlement offers to Womply. Womply is
reviewing Capital Plus’ most recent settlement offer and is preparing a settlement offer in response.
15. What form of alternative dispute resolution (e.g., mediation, arbitration, summary
jury trial, court-supervised settlement conference, or early neutral evaluation) would
be most appropriate for resolving this case and when it would be most effective.
Plaintiff Womply’s Position: After this Court rules on the pending and forthcoming
motions and the Parties have taken discovery, mediation may be appropriate for resolving this case
and the Parties may confer about the selection of a mediator at that time.
Defendants’ Position: Blueacorn and Capital Plus have agreed to attend a mediation at
any time, including now.
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16. Any other matters relevant to the status and disposition of this case.
None at this time.
The Parties have conferred regarding this Joint Status Report and, except where separate
positions are specifically outlined, agree upon the above.
Dated: January 25, 2021 Respectfully submitted,
Of Counsel: By:___/s/ Jason P. Bloom ___
Jason P. Bloom
Willkie Farr & Gallagher LLP Texas Bar No. 24045511
Nina Cortell
Alexander L. Cheney (admitted pro hac vice) Texas Bar No. 04844500
One Front Street Haynes and Boone, LLP
San Francisco, CA 94111 2323 Victory Avenue, Suite 700
(415) 858-7400 Dallas, TX 75219
acheney@willkie.com (214) 651-5000
jason.bloom@haynesboone.com
Mark T. Stancil (admitted pro hac vice) nina.cortell@haynesboone.com
Joshua S. Levy (admitted pro hac vice)
1875 K Street, N.W. Attorneys for Plaintiff Oto Analytics, Inc. d/b/a
Washington, D.C. 20006 Womply
(202) 303-1000
mstancil@willkie.com
jlevy@willkie.com
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Case 3:21-cv-02636-B Document 33 Filed 01/25/22 Page 12 of 13 PageID 379
SUSMAN GODFREY L.L.P.
/s/ Megan E. Griffith _______
Terrell W. Oxford
Texas Bar No. 15390500
Harry Susman (admitted pro hac vice)
Texas Bar No. 24008875
Megan E. Griffith
Texas Bar No. 24122748
1000 Louisiana Street, Suite 5100
Houston, TX 77002-5096
Telephone: (713) 651-5096
Fax: (713) 654-6666
toxford@susmangodfrey.com
hsusman@susmangodfrey.com
mgriffith@susmangodfrey.com
Attorneys for Defendants Capital Plus Financial
LLC, Crossroads Systems, Inc., and Eric Donnelly
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Case 3:21-cv-02636-B Document 33 Filed 01/25/22 Page 13 of 13 PageID 380
Sidley Austin LLP
/s/ _Penny P. Reid___
Penny P. Reid
Texas Bar No. 15402570
preid@sidley.com
Claire Homsher
Texas Bar No. 24105899
chomsher@sidley.com
SIDLEY AUSTIN LLP
2021 McKinney Ave No. 2000
Dallas, Tex. 75201
(214) 981-3300
(214) 981-3400 (facsimile)
Michael A. Levy
(pro hac vice to be filed)
mlevy@sidley.com
Christopher M. Egleson
(pro hac vice to be filed)
cegleson@sidley.com
Katelin Everson
(pro hac vice to be filed)
keverson@sidley.com
SIDLEY AUSTIN LLP
787 Seventh Avenue
New York, N.Y. 10019
TEL: (212) 839-5300
FAX: (212) 839-5599
Attorneys for the Blueacorn Defendants
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