Athens v. Bank of America and Megan Scholz — Order (Document 14)

Summary

An order on preliminary review under 28 U.S.C. § 1915(e)(2), filed October 4, 2021 as Document 14 in Natasha Athens d/b/a Favorite Things v. Bank of America and Megan Scholz, Case No. 21-cv-748-SM, in the U.S. District Court for the District of New Hampshire. The order summarizes the allegations that Athens received a PPP loan of $18,625 in May 2020 and that Scholz reduced the forgiveness amount to zero on August 9, 2021 and later to one dollar. Construing the pro se complaint liberally, the court identifies state law claims of fraud, breach of contract and intentional infliction of emotional distress, and notes diversity jurisdiction under 28 U.S.C. § 1332. United States Magistrate Judge Andrea K. Johnstone directs the clerk to issue summonses and the U.S. Marshals Service to serve the defendants, who must respond within 30 days of service.

Summary drafted by a model from the text of the original file linked on this page and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

       Case 1:21-cv-00748-SM Document 14 Filed 10/04/21 Page 1 of 5



                      UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF NEW HAMPSHIRE


Natasha Athens d/b/a
Favorite Things

      v.                                   Case No. 21-cv-748-SM

Bank of America and
Megan Scholz


                                 ORDER
     Pro se plaintiff Natasha Athens, d/b/a Favorite Things,

proceeding in forma pauperis, has sued Bank of America (“BOA”)

and BOA Vice President Megan Scholz.        Ms. Athens contends that

the defendants improperly refused to forgive a loan she obtained

pursuant to the COVID-19 pandemic-related Paycheck Protection

Program (“PPP”).     Ms. Athens’s complaint is before the court for

preliminary review under 28 U.S.C. § 1915(e)(2).


                                Standard

     This court conducts a preliminary review of complaints

filed in forma pauperis.     See 28 U.S.C. § 1915(e)(2).      Claims may

be dismissed sua sponte, if, among other things, the court lacks

jurisdiction, a defendant is immune from the relief sought, or

the complaint fails to state a claim upon which relief may be

granted.   See id.    In considering whether the complaint states a

claim, the court determines whether, stripped of legal
      Case 1:21-cv-00748-SM Document 14 Filed 10/04/21 Page 2 of 5



conclusions and with all reasonable inferences construed in

plaintiff’s favor, the complaint contains “sufficient factual

matter, accepted as true, to ‘state a claim to relief’” or state

a claim upon which relief can be granted.       Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (citation omitted).       In undertaking

this review, the court is mindful that pro se complaints must be

construed liberally.     See Erickson v. Pardus, 551 U.S. 89, 94

(2007) (per curiam).



                              Background

     Created in 2020 under the Coronavirus Aid, Relief, and

Economic Security Act (“CARES Act”), as an emergency measure to

combat the economic damage of the COVID-19 pandemic, the PPP was

“designed to give loans to eligible businesses and, if the

loaned funds are used for specified expenses, to allow those

loans to be forgiven.”     In re: Gateway Radiology Consultants

P.A., 983 F.3d 1239, 1247 (11th Cir. 2020).       Obtaining loan

forgiveness for forgivable expenses paid or incurred is a

separate process in which the borrower applies to the PPP

lender.   Savage v. U.S. Small Bus. Admin., No. 21-CV-0153-MSM-

PAS, 2021 WL 3406387, at *2 (D.R.I. Aug. 4, 2021).          Once the

borrower applies for loan forgiveness, the lender has 60 days to

determine whether the “borrower is entitled to forgiveness of

some or all of the amount applied for . . . .”        Id.   (quoting 85


                                   2
         Case 1:21-cv-00748-SM Document 14 Filed 10/04/21 Page 3 of 5



Fed Reg. 38,306).      The lender then submits its determination to

the Small Business Administration (“SBA”) and requests payment

from the SBA for any amounts for which the borrower is entitled

to forgiveness.     85 Fed. Reg. 33,005.      Within 90 days, the SBA

makes a final determination of the forgivable PPP expenses and

remits such amounts to the lender.         Id.

     Plaintiff alleges that, on behalf of her business, she

received a PPP loan of $18,625 in May 2020.           Compl. (Doc. No. 1)

at 4-5.    She then proceeded to use the funds in accordance with

all appropriate guidelines.       Id. at 5.      Ms. Athens further

alleges that in July 2021 she was notified that her loan would

be forgiven in full.      Id. at 9-10.     Contrary to this

notification, plaintiff claims, defendant Scholz notified

plaintiff on August 9, 2021 that she had reduced the forgiveness

amount to zero “after closer review of the documents provided.”

Id. at 10.    Later, Scholz indicated that she would change the

forgiveness amount to one dollar, in order to facilitate

plaintiff’s ability to pursue an appeal.           Id.   Plaintiff alleges

that her first loan repayment is due on October 14, 2021.               Id.

at 14.

     Ms. Athens alleges that the defendants have no legitimate

reason to deny forgiveness of the entire loan and that the

denial is a fraudulent attempt to increase BOA’s profits.




                                      3
         Case 1:21-cv-00748-SM Document 14 Filed 10/04/21 Page 4 of 5



Plaintiff alleges that the defendants’ actions have destroyed

her business and caused her emotional distress.



                                   Claims

     Construed liberally, the complaint contains the following

state law claims: 1) fraud 1; 2) breach of contract; and 3)

intentional infliction of emotional distress.



                                  Service

         Accordingly, the court directs that the complaint be

served upon the defendants at the addresses provided on

plaintiff’s summonses.       (Doc. Nos. 8 and 9).     The court’s

determination that the complaint should be served is issued

without prejudice to the defendant’s ability to move to dismiss

this action on any proper basis. 2


     1The court notes that the asserted claim is one for common
law civil fraud, not criminal fraud, as the latter does not
provide a private right of action. See Linda R.S. v. Richard
D., 410 U.S. 614, 619 (1973) (“a private citizen lacks a
judicially cognizable interest in the prosecution or
nonprosecution of another”).

     Plaintiff invokes the court’s diversity jurisdiction. See
     2

28 U.S.C. § 1332. She appears to be a citizen of New Hampshire,
while the defendants do not. In addition, her allegations of
compensatory damages and emotional distress are sufficient, at
this stage of the litigation, to meet her “burden of alleging
with sufficient particularity facts indicating that it is not a
legal certainty that the claim involves less than the
jurisdictional amount” necessary to support diversity
jurisdiction, $75,000. Mojtabai v. Mojtabai, 4 F.4th 77, 83–84


                                      4
       Case 1:21-cv-00748-SM Document 14 Filed 10/04/21 Page 5 of 5



                               Conclusion

      The clerk’s office is directed to prepare and issue

summonses for defendants Bank of America and Megan Scholz.

After issuing the summonses, the clerk’s office is directed to

provide the summonses, copies of the complaint (Doc. No. 1), and

this Order, to the U.S. Marshals Service (“USMS”) for service.

The USMS is directed to effect service pursuant to Fed. R. Civ.

P. 4 and 28 U.S.C. § 1915(d).

      The defendants shall respond to the complaint within 30

days of the date of service on the latest-served defendant.

      SO ORDERED.

                                  ___________________
                                  Andrea K. Johnstone
                                  United States Magistrate Judge

October 4, 2021

cc:   Natasha Athens, pro se




(1st Cir. 2021) (quoting Dep't of Recreation & Sports v. World
Boxing Ass'n, 942 F.2d 84, 88 (1st Cir. 1991)).


                                    5


File and source

File

14-order-directing-us-marshal-to-make-service-so-ordered-by-mag.pdf

Size

144,474 bytes

SHA-256

628cdeb9420b09d81ee5e8603716da9f94b51c34f4b34ba029d6823bd169fc33

Our copy

14-order-directing-us-marshal-to-make-service-so-ordered-by-mag.pdf

Original

archive.org