California Court Holds Agents Not Entitled to Agent Fees on PPP Loans

The United States District Court for the Central District of California recently held that plaintiffs, who assisted clients in obtaining PPP loans from the defendant lenders, did not have a private right of action against the defendants for agent fees.  See Am. Video Duplicating Inc. v. Citigroup Inc., 2020 WL 6712232 (C.D. Cal. Nov. 16, 2020).  In the case, plaintiffs, who included accountants and other consultants, assisted their clients in obtaining PPP loans from defendants.  Plaintiffs then claimed that the defendant lenders who issued the loans to their clients were required to pay plaintiffs agent fees for these loans.  Defendants refused to pay, and plaintiffs brought this action.   Defendants then filed a motion to dismiss, arguing that plaintiffs lacked standing and that they failed to state a claim.

The Court granted the motion to dismiss.  First, the Court dismissed the complaint based on a lack of standing.  The Court found that plaintiffs only provided generalized allegations that they acted as agents, and did not identify a single PPP application through defendants with which they assisted.  Although plaintiffs provided a certification with their opposition papers that provided more detail on their claims, that information was not in the complaint, and the Court dismissed under Rule 12(b)(1).  Second, the Court found that, even if plaintiffs had standing, their claims fail as a matter of law because “the CARES Act does not create an entitlement or private right of action to collect agent fees.”  Instead, the Court found that an agent fee is only required if the lender agreed to pay one, noting that there have been “over fifty similar lawsuits across the country with plaintiffs alleging unpaid agent fees under the PPP” and that “[i]t appears every court that has decided this issue has held that the CARES Act does not require lenders to pay agent fees absent an agreement to do so, nor does it create a corresponding private right of action.”  Accordingly, the Court granted defendants’ motion to dismiss.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Andrew Raimondi at araimondi@riker.com.