PLAINTIFF’S ORIGINAL COMPLAINT PAGE 1 OF 15

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

D H Massey Enterprises LLC,

Plaintiff,

vs.

The United States Small Business 

Administration; Isabel Casillas Guzman, 

in her official capacity as Administrator of 

the Small Business Administration; and 

Janet Yellen, in her official capacity as 

United States Secretary of Treasury, and 

the United States of America,

 Defendants.

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Cause No. ___________________

PLAINTIFF’S ORIGINAL COMPLAINT

TO THE HONORABLE JUDGE OF SAID COURT:

COMES NOW, D H Massey Enterprises LLC (“Plaintiff”) and files this 

Complaint against Defendants, the United States Small Business Administration 

(“SBA”), Isabel Casillas Guzman in her official capacity as Administrator of the SBA, 

Janet Yellen in her official capacity as United States Secretary of Treasury, and the 

United States of America, and allege the following:

I. INTRODUCTION

1. This is an appeal of denial of loan forgiveness by the SBA involving the 

Paycheck Protection Program (“PPP”). Plaintiff was approved for $3,311,200.00 in 

PPP Loans. The SBA determined that Plaintiff was ineligible for PPP loan 

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forgiveness on account of having an owner with 20% or more equity on probation at 

the time of applying for the PPP loan.

2. Critical to this appeal, the Interim Final Rule (“IFR”) relied upon by the 

SBA to deny forgiveness was modified extensively over the course of the PPP. In fact, 

under subsequent iterations of the IFRs, probation commenced in 2013 – as was the 

case here – would not disqualify a borrower for forgiveness. Importantly, these IFR 

revisions were to be applied retroactively, changing the requirements for PPP 

eligibility for all PPP loans and forgiveness. Yet, despite the clear retroactive 

application of these modifications, the SBA denied forgiveness to Plaintiff, and, on 

administrative appeal, the administrative law judge (“ALJ”) committed clear error in 

not applying the revised IFRs to Plaintiff. For this reason, Plaintiff has been forced 

to file suit.

II. PARTIES

3. D H Massey Enterprises LLC is a Texas Limited Liability Company duly 

organized and authorized to conduct business in the State of Texas. D H Massey 

Enterprises LLC is located at 1529 13th Street, Argyle, Texas 76226, which is located

in Denton County, Texas.

4. Defendant SBA is an independent federal agency created and 

authorized pursuant to 15 U.S.C. 633 § et seq. Under the CARES Act, Pub. L. No. 

116-136, 134 State. 281 (2020), the SBA administers the PPP. The SBA maintains a 

branch office at 150 Westpark Way, Suite 130, Euless, Texas 76040-3705, which is 

within the Northern District of Texas—Fort Worth Division.

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5. Defendant Isabel Casillas Guzman (“Guzman”) is the Administrator of 

the SBA, a Cabinet-level position, and is sued only in her official capacity. Because 

she is the officer with final authority for administering the PPP within the SBA, 

Administrator Guzman is a proper defendant for causes of action brought under the 

Administrative Procedure Act (“APA”). Authority to sue the Administrator is granted 

by 15 U.S.C. § 634(b).

6. Defendant Janet Yellen (“Yellen”) is the Secretary of the United States 

Department of Treasury and is sued only in her official capacity.

7. Plaintiff currently does not seek monetary relief, and only seeks to 

restrain the actions of the Administrator and the Secretary in each of their official 

capacities and requests only declaratory and injunctive relief under 5 U.S.C. § 701, et 

seq. in order to restrain the actions of the SBA, the Administrator, and the Secretary 

in each of their official capacities.

8. The United States of America is a sovereign nation dedicated to the 

protection of life, liberty, and property as set forth in the Bill of Rights and other 

provisions and amendments to the Constitution of the United States of America.

III. JURISDICTION AND VENUE

9. This Court has subject-matter jurisdiction under 28 U.S.C. § 1331 

because this action arises under the laws of the United States. This Court also has 

subject-matter jurisdiction under 5 U.S.C. § 706.

10. This Court has personal jurisdiction over all Defendants in this action 

because Defendants regularly conduct business in the State of Texas and have 

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engaged in conduct alleged herein in Texas targeted toward Texas residents, 

business, and/or interests.

11. Authority for judicial review of agency actions is further provided by 5 

U.S.C. § 702.

12. Defendant United States of America is a proper defendant in APA cases. 

See 5 U.S.C. § 702.

13. The request for declaratory relief is founded in part under Rule 57 of the 

Federal Rules of Civil Procedure and in 28 U.S.C. § 2201.

14. No other action, civil or criminal, is pending in any state court involving 

Plaintiff regarding the activities and events relevant to this suit.

15. Pursuant to 28 U.S.C. § 1391(b) or (e), venue in this Court is appropriate 

as the SBA and Treasury Department operate in the Northern District of Texas; and

the acts causing injury occurred in the Northern District of Texas.

IV. STATEMENT OF FACTS

A. The Paycheck Protection Program

16. Congress passed the Coronavirus Aid, Relief, and Economic Security Act 

(“CARES Act”), Pub. L. No. 116-136, 134 Stat. 281 (2020), in order to mitigate the 

economic devastation and mass unemployment caused by the COVID-19 Pandemic. 

Congress created the PPP to help accomplish that critical goal. The PPP authorized 

the SBA to guarantee billions of dollars in loans for small businesses. PPP loans were 

to be made by private lenders with Congress pledging to forgive these loans provided 

that, among other things, the borrowers used most of the proceeds to pay employees’

wages. See 15 U.S.C. § 636 (a)(36)(F).

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17. “The PPP is a new loan program to be administered by the SBA under 

Section 7(a) of the Small Business Act (codified at 15 U.S.C. § 636(a)). Its purpose is 

to assist small businesses during the COVID-19 crisis by immediately extending 

them loans on favorable terms.” Camelot Banquet Rooms, Inc. v. U.S. Small Bus. 

Admin., 458 F. Supp. 3d 1044, 1050 (E.D. Wis. 2020). Section 1106 of the CARES Act 

“provides that a borrower’s indebtedness under a PPP loan will be forgiven to the 

extent that the borrower uses the funds to pay expenses relating to payroll, mortgage 

interest, rent, and utilities during the eight-week period following the loan’s 

origination.” Id. (citing Interim Final Rule, Business Loan Program Temporary 

Changes; Paycheck Protection Program, 85 Fed. Reg. 20,811, 20,813-14 (Apr. 15, 

2020)).

18. The CARES Act was effective immediately and was not subject to the 

30-day delay that is provided for in the APA. 85 Fed. Reg. 20811, 20811. The loan 

application deadline was June 30, 2020, which meant there was no time for noticeand-comment rulemaking. Congress recognized the need for the ability to change and 

modify the program, however, so Congress still solicited comments from interested 

members of the public.

19. Under the initial requirement (the “First Interim Final Rule”), a 

business was ineligible for a PPP loan if “[a]n owner of 20 percent or more of the 

equity of the applicant is incarcerated, on probation, on parole; presently subject to 

an indictment, criminal information, arraignment, or other means by which formal 

criminal charges are brought in any jurisdiction; or has been convicted of a felony 

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within the last five years.” 85 Fed. Reg. 20811, 20812. In other words, any type of 

probation or parole by a 20% owner was sufficient to disqualify the business from 

receiving a PPP loan.

B. Additional Eligibility Revisions

20. Shortly after the First Interim Final Rule took effect, on June 26, 2020, 

the SBA promulgated “Additional Eligibility Revisions to First Interim Final Rule”

(the “June 26 IFR”), modifying the requirements for PPP eligibility. The SBA stated:

Upon further consideration, and in consultation with the Secretary, the 

Administrator has determined that two additional modifications to the 

First Interim Final Rule are appropriate to ensure a consistent approach 

to applicants with criminal histories . . . Second, the First Interim Final 

Rule provided that an applicant was ineligible for a PPP loan if an owner 

of 20 percent or more of the equity of the applicant is on probation or on 

parole. The Administrator has determined that this restriction should be 

limited to individuals whose probation or parole commenced within the 

time periods specified above—i.e., within the last five years for any felony 

involving fraud, bribery, embezzlement, or a false statement in a loan 

application or an application for federal financial assistance, and within 

the last one year for other felonies. In other words, under the Additional 

Eligibility Requirements, loan applicants were no longer disqualified 

based on owner’s prior DWI. 85 Fed. Reg. 38301, 38302-03 (emphasis 

added).

C. Section 3(d) Makes Amendments Retroactive.

21. Importantly, the SBA made the Additional Eligibility Revisions 

retroactive consistent with section 3(d) of the Paycheck Protection Program 

Flexibility Act of 2020. Id. at 38304. “Section 3(d) of the Flexibility Act provides that 

the amendments relating to PPP loan forgiveness and extension of the deferral period 

for PPP loans shall be effective as if included in the CARES Act, which means the 

amendments are retroactive to March 27, 2020.” 85 Fed. Reg. 36997, 36997 (emphasis 

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added). Thus, the regulations regarding parole and probation, as described in the 

June 26 IFR, govern all PPP loans applied for on or after March 27, 2020.

D. Background and Application for the PPP Loan.

22. Plaintiff is the holding company for six McDonald’s restaurants owned 

by Daniel Heath Massey. The Massey family consists of Phyllis and William T. 

Massey (parents), Chanda Massey (daughter), and Daniel Heath Massey (son) (the 

“Massey Family”) who collectively own fifteen McDonald’s franchised stores in the 

Dallas-Fort Worth area (the “Massey Companies”). Phyllis and William Massey 

operate six McDonald’s restaurants through three operating companies and a holding 

company, Chanda Massey operates three McDonald’s restaurants through her 

operating company and a holding company, and Daniel Heath Massey operates six 

McDonald’s restaurants through his two operating companies and a holding company 

(i.e., Plaintiff). The Massey Companies employ more than 800 employees.

23. McMassey Management Services LLC and McMassey Staff Services 

LLC (collectively, the “Management Companies”) provide payroll and human 

resource services to all of the Massey Companies. The Management Companies are 

wholly owned by Phyllis and William Massey’s holding company, B&G Massey 

Enterprises, Inc. (“B&G”). The Management Companies received the funds of the 

PPP Loan and expended them in strict accordance with all PPP guidelines. 

24. While Plaintiff is the holding company for the six McDonald’s 

restaurants owned by Daniel Heath Massey, as noted above, Plaintiff applied for the 

PPP Loan on behalf of all of the Massey Companies, and the SBA was indisputably 

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aware of same. Indeed, the PPP Loan application was completed using statistics 

concerning average monthly payroll, number of employees, etc., that were for the 

Massey Companies in the aggregate, not just Plaintiff. The individual completing 

the PPP Loan application was Daniel Heath Massey, the CEO and owner of Plaintiff. 

However, Daniel Heath Massey is also an employee of the Management Companies 

and completed the PPP Loan application for all of the Massey Companies and the 

Management Companies. Again, the Management Companies are wholly owned by 

B&G, which itself is owned 100% by Phyllis and William Massey.

E. Denial of Plaintiff’s Loan Forgiveness.

25. As noted, Plaintiff is 100% owned by Daniel Heath Massey (hereafter, 

“Massey”).

26. Massey was convicted of a third-degree felony DUI on September 17, 

2012, spent forty-five days in jail, and was required to serve one-hundred twenty

months of probation, commencing on June 5, 2013.

27. In April 2020, Plaintiff submitted its PPP loan application to its lender, 

Citizens Bank, National Association.

28. Massey was on probation at the time Plaintiff submitted its PPP loan 

application.

29. On March 7, 2022, Plaintiff was denied loan forgiveness, based on the 

fact that Massey was on probation.

30. On April 1, 2022, Plaintiff initiated its administrative appeal.

31. On July 15, 2022, the SBA filed its response to Plaintiff’s appeal.

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32. On August 30, 2022, Plaintiff received the United States Small Business 

Administration Office of Hearings and Appeals’ (“OHA”) Decision.

33. OHA’s Decision became final on September 29, 2022, thirty days after 

its service. 13 CFR 134.1211.

34. Throughout Plaintiff’s appeal process, it argued that the subsequent 

IFRs should be applied to its loans.

35. As previously referenced, on June 26, 2020, the SBA published its 

June 26 IFR, which provides that the “SBA has drafted this rule, to the extent 

practicable, in accordance with the standards set forth in section 3(a) and 3(b)(2) 

of Executive Order 12988, to minimize litigation, eliminate ambiguity, and reduce 

burden. The rule has no preemptive effect but does have a limited retroactive 

effect consistent with section 3(d) of the Flexibility Act.” 85 Fed. Reg. 38304.

36. The June 26 IFR is retroactive as to be consistent with section 3(d) of 

the Flexibility Act, which provides that amendments shall be effective as if included 

in the CARES ACT and shall apply to any loan made pursuant to section 7(a)(36) of 

the Small Business Act or section 1109 of the CARES Act. 85 Fed. Reg. 38301, 38304; 

H.R. 7010 (2020). Thus, the regulations regarding criminal history exclusions are 

applied to any and all PPP loans that were applied for on or after March 27, 2020.

37. The June 26 IFR also provides that individuals who are on probation are 

still eligible unless they “commenced any form of parole or probation (including 

probation before judgment) for, a felony involving fraud, bribery, embezzlement, or a 

false statement in a loan application or an application for federal financial assistance 

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within the last five years.” 85 Fed. Reg. 38303 (emphasis added). Massey commenced 

probation in 2013 and applied for a PPP Loan on behalf of Plaintiff in 2020, almost 

seven years after Massey’s probation commenced. Additionally, Massey’s conviction 

was not one involving fraud, bribery, embezzlement, or a false statement in a loan 

application or an application for federal financial assistance. Thus, Plaintiff’s appeal 

should have been granted and the SBA’s denial reversed.

V. CAUSES OF ACTION

A. COUNT I - Agency Action Contrary to Law (4 U.S.C. § 706(2)(A) &(C))

38. Plaintiff incorporates the foregoing paragraphs as if fully stated herein.

39. The APA authorizes judicial review of federal agency actions. 5 U.S.C. § 

702.

40. The APA provides that the reviewing court shall “hold unlawful and set 

aside agency action, findings, and conclusions found to be . . . not in accordance with 

law,” or “in excess of statutory jurisdiction, authority, or limitations, or short of 

statutory right.” Id. at §§ 706(2)(A), (C).

41. The June 26 IFR states explicitly that, “SBA has drafted this rule, to the 

extent practicable, in accordance with the standards set forth in section 3(a) and 

3(b)(2) of Executive Order 12988, to minimize litigation, eliminate ambiguity, and 

reduce burden. The rule has no preemptive effect but does have a limited retroactive 

effect consistent with section 3(d) of the Flexibility Act.” 85 Fed. Reg. 38304

(emphasis added).

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Section 3(d) of the Flexibility Act, H.R. 7010 (2020) states:

(d) Effective Date; Applicability.

The amendments made by this section shall be effective as if included in 

the CARES Act (Public Law 116-136) and shall apply to any loan made 

pursuant to section 7(a)(36) of the Small Business Act (15 U.S.C. 

636(a)(36)) or section 1109 of the CARES Act.

42. Additionally, SBA has applied other PPP regulations retroactively. For 

example, in Auto Money North LLC v. United States Small Business Administration 

et al., 7:22-CV-001455-DCC (S.C. D.Ct. May 5, 2022), the SBA applied the Exclusion 

Rule retroactively to an approved PPP borrower. Accordingly, since the June 26 IFR 

explicitly calls for retroactive application, Plaintiff was eligible for its PPP loan; and 

the SBA’s denial of forgiveness was, therefore, improper.

43. Defendants’ actions of (i) refusing to apply the retroactive language 

clearly set forth in the June 26 IFR and (ii) determining that Plaintiff was ineligible 

for PPP Loan forgiveness are not in accordance with the law, including the CARES 

Act, the APA, and the June 26 IFR. Plaintiff is entitled to an order declaring the 

same.

44. Plaintiff is also entitled to a permanent injunction enjoining Defendants 

from applying the First Interim Final Rule to Plaintiff and an order requiring the 

SBA to forgive Plaintiff’s PPP loans.

B. COUNT II - Arbitrary & Capricious Agency Action (4 U.S.C. § 706(2)(A))

45. Plaintiff incorporates the foregoing paragraphs as if fully stated herein.

46. The APA authorizes judicial review of federal agency action (5 U.S.C. 

§ 702) and provides that the reviewing court shall “hold unlawful and set aside agency 

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action, findings, and conclusions found to be . . . arbitrary, capricious,” or “an abuse 

of discretion.” Id. at § 706(2)(A).

47. The disqualification requirement under the First Interim Final Rule is 

no longer in effect, and the June 26 IFR applies retroactively.

48. In addition, courts have held the First Interim Final Rule arbitrary and 

capricious because it did not adequately explain the criminal history exclusion.

49. Therefore, Plaintiff’s forgiveness should not be reviewed under the 

arbitrary and capricious, no-longer-in-effect First Interim Final Rule. 5 U.S.C. § 

706(2)(A). Plaintiff is entitled to loan forgiveness under the CARES Act and the June 

26 IFR.

C. COUNT III - Declaratory Judgment (28 U.S.C. § 2201)

50. Plaintiff incorporates the foregoing paragraphs as if fully stated herein.

51. Plaintiff qualifies for loan forgiveness because the June 26 IFR 

requirements apply retroactively. However, the SBA is refusing to apply the legally 

required retroactive effect of the June 26 IFR to Plaintiff’s loans.

52. A declaratory judgment from this Court, that Defendants may not 

exclude businesses from PPP eligibility, based on the First Interim Final Rule

exclusions, will resolve this actual controversy.

53. Plaintiff requests that the Court enter a declaratory judgment, pursuant 

to 28 U.S.C. § 2201, declaring that:

a. Plaintiff is eligible for loan forgiveness under the CARES Act;

b. Plaintiff is an eligible recipient under the CARES Act;

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c. The SBA’s attempt to deny loan forgiveness to Plaintiff is an improper 

and impermissible application of the law, contrary to the CARES Act 

and the June 26 IFR; and

d. The SBA must grant loan forgiveness of its loans to Plaintiff.

D. COUNT IV - Alternative Claim For Partial Forgiveness

54. Plaintiff incorporates the foregoing paragraphs as if fully stated herein.

55. In the alternative to Counts I, II, and III, Plaintiff seeks partial 

forgiveness under 4 U.S.C. § 706(2)(A) &(C) and 28 U.S.C. § 2201. 

56. Should the Court find that the June 26 IFR is not retroactive, the SBA 

still should have forgiven those funds that were used by related entities (of which the 

SBA was fully aware) that did not have an owner (with more than 20%) that was on 

probation, because its only ground for denial was the criminal history exclusion. 

57. The criminal history exclusion should not apply to the funds that went 

to the Management Companies and B&G, as Massey did not own an interest greater 

than 20% in any of those entities. Additionally, at all relevant times during the 

application process, the SBA knew that Plaintiff was seeking funds for these entities 

since the SBA had requested and obtained financial records for each of them.

F. COUNT V - Attorney’s Fees (5 U.S.C. § 504)

58. Plaintiff incorporates the foregoing paragraphs as if fully stated herein.

59. Plaintiff has been forced to retain the services of the law firm of 

Eggleston King Davis, LLP in connection with this dispute.

60. Pursuant to 5 U.S.C. § 504 of the APA, Plaintiff seeks all reasonable 

and necessary attorney’s fees and costs associated with this suit.

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REQUESTS FOR RELIEF

For these reasons, Plaintiff, D H Massey Enterprises LLC, requests that the 

Court order the following relief:

a. Declare that the SBA erred in refusing to apply the June 26 IFR to 

Plaintiff’s PPP loan;

b. Declare that the SBA’s application of the First Interim Final Rule to 

Plaintiff, in denying forgiveness of Plaintiff’s PPP loans, was arbitrary 

and capricious;

c. Permanently enjoin the SBA from enforcing the First Interim Final Rule

against Plaintiff in determining eligibility for forgiveness;

d. Order the SBA to forgive Plaintiff’s PPP loan;

e. Issue a declaratory judgment that Plaintiff has met all requirements for 

loan forgiveness under the CARES Act; that Plaintiff is an “eligible 

recipient under the CARES Act; that the SBA’s attempts to deny loan 

forgiveness to Plaintiff is an improper and impermissible application of 

law, contrary to the CARES Act and the June 26 IFR; and that the SBA 

shall grant loan forgiveness to Plaintiff;

f. Award costs and reasonable attorney’s fees to the extent permitted by 

law; and

g. Grant all such further relief, both legal and equitable, to the extent 

Plaintiff shows itself justly entitled.

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Respectfully submitted,

EGGLESTON KING DAVIS, LLP

102 Houston Avenue, Suite 300

Weatherford, Texas 76086

(817) 596-4200

(214) 717-0980 Cell

By: /s/ David D. Rapp

 David D. Rapp

State Bar No. 24027764

david@ekdlaw.com 

 Julian E. Whitley

 State Bar No. 24108913

 julian@ekdlaw.com

-and-

/s/ Jason C. Nash

Jason C. Nash

State Bar No. 24032894

jnash@jasonnashlaw.com 

THE LAW OFFICE OF 

JASON NASH, P.L.L.C.

601 Jameson Street

Weatherford, Texas 76086

(817) 757-7062 Phone

ATTORNEYS FOR PLAINTIFF

D H MASSEY ENTERPRISES LLC

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