IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

A.D. SIMS, LLC, on behalf of a class of 

similarly situated businesses and individuals,

Plaintiff(s),

v.

WINTRUST FINANCIAL CORPORATION; 

WINTRUST BANK, N.A.; BANK OF 

AMERICA CO.; BANK OF AMERICA N.A.; 

RETAIL CAPITAL LLC DBA CREDIBLY; 

MODERN BANK MANAGEMENT, LLC; 

MODERN BANK N.A.; CRB GROUP INC.; 

CROSS RIVER BANK; BLUEVINE 

CAPITAL INC.; and DOE LENDERS 1 to 

4,975, inclusive,

Defendants.

Case No. 1:20-cv-02644

Hon. Edmond E. Chang

REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF 

DEFENDANTS’ MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 1 of 22 PageID #:684
i

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 1

ARGUMENT.................................................................................................................................. 3

I. PLAINTIFF MISREADS THE CARES ACT AND THE IMPLEMENTING 

REGULATIONS, AS SIX COURTS HAVE NOW CONFIRMED................ 3

A. Defendants Are Not Required to Pay an Agent Fee Absent a Compensation 

Agreement by Each Lender with the Agent...................................................... 3

B. Plaintiff Does Not Satisfy the Requirement of a “Compensation Agreement” 

by “Agreeing” Solely with the Borrower.......................................................... 5

C. Defendants Are Not Equitably Estopped From Requesting That Plaintiff 

Comply with SBA Regulations......................................................................... 8

D. Plaintiff Cannot Overcome the Consensus of Opinions that Have Decided 

This Same Issue. ............................................................................................... 9

II. PLAINTIFF CONCEDES THAT THE CARES ACT LACKS A PRIVATE 

RIGHT OF ACTION, WHICH ADMISSION IS FATAL TO ITS FEDERAL 

CAUSES OF ACTION................................................................................... 11

III. PLAINTIFF CANNOT OVERCOME THE MANY DEFECTS IN ITS STATE 

LAW CLAIMS. .............................................................................................. 12

A. Plaintiff Does Not State a Conversion Claim. ................................................ 12

B. Plaintiff’s Unjust Enrichment Claim Fails Because It Does Not Allege a 

“Better Claim” to Fees.................................................................................... 13

C. Plaintiff’s Equitable Estoppel Claim Fails Because It Does Not Allege 

Reliance or Misrepresentation. ....................................................................... 14

CONCLUSION............................................................................................................................. 15

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 2 of 22 PageID #:685
ii

TABLE OF AUTHORITIES

CASES

Am. Video Duplicating Inc., et al. v. Citigroup Inc., et al., No. 2:20-cv-03815-ODWAGR, 2020 WL 6712232 (C.D. Cal. Nov. 16, 2020) ...................................................... passim

Am. Video Duplicating, Inc. v. City National Bank, et al., No. 2:20-cv-04036-JFW-JPR, 

slip op. (C.D. Cal. November 20, 2020).......................................................................... passim

Auer v. Robbins, 519 U.S. 452 (1997)...........................................................................................10

Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101 (7th Cir. 1984)......................................6, 14

Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) .....................10

Fonda v. General Casualty Co., 279 Ill. App. 3d 894 (1996) .......................................................13

Gates v. Towery, 435 F. Supp. 2d 794 (N.D. Ill. 2006).................................................................13

Goodpaster v. City of Indianapolis, 736 F.3d 1060 (7th Cir. 2013)..............................................11

In re Thebus, 483 N.E.2d 1258 (Ill. 1985).....................................................................................12

Juan Antonio Sanchez, PC v. Bank of South Texas, et al., No. 7:20-cv-139, 2020 WL 

6060868 (S.D. Tex. Oct. 14, 2020).................................................................................. passim

Kennedy v. United States, 965 F.2d 413 (7th Cir. 1992) .................................................................8

Lee v. Ne. Illinois Reg’l Commuter R.R. Corp., 912 F.3d 1049 (7th Cir. 2019) ...........................15

Leigh King Norton & Underwood, LLC v. Regions Financial Corporation, et al., No. 

2:20-cv-591-ACA, 2020 WL 6273739 (N.D. Ala. Oct. 26, 2020)......................................1, 11

Robin Johnson d/b/a CG Johnson & Company, et al. v. JPMorgan Chase Bank, N.A., et 

al., No. 20-cv-4100 (JSR), 2020 WL 5608683 (S.D.N.Y. Sept. 21, 2020)..................... passim

Roderick Development Investment Co., Inc. v. Community Bank of Edgewater, 282 Ill. 

App. 3d 1052 (1996)................................................................................................................13

Runnemede Owners, Inc. v. Crest Mortg. Corp., 861 F.2d 1053 (7th Cir. 1988)..........................13

Schilling v. Rogers, 363 U.S. 666 (1960) ......................................................................................11

Sport & Wheat, CPA, PA v. ServisFirst Bank, Inc., No. 3:20-cv-5425-TKW-HTC, 2020 

WL 4882416 (N.D. Fla. Aug. 17, 2020).......................................................................... passim

Steven L. Steward & Associates, P.A. v. Truist Bank & Truist Fin. Corp., No. 

620CV1083ORL40GJK, 2020 WL 5939150 (M.D. Fla. Oct. 6, 2020) ..............................2, 11

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 3 of 22 PageID #:686
iii

OTHER AUTHORITIES

13 C.F.R. § 103.1.............................................................................................................................5

13 C.F.R. § 103.5.................................................................................................................5, 6, 7, 9

85 Fed. Reg. 20,811 .................................................................................................................3, 7, 8

85 Fed. Reg. 20,816 .................................................................................................................3, 4, 8

15 U.S.C. § 636................................................................................................................................4

Pub. L. 111-31 (2020)......................................................................................................................1

Pub. L. 116-136, § 1102(e), 134 Stat. 281, 294 (Mar. 27, 2020).................................................4, 5

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 4 of 22 PageID #:687
1

INTRODUCTION

Plaintiff frames the issue before the Court as whether, under the Coronavirus Aid, Relief, 

and Economic Security (“CARES”) Act, Pub. L. 111-31 (2020), Plaintiff is “permitted to collect 

agent fees from defendants for [Paycheck Protection Program (“PPP”)]-related services it 

provided to the borrowers.” Opp. at 8. Framed more objectively, Plaintiff seeks by this suit to 

require Defendant to pay it fees that Defendants never agreed to pay, for work they did not even 

know Plaintiff allegedly was performing.

The CARES Act imposes no such requirement. In just the last three months, every court 

to have addressed this identical issue has squarely held that PPP lenders are not required to pay 

agent fees absent an agreement between the parties to do so. See Juan Antonio Sanchez, PC v. 

Bank of South Texas, et al., No. 7:20-cv-139, 2020 WL 6060868, at *2 (S.D. Tex. Oct. 14, 2020) 

(Alvarez, J.) (joining “the emerging consensus described by the Northern District of Florida and 

Southern District of New York” in dismissing similar claims); Leigh King Norton & Underwood, 

LLC v. Regions Financial Corporation, et al., No. 2:20-cv-591-ACA, 2020 WL 6273739, at *7 

(N.D. Ala. Oct. 26, 2020) (Axon, J.) (“Accordingly, the court finds that the Small Business Act 

does not make payment of agent fees mandatory.”); Am. Video Duplicating Inc., et al. v. 

Citigroup Inc., et al., No. 2:20-cv-03815-ODW-AGR, 2020 WL 6712232, at *4 (C.D. Cal. Nov. 

16, 2020) (Wright, J.) (“American Video I”) (“[E]very 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.”); Am. Video Duplicating, Inc. v. City 

National Bank, et al., No. 2:20-cv-04036-JFW-JPR, slip op., at 1 (C.D. Cal. November 20, 2020) 

(Walter, J.) (“American Video II”) (“The Court agrees with the analysis in [American Video I], 

and with the decisions from four other courts across the country that have unanimously 

concluded that ‘the CARES Act does not require lenders to pay agent fees absent an agreement 

to do so.’”); Robin Johnson d/b/a CG Johnson & Company, et al. v. JPMorgan Chase Bank, 

N.A., et al., No. 20-cv-4100 (JSR), 2020 WL 5608683, at *1 (S.D.N.Y. Sept. 21, 2020) (Rakoff, 

J.) (“The Court holds that, absent an agreement between agent and lender, defendant banks are 

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 5 of 22 PageID #:688
2

not required to pay agent fees.”); Sport & Wheat, CPA, PA v. ServisFirst Bank, Inc., No. 3:20-

cv-5425-TKW-HTC, 2020 WL 4882416, at *1 (N.D. Fla. Aug. 17, 2020) (Wetherell, J.) (“The 

central issue of first impression in this case is whether Plaintiff and others like it are entitled to 

any portion of the fees paid . . . under the [PPP]. The short answer is no.”) (quotation marks and 

footnote omitted).

1

 

These cases unanimously and persuasively reject the linchpin of Plaintiff’s argument, 

based solely on one line of the Small Business Administration’s (“SBA”) Interim Final Rule 

(“IFR”) concerning PPP loans. Plaintiff claims that the IFR—rather than merely specifying who

may pay agent fees when agent fees are payable—somehow overrides express statutory text and 

requires lenders to pay agent fees even when the lender never agreed to do so and did not know 

the agent existed. Plaintiff further asserts that it can satisfy the SBA’s longstanding requirement 

of a “compensation agreement” by “agreeing” with the borrower that the lender will pay the 

agent. As the Sanchez court aptly put it, “Plaintiff believed that it could serve as applicants’ 

agent, kick its feet up and wait for the banks to issue PPP loans to successful applicants, and only 

then notify Defendant banks of its agency role and demand payment.” Sanchez, 2020 WL 

6060868, at *9. That interpretation is wrong: It is “simply unmoored from the text,” “not how 

the PPP works,” id. at *6, *9, and would upend longstanding SBA requirements for agent fees.

Plaintiff also fails to explain why the lack of a private right of action in the CARES Act is 

not dispositive to its federal claims. Finally, Plaintiff cannot rebut the independent reasons why 

Plaintiff’s state law claims fail.

1 A seventh court, Steven L. Steward & Associates, P.A. v. Truist Bank & Truist Fin. 

Corp., No. 620CV1083ORL40GJK, 2020 WL 5939150, at *3 (M.D. Fla. Oct. 6, 2020) (Byron, 

J.), has likewise dismissed nearly identical claims for failure to plead unjust enrichment and 

standing for declaratory relief. No agent-fee case has survived a motion to dismiss to date. In 

addition, other plaintiffs alleging similar claims have voluntarily dismissed dozens of cases after 

courts began rejecting plaintiffs’ theory of liability.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 6 of 22 PageID #:689
3

ARGUMENT

I. PLAINTIFF MISREADS THE CARES ACT AND THE IMPLEMENTING 

REGULATIONS, AS SIX COURTS HAVE NOW CONFIRMED.

Plaintiff’s Opposition relies entirely on a purported entitlement to fees that simply does 

not exist and is not supported by the text of the CARES Act or Section 7(a). As six courts have 

now confirmed in well-reasoned decisions, supra p. 1–2, the CARES Act and the Small Business 

Administration’s (“SBA”) IFR, 85 Fed. Reg. 20,811, only imposes limits on the fee that an agent 

may receive from a PPP lender if a valid agreement between the parties exists, and nowhere 

mandates that the lender pay a fee without an agreement between the lender and the agent. 

Plaintiff presents no reason for the Court to deviate from this well-reasoned and unbroken line of 

authority, and which is consistent with the SBA’s longstanding framework governing agent 

fees.

2

A. Defendants Are Not Required to Pay an Agent Fee Absent a 

Compensation Agreement by Each Lender with the Agent.

Plaintiff insists that the IFR upends the SBA’s longstanding framework requiring a 

compensation agreement because the IFR’s answer to the question “[w]ho pays the fee to an 

agent who assists a borrower?” is that “[a]gent fees will be paid by the lender out of the fees the 

lender receives from the SBA.” 85 Fed. Reg. 20,816. See Opp. at 9–10. But this section of the 

IFR does not bring about the significant regulatory change that Plaintiff suggests. On the 

contrary, the phrase “will be paid” refers only to the mandate that when an agent is to be paid 

fees pursuant to an agreement between the parties, such fees will be paid by the lender out of the 

fees the lender receives from the SBA, not from the loan proceeds or from the borrower, and 

may not exceed a certain percentage of the loan. See Sport & Wheat, 2020 WL 4882416, at *3 

(“[The IFR] simply explains that, if an agent is to be paid a fee, the fee must be paid by the 

2 Plaintiff defines itself as an “accounting and consulting firm,” a description nowhere 

found in the Amended Complaint. Opp. at 2. Further, public records confirm that neither 

Plaintiff nor its principal (Aaron Sims) are licensed in Illinois as public accountants with the 

Illinois Department of Financial and Professional Regulation. See 

https://ilesonline.idfpr.illinois.gov/DFPR/Lookup/LicenseLookup.aspx (last accessed November 

23, 2020).

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 7 of 22 PageID #:690
4

lender from the fee it receives from the SBA.”); Johnson, 2020 WL 5608683, at *7 (“[I]f 

Congress had intended for agents to automatically receive a portion of the lenders’ fees, it would 

have said so.”).

This reading is “bolstered by the fact that when Congress wanted to compensate parties 

involved in processing PPP loan applications, as is the case with lenders, it did so explicitly.” 

Johnson, 2020 WL 5608683, at *7 (citing 15 U.S.C. § 636(a)(36)(P)(i)). The CARES Act, by 

contrast, instructs the SBA to set limits on the fees that an agent “may . . . collect.” 15 U.S.C. 

§ 636(a)(36)(P)(ii) (emphasis added). 

Underscoring that distinction, Section III.3.d of the IFR mandates that lenders receive 

fees at a fixed amount based on loan size. See 85 Fed. Reg. 20,816. In contrast, Section III.4.c 

only imposes maximums on the amount that agents may receive. Setting a “maximum” only 

makes sense if the lender has a say in negotiating the fee—otherwise, how could there ever be a 

payment less than the maximum? See Johnson, 2020 WL 5608683, at *6 n.14 (noting that 

plaintiffs could not “even extract a definite theory of how much they are owed,” “itself an 

indication that the statute does not automatically entitle them to any portion of the fees”). 

Therefore, the IFR clearly contemplates that any agent fees will be paid pursuant to an agreement 

between the lender and the agent, which agreement will specify the amount of those fees up to 

the IFR’s maximum. Consistent with longstanding regulations, that agreement would then be 

disclosed to the SBA. Tellingly, while Defendants’ Motion emphasized that the “maximum” fee 

is inconsistent with Plaintiff’s theory, Mot. at 17, Plaintiff’s Opposition does not address this 

point. 

Instead, Plaintiff repeatedly seeks to draw a distinction between “Borrower’s Agents” and 

“Lender’s Agents,” claiming that the requirement of a compensation agreement only applies to 

“Lender’s Agents.” See, e.g., Opp. at 15. Plaintiff is mistaken. As an initial matter, in making 

this distinction, Plaintiff relies on regulations that were expressly rescinded by the CARES Act. 

See Pub. L. 116-136, § 1102(e), 134 Stat. 281, 294 (Mar. 27, 2020). Plaintiff, moreover, refers

to regulations governing Lender Service Providers, a specific type of agent that is not at issue 

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 8 of 22 PageID #:691
5

here, when purporting to describe the requirements for all “Lender’s Agents.”3 The regulations 

that apply here do not support Plaintiff’s imagined distinction. Regardless of who retains the 

agent, SBA regulations make clear that “Any . . . Agent . . . must execute and provide to SBA a 

compensation agreement . . . [that] governs the compensation charged for services rendered or to 

be rendered to the Applicant or lender.” 13 C.F.R. § 103.5(a). The SBA’s Standard Operating 

Procedures are in accord: “For all other Agents [besides Lender Service Providers, who must 

instead submit a separate written agreement to the SBA] paid by either an Applicant or a Lender, 

[the] SBA Form 159 [compensation agreement] must be completed and signed by the Applicant 

and the Lender.” Mot. Exhibit 12 at 7 (emphases added).

B. Plaintiff Does Not Satisfy the Requirement of a “Compensation 

Agreement” by “Agreeing” Solely with the Borrower.

Plaintiff puts forth a number of arguments seeking to justify its failure to satisfy the 

requirements for agent fees. Each is meritless. 

First, Plaintiff contends that it satisfied the requirement of a compensation agreement 

because it entered into “compensation agreements” with borrowers that Defendants lack 

authority to negotiate, modify, or reject. Opp. at 12. In other words, as Plaintiff would have it, 

the agent and borrower may enter into a “compensation agreement” binding the lender to pay 

the “compensation.” The Amended Complaint contains no allegations of such “agreements.”4

 

3 Plaintiff quotes from 13 C.F.R. § 103.5(c) for the proposition that lenders must enter 

into “written agreements” with “Lender’s Agents.” Opp. at 15 (incorrectly citing to § 103.1(c)). 

That provision refers to “Lender Service Providers,” an agent that “carries out lender functions in 

originating, disbursing, servicing, or liquidating a specific SBA business loan” and that solely 

works with and is paid by lenders. 13 C.F.R. § 103.1(d) (reinstated by Pub. L. 116-136, § 

1102(e), 134 Stat. 281, 294 (Mar. 27, 2020)). As Plaintiff notes, agents that do not qualify as 

Lender Service Providers can assist and be paid by either borrowers or lenders. Opp. at 5 (citing 

SBA’s Standard Operating Procedure at 173). But those agents must still execute a 

compensation agreement governing the payment of those fees. 13 C.F.R. § 103.5(a). Plaintiff is 

thus wrong to suggest that lenders only enter into written compensation agreements with Lender 

Service Providers. To the contrary, lenders enter into compensation agreements whenever they 

agree to pay an agent fees—whether the agent assists the borrower, assists the lender, or is a 

Lender Service Provider.

4 To the contrary, in its Amended Complaint, Plaintiff argued that “[a]ll that is required is 

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 9 of 22 PageID #:692
6

But even assuming Plaintiff entered into agreements with its clients, Plaintiff’s theory that an 

agreement between the agent and the borrower can bind the lender is outlandish and directly 

contrary to the SBA regulations that require the compensation agreement be with the lender. All

courts to consider this issue have so held. See, e.g., Sanchez, 2020 WL 6060868, at *2 

(“[A]gents who assist applicants with a PPP [loan application] are not entitled to agent fees in the 

absence of an agreement with the lenders.”) (emphasis added); American Video II, at 4 (“By 

requiring a compensation agreement to which the lender and applicant also are parties before an 

agent may receive a fee, 13 C.F.R. § 103.5(a), the SBA made agent compensation an issue to be 

settled by contract among the lender, applicant, and agent—not a statutory or regulatory 

entitlement.”). That makes good sense: Under the IFR, the only party that can pay agent fees is a 

lender. Thus, any agreement to which a payor is not a party—such as the supposed agreement 

between Plaintiff and its client—is by definition not a “compensation agreement” that can bind 

the lender.

SBA guidance is also in accord. The SBA’s Standard Operating Procedures, in effect at 

all operative times, provide that

For all other Agents [besides Lender Service Providers, who must 

instead submit a separate written agreement to the SBA] paid by 

either an Applicant or a Lender, SBA Form 159 must be completed 

and signed by the Applicant and the Lender. For each Agent paid 

by the Applicant to assist it in connection with its application, the 

Agent also must complete and sign the form. When an Agent is 

paid by the Lender, the Lender must identify the Agent on SBA 

Form 159 and the Lender and Applicant must sign the form.

Mot. Exhibit 12. In every case, the compensation agreement must be signed by the lender. 

Plaintiff’s argument that Defendants do not have the “authority” to “negotiate or 

modify,” Opp. at 14, Plaintiff’s purported agent’s fee is therefore incorrect. The IFR only sets 

caps for agent fees, and the putative agent is still required to contact the lender in advance, obtain 

that the [a]gent fit into one of the broad categories outlined in [SBA regulations] and do the work 

in connecting the [b]orrower to the PPP funds,” Am. Compl. ¶ 30. “[I]t is axiomatic that the 

complaint may not be amended by the briefs in opposition to a motion to dismiss.” Car 

Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984).

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 10 of 22 PageID #:693
7

the lender’s agreement to pay fees to the agent and the amount of the fees the lender is willing to 

pay, and enter into the required compensation agreement, all of which Plaintiff failed to do here.

Second, Plaintiff contends that it can secure fees even without complying with the SBA’s 

requirement of a Form 159 disclosing a compensation agreement. Plaintiff is simply wrong that 

Form 159 was somehow “superseded” by the IFR. Opp. at 16. The IFR states explicitly that 

only “conflicting Loan Program Requirements” are “temporarily supersede[d]” by the PPP. 85 

Fed. Reg. 20,812 (emphasis added).5 Nothing in the IFR or the CARES Act conflicts with the 

requirement under 13 C.F.R. § 103.5(a) that the parties execute a compensation agreement, 

provided by the SBA on Form 159. See Sport & Wheat, 2020 WL 4882416, at *4 (“Form 159 

does not conflict with the IFR.”). The argument is also “beside the point,” because “[t]he 

question is whether the PPP supersedes [Section] 103.5(a), not the form compensation agreement 

promulgated under that regulation.” Sanchez, 2020 WL 6060868, at *8; see also American

Video I, 2020 WL 6712232, at *5 (“The question before the Court is whether the IFR conflicts 

with the Section 7(a) requirement that a Form 159 must be executed and submitted to the SBA, 

not whether the application form for a PPP loan appears different than the application form for a 

standard Section 7(a) loan.”). Plaintiff thus fundamentally errs by focusing exclusively on Form 

159, and not the underlying requirement of a compensation agreement that the Form merely 

implements.

Next, in a telling concession, Plaintiff acknowledges that “Form 159 may be required,” 

Opp. at 21, but attempts to skirt the obligation for an agent to enter into an agreement with the 

lender by suggesting that, for the PPP, the agent fee is not paid by the lender but by the SBA. 

5 Plaintiff points to various aspects of the PPP that do supersede section 7(a)—for 

example, Section 7(a) “does not allow an [a]gent to charge a fee contingent on the funding of a 

loan,” while the PPP does, Opp. at 5–6—but none of the differences Plaintiff points to has 

anything to do with the SBA’s compensation agreement requirement. Defendants do not dispute 

that by setting the maximum amount of an agent fee, the IFR “temporarily supersede[s]” the 

portion of 13 C.F.R. § 103.5(b) that sets a different maximum amount of agent fees payable 

under the 7(a) program. To the extent Plaintiff is contending that because one provision of 

section 103.5 is superseded by the IFR, the entire regulation is, Opp. at 5–6, Plaintiff offers no 

support for that proposition, and it is wrong.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 11 of 22 PageID #:694
8

Opp. at 3, 5. But this argument disregards the plain language of the IFR upon which Plaintiff 

relies for its alleged entitlement to a fee, providing that if agent fees are to be paid, they “will be 

paid by the lender. . . .” See 85 Fed. Reg. 20,816 (emphasis added); see also 85 Fed. Reg. 

20,811-01(III)(4)(c) (emphasis added) (“The total amount that an agent may collect from the 

lender for assistance in preparing an application for a [PPP] loan . . . may not exceed [specified 

percentages dependent on loan amount.]”); see also American Video I, 2020 WL 6712232, at *5.

Finally, coming full circle, Plaintiff argues that, if Form 159 is required, it is now willing 

to complete and submit Form 159. Opp. at 16–19. But this assertion is also unavailing. Form 

159 documents, but does not replace, the required underlying compensation agreement between 

the lender and the agent. Thus, as the Johnson court correctly recognized, “even if plaintiffs 

were correct that this particular form is inapplicable to the PPP, that would not itself dispose of 

the requirement that agents and lenders enter into an agreement in order for agents to receive 

fees.” Johnson, 2020 WL 5608683, at *7 n.16. Completing and submitting a belated Form 159 

does not remedy the lack of an agreement with Defendants.

6

C. Defendants Are Not Equitably Estopped From Requesting That 

Plaintiff Comply with SBA Regulations.

Plaintiff attempts to blame Defendants for Plaintiff’s failure to comply with the 

regulatory requirements, asserting Defendants should be estopped from arguing that the law 

applies to Plaintiff. That is nonsense. A claim of equitable estoppel requires: “(1) 

misrepresentation by the party against whom estoppel is asserted; (2) reasonable reliance on that 

misrepresentation by the party asserting estoppel; and (3) detriment to the party asserting 

estoppel.” Kennedy v. United States, 965 F.2d 413, 417 (7th Cir. 1992). Here, there was no 

misrepresentation, and any alleged reliance by Plaintiff is utterly implausible.

6 Nor is Plaintiff’s argument that it was defendants’ responsibility to submit Form 159 

persuasive or sensible. Defendants would have had to know of the agent’s existence and demand 

for payment soon after the loan was funded in order to submit the required monthly paperwork, 

Mot. Exhibit 12 at 171, and Plaintiff makes no allegation that Defendants had this knowledge.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 12 of 22 PageID #:695
9

Plaintiff baldly claims that “Defendants hid Form 159 during the application process.” 

Opp. at 20. Of course, there is no such allegation in the Amended Complaint, nor could 

Defendants have concealed the publicly-available Form 159 or the SBA’s 24-year-old rule 

requiring lenders, agents, and applicants to negotiate the agent relationship. Those requirements 

are detailed in the longstanding SBA rules and regulations. 13 CFR § 103.5(a) (providing that 

the “SBA provides the form of compensation agreement...to be used by Agents”).

If Plaintiff “spent considerable time becoming familiar with the [CARES] Act and the 

related SBA Regulations,” Am. Compl. ¶ 47, it surely was well aware of Form 159, which is on 

the SBA’s website and easily accessible. Form 159 makes clear that it “must be completed and 

signed by the SBA Lender and Applicant whenever an Agent is paid by either the Applicant or 

the SBA Lender in connection with the SBA loan application.” Mot. Exhibit 2. Plaintiff 

provided no reason why it chose to ignore this instruction, or the SBA Regulations, regardless of 

any of the Defendants’ alleged conduct. What is more, the Association of International Certified 

Public Accountants (“AICPA”) specifically warned accounting firms, such as Plaintiff, that 

“there is a possibility that you will not be paid for your services” and advised potential agents to 

“discuss this issue with clients and the banks to ensure there is an understanding, preferably in 

writing, as to how and when any fees will be paid.” Mot. Exhibit 6 (emphasis added).

Nevertheless, it is the legal requirement of a compensation agreement, not Form 159 

itself, that defeats Plaintiff’s claim. Plaintiff cites no authority for the proposition that a litigant 

may be “equitably estopped” from correctly interpreting the law, and it is nonsensical to suggest 

otherwise. In short, Defendants could not (and did not) hide longstanding government 

regulations and publicly available forms from Plaintiff, and surely Defendants cannot be 

estopped from arguing correctly that the CARES Act and SBA regulations mean what they say.

D. Plaintiff Cannot Overcome the Consensus of Opinions that Have 

Decided This Same Issue.

Plaintiff asserts that the reasoning in a unanimous line of opinions dismissing agent fee 

cases “is not on point and/or is faulty” and the decisions are not “dispositive,” Opp. at 21, but all 

of these cases decide the same issue presented here and are persuasive, and no court has held 

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 13 of 22 PageID #:696
10

otherwise. See Sanchez, PC, 2020 WL 6060868, at *2 (joining “the emerging consensus” that 

the CARES Act and IFR do not entitled agents to fees without a compensation agreement); 

American Video I, 2020 WL 6712232, at *4 (“It 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. . . . The Court sees no reason to 

depart from these conclusion.”); see also American Video II, at 8.

7

 

Plaintiff also claims that these courts misapprehended the Supreme Court’s decisions in 

Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), and Auer v. 

Robbins, 519 U.S. 452 (1997). Opp. at 11 & n.6–7. But Chevron and Auer govern only the 

circumstances in which a court should defer to an agency’s interpretation of the statute it 

administers. Plaintiff cannot invoke this case law to urge this Court to adopt Plaintiff’s 

interpretation of the CARES Act without showing that the SBA adopted that interpretation in the 

IFR. All six of the courts that have rejected Plaintiff’s theory have concluded that the SBA did 

not mandate that lenders pay agents fees, and thus they did not commit “reversible error” by 

failing to consider whether Plaintiff’s (not the SBA’s) implausible reading of the IFR should 

receive Chevron deference. See, e.g., American Video II, at 5 n.2.

In fact, the only relevant agency guidance, from Congressional testimony by the 

Secretary of the Treasury, undercuts Plaintiff’s theory. Mot. at 9–10. Plaintiff dismisses the 

Secretary’s testimony, arguing, in effect, that the Secretary could not have meant what he said 

because it would conflict with Plaintiff’s theory. Opp. at 15–16 & n.10. But Plaintiff’s 

explanation for what the Secretary meant to say—that he was referring only to “Lender’s 

Agents,” id. at n.10, a term that appears nowhere in the applicable regulations—is implausible. 

The Secretary said unequivocally that the obligation to pay any agent fees must be “based upon a 

contractual relationship between the agent and the bank,” Mot. Exhibit 1, which testimony is 

7 Many of the same law firms in this case, in fact, represented plaintiffs in the recently 

dismissed American Video I and American Video II cases.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 14 of 22 PageID #:697
11

consistent with the plain text of the CARES Act and the IFR and the opinions of every court to 

have addressed the issue.

II. PLAINTIFF CONCEDES THAT THE CARES ACT LACKS A PRIVATE 

RIGHT OF ACTION, WHICH ADMISSION IS FATAL TO ITS FEDERAL 

CAUSES OF ACTION.

Plaintiff admits that the PPP provisions of the CARES Act do not provide a private right 

of action, Opp. at 21, as every court to have considered the issue has held, Sanchez, 2020 WL 

6060868, at *7 (“The Court joins the preexisting consensus that ‘there is no private cause of 

action to enforce this [agent fee] provision of the CARES Act.’” (citation omitted)); Leigh King, 

2020 WL 6273739, at *7–9 (same); Johnson, 2020 WL 5608683, at *8–9 (same); American

Video I, 2020 WL 6712232, at *4 (same); American Video II, at 8 (same); see also Sport & 

Wheat, 2020 WL 4882416, at *3 n.6 (noting that “it is doubtful that . . . a private right of action 

exists” under the CARES Act, but declining to reach the question “because the claim asserted by 

[p]laintiff under the [Declaratory Judgment Act] clearly fails on the merits”); Steward, 2020 WL 

5939150, at *3 (same).

This concession is fatal to Plaintiff’s three federal causes of action. Plaintiff’s Opposition 

does not dispute that a claim for declaratory relief (Count I) must be predicated on an underlying 

substantive cause of action, and that the CARES Act provides none. See Schilling v. Rogers, 363 

U.S. 666, 677 (1960) (holding that the “availability of [declaratory] relief presupposes the 

existence of a judicially remediable right”); Sport & Wheat, 2020 WL 4882416, at *4; Johnson, 

2020 WL 5608683, at *8; Sanchez, 2020 WL 6060868, at *5; American Video II, at 9. Nor does 

Plaintiff marshal any argument in support of its claims under the CARES Act (Count II) or the 

SBA’s 7(a) Loan Program (Count III). Accordingly, these three claims should be dismissed. See 

Goodpaster v. City of Indianapolis, 736 F.3d 1060, 1075 (7th Cir. 2013) (affirming dismissal of 

claims because the plaintiff “failed to respond to the [defendant’s] arguments against these 

claims in their reply to the [defendant’s] motion to dismiss,” and “did not provide the district 

court with any basis to decide their claims, . . . these claims are waived”).

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 15 of 22 PageID #:698
12

Instead, Plaintiff spends almost three pages of its brief arguing that the lack of a private 

right of action does not foreclose Plaintiff’s state law claims. Opp. at 20–23. But Defendants 

never argued that it did. Defendants instead argued that the lack of a private right of action 

foreclosed Plaintiff’s claims under the CARES Act, Section 7(a), and the Declaratory Judgment 

Act. As for Plaintiff’s state law claims, Defendants demonstrated that those claims should be 

dismissed because Plaintiff cannot plead their necessary elements.

III. PLAINTIFF CANNOT OVERCOME THE MANY DEFECTS IN ITS 

STATE LAW CLAIMS.

Plaintiff alleges no facts and cites no authorities that could save its state law claims. 

A. Plaintiff Does Not State a Conversion Claim.

Plaintiff does not dispute that its conversion claim is predicated solely on its asserted

entitlement to agent fees under SBA regulations. Opp. at 24. Because there is no such 

entitlement, this claim fails. Four courts have already dismissed conversion claims brought by 

PPP agents for this reason. Sanchez, 2020 WL 6060868, at *10 (no conversion claim where 

plaintiff is not entitled to PPP fees); Sport & Wheat, 2020 WL 4882416, at *4 (same); Johnson, 

2020 WL 5608683, at *10 (same); American Video II, at 11 (same). This court should do the 

same. 

In addition, Plaintiff cites no authority to support its contention that agent fees are a 

proper subject of a conversion claim. Plaintiff contends that the claimed agent fees “are not 

merely a debt that may be generally satisfied by any money because Defendants are required to 

pay the Agent Fees out of the specific lender processing fee they received from the SBA based 

upon specified rates and funded loans only.” Opp. at 26. But the proposition that agent fees 

must be paid “out of” lender processing fees does not render the agent fees themselves “a 

specified identifiable fund capable of being the subject of a conversion.” In re Thebus, 483 

N.E.2d 1258, 1261 (Ill. 1985). To the contrary, because the IFR nowhere creates a mandatory 

entitlement to a set amount of fees and instead merely purports to set maximum fee amounts,

Mot. at 17, Plaintiff can provide nothing more than an estimate of the agent fees allegedly owed. 

This important fact distinguishes this case from the authorities Plaintiff cites, and it demonstrates

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 16 of 22 PageID #:699
13

that the alleged agent fees cannot sustain a conversion claim. See Roderick Development 

Investment Co., Inc. v. Community Bank of Edgewater, 282 Ill. App. 3d 1052, 1062 (1996) 

(plaintiff stated conversion claim where funds were “specific and identifiable” and “not 

estimated”); Fonda v. General Casualty Co., 279 Ill. App. 3d 894, 905 (1996) (plaintiff stated 

conversion claim for insurance proceeds where defendant had notice of plaintiff’s security 

interest in the amount of $28,700 but delivered the money to plaintiff’s debtor); Gates v. Towery, 

435 F. Supp. 2d 794, 801 (N.D. Ill. 2006) (two plaintiffs sufficiently stated conversion claims 

where police officers seized “specific amounts of money from them”).

Finally, Plaintiff does not dispute that it failed to make a pre-suit demand. Instead, 

Plaintiff argues that any such demand would have been futile. Opp. at 26. But in the case 

Plaintiff cites for this proposition, Brodsky v. HumanaDental Ins. Co., a demand for return of the 

product was literally futile because the product no longer existed. No. 10-C-3233, 2011 WL 

529302, at *6, *9 (N.D. Ill. Feb. 8, 2011) (demand for return of “lost paper, toner, ink and use of 

the facsimile machine,” was futile because “the alleged fax transmission presumably materially 

altered the paper and toner from their original state”). Plaintiff’s “belief that [the] demand would 

have been refused” is insufficient to establish futility. Runnemede Owners, Inc. v. Crest Mortg. 

Corp., 861 F.2d 1053, 1060 (7th Cir. 1988).

B. Plaintiff’s Unjust Enrichment Claim Fails Because It Does Not Allege 

a “Better Claim” to Fees.

Plaintiff acknowledges that it must establish that it has a “better claim” to the alleged 

agent fees than Defendants in order to show that an unjustly retained benefit was transferred to 

Defendants by a third party, the SBA. Opp. at 27. But Plaintiff offers no explanation for why it 

has a better claim, except to reiterate its erroneous theory of an entitlement to agent fees under 

the CARES Act. Thus, Plaintiff’s conversion claim necessarily fails for the same reason its 

CARES Act claim fails. Plaintiff’s contention that this claim “does not ‘stand or fall’ with its 

other causes of action” is therefore incorrect.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 17 of 22 PageID #:700
14

C. Plaintiff’s Equitable Estoppel Claim Fails Because It Does Not Allege 

Reliance or Misrepresentation.

In its opposition, Plaintiff for the first time specifically alleges that Defendants have 

misrepresented their positions on agent fees “through action, inaction and silence” and that 

Plaintiff relied on these misrepresentations. Opp. at 28. As an initial matter, Plaintiff’s attempt 

to add new facts is improper because “it is axiomatic that the complaint may not be amended by 

the briefs in opposition to a motion to dismiss.” Car Carriers, 745 F.2d at 1107. But even so,

this characterization of Defendants’ alleged conduct cannot save Plaintiff’s equitable estoppel 

claim because Plaintiff still does not offer any facts to establish the elements of the claim. 

As a threshold matter, Plaintiff does not dispute that its claim is based on the same flawed 

interpretation of the CARES Act and PPP regulations discussed above, for no equitable estoppel 

claim lies where defendant’s conduct violated no duty and instead comported with the law. Mot.

at 28 (citing Prestwick Capital Mgmt., 727 F.3d at 662–63 (7th Cir. 2013)). 

In addition, despite asserting that Defendants made misrepresentations, Plaintiff is unable 

to allege any actual communications between itself and Defendants. Nor does it satisfactorily 

explain how it could have relied on any misrepresentations by Defendants, where its Amended 

Complaint alleges Plaintiff “relied on the existing SBA Regulations to expect its earned Agent 

Fees from the Lenders,” Am. Compl. ¶ 52, and insists Plaintiff was “unaware” that Defendants 

would rely on a different interpretation of the regulations to deny them Agent Fees,” Am. Compl. 

¶ 120.

Lastly, Plaintiff alleges that Defendants failed to request Form 159 and even “hid Form 

159,” despite believing it was required for agent fees, and that this shows “Defendants acted with 

actual or implied knowledge that their representations were untrue.” Opp. at 29, 31. As 

discussed above (supra, p. 9), the claim that Defendants “hid” the law from Plaintiff is 

implausible. In any event, Plaintiff does not point to anything that would require Defendants to 

provide borrowers with Form 159 or solicit its completion.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 18 of 22 PageID #:701
15

CONCLUSION

For the foregoing reasons, this Court should dismiss Plaintiff’s Amended Complaint in its 

entirety. Dismissal should be with prejudice as Plaintiff has not offered any substantive proposal 

for amendment other than a cursory reference in its Opposition, and as shown above, no set of 

facts that could possibly cure the deficiencies in its Amended Complaint. See Lee v. Ne. Illinois 

Reg’l Commuter R.R. Corp., 912 F.3d 1049, 1052–53 (7th Cir. 2019) (although leave to amend 

should be freely granted, “this presumption may be overcome if the court finds . . . futility of the 

amendment”).

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 19 of 22 PageID #:702
16

Dated: November 23, 2020

By:

Respectfully submitted,

GRANT LAW, LLC

/s/ Maurice Grant

Maurice Grant

Senija Grebovic

230 West Monroe Street, Suite 240

Chicago, IL 60606

Telephone: (312) 551-0111

mgrant@grantlawllc.com

sgrebovic@grantlawllc.com

WILLIAMS & CONNOLLY LLP

Enu A. Mainigi (admitted pro hac vice)

Kenneth C. Smurzynski (admitted pro hac vice)

Craig D. Singer (admitted pro hac vice)

Jesse T. Smallwood (admitted pro hac vice)

725 Twelfth Street, N.W.

Washington, D.C. 20005

Telephone: (202) 434-5000

emainigi@wc.com

ksmurzynski@wc.com

csinger@wc.com

jsmallwood@wc.com

Attorneys for Defendants

Bank of America Corporation and Bank of 

America, N.A.

/s/ Thomas V. Panoff

MAYER BROWN LLP

Lucia Nale

Thomas V. Panoff

Christopher S. Comstock

Samuel P. Myler

71 South Wacker Drive

Chicago, IL 60606

Telephone: (312) 782-0600

lnale@mayerbrown.com

tpanoff@mayerbrown.com

ccomstock@mayerbrown.com

smyler@mayerbrown.com

Attorneys for Defendant 

Wintrust Bank, N.A.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 20 of 22 PageID #:703
17

/s/ Richard E. Gottlieb

MANATT, PHELPS & PHILLIPS, LLP

Richard E. Gottlieb 

Brett J. Natarelli

A. Paul Heeringa

151 North Franklin Street, Suite 2600

Chicago, Illinois 60606

Telephone: (312) 529-6300

Attorneys for Defendants Cross River Bank

(mistakenly sued as Cross River Bank, Inc.)

and Modern Bank, N.A.

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 21 of 22 PageID #:704
18

CERTIFICATE OF SERVICE

The undersigned hereby certifies that on this 23rd day of November 2020, true and correct 

copies of Reply Memorandum of Law in Further Support of Defendants’ Motion to Dismiss for 

Failure to State a Claim were filed with the Court, and served on Plaintiff’s counsel, via CM/ECF.

/s/ Maurice Grant

Maurice Grant

Case: 1:20-cv-02644 Document #: 83 Filed: 11/23/20 Page 22 of 22 PageID #:705