Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Banking newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (July 6, 2020, 4:48 PM EDT) -- Truist Bank is urging a Florida federal judge to dismiss an accounting firm's proposed class suit claiming that agents for loan recipients under the federal Paycheck Protection Program should get a portion of the processing fees received by lenders, saying the governing law does not give agents a cut of the fees.
Truist said Friday that accounting firm Sport & Wheat CPA PA is trying to turn the limitation on agent fees placed in the Coronavirus Aid, Relief, and Economic Security Act into an affirmative entitlement to a portion of the fees for helping small businesses apply for the PPP loans.
But the bank said there is nothing in the federal law entitling agents to be paid fees by the lenders. Congress only prohibited agents from collecting excessive fees, but there is no evidence lawmakers intended to allow agents to pursue claims for fees, Truist said.
"Sport & Wheat casts these common law claims as arising under state law," Truist said. "But the viability of each depends on whether the federal Coronavirus Aid, Relief and Economic Security Act entitles purported 'agents' to receive a portion of the fees the Small Business Administration must pay lenders for processing Paycheck Protection Program loans. The CARES Act provides no such right."
Sport & Wheat filed its suit April 27 against Georgia-based Synovus Trust Co. NA and Alabama-based ServisFirst Bank Inc., claiming that they should compensate agents from the processing fees they receive from the federal Small Business Administration. Truist was added to the suit one month later when Sport & Wheat amended its complaint.
In its complaint, the accounting firm says it is "simply un-American" not to compensate agents for their work, "particularly when that work is what results in the PPP loan being issued and the banks then earning a processing fee."
The suit seeks to form a proposed class covering PPP agents in Florida that have been refused payment of their fees by a lender for helping the bank's customers obtain PPP loans, but left the door open to possible expansion into a national class action or multidistrict litigation.
Congress established the PPP in late March as part of the CARES Act, which was valued at $2.1 trillion. The PPP, which started with a pot of $349 billion and was later increased by another $300 billion, was intended to provide small businesses with eight weeks of cash to cover payroll through 100% federally backed loans administered by private banks. If a recipient continues to pay its employees through the two-month period, the loans would be either entirely or mostly forgiven, according to the suit.
Attorneys for the parties did not respond to requests for comment Monday.
Sport & Wheat is represented by John S. Wirt and Pamela Cocalas Wirt of Wirt & Wirt PA and Bill Cash, Matt Schultz and Virginia Buchanan of Levin Papantonio Thomas Mitchell Rafferty & Proctor PA.
Truist is represented by Cheryl L. Haas, Meredith Laughlin Allen, Kathryn M. Barber and Emily Y. Rottman of McGuireWoods LLP.
The case is Sport & Wheat CPA PA et al. v. ServisFirst Bank Inc. et al., case number 3:20-cv-05425, in the U.S. District Court for the Northern District of Florida.
--Additional reporting by Nathan Hale. Editing by Abbie Sarfo.
For a reprint of this article, please contact reprints@law360.com.
