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NEWS AUGUST 31, 2020 ¦ 15

Federal Court Rules Lenders
Don’t Have To Pay PPP Agent Fees

By Michael A. Mora

Afederal district court judge has made one of
the first major decisions in litigation over
agent fees under the Paycheck Protection
Program.
And agents for borrowers likely won’t be happy.
This case is significant because it was the first of
at least 50 cases pending around the country raising
the same issue, since the Judicial Panel on Multi-
district Litigation denied a motion to transfer these
cases into a single MDL proceeding.
The decision came from the U.S. District Court
for the Northern District of Florida, which ruled
that the Coronavirus Aid, Relief, and Economic
Security Act, also known as the CARES Act, “does
not require lenders to pay the agent’s fees absent an
agreement to do so.”
The CARES Act, a $2.2 trillion economic stimulus
bill signed into law in March 2020, provided small
businesses with funds to pay up to eight weeks of T. Kent Wetherell II testifies before the Senate Judiciary
payroll costs, including benefits. Committee during his confirmation hearing to be U.S.
District Judge for the Northern District of Florida,

on Oct. 17, 2018. Photo by Diego Radzinschi/ALM

No federal avenues?
In the Florida litigation, plaintiff Sport & Wheat Florida litigation. “Going forward, it will create or
CPA alleged Servisfirst Bank did not pay about force a more heavy reliance on state law claims.”
$4,500 in agent fees.
The small accounting firm claimed it had com- ‘Courts are picking apart the CARES Act’
piled borrower information that the bank had used In Florida, U.S. District Judge T. Kent Wetherell
for the PPP. But without a written agreement be- found that the CARES Act mandated that the Small
tween the agent or the borrower and the lender, the Business Administration reimburse the lender au-
court denied that the accounting firm was entitled thorized to make the loan, and detailed the amount
to the requested agent fees. that a lender would be compensated as a fee for bro-
Now, Graham Ryan, a partner at Jones Walker in kering the loan.
New Orleans, said the district court’s decision pro- The judge found the CARES Act also provides that
vided insight into how federal courts are likely to an agent who assists in the loan application process
interpret the CARES Act, which could have billion- may not “collect a fee in excess of the limits estab-
dollar implications for pending cases. lished” by the SBA.
“This decision continues a trend of chipping away The district court’s order dismissing the plain-
at the ability of private litigants to sue lenders under tiff ’s amended complaint cited the total amount
federal law,” said Ryan, who is not involved in the
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