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Law360 (October 26, 2020, 10:48 PM EDT ) JPMorgan Chase Bank NA has urged an Arizona federal court to toss claims that it unjustly enriched itself by failing to pay a law firm for its work on federal Paycheck Protection Program loans, arguing that the parties never had a deal.
Because Radix Law PLC never signed an agreement with Chase that would entitle it to fees for helping borrowers obtain the loans awarded as part of the federal government's response to the COVID-19 pandemic, the court should dismiss the firm's attempt to now cash in, the banking giant argued Friday.
Other federal courts reviewing similar arguments in other cases have determined that the Coronavirus Aid, Relief and Economic Security Act that created the PPP does not entitle agents to collect fees from lenders if they do not have an agreement that calls for it, according to a memorandum accompanying Chase's motion to dismiss.
"Plaintiff's theory is refuted by the plain language of the CARES Act and the existing regulatory framework, as the only courts to have considered this issue have held," the memorandum said.
Radix Law sued Chase in a county court in Maricopa County, Arizona, in August, contending that under a fact sheet issued in March and a final rule issued in April by the U.S. Treasury Department for the PPP, lenders who accept and issue loans under the program must pay fees to agents, including attorneys.
The firm asserts that it was the agent for 10 Chase clients who got PPP loans totaling over $700,000, according to the complaint for the case, which was removed to federal court in September.
"Defendant did not at any time during the PPP process object to paying Radix Law this fee," the complaint says. "However, after completing the loan process, and despite demand, defendant has failed and refused to compensate Radix Law as required."
Radix Law seeks an unspecified amount of damages, interest, costs and attorney fees.
Jonathan Frutkin of Radix Law, representing the firm, told Law360 on Monday that thousands of small service providers responded to the government's emergency call for application assistance for small business owners.
"The government said don't charge your clients — we will make sure that you get paid," Frutkin said. "Instead the banks want to keep every penny of the government-paid fees for themselves."
Counsel for Chase could not immediately be reached for comment Monday.
Radix Law is represented in-house by Jonathan Frutkin and Robert N. Mann.
JPMorgan Chase is represented by Nicole M. Goodwin and Adrianna Griego Gorton of Greenberg Traurig LLP.
The case is Radix Law PLC v. JPMorgan Chase Bank NA, case number 2:20-cv-01810, in the U.S. District Court for the District of Arizona.
--Editing by Daniel King.
For a reprint of this article, please contact reprints@law360.com.
