Loan Docs Provided to SBA Started Clock on Statute of Limitations; United States Court of Appeals for the Ninth Circuit No. 19-35205, U.S. ex rel. Charles W. Houpt v. Wells Fargo Bank N.A.

39

The Ninth Circuit affirmed a district court’s decision to grant summary judgment to Wells Fargo in a qui tam complaint alleging SBA loan fraud. The appeals court agreed the claims were barred under both provisions of the statute of limitations language, as the complaint was filed more than six years after the date of the alleged fraud and more than three years after SBA closed out the loan, at which point it should have been aware of the materials facts underlying the relator’s allegations.

Relator Charles Houpt appealed the district court’s decision to grant summary judgment in favor of Wells Fargo Bank in his qui tam complaint alleging the bank made false statements to obtain SBA loan guarantees.

The district court granted summary judgment after finding Haupt’s claims were barred by the statute of limitations. The court found the claims barred under both provisions: that more than 6 years had passed since the date the violations occurred and that more than three years had passed since the facts were known or should have been known to an agent of the United States.

Assuming Haupt’s allegations as true, the court found the statute of limitations began to run on April 19, 2010, the date Wells Fargo asked SBA to purchase the guaranteed portion of a loan. However, Haupt did not file his qui tam complaint until September 2017, so the claims were barred by the six-year statute of limitations.

Likewise, the court found that SBA knew or should have known the material facts of Haupt’s claim no later than April 30, 2014, the date Wells Fargo repaid the loan amount to SBA. When SBA closed the loan, it would have known what reports, documents, or other information it had or had not received from Wells Fargo. Based on those documents, the SBA either knew or should have known whether it should have paid the loan guarantee in 2010. Because SBA was aware of the basis of Haupt’s complaint in April 2014, the court found the claims were barred by the three-year standard as well.