71 F.4th 257
5th Cir.2023Background
- Ramey & Schwaller, L.L.P. obtained a $249,300 PPP loan from Amegy Bank in April 2020; the SBA application asked (Question 5) whether any ≥20% owner was "subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought."
- William Ramey (100% owner) answered "No" to Question 5, signed certifications that the application was true, and the bank disbursed the loan; loan documents incorporated the application and allowed default/setoff for materially false representations.
- Unbeknownst to the bank at application time, a criminal complaint under Texas Code Crim. P. art. 15.04 had been filed against Ramey in Sept. 2019; magistrate found probable cause, warrant issued, Ramey arrested and released on bond, arraignment was scheduled (later delayed), and ultimately a grand jury did not indict in Oct. 2021.
- Bank later discovered the state proceedings from background checks, declared an event of default, froze the firm’s accounts by setoff, and SBA denied forgiveness on the basis that the borrower was ineligible due to Ramey’s false answer.
- Ramey & Schwaller sued the bank; district court granted summary judgment to the bank, holding Ramey’s answer was false because he was subject to "other means by which formal criminal charges are brought," and awarded damages and fees; the firm appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Question 5 cover a pending state criminal complaint / Article 15.04 proceeding as "other means by which formal criminal charges are brought"? | No — the complaint is not equivalent to an indictment or formal information; the phrase should be read narrowly. | Yes — the complaint, arrest, probable cause finding, scheduled arraignment and court documents show a formal accusation and fall within the catch‑all phrase. | Held: Yes. The court concluded the complaint and related proceedings fit the plain meaning of "charge" and fall within "other means." |
| Does Texas law treat an affidavit/complaint under Art. 15.04 as a charging instrument/"charge"? | Argues it should not be read to the same effect as an indictment for Question 5. | Points to art. 15.04 which defines an affidavit charging an offense as a "complaint" and to state court labels ("charging instrument," bail documents listing a "charge"). | Held: Yes. The court relied on Texas law and court records labeling the document a charging instrument and the bond referring to the "charge." |
| Should ejusdem generis or SBA regulatory history narrow "other means" to instruments like indictments/informations only? | Yes — ejusdem generis and SBA materials indicate a narrower class similar to indictments/informations. | No — the Application’s plain language controls; the SBA form cited is not probative of PPP Question 5’s meaning. | Held: Rejected. The court found the genus not obvious and the plain text controls; SBA history and ejusdem generis did not compel narrowing. |
| Did the bank prevail on summary judgment and get relief (default, setoff, damages)? | Contended material facts precluded SJ and sought declaratory relief that no default occurred. | Argued no genuine dispute: false statement → default under loan docs → setoff and damages. | Held: Affirmed SJ for bank. Ramey’s "No" was false, firm was in default, and bank’s counterclaim succeeded. |
Key Cases Cited
- Wantou v. Wal‑Mart Stores Tex., L.L.C., 23 F.4th 422 (5th Cir. 2022) (appellate court may affirm on any ground supported by record)
- Great Am. Ins. Co. v. Primo, 512 S.W.3d 890 (Tex. 2017) (contract terms given their ordinary meaning)
- Certain Underwriters at Lloyd’s, London v. Axon Pressure Prods. Inc., 951 F.3d 248 (5th Cir. 2020) (summary‑judgment standard and de novo review on appeal)
- Murray v. Earle, 405 F.3d 278 (5th Cir. 2005) (construe facts and inferences in light most favorable to nonmovant)
- Clark v. America’s Favorite Chicken Co., 110 F.3d 295 (5th Cir. 1997) (conclusory allegations insufficient to defeat summary judgment)
- Rollins v. Home Depot USA, 8 F.4th 393 (5th Cir. 2021) (arguments not briefed on appeal are forfeited)