Community Associates, Inc. v. U.S. Small Business Administration, et al

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
COMMUNITY ASSOCIATES, INC.
Plaintiff
CIVIL ACTION
VERSUS 	NO. 25-1181
KELLY LOEFFLER, ET AL.
Defendant
SECTION: “E” (1)
ORDER AND REASONS
Before the Court is the motion of Defendant Scott Bessent, in his official capacity
as Secretary of the United States Department of the Treasury (“Defendant” or “Treasury
Department”), to dismiss the complaint of Plaintiff Community Associates (“Plaintiff”) on
the grounds that the Court lacks subject matter jurisdiction. 1 Plaintiff filed a statement of
non-opposition. 2 Considering the law, Defendant’s arguments, and Plaintiff’s non-
opposition, the Court finds it lacks subject matter jurisdiction over this issue and
GRANTS the motion to dismiss.
Plaintiff brings this action against Scott Bessent in his capacity as Secretary of the
United States Treasury Department and against Kelly Loeffler in her capacity as
Administrator of the U.S. Small Business Administration (“SBA”). 3 This action stems
from Plaintiff’s attainment of a Paycheck Protection Program (PPP) loan. 4 SBA initially
granted Plaintiff a PPP loan, but when Plaintiff applied for loan forgiveness, SBA
determined that Community Associates had never been an eligible recipient and
1 R. Doc. 7. The Treasury Department also moved to dismiss the complaint for failure to state a claim upon
which relief can be granted.
2 R. Doc. 10.
3 R. Doc. 1 at p. 1.
4 Id. at p. 2
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demanded repayment. 5 Plaintiff did not repay the loan, and SBA referred the debt to the
Treasury Department’s Bureau of the Fiscal Service’s Treasury Offset Program (TOP). 6
Plaintiff then filed suit against the SBA and the Treasury Department, asserting
that Defendants violated its Fifth Amendment right to Due Process and engaged in
unlawful agency and ultra vires actions. 7 Plaintiff seeks to prevent the Treasury
Department from “continuing any efforts to collect the loan through administrative offset,
wage garnishment, or credit reporting.” 8
On September 12, 2025, the Treasury Department filed the motion to dismiss
currently before the Court, arguing this Court does not have jurisdiction to hear this
action.9 Plaintiff filed a statement of non-opposition. 10
LEGAL STANDARD
I. 	Rule 12(b)(1) Standard
Federal courts are courts of limited jurisdiction, possessing only the authority
expressly granted and conferred by the United States Constitution or by statute. 11 A
motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) challenges a federal
court’s subject-matter jurisdiction.12 Under Rule 12(b)(1), “[a] case is properly dismissed
for lack of subject matter jurisdiction when the court lacks the statutory or constitutional
power to adjudicate the case.” 13 The party asserting jurisdiction bears the burden of
5 Id. at pp 2-3 ¶ ¶ 8, 10, 12, 13.
6 Id. at p. 4 ¶ 15.
7 Id. at pp. 4-5 ¶ ¶ 17-22.
8 Id. at p. 5.
9 R. Doc. 7.
10 R. Doc. 10. The Treasury Department also argued the Court should dismiss the complaint against it
pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be
granted, but the Court need not consider this argument.
11 Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001).
12 See F ED . R. CIV . P. 12(b)(1).
13 Home Builders Ass’n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998) (internal
quotation marks and citation omitted).
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establishing that the district court possesses subject-matter jurisdiction. 14 “[W]hen a
federal court concludes that it lacks subject matter jurisdiction, the court must dismiss
the complaint in its entirety.” 15 “When a Rule 12(b)(1) motion is filed in conjunction with
other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack
before addressing any attack on the merits.” 16
LAW AND ANALYSIS
The Treasury Department administers the TOP program to help federal agencies
collect delinquent debt owed to the government. In this case, SBA referred Plaintiff’s loan
debt to TOP for collection. When an agency refers a debt to TOP, as SBA did here, the
Treasury Department, pursuant to 26 U.S.C. § 6402(d)(1)(A)-(B), must “reduce the
amount of [any federal tax] overpayment payable” to a debtor by the amount of the debt
owed and “pay the amount by which the overpayment is reduced . . . to such [referring]
agency.”17
The Treasury Department’s offset activities under 26 U.S.C. § 6402 are not subject
to judicial review, as “No court of the United States shall have jurisdiction to hear any
action, whether legal or equitable, brought to restrain or review a reduction authorized by
subsection (c), (d), (e), or (f).” 18 In the present case, SBA referred Plaintiff’s debt to the
Treasury 	Department’s 	TOP 	program 	and 	Plaintiff 	seeks 	to 	enjoin 	the 	Treasury
Department from collecting the loan through administrative offset, wage garnishment, or
14 Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
15 Arbaugh v. Y&H Corp., 546 U.S. 500, 502 (2006).
16 Ramming, 281 F.3d at 161.
17 See also 31 U.S.C. § 3720A (regarding offset of tax-refund payments)
18 26 U.S.C. § 6402(g); see also Vann v. Comm’r of Internal Revenue, No. 09-305, 2009 WL 1227260, at *1
(N.D. Tex. May 1, 2009); Tatum v. United States, No. 23-6184, 2024 WL 1716639, at *2 (E.D. La. Apr. 22,
2024).
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credit reporting. However, this Court is incapable of reviewing such a claim as it lacks
jurisdiction to review TOP offset activities. 19
Accordingly,
IT IS ORDERED that Defendant United States Treasury Department’s motion to
dismiss20 is GRANTED for lack of subject matter jurisdiction. Plaintiff’s claim against
Defendant 	United 	States 	Treasury 	Department 	is 	DISMISSED 	WITHOUT
PREJUDICE.
New Orleans, Louisiana, this 7th day of November, 2025.
_______ 	________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE
19 26 U.S.C. § 6402(g).
20 R. Doc. 7.
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