Background
Abel Gutierrez, doing business as Splice Funding Solutions, agreed to help Derek Engh obtain financing to buy a business. Their July 2020 consulting contract required Engh to pay Gutierrez 0.5% of financing obtained from a lender Gutierrez introduced. It also stated that lender-paid broker or referral compensation would not substitute for the agreed consulting fee.
Gutierrez helped Engh secure a $2.52 million SBA-backed loan from Falcon National Bank. At closing, Engh, Gutierrez, and the bank signed SBA Form 159, which disclosed that Falcon would pay Gutierrez $25,200 for broker or referral services. The form did not disclose the separate $12,600 consulting fee payable by Engh. After closing, Engh refused to pay that fee. The district court found that Engh breached the consulting contract and awarded Gutierrez $12,600, interest, costs, and trial-level attorney fees.
The Court’s Holding
The Iowa Court of Appeals affirmed. Engh conceded that the consulting contract was valid and, by its terms, entitled Gutierrez to the $12,600 fee. His sole appellate argument was that Form 159 was a later contract that barred Gutierrez from seeking an undisclosed additional fee.
Even assuming Form 159 was a contract between Engh and Gutierrez, the court held that it did not modify or discharge the consulting contract. The form did not refer to the earlier agreement, release Engh from his payment obligation, or give Engh a contractual defense to collection. Its relevant provisions were certifications to the SBA, not promises to Engh. The court expressly declined to decide whether the consulting fee was required to be disclosed under SBA rules or whether federal law affected enforcement, because Engh had disclaimed those issues. It remanded for the district court to determine reasonable appellate attorney fees under the consulting contract.
Key Takeaways
- A later signed document does not displace an earlier contract without evidence of mutual intent to modify or extinguish the earlier obligations.
- SBA Form 159 certifications, on the facts and argument presented, did not waive the consultant’s separate contractual right to collect an agreed fee.
- The court did not decide whether the fee complied with SBA disclosure requirements or regulations.
Why It Matters
The decision distinguishes a regulatory disclosure form from a private contractual modification. Parties asserting that a later agreement superseded an earlier contract must identify language demonstrating that result; a certification directed to a regulator may not suffice.
It also underscores the importance of preserving and presenting regulatory or illegality defenses. Engh limited his appeal to the asserted contractual effect of Form 159, leaving the court to decide only that narrow issue.