Armando Montelongo, Jr., Real Estate Training International, LLC, Performance Advantage Group, Inc., and License Branding, LLC v. Cecil G. Abrea

Citation: Not availableDocket: 04-19-00301-CV

Court: Court of Appeals of Texas; November 12, 2019; Texas; State Appellate Court

Original Court Document: View Document

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The Fourth Court of Appeals in San Antonio, Texas affirmed the trial court's denial of a motion to dismiss filed by Appellants Armando Montelongo, Jr. and his companies—Real Estate Training International, LLC, Performance Advantage Group, Inc., and License Branding, LLC—under the Texas Citizens Participation Act (TCPA). The Appellants sought dismissal of specific claims, including fraud, conspiracy to commit fraud, and fraudulent concealment, brought by Appellees Cecil G. Abrea and 423 other individuals who alleged financial and emotional harm from the Appellants' seminars and products, which they argued were misleadingly marketed as educational. 

The Appellees contended that the seminars served primarily as mechanisms for upselling additional products and services rather than providing genuine educational value. They noted that third-party affiliates offered "turn-key cash-flow properties" at the seminars and that Kurt Weinrich, associated with IRA custodians, was introduced by Montelongo during presentations, though he did not conduct sales on-site. The Appellants denied any financial ties to Weinrich or his companies and claimed no responsibility for encouraging purchases from them. The lawsuit, filed on July 17, 2018, included claims under the Deceptive Trade Practices Act (DTPA), negligence, and negligent misrepresentation, alleging that the Appellants fostered a predatory environment by encouraging students to engage with their allies, who allegedly further exploited them.

Appellees allege that Appellants engage in deceptive practices, including coercion, fabricating personal success stories, and instilling fear to prevent scrutiny of their operations. They claim Appellants encourage students to transfer funds to self-directed IRAs managed by Appellants' affiliates and monitor private Facebook groups to eliminate dissent. Appellees also assert that Appellants, through an affiliate, purchase properties and sell them to students at inflated prices without disclosing Appellants' financial interests in these transactions. Previously, Appellees attempted to sue Appellants in federal court, but both cases were dismissed due to lack of jurisdiction and insufficient pleading of claims. Appellees' original petition included sections on fraud, self-interested dealings, and student exploitation. After Appellants filed their original answer, they sought to dismiss parts of the petition but did not invoke the Texas Citizens Participation Act (TCPA). Appellees later filed an amended petition that reiterated their claims and added new theories of fraud and conspiracy, although they did not provide new substantive facts. Appellants moved to dismiss certain fraud claims under the TCPA, but Appellees contended the motion was untimely, as many allegations were present in the original petition. The trial court denied Appellants' motion without providing a reason, leading to the current interlocutory appeal.

Review of a trial court's denial of a TCPA motion to dismiss is conducted de novo, examining pleadings and evidence favorably towards the nonmovant. Questions of statutory construction are also reviewed de novo, with the aim to determine legislative intent based on statutory language. The TCPA facilitates the early dismissal of groundless actions that infringe on First Amendment rights and is designed to protect constitutional rights while allowing meritorious lawsuits. A TCPA motion must be filed within 60 days of service of the legal action, which is defined broadly to include various judicial filings seeking legal or equitable relief.

The TCPA does not explicitly define "cause of action," though it implies that it consists of the factual basis for the plaintiff's claim. In this case, the Appellants' motion targets specific fraud-based claims related to their rights to free speech and association, asserting that these claims were newly introduced in the Appellees' amended petition. The Appellees counter that the factual allegations in question were included in the original petition, meaning the deadline for Appellants to file their TCPA motion should have started with that initial service. A precedent from Maldonado v. Franklin illustrates that if new claims arise from the same essential facts as those in the original petition, the TCPA motion may be considered untimely for the new claims.

The court affirms the trial court's denial of Appellants' motion to dismiss under the Texas Citizens Participation Act (TCPA), determining that Appellants failed to timely challenge the factual allegations in Appellees’ original petition. The Appellants asserted that the TCPA motion targeted fraud-based theories involving “predation, self-dealing, and deletion of Facebook posts,” which were unchanged from the original to the amended petition. Since Appellants did not claim that the amended petition introduced new factual allegations or different conduct, their deadline to contest these claims started with the original petition. 

Appellees argued that their claims involve commercial speech, which would exempt them from the TCPA, but the court assumes without deciding that the TCPA applies. The Appellants expressed concern that this ruling would compel litigants to address every possible cause of action, but the court found that the TCPA's definitions do not allow for such a distinction between factual allegations and causes of action. Moreover, the ruling does not impose additional burdens on litigants beyond those already mandated by the Legislature. 

The court also addressed Appellants’ claim that allowing amendments to pleadings could restart the TCPA's timeline, noting that this interpretation could lead to unintended consequences that contradict the purpose of the TCPA. Consequently, since the motion to dismiss was filed after the 60-day period following service of the original petition, it was deemed untimely, and the trial court’s decision was upheld. The court concluded that no further arguments needed to be considered.