Montelongo v. Abrea, 04-19-00301-CV

• Decision Date: 13 November 2019
• Docket Number: No. 04-19-00301-CV,04-19-00301-CV
• Citation: 612 S.W.3d 71
• Parties: Armando MONTELONGO, Jr., Real Estate Training International, LLC, Performance Advantage Group, Inc., and License Branding, LLC, Appellants v. Cecil G. ABREA, et al., Appellees
• Court: Texas Court of Appeals

612 S.W.3d 71

Armando MONTELONGO, Jr., Real Estate Training International, LLC, Performance Advantage Group, Inc., and License Branding, LLC, Appellants

v.Cecil G. ABREA, et al., Appellees

No. 04-19-00301-CV

Court of Appeals of Texas, San Antonio.

Delivered and Filed: November 13, 2019

Santos Vargas, Joshua Caldwell, Yamil Farid Yunes, Davis & Santos, P.C., 719 S. Flores St., San Antonio, TX 78204-1350, for Appellants.

Jon T. Powell, John Johnson, Powell Law Firm, 1148 E. Commerce St., San Antonio, TX 78205-3313, Renee Yanta, The Law Firm of Renee Yanta PLLC, 8000 IH10 West, Suite 600, San Antonio, TX 78230, Peter Roldan, Jason Fisher, Emergent, LLP, 5 3rd St., Suite 1000, San Francisco, CA 94103, for Appellees.

Sitting: Patricia O. Alvarez, Justice, Beth Watkins, Justice, Liza A. Rodriguez, Justice

MEMORANDUM OPINION

Opinion by: Beth Watkins, Justice

Appellants Armando Montelongo, Jr., Real Estate Training International, LLC ("RETI"), Performance Advantage Group, Inc. ("PAG"), and License Branding, LLC (collectively, "Appellants") appeal the trial court's order denying a motion to dismiss they filed pursuant to the Texas Citizens Participation Act ("TCPA"). Appellants' motion sought to dismiss "certain portions of" fraud, conspiracy to commit fraud, and fraudulent concealment claims asserted by appellees Cecil G. Abrea, et al. (collectively, "Appellees"). We affirm the trial court's order.

BACKGROUND

Montelongo is a real estate investor and the president and CEO of RETI and PAG. Both entities produce, sell, and conduct seminars on principles and methods of real estate investing. Montelongo is also the president of License Branding, LLC, a holding company for the trademarks and copyrights RETI and PAG use.

Appellees are 423 individuals from across the United States who claim to have suffered financial and emotional harm after purchasing one or more of Appellants' seminars or products. According to Appellees, even though Appellants refer to their seminar attendees as "students," the seminars "are not genuine educational offerings." Appellees contend that the seminars are a series of coercive "upsells" whose only purpose is to convince attendees to purchase additional seminars, products, and services from Appellants and people allied with Appellants.

One of the topics addressed at Appellants' seminars was the generation of cash flow through rental income. To that end, third-party affiliates of RETI set up booths at RETI seminars where they offered " ‘turn-key,’ cash-flow properties" for purchase by attendees. Appellants' seminars also included presentations by Kurt Weinrich, who was associated with two individual retirement account ("IRA") custodian companies. Montelongo would introduce Weinrich onstage during seminars and tell attendees that "Weinrich's line of work included self-directed IRAs." Weinrich did not conduct sales transactions during his seminar presentations, but he informed attendees that he and his associated companies had a booth outside the main seminar room. Appellants maintain that they did not instruct or advise students to purchase products from Weinrich or his associated companies, that they did not have any "ownership, management, or controlling interest" in Weinrich's companies, and that they did not make any money from Weinrich's sales at their events.

Appellees filed the lawsuit that is the basis for this appeal on July 17, 2018.¹ In their original petition, they asserted theories of liability based on the Deceptive Trade Practices Act ("DTPA"), negligence, and negligent misrepresentation. As factual support for these claims, Appellees alleged that Appellants would, inter alia:

• "encourage[ ] [students] to pursue their real estate investments using [Montelongo's] allies, who also victimize the students";

• "engage in self-dealing transactions with the students (whose trust Montelongo cultivates), and expose the students, including [Appellees], to predation at the hands of [Appellants'] allies," including Weinrich and the turn-key property affiliates;

• "sell their products using coercion and deception";

• "engage in outright lies to sell their products, for example, creating fake personal success stories";

• "encourage students to transfer money in their employer-controlled or other secure retirement accounts to self-directed IRAs held by companies allied with [Appellants]";

• "instill fear in students to discourage them from questioning the [Appellants'] system, and attack or silence those who attempt to speak out";

• "carefully monitor the private Facebook groups to which they invite their past and present students, immediately deleting anything critical of not only [Appellants], but also of anyone else who is a member of the group—even if that person is known to have cheated other students of money—and forcing out those who continue to dissent"; and

• "use an affiliate to purchase properties in the area where the event will occur, and then, during the event, sell the properties to students at inflated prices without disclosing that [Montelongo] has an interest in the sales or receives a share of the profits."

Appellees' original petition also included sections entitled "Defendants' Fraudulent Scheme," "Defendants' Self-Interested Business Dealings with their Students," and "Defendants' Exposure of Students to Predation by their Allies."

Appellants filed their original answer on November 13, 2018. They also unsuccessfully sought the dismissal of Appellees' original petition under Texas Rule of Civil Procedure 91a. However, they did not seek to dismiss any part of the original petition pursuant to the TCPA.

On January 22, 2019, Appellees filed their first amended petition, which restated their DTPA, negligence, and negligent misrepresentation theories and added new theories of fraud, conspiracy to commit fraud, and fraudulent concealment. The new paragraphs alleging fraud and conspiracy to commit fraud listed the elements of those theories but did not include any additional substantive factual claims. The paragraphs alleging fraudulent concealment listed the elements of that theory and included supporting factual allegations that were essentially identical to factual allegations that appeared in Appellees' original petition.

On March 25, 2019, Appellants moved to dismiss "certain portions of the fraud claims, and the fraudulent concealment claims altogether, pursuant to the TCPA." Appellants filed their motion within 60 days of the filing of Appellees' first amended petition, but 132 days after they answered Appellees' original petition.² In response, Appellees argued, inter alia, that Appellants' motion was untimely because each of their fraud-based theories "arises out of factual allegations that were first made in the Original Petition, including all of the activities [Appellants] contend are protected under the TCPA." They also noted that certain paragraphs Appellants attacked in the motion were identical in both the original and first amended petitions, and argued that "[b]ecause the First Amended Petition does not alter the essential nature of this action, [Appellants'] time to bring a TCPA motion should be calculated from the date of service of the Original Petition."

The trial court denied Appellants' motion to dismiss without stating the basis for its ruling. This interlocutory appeal followed.

ANALYSIS

Standard of Review

We review a trial court's denial of a TCPA motion to dismiss de novo. Robert B. James, DDS, Inc. v. Elkins , 553 S.W.3d 596, 603 (Tex. App.—San Antonio 2018, pet. denied). In reviewing a ruling on a TCPA motion, "[w]e view the pleadings and evidence in the light most favorable to the nonmovant." Id.

We also review questions of statutory construction de novo. State ex rel. Best v. Harper , 562 S.W.3d 1, 11 (Tex. 2018). Our objective is to "ascertain and give effect to the Legislature's intent as expressed by the language of the statute." Id. (internal quotation marks omitted). When a statute does not define a key term, we give that term its "common, ordinary meaning unless a contrary meaning is apparent from the statute's language." Tex. State Bd. of Exam'rs of Marriage & Family Therapists v. Tex. Med. Ass'n , 511 S.W.3d 28, 34 (Tex. 2017).

Applicable Law

"The TCPA provides an expedited procedure for the early dismissal of groundless legal actions that impinge on First Amendment rights." Greer v. Abraham , 489 S.W.3d 440, 442 (Tex. 2016). Its purpose is "to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury." TEX. CIV. PRAC. & REM. CODE ANN. § 27.002. We construe the TCPA "liberally to effectuate its purpose and intent fully." Id. § 27.011(b).

A motion to dismiss under the TCPA "must be filed not later than the 60th day after the date of service of the legal action." Id. § 27.003(b). The statute as it existed at the time this lawsuit was filed³ defined a "legal action" as "a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal or equitable relief." Id. § 27.001(6). Although the TCPA does not define the term "cause of action," we have explained that "[a] ‘cause of action’ consists of the operative facts entitling the plaintiff to the relief sought." Elkins , 553 S.W.3d at 604. Similarly, the Texas Supreme Court has held—albeit while reviewing a different statute—that "cause of action" means "the fact or facts entitling one to institute and maintain an action, which must be alleged and proved in order to obtain relief." Loaisiga v. Cerda , 379 S.W.3d 248, 262 (Tex. 2012) (internal quotation marks omitted).

Application

Appellants' TCPA motion is limited to "certain portions of" Appellees' fraud-based theories they contend "relate or are in response to [their]...