Montelongo v. Abrea

• Decision Date: 30 April 2021
• Docket Number: No. 19-1112,19-1112
• Citation: 622 S.W.3d 290
• Parties: Armando MONTELONGO, Jr., Real Estate Training International, LLC, Performance Advantage Group, Inc., and License Branding, LLC, Petitioners, v. Cecil G. ABREA, et al., Respondents
• Court: Texas Supreme Court

622 S.W.3d 290

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

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

No. 19-1112

Supreme Court of Texas.

Argued February 4, 2021

Opinion delivered: April 30, 2021

Yamil Yunes, Joshua J. Caldwell, San Antonio, Lara Hudgins Hollingsworth, Joe M. Roden, Houston, John MacVane, Santos Vargas, San Antonio, for Petitioners.

Jason Fisher, John Johnson, Dallas, Peter Roldan, Renée A. Yanta, Kerrville, Jon Todd Powell, San Antonio, for Respondents.

Justice Boyd delivered the opinion of the Court.

The Texas Citizens Participation Act (TCPA)¹ provides for the dismissal of certain "legal actions" that are based on or in response to a party's exercise of the right of free speech, petition, or association.² Absent an extension by agreement or for good cause, the party seeking dismissal must file a motion within sixty days after the party is served with the legal action.³ In this case, the defendants did not file a TCPA dismissal motion in response to the plaintiffs' original petition but did file one within sixty days after the plaintiffs served an amended petition adding new legal claims based on the same essential facts alleged in the original petition. The issue is whether the amended petition asserted a new "legal action" that triggered a new sixty-day period for filing a dismissal motion.

We hold that an amended or supplemental pleading that asserts the same legal claims or theories by and against the same parties and based on the same essential facts alleged in a prior pleading asserts the same "legal action" to which the sixty-day period previously applied and thus does not trigger a new sixty-day period for filing a dismissal motion. But to the extent an amended or supplemental pleading either (1) adds a new party or parties, (2) alleges new essential facts to support previously asserted claims, or (3) asserts new legal claims or theories involving different elements than the claims or theories previously asserted, the new pleading asserts a new legal action and triggers a new sixty-day period as to those new parties, facts, or claims. Because the plaintiffs' amended petition in this case asserted new legal claims, the defendants' motion to dismiss those claims was timely. We therefore reverse the court of appeals' judgment denying the defendants' dismissal motion as untimely and remand the case for that court to address issues it did not reach.

I.Background

Armando Montelongo, Jr. is a real estate investor and president of three companies: Real Estate Training International, LLC, Performance Advantage Group, Inc., and License Branding, LLC. Real Estate Training International and Performance Advantage Group produce, sell, and conduct real-estate-education seminars, during which Montelongo teaches principles, methods, and strategies for real-estate investing. License Branding is a holding company that owns the trademarks and copyrights the other two companies use.

Cecil G. Abrea and 422 others (collectively, Abrea) allege that they "suffered financial and emotional harm after being defrauded into purchasing one or more of [Montelongo's] seminars or products." According to Abrea, the seminars "are not genuine educational offerings" as advertised. Instead, they are part of a "fraudulent scheme" through which Montelongo subjects participants to coercive "upsells" designed to force them to purchase additional seminars, products, and services from Montelongo and others allied with him. Abrea filed this suit against Montelongo and the three companies (collectively, Montelongo) on July 17, 2018. In his original petition, Abrea asserted claims for deceptive trade practices, negligence, and negligent misrepresentation, seeking relief in the form of actual damages, treble damages, and attorney's fees.

Montelongo filed his original answer on November 13, 2018, asserting a general denial and several defenses. On December 7, 2018, Montelongo filed a motion to dismiss under Texas Rule of Civil Procedure 91a, asserting that Abrea's pleadings established on their face that the two-year statute of limitations bars most of Abrea's claims. See TEX. R. CIV. P. 91a (permitting dismissal of claims having "no basis in law or fact").

On January 22, 2019, Abrea filed both a response to the rule 91a dismissal motion and a first amended petition. The amended petition reasserted the claims for deceptive trade practices, negligence, and negligent misrepresentation, and added new claims for fraud, conspiracy to commit fraud, fraudulent concealment, and breach of contract. The amended petition alleged the same essential facts alleged in the original petition and requested the same relief.⁴

On January 31, 2019, the trial court denied Montelongo's rule 91a dismissal motion. On March 25, 2019, within sixty days after he was served with the amended petition, Montelongo filed a TCPA dismissal motion. Montelongo sought dismissal of the fraudulent-concealment claims and "certain portions" of the fraud and conspiracy claims on the grounds that the claims relate to or are in response to Montelongo's exercise of the rights of speech and association.

Specifically, Montelongo pointed to Abrea's allegations that Montelongo engaged in (1) "self-dealing," by using affiliates to sell products at inflated prices without disclosing his financial interests in those sales, (2) "predation," by encouraging participants to transfer their retirement-account funds into self-directed individual retirement accounts held by Montelongo's affiliates, and (3) "deletion of Facebook posts," by monitoring plaintiffs' Facebook groups and deleting posts and comments that criticized Montelongo or his affiliates. Montelongo sought dismissal of the fraudulent-concealment, fraud, and conspiracy claims to the extent they are based on or in response to this alleged conduct because the alleged conduct involved Montelongo's exercise of his rights of speech and association.

In response, Abrea argued that (1) Montelongo's TCPA dismissal motion was untimely, and (2) even if the motion was timely, the TCPA does not apply because the claims complain about commercial speech and are therefore exempted from the TCPA.⁵ In support of his untimeliness argument, Abrea pointed out that he had alleged the same self-dealing, predation, and Facebook-post-deletion facts in his original petition, as the basis for his deceptive-trade-practices, negligence, and negligent-misrepresentation claims. Abrea argued that the newly asserted fraud and conspiracy claims did not trigger a new sixty-day period because they arose "out of factual allegations that were first made in the Original Petition." Because the amended petition did not "alter the essential nature of this action," Abrea argued that Montelongo's "time to bring a TCPA motion should be calculated from the date of service of the Original Petition."

The trial court denied Montelongo's TCPA dismissal motion without stating its reasons, and Montelongo appealed. See TEX. CIV. PRAC. & REM. CODE § 27.008(b) (permitting interlocutory appeal "from a trial court order on a motion to dismiss a legal action"). The court of appeals affirmed, agreeing with Abrea that, although the amended petition asserted new legal claims, it did not trigger a new sixty-day period because the original petition alleged the "same essential factual allegations" as the amended petition. Montelongo v. Abrea , 612 S.W.3d 71, 76 (Tex. App.—San Antonio 2019). Having decided that Montelongo's dismissal motion was untimely, the court did not reach Abrea's commercial-speech-exemption argument and instead assumed that the TCPA applies. Id. at 76 n.4. We granted Montelongo's petition for review to decide, as a matter of first impression in this Court, when amended and supplemental pleadings constitute or assert a new "legal action" that starts a new sixty-day period for filing a TCPA dismissal motion.

II."Legal Action"

The TCPA was designed to protect both a defendant's rights of speech, petition, and association and a claimant's right to pursue valid legal claims for injuries the defendant caused. TEX. CIV. PRAC. & REM. CODE § 27.002.⁶ To accomplish this objective, the Act provides a three-step process for the dismissal of a "legal action" to which it applies. Castleman , 546 S.W.3d at 691 (describing three-step process). First, the defendant must demonstrate that the "legal action" is "based on or is in response to" the defendant's exercise of the right of speech, petition, or association. TEX. CIV. PRAC. & REM. CODE §§ 27.003(a), .005(b). Second, if the defendant meets that burden, the claimant may avoid dismissal by establishing "by clear and specific evidence a prima facie case for each essential element of the claim in question." Id. § 27.005(c). Finally, if the claimant meets that burden, the court still must dismiss the "legal action" if the defendant "establishes an affirmative defense or other grounds on which the moving party is entitled to judgment as a matter of law." Id. § 27.005(d).

In deciding whether a "legal action" should be dismissed, the trial court must consider the "pleadings" and "evidence ... stating the facts on which the liability or defense is based." Id. § 27.006(a). For each step, the Act provides specific procedures and deadlines for filing, responding to, hearing, ruling on, and appealing the dismissal motion. Id. §§ 27.003–.005, .008.

The dismissal motion itself must be filed "not later than the 60th day after the date of service of the legal action." Id. § 27.003(b). The Act expressly defines a "legal action" to mean "a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal, declaratory, or equitable relief." Id. § 27.001(6). As we recently observed, this definition is "undeniably ‘broad’ " and "encompass[es] any ‘procedural vehicle for the vindication of a legal claim.’ "...