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Ocoro v. Montelongo

United States District Court, W.D. Texas, San Antonio Division

June 19, 2018

CLAUDIA OCORO, et al., Plaintiffs,
v.
ARMANDO MONTELONGO JR.; REAL ESTATE TRAINING INTERNATIONAL, LLC; PERFORMANCE ADVANTAGE GROUP, INC.; LICENSE BRANDING, LLC, Defendants.

          MEMORANDUM OPINION

          Royce C. Lamberth United States District Judge.

         Before the Court is the Motion to Dismiss Plaintiffs First Amended Complaint [ECF No. 39] by the defendants Armando Montelongo Jr., Real Estate Training International, LLC ("RETT), Performance Advantage Group, Inc. ("PAG"), and License Branding, LLC ("LB"), and all responses and replies thereto. For the reasons stated below, the Court GRANTS the defendants' motion to dismiss.

         Background

         This case involves allegations brought by 355 plaintiffs for civil violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), negligence, and negligent misrepresentation against the defendants: Armando Montelongo, RETI, PAG, and LB (referred to collectively by the complaint as "Armando Montelongo Seminars, " or "AMS"). Specifically, the plaintiffs assert the following four claims against Montelongo and each of the three identified defendant entities:

(1) conducting a RICO enterprise by a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c) (Id. at 30-31, ¶¶57-63);
(2) conspiring to conduct a RICO enterprise by a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d) (Id. at 31 -32, ¶¶64-67);
(3) negligence (Id. at 32-33, ¶¶68-73); and
(4) negligent misrepresentation (Id. at 33-34, ¶¶74-81).

         Armando Montelongo, a former star of the A&E television series "Flip This House, " runs a real estate education business that operates through the three other defendant entities (RETI, PAG, and LB). ECF No. 37 at 11-12, ¶13. The defendants provide various seminars and educational offerings, each focusing on different aspects of the real estate industry, in the form of preview events, foundation events, bus tours, and continuing education programs. ECF No. 37 at 12-15, ¶15. This business has proven lucrative for Montelongo. In 2013, Forbes reported that Montelongo's seminars would generate $100 million in revenue in that year alone. Id. at 15, ¶16.

         The First Amended Complaint alleges that the 355 plaintiffs, each a current or former customer of the defendants' seminars, fell victim to predatory and fraudulent business practices conducted by the defendants. ECF No. 37 at 11, ¶¶7-8. The plaintiffs claim that the defendants' offerings are devoid of educational value. Instead, they are nothing more than a series of fraudulent up-sells designed to deceive and coerce customers into purchasing additional products. Id. at 15, ¶17.

         The First Amended Complaint is actually the fourth iteration of this suit against Montelongo and the entities through which he operates the real estate education program. This suit was preceded by Skurkis, et al. v. Montelongo, et al. (No. 4:16-cv-00972-YGR) (N.D. Cal.), which was initially brought on February 26, 2016, in the United States District Court for the Northern District of California by 166 plaintiffs, 124 of whom are plaintiffs in the instant case. ECF No.41at 2.

         In response to the first complaint in Skurkis, the defendants filed a motion to dismiss pursuant to Rules 12(b)(2) and 12(b)(3) for lack of personal jurisdiction and improper venue. The plaintiffs then amended their complaint with leave from the Court. The defendants responded again by filing a motion to dismiss under Rules 12(b)(2) and 12(b)(3). The Honorable Yvonne Gonzalez Rogers, presiding over Skurkis, granted the defendants' motion to dismiss for lack of personal jurisdiction while granting leave to amend if the plaintiffs could satisfy the jurisdictional requirements over each defendant in California. Instead of amending again, the plaintiffs voluntarily dismissed their suit pursuant to Rule 41 (a).

         The Complaint in this case [ECF No. 1] was subsequently filed in this Court on December 20, 2016, by 138 plaintiffs. The plaintiffs were later granted leave to amend the Complaint to add additional plaintiffs, bringing the current count to 355. In response to the First Amended Complaint, the defendants filed (1) a motion to dismiss pursuant to Rule 12(b)(6) [ECF No. 39], or in the alternative, (2) a motion ...


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