United States District Court, W.D. Texas, San Antonio Division
C. Lamberth United States District Judge.
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
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);
(4) negligent misrepresentation (Id. at 33-34,
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.
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.
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.
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).
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 ...