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Montelongo v. Abrea

Court of Appeals of Texas, Fourth District, San Antonio

November 13, 2019

Armando MONTELONGO, Jr., Real Estate Training International, LLC, Performance Advantage Group, Inc., and License Branding, LLC, Appellants
v.
Cecil G. ABREA, et al., Appellees

          From the 408th Judicial District Court, Bexar County, Texas Trial Court No. 2018-CI-13094 Honorable Karen H. Pozza, Judge Presiding

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

          MEMORANDUM OPINION

          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 ...

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