Flip This Lawsuit

The massive number of email solicitations I recieve from Armondo on a weekly basis have concerned me.

But, even more concerned about the numerous people who contact me because they are dissatisfied with the Armando’s program, who never receive what they were sold, or who find themselves with nothing but maxed out credit cards, a 100 point hit to their credit score and the inability to obtain a loan.

Several have asked about a class action, and while I do not handle class action cases, I will be happy to publish contact information for an attorney wishing to pursue the case. 

One of the people who emailed suggested contacting your state’s Attorney General:

… I finally was able to speak to the consumer complaint center in my area. I was told that the best thing I could do at this point was to contact my credit card companies and have them investigate the matter. No guarantee of a refund. However, they did instruct me to contact the Tx. Attorney General where I live, and to file a complaint with them. They also told me to do the same with the Attorney General in Utah, where the program is based.

If enough people complained to the Attorney General, then they would launch their own investigation and if necessary, take action. This may be helpful info to anyone else who contacts you with complaints about this program.

Even though we all live in different states, their program is based out of Draper, Utah. If everyone contacted the Utah Attorney General maybe something can be done to benefit the people who have wasted their money and keep more people from making the same mistake. …

Others, like MV from Dallas, are posting on message boards:

… I responded to his radio ad for the “free” DVD, and subsequently accepted his Flip and Grow Rich package for a 30 day trial. The material is crap, not worth the $400 price tag (5 credit card charges of $79.95) by a long shot, barely worth $10. As an example, you make your money when you buy right, and foreclosures are the best place to buy. This wonderful program contains a whopping 5 paragraphs on foreclosures. Basically, it says foreclosures are great, you should find and buy them. That’s about it. Nothing on how to use the county clerk’s records, or even that the clerk is where you can look. But the real winner is how they cram the program down your throat. If you are even one day over when their tracking program says it was placed in your mailbox, you are stuck with it and they will not allow you to return it. They also fight any disputes on payment, and the person you talk to in the sales office is also the supervisor (no matter who you speak to), and the only person higher to speak with is Armando, and he doesn’t speak to anyone. These are some real pieces of canine excrement, /Caveat Emptor/ doesn’t even begin to cover it. …

A nice lady from Houston sends me her review of his book:

First, I’m very impressed with how Armando and his wife had nothing, moved to Texas and built a wondrous fortune.  Certainly, the American dream!  However, watching them I also often think he could be far more professional rather than as brusk as he gets with people whom he embarrasses on national TV.
 
I watch the program from time to time…and when they announced the book, I got on-line and ordered it (Flip and Grow Rich).  It took about 3 weeks to receive, so when it did come, I was eager to start reading it.  It didn’t take more than a few pages to realize that something was wrong with the way the publisher had put the book together and then bound it.
 
If you are reading anything on the left side page, whether the paragraph completes or not, you can’t continue reading what was on that page on the next page but instead have to turn the right page over to read the left page completion on, the next left page.
 
Every left page has 1 thing on it and every right page has something else on it. 
 
The pages are correctly numbered but someone evidently wasn’t paying attention to the subject matter, nor do I believe they even went to not only an American school, but any school.  They made a major mistake the way they published it.
 
I called every number I could find and couldn’t get anyone to help me.  Finally I got back on line and through the web site, was able to get a message to one of Armando’s many many offices…and someone who calls himself “Merlin” wrote me back.
 
I explained the problem and Merlin told me to return it and he would send me another.  I sent the book back UPS, spending my own money ($8.50 approx).  After a week I began writing to ask if they had received it and when was I going to get my new, correctly published book.  Didn’t hear a word for weeks, despite I began writing notes several times a week.  Finally, last week I was notified the book was on its way, with a tracking number.  The first tracking number didn’t work…so I wrote again and Merlin said they were sending the new book and included the tracking number.
 
I finally got the 2nd book after waiting over 3 weeks this past Thursday, and I’m very sad to tell you but this book is also published incorrectly.  I don’t know what school the publisher went to but I sure didn’t learn to read the way this book is published.
 
I called a number in the back of the book today and reached someone in customer service in Utah, who acted surprised that the book was bound incorrectly.  He wasn’t able to help me but transferred me to someone named Helen (her voicemail) and I left a message to call me Monday…as well as why I was calling.
 
I’m sure the book is as interesting as Armando and his wife are on their program, but how in the World are we to learn with this type of mistake?  Also, I attempted to locate the publisher but the information in the front of the book has none, making me believe Armando had it published privately…to save money????? I presume!
 
I was going to purchase the Master Course, but have now decided against it.  I am certain the World is filled with experts on the subject and after this fiasco, I have no trust in Armando or his many companies.  HOW does anyone ever personally reach him or his wife?

But, the thing that tops it all are Armando’s own emails.  They all have weird characters and spelling in an attempt to avoid spam filters, because they are, in fact, spam:

Mark Last Day to Get Fore/closures and Grow Ri/ch…
Armando Montelongo to Mark
May 8 (5 days ago)
Hello Mark

*********************
Shhhh, there is a secret
message at the end of this
email
*********************

Today is the last day to get
my…

MAKING MILLIONS IN FORE/CLOSURES
EBOOK!!!

Right now, I have students all over
the country making lots of c/a/sh in
the fore/closure market.

After today, this is GONE!!!
>>> http://[REDACTED]/foreclosures.php

Secret Message: I will finance the E-book for you
if you act now!

Armando Montelongo, President
Armando Montelongo Worldwide, Inc.

and

Mark Am I Renewing Flip This House and Investment Info…
Armando Montelongo to Mark
9:02 AM (11 hours ago)
Hello Mark

Business First:

I will be holding a teleconference about
retiring your existing retirement
accounts and learning how to passively earn…

UP TO 12% RETURN ON YOUR INVESTMENTS!!!

It’s a totally informative phone call
and it’s totally F/R/EE!!!

Also, there is nothing to buy,
just educating you on how to…

STOP LOSING M/O/NEY IN YOUR:

RETIREMENTS ACCOUNTS
401K
IRA
AND STOCKS!!!

Click below to register for the F/r/ee
teleconference.

>>>  http://[REDACTED]/teleconference.php

 

Pleasure Second:

I will be making an announcement about
my contract with Flip This House on Thursday.
Click below for details:

>>>  http://[REDACTED]/news/?p=154#respond

 

Take care,

Armando Montelongo, President
Armando Montelongo Worldwide, Inc.

So, buyers beware. 

I just received word that the jury came back with a $4,000,000 verdict for Trademark Properties and Richard Davis in their dispute with A&E Television Networks.  

Congratulations, Richard and the Team Trademark! 

EDIT (3:52PM): The Charleston Post and Courier has an update-

A federal jury in Charleston awarded real estate investor Richard C. Davis more than $4 million in damages today in a trial stemming from the “Flip This House” reality television series.

Davis sued cable network A&E, saying he had an oral agreement with A&E to split revenues from the program he created. Davis, of James Island-based Trademark Properties Inc., said he was never paid.

A&E disputed that any agreement existed. Its lawyers declined to provide immediate comment on the ruling, which came after more than five hours of deliberation.

“I’m very pleased with the verdict,” said Mount Pleasant attorney Frank M. Cisa, who represented Davis. “These cases are very tough to prove.”

For more details, see Thursday’s Post and Courier.

The Charleston Post and Courier continue their coverage with reports on Friday and Monday.  The case is now in the hands of the jurors.  Because of the holiday, deliberation will resume on Wednesday.  

From “Witness denies any 50/50 deal“: 

For days the jury in a breach of contract trial between local real estate magnate Richard Davis and television network A&E has heard over and over about a man named Charles Norlander.

Davis alleges that he and Norlander hatched the 50/50 profit split for the show “Flip This House” in a verbal agreement at the heart of Davis’ lawsuit.

Friday, a man with a goatee and Harry Potter-styled spectacles took the witness stand and repeatedly denied any such conversation ever took place.

…

Norlander testified that, though he no longer worked for A&E when Davis began threatening to pull out of the show, he encouraged Davis to resolve his differences with the network before it replaced him. He added that he did not know what, specifically, was bothering Davis.

“In terms of what he was looking for, I had no better idea at the end of that conversation than I had at the beginning of it,” Norlander said.

He testified that he never heard of the 50/50 split until he learned Davis filed a lawsuit.

…

A series of defense witnesses followed Norlander, nearly all making the same point: that Davis never said anything about a profit-sharing deal, and neither did they.

Max Weissman of Departure Films, the third-party production company which still makes “Flip This House,” testified that he suggested Davis ask for compensation from A&E.

“He kept saying he wasn’t interested, that it was small potatoes,” Weissman said.

But Weissman also testified that Davis wanted to see Departure Films’ contract with A&E, which held a confidentiality clause Weissman was unwilling to breach.

…

Asked whether Davis had a profit-sharing deal with A&E, Weissman replied, “He complained endlessly that he didn’t.”

During cross-examination, Cisa pointed out that Weissman spent no time on location in South Carolina during production of “Flip This House” and that Departure Films grew exponentially because of the series.

Cisa suggested that Weissman, now in the midst of producing the fourth season of “Flip This House,” learned everything he knows about real estate from Davis.

In court documents, A&E has disclosed that the show generated about $13.7 million in revenue and $5.9 million in expenses its first season.

Davis has testified he was never paid for his efforts toward “Flip This House,” which often demanded 80 hours of his time per week. He also was never reimbursed for an estimated $92,000 in expenses, he said.

From “Attorney: A&E owes $7.5M“:

In closing arguments before a federal jury, attorney Frank Cisa said cable television network A&E owes his client, local real estate investor Richard C. Davis, more than $7.5 million in a profit-sharing arrangement attached to the reality show “Flip This House.”

“He had the pilot (episode) in one hand. He had the Writers Guild registration in the other hand. And they never asked Richard Davis what he wanted for his show?” Cisa said in closing arguments. “They knew he spent $85,000 on the pilot and never asked what he wanted for his show? … I submit to you that’s not credible.”

…

A&E’s New York-based attorney, Jeremy Feigelson, began his closing remarks the same way the network’s local defense attorney, Richard Farrier, began his opening arguments. “No way,” Feigelson said.

He suggested that Davis and Charles Norlander, the A&E representative with whom Davis claims to have made the verbal deal, were “ships in the night” that never quite reached the same point.

“Can you picture a conversation where Mr. Davis talked on and on, maybe talked at Charles … and he persuaded himself he’s come away with an agreement?” Feigelson said.

He told the jury that Davis never shared with them any specifics from the conversation with A&E that allegedly hatched the deal.

…

Prior to closing arguments, Monday marked the first time in the weeklong trial in which A&E employees acknowledged any mention of a potential 50-50 profit-splitting arrangement prior to the lawsuit.

Cisa produced a copy of an e-mail between Davis and the network with the term “50 percent” handwritten in the margin. But A&E representative Melinda McLaughlin testified she made that note only as the amount Davis proposed he receive on advertising revenue he helped bring for the show, not as an agreed-upon amount.

“I let him know that it would be single digits so he wouldn’t be surprised to see the final (figure),” McLaughlin said.

Below where she marked Davis’ 50 percent suggestion, McLaughlin also made a note to herself: “No way!”

Allyson Bird at the Charleston Post and Courier continues with her reporting:

A&E’s New York-based attorney Jeremy Feigelson worked to disprove Davis’ claim that his Trademark Properties and the network verbally agreed to a 50-50 profit split from the reality series “Flip This House.”

“The agreement we’re talking about is an agreement in your mind?” Feigelson asked.

Davis calmly replied that it was “absolutely an agreement” he had with an A&E representative. Finally, after more than 10 hours of testimony spread over three days, he lost his patience.

Responding to one question, David raised his voice and said, “It’s my possession. You stole it. … You stole my possession.”

…

While on the stand Davis made several jurors chuckle as he shared his inexperience with the legal system.

“This is the first time I’ve sued. I don’t know how this works,” he said. “This is the last time. This is miserable.”

…

Cisa called his second and final witness, Trademark Properties Inc. investment coordinator Ginger Alexander, who was often featured on “Flip This House.”

She testified that the firm’s normal business took longer because of the series and that, overall, the company lost money creating episodes of the show because it still holds a few unsold properties.

…

Feigelson asked if the lack of demand for the unsold properties could be attributed to a downturn in the real estate market and not “Flip This House.”

Alexander said the market spoiled one sale, but she blamed the show for hindering the sale of a home originally listed at $1.8 million.

She said a rodent infestation at the home when Trademark Properties acquired it was exploited during the post-production process, even though the problem had been fixed.

“It’s hard to sell a house after you show a bunch of rats running around,” she said.

Allyson Bird at the Charleston Post and Courier continues with her excellent reporting on the Trademark Trial.  Some excerpts:

Davis claims A&E violated a verbal agreement to split any revenue after expenses from the “Flip This House” TV show that documented Davis’ risk-taking real estate business, Trademark Properties Inc. Davis’ testimony took nearly all of Wednesday, the second day in the jury trial in U.S. District Court.

…

Davis asserted he was never paid for his efforts toward “Flip This House,” which often demanded 80 hours of his time per week. He also was never reimbursed for an estimated $92,000 in expenses, he said.

He testified that he was told the first episode drew nearly 1 million viewers with no promotion outside of A&E.

But when Davis asked for rough cuts of the show or a copy of a contract from a third-party production company, he encountered roadblocks, he said. By then the person with whom he said he made the verbal agreement for the 50-50 revenue split no longer worked for A&E.

That man, Charles Norlander, called Davis “Crazy Richard” in an e-mail to an A&E representative and offered to speak with Davis after Davis threatened to shut down the show.

“Knowing his ego, he probably really believes that you wouldn’t/couldn’t do the show without him,” Norlander wrote.

…

In court documents, A&E disclosed that the show generated about $13.7 million in revenue and $5.9 million in expenses its first season; $9.3 million in revenue and $4.6 million in expenses its second season; and $11.8 million in revenue and $9.9 million in expenses its third season.

Today was slated for jury selection, but the Court moved much more quickly than expected.  I’m informed that witnesses were heard after lunch.  Richard Davis took the stand sometime around 5PM.

Tomorrow, due to elections, the Court will not be in session.  Trial will resume on Wednesday.

The trial picked up some coverage in the Los Angeles Times and the Charleston, SC Post and Courier.

UPDATE (Tuesday, November 4):  The Charleston Post and Courier has coverage of the first day of trial. From the article:

“[Trademark Properties and Richard Davis] did everything we were supposed to do, and Richard Davis was credited as creator of the show,” [Frank Cisa, attorney for Trademark] said.

Cisa said A&E executives “did everything they were supposed to do — except pay.”

He told the 12 jurors that Davis is entitled to a multimillion-dollar award.

Charleston attorney Richard Farrier, who represents A&E, began his opening arguments with the phrase, “No way.”

He said Davis was asked if he had any “deals” with A&E when Davis began working with a competing network, TLC.

“He, in writing, confirmed he had no deals,” Farrier said.

He said A&E would never agree to such an arrangement, that even superstar comedienne Tina Fey couldn’t swing a 50-50 split.

“We would never make that deal. The suggestion we would is, frankly, absurd,” Farrier said. “It’s preposterous.”

He asked the jury why someone would appear on national television for free and then answered his own question. Davis, Farrier said, “in effect, got an hour-long infomercial.”

He told jurors that their job is much like the A&E program, “CSI: Miami.”

“What we’re doing today is CSI: Charleston,” he said. “And CSI: Charleston is about contract scene investigation.”

According to the most recent information on the docketing system, jury selection and trial in Trademark v. A&E is expected to begin on Wednesday, November 5, 2008.  You are cordially invited to attend.  The Charleston Federal Courthouse is located at 85 Broad Street in Charleston, South Carolina 29401.  For more information, the Clerk’s phone number is (843) 579-1401.  Arrive before 8:30 to get a good seat.

The Honorable C. Weston Houck will preside over the trial.  There are still a number of dispositive motions which were improperly sealed by A&E in order to prevent the public from viewing them, but some new documents have been filed since the last trial update.  The most important of these are A&E’s motion in limine to prevent Trademark from using their damages expert, Mark Halloran, at trial.  Mr. Halloran initially represented Trademark’s damages as 50% of the net revenues that A&E has earned from the television show “Flip This House”.  At a later date, after receiving discovery materials that A&E failed to produce until after his deposition, he did some research to determine that if a show like “Flip This House” makes it four seasons on TV, it will make it for fifteen.  This would, of course, significantly increase the amount of money owed to Trademark if, in fact, the Jury finds in their favor.  The Judge has determined that the jury should not hear Mr. Halloran’s opinions.

The parties seem to be in general agreement over the net revenues from the show, and the main dispute at this point is whether there was an actual agreement between Trademark and A&E that Trademark would receive 50% of the net revenues.  The jury will decide this and several other questions after reviewing the evidence at trial.

For those curious about the excluded witness, you may wish to review the transcript of the October 16, 2008 hearing and the Order GRANTING A&E’s Motion.  There are also various documents relating to Jury selection and instruction.

• Docket as of October 30, 2008
• 09/11/2008 #95 NOTICE of Bar Meeting: set for 10/14/2008 10:00 AM in Charleston Courtroom #4, U. S. Court House, 85 Broad St, Charleston before Honorable C Weston Houck.
• 10/22/2008 #108 OFFICIAL TRANSCRIPT of Proceedings Motion hearing held on 10-16-08, before Judge C. Weston Houck. Court Reporter/Transcriber Debra Potocki, Telephone number 843-723-####. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Parties have 7 calendar days from the filing of the transcript to file with the court a Notice of Intent to Request Redaction.. Redaction Request due 11/12/2008. Redacted Transcript Deadline set for 11/24/2008. Release of Transcript Restriction set for 1/20/2009.
• 10/24/2008 #110 STIPULATION Dismissing Plaintiffs’ Promissory Estoppel Claim by Trademark Properties Inc, Richard C Davis, A&E Television Networks.
• 10/24/2008 #112 Defendant’s Deposition Designations RULE 26(a)(3)PRETRIAL DISCLOSURES by A&E Television Networks. Objections to PreTrial Disclosures due by 11/10/2008.
• 10/27/2008 #113 Proposed Voir Dire by A&E Television Networks.
• 10/27/2008 #114 Proposed Jury Instructions by A&E Television Networks
• 10/28/2008 #116 ORDER granting 98 Sealed Motion Signed by Honorable C Weston Houck on October 28, 2008.
• 10/29/2008 #117 Proposed Jury Instructions by A&E Television Networks.

While I will be attempting to get copies of the trial transcripts, I will be unable to attend the trial.  Several of our regular visitors, however, have promised to share updates with me as the trial progresses.  I also have not had the time necessary to intervene and request that the Court unseal those documents which were inappropriately restricted. 

Good luck to everyone involved.

Courtesy of MetaFilter, I’d like to point you to It’s Lovely! I’ll Take It!, a blog which points out poorly chosen photos in MLS listings. 

Remember, it’s always important to put your best foot forward when marketing your property. 

It has been some time since I last updated you on the status of the Trademark vs A&E litigation taking place in the US District Court in Charleston, SC. 

During this time, discovery has been taking place, with Judge Houck offering reasonable extensions of deadlines for the parties.  A&E expressed difficulty in obtaining discovery from Trademark, but the proablems appear to have been resolved.  There is no indication that mediation took place, though the parties did at least attempt to arrange same. 

The case is moving toward trial.  Discovery has been closed.  Motions were due on July 10, and jury selection is to be done by November 3.  Motions for summary judgment were filed by A&E and Departure Films on the 10th. The motions and their exhibits, however, were filed under seal.  Your humble webmaster will effort a copy of these documents as soon as possible.  As dispositive motions, these records should be available to the public.

Trademark did not file motions of their own, but will file their responses to the pending motions by July 28. 

New Documents:

• Docket as of July 13, 2008
• 11/30/2007 #71 MOTION to Compel Discovery Responses of Plaintiffs/Counterclaim Defendants and Memorandum in Support Thereof by Departure Films & A&E Television Networks
  • Exhibit A - Plaintiff’s Discovery Responses dated 11/8/06 and 12/27/06
  • Exhibit B - Plaintiff’s Supplemental Discovery Responses dated 03/2007
  • Exhibit C - 3/22/07 Letter from Richard Farrier to Frank Cisa
  • Exhibit D - 4/19/07 E-Mail from Richard Farrier to Frank Cisa
  • Exhibit E - 6/21/07 Letter from Richard Farrier to Frank Cisa
  • Exhibit F - 10/31/07 E-Mail from Robert Jordan to Frank Cisa
• 12/19/2007 #72 ORDER denying Motion for Reconsideration; denying Motion for More Definite Statement on 12/19/07
• 02/07/2008 #75 THIRD AMENDED SCHEDULING ORDER ADR Statement due by 3/14/2008, Amended Pleadings due by 3/14/2008, Discovery due by 3/14/2008, Motions due by 4/14/2008, Case ready for trial not later than 6/2/2008.
• 03/14/2008 #77 ADR STATEMENT/CERTIFICATION by A&E Television Networks
• 03/14/2008 #78 ADR STATEMENT/CERTIFICATION by Departure Films
• 03/14/2008 #79 MOTION for Extension of Time to Complete Discovery or, in the Alternative, Motion to Compel by Departure Films, A&E Television Networks. Response to Motion due by 4/1/2008
  • Exhibit A- Materials Noticing Deposition of Mark Halloran
  • Exhibit B- Excerpts from 1/24/08 Deposition of Richard C. Davis
  • Exhibit C- Materials Noticing 2/20/08 Deposition of William Campbell
  • Exhibit D- Materials Noticing 3/21/08 Deposition of William Campbell
  • Exhibit E- 2/27/08 Email from Billy Campbell to Nelson Mullins
  • Exhibit F- 1/21/08 Letter from Thomas Whaley to Robert Jordan
  • Exhibit G- 1/31/08 Letter from Richard Farrier to Frank Cisa
  • Exhibit H- 1/14/08 Letter from Frank Cisa to Robert Jordan
  • Exhibit I- 1/28/08 Email from Frank Cisa to Robert Jordan
  • Exhibit J- 1/29/08 Subpoenas and Letters from Robert Jordan to Sprint Nextel and NuVox Communications
  • Exhibit K- Second Set of Interrogatories of Defendants/Counterclaim Plaintiff to Plaintiffs/Counterclaim Defendants
  • Exhibit L- 3/12/08 Email from Robert Jordan to Frank Cisa with proposed Fourth Amended Scheduling Order
• 04/10/2008 #82 TRANSCRIPT (Unredacted) of telephone conference held on 4-1-08 before Judge C. Weston Houck
• 06/27/2008 #85 FOURTH AMENDED SCHEDULING ORDER: Discovery is closed, Motions due by 7/10/2008, Jury Selection Deadline 11/3/2008.
• 07/10/2008 #87 SEALED MOTION by A&E Television Networks. Response to Motion due by 7/28/2008
  • Exhibit #1 Memo in Support of Motion for Partial Summary Judgment
  • Exhibit #2 Affidavit Declaration of Nancy Dubuc
  • Exhibit #3 Affidavit Declaration of Andrew Lemaire
  • No proposed order
• 07/10/2008 #88 SEALED MOTION by Departure Films. Response to Motion due by 7/28/2008
  • Exhibit #1 Memo in Support in Support of Motion for Summary Judgment
  • Exhibit #2 Affidavit Declaration of Max Weissman
  • No proposed order
• 07/10/2008 #89 Sealed Document.
• 07/10/2008 #90 Sealed Document.
  • Exhibit A- Excerpts from 3/8/07 Davis Deposition
  • Exhibit B- Excerpts from 3/9/07 Davis Deposition
  • Exhibit C- Excerpts from 1/24/08 Davis Deposition
  • Exhibit D- Excerpts from 3/16/07 Alexander Deposition
  • Exhibit E- Excerpts from 6/19/08 Halloran Deposition
  • Exhibit F- Amended Complaint
  • Exhibit G- Plaintiff’s Memorandum in Opposition to Defendants’ Motion for Summary Judgment
  • Exhibit H- Transcript of 6/6/07 Hearing
  • Exhibit I- Fourth Amended Scheduling Order
  • Exhibit J- Halloran Expert Report
  • Exhibit K- 12/19/07 Order

As mentioned above, I will be working to obtain copies of the sealed documents (including #87, 88, 89, and 90) in the coming days.

Armando Montelongo frequently tells viewers that in 2001, he grew tired of being unemployed, living in his in-law’s garage in Southern California.  He and his wife borrowed $1000, packed up the car, and coasted into San Antonio on their last tank of gas, where he negotiated two months of free rent and sold all his furniture to buy groceries.

If the reports I’m receiving are to to be believed, he’s now back in California.  The California housing market can’t be an easy place for a flipper with the current state of lending, but with home prices on the decline in some markets, the move might produce interesting results. 

At the moment, I have very little information about the progress of his Theft of Services case in Texas - for failure to pay Reliance Appraisal Services for their work.  We’re working on collecting additional information on this matter.

We are unable to determine whether Montelongo is still associated with A&E’s Flip This House after this move, but will continue to report as this story develops.

As often happens in litigation, the Trademark Properties lawsuit is moving along slowly.  On July 17, the Court set a number of deadlines:

• Plaintiffs ID of Expert Witness due by 9/13/2007
• Defendants ID of Expert Witnesses Due by 10/13/2007
• Amended Pleadings due by 11/13/2007
• Discovery due by 11/13/2007
• Motions due by 12/13/2007
• Jury Selection Deadline 2/13/2008

The docket doesn’t reflect any filings that designate experts in this case.  Discovery, of course, is not filed with the Court.  It looks as if there won’t be much activity on the case until we start approaching the motions deadline, and it is entirely possible that the parties will seek a new scheduling order at that time.

There have been a few documents filed, dealing with the results of the summary judgment hearing.  They are:

• TRANSCRIPT of Summary Judgment Motion Hearing held on June 6, 2007 before Judge C. Weston Houck.
• MOTION for Reconsideration by Departure Films.
• MOTION for More Definite Statement for Clarification by A&E Television Networks.
• RESPONSE in Opposition re MOTION for More Definite Statement for Clarification, MOTION for Reconsideration.
• FIRST AMENDED SCHEDULING ORDER

It appears that Armando Montelongo experienced difficulty with some recent financing from VCH Funding Corporation.  Montelongo’s company, Mandoman Management, Inc., fought off August 7, 2007, foreclosures on four separate properties by obtaining a temporary restraining order, allowing Montelongo the time necessary to line up alternate financing.  The restraining orders ended on August 21, 2007.  The cases now indicate that they have been terminated.  Neither Montelongo’s Attorney nor VCH Funding have returned calls requesting comment.

You can view the court documents to learn more.

Stopping the foreclosures, if alternate funding can be obtained, is an very smart move.  Same allows the lender to receive cash instead of properties, and allows the owner to continue forward with efforts to sell the properties for a profit.  An important lesson to be learned in the current real estate market is that owners should communicate with their lenders when business is not going as planned.  Often, lenders are willing to work with a borrower, or will at least delay action if the borrower presents a solid plan that benefits all parties. 

Additionally, public records searches have uncovered additional foreclosures and civil cases, all of which may be of interest to our readers.  Due to the high cost of copying, some of the civil cases only include dockets, and some foreclosures do not include deeds or trust and acquisition deeds.

Properties:

1139 Lombrano Trustee Sale
114 Repose Deed of Trust
114 Repose Trustee Sale
114 Repose Warranty Deed
131 Bristol Deed of Trust
131 Bristol Trustee Sale
131 Bristol Warranty Deed
1410 Thorain Trustee Sale
1419 Woodlawn Trustee Sale
158 Ballard Deed of Trust
158 Ballard Trustee Sale
158 Ballard Warranty Deed
238 Basswood Deed of Trust
238 Basswood Trustee Sale
238 Basswood Warranty Deed
254 St Francis Deed of Trust
254 St Francis Trustee Sale
254 St Francis Warranty Deed
3123 Hicks Trustee Sale
Camada Trustee Sale
Colina Moderena Trustee Sale
Devoto Trustee Sale
F Street Trustee Sale
Gardina Trustee Sale
Gibbs Sprawl Trustee Sale
Jefferson Trustee Sale
Kashmuir Trustee Sale
Lennon Trustee Sale
Pleasure Park Trustee Sale
Rivas Trustee Sale
Rose Trustee Sale
Rosewood Trustee Sale
San Carlos Trustee Sale
San Eduardo Trustee Sale
Topeka Trustee Sale
Weidner Trustee Sale
Winnepeg Trustee Sale

Civil Cases:

Allison, et al v Armando Montelongo LTD, et al
Bexar County, et al v Montelongo Acquisitions Inc, et al
Escalante, et al v Montelongo Developments LLC, et al
Montelongo v Waring Investments, Inc.
Olsen, et al v Montelongo Inc, et al
Summers v Armando Montelongo, et al

Thus far, the producers of Flip This House have been unwilling to show viewers less than successful results.  As the market declines, property flippers across the country are suddenly finding that they’ve overbuilt, overpaid, or overestimated demand in their areas.  Now is a perfect opportunity for A&E to show the bad, as well as the good.

Failure can often be more educational than success.

The San Antionio Express-News Reports:

The lawsuit, brought by David Escalante of California, alleges that he gave David Montelongo and his company, Montelongo Developments LLC, $5,000 in earnest money and $500 in option money for a 17 percent share in a 14,000-square-foot retail development on a 4-acre tract in Schertz.

The deal was outlined in a partnership agreement that Montelongo drafted, the lawsuit alleges.

The lawsuit claims that Montelongo used the money to put the land under contract, but never signed the partnership agreement.

Montelongo told Escalante he had decided to pursue the deal with a different party, claims Todd Prins, the San Antonio lawyer representing Escalante in the suit.

Montelongo never returned the earnest money, Prins said.

Escalante and his investment company, Pres Estate LLC, are seeking “our share of the deal,” Prins said.

“We’re not seeking anything else than what was agreed to in the beginning,” he said, adding that Montelongo could buy his clients out of the partnership agreement.

Read the entire story for additional details.  FlipThisLawsuit will post the complaint and other documents as soon as we can obtain them from the courthouse.

[Hat tip to the numerous people who submitted the article to us.]

The Texas State University Star reports:

A&E falls short on agreement with students, faculty member 

A group of former Texas State students and a faculty member are disappointed after working with the A&E television show “Flip This House.”

The show “Flip This House” with Armando Montelongo of Montelongo House Buyers Inc. of San Antonio, produced an episode during the fall 2006 semester in conjunction with a Texas State Architectural Design 3 class.

…

Montelongo planned to enlist the help of the undergraduate class to “flip” an empty lot at Smith Lane in San Marcos, and construct nine buildings with four condominium units in each structure, all the while maximizing the return on his investment.

The students were instructed to form teams and develop site diagrams for the project. Montelongo planned to judge the team’s work and choose a winner at the end of the show. The winner’s diagrams were then to be implemented by Montelongo at the site.

…

“The winning team composed of six students was promised a cash prize of $500 per student,” Carpenter said. “The show was filmed, the winning team was announced in a board room scene and a check was presented to the students. The students later found out that the check was only a prop and could not be deposited.”

Read the full article at the Texas State University Star. Hat tip to Steve in Texas for finding this article.

Frequent visitior, Mike Voss, offers the following review of Armando Montelongo’s e-books to readers of Flip This Lawsuit.  Please note, Flip This Lawsuit has not reviewed the e-books, and the opinions expressed in the review are not necessarily those of Flip This Lawsuit.

You can view the entire review by clicking the title above.

(Continued)

Hello Everyone!

I can’t thank you all enough for sending your surveys so promptly!  You all are getting the inside scoop first for taking the initiative to be at the Speech outlining what Richard is expecting out of area partners and your chance to see who we are , where we work and what we are about before moving forward. We want to make sure that there is very little room for error in how we communicate our vision into your backyards so…….Please log onto http://www.youtube.com/watch?v=r9SDyM3FJUo and you can see Richard’s newest message to everyone, in the format we will use to breakdown the distance barrier, we really feel like this format will speed up the learning curve on both ends and not leave the possibility of miscommunication from interpreting the written word,   Cant wait to hear from all of you soon!  This is going to be very exciting!
 
Ginger Alexander, Investment Coordinator
Trademark Properties, Inc.

I’m sitting for the bar exam in just two weeks, and as such am focusing the majority of my time on studying.  At the same time, I’m job hunting and preparing to move to a new city.  If you guess that I have very little free time, you would be correct.

As a result, be aware that new comments may not appear as quickly has they have in the past.  I cannot allow comments to be automatically posted due to the number of spam posts we receive each day here on the site.  Please be patient; your comments will be made available as quickly as possible. 

For those of you new to this website, I encourage you to check out and comment on some of our more popular posts:

• From Richard C. Davis: Team Trademark No Longer On “Flip This House”
• Samuel Leccima of ATL Season 2 Cast - Real Estate License Revoked
• Melina Montelongo Seeks Actor for Flip This House
• The Real Deal
• Anyone purchased Armando Montelongo’s Real Estate Package?
• Fox 5 Atlanta - Sam Leccima
• Summary Judgment Motion Hearing - June 6

You might also want to review some documents from the Trademark Properties v A&E lawsuit:

• Trademark’s Amended Complaint
• A&E’s Answer and Counterclaims
• Trademark’s Answer to Counterclaims
• Transcript of February 6, 2007 Motion Hearing
• Transcript of Summary Judgment Motion Hearing

And finally, if you’ve flipped your own properties, please take a moment to share your advice with our readers in What Are Your Flip Tips?  Thanks for visiting!

From Steve Grant of 813 Casting:

Get your team onto Flip This House!
 
813 Casting and Departure Films are looking for another great cast of characters to be featured on the new season of A&E’s #1 rated lifestyle show, Flip This House!
 
We’re looking for confident, charasmatic, motivated and opinionated people who “flip” residential properties for a living. We want real-estate adrenaline junkies who love the high risk, high reward nature of their jobs and who are devoted to doing a great job! 
 
If you would like your team to be featured on the upcoming season of Flip This House, send an email to FTH@813casting.com. Include your contact info, bios on you and your team, and some reasons why your team should be the next team featured on Flip This House! This is a nationwide search. We are casting teams of people (approx 3 or 4) and not individuals. No phone calls please. 
 
$500 Finder’s Fee

Did you know that Than Merrill and the New Haven team were found through a referral? If you think you know someone who would be GREAT on Flip This House - tell us about them! If they get cast, you’ll get a $500 finder’s fee (and a cool story!) Email us at FTH@813casting.com. Make sure to provide all necessary contact info.

Richard just sent this email out to fans of the show:

I want to thank all of you who have emailed and called to send your condolences and support of the Charleston Community during probably one of the most tragic days in the history of this city. As you know, my good friend Rusty Thomas has been on a few episodes of both Flip This House and The Real Deal/Real Estate Pros over the last few years, usually talking about community involvement. He is the City of Charleston Fire Chief, one of the best people I know and a true inspiration to me and a big influence on why I believe Team Trademark has an obligation to give back, I watched him do it for years on James Island, whether it was cutting the grass at the high school, working the concession stand or teaching my son how to throw a curve ball, he always gave his time selflessly and anonymously.

Fortunately, he is still with us today and if you watched CNN a bit ago, you saw him give a heart wrenching assessment of his loss of nine friends and 100 years of service to the city of Charleston Fire Department. This guy is a true American hero and patriot, he sent his men to NYC after 911 to do whatever they could to help, but he is hurting today as we all are in Charleston because of the horrible blow to our community.

All I ask is for y’all to say a prayer for the firefighters we lost and their families and please go hug someone you love because you never know when it might be the last time. Many have asked where to send funds, the mayor announced a few minutes ago that you can go to ANY Bank of America branch in the country and donate to the Charleston firefighters family fund, so that would be my best guess.

Thanks for the continued support of team trademark and if you have a message for Chief Rusty or any other firefighters in Charleston, please feel free to email them to me personally ( Richard@trademark-properties.com) , I’ll print them all off tonight and hand deliver to his house tonight. If he ever needed our support it would be now!

Thanks again,
Richard

We’ve learned that a number of the publications out there offering advice and assistance to would-be investors are either scams or are simply re-hashes of classic advice offered by old pros at this business. 

A number of my readers are skilled in the property rehabilitation game, and I’d appreciate you sharing your “lessons learned.”  What’s worked for you?  What hasn’t?  Have you made money?  Is real estate “flipping” viable in the currently real estate market?

From a promotional email dated June 16, 2007:

Ever wonder what happened to Gus? Get your answer tonight during a brand new episode of The Real Estate Pros. Featuring Richard C. Davis and his team of professionals at Trademark Properties, this show is the real deal!

9:00PM
Life’s Little Surprises
TV-PG (L), CC
Richard is a businessman with a big heart but when his tenant Gus is hard hit by substance abuse and doesn’t pay rent owed to Richard for nearly a year, things have finally gone too far. The house will need to be renovated and sold.
Miss last week’s episode?? Catch a rerun tonight at 7 PM.
7:00 PM
Straightened Out
TV-PG (L), CC
Richard and Team Trademark help an old friend with substance abuse problems and a house that is on the verge of foreclosure and infested by rats. The team will help him renovate both his life and his home.

As always, we hope y’all have a fantastic weekend - thank you for the support and please be sure to let us know what you think!

Richard and Team Trademark

Richard Davis will be sharing a motivational message, “Come Get Inspired!”, at the Gaillard Auditorium in Charleston, South Carolina.  Tickets are $45 and are available online.

Trademark Properties is beginning a national rollout, and this presentation promises to also include information on how you can become part of the Trademark Team.

In related news, Richard Davis’ book will also be released on July 27.  Attendees will likely be able to purchase copies at the event.

On Wednesday, June 6, 2007, Judge C. Weston Houck held a hearing on the Summary Judgment motions of A&E Television Networks and Departure Films.  Today, I received a transcript of the hearing.  For the most part, the hearing seems to have been routine. 

A&E/Departure argues that there was no written contract, that the verbal contract to split profits didn’t contain the terms that Richard Davis and Trademark claim, and that Richard Davis has been inconsistent in even his understanding of the agreement.

Several things of note were decided:

• The contract issues will be handled under New York law.
• The defense claims that an oral contract under New York law will fail unless it contains an express termination provision, under Burke, a case that was not fully cited in the hearing and to which my Westlaw account doesn’t provide access.
• The Court felt that an oral contract did exist between Trademark/Davis and A&E/Departure.
• If that oral contract is believed by the Jury, then it is enforceable.
• The Court ruled that issuing partial summary judgment, even if it was determined appropriate, would not reduce the discovery burden, and therefore would be denied in its entirety.
• The Court declined to restrict discovery information relating to costs and other finances to the view of only the attorneys, ruling that preventing Richard Davis from seeing this information would be fundamentally unfair.
• The Court believes that discovery should be scheduled to end within four months.

The thing that was a minor point in the hearing, mentioned at the end of the hearing only, but of significant note and concern to your humble webmaster, is the Court’s final message:

One other thing I was not going to mention today, because I just thought it might be best to ignore it, but upon reflection, I think it’s a matter of such seriousness that I do need to mention it.

It’s been brought to my attention that there is a web blog entitled Flip This Lawsuit. I haven’t looked at that blog, I haven’t studied it to see what it says. I have been told what it says.

Now, I’ve never had this happen before, and I consider it a very, very serious matter. At first blush, it appears to me to be an attempt to influence this lawsuit in an improper way. We can’t tell what’s happening there until we draw a jury.

But at some point in time, if I’m convinced that that has been the result of such a blog, in other words, if we have jurors that come in here and they’ve read that blog, and upon reading that, they cannot give the defendants a fair trial, then that is a serious matter, and it will be considered by such as this court. And an appropriate punishment and sanctions will be handed out. I’m not sure what those will be. I think you lawyers know that if you did that, what would happen to you, you would probably be looking for another profession. So that’s how I feel about that.

Now, whether what’s going on that blog is of such a nature that it in and of itself, whether members of the public read it and act on it or not, warrants a sanction by this court, and some sort of obstruction of justice, some sort of contempt of this court, I don’t know. But it’s because of those consequences that I see fit to bring this to your attention. This is a serious matter. This is a serious court. And we will not permit its function to be undermined in such an unseemly fashion.

Now, who is responsible for that blog? I don’t know. It may be that I’ll have to ask the FBI to look into it. It may be I’ll have to ask the U.S. Attorney to get the grand jury to look into it, I don’t know. Those are things down the road. But it seems to me that the information I have certainly shows that the defendants don’t have their name on this blog and that the plaintiff does.

And I would think that good, prudent action on his part would have gotten it off of there a long time ago. And that’s all I’m going to say on that. But when we get to the end of this case at some point, we’ll look at it again and see who is responsible; what the effects are and what action we should take.

But it just felt like that it is such a serious matter and such an unthinkable thing for a litigant to do in this court, that it needed to be commented on. I mean, we are not in Boy Scout camp; we are in serious court here and we don’t do business that way. And I’m not going to permit litigants in this case to do business in that way. Okay?

Thank you very much. We’ll be in recess.

I, of course, have no affiliation with Flip This House, Richard Davis, Trademark Properties, A&E Entertainment Television, or Departure Films.  I don’t work for any of their attorneys, agents, or employees.  The site is supported through my own funds and through revenue generated by advertising on this page.

I’m a fan, and one that was incredibly pissed off by the actions of A&E on the first night of season two.  Not only did they deceive me, as a viewer, about what I was about to see by running only ads for Trademark Properties, but when I went to their website - to the place that they set aside for viewer discussion - I quickly found that my voice, and the voice of others who disliked the new cast or simply wanted to learn more information about the change, were quickly edited with the delete button.  This heavy-handed moderation continues to this day, and I feel it only appropriate to provide a forum for open discussion of not only the lawsuit but also the subsequent developments in both television shows, Flip This House and The Real Estate Pros / The Real Deal. 

I informed all counsel, through email on February 23, 2007 that my website was open to accepting information from any party that they wished to share with this audience.  In that same email, I informed all counsel that I was not affiliated with any of the parties and requested that, if they submitted printed copies of pages from my website, that they include the entirety of the page so as to include the disclaimer which appears at the bottom of each page on this site. 

The information I post here is obtained through the public records of the Court itself.  Any potential juror who wished to learn these things could easily visit the courthouse themselves and check out the file or even read it through PACER in their underwear at home or from nearly any coffee shop in the world.  Unlike traditional media, which filter the information provided and determine what information you deserve to know, I make it a point to report on all possible information by providing you access, for free, to all of the court documents.  In this manner, you can view and decide for yourself what information is relevant - or even just interesting - to you personally. 

The Court’s comments regarding this website are the subject of an item in the Charleston, SC Post and Courier, which you can read online.  The article begins, “Is the Internet weaving its web into America’s court rooms? Not if a district court judge in Charleston has anything to do with it.” 

I’ve pulled new documents from PACER.  They are, as follows:

• Updated Docket (6/11/07)
• Response to Plaintiffs’ Memorandum in Opposition to Defendants’ Motion for Summary Judgment
• Exhibits 1, 2, 3, 4, 5, 6, and 7 to same.
• Transcript of Summary Judgment Motion Hearing held on June 6, 2007 before Judge C. Weston Houck.

I will continue to report on developments in the litigation, as well as on both shows, as events unfold.

EDIT - June 15, 2007 - I have removed Plaintiffs’ Memorandum in Opposition to Defendants’ Motion for Summary Judgment and the exhibits thereto.  I was informed that this document is actually a sealed document, but because of a filing error was available for public access.  While I don’t believe this trial should continue being conducted behind a veil of secrecy, I do not desire to publish documents that are restricted by the Court’s order. 

UPDATE - JUNE 13 - Flip This Lawsuit is informed that the teleconference has been rescheduled for next week. More information to follow soon.

From a blog post purporting to be from Melina Montelongo:

David and I have recently walked away from Flip This House for many reasons. We receive hundreds of emails asking us if the last show was “staged”. David has refrained from talking about it until NOW.

He will TELL ALL on a telecast on Wednesday Night. June 13, 2007.

“Dear Friends & Associates,

For over a year now you have peeked into my business life and have shared in some very fun and trying times with my family and myself. As I am sure you all know there have been many changes that have gone on within Montelongo House Buyers, and there is definitely more to the story than was presented to the general public, I want to share these very personal events with all of YOU. ……. “

Click on this link to get call in number and pin!

Click here to read more.

Update: You might also be interested in Angela Wilford’s explanation of the Atlanta shenanigans.

From Peter Hull of the Charleston Post and Courier:

U.S. District Court Judge C. Weston Houck ruled Wednesday that there’s enough evidence to suggest that the two sides made a verbal agreement to equally share profits from the show.

In making the ruling, Houck denied a request by A&E Networks to dismiss the suit brought by Richard C. Davis of James Island-based Trademark Properties.

A&E, which aired the real estate show until last summer, has said it never agreed to share revenue with Davis. He sued A&E last July, alleging that the network took his idea for “Flip This House” and did not pay him and his company their share.

Read the Entire Article

We’ve ordered a copy of the transcript, and will post it as soon as it is available.