* Pursuant to 5 TH C IR

. R. 47.5, the Court has determined th a t

this opinion should not be published and is not precedent except

under the limited circumstances set forth in 5 TH C IR . R. 47.5.4. UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________

No. 99-10087

__________________

FRANKLIN ENGLE; ROBERT GARBARINO,

Plaintiffs-Appellants,

versus

MASON A. DINEHART, III, Individually, doing business as

Financial Education Network Development, Inc.,

Defendant-Appellee.

_________________________________________________________________

Appeal from the United States District Court

for the Northern District of Texas

(4:97-CV-1058-A)

_________________________________________________________________ April 19, 2000

Before DUHÉ, BARKSDALE, and DENNIS, Circuit Judges.

PER CURIAM: *

At issue is whether a Rule 12(b)(6) dismiss al for failure to

state a claim is proper when the compl aint alleges an individual,

who uses another to presen t an educational financial planning

workshop, is liable to a workshop attendee for the presenter’s postworkshop conversion of the attendee’s funds, liability having been

premised on negligent misrepresentation of the presenter’s

qualifications, negligence, vicarious liability for the presenter’s

criminal acts, violation of the Texas Deceptive Trade Practices Act,

T EX

. B U S

. & C OM

. C ODE §§ 17.41-17.63, and violation of the Texas- 2 -

Securities Act, T EX

. R EV

. C IV

. S TAT . arts. 581-1 through 581-37. We

AFFIRM

.

I.

The third amended complaint alleges the following. Defendants

Ft. Worth Chapter of the National Management Association (NMA) and

General Dynamics Management Association jointly sponsored three-day

retirement planning workshops at General Dynamics’ facility. (NMA

and General Dynamics settled.)

On 31 Ja nuary 1992, Defendant Successful Money Management

Seminars, Inc. (SMMS), entered into a license agreement with Turner

(“Financial Strategies for Successful Retirement Services License

Agreement”). Turner paid SMMS $4,500 “for the right to teach and

promote the i nvestment advisory business of [his company] Annable

Turner & Comp any at certain pre-arranged seminars under the SMMS

trademark/service mark

... and use and distribute SMMS materials at

these seminars”. Accordingly, he “was allowed to hold himself out

as a financial planner and retirement specialist approved by SMMS”.

Defendant Mason A. Dinehart III, “as SMMS’ apparent agent and

licensee, represented himself to be an authorized representative of

the NMA”. Doing business as Financial Education Network Development

(FEND), Di nehart selected Turner to be his representative for

prese nting the workshops. Dinehart introduced Turner at those

workshops as a “certified financial planner” or “c.f.p.” Turner was

not a “c.f.p.” Furthermore, he was promoting his own unregistered

advisory firm, Annable Tu rner & Co., at these workshops; Turner,

individually, was not registered, contrary to Texas law, as a fee-- 3 -

based financial planner; he had a disciplinary record with the

National Association of Securities Dealers; and he had been fired

by E.F. Hutton for engaging in improper financial transactions.

Dinehart knew, or should have known, these facts about Turner.

Turner agreed to pay Dinehart 25% of the fees he received from

each workshop. Dinehart negligently referred Turner to Franklin

Engle and Robert Garbarino (Plaintiffs).

Engle attended a workshop beginning 2 9 September 1992. It

included a free individualized financial plan worth $500. He

completed the financial history forms, and attended his free

consultation with Turner.

In September 1993 (alm ost a year after the workshop), Engle

transferred funds to Turner to purc hase investment securities.

Turner, howev er, did n ot purchase any securities with the money;

instead, he conve rted it. In 1994

, Engle transferred more than

$100,000 in assets to Turner for him to manage. O n 2 4 July 1995

,

Turner convinced Engle to liquidate a portion of these assets to

purchase a security; but, ins tead of buying the security, Turner

converted the liquidated portion to his own use. Finally, i n 1996

,

Engle transferred an IRA to Turner; he converted it. In April 1997,

Engle learned the investments he had with Turner had no value.

Garbarino attended a workshop at General Dynamics’ facility on

29 January 1992. Turner was introduced by Dinehart as “FEND’s

represen tative”; Garbarino also received the free financial plan.

In April and July 1992 , Garbarino cashed his United States

Savings Bonds and gave the money, along with almost all of his and- 4 -

his wife’s ot her money, to Turner to manage. In October 1993

,

Garbarino transferred his 401(k) funds to Turner. I n November 1995

(more than three years after the workshop), Turner recommended that

Garbarino invest i n a high-yield corporate bond. Once again,

instead of investing in a security, Turner converted the money

Garbarino transferred. I n 1996 (four years a fter the workshop),

Garbarino transfe rred more assets to Turner. Once again, Turner

converted them.

The original complaint was filed in district court on 19

December 1997. Plaintiffs claim, i nter alia

, ne gligent

misrepresentation, negligence, vicarious liability, violation of the

Texas Deceptive Trade Practices Act, and violation of the Texas

Securities Act. The first amended complaint was filed on 13

February 1998.

In March 1998, Plaintiffs’ request to file a second amended

complaint was granted without opposition. It was filed on 23 March.

On 17 April, Dinehart moved to dismiss the second amended

complaint. On 9 June, pursuant to F E D

. R. C IV

. P. 12(b)(6), the

district court tentatively d ismissed the complaint for failure to

state a claim. The district court ruled that Plaintiffs had failed

to allege: (1) facts constituting a primary violation of the Texas

Securities Act, or, assuming a primary violation, aider and abettor

liability; (2) a contractual relationship supported by consideration

between Plaintiffs and Defendants; (3) a duty of care on the part

of Defendants to Plaintiffs; and (4) facts that would classify

Plaintiffs as consumers, that there was a fals e, misleading, or- 5 -

deceptive trade practice, and, that, if there was a deceptive trade

practice, it was the cause of Plaintiffs’ damages.

The court gave Plaintiffs until 9 July to file a third amended

complaint, reminding th em of their obligations under Rule 11. On

22 June, instead of filing a third amended complaint, Plaintiffs

moved to transfer venue. The motion was denied four days later.

On 9 July, the third amended complaint was filed. Pursuant to

a comprehensive opinion, it was dismissed in January 1999 for

failure to state a claim. Engle v. Dinehart , No. 4:97-CV-1058-A

(N.D. Tex. 7 Jan. 1999).

Defendant SMM S settled just before oral argument here.

Dinehart is the only remaining Defendant.

II.

In addition to contesting the dismissal of their third amended

complaint, Plaintiffs challenge rulings on venue and discovery.

A.

1.

The court refused to transfer venue under 28 U.S.C. § 1404(a).

Such denial is reviewed for abuse of discretion. E .g., Peteet v.

Dow Chem. Co. , 868 F.2d 1428, 1436 (5th Cir. 1989).

This action concerns Tu rner and educational workshops. An

actio n in another forum concerns Turner and several securities

accounts. The actions do n ot involve substantially similar issues.

There was no abuse of discretion.

2.- 6 -

Discovery was stayed, pending ruling on the motion to dismiss.

Appellants provide no authority in support of this issue.

F ED

. R. A P P

. P. 28(a)(9)(A) requires their brief to include

argument, which must include their “contentions and the reasons for

them, with citations to the authorities and parts of the record on

which appellant relies”. Of course, issues n ot properly briefed are

deemed abandoned. E .g., United States v. Guerrero

, 169 F.3d 93 3

,

943 (5th Cir. 1999).

In any event, the stay was proper, in the light of Plaintiffs’

frequent amendments to the complaint and the pending 12(b)(6)

motion.

B.

We review de novo dismissal of a complaint, pursuant to Rule

12(b)(6), for failure to state a claim. E .g.

, Blackburn v. City of

Marshall

, 42 F.3d 925, 931 (5th Cir. 1995). A complaint survives

scrutiny “unless it appears beyond doubt that the plai ntiff can

prove no set of facts i n support of his claim which would entitle

him to relief”. C onley v. Gibson

, 355 U.S. 41, 45-46 (1957). The

question is whether, “in the light most favorable to the plaintiff

and with every doubt resolved in his behalf, the complaint states

any valid claim for relief”. L ow rey v. Texas A&M Univ. Sys. , 117

F.3d 242, 247 (5th Cir. 1997) (internal quotation marks and citation

omitted).

Dismissal was proper, essentially for the reasons stated in the

district court’s opinion. A few of the numerous reasons for our so

holding follow.- 7 - 1.

The third amended complaint fails to state a claim for

negligent misrepresentation, because there is no allegation Dinehart

gave any advice to Plaintiffs with respect to investment purchases

from Turner. Dinehart’s comments about Turner’s qualifications were

not a recommendation to make investments with him. Nor were

Plaintiffs ju stified in relying on them in trying to purchase

investments. In addition, Turner’s conversion, the cause of the

los ses, is far too attenuated from Dinehart’s representing Turner

as a “certified financial planner”.

2.

For the negligence claim, the third amended complaint points

to no duty on the part of Dinehart to Plaintiffs. Dinehart did n ot

have a duty to investigate Turner and disclose the results of such

investigation to Plaintiffs. S ee Golden Spread C ouncil, Inc. v.

Akins

, 926 S.W.2d 287, 291 (Tex. 1996). Plaintiffs allege Turner’s

criminal acts were foreseeable to Dinehart. Foreseeability alone,

however, is not sufficient to justify the imposition of a duty. I d

.

at 290-91.

3.

For the vicarious liability claim, Turner was not Din ehart’s

agent for the purchase of investments, the cause of the losses; and,

for the purchase of securities, Plaintiffs did not justifiably rely

on any statement or conduct by Dinehart representing that Turner was

his agent. Furthermore, the application to attend the workshop,

attached to the third amended complaint as an exhibit, states FEND- 8 -

was “ a purely educational organization where only information is

provided ”. (Emphasis in original.)

4.

Liability under the Texas Deceptive Trade Practices Act (DTPA),

is limited to those committing a deceptive trade practice or act in

connection with a consumer transaction in goods or services. E .g.

,

Amstadt v. United States Brass Corp. , 919 S.W.2d 644, 650 (Tex.

1996). The complaint does not allege a consumer transaction between

Dinehart and Plaintiffs.

5.

For the Texas Securities Act, the third amended complaint does

not allege Turner sold Plaintiff s securities. Instead, without

purchasing securities, he converted money they entrusted to him.

Assuming a securities transaction between Turner and

Plaintiffs, Dinehart cannot be liable as an aider and abettor unless

he was aware of the violation and recklessly disregarded it. E .g.,

Insurance Co. of N. Am. v. Morris

, 981 S.W.2d 667, 675 (Tex. 1998).

There is no allegation of any knowledge by Dinehart of any security

transaction between Turner and Plaintiffs.

III.

For the foregoing reasons, the dismissal is

AFFIRMED.2 This court granted the parties’ joint motion to dismiss the

appeal without prejudice as to appellee Successful Money Management

Seminars, Inc. on October 28, 1999.

- 9 - DENNIS, Circuit Judge, concurring in part and dissenting in part:

The plaintiffs-appellants, Franklin Engle and Robert Garbarino,

appeal from the district court’s judgment, which dismissed their

complaint, under F ED

. R. C IV

. P. 12(b)(6), for failure of the

pleading to state a claim upon which relief can be granted. In my

opinion, the complaint stated claims against defendant-appellee,

Mason Dinehar t, doing business as Financial Education Network

Development, Inc., based on the Texas Deceptive Trade Practices Act

and the Texas common law of negligence and negligent

misrepresentation, but failed to state a claim under the Texas

Securities Act. Accordingly, I respectfully dissent from the

majority’s affirmance of the district court’s judgment, except for

its dismissal of the Texas Securities Act claim.

I. BACKGROUND FACTS ALLEGED IN THE COMPLAINT

The plaintiffs’ petition alleges that: Dinehart, doing business

as Financial Education Network Development, Inc.(“FEND”), and as the

apparent agent and licensee of Successful Money Management Seminars,

Inc. (“SMMS”), represented to plaintiffs that he was an authorized

representative of the Nation al Management Association (“NMA”) and

that he had contacts with virtually all of NMA’s chapters at major

corporations in the United States. 2 Through his network of

financial planners and c o nsultants, Dinehart, doing business as

FEND, was in the business of arranging for financial advisers to

conduct workshops for groups of corporate employees seeking expert- 10 -

knowledge, in formation and advice about financial planning and

investment of their 401(k) and other retirement funds. Dinehart had

the exclusive right to use the SMMS materials at NMA chapters across

the country. SMMS prohibited other licensees from competing with

Dinehart for the NMA account.

In 1992, Dinehart selected Roger E. Turner to be his and FEND’s

representative in the presentation of SMMS workshops to NMA chapters

in the Dallas-Ft. Worth area, including the NMA chapter at General

Dynamics Corporation. Dinehart introduced Turner at the workshops

that plaintiffs attended and represented to them that Turner was a

“certified financial planner,” or “c.f.p.”

In truth, however, as Dinehart knew or should have known,

Turner had never been certified by the Certified Financial Planner

Board of Standards, Inc. to use the federally registered trademark

“c.f.p.” or “certified financial planner,” and he was not licensed

to provide fee based advisory services in Texas; Turner had a

disciplinary record with the NASD for engaging in pri vate

transactions and selling unregistered financial products without the

knowledge of his broker-dealer; Turner had been fired by E.F. Hutton

in 1986 fo r such conduct; Turner had misappropriated almost a

million dollars from victims through the sale of “Towers Financial”

collateralized notes; and Turner’s investment advisory firm, Annable

Turner and Company, was not registered to provide investment advice

in Texas.- 11 -

Dinehart concealed from or did not disclose to plaintiffs that,

prior to the 1992-1993 worksh ops, Dinehart and Turner had agreed

that Turner would pay Dinehart approximately 25% of the fees Turner

collected from the workshop participants; and that Dinehart and

Turner carried out this plan and agreement while Turner conducted

regular workshops in 1992-1993 at General Dynamics Corporation and

Lockheed Corporation under the trademark “Financial Strategies for

Successful Retirement Seminar.”

In 1992, Frank Engle, almost sixt y years old, and Robert

Garbarino, aged fifty years, were veteran engineers employed by

General Dynamics. They worked at a plant which Lockheed planned to

acquire from General Dynamics. The sale was expected to trigger

lump sum distributions of retirement funds to many General Dynamics

employees. Dinehart and FEND organized and presented comprehensive

retirement planning workshops at the General Dyna mics plant to

assist employees in financial planning and investment of retirement

funds. Engle and Garbarino participated in workshops conducted at

their plant by Turner, acting as Dinehart/FEND’s representative.

As part of the workshops each participant receiv ed an

individualized financial plan an d consultation, valued by the

organizer s at $500, designed to prepare them for the anticipated

sale of the plant to Loc keed and the distribution of retirement

funds by General Dynamics. At the close of their workshops, Turner

had e ach plaintiff fill out forms disclosing his confidential

personal financial data a nd history. The forms were drafted and

disseminated by SMMS, bearing the SMMS logo and trademark. The SMMS- 12 -

materials represented to the plaintiffs that the information would

be treated as confidential and analyzed by a SMMS financial planner.

SMMS represented that each plaintiff could receive a personalized

retirement plan including recommendations for specific investments

and other financial planning tools to help them meet their families’

needs and achieve their goal s. In fact, however, Turner used the

SMMS materials and his position as the Dinehart/FEND representative

to gain the confidence of the plaintiffs and their authorization to

advise, recommend and execute the investment of their IRA and other

retirement assets. During that process, however, Turner converted

the plaintiffs’ assets to his own use and benefit. From 1993 to

1996, plaintiffs lost ove r $200,000 of their retirement funds

through the fraudulent conduct of Roger E. Turner. The plaintiffs

relied to their detriment on the false information provided them by

Dinehart/FEND to the effect that Turner was a qualified and reliable

retirement specialist, certified financial planner or accredited

investment adviser. On the basis of these and other representations

by Dinehart/FEND, the plaintiffs entrusted their retiremen t funds

to Turner for investment. Dinehart/FEND knew or should have known

that Turner was corrupt, had a discip linary record, did not have

valid credentials as a retirement or financial pla nner, and was

likely to commit intentional misconduct and abuses of trust to the

plaintiffs’ detriment. But for the false information about Turner

provided by Dinehart/FEND, the plaintiffs would not have relied on

Turner’s advice or guidance and would not h ave entrusted him with

the investment of their IRA and other retirement funds.- 13 -

Turner’s registration as an investment adviser in Texas expired

on December 31, 19 91 and was not renewed. The Annable Turner and

Company’s registration with the Texas Securities Board as an

investment adviser lapsed before Turner began the workshops. Turner

violated the Texas Securities Act, T EX

. R EV

. C IV

. S TAT

. art. 581-

19(C)(6), by conducting a fee-based investment advisory business in

Texas through which he recommended a nd executed the purchase of

unregistered securities on behalf of the plaintiffs. Turner also

violated the Texas Securities Act, T EX

. R EV

. C IV

. S TAT

. art. 581-

33(a)(1) and (2) by selling unregistered securities and securities

by means of untrue statements of material facts and fraudulent

omissions. On May 12, 1998, Turner was convicted of federal

securities fraud under 15 U.S.C. §§ 77q(a) and 77x.

II. ANALYSIS

A. Negligent Misrepresentation

The Texas Supreme Court, in Feder al Land Bank Ass’n of Tyler

v. Sloane

, 825 S.W.2d 439, 442 (Tex. 1991), adopted the common law

ca use of action for negligent misrepresentation that results in

pecuniary loss as set out in the RESTATEMENT (S ECOND ) OF TORTS § 552

(1977). S ee also McCamish, Martin, Brown & Loeffler v. F.E. Appling

Interests

, 991 S.W.2d 787, 791 (Tex. 1999); First Nat’l Bank of

Durant v. Trans Terra Corp. Int.

, 142 F.3d 802, 808 (5 th Cir. 1998).

Section 552(1) of the Restatement provides:

One who, in the co urse of his business, profession or

employment, or in any other transaction in which he has

a pecuniary interest, supplies false information for the

g uidance of others in their business transactions, is

subject to liability for pecuniary loss caused to them by

their justifiable reliance on the information, if he- 14 -

fails to exercise reasonable care or competence in

obtaining or communicating the information.

Although the Texas Supreme Court, in Sloane and McCamish

, did

n o t quote or paraphrase section 552(2) & (3), as it did section

552(1), the opinions indicate an intention to adopt section 552 as

a whole. This court has interpreted the decisions accordingly. S ee

First National, 142 F.3d at 808-09; Scottish Heritable Trust, PLC

v. Peat Marwick Main & Co., 81 F.3d 606, 612-14 (5 th Cir. 1996).

Because Engle and Garbarino do not alle ge that Dinehart and FEND

were under a public duty to give the information in q uestion, the

liability in the presen t case is limited by section 552(2) which,

in pertinent part, provides:

[T]he liability stated in Subsection (1) is limited to

loss suffered

(a) by the person or one of a limited group of persons

for whose benefit and guidance he intends to supply the

informartion or knows that the recipient i ntends to

supply it; and

(b) through reliance upon it in a transaction that he

intends the information to influence or knows that the

recipient so intends or in a substantially similar

transaction.

Accepting all well-pleaded facts as true and viewing them in

the light most favorable to the p laintiffs, with every doubt

resolved in their behalf, I believe that their complaint states a

cause of action against the defen dants under the Texas common law

of negligent misrepresentation causing pecuniary loss as described

by the R ESTATEMENT (S ECOND ) OF T ORTS § 552. Dinehart, doing business as

FEND, was acting in the course of his business, profession or

employment when he planned and organized the retirement investment

workshops, selected Turner as his representative and as the expert- 15 -

to conduct them, and solicited the plaintiffs’ participation and

reliance on Turner for financial advice and instruction. Dinehart

also had a pecuniary intere st in the fees charged the workshop

participants and in the quality and reputation of the workshops he

organized and promoted nationwide in the scope and course of his

business. Dinehart, personally and doing business as FEND, supplied

false information directly to the plaintiffs for the guidance of the

plaintiffs in their business transactions. He incorrectly

represented to them that Turner was a reputable , qualified, and

certified expert upon whom they could rely for sound information and

beneficial advice in their financial, investment and retir e ment

planning transactions. The plaintiffs, inexperienced and

unsophisticated in financial planning and investments, justifiably

relied upon the information supplied them about Turner by Dinehart,

who had bolstered his own credibility by advertising his experience

and relations with the NMA chapters at major corporations, SMMS, and

his own organization, FEND. The plaintiffs suffered losses of their

assets due to their justifiable reliance upon the false information

about Turner supplied them by Dinehart/FEND, as well as

Dinehart/FEND’s endorsement of Turner as their representative, which

caused the plaintiffs to justifiably rely on Turner’s fraudulent

advice, information and services. Dinehart is liable to the

plaintiffs for these losses because he did not exercise the

reasonable care and competence, professed by and expected of a

person engaged in his business or profession, in engaging Turner to

conduct the workshops without an adequate investigation of his- 16 -

reliability, and in obtaining and communicating to the plaintiffs

the false information and impressions concerning the trustworthiness

of Turner. Engle and Garbarino were among a limited group of

persons for whose benefit and guidance Dinehart and FEND intended

to supply the false information about Turner. The plaintiffs

suffered losses t hrough reliance upon the false information in

transactions Dinehart intended the information to influence, viz.,

the plaintiffs’ participation for a fee in the workshops under

Turner’s tutelage; the plaintiffs’ reliance on Turner for

instruction, advice and information regarding their financial,

investment, and retirement planning and transactions; the

plaintiffs’ disclosures of personal financial data to Turner and

receipt from him of individualized financial plans and

consultations; and in substantially similar transactions.

The damages recoverable for a negligent representation,

however, are limited to those necessary to compensate Engle and

Garbarino for the pecuniary losse s to them of which the

misrepresentations were a leg al cause. In S loane

, 825 S.W.2d at

443, the Texas Supreme Court declined to extend damages beyond those

limits provided in Restatement section 552B. The court adopted the

pertinent part of that section in its opinion, as follows:

The Restatement provides damages for t his tort as

follows:

(1) The damages recoverable for a negligent

misrepresentation are those necessary to compensate the

plaintiff for the pecuniary loss to him of which the

m isrepresentation is legal cause, including

(a) the difference be tween the value of what he has

received in the transaction and its purchase price or

other value given for it; and

(b) pecuniary loss suffered otherwise as a consequence of- 17 -

the plaintiff ’s reliance upon the misrepresentation.

(2) the damages recoverable for a negligent

misrepresentatio n do not include the benefit of the

plaintiff’s contract with the defendant.

Id. at 442. The court pointed out that “[t]he Restatement advances

several policy r easons for limiting damages, including a lower

deg ree of fault indicated by a less culpable mental state and the

need to keep liability proportional to risk.” I d. at 442-43 (citing

R ESTATEMENT ( S ECOND ) O F T ORTS § 552, comment a (1977)). Accordingly,

the court rejected the Sloanes’ argument that they should be allowed

damages for mental anguish because Restatement 552B “limits damages

to pecuniary loss alone.” Sloane, 825 S.W.2d at 442.

Consequently, I conclude that Engle and Garbarino have stated

a claim against Dinehart and FEND for which relief ma y be granted

based upon an action for negligent misrepresenta tion under the

common law of Texas, by virtue of the Texas Supreme Court’s adoption

of the provisions and limita tions of sections 552 and 552B of the

R ESTATEMENT (S ECOND ) OF T ORTS

.

B. Negligence

In their third amended complaint, the plaintiffs made the

following allegations with regard to the defendant’s negligence:

[Dinehart a nd FEND] knew or should have known the

following about Turner when they selected him to present

comprehensive retirement planning workshops to retiring

employees at General Dynamics:

1) Mr. Turner had a disciplinary record with the NASD for

securities offenses;

2)Mr. Turner was not licensed or registered to provide

investment advice in Texas in 1992;

3) Mr. Turner and/or his businesses h ad tax liens and

other financial difficulties which would affect the

advice given to General Dynamics employees; and3 RESTATEMENT (SECOND) OF AGENCY § 219, in pertinent part,

provides:

(1) A master is subject to liability for the torts of his

servants committed while acting in the scope of t heir

employment.

(2) A master is not subject to liability for the torts of his

servants acting outside the scope of their employment, unless:

* * *

(d) the servant purported to act or to speak on behalf of the

principal and there was reliance upon apparent authority, or

he was aided in accomplishing the tort by the existence of the

agency relation.

- 18 - 4) Mr. Turner had numerous outside business intere s ts

which created a dangerous conflict of interest in

adv ising retiring employees as to investment

alternatives.

Defendants[] owed Plaintiffs a duty to exercise

reasonable care in selecting and employing financial

planners and advisers appearing before a targeted

audience of General Dynamics employees receiving lump sum

distributions of retirement funds. It was reasonably

foreseeable to [the Defendants] that Plaintiffs would

base investment decisions about their retirement funds on

the presentations they received at the workshops.

Defendants knew or should hav e known that Plaintiffs

would utilize the workshop (which included a confidential

consultation with Turner purportedly worth $500.00) to

purchase services from Turner.

The complaint states a valid claim for relief under the Texas

c ommon law of negligence. The pleadings, taken in the light most

favorable to the plaintiffs, set forth several sets of facts that

would support their negligence claim.

Under the doctrine of respondeat superior, a master is subject

to liability for the torts of his servants committed while acting

within the scope of their employment. See Baptist Memorial Hosp.

Sys. v. Sampson , 969 S.W.2d 945, 947 (Tex. 1998)(citing D eWitt v.

Harris County

, 904 S.W.2d 650, 654 (Tex. 1995); R ESTATEMENT (S ECOND ) OF

A GENCY § 219 (1958)); 3 Durand v. Moore

, 879 S.W.2d 196, 1994 As a practical matter, there is no di stinction between

ostensible agency, apparent agency, apparent authority, and agency

by estoppel. S ee Baptist Memorial

, 969 S.W.2d at 947, n.2 (citing

authorities).

- 19 - (Tex.App.-Houston [14 th Dist.] 1994, no writ); McMurrey Corp. v.

Yawn

, 143 S.W.2d 664, 666 (Tex.Ct.Civ.Ap p .-Texarkana 1940, writ

refused); Cameron Compress Co. v. Kubecka

, 283 S.W. 2 85, 286

(Tex.Ct.Civ.App.-Austin 1926, no writ). The most frequently

proffered justification f or imposing such liability is that the

master has the control or right to control the physical conduct of

the servant in the performance of the services or work. S ee Baptist

Memorial, 969 S.W.2d at 947 (citi ng Newspapers, Inc. v. Love , 380

S.W .2d 582, 585-86 (Tex. 1964); RESTATEMENT (SECOND) OF AGENCY §

220, cmt. d). But because an independent contractor usually has

sole control over the means and metho ds of the work to be

accomplished, the general rule is that an employer or principal who

hires an independent contractor is not vicariously liable for the

contractor’s tort or negligence. S ee id. (citing Enserch Corp. v.

Parker

, 794 S.W.2d 2, 6 (Tex. 1990); Redinger v. Living, Inc.

, 689

S.W.2d 415, 418 (Tex. 1985)). Nevertheless, an employer or

principal may act so as to be subjected to liability because of the

conduct of a person who is not its agent, or who, although an agent,

h as acted outside the scope of his or her authority. S ee id. at

947. Under the doctrine of ostensible agency, the employer or

principal may be held liable unde r circumstances in which his own

conduct should equitably prevent him from denying the existence of

an agency. 4 S ee id. at 947-48 (citing, e .g.

, Marble Falls Hous.- 20 -

Auth. v. McKinley

, 474 S.W.2d 292, 294 (Tex.Civ. App.-Austin 1971,

writ ref'd n.r.e.)); McWhorter v. Sheller

, 993 S.W.2d 781, 786

(Tex.App.-Houston[14th Dist.] 1999) (persons who defrauded plaintiff

had apparent authority as defendant’s agents)(citing Baptist

Memorial, 969 S.W.2d at 949; Biggs v. United States Fire Ins. Co.

,

611 S.W.2d 624, 629 (Tex. 1981)); cf. Lane v. Security Title & Trust

Co., 382 S.W.2d 326, 330 (Tex.App.-Dallas 1964, no writ)(Insurer

held liable for its local agent’s misrepresentations ) (citing

R ESTATEMENT OF L AW OF A GENCY

, §§ 257, 258). “Ostensible agency in Texas

is based on the notion of estoppel, that is, a representation by the

principal causing justifiable reliance and resulting harm.” B aptist

Memorial, 9 69 S.W.2d at 948 (citing Ames v. Great S. Bank

, 672

S.W.2d 447, 450 (Tex. 1984); RESTATEMENT (S ECOND ) O F AGENCY § 267;

K EETON ET AL

., P ROSSER AND K EETON ON THE L AW OF T ORTS § 105, at 733-34 (5th

ed.1984) [hereinafter P ROSSER ]).

Texas has adopted R ESTATEMENT (S ECOND ) OF A GENCY § 267 (1958), under

which a person “asserti ng ostensible agency must demonstrate that

(1) the principal, by its conduct, (2) caused him or her to

reasonably believe that the putative agent was an employee or agent

of the principal, and (3) that he or she justifiably relied on the

appearance of agency.” B aptist M emorial, 9 69 S.W.2d. at 948; see

also Ames

, 672 S.W.2d at 450. The Texas Supreme Court, in B aptist

Memorial Hospital

, repeated its earlie r explanation of ostensible

agency:

Apparent authority in Texas is based on estoppel. It may

a rise either from a principal knowingly permitting an agent to hold herself out as having authority or by a

principal's actions which lack su ch ordinary care as to- 21 -

clothe an agent wi th the indicia of authority, thus

leading a reasonably prudent person to believe that the

agent has the authority she purports to exercise....

A prerequisite to a proper finding of apparent authority

is evidence of conduct by the principal relied upon by

the party asserting the estoppel defense which would lead

a reasonably prudent person to believe an agent had

authority to so act.

Baptist Memorial, 969 S.W.2d at 948 (quoting Ames

, 672 S.W.2d 447,

450 (Tex. 1984)).

The pla intiffs’ complaint alleges facts from which, in the

light most favorable to them, it reasonably may be found or inferred

that Dineha rt, doing business as FEND, by his own communications

directly to the plaintiffs and the other workshop participants,

proclaimed Turner, and continuously held him out to be, the agent

and representative of FEND and himself, caused the plai ntiffs to

reasonably believe that Turner was his agent and representative, and

that the plaintiffs justifiably relied on the appearance of agency.

Cons equently, the plaintiffs alleged facts stating a claim upon

which relief may be granted on the ground that Dinehart, by his

conduct, made Turner his ostensible agent in all matters pertaining

to the workshops, and, in the process, subjected himself to

liability for Turner’s alleged torts against the plaintiffs.

Further, quite apart from any question of vicarious liability,

the employer may be held liable for his own negligence in certain

situations relevant to the present case. S ee generally P ROSSER

, §

71 at 510. Where there is a foreseeable risk of harm to others

unless precautions are taken, it is the employer’s duty to exercise

reasonable care to select a competent, experienced, and careful

contractor, and to provide for such precautions as reasonably appear- 22 -

to be called for. S ee Ross, 796 S.W.2d at 216; Wasson v. Stracener

,

786 S.W.2d 414, 422 (Tex.App.–Texarkana 1990, writ denied); King v.

Associates Commercial Corp.

, 744 S.W.2d 209, 213 (Tex.App.–Texarkana

1987, writ denied) (citing Jones v. Southwestern Newspapers Corp.

,

694 S.W.2d 455, 458 (Tex.App.-Amarillo 1985, no writ); Texas

American Bank v. Bogess

, 673 S.W.2d 398, 400 (Tex.App.–Fort Worth

1984, dism. agr); Moore v. Roberts

, 93 S.W.2d 236, 238-39

(Tex.Civ.App.–Texarkana 1936, wri t ref’d); S immonton v. Perry

, 62

S.W. 1090 (Tex.Civ.App. 1901, no writ)); see also Estate of

Arringti on v. Fields , 578 S.W.2d 173, 178 (Tex.Civ.App. 1979,

refused n.r.e.); R ead v. Scott Fetzer Co.

, 990 S.W.2d 732, 739-40

(Tex. 1999)(Hecht, J.,dissenting); P ROSSER , § 33 at 203.

Also, under another closely related Texas tort law theory, a

person’s act or omission may be negligent if he realizes or should

realize that it involves an unreasonable risk of harm to another

through the intentional tort or crime of a third person.

Accordingly, the Texas Supreme Court, in Golden Spread Council, Inc.

v. Akins, 926 S.W.2d 287, 290-91 (Tex. 1996), held that a local Boy

Scouts council’s affirmative act of recommending a person as a

potential scoutmaster to a church sponsor of a scout troop created

a duty on the part of the council to use reasonable care in light

of the information the c ouncil had received about that person’s

alleged prior molestation of boys while he was an assistant

scoutmaster in a different troop. The court stated that the local

council’s “duty is best expressed in commen t e to Section 302B of

the R ESTATEMENT (S ECOND ) OF T O RTS

, which recognizes that there may be- 23 -

liability ‘[w]here the actor has brought into contact or association

with the other a p erson whom the actor knows or should know to be

peculiarly likely to commit intentional misconduct, under

circumstances which afford a peculiar opportunity or temptation for

such misconduct.’” I d. at 291 (quoting R E STATEMENT ( S ECOND ) OF T ORTS

§ 302B, cmt. e, par. D). Similarly, the court, in N ixon v. Mr.

Property Management Co.

, 690 S.W. 2d 546, 550 (Tex. 1985), in

reversing the trial court’s summary judgment dismissing plaintiff’s

claim, held that a genuine issue of material fa c t existed as to

whether an apartment building owner breached his duty under a

municipal ordinance to securely c lose the vacant portions of his

structure against unauthorized entry, resulting in the rape of a 10

year old girl in an empty apartment by an offender who abducted and

brought the victim to the apartment building. With respect to the

issue of proximate cause, the court concluded that, although usually

the criminal conduct of a third p arty is a superseding cause

relieving a negligent actor from liability, his negligence will not

be excused where the third person’s criminal conduct is a

foreseeable result of his neglige nce. I d. at 549-50 (citing

Castillo v. Sears Roebuck & Co.

, 663 S.W.2d 60 (Tex.App.–San Antonio

1983, writ ref’d n.r.e.); Walkoviak v. Hilton Hotel Corp

., 580

S.W.2 d 623 (Tex.Civ.App.–Houston [14 t h Dist.] 1979, writ ref’d

n.r.e.)). In support of the holding, the court quoted R E STAT EMENT

(S ECOND ) O F T ORTS § 448 (1965), which, in pertinent part, provides:

“The act of a third person in committing an intentional tort or

crime is a superseding cause of harm to another...unless the actor5 See also R ESTATEMENT (S ECOND ) O F T ORTS § 448, cmt. c (“This is

true although the likelihood that such a crime would be committed

might not be of itself enough to make the actor’s conduct

negligent, and the negligent character of the act arises from the

fact that it involves other risks which of themselves are enough to

m ake it unreasonable, or from such risks together with the

possibility of crime.”).

- 24 - at the time of his negligent conduct [creating a situation making

another vulnerable to such tort or crime] realized or should have

realized the likelihood that such a situation might be created, and

that a third person might avail himself of the opportunity to commit

such a tort or crime.” 5

Moreover, the court in N ixon pointed out that evidence of a

previous rape in the apartment building is not a prerequisite to

recovery: “All that is required is ‘that the injury be of such a

general character as might reasonably have been anticipated; and

that the injured party should be so si tuated with relation to the

wrongful act that injury to him or to one similarly situated might

reasonably have been foreseen.’” I d. at 551 (quoting Carey v. Pure

Distributing Corp.

, 124 S.W.2d 847, 849 (Tex. 1939)). Texas courts

have also followed the principle underlying R ESTATEMENT (S ECOND ) OF

T ORTS § 499: “If the likelihood that a third pers on may act in a

particular manner is the hazard or one of the hazards which makes

the actor negligent, such an act whet her innocent, negligent,

intentionally tortious, or criminal does not prevent the actor from

b eing liable for harm caused thereby.” S ee Hale v. Burgess

, 478

S.W.2d 856, 858 (Tex.Civ.App.-Waco 1972, no writ); Texas-N.M. & Okl.

Coaches v. Williams

, 191 S.W.2d 66, 71 (Tex.Civ.App.-El Paso 1945,

writ ref. w.m); Reeves v. Tittle

, 129 S.W.2d 364, 367 (Tex.Civ.App.-6 The R ESTATEME NT (S ECOND ) OF T ORTS cites Jesse French Piano in

support of the last two sentences of comment b accompanying section

449: “The duty to refrain from the act committed or to do the act

omitted is imposed to protect the other from this very danger. To

deny recovery because the other’s exposure to the very risk from

which it was the purpose of the duty to protect him resulted in

harm to him, would be to deprive the other of all protection and to

make the duty a nullity.”

- 25 - Eas tland 1939, writ refused); J esse French Piano & Organ Co. v.

Phelps , 105 S.W. 225 (Tex.Civ.App. 1907, no writ). 6

The Texas courts have applied the principles underlying the

foregoing cases and R ESTATEMENT (S ECOND ) OF T ORTS §§ 302B and 448 to

allow recovery by plaintiffs for negligently inflicted harm or loss

of personal property, including money, through the intentional torts

or crimes of third persons. S ee Hoe n ig v. Texas Commerce Bank,

N.A.

, 939 S.W.2d 656, 660 (Tex.Civ.App.-San Antonio 1996, no

writ)(negligently inflicted loss of rents upon trust through

conversion by third person); Byrd v. Woodruff

, 891 S.W.2d 689, 701-

02 (Tex.Civ.App.--Dallas 1994, writ denied, order withdrawn; dism.

agr.)(attorney negligently caused loss to client through conversion

by third persons); Gilstrap v. Beakley

, 636 S.W.2d 736, 741

(Tex.Civ.App.-Corpus Christi 1982, no writ)(negl igently inflicted

loss of ownership of oil rig through fraud of thi rd person); c f.

Jesse French Piano

, 105 S.W. 225 at 227 (negligent cause of loss of

personal property through theft by thrid person). Similarly, in the

present case, Engle and Garbarino seek to recover damages from

Dinehart and FEND for the negligently inflicted harm they suffered

through the fraud of Turner and the loss of their personal property,

viz., their retirement funds and securities. S ee, e.g., R ESTATEMENT7 The present case is not one in which a plaintiff is seeking

to recover for negligently inflicted, purely economic loss, without

harm to his person or legally protected property interest. The

traditional rule is that a plaintiff cannot recover for pure

economic loss in such cases. See Rodriquez v. Carson

, 519 S.W.2d

214, 217 (Tex.App.-Amarillo 1979, ref. n.r.e.) (truck driver could

not recover loss of salary and commis sions due to defendant’s

negligent damage to truck owned by driver’s employer); D AN B. D OBBS

, L AW OF R EMEDIES § 6.6(2), at 142, n.55 (2d ed. 1993) (c iting R obins

Dry Dock & Repair Co. v. Flint

, 275 U.S. 303 (1927); State of

L ouisiana ex rel. Guste v. M/V Testbank , 752 F.2d 1019 (5 t h Cir.

1985), cert. denied

, 477 U.S. 903 (1986); General Public Utilities

v. Glass Kitc hens of Lancaster, Inc. , 374 Pa.Super. 203 (1988);

Hale v. Groce

, 744 P.2d 1289 (1987)); see also R ESTATEMENT (S ECOND ) OF

T ORTS § 766C (Negligent Interference with Contract or Prospective

Contractual Relation)(Comment a:“[]Thus far there has been n o

general recognition of any li ability for a negligent

interference...with the plaintiff's acquisition of prospective

contractual relations[.]”); William Powers, Jr. and Margaret Niver,

Neg ligence, Breach of Contract, and the “Economic Loss” Rule , 23

T EX

. T ECH L. R EV

. 477, 517 (1992). On the contrary, Dinehart and

Garbarino are seeking recovery for the harm and loss of their

legally vested protected property rights.

- 26 - (S ECOND ) O F T ORTS § 927 (Conversion or Destruction of a Thing or of a

Legally Protected Interest In It); R ESTATEMENT (S ECOND ) O F T ORTS § 927,

illus. 4, 5 (recovery of da mages for the embezzlement of stock

entrusted to a broker). 7

The plaintiffs Engle and Garbarino have alleged facts under

which Dinehart and FEND may be held liable, not only vicariously for

the torts of Turner as their ostensible agent, but also for their

own negligence in exposing the plaintiffs to the intentional torts

and crimes of Turner. The complaint alleges that Turner, under the

guise of a helpful financial planner and workshop counselor, gained

access to their personal financial information, induced them to

entrust him with control of their retirement assets for the- 27 -

ost e nsible purpose of financial planning and reinvestment; that

Turner fraudulently converted their funds to his own use and thereby

caused them to suffer the harm of the total loss of their personal

property, that is, their retirement funds and asset s; that they

relied on Dinehart’s false representations that Turner was a

certified, competent, experienced and reliable financial and

retirement investment planner; that, in fact, Turner had little more

than a hig h school education, had been discharged by a national

stock broker for financial misconduct, had been disciplined for such

miscondu ct by a national securities exchange, had never been

certified as a financial planner, and had lost his registration and

license as a securities dealer; that Dinehart, as a prudent and

reasonable organizer of retirement planning and investment

workshops, should have discovered these fa cts by conducting a

routine pre-employment investigation of Turner’s qualifications and

experience as an investment, financial, and retiremen t counselor;

that Dinehart negligently employed Turner, whom he knew or should

have known was neither competent nor trustworthy, and negl igently

exposed the plaintiffs to an unreasonable risk of harm by the loss

of their assets through the fraud, misconduct and incompetence of

Turner; that Dinehart’s false misrepresentations, negligent hiring,

affirmative actions in p romoting the workshops and vouching for

Turner’s professional qualifications, and negligent exposure of the

plaintiffs to the risk of intentional tortious and criminal conduct

by Turner, caused them to suffer the loss o f their property; that

they justifiably relied on Dinehart and Turner to their detriment- 28 -

because, in the absence of Dinehart’s negligent acts and omissions,

the plaintiffs would not have entrusted Turner with their retirement

assets.

C. Texas Deceptive Trade Practices Act

To recover under the Texa s Deceptive Trade Practices Act

(DTPA), a plaintiff must establish (1) that he was a consumer; (2)

that the defendant engaged in false, misleading, or deceptive acts;

(3) that he relied on the false, misleading, or deceptive practices

to his detriment; and (4) that the defendant’s conduct was a

producing cause of his damage. S ee T EX

. B US

. & C OM

. C ODE A NN

.

§17.50(a) (West 1987); Doe v. Boys Clubs of Greater Dallas, Inc. 907

S.W.2d 472, 478 (Tex. 1995); Weitzel v. Barnes

, 691 S.W.2d 598, 600

(Te x. 1985). A producing cause is “an efficient, exciting or

contributing cause, which in a natural sequence, produced injuries

or damages.” R ourke v. Garza

, 530 S.W.2d 794, 801 (Tex. 1975). To

qualify as a consumer, a plaintiff must have sought or acquired

goods or services by pu rchase or lease; and the goods or services

sought, purchased, or leased must form the basis of the complaint.

See Ins. Co. of N. Am. v. Morris

, 981 S.W.2d 667, 675 (Tex. 1998);

Cameron v. Terrell & Garrett, Inc.

, 618 S.W.2d 535, 539 (Tex. 1981);

T EX

. B US

. & C OM

. C ODE §§ 17.45(4) and 17.50(a). Furthermore, the

Texas Supreme Court has clearly established that the DTPA definition

of “consumer” is not limited to the actual provider of the goods or

services at issue:

We find n o indication in the definition of consumer in

section 17.45(4), or any other provision of the Act, that

the legislature intended to restrict its application only

to deceptive trade practices committed by perso n s who- 29 -

furnish the goods or services on which the complaint is

based. Nor do we find any indication that the legislature

intended to restrict its application by any other similar

privity requirement... The Act i s designed to protect

consumers fromany deceptive trade practice made in

connection with the purcha se or lease of any goods or

services... We, therefore, hold that a person need not

seek or acquire goods or services furnished by the

defendant to be a consumer as defined in the DTPA.

Cameron

, 618 S.W.2d at 540-41; see also Amstadt v. United States

Brass Corp.

, 919 S.W.2d 644, 649-50 (Tex. 1996) (reaffirming Cameron

while finding that the DTPA does not “reach upstream manufacturers

and suppliers when their misrepresentations are not communicated to

the consumer.” Id. at 649.).

E ngle and Garbarino allege that they acquired or sought to

purchase the s ervices of a retirement planning specialist and

incorporate by reference all of the other facts asserted in the

complaint. Thus, they allege that Dinehart/FEND committed false,

misleading or deceptive acts in violation of the DTPA which

constituted a producing cause of the plaintiffs’ loss of their

retirement funds, including the following:

(a) causing confusion or misunderstan ding as to the

source, sponsorship, approval, or certification of Turner

as a financial planner, adviser and retirement specialist

by making the representations set forth in paragraphs 17-

22, 24-29, 45-45, and 58 above, without making a

reasonable investigation of T urner’s financial history

a nd background, qualifications, licenses, a n d

registrations;

(b) causing confusion or misunderstanding as to Turner’s

affiliation, connection or association with Dinehart,

FEND and SMMS as a retirement specialist and SMMS

financial planner, and his cert ification and/or

accreditation as a financial planner and adviser

authorize d to do business in Texas by committing the

conduct set forth in paragraphs 17-29, 40-45, 58 above- 30 -

and by passing off the services of Roger Turner as being

those of SMMS and FEND;

(c) expressly and implicitly representing that Turner’s

qualifications, skill, and background were approved and

suitable for employees seeking advice and rudent

investment of retirement funds;

(d) failing t o disclose to Plaintiffs the financial

relationships between the Defendants; and

(e) representing to Plaintiffs that Turner’s services

were specially accredited without having conducted any independent investigation of his qualifications,

background, and credentia ls and failing to disclose to

Plaintiffs that Defendants had conducted no independent

review of Turne r’s qualifications, background and

credentials.

The plaintiffs aver that Dinehart/FEND’s foregoing conduct was the

producing cause of their loss or harm because, but for such conduct,

plaintiffs would not have entrusted their IRA and other retirement

funds to Turner’s custody and control.

Accepting the facts alleged as true, and construing them in the

light most favorable to the plaintiffs, I conclude that Engle and

Garbarino have stated a claim satisfying all of the DTPA

requirements. The plaintiffs aver that they purchased and acquired

from Dinehart/ FEND and Turner for their immediate use what they

believed were the services of an expert planning specialist within

the context of a retirement workshop program supported by a

nationally known organization with professionally crafted materials

and methodology an d specifically designed for their individual

retirement needs. From the plaintiffs’ perspective, they did not

pay for a general survey or academic enrichment course. Instead,

as fifty and sixty year old employees anticipating early retirements- 31 -

or layoffs and lump sum distributions of retirement funds, they

sought and paid to receive so und, personal advice and counseling

from a qualified, reliable expert suitable to their individual

financial and retirement situations. Thus, the plaintiffs’

complaint is based on Dinehart/FEND’s false, deceptive

representations o f the quality and character of the retirement

workshop and its counselor, as well as Turner’s fraudulent conduct.

Consquently, the false, misleading and deceptive practices of each

Dinehart/FEND and Turner were a producing cause that contributed to

each plaintiff’s grievous loss of his life’s savings in retirement

assets and missed opportunity to acquire what he earnestly sought,

a soundly planned, structured, and funded retirement program fitting

his personal and family needs. Accordingly, the plaintiffs have

stated a valid claim under the DTPA as consumers who relied on the

false, misleading and deceptive practices of the defendant, which

were a producing cause of their severe loss and harm.

D. Texas Securities Act

I agree that the district court’s dismissal of the plaintiffs’

claims under th e Texas Securities Act should be affirmed. The

plaintiffs al lege that Turner violated the Texas Securities Act

(TSA), T EX

. R EV

. C IV

. S TAT

. art. 581-19(C)(6) by conducting a feebased investment advisory business through which he recommended and

purchased unregistered securities, and violated T EX

. R EV

. C IV

. S TAT

.

art. 581-33(A)(1) and (2) by sell ing improperly registered

securities by use of untrue state ments of material facts and

fraudulent omissions. They allege that Dinehart/FEND materially- 32 -

aid ed and abetted Turner’s TSA violations by acting in reckless

disregard of the law in failing to condu c t a review of Turner’s

licenses, registrations, and disciplinary record before representing

to plaintiffs that he was a retirement planning specialist;

promoting services they knew or should have known were illegal and

likely to cause harm or loss to the plaintiffs; recklessly failing

to conduct an inv estigation of the applicable licensing rules in

Texas and Turner’s failure to comply with them; failing to disclose

that Turner was not legally au thorized to conduct a fee-based

investment advisory business in Texas; and fa iling to disclose

Turner’s outside business activit ies and private transactions in

securities.

T EX

. R EV

. C IV

. S TAT . art. 581-33 F(2) imposes joint and several

liability on any person who directly or indirect ly with intent to

deceive or defraud or with reckless disregard for the truth or the

law materially aids a seller, buyer, or issuer of a security. S ee

Morris

, 981 S.W.2d at 6 75. For aider liability to attach, Turner

as the seller h ad to be liable for a violation of the TSA and

D inehart/FEND had to have been aware of the violation but had to

have recklessly disregarded the fact of the violations. See id.

The plaintiffs have not alleged any facts from w hich it

reasonably may be found or inferred that Dinehart/FEND was aware of

the alleged illegal securities transactions between Turner and the

plaintiffs. The complaint alleges that after attending a three week

workshop conducted by Turner beginning on September 29, 1992, Engle

transferred to Turner for investment $25,000 on September 20, 1993,- 33 -

$100,000 in 1994, rolled over $45,000 from a mutual fund to Turner

on July 24, 1995, and rolled over $50,000 from a Schwab account to

securities offered by Turner in October 1996. The complaint alleges

that after attending a three week workshop conducted by Turner

beginning on January 29, 1992, Garbarino and his wife turned over

to Turner unspecified sums in April and July of 1992, $77,476 in

October 1993, $50,000 on November 14, 1995, and $35,000 on July 5,

1996 and September 10, 1996. The complaint does not allege that any

of Turner’s alleged TSA violations occurred during the three week

workshops, that any a g ency or other relationship between

Dinehart/FEND and Turner continued after the workshops, or that any

particular fact or event tends to show that Dinehart/FEND was aware

of or recklessly disregarded Turner’s alleged TSA violations.

III. CONCLUSION

For the reasons assigned, I concur in affirming the district

court’s dismissal of the plaintiffs’ Texas Securities Act claims,

but I respectfully dissent from the majority’s affirmance of the

dismissal of the plaintiffs’ other claims.