Jacobson v. Hofgard

168 F. Supp. 3d 187, 2016 U.S. Dist. LEXIS 26802, 2016 WL 837923
CourtDistrict Court, District of Columbia
DecidedMarch 1, 2016
DocketCivil No. 1:15-cv-00764 (APM)
StatusPublished
Cited by43 cases

This text of 168 F. Supp. 3d 187 (Jacobson v. Hofgard) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jacobson v. Hofgard, 168 F. Supp. 3d 187, 2016 U.S. Dist. LEXIS 26802, 2016 WL 837923 (D.D.C. 2016).

Opinion

MEMORANDUM OPINION

Amit P. Mehta, United States District Judge

I. INTRODUCTION

In December 2014, Plaintiffs Brian Jacobson and Branko Jovanovic moved into a townhouse that they had recently purchased from Defendants Insun and Jefferson Hofgard. Although Defendants had advertised the property as a new, stunning renovation, Plaintiffs quickly found multiple major flaws in their new home. Within the first several months of moving in, Plaintiffs uncovered zoning violations, faulty structural support, and defective heating, plumbing, and electrical systems. Plaintiffs spent time and money addressing these defects, with minimal assistance from Defendants.

Believing that they had been swindled, Plaintiffs filed a lawsuit against Defendants alleging various claims sounding in tort and contract. After removing the case to this court, Defendants filed a Motion to Dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). After reviewing the pleadings and the accompanying exhibits, the court grants in part and denies in part Defendants’ Motion to Dismiss. With some exceptions, the court finds that Plaintiffs may proceed with their fraud and contract claims, as well as their claim under the District of [193]*193Columbia Consumer Protection Procedures Act.

II. BACKGROUND

A. Factual Background

In November 2013, Defendants Insun S. Hofgard and Jefferson S. Hofgard — -who buy, remodel, and then resell homes — purchased a townhouse located at 238 Madison Street, N.W., in the District of Columbia (the “Property”). Notice of Removal, ECF No. 1, Compl., ECF No. 1-1 [hereinafter Compl.], ¶¶ 4-5. Over the next several months, Defendants renovated the Property, using the services of an unlicensed construction company, which operated without the required building permits, inspections, or approvals. Id. ¶¶ 6-8. The result was a home with zoning violations and significant construction defects, most of which were concealed behind floors and drywall. See, e.g., id. ¶¶ 9-11. Despite these problems, Defendants put the Property on the market, listing it as a “stunning renovation” with a “fully furnished, improved ‘English Basement set up with full kitchen.’ ” Id. ¶ 12. The Property’s English basement was an important feature for Plaintiffs, who wished to buy a home with accommodations for live-in child care. Id. ¶ 13.

On November 2, 2014, Plaintiffs entered into an agreement to purchase the Property from Defendants for $640,000 (the “Sales Contract”). Id. ¶ 15; Defs.’ Reply to Opp’n to Mot. to Dismiss, • ECF No. 7 [hereinafter Reply], Ex. 1, ECF No. 7-1 [hereinafter Defs.’ Ex. 1], at 2-18. Before purchasing the Property, Plaintiffs received from Defendants a disclosure statement (the “Disclosure Statement”), dated October 20, 2014, in which Defendants responded to a series of questions about the condition of the Property, as required by District of Columbia law. See Compl. ¶¶ 13-15; Defs.’ Ex. 1 at 29-35. Plaintiffs acknowledged their receipt of the Disclosure Statement by signing a copy on November 2, 2014. Id. at 35.

Pursuant to the terms of the Sales Contract, Plaintiffs’ purchase of the Property was contingent on a home inspection. Compl. ¶ 15. Following this inspection, the parties modified the Sales Contract to include Defendants’ promise to remedy prior to settlement 27 defects identified by Plaintiffs’ home inspector. Id. ¶ 16. Among other fixes, Defendants agreed to “supply electricity to the basement stove.” Id. ¶ 20.

At settlement on November 26, 2014, Plaintiffs and Defendants amended the Sales Contract one final time. Id. ¶ 17. This final amendment stipulated that Plaintiffs would delay occupancy of the Property until “final inspection and approval” by the District of Columbia Department of Consumer and Regulatory Affairs (the “DCRA”). Id. This inspection was to occur “on or before December 11C], 2014.” Id. On December 12, 2014, Plaintiffs moved into their new home, id. ¶ 18, even though the DCRA inspection did not actually occur until after Plaintiffs had occupied the Property, see Reply at 10 n.5.

Within a week of moving into the Property, Plaintiffs began to discover substantial problems with the construction of their new home. Compl. ¶ 18. First, on December 19, 2014, they learned from a DCRA inspector that “the basement kitchen violate[d] zoning laws and would need to be removed.” Id. ¶ 21. That same day, Plaintiffs discovered that Defendants had “performed work without a plumbing permit and failed to obtain a rough plumbing inspection.” Id. ¶ 27. Shortly thereafter, attention to a leak revealed that a toilet had been incorrectly installed, causing contaminated water to saturate the property’s insulation. Id.

Additional defects came to light in January and February 2015. Plaintiffs experienced difficulties heating the Property and [194]*194uncovered subpar construction of the HVAC system. Id. ¶¶ 22-23. Pipes burst and the basement flooded, leading Plaintiffs to discover that the Property-was inadequately insulated. Id. ¶¶ 25-26. Cracked walls and separated baseboards alerted Plaintiffs to structural problems with the Property, which were confirmed by another DCRA . inspector. Id. ¶ 28. Plaintiffs also became aware of significant problems with the Property’s electrical system. Id. ¶ 29.

Plaintiffs assert that they relied on “the representations and omissions of material fact made by [Defendants and their agents” in deciding “to purchase the Property on or about November 7, 2014 for the sum of $640,000.” Id. ¶ 15. Since purchasing the Property, they allege that they have lost time and money addressing the various problems which have arisen. Id. ¶ 30. Because of the “unfit nature of the basement unit,” Plaintiffs also claim that they have been unable to hire live-in child care as they had planned. Id. Overall, Plaintiffs contend that they have received “a residence whose value was greatly diminished by concealed defects and nonconforming use.” Id. ¶ 54.

B. Procedural Background

On April 29, 2015, Plaintiffs filed suit against Defendants in the Superior Court of the District of Columbia,- alleging seven different causes of action. See Compl. ¶¶ 31-64; see also Notice of Removal, ECF No. 1, ¶ 1. On May 22, 2015, Defendants removed the case to this court. See generally Notice of Removal. A week later, Defendants filed their Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). See generally Defs.’ Mot. to Dismiss, ECF No. 5. Defendants argue both that Plaintiffs’ claims cannot be sustained as a matter of law and that they fail to meet the pleading requirements of Federal Rules of Civil Procedure 8 and 9. See generally Defs.’ Mem. in Support of Mot. to Dismiss, ECF No. 5-1 [hereinafter Mot. to Dismiss].

III. LEGAL STANDARD

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Bluebook (online)
168 F. Supp. 3d 187, 2016 U.S. Dist. LEXIS 26802, 2016 WL 837923, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jacobson-v-hofgard-dcd-2016.