THE SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA Civil Division STUART CRAMPTON, et al. Plaintifts v, C.A. No. 2014 CA 001722 B Judge Brian F. Holeman REAL MANOR ZLK, LLC, et al. Next Event: Deadline for Discovery Requests, September 18, 2014 Defendants SECOND AMENDED COMPLAINT ACTION INVOLVING REAL PROPERTY Plaintiffs Stuart Crampton and Violeta Roman (collectively, “the Cramptons”), by and through their undersigned counsel, Mark G. Chalpin, Esq., respectfully amend their Complaint pursuant to Sup. Ct. R. Pro, 15 to sue Defendants'Real Manor ZLK, LLC (Real Manor”), Jay Gulati (“Gulati”), A-K Real Estate, Inc, (“A-K”), Sunil Chhabra (Chhabra”), Michael Loudon Construction (“Loudon”) and Michael Crisci for breach of, warranty, breach of contract, negligence, fraud, negligent misrepresentation, violation of the DC Consumer Protection Procedures Act, civil conspiracy, and breach of the implied ‘covenant of good faith and fair dealing as follows: PARTIES 1. Stuart Crampton is an adult resident of the District of Columbia, He is the husband of Violeta Roman. 2. Violeta Roman is an adult resident of the District of Columbia. 3. Real Manors a Maryland company in the business of buying and selling rreal estate that conducts a regular business in the District of Columbia.4. Gulati is an adult resident of the State of Maryland. Gulati was the sole member and manager of Real Manor at all times relevant to the Complaint. 5. A-Kisa Maryland company in the real estate business that conducts a regular business in the District of Columbia. 6. Chhabra is an adult resident of the State of Maryland, Chhabra was a real estate agent for A-K and business partner with Gulati at all times relevant to the Complaint, Chhabra is also the brother-in-law of Gulati. 7. Loudon is a Virginia company in the construction business that conducts a regular business in the District of Columbia, 8. Crisci is an adult resident of the Commonwealth of Virginia. Crisci was the managing member of Loudon at all times relevant to the Complaint. JURISDICTION AND VENUE 9. Jurisdiction and venue are proper as the subject matter of this action, 1367 Perry Place, N.W., Washington, DC 20010 is located in the District of Columbia. EACTS COMMON TO ALL COUNTS 10, In 1911, a row house was built at 1367 Perry Place, N.W., Washington, DC 20010 (“Real Property”). There are row houses immediately adjoining the Real Property to cach side. The front and back sides of the Real Property do not adjoin any other real property. 11. Onor about September 23, 2010, Real Manor purchased the Real Property with the intention of renovating and reselling it, thats, flipping the Real Property, Gulati and Real Manor hired Loudon and Crisci to renovate the Real Property for resale and hired Chhabra and A-K as realtors. In renovating the Real Property, Gulati and RealManor stripped it to the subflooring and bare walls, Gulati and Real Mancr installed no insulation on the front and back sides or in the cavity above the second floor ceiling of the Real Property. 12, Atall times relevant to the Complaint and on information and belief, Gulati was the sole member and manager of Real Manor. As the only corporate officer of Real Manor, Gulati dominated Real Manor and used his authority to participate in, encourage, and ultimately decide and engineer the actions that generated the fraud perpetrated against the Cramptons. Gulati used Real Manor to perpetrate fraud and. wrongdoing on buyers of real property from Real Manor, including the Cramptons, the financial institutions that backed buyers including the Cramptons with loans, and the D.C. Department of Consumer and Regulatory Affairs (“DCRA”) by failing to disclose and knowingly misrepresenting material defects about real property he was selling to buyers, and by knowingly misrepresenting the type of renovation work for which he was seeking permits from DCRA. On information and belief, Gulati has used Real Manor to perpetrate fraud during the sale of not only the Cramptons’ real property but also during the'sale of more than 20 other renovated homes in Washington, D.C. alonein the span of abouta single year. On information and belief, Gulati has, over a period of years, co- mingled Real Manor assets and funds with his own, along with funds of the more than 15 LLCs or shell corporatioas that he owns and runs out of his home in Potomac, Maryland and uses to renovate homes and defraud homebuyers in Washington, D.C., Maryland, and ‘Virginia. On information and belief, the small number of persons whom Gulati has ‘sought and received help from in the administration of Real Manor’s affairs, including his father and brother-in-law, are the same ones he has used to run his more than 15 otherLLCs or shell corporations that operate from his home. On information and belief, Gulati has not adhered to LLC formalities or treated Real Manor as a distinct and separate entity as he has, inter alia, applied for and paid for building permits in his individual capacity for real properties bought and sold by Real Manor, always used his personal residence as the principle address for Real Manor, and paid bills for the upkeep of Real Manor's office from his personal accounts,. On information and belief, Gulati solely makes all business decisions, decides all business policies, and controls all finances for Real Manor. On information and belief, Gulati did not adequately capitalize Real Manor. There is unity of ownership and interest in that Gulati owns at least 50 percent of Real Manor. 13, Inearly 2011, A-K and Chhabra, Real Manor’s realtor, listed the Real Property as having three bedrooms, In fact, as the Cramptons discovered in the summer of 2013 during an appraisal related to refinancing of the Real Property, the Real Property ‘only has two bedrooms, both located on the second floor. The other room that Real Manor, Gulati, A-K and Chhabra claimed to the Cramptons was a bedroom is a room in the basement that has inadequate egress and windows to qualify as a bedroom pursuant to District of Columbia building and fire codes. ‘This means that the Cramptons cannot legally rent the bedroom and cannot sell the Real Property as a three bedroom house unless they invest in an expensive structural remodeling project to knock down much of the back basement wall and carve out larger egress and windows. The Cramptons viewed the Multiple Listing Service listing for the Real Property and relied on the information therein (as well as other information) in deciding to purchase the Real Property. ‘The Cramptons would not have purchased the Real Property had Defendants disclosed the illegal manner in which the Real Property was illegally renovated.14, Real Manor, Gulati, Loudon and Crisci obtained four permits from the DCRA for building, plumbing, air conditioning and electrical work at the Real Property. ‘The D.C. Construction Codes (2008) and the District of Columbia Construction Codes Supplement of 2008 (collectively the “Construction Codes”) set forth regulations ‘governing the renovation of the Real Property. In the case of the scope of the work undertaken in renovating the Real Property, the Construction Codes required a building permit, demolition permit, and supplemental plumbing, mechanical and electrical permits, with corresponding inspections; Pursuant to 12A DCMR 105.1.3, titled Owner's Responsibility, the owner, builder or authorized representative is responsible for securing all required permits, and work performed without a required permit is deemed a violation of the Construction Codes. In the permit applications Real Manor, Gulati, Loudon and Crisci knowingly and intentionally misrepresented that they were only renovating the interior of the Real Property with no structural work to be performed in order to avoid more in-depth review by DCRA and to save money and time on the renovation work in violation of 12 DCMR 105.1. In fact; Real Manor, Gulati, Loudon and Crisei performed structural work on both the interior and exterior by removing load-bearing walls and/or columns as well as ceilings and taking out windows and a supporting steel beam above one window. Inelusion of these renovations would have triggered a requirement for additional permits and inspections. Further, Real Manor, Gulati, Loudon and Crisci only obtained one inspection (for the electrical system) after the issuance of the four permits in violation of 16 DCMR 3309.3(c)/12 DCMR 109.5. In addition, shortly before purchasing the Real Property, the Cramptons had their real estate agent ask Chhabra if all lhe correvt permits had been obtained and taken care of, and he affirmatively represented that theyhad been. Chhabra and A-K knew or should have known that the renovations to the Real Property required permits that were never obtained and inspections that were not called in. By avoiding required inspections, Real Manor, Gulati, Loudon and Crisci concealed from DCRA that they had altered both the interior and exterior structure of the Real Property. These violations constituted illegal construction under 12A DCMR 113A. Real Manor, Gulati, Loudon and Crisci also concealed from DCRA obstruction in the main pipe caused by construction debris that was improperly disposed during renovation. Further, the building permit did not trigger an insulation review by DCRA because the renovation job’s permit application submitted by Gulati, Real Manor, Loudon, and Crisci did not list any structural changes, and Real Manor, Gulati, Loudon and Crisci knowingly and intentionally chose not to follow up the building permit work with a DCRA inspection, as required by D.C. law. While the Cramptons were in the process of inspecting and buying the Real Property, the permits were not only a matter of public record but were also posted on the Real Property for all prospective buyers, including the Cramptons, to see. On June 6, 2014, DCRA issued the Cramptons a Notice of Violation and Notice to Abate (“DCRA Notice”) for, inter alia, failure to obtain permits for structural renovations and failure to obtain required inspections. The DCRA Notice stated that failure by the Cramptons to correct the violations could result in a fine, criminal prosecution of the Cramptons, and/or a lien being placed on the Real Property that could result in it being sold at a tax sale. 15, Real Manor, Gulati, Loudon and Crisci damaged the structure of the Real Property by removing load-bearing walls and/or columns in the basement and load bearing walls above the first floor: As a result, the Real Property sags significantly in itscenter on both the first and second floors, and it is likely that there will be continued settling causing cracking in the walls. The second floor is bouncy and is sagging beyond building code limits. On information and belief, Chhabra and A-K knew or should have known of the structural defects of the Real Property caused by removing load bearing walls and/or columns. In May 2014, DCRA officials told the Cramptons that they are required to correct these serious violations under D.C. law in a timely manner, and, if not, the Cramptons will face fines and forced removal of portions of the Real Property. 16, Loudon, an unlicensed contractor in the District of Columbia in violation of 16 DCMR 801 and 16 DCMR 3301, was the general contractor that Gulati and Real Manor contracted with to perform renovation work for Real Manor on the Real Property. Loudon and Crisci concealed rot in the porch that must have been apparent to Loudon and Crisci by covering it with decorative casings and improperly constructed the porch. ‘They failed to provide positive connections from the ceiling/rafter framing to the foundation of the porch in violation of 16 DCMR 3309.3(c)/2006 IRC $02.9. Rather, they only used glue to attach the wood posts of the porch, making the porch vulnerable to collapse, Loudon and Crisei knew or should have known that removal of load beating ‘walls would damage the structure of the Real Property, wood flooring, bathroom tiling and drywalls. On information and belief, Loudon and Crisci improperly disposed of construction debris during renovation, thus causing damage to the plumbing at the Real Property, and concealed other trash and debris behind the drywalls. 17. Atall times relevant to the Complaint and on information and belief, Crisci was the sole member of Loudon. On information and belicf, Loudon is the alter go of Crisci, and Crisci used Loudon to perpetrate fraud and wrongdoing on buyers ofreal property from Gulati and Real Manor, including the Cramptons, by failing to disclose and misrepresenting serious defects about real property it is renovating for Gulati and Real Manor to sell. On information and belief, Crisci has often applied for construction permits in the District of Columbia using his name rather than that of Loudon. On information and belief, Loudon was not adequately capitalized, did not adhere to the formalities of a limited liability company, and did not identify itself on cards, letterhead, permit applications, etc. On information and belief, Crisci was co mingling personal funds with those of Loudon and diverts Loudon’s assets for his own personal use. On information and belief, Crisci personally guaranteed debts of Loudon, 18, Real Manor, Gulati, Loudon and Crisci constructed a back deck without a permit to do'so, Their unlawful construction resulted in several deficiencies, including: 1) the deck is not properly and positively anchored to the primary structure of the Real Property in violation of 16 DCMR 3309.3(c)/2006 IRC 402.2.2, 2) the deck joist does not have a proper bearing in violation of 16 DCMR 3309.3(c)/2006 IRC 502.6, 3) handrails are missing on the rear deck stairs in violation of 16 DCMR 3309.3(c)/2006 IRC 311.5.6.3, and 4) the former brick porch was illegally and partially demolished so as to trap water from the downspout of the roof, resulting in flooding through the back door. 19, When Real Manor, Gulati, Loudon and Crisci created a parking pad by digging out and removing a portion of the back yard, they deficiently graded the back: yard and paved the sidewalk and stairs in the back yard that slope downward toward the house and funnel rainwater directly toward the basement back door so as to contribute to drainage problems on the Real Property and flooding under the basement back door.20. On or about February 24, 2011, the Cramptons and Gulati and Real Manor entered into a written sales contract (“Sales Contract”) in the amount of $540,000 for the ‘Cramptons to purchase from Gulati and Real Manor the Real Property to be the Cramptons’ principal residence. Gulati executed the Sales Contract as the seller of the Real Property. Gulati signed the seller’s disclosures attached to the Sales Contract and dated it November 8, 2010, which was almost three months before the electrical work had been inspected by DCRA (on January 28, 2011), and without having DCRA inspectons done for any of the other permit work (building, HVAC, and plumbing) 21. Inthe Sales Contract, Real Manor and Gulati made the following written, express warranty: Seller warrants that, except as otherwise provided, the existing appliances, heating, cooling, plumbing, electrical systems and equipment, and smoke and heat detectors (as required), will be in normal working order as of the Possession Date. 22. In the seller’s disclosures attached to the Sales Contract, Real Manor and Gulati disclosed that they had no actual knowledge of any violation of D.C. permits or other building restrictions affecting the Real Property, and they disclosed that the roof of the Real Property was 0-5 years old. In fact, the proper building permits for interior and) exterior structural work had not been obtained, permits that were obtained (other than the electrical permit) were not closed out with an inspection as required, and the front roof’ ‘was the original, 100-year-cld roof and needed replacement due to leaks that appeared for the first time in December 2013. 23. In the seller’s disclosures attached to the Sales Contract, Real Manor and Gulati disclosed that they had no actual knowledge of any structural defects in the walls ‘or floors of the Real Property. In fact, the interior structure of the Real Propertyunsound due to the removal of load bearing walls and/or columns that requires expensive repair by the Cramptons. These structural defects are a latent defect that the Cramptons did not realize until February 2014. 24. Real Manor and Gulati did not disclose in the seller’s disclosures attached ‘to the Sales Contract that there was asbestos in the basement tiles of the Real Property, and that Gulati, Real Manor, Crisci and Loudon had disturbed the asbestos. In fact, the basement tiles contain asbestos that must be removed at great expense due to the serious health hazard they present to the Cramptons and their minor daughter, and the Cramptons’ two years of exposure to the asbestos (up until the discovery and testing of the asbestos tiles in 2014) will require health and lung cancer monitoring for years to come due to the fact that asbestos exposure’s symptoms can take years to appear. On information and belief, Gulati, Real Manor, Loudon and Crisci tried to remove asbestos tiles by force without alerting the proper authorities and without undertaking proper remediation measures (as required by the National Clean Air Act of 1970 and the U.S. Environmental Protection Agency's Asbestos National Emission Standard for Hazardous Air Pollutants), which sent asbestos dust throughout the Real Property, including in the HVAC system. Real Manor, Gulati, Loudon and Crisci then covered up the remaining asbestos tiles by installing carpet over them: Without knowing of the risk, the Cramptons set up a play area for their baby daughter on the basement carpet and regularly vacuumed the basement carpet, thereby spreading the asbestos dust throughout the house. 25. The Cramptons settled on the Real Property on March 24, 2011 and moved in on March 30, 2011. 1026. The Cramptons have incurred expense insulating the Real Property. The removal by Gulati, Real Manor, Loudon, and Crisci of the second floor ceiling/attic during renovation, despite the lack of a permit to do so, was a structural change that altered the thermal envelope of the house and required that the exterior walls and ceiling cavity of the second floor be insulated. ‘The Cramptons have also incurred higher utility bills due to the lack of insulation. The lack of insulation was a latent defect that the Cramptons did not suspect until the change of seasons in fall 2011 and did not confirm until an inspection by an insulation contractor in the fall of 2013. 27. The Cramptons have a rotting and structurally unsound porch that is slowly collapsing and requires expensive repairs. ‘The rotting and structurally unsound porch was a latent defect that the Cramptons did not discover until the earthquake in August 2011 caused one of the decorative casings covering the west beam of the porch’s ceiling to sag, exposing thoroughly rotten, old wood inside the casing and the ceiling. 28. The Cramptons have had to replace the 10-year-old roof on the front of the Real Property. 29. The Cramptons have construction debris obstructing the main pipe under the Real Property, causing back up into their basement and property damage, requiring expensive repairs, This obstruction was a latent defect that the Cramptons did not discover until the plumbing malfunctioned in December 2013. 30, ‘The Cramptons’ HVAC system does not work properly and was not installed properly, as there is poor air circulation and leakage in some areas, There is stagnant heat trapped in some areas, including in the master bedroom, where Gulati, Real Manor, Loudon, and Crisci removed the ceiling/attic during renovation, changing the uMthermal envelope of the house and putting greater strain on an already defective HVAC system, In addition, temperatures differ throughout the house, the second floor return is too small and does not work, the system often quits working for no apparent reason, and — as the Cramptons leamed from the February 2014 discovery of asbestos in the basement s — the HVAC s tem was potentially circulating asbestos dust throughout the house since the Cramptons moved in, Moreover, Real Manor and Gulati were obligated under the Sales Contract to provide receipts and warranties for the HVAC system and the roof prior to the end of the inspection contingency period but failed to do so. These problems with the HVAC system, which includes ducts that are not properly connected and which are concealed by the drywall in the Real Property, have required and continue to require expensive repairs. These problems with the HVAC system were a latent defect that the Cramptons did not discover until 2014. 31. The Cramptons have discovered latent defects with the wood flooring, bathroom tiling, drywalls and second floor rear bedroom windows. Less than a year after the Cramptons moved in, the wood flooring, including the stairs and in the kitchen, splintered, bowed, and cracked, and the drywall showed stress and cracks in the basement around doors, under both sets of stairs, and in the bathrooms: As the Cramptons discovered in March 2014, when they were forced to stop using their bedroom’s: bathroom, tiling cracks and other tiling defects in the master bedroom bathroom regularly caused water to seep out of the shower onto the floor and under increasingly large gaps between the sagging tile floor and the bottom of the drywall. Also, as the Crampton discovered in the fall of 2013 when they were having a company assess the walls for an insulation job, the two-by-fours attached to the drywall do not connect the drywall to the 12brick wall. In addition, the Cramptons found out in February 2014 that steel angle lintels had likely been removed from above the second floor rear bedroom windows during the renovation and need to be replaced to prevent collapse of the large portion of the brick wall above the window. Lastly, within a year of moving in, the Cramptons discovered that the contractors left significant construction debris, trash, and beer bottles behind the drywall of the front exterior basement wall and the drywall of the second floor rear bedroom (all of which would require removal of the drywalls to clean), despite a contractual obligation by Real Mano: and Gulati to clean the premise before transferring itto the Cramptons. These problems require expensive repairs. 32, Real Manor and Gulati did not disclose in the seller’s disclosures attached to the Sales Contract that they had constructed a back deck without a permit and had partially demolished the former brick deck. The Cramptons incurred expense hauling the remains of the former brick deck. ‘The present back deck has several deficiencies that will require expensive repair. 33. Real Manor and Gulati did not disclose in the seller’s disclosures attached to the Sales Contract that they had graded the back yard, thereby creating drainage problems, in the process of creating a parking pad. This grading and paving of a sidewalk and stairs that slope downward toward the house funnels rainwater directly to the basement back door, which has required expensive repair for the Cramptons and will require additional measures to prevent flooding and mold because these elements have contributed to flooding under the basement back door. 13COUNTI (Breach of Warranty by Real Manor an 34, Paragraphs 1 through 33 are incorporated by reference as if fully set forth ilati) herein. 35. Real Manor and Gulati expressly warranted in the Sales Contract that the plumbing, heating and cooling in the Real Property would be in normal working order. 36. Real Manor and Gulati breached these warranties by selling the Real Property with material defects in the plumbing, heating and cooling that have required and continue to require expensive repairs. 37. Asadirect and proximate result of Real Manor’s and Gulati’s breach of warranty, the Cramptons have suffered financial damage. WHEREFORE, the Cramptons seek judgment against Real Manor and Gulati, jointly and severally, under Count I for the following relief: A. Compensatory damages of $20,000; B. Costs, attorney’s fees, and post-judgment interest; and C. Such other and further relief as the Court deems proper. COUNT II (Breach of Contract by Real Manor and Gulati) 38. Paragraphs 1 through 37 are incorporated by reference as if fully set forth herein, 39. Real Manor and Gulati entered into a written Sales Contract to sell the mns in the Sales Real Property to the Cramptons pursuant to the terms and con Contract. 1440. Real Manor and Gulati breached the Sales Contract by selling the Real Property with uninsulated walls; only two bedrooms rather than the three bedrooms advertised in the listing; a main pipe clogged with construction debris; a structurally ‘unsound house due to the removal of ceilings and load bearing walls and/or columns; a rotting porch; a 10-year-old roof that required replacement; asbestos in the basement tiles and asbestos dust released into the air; a defective HVAC system; a deficiently constructed back deck; a deficiently graded back yard; construction trash and debris behind the drywalls; and defects with the wood flooring, bathroom tiles, drywalls, and second floor rear bedroom windows. These numerous material defects have required and continue to require expensive repairs. 41, Asadirect and proximate result of Real Manor and Gulati’s breach of contract, the Cramptons have suffered financial damage. WHEREFORE, the Cramptons seek judgment against Real Manor and Gulati, jointly and severally, under Count II for the following relief: A. Compensatory damages of $300,000; B. Costs, attorney's fees, and post-judgment interest; and C. Such other and further relief as the Court deems proper. COUNT III (Negligence by Real Manor and Gulati) 42, Paragraphs 1 through 41 are incorporated by reference as if fully set forth herein. 43. Real Manor and Gulati owed a duty of care to the Cramptons to sell them. the Real Property without latent defects, false and misleading advertising, defects covered under express warranty, undisclosed defects, and concealed defects. 1544, Real Manor and Gulati breached the duty of care owed to the Cramptons by selling the Real Property to them with uninsulated walls; only two bedrooms rather than the three bedrooms advertised in the listing; a main pipe clogged with construction debris; a structurally unsound house due to the removal of load bearing walls and/or columns; a rotting porch; a 100-year-old roof that required replacement; asbestos in the basement tiles as well as disturbing the asbestos material without alerting the proper authorities as required by federal law or taking the proper precautions; a defective HVAC system; a deficiently constructed back deck; a deficiently graded back yard; and material defects with the wood flooring, bathroom tiles drywalls and second floor rear bedroom windows as well as trash and debris behind the drywalls. These numerous material defects have required and continue to require expensive repairs. 45. Asa direct and proximate result of Real Manor and Gulati's negligence, the Cramptons have suffered financial damage and emotional pain and suffering. WHEREFORE, the Cramptons seek judgment against Real Manor and Gulati, jointly and severally, under Count Ill for the following relief: A. Compensatory damages of $350,000; B. Costs, attorney’s fees, and post-judgment interest; and C. Such other and further relief as the Court deems proper. COUNT IV (Negligence by A-K and Chhabra) 46. Paragraphs 1 through 45 are incorporated by reference as if fully set forth herein. 1647. A-K and Chhabra owed a duty of care to the Cramptons to truthfully advertise the Real Property and to disclose any material defects that were known or should have been known by A-K and Chhabra. 48. A-K and Chhabra breached the duty of care owed to the Cramptons by advertising the Real Property as having three bedrooms, misrepresenting to the Cramptons that the correct permits had been obtained and taken care of, and not disclosing that the Real Property was structurally unsound due to the removal of load bearing walls and/or columns and that the proper permits had not been obtained and the proper inspections had not been called in. 49. Asa direct and proximate result of A-K and Chhabra’s negligence, the Cramptons have suffered financial damage and emotional pain and suffering. WHEREFORE, the Cramptons seek judgment against A-K and Chhabra, jointly and severally, under Count IV for the following relief: A. Compensatory damages of $200,000; B. Costs, attorney’s fees, and post-judgment interest; and C. Such other and further relief as the Court deems proper. COUNT V (Negligence by Loudon and Crisci) 50. Paragraphs 1 through 49 are incorporated by reference as if fully set forth herein $1. Loudon and Crisci owed a duty of care to the Cramptons as the eventual purchasers of the Real Property to renovate the Real Property so as to not create, cause or conceal material defects. 1752. Loudon and Crisci breached the duty of care owed to the Cramptons by disposing of construction debris in the main pipe, improperly constructing the porch and concealing rot in the porch, disturbing asbestos material without notifying the proper authorities (as required by federal law) or taking the proper precautions and then concealing it under carpeting, removing load bearing walls and/or columns, installing and/or overseeing the installation of defective wood flooring, bathroom tiles, drywalls, and alterations to the second floor rear bedroom windows as well as concealing trash and debris behind the drywalls, deficiently constructing the back deck, deficiently grading the back yard, and misrepresenting to DCRA that there would be no structural changes to the Real Property and not obtaining inspections pursuant to the building, plumbing and air conditioning permits 53. Asadirect and proximate result of Loudon and Crisci’s negligence, the Cramptons have suffered financial damage and emotional pain and suffering WHEREFORE, the Cramptons seek judgment against Loudon and Crisei, jointly and severally, under Count V for the following relief: A. Compensatory damages of $250,000; B. Costs, attorney’s fees, and post-judgment interest; and C. Such other and further relief as the Court deems proper. COUNT VI (Fraud by Real Manor and Gulati) 54, Paragraphs 1 through 53 are incorporated by reference as if fully set forth herein. 55. Real Manor and Gulati maliciously, intentionally and willfully misrepresented to the Cramptons that the Real Property had three bedrooms, the 18plumbing and HVAC system were in good working order, the roof was 0-§ years old when it was 100-years-old, that the Real Property was structurally sound, end that the porch was in sound condition. Real Manor and Gulati maliciously, intentionally and willfully failed to disclose to the Cramptons that there was asbestos in the basement tiles, that the asbestos material was concealed under a carpet, that the asbestos material had been disturbed, that the proper permits had not been obtained and the proper inspections had not been called in, that the back deck was deficiently constructed, that the back yard ‘was deficiently graded, that there was no insulation, that there was construction trash and debris behind the dry walls, and that there were material defects with the wood flooring, bathroom tiles, drywalls and second floor rear bedroom windows. 56, Real Manor and Gulati made these malicious, intentional ard willful misrepresentations of material facts and malicious, intentional and willful failures to disclose material facts in order to deceive the Cramptons into buying the Real Property for $540,000. 57. In detrimental reliance on Real Manor and Gulati’s malicious, intentional and willful misrepresentations of material facts and malicious, intentional and willful failures to disclose material facts, the Cramptons purchased the Real Property for $540,000 and have suffered and will continue to suffer financial damage to repair and cure the numerous material defects to the Real Property and emotional pain and suffering WHEREFORE, the Cramptons seek judgment against Real Manor and Gulati, Jointly and severally, under Count VI for the following relief: ‘A. Compensatory damages of $350,000; B, Punitive damages of $1,050,000; 19C. Costs, attorney’s fees, and post-judgment interest; and D. Such other and further relief as the Court deems proper. COUNT VII (Braud by A-K and Chhabra) 58, Paragraphs 1 through 57 are incorporated by reference as if fully set forth herein, 59. A-K and Chhabra maliciously, intentionally and willfully misrepresented to the Cramptons that the Real Property had three bedrooms and that the correct permits had been obtained and taken care of. A-K and Chhabra maliciously, intentionally and willfully failed to disclose to the Cramptons that the Real Property was structurally unsound and that the proper permits had not been obtained and the proper inspections had not been called in, 60, A-K and Chhabra made these malicious, intentional and willful misrepresentation of material facts and malicious, intentional and willful failure to disclose material facts in order to deceive the Cramptons into buying the Real Property for $540,000. 61. Inddetrimental reliance on A-K and Chhabra’s malicious, intentional and willful mistepresentation of material facts and malicious, intentional and willful failure to disclose material facts, the Cramptons purchased the Real Property for $540,000 and have suffered and will continue to suffer financial damage to repair and cure the numerous material defects to the Real Property and emotional pain and suffering. WHEREFORE, the Cramptons seek judgment against A-K and Chhabra, jointly and severally, under Count VII for the following reli ‘A. Compensatory damages of $200,000; 20B, Punitive damages of $600,000; C. Costs, attorney’s fees, and post-judgment interest; and D. Such other and further relief as the Court deems proper. COUNT VIII (Negligent Misrepresentation by Real Manor and Gulati) 62. Paragraphs 1 through 61 are incorporated by reference as if fully set forth herein, 63. Real Manor and Gulati negligently misrepresented to the Cramptons that the Real Property had three bedrooms, the plumbing and HVAC system were in good ‘working order, the roof was 0-5 years old when it was 100 years old, that the Real Property was structurally sound, and that the porch was in sound condition. Real Manor and Gulati negligently failed to disclose to the Cramptons that there was asbestos in the basement tiles, the asbestos material had been disturbed, the asbestos material was concealed by a carpet, that the proper permits had not been obtained and the proper inspections had not been called in, that the back deck was deficiently constructed, that the back yard was deficiently graded, that there was no insulation, that there was construction. trash and debris behind the dry walls, and that there were material defects with the wood flooring, bathroom tiles, drywalls and second floor rear bedroom windows. 64, In detrimental reliance on Real Manor and Gulati’s negligent misrepresentations of material facts and failures to disclose material facts, the Cramptons purchased the Real Property for $540,000 and have suffered and will continue to suffer financial damage to repair and cure the numerous material defects to the Real Property and emotional pain and suffering. 21WHEREFORE, the Cramptons seek judgment against Real Manor and Gulati, jointly and severally, under Count VIII for the following relief: A. Compensatory damages of $350,000; B. Costs, attorney’s fees, and post-judgment interest; and C. Such other and further relief es the Court deems proper. COUNT IX (Negligent Misrepresentation by A-K and Chhabra) 65. Paragraphs | through 64 are incorporated by reference as if fully set forth herein. 66. A-K and Chhabra negligently misrepresented to the Cramptons that the Real Property had three bedrooms and that the correct permits had been obtained and taken care of. A-K and Chhabra negligently failed to disclose to the Cramptons that the Real Property was structurally unsound and that the proper permits had not been obtained and the proper inspections had not been called in, 67. Inddetrimental reliance on A-K and Chhabra’s negligent mistepresentation of material facts and failure to disclose material facts, the Cramptons purchased the Real Property for $540,000 and have suffered and will continue to suffer financial damage to repair and cure the numerous material defects to the Real Property and emotional pain and suffering, WHEREFORE, the Cramptons seek judgment against A-K and Chhabra, jointly and severally, under Count IX for the following relief: A. Compensatory damages of $200,000; B. Costs, attorney’s fees, and post-judgment interest; and C. Such other and further relief as the Court deems proper. 2COUNT X (Violation of the Consumer Protection Procedures Act, D.C. Code §§ 28-3904, by Real Manor and Gulati) 68. Paragraphs 1 through 67 are incorporated by reference as if fully set forth herein. 69. ‘The Cramptons are “consumers” within the meaning of D.C. Code § 28- 3901(a)Q2). 70. Real Manor and Gulati are “merchants” within the meaning of D.C. Code § 28-3901 (a3). 71, The sale of the Real Property is “goods and services” within the meaning of D.C. Code § 28-3901 (a)(7). 72. Real Manor and Gulati committed unlawful trade practices in violation of D.C. Code § 28-3904 by: ‘A. Maliciously, intentionally and willfully misrepresenting to the Cramptons that the Real Property had three bedrooms, the plumbing and HVAC system were in good working order, the roof was 0-5 years old when it was 100 years old, that the Real Property was structurally sound after removal of load Bearing walls and/or columns, and that the porch was in sound condition after their contractor had concealed rot in the porch; B, Maliciously, intentionally and willfully failing to disclose to the Cramptons that there was asbestos in the basement tiles, that the proper permits had not been obtained and the proper inspections called in, that the asbestos tiles had been disturbed, that the asbestos material was concealed under a carpet, that the back deck was deficiently constructed, that the back yard was deficiently 23graded, that there was no insulation, that there was construction trash and debris behind the dry walls, and there were material defects with the wood flooring, bathroom tiles, drywalls and second floor rear bedroom windows; C. Maliciously, intentionally, willfully and affirmatively representing that they had obtained the proper permits and inspections by posting the permits at the Real Property when the Cramptons were inspecting and buying the Real Property, and denying the existence of known defects and hazards in the Real Property; and D. Offering for sale a produet which was not in conformity with applicable safety standards and codes. 73. Real Manor and Gulati committed unlawful trade practices in violation of D.C. Code § 28-3904 by violating 12 DCMR 105.1, 16 DCMR 3309.3(c)/12 DCMR, 109.5, and 16 DCMR 812 by failing to obtain required permits and inspections and failing to perform work in accordance with permit terms 74, Asa direct and proximate result of the violations of the D.C. Consumer Protection Procedures Act by Real Manor and Gulati, the Cramptons were deceived into purchasing the Real Property for $540,000, suffered financial damage to repair and cure the numerous material defects to the Real Property, the Real Property has lost value on account of stigma laden defects that, even if remedied will have to be disclosed to prospective buyers and/or renters when the Cramptons sell or rent the Real Property in the future, The Cramptons have suffered emotional pain and suffering, including as they continue to monitor their and their young daughter’s health for potentially serious effects from three years’ worth of exposure to disturbed (and concealed) asbestos, Gulati and. Real Manor falsely represented that certain repairs had been made - when they had not - 24by having Chhabra tell the Cramptons” real estate agent over the telephone in February 2011 that Gulati and Real Manor had obtained and taken care of all proper permits. Each building permit that Gulati and Real Manor obtained under false pretenses in the fall of 2010 states “all construction done according to the current building codes and zoning regulations”, and that all work will be “in accordance with all epplicable laws and regulations of the District of Columbia”. Gulati and Real Manor should have revealed (well before the March 2011 closing) that work they had claimed had been completed had not in fact been done, and they should have done so by amending the seller's disclosure attached to the Sales Contract, and by scheduling a DCRA inspection (well before the closing) for all permits in order to flag incomplete work and permits obtained through false statements. WHEREFORE, the Cramptons seek judgment against Real Manor and Gulati, jointly and severally, under Count X for the following relief: A. Compensatory damages of $900,000; B. Punitive damages of $2,700,000; C. Costs, attorney’s fees, and post-judgment interest; and D. Such other and further relief as the Court deems proper. COUNT XI ‘Violation of the Consumer Protection Procedures Act, D.C. Code §§ 28-3904, by Kand Chhabra) 75. — Paragraphs 1 through 74 are incorporated by reference as if fully set forth herein. 76. The Cramptons are “consumers” within the meaning of D.C. Code § 28- 3901(a)(2). 2577. A-K and Chhabra are “merchants” within the meaning of D.C. Code § 28- 3901(a)(3). 78. The sale of the Real Property is “goods and services” within the meaning, of D.C. Code § 28-3901(a)(7). 79. A-K and Chhabra committed unlawful trade practices in violation of D.C. Code § 28-3904 by: A. Maliciously, intentionally and willfully misrepresenting to the Cramptons that the Real Property had three bedrooms, that the correct permits had been obtained and taken care of; B. Maliciously, intentionally and willfully failing to disclose to the Cramptons that load bearing walls and columns had been removed and that the proper permits had not been obtained and the proper inspections had not been called ins C. Maliciously, intentionally, willfully and affirmatively denying the existence of known defects and hazards in the Real Property; and D. Offering for sale a product which was not in conformity with applicable safety standards and codes. 80. Asa direct and proximate result of the violations of the D.C. Consumer Protection Procedures Act by A-K and Chhabra, the Cramptons were deceived into purchasing the Real Property for $540,000, suffered financial damage to repair and cure the numerous material defects to the Real Property, the Real Property has lost value on account of stigma laden defects that, even if remedied, will have to be disclosed to prospective buyers and/or renters when the Cramptons sell or rent the Real Property in 26the future, The Cramptons have suffered emotional pain and suffering as they continue to monitor their and their young daughter’s health for potentially serious effects from three years’ worth of exposure to disturbed (and concealed) asbestos. A-K and Chhabra falsely represented that certain repairs had been made - when they had not - when Chhabra told the Cramptons’ real estate agent over the telephone in February 2011 that Gulati and Real Manor had obtained and taken care of all proper permits. Chhabra and A-K should have revealed that work that Gulati and Real Manor had claimed had been completed had not in fact been done; this admission should have been undertaken by amending the seller’s disclosure attached to the Sales Contract (well before the March 2011 closing) and by scheduling a DCRA inspection (also well before the March 2011 closing) for all permits in order to flag incomplete work, as well as permits obtained through false statements. WHEREFORE, the Cramptons seek judgment against A-K and Chhatra, jointly and severally, under Count XI for the following relief: ‘A. Compensatory damages of $450,000; B. Punitive damages of $1,350,000; C. Costs, attorney's fees, and post-judgment interest; and D. Such other and further relief as the Court deems proper. UNT XII (Violation of the Consumer Protection Procedures Act, D.C. Code §§ 28-3904, by. Loudon and Crisci) 81. Paragraphs 1 through 80 are incorporated by reference as if fully set forth herein. 2782. The Cramptons are “consumers” within the meaning of D.C. Code § 28- 3901(a)(2). 83. Loudon and Crisci are “merchants” within the meaning of D.C. Code § 28-3901(a)(3). 84, The sale of the Real Property is “goods and services” within the meaning of D.C. Code § 28-3901(a)(7). 85. Loudon and Crisci committed unlawful trade practices in violation of D.C. Code § 28-3904 by: ‘A. Maliciously, intentionally and willfully failing to disclose to the ‘Cramptons that they had intentionally concealed the rot in the porch, that they had not obtained the proper permits and had not called in the proper inspections in violation of 12 DCMR 105.1, 16 DCMR 3309.3(¢)/12 DCMR 109.5, and 16 DCMR 812, that they had intentionally concealed the fact that there was asbestos tiles in the basement and that they had disturbed those tiles and concealed them under carpeting, that they had rendered the Real Property structurally unsound by removing load bearing walls and columns, that the back deck was deficiently constructed in violation of 16 DCMR 3309.3(c)/2006 IRC 502.2.2, 2006 IRC 502.6, and 2006 IRC 311.5.6.3, that the back yard was deficiently graded, that there was no insulation, and that they had installed or overseen the installment of defective wood flooring, bathroom tile, drywalls and second floor rear bedroom ‘windows as well as concealed trash and debris behind the drywalls; B. Maliciously, intentionally, willfully and affirmatively representing that they had obtained the proper permits and inspections by posting the permits at the 28Real Property when the Cramptons were inspecting and buying the Real Property, and denying the existence of known defects and hazards in the Real Property; C. Offering for sale a product which was not in conformity with applicable: safety standards and codes; and D. Being unlicensed in the District of Columbia in violation of 16 DCMR 801 and 16 DCMR 3301. 86, Loudon and Crisei committed unlawful trade practices in violation of D.C, Code § 28-3904 by violating 12 DCMR 105.1, 16 DCMR 3309.3(e)/12 DCMR 109.5, and 16 DCMR 812 by failing to obtain required permits and inspections and failing to perform work in accordance with permit terms. 87. Asa direct and proximate result of the violations of the D.C. Consumer Protection Procedures Act by Loudon and Crisci, the Cramptons were deceived into purchasing the Real Property for $540,000, suffered financial damage to repair and cure the numerous material defects to the Real Property, the Real Property has lost value on account of stigma laden defects that, even if remedied, will have to be disclosed to prospective buyers and/or renters when the Cramptons sell or rent the Real Property in the future, The Cramptons have emotional pain and suffering as they continue to monitor their and their young daughter's health for potentially serious effects from three years’ worth of exposure to disturbed (and concealed) asbestos. Loudon and Crisci falsely represented that certain repairs had been made - when they ha¢ not ~ by allowing permits to be posted on the Real Property in which they were working, which stated that all work ‘was done to current building code and in compliance with all relevant D.C. laws and regulations, Loudon and Crisci should have revealed that work that they, Gulati, and 29Real Manor had claimed had been completed had not in fact been done; this admission should have been undertaken (well before the March 2011 closing) by calling DCRA to provide notice that the permits were obtained through false statements, and by scheduling a DCRA inspection (also well before the March 2011 closing) for all permits in order to flag incomplete work. WHEREFORE, the Cramptons seek judgment against Loudon and Crisci, jointly and severally, under Count XII for the following relief: A. Compensatory damages of $900,000; B. Punitive damages of $1,800,000; C. Costs, attorney’s fees, and post-judgment interest; and D. Such other and further relief as the Court deems proper. COUNT XIII (Civil Conspiracy) 88. Paragraphs 1 through 87 are incorporated by reference as if fully set forth herein. 89. Defendants entered into an agreement to defraud the Cramptons by willfully, maliciously and intentionally misrepresenting that the Real Property had three bedrooms, the plumbing and HVAC system were in good working order, the roof was 0-5 years old when it was 100 years old, that the Real Property was structurally sound, and that the porch was in sound condition, Defendants entered into an agreement to defraud the Cramptons by maliciously, intentionally and willfully failing to disclose to the Cramptons that there was asbestos in the basement tiles and that the asbestos tiles had been disturbed and concealed, that they had not obtained the proper permits and had not called in the proper inspections, that the back deck was deficiently constructed, that the 30back yard was deficiently graded, that there was no insulation, and that there were ‘material defects with the wood flooring, bathroom tiles, drywalls and second floor rear bedroom windows as well as trash and debris concealed behind the drywalls. Defendants centered into an agreement to defraud the Cramptons by maliciously, intentionally and willfully misrepresenting to DCRA that they were only renovating the interior of the Real Property with no structural work to be performed and then not obtaining inspections of the building, plumbing and air conditioning work that would have uncovered their misrepresentations. 90. Asa direct and proximate result of these malicious, intentional and willful mistepresentations of material facts and malicious, intentional and willful failures to disclose material facts pursuant to and in furtherance of the Defendants’ scheme to deceive the Cramptons into purchasing the Real Property for $540,000, the Cramptons purchased the Real Property for $540,000 and suffered financial damage and emotional pain and suffering, WHEREFORE, the Cramptons seek judgment against Defendants, jointly and severally, under Count XIII for the following relief: A. Compensatory damages of $350,000; B. Punitive damages of $1,050,000; C. Costs, attorney’s fees, and post-judgment interest; and D, Such other and further relief as the Court deems proper. 31COUNT XIV ich of the Implied Covenant of Good Faith and Fair Dealing by Real Manor and Gulati) 91. — Paragraphs 1 through 90 are incorporated by reference as if fully set forth herein. 92, Real Manor and Gulati entered into a written Sales Contract to sell the Real Property to the Cramptons pursuant to the terms and conditions in the Sales Contract. 93, Real Manor and Gulati breached the implied covenant of good faith and fair dealing contained in the Sales Contract by selling the Real Property with uninsulated walls; only two bedrooms rather than the three bedrooms advertised in the listing; a main pipe clogged with construction debris; a structurally unsound house due to the removal of ceilings and load-bearing walls and/or columns; a rotting porch; a 100-year-old roof that required replacement; asbestos in the basement tiles and asbestos dust released into the air; a defective HVAC system; ; a deficiently constructed back deck; a deficiently graded back yard; construction trash and debris behind the drywalls; and defects with the wood flooring, bathroom tiles, drywalls and second floor rear bedroom windows. These ‘numerous material defects have required and continue to require expensive repairs. Real Manor and Gulati thereby evaded the spirit of the Sales Contract and willfully rendered imperfect performance under the Sales Contract. 94. Asa direct and proximate result of Real Manor and Gulati’s breach of the implied covenant of good faith and fair dealing, the Cramptons have suffered financial damage. 32,WHEREFORE, the Cramptons seek judgment against Real Manor and Gulati, jointly and severally, under Count XIV for the following relief: A. Compensatory damages of $300,000; B. Costs, attorney’s fees, and post-judgment interest; and C. Such other and further relief as the Court deems proper. Respectfully submitted, _/si Mark G. Chalpi MARK G. CHALPIN, ESQ. #366794 116 Billingsgate Lane Gaithersburg, MD 20877 (301) 990-4900 (301) 990-4900 (telephone) (832) 201-7392 (facsimile) mark.chalpin@gmail.com Counsel for Plaintiffs CERTIFICATE OF SERVICE hereby certify that a copy of the foregoing Second Amended Complaint was sent electronically this 4" day of July, 2014, to: Padraic K. Keane, Esq. Jordan Coyne LLP 10509 Judicial Drive, Suite 200 Fairfax, VA 22030 Counsel for Michael Crisei and Michael Loudon Construction, LLC 33Erie E. Dorsey Hendrixson, Esq. Mariana D. Bravo, Esq. Carr Maloney PC 2000 L Street, N.W., Suite 450 Washington, DC 20036 Counsel for A-K Real Estate, Inc., and Sunil Chhabra Philip J. Collins, Esq. Protas, Spivok & Collins, LLC 4330 East West Highway, Suite 900 Bethesda, MD 20814 Counsel for Real Manor ZLK, LLC ‘Aaron L. Handleman, Esq. Laura M.K. Hassler, Esq. ECCLESTON & WOLF, P.C. 1629 K Street, N.W., Suite 260 ‘Washington, D.C. 20006 Counsel for Defendant Jay Gulati /s! Mark G. Chalpin 34