Filed D.C. Superior Court 07/24/2015 21:37PM Clerk of the Court SUPERIOR COURT OF THE DISTRICT OF COLUMBIA CIVIL DIVISION DISTRICT OF COLUMBIA Plaintiff, Civil Action No. 2015 CA 003354 B Judge: Robert D. Okun y, Next Event: Initial Scheduling Conference Date: August 7, 2015 at 9:30 a.m. INSUN HOFGARD, et al. Defendants, DISTRICT OF COLUMBIA’S MOTION FOR PRELIMINARY INJUNCTIO! The District of Columbia (“District”), through its Attorney General, brings this Motion for a Preliminary Injunction (i) enjoining Defendants Insun Hofgard and Jefferson Hofgard from selling any residential property in the District of Columbia, performing any construction work or inspections at such property, or requesting any construction-related permit or approval at such property without written authorization to do so from a designated representative of the District of Columbia Department of Consumer and Regulatory Affairs (“DCRA”), and (ii) ordering Defendants to comply with all Stop Work Orders issued by DCRA on any property owned or controlled, di -cly or indirectly, by Defendants The District seeks the requested preliminary injunction under the District’s Consumer Protection Procedures Act (‘CPPA”), D.C. Code § 28-3901, ef seq., and the District's Construction Codes, enforceable pursuant to D.C. Code § 6-1403, ef seq., and pursuant to the Attorney General’s express authority to enjoin violations of these statutes. D.C. Code §§ 28- 3909(a), 6-1407(a)-(b). ‘The requested preliminary injunction is necessary because Defendants have used, and continue to use, deceptive trade practices in the offering and selling of residential properties in DC in violation of the CPPA. Defendants also have engaged, and continue toengage, in pervasive illegal construction activity at their residential properties in DC in violation of the Construction Codes. Defendants’ activities are harming consumers who purchase homes from Defendants pursuant to misrepresentations or omissions of material fact by Defendants, and harms these the hazardous conditions created by Defendants’ illegal construction activit consumers and causes damage to adjoining properties. A preliminary injunction is necessary to prevent future harm to DC consumers and the owners and residents of homes adjoining Defendants’ properties during the pendency of the District's case. The District respectfully requests that the Court enter the requested preliminary injunction. A memorandum of points and authorities, declarations in support of the Motion, and a proposed Preliminary Injunction Order are attached. The District also requests that the Court schedule this Motion for a hearing at the earliest possible date. Respectfully submitted, KARL A. RACINE Attorney General for the District of Columbia ELIZABETH SARAH GERE Acting Deputy Attorney General, Public Interest Division 4s/ Bermett Rushko| BENNETT RUSHKOFF (Bar #386925) Chief, Public Advocacy Section (sf Richard V. Rodriguez, CATHERINE A. JACKSON (Bar #1005415) RICHARD V. RODRIGUEZ (Bar # 1014925) Assistant Attorneys General Office of the Attorney General 441 4th Street, N.W.., Suite 600-South Washington, D.C, 20001 (202) 442-9864/(202) 727-6337 Richard Rodriguez @ de.gov/catherine jackson@de.gov Dated: July 24, 2015 Attorneys for the District of ColumRULE 12. TATEM! The undersigned counsel for the District contacted A. Scott Bolden, Michael Roberts, Michael Dingman, and Nicholas Albu, counsel for Defendants, by email on July 23, 2015, seeking consent (o the relief requested in the instant motion. Defendants do not consent to the relief requested. Dated: July 24, 2015 (s/ Catherine A. Jackson CATHERINE A. JACKSON (Bar # 1005415) Assistant Attorney General RTIFICATE RVICE The undersigned hereby certifies that on July 24, 2015, I caused the District’s Motion for Preliminary Injunction; Memorandum in Support of the District's Motion for Preliminary Injunction; the Declarations of Delaine Englebert, Hamilton Kuralt, Don Van Leuven, Tyrone Q. Lawson, Ruben Legaspi, Robert Spriggs, Robert Cluff, George Jalis, Jr., Gabriel Oran, Brian Jacobson, Kenneth William Sparrow, Carla Cromer-Butler, Patricia Simon, Ian C. Smith, Edward F, Pramuk, Lauren J. Pair, and Gloria Roberts-Henry in Support of the Motion for Preliminary Injunction; and Proposed Preliminary Injunction Order to be served on counsel for all Defendants via the court’s CaseFileXpress e-filing service: Dated: July 24, 2015 (s/ Richard V. Rodriguez RICHARD V. RODRIGUEZ (D.C. Bar # 1014925) Assistant Attorney GeneralTHE SUPERIOR COURT OF THE DISTRICT OF COLUMBIA CIVIL DIVISION DISTRICT OF COLUMBIA Plaintiff, Civil Action No. 2015 CA 003354 B Judge: Robert D. Okun y, Next Event: Initial Scheduling Conference Date: August 7, 2015 at 9:30 a.m, INSUN HOFGARD, et al. Defendants, MEMORANDUM IN SUPPORT OF THE DISTRICT OF COLUMBIA’S MOTION FOR PRELIMINARY INJUNCTIONTABLE OF CON1 1. INTRODUCTION...... Il. FACTUAL BACKGROUND A. The Hofgard Family Business B. Defendants’ Construction And Sales Practices In The Defendants do not obtain required permit Defendants perform sub-standard construction work. Defendants identify licensed contractors in permit applications, but then use unlicensed contractors to perform the work Defendants’ properties are not inspected appropriately 5. Defendants materially misrepresent and fail to disclose material facts when marketing 9 homes to consumers.. C. Defendants Evade OrDisregard D DCRA’s s Oversight Over Defendants And Routinely Violate Settlement Agreements With DCRA. 10 D. Defendants Own Or Control District Properties That Have Not Yet Been Sold ....0u15 111. ARGUMENT. seven 15 AA. Standard For Granting A Preliminary Injunction. 15 B. The Preliminary Injunction Should Be Entered Because Defendants Continue To Offer And Sell Residential Properties In The District In Violation Of The CPPA And Continue ‘To Engage In legal Construction Activity In The District. aa) 1. The District has a substantial likelihood of succeeding on the merits of its CPPA claims 7 a) Defendants have made material misrepresentations, or failed to disclose material facts, to consumers regarding the condition of Defendants’ properties, their characteristics, and their standard or quality 18, b) Defendants are individually liable 20 (1) Standard for individual liability. eal (2) The Hofgards are individually liable ... 23 2. The District has a substantial likelihood of succeeding on the merits of claims under the Construction Codes 25 C._ The Balancing Of The Equities Supports The Preliminary Injunction The District Seeks 26 1. The public will be irreparably harmed if a preliminary injunction is not entered ......27 2. Issuance of a preliminary injunction will not harm defendants 28 3. The public interest favors entering the preliminary injunction 29 1V.CONCLUSION 29I. INTRODUCTION The District of Columbia (the District) moves for a preliminary injunction to stop developers Insun Hofgard and Jefferson Hofgard (collectively Defendants) from violating the District’s Consumer Protection Procedures Act (CPPA), D.C. Code § 28-3901, et seq., and District Construction Codes (enforceable pursuant to D.C. Code § 6-1407) when renovating and selling homes in the District. This interim relief is necessary to protect consumers who might otherwise buy homes in reliance on Defendants’ false and misleading statements and to protect both consumers and neighboring property-owners from the risks posed by Defendants’ construction code violations. Defendants’ “house-flipping” business has been cited numerous times by the District's Department of Consumer and Regulatory Affairs (DCRA) for construction code violations. Yet Defendants have continued to sell their “renovated” properties in the District to consumers without disclosing to them that Defendants’ contractors have performed the renovations in violation of the District’s licensing and permitting requirements, Construction Codes, and zoning restrictions. As a result, many consumers have been misled by Defendants into purchasing a home that lacks the certificate of occupancy needed for lawful habitation; that features an unlawful deck, balcony, or English basement kitchen that ultimately may have to be removed; that has a defective gas, electrical, or HVAC system; that incurs water damage from a leaky roof; or that subjects occupants to a fire hazard. And, some of Defendants’ construction code violations have seriously damaged neighboring properties, including three that are in danger of partial collapse. Since coming to the attention of DCRA officials years ago, Defendants have frustrated the agency’s efforts to bring their properties into compliance. They have flouted DCRA’s Stop Work Orders (SWOs), disregarded settlement agreements reached with DCRA, and failed to