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Simon v. Hofgard

United States District Court, District of Columbia

March 28, 2016

PATRICIA SIMON, et al., Plaintiffs,
INSUN HOFGARD, et al., Defendants.


TANYA S. CHUTKAN United States District Judge

This case arises out of Plaintiffs Patricia Simon and Timothy Snowhite’s purchase of a condominium and parking space (the “Property”) from Defendants JBA Development, LLC (“JBA”), Insun Hofgard and Jefferson Hofgard (collectively, the “Hofgard Defendants”). Defendants Premium Title & Escrow LLC (“Premium”) and its principal Benjamin Soto (together, the “Soto Defendants”) provided settlement services to Plaintiffs in connection with their purchase of the Property, including issuing them a title insurance policy.

After purchasing the Property, Plaintiffs sued Defendants in the Superior Court of the District of Columbia. Plaintiffs’ Superior Court complaint, which remains the operative pleading in this case, alleges three counts: (i) “Fraud and Misrepresentation, Breach of Contract”; (ii) violation of the District of Columbia Consumer Protection Procedures Act, 28 D.C. Code §§ 3901-3913 (the “CPPA”); and (iii) rescission. Shortly after the complaint was filed, the Hofgard Defendants removed the case to this court, claiming complete diversity between themselves and Plaintiffs, and alleging the fraudulent joinder of the non-diverse Soto Defendants.

Before the court is Plaintiffs’ motion requesting: (i) that pending motions be held in abeyance;[1] (ii) remand of this case to the Superior Court; and (iii) costs and expenses, including attorneys’ fees, pursuant to 28 U.S.C. § 1447(c) (the “Motion”). Plaintiffs argue that remand is appropriate because, contrary to the Hofgard Defendants’ position in their Notice of Removal, the Soto Defendants were not fraudulently joined. In order to decide the Motion, then, the court must determine whether the Soto Defendants were, in fact, fraudulently joined. This requires the court to determine whether it would be possible for Plaintiffs to establish a cause of action or right to relief against the Soto Defendants on their CPPA claim, which is the only claim that Plaintiffs appear to bring against the Soto Defendants. (See Compl. ¶¶ 26-34).

Upon consideration of the parties’ pleadings and the briefs filed in support of and in opposition to Plaintiffs’ Motion, and for the reasons set forth below, the court finds that: (i) Defendants have not carried their burden of demonstrating that Plaintiffs cannot possibly establish a cause of action or right to relief against the Soto Defendants on their CPPA claim, and therefore have not established fraudulent joinder; and (ii) Plaintiffs have not demonstrated an entitlement to attorneys’ fees or any other costs or expenses. Accordingly, Plaintiffs’ Motion is hereby GRANTED IN PART and DENIED IN PART, and this case is remanded to the Superior Court of the District of Columbia.


Plaintiffs are citizens of the District of Columbia. (See Compl. ¶ 2). In November 2013, they purchased the Property from the Hofgard Defendants, who are citizens of the Commonwealth of Virginia. (See id.; Notice of Removal ¶ 7). The Soto Defendants provided settlement services in connection with Plaintiffs’ purchase of the Property, which included issuing a title insurance policy in their capacity as agent for a non-party title insurance company. (See Compl. ¶ 15). Benjamin Soto is alleged to be “a District of Columbia attorney” and the “principal/owner” of Premium, which the court will construe to mean that each of the Soto Defendants is a resident and citizen of the District of Columbia. (See Id. ¶ 4). Thus, because both Plaintiffs and the Soto Defendants are alleged to be residents and citizens of the District of Columbia, the complaint does not allege diversity of citizenship on its face.

Plaintiffs claim that they discovered various problems with the Property after purchasing it, including that it was:

a) not constructed in accordance with the approved plans; b) constructed using non-code compliant materials and fixtures by unlicensed and incompetent trades people; [and] c) not subject to occupancy due to Defendants’ failure to obtain a final inspection and occupancy permit as well as being contrary to the applicable zoning ordinances, codes and regulations.

(Id. ¶ 16). Plaintiffs allege that, as a result of these issues, they cannot lawfully occupy the Property and are subject to a D.C. government order to vacate it. (See id ¶¶ 22-23). Plaintiffs also allege that they continue to incur expenses to obtain zoning permits and make the repairs necessary to allow them to lawfully occupy the Property. (See id ¶ 37).

According to Plaintiffs, the Hofgard Defendants induced them to use the Soto Defendants as the settlement agent for their purchase of the Property without advising them that the two sets of Defendants had “an ongoing business relationship” with one another, and Plaintiffs contend that this “unethical conflict of interest” should have been disclosed to them. (Id. ¶¶ 13-14, 29-32). Plaintiffs also allege that the Soto Defendants:

. “offer real estate settlement services including but not limited to document preparation, filing and releasing real property deeds of trust, paying off any outstanding liens and investigating all conditions relevant to the property condition in order for [a buyer and his or her] lender to be able to purchase title insurance which guarantees that the title to the property is good and marketable, ” which are “goods and services as defined by the CPPA” (id. ¶ 28);
. were paid by Plaintiffs for “settlement/closing services which included but were not limited to the issuance of a policy of title insurance from Chicago Title Insurance Company, for whom Defendant Soto was an authorized agent, ” and that this title insurance policy “warranted and ensured that Plaintiffs would have good and marketable title” to the Property (id. ¶ 15); and
. “acting in concert with the [Hofgard] Defendants, failed to diligently investigate the situation surrounding the property conditions necessary to make a legally sufficient determination as to whether the then-existing condition of the [Property] upon sale were such that the title conveyed by [the Hofgard] Defendants to Plaintiffs was good and marketable” (id ¶ 33).

Plaintiffs further allege that,

had [the Soto Defendants] acted diligently, they would have learned that a) no final inspection was ever performed on the [P]roperty; b) no certificate of occupancy was ever issued to allow the Plaintiffs to occupy the [P]roperty; and c) a current survey would have revealed that the [P]roperty as sold was built beyond the scope of the plans and beyond the footprint of the [P]roperty so as to render the [P]roperty non-conforming with applicable codes, ordinances and regulations then existing in the District of Columbia.


Each set of Defendants has attached to its opposition brief a declaration from Benjamin Soto (the “Soto Declaration”), as well as a copy of the Settlement Disclosure and Agreement between Plaintiffs, the Hofgard Defendants and the Soto Defendants (“the SDA”). The Soto Declaration states, among other things, that Premium “is not in the business of performing home inspections, was not engaged in this transaction to perform a home inspection, and would not have accepted such an engagement if asked.” (Soto Decl. ¶ 6). It also states:

In transactions where a single condominium unit is being purchased, a property survey of the boundaries of the entire lot containing the condominium building is customarily not ordered, as such a boundary survey would be duplicative of the survey obtained by the condominium developer and would needlessly increase costs. When a purchaser buys a condominium, the condominium developer is required to give the purchaser a copy of the condominium bylaws, which include a copy of the plats and plans recorded with the District, and a copy of the survey which the developer purchased when it acquired the land. The owners’ title insurance policy for the condominium included a corresponding exception for matters which would be ...

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