Ieg Report August 14, 2008

Table of Contents 1. Transmittal Letter 2. Pictorial Summary 3. Executive Summary 4. Documents Reviewed 5. Clarification of Terms & Identification of People 6. The Lovely House You Shouldn't Know About 7. General Comments on Accutech's Report 8. Review of Warren Gross Report, Dated April 21, 2008 9. Comments on Warren Gross Report, Dated March 17, 2008 10. Conclusion

Attachments 1. Joseph Pandolfi's letter to Stanley Scherer, dated March 30, 2004. Anita Tronto's memorandum to Stanley Scherer, dated March 31, 2004 stressing the immediacy and imperativeness of the repairs. Stanley Scherer's letter to Joseph Pandolfi, dated April 1, 2004. Joseph Pandolfi's letter to Stanley Scherer, dated April 2, 2004. Stanley Scherer's letter to Joseph Pandolfi, dated April 7, 2004. 2. Borough of Park Ridge Letter, dated March 16, 2007 3. 4. 5. 6. 7.

IEG's Letters to Ira Kaplan, dated January 18, 2008 & May 8, 2008 Ira C. Kaplan's Letters to The Epstein Law Firm, dated May 14, 2008 Epstein's Law Firms Two Letters to Ira C. Kaplan & Others, dated May 9, 2008 Warren C. Gross Propsal to James & Anita Peloso, dated August 27, 2007 Letter Agreement for New House Design between GI Design Studio and Jim Peloso, one of the plaintiffs, dated May 30, 2007. Photocopies of Anita & James Peloso's Checks No. 2384 & 2398 to GI Design Studio

Photographs 1. A Series, July 20, 2007 2. B Series, June 2, 2008 3. C Series, circa 2002

From This...

To This...

Courtesy of the Pelosos!

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 1

August 14, 2008

Executive Summary A real estate transaction was concluded in 2004 between Thomas and Karen Mikalouskas Sellers - and Anita Tronto - buyer - for the purchase of the house at 14 Ridge Avenue, Park Ridge, NJ. The deed was made on May 5, 2004. The Mikalouskases had no contractual dealings with a Mr. James Peloso - a plaintiff - in connection with this transaction. Certain defects were identified by Ms. Tronto's experts before the closing of the deal. Ms. Tronto claimed that making repairs to those defects was "imperative" and that they required her "immediate attention." She proceeded to demand credit against the purchase price from the Mikalouskases. The Mikalouskases consented to Ms. Tronto's demands and extended her the exact amount of credit she demanded as "full and final resolution" of all remaining issues. It is of interest to note that as of June 2, 2008 - over 3 years after the purchase of the house - there was no evidence of any repair work done to correct the defects that required Ms. Tronto's immediate attention back in May of 2004. However, there is evidence of many other construction activities at the house. In the time span between May 2005 - the time at which Ms. Tronto took possession of the house - and March 2007, the plaintiffs engaged in major construction activities. These activities included the replacement of the bathroom on the top floor, the replacement of the bathroom on the first floor, the removal of all staircases, changes and additions to the framing of the house and extensive gutting work. There is no record in all the documents we reviewed to indicate that any construction permits were obtained for any of that work. It appears that the plaintiffs were not quite satisfied with the amount of money they extracted from the Mikalouskases at the closing in 2004. To supplement that money, they went after their insurance company for additional funds. The insurance company was quick to deny their claim in a letter dated March 19, 2007. The date of the losses claimed by the plaintiffs was given as March 16, 2007. The insurance company advised the plaintiffs of their right to appeal that decision. To our knowledge, no such appeal was ever made. It is of interest to note that the loss date presented to their insurance company is the same date of the letter issued by the Construction Official declaring the structure unsafe. Was that a coincidence? Did the plaintiffs seek to have the house declared unsafe to justify their claim to the insurance company? It is also of interest to note that the Construction Official declared the structure unsafe because of termite damage that existed for years with no signs whatsoever that the structure was in any imminent danger of collapse, while overlooking the dangerous situation created by the plaintiffs' removal of all staircases leading to the top floor and the basement. Anyone walking in the house was in danger of falling through an opening in the floor where the staircase once existed. The

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 2

August 14, 2008

silence of the Construction Official about the unsafe conditions created by the plaintiffs is an issue of interest that warrants further investigation. After the plaintiffs were rebuffed by their insurance company, they instituted this legal action against the Mikalouskases and a number of other defendants. It was relatively easy to establish that the plaintiffs had no intention of repairing the house. The Construction Official's recommendation to "remove and replace all damaged timber due [to] termite infestation" was never seriously considered by the plaintiffs. We were able to make that determination on the basis of the following chronological sequence of events:


On May 30, 2007, James Peloso - a plaintiff - entered into an agreement with GI Design Studio for a new house design at 14 Ridge Avenue, Park Ridge, NJ.




By July 19, 2007, 40% of the design of the new house was complete as evidenced by the successive payments made by James and Anita Peloso to the Architect, Gianni Intili of GI Design Studio on two occasions: June 4, 2007 and July 19, 2007. The total paid by James and Anita Peloso for the design of the new house as of July 19, 2007 amounted to 40% of the total design fee for the new house.




It was the height of disingenuousness for James and Anita Peloso, after the completion 40% of the design of the new house, to solicit a proposal from Warren W. Gross on August 27, 2007 for work they never intended to do on the existing house in the first place. That took place almost 3 months after the agreement to design a new house was signed by the Pelosos and their Architect and after 40% of the design was complete. That the Pelosos never intended to repair the existing house may explain their reluctance, rather refusal to provide a breakdown of the arbitrary estimate of $289,498 provided by Warren W. Gross in his August 26, 2007 proposal to repair the house.

It is well within the Pelosos rights to demolish a house they own, to build a new one in its place. However, it is essential to recognize that the decision to demolish the existing house and a build a new one was a matter of choice NOT necessity. What is so unique about the Pelosos approach, however, is the way they're going about financing their new dream house. In that same vein, it is important to note that the new design is not a mere replacement of an existing house. We counted, without being exhaustive in our count, the following features that did not exist in the original house:







Double-sided fireplace in the living room (none existed); Master Bathroom & Laundry Room on 2d Floor (no master bath existed); Full Basement (only partial basement existed); Central Air-Conditioning (only window/wall unit existed); Under-floor Radiant Heating (none existed); and Brick and/or Stucco Exterior Wall Finish (existing finish was neither brick nor stucco).

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 3

August 14, 2008

The repair of the termite-damaged members in the house would have been an easy undertaking. Evidence of attempts to repair such damage was visible from the basement after the walls were exposed. Those repairs are not recent in nature and appear to have taken place well before the Mikalouskases took ownership of the property. The repairs attempted may not have been of the highest quality. But the fact that they were made provides further evidence that the existing condition was repairable. However, this type of repair requires some technical guidance at both the design and implementation stages and certainly requires a contractor familiar and experienced in this type of work.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 4

August 14, 2008

Documents Reviewed Accutech's Report. Prepared by Vijay K. Chopra and dated January 29, 2008. The report is supplemented by undated photographs of the subject house presumed to have been taken on January 14, 2008. Photo No. 047 was deleted and red x's appeared in Photos No. 051, 074, 077 and 090. The body of the report was received by e-mail on April 24, 2008. The supporting photographs of the report were received through the mail on April 28, 2008 Warren W. Gross Reports. Two reports dated March 17, 2008 and April 21, 2008 were received by e-mail on April 24, 2008. . A legible set of the photographs referenced in the Gross report was delivered to our office on May 12, 2008. Discovery Record. A compilation of material, presumably obtained through the discovery process, that addressed some of the issues raised in our January 18, 2008 letter (Copy Attached). This compilation was received with a cover letter dated February 22, 2008 and will be referred to as the Discovery Record throughout the report to avoid repetitive reproduction of lengthy documents contained in that compilation. However, brief documents from the Discovery Record are included at the end of this report for ease of reference. Clarification of Terms & Identification of People Accutech makes reference to the "buyer and his wife." We presume that is in reference to the Plaintiffs in this Case -- James Peloso and Anita Peloso. For the sake of accuracy that may have some legal ramifications, we point out that the buyer of the house was known at the time of purchase as Ms. Anita Tronto. We also understand the Ms. Tronto is known now as Ms. Peloso. We make this distinction to clarify that there was only a single buyer who bought the house from Mr. & Mrs. Mikalouskas. The Mikalouskases have no dealings with any other person or persons who may be identified in this case as plaintiffs. It is our understanding that, in concluding the subject transaction, Ms. Tronto, the buyer, relied on at least the services of the following experts:





Stanley R. Sherer, Esq. -- Legal Services Staub Home Inspection -- Home Inspection Palisades Appraisals -- Appraisal of Property Preferred Tank Services -- Oil Tank Investigation. Report addressed to Mr. James Pelosa, one of the plaintiffs, presumably acting on behalf of the buyer Ms. Tronto. The report was addressed to 25 Avenue at Port Imperial Apt. 1215, West New York, NJ 07093 which matches the buyer's address at the time.

It is our understanding that among these experts only Staub Home Inspection is named as a defendant in this case.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 5

August 14, 2008

The Lovely House You Shouldn't Know About In the course of preparing this report we first visited the house at 14 Ridge Avenue, Ridge Park, NJ on July 20, 2007 and again on June 2, 2008. In our first visit we documented the condition of the house in a set of photographs. These photographs are referred to as the A Series and are included in the Photographs Section at the end of the report. By the time of our second visit we were under the impression that the plaintiffs would not accede to preserving the house as evidence while this matter was still being litigated. So the photographs we took were intended to document the general condition of the house as much as practicable, knowing that the plaintiffs were intent on destroying the evidence in a matter of days after our inspection. The photographs taken during this visit are referred to as the B Series and are also included in the Photographs Section at the end of the report. The photographs included in the B Series serve to document the fact that no repair work was done on any of the defects identified before the purchase of the house. We were also able to document that no repair work was performed on these defects since our initial visit on July 20, 2007. These photographs were also intended to show that the rest of the house, which did not receive adequate coverage in the reports presented by the Plaintiffs' experts, was in fact in a very good condition in spite of the plaintiffs' haphazard, destructive work. Our Photographs Section also includes a third set of photographs provided to us by Mr. Mikalouskas which were taken circa 2002. These photographs are referred to as the C Series and are presumed to reflect the condition of the house when it was turned over to the Ms. Tronto by the Mikalouskases. Reference is made to the following photographs:




Photos No. B.1-B.6 (Front of the House); Photos No. B.34-B.54 & B.57 (Top Floor); and Photos No. B.58-B.72 & B.75-B.78 (First Floor).

These photographs, taken on June 2, 2008, reflect the quality and condition of the living quarters of the house that escaped the plaintiffs' destructive adventures. If houses in this shape and form are considered candidates for demolition, a large percentage of the houses in New Jersey (which are certainly in a lot worse shape than this house) will be doomed, causing an unprecedented housing shortage in the state. While the above pictures depict the way these quarters appeared on June 2, 2008, their condition can be considered representative of the condition of the house as it existed in 2004 when it was turned over by the Mikalouskases to Ms. Tronto.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 6

August 14, 2008

As we attempted to document the condition of the various rooms on the top floor, we certainly did not have the luxury of using the beautiful staircase that existed when Ms. Tronto purchased the house in 2004. That staircase is depicted in the background of Photos No. C.4 , C.18 and C.19. Instead we had to climb up the ladder shown in Photo No. B.55 which provided the only means of access to the floor. Staircases don't disappear from homes on their own. The disappearance of that staircase was but one example of the haphazard, destructive construction activities undertaken by the plaintiffs after Ms. Tronto purchased the house. Evidence of the extensive construction that resulted in the disfigurement of the beautiful, habitable house sold to Ms. Tronto can be found in different parts of the house. During our visit to the house on July 20, 2007, we were surprised to discover a vast array of construction tools and equipment on the floor of the living room. A quick look at Photo No. A.26 was enough to convince us that what we stumbled upon was not some unusual living room decoration, but rather tools that were used in some type of construction that resulted in unsafe conditions and the disfiguration of parts of the house. Unsafe conditions were created by the plaintiffs' construction activities. Anyone walking on the first floor could have easily fallen through the floor to the basement through the opening left in the floor after the staircase was removed by the plaintiffs. Houses often fail inspection for items as simple as a missing handrail. By any measure, a missing staircase is by far more dangerous than a missing handrail. These unsafe conditions created by the plaintiffs' construction activities were hard for any Building Official to miss. Our search of the Discovery Record did not reveal any evidence that any construction permits were obtained for the construction activities that the plaintiffs were engaged in. We were extremely surprised to see absent from the Discovery Record any mention of the unsafe conditions created by the plaintiffs by their removal of the staircase and other elaborate construction activities that went on with no permits. The Construction Official may be in a position to explain why he omitted making any reference to these occurrences in the Building Department's Record for this house. Why were these obvious, unsafe conditions missing from the Building Department's Records? Was that an oversight? Was that intentional? Was the reporting selective to help the plaintiffs present their claim to their insurance company, OR to others? These questions warrant further investigation and clarification.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 7

August 14, 2008

General Comments on Accutech's Report Before we get into the specifics of the Accutech report, there are a number of issues that need to be addressed.


For all their attempts to project comprehensiveness and objectivity as they labored to provide a tally of all the defects they observed at the subject house on January 14, 2007, they failed to make any mention of the fact that almost 3 years had elapsed since the Staub inspection was performed, during which the house was in the custody of the plaintiffs who had the sole responsibility for its maintenance, repair and upkeep. The Staub inspection was conducted on March 22, 2004.




Absent from Accutech's report is any mention of the damage caused by the plaintiffs themselves when they engaged in elaborate construction activities without obtaining the proper construction permits or consulting with experts before engaging in such activities. Experts appear to have been assembled after the fact to formulate a legal strategy to assign blame, but not when they were most needed in the planning, prosecution, and permitting process of the construction activities they engaged in.




Additionally, Accutech failed to acknowledge that some of the defects identified in their report were the same defects identified in the Staub report for which a credit was issued to Ms. Tronto by Mr. and Mrs. Mikalouskas at the time of closing as "full and final resolution of all remaining issues."

In fairness to Accutech, we have to realize that they may not have been fully aware of the history of the issues they reported on and the fact that the purchaser at the time, Ms. Tronto, was fully compensated to undertake those repairs on her own. Ms. Tronto was not only aware of these issues, but she considered them "imperative" and requiring "immediate" attention and demanded money from the Mikalouskases to correct these issues. Four years later - after Mr. & Mrs. Mikalouskas, in good faith, acceded to her demands and handed her the full credit she demanded - we discover that none of these issues have been corrected. The only imperative thing in this matter appears to have been the desire to extract money from the Mikalouskases under false pretenses. In support of the above, we cite:






Joseph Pandolfi's letter to Stanley Scherer, dated March 30, 2004. Anita Tronto's memorandum to Stanley Scherer, dated March 31, 2004 stressing the immediacy and imperativeness of the repairs. Stanley Scherer's letter to Joseph Pandolfi, dated April 1, 2004. Joseph Pandolfi's letter to Stanley Scherer, dated April 2, 2004. Stanley Scherer's letter to Joseph Pandolfi, dated April 7, 2004.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 8

August 14, 2008

It also appears that some of the conclusions Accutech reached are based on some self-serving, selected exchanges they had with one of the plaintiffs, namely Mr. Peloso who was not party to the sale of this house. Those exchanges ended up prejudicing Accutech's conclusions. This can best be illustrated by how Accutech handled and reported on the oil tank issue. In the caption to one of their many photographs, namely Photo No. 027, Accutech makes reference to "where the oil tank pipes discovery was made." We fail to understand why that was referred to as a "discovery" when the history of the oil tank was well documented and all issues associated with it, investigated and resolved by one of the plaintiffs, presumably on behalf of the purchaser, Ms. Tronto, before the closing date. For the above reasons we only accept the photographs taken by Accutech as representative of the condition of the house on the day those photographs were taken, but reject their non-contextual interpretation and subjective posturing for the reasons cited above.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 9

August 14, 2008

Review of Warren W. Gross 's Report, Dated April 21, 2008 We are in receipt of a letter/report prepared by Warren W. Gross, dated April 21, 2008 and addressed to the Epstein Law Firm. (Copy attached). The letter opens with "We have reviewed the construction permit documents and the home inspection reports forwarded to this office, along with our visits to the property referred to above." Since no property is mentioned in the Gross letter, we seek clarification and confirmation that the property referred to in the Gross April 21, 2008 letter is the property located at 14 Ridge Avenue, Park Ridge, NJ 07656. We will proceed to make our comments on the Gross report on the presumption that the 14 Ridge Avenue property is the property intended to be addressed in the report. Additionally, we seek to have the construction permit documents reviewed by Mr. Gross identified individually. It is our understanding, and the record shows, that no construction permits were issued for the construction work undertaken by the Plaintiffs at the subject property. We, hereby, quote from and comment on the Gross report.

This uncertainty is hardly an argument on which the demolition the house can be based. Even if the uncertainty is removed and a deficiency is established, the logical next step would be to correct the deficiency rather than demolish the house.

Without going into the merit or demerit of the above statement, we cannot conclude, even under the worst of circumstances, that the demolition of the subject property can be justified for any of the reasons mentioned.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 10

August 14, 2008

Here Mr. Gross is lumping plumbing issues with structural ones. Even if we were to accept Mr. Gross's assessment of the plumbing conditions at face value, we fail to see how any of that could lead to a conclusion recommending the demolition of the house. Mr. Gross makes mention of a "bearing block wall" that "was removed and never replaced." Mr. Gross, however, doesn't explain to us why no collapse has taken place after the "bearing block wall" was removed. Mr. Gross does not even recommend rebuilding the portion that "was removed and never replaced." And in a 22-item proposal, dated 8/26/07, Mr. Gross, does not even propose to rebuild that "bearing block wall" that "was removed and never replaced." If he is rendering an engineering opinion and expressing his concern about the structural integrity of the house, one has to wonder why this concern was abandoned in his itemized list of proposed repairs when even an item as minor as paint was included in that list. A copy of Mr. Gross's itemized list, dated August 26, 2007, is included at the end of the report as Attachment No. 6.

We note Mr. Gross's concern and speculation about how hazardous materials may have been handled in the past. This concern, however, is not the subject of any of the claims made by the plaintiffs in this case, and as such do not constitute even a remote reason for demolishing the house. On the other hand, we are in full agreement with Mr. Gross that an asbestos remediation contractor will be needed to remove the balance of any remaining asbestos should that material be disturbed by any activity.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 11

August 14, 2008

Now since the plaintiffs have demolished the house after being made aware by Mr. Gross of the necessity of securing the services of an asbestos remediation contractor to properly remove and dispose of such material, we request that the plaintiffs provide detailed records about the contractor who performed the work, the disposal site of the asbestos, all the permits that were obtained and the government agencies that were notified. Failure to provide such records will lead us to believe that such material was disposed of improperly. In this case, the charge will be based on the definitive facts presented and witnessed by Mr. Gross and will not be a mere speculation about something that may have happened in 1978. Please refer to Item No. 1 of Mr. Gross's proposal, dated August 26, 2007, which is reproduced at the end of the report in Attachment 3.

Here we have to question the validity of Mr. Gross's reasoning and the conclusion he arrived at. Our review of the permit files revealed that sketches prepared by the then owner were submitted to the town. On the basis of those sketches, construction permits were issued by the town. The town then performed plumbing, electrical and building inspections as required. Based on the town's approval of the construction, a certificate of occupancy was issued. In reviewing the town's own actions regarding the addition to the house, we only encountered a record of approvals culminating in the issuance of the CO. Accordingly, we deem Mr. Gross's assertion that "general construction of the additions to the original structure is what led to the condemnation of the building as a residence" to be baseless and unsupported by the facts. We also go one step further to point out that if Mr. Gross was as convinced by his own conclusion as the above statement suggests, legal action against the town would have been the natural recommendation to make to his client. Mr. Gross's above statement suggests that the town has approved an unsafe addition to the house. We disagree with Mr. Gross's conclusion, but even if we didn't, we wonder about the relevance of his conclusion to the claims the plaintiffs are making against Mr. and Mrs. Mikalouskas.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 12

August 14, 2008

We certainly agree with Mr. Gross's statement that "Any structure is only as solid as the foundation on which it rests." And it is for that reason that the house did not show any signs of distress all these years. A foundation wall that is 2 1/2 feet is a testament to the strength of the foundation. The discontinuity in the basement wall that Mr. Gross talks about was bridged by sizable wooden beams that transferred the loads to other parts of the foundation wall. That was no different than having an opening in a load-bearing wall to have a window. That's why we have lintels. If no openings can be provided in load-bearing walls, how can we ever have doors and windows? When an opening interrupts the continuity of a load-bearing wall, the load gets transferred to the foundations by other means. That was the case here. A structure that stood the test of time is the strongest rebuttal to any argument that it should have fallen down. At any rate, what Mr. Gross is asserting has no bearing on the claims made by the plaintiffs against Mr. And Mrs. Mikalouskas, for they were not the owners of the house when any of that work was done.

I wonder if Mr. Gross realizes that some of what he is referring to is the handy work of the plaintiffs themselves. His own Photograph 6 reveals the haphazard work done by the plaintiffs as evidenced by the new wood and bolts used. Additional evidence of the plaintiffs' work can be seen at the end of this report in Photos No. A.27, A.28, A.29, A.31, A.32, A.33, B81, B.82, B.83 and B.84. Again we fail to see the connection of any of that to Mikalouskases.

We note the striking similarities between Mr. Gross's words here and those offered by Staub Home Inspection on March 3, 2004. This was the advice offered to Ms. Tronto on page 20 of the Staub Report, "The dirt walls are in contact with wood walls installed. This is conducive to wood destroying insect infestation, mold and mildew as well as radon penetration."

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 13

August 14, 2008

The exact date on the sheetrock is 05/15/00. That is months before the Mikalouskas even closed on the house. The termite damage as seen in Photos No. B.86, B.87, B.88 and B92 is not a recent development. The damage has accumulated over a number of years. It is a fact that termite damage existed during the Coslow ownership as was reported in the Allen report, dated July 7, 2000. That report noted "evidence of termite... in basement sill/joist area." Certainly the treatment by ALLEN did nothing to undo the damage that already existed.

Based on the evidence, we certainly concur with Mr. Gross that such activities occurred at a time that preceded the Mikalouskases' period of ownership. We also concur that those repairs were instituted with very little technical guidance. Had technical guidance been sought at the time, proper repairs could have been achieved. After reviewing Mr. Gross's report, we make the following two observations: 1. Mr. Gross opines that "the most egregious mistakes" occurred "during the various "remodels" of the structure." The record is very clear that none of these "remodels" occurred during the Mikalouskases' period of ownership of the house. Accordingly, there are no grounds for any of the claims made by the plaintiffs against the Mikalouskases in that regard. 2. Nowhere in his report does Mr. Gross recommend that the house be demolished. Comments on Warren W. Gross 's Report, Dated March 17, 2008 In his April 21, 2008 report, Mr. Gross was circumspect in making reference to codes that existed at the time of the construction. His own wording, "the framing materials used for the spans shown on the homeowner drawings were allowable at the time the permits were issued," reveals an awareness of the fact that codes change over time and that existing structures are not expected to be evaluated by codes that come into being years after they were constructed. That's why it was surprising to see him apply current CABO provisions, which are intended for new construction, to an existing structure that was built so many years ago. We can always find issues with any structure if we start applying codes that didn't exist when the structure was built. The proper code that should have been consulted in the design of any repairs to this house would have been the Rehabilitation Subcode (N.J.A.C. 5:23-6). The State of New Jersey was at the forefront in the effort to preserve existing structures without penalizing them by unnecessarily imposing current code standards on them. The Rehabilitation Subcode takes a commonsense approach by applying "building code requirements to the rehabilitation of existing buildings in a rational manner, protecting the safety of building occupants without imposing needless

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 14

August 14, 2008

requirements, or unnecessary additional costs." The intent is to eliminate "building code requirements as a disincentive to the rehabilitation of existing buildings." Mr. Gross, in his attempts to impose current standards on an existing structure, seems to be challenging existing work that has already been approved by the Park Ridge Building Department. That discussion, if warranted, can best be carried out with the Park Ridge Building Department for all the faulty work they did over the years. But we still fail to see how any of these points support any of the claims made by the plaintiffs against the Mikalouskases. And for all this talk about codes, there is a deafening silence about the haphazard construction activities carried out by the plaintiffs without even obtaining a single construction permit. And this discussion is moot for a totally different reason: as we know now, the design for the new house was already 40% complete before the plaintiffs disingenuously solicited a proposal from Mr. Gross to repair and rehabilitate the house.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 15

August 14, 2008

Conclusion The plaintiffs embarked on a major construction project at the subject property without obtaining the proper construction permits. Their work included, as a minimum, the complete gutting and rebuilding of the two existing bathrooms, the removal of the staircase and the removal of sheetrock from a large percentage of the house. We are not aware if the plaintiffs ever submitted a complete accounting of all the work they performed since their purchase of the house from the Mikalouskases. During that project, the plaintiffs encountered some termite damage that appeared to have been repaired at some point in the distant past. Lacking qualified personnel who could have repaired any termite-affected members right then and there, they chose to submit a claim to their insurance company. The plaintiffs' claim was denied in a letter dated March 19, 2007 because the damage was deemed as the result of insect infestation which was not covered by their policy. That same letter also quoted other exclusions from their policy. The insurance company invited the plaintiffs to submit an appeal in case they disagreed with the company findings within a specified time frame. It is our understanding that no such appeal was ever submitted, for we have not received any evidence to that effect during the discovery period. After the insurance company denied their claim, the plaintiffs' wish list got a little more ambitious. The plaintiffs then approached an architect to design a new house for them at the same location. The Architect, Gianni Intilli, submitted a proposal dated May 30, 2007 for the design of a brand new house and was accepted by the plaintiffs. As of July 19, 2007, payments amounting to 40% of the total design fee were made by the Plaintiffs to the Architect. Almost 3 months after the plaintiffs engaged the architect who completed 40% of the design of the new house, the plaintiffs still solicited a proposal to upgrade the property from an entity called Warren W. Gross & Associates, Inc. Gross submitted a proposal, dated August 26, 2007, that included 22 items for the upgrade and repair of the existing house for a total of $289,498.00. The review of this timeline reveals the following: 1- As of March 2007, the Plaintiffs had no issues with the existing house other than the termite claim they presented to their insurance company which was denied. 2- When the Plaintiffs were rebuffed by the insurance company, their wish list grew more ambitious. They then decided to build a new house. This lawsuit is nothing more than an attempt to secure funding for the construction of their new dream house.

International Engineering Group, P.C.

14 Ridge Ave, Park Ridge, NJ Page 16

August 14, 2008

3- As an afterthought, and after spending $4,500 on the design of a new house, the Plaintiffs solicited a proposal from Warren W. Gross & Associates, supposedly to repair/rebuild the existing house. Many of the items in that proposal were to upgrade the house rather than repair the termite damage. By adding all these additional items to the proposal, they are seeking to claim that a new house can be justified based on the high cost of the repairs. The sequence of events proves that the plaintiffs had no intention of repairing the house. They did not only mislead the court in the claims they made against the Mikalouskases, but they also misled their own experts by withholding critical information from them. Nowhere in the reports prepared by their experts did any of the experts acknowledge that a number of the defects they were discovering three years after the sale, were defects for which the plaintiffs demanded payment and were compensated in full by the Mikalouskas before the sale of the house was ever completed. Their experts were in no position to discover these minor details on their own when their commission was apparently to tally as many defects as possible regardless of the significance of the defects or on whom the responsibility of repairing these defects falls. The bottom line is that the house had termite damage. Attempts were made in the distant past to repair that damage. Deteriorated wood members can be repaired/replaced. There was no reason for the house to be demolished on that basis. However, this type of repair requires some technical guidance at both the design and implementation stages and certainly requires a contractor familiar and experienced in this type of work. Demolishing the house was a matter of choice not necessity.

International Engineering Group, P.C.