Kristen d’Offay, et al. v. Berkshire Hathaway Home Services, et al.

Case Number

25CV06538

Case Type

Hearing Date / Time

Wed, 01/28/2026 - 10:00

Nature of Proceedings

(1) Plaintiff’s Motion to Disqualify Opposing Counsel (2) Defendants’ Demurrer to First Amended Complaint

Tentative Ruling

For Plaintiffs Kristen d’Offay, L.D., and P.D.: Shawn E. Cowles, Anthony J. Fusaro, Jr., Dhillon Law Group Inc.

                                   

For Defendants Jamie Faletti and SB Wealth, Inc., dba Keller Williams Realty Santa Barbara: R. Chris Kroes, Jake Stoddard, Law Offices of McCarthy & Kroes

                       

RULING

(1) For all reasons stated herein, Plaintiff Kristen d’Offay’s motion to disqualify the Law Offices of McCarthy & Kroes is granted. The Court anticipates that Defendants Jamie Faletti and SB Wealth, Inc., dba Keller Williams Realty Santa Barbara will retain new counsel on or before April 29, 2026.

(2) For all reasons stated herein, Defendant Jamie Faletti and SB Wealth, Inc., dba Keller Williams Realty Santa Barbara’s demurrer is ordered off calendar without prejudice. These Defendants shall file a responsive pleading to the first amended complaint on or before April 29, 2026.

Background

This action was initiated on October 17, 2025. On October 31, 2025, Plaintiff Kristen d’Offay (d’Offay) and two of her children, L.D. and P.D., filed the operative first amended complaint (FAC) against Pickford Real Estate, Inc., dba Berkshire Hathaway Home Services California Properties (Berkshire Hathaway), Marsha Kotlyar (Kotlyar), Patrice Serrani (Serrani), SB Wealth, Inc., dba Keller Williams Realty Santa Barbara (Keller Williams), Jamie Faletti (Faletti), Shengsheng “Adam” He (Adam He) (collectively, Defendants). The FAC asserts five causes of action for (1) concealment, (2) breach of fiduciary duty, (3) negligence, (4) negligent misrepresentation, and (5) nuisance.

As alleged in the FAC:

Defendants participated in the sale of residential property at 627 Romero Canyon Road in Montecito, CA (Property) to d’Offay without disclosing that it had previously been impacted by the 2018 mudslides in Montecito (the 2018 Mudslides). (FAC, ¶ 3.)

Defendant Adam He was the seller. (FAC, ¶¶ 5-6, 30.)

Defendant Faletti was the seller’s listing agent who worked with Defendant Keller Williams. (FAC, ¶¶ 28, 48.)

Defendants Kotlyar and Serrani were the buyer’s agents who worked with Defendant Berkshire Hathaway. (FAC, ¶¶ 25, 26, 50.)

Seller Adam He knew the Property was severely affected by the 2018 Mudslides. (FAC, ¶ 45.) Adam He knew that water and mud had entered the Property, filled the crawl space which lacked adequate ventilation, and polluted the pool. (Ibid.)

Adam He covered up the damage and sold the Property to d’Offay without disclosing the Property was affected by flooding, mudflow, and mold. (FAC, ¶ 5.) Adam He conducted the minimum renovations necessary to make the Property appear attractive and livable so that he could sell it for a large profit. (FAC, ¶ 47.) Adam He knowingly cut corners and covered up defects, and sold the Property knowing it was not fit for habitation. (Ibid.)

Defendants Faletti, Kotlyar, Serrani, Keller Williams, and Berkshire Hathaway (collectively, Real Estate Professionals) also knew about the 2018 Mudslides and preexisting damage to the Property. (FAC, ¶¶ 49, 59.) The Real Estate Professionals actively concealed the Property’s defects during the sales process or negligently misrepresented facts to complete the sale to d’Offay. (FAC, ¶¶ 49-72.)

d’Offay purchased the Property in 2020 after recently moving to this area. (FAC, ¶¶ 8, 17.)

After purchasing the home, d’Offay and two of her children became ill with decreased energy, lethargy, repeated sickness, rashes, constant watery eyes, and sinus issues. (FAC, ¶ 18.)

d’Offay subsequently learned that mud and water had penetrated the difficult-to-access crawl space located below the Property. (FAC, ¶ 19.) She also learned that moisture and water were trapped in the wall cavities hidden from view. (Ibid.) Plaintiff further learned in March 2024 that this water and mud intrusion had caused mold to grow in hidden places throughout the Property. (Ibid.)

d’Offay was required to undertake mold remediation work, throw away valuable personal property, move out of the Property into a rental property, get blood tests and seek medical interventions, and permanently close her women’s clothing business since she lacked the energy and good health necessary to run the business. (FAC, ¶ 20.)

d'Offay seeks to recover damages and other relief based on legal theories including that Defendants negligently misrepresented facts, fraudulently concealed known defects in the Property, committed negligence, and breached fiduciary duties.

d’Offay moves to disqualify counsel for Defendants Faletti and Keller Williams, the Law Offices of McCarthy & Kroes (M&K), on the basis that d’Offay previously consulted with M&K as a potential client prior to d’Offay hiring her current counsel and bringing this action. This motion is opposed.

Faletti and Keller Williams demurrer to the FAC on the grounds that all causes of action against them are barred by the two-year statute of limitations established by Civil Code sections 2079 and 2079.4. This demurrer is opposed.

Analysis

(1)       Motion for Disqualification

“A trial Court’s authority to disqualify an attorney derives from the power inherent in every Court ‘[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.’ [Citations.] Ultimately, disqualification motions involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility. [Citation.] The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.” (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145.)

Rule 1.18 of the California Rules of Professional Conduct (Rule 1.18), subdivision (a) provides in part: “A person who … consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from the lawyer in the lawyer’s professional capacity, is a prospective client.”

“A lawyer … shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received from the prospective client [confidential] information … that is material to the matter ….” (Rule 1.18(c).)

“[T]here is no statutory or rule definition of the term [confidential] in the context of prospective clients ….” (Syre v. Douglas (2024) 104 Cal.App.5th 280, 297.) In the context of an attorney-client relationship, confidential information “means information transmitted … in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present ….” (Evid. Code, § 952.)

Materiality must be evaluated at the time of the requested disqualification. (Winter v. Menlo (2025) 110 Cal.App.5th 299, 312 (Winter).) “Accordingly … Courts must evaluate whether the confidential material information disclosed by a prospective client remains material to the present representation. If it does, disqualification is warranted where no exception under Rule 1.18 applies.” (Ibid.) “[M]ateriality in the context of a disqualification motion under Rule 1.18 means materially harmful.” (Id. at 315.)

The parties do not dispute that d’Offay was a prospective client of M&K, she consulted with M&K on a matter substantially related to this action, that M&K is adverse to d’Offay in this action, or that M&K did not seek to establish an exception to Rule 1.18. The parties do dispute whether d’Offay carried her burden to prove that material confidential information was disclosed to M&K as part of her consultation with M&K. (Opp., p. 5, l. – 6, l. 2.) M&K argues that d’Offay has not proven the disclosure of confidential “information relevant to the present litigation that could be used to her disadvantage regarding Keller Williams and Faletti ….” (Opp., p. 5, ll. 18-20.)

d’Offay submits a declaration in support of her motion. (See Declaration of Kristen d’Offay ISO Motion (d’Offay Decl.).) In August 2025, d’Offay was searching for an attorney to represent her in this matter. (d’Offay Decl., ¶ 2.) d’Offay submitted an email to M&K through its website portal explaining that she purchased a home in Montecito in 2020, and subsequently learned it was referred to as the “mold house” by local realtors in the Montecito area. (Ibid.) She further stated she had become very sick because of the mold and two of her three children had also become sick because of the mold. (Ibid.) d’Offay also indicated she has a file of documents, lab results, and photos supporting her claims. (Ibid.) d’Offay further stated that her Montecito home had gone through multiple mold remediations without success, and she and her children had to move out of the home in July 2024. (Ibid.) d’Offay explained why she believed there was collusion and fraud between the seller’s real estate representatives and her buyer’s real estate representatives. (Ibid.) d’Offay also conveyed a strategy in this email for recovering from insurers for the real estate representatives. (Ibid.) Faletti and Keller Williams do not dispute that this email was transmitted to M&K and do not argue that M&K failed to receive it.

According to d’Offay, on August 19, 2025, she then received a phone call from M&K attorney Frusetta to discuss her claims. (d’Offay Decl., ¶ 3.) They spoke for 55 minutes. (Ibid.) On this call d’Offay revealed facts, information, and potential strategies about her claims including: (a) the names of the Real Estate Professionals; (b) her communications with the Real Estate Professionals and seller; (c) the series of events giving rise to her claims; (d) her perception of what happened when the Real Estate Professionals and seller failed to disclose a mold issue and why she believed there was collusion between these parties; (e) every issue mentioned in her August 2025 email to M&K in greater detail; (f) her statute of limitations concern; (g) facts and information concerning why the statute of limitation should not be applicable, including a discussion about the “delayed discovery rule”; and (h) facts and information concerning the statute of limitation. (Ibid.)  

Faletti and Keller Williams do not dispute that this conversation occurred and lasted for 55 minutes, but attorney Frusetta provides a different description of this conversation. (Declaration of William P. Frusetta ISO Opposition (Frusetta Decl.), ¶¶ 3-4.) Attorney Frusetta states that on August 19, 2025, he spoke with d’Offay to evaluate her claims. (Frusetta Decl., ¶ 4.) The consultation involved a general discussion of d’Offay’s claims arising from the real estate transaction and the names of some involved parties. (Ibid.) According to Frusetta, no confidential information was relayed. (Ibid.) d’Offay relayed those matters she ultimately pled in the complaint and FAC. (Ibid.) Frusetta states that d’Offay did not relay any information adverse to the parties represented by M&K in this action. (Ibid.)

The FAC discusses some of the issues that d’Offay states she discussed with attorney Frusetta, including the purchase of the Property, the mold damage, the collusion between the real estate representatives, the identity of the real estate representatives and their respective roles, the mold remediation efforts, the family’s illnesses associated with mold, that d’Offay and her children moved out of the Property, and other facts. The information contained in the FAC is not confidential for purposes of this analysis because the analysis must address the circumstances at the time of the requested disqualification. (See Winter, supra, 110 Cal.App.5th at p. 312; see also Bus. & Prof. Code, § 6068, subd. (e) [referring to “secrets”]; Evid. Code, § 952 [confidential means not intentionally disclosed to third parties].)

However, not everything disclosed by d’Offay to M&K is contained in her original complaint or the FAC. For example, d’Offay disclosed in her “portal email that [she has] a file of documents, lab results and photos supporting [her] claims.” (d’Offay Decl., ¶ 2.) In this same email d’Offay “conveyed a strategy for recovering from the insurers for the seller’s real estate broker and the buyer’s real estate broker.” (Ibid.) d’Offay disclosed her subjective views about important facts, potential defenses, and her concerns about issues that may impact her ability to recover. (d’Offay Decl., ¶ 3.)

Winter is instructive. “[T]he preliminary disclosure of certain information by a prospective client could give the opposing side an advantage in discovery. For example, here, [the opposing party] can use the document disclosed by [the prospective client] during his consultation with [the opposing attorney] to obtain additional information that might not necessarily be available as it was never disclosed in the pleadings. [The opposing party] could also use [the disclosed information] … to obtain additional information … not disclosed in the pleading. Further, there is also a scenario where [the prospective client] could subsequently contradict his statements to [the opposing attorney]. In that scenario, [the opposing attorney] would either become a witness for [the opposing party] or would have to withhold the information to avoid violating his duty of confidentiality owed to … [the] prospective client. [¶] We therefore conclude the information [the prospective client] disclosed to [the opposing attorney] was material for purposes of disqualification under Rule 1.18.” (Winter, supra, 110 Cal.App.5th at pp. 318-319.)

The concerns expressed in Winter are also apparent here. M&K obtained confidential information about its client’s adversary in this action, d’Offay, that M&K would not know but for M&K’s prior consultation with d’Offay as a prospective client. d’Offay prepared a written summary of what she viewed as key issues in her case and transmitted this document to M&K, including strategies for obtaining monetary recovery, the existence of relevant documents, and other issues. The subsequent 55-minute phone call gives M&K an unfair insight into d’Offay’s demeanor, mental impressions, potential defenses, and other issues that may impact the case. M&K gained information that another firm would not have obtained. This gives M&K’s current clients, Faletti and Keller Williams, an unfair advantage against d’Offay in discovery and defense strategy. These advantages are materially harmful to d’Offay in this action at the time of the requested disqualification. Therefore, disqualification is warranted where no exception under Rule 1.18 applies. (See Winter, supra, 110 Cal.App.5th at p. 312.) M&K has not sought to establish any such exception.

For all these reasons, the Court will grant d’Offay’s motion for disqualification of M&K in this action.

(2)       Demurrer

To facilitate new counsel, the Court will order Faletti and Keller Williams’ demurrer off calendar without prejudice.