COHEN FINANCIAL, LP, a Delaware Limited Partnership, and CFC

[Pages:6]IN THE SUPREME COURT STATE OF FLORIDA

CASE NO. SC07-2195

COHEN FINANCIAL, LP, a Delaware Limited Partnership, and CFC Transactions Limited Partnership, an Illinois Limited Partnership, Petitioners,

v.

KMC/EC II, LLC, a Delaware Limited Liability Corporation,

Respondent.

BRIEF ON JURISDICTION OF PETITIONERS COHEN FINANCIAL LLP AND CFC TRANSACTIONS LIMITED PARTNERSHIP

ON DISCRETIONARY REVIEW FROM A DECISION OF THE THIRD DISTRICT COURT OF APPEAL

Elliot H. Scherker, Esq. Florida Bar No. 202304

Kerri L. McNulty, Esq. Florida Bar No. 016171

Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33131 Telephone: (305) 579-0500 Facsimile: (305) 579-0717

Counsel for Cohen Financial, LP and CFC Transactions Limited Partnership

TABLE OF CONTENTS

Page

TABLE OF CITATIONS.................................................................................... ii INTRODUCTION.............................................................................................. 1 STATEMENT OF THE CASE AND FACTS...................................................... 1 SUMMARY OF ARGUMENT ........................................................................... 3 ARGUMENT ..................................................................................................... 4 CONCLUSION.................................................................................................. 7 CERTIFICATE OF SERVICE............................................................................ 7 CERTIFICATE OF COMPLIANCE ................................................................... 8

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TABLE OF CITATIONS Page

Cases Ballas v. Lake Weir Light & Water Co.

130 So. 421 (Fla. 1930) ..................................................................... 1, 3, 4 Moss v. Sperry

191 So. 531 (Fla. 1939) ..................................................................... 1, 3, 5 Murphy v. Green

135 So. 531 (Fla. 1931) ..................................................................... 1, 3, 4 Riverland & Indian Sun L.C. v. L.J. Melody & Co.

879 So. 2d 1271 (Fla. 3d DCA 2004)................................................. 2, 3, 6

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INTRODUCTION Petitioners Cohen Financial, LP, and CFC Transactions Limited Partnership (collectively Cohen Financial), entered into two agreements with respondent KMC/EC II, LLC (KMC), which provide that Cohen Financial's one percent brokerage fee is due at the closing of any transaction contemplated by the agreements. The Third District's decision, which holds that Cohen Financial is not entitled to injunctive relief against KMC to prevent KMC from disbursing proceeds from a real estate transaction in violation of those agreements, is in express and direct conflict with established precedent of this Court, under which a broker's commission is due upon the completion of the broker's services. E.g., Ballas v. Lake Weir Light & Water Co., 130 So. 421, 427 (Fla. 1930). The decision also expressly and directly conflicts with Murphy v. Green, 135 So. 531, 534 (Fla. 1931), which holds that "a promise to pay restricted to particular funds" is enforceable once "the funds are realized." Id. at 534. Finally, the decision expressly and directly conflicts with Moss v. Sperry, 191 So. 531 (Fla. 1939), which holds that an aggrieved party may invoke equity when a commission is to be paid from the proceeds of a transaction. Id. at 537-40.

STATEMENT OF THE CASE AND FACTS In February 2006, Cohen Financial and KMC entered into an agreement under which Cohen Financial was to operate as KMC's exclusive mortgage broker for a 30-day period to obtain financing for a development project. (A:2). The agreement included a provision stating that Cohen Financial "shall be paid a fee in the amount equal to one percent (1%) of the total committed amount of the debt to

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be funded by the lender." Id. The parties signed a subsequent agreement in June 2006, under which "all terms and provisions of the existing fee agreement" are "fully ratified and shall remain in full force, and extend to the date at which closing of the project takes place." Id.

After learning that KMC planned to close on a loan, but without any arrangements to provide for Cohen Financial's fee, Cohen Financial filed an action requesting a constructive trust over one percent of the loan amount, injunctive relief, and specific performance. (A:3). The trial court denied injunctive relief, ruling that Cohen Financial had both failed to establish a likelihood of success on the merits and that it lacked an adequate remedy at law. Id.

In affirming the trial court, the Third District distinguished its earlier decision in Riverland & Indian Sun L.C. v. L.J. Melody & Co., 879 So. 2d 1271 (Fla. 3d DCA 2004), upon which Cohen Financial had relied to argue that the trial court had abused its discretion by denying injunctive relief. In Riverland, the Third District affirmed the trial court's imposition of a temporary injunction after a real estate broker learned that a transaction was going to close without arrangements having been made for payment of the brokerage fee out of the sale proceeds, as required by the contractual provisions governing the transaction. (A:4). The Third District distinguished Riverland on the basis that the contract in Riverland identified a "particular fund to be set aside at the closing for the broker's benefit" and that the broker in Riverland was a "named beneficiary of a particular

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fund."1 (A:5). In addition to holding that the trial court had not abused its discretion in denying injunctive relief, the Third District also held that the allegations in Cohen Financial's complaint failed to state a basis upon which relief could be granted and that the trial court had correctly ruled that Cohen Financial has an adequate remedy at law. (A:5, 7).

SUMMARY OF ARGUMENT The Third District's decision expressly and directly conflicts with Ballas v. Lake Weir Light & Water Co., 130 So. 421 (Fla. 1930), in which this Court established that a real estate broker's fee becomes payable and due upon the completion of the broker's services. Id. at 427; accord, Murphy v. Green, 135 So. 531, 534 (Fla. 1931). The decision also expressly and directly conflicts with Murphy's holding that a promise to pay certain funds becomes enforceable once those funds are realized. 135 So. at 534. Despite clear contractual language to the contrary, the Third District has held that Cohen Financial is not entitled to the commission that is owed under the contracts with KMC. Additionally, the decision expressly and directly conflicts with Moss v. Sperry, 191 So. 531 (Fla. 1939), in which this Court held that equity may be

1 Recognizing the conflict between the decision and Riverland, Judge Shepherd's dissenting opinion notes that the language used in the contracts does not differ in any legally significant manner. (A:9-10). Cohen Financial moved for rehearing and/or rehearing en banc in the Third District, on the basis of conflict between the decision below and Riverland, but that motion was denied.

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invoked when a commission is to be paid from the proceeds of a transaction, if no adequate remedy at law exists. Id. at 537-40.

ARGUMENT In Ballas v. Lake Weir Light & Water Co., 130 So. 421 (Fla. 1930), this Court established that, "[i]n the absence of some provision to the contrary[,] a broker's commission becomes due and payable upon the completion of . . . services." Id. at 427; accord Murphy v. Green, 135 So. 531, 534 (Fla. 1931). Far from having a "provision to the contrary," the Cohen Financial-KMC contract calls for the payment of the one percent brokerage fee at closing. (A:2) To the extent that the Third District's decision fails to recognize Cohen Financial's entitlement to its brokerage fee under the contract, the decision expressly and directly conflicts with this long-standing precedent. Similarly, in Murphy, the Court noted that "a promise to pay restricted to particular funds" is enforceable once "the funds are realized." 135 So. at 534. In affirming the trial court's ruling that Cohen Financial had not shown a substantial likelihood of success on the merits, the Third District ignored Cohen Financial's enforceable right to its brokerage fee, under the contracts, the moment that KMC closes on any loan. (A:9). The majority opinion quotes the provision of the contract that provides for Cohen Financial's one percent brokerage fee, but fails to enforce Cohen Financial's rights under that provision. Under both the February and June agreements, Cohen Financial has an enforceable right against KMC, because KMC has proceeded with the closing

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process without making the necessary arrangements for payment of Cohen Financial's brokerage fee. To the extent that the Third District affirmed the denial of injunctive relief for failure to establish a likelihood of success on the merits, the decision expressly and directly conflicts with this precedent.

Although the Third District held that equitable relief is not warranted in this case, this Court previously held in Moss v. Sperry, 191 So. 531 (Fla. 1939), that equity may be invoked when a commission is to be paid from the proceeds of a transaction. Id. at 537-40. In Moss, as here, a party to a real estate contract attempted to avoid paying the broker his commission due out of the purchase money by proceeding with the sale without notice to the broker. Id. at 532. The Court held that, although the sale had not been consummated, the broker had an equitable interest in the purchase money funds "to the extent of his commission." Id. at 540.

Because the contract clearly stated that Cohen Financial's brokerage fee was to be paid from the proceeds of the real estate transaction, Cohen Financial was entitled to a similar equitable interest in the funds involved in the instant real estate transaction. (A:2). Therefore, the equitable relief that Cohen Financial sought is appropriate, and the Third District's decision denying that relief expressly and directly conflicts with Moss.

Cohen Financial recognizes that intra-district conflict does not invoke this Court's jurisdiction, but submits that this Court should exercise its discretion to grant review of the Third District's decision, based on the express and direct conflict between that decision and this Court's precedent, because that intra-district

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