In February 2016 Jerry Bain was looking to purchase investment real estate. Kathryn Sylvia Coleman and her broker, Platinum Realty, LLC, represented the seller. When the deal was ready to close, Jerry alleges that Coleman instructed him to wire almost $200,000 in closing proceeds.
Jerry followed the instructions furnished to him.
Unfortunately, however, the amount wired was sent to the wrong account, with the result that Jerry lost it all. It appears that a hacker gained knowledge of the pending transaction, and inserted wire transfer account data that dumped the funds directly into the control of the hacker instead of the title company.
1. Neither Coleman nor Platinum Realty represented Jerry Bain. And yet the Court still imposed liability on both without a fiduciary duty analysis.
2. This Court is telegraphing the message that brokers and agents must exercise extreme caution not only with their principals, but also with other parties in their transactions.
3. There’s at least one more point worthy of mention (besides the obvious which is that every email from a broker or agent to every party in every deal should state “We don’t send wire transfer information; contact the wire recipient to verify data before you send funds” or similar) – note that the jury found Jerry only 15% responsible for wiring funds to the wrong party. And this is after testimony that Jerry was an experienced commercial real estate investor. And that evidently Jerry never called the title agent to verify.
Stuart A. Lautin, Esq.*
* Board Certified, Commercial (1989) and Residential (1988) Real Estate Law,
Texas Board of Legal Specialization
Licensed in the States of Texas and New York
Higier Allen & Lautin, PC
2711 N. Haskell Avenue, Suite 2400
Dallas Texas 75204