Wash. Court of Appeals published opinion — D2 59088-3-II Published Opinion.pdf

Citation: Wash. Court of Appeals published opinion — D2 59088-3-II Published Opinion.pdf
Jurisdiction: Washington (state)
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Original Source: https://www.courts.wa.gov/opinions/pdf/D2%2059088-3-II%20Published%20Opinion.pdf ↗

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In December 2022, the Receiver moved for an order approving a preliminary partial

distribution of the proceeds to CLS. While the Receiver was still analyzing claims against the

receivership estate to determine claim validity and priority, it sought to make a preliminary

distribution to CLS, which had the largest outstanding debt of any of the claimants. At that time,

CLS claimed that its loan debt exceeded $7,000,000 and the loan was accruing interest at 18% per

year. The Receiver wanted to reduce the interest accrual from CLS’s loan and argued that a

preliminary distribution would still “retain and preserve sufficient estate funds to cover the

ongoing actual, necessary costs and expenses of the administration of [the] receivership estate,”

and other secured claimants would not be prejudiced. CP at 488. The superior court approved a

preliminary distribution to CLS for $3,000,000.

Then, in March 2023, the Receiver filed a motion to administer claims and determine claim

priority. $2,928,813.48 of the Phase 2 proceeds remained in the receivership estate. In its motion,

the Receiver noted that after review of the claims against the receivership estate and supporting

documentation, it believed that CLS held “a first position lien on Phase 2 sale proceeds in the

amount of $7,442,774.13, subject to reduction by the $3,000,000 amount CLS ha[d] already

received.” CP at 588.

However, the Receiver also recommended that CLS’s distribution amount “should be

reduced by the amount of Phase 2 earnest money provided by LGI.” CP at 588. Specifically, the

Receiver stated that $450,000 was “traceable to LGI’s earnest money deposit for the Phase 2

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For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.

No. 59088-3-II