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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insolvency context), review denied, 146 Wn.2d 1023 (2002).

2. LGI’s Deposit is an Unsecured Claim

CLS argues that the superior court erred in its holding that LGI’s Phase 2 deposit was

traceable within the Phase 2 sale proceeds that the Receiver could then distribute back to LGI.

Specifically, CLS argues that “the LGI Earnest Money Deposit was paid to ECM in August 2018[,]

. . . more than two years before [the] Receiver’s appointment and . . . those funds were fully

expended well before [the] Receiver’s appointment.” Br. of Appellant at 6-7. Accordingly, CLS

asserts that the Phase 2 deposit was “never” part of the receivership estate and cannot be returned

by the Receiver through the receivership estate. Br. of Appellant at 12.

LGI agrees that its Phase 2 deposit was not part of the receivership estate, but on the

grounds that ECM never had title to the $450,000 because those funds were supposed to have been

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No. 59088-3-II

applied the Phase 2 purchase price according to the terms of the breached PSA and the Phase 2

deposit is directly traceable within the Phase 2 sale proceeds. Further, LGI urges this court to look

to bankruptcy law for guidance, which provides that escrow funds “that are not ultimately applied

to a purchase price pursuant to contract terms due to no fault of the buyer are not property of the

seller’s estate” and the buyer is entitled to full return of those escrow funds. Br. of Resp’t at 20-

21 (citing Gulf Petroleum, S.A. v. Collazo, 316 F.2d 257, 261 (1st Cir. 1963)).

The superior court’s May 11, 2023 Order amounts to a judgment regarding the

receivership. Thus, we review the superior court’s decision for abuse of discretion. 9 Applied