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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schedule of priorities provided in RCW 7.60.230, LGI’s claim falls below that of secured creditors

of the receivership estate, and the superior court erred when it ordered that LGI is entitled to return

of its deposit prior to any other receivership estate distributions. Therefore, we affirm in part and

reverse in part.

FACTS

A. BACKGROUND

In December 2017, ECM Riverside LLC (ECM) purchased land, known as the Riverside

Estates (Property), that it intended to subdivide into residential lots. In May 2018, ECM entered

into a purchase and sale agreement (PSA) for the Property with LGI, a homebuilder.

The terms of the PSA1 divided LGI’s purchase into “Phase 1” and “Phase 2.” Clerk’s

Papers (CP) at 92 (boldface omitted). Phase 1 consisted of 132 lots, for which LGI would pay a

purchase price of $11,880,000. Phase 2 consisted of 50 lots, for which LGI would pay $4,500,000.

Pursuant to the PSA, LGI paid a deposit of $1,621,000 for the Property, with $1,171,000 allocated

as the “‘Phase 1 Deposit’” and $450,000 allocated as the “‘Phase 2 Deposit.’” CP at 142. The

PSA provided that the deposits would be applied to the Phase 1 and Phase 2 purchase prices,

respectively, at each closing.

1
Between May 2018 and October 2020, ECM and LGI amended the PSA six times. The
amendments adjusted the ultimate purchase prices, allocations of deposits, and legal descriptions
of Phase 1 and Phase 2 properties, among other terms. Unless explicitly noted, references to the
PSA are based on the contract terms following the sixth and final amendment.

2
For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.

No. 59088-3-II

LGI deposited $1,621,000 with an escrow agent. The PSA then provided that the total