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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several performance obligations remained on the part of both ECM and LGI, including closing on

Phase 2, the PSA was an executory contract. RCW 7.60.005(4).

The Receiver rejected the PSA in accordance with its statutory powers. RCW 7.60.130.

Based on the receivership statute, the Receiver’s rejection of the PSA constitutes a “breach of the

contract . . . occurring immediately prior to the receiver’s appointment.” RCW 7.60.130(2)

(emphasis added). Thus, we view the breach of the PSA outside the receivership context, i.e., as

an event that occurred “prior to the receiver’s appointment.” RCW 7.60.130(2). If the rejection

of the PSA was a breach that occurred prior to the appointment of the Receiver, then we must

consider what would happen in a circumstance whereby ECM breached the PSA with LGI. In

other words, this becomes a contract dispute and we look to the terms of the contract.

Here, Article 11 of the PSA clearly outlined what would occur in the case of ECM’s breach.

Specifically, if ECM breached the PSA, LGI would have the right to either

terminate this [PSA] and receive (a) reimbursement from [ECM] for its reasonable
out-of-pocket expenses incurred in investigating the Property, not to exceed
$25,000 and (b) return of the Deposit (except to the extent previously applied to
the Phase I Purchase Price), . . . or (ii) to take any and all legal actions necessary to
compel [ECM]’s specific performance hereunder . . .; provided that if the remedy
of specific performance is unavailable then [LGI] shall be entitled to seek any
remedies available at law or equity.

CP at 107 (emphasis added). The record shows that LGI deposited a total of $1,621,000 in escrow,

with $1,171,000 allocated to Phase 1, to be applied to the Phase 1 purchase price, and $450,000 to