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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of the PSA. Instead, the entire deposit (for Phase 1 and Phase 2) was released from escrow to

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While we need not look beyond Washington’s receivership statute to reach this conclusion, this
holding also finds support within federal bankruptcy law. See, e.g., Gulf Petroleum, 316 F.2d at
261 (stating that “money held in escrow is not property which vests in the trustee in bankruptcy”);
In re Summit Airlines, Inc., 94 B.R. 367, 368 (Bankr. E.D. Pa. 1988), aff’d, 102 B.R. 32 (E.D. Pa.
1989) (holding “all of the funds in, and reasonably traceable to, an escrow fund created by the
Movant’s deposits pursuant to an agreement . . . , frustrated by the Debtor’s rejection thereof . . . ,
are not property of the Debtor’s estate in which the estate has an equitable interest, entitling the
Movant to possession thereof”).

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

No. 59088-3-II

ECM and spent. Based on the record, the only funds available for any distribution to any claimant

are proceeds from the sale of the Phase 2 property—funds that fall squarely within the receivership

estate.

Thus, while LGI has a valid claim for the return of its deposit separate from creditors of

the receivership estate, Washington’s receivership statute does not appear to directly contemplate

a scenario where the return of non-receivership funds can only be accomplished through

receivership property. See RCW 7.60.130.

Here, LGI argues that it is “instructive and helpful” to look to bankruptcy law for guidance.

Br. of Resp’t at 20. Specifically, LGI argues that bankruptcy courts have determined “that funds

held in escrow that are not ultimately applied to a purchase price pursuant to contract terms due to