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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only exceptions to a secured creditor’s first position priority are for a receiver to recover “the

reasonable, necessary expenses of preserving, protecting, or disposing of the property to the extent

of any benefit to the creditors” and

[a]ctual, necessary costs and expenses incurred during the administration of the
estate, other than those expenses allowable under (a) of this subsection, including
allowed fees and reimbursement of reasonable charges and expenses of the receiver
and professional persons employed by the receiver under RCW 7.60.180.
Notwithstanding (a) of this subsection, expenses incurred during the administration
of the estate have priority over the secured claim of any creditor obtaining or
consenting to the appointment of the receiver.

RCW 7.60.230(1)(a), (b).

The record shows that while LGI had a deed of trust in place securing its deposit, that deed

created a security interest only in Phase 1 property.15 LGI already owns Phase 1 property.

Moreover, the PSA provided that that ECM’s obligation to return the deposit to LGI, “to

the extent required to do so under this Agreement, shall be secured by a mortgage lien against the

Land in the form of the Deed of Trust attached hereto.” CP at 93 (emphasis added). Thus, ECM

was obligated to return the Phase 2 deposit if it breached the PSA; however, the obligation with

regard to the Phase 2 deposit was not secured with the Phase 2 property. Based on the terms of

the PSA and the property that the LGI Deed secured, loss of the Phase 2 deposit is a risk that LGI

15
While LGI argued during proceedings below that its claim for the Phase 2 deposit was secured
by a deed of trust “recorded against the estate property,” LGI did not argue it is a secured creditor
on the Phase 2 property on appeal. CP at 84.