A plaintiff purchaser (purchaser) sought a declaratory judgment that it is entitled, as the seller’s assignee, to funds escrowed in connection with a contract of sale of real estate. Defendant “A” was a prior purchaser which had not closed on its purchase. The seller was Brooklyn Law School (BLS). Counterclaim defendants included BLS, BLS’s law firm, which had served as an escrow agent, certain individual members of the purchaser LLC and the dean of BLS.
In 2010, the purchaser had submitted an offer to buy the subject property for $9.2 million. BLS declined the offer and instead, accepted a higher offer from “A,” an offer of $10,125,000. “A” deposited $1,012,000 with BLS’s attorney as escrow agent. An escrow agreement provided that the escrow agent would “incur no liability except for willful misconduct or gross negligence ‘so long as Escrow Agent has acted in good faith’….” The escrow agreement required the escrow agent to hold the deposit “in its IOLA escrow account, to be released upon receipt of authorization from both ['A'] and BLS, or upon receipt of a demand for the funds from one party if that demand is not objected to by the other party.” In the event of a dispute, the escrow agent could deposit the funds into court. The escrow agent was still holding the deposit.
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