In 2005, the Merritt Square Mall in central Florida was sold pursuant to a purchase and sale agreement among Delaware limited liability companies. The sellers undertook in the purchase agreement to perform and pay for the work required to bring a JC Penney store in the mall into compliance with the fire code. At the closing, the sellers and the buyer entered into a separate escrow agreement pursuant to which the sellers deposited approximately $250,000 into an escrow account to secure the work obligation, though the escrow agreement required the sellers to pay for the work whether or not the escrowed funds were sufficient.1
Shortly after the closing of the sale, the sellers distributed substantially all of the sale proceeds and the sellers’ other assets, other than the escrow account, to their respective members. The sellers subsequently filed certificates of cancellation, ending their legal existence effective Dec. 6, 2006. Although the sellers hired a contractor to perform the required work, it was never undertaken by the contractor. The buyer asserted, as noted by the court in the resulting litigation, that once it was determined after the closing that the presence of asbestos would substantially increase the cost of the work, the sellers abandoned their efforts. Eventually the buyer was forced to undertake the work at its expense with the same contractor, at an ultimate cost in excess of four times the escrow. Shortly after the dissolution of the sellers, the buyers sent a demand to the sellers for release of the escrowed funds and reimbursement of the excess costs, which demand went unsatisfied, and the buyer brought an action against the sellers.
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