Thomas v Montelucia Villas LLC

The Arizona Supreme Court made several key holdings in this case.  The first issue before the Court was the ability of a defendant to retain an “earnest” deposit when the Plaintiff anticipatorily breached the contract.  The Court ruled that if one party anticipatorily breaches a contract the defendant must still prove it is ready, willing and able to perform to retain any liquidated damages, including earnest monies.  Second, the Court also clearly defined earnest monies as those that are deposited with a third party neutral in order to show that the purchaser is in earnest and in good faith.  Monies that are paid directly to the seller and utilized by the seller are not earnest monies but in fact progress payments.