Royce Loses Escrow Appeal in Entercom/KWOD Case

RADIO ONLINE | , , | :am CT

Yet another court ruling has come down in the long running saga of Royce International vs. Entercom over the sale of KWOD-FM/Sacramento. The latest appeal by Royce concerns a post-judgment order terminating the escrow account containing $25 million that Entercom deposited towards the purchase price.

Royce contends the trial court erred in finding Royce had forfeited its right to complain that too little interest was earned on the escrow deposit when Entercom was permitted to withdraw $2.65 million of the accrued interest before the final accounting and distribution.

The court rejected, as "without merit," Royce's claim that Entercom breached the terms of the interlocutory judgment by establishing an escrow account which earned too little interest. Specifically, the court found that Royce "had waived any objection" to "the rate of interest being earned" in light of "the passage of almost 6 years" since the escrow account was established.

During the six-year term of the escrow account, Entercom periodically withdrew interest as it accrued, thereby preventing the interest from compounding. Royce characterized this action as a breach of the interlocutory judgment and asked for damages. The trial court agreed with Royce that the interim interests payments from the escrow account to Entercom were "inappropriate," but found insufficient evidence to calculate its effect.

However, the judge said, that Royce omitted any reference in its opening brief to the standard of review and argues instead, in its reply brief, that "Entercom failed to establish that the trial court did not commit reversible error." Thus, the court ruled, Royce appears to misunderstand that it, not Entercom, bears the affirmative burden on appeal to establish the existence of reversible error.

The court battle between Entercom and Royce began in 1999, when Entercom filed suit against Royce for backing out of deal to sell the station for $25 million. In April, 2002, a California Superior Court ordered Royce owner Ed Stolz to proceed with the transfer after ruling Entercom had a valid contract. Royce has been fighting the transfer ever since.