Seller not releasing Earnest Money Deposit

[James You]

Seeking for legal advice. My friend (let's call him Jimmy) had recently made an offer to a condo in CA, and the appraiser came way below the listed price (approx 30k). The seller wasn't willing to go down in his price and decided to take legal action against the lender claiming that they hand selected the appraiser purposely to help the buyer. As a result, he stated that he will not release the earnest money deposit. The condo is located in LA so the EMD amount is fairly hefty. Below is his statement:

I am the owner of the townhouse located at  ---------------------

It is my position that the unreasonably low valuation by the appraiser you hand picked was done in a fraudulent manner with sole intent to drive the price of the property down so that your buyer can benefit from a lower purchase price. In addition, the appraiser you selected admitted to my broker that he is not familiar with the area, which further violates the code of conduct for appraisers.

According to regulations established by the Federal Housing Administration, Fannie Mae, and Freddie Mac, lenders cannot be affiliated with appraisers and all appraisers are to follow the Uniform Standard of Professional Appraisal Practice set forth by the Appraisal Foundation which is governed by the US Congress.

These actions have caused monetary damages to me and my lawyer is reviewing the information to determine our next course of action. As such, I will not be signing the cancelation documents and will not be releasing the deposit out of escrow.

Should you wish to settle this matter without legal action, please respond to this email with a reasonable offer for the damaged incurred.

Obviously the lender did not handpick the appraiser, and the appraiser was based on the near by comps in the same complex.  Luckily Jimmy did not waive his appraiser contingency in the RPA.  

Jimmy is a first time home buyer, and he is having the worst experience to trying to buy his dream home.  He's a good friend of mine and I was hoping to see if I can provide him with some information through BP community.  

What kind of actions should Jimmy take in a situation like this? Should he asked his broker/agent for the EMD? What procedures should he take to get his EMD back?