My friend was supposed to close on the house she was buying and they had a purchase agreement done and money on the agreement and the seller backs out last minute, Can he do that legally? And if we went to court what would probably happen?

You can not do anything, since you are not a party to the contract.

Your friend, can sue in court for all damages allowed in the contract. So you have to read what the contract allows for breach of contract.

The purchase contract will spell out any penalties for backing out. What will probably happen when your friend goes to court will depend on the terms of the contract.

At the very least your friend should be returned any money he paid. Depending on how close they were to closing, there could be reimbursement for additional expenses incurred.

And the friend could sue for specific performance of the contract to sell.