If the sale is canceled by the seller you should certainly get ant earnest money deposit back. What other fees are involved? Real estate contracts in California generally spell out the responsibilities of both the buyer and the seller and your agent should be able to draw your attention to the relevant paragraphs.
You did have an agent other than the Listing agent representing you, I hope?
If all else fails, litigation (maybe just small claims court) may be a resort but as Short Sale sellers generally don't have much, if any, money, that may not be worth your efforts.
Trying to buy a short sale can be a thankless task at times.
Good luck to you
Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist, DRE License # 01331583
J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526
Phone (925) 997-1585
See all homes for sale in Contra Costa and Alameda Counties