Nancy A. Gass, Resp. v. Ahmad Abdel-wahed, App. ( 2014 )

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Marriage of
NANCY A. GASS,
No. 71007-9-1
Respondent,
DIVISION ONE
v.
AHMAD ABDEL-WAHED, UNPUBLISHED OPINION
Appellant. FILED: October 27, 2014
Becker, J. — The homestead statute exemption cannot be used to
facilitate unjust enrichment. Where a party has wrongfully obtained funds
belonging to another and there is a sufficient connection between the wrongfully
obtained funds and the homestead property, a court may impose the equitable
remedy of a constructive trust on proceeds received from the sale of that
property.
The parties to this declaratory judgment action, Nancy Gass and Ahmad
Abdel-Wahed, were previously married. They separated in September 2009. A
decree dividing their marital assets was entered on August 24, 2010, confirming
a binding arbitration award. Each party was to receive an equal share of the
community assets as valued by the arbitrator. The marital home was awarded to
Abdel-Wahed. Gass's offsetting award was to come from specified investment
No. 71007-9-1/2
accounts held in Abdel-Wahed's name. Abdel-Wahed was ordered to pay
spousal maintenance.
Abdel-Wahed continued to live in the house. He did not make spousal
maintenance payments. And he did not transfer funds to Gass.
The trial court issued an order and judgment of contempt against Abdel-
Wahed for failing to pay spousal maintenance and transfer assets as required by
the decree, despite having the ability to do so. Judgment was entered in the
amount of $190,318.35 on August 8, 2012. This amount included $50,400.00 in
past-due spousal maintenance. It also included $96,760.35 which should have
been transferred to Gass from the investment accounts. The remainder of the
judgment was for interest, attorney fees, and costs. The judgment ordered that
the marital home be sold and authorized Gass to sell it under court supervision.
Gass obtained an order forcibly removing Abdel-Wahed from the home on
September 14, 2012. The home was sold on November 28, 2012. The sale
netted $175,074.08 in proceeds. Pursuant to an agreement between the parties,
Gass received $50,400.00 from the sale proceeds to cover the past-due spousal
maintenance payments.
Abdel-Wahed refused to agree to let Gass receive any of the remainder of
the sale proceeds towards satisfying the balance of her judgment. He asserted
the protection of the homestead statute. Abdel-Wahed claims that he had an
automatic homestead on the property from the time he began living there years
before the dissolution. Also, he recorded a homestead declaration on September
28, 2012, to protect that interest.
No. 71007-9-1/3
Gass instituted this declaratory judgment action to obtain an order
awarding the remaining sale proceeds to her. Upon cross-motions for summary
judgment, the court issued an order on September 18, 2013. The order granted
Gass's motion in part, declaring she was entitled to receive from the remaining
sale proceeds the sum that, under the decree, should have been transferred to
her from the investment accounts. To that extent, the court imposed a
constructive trust over the sale proceeds. The court recognized that Abdel-
Wahed also owed Gass the interest, attorney fees, and costs itemized in the
judgment of August 8, 2012, but the court was not certain of its legal authority to
impose a constructive trust on those obligations as they were not specifically
mentioned in the dissolution decree. Accordingly, the order provided that Gass
would be permitted to withdraw $96,760.35 from the residence sale proceeds
that had been deposited with the court.
Abdel-Wahed appeals. He challenges the court's authority to impose a
constructive trust in these circumstances.
This court reviews orders granting summary judgment de novo and all
inferences must be drawn in favor of the nonmoving party. Lvbbert v. Grant
County, 141 Wash. 2d 29, 34, 1 P.3d 1124 (2000).
JURISDICTION AND STATUTORY AUTHORITY
Abdel-Wahed first argues that the order of summary judgment is void for
want of jurisdiction because Gass's complaint for declaratory relief did not
specifically request that the trial court impose a constructive trust. Abdel-Wahed
claims that the absence of a request for the specific relief granted makes the
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judgment void under In re Marriage of Hardt, 39 Wash. App. 493, 496, 693 P.2d
1386(1985).
In Hardt, a decree of marriage dissolution was entered ordering the
husband to pay child support despite the parties having stipulated in their joint
petition that an order of child support was not requested. Five years after the
decree was entered, the former husband obtained a judgment vacating the child
support obligation. The vacation was affirmed on appeal under CR 60(b)(11).
The court concluded that the entry of a judgment that did not conform to the
parties' stipulation was the type of irregularity allowing vacation of an order that
was not appealable for error of law. Here, the petition was not stipulated.
A court has subject matter jurisdiction when it has authority to adjudicate
the type of controversy involved in an action. Williams v. Leone & Keeble, Inc.,
171 Wash. 2d 726, 730, 254 P.3d 818 (2011). There can be no doubt that a case in
which a declaratory judgment or a constructive trust is sought is among the types
of cases a superior court has the power to decide. The trial court did not lack
subject matter jurisdiction, and the judgment is not void.
Abdel-Wahed restates the argument in his reply brief as a lack of statutory
authority. He contends that the authority granted by the declaratory judgment
statute does not include the authority to fashion equitable relief such as a
constructive trust. He did not make this argument below in response to Gass's
motion for summary judgment and has not identified any rationale which allows
him to raise it for the first time on appeal.
No. 71007-9-1/5
In any event, the cases Abdel-Wahed cites are not on point. He cites
Bainbridqe Citizens United v. Dep't of Natural Res., 147 Wash. App. 365, 374-75,
198 P.3d 1033 (2008), and City of Tacoma v. City of Bonnev Lake, 173 Wash. 2d
584, 595, 269 P.3d 1017 (2012). In Bainbridqe Citizens, the appellants sought to
use a declaratory judgment action as a vehicle to make a state agency enforce
certain regulations in a manner that the appellants desired. The court stated that
this would be an improper use of our declaratory judgment statutes. "Declaratory
judgments are not meant to compel government agencies to enforce laws. If the
UDJA [Uniform Declaratory Judgments Act] allowed otherwise, the negative
implications would be endless. Courts would be forced to supervise
administrative agencies, a function we have long found contrary to the judiciary's
proper role." Bainbridqe Citizens, 147 Wash. App. at 375. Nothing in Bainbridqe
Citizens suggests the trial court lacked authority to impose a constructive trust as
a remedy after declaring that Gass's right to be paid from the sale proceeds was
not barred by Abdel-Wahed's homestead declaration. Abdel-Wahed's reliance on
City of Tacoma is equally misplaced. In that opinion, our Supreme Court simply
recognized that courts err by dismissing a complaint with prejudice without
declaring the rights of the parties when declaratory relief is sought. City of
Tacoma, 173 Wash. 2d at 595.
Gass's complaint sought declaratory relief, and it also asked the court to
grant "such other and further relief as the Court finds just and equitable." While
the complaint did not specifically ask for imposition of a constructive trust, Gass's
cross motion for summary judgment fully explained her theory that the proceeds
No. 71007-9-1/6
from the sale of the home were subject to a constructive trust to prevent Abdel-
Wahed's unjust enrichment.
We conclude the court did not lack jurisdiction or authority to impose a
constructive trust.
EFFECT OF HOMESTEAD EXEMPTION
Abdel-Wahed contends the trial court improperly disregarded his
homestead exemption.
A homestead is "real or personal property that the owner uses as a
residence." RCW 6.13.010(1). A homestead is exempt from execution on
judgments up to a specified amount. RCW 6.13.070(1). That amount is
presently $125,000. RCW 6.13.030. Ajudgment against the owner of the
homestead becomes a lien on the value of the homestead property in excess of
the homestead exemption from the time it is recorded. RCW 6.13.090; Wilson
Sportinq Goods Co. v. Pedersen, 76 Wash. App. 300, 304-06, 886 P.2d 203 (1994).
Abdel-Wahed contends that Gass is barred from recovering against the
homestead sale proceeds because she did not record any of her judgments
concerning the home and therefore did not create a lien. This argument is
without merit. The trial court's decision to impose a constructive trust was not
based on a finding that Gass had a lien under RCW 6.13.090. The trial court's
decision was based on a record showing that "the defendant intentionally and in
bad faith 'looted' the investment accounts which were supposed to be transferred
to plaintiff as part of the Decree, and was unjustly enriched by doing so." Clerk's
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Papers at 207 (Order on Cross Motions for Summary Judgment, September 18,
2013).
As stated by the trial court in its order, "it is well established that the
Homestead Statute exemption cannot be used to facilitate unjust enrichment or
fraud, and the court in equity may impose a constructive trust." The court cited
Webster v. Rod rick, 64 Wash. 2d 814, 394 P.2d 689 (1964), to support this
proposition. Webster recognizes a nonstatutory exemption that "allows an
equitable lien to be imposed against a homestead when the homestead claimant
acquires the funds to purchase the homestead by fraud or theft." Fed.
Intermediate Credit Bank of Spokane v. O/S Sablefish. 111 Wash. 2d 219, 229-30,
758 P.2d 494 (1988).
In Webster, an employer sued to recover funds embezzled by his
bookkeeper. The employer obtained a money judgment against the bookkeeper
individually and her marital community for the sum embezzled, as well as a
decree imposing an equitable lien upon the defendants' property, including their
residence. The employer attempted to have the residence sold to satisfy the
judgment. The defendants claimed protection under the homestead statute, and
the trial court denied the employer's motion to declare the homestead exemption
invalid.
Our Supreme Court reversed and observed that the homestead
exemption, while enjoying a favorable position in law, is intended for use as a
shield to protect the homesteader. "We find no decision in this jurisdiction where
the court has permitted the judgment debtor to use the statutes as a sword to
No. 71007-9-1/8
protect a theft." Webster, 64 Wash. 2d at 816. Nor can they be used "as an
instrument of fraud or imposition." Webster, 64 Wash. 2d at 818. The court
concluded that the homestead statutes did not protect the defendants from the
equitable lien.
Webster allows an equitable lien to be imposed against a homestead
when the homestead claimant acquires the funds to purchase the homestead by
fraud or theft or other wrongful conduct. Pinebrook Homowners Ass'n v. Owen,
48 Wash. App. 424, 430, 739 P.2d 110, review denied, 109 Wash. 2d 1009 (1987); see
also Casterline v. Roberts, 168 Wash. App. 376, 386-87, 284 P.3d 743 (2012). The
imposition of an equitable lien against homestead property requires a showing
that the wrongfully obtained funds are traceable in some way to the homestead
property or connected with its use or obtained by intentional culpability such as
fraud. See Christensen v. Christqard, Inc.. 35 Wash. App. 626, 630-31, 668 P.2d
1301, review denied, 100 Wash. 2d 1032 (1983). In Webster, the court took pains
to recite the evidence that the embezzled funds were "used to purchase and
improve the property in question." Webster, 64 Wash. 2d at 819. Abdel-Wahed
argues that Webster does not apply here because the funds he wrongfully took
from the investment accounts were not used to purchase or improve the
residence and were not obtained by fraud.
The record shows a clear connection between the wrongfully obtained
funds and the property claimed as an exempt homestead. The dissolution
decree gave Abdel-Wahed sole ownership of the home in which he now claims
homestead protection. He was held in contempt for failing to comply with an
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No. 71007-9-1/9
order to transfer money to Gass from the investment accounts to equalize the
distribution of marital assets. This was intentionally culpable conduct. In effect,
Abdel-Wahed is attempting to use the homestead exemption to avoid paying for
the home. Also, his motion for summary judgment admits that he directly used
investment account funds to meet his living expenses, which included mortgage
payments on the home. Under these circumstances, the wrongfully obtained
funds are sufficiently connected to the homestead. The trial court appropriately
relied on Webster as authority to impose the constructive trust.
Gass requests attorney fees on appeal under RCW 26.09.140. The
request is granted. An award of attorney fees under the statute is proper if the
present litigation is a "continuation of the original dissolution action." Seals v.
Seals, 22 Wash. App. 652, 657, 590 P.2d 1301 (1979). This is especially true when
the losing party's conduct constitutes bad faith. Seals, 22 Wash. App. at 658.
Affirmed. Attorney fees on appeal are awarded to Gass.
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WE CONCUR:
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