Karen Konz, V. Colin Hofmann

• Court: Court of Appeals of Washington
• Decided: January 21, 2025
• Docket: 85353-8
• Status: Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

COLIN HOFMANN, No. 85353-8-I

Respondent, DIVISION ONE

v. UNPUBLISHED OPINION KAREN KONZ (formerly HOFMANN),

Appellant,

and

DANIEL SIMPSON,

Defendant.

SMITH, C.J. — Karen Konz was found to have willingly and fraudulently

failed to disclose and secreted community funds to purchase property during a

dissolution proceeding with her former spouse, Colin Hofmann. Konz appeals

and asserts the court erred when it considered loans she took out during the

dissolution proceeding as community property. Because the trial court did not

consider the loans as community property, we find no error and affirm.

FACTS

In August 2019, Karen M. Konz and Colin D. Hofmann dissolved their

marriage following a three-month trial. During trial, Konz and Hofmann disputed

the dissipation of approximately $200,000 from two bank accounts. The

accounts belonged to Maple Leaf Pet Corner (MLPC), a veterinary clinic owned No. 85353-8-I/2

and operated by Konz. The money was withdrawn between the initiation of the

dissolution action and the beginning of trial. Hofmann argued Konz depleted the

funds to buy a butcher shop in Ferry County, Washington. Konz denied any

improper secreting of funds and provided alternative explanations for the

dissipation of assets and decline in revenue at MLPC.

Acknowledging both parties’ arguments, the court stated, “without more

specific testimony, the court cannot simply review the Profit & Loss statements

and the Balance Sheets and determine what amounts have been improperly

spent.” While the court noted Konz was not “forthcoming with financial

information,” it did not find misappropriation with regards to her handling of MLPC

funds.

In November 2019, Hofmann initiated a complaint for partition of property,

alleging Konz contracted to purchase the butcher shop using funds from MLPC

during the dissolution of marriage proceeding. At the time of the proceeding,

MLPC was considered community property and assigned a value of $807,000.

The matter went to trial in November 2022, to determine whether Konz

misappropriated funds from MLPC to purchase the butcher shop and whether

Hofmann was entitled to half of the funds used to purchase the business.

At trial, Hofmann presented text messages from Konz to some of her

friends. He discovered the messages on a phone left at his home. In four

separate messages, all sent in June 2019, Konz asked her friends if they knew

anyone who could loan her $180,000 to invest in a business and real estate. Her

texts stated she had already “paid 140,000 on the 320,000” and if she didn’t

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come up with the remainder she would “lose [her] $120,000.” When asked about

the text messages at trial, Konz stated “they weren't truth to the matter. They

don't even make sense to me to this day, trying to put everything out. And I'm

like -- you know, I clearly was not thinking -- you know, I didn't have the -- I

wasn't sure, you know, about numbers or stuff. And when I said ‘I,’ I meant Dan.”

In response to Konz’s messages, one of the friends suggested Konz could

use her retirement account, to which Konz replied “I can take out that!” Less

than a week after receiving that message, Konz withdrew $18,330 from a

retirement account she failed to disclose during trial. Two weeks later, in early

July 2019, Konz took out two loans, totaling $320,000. Less than a week after

receiving the loans, Konz transferred a total of $86,655.66 to Alicia Carlos, the

previous owner of MLPC. Carlos then wrote three separate checks to William

Page, the owner of the butcher shop property, totaling $86,655.66.

The sale of the butcher shop property was finalized in September 2019.

The title for the property listed Daniel Simpson, a friend of Konz, as the

purchaser for $271,000, but Konz paid $6,421 for the closing costs. Simpson

testified he used $100,000 of his own money to pay for the property. He

produced a receipt for a cashier’s check dated April 2019 for the sum of

$100,000, but the receipt did not include a payee. Simpson claimed he was

unable to obtain bank records to corroborate these funds came from his account.

He also claimed he borrowed the remaining funds used to purchase the butcher

shop from Konz, but has since made no payments on the alleged loan. Simpson

testified Konz has current use of the butcher shop and associated property.

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The trial court did not find credible either Konz’s testimony about the text

messages or Simpson’s testimony about the purchase of the butcher shop. The

trial court concluded Konz had purchased the butcher shop and listed Simpson

as the buyer to “avoid detection.” The court also found Konz used Carlos “in an

effort to conceal her purchase of the Butcher Shop Property.” The court noted

the likely source of the $120,000 down payment for the butcher shop was MLPC

revenue diverted by Konz, and the loans taken out in July 2019 were for the

purpose of completing the purchase.

The court concluded the $120,000 used to purchase the butcher shop was

a community asset and should have been before the dissolution court for

distribution. The court specifically noted this amount was not included in the

valuation of MLPC and, in light of Konz’s deception, “it would be inequitable to

attempt to recalculate the value of MLPC.” The court granted Hofmann a

constructive trust for the butcher shop property in the amount of $69,375 plus

interest. The court also awarded Hofmann attorney fees and costs. Konz

appeals.

Analysis

RAP 10.3

Hofmann claims Konz violated RAP 10.3 by not making concise

statements of error, improperly citing the record, and failing to challenge specific

findings. Konz does not address this issue in her reply brief. We conclude

Konz’s brief satisfies RAP 10.3.

RAP 10.3 governs the requirements for appellant briefs. RAP 10.3(4)

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requires the appellant to include “[a] separate concise statement of each error a

party contends was made by the trial court, together with the issues pertaining to

the assignments of error.” The rule also requires factual statements in the

“statement of the case” and “argument” to have a reference to the record.

RAP 10.3(5)-(6). The record may consist of the report of proceedings, clerk’s

papers, and exhibits. RAP 9.1(a). Technical violations of RAP 10.3 will not bar

review of the case when “the nature of the challenge is perfectly clear, and the

challenged finding is set forth in the appellate brief.” Daughtry v. Jet Aeration

Co., 91 Wn.2d 704, 710, 592 P.2d 631 (1979).

Here, Konz failed to make concise statements of error and challenge

specific findings, but the nature of her challenge was clear in her brief and

Hofmann did not appear to have any trouble responding to Konz’s claims.

Because the challenged findings can be found in the text of the brief, we consider

the merits of Konz’s appeal.

Washington Privacy Act

Konz claims Hofmann violated the Washington privacy act1 when he read

her text messages and shared them with his attorney. Hofmann contends Konz

withdrew her objection at trial and cannot raise the issue for the first time on

appeal. Hofmann also maintains the statute of limitations to bring such a claim

has passed. Because Konz did not argue this issue at trial and the statute of

limitations has run, we agree with Hofmann.

The Washington privacy act provides that it is unlawful for any individual to

1 Chapter 9.73 RCW.

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intercept or record any private communication transmitted by phone by two or

more individuals by any device designed to record and/or transmit such

communications without first obtaining consent. RCW 9.73.030. The statute of

limitations to bring a claim under the Washington privacy act is three years.

RCW 4.16.080. When a claim is not pled nor argued during trial, it cannot be

raised for the first time on appeal. Sourakli v. Kyriakos, Inc., 144 Wn. App. 501,

509, 182 P.3d 985 (2008).

During trial, Konz sought for the text messages to be excluded under

RCW 9.73.030. The trial court asked for briefing on the issue. The next day,

Konz withdrew the objection, stating “I couldn’t, in good faith, continue to make

that objection. . . . [W]e’re going to withdraw our objection on the privacy grounds

at this time.” Konz now raises the issue in her opening brief, but admits in her

reply brief “a claim for violating [Konz’s] right of privacy under RCW 9.73.030

may have passed.” Because Konz cannot raise this issue for the first time on

appeal and the statute of limitations has run, we need not address the issue.

Loans as Community Property

Konz contends the trial court abused its discretion by considering the loan

assets she acquired during the dissolution proceeding as community property.

Hofmann claims the trial court did not consider the loan assets as community

property. Because the court did not consider the loans as community property,

we agree with Hofmann.

A court’s decision is an abuse of discretion only when “its decision is

manifestly unreasonable or based on untenable grounds.” In re Marriage of

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Fiorito, 112 Wn. App. 657, 664, 50 P.3d 298 (2002). A decision is manifestly

unreasonable or based on untenable grounds if it is “unsupported by the record

or result[s] from applying the wrong legal standard.” Gilmore v. Jefferson County

Pub. Transp. Benefit Area, 190 Wn.2d 483, 494, 415 P.3d 212 (2018)

We review a trial court’s factual findings for substantial evidence. In re

Vulnerable Adult Petition for Winter, 12 Wn. App. 2d 815, 829, 460 P.3d 667

(2020). The substantial evidence standard requires evidence sufficient to

“persuade a rational fair-minded person the premise is true.” Sunnyside Valley

Irrig. Dist. v. Dickie, 149 Wn.2d 873, 879, 73 P.3d 369 (2003). We defer to the

judgment of the trial court for matters concerning weight of the evidence or

credibility of witnesses. In re Welfare of Sego, 82 Wn.2d 736, 739-40, 513 P.2d

831 (1973). Conclusions of law are reviewed de novo. In re Est. of Little, 9 Wn.

App. 2d 262, 275, 444 P.3d 23 (2019).

Here, Konz claims the trial court abused it’s discretion by considering the

loans she took out during the trial as community property. She contends she

took out the loans after the marriage ended and, therefore, they were separate

property that did not affect the valuation of MPLC and should not have been

considered in the judgment entered. But neither the court nor Hofmann disagree

with Konz’s assertion. The trial court did not consider the loans Konz acquired

as community property and Konz provides no evidence to the contrary.

In its order, the court only references the loans as evidence of how Konz

paid for the butcher shop. The court makes clear the misused funds were the

moneys depleted from the MLPC accounts, which Konz does not deny were

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community property. In the order, the court states, “[d]uring the dissolution

proceedings, there is clear cogent and convincing evidence that Konz willfully

and fraudulently failed to disclose to Hofmann and to the trial court the existence

of $120,000 that she diverted [from MPLC] and used as a down payment for the

Butcher Shop Property. By hiding this asset, Konz breached her fiduciary duty to

Hoffman.” Additionally, the court noted the valuation of the business was not

affected by the loans; the valuation was affected by Konz’s diversion of funds in

the MLPC accounts. In making its findings, the court relied on witness testimony,

bank records, and text messages from Konz’s phone.

Konz also contends the trial court erred by relying on the dissolution

court’s statement that $200,000 had been depleted from the accounts because

the trial court “could not determine what amounts have been improperly spent.”

But proving how the $200,000 was spent is precisely the question the trial court

addressed.

Because substantial evidence existed for the court to determine Konz had

used funds from MLPC accounts to purchase the butcher shop, and the court did

not consider the loans as community property, the court did not abuse its

discretion.

Constructive Trust

Konz asserts the court erred when it imposed a constructive trust because

clear and convincing evidence did not exist to prove she misused funds.

Hofmann disagrees. Because substantial evidence supports a finding that Konz

secreted funds from MPLC, we agree with Hofmann.

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“A constructive trust is an equitable remedy by which a court may restore

property that another has gained through questionable means, such as fraud,

misrepresentation, or overreaching.” In re Gilbert Miller Testamentary Credit

Shelter Tr., 13 Wn. App. 2d 99, 106, 462 P.3d 878 (2020). Courts may choose to

impose a constructive trust to prevent unjust enrichment. Gilbert, 13 Wn. App.

2d at 107. A constructive trust is proper when there is “clear, cogent, and

convincing evidence of the basis for impressing the trust.” Baker v. Leonard, 120

Wn.2d 538, 547, 843 P.2d 1050 (1993)

Konz contends that a constructive trust is an improper solution because

clear and convincing evidence did not exist to prove she used community funds

to purchase the butcher shop. However, because substantial evidence supports

the trial court’s finding that Konz diverted community funds and breached her

fiduciary duty, the court did not err when it imposed a constructive trust.

Attorney Fees

RAP 18.1 provides that applicable law may grant a party the right to

recover reasonable attorney fees or expenses on review. A party requesting

fees under RAP 18.1 must provide argument and citation to authority “to advise

the court of the appropriate grounds for an award of attorney fees as costs.”

Stiles v. Kearney, 168 Wn. App. 250, 267, 277 P.3d 9 (2012).

Here, both Konz and Hofmann request an award of fees under RAP 18.1.

Konz does not cite to any authority for her request, she simply states Hofmann

pursued his claim in bad faith. Because Konz failed to comply with the

mandatory requirements of RAP 18.1, we deny her request for attorney fees.

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Hofmann cites to RCW 26.09.140 in his request for attorney fees. Under

RCW 26.09.140, a trial court may award attorney fees after considering the

financial resources of both parties. While generally this statute is applied to

dissolution proceedings, a partition action to divide property that was concealed

at the time of the dissolution is a continuation of the dissolution proceeding for

purposes of an award of attorney fees. Seals v. Seals, 22 Wn. App. 652, 657,

590 P.2d 1301 (1979).

A court need not consider the parties’ financial resources in awarding

attorney fees when one party’s intransigence causes additional legal fees. In re

Marriage of Mattson, 95 Wn. App. 592, 604, 976 P.2d 157 (1999). Typically, an

award of attorney fees based on intransigence is limited to additional fees

incurred because of the intransigence, but “where a party’s bad acts permeate

the entire proceedings, the court need not segregate which fees were incurred as

a result of the intransigence and which were not.” Burrill v. Burrill, 113 Wn. App.

863, 873, 56 P.3d 993 (2002).

Similar to the trial court, a court of appeals may award attorney fees

“[w]here an intransigent spouse’s appeal ‘amounts to little more than an effort to

carry on with the same efforts which caused [them] to lose credibility with the trial

court.” In re Marriage of Bresnahan, 21 Wn. App. 2d 385, 413, 505 P.3d 1218,

1233 (2022) (alteration in original) (quoting In re Marriage of Sievers, 78 Wn.

App. 287, 312, 897 P.2d 388 (1995)).

Hofmann also claims the appeal is frivolous and the court may impose

sanctions under RAP 18.9(a). An appeal is frivolous “if there are ‘no debatable

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issues upon which reasonable minds might differ, and it is so totally devoid of

merit that there was no reasonable possibility’ of success.” In re Recall Charges

Against Feetham, 149 Wn.2d 860, 872, 72 P.3d 741 (2003) (internal quotation

marks omitted) (quoting Millers Cas. Ins. v. Briggs, 100 Wn.2d 9, 15, 665

P.2d 887 (1983)).

Here, the trial court determined “Konz’s bad faith permeated the entire

proceedings” and awarded Hofmann reasonable attorney fees and costs.

Because Konz’s appeal is a continuation of the intransigence demonstrated at

the trial court, and there are no debatable issues on appeal, we award

reasonable attorney fees to Hofmann.

Sufficient evidence supports the trial court’s finding that Konz diverted

funds from MLPC and used them to purchase the butcher shop, and the

imposition of the constructive trust was a proper remedy to prevent unjust

enrichment. We affirm and award Hofmann reasonable attorney fees and costs.

WE CONCUR: