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    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                       DIVISION  II

James C. Casterline, in his capacity as                          No.  41392-2-II
Guardian/Conservator of THERESA             A. 
ROBERTS,

                             Respondents,                   PUBLISHED OPINION

       v.

DENISE H. ROBERTS a/k/a DENISE 
WILSON; and JOHN MILLER WILSON,

                             Appellants.

       Armstrong, J.  --  Denise Roberts used money from her mother's trust to purchase 

property and build a home in Kelso for herself and her husband, John Wilson.    When the court 

appointed a guardian to investigate her mother's assets, Denise1 transferred her interest in the 

Kelso property to Wilson without consideration; she also transferred property in California to her 

brother-in-law without consideration.  The guardian sued to set aside the Kelso property transfer 

and to impose an equitable lien on the property for the money Denise took from the trust. Denise 

and Wilson appeal the trial court's decision in the guardian's favor, arguing that (1) the trial court 

erred by imposing an equitable lien on the Kelso property because Denise had discretion to use 

trust funds for Theresa's care, maintenance, and support; (2) the court erred in finding Denise's 

property transfer to be fraudulent; and (3) the homestead exemption protects their interest in the 

property.  Finding no error, we affirm.

1 We refer to Theresa Roberts and Denise Roberts by their first names for clarity. 

No. 41392-2-II

                                            FACTS

       Theresa Roberts is in her mid 80s.     She has three children, John Teaman and Marta 

Vignola, who live in California, and Denise, who lives in Washington.  Denise is married to John 

Wilson. Theresa formed a revocable living trust in 1995 and amended it in January 2004 to name 

Denise as trustee.

       In May 2005, Denise and Wilson purchased unimproved property in Kelso on which to 

build a home; they testified that their intent was to have Theresa live in the home with them.  They 

designed the  home to have four bedrooms, a three-car garage, a mother-in-law unit, and four 

bathrooms.  Denise and Wilson agreed to pay $450,203.55 for the home. 

       In April 2006, Theresa sold her home in California with net proceeds of approximately 

$640,000.  The sale proceeds were initially put in an account in Denise's name but later 

transferred to Theresa's trust account.  Denise took $153,000 from the trust account to pay 

toward the Kelso property purchase.   

       After the California property sale, Denise moved Theresa to an assisted living facility in 

Seaside, Oregon.2  Denise did not immediately inform Teaman or Vignola of the move.  Three 

weeks after the move, Denise e-mailed Vignola a new address for Theresa.  Denise admitted, 

however, that she sent Vignola the wrong address.

       On August 1, 2006, Teaman and Vignola petitioned the Clatsop County Court (Oregon) 

to appoint a temporary guardian for Theresa.  The court appointed Nancy Sells as "visitor" for 

2 In 2006, two physicians reported to Denise that Theresa had been suffering from dementia for 
two or three years and was "mentally incapable to make responsible decisions concerning her 
welfare and management of her assets." Report of Proceedings (RP) (July 15, 2010) at 159.  
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No. 41392-2-II

Theresa.3  RP (July 15, 2010) at 145. On August 14, Sells filed her report recommending that the 

court appoint a guardian because of Theresa's dementia and a conservator4 to protect her assets.

The  court then appointed Teaman and Vignola as temporary co-guardians and temporary co-

trustees.

       On the day Sells filed her report, Denise conveyed her California condominium to her 

brother-in-law, Sterling Clayton Wilson, for no consideration.  One day later, on August 15, she 

conveyed the Kelso property to her husband, again for no consideration.  Approximately seven 

months later, Sterling reconveyed the California property to Denise for no consideration and, on 

the same day, Denise sold the property to another person.  In November 2006, the Oregon court 

appointed James Casterline as conservator of Theresa's estate.  

       Casterline sued Denise and Wilson, alleging that Denise breached her fiduciary duties of 

loyalty, prudence, and good faith.  Casterline alleged that  Denise and Wilson were unjustly 

enriched by Denise's transfers from the trust and asked the court to impose a $153,000 equitable 

lien on the Kelso property.

       The trial court found that Denise tried to hide her mother and prevent access to her.  The 

trial court also found that the property transfers through quitclaim deeds for no consideration 

were fraudulent and specifically noted that (1) the transfers were to insiders; (2) the transfers 

3 A "visitor" describes a person appointed by the court to interview and evaluate a respondent or 
protected person.  The law requires the court to appoint a visitor to make a report before a 
guardian is appointed for an adult respondent.  ORS 125.005, .125.

4 A "conservator" is the legal term used in Oregon for a person acting as a guardian of the estate.  
RP (July 15, 2010) at 11.
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No. 41392-2-II

constituted substantially all of Denise's assets and left her insolvent; (3) Denise continued to enjoy 

the use of the properties; and (4) the transferees paid no consideration.  The court ruled that 

because Denise fraudulently transferred the Kelso property to Wilson, the homestead exemption 

did not apply to the property and the transfer should be set aside. The court imposed an equitable 

lien of $153,000 on the property.

                                          ANALYSIS

                                        I. Equitable Lien

       Denise and Wilson argue that the trial court erred by ordering an equitable lien because 

Denise had discretion to use trust funds for Theresa's care, maintenance, and support.  

       We review a trial court's decision following a bench trial by asking whether substantial 

evidence supports the findings and whether the findings support the court's conclusions of law.  

Standing Rock Homeowners Ass'n v. Misich, 106 Wn. App. 231, 242-43, 23 P.3d 520 (2001).  

Substantial evidence is that quantity of evidence sufficient to persuade a rational fair-minded 

person that a finding is true.  Hegwine v. Longview Fibre Co., Inc., 132 Wn. App. 546, 555-56, 

132 P.3d 789 (2006).  We consider unchallenged findings to be verities on appeal.  Cowiche 

Canyon Conservancy v. Bosley, 118 Wn.2d 801, 808, 828 P.2d 549 (1992).  We review questions 

of law de novo.  Sunnyside Valley Irrigation Dist. v. Dickie, 149 Wn.2d 873, 880, 73 P.3d 369

(2003).  Where the trial court mislabels a conclusion of law as a finding of fact, we review the 

conclusion de novo.  Hegwine, 132 Wn. App. at 556.  

       The trial court concluded that Denise breached her fiduciary duty because she (1) lacked 

authorityto use trust assets for herself and her husband, (2) may have intended to use the funds 

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No. 41392-2-II

for Theresa's benefit but did not, and (3) failed to protect Theresa's investment in the home by 

granting her a security interest in the home.  Denise argues that she had authority to use the trust 

funds for Theresa's maintenance and thus, did not breach her fiduciary duty.   

       Denise has not assigned error to any finding of fact.   Generally, we treat unchallenged 

findings of fact as verities on appeal, not subject to review.  See Cowiche Canyon, 118 Wn.2d at 

808. Denise also has not assigned error to any of the trial court's legal conclusions.  In spite of 

this imperfect presentation, we consider Denise's claim that  "[a]s successor trustee, Denise 

Roberts had the unfettered discretion to use trust funds for the benefit of the Trustor." Br. of 

Appellant at 8.  

       Theresa's trust authorized Denise to use the trust funds for:

       Distribution of Principal for Support . . . if at any time in the discretion of the 
       Trustee the Trustor [Theresa] should be in need of funds for her proper medical 
       care, dental care, maintenance and support, the Trustee may, in the Trustee's 
       discretion, pay to the Trustor, or apply for her benefit, such sums from the 
       principal of the Trust Estate as the Trustee deems necessary or advisable for such 
       purposes. . . .

Br. of Appellant at 7.  

       Substantial evidence supports the trial court's findings as to how Denise used Theresa's 

trust funds.  In July 2006, Denise used $153,000 of Theresa's funds to build the home.  Theresa 

never benefitted from the investment and Denise took no steps to protect the trust's investment in 

the home.    Nor did Denise attempt to segregate the trust investment from her personal 

investment. Later, when the court-appointed visitor reported that Theresa needed a guardian and 

conservator, Denise conveyed all of her interest in two properties to her brother-in-law and her 

husband, for no consideration.  We conclude that substantial evidence supports the trial court's 

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No. 41392-2-II

findings.

       Denise's argument appears to be that the trial court's findings do not support a legal 

conclusion that she breached her fiduciary duty as trustee.  The trial court's breach of a fiduciary 

duty discussion is mischaracterized as a finding of fact. Findings of fact are determinations of 

"whether . . . evidence show[s] that something occurred or existed."  Moulden & Sons, Inc. v. 

Osaka Landscaping & Nursery, Inc., 21 Wn. App. 194, 197, 584 P.2d 968 (1978).  Conclusions 

of law are "determination[s] . . . made by a process of legal reasoning from facts in evidence."

State v. Niedergang, 43 Wn. App. 656, 658-59, 719 P.2d 576 (1986) (citing Moulden & Sons, 

Inc., 21 Wn. App. at 197-98 n.5).  Where a conclusion of law is mislabeled as a finding of fact, 

we review it as a conclusion of law.  Willener v. Sweeting, 107 Wn.2d 388, 394, 730 P.2d 45 

(1986).  Because the trial court's determination that Denise breached her fiduciary duty was legal 

reasoning, we treat it as a conclusion of law, which we review de novo.  See Hegwine, 132 Wn. 

App. at 556.

       A trustee owes beneficiaries the "highest degree of good faith, care, loyalty and integrity."

Esmieu v. Schrag, 88 Wn.2d 490, 498, 563 P.2d 203 (1977).  '"It is the duty of a trustee to 

administer the trust in the interest of the beneficiaries."' Cook v. Brateng, 158 Wn. App. 777, 

785, 262 P.3d 1228 (2010) (quoting Tucker v. Brown, 20 Wn.2d 740, 768, 150 P.2d 604 (1944)).  

Where the trust confers discretion on a trustee to carry out the trust, we review the trustee's 

actions for an abuse of discretion.  Templeton v. Peoples Nat'l Bank of Wash., 106 Wn.2d 304, 

309, 722 P.2d 63 (1986).  Here, Denise had discretion to use trust assets to provide for Theresa 

as stated in the revocable living trust agreement under "Distribution of Principal for Support."

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No. 41392-2-II

The trust's clear intent was to benefit Theresa during her life.

       But a trustee who engages in self-dealing or who mingles trust funds with the trustee's 

private funds breaches her fiduciary duty of loyalty, even where the trustee eventually replaces the 

funds and the trust suffers no loss.  Estate of Jordan v. Hartford Accident & Indem. Co., 120 

Wn.2d 490, 506, 844 P.2d 403 (1993) (citing 90 C.J.S. Trusts § 270b, at 349 (1955)); In re 

Marriage of Petrie, 105 Wn. App. 268, 276, 19 P.3d 443 (2001) ("a trustee's commingling of 

personal funds and assets with the funds and assets of a beneficiary is a breach of fiduciary duty 

because it creates a conflict of interest for the trustee."). 

       Denise argues that she used the trust assets to provide maintenance for her mother but that 

"[t]he basement apartment was not used only because the Oregon conservator would not allow 

[Theresa] to use it." Br. of Appellant at 10.  Even if we accept that Denise intended to care for 

Theresa in the new home, she still breached her duty by mingling trust assets with her personal 

funds and by failing to protect the trust assets with, for example, a security interest in the home.

These protections are particularly important here;     Denise knew of Theresa's fragile and 

deteriorating health and that Theresa would likely need full-time professional nursing care. 

Finally, by transferring her assets, including the trust's investment, arguably to prevent the trust 

from recovering its investment, Denise was acting in direct conflict with her duty to protect the 

trust assets.  Petrie, 105 Wn. App. at 276.   

       We conclude that the trial court's findings of fact support its conclusion of law that Denise 

breached her fiduciary duty.  

                              II. Uniform Fraudulent Transfer Act

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No. 41392-2-II

       Denise asserts that the trial court erred in setting aside her transfer of the Kelso property

to Wilson.  We disagree. 

       Under the Uniform Fraudulent Transfer Act (UFTA), chapter 19.40 RCW, a transfer is 

fraudulent if the debtor acts with intent to hinder, delay, or defraud a creditor or transfers 

"[w]ithout receiving a reasonably equivalent value in exchange for the transfer or obligation."

RCW 19.40.041(a)(2).  A debtor violates the UFTA by transferring an asset as defined in the 

UFTA.   But the term "asset" does not include (1) property to the extent it is encumbered by a 

valid lien or (2) property to the extent it is generally exempt under non-bankruptcy law.  RCW 

19.40.011(2).  Although the burden of proof rests upon the party seeking to set aside a fraudulent 

transfer, the burden shifts to the defendant to prove good faith when the consideration for the 

transfer is shown to be grossly inadequate.  Workman v. Bryce, 50 Wn.2d 185, 189, 310 P.2d 228 

(1957).

       Denise argues that the Kelso property is not an asset under UFTA because it is a 

homestead.  She does not challenge the trial court's finding that she fraudulently transferred 

property. Moreover, she cites no Washington case or statute to support her argument.   See RAP 

10.3(a)(6) (only issues which are supported by argument and legal authority are considered by this

court on appeal).  She cites only cases from other jurisdictions, which are not controlling, to 

support her contention that the homestead exemption should protect the property.       See e.g.,

McCone County Fed. Credit Union v. Gribble, 352 Mont. 254, 255, 216 P.3d 206, 2009 MT 290

(Mont. 2009); Duran v. Henderson, 71 S.W.3d 833 (Tex. App. 2002); Fid. Nat'l Title Ins. Co. v. 

Schroeder, 179 Cal. App. 4th 834, 101 Cal Rptr. 3d 854 (2009); In re Roca, 404 B.R. 531 (D. 

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No. 41392-2-II

Ariz. 2009).

       In Clearwater v. Skyline Construction Co., Inc., 67 Wn. App. 305, 835 P.2d 257 (1992), 

Division One of this court upheld a fraudulent conveyance finding where Skyline Construction 

contracted to build a residence for the Clearwaters.  Clearwater, 67 Wn. App. at 308.  After 

several disputes, the Clearwaters informed Skyline they intended to commence legal action.

Clearwater, 67 Wn. App. at 308.  About a week later, Panasiuk, the president and sole 

shareholder of Skyline, conveyed the Skyline property to herself, individually, for no 

consideration.  Clearwater, 67 Wn. App. at 308.  Panasiuk believed that Skyline would incur a 

debt stemming from a judgment against it.  Clearwater, 67 Wn. App. at 322.  The court affirmed 

the trial court's finding of a fraudulent transfer.  Clearwater, 67 Wn. App. at 323. 

       Here, Denise conveyed the property to Wilson without receiving any consideration.  See

RCW 19.40.041(a)(2).  The trial court concluded that the transfer was fraudulent under both 

RCW 19.40.041 and RCW 19.40.051.  The evidence supports this conclusion.  

                             III. Automatic Homestead Exemption

       Denise argues, nonetheless, that she is entitled to the automatic homestead exemption. 

       Under  RCW 6.13.070, the homestead is automatically exempt from execution on 

judgments against the homestead's owner in an amount up to $125,000.  See RCW 6.13.030.  A 

"homestead" is "real or personal property that the owner uses as a residence." RCW 6.13.010(1).  

       But homestead protection does not extend to equitable liens imposed when the homestead 

claimant purchases the homestead property with wrongfully obtained funds.  Fed. Intermediate 

Credit Bank of Spokane v. O/S Sablefish, 111 Wn.2d 219, 229-30, 758 P.2d 494 (1988) (citing 

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No. 41392-2-II

Webster v. Rodrick, 64 Wn.2d 814, 818-19, 394 P.2d 689 (1964) and Pinebrook Homeowners 

Ass'n v. Owen, 48 Wn. App. 424, 430, 739 P.2d 110 (1987)). 

       In Webster, 64 Wn.2d at 818-19, the defendant embezzled from the plaintiff and then used 

the misappropriated funds to acquire real estate and make improvements to it.  The court 

reasoned that "[t]he homestead exemption statute cannot be used as an instrument of fraud" and 

refused to allow the defendants to use the homestead exemption to protect property purchased 

with the judgment creditor's funds.  Webster, 64 Wn.2d at 818.  

       Denise asserts that "the Webster case is limited to cases of fraud or wrongdoing.  There 

are no such findings in this case." Br. of Appellant at 18.  The trial court found, however, that 

Denise fraudulently transferred the Kelso property essentially to shield the trust money she had 

wrongfully taken from Theresa's trust.  

       Denise next argues that because the Washington legislature adopted the UFTA after the 

Supreme Court decided Webster, the Webster holding has been "implicitly overruled."       Br. of 

Appellant at 18-19.  But cases decided after the legislature enacted the UFTA have upheld 

imposing equitable liens on real property acquired by fraudulently obtained funds, citing to 

Webster.  See i.e., Fed. Intermediate Credit Bank, 111 Wn.2d at 229-30.

       Moreover, the Restatement's discussion of trust property states that the "policy in favor of 

exempting certain property from the claims of creditors is not applicable where the property is 

wrongfully acquired with the property of another" and provides the following illustration:

       8. A, trustee for B, wrongfully takes $2000 of the trust funds and purchases a 
       homestead which by law is not subject to attachment or levy on execution by his 
       creditors. B can follow the money into the property so acquired and compel A to
       hold it in constructive trust for him, or can enforce an equitable lien upon the 
       property.

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No. 41392-2-II

Restatement (Second) of Trusts § 202, cmt. d (1959).

       Here, Denise violated her fiduciary duty to the trust by investing trust funds in an asset 

that did not benefit  the trust.  And the homestead exemption is intended to "protect the 

homesteader and his dependents in the enjoyment of a domicile," not property an owner 

fraudulently transfers to avoid the legal consequences of a wrongful act. See Webster, 64 Wn.2d 

at 816. Thus, the trial court properly ruled that the homestead exemption did not apply to the 

$153,000 that Denise took from Theresa's trust.  We hold that the trial court did not err in ruling 

as a matter of law that Theresa's trust was entitled to a $153,000 equitable lien on the property.

       Affirmed.

                                                 Armstrong, J.
We concur:

Quinn-Brintnall, J.

Penoyar, C.J.

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