the beneficiary of a resulting trust; (2) that he is the beneficiary of a constructive trust; or (3) that he has an equitable lien on the property. Although the real estate transaction in issue certainly was not the norm, I find that Abed has established by a preponderance of the evidence that he is the equitable owner of the property pursuant to a constructive trust. Therefore, Abed has a "a legal right, title, or interest in the property . . . superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property." 21 U.S.C. § 853(n)(6)(A).
"'A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.'" Simonds v. Simonds, 45 N.Y.2d 233, 241, 408 N.Y.S.2d 359, 380 N.E.2d 189 (1978) (quoting Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378 (1919)). In the forfeiture context, courts have held that a constructive trust, if proven, may establish an interest in the property superior to that of the defendant. See Schwimmer, 968 F.2d at 1582; United States v. Marx, 844 F.2d 1303, 1308 (7th Cir. 1988); United States v. Campos, 859 F.2d 1233, 1238-39 (6th Cir. 1987).
Under New York law, a person must establish four elements before a court will impose a constructive trust: (1) a confidential or fiduciary relationship; (2) a promise, express or implied; (3) a transfer of the subject res made in reliance on that promise; and (4) unjust enrichment. United States v. Coluccio, 51 F.3d 337, 340 (2d Cir. 1995); In re Koreag, Controle et Revision, S.A., 961 F.2d 341, 352 (2d Cir. 1992).
In the instance case, I find that Abed has satisfied all four elements. First, Abed shared the requisite confidential relationship with his uncle, Herbawi. Second, there was a stated mutual assumption that the property would be held by Herbawi in name only and that Abed would be the real owner. Third, Abed relied on that promise when he tendered the down payment, took possession of the property, made subsequent mortgage payments, paid the property taxes, and made improvements to the property. Fourth, the Government's forfeiture would force a breach of Herbawi's promise and result in unjust enrichment of the Government and unjust impoverishment of Abed. See Coluccio, 51 F.3d at 340.
Therefore, I find that although he is listed as legal owner, Herbawi was not the real owner of the property. He paid no consideration for the property and his name was utilized simply as a favor for Abed, his nephew. I accept the testimony that Abed and Herbawi trusted each other and that there was no need for any writing between them to memorialize their arrangement.
For the foregoing reasons, I determine that McGrath has a valid interest in the property, as a first, purchase money mortgagee and that his interest is not subject to forfeiture. I determine that Abed also has a valid interest in the property, as the equitable owner pursuant to a constructive trust, and that his interest is not subject to forfeiture. I further find that Herbawi has no forfeitable interest in the property. To the extent that Herbawi has a colorable interest because he was listed as the purchaser of the property, in a deed transferred July 2, 1992, and therefore appears as the record legal title holder to the property, Abed's interest is superior to any right, title, or interest of Herbawi.
I further determine that the preliminary order of forfeiture entered January 27, 1997 is invalid and must be amended and vacated insofar as it directs forfeiture of the property to the Government.
I further direct the parties to prepare a stipulated final Judgment, which properly reflects the Court's decision and the interests of the parties, and to promptly file such Judgment to effect removal of any lien or encumbrance placed on the property by virtue of the preliminary order of forfeiture. If the parties are unable to agree to a stipulated final Judgment, within twenty (20) days of entry of this Decision and Order, any interested party may move the Court, on notice, to settle the final Judgment.
IT IS SO ORDERED.
DAVID G. LARIMER
UNITED STATES DISTRICT COURT
Dated: Rochester, New York
July 16, 1997.
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