BACKGROUND ^[FN1]

Plaintiffs commenced this action seeking, among other relief, the imposition of a constructive trust on real property located at 35 Pulaski Street in Brooklyn, New York between Plaintiff Loraine Coke-Holmes and Defendant Juliet Campbell, and a declaration that the conveyance of said property from Defendant Campbell to Defendant Holsey Holdings, LLC is void.

Following a bench trial, the Court reserved decision. For the reasons set forth below, the [*2]Court declines to impose a constructive trust between Plaintiff Coke-Holmes and Defendant Campbell. However, the Court finds the conveyance of the subject property from Defendant Campbell to Defendant Holsey Holdings, LLC is void.

In 2007, Plaintiff Coke-Holmes faced foreclosure on her home at 35 Pulaski Street.^[FN2] She approached Defendant Campbell, a longtime friend, and asked her to purchase the home in her own name with the understanding that Coke-Holmes could potentially repurchase it once financially stable.^[FN3] Campbell agreed and Coke-Holmes arranged the financing using Campbell's personal information to obtain a new mortgage.^[FN4] Title was transferred to Campbell on March 8, 2007,^[FN5] and she assumed a mortgage of approximately $4,000 per month.^[FN6]

The parties orally agreed that Plaintiffs would remain in the home and pay rent to cover the mortgage.^[FN7] She made payments for five months ^[FN8] but ceased in November 2007 after receiving notice from the bank that payments had not been received.^[FN9] In October 2007, the parties executed a written agreement granting Plaintiff Coke-Holmes the first opportunity to repurchase the home and if Defendant Campbell chose not to return the property, she would pay Plaintiff Coke-Holmes $111,000.^[FN10] After the agreement was signed, Plaintiff Coke-Holmes ceased making rent payments and had no further communication with Defendant Campbell.^[FN11]

In January 2013, facing continued financial strain, Campbell transferred the property to Defendant Holsey Holdings, LLC.^[FN12] Plaintiffs filed suit in May 2013 seeking to impose a constructive trust and void the transfer.

To impose a constructive trust, a plaintiff must establish: (1) a confidential or fiduciary relationship; (2) a promise; (3) a transfer made in reliance on the promise; and (4) unjust enrichment. Sharp v. Kosmalski, 40 NY2d 119, 121 (1976).

These elements are flexible guidelines, and courts consider the totality of the circumstances when determining whether equity demands the imposition of a constructive trust. Simonds v. Simonds, 45 NY2d 233, 241 (1978). A constructive trust cannot be imposed here because the transfer was not made in reliance on a promise or resulted in unjust enrichment to Defendant Campbell.

A. Existence of a Promise

To establish a constructive trust under New York law, a plaintiff must demonstrate the existence of a promise, which need not be express or in writing. Sharp, 40 NY2d at 122. While there may have been a mutual understanding that Plaintiff Coke-Holmes could eventually repurchase the property, the essential terms of such an agreement—repurchase price, timeline, and conditions—were never defined. There was no agreed-upon buy-back amount, no timeframe for repurchase, and no discussion of what would occur if Plaintiff Coke-Holmes remained unable to repurchase the property. Courts have consistently held that promises supporting equitable relief must be sufficiently specific and definite.^[FN13] In this case, the October 2007 written agreement—which granted Plaintiff Coke-Holmes a right of first refusal and provided a monetary remedy of $111,000—supersedes any vague or informal oral understandings.

A promise may also be implied from the parties' conduct and the surrounding circumstances. See Estate of Uddin v. Miah, 229 AD3d 764, 766 (2d Dept. 2024). In such instances, courts examine the nature of the relationship and the totality of the circumstances to determine whether it would be unconscionable to deny the transferor an equitable interest.^[FN14] However, the facts presented here do not support such an inference.

B. Transfer in Reliance on a Promise

To establish a constructive trust, a plaintiff must demonstrate that the transfer of property was made in reliance on a promise by the defendant. Sharp, 40 NY2d at 121. This reliance must be genuine and serve as the primary motivation for the conveyance, rather than being incidental to other personal or financial circumstances. See Marini v. Lombardo, 70 AD3d 934 (2d Dept. [*3]2010). Courts have consistently declined to impose constructive trusts where the transferor's actions were driven by financial necessity rather than detrimental reliance. Id.^[FN15] Additionally, courts consider whether a plaintiff made substantial and continuous investments in the property in reliance on the alleged promise.^[FN16]

In this case, Plaintiff Coke-Holmes transferred title to the property while facing foreclosure and lacking the credit necessary to secure financing. Her decision appears to have been motivated by financial exigency rather than reliance on a specific promise of reconveyance. Defendant Campbell was selected to take to title due to her trustworthiness and availability, not pursuant to a clearly defined agreement. Beyond making five mortgage payments after the transfer, Plaintiffs took no further steps to protect her interest in the property.^[FN17] When the mortgage again fell into default, she did not attempt to cure the arrears or communicate with the lender.^[FN18] These facts do not support a finding that the transfer was made in reliance on a promise, nor do they reflect the kind of ongoing investment or engagement that courts have found sufficient to justify the imposition of a constructive trust.

C. Unjust Enrichment

To establish a constructive trust, a plaintiff must demonstrate that a defendant was unjustly enriched at the plaintiff's expense. Sharp, 40 NY2d at 122. The inquiry focuses on whether "it is against equity and good conscience to permit the other party to retain what is sought." Mehmedovic v. Xhudo, 189 AD3d 1573, 1574 (2d Dept. 2020). Courts are generally reluctant to find unjust enrichment where the transferor has continued to reside on the property rent-free or has otherwise benefited from the arrangement.^[FN19]

In this case, although Plaintiff Coke-Holmes contributed approximately five months of mortgage payments following the transfer, she subsequently ceased all payments and remained in the home for seventeen years without paying rent, property taxes, insurance, or maintenance costs. In contrast, Defendant Campbell assumed full responsibility for a $520,000 mortgage, used her own credit to obtain financing, and bore the ongoing financial burdens and risks of ownership.^[FN20] Under these circumstances, the Court finds no basis to conclude that Campbell was unjustly enriched.

D. Written Agreement Supersedes Constructive Trust

New York courts have consistently held that a constructive trust will not be imposed where the parties have entered into a valid written agreement that provides an express equitable remedy. In such cases, equitable relief yields to the terms of the contract.^[FN21] Here, the written agreement executed on October 1, 2007, clearly defines the legal relationship between the parties and supersedes any prior oral or informal understandings.^[FN22] That agreement granted Plaintiff Coke-Holmes a right of first refusal in the event Defendant Campbell chose to sell the property and provided for a specific remedy—a payment of $111,000—if the property was not reconveyed. The inclusion of a monetary remedy, along with unambiguous language acknowledging Campbell's ownership, reflects the parties' mutual intent to resolve any future claims without the need for judicial intervention.

Pursuant to Real Property Law § 266, a bona fide purchaser is protected unless they had notice of fraud. Morris v. Adams, 82 AD3d 946 (2d Dept. 2011). A bona fide purchaser is one that "purchased the property for valuable consideration and did not purchase with knowledge of facts that would lead a reasonably prudent purchaser to make inquiry." Cencore Properties, Inc. v. Spitzer, 189 AD3d 983 (2d Dept. 2020). Courts have found parties are not bona fide [*4]purchasers where a property deed was recorded after the filing of a lis pendens on said property as against the purchaser and the vendor. See Burkhart v. George, 228 AD2d 536 (2d Dept. 1996); Morrocoy Mar., Inc. v. Altengarten, 120 AD2d 500 (2d Dept. 1986).

Defendant Holsey Holdings, LLC is not a bona fide purchaser of the property located at 35 Pulaski Street in Brooklyn. In a companion case, the Court previously determined the deed dated January 24, 2013—transferring the property from Defendant Campbell to Defendant Holsely Holdings, LLC—was void, as it was executed while Defendant Campbell had a pending bankruptcy petition. See Holsey Holdings, LLC v. Nationstar Mortgage, Index No. 510638/2014 (Sup. Ct., Kings County, Hon. Larry D. Martin, July 21, 2016).

Although Defendants later executed a subsequent deed dated May 18, 2015 (retroactively effective as of May 4, 2013), that deed was recorded about two years after Plaintiffs filed a notice of pendency in this action.^[FN23] As such, Defendant Holsey Holdings, LLC had constructive notice of Plaintiffs' claims and cannot be deemed a bona fide purchaser for value. Accordingly, the transfer of the property from Defendant Campbell to Defendant Holsey Holdings, LLC is void.

Based on the credible evidence presented at the bench trial and applicable law, the Court finds that:

• Plaintiffs' failed to prove their first and third causes of action warranting dismissal.

• The October 1, 2007 agreement between Plaintiff Loraine Coke-Holmes and Defendant Juliet Campbell is valid and the remedy of $111,000 shall be enforced pursuant to its terms, if not already satisfied.

• Plaintiffs' proved their second cause of action to the extent that the conveyance of the subject property on January 24, 2013 and May 18, 2015 (retroactive to May 4, 2013) from Defendant Campbell to Defendant Holsey Holdings, LLC is void.

This constitutes the Decision and Order of the Court.