FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL M. TURNACLIFF, in his 

capacity as Administrator for the

Estate of Kathleen M. Dodd, with

will annexed,

Plaintiff-Appellant, No. 07-15287

v. D.C. No.

STEVE WESTLY, in his individual &  CV-05-05303-SI

official capacity as State OPINION Controller of the State of

California, and in his custodial

capacity as Administrator of the

Unclaimed Property Fund,

Defendant-Appellee. 

Appeal from the United States District Court

for the Northern District of California

Susan Yvonne Illston, District Judge, Presiding

Argued and Submitted

August 12, 2008—San Francisco, California

Filed October 15, 2008

Before: David R. Thompson and Kim McLane Wardlaw,

Circuit Judges, and Susan R. Bolton,* District Judge.

Opinion by Judge Thompson

*The Honorable Susan R. Bolton, United States District Judge for the

District of Arizona, sitting by designation. 

14549
COUNSEL

David B. Tillotson & John A. Lofton, San Francisco, California, for the plaintiff-appellant. 

Edmund G. Brown, Jr., Christopher E. Krueger, Douglas J.

Woods, and Zackery P. Morazzini, Sacramento, California,

for the defendant-appellee. 

TURNACLIFF v. WESTLY 14551
OPINION

Judge THOMPSON, Senior Circuit Judge: 

Plaintiff-Appellant Michael M. Turnacliff (Turnacliff), in

his capacity as administrator of the Estate of Kathleen M.

Dodd (the Estate), appeals the district court’s summary judgment in favor of defendant Steve Westly, in his individual and

official capacity as State Controller of the State of California,

and his custodial capacity as administrator of the Unclaimed

Property Fund (Controller). Turnacliff alleged that the Controller improperly calculated the interest due to the Estate for

the time that the State of California held the Estate’s

unclaimed property. 

Turnacliff contends that, when the Controller returned the

previously unclaimed property to the Estate, with interest, the

Controller incorrectly construed California Code of Civil Procedure § 1540(c) (amended 2002) by applying a single,

statutorily-defined interest rate to the principal for the years

that California held the property. Turnacliff maintains that the

Controller should have applied an average of various interest

rates that California earned while holding the property. He

also contends that, if the Controller’s construction and application of § 1540(c) was correct, then the Controller’s action

ran afoul of the Takings Clause of the Fifth Amendment,

because he did not pay to the Estate the actual interest that the

unclaimed property earned while California held it. 

Turnacliff further argues, for the first time on appeal, that

the Controller violated the Takings Clause by failing to provide adequate notice to the Estate before acquiring the abandoned property. Exercising our discretion, we decline to

consider this argument. 

We have jurisdiction under 28 U.S.C. § 1291, and affirm

the district court’s summary judgment in favor of the Controller. The Controller correctly construed and applied § 1540(c).

14552 TURNACLIFF v. WESTLY
And, even if the facts of this case were to implicate the Takings Clause, Turnacliff has failed to show that the Estate is

entitled to additional compensation. 

I. Statutory Framework

In Suever v. Connell, 439 F.3d 1142 (9th Cir. 2006), we

explained: 

Title 10 of the California Code of Civil Procedure

deals with unclaimed property located in California.

Cal. Civ. Proc. Code § 1300, et seq. “It is the purpose of this title to provide for the receipt, custody,

investment, management, disposal, escheat and permanent escheat of various classes of unclaimed

property . . . .” Id. § 1305 . . . . “ ‘Escheat’ . . . means

the vesting in the state of title to property the whereabouts of whose owner is unknown or whose owner

is unknown, . . . subject to the right of claimants to

appear and claim the escheated property . . . .” Id.

§ 1300(c) . . . . 

Suever, 439 F.3d at 1144 (internal brackets and footnotes

omitted). 

At the time that the Controller received the Estate’s claim

for the property, and returned it, California Code of Civil Procedure § 1540(c) provided:1

The Controller shall add interest at the rate of 5 percent or the bond equivalent rate of 13-week United

States Treasury bills, whichever is lower, to the

amount of any claim paid the owner under this section for the period the property was on deposit in the

Unclaimed Property Fund. No interest shall be pay1Since August 11, 2003, § 1540(c) has provided “No interest shall be

payable on any claim paid under this chapter.” 

TURNACLIFF v. WESTLY 14553
able for any period prior to January 1, 1977. Any

interest required to be paid by the state pursuant to

this section shall be computed as simple interest, not

compound interest. For purposes of this section, the

bond equivalent rate of 13-week United States Treasury bills shall be defined in accordance with the following criteria: 

(1) The bond equivalent rate of 13-week United

States Treasury bills established at the first auction

held during the month of January shall apply for the

following July 1 to December 31, inclusive. 

(2) The bond equivalent rate of 13-week United

States Treasury bills established at the first auction

held during the month of July shall apply for the following January 1 to June 30, inclusive. 

Proceeds from the sale of escheated property are deposited

in the Unclaimed Property Fund in an Abandoned Property

Account. Id. § 1564(a). On at least a monthly basis, the Controller is required to transfer to California’s General Fund all

money in the Abandoned Property Account in excess of fifty

thousand dollars. Id. § 1564(c). 

Citing California Government Code §§ 16470 and 16480.1,

Turnacliff contends that “surplus” money in the General Fund

is placed in a Pooled Money Investment Account (PMIA),

where it earns interest at the rate of the PMIA yield. The Controller does not dispute this assertion. 

II. Background

On November 15, 1958, Kathleen M. Dodd died. 

In January 1979, Echlin, Inc. sent a cash dividend of more

than $3100 to Ms. Dodd. That dividend was returned to

Echlin by the United States Postal Service. Over the next

14554 TURNACLIFF v. WESTLY
eleven years, Echlin sent Ms. Dodd at her address of record

dozens of cash dividends, ranging from $3100 to $8000. None

of the dividend checks were ever cashed, and most were

returned by the Postal Service. 

On June 29, 1990, the Controller received 57,600 shares of

Echlin stock that had belonged to the late Ms. Dodd. While

the shares were held by the Controller, they earned dividends

in excess of $347,000. The Controller sold the stock on June

17, 1993, for more than $1,513,000. By June 1993, the Controller held property in excess of $1,860,000 belonging to the

Estate. In May 2003, the Estate filed a claim with the Controller for the return of its property. 

On June 24, 2003, the Controller issued a check to the

Estate for roughly $1,983,000, which purportedly represented

the principal plus simple interest at a rate of 1.69%. The figure of 1.69% was reached by referring to the interest rate of

13-week United States Treasury bills established at the first

auction of July 2002. 

The interest was incorrectly calculated, however, and on

January 21, 2005, the Controller paid another $201,000 to the

Estate. The parties agree that after this payment, the Controller had paid in full the 1.69% simple interest on the principal

of the previously unclaimed property. But the Estate disagreed with the Controller that 1.69% was the correct interest

rate that should have applied. 

On December 21, 2005, Turnacliff filed this action alleging

the Controller incorrectly applied California Code of Civil

Procedure § 1540(c), violated the Takings Clause by paying

to the Estate less than the amount of interest actually earned

by the unclaimed property, violated the Estate’s procedural

due process by retroactively applying the 2002 version of

§ 1540(c) to the pre-2002 years that California held the

unclaimed property, and breached its fiduciary duty to the

Estate under the law of the State of California. 

TURNACLIFF v. WESTLY 14555
The district court granted the Controller’s motion for summary judgment and denied Turnacliff’s motion for summary

judgment, holding that the Controller’s interpretation of

§ 1540(c) — applying a single rate for the time that the principal of the unclaimed property was held by California — was

correct, and that this interpretation raised no constitutional

problems. This appeal followed.2

III. Discussion 

A. California Code of Civil Procedure § 1540(c) 

Turnacliff contends that California Code of Civil Procedure

§ 1540(c) required the Controller to add interest to the

Estate’s unclaimed property at a rate of the average of the 13-

week bond equivalent rates of United States Treasury bills

established — according to the statute — at the first auctions

in January and July of each year over the time the Controller

held the assets. This interpretation of the statute, Turnacliff

maintains, results in a “reasonable approximation of interest

actually earned.” According to Turnacliff’s calculations, the

Controller should have paid interest at a rate of 4.5%. 

The Controller argues that the plain language of § 1540(c)

required him to apply a single interest rate. And, in this case,

the applicable rate was 1.69%. 

[1] Because we are interpreting a California statute, we

apply California’s rules of statutory construction. See In re

First T.D. & Inv., Inc., 253 F.3d 520, 527 (9th Cir. 2001). In

2Turnacliff does not appeal summary judgment on his claim that the

Controller violated the Estate’s procedural due process rights. As for his

claim that the Controller breached his fiduciary duty to the Estate, Turnacliff refers to “the basic tenets of trust law” in his opening brief, but only

in developing his Takings Clause argument. Turnacliff offers no argument, and presents no authority, on the issue of the Controller’s fiduciary

duty to the Estate. Accordingly, we deem this issue abandoned. See Collins v. City of San Diego, 841 F.2d 337, 339 (9th Cir. 1988). 

14556 TURNACLIFF v. WESTLY
this regard, we have previously noted that “[t]he California

Supreme Court has declared that the ‘ultimate task’ in statutory interpretation ‘is to ascertain the legislature’s intent.’ ”

Id. (quoting People v. Massie, 19 Cal. 4th 550, 569, 79 Cal.

Rptr. 2d 816, 967 P.2d 29, 41 (1998)). “ ‘Ordinarily, the

words of the statute provide the most reliable indication of

legislative intent.’ ” In re First T.D. & Inv., 253 F.3d at 527

(quoting Pac. Gas & Elec. Co. v. County of Stanislaus, 16

Cal. 4th 1143, 1152, 69 Cal. Rptr. 2d 329, 947 P.2d 291, 297

(1997)). “Courts should give the language of the statute ‘its

usual, ordinary import and accord significance, if possible, to

every word, phrase and sentence in pursuance of the legislative purpose.’ ” In re First T.D. & Inv., 253 F.3d at 527 (quoting Dyna-Med, Inc. v. Fair Employment & Hous. Comm’n, 43

Cal. 3d 1379, 1386-87, 241 Cal. Rptr. 67, 743 P.2d 1323,

1326 (1987)).

[2] California Code of Civil Procedure § 1540(c) provides:

“The Controller shall add interest at the rate of 5 percent or

the bond equivalent rate of 13-week United States Treasury

bills, whichever is lower, to the amount of any claim paid the

owner under this section for the period the property was on

deposit . . . .” (emphasis added). 

[3] We agree with the district court that the Controller’s

construction of § 1540(c) was correct. The statute requires the

Controller to add interest at a “rate,” in the singular, not plural, “for the period the property was on deposit.” The plain

language of the statute supports the Controller’s construction

that a single interest rate must be applied for the whole time

period that unclaimed property was held. 

Turnacliff’s construction would change the text of the statute, and its ordinary import, by inserting the word “average”

between the words “the” and “rate” in the first clause of the

above-quoted portion of the statute as it existed during the

applicable period. We see no reason why the California Legislature would not have included the word “average” in the statTURNACLIFF v. WESTLY 14557
ute if indeed it had intended to require the Controller to

average the statutorily-defined interest rates and apply the

average interest rate to the principal of unclaimed property. 

B. The Takings Clause 

Turnacliff also argues that if the Controller’s construction

of California Code of Civil Procedure § 1540(c) was correct,

then the Controller violated the Takings Clause of the Fifth

Amendment by failing to pay “just compensation” for taking

the Estate’s property. Turnacliff contends that, under the traditional common law rule that “interest follows the principal,”

any and all interest that the unclaimed property earned while

held by California belongs to the Estate. Turnacliff further

maintains that, to the extent that the property did not earn

actual interest, the Estate is entitled to constructive interest.

We disagree. 

[4] Pursuant to the Takings Clause of the Fifth Amendment, “private property [shall not] be taken for public use,

without just compensation.” U.S. Const. amend. V. “In order

to state a claim under the Takings Clause, a plaintiff must first

demonstrate that he possesses a ‘property interest’ that is constitutionally protected.” Schneider v. Cal. Dep’t of Corr., 151

F.3d 1194, 1198 (9th Cir. 1998). “Only if he does indeed possess such an interest will a reviewing court proceed to determine whether the expropriation of that interest constitutes a

‘taking’ within the meaning of the Fifth Amendment.” Id.

Depending on the facts of a case, a court will answer the

question whether a “taking” has occurred by utilizing either

a “per se” or an “ad hoc” analysis. See Brown v. Legal Found.

of Wash., 538 U.S. 216, 233-35 (2003). Finally, if a “taking”

has indeed occurred, a court must determine whether the

property owner has received “just compensation.” Id. at 235

(“The Fifth Amendment does not proscribe the taking of

property; it proscribes taking without just compensation.”)

(quotation marks and citation omitted). The “just compensation” required by the Fifth Amendment “is measured by the

14558 TURNACLIFF v. WESTLY
property owner’s loss rather than the government’s gain.” Id.

at 235-36.

[5] Assuming, arguendo, that the Estate had a cognizable

property right to interest earned by its escheated property,3

and that this property was “taken” by California, no further

compensation is due to the Estate because when the Estate

abandoned its property, it forfeited any right to interest earned

by that property. 

[6] The Estate does not challenge the fundamental prerogative of the State to acquire and hold abandoned property. And,

before the district court, the Estate did not challenge the

escheat, per se, of its property to the State. Implicitly, therefore, the Estate admitted that the property properly escheated

to the State because it sat abandoned for many years. 

In Texaco, Inc. v. Short, 454 U.S. 516, 526, the Court

explained that “[f]rom an early time, th[e] Court has recognized that States have the power to permit unused or abandoned interests in property to revert to another after the

passage of time.” The Court further explained that owners of

abandoned property were not owed compensation: 

3

In Schneider, we held, despite a state statute to the contrary, that prisoners possess a constitutionally cognizable property right in the interest

earned on the principal held in Inmate Trust Accounts. 151 F.3d at 1201.

We explained that, though states may “create constitutionally protected

‘new property’ interests,” they cannot “roll back or eliminate traditional

‘old property’ rights” found within the “core of constitutionally protected

property.” Id. at 1200-01 (emphasis removed). That “core,” we continued,

“is defined by reference to traditional ‘background principles’ of property

law.” Id. at 1201. “The ‘interest follows principal’ rule’s common law

pedigree, and near-universal endorsement by American courts — including California’s” left us with “little doubt that interest income of the sort

at issue” in Schneider was “sufficiently fundamental that States may not

appropriate it without implicating the Takings Clause.” Id. at 1201 (citations omitted). By contrast, we are unaware of, and Turnacliff has not provided us, any authority for the proposition that interest earned by

unclaimed or abandoned property belongs to the property owner. 

TURNACLIFF v. WESTLY 14559
In ruling that private property may be deemed to be

abandoned and to lapse upon the failure of its owner

to take reasonable actions imposed by law, this

Court has never required the State to compensate the

owner for the consequences of his own neglect . . . .

It is the owner’s failure to make any use of the property — and not the action of the State — that causes

the lapse of the property right[.] 

Id. at 530. 

[7] Though Short concerned abandoned mineral interests,

the long-running principle articulated in that case applies with

equal force to this case involving commercial paper. To the

extent that it was even entitled to it, the Estate has received

“just compensation,” because California returned the Estate’s

abandoned property, with statutorily-determined interest of

1.69%. The Estate has no Fifth Amendment right to “actual”

or “constructive” interest earned by its property while held by

the State; California need not further compensate the Estate

for the consequences of the Estate’s neglect. 

The cases that Turnacliff cites for the proposition that the

Estate is owed actual or constructive interest are distinguishable, because in none of them was the property owner negligent in handling his or her property.4

C. Notice 

For the first time on appeal, Turnacliff argues that the

Estate was not afforded adequate procedural due process

before its property was taken.

We will review an issue that has been raised for the

4Because we do not inquire into the interest earned by the property, we

deny as irrelevant Turnacliff’s request for judicial notice of United States

Department of Treasury records. 

14560 TURNACLIFF v. WESTLY
first time on appeal under certain narrow circumstances: (1) to prevent a miscarriage of justice; (2)

when a change in law raises a new issue while an

appeal is pending; and (3) when the issue is purely

one of law. The decision to consider an issue not

raised below is discretionary, and such an issue

should not be decided if it would prejudice the other

party. 

MacDonald v. Grace Church Seattle, 457 F.3d 1079, 1086

(9th Cir. 2006) (internal quotation marks and citations omitted). 

We decline to consider this new issue on appeal. None of

the three narrow circumstances which must exist for us to

consider an issue raised for the first time on appeal is present

in this case. Primarily, Turnacliff’s due process challenge is

not a pure question of law, but rather depends on a determination of facts not in the record.5

 Further, we reject the argument

that Taylor v. Westly, 488 F.3d 1197 (9th Cir. 2007), changed

the law in a way that created a new issue on appeal. Turnacliff

could easily have made a procedural due process argument in

the lower court prior to our decision in that case. And finally,

in light of the above, we perceive no miscarriage that would

result from our restraint. Accordingly we exercise our discretion not to review Turnacliff’s due process claim that he raises

for the first time in this appeal. 

5We deny Turnacliff’s request that we take judicial notice of a declaration — of a former employee in the Controller’s office — filed in a different action. Rule 201(b) of the Federal Rules of Evidence provides that: “A

judicially noticed fact must be one not subject to reasonable dispute in that

it is either (1) generally known within the territorial jurisdiction of the trial

court or (2) capable of accurate and ready determination by resort to

sources whose accuracy cannot reasonably be questioned.” The facts

described in the declaration (regarding the manner in which the Controller

provided notice to property owners) are not “generally known;” and the

former employee is not a source “whose accuracy cannot reasonably be

questioned.” 

TURNACLIFF v. WESTLY 14561
IV. Conclusion 

We conclude that the Controller correctly construed California Code of Civil Procedure § 1540(c) and did not violate

the Takings Clause when he returned the Estate’s previously

abandoned property with statutorily-determined interest of

1.69%. The district court properly granted summary judgment

in favor of the defendant-appellee.

AFFIRMED. 

14562 TURNACLIFF v. WESTLY