Opinion ID: 3065051
Heading Depth: 3
Heading Rank: 2

Heading: Retroactive Interest

Text: 1. Plaintiffs’ Standing to Seek Retroactive Interest In its appeal, the Controller contends that Plaintiffs lack standing to seek retroactive interest under the pre-amendment version of the UPL because none of them who made a valid claim for unclaimed property has been denied interest. We disagree. [3] The “irreducible constitutional minimum” of Article III standing has three “elements”: First, the plaintiff must have suffered an “injury in fact”—an invasion of a legally protected interest which is (a) concrete and particularized, . . . and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical,’ ” . . . . Second, there must be a causal connec- tion between the injury and conduct complained of —the injury has to be “fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.” . . . Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be “redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (alterations in original). Here, as the district court explained in its November 2007 order denying the Controller’s motion for leave to seek reconsideration, the Controller concedes that now-deceased Plaintiff Agnes Suever did not receive interest when she reclaimed the amount of her cashier’s check. The Controller asserts that she would have received interest if she had made her claim to the Controller rather than to World Savings and Loan Bank. However, Plaintiffs dispute this assertion, arguing that “the Controller has never paid interest on cashier’s checks,” and that the Controller’s argument “is belied by not only the Assignment Agreement, which clearly 11850 SUEVER v. CONNELL contemplates the payment of interest, but by the UPL itself, which does not differentiate between payment of a claim to the Owner or an Assignee.” In addition, as noted in the district court’s November 2007 order, Plaintiff Richard Valdes alleges that the Controller has failed even to acknowledge that it holds his property, let alone to return either principal or interest. Although the Controller argues that Valdes’s claim lacks merit, citing his deposition testimony to the effect that it is “possible, but not probable” that his memory is inaccurate, the question of whether Valdes is likely to prevail is a separate issue from standing. Further, there is no apparent dispute that if Valdes were able to prove that the Controller holds his property, the Controller would willingly return the principal but would not pay the interest absent a court order or amendment of the UPL. [4] Finally, the remaining Plaintiffs allege that they received inadequate interest, because they were constitutionally entitled to “constructive” interest instead of the thenstatutorily provided “simple” interest. This was the same argument legitimately raised, though ultimately rejected, in Turnacliff. Accordingly, Plaintiffs have alleged a sufficiently concrete, actual injury in the form of economic loss, fairly traceable to the Controller’s actions, which a favorable decision would redress so as to establish their constitutional standing to assert their retroactive interest claim. 2. Merits of Retroactive Interest Claim The Controller asserts that the Eleventh Amendment bars Plaintiffs from seeking retroactive interest under the preamendment version of the UPL. In arguing to the contrary, Plaintiffs attempt to distinguish Turnacliff as “irrelevant” and “inapposite” because “the instant Appeal relates to interest payable on illegitimately seized private property used for public purposes, not on property that legitimately escheated to the State.” In the course of its decision, the Turnacliff court noted: SUEVER v. CONNELL 11851 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. 546 F.3d at 1119. Presumably in reliance on this passage, Plaintiffs note that the Turnacliff court “found that the property owner in that case had no cognizable claim to interest because plaintiff itself had ‘abandoned’ her property.” By contrast, Plaintiffs argue, their property “cannot be deemed ‘abandoned’ under the pre-amendment UPL because the property was illegally seized outside the scope of the UPL itself,” thereby entitling them to retroactive interest. The Eleventh Amendment is no bar, they assert, because, under the holdings of Taylor I, 402 F.3d at 932-35, and Suever I, 439 F.3d at 1146-48, state sovereign immunity does not preclude them from suing to obtain their own property that state officials seized and retained through ultra vires and unconstitutional acts. These arguments are unavailing. First, the district court expressly held that Plaintiffs “have failed to meet their burden to show as a matter of undisputed fact that seizures of property outside the scope of the UPL have occurred.” [5] Second, Plaintiffs misread the relevant precedent. Our case law states that the Eleventh Amendment does not bar claims by plaintiffs for return of their own property under the UPL, because such claims are not for “damages” against the State. See Taylor I, 402 F.3d at 932-35; Suever I, 439 F.3d at 1143. But nothing in Taylor I or Suever I supports Plaintiffs’ assertions that they are entitled to more than the actual property that the State took into its possession or the proceeds of that property. On the contrary, the Taylor I court expressly limited its holding to avoid such a reading: “Eleventh Amend11852 SUEVER v. CONNELL ment immunity from suit against [the State] for damages payable from its treasury has no application to escheated property and sales proceeds from escheated property.” 402 F.3d at 932 (emphasis added). Likewise, in applying the rule established in Taylor I, the Suever I court held only that “[t]he Eleventh Amendment does not bar the class’s claims [for] . . . the return of the class’s property.” 439 F.3d at 1146-47 (emphasis added). Thus, while the Eleventh Amendment is no bar to Plaintiffs’ claims for return of their escheated principal and the sales proceeds therefrom, state sovereign immunity clearly precludes Plaintiffs from successfully obtaining more than that amount in the form of interest. [6] Indeed, the Taylor I court made this very point: The district court was correct in concluding that, to the extent the plaintiffs sought a declaratory judgment that Mr. Taylor’s and Ms. Pepple-Gonsalves’s shares of stock were unconstitutionally taken from them, and an injunction that the state pay them money to compensate them, the claims would not fall within the Ex parte Young prospective relief exception to the Eleventh Amendment. While some may describe “this retroactive award of monetary relief as a form of ‘equitable restitution,’ ” such claims are “in practical effect indistinguishable in many aspects from an award of damages against the State.” 402 F.3d at 935 (quoting Edelman v. Jordan, 415 U.S. 651, 668 (1974)); see also Seven Up Pete Venture v. Schweitzer, 523 F.3d 948, 956 (9th Cir. 2008) (holding that a claim for damages for the unconstitutional denial of just compensation under the Fifth Amendment cannot qualify as available prospective relief under Ex parte Young, and is therefore barred by the Eleventh Amendment), cert. denied, 129 S. Ct. 258 (2008). Here, Plaintiffs similarly seek a declaration that the interest on their principal was unconstitutionally taken from SUEVER v. CONNELL 11853 them, and a permanent injunction requiring the State to pay them money at California’s alternative borrowing rate. Accordingly, we hold that the retroactive interest they seek is precisely the form of relief barred by the Eleventh Amendment, and we reverse the district court’s contrary ruling in its October 12, 2007 order.