Opinion ID: 3036584
Heading Depth: 3
Heading Rank: 2

Heading: The Class’s Allegations

Text: The members of the class are individuals who claim the Controller unlawfully seized, mishandled, liquidated, and refused to return their assets. The class alleges, in its combe added to an asset when it is claimed. Cal. Civ. Proc. Code § 1540 (amended 2003). In addition, the interest rate would no longer be compounded annually; the owners would receive simple interest. Id. Since August 11, 2003, however—two months after the complaint in the present case was filed—the same section has stated that “[n]o interest shall be payable on any claim paid under this chapter.” Id. 6 The current UPL requires mailed notice in the following circumstance: If an account paid or delivered to the Controller pursuant to Section 1532 includes a social security number, the Controller shall request the Franchise Tax Board to provide a current address for the apparent owner on the basis of that number. The Controller shall mail a notice to the apparent owner for whom a current address is obtained if the address is different than the address previously reported to the Controller. Id. § 1531(d). The current UPL does not require mailed notice in any other circumstance. Previously, the UPL’s notice requirements were more demanding. Before 1996, the Controller was required to list each apparent owner’s name in the published notification, whereas now the published notice may be generic. 1996 Cal. Stat. 762 § 6. The Controller was also required to mail notice to every apparent owner who had a last known address listed on the escheated property’s account. Id. SUEVER v. CONNELL 2647 plaint filed July 14, 2003, that the Controller unlawfully used “auditors” to coerce financial institutions into paying or delivering property ineligible to be escheated. For instance, said financial institutions knew some of the class members’ addresses at the time of transfer.7 In addition, the Controller failed to provide adequate notice to the class to enable class members to claim their property before it was liquidated. After 1989, the Controller decided to publish only block ads instead of listing the particular names and addresses of the apparent owners, in violation of § 1531 of the UPL.8 The Controller also failed to mail direct notices to the owners’ last known address. The complaint also alleges that the Controller mishandled the property in the State’s possession. The class claims that the Controller unconstitutionally applied interest rate legislation retroactively, stripping compound interest that had been accruing on unclaimed property and replacing it at a much lower simple interest rate. On some investments such as cashiers’ checks and dividends, the Controller allegedly failed to pay interest altogether. The Controller also allegedly failed to register cashiers checks or provide adequate notice, precluding the owners from claiming their property. She is alleged to have commingled money from the Unclaimed Property Funds with money from the General Fund. Finally, the Controller 7 As an example, the complaint alleges that the Controller escheated the Intel stock of one class member who lives in England and there collects an Intel pension, as though the class member were an “unknown” owner. 8 The Controller’s decision not to list individual owners in its published advertisements predated by seven years the amendment to the UPL that authorized such block ads. Regardless, the class alleges that the current UPL statute authorizing block ads violates due process by failing to give adequate notice. See Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950) (“An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”). 2648 SUEVER v. CONNELL allegedly instituted a shredding policy that destroyed many of the documents necessary to prove the owners’ entitlement to the property; contents of safety deposit boxes were also destroyed without notice. The class alleges that the Controller’s wrongful acts constitute a conspiracy to withhold owners’ assets to alleviate California’s budget crisis. The class claims the Controller allowed certain companies, financial institutions, and regulated entities unlawfully to retain owners’ property worth over $1 billion in total. The class further alleges the Controller did not promulgate formal rules to carry out these acts, but rather changed policies frequently without notice or accountability. The Controller’s acts allegedly violated the class’s rights under the Due Process, Takings, and Contracts Clauses of the Federal Constitution; state and federal securities laws; and the UPL itself. The class alleges eleven claims for relief. It cites all the violations discussed above as justifying declaratory relief. The class claims that a determination of the class’s rights would entitle it to disgorgement and return of either their property or the reasonable value thereof. The class also alleges two federal § 1983 claims, based on procedural due process and the Takings Clause respectively. The class alleges the Controller violated due process by unlawfully seizing, and sometimes selling, property without notice and paying too little interest to owners. The class claims that these same unlawful acts also constitute a “taking” for which it must receive just compensation. In addition, the class claims that it is entitled to the “proper value of [its] property,” which “should be valued according to the applicable principles of law for reimbursement purposes.” These constitutional rights also form the basis for an accounting of the class’s seized property; the payment of attorneys’ fees; the creation of a common fund to return the class’s property “with proper interest”; and injunctive relief to require the Controller no longer to violate the SUEVER v. CONNELL 2649 Constitution or federal statutory law, and to return the class’s property. The class also alleges a variety of state law claims: taxpayer action, violation of the UPL, breach of fiduciary duty, negligence, and fraud. These violations allegedly merit the payment of both restitution for the fair value of the owners’ property and punitive damages. In addition, the class contends the state claims justify injunctive relief requiring the Controller to comply with the UPL in the future.