Knellinger v. Young

134 F.4th 1034
Court of Appeals for the Tenth Circuit·Decided April 11, 2025·No. 23-1018·Published·Cited by 4 cases

Opinion

FILED

United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS April 11, 2025

Christopher M. Wolpert

FOR THE TENTH CIRCUIT Clerk of Court

DAVID KNELLINGER; ROBERT STOREY,

Plaintiffs - Appellants, v. No. 23-1018

DAVID YOUNG, in his individual and official capacities as Colorado State Treasurer, Colorado Office of Treasury; BIANCA GARDELLI, in her individual and official capacities as Director of Colorado Department of Treasury, Unclaimed Property Division,

Defendants - Appellees.

Appeal from the United States District Court for the District of Colorado (D.C. No. 1:22-CV-01379-CNS-STV)

Richard M. Paul III, Paul, LLP, Kansas City, Missouri (Jonathan Greiner and Christopher Ross, Griener & Associates, PLLC, San Antonio, Texas; and Laura C. Fellows and David W. Bodenheimer, Paul, LLP, Kansas City, Missouri; with him on the briefs), for Plaintiffs-Appellants

LeeAnn Morrill, First Assistant Attorney General (Amy Colony and Jennifer H. Hunt, Senior Assistant Attorneys General, with her on the briefs), Denver, Colorado, for Defendants-Appellees

Before BACHARACH, PHILLIPS, and EID, Circuit Judges.

EID, Circuit Judge.

This case concerns the application of Colorado’s Revised Uniform Unclaimed Property Act (“RUUPA”), Colo. Rev. Stat. §§ 38-13-201–220, and its interaction with the Takings Clause of the Fifth Amendment, as applied to the States through the Fourteenth Amendment.

After learning that the state of Colorado took possession of specific property under RUUPA, David Knellinger and Robert Storey (collectively, “Plaintiffs”) filed suit under 42 U.S.C. § 1983, alleging that Colorado’s unclaimed property scheme violated the Takings Clause. The district court dismissed their claims for lack of standing. In its view, they failed to sufficiently allege ownership of the property at issue, in part because Plaintiffs never filed an administrative claim to establish ownership as required by RUUPA.

Knellinger and Storey now appeal that decision, arguing that they alleged facts sufficient to state a claim that Colorado took their property for public use without just compensation. We agree. Property owners who plausibly allege that Colorado has taken custody of their property under RUUPA, and used it for public purposes, need not file administrative claims with Colorado before they may sue for just compensation. The moment a state takes private property for public use without just compensation, a property owner has an actionable claim under the Takings Clause. At this phase in the litigation, it is premature to decide whether any such taking occurred here. However, taking the allegations of the complaint as true and viewing

them in the light most favorable to the non-movant, we hold that the property owners in this case stated a plausible claim for damages and therefore adequately pleaded an injury sufficient to confer standing. The district court, however, properly dismissed Plaintiffs’ equitable claims because § 1983 provides an adequate basis for Knellinger and Storey to obtain just compensation for any taking.

Accordingly, we AFFIRM the district court’s dismissal of Plaintiffs’ equitable claims, REVERSE the district court’s dismissal of their damages claims, and REMAND to the district court for proceedings consistent with this opinion.

I.

Under RUUPA, Colorado presumes that certain property has been abandoned after a period of time defined by statute.1 See Colo. Rev. Stat. §§ 38-13-201–220. The time period differs depending on the type of property. For example, if an employee has failed to collect his wages “one year after the amount becomes payable,” those wages are “presumed abandoned.” Id. § 38-13-201(1)(k). If a retail store owes a customer a refund, however, the customer has three years to collect such refund before Colorado presumes that money to be abandoned. See id. § 38-13-201(1)(f). Once Colorado presumes property to be “abandoned” under RUUPA, whoever holds the property must report it and then pay or deliver it to the Colorado State Treasurer. Id. §§ 38-13-401, 38-13-603. If, for instance, someone

1 RUUPA itself took effect in 2020, but Colorado has employed a similar unclaimed property scheme since at least 1987. See Colo. Rev. Stat. §§ 31-13-101– 134 (1987). RUUPA also contains some exceptions to the following provisions, not relevant here.

waits more than one year to collect or to cash his final paycheck, his former employer must report and pay the uncollected wages to the Treasurer.

RUUPA requires the Treasurer to hold the unclaimed property he receives “in custody for the benefit of the owner.” Id. § 38-13-803. If the relevant property is money, the Treasurer holds it in Colorado’s unclaimed property trust fund. Id. § 38-13-801. If the property takes another form, the Treasurer may typically sell it after three years, with all proceeds to the trust fund. Id. §§ 38-13-701, 38-13-801. In theory, such property “is not owned by the state,” id. § 38-13-803, and it “does not revert to the general fund” automatically, id. § 38-13-801. Nevertheless, Colorado regularly reappropriates money from the unclaimed property trust fund to the state’s general fund, or to specific public uses, such as the Colorado state fair. See id. §§ 38-13-801, 38-13-801.5.

A property owner who discovers that Colorado has taken his property may recover it by filing an administrative claim. Id. § 38-13-903. If the Treasurer denies such claim or fails to respond to it, RUUPA authorizes a suit to recover the property in the district court for the City and County of Denver. Id. § 38-13-906.

Under RUUPA, once Colorado takes possession of the abandoned property, the Treasurer must provide direct notice to a property owner if the Treasurer has the property owner’s email address and “does not know [it] to be invalid.” Id. § 38-13-503. The Treasurer also may, but need not, notify the property owner by other means such as first-class mail or telephone. Id. If the Treasurer does not have a valid email address for the property owner, the Treasurer is not required to provide

direct notice, but need only maintain a website with a list of all property owners whose property has been transferred to the Treasurer. Id. Colorado maintains such an unclaimed property website in compliance with RUUPA.

In 2022, David Knellinger and Robert Storey visited Colorado’s unclaimed property website and discovered a listing for their property. The website listed property previously possessed by “DAVID KNELLINGER” and “STOREY ROBERT E,” valued at “$50–$249” and under “$50,” respectively. App’x at 10–11. The website did not list the type of property or the precise value. Moreover, Plaintiffs had never received notice of Colorado taking any of their property, nor any compensation for it.

Knellinger and Storey did not file administrative claims, nor did they file a suit in Denver County Court as authorized by RUUPA. Instead, Plaintiffs sued in federal district court. As relevant here, Knellinger and Storey brought a claim under 42 U.S.C. § 1983, alleging that Colorado’s unclaimed property scheme violated the Takings Clause of the Fifth Amendment, as applied to the States through the Fourteenth Amendment. They filed suit against the officials in charge of administering RUUPA: David Young (the Colorado State Treasurer) and Bianca Gardelli (the Director of the Unclaimed Property Division of the Treasury) in their individual and official capacities (collectively, “Defendants”). Knellinger and Storey alleged that Defendants had “taken control of and liquidated” their property and “converted [it] to public use” without “just compensation.” App’x at 34. They sought a monetary remedy of “restitution of the proper value of their property . . .

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