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Hall v. State

Supreme Court of Minnesota

March 7, 2018

Timothy Hall, Jr., et al., Appellants,
v.
State of Minnesota et al., Respondents.

         Court of Appeals Office of Appellate Courts

          Daniel E. Gustafson, Daniel C. Hedlund, Joseph C. Bourne, Gustafson Gluek PLLC, Minneapolis, Minnesota; and Vildan A. Teske, Marisa C. Katz, Teske, Micko, Katz, Kizter, & Rochel, PLLP, Minneapolis, Minnesota; and J. Gordon Rudd, Jr., David Cialkowski, Zimmerman Reed, PLLP, Minneapolis, Minnesota; and Patrick W. Michenfelder, Throndset Michenfelder, LLC, Saint Michael, Minnesota; and Garret D. Blanchfield, Brant D. Penney, Reinhardt, Wendorf & Blanchfield, Saint Paul, Minnesota, for appellants.

          Lori Swanson, Attorney General, Sarah L. Krans, Angela Behrens, Assistant Attorneys General, Saint Paul, Minnesota, for respondents

          Todd Murray, Friedman Iverson, Minneapolis, Minnesota; and Daniel M. Eaton, Christensen Law Office PLLC, Minneapolis, Minnesota, for amicus curiae National Association of Consumer Advocates.

          Julie Nepveu, AARP Foundation Litigation, Washington, D.C.; and 2 Janet C. Evans, Neil S. Goldsmith, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Minnesota; and Mahesha P. Subbaraman, Subbaraman PLLC, Minneapolis, Minnesota, for amici curiae AARP and AARP Foundation.

          Jarod Bona, Aaron R. Gott, Bona Law PC, La Jolla, California; and Luke A. Wake, NFIB Small Business Legal Center, Sacramento, California, for amicus curiae National Federation of Independent Business, Small Business Legal Center.

         SYLLABUS

         1. When unclaimed property transferred to the State under the Minnesota Unclaimed Property Act, Minn. Stat. §§ 345.31-.60 (2016) ("the Act") is interest bearing, the State effects a taking under the Minnesota and United States Constitutions if the State does not compensate the property owner for the lost interest.

         2. Because the notice provided by and under the Act to owners of interest-bearing property valued over $100 is sufficient to inform those property owners that their unclaimed property is subject to transfer to the State and of steps to take to avoid the transfer, the Act comports with due process under the Minnesota and United States Constitutions.

         Affirmed in part, reversed in part, and remanded.

          OPINION

          GILDEA, Chief Justice.

         This case involves the constitutionality of the Minnesota Unclaimed Property Act, Minn. Stat. §§ 345.31-.60 (2016). The Act provides that unclaimed property is presumed abandoned and remitted to and held by the State in its general fund until the owners seek to reclaim the property. Id. Appellants allege that their unclaimed property was transferred to the Commissioner of Commerce and held by the State under the Act, and they contend that the State's failure to pay interest accrued on the property while it was in the State's custody violates the Takings Clauses of the Fifth Amendment to the United States Constitution, as applied to the states through the Fourteenth Amendment, and the Minnesota Constitution. U.S. Const. amends. V, XIV, § 1; Minn. Const. art. I, § 13. They also assert that the State fails to provide adequate notice to property owners that it takes custody of their presumably abandoned property, in violation of the Due Process Clauses of the Fourteenth Amendment to the United States Constitution and the Minnesota Constitution. U.S. Const. amend. XIV, § 1; Minn. Const. art. I, § 13.

         Respondents, Commissioner of Commerce Michael Rothman and the State, moved to dismiss the complaint. The district court denied that motion, but the court certified the Takings and Due Process Clause questions to the court of appeals pursuant to Minn. R. Civ. App. P. 103.03(i). The court of appeals reviewed the certified questions and rejected the constitutional challenges to the Act. Because we conclude that owners of interest-bearing bank accounts-but not the owners of the other property at issue in this case- have a constitutionally protected property right that is taken when the State does not compensate the owners for the lost interest, and that the notice provided under the Act to owners of such property valued over $100 is sufficient to satisfy the requirements of due process, we affirm in part, reverse in part, and remand to the district court for further proceedings.

         FACTS [1]

         Appellants are four property owners whose property was presumed abandoned under the Act and transferred to the State. Appellant Timothy Hall, Jr. was issued a final paycheck in an amount under $100 from his employer in 2011. Sometime in 2015, Hall learned that the funds from this check had been transferred to the State under the Act. It is unclear whether Hall has sought the return of his property.

         In June 2015, appellant Michael Undlin learned from his attorneys that the State was holding property payable to him, worth over $100 in value. The previous holders remitted the property to the State under the Act. The complaint states that Undlin has begun the process for the return of the property.

         Appellant Beverly Herron learned from her daughter, who had searched for Herron's name on MissingMoney.com, that the State was holding insurance proceeds in the amount of $236.57 in Herron's name. Herron submitted a claim for the return of her property and received a check for the value of the insurance proceeds.

         Finally, appellant Mary Wingfield had an interest-bearing account. In 2014, she received a letter from the bank asking her to contact it regarding the account, but she did not do so. The bank later remitted the balance of Wingfield's account to the State. After she filed a claim for the return of her property, the State sent Wingfield a check for the principal amount, which was in excess of $100, 000. But the State did not include the value of the interest that would have accrued had the money remained in Wingfield's account during the time that the State held the money.

         Appellants allege, individually and on behalf of a class of all owners of property that has been remitted to the State under the Act, that they did not receive sufficient notice-either from the original holder of their property or from the State-that their property had been remitted to the State. The complaint further alleges that the notice deficiency violates appellants' and the class members' procedural due process rights. Finally, the complaint asserts that the Act effects an unconstitutional taking because claimants do not receive earnings or constructive interest on the unclaimed property after it is delivered to the State.

         Respondents moved to dismiss under Minn. R. Civ. P. 12.02(a), (e), for lack of subject-matter jurisdiction and failure to state a claim upon which relief may be granted. The district court denied the motion to dismiss the due process and unconstitutional taking claims. The court determined that appellants sufficiently alleged a due process claim because they asserted that the notice provided under the Act is not reasonably certain to inform those affected that their property is being remitted to the State. The court determined that appellants also sufficiently alleged a takings claim because respondents took appellants' property and put it in a fund for public use, for which appellants are entitled to just compensation.

         Respondents then made a motion, which the district court granted in part, to certify the constitutional questions to the court of appeals as important and doubtful. See Minn. R. Civ. App. P. 103.03(i). The court of appeals answered the certified questions. Hall v. State, 890 N.W.2d 728, 731 (Minn.App. 2017). Regarding the takings question, the court determined that no taking occurs when the Act specifies the disposition of unclaimed property. Id. at 735-36.[2] With respect to the due process issue, the court determined that no process was due under the Act because it does not deprive unclaimed property owners of a protected property interest. Id. at 737.[3] In the alternative, the court determined that, even if the Act does deprive property owners of a protected interest, the notice required under the statute is sufficient. Id. at 738. We granted appellants' petition for review.

         ANALYSIS

         Appellants challenge the constitutionality of the Act. We review the constitutionality of a statute de novo. State v. Hensel, 901 N.W.2d 166, 170 (Minn. 2017); Schatz v. Interfaith Care Ctr., 811 N.W.2d 643, 653 (Minn. 2012). In addition, the issues that appellants specifically raise came to the court of appeals as certified questions and therefore these issues present questions of law that we review de novo. See Siewert v. N. States Power Co., 793 N.W.2d 272, 277 (Minn. 2011); Hoffman v. N. States Power Co., 764 N.W.2d 34, 42 (Minn. 2009); Watson ex rel. Hanson v. Metro. Transit Comm'n, 553 N.W.2d 406, 411 (Minn. 1996).

         We begin our analysis with a discussion of the Act. It covers a wide range of property, including bank accounts, unclaimed insurance proceeds, and unclaimed wages. See Minn. Stat. §§ 345.32-.39 (identifying types of property covered by the Act). The Act provides that property is "presumed abandoned" if the property owner does not take action regarding the property for a set period of time, the length of which varies depending on the type of property at issue. Id. For example, if the owner of a bank account does not take any action relating to her account for 3 years (e.g., withdraw, deposit, or communicate with the bank in writing about the account, or receive regular statements by mail), the balance of the account "together with any interest or dividend thereon" is presumed abandoned. Minn. Stat. § 345.32(a). Likewise, funds held by a "life insurance corporation" that are "unclaimed and unpaid for more than three years after the moneys became due and payable" are presumed abandoned. Minn. Stat. § 345.33(a)-(b). And wages owing in the ordinary course of business that an owner fails to claim for more than 1 year are presumed abandoned. Minn. Stat. § 345.39, subd. 3.

         Every holder of property (e.g., a bank) that is presumed abandoned must submit an annual report to the Commissioner describing the property, including the property owner's name and last known address. Minn. Stat. § 345.41(a)-(b). At the time of the annual report, the holder "shall pay or deliver" to the Commissioner, the unclaimed property including "all interest, dividends, increments, and accretions due, payable, or distributable on the property on November 1, or October 1 for a life insurance company." Minn. Stat. § 345.43, subd. 2a. Holders of presumptively abandoned property who fail to follow the requirements of the Act are subject to criminal penalties. Minn. Stat. § 345.55.

         Before unclaimed property is delivered to the Commissioner, the Act requires that the holder of the property provide notice to the owner advising that the holder is in possession of the property and of the necessary steps to "prevent abandonment." Minn. Stat. § 345.41(e). The holder is required to provide this notice when it has the property owner's address, the owner's claim ...


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