Agnes Suever v. Kathleen Connell ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AGNES SUEVER, deceased; 
MADONNA SUEVER; STEVE TUCKER;
ALEXANDER VONDJIDIS; RICHARD W.
SEITZINGER; JO-ANN SEITZINGER,
individually and as trustees for the
Seitzinger Family Trust;
JOHNSTONE WHITLEY; TONY LEE;
LYNN KEITH,
Plaintiffs-Appellants,
No. 08-15884
v.
 D.C. No.
KATHLEEN CONNELL, in her 5:03-CV-00156-RS
individual capacity; RICHARD
CHIVARO, in his individual and
official capacity; GEORGE DELEON,
in his individual and official
capacity; STEVE WESTLY, in his
individual and official capacity as
Controller of the State of
California,
Defendants-Appellees.

11831
11832 SUEVER v. CONNELL
AGNES SUEVER; MADONNA SUEVER; 
STEVE TUCKER; RICHARD W.
SEITZINGER, individually and as
trustees for the Seitzinger Family
Trust; ALEXANDER VONDJIDIS; JO-
ANN SEITZINGER individually and
as trustees for the Seitzinger
Family Trust; JOHNSTONE WHITLEY;
LYNN KEITH; TONY LEE; RICHARD No. 08-16161
V. VALDES,
Plaintiffs-Appellees,  D.C. No.
5:03-cv-00156-RS
v. OPINION
JOHN CHIANG, in his individual and
official capacity as Controller of
the State of California, and in his
custodial capacity as administrator
of the Unclaimed Property Fund;
RICHARD CHIVARO, in his individual
and official capacity,
Defendants-Appellants.

Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, District Judge, Presiding
Argued and Submitted
July 13, 2009—San Francisco, California
Filed August 26, 2009
Before: Barry G. Silverman, Richard R. Clifton, and
Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
SUEVER v. CONNELL 11835
COUNSEL
William Wayne Palmer & Daniel J. Culhane, Law Offices of
William W. Palmer, Sacramento, California, for the plaintiffs-
appellants/appellees.
Robin B. Johansen, James C. Harrison, Thomas A. Willis, &
Margaret R. Prinzing, Remcho, Johansen & Purcell, LLP, San
Leandro, California, for the defendants-appellees/appellants.
OPINION
MILAN D. SMITH, JR., Circuit Judge:
Plaintiffs, an uncertified class of individuals whose finan-
cial assets escheated to the Controller’s Office pursuant to
California’s unclaimed property law (UPL), CAL. CIV. PROC.
CODE §§ 1300, et seq., sued alleging insufficient notice and
mishandling of their property. Defendants are Kathleen Con-
nell, Richard Chivaro, Steve Westly, and George DeLeon
(collectively, the Controller).1 For the reasons discussed
1
Connell was the former Controller for the State of California, and
Westly was the Controller at the time of the initial complaint. Chivaro was
the Chief Legal Counsel at the Controller’s Office, and DeLeon works in
the Controller’s Unclaimed Property Division.
11836 SUEVER v. CONNELL
below, we affirm the district court’s (1) denial without preju-
dice of Plaintiffs’ motion for a permanent injunction requiring
the State to pay interest on unclaimed property at California’s
alternative borrowing rate; and (2) partial summary judgment
determining that the Eleventh Amendment bars Plaintiffs’
“restitution” claims and dismissing former Controller Westly
as a defendant in his individual capacity. However, we
reverse the district court’s rulings that (3) the State is constitu-
tionally required to pay interest when it returns property to
owners under the UPL; and that (4) the Eleventh Amendment
does not bar Plaintiffs from being awarded such interest retro-
actively.
I. BACKGROUND
A. Statutory Framework
Title 10 of the California Code of Civil Procedure governs
unclaimed property located within California. See CAL. CIV.
PROC. CODE §§ 1300, et seq. Its purpose is “to provide for the
receipt, custody, investment, management, disposal, escheat
and permanent escheat of various classes of unclaimed prop-
erty . . . .” 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). “ ‘Permanent escheat’ means the absolute vest-
ing in the state of title to property . . . pursuant to judicial
determination, pursuant to a proceeding of escheat as pro-
vided by Chapter 5 . . . of [Title 10], or pursuant to operation
of law and the barring of all claims to the property by the for-
mer owner thereof or his successors.” Id. § 1300(d).
During the time in which Plaintiffs submitted their claims
to the Controller’s Office for return of their escheated assets,
California Code of Civil Procedure § 1540(c) stated:
SUEVER v. CONNELL 11837
The Controller shall add interest at the rate of 5 per-
cent 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 sec-
tion for the period the property was on deposit in the
Unclaimed Property Fund. No interest shall be pay-
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 trea-
sury bills shall be defined in accordance with the fol-
lowing 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 fol-
lowing January 1 to June 30, inclusive.
Since August 11, 2003, however, § 1540(c) has stated: “No
interest shall be payable on any claim paid under this chap-
ter.”
The Controller’s Office must deposit proceeds from the
sale of escheated property in the Unclaimed Property Fund in
an Abandoned Property account. Id. § 1564(a). At least
monthly, the Controller’s Office must also transfer to Califor-
nia’s General Fund all money in the Abandoned Property
account in excess of $50,000. Id. § 1564(c).
B. The Putative2 Class Allegations3
2
In its April 1, 2008 order, the district court granted Plaintiffs’ motion
to amend the class definition, but denied Plaintiffs’ motion to certify the
11838 SUEVER v. CONNELL
Plaintiffs allege that the Controller wrongfully appropri-
ated, misused, sold, and refused to relinquish their financial
assets. In their first amended complaint, they claim that the
Controller unlawfully employed “auditors” to pressure certain
financial institutions into paying or turning over assets that
were not properly subject to escheat. For example, these
financial institutions purportedly had knowledge of some of
Plaintiffs’ addresses when the transfers occurred. Moreover,
the Controller allegedly failed to provide the requisite notice
to Plaintiffs, thereby preventing them from reclaiming their
property before its liquidation. After 1989, Plaintiffs assert,
the Controller implemented a policy of publishing only block
advertisements rather than listing the specific names and
addresses of putative owners, in violation of California Code
of Civil Procedure § 1531. The Controller also allegedly
stopped mailing direct notices to owners’ last known
addresses.
The first amended complaint further alleges that the Con-
troller misused the property it unlawfully seized. For instance,
Plaintiffs assert that the Controller unconstitutionally applied
simple-interest-rate legislation retroactively, thereby appropri-
ating compound interest that had accrued on escheated prop-
erty. Meanwhile, the Controller purportedly refused to pay
any interest at all on escheated cashier’s checks and divi-
dends. Nor, according to Plaintiffs, did the Controller prop-
erly register or notify owners of escheated cashier’s checks,
or properly segregate the money in the Unclaimed Property
Fund from the money in the General Fund. The Controller
also allegedly destroyed documents pertaining to proof of
class “without prejudice to a further motion upon any future resolution of
the interest rate issues.”
3
We extract many of the facts regarding the first amended complaint
from the background discussion in Suever v. Connell (Suever I), 439 F.3d
1142, 1145-46 (9th Cir. 2006), facts which our own independent review
of the record confirms.
SUEVER v. CONNELL 11839
ownership as well as the contents of safety deposit boxes,
again without notice.
Plaintiffs claim that these unlawful acts amount to a con-
spiracy on the Controller’s part to obtain funds with which to
mitigate California’s longstanding budget crisis. Through this
conspiracy, the Controller allegedly permitted several compa-
nies, regulated entities, and financial institutions to unlawfully
withhold over $1 billion in personal property. Rather than
promulgating any formal rules to authorize these actions, the
Controller switched internal policies repeatedly, failed to pro-
vide any notice, and insulated itself from public accountabil-
ity. In doing so, Plaintiffs allege, the Controller violated not
only the federal Due Process, Takings, and Contracts Clauses,
but also federal and state securities statutes and the UPL
itself.
Plaintiffs cite the above-mentioned violations as supporting
their claim for declaratory relief, which in turn, they assert,
would require the Controller to disgorge or return either their
property or the reasonable value thereof. In addition, Plaintiffs
allege two 42 U.S.C. § 1983 claims based on procedural due
process and the Takings Clause. Specifically, Plaintiffs assert
that the Controller violated procedural due process by appro-
priating and liquidating assets without adequate notice, and
that these same actions also constitute a “taking” that requires
the State to pay just compensation. Plaintiffs also allege that
they deserve the “proper value of their property, which
“should be valued according to the applicable principles of
law for reimbursement purposes,” and that they are entitled
to: (1) an accounting of their appropriated property; (2) attor-
neys’ fees; (3) creation of a common fund for return of their
property “with proper interest”; and (4) injunctive relief to
require the return of their property and to prevent the Control-
ler’s continued violation of federal constitutional or statutory
law.
Finally, Plaintiffs allege several state law actions: negli-
gence, fraud, a taxpayer claim, breach of fiduciary duty, and
11840 SUEVER v. CONNELL
violation of the UPL. These violations purportedly warrant
payment of “restitution” in the amount of the difference
between the proceeds of the sale of their unclaimed property
and the current market value, as well as punitive damages.
Plaintiffs also assert that the state claims warrant injunctive
relief to require the Controller’s prospective compliance with
the UPL.
C. Status of Individual Plaintiffs’ Claims for
Escheated Property
In 1993, Plaintiff Agnes Suever (now deceased and repre-
sented in this lawsuit by her daughter, Plaintiff Madonna
Suever, who held general and financial power of attorney over
her) purchased a cashier’s check from World Savings and
Loan Bank in the amount of $13,603.24. She then “forgot”
about the check, which “fell under a piece of heavy furniture
for quite some time.” The check escheated to the State in
October 1999. According to the declaration of the Chief of the
Division of Collections at the Controller’s Office, “[t]he fact
that the Controller reimbursed World Savings for the full
amount of the cashier’s check that had previously escheated
to the State indicates that Agnes Suever reclaimed her prop-
erty from World Savings rather than the Controller. If Mrs.
Suever reclaimed her property from the State, the State would
have paid her the statutory rate of interest then in effect.”
In November 1991, 505 shares of Plaintiff Steve Tucker’s
Intel stock escheated to the State. He alleges that his stock
“was seized by the . . . Controller . . . without notice, his
knowledge or consent, and while he was living in England as
an English citizen.” In 1999, the State returned to Tucker
$74,728, including $18,703 in interest. He claims that he is
entitled to “roughly double” the interest he actually received
because the State was able to “avoid[ ] borrowing costs”
while it held his property.
Plaintiff Alexander Vondjidis purchased stock from Hew-
lett Packard (HP) when he worked in HP’s office in Athens,
SUEVER v. CONNELL 11841
Greece, in the 1970s. He stopped working for HP in 1978, and
the Athens office closed in the early 1980s. His stock
escheated in 1993. In 2001, he filed a claim for it, and the
Controller returned to him $25,961, including $4464 in inter-
est.
General Electric transferred stock owned by Plaintiffs
Richard and Jo-Ann Seitzinger to the State in 1994. The
Seitzingers submitted a claim for the shares in September
2000, and the Controller returned to them $18,366, including
$3986 in interest.
Plaintiff Johnstone Whitley—whose daughter, Plaintiff
Lynn Keith, holds power of attorney over him—claims that
the Controller destroyed documentary evidence transferred to
the State by a trust company that would have established their
family’s interest in railroad rights of way. The Controller’s
records show that the trust company sold the railroad rights of
way in 1977 and could not locate certain beneficiaries of the
trust, including Whitley’s father and grandfather, to pay them
their share of the sale proceeds. In 1986, the Controller paid
Whitley and a relative $15,581.66 each, plus an additional
$3418.83 each, which (although not specifically designated as
such) appears to be interest.
Plaintiff Richard Valdes “was an individual shareholder,
taxpayer, and former President of Columbia Yacht Corpora-
tion” who claims that “the Controller seized shares of stock
[he] owned in Columbia Yacht.” He alleges that, when he
sought return of these shares, “[t]he Controller’s Office
informed [him] that all their records pertaining to his stock
w[ere] deliberately destroyed pursuant to the Controller’s
unwritten document destruction policy.” The Controller
asserts that Valdes “admits that all of the shares he now
claims are identified as belonging to other people, not him,
and he admits that he knows of no documents that could
prove his claim.” However, Valdez maintains that “because of
either poor record keeping or deliberate wrongdoing, when
11842 SUEVER v. CONNELL
the shares were seized, they were listed under the name
‘Columbia Yacht Shareholders’ instead of [the] individual
names.” It is true, though, as the Controller points out, that
Valdes has admitted in a related case that it is “possible, but
not probable” that his memory regarding his ownership of the
shares is inaccurate.
D. Prior Relevant Proceedings
In 2001, counsel for Plaintiffs filed a lawsuit in the case of
Taylor v. Connell seeking on behalf of different plaintiffs in
the Eastern District of California the return of stock or refund
of proceeds held by the Controller, alleging violations of,
inter alia, the Due Process Clause, federal securities acts, and
state law. See No. CIV. S-01-2407 FCD GGH, 2002 WL
34204694, at *1 (E.D. Cal. June 26, 2002). After the district
court dismissed the action on Eleventh Amendment grounds,
id. at *3-6, we vacated the judgment and remanded, conclud-
ing:
Because the plaintiffs seek genuinely prospective
relief, and because the funds they seek are held by
the state as custodian in trust for them rather than as
the state’s own funds, much as a municipality holds
a car towed from an expired parking meter, the com-
plaint should not have been dismissed under the
Eleventh Amendment for lack of jurisdiction.
Taylor v. Westly (Taylor I), 402 F.3d 924, 936 (9th Cir. 2005).
The Taylor I panel further stated, however, that the Eleventh
Amendment did bar the plaintiffs’ “retroactive requests for
money,” and also noted: “We need not decide the issue of
sovereign immunity in the context of a takings claim, since
we have already decided that plaintiffs’ property has not been
taken at all, but has merely been held in trust for them by the
Controller.” Id. at 935-36.
Meanwhile, in November 2003, prior to our decision in
Taylor I, the district court in the present case granted the Con-
SUEVER v. CONNELL 11843
troller’s motion to dismiss this action, without leave to
amend, on the ground that the Eleventh Amendment barred
the claims alleged. On appeal, we issued our decision in
Suever I, which, based on the ruling in Taylor I, likewise
vacated the district court’s Eleventh Amendment ruling
because “the class’s request that the Controller return the
members’ property is not barred by the State’s sovereign
immunity.” Suever I, 439 F.3d at 1147-48. While the Suever
I panel gave examples of some claims that could go forward
and others that “were clearly barred,” it elected not to parse
all of the averments of the first amended complaint or to
opine on every potential claim. Id. at 1148.
On remand, the Controller moved for judgment on the
pleadings, asking the district court to answer the questions left
open by the Suever I panel regarding which claims could pro-
ceed and which could not, and the district court granted the
motion in part in November 2006. Plaintiffs subsequently
moved for partial summary judgment on several issues,
largely based on the argument that it is beyond factual dispute
that the State engaged in conduct that we had previously
declared unlawful. See Taylor I, 402 F.3d at 935 (stating that
the plaintiffs “allege[d] actions that would fall outside the
scope of the Controller’s statutory authority to such an extent
as to be ultra vires”); Suever I, 439 F.3d at 1148 (noting that
the first amended complaint alleges both “that the Controller
acted ultra vires by improperly seizing property ineligible for
escheat” and “that the Controller acted unconstitutionally by
providing inadequate notice to property owners whose prop-
erty was to be escheated”); Taylor v. Westly (Taylor II), 488
F.3d 1197, 1201 (9th Cir. 2007) (granting plaintiffs a prelimi-
nary injunction in part because “the likelihood of success on
the merits [wa]s high” regarding their unconstitutional notice
claim).4
4
In Taylor v. Westly (Taylor III), 525 F.3d 1288 (9th Cir. 2008) (per
curiam), we held that the “entirely new statutory procedure addressing
escheat” promulgated by the State following the issuance of the prelimi-
nary injunction in Taylor II is facially constitutional, and that, as a result,
the district court did not abuse its discretion in dissolving the injunction.
Id. at 1289-90.
11844 SUEVER v. CONNELL
The district court’s October 12, 2007 order granted partial
summary judgment to Plaintiffs on their claim that the State
may not constitutionally withhold interest when it returns
property to owners under the UPL. The district court other-
wise denied Plaintiffs’ claims for (1) a declaration on the mer-
its that the notice provisions of the UPL and the Controller’s
practices thereunder are unconstitutional; (2) a declaration on
the merits that the Controller has taken possession of property
“outside the scope” of the UPL; and (3) an order that the Con-
troller begin the process of promulgating regulations that will
govern how persons may present and “perfect” a claim under
the UPL.
On October 26, 2007, the district court issued an order
denying Plaintiffs’ motion for class certification, which had
been heard at the same time as the motion for partial summary
judgment. The district court also denied in November 2007 a
request by the Controller for leave to seek reconsideration of
the ruling that interest is constitutionally required.
In its April 1, 2008 order, the district court granted the
Controller’s motion to certify for interlocutory appeal its ear-
lier ruling that the State is constitutionally required to pay
interest when it returns property to owners under the UPL;
granted Plaintiffs’ motion to amend the class definition but
denied without prejudice their motion to certify the class; and
denied Plaintiffs’ request for a permanent injunction requiring
the State to pay interest at California’s alterative borrowing
rate. The district court also granted in part and denied in part
the Controller’s motion for partial summary judgment. Specif-
ically, the district court granted the Controller’s motion
regarding (1) Plaintiffs’ claim for retroactive “restitution” in
the amount of the difference between the proceeds of the sale
of their unclaimed property and the current market value; (2)
dismissal of former Controller Westly as a defendant in his
individual capacity; (3) Plaintiffs’ taxpayer and state law
claims; and (4) Plaintiffs’ motion to compel further discovery
responses. However, the district court denied without preju-
SUEVER v. CONNELL 11845
dice the Controller’s request for a determination that the UPL,
as amended, is now constitutional5; rejected the Controller’s
statute of limitations argument; and denied the Controller’s
requests for a protective order and for sanctions arising from
its contention that Plaintiffs have improperly obtained and
used privileged documents.
E. The Consolidated Appeals
On appeal, Plaintiffs challenge the district court’s (1) denial
without prejudice of their motion for a permanent injunction
requiring the State to pay interest on unclaimed property at
California’s alternative borrowing rate; and (2) partial sum-
mary judgment determining that the Eleventh Amendment
bars Plaintiffs’ “restitution” claims and dismissing former
Controller Westly as a defendant in his individual capacity.
The Controller, meanwhile, challenges the district court’s par-
tial summary judgment rulings that (3) the State is constitu-
tionally required to pay interest when it returns property to
owners under the UPL; and that (4) the Eleventh Amendment
does not bar Plaintiffs from being awarded such interest retro-
actively.
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction pursuant to 28 U.S.C. §§ 1291,
1292(a)(1), and 1292(b). We review a district court’s ruling
on the constitutionality of a state statute de novo. Bland v.
Fessler, 88 F.3d 729, 732 (9th Cir. 1996).
A district court’s grant of summary judgment also receives
de novo review. Covey v. Hollydale Mobilehome Estates, 116
F.3d 830, 834 (9th Cir. 1997). “We must determine, viewing
the evidence in the light most favorable to . . . the non-moving
party, whether there are any genuine issues of material fact
5
See supra note 4 (noting that the Taylor III court subsequently held that
the amended version of the UPL is facially constitutional).
11846 SUEVER v. CONNELL
and whether the district court correctly applied the substantive
law.” Olsen v. Idaho State Bd. of Medicine, 363 F.3d 916, 922
(9th Cir. 2004). “We may affirm on any grounds supported by
the record.” Id. “The underlying substantive law governing
the claims determines whether or not [the disputed fact] is
material.” Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134
(9th Cir. 2000). “There must be enough doubt for a ‘reason-
able trier of fact’ to find for the plaintiffs in order to defeat
the summary judgment motion.” Id. (quoting Wallis v. J.R.
Simplot Co., 26 F.3d 885, 889 (9th Cir. 1994)).
III. DISCUSSION
A. Prospective Interest Under the UPL
[1] The Controller challenges the district court’s October
12, 2007 ruling that the State is constitutionally required to
pay interest when it returns property to owners under the
UPL. Plaintiffs, on the other hand, challenge the district
court’s April 1, 2008 denial of their motion for a permanent
injunction requiring the State to pay interest on unclaimed
property at California’s alternative borrowing rate. Because,
as discussed below, intervening Ninth Circuit precedent has
held that the State is not constitutionally required to pay any
interest under the UPL, we need not reach the issue regarding
the appropriate rate of such interest.
After the district court’s October 12, 2007 order, and after
the filing of the opening briefs in this case, we squarely
rejected the proposition that property owners have a compen-
sable Fifth Amendment right to interest earned on unclaimed
property that escheats to the State of California. Turnacliff v.
Westly, 546 F.3d 1113, 1119-20 (9th Cir. 2008). In Turnacliff,
the plaintiff, in his capacity as administrator of an estate, “al-
leged 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.” Id. at 1115. In the alterna-
tive, he also argued that:
SUEVER v. CONNELL 11847
if the Controller’s construction of California Code of
Civil Procedure § 1540(c) was correct, then the Con-
troller 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 “in-
terest follows the principal,” any and all interest that
the unclaimed property earned while held by Califor-
nia belongs to the Estate. Turnacliff further main-
tains that, to the extent that the property did not earn
actual interest, the Estate is entitled to constructive
interest.
Id. at 1118.
The Turnacliff panel first held that the Controller had prop-
erly calculated interest under California Code of Civil Proce-
dure § 1540(c). Id. Next, the panel rejected the plaintiff ’s
Fifth Amendment argument because “[a]ssuming, arguendo,
that the Estate had a cognizable property right to interest
earned by its escheated property, and that this property was
‘taken’ by California, no further compensation is due to the
Estate because when the Estate abandoned its property, it for-
feited any right to interest earned by that property.” Id. at
1119 (footnote omitted). In support of this conclusion, the
panel reasoned:
In Texaco, Inc. v. Short, 454 U.S. 516, 526 [1982],
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:
In ruling that private property may be
deemed to be abandoned and to lapse upon
the failure of its owner to take reasonable
11848 SUEVER v. CONNELL
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.
Though Short concerned abandoned mineral inter-
ests, 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 compensa-
tion,” because California returned the Estate’s aban-
doned 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.
Turnacliff, 546 F.3d at 1119-20 (emphasis added).
[2] Apparently in light of the intervening Turnacliff deci-
sion, Plaintiffs concede that “[w]hether the UPL requires the
payment of interest on genuinely ‘abandoned’ property under
a Constitutional UPL is not before the Court in this appeal,
and is irrelevant.” As previously noted, we have declared that
the current version of the UPL is facially constitutional. Tay-
lor III, 525 F.3d at 1289. Thus, insofar as the district court’s
October 12, 2007 order requires prospective payment of inter-
est, or payment of interest on any claims for unclaimed prop-
erty that escheated under the current version of the UPL, both
parties now appear to agree that Turnacliff requires reversal,
as do we.
SUEVER v. CONNELL 11849
B. Retroactive Interest
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 ‘hypotheti-
cal,’ ” . . . . 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 constitution-
ally entitled to “constructive” interest instead of the then-
statutorily 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 deci-
sion would redress so as to establish their constitutional stand-
ing 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 pre-
amendment 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 pub-
lic 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 pre-
rogative 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 prop-
erty 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 prop-
erty 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 prop-
erty 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 prop-
erty 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 Amend-
11852 SUEVER v. CONNELL
ment immunity from suit against [the State] for damages pay-
able 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 judg-
ment 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 pro-
spective 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 Amend-
ment, and we reverse the district court’s contrary ruling in its
October 12, 2007 order.
C. Retroactive “Restitution”
[7] Plaintiffs also argue that the district court erred in deny-
ing their claim for retroactive “restitution” in the amount of
the difference between the proceeds of the sale of their
unclaimed property and the current market value. In other
words, they claim that they are entitled to recover the “value”
of non-cash property taken into the Controller’s possession
without regard to the actual sums the Controller obtained
upon liquidating it. As previously explained, however, Plain-
tiffs are not entitled to more than the actual property that the
State took into its possession or the proceeds of that property.
See Taylor I, 402 F.3d at 932. Rather, such claims for addi-
tional compensation, whether described as “restitution” or
otherwise, are indistinguishable in effect from claims for
money damages against the State and, as such, are barred by
the Eleventh Amendment. Id. at 935.
[8] Nor can Plaintiffs justify their claim for “restitution” on
the basis that they seek only private money, not state funds.
First, contrary to Plaintiffs’ arguments, there is not $5.3 bil-
lion worth of private money in the Unclaimed Property Fund.
As required by state law, the Controller transfers funds in
excess of $50,000 to the General Fund every month. CAL. CIV.
PROC. CODE § 1564(c). Second, even if there were $5.3 billion
in the Unclaimed Property Fund, the Controller could not law-
fully use it to pay Plaintiffs the difference between the pro-
ceeds of the sale of their escheated property and what they
claim that property is worth now; to do so, the Controller
would by definition have to use money belonging to other
owners of unclaimed property. For these reasons, the district
11854 SUEVER v. CONNELL
court properly held that Plaintiffs are not entitled to recover
anything beyond the actual cash proceeds that the Controller
realized upon liquidating their non-cash escheated property.
D. Dismissal of Former Controller Westly as a
Defendant in his Individual Capacity
Finally, Plaintiffs challenge the district court’s April 1,
2008 ruling dismissing former Controller Westly as a defen-
dant in his individual capacity. This argument is also unavail-
ing.
As the district court observed, the first amended complaint
names each defendant in his or her “individual and official”
capacity. “Individual” capacity, however, can refer to two dis-
tinct doctrines. First, a complaint can name a state official in
an “individual” capacity as a fictional surrogate for the State,
such that the Eleventh Amendment does not apply even
though recovery ultimately still comes from the State’s cof-
fers. See Malone v. Bowdoin, 369 U.S. 643, 647 (1962) (not-
ing that “the action of a federal officer affecting property
claimed by a plaintiff can be made the basis of a suit for spe-
cific relief against the officer as an individual only if the offi-
cer’s action is not within the officer’s statutory powers or, if
within those powers, only if the powers, or their exercise in
the particular case, are constitutionally void” (emphasis
added) (internal quotation marks omitted))6; Ex parte Young,
209 U.S. 123, 159-60 (1908) (holding that a state official who
acts unconstitutionally is “stripped of his official or represen-
tative character and is subjected in his person to the conse-
quences of his individual conduct” (emphasis added)).7
6
The Taylor I court, 402 F.3d at 934, referred to this as the “Lee-Malone
exception to sovereign immunity,” recognizing the role that United States
v. Lee, 106 U.S. 196 (1882), also played in the development of the rule.
7
The scope of the Ex parte Young exception has since been limited to
claims for prospective equitable relief and state funds “ancillary” to such
relief; the Eleventh Amendment bars retroactive compensation to plaintiffs
from state funds. Edelman, 415 U.S. at 663-69.
SUEVER v. CONNELL 11855
Second, a plaintiff may pursue a 42 U.S.C. § 1983 claim
against a state official seeking to impose personal liability on
that official, such that the money comes from the official’s
own resources. To succeed on the merits of such a claim, a
plaintiff must show only that “the official, acting under color
of state law, caused the deprivation of a federal right.” Hafer
v. Melo, 502 U.S. 21, 25 (1991). In that instance, the Eleventh
Amendment is not implicated, because the claim is truly
against the individual, not the State. Id. at 30. Nor does liabil-
ity in such cases turn on whether the state official acted within
his or her authority or outside of it; the only issue is whether
the conduct was undertaken under color of state law. Id. at 28.
Applying these principles, the district court correctly con-
cluded that “even though there are ‘individual’ claims against
present office holders for prospective injunctive relief (under
Ex parte Young) and for an injunction requiring that plain-
tiffs’ own property be returned to them (under Lee-Malone),
no claim for damages against individual defendants ha[s] been
adequately pleaded.” In support of this determination, the
court grounded its reasoning in part in its earlier November
2003 order, which dismissed the first amended complaint
without leave to amend for failure to fairly state a claim
against any named defendant in the sense contemplated by
Hafer:
For those plaintiffs who have alleged that they are
entitled to money damages, they have failed to
plead: (1) a constitutional violation; (2) caused by
specific behavior of an individual defendant; (3)
entitling them to money damages from that individ-
ual. Instead, the complaint sets forth a description of
plaintiffs’ grievances followed by broad and sweep-
ing allegations of misfeasance in the Controller’s
office lasting for more than a decade. Plaintiffs do
not present a link between any particular harm they
suffered and the actions of any individual defendant.
Nor do they make any effort to differentiate between
11856 SUEVER v. CONNELL
the four individual defendants named in this action.
By pleading in such a scattered fashion, plaintiffs
have put themselves in a position where their com-
plaint cannot fairly be read as one for money dam-
ages against any individual defendant, but rather a
complaint alleging that the customs and practices of
the Controller’s Office have caused them harm.
Although we disagree with the court’s additional determina-
tion that the § 1983 allegations in the first amended complaint
actually indicate that the State is the “real, substantial party in
interest,” thereby triggering Eleventh Amendment immunity,
we nonetheless affirm the court’s conclusion that the allega-
tions are insufficient to put Westly on notice of specific, indi-
vidual actions for which he is personally liable to Plaintiffs.
[9] On appeal, Plaintiffs offer no persuasive arguments to
the contrary. They merely make the bald assertion that the fol-
lowing allegations in the first amended complaint “squarely
satisfy the requirements of Hafer”:
60. Starting in 1990, then Controller Gray Davis,
with defendants Chivaro, DeLeon, and others, made
a series of unpublished, internal policy decisions.
When Defendant Connell took office in 1995, she
continued and/or failed to correct the policies of
Controller Davis that continues to the present day;
likewise, when Defendant Westly took office in
2003, he continued and/or failed to correct the same
policies.
61. As discussed in greater detail below, Defen-
dants’ actions in taking possession of Plaintiffs’ pri-
vate property that falls completely outside the
statutes, and sometimes raiding private bank safety
deposit boxes, without notice to Plaintiffs and Class,
and the selling the property without notice to or the
consent of the Plaintiff violates the express provi-
SUEVER v. CONNELL 11857
sions of the UPL, and the California Constitution,
Article I, §§ 7, 15, and the United States Constitu-
tion, including the Contract Clause of Article I, Sec-
tion 10, and the Fourth, Fifth and Fourteenth
Amendments, the latter of which states that no state
shall “deprive any person of life, liberty, or property
without due process of law.” These policy decisions
and actions directly caused the injury described
herein that was inflicted on the various Plaintiffs in
this case.
Paragraph 60, however, says nothing about what the “internal
policy decisions” were, or about how they purportedly
harmed Plaintiffs. Rather, it again merely challenges the poli-
cies and customs continued by Westly in his official position
with the State. Nor is paragraph 61 helpful to Plaintiffs. It
likewise challenges only the policies and practices of the Con-
troller’s Office, and it fails to differentiate at all among the
four named defendants. Moreover, when read in conjunction
with the individual Plaintiffs’ allegations, see supra section
I.B., paragraph 61 fails to tie any particular harm that any par-
ticular plaintiff allegedly suffered to any discrete action taken
by Westly. The district court therefore properly dismissed
Westly as a defendant in his individual capacity.
IV. CONCLUSION
For these reasons, we AFFIRM the district court’s (1)
denial without prejudice of Plaintiffs’ motion for a permanent
injunction requiring the State to pay interest on unclaimed
property at California’s alternative borrowing rate; and (2)
partial summary judgment determining that the Eleventh
Amendment bars Plaintiffs’ “restitution” claims and dismiss-
ing former Controller Westly as a defendant in his individual
capacity. However, we REVERSE the district court’s rulings
that (3) the State is constitutionally required to pay interest
when it returns property to owners under the UPL; and that
(4) the Eleventh Amendment does not bar Plaintiffs from
11858 SUEVER v. CONNELL
being awarded such interest retroactively. Each party shall
bear its own costs on appeal.
AFFIRMED in part; REVERSED in part; and
REMANDED for further proceedings.