Agnes Suever v. Kathleen Connell

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.