Bona Law Files Amicus Brief for NFIB Challenging Minnesota Unclaimed Property Act
October 20, 2020
Bona Law PC attorneys Jarod Bona and Aaron Gott filed an amicus brief on behalf of the National Federation of Independent Businesses Small Business Legal Center in the Minnesota Supreme Court in support of property owners who challenged the Minnesota Uniform Disposition of Unclaimed Property Act (MUPA) in Hall v. Minnesota. The brief argued that the act is unconstitutional under the Takings Clause and the Due Process Clause of the Fifth Amendment to the U.S. Constitution.
The Takings Clause makes it unconstitutional for “private property [to] be taken for public use, without just compensation.” U.S. Const. Amend. V. In other words, a government, whether it be the federal government, a state, a city, or a county, must pay the fair market value of any property that it takes from a person. The Takings Clause is important to eminant domain law, but it also comes up in many other situations.
In Hall v. Minnesota, the State of Minnesota used the MUPA to deem a Minnesota resident’s savings bank account “abandoned” because she had not touched—that is, taken any money out—from the account in three years. Once it was deemed abandoned, the state directed the bank to transfer the money to the state’s general fund. Eventually the resident discovered that her investment was gone. That’s the first problem: even though for all of our common law history the resident would have been the owner of the property, MUPA defines away that property right by deeming it presumptively abandoned.
Under Minnesota law, this can happen to anyone—all you have to do is nothing for three years. The good news is that if you find out the state took your money, you can get it back. The second problem is that the state makes no effort to contact the rightful owners of money it seizes as abandoned and only puts the information on a website directory, even though in many cases the state has actual knowledge of the rightful owner’s address and could easily send notice.
The third problem is that even when a resident eventually discovers that the state has taken its money and the state gives it back, it refuses to pay whatever interest would have accumulated between the time it seizes the money and the time it gives it back—even though that interest would have accumulated had the state left it alone, and even though the state itself earns interest on the money while it keeps it in its general fund account.
The amicus brief argues that the state cannot assert physical dominion over the property by disclaiming an ownership interest and deeming the property abandoned in order to avoid the Takings Clause problem. Under the Takings Clause, a state takes property when it takes physical possession or control of private property. Minnesota’s attempt to redefine what it is doing as a benevolent act that does not technically transfer ownership (rather, the state claims it is merely “holding” the property until the owner claims it) does not change the fact that a taking occurred.
The brief also argues that, since a taking occurred, the state must pay interest because (a) an owner must be placed in as good a position (financially) as she would have had the taking not occurred, and (b) by taking invested money and holding it, the state does not just take the amount in the bank account at the time—it also deprives the owner of the time value of that money and the income that would have been earned had it been left alone.
Finally, the brief argues that under the Due Process Clause (also part of the Fifth Amendment), Minnesota’s scheme of publishing “abandoned” property on a website does not give adequate notice to the affected property owners where the state could easily notify that person by mail. In reality, the state’s profit motive betrays its lack of diligence: the state does not want to notify the rightful owners because it wants to keep the money for itself. The Due Process Clause requires more: the state must provide reasonable notice that efficiently and effectively accomplishes the goal of reuniting owners with their property (which is supposed to be the purpose of the notice). In this case, Minnesota had actual knowledge of the rightful owner’s current address and mail is inexpensive. Therefore, the state should be constitutionally required to mail actual notice to owners affected under MUPA rather than provide constructive notice through a little-known website.