SAN FRANCISCO (CN) – Owners of unclaimed assets have no right to demand the interest earned by their property while it was being held by the state of California, the 9th Circuit ruled in a decision that could affect millions of people.
Michael Turnacliff, administrator for the estate of Kathleen Dodd, claimed State Controller Steve Westly violated his Fifth Amendment rights by underpaying the interest the estate earned on the sale of 57,000 shares of stock in Echlin Inc. that belonged to the late Dodd. The shares earned $347,000 in dividends and sold for more than $1.5 million in 1993. By June 1993, the controller held more than $1.86 million belonging to Dodd’s estate.
In May 2003, Turnacliff filed a claim for the return of the estate’s property. Westly cut him a check for about $1.98 million for the principal and 1.69 percent interest.
But Turnacliff disputed the interest rate in court, claiming Westly paid him less interest than the unclaimed property had actually earned. He said the controller was supposed to calculate an average rate for the time the state held the property, not a single rate. Under the plaintiff’s calculations, Westly should have paid 4.5 percent interest.
The appellate court upheld the district court’s ruling for the controller.
“The plain language of the statute supports the controller’s construction that a single interest rate must be applied for the whole time period that the unclaimed property was held,” Judge Thompson wrote.
Turning to Turnacliff’s takings claim, the court ruled that even if he had a property right to interest on property taken by the state, “no further compensation is due to the estate because when the estate abandoned its property, it forfeited any right to interest earned by that property.”