Tenth Circuit Court ruling might expose state treasurer to class action suit

The recent ruling in the Tenth Circuit U.S. Court of Appeals in Denver has implications for the state treasurer, potentially opening them up to a class action lawsuit regarding the Great Colorado Payback program. This legal battle originated in 2022 when Colorado residents David Knellinger and Robert Storey alleged that the state officials had violated their constitutional rights by not providing notice before claiming their abandoned property under the state’s Revised Uniform Unclaimed Property Act.

The basis for the Great Colorado Payback program is to reunite individuals, businesses, and organizations with lost or forgotten property or assets that have been handed over to the state. Managed by the state Department of Treasury, this program claims to have reunited people with over $781 million worth of unclaimed property.

In their initial lawsuit, Knellinger and Storey argued that the Colorado Department of Treasury did not notify them before taking possession of their unclaimed property, contending that this lack of notice infringed upon their rights under the U.S. Constitution. They cited violations of the Takings Clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment. The lawsuit asserted that the law was unconstitutional and requested an injunction to halt the government from enforcing it, as well as damages for the numerous individuals whose property was being held by the state.

However, the case was dismissed in 2023 by U.S. District Court Judge Charlotte N. Sweeney, who ruled that Knellinger and Storey lacked standing because they could not prove actual ownership of any property held by the state and had not utilized the Great Colorado Payback program to claim ownership.

In response, the men appealed the dismissal, acknowledging their approval of the Great Colorado Payback program but maintaining that it was unconstitutional for the state to take property without providing notice or attempting to locate its rightful owners. The recent decision by the Tenth Circuit Court sided with Knellinger and Storey, granting them the opportunity to pursue a lawsuit against the state treasurer.

The judges concluded that if the state wishes to avoid lawsuits related to unclaimed property, it could consider voluntarily amending its laws or practices to streamline just compensation or implement procedures for easier restitution of property compared to the complexities of inverse-condemnation litigation. The state treasurer’s office declined to comment on the ongoing legal proceedings.

The case will now return to Judge Sweeney for further proceedings. This ruling marks a significant development in the ongoing battle over the Great Colorado Payback program and could have far-reaching implications for the state treasurer and individuals seeking to reclaim their unclaimed property.