Opinion
APPEAL from a judgment of the Superior Court of Los Angeles County. Peter D. Lichtman, Judge, Los Angeles County Super. Ct. No. BC288429.
Law Offices of William W. Palmer, William W. Palmer; Pick & Boydston and Brian D. Boydston for Plaintiff and Appellant.
Remcho, Johansen & Purcell, Robin B. Johansen, James C. Harrison and Margaret R. Prinzing, for Defendants and Respondents.
COOPER, P. J.
Plaintiff Barbara Porcile appeals from a judgment dismissing her action against two former California State Controllers (Kathleen Connell and Steve Westly) and two employees of the controller’s office (Richard J. Chivaro and George DeLeon), after the trial court sustained without leave to amend demurrers to plaintiff’s third through ninth causes of action and plaintiff voluntarily dismissed her remaining causes. The complaint, styled as a class action, alleged various federal and state wrongs by defendants in the handling of property subject to the Unclaimed Property Law, Code of Civil Procedure section 1500 et seq. (UPL; undesignated section references are to that code). The court ruled that plaintiff’s federal claims lacked merit and were precluded by federal immunity, and that the state claims could not proceed in light of the UPL’s own preclusion of suit, and noncompliance with the Tort Claims Act. We affirm the judgment.
Westly was the controller until January of this year.
The complaint named two further plaintiffs, but they were not included in the notice of appeal.
FACTS
The complaint alleged that plaintiff had been employed for 26 years by Bank of America (BofA) and owned at least 91 of its shares. Apparently this stock had come within the controller’s custody under the UPL, which gives the state custody of certain defined unclaimed property until the owner claims it (if at all). The controller apparently sold the stock and returned the proceeds to BofA. Plaintiff alleged that the controller had mishandled the acquisition, retention, and disposition of this and other such property, primarily by failing to give owners constitutionally sufficient and even UPL-mandated notice (former § 1531) that custody had been taken. In this regard, whereas the statute in the 1990s had required published notice, listing the names of owners, and also mailed notice if an address were available, the controller instead had published notices without names, generally inviting the public to call and inquire. In its general allegations, the complaint alleged numerous other violations, including taking custody of property of which the owner’s identity was known, and retroactively applying a reduced interest rate.
As defendants document through request for judicial notice, which we grant, during some of this period the state budget act prohibited the controller from expending funds to provide the statutory notice.
The complaint proceeded to set forth 11 purported causes of action. The first, for declaratory relief, sought a declaration that numerous previously alleged misdeeds had occurred, while the second, for taxpayer relief under section 526a, alleged improper expenditure or waste of funds in these pursuits. The third cause, filed under Title 42 United States Code section 1983, alleged that defendants had deprived plaintiffs of their property without due process. The fourth cause, also under federal section 1983, alleged that the controller had sold plaintiff’s property, and had set its value at the sales price, whereas just compensation for this taking required valuation “according to the applicable principles of law . . . .”
The complaint’s fifth cause, for violation of the UPL, set forth a list of functions, including provision of notice, that the UPL “either expressly or impliedly required Defendant to” do, and sought damages for defendants’ violations. The sixth cause, entitled breach of fiduciary duty, alleged that defendants owed fiduciary duties to plaintiffs by virtue of defendants’custody of $2.7 billion of unclaimed property. Defendants had breached their duties by losing track of and mishandling property, paying the wrong interest rate, and failing to provide notice, together with other acts. A seventh cause, for negligence, alleged breach of duty of care in various respects, including notice, interest, maintenance of records, and commingling with the General Fund.
The eighth cause of action, entitled fraud, realleged the fiduciary relationship and stated that the failure to give notice had been wrongful, as had been the alleged concealment of facts regarding interest “and other misdeeds.” Plaintiff further alleged an intent to deceive and injure, and prayed for punitive damages. The ninth cause sought an accounting for plaintiff’s property and associated rights such as dividends and expenses. The tenth cause, for “Attorneys’ Fees and Common Fund,” alleged that a common fund would be created by the action, and that an attorney fees award would be justified. The eleventh cause, for injunction, sought a prohibitory injunction against unlawful conduct and waste of funds, as well as mandatory provisions requiring defendants to enforce the UPL, promulgate regulations, and recover funds unlawfully withheld.
Defendants demurred to the complaint, asserting a number of grounds. The court first sustained demurrers to all causes of action, with leave to amend, based on the statute of limitations. In addition, with respect to the two Title 42 United States Code section 1983 claims, demurrers were sustained without leave to amend, based on several elements of immunity under federal law, and also because the pleadings did not disclose constitutional violations. With respect to the state law claims of the fifth through ninth causes, the court sustained the demurrers, without leave, based on the preclusive provisions of section 1566, and for failure to comply with the claim requirements of the Tort Claims Act, Government Code section 945.4.
Plaintiff dismissed her causes of action as to which demurrers had not been sustained without leave, and judgment for defendants was entered. Plaintiff then commenced this appeal.
DISCUSSION
This case follows upon other appellate decisions concerning charges much the same as plaintiff makes. One of those decisions was by this division (Harris v. Westly (2004) 116 Cal.App.4th 214 (Harris)), and the other was by the Third District (Fong v. Westly (2004) 117 Cal.App.4th 841 (Fong)). These cases naturally possess instructive capacity and authority. In addition, plaintiff stresses two Ninth Circuit Court of Appeals decisions involving similar claims (Taylor v. Westly (9th Cir. 2005) 402 F.3d 924 (Taylor) and Suever v. Connell (9th Cir. 2006) 439 F.3d 1142 (Suever)), but those cases decided a jurisdictional question, under the Eleventh Amendment, while making some references to the issues pled.
We first review the trial court’s sustaining without leave to amend demurrers to plaintiff’s state law causes of action, numbers five through nine, on grounds of immunity under section 1566. Section 1566 has two subdivisions, the first of which provides: “(a) When payment or delivery of money or other property has been made to any claimant under the provisions of this chapter, no suit shall thereafter be maintained by any other claimant against the state or any officer or employee thereof for or on account of such property.” The second and broader subdivision, upon which defendants rely, states: “(b) Except as provided in section 1541, no suit shall be maintained by any person against the state or any officer or employee thereof for or on account of any transaction entered into by the State Controller pursuant to this chapter [the UPL].”
The trial court did not apply this statutory immunity to plaintiff’s federal claims, nor do we.
Section 1541 permits suit to determine a claim for property if the controller has denied the claim or failed to act timely on it.
Subdivision (b) of section 1566 on its face precludes suit on account of transactions that are part of the controller’s administration of the UPL. Plaintiff opposes this conclusion first by seeking to invoke subdivision (a), but that part of section 1566 is not germane. (Fong, supra, 117 Cal.App.4th at pp. 851-852.) Plaintiff also obliquely refers to subdivision (b)’s reference to a transaction “entered into pursuant to this chapter,” and argues that because defendants did not comply with the notice requirements of section 1531 with respect to plaintiff’s stock, the transaction did not qualify. We held, however, in Harris, supra, 116 Cal.App.4th at page 224, that failure to give notice under section 1531 did not deprive a subsequent stock sale of section 1566, subdivision (b)’s protection. A similar conclusion applies here.
The trial court also dismissed the fifth through ninth causes of action by reason of plaintiff’s failure to file a claim under Government Code section 945.4. Plaintiff contends this ruling was erroneous because she allegedly sought not damages or money (id.), but rather “specific recovery” of her property. (See Long v. City of Los Angeles (1998) 68 Cal.App.4th 782, 786-787; cf. Seuver, supra, 439 F.3d at pp. 1146-1147.) But this is flatly contradicted by the complaint. Each of the fifth through eighth causes of action expressly seeks not property but damages, in some cases punitive damages, while the ninth cause, for accounting, seeks that remedy to ascertain the total amount of plaintiff’s damages. We conclude that these causes of action were properly disallowed because of failure to comply with the claims requirement.
We turn next to plaintiff’s two constitutionally based causes of action, the third, for “Procedural Due Process,” and the fourth, under the takings clause. Our evaluation of these causes and the trial court’s disposition of them is assisted by the decisions in Harris, supra, 116 Cal.App.4th 214, and Fong, supra, 117 Cal.App.4th 841.
Preliminarily but significantly, the UPL constitutes a “custodial” escheat system, not a “permanent” one. Section 1501.5, subdivision (a) provides that “Notwithstanding any provision of law to the contrary, property received by the state under this chapter shall not permanently escheat to the state.” Rather, property so received may be liquidated for cash, but the state still holds the property or its proceeds for and subject to claim by the original owner. (See Harris, supra, 116 Cal.App.4th at p. 219.)
Because property subject to the UPL is not vested in the state, plaintiff’s fourth cause of action, which sought just compensation under the takings clause of the Fifth Amendment, was properly adjudicated unmeritorious. It has repeatedly been decided that neither the intake nor the liquidation of property under this system constitutes a taking within the meaning of that amendment. (Fong, supra, 117 Cal.App.4th at p. 84; Harris, supra, 116 Cal.App.4th at pp. 223-224 & fn. 16; see Taylor, supra, 402 F.3d at p. 936; cf. Anderson Nat. Bank v. Luckett (1944) 321 U.S. 233, 241-242.) The constitutional predicate of the fourth cause of action, a taking, thus is lacking.
Contrary to plaintiff’s argument, her allegations of defendants’ occasionally departing from the statutory system or mishandling property do not defeat the UPL’s non-permanent, custodial nature.
In her third cause of action, plaintiff alleged that her property had been seized and sold without due process. She did not specify how a due process denial occurred, but from the overall tenor of the pleading, it would appear to involve failure to provide plaintiff (and those in her class) proper notice as required under former versions of section 1531.
With regard to provision of notice before sale, in Harris, supra, 116 Cal.App.4th at page 222, we found no legal basis for a requirement of prior notice before conversion of stock to cash, which remains the property of the shareholder. Such a sale, on the open market, is not such a deprivation that requires notice.
In Harris we further implied that the constitutionally requisite degree of notice of the absorption of property into the UPL’s custodial system was less than that required for final adjudicative deprivations of property. (116 Cal.App.4th at p. 223.) We thus distinguished Mullane v. Central Hanover Tr. Co. (1950) 339 U.S. 306, a familiar case of the latter variety, and one that Taylor, supra, 402 F.3d at p. 934, cited in derogation of the controller’s position. The same distinction applies with respect to Jones v. Flowers (2006) 547 U.S. 220, which involved notice of a tax sale of an individual’s home. We also discussed Texaco, Inc. v. Short (1982) 454 U.S. 516, which distinguished between a final adjudication and a law providing for abandonment of property, and which stated that enactment and publication of the latter provided sufficient notice of its existence and impending operation. (Harris, supra, 116 Cal.App.4th at p. 223, fns. 14, 15.)
Fong, supra, 117 Cal.App.4th at pages 853-855, rejected the same due process position plaintiff advances. Citing Texaco, Inc. v. Short, supra, 454 U.S. 516, the court first stated that “due process did not require the Controller to give notice to plaintiffs under these circumstances beyond what plaintiffs had already received constructively,” by publication of the UPL. (Fong, at p. 854.) The court then also referred to notices presumed to have been given by another state, in which the property had first escheated, and stated, “These notices, along with the notice provided by the [UPL], satisfied the demands of due process.” (Id. at p. 855.) Finally, Fong held that the UPL’s notice requirements, which the controller allegedly disregarded, exceeded what due process required, and therefore violations of those requirements did not themselves infringe due process.
We follow Fong and Harris, and hold that the due process claims of plaintiff’s third cause of action were without merit. We note, moreover, certain features that enhance the provision of process. Under section 1516, subdivision (d), business associations are required to make reasonable efforts to notify by mail owners of securities that their property may escheat and the effects of that condition. This provision parallels the sister-state notice described in Fong, supra, 117 Cal.App.4th at page 854. In addition, the advertisements that the controller published, although not consonant with former section 1531, did provide an increment of notice. Together with the traditionally sufficient notice provided by the law itself, these factors combine to give due process notice of the controller’s assuming custody of property under the UPL.
Harris v. Verizon Communications (2006) 141 Cal.App.4th 573 held that a statutory immunity precluded liability for failure of a business to give the notice. However, the statutory duty of notice still remains.
The trial court also sustained demurrers, with leave to amend, on grounds of the statute of limitations. By declining to amend and instead dismissing her first and second causes of action, plaintiff affirmed that her original pleading was her final statement of those claims. (See Reynolds v. Bement (2005) 36 Cal.4th 1075, 1091.) Although plaintiff now argues that the court did not properly invoke the statute of limitations, her claim is unavailing.
The complaint showed that the acts complained of, principally the intake and sale of plaintiff’s stock, occurred about a decade before the complaint was filed. (But see § 340, subd. (d) [one-year limitation for action against officer to recover damages for seizure of property].) In opposition to the statute, plaintiff has relied on a portion of the complaint, entitled “equitable estoppel and the tolling of the statute of limitations.” But these allegations, principally of false testimony and retaliatory action against questioners on the part of the controller’s office, set forth neither the elements of estoppel or those of equitable tolling. And plaintiff’s lead excuse for late filing, that she was never given statutory notice of the handling of her property, contrasts with our decision that sufficient notice was given.
DISPOSITION
The judgment is affirmed.
We concur: RUBIN, J. BOLAND, J.