Author: Luke Wake
Luke Wake is an attorney for the National Federation of Independent Business Small Business Legal Center—a Bona Law client. Luke and Jarod Bona have also published two law review articles together, on both takings and antitrust law. Luke is one of this nation’s leading experts on takings law. You can read some of his academic articles here.
Last week Bona PC filed an amicus brief, on behalf of the National Federation of Independent Business Small Business Legal Center, challenging the Minnesota Uniform Disposition of Unclaimed Property Act (“MUPA”).
In this case, a Minnesota resident discovered that she had lost a substantial inheritance because she had invested it in a savings account and left the money untouched—without any interaction with her bank—for a three-year period. At that time, Minnesota deemed her account presumptively “abandoned” under MUPA and the Act required the bank to transfer her money to the State’s general fund.
Under Minnesota law this could happen to anyone holding assets in a Minnesota bank account. This is, of course, highly concerning, especially since the State offers no actual notice to affected owners. For that matter, the only way that a Minnesota resident may learn that he or she has lost assets under MUPA is by searching a website.
Minnesota is willing to return the amount it seized when an owner discovers that the State has taken possession, but MUPA assigns the interest on the money to the State rather than the owner during the time the State holds his or her assets. So whereas one fully expects to earn interest on money deposited in a savings account, MUPA purports to extinguish that right at the time the State forcibly transfers the money to the State’s control.
But can a state law simply abrogate private property rights in this manner?
This is the essential question that the Minnesota Supreme Court will soon decide in Hall v. State. Affected owners argue that MUPA effects an unconstitutional taking of their property in withholding accrued interest, while the State defends its regime on the view that nothing is taken because MUPA defines the scope of one’s continued rights in property deemed presumptively abandoned. That is, the state tries to define away your property rights to the money in your savings account.
In the proceedings below, the Court of Appeals sided with the State—holding that there could be no valid takings claim where an owner has lost rights as a result of his or her own “neglect” under the statute.
We argue in our amicus brief that the State cannot simply avoid a takings claim by virtue of the fact that an enacted statute purports to impose restrictions on one’s common law property rights. If that were the case then regulatory authorities could enact legislation to take private property without paying just compensation by putting an expiration date on one’s right to retain title, or by simply declaring that once protected private property rights are no longer recognized under state law. But, of course, the U.S. Supreme Court had already made clear—in numerous cases—that the government cannot abrogate private property rights in this manner.
This amicus brief draws significantly from my scholarship examining the enduring legacy of Lucas v. South Carolina Coastal Council—which was decided 25 years ago this spring. As emphasized in my article, to be published in the George Mason University Civil Rights Law Journal, the Lucas decision elucidated a fundamental concept—applicable in all takings cases—in its discussion of the “background principles” doctrine.
Simply put, this doctrine holds that takings claims are assessed by reference to those “background principles” of state property law incorporated into the title to the property in question. And while Lucas recognized that states may restrict private property rights through prospective legislation, it affirmed that this will amount to a taking if it goes too far in abrogating common law property rights, which are ensconced in historic background principles.
Accordingly, since MUPA abrogates the common law right to maintain uninterrupted possession of one’s financial assets (with only minimal intermittent oversight), and to retain exclusive control of accruing interest, NFIB Legal Center’s amicus brief argues that the regime violates the Takings Clause of the Fifth Amendment.
Not every regulatory restriction abrogating previously recognized private property rights will, of course, give rise to a valid takings claim. For example, if a restriction merely limits permissible uses of one’s property, it is difficult to prosecute a takings claim. But the MUPA regime is different because the State affirmatively assumes physical control of private assets and refuses to return accruing interest to the rightful owner.
In these sort of cases—where the government has actually appropriated a common law interest in private property—the Constitution requires payment of just compensation as a categorical matter.
For more commentary on this amicus brief, check out the discussion at the NFIB Legal Center website.
You can read more about amicus briefs and Bona Law’s appellate litigation practice here. And here is an article at Bona Law about the NFIB amicus brief challenging the Minnesota Unclaimed Property Act.