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Cerajeski v. Zoeller

United States District Court, S.D. Indiana, Indianapolis Division

September 10, 2014

KATHERINE CERAJESKI, Guardian for Walter Cerajeski, Plaintiff,
GREG ZOELLER, Attorney General of the State of Indiana, et al., Defendants.



Presently pending before the Court is a Renewed Motion to Dismiss filed by Defendants Greg Zoeller, in his official capacity as the Attorney General of the State of Indiana, and Daniel Huge, in his official capacity as the interim Treasurer of the State of Indiana[1] (collectively, the "State"). [Filing No. 64.] The State asks this Court to dismiss the claims of Plaintiff Katherine Cerajeski, Guardian for Walter Cerajeski, because Ms. Cerajeski seeks prospective relief regarding a portion of the Indiana Unclaimed Property Act that has recently been amended. [Filing No. 65; Filing No. 80.] For the reasons that follow, the Court concludes that Ms. Cerajeski's claims are MOOT and GRANTS the State's Renewed Motion to Dismiss. [Filing No. 64.]



A. Ms. Cerajeski's Claim

On December 23, 2011, Ms. Cerajeski filed a Complaint against the State, asserting an action under 42 U.S.C. § 1983 and the United States Constitution.[2] [Filing No. 1.] In relevant part, Ms. Cerajeski alleged that a portion of the Indiana Unclaimed Property Act (the "UPA") violated the Takings Clause of the Fifth Amendment to the United States Constitution, as applied to Indiana through the Fourteenth Amendment. [Filing No. 1 at 1-2.] In relevant part, the UPA provides that unclaimed property, as defined by the statute, remits to the State once certain conditions re met and it is "presumed abandoned." See Ind. Code § 32-34-1-1, et seq.; Ind. Code § 32-34-1-20 ("Presumption of Abandonment"). At the time Ms. Cerajeski filed her Complaint, the UPA provided that although the owner could file a claim and receive the property back, the owner was not entitled to any dividends, interest, or other increments accrued after delivery to the Attorney General. Ind. Code § 32-34-1-30(b) (2013).

Ms. Cerajeski alleges that on or about September 21, 2006, Mainsource Bank of Hobart delivered certain funds from a bank account to the State. [Filing No. 1 at 7.] Ms. Cerajeski has not made a claim for the money that the State is holding, and she believed at the time she filed her Complaint that should she make such a claim, the State "would not pay just compensation for the use of [her] money during the period of custody." [Filing No. 1 at 7.]

In response to Ms. Cerajeski's Complaint, the State filed a Motion to Dismiss. [Filing No. 14.] This Court granted the State's Motion to Dismiss, concluding in relevant part that Ms. Cerajeski had not stated a takings claim that was plausible on its face.[3] [Filing No. 13 at 10.] In so holding, the Court emphasized that Ms. Cerajeski sought "purely prospective" relief and was "not seeking interest earned on their property" but, instead, sought "an order enjoining Defendants to pay just compensation with respect to future claims for their use of unclaimed property." [Filing No. 35 at 5 (quoting Filing No. 19 at 21; Filing No. 19 at 23 (original emphasis)); Filing No. 19 at 27.]

B. Ms. Cerajeski's Appeal

Ms. Cerajeski appealed the Court's dismissal of her claim to the Seventh Circuit Court of Appeals. [Filing No. 37.] On November 22, 2013, the Seventh Circuit issued a Mandate reversing this Court's decision and remanding Ms. Cerajeski's claim to this Court. [Filing No. 48.] The Seventh Circuit held that "[t]he confiscation of the interest on Cerajeski's principal was [] a taking of a part of [the] property." Cerajeski v. Zoeller , 735 F.3d 577, 579 (7th Cir. 2013). The Seventh Circuit emphasized that "Cerajeski did not voluntarily relinquish either the principal or the interest in [the] bank account... [so t]he account was unclaimed rather than abandoned." Id. at 581. Because the State was "merely a custodian" of the unclaimed property, "[t]here is no basis for the state's confiscating the interest in Cerajeski's account." Id. at 582. The Seventh Circuit discussed the State's escheat power but concluded that because the UPA does not provide for escheat until 25 years after the property remains unclaimed, "if before then the state takes either principal or interest it must render just compensation to the owner if as in this case the owner's identity is known." Id. at 583. While the State could charge a fee for custodianship and for searching for the owner, "the interest on the principal in a bank account is not a fee for those services." Id.

For these reasons, the Seventh Circuit reversed and remanded the case to this Court for further proceedings consistent with its opinion. Id. In doing so, the Seventh Circuit specifically noted:

The plaintiff is entitled to just compensation from the state when she files her claim to Cerajeski's account, but the amount of that just compensation has yet to be determined. The plaintiff has also sought an injunction-why we don't know; and injunctive relief may well be unavailable in this case. "Equitable relief is not available to enjoin an alleged taking of private property for a public use." Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016 (1984). The availability and propriety of injunctive relief are other issues to be resolved by the district judge in the first instance.

Cerajeski, 735 F.3d ...

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