Laturner v. United States
13-1011
| Fed. Cl. | Dec 1, 2017Background
- Kansas (LaTurner, State Treasurer) sued the United States seeking title/return of proceeds for U.S. savings bonds that Kansas claims were vested in it by a state-court escheat judgment under Kansas’s Unclaimed Property Act.
- The Court granted Kansas’s motion for partial summary judgment, holding that the state-court escheat proceedings were “valid, judicial proceedings” under the Treasury regulation in effect at the time (31 C.F.R. § 315.20(b) (2012)), and thus could establish state title to absent bonds.
- The government challenged that interpretation, arguing the Treasury regulations do not permit recognition of title via escheat, and raised preemption, intergovernmental immunity, and due-process objections to the state proceedings.
- Treasury subsequently revised its regulations (final rule Dec. 24, 2015) to state that escheat proceedings will not be recognized and to limit recognition of escheat judgments to bonds actually in a State’s possession.
- The government moved under 28 U.S.C. § 1292(d)(2) to certify the Court’s August 8, 2017 order for interlocutory appeal and to stay proceedings pending appeal; the Court granted certification and a stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether state-court escheat judgments are “valid, judicial proceedings” under 31 C.F.R. § 315.20(b) (2012) | Kansas: such judgments qualify and thus vest title recognized by Treasury regulations | U.S.: Treasury’s prior and revised interpretations show escheat judgments are not recognized to vest title | Court: Escheat judgments are “valid, judicial proceedings” under the pre-2015 regulation; court ruled for Kansas |
| Whether the Unclaimed Property Act is preempted by federal law | Kansas: state law governs abandoned property and is not preempted | U.S.: federal law/regulation governs savings bond ownership and preempts state escheat | Court: Rejected government’s preemption argument |
| Whether state-court judgment is invalid under intergovernmental immunity | Kansas: state proceedings valid against private bondholders; immunity doctrine not implicated | U.S.: Judgment impermissibly affects federal functions/privileges | Court: Rejected government’s intergovernmental immunity argument |
| Whether the escheat proceedings violated due process of former bond owners | Kansas: procedural protections satisfied; judgment binding | U.S.: Due-process defects in notice/representation of absent owners | Court: Rejected government’s due-process challenge |
| Whether Treasury regulations preclude recovery of proceeds for bonds not in the State’s possession | Kansas: ownership by judgment suffices to recover proceeds | U.S.: Treasury’s practice/regulation bars recognizing escheat where state lacks possession | Court: Government’s argument deemed premature; court did not bar Kansas’s claim on that basis at summary judgment |
Key Cases Cited
- LaTurner v. United States, 133 Fed. Cl. 47 (2017) (Court of Federal Claims decision holding state escheat judgments can be “valid, judicial proceedings” under the pre-2015 Treasury regulation)
- Estes v. United States Dep’t of the Treasury, 219 F. Supp. 3d 17 (D.D.C. 2016) (district court took a different view of Treasury’s historical statements regarding recognition of state escheat judgments)
- Air Line Pilots Ass’n v. Miller, 523 U.S. 866 (1998) (stay-of-proceedings standard and courts’ discretion to manage dockets)
- Landis v. N. Am. Co., 299 U.S. 248 (1936) (factors for staying litigation to conserve judicial and party resources)
- United States v. Connolly, 716 F.2d 882 (Fed. Cir. 1983) (interpretation of interlocutory-appeal statute analogous to § 1292(d)(2))
- Abbey v. United States, 89 Fed. Cl. 425 (2009) (statutory construction and use of § 1292(d)(2) principles)