In a decision cementing a split with the Tenth Circuit, the Ninth Circuit recently held that property owners’ unclaimed property is not taken in violation of the Fifth Amendment where it is held in trust by the State. See Garza v. Woods, No. 24-1064, 2025 WL 2435221 (9th Cir. Aug. 25, 2025). The district court dismissed plaintiffs’ claims because sovereign immunity barred suit against the Arizona Department of Revenue (“Department”). See Garza v. Woods, No. CV-22-01310-PHX-JJT, 2023 WL 5608414 (D. Ariz. Aug. 30, 2023). The Ninth Circuit reversed this portion of the district court decision and allowed plaintiffs’ takings and due process claims because they plausibly alleged that the Department unconstitutionally seized their property under Arizona’s Unclaimed Property Law (“UPA”).

Arizona’s Unclaimed Property Law
Arizona’s UPA presumes that certain types of property have been abandoned if unclaimed within a statutory period. See Ariz. Rev. Stat. 44-302(A). Holders of presumably abandoned property must send a written notice to the apparent owner, provide a report to the Department, and ultimately deliver the unclaimed property to the Department. Id. 44-302(E), 44-308(A). Though the Department need not provide actual notice to apparent owners that it is in possession of their property, the UPA requires the Department to operate a website that lists the unclaimed property in its possession. See id. 44-309 (A), 44-309(B). The UPA further requires the Department to deposit all unclaimed money in the state’s general fund. Id. 44-313(A).

Reprinted courtesy of Ed J. Hermes, Snell & Wilmer, Jeremy J. Stewart, Snell & Wilmer, Benjamin J. Mills, Snell & Wilmer and Emily Statham, Snell & Wilmer

Mr. Hermes may be contacted at ehermes@swlaw.com
Mr. Stewart may be contacted at jjstewart@swlaw.com
Mr. Mills may be contacted at bemills@swlaw.com
Ms. Statham may be contacted at estatham@swlaw.com