Knellinger et al v. Young et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Charlotte N. Sweeney
Civil Action No. 1:22-cv-01379-CNS-MDB
DAVID KNELLINGER and
ROBERT STOREY, individually and on behalf of all persons similarly situated,
Plaintiffs,
v.
DAVID YOUNG, in his individual and official capacities as Colorado Treasurer, Colorado Office
of Treasury; and
BIANCA GARDELLI, in her individual and official capacities as Director of Colorado
Department of Treasury, Unclaimed Property Division,
Defendants.
ORDER
Before the Court is Defendants’ Motion to Dismiss under Rules 12(b)(1) and 12(b)(6).
(ECF No. 31). The Court GRANTS the motion for the following reasons.
I. FACTS1
Plaintiffs bring this putative class action under 42 U.S.C. § 1983 against Defendant Young
in his individual and official capacity as Colorado Treasurer, and Defendant Gardelli in her
individual and official capacity as Director of the Colorado Department of Treasury regarding
unclaimed property held in trust under the Revised Uniform Unclaimed Property Act, Colorado
Revised Statute § 38-13-101, et. seq. (RUUPA)2. 	Plaintiffs allege that Defendants’ failure to
1 For the purposes of this motion, the Court takes as true all allegations of the Complaint. (See ECF No. 1).
2 RUUPA was enacted in Colorado via Senate Bill 19-088 and became effective on July 1, 2020. (ECF No. 1, p. 7).
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provide notice to the property owners about the alleged seizures and sales of abandoned property
allows them to use RUUPA funds “to satisfy budget shortfalls.” (ECF No. 1, pp. 3-6).
Under the RUUPA, if a property holder cannot locate the owners after a certain period of
time (as defined by Colorado Revised Statute §§ 38-13-201 to -220) and the property is presumed
to be abandoned, the holder will first provide notice to the apparent owner before the administrator
may take custody of the property. See §§ 38-13-501 to -504, 38-13-601 to -609. Certain properties
may be sold by the administrator at a public sale after public notice. See §§ 38-13-701 to -705.
Any money received or derived from the sale of the property is held in trust by the administrator
for the benefit of the owner and not the State. 	See §§ 38-13-801 to -803. 	The money in the
unclaimed property trust fund does not revert to the general fund at the end of any fiscal year.
§ 38-13-801(1)(d).3 	The owner may submit a claim to the administrator and may search for
unclaimed property on the Colorado Department of Treasury’s website. 	See Claim Unclaimed
Property (last visited January 4, 2023).4
Plaintiffs Knellinger and Storey searched their names on the website and discovered that
they may each have a claim for abandoned property. (ECF No. 1, pp. 3-4). Plaintiffs allege that
they did not receive any notice from the Colorado Department of Treasury. (Id.). Plaintiffs neither
allege in the Complaint whether they have attempted to claim the property identified on the website
under RUUPA’s administrative claims process nor identify what type of property is being held by
3 The Court takes judicial notice of the Colorado Unclaimed Property Website. See O’Toole v. Northrop Grumman
Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) (“It is not uncommon for courts to take judicial notice of factual
information found on the world wide web.”). 	According to the Colorado Department of Treasury’s website,
“Unclaimed property always belongs to its owner even if it is never claimed. All unclaimed property is held in trust
until the rightful owner(s) or their heirs claim it.” See FAQS, https://colorado.findyourunclaimedproperty.com/app/f
aq-claim (last visited December 12, 2022).
4 The Court notes that this website was referenced in the Complaint and is central to Plaintiffs’ claims.
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the Colorado Department of Treasury, Unclaimed Property Division. 	The proposed Class is
defined as: “[a]ll persons or entities who did not receive actual notice before their property was
taken by the State of Colorado between May 27, 2016[,] and the present.” (ECF No. 1, p. 23).
Plaintiffs raise five claims for relief:5 (1) injunctive and declaratory relief that Defendants
violated the Fourth Amendment (Right to Privacy), Fifth Amendment (Takings Clause),
Fourteenth Amendment (Due Process), and the Due Process Clause of the Colorado Constitution
(Colo. Const. art. 2, § 25); (2) violation of their due process rights under the Fourteenth
Amendment via 42 U.S.C. § 1983 and the Due Process Clause of the Colorado Constitution;
(3) violation of the Takings Clause of the Fifth Amendment via 42 U.S.C. § 1983; (4) accounting;
and (5) breach of fiduciary duty under Colorado Revised Statutes §§ 24-22-101, 604, 38-13-803.
(ECF No. 1, pp. 24-29).
Defendants move to dismiss arguing that (1) Plaintiffs lack standing; (2) the Court should
decline jurisdiction of the § 1983 under the Burford abstention doctrine; (3) qualified immunity
bars Plaintiffs’ § 1983 claims for monetary damages; (4) Eleventh Amendment sovereign
immunity bars state law claims against Defendants in their official capacity; (5) the state law
claims for monetary relief are barred by the Colorado Governmental Immunity Act and for failure
to exhaust administrative remedies; (6) Counts II, III, and IV fail to state a claim for relief and are
barred by the statute of limitations; (7) Plaintiff cannot state a claim for accounting. (ECF No. 21,
pp. 10-35).
5 It is unclear to this Court whether Plaintiffs are only raising five claims for relief. At various points in the Complaint,
Plaintiffs also allege that Defendants violated the Colorado Constitution, Article II, Section 25, Article I of the United
States Constitution, Fourth Amendment, Fifth Amendment, and Fourteenth Amendments, and the Contract Clause of
Article I, Section 10. Plaintiffs also fail to specify whether they are raising claims of violations of federal law via 42
U.S.C. § 1983 against Defendants in their official or individual capacity.
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II. LEGAL STANDARD
Rule 12(b)(1) governs dismissal challenges for lack of subject matter jurisdiction and
assumes two forms: factual or facial. 	In the first, the moving party may “facially attack the
complaint’s allegations as to the existence of subject matter jurisdiction.” Merrill Lynch Bus. Fin.
Servs., Inc. v. Nudell, 363 F.3d 1072, 1074 (10th Cir. 2004). When reviewing a facial attack, courts
must accept a complaint’s allegations in the complaint as true. Ratheal v. United States, No. 20-
4099, 2021 WL 3619902, at *3 (10th Cir. Aug. 16, 2021) (citation omitted). In the second, a party
may “go beyond” the complaint’s allegations by presenting evidence challenging the factual basis
“upon which subject matter jurisdiction rests.” Nudell, 363 F.3d at 1074 (citation omitted). When
reviewing a factual attack, courts cannot “presume the truthfulness of the complaint’s factual
allegations,” and may consider documents outside the complaint without converting the motion to
dismiss into a motion for summary judgment. Ratheal, 2021 WL 3619902, at *3. In this instance,
the plaintiff bears the burden of establishing subject matter jurisdiction as the party asserting it
exists. Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974).
Under Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon
which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true and interpreted in the light most favorable
to the non-moving party, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Additionally,
the complaint must sufficiently allege facts supporting all the elements necessary to establish an
entitlement to relief under the legal theory proposed; however, a complaint may be dismissed
because it asserts a legal theory not cognizable as a matter of law. Forest Guardians v. Forsgren,
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478 F.3d 1149, 1160 (10th Cir. 2007); Golan v. Ashcroft, 310 F. Supp. 2d 1215, 1217 (D. Colo.
2004). A claim is not plausible on its face “if [the allegations] are so general that they encompass
a wide swath of conduct, much of it innocent,” and the plaintiff has failed to “nudge[ the] claims
across the line from conceivable to plausible.” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th
Cir. 2008) (quoting Twombly, 550 U.S. at 570). The standard, however, remains a liberal pleading
standard, and “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual
proof of those facts is improbable, and that a recovery is very remote and unlikely.” Dias v. City
& Cty. of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009) (internal quotations and citation omitted).
III. ANALYSIS
A. 	Conceded Claims and Claims Not Raised
In their response to Defendant’s motion to dismiss, Plaintiffs abandon their claims for
violations of the Contracts Clause, U.S. Const. article I, section 10, clause 1, and the Fourth
Amendment for violation of privacy. (ECF No. 33, p. 15 n.5). Defendants also argue that Plaintiffs
have conceded all their state law claims for relief. (ECF No. 40. pp. 1-2). The Court agrees that
Plaintiffs have abandoned their fifth claim, breach of fiduciary duty, by not responding to
Defendant’s arguments in the motion to dismiss. Plaintiffs, however, did sufficiently respond to
the motion to dismiss regarding their accounting claim.6 Accordingly, Plaintiffs’ federal claims
for violations of the Contracts Clause, U.S. Const. article I, section 10, clause 1,7 and the Fourth
6 Confusingly, it appears that Plaintiffs may have also abandoned the remaining state law claims in a separate filing.
(See ECF No. 39, pp. 3-4). In an abundance of caution, this Court will proceed with examining Plaintiffs’ briefing in
their response. (See ECF No. 33).
7 The Complaint contains several references to the Contracts Clause, but Plaintiffs fail to assert a claim for relief based
on the Contracts Clause or plead any facts in support of such a claim. To the extent that this claim was even raised,
which is wholly unclear to the Court, it is conceded and dismissed.
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Amendment for violation of privacy and state law claim regarding breach of fiduciary duty are
conceded and, therefore, DISMISSED.
B. 	Federal Rule of Civil Procedure 12(b)(1)
Defendants move to dismiss Plaintiffs’ claims for lack of subject matter jurisdiction due to
lack of standing and sovereign immunity. A court must first address a motion to dismiss for lack
of subject matter jurisdiction in order to determine jurisdiction before addressing any other
arguments regarding the underlying validity of a claim. Bell v. Hood, 327 U.S. 678, 682 (1946).
1. 	Sovereign Immunity and the Eleventh Amendment
Defendants argue that sovereign immunity bars only Plaintiffs’ state law claims. Plaintiffs
argue that their state law claim for accounting is permissible under the Ex parte Young exception
because they are suing “Defendants in their official capacities, they alleged an ongoing violation
of federal law, and they are seeking prospective relief.” (ECF No. 33, p. 22).8
The Eleventh Amendment of the United States Constitution provides that the “Judicial
power of the United States shall not be construed to extend to any suit in law or equity, commenced
or prosecuted against one of the United States by Citizens of another State, or by Citizens or
Subjects of any Foreign State.” 	U.S. Const. amend. XI. 	A plaintiff may not circumvent the
Eleventh Amendment by suing specific state officials instead of the State. See Hafer v. Melo, 502
U.S. 21, 25 (1991). Sovereign immunity acts as a jurisdictional bar that precludes unconsented
suits in federal court against an arm of the state or from asserting a damage claim against state
8 The Court will inspect all of Plaintiffs’ claims because federal courts “have an independent obligation to determine
whether subject-matter jurisdiction exists, even in the absence of a challenge from any party,” and may at any stage
in the litigation raise the question of whether there is subject matter jurisdiction sua sponte. 1mage Software, Inc. v.
Reynolds & Reynolds Co., 459 F.3d 1044, 1048 (10th Cir. 2006); V–1 Oil Co. v. Utah State Dep’t of Pub. Safety,
131 F.3d 1415, 1419–20 (10th Cir. 1997) (a federal court may raise Eleventh Amendment immunity sua sponte).
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officers in their official capacities. 	Colby v. Herrick, 849 F.3d 1273, 1276 (10th Cir. 2017);
Peterson v. Martinez, 707 F.3d 1197, 1205 (10th Cir. 2013) (citation omitted); see also Pietrowski
v. Town of Dibble, 134 F.3d 1006, 1009 (10th Cir. 1998) (“An action against a person in his official
capacity is, in reality, an action against the government entity for whom the person works.”).
Eleventh Amendment immunity also extends to claims in federal court brought against the state or
its agencies, as well as suits against state officials sued in their official capacity for monetary
damages under § 1983. Muscogee (Creek) Nation v. Oklahoma Tax Comm’n, 611 F.3d 1222, 1227
(10th Cir. 2010); Johns v. Stewart, 57 F.3d 1544, 1552 (10th Cir. 1995).
However, immunity from suit is not absolute —a claim may fall under the Ex parte Young
exception, States may consent to suit in federal court, or Congress may abrogate the States’
sovereign immunity. See Port Auth. Trans-Hudson Corp. v. Feeney, 495 U.S. 299, 304 (1990).
Plaintiffs do not argue that Colorado consented to the lawsuit or that Congress abrogated
Colorado’s sovereign immunity. A review of RUUPA also does not indicate to this Court that the
State waived its sovereign immunity.
a. 	Ex parte Young Exception
The Supreme Court carved out an exception to Eleventh Amendment sovereign immunity
when the suit challenges the constitutionality of state officials acting in their official capacity. Ex
parte Young, 209 U.S. 123, 159-60 (1908); Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261,
269 (1997). 	For Plaintiffs’ civil action to fall under the Ex parte Young exception, they must
satisfy three criteria: (1) the individual state officers named must be acting in their official
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capacities, (2) the complaint alleges an ongoing violation of federal law, and (3) the plaintiff seeks
only prospective relief. Hendrickson v. AFSCME Council 18, 992 F.3d 950, 965 (10th Cir. 2021).
i. 	State Law Claims
To the extent Plaintiffs’ state law claims were not conceded,9 they are barred by sovereign
immunity and do not fall under the Ex parte Young exception. See Pennhurst State Sch. & Hosp.
v. Halderman, 465 U.S. 89, 121 (1984) (holding that a claim that state officials violated state law
in carrying out their official responsibilities was a claim against the State that is protected
sovereign immunity). 	Accordingly, Plaintiffs’ state law claims are DISMISSED WITHOUT
PREJUDICE.10
ii. 	Federal Law Claims
Regarding Plaintiffs’ allegations that Defendants in their official capacity violated the Fifth
and Fourteenth Amendments through § 1983, Defendants do not have immunity under the
Eleventh Amendment. See Will v. Michigan Dep’t of State Police, 491 U.S. 58, 71 n.10 (1989) (A
state official “in his or her official capacity, when sued for injunctive relief, would be a person
under § 1983 because ‘official-capacity actions for prospective relief are not treated as actions
against the State.’”). The Court will examine whether Plaintiffs have standing to bring these claims
in federal court.
9 Plaintiffs noted in a separate filing that “Plaintiffs have conceded their state law claims and are only proceeding on
their federal law claims. Defendants may no longer claim 11th Amendment immunity, Colorado Governmental
Immunity Act, or exhaustion of administrative remedies as defenses and may only avail themselves of qualified
immunity.” (See ECF No. 39). 	Plaintiffs should have, in the spirit of judicial economy, notified the Court in their
response or a supplemental filing that it was conceding the state law claims rather than burying their concession in
their Opposition to Defendants’ Motion to Stay Discovery.
10 Dismissal on sovereign immunity grounds must be without prejudice. See Rural Water Sewer & Solid Waste Mgmt.,
Dist. No. 1, Logan Cnty., Oklahoma v. City of Guthrie, 654 F.3d 1058, 1069 n.9 (10th Cir. 2011).
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2. 	Standing and 42 U.S.C. § 1983
Defendants argue that Plaintiffs cannot establish standing to maintain their claims because
they fail to allege within the Complaint that they are the actual owners of any unclaimed property
as identified on the Colorado Treasury’s website. 	Plaintiffs argue that they have sufficiently
alleged ownership and are not required to establish that they are actual owners of the property at
this time.
“The standing inquiry ensures that a plaintiff has a sufficient personal stake in a dispute to
ensure the existence of a live case or controversy which renders judicial resolution appropriate.”
Tandy v. City of Wichita, 380 F.3d 1277, 1283 (10th Cir. 2004). 	To demonstrate standing,
Plaintiffs must establish: 	(1) they have suffered an injury in fact, which is concrete and
particularized as well as actual or imminent, as opposed to hypothetical; (2) there is a causal
connection between the injury and the challenged conduct, which is not the result of a third party’s
independent action; and (3) the injury is likely to be redressed by a favorable decision as opposed
to merely speculative. 	Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). 	The burden to
establish standing rests with Plaintiffs as they are the party that invoked the jurisdiction of the
federal courts. Id. at 561.
The first requirement can be satisfied differently depending on whether the plaintiff seeks
prospective or retrospective relief. Tandy, 380 F.3d at 1283. A plaintiff, if seeking prospective
relief, must be suffering a continuing injury or under an immediate and real threat of being injured
in the future. Id. (citation omitted). A plaintiff’s standing for retrospective relief is based on past
injuries, where there is a real and immediate threat of repeated injury. Id.; PeTA, People for the
Ethical Treatment of Animals v. Rasmussen, 298 F.3d 1198, 1202 (10th Cir. 2002). 	“[W]hile a
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plaintiff who has been constitutionally injured can bring a § 1983 action to recover damages, that
same plaintiff cannot maintain a declaratory or injunctive action unless he or she can demonstrate
a good chance of being likewise injured in the future.” Facio v. Jones, 929 F.2d 541, 544 (10th
Cir. 1991). 	Regardless of what type of relief a plaintiff seeks, the claimed injury cannot be
contingent on speculation or conjecture. Whitmore v. Arkansas, 495 U.S. 149, 158 (1990).
In a class action, the plaintiff is required to allege that they have been personally injured,
“not that injury has been suffered by other, unidentified members of the class to which they
belong.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 n.6 (2016). Indeed, a prerequisite for class
certification requires that the class representatives “be a part of the class and possess the same
interest and suffer the same injury as class members.” Rector v. City & Cnty. of Denver, 348 F.3d
935, 949 (10th Cir. 2003).
In this case, Defendants argue that Plaintiffs lack standing because their claims of injuries
are conjectural because Plaintiffs fail to allege that they have filed any administrative claim to
establish ownership over the property identified in the Complaint. (ECF No. 31, p. 10). Plaintiffs,
citing James et al v. Hegar Jr. et al, No. 5:22-CV-51-DAE, slip op. at *28-29 (W.D. Tex. Sept. 6,
2022); Salvato v. Harris, No. 21-12706-FLW, 2020 WL 1224962, at *18 fn. 5 (D.N.J. Apr. 26),
argue that two separate federal district courts have rejected this argument. This is not so.
In James, the Western District of Texas did not discuss standing as Defendants moved to
dismiss the putative class action based on sovereign immunity and the failure to state a claim.
(ECF No. 33-1, p. 9). Additionally, the facts of the case are distinct from the instant case because
the funds from unclaimed property in Texas were not held in a separate custodial trust for owners
but deposited into the state’s general revenue fund under the Texas Unclaimed Property Act. (Id.,
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p. 17). Salvato is also factually distinct. In Salvato, the District Court of New Jersey found, among
other things, that Plaintiff had standing because (1) she alleged that New Jersey holds unclaimed
property or proceeds from the sale of said property in a separate trust account under the New Jersey
Uniform Disposition of Unclaimed Property Act and (2) the defendant notified her that it possessed
about forty shares of stock that had been previously owned by Plaintiff’s deceased mother.
Salvato, 2022 WL 1224962, at *1. The district court determined that the plaintiff had standing to
seek injunctive relief and the return of her property. Id., at *6 n.5.
First, Plaintiffs have not sufficiently alleged ownership of the respective property identified
in the Complaint. 	Rather, as the Complaint alleges, Plaintiffs searched for their names on the
Colorado Department of Treasury’s website and found potential claims; however, these may be
claims of individuals who have similar names. Defendants note that Plaintiffs have neither filed
an administrative claim to establish ownership over the property nor informed the Court about the
type of property that is in dispute at this time. 	(ECF No. 31-1, p. 3). 	Additionally, Plaintiff
Knellinger’s claim for alleged abandoned property could range between $50 to $249 while Plaintiff
Storey’s claim for alleged abandoned property is potentially valued at under $50. (ECF No. 1, pp.
3-4). Plaintiffs fail to specify or identify what type of property was allegedly improperly seized
and whether the property was actually owned by them. 	Second, Plaintiffs fail to allege injuries
either in the past or future that could give rise to their claims. Plaintiffs merely allege that they
currently reside in Colorado and, therefore, “could be subject to future wrongful seizure of their
property.” (ECF No. 33, p. 8). This is not enough to satisfy Plaintiffs’ burden under Lujan. Third,
because Plaintiffs’ allegations are only conjectural and there is no continuing injury, they cannot
sustain a claim under § 1983 for declaratory or injunctive relief. 	Plaintiffs have only alleged
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hypothetical harm rather than pleading that they have suffered an actual injury in fact that is
concrete, particularized, actual, and/or imminent. Accordingly, Plaintiffs’ claims under § 1983 are
DISMISSED WITHOUT PREJUDICE.11 	The Court does not need to reach the remaining
arguments in Defendants’ motion.
IV. CONCLUSION
Accordingly, Defendants’ Motion to Dismiss is GRANTED. 	(ECF No. 31). 	Plaintiffs’
claims are DISMISSED WITHOUT PREJUDICE.
DATED this 6th day of January 2023.
BY THE COURT:
___________________________________
Charlotte N. Sweeney
United States District Judge
11 Dismissal for lack of standing must be without prejudice. Rural Water Sewer, 654 F.3d at 1069 n.9.
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