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A Judgment Creditor May Apply For And Receive Property Held By The State Controller Under California’s Unclaimed Property Law – Glass & Goldberg | Financing, Property & Bankruptcy Law
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A Judgment Creditor May Apply For And Receive Property Held By The State Controller Under California’s Unclaimed Property Law

Weingarten Realty Investors v. Chiang,  (Cal. App. 4th, December 19, 2012)

The Court of Appeal for California’s Fourth Appellate District recently held that any persons who claim an interest in unclaimed property, such as an assignee, may apply for and recover the property under section Code of Civil Procedure Section 1540[1].  The phrase “any person” includes an assignee judgment creditor who wishes to recover unclaimed property that escheated to the state prior to the assignment.

Under California’s Unclaimed Property Law, the State Controller may take possession of funds or properties held in trust by entities such as banks or brokerage firms if the property owners have not acknowledged or claimed an interest in the property for a period of several years. Property owners may be allowed to later demonstrate their ownership and claim their property.

In Weingarten Realty Investors v. Chiang,  (Cal. App. 4th, December 19, 2012), Weingarten Realty Investors (Weingarten) was a judgment creditor of Novadyne Computer Systems, Inc. (Novadyne).  Property belonging to Novadyne, including cash in various accounts and stock holdings, escheated to the state and was being held by the Controller’s Office (Chiang) pursuant to California’s Unclaimed Property Law.

Weingarten made application for the property under Code of Civil Procedure Section 1540 and the Superior Court ordered the Chiang to turn the property over to Weingarten.   Chiang declined on grounds that the law only permitted him to deliver the money to an owner in fact, not to an assignment creditor.

Weingarten sued the Controller and the Superior Court granted summary judgment to Weingarten.  The Controller appealed the Superior Court’s decision to the Fourth Appellate District, who also agreed with Weingarten.

The court reasoned that although the language of subsections (a) and (d) allow for conflicting interpretations because of who may apply for possession of the property, an interpretation which rendered the law nonsensical would not withstand judicial scrutiny.  Thus, the Court reasons that because the Legislature, in subsection (a) specified that  as defined in subsection (d).

If you have any questions about applying for property under Section 1540, seek the advice of an attorney experience in transactional law and business litigation.  The attorneys at Glass & Goldberg are committed to helping you minimize risk and manage uncertainty while moving forward to meet your goals.  Call us at (818) 888-2220, email us at info@glassgoldberg.com, or visit us on the web at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.

 


[1] Code of Civil Procedure Section 1540 subsection (a) states: “Any person, excluding another state, who claims an interest in property paid or delivered to the controller under this chapter may file a claim to the property or to the net proceeds from its sale.”  Subsection (d) provides that “Owner” means any person having a legal or equitable interest in property subject to the (Unclaimed Property Law) prior to its escheat.

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