Florida Appeals Court Critical of State Unclaimed Property Department

Federal Judge Sends Gift Card case back to State CourtGenerally, Florida is seen as a model state, allowing claims to go forward. In 2013, the Florida legislature authorized an online claims system to allow for faster claims in certain instances. However, in State of Florida Department of Financial Services v. Lisa O'Connor, the Florida District Court of Appeals is quite critical of the Florida Unclaimed Property Bureau and their decision to deny a judgment creditor's claim of the debtor's unclaimed property.

This case is round two for Lisa O'Connor as she attempts to claim amounts to fulfill unpaid child support obligations of her ex-husband. The first case, O'Connor I, was rejected by the court since she had not exhausted her administrative remedies. She then filed a claim which was then denied by the Bureau since the claimant was determined not to be the owner. O'Connor then filed a writ of garnishment which the Department moved to dismiss and dissolve on sovereign immunity grounds. The trial court denied the motion, and this appeal followed.

While the Department contends that the legislature has not waived sovereign immunity for the purposes of allowing judgment creditors to claim funds held as unclaimed property, the claimant says that the stated purpose is to return unclaimed property to its owner and that her equitable and legal claim of ownership entitles her to the unclaimed property of her former spouse. The claimant goes further stating that sovereign immunity is not implicated because the State is only a custodian, not the owner, of the property.

Florida law specifically defines an "owner", in Section 717.101(18) as, among other things, "a person having a legal or equitable interest in property subject to this chapter." The trial court's order permitting the garnishment, in favor of the ex-wife, gives her a "legal or equitable interest in the property." The trial court determined that the ex-husband had a legal obligation to pay the ex-wife and he failed to pay that legal obligation. Further, he failed to make a claim on property held by the State and thus forfeited his ownership interest in the property. The court's order also relieves the Department's obligation to hold the funds in favor of the ex-husband, and thus ended the Department's conservatorship over the funds.

Both the trial court and the appeals court rejected the claim of sovereign immunity by the State. Instead, they relied on the custodial nature of unclaimed property and likened the funds to bank accounts. The Courts also noted that the writ of garnishment is a "one-time transaction for Zane's accounts themselves, rather than an ongoing garnishment of wages or salary."

In addition, the Court relies heavily on the public policy of favoring enforcement of child support payments. To this end, the Court has some strong language that even holders can agree with (emphasis added):

The Department points out, as a public policy matter, that the State treasury will not get Zane's unclaimed funds if O'Connor prevails ("if Florida unclaimed property is to be remitted to `missing owner' judgment creditors, there will be less funds available to benefit the people of the State of Florida."). But the thirst for funds for governmental purposes is unslakable, and not a recognized legal grounds to deprive O'Connor of the funds her ex-husband owes her and her family. The total proceeds from Zane's unclaimed accounts will only cover about a third of the total arrearages Zane owes O'Connor for the care of their children and the sale of their marital property. Surely the State would prefer that these private funds go directly to satisfy Zane's long-standing paternal obligations to his offspring for their personal upbringing—which may reduce the need for government assistance or services—than be deposited into a faceless general treasury fund for indeterminate purposes. Unclaimed property may ultimately become governmental property, but that does not foreswear the government's primary obligation to return it to private hands.

In summary, the Court says "[s]overeign immunity is not implicated when an original owner makes and prevails on a claim for unclaimed property; likewise, it is not implicated when a superior claim of ownership to unclaimed property is established by court orders."

Full Text of the Opinion

See Also:
Federal Judge Sends Gift Card Case Back to State Court
Osram Sylvania Files Suit Against Delaware
California Judgment Creditors May Recover Unclaimed Property