Tenth Circuit Revives Takings Claims for Public Use of Property Held Under the State’s Unclaimed Property Act

In a decision that may reshape how states administer their unclaimed property statutes, the Tenth Circuit held that property owners can pursue takings claims against the Colorado State Treasurer (Treasurer) without exhausting their administrative remedies. See Knellinger v. Young, No. 23-1018, 2025 WL 1085165, at *7 (10th Cir. Apr. 11, 2025). The district court dismissed the plaintiffs’ claim for lack of standing, since the plaintiffs had not first pursued all administrative remedies. The Tenth Circuit reversed and allowed the takings claims because the plaintiffs plausibly alleged that the Treasurer took their property for public use under Colorado’s version of the Revised Uniform Unclaimed Property Act (“RUUPA”), Colo. Rev. Stat. §§ 38-13-201 to -220.

Generally, RUUPA presumes that certain types of property have been abandoned if not claimed within a statutory period. See Colo. Rev. Stat. § 38-13-201(1)(k), (f). Once presumed abandoned, holders must remit the property to the Treasurer, id. §§ 38-13-401, 38-13-603, who holds it “in custody for the benefit of the owner.” Id. § 38-13-803. Although RUUPA states that the property “is not owned by the state,” id. § 38-13-803, the Treasurer routinely transfers funds from the unclaimed property trust to its general fund and other public programs. See id. §§ 38-13-801, -801.5. The Treasurer is required to notify the owner directly only if the Treasurer has the owner’s valid email address. Id. § 38-13-503.

Enter the plaintiffs in Knellinger. They discovered that the Treasurer had taken possession of their alleged property through a listing on the state’s unclaimed property website. Knellinger, 2025 WL 1085165, at *2. Rather than file administrative claims, they brought a takings claim under 42 U.S.C. § 1983, asserting that the Treasurer’s transfer of their property to other public funder under RUUPA violated the Takings Clause of the Fifth Amendment. Id. They sought just compensation and injunctive relief on behalf of a putative class of owners who did not receive notice before the Treasurer allegedly took their property. Id. The district court dismissed the claims. Id. at *3.

The Tenth Circuit reversed, concluding that the plaintiffs had plausibly alleged takings claims for several reasons. First, the complaint adequately alleged the Treasurer reappropriated funds from the unclaimed property trust to cover public expenses—a taking for a public use. Id. at *6. Second, the plaintiffs sufficiently pleaded ownership of the property by alleging that they had the same names as the property owners listed on the state’s website, and that they had been Colorado residents subject to RUUPA for the last decade. Id. Lastly, and perhaps most importantly, the Tenth Circuit rejected the requirement imposed by the district court that the plaintiffs must first file administrative claims under RUUPA before asserting a takings claim in federal court. Id. at *6–7. Citing Knick v. Township of Scott, 588 U.S. 180 (2019), the court reaffirmed that a property owner has an actionable claim under the Takings Clause the moment the government seizes property without compensation, and that he or she may bring such claim in federal court under Section 1983 without first pursuing other state-law remedies. Id. at *7.

The Tenth Circuit affirmed, however, the limitation on available remedies by upholding the dismissal of the plaintiffs’ claim for injunctive relief because an adequate legal remedy for obtaining just compensation exists. Id. The court also declined to second-guess the structure of Colorado’s administrative procedures. Although states may revise their practices to avoid constitutional litigation, the plaintiffs “have no ability to force Colorado to compensate property owners through their procedure of choice.” Id. at *8.