The Fourteenth Amendment’s Due Process Clause; A state’s taking custody of unclaimed financial accounts; Ownership of the principal; Common-law presumption that owners retain their property rights; Michigan’s Uniform Unclaimed Property Act; Kemerer v State (MI App); Ownership of interest generated from the accounts; Rule that interest follows principal

[This appeal was from the ED-MI.] The court held that under Michigan law, plaintiff-O’Connor (and other original owners of presumptively abandoned property subject to the state’s Uniform Unclaimed Property Act) “continue to own that property—even after the state takes custody of it.” He had two non-interest-bearing financial accounts with private companies that they turned over to Michigan under the Act after they lost touch with him. The state took possession of the accounts and later deposited the money into its general fund, giving rise to this suit. After an earlier remand, the district court again dismissed O’Connor’s due-process claims, determining that the state had taken ownership of the accounts and also owned the interest, but “had provided him sufficient process.” On appeal, the court concluded that because O’Connor retained ownership of the principal and of the interest his funds generated while they were in the state’s custody, the district court’s opposite conclusion tainted the rest of its analysis of his due-process claims. “Based on the Act’s text and the history of Michigan property law, O’Connor kept ownership of the principal even after Michigan took custody of it. The statutory text repeatedly refers to the state’s control over unclaimed items as ‘custody,’ not ownership.” In addition, the Act “consistently refers to the rightful holders of the unclaimed property as ‘owners,’ not ‘former’ or ‘previous’ owners.” And the text of the Act “accords with Michigan’s common-law presumption: Owners retain their property rights even when the state holds their property and doesn’t know their identity.” As to the interest, the common-law rule that it “follows principal applies regardless of whether the principal was interest bearing at the time the state took custody.” The district court relied on a Michigan Court of Appeals case, Kemerer. But the court concluded that “available data clearly indicate that the Michigan Supreme Court wouldn’t follow” Kemerer’s holdings. First, as to the taking of ownership, “Kemerer represents an outlier holding that the Michigan Supreme Court likely wouldn’t follow. Second, Kemerer erred by concluding that the original property owner doesn’t own the interest generated while the property is in state custody.” Vacated and remanded.