A federal judge has dismissed a lawsuit by two Colorado residents against Treasurer Dave Young that alleged the state is failing to provide adequate notice to potential owners of unclaimed property totaling roughly $1 billion.

Although plaintiffs David Knellinger and Robert Storey filed a proposed class action lawsuit, which would cover an estimated 1.6 million people with property in the custody of the state, there was a glaring flaw with their complaint: They did not show Colorado was actually holding onto unclaimed property that belongs to them, the judge determined. 

“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,” wrote U.S. District Court Judge Charlotte N. Sweeney in a Jan. 6 order.

Colorado’s legislature passed the Unclaimed Property Act in 1987, replacing it with the Revised Uniform Unclaimed Property Act in 2020. UPA and RUUPA, as administered through the treasurer’s office, aim to reunite people with lost or forgotten-about property. The law allows holders of unclaimed property, including banks or utility companies, to transfer checks, gift cards, stocks and other items to state custody.

RUUPA requires holders and the state to provide notice to the suspected property owner, which can now take place over email. The treasurer’s office also maintains a website where people can search for and claim their property.

Since its inception, the program – which is nicknamed the Great Colorado Payback – returned property worth $622.5 million to its owners. Last year through the program, a man was reunited with baseball cards missing after 24 years.

In their complaint, Knellinger, of Fremont County, reportedly typed his name into the unclaimed property database and saw he had an unknown item, held by Verizon, with an estimated worth between $50 and $249. Storey, who is an El Paso County resident, discovered he had unclaimed property worth less than $50.

Neither man proceeded to claim his property. They accused Young’s office of seizing the property without each plaintiff’s “notice, his knowledge, or his consent.”

“Defendants in many instances unlawfully sell Plaintiffs’ property and deposit the proceeds into the General Revenue Fund, again in violation of the procedural requirements of the RUUPA,” their lawyers wrote, adding that the website was “constitutionally deficient” at providing notice.

Knellinger and Storey proposed to sue on behalf of all people who did not receive notice of their unclaimed property since May 2016, which they estimated to be 1.6 million people. They sought, among other things, restitution and a court declaration that the lack of notice violated their constitutional right to due process under the law.

In August, the state moved to dismiss the lawsuit. The plaintiffs did not have standing to sue because they had not suffered an injury, the Colorado Attorney General’s Office argued.

“Absent having filed administrative claims seeking to collect those properties from Defendants,” wrote First Assistant Attorney General LeeAnn Morrill, “at most they allege that they might be the owners of the properties.”

She added that unclaimed property does not “revert to the general fund” under the law.

The plaintiffs responded by pointing to a 2019 report from the Colorado Office of the State Auditor, before the enactment of RUUPA, which found the notices to suspected owners of unclaimed property ceased in 2005. As a result, the program was “out of statutory compliance.”

In addition to alleging the “failures and unlawful practices” mentioned in the audit are ongoing, the plaintiffs further explained they “are not required to establish ownership with certainty at this stage in the proceedings” for their own unclaimed property.

But Sweeney felt otherwise. It is the plaintiff’s responsibility, she wrote, to ensure they have a “sufficient personal stake” in the dispute. All they had done to date was allege their names appear in the unclaimed property database, without following through to show ownership.

“Plaintiffs fail to specify or identify what type of property was allegedly improperly seized and whether the property was actually owned by them,” Sweeney concluded.

Attorneys for the plaintiffs did not immediately respond to a request for comment, nor did a spokesperson for Young.

The case is Knellinger et al. v. Young et al.