CERAJESKI v. ZOELLER

Filing 82

ORDER ON RENEWED MOTION TO DISMISS: The Court directs the Clerk to SUBSTITUTE Daniel Huge in his official capacity as in-terim Treasurer of the State of Indiana for Defendant Richard Mourdock in his official capacity as Treasurer of the State of In diana. For the reasons set forth herein, Ms. Cerajeski's claims are DISMISSED AS MOOT, in light of the State's amendment to the challenged portions of the UPA. Ms. Cerajeski requests that the Court set a briefing schedule for her to reques t attorneys' fees. If after considering the points made by the Court in this order, and consistent with Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927, Ms. Cerajeski still believes that she is entitled to attorneys' fees, she is ORDERED to file such a motion within 30 days of the date of this order setting forth the legal basis for her fee request, addressing the points the Court raises, and providing sufficient documentation to support such a request. If she files such a motion, the State has 21 days to file a response, and Ms. Cerajeski has 14 days to file a reply. If Ms. Cerajeski does not file a motion for attorneys' fees within 30 days of this order, the Court will enter final judgment dismissing this case as moot at that time ***SEE ORDER FOR ADDITIONAL INFORMATION***. Signed by Judge Jane Magnus-Stinson on 9/10/2014. C (DW)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
KATHERINE CERAJESKI, Guardian for Walter
Cerajeski,
Plaintiff,
vs.
GREG ZOELLER, Attorney General of the
State of Indiana, et al.,
Defendants.

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1:11-cv-1705-JMS-DKL

ORDER ON RENEWED MOTION TO DISMISS
Presently pending before the Court is a Renewed Motion to Dismiss filed by Defendants
Greg Zoeller, in his official capacity as the Attorney General of the State of Indiana, and Daniel
Huge, in his official capacity as the interim Treasurer of the State of Indiana 1 (collectively, the
“State”). [Filing No. 64.] The State asks this Court to dismiss the claims of Plaintiff Katherine
Cerajeski, Guardian for Walter Cerajeski, because Ms. Cerajeski seeks prospective relief regarding
a portion of the Indiana Unclaimed Property Act that has recently been amended. [Filing No. 65;
Filing No. 80.] For the reasons that follow, the Court concludes that Ms. Cerajeski’s claims are
MOOT and GRANTS the State’s Renewed Motion to Dismiss. [Filing No. 64.]

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The Complaint lists Defendant Richard Mourdock in his official capacity as the Treasurer of the
State of Indiana. [Filing No. 1.] Mr. Mourdock recently resigned from that position, and Mr.
Huge was named the interim Treasurer. See About the Treasurer, http://www.in.gov/tos/2347.htm
(visited September 9, 2014). Thus, the Court has substituted Mr. Huge in his official capacity as
a Defendant.
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I.
BACKGROUND
A. Ms. Cerajeski’s Claim
On December 23, 2011, Ms. Cerajeski filed a Complaint against the State, asserting an
action under 42 U.S.C. § 1983 and the United States Constitution. 2 [Filing No. 1.] In relevant
part, Ms. Cerajeski alleged that a portion of the Indiana Unclaimed Property Act (the “UPA”)
violated the Takings Clause of the Fifth Amendment to the United States Constitution, as applied
to Indiana through the Fourteenth Amendment. [Filing No. 1 at 1-2.] In relevant part, the UPA
provides that unclaimed property, as defined by the statute, remits to the State once certain conditions are met and it is “presumed abandoned.” See Ind. Code § 32-34-1-1, et seq.; Ind. Code § 3234-1-20 (“Presumption of Abandonment”). At the time Ms. Cerajeski filed her Complaint, the
UPA provided that although the owner could file a claim and receive the property back, the owner
was not entitled to any dividends, interest, or other increments accrued after delivery to the Attorney General. Ind. Code § 32-34-1-30(b) (2013).
Ms. Cerajeski alleges that on or about September 21, 2006, Mainsource Bank of Hobart
delivered certain funds from a bank account to the State. [Filing No. 1 at 7.] Ms. Cerajeski has
not made a claim for the money that the State is holding, and she believed at the time she filed her
Complaint that should she make such a claim, the State “would not pay just compensation for the
use of [her] money during the period of custody.” [Filing No. 1 at 7.]

2

Carroll Schunn, as personal representative of the estate of R. Paul Schunn, joined Ms. Cerajeski
as a party plaintiff. [Filing No. 1.] On November 18, 2012, this Court concluded that Ms. Schunn
lacked standing to pursue the prospective relief the parties requested, and Ms. Schunn’s claims
were dismissed without prejudice. [Filing No. 35 at 6-7; Filing No. 35 at 12.] Ms. Schunn did not
appeal that decision, and her claims are no longer before this Court.
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In response to Ms. Cerajeski’s Complaint, the State filed a Motion to Dismiss. [Filing No.
14.] This Court granted the State’s Motion to Dismiss, concluding in relevant part that Ms. Cerajeski had not stated a takings claim that was plausible on its face. 3 [Filing No. 13 at 10.] In so
holding, the Court emphasized that Ms. Cerajeski sought “purely prospective” relief and was “not
seeking interest earned on their property” but, instead, sought “an order enjoining Defendants to
pay just compensation with respect to future claims for their use of unclaimed property.” [Filing
No. 35 at 5 (quoting Filing No. 19 at 21; Filing No. 19 at 23 (original emphasis)); Filing No. 19 at
27.]
B. Ms. Cerajeski’s Appeal
Ms. Cerajeski appealed the Court’s dismissal of her claim to the Seventh Circuit Court of
Appeals. [Filing No. 37.] On November 22, 2013, the Seventh Circuit issued a Mandate reversing
this Court’s decision and remanding Ms. Cerajeski’s claim to this Court. [Filing No. 48.] The
Seventh Circuit held that “[t]he confiscation of the interest on Cerajeski’s principal was [] a taking
of a part of [the] property.” Cerajeski v. Zoeller, 735 F.3d 577, 579 (7th Cir. 2013). The Seventh
Circuit emphasized that “Cerajeski did not voluntarily relinquish either the principal or the interest
in [the] bank account . . . [so t]he account was unclaimed rather than abandoned.” Id. at 581.
Because the State was “merely a custodian” of the unclaimed property, “[t]here is no basis for the
state’s confiscating the interest in Cerajeski’s account.” Id. at 582. The Seventh Circuit discussed

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In granting the State’s Motion to Dismiss Ms. Cerajeski’s Takings Clause claim, the Court relied
on United States Supreme Court precedent holding in the context of lapsed mineral property rights
that the State is “never required” to “compensate the owner for the consequence of his own neglect.” [Filing No. 35 at 9 (citing Texaco, Inc. v. Short, 454 U.S. 516, 530 (1982)).] Specifically,
when “[i]t is the owner’s failure to make any use of the property—and not the action of the State—
that causes the lapse of the property right; there is no ‘taking’ that requires compensation.” [Filing
No. 35 at 9 (citing Texaco, 454 U.S. at 530).] For that reason, the Court concluded that the State’s
retention of the interest at issue did not result in a taking of Ms. Cerajeski’s property requiring
compensation. [Filing No. 35 at 10.]
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the State’s escheat power but concluded that because the UPA does not provide for escheat until
25 years after the property remains unclaimed, “if before then the state takes either principal or
interest it must render just compensation to the owner if as in this case the owner’s identity is
known.” Id. at 583. While the State could charge a fee for custodianship and for searching for the
owner, “the interest on the principal in a bank account is not a fee for those services.” Id.
For these reasons, the Seventh Circuit reversed and remanded the case to this Court for
further proceedings consistent with its opinion. Id. In doing so, the Seventh Circuit specifically
noted:
The plaintiff is entitled to just compensation from the state when she files her claim
to Cerajeski’s account, but the amount of that just compensation has yet to be determined. The plaintiff has also sought an injunction—why we don’t know; and
injunctive relief may well be unavailable in this case. “Equitable relief is not available to enjoin an alleged taking of private property for a public use.” Ruckelshaus
v. Monsanto Co., 467 U.S. 986, 1016 (1984). The availability and propriety of
injunctive relief are other issues to be resolved by the district judge in the first instance.
Cerajeski, 735 F.3d at 583.
C. History on Remand
On remand, Ms. Cerajeski initially sought leave to amend her complaint to reinstate Ms.
Schunn’s claims, add a class action allegation for declaratory and injunctive relief, and add a new
party plaintiff. [Filing No. 60.] In response to that motion, the State pointed out that “[i]n the
wake of the Seventh Circuit’s opinion,” Indiana amended the UPA. [Filing No. 65 at 11.] Specifically, effective July 1, 2014, the definition of “interest bearing property” was modified and an
owner making a claim under the UPA “is now entitled to ‘interest that accrues on the property
from the date of payment or delivery.’” [Filing No. 65 at 11 (quoting Ind. Code § 32-34-1-9.1
(2014) and Ind. Code § 32-34-1-30(a) (2014)).] The amended UPA sets forth how the measure of
interest is calculated and provides the owner an opportunity to establish that a higher rate of interest
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is warranted. [Filing No. 65 at 1 (citing Ind. Code § 32-34-1-30.1(e) (2014)).] In light of the
amendments to the UPA, Ms. Cerajeski withdrew her motion to amend her complaint. [Filing No.
77 at 2 (“Plaintiff has concluded that it is not necessary or appropriate to raise [issues raised by the
proposed amended complaint] in this proceeding”); Filing No. 81 (denying motion to amend as
withdrawn).] Thus, Ms. Cerajeski’s initial Complaint remains the operative pleading. [Filing No.
1.]
Presently pending before the Court is the State’s Renewed Motion to Dismiss Ms. Cerajeski’s Complaint. [Filing No. 64.] Ms. Cerajeski opposes that motion, [Filing No. 77], and it is
now ripe for ruling, [Filing No. 80].
II.
DISCUSSION
A. Effect of Amendments to the UPA on Ms. Cerajeski’s Claims
The State argues that Ms. Cerajeski’s Complaint should be dismissed for multiple reasons,
one of which the Court finds to be dispositive. 4 Specifically, the State contends that because Indiana has amended the portions of the UPA at issue in this action, Ms. Cerajeski’s claim is moot.
[Filing No. 65 at 11.] The State points out that Ms. Cerajeski can submit a claim under the
amended version of the UPA and receive the principal and the measure of interest at issue. [Filing
No. 65 at 11.]
In response, Ms. Cerajeski claims that “what remains before this Court is plaintiff Cerajeski’s claim for a judgment, pursuant to 42 U.S.C. § 1983, that under the Fifth Amendment to the

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Because Ms. Cerajeski’s Motion to Amend her Complaint was pending when the State filed its
Renewed Motion to Dismiss, the State focuses its arguments on the proposed amended complaint.
[Filing No. 65.] At the end of its Renewed Motion to Dismiss, however, the State also notes that
its arguments apply to Ms. Cerajeski’s initial Complaint. [Filing No. 1.]
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United States Constitution, she is entitled to just compensation for the State’s taking of her property.” [Filing No. 77 at 3.] Ms. Cerajeski argues that dismissing her case would be tantamount to
disregarding the mandate of the Seventh Circuit Court of Appeals, contending that “[a] state cannot
make a ruling of a Circuit Court of Appeals that one of its statutes is unconstitutional disappear
simply by enacting an amendment that might cure all or some part of the defect.” [Filing No. 77
at 4.] Ms. Cerajeski “asks only that this Court follow the mandate of the Court of Appeals and
enter a judgment, pursuant to 42 U.S.C. § 1983, consistent with the opinion of that Court that the
state’s confiscation of interest violated the Fifth Amendment to the United States Constitution.”
[Filing No. 77 at 4.]
In reply, the State again asserts that Ms. Cerajeski’s constitutional challenge to the UPA
was rendered moot by the State’s amendment to the statutory provisions she challenged. [Filing
No. 80 at 4.] The State cites case law that it contends supports its position, noting that the only
exception is when the statutory amendment was not genuine, which Ms. Cerajeski has not suggested applies. [Filing No. 80 at 5.]
“The United States Constitution limits this Court’s jurisdiction to live cases and controversies.” Stotts v. Cmty. Unit Sch. Dist. No. 1, 230 F.3d 989, 990-91 (7th Cir. 2000) (citations omitted). “A case is moot when the issues presented are no longer live or the parties lack a legally
cognizable interest in the outcome.” Id. “The requirement that a case have an actual, ongoing
controversy extends throughout the pendency of the action.” Id.
The Seventh Circuit has “previously held that any dispute over the constitutionality of a
statute becomes moot if a new statute is enacted in its place during the pendency of the litigation,
and the plaintiff seeks only prospective relief.” Zessar v. Keith, 536 F.3d 788, 793 (7th Cir. 2008)
(citing MacDonald v. City of Chicago, 243 F.3d 1021, 1025 (7th Cir. 2001) (“Any dispute over

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the [previous] version of the ordinance was mooted by the enactment of the new ordinance.”)). A
case or controversy remains only if the revised statute continues to impact the plaintiff. See MacDonald, 243 F.3d at 1025 (“But even as revised, the ordinance as interpreted by the district court
continues to impact the plaintiffs. Thus, since a case or controversy remains, we will consider the
constitutionality . . . .”). If the “intervening amendment provides no assurance that the complainedof conduct will cease, the case is not moot[,]” but legislative action typically provides such assurance because “when the defendants are public officials we place greater stock in their acts of selfcorrection, so long as they appear genuine.” Zessar, 536 F.3d at 794 (citation omitted). When
statutory amendments moot pending litigation, a district court should dismiss the action as moot.
Id. at 797; see also Nat’l Rifle Ass’n of Am., Inc. v. City of Chicago, Ill., 393 F. App’x 390 (7th
Cir. 2010) (vacating district court’s judgments and remanding with instructions to dismiss case as
moot after ordinances at issue were repealed).
Ms. Cerajeski has repeatedly emphasized that she seeks “purely prospective” relief and is
“not seeking interest earned on [the] property” but, instead, is seeking “an order enjoining Defendants to pay just compensation with respect to future claims for their use of unclaimed property.” 5

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Ms. Cerajeski may have framed the relief she is seeking to avoid the State’s arguments regarding
the applicability of the Indiana Court of Appeals’ decision in Smythe v. Carter, 845 N.E.2d 219
(Ind. Ct. App. 2006), which affirmed a trial court’s dismissal of state and federal constitutional
challenges to the interest-retention provision of the UPA. The State initially asserted res judicata
and Rooker-Feldman arguments in response to Ms. Cerajeski’s claim, [Filing No. 25 at 8-10], but
it withdrew those arguments after Ms. Cerajeski clarified her claims and the type of relief she was
seeking, [Filing No. 19 at 28-31; Filing No. 35 at 4]. Moreover, if Ms. Cerajeski had sought
monetary relief from the defendants she sued in their official capacities, Eleventh Amendment
immunity would preclude that relief. MSA Realty Corp. v. State of Ill., 990 F.2d 288, 291 (7th Cir.
1993) (“The eleventh amendment bar extends to suits for money damages against state officials
sued in their official capacities, because a judgment against a public official in his official capacity
imposes liability on the entity that he represents.”) (citation omitted).

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[Filing No. 35 at 5 (quoting Filing No. 19 at 21; Filing No. 19 at 23; Filing No. 19 at 27).] On
appeal, the Seventh Circuit agreed that Ms. Cerajeski was entitled to some measure of interest
because “[t]he confiscation of the interest on Cerajeski’s principal was [] a taking of a part of [the]
property.” Cerajeski, 735 F.3d at 579. In response to that decision, Indiana amended the offending
provisions of the UPA. [See Filing No. 65 at 11 (“In the wake of the Seventh Circuit’s opinion,
Indiana has amended its Unclaimed Property Act . . . .”)]; see also Indiana Legislative Agenda,
http://www.in.gov/attorneygeneral/2472.htm (noting that “Senate Enrolled Act 208 makes important changes to Indiana’s unclaimed property law . . . [t]o make the statute compliant with
recent court decisions”). Ms. Cerajeski has not suggested that the State’s amendment was not
genuine or that it does not provide her with an adequate remedy.
The State’s amendment to the UPA directly addresses Ms. Cerajeski’s constitutional challenge to the repealed portions of that statute. Because she is only seeking prospective relief concerning statutory provisions that are no longer in effect, the Court must dismiss her claim as moot.
Zessar, 536 F.3d at 793. To the extent that Ms. Cerajeski alludes that there may be deficiencies in
the amended law, [see Filing No. 77 at 2 (noting that the term “interest bearing property . . . does
not include dividend paying or interest bearing securities, such as stocks and bonds”)], those contentions may be pursued in new suits, see Nat’l Rifle Ass’n of Am., Inc., 393 F. App’x at 390
(“Plaintiffs contend that the new ordinances enacted to supersede the ones challenged in these suits
have constitutional flaws. Plaintiffs are entitled to pursue those contentions in new suits. The
subject matter of this litigation, however, no longer exists.”).
The Court disagrees with Ms. Cerajeski that dismissing her claim as moot is tantamount to
ignoring the Seventh Circuit Court of Appeals’ mandate. [Filing No. 77 at 3-4.] As an initial
matter, despite Ms. Cerajeski’s argument to the contrary, the Seventh Circuit did not remand Ms.

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Cerajeski’s case with an order for this Court to immediately enter judgment in her favor. See
Cerajeski, 735 F.3d at 583 (holding that Ms. Cerajeski “is entitled to just compensation from the
state when she files her claim to Cerajeski’s account, but the amount of that just compensation has
yet to be determined” and that while injunctive relief “may well be unavailable in this case,” issues
such as those are “to be resolved by the district judge in the first instance”) (emphasis added). Ms.
Cerajeski makes no allegation that she has filed such a claim. Additionally, the Seventh Circuit’s
decision prompted a material change in the law that moots the constitutional challenge that Ms.
Cerajeski makes in this action. Thus, based on binding precedent, this Court must dismiss Ms.
Cerajeski’s claim as moot. See, e.g., Zessar, 536 F.3d at 798; MacDonald, 243 F.3d at 1025.
B. Availability of Attorneys’ Fees
Ms. Cerajeski asks the Court to set a briefing schedule for her to file a motion for an award
of attorneys’ fees. [Filing No. 77 at 5.] She contends that she is the prevailing party in this litigation pursuant to 42 U.S.C. § 1983 and, thus, is entitled to attorneys’ fees pursuant to 42 U.S.C. §
1988. [Filing No. 77 at 5.]
The Court acknowledges that Ms. Cerajeski asserts a § 1983 claim in her Complaint, [Filing No. 1 at 7-10], but she also asserts a constitutional claim pursuant to the Taking Clause of the
Fifth Amendment to the United States Constitution, [Filing No. 1 at 10-11]. In its decision, the
Seventh Circuit Court of Appeals never cited § 1983 or held that it was ruling in Ms. Cerajeski’s
favor based on her claim brought pursuant to that statute. See Cerajeski, 735 F.3d 577. Instead,
the Seventh Circuit concluded that Ms. Cerajeski was entitled to relief on her Takings Clause
claim. Id. at 579 (“[t]he confiscation of the interest on Cerajeski’s principal was [] a taking of a
part of [the] property”). In fact, Ms. Cerajeski did not respond to the State’s argument that she

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cannot recover from the Defendants in their official capacities pursuant to 42 U.S.C. § 1983 because they are not “persons” under that statute. [Filing No. 65 at 5 (citing Will v. Michigan Dep’t
of State Police, 491 U.S. 58, 71 (1989)).] Failure to respond typically constitutes waiver of any
contrary argument. Bonte v. U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010) (concluding that
failure to respond to an opponent’s arguments leads to waiver of the contrary argument).
If after considering these points, and consistent with Federal Rule of Civil Procedure 11
and 28 U.S.C. § 1927, Ms. Cerajeski still believes that she is entitled to attorneys’ fees, she is
ORDERED to file such a motion within 30 days of the date of this order setting forth the legal
basis for her fee request, addressing the points the Court raises, and providing sufficient documentation to support such a request. If she files such a motion, the State has 21 days to file a response,
and Ms. Cerajeski has 14 days to file a reply. If Ms. Cerajeski does not file a motion for attorneys’
fees within 30 days of this order, the Court will enter final judgment dismissing this case as moot
at that time. 6
III.
CONCLUSION
The Court directs the Clerk to SUBSTITUTE Daniel Huge in his official capacity as interim Treasurer of the State of Indiana for Defendant Richard Mourdock in his official capacity as
Treasurer of the State of Indiana. For the reasons set forth herein, Ms. Cerajeski’s claims are
DISMISSED AS MOOT, in light of the State’s amendment to the challenged portions of the
UPA.

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The Court declines to enter final judgment at this time, given Ms. Cerajeski’s request for a briefing schedule and the possibility that she may seek attorneys’ fees, because the federal system disfavors piecemeal appeals. Cont’l Cas. Co. v. Anderson Excavating & Wrecking Co., 189 F.3d 512,
518 (7th Cir. 1999).
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Ms. Cerajeski requests that the Court set a briefing schedule for her to request attorneys’
fees. If after considering the points made by the Court in this order, and consistent with Federal
Rule of Civil Procedure 11 and 28 U.S.C. § 1927, Ms. Cerajeski still believes that she is entitled
to attorneys’ fees, she is ORDERED to file such a motion within 30 days of the date of this order
setting forth the legal basis for her fee request, addressing the points the Court raises, and providing
sufficient documentation to support such a request. If she files such a motion, the State has 21
days to file a response, and Ms. Cerajeski has 14 days to file a reply. If Ms. Cerajeski does not
file a motion for attorneys’ fees within 30 days of this order, the Court will enter final judgment
dismissing this case as moot at that time.

September 10, 2014

_______________________________
Hon. Jane Magnus-Stinson, Judge
United States District Court
Southern District of Indiana

Distribution via ECF only:
John R. Wylie
[e-mail]
M. Scott Barrett
BARRETT WYLIE, LLC
[e-mail]
Frederick William Schultz
GREENE & SCHULTZ
[e-mail]
Adam Clay
INDIANA ATTORNEY GENERAL
[e-mail]

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Kenneth Lawson Joel
INDIANA ATTORNEY GENERAL
[e-mail]
Arthur T. Susman
LAW OFFICES OF ARTHUR SUSMAN
[e-mail]
Caryn M. Nieman
OFFICE OF THE ATTORNEY GENERAL
[e-mail]
Glenn L. Hara
SUSMAN HEFFNER & HURST LLP
[e-mail]
Terry Rose Saunders
THE SAUNDERS LAW FIRM
[e-mail]

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