Upwords, March 2010- Where We’ve Been and Where We’re Going - Taking Stock

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Unclaimed property law has seen significant development over the past few years. These changes have created excitement for practitioners, holders, and states alike. The scope and breadth of the recent developments are quite remarkable considering that the body of law has been in existence since the time of the Roman Empire and is now being pondered by those wondering how to survive a zombie apocalypse. You would think that with such a long history the law would be more settled.

In this installment of UPwords, we review some of the more significant legal developments over the past few years and highlight a few of the interesting developments on the horizon.

What We Didn’t Know Then but Know Now

Qualified Immunity in Delaware (at Least for Stock . . . )

Perhaps one of the most important decisions this past year was out of a most appropriate state — Delaware — the center of the unclaimed property universe. On September 15, 2009, in A.W. Financial, S.A. v. Empire Resources, Inc., American Stock Transfer & ACS2 the Delaware Supreme Court sua sponte considered and decided novel questions of unclaimed property law.

The underlying cause of action involved the escheat of unclaimed stock. The plaintiff brought suit in the Southern District Court of New York alleging that the stock was improperly turned over to Delaware before the running of the proper abandonment period. Under escheat laws then in effect, stock must be dormant for five years before it can be abandoned. Delaware subsequently amended its law shortening the dormancy period for stock and escheated the stock under the shortened period.

A.W. Financial brought various actions, including negligence, breach of contract, breach of fiduciary duties, and conversion. Delaware moved to dismiss for failure to state a claim and argued that the change in the statute was to apply retroactively and also asserted immunity from suit as provided for under Delaware’s escheat laws.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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