GENE HARRIS v. VERIZON COMMUNICATIONS

Filed 7/19/06

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment of the Superior Court of Los Angeles County, Susan Bryant-Deason, Judge. Dismissed.

Law Office of William W. Palmer and William W. Palmer for Plaintiffs and Appellants.

Munger, Tolles & Olson, Henry Weissmann, Stuart N. Senator and James C. Rutten for Defendants and Respondents.

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The Unclaimed Property Law (the UPL, Code Civ. Proc., §§ 1500-1582) protects unknown property owners by reuniting them with their property and giving the state, rather than the holders of the unclaimed property, the benefit of its use until it is claimed.[1] (Harris v. Westly (2004) 116 Cal.App.4th 214, 219.) To these ends, stock held by a corporation escheats to the State of California if the shareholder (owner) has not communicated with the corporation for more than three years and if the owner's whereabouts are unknown, at which point the corporation must deliver duplicate stock certificates to the State Controller. (§ 1532, subd. (b); Harris v. Westly, supra, 116 Cal.App.4th at p. 219.)[2] Failure to comply with the escheat requirements subjects a corporation to fines and other penalties. (§§ 1576, 1577.)

Dividends accrued on escheated stock are credited to the owner's account until the shares are sold (securities listed on an established stock exchange must be sold within two years after receipt by the Controller). (§§ 1562, 1563, subd. (b).) After the sale, the Controller holds the proceeds and pre-sale dividends for the benefit of the owner, who may at any time submit a claim for the full amount due (there is no statute of limitations). (§§ 1501.5, subd. (a), 1540, subd. (b), 1564.) The claim must be paid within 180 days and the claimant, if dissatisfied about the amount, may sue the Controller to resolve that dispute (§ 1541) -- but the Controller is in all other respects immune from suit (§ 1566, subd. (b); Fong v. Westly (2004) 117 Cal.App.4th 841, 851-853). For its part, a corporation escheating stock is immune from an owner's suit for recovery of the stock, for interest, for damages stemming from the delivery of the stock to the Controller, and for any similar type of liability. (§ 1532, subd. (b), 1321, 1560.)

In Harris v. Westly, supra, 116 Cal.App.4th 214, Division Eight of our court held that the Controller's immunity is absolute. In this case involving the same plaintiffs and the same stock, we reach the same result with regard to the corporation's immunity.

FACTS

Gene Harris worked for GTE Corporation during the 1970's and 1980's, during which time GTE promised to (and did) give him shares in the corporation as a â€