Delaware’s efforts to avoid financial culpability for escheating a foreign resident’s assets under the state’s unclaimed property law recently suffered a setback in federal court. On March 23, 2026, the District of Delaware denied the state’s motion to dismiss in Vial v. Mayrack, allowing the plaintiff’s claims to proceed.
The plaintiff is a Chilean national acting as the legal representative of a deceased individual’s estate. After learning that shares of stock owned by the decedent were escheated to Delaware, the plaintiff filed a claim to recover on behalf of the estate. Delaware paid approximately $2.6 million on the claim, reflecting the proceeds it received from the liquidation of the decedent’s assets. The plaintiff asserted that the estate was entitled to approximately $11 million more, based on the market value of the shares at the time of the claim. The plaintiff asserted claims for relief under both the Due Process Clause of the Fourteenth Amendment and the Takings Clause of the Fifth Amendment.
Delaware moved to dismiss, arguing that the plaintiff does not have standing, the claims are barred by the statute of limitations, the complaint fails to state a claim for relief, and the Eleventh Amendment precludes the plaintiff’s right to monetary damages. The court reviewed each of Delaware’s arguments for dismissal.
Lack of Standing
The court found that the plaintiff alleged facts that “affirmatively and plausibly suggest” standing to sue, including an allegation of monetary injury. It further found that the plaintiff sufficiently alleged a likelihood of future injury—that additional shares purchased to recoup the loss were acquired under a buy-and-hold strategy, making them subject to potential escheatment after three years.
Takings
Delaware argued that “escheat and takings are separate concepts,” with escheat occurring when private property is considered abandoned due to the owner’s failure to act as required by law. The plaintiff countered that his property was seized and liquidated and the proceeds were used for the public good without just compensation.
The court agreed that the plaintiff had sufficiently described the “exact pocketbook injury that invokes just compensation” sufficient to survive a motion to dismiss. Taking the plaintiff’s allegations as true, the court concluded that the state has “effected a pocketbook loss sufficient to invoke a question of just compensation” because its scheme allegedly gives no weight to the owner’s use of property.
Notably, the same district court judge had previously dismissed a Takings Clause claim against Delaware in Schramm v. Mayrack, finding that the plaintiffs’ complaint did not establish a protected property interest related to stocks that the state allegedly sold and therefore failed to assert a “legally cognizable property interest.” The judge, recognizing the discrepancy, stated that in Schramm, the Takings Clause claims failed to describe “the value, content, or otherwise cognizable property interest invoking takings,” in contrast to the plaintiff’s complaint in Vial.
It thus appears that the owner’s specific factual pleading will be a significant factor in whether a takings claim will survive a motion to dismiss in Delaware federal court even under the same basic set of facts (i.e., the escheat of shares by Delaware).
Statute of Limitations
Delaware argued that the plaintiff’s takings claim was time-barred under the two-year limitations period for Section 1983 claims, alleging that the plaintiff knew that the decedent’s shares had been escheated years before the claims were paid. The court disagreed, finding that the statute of limitations did not begin to run until early 2023—the date Delaware issued its final determination that only a partial amount of the claimed value would be paid.
For the plaintiff’s due process claim, the court found that although the complaint suggests the plaintiff knew some of the property was taken years before the complaint was filed, the assertion that the plaintiff discovered after the initial claim submission that more of the decedent’s shares had escheated to Delaware (the earliest of which occurred in January 2023) “clearly pleads a claim within the statute of limitation sufficient to deny the motion to dismiss.” In its conclusion, the court did not distinguish between the original shares that were claimed and the additional shares that were discovered.
Eleventh Amendment
Delaware argued that the plaintiff’s claims should be dismissed under the Eleventh Amendment, asserting that the plaintiff was seeking a damages award from the state’s treasury. The court noted that if the plaintiff “seeks recovery out of a state’s specially-earmarked fund for escheat claims, then those are damages drawn from a fund that is custodial in nature, whose administrators are not protected by the Eleventh Amendment.” The complaint, it found, “plainly seeks payment from the Escheat Special Fund.”
At the same time, the court acknowledged it was unclear whether payment of the plaintiff’s claim would come from the general fund (in which case the Eleventh Amendment would apply) or from “exclusively set-aside funds,” due in part to the fact that Section 1168 of the Delaware unclaimed property law requires claims to be paid first through the state’s general fund rather than directly from the Escheat Special Fund.
The court directed the parties to proceed with expedited discovery regarding the Escheat Special Fund to clarify its operation and how it would apply to the plaintiff’s claims in order to determine the Eleventh Amendment issue. Thus far, it does not appear that the parties or the court have addressed the separate question whether the Eleventh Amendment provides a potential defense to the plaintiff’s takings claim or just the due process claim.
Implications
The district court’s decision reflects an initial victory on both the Takings Clause and Due Process Clause issues, which are frequent subjects of litigation between states and property owners, particularly as they relate to escheated shares of stock. While courts have largely avoided adverse rulings on substantive issues for escheatment and liquidation of shares, some courts have found that a state’s custodial escheatment and subsequent liquidation of the shares do not constitute a taking at all. Courts have also relied on the Eleventh Amendment in denying owners’ claims for monetary damages from states.
The tides, however, could shift in favor of owner claims if the Vial litigation proceeds, discovery bears out the plaintiff’s arguments regarding the Escheat Special Fund, or the court holds that the Eleventh Amendment applies only to the due process claim. Delaware may also appeal the court’s ruling to the Third Circuit.
Still, this decision establishes a blueprint for how other property owners could challenge Delaware’s escheatment and liquidation practices under similar facts. Foreign shareholders, indeed, remain particularly at risk of having their shares escheated.
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