No Ex parte Young Path to “Just Compensation” for Texas Unclaimed Property: Fifth Circuit Bars Federal Takings Claim on Sovereign Immunity Grounds

Introduction

In Ambriz v. Hancock, No. 23-50582 (5th Cir. Oct. 17, 2025) (per curiam) (unpublished), a panel of the United States Court of Appeals for the Fifth Circuit (Chief Judge Richman and Judges Oldham and Ramirez) held that the Eleventh Amendment bars a federal takings claim seeking “just compensation” for the State’s use of unclaimed property deposited into Texas’s general revenue fund. Framed as a class action for prospective declaratory and injunctive relief under 42 U.S.C. § 1983, the suit challenged a core feature of the Texas Unclaimed Property Act (TUPA), namely, that the Comptroller pays owners the principal amount of their property when reclaimed, but no interest or other compensation earned during state custody. The district court dismissed the takings claim on the merits; the Fifth Circuit affirmed the dismissal but on sovereign immunity grounds and remanded with instructions to dismiss without prejudice for lack of jurisdiction.

The decision clarifies two interlocking principles in the Fifth Circuit: (1) a Takings Clause injury from a governmental appropriation accrues when the property is taken, not on a continuing basis, and (2) Ex parte Young does not permit recasting retrospective monetary relief—i.e., “just compensation”—as prospective declaratory or injunctive relief, even if payment is triggered by a future claim event. The court did not decide whether TUPA effects a taking or what compensation, if any, is due under the Fifth Amendment or Texas law; rather, it held that the federal courts lack subject-matter jurisdiction over the claim against the state officer in his official capacity.

Summary of the Opinion

Statutory backdrop. Under TUPA, after a dormancy period, holders must report and deliver presumed abandoned property to the Texas Comptroller. The State assumes custody and deposits money into the general revenue fund, including income generated by those funds. When an owner later claims the property, the Comptroller pays out the principal but, by statute, owes no interest or other compensation. Tex. Prop. Code §§ 74.304(d), 74.601–.603.
Plaintiff’s claim. The putative class representative, claiming ownership of a $25 savings account, alleged that the State’s use of unclaimed funds without paying interest constitutes a taking requiring “just compensation.” He sought a declaratory judgment establishing a compensation measure and an injunction requiring the Comptroller to pay “just compensation” upon future claim payouts.
District court ruling. The district court dismissed state-law claims and federal claims for retrospective or specific monetary relief as barred by sovereign immunity. It allowed prospective federal claims to proceed past immunity but dismissed those on the merits for failure to state a Takings Clause claim.
Fifth Circuit holding. The appellate court affirmed the judgment of dismissal but on a different ground: sovereign immunity. It held that the Ex parte Young exception does not apply because (i) the alleged constitutional violation (the taking) was a past event and not ongoing, and (ii) the relief sought, though framed prospectively, is tantamount to retrospective damages. The panel remanded with instructions to dismiss the federal takings claim without prejudice for lack of jurisdiction. It expressly did not reach standing or ripeness, and it “express[ed] no opinion” on state-law remedies in light of DeVillier v. Texas.

Analysis

Precedents Cited and Their Influence

Knick v. Township of Scott, 588 U.S. 180 (2019). The court invoked Knick for the proposition that a Takings Clause violation occurs “as soon as” the government takes property without paying just compensation. Building on Knick’s accrual rule, the panel reasoned that any injury here happened when the Comptroller took custody and deposited the funds into the general revenue fund; therefore, the violation is not “ongoing” for Ex parte Young purposes.
Ex parte Young, 209 U.S. 123 (1908); Frew ex rel. Frew v. Hawkins, 540 U.S. 431 (2004); Verizon Maryland, Inc. v. PSC of Maryland, 535 U.S. 635 (2002). These cases frame the narrow path around Eleventh Amendment immunity: a plaintiff must plausibly allege an ongoing violation of federal law and seek relief properly characterized as prospective. The Fifth Circuit applied that two-part test and concluded neither element was satisfied.
Papasan v. Allain, 478 U.S. 265 (1986). Papasan distinguishes between ongoing violations (proper targets for Ex parte Young) and continuing effects of past violations (not a basis for Ex parte Young). The panel used this distinction to reject the argument that the State’s continuing “use” of deposited funds keeps the violation alive; any continuing state benefit stems from a past event, not an ongoing violation.
Edelman v. Jordan, 415 U.S. 651 (1974). Edelman holds that the Eleventh Amendment bars federal courts from ordering retroactive monetary relief payable from the state treasury, even when styled as an injunction. The Fifth Circuit treated the requested declaration and injunction—requiring payment of “just compensation” when the owner later reclaims the principal—as an attempt to obtain retrospective monetary relief.
Seven Up Pete Venture v. Schweitzer, 523 F.3d 948 (9th Cir. 2008). Cited for the principle that a remedy for past injury cannot be laundered into permissible prospective relief merely by phrasing it as an injunction requiring future payment; if funds would inevitably come from the state treasury to remedy a past deprivation, Eleventh Amendment immunity applies.
Green Valley Special Utility District v. City of Schertz, 969 F.3d 460 (5th Cir. 2020) (en banc). The Fifth Circuit emphasized that the Ex parte Young assessment is a “simple, straightforward inquiry” that does not reach the merits. That guided the court to focus narrowly on whether the alleged violation is ongoing and whether the requested relief is truly prospective, without deciding whether a taking actually occurred.
Sinochem International Co. v. Malaysia International Shipping Corp., 549 U.S. 422 (2007); Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999); Fontenot v. McCraw, 777 F.3d 741 (5th Cir. 2015); NiGen Biotech, L.L.C. v. Paxton, 804 F.3d 389 (5th Cir. 2015). These authorities allow pragmatic sequencing of threshold issues. The panel chose to resolve sovereign immunity first, pretermitting standing and ripeness (citing James v. Hegar as an example of that approach).
James v. Hegar, 86 F.4th 1076 (5th Cir. 2023). Referenced to note that once sovereign immunity applies, other jurisdictional questions may be set aside. The panel followed that path here.
Block v. Texas Board of Law Examiners, 952 F.3d 613 (5th Cir. 2020); Warnock v. Pecos County, 88 F.3d 341 (5th Cir. 1996). These cases establish that dismissals on Eleventh Amendment grounds are without prejudice and under Rule 12(b)(1) for lack of jurisdiction. The panel remanded with instructions to enter dismissal without prejudice accordingly.
DeVillier v. Texas, 601 U.S. 285 (2024). The Supreme Court’s recent decision clarified that while the Takings Clause is “self-executing,” owners ordinarily vindicate federal takings rights through available state-law inverse condemnation remedies; the federal Constitution does not itself create a damages cause of action against a State in federal court. The panel cited DeVillier in expressly reserving Ambriz’s state-law rights and remedies.
PennEast Pipeline Co. v. New Jersey, 594 U.S. 482 (2021). Ambriz invoked PennEast’s “plan of the Convention” theory to argue that Texas consented to suit. The panel’s sovereign immunity holding necessarily rejects any such waiver here, distinguishing PennEast’s narrow context involving condemnation actions prosecuted under delegated federal eminent domain power. The opinion notes PennEast’s reasoning but does not extend it to § 1983 takings compensation claims against a state officer.

Legal Reasoning

The court’s analysis proceeds in two independent steps under Ex parte Young, neither of which Ambriz satisfied.

No ongoing violation of federal law. A Takings Clause violation, if any, occurred “as soon as” the Comptroller took custody and deposited the funds into the general revenue fund. At that moment, the alleged injury accrued. The State’s continued holding or use of those funds is a continuing consequence of a past event—not an ongoing constitutional violation. Papasan forecloses using Ex parte Young to redress mere “continuing effects.”
Relief sought is retrospective damages in substance. Although Ambriz styled his prayer as a declaration and injunction compelling the Comptroller to pay “just compensation” upon his future recovery of the principal, the relief compensates for the State’s past use. Under Edelman and Seven Up Pete, such relief would be paid from state coffers to remedy a past harm and therefore falls on the wrong side of the Ex parte Young line.

Two additional aspects of the court’s reasoning are important:

Merits not reached. The panel carefully avoided deciding whether TUPA effects a taking or whether interest is “just compensation” for the State’s use. Its references to Knick’s accrual rule were used solely to explain why the alleged violation was not ongoing, not to validate the merits of the takings theory.
Sovereign immunity controls the forum. Because Eleventh Amendment immunity deprives federal courts of jurisdiction over this suit against a state official in his official capacity, the dismissal must be without prejudice and under Rule 12(b)(1). The court underscored that state-law routes may remain available, explicitly citing DeVillier.

Impact

Unclaimed property litigation in federal court. Claimants who seek “just compensation” (including interest) for Texas’s use of unclaimed property will face a sovereign immunity bar in federal court if they proceed against the Comptroller in his official capacity under § 1983. Styling relief as prospective declaratory or injunctive relief will not avoid Edelman’s prohibition on retrospective monetary awards.
Ex parte Young’s narrowness in takings cases. The decision reiterates a structural tension: because “just compensation” is inherently monetary redress for a completed taking, classic Young-style relief typically is unavailable. Only truly prospective, non-monetary injunctions aimed at preventing an ongoing or imminent violation (e.g., stopping a continuing physical occupation) might fit; compensation for the past deprivation will not.
State-court path emphasized. Following DeVillier, property owners should expect to pursue takings-based compensation for state action in Texas state court via inverse condemnation or other state-law vehicles, not in federal court via § 1983. The Fifth Circuit expressly reserved opinion on those remedies.
Class actions and systemic relief. Attempts to obtain class-wide declarations fixing a compensation measure for unclaimed property (e.g., a uniform interest rate) will likely be treated as impermissible retrospective monetary relief when pressed in federal court against state officers. This channels policy-level changes to the legislative arena (e.g., amending TUPA) or to state-court litigation, not federal injunctive practice.
Plan-of-the-Convention arguments constrained. PennEast’s limited holding concerning condemnation proceedings under delegated federal eminent domain authority does not translate into a general waiver of state immunity for takings compensation claims seeking payment from the state treasury. Litigants should not expect PennEast to open a federal forum for claims like Ambriz’s.
Procedural posture discipline. The panel’s choice to decide sovereign immunity first, and to remand for dismissal without prejudice, signals continued adherence to pragmatic jurisdictional sequencing and careful separation between jurisdiction and merits in this area.

Complex Concepts Simplified

Eleventh Amendment sovereign immunity. A constitutional shield generally preventing private suits against a State in federal court. It extends to suits against state officials in their official capacities when the relief would be paid from the state treasury.
Ex parte Young exception. A narrow carve-out letting plaintiffs sue state officials in federal court to stop an ongoing violation of federal law with prospective relief (like an injunction to obey federal law going forward). It does not permit retrospective money awards.
Prospective vs. retrospective relief. Prospective relief prevents or stops ongoing illegal action; retrospective relief compensates for harm already done. Even if labeled “injunctive,” relief that requires the State to pay money for past violations is retrospective and barred.
Takings Clause and “just compensation.” The Fifth Amendment requires the government to pay when it takes private property for public use. “Just compensation” is usually the fair monetary value of what was taken. In money-use contexts, parties often argue that “interest” is the proper measure of compensation for the State’s time-value use of funds.
Unclaimed property statutes (TUPA). These laws require holders to turn over property deemed “abandoned” after specified dormancy periods. The State holds the property in custody and returns it when claimed. Under TUPA, Texas pays the principal but not interest earned during custody.
Knick accrual rule. A takings claim “accrues” the moment the government takes property without paying compensation; owners need not pursue state remedies before suing. But Knick does not abrogate sovereign immunity—States can still assert Eleventh Amendment defenses in federal court.
DeVillier’s state-law route. The Supreme Court has emphasized that property owners ordinarily vindicate federal takings rights via state-law inverse condemnation or similar vehicles, not by suing States directly for damages in federal court.

Conclusion

Ambriz v. Hancock cements a practical constraint on federal takings litigation against Texas officials: where the gravamen is to obtain money from the state treasury as “just compensation” for a completed taking, Ex parte Young offers no way around the Eleventh Amendment. The Fifth Circuit held that the alleged violation here was not ongoing and that the relief sought—payment of compensation upon future claim payout—was retrospective in substance. The court affirmed dismissal and remanded for entry of a jurisdictional dismissal without prejudice, leaving open whatever remedies may exist in Texas courts under state law.

Beyond this case, the opinion reinforces a doctrinal throughline from Edelman and Papasan to Knick and DeVillier: federal courts may enjoin true ongoing state violations of federal law, but they may not order States to pay for past harms under the guise of prospective relief; and compensation claims against States for alleged takings typically belong in state court. For owners of unclaimed property seeking interest or other compensation for the State’s use, the strategic implication is clear—pursue state-law remedies in Texas courts or seek legislative change to TUPA’s no-interest rule, rather than attempting to fit such claims within Ex parte Young in federal court.