Opinion ID: 4539740
Heading Depth: 2
Heading Rank: 2

Heading: Smith v. Clifton Sanitation District

Text: ¶15 In Smith, the Clifton Sanitation District (the “District”) initially sought to purchase a 21-acre tract of land from its owner, Clyde Peterson, in order to construct a sanitation disposal system for municipal use on that land. 300 P.2d at 548. While the purchase negotiations were ongoing, a group of landowners, including Peterson, executed a restrictive covenant that prohibited use of their land for certain purposes, including the sanitation district’s intended use. Id. at 549. Peterson ultimately refused to sell the property to the District, and the District filed a condemnation proceeding. Id. at 548. The landowners who owned property subject to the restrictive covenant sought to intervene in the condemnation proceeding. Id. at 549. ¶16 This court noted that “[i]t requires no imagination to determine why the restrictive covenants were executed and recorded on the eve of the filing of the 8 condemnation case.” Id. We further opined that “such a scheme” as this apparent effort to interfere with the District’s plans was “contrary to sound public policy and invalid as against the constitutional and statutory rights of the condemner.” Id. ¶17 In reaching this conclusion, we stated that: We think it is fundamental that where a company, corporation or agency of the state is vested with the right of eminent domain and has acquired property thru [sic] eminent domain proceedings and is using the property for public purposes, no claim for damages arises by virtue of such a covenant as in the instant case, in favor of the owners of other property on account of such use by the condemner. Were the rule otherwise the right of eminent domain could be defeated if the condemning authority had to respond in damages for each interest in a large subdivision or area subject to deed restrictions or restrictive covenants. Id. at 550. We further concluded that the restrictive covenant in that case was more akin to a negative easement or equitable servitude, “not a positive easement or right in the land itself which would permit of the physical use or occupation of the Peterson land by the other property owners who signed the covenant.” Id. And while we determined that a right enforceable in equity between the parties to the contract likely existed as a result of the restrictive covenant, parties could not “by contract between themselves restrict the exercise of the power of eminent domain.” Id. ¶18 As the intervenors rightly point out, our decision in Smith is reasonably susceptible of two readings: either as stating a general rule that restrictive 9 covenants are not compensable property interests for purposes of eminent domain, or simply disapproving of the particular circumstances of the restrictive covenant at issue in that case. They cite the language in Smith referring to a “scheme . . . contrary to sound public policy and invalid as against the constitutional and statutory rights of the condemner” to argue that our ruling turned on the particular facts of that case. Id. at 549; see also City of Steamboat Springs v. Johnson, 252 P.3d 1142, 1146 (Colo. App. 2010) (reading Smith as limited to its facts and concluding that a restrictive covenant was a compensable property interest). But as the court of appeals here concluded, the “‘scheme’—or, put another way, the property owners’ intent—wasn’t the fulcrum of the court’s decision. Had it been so, the court wouldn’t have needed to articulate the rule.” Town of Monument, ¶ 15. ¶19 We read the rule articulated in Smith, which states that “no claim for damages arises by virtue of such a covenant . . . in favor of the owners of other property on account of such use by the condemner,” as applicable beyond the facts of that case. 300 P.2d at 550. The question we must answer, then, is whether sound reasons exist for departing from this settled precedent. We conclude that they do not. 10 C. Claims Cognizable Under Article II, Section 15 of the Colorado Constitution ¶20 Article II, section 15 provides that “[p]rivate property shall not be taken or damaged, for public or private use, without just compensation.” Colo. Const. art. II, § 15. “A taking occurs when a[] [government] entity clothed with the power of eminent domain substantially deprives a property owner of the use and enjoyment of that property.” City of Northglenn v. Grynberg, 846 P.2d 175, 178 (Colo. 1993). For a landowner to be entitled to compensation under our constitution, “there must be either a taking or a damaging of private property without just compensation.” Id. at 179. We have previously explained that article II, section 15 of the Colorado Constitution encompasses three types of claims: (1) a taking that involves the government’s physical occupation of land; (2) a regulatory taking, in which extensive regulatory interference deprives a property owner of all or almost all use of his land; and (3) a damaging, in which governmental activity has damaged an adjacent landowner’s land. Animas Valley Sand & Gravel, Inc. v. Bd. of Cty. Comm’rs, 38 P.3d 59, 63 (Colo. 2001). The intervenors do not make any of these claims. ¶21 The intervenors have not asserted that the Town is physically occupying their land. Their claims, rather, might be understood as asserting that the violation of the restrictive covenant on Lot 6 is effectively a physical occupation of the restrictive covenants held by the other landowners who are subject to the 11 covenant. But a restrictive covenant is intangible and cannot be physically occupied. This highlights an essential difference between a positive easement—a right to occupy another person’s land for some purpose—and a negative easement—a right to prohibit certain conduct on another person’s land—in the takings context. Jon W. Bruce & James W. Ely, Jr., The Law of Easements & Licenses in Land § 2:10 (2019) (explaining the distinction between affirmative and negative easements). If the Town, when it acquired Lot 6, intended to extinguish a right of way over Lot 6, then the Town would be physically occupying the land subject to that right of way. Here, however, in violating the restrictive covenant, the Town is not physically occupying any property other than Lot 6. ¶22 The intervenors’ claims are logically more analogous to regulatory taking claims. A regulatory taking occurs when a government entity does not physically occupy the land, but government action places an impermissible burden on certain landowners, effectively “forcing some people alone to bear public burdens that, in fairness and justice, should be borne by the public as a whole.” Bd. of Cty. Comm’rs v. Flickinger, 687 P.2d 975, 983 (Colo. 1984). However, a regulatory taking can only be established if the regulation imposes a “very high” level of interference with the property owner’s use of the land—that is, “a mere decrease in property value is not enough.” Animas Valley Sand & Gravel, 38 P.3d at 65; see also Van Sickle v. Boyes, 797 P.2d 1267, 1271 (Colo. 1990) (noting that landowners do not 12 have a constitutional right to the most valuable use of their property); Sellon v. City of Manitou Springs, 745 P.2d 229, 234 (Colo. 1987) (noting the same). Therefore, without evidence of more than diminished property value, regulatory takings law cannot save the intervenors’ claims. ¶23 Finally, the intervenors have not claimed that their land was “damaged” in violation of article II, section 15. In any event, “[t]he ‘damage’ clause only applies to situations in which the damage is caused by government activity in areas adjacent to the landowner’s land.” Animas Valley Sand & Gravel, 38 P.3d at 63; see also Pub. Serv. Co. of Colo. v. Van Wyk, 27 P.3d 377, 388 (Colo. 2001) (“The word ‘damaged’ is in the Colorado Constitution in order to grant relief to those property owners who have been substantially damaged by public improvements made upon land abutting their lands, but where no physical taking by the government has occurred.”); Troiano v. Colo. Dep’t of Highways, 463 P.2d 448, 449–50 (Colo. 1969) (applying “the rule long established in Colorado” that there may be recovery “[w]hen damages are occasioned an abutting owner by an improvement in the street in front of his property” (quoting City of Pueblo v. Strait, 36 P. 789, 792 (Colo. 13 1894))). Thus, the restrictive covenant holders whose land is not adjacent to Lot 6 could not bring a claim for “damage” to their land.2 ¶24 The rule we announced in Smith is thus consistent with our takings jurisprudence more generally. The intervenors correctly note that a majority (albeit a narrow one) of jurisdictions that have considered this question have reached the opposite conclusion to the one we reached in Smith. Compare Anderson v. Lynch, 3 S.E.2d 85, 87 (Ga. 1939) (holding that owners of adjacent lots did not have a compensable ownership interest in a residential-use restrictive covenant), and Doan v. Cleveland Short Line Ry. Co., 112 N.E. 505, 506–07 (Ohio 1915) (holding that building restrictions in lot deeds do not apply to any agency vested with the right of eminent domain), with S. Cal. Edison Co. v. Bourgerie, 507 P.2d 964, 965 (Cal. 1973) (holding that property owners are entitled to be compensated for the violation of building restrictions in eminent domain proceedings), Horst v. Hous. Auth., 166 N.W.2d 119, 121 (Neb. 1969) (holding that, where taking of land by eminent domain permits use violative of restrictions imposed by lawful covenants, there is a taking from property owners for whose benefit the 2Because no damage claim was asserted here, we do not consider or express an opinion as to whether the owners of the property immediately adjacent to Lot 6 would have such a claim. 14 restrictions were imposed), and Leigh v. Vill. of Los Lunas, 108 P.3d 525, 527 (N.M. Ct. App. 2004) (holding that easements in the form of restrictive covenants constitute valuable property rights requiring compensation). See also Restatement (Third) of Property: Servitudes § 7.8 reporter’s note (Am. Law Inst. 2000) (describing the majority and minority positions); R.E. Barber, Annotation, Eminent Domain: Restrictive Covenant or Right to Enforcement Thereof as Compensable Property Right, 4 A.L.R. 3d 1137 (1965) (describing the same). They urge us to join the majority view and conclude that, although it is a different species of claim than any Colorado court currently recognizes, a claim for compensation of the sort asserted here is cognizable under article II, section 15. D. Strong Policy Concerns Counsel Against Extending Colorado Takings Jurisprudence to Recognize the Claims Asserted Here ¶25 We are sympathetic to the frustration of the intervenors, who will almost certainly see a drop in the value of their properties as a result of the Town’s decision to build a water tower on Lot 6. But, as we have previously explained, “[t]akings jurisprudence balances the competing goals of compensating landowners on whom a significant burden of regulation falls and avoiding prohibitory costs to needed government regulation.” Animas Valley Sand & Gravel, 38 P.3d at 63. When we consider the balance of the burdens that would be faced by a government agency seeking to provide public services against the harm to the 15 property owners if we were to adopt the rule proposed by the intervenors, the balance ultimately weighs against the intervening property owners. ¶26 First, the property owners have not actually had their restrictive covenants taken; they can still enforce those covenants against all other private owners. Second, the harm they have suffered is a diminution in the value of their property. If that is not sufficient to require compensation in the context of a regulatory taking, it is unclear why it would be sufficient in this context. ¶27 Finally, the potential burden on municipalities like the Town were we to reverse Smith would be enormous. As we explained in Smith, requiring compensation for property owners other than those whose land is being condemned “would place a premium on property owners of adjacent property to attempt to thwart a public improvement by the execution of restrictive covenants and subject the public agency seeking to acquire lands for proper purposes to the payment of speculative and unwarranted damages.” 300 P.2d at 550. And, putting aside questions of covenant holders’ intentions, the burden on municipalities and other government entities if every holder of a covenant had to be included in a condemnation action involving development that does not conform to a restrictive covenant would be immense. 16 ¶28 Title 38 places a broad range of obligations on a government entity seeking to exercise its eminent domain authority. In order for a petition in condemnation to be filed, the condemning authority must: • Provide adequate notice “to anyone having an interest of record in the property involved,” and “[i]f the property has an estimated value of five thousand dollars or more, such notice shall advise that the condemning authority shall pay the reasonable costs of an appraisal.” § 38-1-121(1),