Forest View Co. v. Town of Monument

• Decision Date: 08 June 2020
• Docket Number: Supreme Court Case No. 18SC793
• Citation: 464 P.3d 774
• Parties: FOREST VIEW COMPANY and Raymond Decker, Petitioners, v. TOWN OF MONUMENT, a Statutory Municipality of the State of Colorado, Respondent.
• Court: Colorado Supreme Court

464 P.3d 774

FOREST VIEW COMPANY and Raymond Decker, Petitioners,

v.TOWN OF MONUMENT, a Statutory Municipality of the State of Colorado, Respondent.

Supreme Court Case No. 18SC793

Supreme Court of Colorado.

June 8, 2020

Attorneys for Petitioners: Hanes & Bartels LLC, Richard W. Hanes, Brenda L. Bartels, Colorado Springs, Colorado

Attorneys for Respondent: Murray Dahl Beery & Renaud LLP, Joseph Rivera, Lakewood, Colorado

Attorneys for Amicus Curiae Colorado Municipal League: Laurel A. Witt, David W. Broadwell,Denver, Colorado

En Banc

JUSTICE HART delivered the Opinion of the Court.

¶1 The Town of Monument (the "Town") purchased a piece of property on which it planned to build a water tower. Neighboring property owners objected, arguing that the property was subject to a restrictive covenant limiting construction to single-family residences. According to the property owners, if the Town were to violate that covenant by building a water tower, the Town would be taking the restrictive covenant from each of the covenant-subject properties, and it would therefore have to compensate the property owners for the diminution in value caused by that taking.

¶2 It is well settled that property owners adjacent to a government project that diminishes the value of their property are not entitled to compensation from the government for that diminution. But does the existence of a restrictive covenant change the analysis? We answered this question over half a century ago in the negative, holding in Smith v. Clifton Sanitation District , 134 Colo. 116, 300 P.2d 548 (1956), that when state or local government acquires property subject to a restrictive covenant and uses it for purposes inconsistent with that covenant, "no claim for damages arises by virtue of such a covenant as in the instant case, in favor of the owners of other property" subject to the covenant. Id . at 550.

¶3 Petitioners here ask us to confine Smith to its facts or to overrule it entirely. We decline to do either. Instead, we reaffirm that where a government entity has obtained property for public purposes, the government may use that land for a purpose inconsistent with a restrictive covenant without compensating all of the other landowners who are subject to that restrictive covenant.

I. Facts and Procedural History

¶4 In September 2016, the Town of Monument purchased a parcel of real property ("Lot 6") from private landowners located in Forest View Estates IV, a 39-lot subdivision in El Paso County whose lots are subject to a restrictive covenant.

¶5 The Town intended to build a million-gallon municipal water storage tank on the property, but due to the residential-use limitation in place, the Town felt that it needed to extinguish the restrictive covenant encumbering Lot 6 to proceed with construction. Specifically, the portion of the covenant at issue here stated that "[a]ll lots shall be known and described as residential lots and shall be used only for private, custom, site-built homes," and "[n]o structure shall be erected ... on any lot other than one single-family dwelling." Believing that it could not construct the water tower without either breaching the covenant or extinguishing the encumbrance, the Town sought to exercise its eminent domain authority.

¶6 In January 2017, the Town filed a petition in condemnation in the El Paso County District Court pursuant to sections 31-15-707(1)(e), C.R.S. (2019), and 38-1-105(5), C.R.S. (2019), which together permit a government entity that has purchased property, instead of acquiring it through its power of eminent domain, to perfect title to that property.

¶7 In February 2017, Forest View Company, Raymond Decker, and John Does 1–40 (the latter all property owners in the same subdivision as Lot 6) (collectively, the "intervenors") intervened in the action, arguing, among other things, that they were owed reasonable compensation for the decrease in value to their lots and homes brought about by lifting the restrictive covenant from Lot 6. The intervenors argued that the covenant encumbering each lot was an independent property interest held by the owner of the lot and that the Town was trying to take that property interest through eminent domain without providing just compensation as required by article II, section 15 of the Colorado Constitution.

¶8 Both the Town and the intervenors agreed that the question of whether the other property owners in the subdivision had to be compensated for any drop in the value of their properties turned on the scope of our holding in Smith . The parties stipulated that if Smith controlled, then the intervenors had no standing and the condemnation could proceed unimpeded.

¶9 In July 2017, the district court issued an order finding that our holding in Smith , particularly the language which stated that "[p]arties may not by contract between themselves restrict the exercise of the power of eminent domain," 300 P.2d at 550, was dicta applicable only to the unique factual context of the case. The court noted that the specific restrictive covenants at issue in Smith were recorded "on the eve of filing" the condemnation action in an obvious effort to thwart the government's exercise of eminent domain. Accordingly, the court found that Smith was distinguishable and that the Forest Valley Estates restrictive covenants created a compensable property interest for each property owner whose land was subject to those covenants.

¶10 The Town appealed, raising a single issue—whether Smith in fact controlled the outcome—and a division of the court of appeals reversed. Town of Monument v. Colorado , 2018 COA 148, ¶¶ 3–4, 467 P.3d 1126. The division reasoned that, although the facts in Smith were unique, the decision's holding "broadly applies to any situation in which a restrictive covenant such as the one at issue is interposed as an obstacle to a condemning authority's attempt to obtain property for public use through eminent domain." Id . at ¶ 14.

¶11 The intervenors petitioned for certiorari review and we granted the petition.¹

II. Analysis

¶12 We begin by discussing the appropriate standard of review and applicable principles of statutory construction. We then turn to a discussion of our decision in Smith to determine whether the rule it espouses is confined to the particular facts of that case. We conclude that it is not. We next explain why the rule in Smith is consistent with our interpretation of article II, section 15 of the Colorado Constitution more generally. Finally, we consider the policy implications associated with extending takings jurisprudence to the claims asserted here. Because we conclude that there are no sound reasons to depart from our holding in Smith , we affirm the judgment of the court of appeals.

A. Standard of Review and Stare Decisis

¶13 While we defer to the trial court's findings of fact in condemnation proceedings, we review a trial court's legal conclusions de novo. Glenelk Ass'n v. Lewis , 260 P.3d 1117, 1120 (Colo. 2011). Likewise, we review questions of constitutional and statutory interpretation de novo. Ziegler v. Park Cty. Bd. of Cty. Comm'rs , 2020 CO 13, ¶ 11, 457 P.3d 584, 588.

¶14 With regard to case law, the doctrine of stare decisis requires that we adhere to precedent in order to promote "uniformity, certainty, and stability of the law." People v. Porter , 2015 CO 34, ¶ 23, 348 P.3d 922, 927 (quoting People v. LaRosa , 2013 CO 2, ¶ 28, 293 P.3d 567, 574 ). We adhere to the doctrine "[a]bsent ‘sound reason for rejecting it.’ " Id . (quoting People v. Blehm , 983 P.2d 779, 788 (Colo. 1999) ); see also Creacy v. Indus. Comm'n , 148 Colo. 429, 366 P.2d 384, 386 (1961) ("Under the doctrine of stare decisis courts are very reluctant to undo settled law.").

B. Smith v. Clifton Sanitation District

¶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 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...