Creegan v. State
111082
Kan.Mar 24, 2017Background
- Grande Oaks subdivision lots were subject to a Declaration of Restrictions limiting use to single‑family residences; the covenants "run with the land."
- In 1999 KDOT purchased several Grande Oaks lots, later using them for trailers, construction, and ultimately building permanent bridges/pavement in a nonconforming public use.
- Plaintiffs (neighboring lot owners) sued in inverse condemnation in 2012, claiming KDOT’s nonconforming use violated the subdivision restrictive covenants and deprived them of property rights.
- The district court granted KDOT summary judgment, concluding plaintiffs alleged no physical taking or substantial physical damage required under Kansas law.
- The Court of Appeals reversed, holding restrictive covenants are property interests and KDOT’s violation required compensation; the Kansas Supreme Court granted review.
- The Kansas Supreme Court affirmed the Court of Appeals’ result, holding violation of restrictive covenants can constitute a compensable taking under the Fifth Amendment and remanding to determine just compensation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether restrictive covenants constitute "property" for takings purposes | Restrictive covenant is a real‑property interest (or at least a compensable property right) that was taken | Covenant is at most a contractual right; EDPA and Kirkpatrick require physical damage or transfer of title for compensation | Covenant rights (even if characterized as contract rights) are property under the Fifth Amendment and can be taken for public use requiring compensation |
| Whether KDOT’s nonconforming use amounted to a compensable taking | KDOT’s use permanently extinguished plaintiffs’ covenant rights (a "stick" in the bundle) — therefore a taking | Recovery requires proof of physical "damage" as interpreted in Kirkpatrick/EDPA (substantial, inevitable physical harm) | The core inquiry is loss of legal control (extinguishment of covenant right); physical damage is not a prerequisite to a constitutional taking |
| Applicability of EDPA’s "damage" language to covenant violations | Plaintiffs can recover both for any physical damage (if proved) and for the extinguished covenant right | EDPA and precedent limit compensation to physical takings/damage; nonphysical covenant violations are noncompensable | EDPA’s damage language is relevant for physical‑damage claims, but the Fifth Amendment independently protects intangible property rights such as covenant enforcement rights |
| Remedy / measure of compensation | Plaintiffs seek just compensation for loss of covenant enforcement and any resultant parcel damage (diminution in market value) | KDOT warns of policy problems and argues diminution alone is insufficient | Remand for district court: measure includes (1) EDPA/Kirkpatrick proof for any physical damage and (2) difference in fair market value of the dominant estate before and after the covenant right was extinguished (value of the "stick"). |
Key Cases Cited
- Estate of Kirkpatrick v. City of Olathe, 289 Kan. 554 (Kan. 2009) (interpreting EDPA’s "damage" requirement and substantial/inevitable physical damage standard)
- Board of Reno County Comm'rs v. Asset Mgmt. & Marketing L.L.C., 28 Kan. App. 2d 501 (Kan. Ct. App. 2001) (treating restrictive covenants as interests that can be addressed via inverse condemnation)
- Persimmon Hill First Homes Ass'n v. Lonsdale, 31 Kan. App. 2d 889 (Kan. Ct. App. 2003) (discussing enforcement and effects of restrictive covenants)
- Southern Cal. Edison Co. v. Bourgerie, 9 Cal. 3d 169 (Cal. 1973) (restrictive covenants can be compensable property in condemnation)
- Ruckelshaus v. Monsanto Co., 467 U.S. 986 (U.S. 1984) (property interests are defined by state law; constitutional protection applies to those rights)
- Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (U.S. 1980) (state may not transform private property into public property without compensation)