Town of Monument v. State of Colorado, 2018 COA 148

The Town of Monument bought a lot in a residential subdivision intending to build a municipal water storage tank, but a recorded restrictive covenant banned such structures across the subdivision.
The Town filed a condemnation action seeking to eliminate the covenant on its lot by eminent domain; other lot owners intervened claiming the covenant benefitted them and thus was a compensable property interest.
The State Board of Land Commissioners (Land Board) owns several benefitted lots and argued that if the covenant is compensable, the Town cannot condemn it because eminent domain cannot be used against the State.
The district court ruled the covenant was a compensable property interest (relying on City of Steamboat Springs v. Johnson) and the parties stipulated to dismissal with prejudice; the Town appealed solely on whether Smith v. Clifton controls.
The Court of Appeals held that Smith v. Clifton Sanitation District announces a broad rule that such restrictive covenants are not compensable property interests in eminent domain, reversed the district court, and remanded for further proceedings.

Issue	Plaintiff's Argument (Town)	Defendant's Argument (Intervenors/Land Board)	Held
Whether a restrictive covenant that bars certain uses is a compensable property interest for eminent domain purposes	Smith controls: restrictive covenants of this type are not compensable; Town can condemn without paying all lot owners	Johnson (and district court) controls: covenant is compensable; Lot owners must be paid and Land Board immunity may block condemnation	Held for Town: Smith is controlling Colorado Supreme Court precedent; restrictive covenant is not a compensable property interest in an eminent domain case
Whether the Court of Appeals has jurisdiction to review the ruling after a stipulation dismissing the case with prejudice	The dismissal was a final, appealable judgment and preserved appellate review of the underlying legal ruling	The Land Board argued the stipulation deprived the court of jurisdiction and the order was not appealable	Held for Town: dismissal with prejudice produced a final, appealable judgment; appellate review of earlier orders that merged into the final judgment is permitted

Smith v. Clifton Sanitation Dist., 134 Colo. 116, 300 P.2d 548 (Colo. 1956) (restrictive covenant not compensable in eminent domain; parties may not contractually restrict eminent domain)
City of Steamboat Springs v. Johnson, 252 P.3d 1142 (Colo. App. 2010) (court of appeals held restrictive covenant compensable; discussed by district court but treated as dictum by this division)
Town of Parker v. Colo. Div. of Parks & Outdoor Recreation, 860 P.2d 584 (Colo. App. 1993) (eminent domain cannot be exercised against the State)
Direct Mail Servs., Inc. v. Best, 729 F.2d 672 (10th Cir. 1984) (cited as treating Smith as adopting a broad rule)