This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiffs owned a lot in a subdivision subject to restrictive covenants limiting land use to residential purposes. The Defendant, a municipality, purchased an adjacent lot in the subdivision and constructed a storm drainage pond on it, violating the restrictive covenants. The Plaintiffs claimed this diminished the value of their property and sought compensation (paras 1-2).
Procedural History
- District Court, Valencia County: The court granted the Defendant's motion to dismiss the breach of restrictive covenants claim, leaving only the inverse condemnation claim. The jury awarded the Plaintiffs $50,000 in damages for the diminution in property value caused by the violation of the restrictive covenants. The Defendant's motion for judgment notwithstanding the verdict (JNOV), remittitur, or a new trial was denied (paras 3, 18).
Parties' Submissions
- Plaintiffs: Argued that the restrictive covenants constituted a compensable property right under the New Mexico Constitution and that the violation of these covenants caused a diminution in the value of their property (paras 1, 5-6, 15-16).
- Defendant: Contended that restrictive covenants are not compensable property rights under eminent domain law, that the damages awarded were unsupported by sufficient evidence, and that the Plaintiffs' injury was not different in kind from that suffered by the general public (paras 6, 15, 17-18).
Legal Issues
- Are restrictive covenants compensable property rights under the New Mexico Constitution's eminent domain provisions?
- Was the evidence sufficient to support the damages awarded for the diminution in property value?
- What is the proper method for calculating damages in an inverse condemnation case involving restrictive covenants?
Disposition
- The Court of Appeals held that restrictive covenants are compensable property rights under the New Mexico Constitution.
- The Court reversed the $50,000 damages award, finding it unsupported by sufficient evidence, and remanded the case for recalculation of damages using the proper valuation method (paras 1, 27, 31).
Reasons
Per Castillo J. (Bustamante and Kennedy JJ. concurring):
Restrictive Covenants as Property Rights: The Court determined that restrictive covenants are equitable easements and constitute valuable property rights under New Mexico law. As such, their violation by a public entity constitutes a compensable taking under the New Mexico Constitution (paras 5-9). The Court rejected the Defendant's reliance on minority jurisdictions that do not recognize restrictive covenants as compensable, emphasizing that New Mexico law treats them as property interests (paras 9-11).
Damages Calculation: The Court clarified that damages for the taking of restrictive covenants must be calculated using the "before and after" rule, which measures the difference in fair market value of the benefitted property immediately before and after the taking (paras 13, 18). The Court found that the Plaintiffs' appraiser failed to apply this method, and the Plaintiffs' testimony did not provide sufficient evidence of fair market value (paras 21-26).
Date of Taking: The Court identified September 26, 2000, the date construction of the drainage pond began, as the date of the taking for purposes of calculating damages (paras 28-29).
Reversal and Remand: The Court reversed the damages award and remanded the case for recalculation of damages in accordance with the proper valuation method (paras 27, 31).