Appeals Court Upholds Six-Year Easement Limitation | Eastern North Carolina Now

    Publisher's note: The author of this post is Michael Lowrey, who is an associate editor for the Carolina Journal, John Hood Publisher.

Judges: Utility should ask legislature for extensions, cost relief

    RALEIGH — Utilities rely on easements to control a considerable amount of land in North Carolina. But state law also places limits on the amount of time a utility has to enforce easements it holds — currently, six years. The state's second highest court recently affirmed that six-year statute of limitations despite an attempt by Duke Energy to argue that the enforcement period should be longer.

    In 1951, J.L. and Pearl Wallace entered into an agreement granting Duke Power, as it was then called, a 200-foot-wide easement to run power transmission lines on property the couple owned in Mecklenburg County. The area covered by the easement was to be kept free of buildings and trees. The easement was recorded by the Mecklenburg County Register of Deeds.

    The Wallace property changed hands over the years, with John Wieland Homes and Neighborhoods of the Carolinas eventually acquiring it and building houses on it. One of the houses Wieland built, located on Lot 533 in Phase 8 of the Skybrook neighborhood in Huntersville, extended into Duke's easement by a little more than 8 feet.

    A certificate of occupancy was issued for the house on Oct. 11, 2006. Wieland in turn sold the home to Herbert Gray in 2007.

    Duke eventually learned that Gray's house sat within the easement. In February 2010, the company sent a letter informing Gray that his house encroached on its right of way. It would not be until Dec. 12, 2012, though, that Duke sued Gray, seeking a judgment that that the homeowner must remove the encroachment from its easement.

    Superior Court Judge Richard Boner dismissed Duke's lawsuit, finding it came after the statute of limitations had ended.


    Before the Court of Appeals, Duke made a variety of arguments saying a six-year statute of limitations shouldn't apply. The N.C. Electric Membership Corporation, the N.C. Association of Electric Cooperatives, PSNC Energy, and Piedmont Natural Gas Co. filed amicus briefs supporting Duke's position. The appeals court was, however, not persuaded.

    "N.C. Gen. Stat. § 1-50(a)(3) provides for a six-year statute of limitations for injury to an incorporeal hereditament [aka easement], which includes claims for encroachment upon an easement. Because plaintiff's claim for encroachment was filed more than six years after its claim accrued, the claim was barred by the statute of limitations," wrote Judge Sanford Steelman for the court.

    Duke argued that the statue of limitations should begin on the date it knew or reasonably should have known of an encroachment. In support of its argument, it cited a 1999 Court of Appeals case called Karner v. Roy White Flowers, Inc. The appeals court said Karner did not apply to the current controversy. It also questioned whether the case had precedential value as the N.C. Supreme Court had reversed the appeals court decision.

    Even if the appeals court had agreed with Duke on its argument related to Karner, it still would have ruled against the utility in the current dispute, noting that "the statute of limitations had expired when plaintiff filed suit," wrote Steelman.

    "It is undisputed that the house was completed, at the latest, by 11 October 2006, when the Mecklenburg County Land Use and Environmental Services Agency issued Wieland a Certificate of Occupancy for the house. Plaintiff should reasonably have known of the existence of a completed house that encroached on its easement, and plaintiff's claim was not filed until more than six years after this date."

    Duke also advanced a number of policy arguments claiming that a six-year statute of limitations was too short, including that the utility would incur "the substantial cost of continuously patrolling [its] easements, [resulting] in higher rates." The appeals court also rejected these rationales, saying that assigning responsibility for those costs was a matter for the legislature rather than the courts to decide.

    N.C. Court of Appeals decisions are controlling interpretations of state law unless overruled by the state Supreme Court. Because the decision by the three-judge panel of the appeals court was unanimous, the high court is not required to hear the case if Duke appeals the ruling.

    The case is Duke Energy Carolinas, LLC v Gray, et al. (14-283).