A Huntersville man might have to demolish his $600,000 house in Skybrook because a corner of the building encroaches on a Duke Energy easement.
The utility company’s suit against Herbert Gray would have been barred by a six-year statute of limitations that the North Carolina Court of Appeals applied to such actions with its 2007 decision in Pottle v. Link.
But the state Supreme Court unanimously overruled Pottle Aug. 19 with a decision that extends the clock from six to 20 years – a move that utility companies across the state are applauding – and allows Duke to move forward with its suit against Gray. Gray could not be reached for comment.
“We’re disappointed with the outcome,” said one of Gray’s attorneys, John Buric of James, McElroy & Diehl in Charlotte. His law partner, John Arrowood, wrote the Pottle decision while serving as a judge at the Court of Appeals. He left the bench in 2008.
Gray’s home protrudes about 6 feet onto Duke’s easement, but the corner in question includes part of the foundation, garage and master bedroom, according to Buric.
“It’s structural and it may require the removal of the home,” he said. “I don’t think it has any real material effect on Duke other than Duke has the right to maintain the easement.”
Gray, in turn, sued homebuilder John Wieland Homes and Neighborhoods of the Carolinas Inc., who, in turn, sued surveyors Yarbrough-Williams & Houle Inc., Lucas-Forman Inc., and Carter Land Surveyors & Planners Inc.
Duke’s attorneys at Womble Carlyle in Charlotte could not be reached to discuss the decision. They had argued in Duke’s brief that continuing to apply the shorter statute of limitations to encroachment actions would jeopardize the state’s infrastructure and result in significantly higher utility costs for state residents.
Before losing at the high court, Gray found success at the trial court, where a judge ruled that Duke should have been aware of the encroachment when the certificate of occupancy was issued for Gray’s house in October 2006. Duke sued Gray in December 2012.
Mecklenburg County Superior Court Judge Richard Boner granted Gray’s motion for summary judgment based on the six-year statute of limitations, and the Court of Appeals affirmed the ruling. A party to a law suit may make a motion for summary judgment before the trial begins, arguing that there is no genuine dispute of the facts and that the party should win under existing law. Since the Supreme Court reversed the lower courts’ rulings, the case can now proceed in Superior Court.
The case hinged on interpretations of a 20-year statute of limitations that applies to real property and a six-year statute of limitations that applies to an intangible right in land, such as an easement.
In overturning the lower courts, Justice Robert Edmunds determined that Duke was trying to recover real property that Gray had taken by encroaching on the easement. Therefore, the 20-year statute of limitations applied.
“Not only do we conclude that this result is dictated by the language found in the applicable statutes and cases, we acknowledge that utility facilities crisscross the state above, on, and beneath the ground,” Edmunds wrote. “Their accompanying easements are not always readily subject to routine inspection by the owning utility.”
He added that he and his fellow justices did not believe that legislators “intended that a utility’s right to maintain such easements could be successfully challenged in a time as short as six years.”
Duke had support from the North Carolina Association of Electric Cooperatives, North Carolina League of Municipalities and the Public Service Company of North Carolina. All three filed separate “friend of the court” briefs urging the court to overturn the Pottle decision.
“This is something that has been kind of festering since 2007,” said Matthew Rhoad of Smith Anderson in Raleigh. He wrote PSCNC’s amicus brief. “It never would have happened if utility companies had been involved [in Pottle] at the trial court level. Pottle was really a break from what had always been the case.”
The Supreme Court had been poised to hear arguments in Pottle and Duke filed an amicus brief in the case, but the action was dismissed after the parties settled. Afterward, Rhoad said, he began searching for another opportunity to challenge Pottle.
After Gray reached the Supreme Court, Rhoad wrote in PSCNC’s brief that Pottle was “contrary to long-established North Carolina law and, should it be upheld, would create an enormous hardship for public utility companies, which potentially could impact all North Carolina citizens by way of rate increases and could result in safety hazards for the general public and adversely impact service reliability.”
Rhoad added that PSCNC lacked the manpower that would be needed to “monitor and police every one of their tens of thousands of easements every six years, much less act to remove all encroachments along their collective 25,000 miles of natural gas pipelines within six years.”
The Association of Electric Cooperatives offered a similar argument, while the League of Municipalities urged the Supreme Court to recognize that “injuries to public service easements are harmful to the general public health” and that “easements are to be accorded the highest level of protection against trespassers.”