Introduction 

A lawsuit has two basic parts: (1) an alleged harm to a right and (2) the remedy sought to redress the harm. The harm is the source of liability. Frequently, clients and lawyers focus almost exclusively on the question of liability with little thought about the precise remedy sought. The recent case of Duke Energy Carolinas v. Gray[1], 2016WL4410713 (August 19, 2016) illustrates that the remedy sought can make all of the difference.

Duke Energy Carolinas v. Gray

Facts 

In Duke Energy, the remedy sought by Duke was injunctive relief and other relief “to regain control over the part of its easement now occupied by defendant’s house” p. 5. Because Duke sought to recover real property, Duke had twenty (20) years to file its lawsuit. Had Duke sought monetary damages for injury to its easement, Duke’s lawsuit would have been barred under a six-year statute of limitations.

In 1951, Duke secured an easement and constructed an overhead 100,000-volt electrical transmission line. A 230,000-volt electrical transmission line was constructed within the easement in 1957 and 1958.

Beginning in 2005, various surveying work was undertaken to develop the lot on which the easement was located. In January and February 2006, a homebuilding company dug footings and poured the foundation for a house on the lot. The company completed construction of the house and a certificate of occupancy for the house was issued in October 2006. In early 2007, the defendant, a homeowner, purchased the house and lot from the building company.

In February 2010, the homeowner received a letter from Duke alleging that a portion of the house was encroaching on Duke’s right-of-way. Duke requested the homeowner to remove the encroachment. When the homeowner did not remove the encroachment, Duke filed a lawsuit in December 2012.

The homeowner added the homebuilding company to the lawsuit and the homebuilding company added three surveying companies it had engaged in connection with developing the lot. The homeowner and the homebuilding company filed a motion for summary judgment. They contended that the six-year statute of limitations applied to Duke’s lawsuit because it was a lawsuit for injury to an incorporeal hereditament. The Superior Court granted summary judgment in favor of the homeowner and homebuilding company and against Duke. Duke appealed to the North Carolina Court of Appeals.

The North Carolina Court of Appeals affirmed the Superior Court’s summary judgment against Duke. According to the North Carolina Court of Appeals, N.C.G.S. § 1-50(a)(3) established a six-year statute of limitations for claims based upon injury to an incorporeal hereditament. (emphasis added). The Court of Appeals reasoned that the plain reading of this statute and the North Carolina Court of Appeals’ prior case of Pottle v. Link, 187 N.C. App. 746 (2007) demonstrated that this six-year statute of limitations applied to Duke’s lawsuit. Specifically, Duke’s right-of-way was an incorporeal hereditament and the plain language of this statute applied to an injury to an incorporeal hereditament.

The Court of Appeals recognized that Duke’s policy argument that a six-year statute of limitations should not apply to utility companies was “not without merit”, but this argument fell outside the Court of Appeals’ purview.

The North Carolina Supreme Court’s Decision

The North Carolina Supreme Court agreed that Duke’s right-of-way was an incorporeal hereditament. It noted that N.C.G.S. § 1-50(a)(3) was codified in Article 5 and Article 5 “by definition” does not apply to recovery of real property. p. 5.

While plaintiff has alleged an injury to its rights as possessor of the easement, the remedy plaintiff pursues is not damages for any injury to the easement. Instead, plaintiff wishes to regain control over the part of its easement now occupied by defendant’s house. Because plaintiff seeks to recover full use of its easement, and because the easement is real property, we conclude that this action is for the recovery of real property. p. 5.

Like the North Carolina Court of Appeals, the North Carolina Supreme Court recognized merit to the argument that applying the six-year statute of limitations found in N.C.G.S. § 1-50(a)(3) to utility companies was problematic. The North Carolina Supreme Court did not “believe that the drafters of [the six-year statute] intended that a utility’s right to maintain such easements could be successfully challenged in a time as short as six years.” p. 5.

The North Carolina Supreme Court reversed the Court of Appeals and expressly overruled the Court of Appeals’ decision in Pottle “in so far as that opinion deemed section 1-40 (the twenty-year statute of limitation) inapplicable to actions involving encroachments on easements.” Id. The North Carolina Supreme Court remanded the case to the Court of Appeals to remand the case to Superior Court to hear and resolve the other issues in the case.

Comments

1.Thinking first about the goal of a lawsuit clarifies the means available to accomplish the outcome desired. Distinctions in real property litigation are very fine and not intuitively obvious to a lawyer trained in the 21st century.

2.Statutory construction is persuasive when the analysis respects the language of the statute and integrates the spirit, purpose and context of the statute so that the construction is harmonious with the language and the policy reasons for a statute.

For example, the Duke Energy opinion states “…we acknowledge that utility facilities crisscross the state above, on, and beneath the ground. Their accompanying easements are not always readily subject to routine inspection by the owning utility.” p. 5. These facts show a fuller understanding for the reason that the statute of limitations for recovery of real estate is 20-years even when the property right is an incorporeal hereditament.

A number of recent appellant opinions have declared boldly the “plain meaning” of a statute and stopped without any portion of the opinion addressing the spirit, purpose or context of the statute. Rarely, are statutes as plain as these decisions portray.

Duke Energy demonstrates that a short, simple decision can contain analysis beyond a plain meaning of a statute. By doing so, the decision discusses all of the core elements of statutory construction and arrives at a persuasive interpretation.

3.From a technical standpoint, the North Carolina Court of Appeals was bound by its prior decision in Pottle. Only the North Carolina Supreme Court possessed the power to overrule a Court of Appeals’ decision.