COA: Discovery rule applies in inverse condemnation action against Duke Energy

The Indiana Court of Appeals has reversed a Monroe Circuit Court decision to dismiss a complaint against Duke Energy after finding that the trial court erred when it ruled that the statute of limitations for the complaint had expired.

In Bellwether Properties, LLC v. Duke Energy Indiana, LLC, 53A04-1511-CT-1880, Bellwether Properties filed a class-action complaint and jury trial demand in Monroe Circuit Court against Duke Energy on June 30, 2015, after Duke would not allow Bellwether to expand a structure on its property.

Duke had obtained an easement in 1957 on the land now owned by Bellwether to install overhead electric lines. The utility company said that Indiana Utility Regulatory Commission standards that were adopted in 2002 included the 2002 National Electrical Safety Code, or NESC, which prohibited Bellwether’s expansion unless the expansion allowed for a 23-foot horizontal strike clearance. The clearance was not included in Bellwether’s expansion plan.

In its class-action suit, Bellwether alleged that Duke had taken property for a public purpose without proceeding with a condemnation action or providing just compensation.

Duke filed a motion to dismiss the suit on Aug. 21, 2015, writing that Bellwether’s inverse condemnation action is barred by a six-year statute of limitations. The utility company maintained that the inverse condemnation claim accrued when the NESC standards were adopted in 2002, thus putting the 2015 claim outside of the six-year filing window.

The court granted the motion to dismiss on Oct. 29.

Bellwether appealed, arguing that the Monroe Superior Court should have applied the discovery rule and noted that no Indiana court had expressly analyzed whether the discovery rule applies to inverse condemnation actions.

Bellwether also argued that although it is charged with knowledge of the laws surrounding utility clearance requirements, its claims did not accrue in 2002, as Duke said it did, because it did not know in 2002 that Duke’s voltage was high enough to require more clearance than what was set out in the original easement.

Further, Bellwether argued that to learn about Duke’s clearance requirements and how they affected its property rights, it would have had to travel to Indianapolis to read the updated 2002 NESC standards. Even if the discovery rule did not apply to its suit, Bellwether said that although it is charged with knowledge of laws relating to its land, it should not be charged with knowledge of technical requirements for public utilities.

But Duke argued that the discovery rule is only applicable to tort cases and, even if it were applicable here, the claim fell outside of the statute of limitations.

Further, Duke said that the 2002 NESC rules could be found and read because they are part of public law, a fact that defeats the application of the discovery rule. In its motion to dismiss the suit, Duke cited multiple cases in which the discovery rule did not apply where the alleged taking occurs by passage of a law.

However, in its reversal of the decision to dismiss the complaint against Duke, the Court of Appeals wrote that the complaint against Duke was distinguishable from the cases it cited.

The 2002 NESC standards that were adopted by the IURC did not put Bellwether on notice that Duke’s control of the land surrounding the easement had widened to accommodate the requirement for the 23-foot horizontal clearance, the court wrote.

Thus, the court wrote that the circumstances were too attenuated to conclude that the extension of Duke’s control over the land through the NESC rules was ascertainable by Bellwether, so the discovery rule tolled the six year statute of limitations until Duke informed Bellwether of the change.

That information came out within six years of the Bellwether’s complaint, meeting the statute of limitations requirement. Thus, the Court of Appeals wrote that the trial court erred when it ruled in favor of Duke’s motion to dismiss on the basis of a statute of limitations expiration and remanded the case for proceedings.

However, Judge Melissa May dissented, writing in a separate opinion that she believes Bellwether did have notice of the change in Duke’s control over the land.

Although the majority of Court of Appeals judges found that some of the information necessary to inform Bellwether of the change was within Duke’s control, that fact alone is not enough to reverse a decision, May wrote.

“The majority points to nothing in the record that reflects the information it characterizes as ‘wholly within the control of Duke,’ such as the voltage levels and types of lines on the property, could not have been obtained by Bellwether through ordinary diligence,” May wrote.