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Issue  218  Article  355
Published:  12/1/2014

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Six Year Statute of Limitation for Easement Encroachment
Chris Burti, Vice President and Senior Legal Counsel

The opinion in Duke Energy Carolinas, LLC v Gray (14-283) filed on December 2, 2014, continues the doctrinal thread with respect to utility companies where Pottle v. Link, 187 N.C. App. 746, 654 S.E.2d 64, (2007) left off with respect to private property owners. In this opinion the Court of Appeals determined that N.C.G.S. Section 1-50(a) (3), which provides for a six year statute of limitations for injury to an incorporeal hereditament, applies to claims for encroachment upon an easement held by a utility company. Because the plaintiff's claim for encroachment of a house onto its utility easement was filed more than six years after its claim accrued, the claim was barred by this statute of limitations.

In 1951, Duke Power Company, the plaintiff's predecessor, obtained a 200 foot easement for electric and telephone transmission services, authorizing it to keep the 200 foot strip of land free of structures and trees that stated that it was binding on the parties and on "their successors, heirs and assigns." In 2006 the developer built a house on the subject building lot which included a strip of land located within the plaintiff's easement and the house was completed by October of 2006. In February of 2010, the plaintiff wrote to defendant informing him that a portion of his house encroached a maximum of 8.7 feet on its 200-foot right of way. In December of 2012, the plaintiff filed this action against the defendant asserting that N.C. Gen. Stat. § 1—50(a) (3) established a six year statute of limitations for "injury to any incorporeal hereditament," including claims for encroachment on an easement, and that plaintiff had not filed suit within six years of the time that its cause of action accrued. The trial court entered an order granting summary judgment for defendant and Wieland, based upon the six year statute of limitations.

The plaintiff first argued that the trial court erred in ruling that the cited six year statute of limitation governs its claim against defendant, but the Court of Appeals disagreed relying on N.C. Gen. Stat. § 1—50(a) (3) establishes a six year statute of limitations for claims based upon definition of an incorporeal hereditament as defined in the 8th edition of Black's Law Dictionary defines [an] "incorporeal hereditament' as '[a]n intangible right in land, such as an easement.' BLACK'S LAW DICTIONARY 743 (8th ed. 2004) and the opinions in Pottle v. Link, 187 N.C. App. 746, 654 S.E.2d 64,(2007) and Hawthorne v. Realty Syndicate, Inc., 43 N.C. App. 436, 259 S.E.2d 591, (1979) (citing Davis v. Robinson, 189 N.C. 589, 127 S.E. 697 (1925)). The problem with the Court's reliance on these cases lies within its recent opinion in Duke Energy Carolinas, LLC v. Bruton Cable Serv., Inc., (13-686), filed April 15, 2014 wherein that panel of the Court cites Fowler v. Valencourt 334 N.C. 345, 435 S.E.2d 530 (1993) as holding "[w]here one of two statutes might apply to the same situation, the statute which deals more directly and specifically with the situation controls over the statute of more general applicability."  With virtually identical language there is doubt as to which statute is applicable and in such a case the opinion notes that "'the rule is that the longer statute is to be selected.' Id. at 350, 435 S.E.2d at 533 (citation omitted).  Therefore, the ten-year limitation period applies."

Unlike a setback violation or other similar violation of restrictive covenants where there is an injury to the incorporeal hereditament by virtue of a devaluation of values in the community otherwise provided by the uniform regulation thereof but no dispossession of a possessory estate, occupation of an easement is a dispossession of such an estate. N.C.G.S. Section 1- 40 provides that an action for the ... possession of real property must be brought within the prescriptive period of 20 years set out in the statute. Thus it would seem that the 20 year statute is more correctly applied in the case of a dispossession of an easement than the six year statute applicable injuries to covenants or even easements, and if applicability is arguably in question then the longer period is mandated by the latter doctrine as set out in Duke Energy cited above.

The plaintiff touched on this issue when it raised arguments based upon its assertion that its easement would be terminated by application of the statute of limitations to its claim against defendant, "including contentions that the trial court's ruling conflicts with the law governing adverse possession and with cases addressing a defendant's continuing trespass upon land owned in fee by a plaintiff. Plaintiff also asserts that defendant "terminated" its easement and "obtained property" to which he was not entitled." The court having concluded that the plaintiff's easement was not extinguished and that defendant did not obtain title to property not previously owned, it declined to examine these arguments further. However the adverse possession statute is clearly one for recovery of possession, not merely title. While the statute is rooted in title, it speaks simply to possession as the injury being redressed. The plaintiffs contentions that there are genuine issues of material fact as to whether its claim was filed within six years of the time that the statute of limitations began to run were disposed of by the Court with the most significant determination being its holding "that the statute of limitations for a claim based on injury to an easement runs from the time that the claim accrues, even if a plaintiff is not aware of the injury at that time." There is a further complication in the Court's failure to recognize the full implications of its interpretation of the application of N.C.G.S. Section 1-40. If an easement holder is prevented from recovering possession as the Court of Appeals has held, then if the encroaching party remains in possession, after 20 years, title will vest in the encroaching parties contrary to this conclusion.

The plaintiff also argued that the original 1951 easement agreement was an instrument "under seal" making the ten year statute of limitations for claims upon a sealed instrument applicable to the plaintiff's suit. The Court of Appeals disagreed, holding that the defendant property owner was not a principal to this agreement and, thus, the plaintiff's claim is not governed by N.C. Gen. Stat. § 1-47 (2).

The plaintiff further contended that the Court of Appeals' decision in Pottle was wrong in that it ignored the law on adverse possession. This court determined that the appellate court's reasoning in Pottle appears to have been correct and even if it agreed with plaintiff's contentions it was nonetheless bound by its holding. '"Where a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court.' In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989)". This is an interesting point in light of the earlier discussion of the earlier Duke Energy case discussed above.

The Court of Appeals next addressed the plaintiff's contentions that there were significant policy reasons that militated "against the application of a six year statute of limitations to a claim by a utility company seeking injunctive relief for encroachment on an easement."  The Court listed the following examples; "if the statute of limitations is limited to 'six short years' it will incur 'the substantial cost of continuously patrolling [its] easements' which will 'increase[] the costs of providing services[.]'" The Court of Appeals rejected those contentions observing that the plaintiff was aware of the encroachment within the limitations period and that it was aware of the Holding in Pottle, having filed an amicus curiae brief in that case.

The plaintiff argued that it is unreasonable to apply the same statute of limitations to utility companies as to adjoining residential property owners such those in Pottle. Deeming such arguments inappropriate for judicial review, the Court did not express its opinion on the merits of plaintiff's policy arguments stating; "it is critical to our system of government and the expectation of our citizens that the courts not assume the role of legislatures.' Normally, questions regarding public policy are for legislative determination." In re N.T., 214 N.C. App. 136, 144, 715 S.E.2d 183, 188 (2011) (quoting Cochrane v. City of Charlotte, 148 N.C. App. 621, 628, 559 S.E.2d 260, 265 (2002) (internal quotation omitted).

It would be our supposition the ramifications of this case to the public, the utility industry, the government, the title industry and others make it very likely that it may be addressed by the legislature if not resolved by a higher court.

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