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Supreme Court allows inverse condemnation complaint to proceed

December 21, 2017

An inverse condemnation complaint against Duke Energy can continue after the Indiana Supreme Court determined the complaint did not allege sufficient facts that could support a dismissal for failure to state a claim.

In Bellwether Properties, LLC v. Duke Energy Indiana, Inc., 35S04-1703-CT-121, Bellwether Properties owns real property in Bloomington on which Duke Energy Indiana, Inc. also holds a utility easement. Duke obtained the easement in 1957 that gave it the right to build, remove and maintain electrical lines for transmitting electricity over a 10-foot strip of land.

In 2015, Bellwether filed an inverse condemnation action alleging Duke’s maintenance of the electrical line imposed a 23-foot easement, 13 feet wider than what was permitted. Thus, Duke had taken its property for public use, which required compensation.

Duke, however, filed a motion to dismiss under Rule 12(B)(6), arguing that when the Indiana Utility Regulatory Commission incorporated by reference the 2002 National Electrical Safety Code, the easement was required to be extended to 23 feet at a certain voltage level. The Monroe Circuit Court agreed, determining the six-year statute of limitations began to run when the NESC was adopted in 2002, thus making the claim untimely.

A divided Indiana Court of Appeals reversed the dismissal in September 2016, determining Indiana’s discovery rule tolled the statute of limitations because the circumstances were “too attenuated to concluded that the taking was ascertainable by Bellwether.” But Judge Melissa May dissented, relying on the case of Tiplick v. State, 43 N.E.3d 1259 (Ind. 2015).

The Indiana Supreme Court also reversed the dismissal of Bellwether’s complaint in a Wednesday opinion, but on different grounds than the Court of Appeals.

Justice Geoffrey Slaughter, writing for the unanimous court, said the face of Bellwether’s complaint failed to establish that the state of limitations had run. Rather, the facts of the complaint only allege Duke’s maintenance of the electrical line “currently” imposes the 23 feet requirement, not when that additional requirement first occurred due to a certain voltage level, Slaughter said.

“Because the complaint does not establish that the statute of limitations had already run when Bellwether sued, Duke Energy jumped the gun by arguing the claim’s untimeliness in a motion to dismiss,” Slaughter wrote.

The justice then went on to address another issue sua sponte: whether the 2002 NESC was reasonably accessible to Bellwether. He noted the court made attempts to obtain a copy of the safety code on its own, but was told the code could only be inspected in the IURC’s Indianapolis office. The court was eventually able to obtain a copy online, though Slaughter noted he was unsure when the online version became available or if it was identical to what was incorporated in 2002.

“Our employee’s unsuccessful effort to obtain a copy of the Code from the Commission may be a one-off,” he wrote. “But if it happened once, it is not inconceivable it happened before. And if it did, a fair question is whether the practice recurs in accordance with Commission policy.”

While the justices did not rule on the question of Bellwether’s access to the code, it did encourage the trial court to consider that question on remand.

Finally, Slaughter wrote the Tiplick decision, which Judge May relied on in her dissent, does not govern in this case because the decision in that case does not address the threshold question of whether Bellwether can be charged with knowledge of the 2002 NESC.

All justices concurred.

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