COA reverses for Duke Energy, orders easement improvements removed

A massive utility company has secured a reversal and judgment from the Indiana Court of Appeals following an easement-related dispute with a neighborhood developer. The result means a southern Indiana developer must remove the entrance to residential development under construction.

The appellate court found improvements within an easement the developer plans to build on unreasonably interfered with Duke Energy’s use of the easement and thus ordered their removal.

J&J Development Company LLC purchased a rural piece of land in Clark County with the intent of developing a residential subdivision on it. Duke Energy Indiana LLC owns a 300-foot-wide electric-transmission-line easement over that land, which it says is part of a greater transmission corridor. According to Duke, the two transmission lines of towers that run through the easement play an important role in providing electricity to the area, including Louisville, New Albany, Clarksville and Speed.

The transmission lines are approximately 100 yards from the subdivision entrance, according to Duke, and an occurrence or outage at or near the entrance may impact a significant number of residential and business customers.

In 2013 and 2014, J&J received plat approval from the Clark County Plan Commission and purchased the land but did not contact Duke. The following year, J&J constructed certain improvements within the easement, including the neighborhood’s only entrance, a road with curbs running parallel to and largely within the easement, detention basins, a fire hydrant and buried utility lines. However, when Duke eventually inspected the improvements, it concluded they impermissibly encroached upon the easement and would have to be removed.

The Clark Circuit Court granted summary judgment in J&J’s favor after the development company sued Duke, alleging that its improvements did not unreasonably interfere with Duke’s use of the easement. The Indiana Court of Appeals reversed, concluding that the trial court “made credibility determinations involving issues that were in dispute,” which is improper at the summary-judgment stage.

Both parties then filed new cross-motions for summary judgment and the trial court similarly ruled for J&J. The appellate court in a Wednesday decision again reversed, holding that J&J’s improvements did unreasonably interfere with the easement’s use.

In Duke Energy Indiana, Llc v. J & J Development LLC, 19A-PL-00735, the appellate court first noted, among other things, that Duke did not assert that its right-of-way restrictions were enforceable independent of the easement instrument.

It further pointed out that the purpose of the easement extends “far beyond the simple transmission of electricity.” Rather, Duke must also be able to move freely “now or in the future” within the easement to build and maintain the necessary infrastructure to transmit electricity.

“The fact that J & J’s improvements have not yet hindered any of Duke’s work by no means establishes that they will not do so in the future,” Judge Nancy Vaidik wrote for the appellate court. “To the contrary, Duke designated extensive evidence that J & J’s improvements could seriously impair Duke’s ability to perform maintenance and repairs in the future.”

The appellate court disagreed with J&J’s citation of four Indiana Court of Appeals decisions that it argued supported its position against Duke. Those cases included Holding v. Ind. & Mich. Elec. Co., 400 N.E.2d 1154, 1158 (Ind. Ct. App. 1980), Northern Indiana Public Service Co. v. G.V.K. Corp., 713 N.E.2d 842 (Ind. Ct. App. 1999), Drees Co. v. Thompson, 868 N.E.2d 32 (Ind. Ct. App. 2007), and Duke Energy of Indiana, LLC v. City of Franklin, 69 N.E.3d 471 (Ind. Ct. App. 2016).

The COA ultimately concluded that J&J failed to meaningfully rebut Duke’s designated evidence. It therefore reversed and remanded for the entry of summary judgment in favor of Duke, including an injunction requiring J & J to remove the challenged improvements.

“We recognize that this may strike some as a harsh result,” the appellate panel concluded. “But as we have said, a landowner who constructs improvements on an easement — especially without consulting the easement holder — does so ‘at their peril.’”

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