The facts in Bellwether Properties, LLC v. Duke Energy Indiana, Inc., No. 53S04-1703-CT-121 (Dec. 20, 2017), are not all that complex and the result is pretty straightforward: the complaint did not show on its face when the plaintiff had knowledge that new rules caused an existing utility easement to expand in size, and thus dismissal under the statute of limitations was incorrect. But buried within the court's short opinion is an interesting issue.
More than 50 years ago, Bellwether's predecessor-in-title granted a ten-foot-wide utility easement to Duke's predecessor. Flash forward to 2002 when the Indiana Utility Regulation Commission adopted the latest version of the National Electric Safety Code, which established new safety guidelines for how close utility lines could be to structures. According to Bellwether, these new safety standards required a 23-foot-wide easement.
It brought an inverse condemnation claim in Indiana court in 2015. Duke argued that the complaint was filed more than six years after 2002, and thus the statute of limitations had run. The claim accrued, according to Duke, when the Commission adopted the 2002 Safety Code.
The trial court agreed, and up they went to the Court of Appeals, which in a split decision, reversed. That court concluded that "the circumstances were too attenuated to conclude that the taking was ascertainable by Bellwether." Slip op. at 3.
The Indiana Supreme Court agreed with the result and affirmed the reversal, but for different reasons. This was a motion to dismiss for failure to state a claim under Rule 12(b)(6), whose purpose is to test "the complaint's legal sufficiency." Slip op. at 4. So the question was whether the pleading itself contained enough facts that could support a claim. By contrast, when dealing with an affirmative defense (like an argument the statute of limitations has run) the court should not dismiss under Rule 12 unless the complaint itself contains the facts which show each essential element of the defense.
The court concluded that the face of Bellwether's complaint did not plead enough facts to support Duke's affirmative defense. The court rejected Duke's claim that the complaint pleaded that the new Safety Code was adopted by the Commission in 2002, and this "unambiguously expanded the required safety clearance beyond the ten feet allowed by the 1957 utility easement," slip op. at 4, and thus it was not necessary for the complaint to state anything further. The court acknowledged that "Bellwether’s claim accrued, conceptually, when the regulatory burden on its property exceeded the ten-foot clearance permitted by the original easement," but concluded:
[a]t this stage, all we know factually is what the complaint alleges, which is that Duke Energy’s maintenance of the electrical lines “currently” imposes a total burden of 23 feet—thirteen feet more than the easement authorized. The complaint does not recite when the additional burden first occurred, only that it was in effect when Bellwether filed its complaint in August 2015. Given the limited factual allegations, we cannot discern whether (or when) any additional burden on Bellwether, beyond the 1957 easement restriction, occurred by operation of law. 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. Based on the current record, we are unable to conclude that Bellwether’s allegations would not entitle it to relief against Duke Energy under any circumstances. We thus reverse the trial court’s judgment dismissing Bellwether’s complaint with prejudice.
Slip op. at 5 (emphasis original). Reversed and remanded to the trial court for more.
In other words, plaintiffs, be careful how much you plead about what you knew and when you knew it.
The court wrapped the opinion by raising an argument sua sponte for "the trial court to consider on remand." The court noted the principle that "citizens know the law and must obey it," slip op. at 5, but implicitly criticized the growing practice of incorporating extrinsic materials into statutes, ordinances, and rules which have the force of law. The is "rulemaking by proxy," and the court questioned whether the charging citizens with knowledge of the law is fair in these circumstances, even while it acknowledged that using this shortcut "has undeniable advantages."
But the practice of incorporating private standards by reference comes at a cost. The cost may be negligible for regulations that incorporate federal statutes, regulations, and other open-source materials, much of which can now be viewed online for free with just a few extra mouse clicks. But regulations incorporating copyrighted materials are often practically unavailable without the accompanying text, which can be difficult and expensive to obtain.
Slip op. at 6-7.
Here, the 2002 Safety Code isn't even published on the Commission's web site, and the court had to locate it via archive.org. Slip op. at 8 ("Given this authorization to republish the Code’s content, we do not know why the Commission does not make this material readily available on its website today."). The court cast a skeptical eye on the practice, even though it concluded "[t]o be clear, we do not prejudge that outcome or foreordain that result here. Legal determinations often turn on concrete facts." Slip op. at 8.
The court reminded the trial court that on remand, one of its tasks is to figure out when Bellwether might have become aware that the 2002 Safety Code expanded the size of the utility easement. That date would be the trigger to the six-year statute of limitations.