Duke Energy Carolinas, LLC v. Gray

IN THE SUPREME COURT OF NORTH CAROLINA

No. 108PA14-2

Filed 19 August 2016

DUKE ENERGY CAROLINAS, LLC, Plaintiff

v.
HERBERT A. GRAY, Defendant/Third-Party Plaintiff
v.
JOHN WIELAND HOMES AND NEIGHBORHOODS OF THE CAROLINAS,
INC., Third-Party Defendant;
and
BUILDER SUPPORT SERVICES OF THE CAROLINAS, INC. f/k/a JOHN
WIELAND HOMES AND NEIGHBORHOODS OF THE CAROLINAS, INC.,
Fourth-Party Plaintiff
v.
YARBROUGH-WILLIAMS & HOULE, INC., LUCAS-FORMAN, INC., and
CARTER LAND SURVEYORS & PLANNERS, INC., Fourth-Party Defendants

On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision

of the Court of Appeals, ___ N.C. App. ___, 766 S.E.2d 354 (2014), affirming an order

of summary judgment entered on 1 November 2013 by Judge Richard D. Boner in

Superior Court, Mecklenburg County. On 10 June 2015, the Supreme Court allowed

defendants’ conditional petition for discretionary review as to additional issues.

Heard in the Supreme Court on 6 October 2015.

Womble Carlyle Sandridge & Rice, LLP, by Debbie W. Harden and Meredith J.
McKee, for plaintiff–appellant/appellee.

James, McElroy & Diehl, P.A., by Preston O. Odom, III and John R. Buric, for
defendant/third-party plaintiff–appellee/appellant Herbert A. Gray; DeVore,
Acton & Stafford, PA, by Fred W. DeVore, III and Derek P. Adler, for third-
party defendant/fourth-party plaintiff–appellee/appellant John Wieland
 DUKE ENERGY CAROLINAS, LLC V. GRAY

Opinion of the Court

Homes and Neighborhoods of the Carolinas, Inc.; and Hamilton Stephens
Steele & Martin, PLLC, by Erik M. Rosenwood and Mark R. Kutny, for fourth-
party defendant–appellee/appellant Yarbrough-Williams & Houle, Inc.

Nelson Mullins Riley & Scarborough LLP, by Joseph W. Eason and D. Martin
Warf, for North Carolina Electric Membership Corporation and North Carolina
Association of Electric Cooperatives, amici curiae.

Kimberly S. Hibbard, General Counsel, and Gregory F. Schwitzgebel, III,
Associate General Counsel, North Carolina League of Municipalities; and
Daniel F. McLawhorn, City of Raleigh Associate City Attorney, for North
Carolina League of Municipalities, amicus curiae.

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., by Matthew D.
Rhoad, for Public Service Company of North Carolina, Inc. d/b/a PSNC
Energy; and Piedmont Natural Gas Company, Inc., amici curiae.

EDMUNDS, Justice.

Defendant Herbert A. Gray (defendant) owns real property located in

Huntersville, North Carolina. Plaintiff Duke Energy Carolinas, LLC (plaintiff or

Duke) owns an easement allowing construction of and access to its power lines. A

portion of defendant’s property encroaches on plaintiff’s easement and defendant has

failed to remove the encroachment upon plaintiff’s request. We consider whether

plaintiff has a right to eject defendant’s encroachment from the easement. Defendant

contends that N.C.G.S. § 1-50(a)(3), which establishes a six-year statute of limitations

for injury to any incorporeal hereditament, bars plaintiff’s claim. We conclude that

removal of the encroachment is a recovery of real property lying outside the scope of

subdivision 1-50(a)(3). As a result, this action falls within the twenty-year statute of

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Opinion of the Court

limitations set out in N.C.G.S. § 1-40. Accordingly, we reverse the decision of the

Court of Appeals.

J.L. and Pearl D. Wallace, defendant’s predecessors in title, executed a duly

recorded easement agreement with Duke Power Company, now plaintiff Duke Energy

Carolinas, LLC, on 18 May 1951. The agreement granted plaintiff certain rights in

a two hundred-foot-wide strip of land, including “the right to enter said strip . . . and

to construct, maintain and operate within the limits of same, poles, towers, wires,

lines, apparatus and appliances for the purpose of transmitting electric power and for

telephone purposes,” and “the right to keep said strip of land free and clear of any or

all structures . . . except those placed in or upon same by said Power Company.” The

agreement also stated that “[t]he right of way and easements hereby granted shall be

binding upon and shall inure to the parties hereto, their successors, heirs and

assigns.” Plaintiff thereafter constructed an overhead 100,000 volt electrical

transmission line within the easement in 1951. A 230,000 volt transmission line was

constructed in 1957 and 1958.

In September 2005, Yarbrough-Williams & Houle, Inc. (Yarbrough-Williams),

a corporation specializing in professional land surveying, created a plat titled

“Skybrook Phase 8 Map 1” and recorded it in Mecklenburg County. At the same time,

Yarbrough-Williams physically staked out the boundaries of the surveyed property,

including the boundaries of Lot 533, the property at issue. The following month, John

Wieland Homes and Neighborhoods of the Carolinas, Inc. (Wieland), now Builder

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Opinion of the Court

Support Services of the Carolinas, Inc., purchased the Skybrook development,

including Lot 533. In December 2005, Wieland contracted with Lucas-Forman, Inc.

(Lucas-Forman), another corporation specializing in land surveying, to plot and stake

the location of the building footprint for Lot 533. In January and February 2006,

Wieland dug the footings and poured the foundation for a house on the Lot. On 16

February 2006, Wieland contracted with Carter Land Surveyors & Planners, Inc.

(Carter Land Surveyors), yet another company specializing in land surveying, to

conduct a foundation survey of Lot 533. The purpose of this week-long foundation

survey was to confirm that no setback, easement, right-of-way, or boundary violations

existed.

Thereafter, Wieland completed construction of the house in question on Lot

533, and the county issued a certificate of occupancy on 11 October 2006. In early

2007, defendant purchased the house and lot from Wieland for $608,667.00. During

the process, Wieland provided defendant a copy of the foundation survey. Defendant

remains the owner of Lot 533, which now bears the address of 14440 Salem Ridge

Road, Huntersville, North Carolina.

Three years later, around 17 February 2010, defendant received a letter from

Duke alleging that a portion of his home was encroaching on Duke’s right-of-way and

asking defendant to remove the encroachment. When defendant did not comply,

plaintiff filed suit in Superior Court, Mecklenburg County, on 12 December 2012,

seeking injunctive and other relief. On 3 January 2013, defendant filed an answer

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Opinion of the Court

and counterclaim, adding a third-party complaint against Wieland. Plaintiff replied

to the counterclaim and third-party complaint on 13 February 2013. Wieland

answered the third-party complaint and filed both a motion to dismiss and a fourth-

party complaint against Yarbrough-Williams, Lucas-Forman, and Carter Land

Surveyors on 8 March 2013. On 7 May 2013, Yarbrough-Williams filed a motion to

dismiss the fourth-party complaint. This filing also included Yarbrough-Williams’s

answer and affirmative defenses. Lucas-Forman filed an answer to and motion to

dismiss the fourth-party complaint on 13 May. Finally, Carter Land Surveyors filed

a motion to dismiss the fourth-party complaint on 21 June. The trial court denied

Yarbrough-Williams’s and Lucas-Forman’s motions to dismiss on 6 September, and

Carter Land Surveyors’ motion to dismiss on 13 September 2013.

Wieland filed a motion seeking partial summary judgment on 10 September

2013, and defendant followed with a motion for summary judgment on 2 October

2013. Both argued that the six-year statute of limitations for an injury to an

incorporeal hereditament set out in N.C.G.S. § 1-50(a)(3) had run and that, as a

result, plaintiff had no legal remedy. After conducting a hearing, the trial court on 1

November 2013 granted the motions for summary judgment filed by defendant and

by Wieland, finding that plaintiff’s claims were barred by the six-year statute of

limitations pertaining to incorporeal hereditaments. The court further found that

the limitations periods set out in N.C.G.S. §§ 1-40 and 1-47(2) did not apply.

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Opinion of the Court

Plaintiff appealed, and the Court of Appeals affirmed the trial court’s grant of

summary judgment. Duke Energy Carolinas, LLC v. Gray, ___ N.C. App. ___, 766

S.E.2d 354 (2014). The Court of Appeals concluded that an easement constitutes an

incorporeal hereditament and, based on the plain language of N.C.G.S. § 1-50(a)(3),

an action for injury to an incorporeal hereditament must be brought within six years.

Id. at ___, 766 S.E.2d at 358. In its analysis, the Court of Appeals found itself bound

by its holding in Pottle v. Link, 187 N.C. App. 746, 654 S.E.2d 64 (2007), appeal

dismissed, 362 N.C. 509, 668 S.E.2d 31 (2008), in which that court concluded that an

action by the owner of a dominant estate for injunctive relief against the servient

estate owner’s encroachment constituted an action for injury to an incorporeal

hereditament governed by subdivision 1-50(a)(3). Duke Energy Carolinas, ___ N.C.

App. at ___, 766 S.E.2d at 361.

The Court of Appeals further held that the statute of limitations for a claim

based on injury to an incorporal hereditament begins to run “from the time that the

claim accrues, even if a plaintiff is not aware of the injury at that time.” Id. at ___,

766 S.E.2d at 359. The court determined that plaintiff should have been aware of the

encroachment when the certificate of occupancy was issued on 11 October 2006,

denoting the completion of construction, and thus was required to file suit against

defendant by 11 October 2012 to avoid running afoul of the statute of limitations. Id.

at ___, 766 S.E.2d at 359. Accordingly, the Court of Appeals concluded that the

statute of limitations had expired when plaintiff filed its complaint on 12 December

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2012. Id. at ___, 766 S.E.2d at 358. On 10 June 2015, this Court allowed plaintiff’s

petition for discretionary review and a conditional petition for discretionary review

filed by defendant, Wieland, and Yarbrough-Williams.

The key issue before us is whether the trial court and the Court of Appeals

erred in identifying the applicable statute of limitations. We review determinations

by the Court of Appeals for errors of law. N.C. R. App. P. 16(a). The Court of Appeals

affirmed the trial court’s grant of summary judgment in favor of defendant and

Weiland on the grounds that the six-year statute of limitations barred plaintiff’s

claims. To prevail on a motion for summary judgment, the moving party must first

show that, when viewed in the light most favorable to the nonmoving party, no

genuine issues of material fact exist. N.C. R. Civ. P. 56(c); Beverage Sys. of the

Carolinas, LLC v. Associated Beverage Repair, LLC, ___ N.C. ___, ___, 784 S.E.2d 457,

460 (2016). Allowing a defendant’s motion for summary judgment on the basis of the

statute of limitations is appropriate only when all the facts necessary to establish the

limitation are alleged or admitted by the plaintiff, with the plaintiff receiving the

benefit of all relevant inferences. City of Reidsville v. Burton, 269 N.C. 206, 210, 152

S.E.2d 147, 150 (1967) (citations omitted).

Defendant argues that the appropriate limitation period is the six years set out

in N.C.G.S. § 1-50(a)(3), while plaintiff contends that the twenty-year statute of

limitations found in N.C.G.S. § 1-40 is proper. The former, set out in Chapter 1,

Article 5 (“Limitations, Other Than Real Property”), applies to actions for “injury to

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any incorporeal hereditament.” N.C.G.S. § 1-50(a)(3) (2015). The latter, set out in

Chapter 1, Article 4 (“Limitations, Real Property”), applies to “action[s] for the

recovery or possession of real property.” Id. § 1-40 (2015). As a result, we must

determine whether this action involves injury to an incorporeal hereditament or

recovery of real property.

We begin our analysis by considering the characteristics of an incorporeal

hereditament, which has been defined as “[a]n intangible right in land, such as an

easement.” Incorporeal Hereditament, Black’s Law Dictionary (10th ed. 2014); see

also Davis v. Robinson, 189 N.C. 589, 598, 127 S.E. 697, 702 (1925) (“An easement is

an incorporeal hereditament, and is an interest in the servient estate.” (citations

omitted)). Consistent with this definition, we have observed that “[a]n easement

always implies an interest in the land. It is real property, and it is created by grant.”

Davis, 189 N.C. at 600, 127 S.E. at 703 (citations omitted) (quoting Atl. & Pac. R.R.

v. Lesueur, 2 Ariz. 428, 430, 19 P. 157, 158-59 (1888)); see also Real Property, Black’s

Law Dictionary (10th ed. 2014) (“Real property can be either corporeal (soil and

buildings) or incorporeal (easements).”). Accordingly, the easement in this case, while

an incorporeal hereditament, is also real property.

Next, we review the nature of plaintiff’s action. Plaintiff’s easement gives

plaintiff a property right to a degree of control over the use of an identified swath of

land, specifically including “the right to keep said strip of land free and clear of any

or all structures.” Plaintiff alleges that the encroachment of defendant’s home into

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that strip interferes with and invades its rights over that tract. While plaintiff has

alleged an injury to its rights as possessor of the easement, the remedy plaintiff

pursues is not damages for any injury to the easement. Instead, plaintiff wishes to

regain control over the part of its easement now occupied by defendant’s house.

Because plaintiff seeks to recover full use of its easement, and because the easement

is real property, we conclude that this action is for the recovery of real property. By

definition, the statutes of limitation in Chapter 1, Article 5 do not apply to the

recovery of real property. See N.C.G.S. § 1-46 (2015) (stating that the limitations

periods found in Article 5 are for “actions, other than for the recovery of real

property”). Consequently, we conclude that plaintiff’s claim is subject to the section

1-40 twenty-year statute of limitations. For similar reasons, the ten-year statute of

limitations for sealed instruments found in N.C.G.S. § 1-47(2) is inapplicable because

it too is contained in Chapter 1, Article 5 of the General Statutes.

Not only do we conclude that this result is dictated by the language found in

the applicable statutes and cases, we acknowledge that utility facilities crisscross the

state above, on, and beneath the ground. Their accompanying easements are not

always readily subject to routine inspection by the owning utility. We do not believe

that the drafters of N.C.G.S. § 1-50(a)(3) intended that a utility’s right to maintain

such easements could be successfully challenged in a time as short as six years.

We reverse the decision of the Court of Appeals and conclude that the trial

court erred in granting summary judgment in favor of defendant and Wieland upon

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finding that Duke’s claims were barred by N.C.G.S. § 1-50(a)(3). In addition, we

overrule the decision of the Court of Appeals in Pottle v. Link, 187 N.C. App. 746, 654

S.E.2d 64 (2007), insofar as that opinion deemed section 1-40 inapplicable to actions

involving encroachments on easements. Defendant’s pending claims against other

parties are unaffected by this result.

Defendant, Weiland, and Yarbrough-Williams raised several additional issues

in their conditional petition to this Court. The first issue is whether plaintiff failed

to assert that the encroachment materially interferes with its use of the easement.

The second issue is whether the doctrine of laches applies if plaintiff knew or should

have known of the alleged encroachment more than six years preceding the filing of

this action. As to both of those issues we hold that discretionary review was

improvidently allowed. Furthermore, we do not reach the remaining issues raised in

the parties’ petitions for discretionary review because we have determined that

Chapter 1, Article 5 does not apply to this case.

For the forgoing reasons, the decision of the Court of Appeals is reversed, and

this case is remanded to that court for remand to the trial court for proceedings not

inconsistent with this opinion.

REVERSED AND REMANDED; DISCRETIONARY REVIEW

IMPROVIDENTLY ALLOWED IN PART.

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