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  09.19.2016  
 
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Statute of Limitations for Actions to Remove Encroachments from Easements Returned to 20 Years

By Matthew D. Rhoad

In 2007, the North Carolina Court of Appeals held in Pottle v. Link, 187 N.C. App. 746, 654 S.E.2d 64 (2007), that actions to remove encroachments from an easement must be brought within six years of the encroachment being installed. Instead of applying the 20-year statute of limitations for adverse possession under N.C. Gen. Stat. § 1-40, the Court in Pottle held that the six-year statute of limitations in N.C. Gen. Stat. § 1-50(a)(3) applies, which governs actions for injury to an “incorporeal hereditament” – a term which the North Carolina Supreme Court has previously defined as “an intangible right in land, such as an easement.” The North Carolina Supreme Court agreed to review the Pottle decision based in large part on amici curiae (“friend of the court”) briefs submitted by several utility companies, but the appeal was dismissed as moot when the parties to the case settled. As a result, for the past nine years the opinion in Pottle has been law and the statute of limitations for bringing an action to remove an encroachment from an easement in North Carolina has been six years.

The North Carolina Supreme Court finally received an opportunity to review the Pottle decision late last year in Duke Energy Carolinas, LLC v. Gray, et al., N.C. Sup. Ct. No. 108 PA 14-2. The defendant in Gray, Herbert A. Gray, owns property in Huntersville, North Carolina that is encumbered by an electric transmission line easement owned by the plaintiff, Duke Energy. In October, 2006, Mr. Gray completed construction of a house on the property, a corner of which encroached upon Duke Energy’s easement. Ultimately, in December 2012, Duke Energy filed suit against Mr. Gray asking the court to issue an injunction forcing him to remove the encroachment from the easement.

The trial court granted summary judgment in favor of Mr. Gray on the basis that Duke Energy’s claim was barred by the six-year statute of limitations set forth in Pottle. Duke Energy appealed to the North Carolina Court of Appeals, with the support of amici curiae including Piedmont Natural Gas and PSNC Energy. The Court of Appeals noted that it was bound by the Pottle decision because one panel of the Court of Appeals cannot overturn a decision issued by another panel, and unanimously upheld the trial court’s ruling in favor of Mr. Gray. Duke Energy, with the continuing support of the amici curiae, successfully petitioned the North Carolina Supreme Court to review the Court of Appeals’ decision. 

The Supreme Court heard oral arguments in Gray in October 2015 and issued an opinion on August 19, 2016, establishing that an easement is both an incorporeal hereditament and real property, and that the six-year statute of limitations for injury to incorporeal hereditaments applies to actions for monetary damages caused by an encroachment, while the 20-year statute of limitation for adverse possession applies to actions to recover possession of the easement. The Supreme Court reasoned that the General Assembly never intended that a utility’s right to maintain its easements could be successfully challenged in a time as short as six years. Accordingly, the Supreme Court overturned Pottle, reversed the Court of Appeals’ holding in Gray, and sent the Gray case back to the trial court for further proceedings. 

For over 100 years prior to Pottle, public utility companies in North Carolina were afforded twenty years in which to bring an action to remove an encroachment on their easements. From 2007-2016, Pottle erroneously reduced that window to six years. The Supreme Court’s holding in Gray re-establishes that public utility companies in North Carolina have twenty years in which to bring an action to remove an encroachment and will not be forced to incur the significant costs necessary to monitor, police and remove encroachments on their hundreds of thousands of easements every six years. 

If you have any questions about this alert or if you would like to learn more about the issues covered in this alert, please contact your Smith Anderson lawyer.

 
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