February 8, 2018

It’s Generally Not Proper to Dismiss a Case as Time-Barred Under Rule 12(b)(6); Bellwether Properties, LLC v. Duke Energy Indiana, Inc.

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Duke Energy owned a 10-foot-wide electric transmission easement on Bellwether’s property that dated back to 1957. In 2002, the Indiana Regulatory Commission adopted the 2002 edition of the National Electrical Safety Code, published by the Institute of Electrical and Electronic Engineers (IEEE), a private professional association. The 2002 Safety Code imposed a 23-foot-wide easement as the required clearance for the electrical line on Bellwether’s property. In 2015, Bellwether brought an inverse-condemnation action against Duke Energy for the added 13-feet of burden on its land.

Duke Energy moved to dismiss under Rule 12(b)(6) arguing that the claim was timebarred under the applicable six-year statute of limitations. The trial court granted the motion. The Court of Appeals reversed. On transfer, the Supreme Court also reversed, but for a different reason than had been relied upon by the Court of Appeals.

The Supreme Court noted in its first sentence: “Dismissal under Trial Rule 12(B)(6) is rarely appropriate when the asserted ground for dismissal is an affirmative defense.” The Court explained:

The plaintiff “need not anticipate a statute of limitations defense and plead matter[s] in avoidance in the complaint.” Thus, a complaint does not fail to state a claim merely because a meritorious defense may be available. But a plaintiff may plead itself out of court if its complaint alleges, and thus admits, the essential elements of a defense. An example is where the “complaint shows on its face that the statute of limitations has run.”

The face of Bellwether’s complaint does not establish that the statute of limitations had run on its inverse-condemnation claim. Duke Energy argues the claim accrued by operation of law when the Commission adopted the 2002 edition of the National Electric Safety Code. According to Duke Energy, the 2002 Safety Code unambiguously expanded the required safety clearance beyond the ten feet allowed by the 1957 utility easement on Bellwether’s property and thereby effected a taking immediately upon the Safety Code’s incorporation into the administrative code. Bellwether counters that the claim did not accrue until the Safety Code expanded the easement, and that the expansion was not automatic but occurred only when there was a sufficiently high voltage associated with Duke Energy’s operation of its electrical lines.

Bellwether’s claim accrued, conceptually, when the regulatory burden on its property exceeded the ten-foot clearance permitted by the original easement. At 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.

In its opinion, the Court also addressed another issue sua sponte: whether the 2002 Safety Code was reasonably accessible to Bellwether. After noting the ancient legal maxim that “ignorance of the law is no excuse,” the Court held that “central to the presumption that persons know the law is that the law is accessible.”

The Court expressed concern about a national trend over the last fifty years “allowing extrinsic materials to be included in statutory and administrative codes” including privately published standards that are copyright-protected and not easily accessible. The Court reported that it had considerable difficulty obtaining a copy of the 2002 Safety Code and indicated that there was a factual question about whether and when it was sufficiently accessible to provide adequate notice of the law. Or as the Court restated: “the threshold question here … is whether the Safety Code was sufficiently in the public domain during the relevant time that Bellwether can be charged with knowing it. The answer is not apparent from the bare factual record before us.”

The court added:

Incorporation by reference of copyright-protected materials may have made sense in an era when statutory and administrative texts were printed in bound volumes at significant expense. Allowing agencies to incorporate extrinsic materials by reference spared them the cost of printing what are often voluminous materials. But that practice has little justification today, given the pervasive use of the internet. Indeed, our Legislative Services Agency discontinued issuing printed volumes of the Indiana Administrative Code beginning in 2005 and the Indiana Register beginning in 2006. Now the official versions of these publications are available only online. In light of prevailing technology, incorporating copyright-protected materials by reference seems antiquated and at odds with government’s obligation to provide meaningful access to laws.

Lessons:

  1. Ignorance of the law may be an excuse if the law is not easily accessible.
  2. Availability online may become the new standard for accessibility.
  3. Motions to dismiss should generally not be based on an affirmative defense such as statute of limitations.