Duke Energy Carolinas, LLC v. Kiser ( 2023 )

IN THE SUPREME COURT OF NORTH CAROLINA
No. 398PA21
Filed 28 April 2023
DUKE ENERGY CAROLINAS, LLC
v.
MICHAEL L. KISER, ROBIN S. KISER, and SUNSET KEYS, LLC
v.
THOMAS E. SCHMITT and KAREN A. SCHMITT, et al.
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision
of the Court of Appeals, 280 N.C. App. 1 (2021), reversing an order and judgment
entered on 2 January 2020 by Judge Nathaniel J. Poovey in Superior Court, Catawba
County and remanding for further proceedings. Heard in the Supreme Court on 7
February 2023.
Kiran H. Mehta, Christopher G. Browning Jr., and Victoria A. Alvarez for
plaintiff-appellant.
TLG Law f/k/a Redding Jones, PLLC, by Ty Kimmell McTier and David G.
Redding, for defendant-appellees.
David P. Parker for third-party defendant-appellants Thomas E. Schmitt,
Karen A. Schmitt, Linda Gail Combs, and [the Estate of] Robert Donald
Shepard.
Mark L. Childers and Kevin C. Donaldson for other third-party
defendant-appellants.
No brief for third-party defendant-appellants Donald Reid Hankins, William
Claypoole, Val Rhae Claypoole, Theodore H. Corriher, and Tommy L. Wallace.
DUKE ENERGY CAROLINAS, LLC V. KISER
Opinion of the Court
NEWBY, Chief Justice.
This case requires us to determine Duke Energy Carolinas, LLC’s1 scope of
authority under an easement it acquired in order to create Lake Norman. Specifically,
we consider, once the lake is created, whether this easement grants Duke the right
to allow third-party homeowners to build structures over and into the submerged
easement property and to use the lake for recreational purposes. To answer this
question, we first look to the language of the easement. The plain language of the
easement grants Duke “absolute water rights” to “treat [the land] in any manner [it]
deem[s] necessary or desirable.” Because the easement’s plain language is clear and
unambiguous and Duke’s actions are encompassed within the broad grant of
authority, Duke properly allowed third-party homeowners to build structures over
and into the submerged property and use the lake in a recreational manner. This
expansive scope of authority evidenced by the easement’s plain language is consistent
with Duke’s federal licensing obligations over Lake Norman and has been confirmed
by the parties in practice. As such, we reverse the decision of the Court of Appeals.
On 4 August 1961, Duke purchased an easement from B. L. and Zula C. Kiser
(the Kiser Grandparents) covering a 280.4-acre tract as part of what is now known as
Lake Norman. At the time of the conveyance, much of the bed of Lake Norman was
dry. Duke acquired the easement, as well as an interest in the surrounding lakebed
1Duke Energy Carolinas, LLC is a subsidiary of Duke Energy Corporation (formerly
Duke Power Company) and is herein referred to as “Duke.”
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Opinion of the Court
property, in order to create the lake by constructing a dam pursuant to a federal
license. Since 1958, Duke has maintained a license issued by the Federal Energy
Regulatory Commission (FERC) to operate a long-term hydroelectric project
involving Lake Norman and several surrounding lakes and dams and “to supervise
and control the uses and occupancies [of Lake Norman] for which it grants
permission.”2
Accordingly, the Kiser Grandparents granted Duke, its successors, and assigns
by deed an easement to create a lake with two distinct component parts: a component
covering the anticipated lake level and a component covering the area subject to
higher water. The first component part of the conveyance includes
a permanent easement of water flowage, absolute water
rights, and easement to back, to pond, to raise, to flood and
to divert the waters of the Catawba River and its
tributaries in, over, upon, through and away from the 280.4
acres, more or less, of land hereinafter described, together
with the right to clear, and keep clear from said 280.4
acres, all timber, underbrush, vegetation, buildings and
other structures or objects, and to grade and to treat said
280.4 acres, more or less, in any manner deemed necessary
or desirable by Duke Power Company.
The first component (the Flowage Easement) references the 280.4 acres of land which
would become submerged property resting below an elevation of 760 feet as part of
the planned lake level. To cover the area subject to higher water, the Kiser
2 FERC initially granted Duke a license for a 50-year term in 1958. Thereafter, the
license was renewed annually for seven years. In 2015, FERC relicensed Duke for a 40-year
term.
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Opinion of the Court
Grandparents granted Duke, its successors, and assigns:
a permanent flood easement, and the right, privilege and
easement of backing, ponding, raising, flooding, or
diverting the waters of the Catawba River and its
tributaries, in, over, upon, through, or away from the land
hereinafter described up to an elevation of 770 feet above
mean sea level, U.S.G.S. datum, whenever and to whatever
extent deemed necessary or desirable by the Power
Company in connection with, as a part of, or incident to the
construction, operation, maintenance, repair, altering, or
replacing of a dam and hydroelectric power plant to be
constructed at or near Cowan’s Ford on the Catawba
River . . . and otherwise use and treat said land up to said
770 feet elevation in any manner deemed necessary or
desirable by the Power Company in connection with the
construction, reconstruction, maintenance and operation of
the dam and power plant above referred . . . and of the
reservoir or lake created or to be created by same.3
The second component of the easement described in the deed (the Flood Easement)
references the land that would rest “up to . . . 770 feet above mean sea level” and thus
would remain dry land, but subject to flooding, after the creation of Lake Norman.4
About two years later Duke flooded the land at issue. Upon the impoundment
of Lake Norman, the Kiser Grandparents retained an area of land that became an
island (Kiser Island) surrounded by the 280.4-acre submerged parcel subject to
Duke’s easement. Between 1964 and 2015, the Kiser Grandparents subdivided Kiser
Island into residential waterfront lots and sold the lots to numerous third-party
3 The language of the easement reflects a filed copy that immaterially differs from the
original.
4 The Flowage and Flood Easements are referred to collectively as “the easement.”
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Opinion of the Court
buyers (the third-party homeowners). The Kiser Grandparents retained at least one
lot (the Kiser lot).
After the creation of Lake Norman and Kiser Island, Duke implemented the
Shoreline Management Guidelines (the SMG) in accordance with its FERC license.
The SMG are a “detailed set of procedures and criteria” that “regulate activities
within [Lake Norman] pursuant to [Duke’s] FERC obligation[ ]” to manage Lake
Norman’s shoreline, uses, and occupancies. Specifically, the SMG “regulate the
construction and maintenance of lake access facilities” and similar dock structures
through “permits or other agreements” that Duke issues. Thus, pursuant to the SMG
and with Duke’s permission, the third-party homeowners began building docks, piers,
and other shoreline structures as early as 1964 that extend from their waterfront lots
over and into the waters of Lake Norman. The Kiser family has also sought and
received permission from Duke to build certain shoreline structures.5 Accordingly,
many of the structures built by the Kisers and the third-party homeowners touch or
are anchored to the Kisers’ submerged property subject to Duke’s easement.
During a drought in 2015, the lake level receded. Michael L. Kiser, a grandson
of the Kiser Grandparents, built a seventeen-and-a-half-foot retaining wall extending
from the Kiser lot into the once submerged property. Mr. Kiser then backfilled the
5 At oral argument, when asked whether the Kisers have requested a permit from
Duke to build a dock or similar structure in the past, counsel for the Kisers responded in the
affirmative, stating that Duke has “the authority to grant permission to build” such
structures. See Oral Argument at 29:58, Duke Energy Carolinas, LLC v. Kiser (No. 398PA21)
(Feb. 7, 2023), https://www.youtube.com/watch?v=yh0mHp58byg (last visited Mar. 16, 2023).
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Opinion of the Court
area behind the wall with dry materials to extend the shoreline and increase the size
of the Kiser lot. As a result, the new construction encompassed nearly 2,449 square
feet of land covered by Duke’s easement which had previously been submerged. Mr.
Kiser, however, did not apply for a permit or receive permission from Duke prior to
building the retaining wall. In response to Mr. Kiser’s actions, Duke issued a
Stop-Work Directive, and the North Carolina Department of Environmental Quality
(NCDEQ) notified Mr. Kiser that the unauthorized construction would affect the
waters of Lake Norman. Despite multiple requests by both Duke and NCDEQ, Mr.
Kiser did not remove the retaining wall or any of the fill material from the lakebed
within the easement boundary.
On 27 January 2017, Duke filed suit against Mr. Kiser and his wife, Robin S.
Kiser, together with their entity Sunset Keys, LLC6 (the Kisers), alleging trespass
and wrongful interference with the easement by building the retaining wall and
backfilling the lakebed area subject to Duke’s easement. Duke sought injunctive relief
requiring the Kisers “to remove the retaining wall and fill material from the lake bed”
and restore “the disturbed shoreline area.” On 13 February 2017, the Kisers
responded and asserted counterclaims against Duke. The Kisers challenged Duke’s
authority under the easement to demand removal of the retaining wall, to issue dock
permits to third-party homeowners, and to allow recreational use of the waters. In
6 Upon the death of Michael Kiser’s father in March of 2016, Michael Kiser and his
two brothers became the owners of the land at issue. They subsequently conveyed the land
to Sunset Keys, LLC, of which Michael Kiser and his two brothers are the members.
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addition, the Kisers brought trespass claims against the third-party homeowners for
building structures on the Kisers’ submerged property without their consent, joining
the homeowners7 as third-party defendants.
On 3 August 2018, Duke moved for partial summary judgment regarding its
claims for wrongful interference and injunctive relief against the Kisers. The trial
court held a hearing on 13 August 2018, heard oral argument from both parties, and
considered the pleadings, affidavits, and briefs submitted to the court. On 27 August
2018, the trial court entered an order and judgment granting Duke’s motion for
partial summary judgment. The trial court found that Duke’s rights under the
easement entitled it to have the retaining wall cleared from the submerged property.
Accordingly, the trial court ordered the Kisers to remove the retaining wall and clear
the backfilled area from the lakebed.
On 25 October 2019, Duke moved for summary judgment on its remaining
trespass claim and the Kisers’ counterclaims. On 28 October 2019, the third-party
homeowners moved for summary judgment on the Kisers’ third-party trespass
claims. After conducting a hearing in which the trial court heard oral argument and
considered materials submitted by the parties, the trial court entered an order and
judgment on 2 January 2020 granting summary judgment in favor of Duke and the
third-party homeowners. The trial court recognized Duke’s broad authority under the
7 Several of the third-party homeowners to this appeal are represented by counsel
while others are proceeding unrepresented.
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Opinion of the Court
easement and determined that Duke “acted within the scope of [its] authority” by
granting permits for docks and other structures on the submerged property and by
allowing recreational use of the water above the submerged property. Furthermore,
the trial court quieted title in the waterfront lots, structures, and waters to the
third-party homeowners, finding that the Kisers’ claims constituted a cloud upon the
third-party homeowners’ titles to their properties. The Kisers appealed.8
On appeal, the Kisers argued that Duke acted outside the scope of its authority
under the easement by allowing third parties to use the 280.4 acres of Lake Norman
without the Kisers’ consent and that the trial court erred by quieting title in the
waterfront structures to the third-party homeowners. Duke Energy Carolinas, LLC
v. Kiser, 280 N.C. App. 1, 6, 867 S.E.2d 1, 7–8 (2021). The Court of Appeals reversed
the trial court’s 2 January 2020 order granting summary judgment to Duke and the
third-party homeowners. Id. at 16, 867 S.E.2d at 14. First, the Court of Appeals
recognized that the plain language of the Flowage Easement is unambiguous and
broad enough to “virtually convey a fee simple interest” to Duke. Id. at 9, 867 S.E.2d
at 9. The Court of Appeals, however, “decline[d] to read [the Flowage Easement] in
such a way,” deferring instead to its subjective view of the Kiser Grandparents’
8 The Kisers filed and served a notice of appeal for both of the trial court’s orders but
certified only the 2 January 2020 order for review. Thus, the Court of Appeals limited its
review to the 2 January 2020 order. Accordingly, we likewise limit our review to the 2
January 2020 order. The trial court’s 27 August 2018 order remains undisturbed.
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Opinion of the Court
purported intent in retaining the fee title to the submerged property.9 Id. at 9–10,
867 S.E.2d at 9–10.
Next, upon noting Duke’s broad interest in the submerged property, the Court
of Appeals considered whether an easement granting “virtually unlimited authority
to ‘treat’ property ‘in any manner’ includes the power for the easement holder to
permit strangers to the agreement to use the land for their own benefit.” Id. at 10,
867 S.E.2d at 10. The Court of Appeals adopted a bright-line principle that
unless an easement explicitly states otherwise, an
easement holder may not permit strangers to the easement
agreement to make use of the land, other than for the use
and benefit of the easement holder, without the consent of
the landowner where such use would constitute additional
burdens upon the servient tenement.
Id.; see Lovin v. Crisp, 36 N.C. App. 185, 189, 243 S.E.2d 406, 409 (1978) (holding that
under the terms of the easement at issue, because the easement holder’s surrounding
property was not mentioned in the easement, the nearby land could not benefit from
the easement holder’s interest). Therefore, according to the Court of Appeals, because
the third-party homeowners here are not mentioned in the easement and did not have
a property interest in the land when the easement was created, “Duke exceeded its
scope of authority by permitting the [third-party homeowners] to construct and
9 There are multiple reasons why the Kiser Grandparents may have conveyed an
easement to Duke rather than title to the parcel in fee simple. It was error for the Court of
Appeals to project its own subjective beliefs in attempting to discern the original parties’
purported intent for granting the easement. When the language of an easement is clear and
unambiguous, the court is to infer the intention of the parties from the words of the easement
itself. See State v. Philip Morris USA Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225 (2005).
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Opinion of the Court
maintain structures over and into the Kisers’ submerged land without the Kisers’
consent.” Kiser, 280 N.C. App. at 11, 867 S.E.2d at 10.
Duke filed a petition for discretionary review with this Court on 22 November
2021. On 2 December 2021, the third-party homeowners also filed a petition for
discretionary review. This Court allowed the parties’ petitions on 9 February 2022.
This Court reviews an appeal of a summary judgment order de novo. In re Will
of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008). Summary judgment is proper
when “there is no genuine issue as to any material fact and . . . any party is entitled
to a judgment as a matter of law.” N.C.G.S. § 1A–1, Rule 56(c) (2021). The moving
party is entitled to summary judgment “when only a question of law arises based on
undisputed facts.” Ussery v. Branch Banking & Tr. Co., 368 N.C. 325, 334, 777 S.E.2d
272, 278 (2015). “All facts asserted by the [nonmoving] party are taken as true
and . . . viewed in the light most favorable to that party.” Id. (alterations in original)
(quoting Dobson v. Harris, 352 N.C. 77, 83, 530 S.E.2d 829, 835 (2000)).
In applying these well-established principles for summary judgment here, we
consider whether an easement granted to establish a lake, which provides for
“absolute water rights” to “treat” the servient estate “in any manner deemed
necessary or desirable,” allows the easement holder to permit third parties to use the
land when the easement holder so deems it necessary or desirable. “An easement is
an interest in land . . . generally created by deed.” Borders v. Yarbrough, 237 N.C.
540, 542, 75 S.E.2d 541, 542 (1953). “An easement deed . . . is, of course, a contract.”
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Weyerhaeuser Co. v. Carolina Power & Light Co., 257 N.C. 717, 719, 127 S.E.2d 539,
541 (1962). As such, the ordinary rules of contract construction apply to construing
an easement. Id.Like contracts, interpreting an easement “requires the court to examine the
language of the [easement] itself for indications of the parties’ intent at the moment
of execution.” State v. Philip Morris USA Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225
(2005) (citing Lane v. Scarborough, 284 N.C. 407, 409–10, 200 S.E.2d 622, 624 (1973)).
In doing so, “[i]t must be presumed the parties intended what the language used
clearly expresses, and the [easement] must be construed to mean what on its face it
purports to mean.” Hartford Accident & Indem. Co. v. Hood, 226 N.C. 706, 710, 40
S.E.2d 198, 201 (1946) (citation omitted). Accordingly, “[i]f the plain language of [the
easement] is clear, the intention of the parties is inferred from the words of the
[easement],” Philip Morris USA Inc., 359 N.C. at 773, 618 S.E.2d at 225 (quoting
Walton v. City of Raleigh, 342 N.C. 879, 881, 467 S.E.2d 410, 411 (1996)), and the
“construction of the [easement] is a matter of law for the court,” Hagler v. Hagler, 319
N.C. 287, 294, 354 S.E.2d 228, 234 (1987).
In addressing whether Duke has authority under the easement to allow the
third-party homeowners to build shoreline structures over and into the submerged
property and use the waters of Lake Norman, we first look to the plain language of
the easement. In looking to the plain language, we do bear in mind that the original
parties created the easement in order for Duke to form a lake. Here the Flowage
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Opinion of the Court
Easement expressly provides that the Kiser Grandparents permanently granted
Duke “absolute water rights” to “treat said 280.4 acres . . . in any manner [Duke]
deem[s] necessary or desirable.” The language of the Flowage Easement is clear,
unambiguous, and broad in scope, plainly allowing Duke to treat the submerged
property however Duke deems “necessary or desirable.” Significantly, the easement’s
text does not limit how Duke may treat the submerged property, confine Duke’s
exercise of discretion, set conditions that Duke must satisfy before using the
submerged property in a particular manner, or prohibit Duke from allowing
third-party uses of the property without the Kisers’ consent.
The Kisers, on the other hand, contend that because the easement is silent
with respect to the third-party homeowners, the third parties have no right to use the
waters recreationally, build shoreline structures into the submerged easement
property, or otherwise benefit from the easement without the Kisers’ consent. The
Kisers, however, overlook Duke’s expansive scope of authority evidenced by the
Flowage Easement’s broad, unambiguous language. Such an expansive reading is
consistent with the original parties’ understanding that the purpose of the easement
was for Duke to create and maintain a lake. Accordingly, Duke may properly exercise
its expansive rights under the Flowage Easement to benefit the third-party
homeowners when it is necessary or desirable to Duke. Therefore, Duke acted within
the scope of its authority under the Flowage Easement by allowing the third-party
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Opinion of the Court
homeowners to build docks, piers, and other structures into the submerged property
and to use the waters of Lake Norman for recreation.
The Court of Appeals, despite initially recognizing the Flowage Easement’s
unambiguous language and Duke’s broad authority under the easement, deferred
instead to the original parties’ purported intent in construing the easement. Kiser,
280 N.C. App. at 9–10, 867 S.E.2d at 9–10. As a result, the Court of Appeals adopted
a bright-line rule from Lovin—that easement rights may only benefit the easement
holder unless third parties are also expressly named in the easement—which
contradicts the Flowage Easement’s plain language. Id. at 10, 867 S.E.2d at 10. Lovin,
however, is readily distinguishable from the facts here, is not binding on this Court,
and establishes a principle that narrows the Flowage Easement’s broad and
unambiguous language.
In Lovin, a landowner conveyed an easement by deed to his neighbor. Lovin,
36 N.C. App. at 188, 243 S.E.2d at 409. The language of the easement permitted the
easement holder “to install and maintain a water line” on a specific tract of land. Id.Because the easement’s language was narrowly confined to benefit one parcel of land
and the surrounding property was not described in the easement, the court held that
the easement holder could not install additional water lines to benefit neighboring
lands. Id. at 189–90, 243 S.E.2d at 409–10. Here, however, unlike the limited
easement in Lovin confining the use of the easement to a specific tract of land for a
narrow purpose, the language of the Flowage Easement is broad and does not
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Opinion of the Court
constrain how Duke may treat the easement property. There is a vast difference
between intending to create and maintain a lake versus allowing a water line to cross
a property. As such, under the Flowage Easement’s broad language, Duke may permit
third parties to use the easement property when such use is necessary or desirable to
Duke. Therefore, because the easement in Lovin and the Flowage Easement here
serve different purposes and contain material differences, the Court of Appeals erred
by relying on Lovin and applying a novel principle that contradicts and narrows the
Flowage Easement’s clear language.
The Flowage Easement’s unambiguous language granting Duke broad
authority over the submerged property is consistent with the purpose of Duke’s
federal licensing obligations over Lake Norman and has been confirmed by the parties
in practice. When Duke obtained the FERC license in 1958, it likewise needed broad
authority over the land at issue in order to flood the entire parcel and comply with its
requirements under the license for developing and operating Lake Norman. As such,
the Kiser Grandparents conveyed to Duke “permanent” and “absolute water rights”
over the Kisers’ parcel, which provided Duke with substantial discretion to manage
the submerged parcel. Duke therefore created a permit plan for homeowners seeking
to build lake access facilities in accordance with Duke’s obligation to oversee Lake
Norman’s shoreline, uses, and occupancies. Duke’s permit plan is encompassed
within Duke’s broad grant of authority under the Flowage Easement’s plain language
and likewise supports the purposes of Duke’s FERC license. Ultimately, Duke’s broad
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grant of authority under the Flowage Easement allows Duke to comply with its FERC
license requirements.
Additionally, the parties’ practices over the past sixty years have consistently
confirmed that Duke has authority under the Flowage Easement to allow the
third-party homeowners to build shoreline structures into the submerged property.
Since the Kisers began subdividing and selling the waterfront lots on Kiser Island,
the third-party homeowners have complied with Duke’s permit plan and have
received authorization from Duke, rather than the Kisers, to build docks, piers, and
other shoreline structures on their lots and into the submerged easement property.
Notably, the Kiser family has also sought and received permission from Duke to build
shoreline structures extending from the Kiser lot and into the submerged property
because Duke has “the authority to grant permission to build” such structures. See
Oral Argument at 29:58, Duke Energy Carolinas, LLC v. Kiser (No. 398PA21) (Feb.
7, 2023), https://www.youtube.com/watch?v=yh0mHp58byg (last visited Mar. 16,
2023). Thus, not only have the third-party homeowners sought permission from Duke,
rather than the Kisers, to build into the submerged land, but the Kisers have also
requested and received similar authorization from Duke. As such, both the named
and unnamed parties to the easement have repeatedly acted in a manner consistent
with Duke’s having authority under the Flowage Easement to permit homeowners to
build structures from their waterfront lots over and into the submerged property.
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Opinion of the Court
In summary, the plain language of the easement is unambiguous and grants
Duke broad authority to treat the submerged easement property in any manner Duke
deems necessary or desirable. Therefore, Duke acted within the scope of its broad
authority under the easement by allowing the third-party homeowners to build docks,
piers, and other structures over and into the submerged land without the Kisers’
consent. The easement’s plain language is consistent with Duke’s federal licensing
obligations and has been confirmed by the parties in practice. Accordingly, the
decision of the Court of Appeals is reversed.
REVERSED.
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