Bellwether Properties, LLC v. Duke Energy Indiana, Inc. , 87 N.E.3d 462 ( 2017 )


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  • ATTORNEYS FOR APPELLANT                               ATTORNEYS FOR APPELLEE
    William N. Riley                                      Thomas L. Davis
    Joseph N. Williams                                    Darren A. Craig
    James A. Piatt                                        Maggie L. Smith
    Anne Medlin Lowe                                      Frost Brown Todd LLC
    Riley Williams & Piatt, LLC                           Indianapolis, IN
    Indianapolis, IN
    Lonnie D. Johnson                          Steven J. Moss
    Pamela J. Hensler                          Duke Energy Business Services, LLC
    Michael J. Potraffke                       Plainfield, IN
    Clendening Johnson & Bohrer, P.C.
    Bloomington, IN
    __________________________________________________________________________________
    In the
    FILED
    Indiana Supreme Court                                         Dec 20 2017, 3:47 pm
    _________________________________                            CLERK
    Indiana Supreme Court
    Court of Appeals
    No. 53S04-1703-CT-121                                  and Tax Court
    BELLWETHER PROPERTIES, LLC,
    Appellant (Plaintiff),
    V.
    DUKE ENERGY INDIANA, INC.,
    Appellee (Defendant).
    _________________________________
    Appeal from the Monroe Circuit Court, No. 53C01-1506-CT-1172
    The Honorable E. Michael Hoff, Judge
    _________________________________
    On Petition to Transfer from the Indiana Court of Appeals, No. 53A04-1511-CT-1880
    _________________________________
    December 20, 2017
    Slaughter, Justice.
    Dismissal under Trial Rule 12(B)(6) is rarely appropriate when the asserted ground for
    dismissal is an affirmative defense. To withstand a 12(B)(6) dismissal, the complaint need only
    allege such facts that, if proved, would entitle the plaintiff to obtain relief from the defendant. A
    complaint that survives that limited scrutiny states a claim for relief, even if there may lurk on the
    horizon an unassailable defense. Only where a plaintiff has pleaded itself out of court by alleging,
    and thus admitting, the essential elements of a defense does its complaint fail to state a claim on
    which relief can be granted. Here, the trial court found the statute of limitations had expired and
    dismissed the plaintiff’s complaint with prejudice under Rule 12(B)(6). We hold the dismissal was
    premature because the face of the complaint did not establish that the asserted claim was time-barred.
    We thus reverse and remand.
    Factual and Procedural History
    Plaintiff, Bellwether Properties, LLC, owns real property in Bloomington, Indiana. In
    1957, the property’s prior owner granted a utility easement—an “Electric Pole Line Easement”—
    to the predecessor in interest of Defendant, Duke Energy Indiana, Inc. The easement, which is
    perpetual and runs with the land, granted the utility the right to build, remove, and maintain
    electrical lines, including necessary poles and wires, for transmitting electricity over a ten-foot-
    wide strip of the property. Thus, the easement’s burden on the property was no more than ten feet
    in width.
    In 2002, the Indiana Utility Regulatory Commission adopted the 2002 edition of the
    National Electrical Safety Code. 
    26 Ind. Reg. 328
    -29 (November 1, 2002) (codified at 
    170 Ind. Admin. Code 4
    -1-26(b) (2004)). The Safety Code is published by the Institute of Electrical and
    Electronic Engineers, Inc., a private professional association. The Code establishes standards for
    safeguarding persons from hazards arising from “the installation, operation, or maintenance of
    overhead supply and communication lines.” National Electric Safety Code, IEEE, 2002 at 59. The
    Commission did not reproduce the Safety Code’s text within an administrative rule, but merely
    incorporated the Code by reference and advised that copies could be obtained from the Institute in
    New Jersey and the Commission in Indianapolis. 170 I.A.C. 4-1-26(b).
    Of relevance here, the 2002 Safety Code establishes how close structures on the land can
    be to a utility’s overhead lines. These minimum “strike” or lateral clearances vary with the types
    of lines and the amount of electrical current they carry. National Electric Safety Code, at 101-03.
    Table 234-1 of the Code provides that “Insulated communication conductors and cables;
    messengers; surge-protection wires; grounded guys; ungrounded guys exposed to 0 to 300 V;
    2
    neutral conductors meeting Rule 230E1; and supply cables meeting Rule 230C1” require 1.40
    meters of horizontal clearance to walls, projections, and guarded windows. 
    Id.
     And “[o]pen supply
    conductors, over 750 V to 22 kV” require 2.30 meters of horizontal clearance. 
    Id.
    In 2015, Bellwether brought an inverse-condemnation action alleging that Duke Energy’s
    maintenance of its electrical line on Bellwether’s property, in accordance with the Safety Code,
    imposes a 23-foot-wide easement—thirteen feet more than the easement permits. According to
    Bellwether, this additional burden effected a taking of its property for a public use requiring the
    payment of just compensation. Duke Energy responded by filing a motion to dismiss under Rule
    12(B)(6), arguing that Bellwether’s claim was time-barred under the applicable six-year statute of
    limitations. The trial court agreed and granted Duke’s motion, concluding that Bellwether’s claim
    was untimely because more than six years had passed since adoption of the Safety Code in 2002.
    A divided Court of Appeals reversed. It held that Indiana’s discovery rule tolled the running
    of the statute of limitations because “the circumstances here are too attenuated to conclude that the
    taking was ascertainable by Bellwether”. Bellwether Properties, LLC v. Duke Energy Indiana,
    Inc., 
    59 N.E.3d 1037
    , 1046 (Ind. Ct. App. 2016) (footnote omitted). The dissent relied on our
    opinion in Tiplick v. State, 
    43 N.E.3d 1259
     (Ind. 2015), in concluding that Bellwether “must be
    charged with knowledge” of the taking and that the trial court was correct to dismiss its complaint
    as untimely. 59 N.E.3d at 1051 (May, J., dissenting). Duke Energy then sought transfer, which we
    granted, thereby vacating the Court of Appeals’ opinion. Like the Court of Appeals, we also
    reverse the trial court’s dismissal, but do so on different grounds.
    Standard of Review
    A motion to dismiss under Rule 12(B)(6) “tests the legal sufficiency of the [plaintiff’s] claim,
    not the facts supporting it.” Thornton v. State, 
    43 N.E.3d 585
    , 587 (Ind. 2015) (citation omitted).
    Dismissals are improper under 12(B)(6) “unless it appears to a certainty on the face of the complaint
    that the complaining party is not entitled to any relief.” State v. American Family Voices, Inc., 
    898 N.E.2d 293
    , 296 (Ind. 2008) (citations omitted). This Court reviews a 12(B)(6) dismissal de novo,
    giving no deference to the trial court’s decision. Veolia Water Indianapolis, LLC v. Nat’l Trust Ins.
    Co., 
    3 N.E.3d 1
    , 4 (Ind. 2014). In reviewing the complaint, we take the alleged facts to be true and
    3
    consider the allegations in the light most favorable to the nonmoving party, drawing every reasonable
    inference in that party’s favor. Id. at 4-5.
    Discussion and Decision
    I.      Dismissal under Trial Rule 12(B)(6) was improper because the limited record here does
    not establish when Bellwether’s cause of action accrued.
    The trial court dismissed Bellwether’s complaint with prejudice under Rule 12(B)(6) after
    concluding “the [six-year] statute of limitations provides a complete defense to [the] complaint.”
    The court premised the dismissal on its determination that “any amendment of the complaint
    pursuant to Trial Rule 12(B) would not change that underlying fact.”
    A 12(B)(6) motion to dismiss tests the complaint’s legal sufficiency. A complaint states a
    claim on which relief can be granted when it recounts sufficient facts that, if proved, would entitle
    the plaintiff to obtain relief from the defendant. The plaintiff “need not anticipate a statute of
    limitations defense and plead matter[s] in avoidance in the complaint.” Nichols v. Amax Coal Co.,
    
    490 N.E.2d 754
    , 755 (Ind. 1986) (adopting statement of Judge Ratliff, who dissented from denial of
    rehearing in Nichols v. Amax Coal Co., 
    482 N.E.2d 776
    , 778 (Ind. Ct. App. 1985)). 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”. 490 N.E.2d at 755 (same).
    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.
    4
    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.
    II.    All persons are charged with knowing the law, but the law must be reasonably
    accessible to those having to obey it.
    Rather than concluding our opinion here, we elect to raise an additional issue sua sponte that
    the parties and the trial court may wish to consider on remand: whether the 2002 Safety Code was
    reasonably accessible to Bellwether.
    A longstanding legal principle presumes that citizens know the law and must obey it—on
    pain of losing their lives, liberty, or property for noncompliance. “[B]ecause we assume that man is
    free to steer between lawful and unlawful conduct, we insist that laws give the person of ordinary
    intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly.”
    Grayned v. City of Rockford, 
    408 U.S. 104
    , 108 (1972). An ancient legal maxim, phrased in the
    obligatory Latin (ignorantia juris non excusat), admonishes that ignorance of the law is no excuse.
    See Cotton v. Commonwealth Loan Co., 
    206 Ind. 626
    , 632, 
    190 N.E. 853
    , 856 (1934). But central
    to the presumption that persons know the law is that the law is accessible.
    It is a maxim of universal application that every man is presumed to know the law,
    and it would seem inherent that freedom of access to the laws, or the official
    interpretations of those laws, should be coextensive with the sweep of the maxim.
    Knowledge is the only just condition of obedience. The laws of Rome were written
    on tablets and posted, that all might read, and all were bound to obedience.
    5
    Ex parte Brown, 
    166 Ind. 593
    , 611, 
    78 N.E. 553
    , 559 (1906) (citation omitted). If the rule of law
    means anything, it is that persons have meaningful access to the laws they are obliged to follow, so
    they can conform their conduct accordingly.
    A.      The practice of incorporating extrinsic materials by reference often includes
    privately published standards that are copyright-protected.
    Over the last fifty years, a trend has emerged nationally allowing extrinsic materials to be
    included in statutory and administrative codes. See Memorandum from Attorney General Ramsey
    Clark to the Executive Departments and Agencies Concerning Section 3 of the Administrative
    Procedure    Act    as   Revised    Effective    July   4,   1967     (June   1967)    (available    at
    https://www.justice.gov/oip/attorney-generals-memorandum-public-information-section-adminis-
    tive-procedure-act#amendments) (discussing Public Law 89-487, 
    80 Stat. 250
    ) (last visited on Dec.
    19, 2017). These materials are often incorporated by reference, meaning they are not reproduced
    within the codes themselves. Indiana has authorized this practice since 1985. 
    1985 Ind. Acts 298
    -
    99. The incorporated materials usually include not only state and federal statutes and regulations,
    but also privately developed standards, written by various industry and professional groups, that
    are often beyond the technical expertise of government officials. “Contemporary production of
    legal materials relies significantly and increasingly on private-sector standard setters, whose
    products are embodied in law by legislatures, regulators, courts, and other governmental
    authorities.” Lawrence A. Cunningham, Private Standards in Public Law: Copyright, Lawmaking
    and the Case of Accounting, 
    104 Mich. L. Rev. 291
    , 296 (2005) (footnote omitted).
    This kind of rulemaking by proxy has undeniable advantages. It saves governments from
    having to hire policy experts to craft these standards. The process of developing these standards is
    often more streamlined because private actors are not subject to the same regulatory hurdles, such as
    a notice-and-comment rulemaking process. See Emily S. Bremer, Incorporation by Reference in an
    Open-Government Age, 36 Harv. J.L. & Pub. Pol’y 131, 140 (2013). And before widespread use of
    the internet, incorporation by reference allowed rulemaking bodies to save significant printing costs,
    as they made their codes shorter by not having to reprint the full text of the incorporated standard.
    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
    6
    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.
    B.      Does incorporation by reference of copyright-protected materials provide
    meaningful access to laws today?
    In November 2002, the Commission published its final rule in the Indiana Register adopting
    an amendment to Indiana’s Administrative Code that incorporated the 2002 Safety Code by
    reference. This amendment was available for free online in the Indiana Register, but the Safety Code
    was not. See 
    26 Ind. Reg. 328
    -29 (November 1, 2002). The online amendment advised that copies
    of the Safety Code could be obtained from the Institute of Electrical and Electronics Engineers, Inc.,
    in Piscataway, New Jersey, and from the Commission’s office in Indianapolis. 
    Id.
    Just as the Safety Code must be accessible to persons charged with following it, so too must
    it be available to courts faced with legal disputes concerning it. The parties did not include a copy of
    the Safety Code as part of the record on appeal. So we undertook to obtain our own copy—and not
    without difficulty. One of our employees telephoned the Commission’s office in Indianapolis. Our
    employee identified herself to the Commission representative by name and title and asked about
    obtaining a copy of the Code, which turns out to be hundreds of pages long. The Commission’s
    representative told our employee she could make an appointment to come in during office hours to
    inspect the Code. But the representative advised that the Commission does not make copies of the
    Code available for purchase, and that our employee could not check out the Code for copying
    elsewhere, because of restrictions imposed by the publisher. Our employee did not challenge these
    instructions, but merely noted them and reported back what she had been told.
    These “facts” obviously are not part of the record. They represent the experience of one
    person contacting the Commission’s office on one occasion fifteen years after the Commission
    incorporated the 2002 Safety Code by reference. Our employee’s unsuccessful effort to obtain a copy
    of the Code from the Commission may be a one-off. But if it happened once, it is not inconceivable
    it happened before. And if it did, a fair question is whether the practice recurs in accordance with
    Commission policy.
    7
    We eventually obtained a copy of the 2002 Safety Code through this website:
    https://ia600704.us.archive.org/16/items/gov.law.ieee.c2.2002/ieee.c2.2002.pdf (last visited on
    Dec. 19, 2017). We do not know when the Code was first made available online, or whether the copy
    we are working from is the same edition that was incorporated in 2002. We note that our copy says
    it is copyright-protected, but that the Institute has specifically authorized governments to republish
    its content. “Public authorities are granted permission to republish the material herein in laws,
    regulations, administrative orders, ordinances, or similar documents.” National Electric Safety Code,
    IEEE, 2002 at i.
    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. 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.
    To be clear, we do not prejudge that outcome or foreordain that result here. Legal
    determinations often turn on concrete facts. And we do not purport to answer the factual questions
    we have posed rhetorically that may bear on the Code’s accessibility to Bellwether during the time
    Duke Energy claims the statute of limitations was running. We merely note them as a non-exhaustive
    list of issues that may warrant further consideration and development on remand.
    C.      Tiplick v. State does not govern here.
    Finally, our decision in Tiplick v. State, 
    43 N.E.3d 1259
    , does not supply the rule of decision
    here. In Tiplick, we rejected a due-process argument that Indiana’s synthetic-drug statute was
    impermissibly vague in defining what conduct was criminally prohibited. The defendant described
    the prohibitions as a “statutory maze” preventing persons of ordinary intelligence from discovering
    8
    what was banned. We rejected that characterization and concluded the relevant statutes adequately
    put persons on notice of proscribed conduct concerning the manufacture and sale of synthetic drugs
    because the legislature provided a “confined universe of investigation.” Id. at 1264. “This is not a
    ‘maze’”, we held, “but rather a chain with three links—three discrete statutes which give clear
    guidance as to how to find everything falling within the definition of ‘synthetic drug’[.] … Such a
    statutory scheme is not unduly vague.” Id.
    Tiplick’s significance extends beyond its specific holding concerning the synthetic-drug
    statute. Its analysis and rationale apply to any statutory and regulatory scheme within the public
    domain. But the potential problem we foresee with the 2002 Safety Code is not a Tiplick issue. Our
    concern here is not that the Safety Code is too complex or requires consultation with too many legal
    sources, but that the Code may not be accessible to those whose property interests it implicates, now
    that it has been adopted by a state regulatory agency and purports to carry the force of law. Tiplick,
    in other words, does not address the threshold question here, which 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.
    Conclusion
    For these reasons, we reverse the trial court’s judgment dismissing Bellwether’s complaint
    with prejudice and remand for further proceedings not inconsistent with this opinion.
    Rush, C.J., and David, Massa, and Goff, JJ., concur.
    9
    

Document Info

Docket Number: 53S04-1703-CT-121

Citation Numbers: 87 N.E.3d 462

Filed Date: 12/20/2017

Precedential Status: Precedential

Modified Date: 1/12/2023