Court Opinion

ID: 4230804
Source: CourtListenerOpinion
Date Created: 2017-12-20 21:08:50.72343+00
Date Added: 2024-06-11T14:42:36.500971
License: Public Domain

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;

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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

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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.

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       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.

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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

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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.

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        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

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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.

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