Indiana Business Lawyer Blog
On February 5, 2020, the Indiana Court of Appeals handed down an opinion that will have landowners thinking twice before interfering with easement owners’ rights. In Duke Energy Indiana v. J & J Development Company, J & J bought a piece of land with the intent of developing a residential subdivision. Duke Energy Indiana v. J & J Development Company, 19A-PL-735, 1 (Ind. Ct. App. 2020). Moving forward with their intent, J & J Development Company (“J & J”) constructed improvements within an electric-transmission line easement owned by Duke Energy (“Duke”). Id. at 1-2.
Duke and its predecessors have owned the electric-transmission line easement in question since 1956 through an instrument that granted Duke, among other rights, the right to “erect, construct, and maintain the necessary substructures for said towers and poles.” Id. at 3. Without contacting Duke, J & J went ahead and had a surveyor prepare a plat for the subdivision, received plat approval, and then purchased the land. Id. at 5. J & J then began to construct the “improvements” to the easement, or in other words, they started to build the subdivision which fell within the easement. Id. at 5. The improvements J & J constructed within the easement included: an entrance, a road running through much of the easement, detention basins, a fire hydrant, and buried utility lines. Id. at 5.
Duke was not contacted by J & J until they wanted to discuss the sewer work they wanted done. Id. at 8. This led to Duke inspecting the improvements made by J & J and concluding that J & J impermissibly encroached upon the easement. Id. at 8. As a result, J & J filed suit against Duke, seeking a declaration that the improvements did not unreasonably interfere with Duke’s use of the easement. Id. at 8. Duke counterclaimed, requesting a declaration that J & J’s improvements were impermissible and asked for an injunction to have J & J remove the improvements. Id. at 8. The trial court ruled that the improvements were permissible, which resulted in an appeal by Duke. Id. at 8.
Both parties stipulated that J & J was entitled to use the land within the easement, but the main issue in this case was to what extent could J & J make use of the land. Id. at 9. It is well established in Indiana law that the owner of land can use land within an easement as long as it does not unreasonable interfere with the easement owner’s rights. Id. at 9-10. Thus, the task that needed to be addressed by the court was what does it truly mean for a landowner to unreasonably interfere with an easement owner’s rights?
The Court of Appeals ultimately sided with Duke for various reasons. Duke argued that the entrance to the subdivision is the only entrance, which means that when Duke is doing work, homeowners would not be able to get in or out. Also, if Duke were required to let traffic through every time they are doing work in that area, their work would be entirely disrupted. The Court agreed. Id. at 11. Another concern of Duke’s was that the buried utilities, roads, and detention basins can impede or possibly prevent Duke from accessing part of its transmission corridor and facilities. Id. at 12. The Court agreed.
One of J & J’s arguments was that its improvements do not unreasonably interfere with Duke’s use of the easement because “the transmission of electricity through the easement has not been obstructed.” Id. at 15. The Court addressed the flaw with this argument is that the easement at issue wasn’t just obtained “to send electrons down conductor wires, but to allow much more.” Id. at 16. The Court stated, “the fact that J & J’s improvements have not yet hindered any of Duke’s work by no means establishes that they will not do so in the future.” Id. at 16. This remark should resonate with Indiana landowners who have granted an easement because the Court of Appeals has just made the unreasonable interference standard much harder to rebut.
Jeremy Fetty is a partner in the law firm of Parr Richey with offices in Indianapolis and Lebanon. Mr. Fetty is current Chair of the Firm Utility and Business Section and often advises businesses and utilities (for profit, non-profit and cooperative) on regulatory, compliance, and transactional matters.
The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.
