Goodwill Loss or Damage:  Reasonable Mitigation

Under California law, the loss or damage of a business’s goodwill due to an eminent domain taking cannot be recovered unless the business acts “reasonably” and takes “reasonably prudent” steps to prevent the loss by relocating the business.

In an earlier article in this blog titled “Relocation:  Show Me The Money!,” we discussed that:

The key words here are “reasonably” and “reasonably prudent.”  Is it reasonably prudent to go into heavy debt in order to relocate?  Is it reasonably prudent to relocate without knowing in advance how much financial assistance you will receive from the government and, perhaps more importantly when you will receive it?  Is it reasonably prudent to relocate when, under the law, your relocation benefits may be subject to caps that fall way below what a relocation would actually cost?

We argued that this was only common sense.  No reasonably prudent business person would undergo the trauma and expense and effort of relocation without knowing how much financing he or she would receive and when he or she would get that financing.

As we predicted, this concept is now being recognized in eminent domain case law.  While the question had not been clearly addressed by the published decisions at the time of our prior blog, a California appellate court (in Los Angeles County Metropolitan Transportation Authority v. Yum Yum Donut Shops, Inc., Second Appellate District Case No. B276280, certified for publication) held on February 28, 2019 that:

We are aware of no authority compelling a condemnee to relocate when the investment required to relocate would make it uneconomic to do so.

The case further held that goodwill loss or damage could be recovered even if SOME of it could have been prevented or mitigated.  The law grinds slowly but it slowly grinds!  This practical common sense notion is now being recognized and should be pursued and extended by businesses impacted in eminent domain and by their legal counsel.

Make us the legal part of your team. At Callanan, Rogers & Dzida, LLP our attorneys have over 40 years of combined experience on representing property and business owners impacted by eminent domain. Contact us to schedule a free initial consultation.

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