People ex rel. Department of Transportation v. Presidio Performing Arts Foundation

In an eminent domain proceeding, once the defendant owner proves it has goodwill to lose, it may use any reasonable method to prove the amount of goodwill lost due to condemnation of its real property.  To recover lost goodwill as in an eminent domain proceeding, the defendant owner must first prove that it had goodwill to lose.  Here, defendant satisfied that burden by presenting evidence showing that it had a favorable location and a good reputation for quality programs and for stability.  Defendant presented substantial evidence of some loss of goodwill because the condemnation forced it to move to a less favorable location and plaintiff’s construction activities interrupted defendant’s operations leading to a loss of students, employees, donors, and awards.  The only remaining issue was quantifying the loss of goodwill.  For that purpose there is no single acceptable methodology.  Contrary to plaintiff’s argument, it was not necessary for defendant to quantify lost goodwill by subtracting the value of its tangible assets from its total business value.  Defendant’s expert’s calculation based on capitalizing the shortfall in revenue during the year in which defendant was displaced was an admissible method of quantifying the lost goodwill.

California Court of Appeal, First District, Division 5 (Needham, J.); November 3, 2016; 2016 WL 6554353

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