Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 06CC04412 Nancy Weiben Stock, Judge.
Century Law Group, Karen A. Larson, Rizza Gonzales and Daniel A. Woodford for Defendant and Appellant.
Department of Transportation, Legal Division, Ronald W. Beals, Chief Counsel, Jeffrey R. Benowitz, Deputy Chief Counsel, Glenn B. Mueller and John Frederick Smith, Assistant Chief Counsel, for Plaintiff and Respondent.
OPINION
RYLAARSDAM, ACTING P. J.
Defendant Ho S. Ahn appeals the judgment entered awarding him over $41,000 for loss of goodwill after his property was taken by the Department of Transportation (plaintiff) in a condemnation action. He contends the court erred in excluding evidence of his claim for mitigation expenses. Finding no error, we affirm the judgment.
FACTS
Plaintiff condemned a shopping plaza where defendant owned and operated a framing store and art gallery. Defendant located a replacement site about a mile away and opened his new store two weeks after a court order authorized plaintiff to take prejudgment possession of the shopping plaza. The relocated business was not profitable.
Plaintiff’s expert David Girbovan determined defendant’s business had $26,000 of good will in the “before condition” of the property prior to condemnation and displacement and no goodwill in the “after condition, ” postdisplacement. In contrast, defense expert Chris Pedersen calculated the business had $83,000 of goodwill in the “[b]efore [c]ondition” and no goodwill in the “[a]fter [c]ondition.” He also concluded defendant was entitled to $323,000 in additional compensation for “[m]itigation [e]xpenses, ” consisting of “[b]usiness net income [l]oss” from 2006 to 2007, “[i]nventory [l]oss 50%, ” “[o]wner’s labor, ” “[r]elocation expense, ” “[c]ost of [c]apital, ” and “[r]emainder [l]ease [p]ayments.” These were “incurred as a result of the business’[s] forced relocation under [Code of Civil Procedure section] 1263.510.”
Upon plaintiff’s objection to the presentation of mitigation expenses to the jury, the court held an evidentiary hearing. It concluded such expenses were “not recoverable apart from the lost goodwill. [¶] Insofar as goodwill is valued by him at $84,000, [defendant’s] recovery for the loss would be at most $84,000. [¶]... [¶] In all of the cases discussing the business owner’s recovery, it has always been in the context of determining the value of the lost goodwill. [¶]... [¶] In the case at bar, it appears that the defendant lacks legal authority for his approach and urges the Court to consider sympathetic factors, suggesting that the outcome in this case will be unfair, and he is not at fault for his business losses. He also makes the argument that metaphysically but for the condemnation, he would not have had to relocate. However, this does not provide a legal support for his theory.”
DISCUSSION
As relevant, Code of Civil Procedure section 1263.510 provides, “(a) The owner of a business conducted on the property taken, or on the remainder if the property is part of a larger parcel, shall be compensated for loss of goodwill if the owner proves all of the following: [¶] (1) The loss is caused by the taking of the property or the injury to the remainder. [¶] (2) The loss cannot reasonably be prevented by a relocation of the business or by taking steps and adopting procedures that a reasonably prudent person would take and adopt in preserving the goodwill. (3) Compensation for the loss will not be included in payments under Section 7262 of the Government Code. [¶] (4) Compensation for the loss will not be duplicated in the compensation otherwise awarded to the owner. [¶] (b) Within the meaning of this article, ‘goodwill’ consists of the benefits that accrue to a business as a result of its location, reputation for dependability, skill or quality, and any other circumstances resulting in probable retention of old or acquisition of new patronage.”
Defendant argues his claimed “mitigation damages are recoverable under the statutory definition of goodwill” (bold and capitalization omitted) based on People ex rel. Dept. of Transp. v. Muller (1984) 36 Cal.3d 263 (Muller). There, condemnation forced a veterinarian to relocate his practice and he did so to a nearby location to avoid losing customers although the rent was higher than at a farther location. Muller held that the decrease in profits attributable to the higher rent could be recovered as lost goodwill, noting “[t]he purpose of the statute was unquestionably to provide monetary compensation for the kind of losses which typically occur when an ongoing small business is forced to move and give up the benefits of its former location.” (Id. at p. 270.) Because the lower rent at the original location was such a benefit, its loss was recoverable as lost goodwill. (Id. at p. 268.)
The court disagreed with the Department of Transportation’s contention that Code of Civil Procedure section 1263.510 did not authorize compensation for increased expenses but only for lost patronage. (Muller, supra, 36 Cal.3d at pp. 268-269.) It stated, in dictum, “Under Department’s definition of goodwill, Dr. Muller would also be entitled to compensation for expenses reasonably incurred in an effort to prevent a loss of patronage. [Citation.] It appears that his expenses-the higher rent at the new location-were incurred in a reasonable (and apparently successful) effort to prevent a loss of patronage. The Department conceded as much in its trial brief and on this appeal. Thus, had the case been tried on a theory that the higher rent was reasonably necessary to mitigate a threatened loss of patronage, Dr. Muller might well have been awarded the same recovery.” (Id. at pp. 271-272.)
Because this part of the court’s opinion was dictum, Muller did not hold, as defendant contends, “that th[e] mitigation expense [for a more expensive lease] was recoverable.” Defendant cites no authority supporting his claim that “where the business fails then there must be two calculations representing two distinct losses, the loss of goodwill and the mitigation expense. Muller did not so hold and neither did Albers v. County of Los Angeles (1965) 62 Cal.2d 250.
Defendant’s argument fails for another reason: he made no showing his claimed mitigation expenses “will not be included in payments under Section 7262 of the Government Code” (section 7262). (Code of Civ. Proc., § 1263.510, subd. (a)(3).) Section 7262 is part of the California Relocation Assistance Act, which authorizes administrative recovery “for actual moving and related expenses” incurred by persons displaced by public projects. (§ 7262, subd. (a); Redevelopment Agency v. Arvey Corp. (1992) 3 Cal.App.4th 1357, 1361.) It provides in relevant part, “(a) Whenever a program or project to be undertaken by a public entity will result in the displacement of any person, the displaced person is entitled to payment for actual moving and related expenses as the public entity determines to be reasonable and necessary, including expenses for all of the following: [¶] (1) Actual and reasonable expenses in moving himself or herself, his or her family, business, or farm operation, or his or her, or his or her family’s, personal property. [¶] (2) Actual direct losses of tangible personal property as a result of moving or discontinuing a business or farm operation, but not to exceed an amount equal to the reasonable expenses that would have been required to relocate the property, as determined by the public entity. [¶] (3) Actual and reasonable expenses in searching for a replacement business or farm, not to exceed one thousand dollars ($1,000). [¶] (4) Actual and reasonable expenses necessary to reestablish a displaced farm, nonprofit organization, or small business at its new site, but not to exceed ten thousand dollars ($10,000).” (§ 7262, subd. (a).)
Under section 7262, “moving expenses incurred in connection with an eminent domain action are fully compensable so long as they are ‘actual’ and ‘reasonable, ’ but reestablishment expenses, even if ‘actual’ and ‘reasonable, ’ are compensable only up to $10,000. [Citation.] [California Code of Regulations, title 25] clarifies this distinction by identifying expenses properly categorized as ‘moving... expenses’ and ‘restablishment expenses.’” (Los Angeles Unified School Dist. v. Casasola (2010) 187 Cal.App.4th 189, ___ [2010 WL 3038722, p. *14] (Casasola), fn. omitted.)
In Casasola, the court recently held that “mitigation expenses are not compensable under [Code of Civil Procedure] section 1263.510 if they constitute ‘moving expenses’ or ‘reestablishment expenses’ as defined by... section 7262 and California Code of Regulations, title 25, section 6090. Accordingly, because the [defendants] have not demonstrated that any of their claimed mitigation expenses are something other than ‘moving expenses’ or ‘reestablishment expenses’ as defined by those sections, the trial court correctly found that the [defendants] were not entitled to be compensated for them in this eminent domain proceeding.” (Casasola, supra, 187 Cal.App.4th at p. ___ [2010 WL 3038722, p. *7], fn omitted.)
In so holding, Casasola rejected the same argument urged here, that “under Muller we must liberally construe the goodwill recovery statute and, where its meaning is unclear, we must construe it to ‘“extend the remedy.”’” (Casasola, supra, 187 Cal.App.4th at p. ___ [2010 WL 3038722, at p. *14.) It explained the defendants “are correct that Muller establishes this general principle, but the principle does not apply here, where there is an express statutory mandate to the contrary.” (Ibid.)
The same applies to this case. Although the trial court ruled defendant had satisfied Code of Civil Procedure section 1263.510, subdivision (a)(3) because “nowhere in... Pedersen’s computation of goodwill are there any payments that will be duplicative of payments actually made and received under... section 7262” (italics added), it did not make the same finding with respect to Pedersen’s determination of mitigation expenses, which was a separate item from lost goodwill in his calculation. According to Pedersen, the mitigation expenses were “[i]n addition to the loss of goodwill” and “incurred as a result of the business[’s] forced relocation.” The latter effectively concedes that the claimed mitigation expenses were in fact relocation expenses. In any event, because defendant failed to show his “claimed ‘mitigation’ expenses are neither ‘moving’ nor ‘relocation’ expenses, we affirm the trial court’s order excluding evidence of those expenses in the eminent domain trial.” (Casasola, supra, 187 Cal.App.4th at p. ___ [2010 WL 3038722, at p. *14].)
Defendant maintains that once he “met the threshold issues under [Code of Civil Procedure section] 1263.510, [subdivision] (a)[, ] then it was up to the jury to decide whether the expenses [he] incurred in relocating... were reasonably incurred in an effort to preserve his business” and the court “invaded the province of the [j]ury” by not allowing it to determine the amount of the mitigation damages. But the contention lacks merit in light of our conclusion he did not meet his initial burden under Code of Civil Procedure section 1263.510, subdivision (a)(3) with respect to his claimed mitigation expenses.
DISPOSITION
The judgment is affirmed. Plaintiff shall recover its costs on appeal.
WE CONCUR: BEDSWORTH, J., MOORE, J.