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The People Ex Rel. v. Timothy N. Lam


December 3, 2010


Appeal from a judgment of the Superior Court of Orange County, Nancy Wieben Stock, Judge. Affirmed. (Super. Ct. No. 06CC04412)

The opinion of the court was delivered by: Rylaarsdam, Acting P. J.

P. ex rel. DOT v. Lam



California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.


Defendant Timothy N. Lam appeals from the judgment denying his claim for loss of business goodwill after his property was taken by plaintiff the Department of Transportation in a condemnation action. He contends the trial court erred in determining he failed to meet the threshold requirements. Finding no error, we affirm the judgment.


Plaintiff condemned a shopping center where defendant and his wife owned and operated a furniture store. Before defendant signed the lease in October 2001, he knew the center might be condemned.

In January 2005, plaintiff's representatives notified tenants the center was being condemned and defendant began searching for a relocation site. With plaintiff's assistance, defendant visited numerous possible new locations within Orange County but was unable to relocate or reopen the business. Although he had two leases drawn up, he did not sign either one because he did not have the money to pay the first and last months' rent, having "already invested everything . . . into [his] stores . . . with opening up all of those manufacturing and furniture lines . . . and . . . the rent was a lot more than what we were paying." The rent would have gone from the approximately $4,000 he was paying to $12,000 or $13,000. His financial circumstances did not allow him to relocate.

Despite multiple notices advising him to leave the premises before July 2006, defendant did not do so until September 2006 and only after he received a 3-day notice to vacate. He had waited "until the very last minute" because he was "cash-strapped" and had not heard back from plaintiff about what it could do for him with regard to the two leases that had been drawn up. He declined the option of having plaintiff move his property and instead had family and friends move his inventory to storage, where it stayed for over a year with plaintiff paying the storage costs. That same month, defendant opened and incorporated another business to represent manufacturers and supply U.S. hotels with furniture imported from China. For his new company, defendant had business partners, advertised it on the Internet, and had several business Internet domains.

The trial court denied defendant's claim for loss of business goodwill compensation, finding defendant had not produced evidence to support the first two elements under Code of Civil Procedure section 1263.510, subdivisions (1) and (2) (all further statutory references are to this code) "inasmuch as the loss was not caused by the taking" or plaintiff's acts or conduct but "by superseding circumstances of the defendant's own personal and business conduct when faced with opportunities to successfully relocate the business." Despite two suitable relocation sites, defendant did not sign the already drawn-up leases based on his "misguided notion . . . [plaintiff] would be paying the first and last months' rental which the business itself could not afford to pay." Although defendant testified he was frustrated waiting for help with that, he failed to show plaintiff had any legal obligation or misled him into believing it would pay the rental deposit. Defendant's "decision ultimately cost [him his] retail platform and placed [him] in the unfortunate position of having to liquidate [his] inventory, something that could have been done perhaps in a more favorable climate if [he] had conducted the inventory reduction from [his] own showroom as part of a planned business closeout." The court concluded, "If there was goodwill in the business, it was lost when the business closed down and never reopened as a retail showroom."


1. Standard of Review

Defendant contends the standard of review is de novo because "[t]he error complained of . . . arose from the trial court's interpretation of . . . [section] 1263.510 and precedents interpreting that statute . . . ." But as defendant concedes, the determination of entitlement to damages for lost goodwill "necessarily involves a factual inquiry" as to each of the four prongs set forth in section 1263.510, subdivision (a). Resolution of disputed factual issues is for the trial court and our review is limited to determining whether the findings of the court are supported by substantial evidence. (Emeryville Redevelopment v. Harcros Pigments, Inc. (2002) 101 Cal.App.4th 1083, 1117, 1119.)

2. Entitlement to Compensation for Loss of Goodwill

As relevant, section 1263.510, subdivision (a) provides, "The owner of a business conducted on the property taken . . . 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."

Defendant argues the court erred in concluding he did not establish the first two elements because his failure to "enter into either of [the] two leases for a potentially workable relocation property at dramatically higher rents does not bar entitlement to compensation for lost goodwill." The absence of supporting legal authority forfeits the claim. (County of Butte v. California Emergency Medical Services Authority, Inc. (2010) 187 Cal.App.4th 1175, 1196, fn. 7.)

As to defendant's conclusory assertion he "lost his leasehold because of [plaintiff's] condemnation action," the trial court found otherwise. It determined the taking did not cause the loss and that defendant's personal and business conduct constituted a superseding cause. "'A public agency is not liable in [a condemnation action] unless the alleged damage arises directly from agency acquisition of the property in question . . . . [Citations.]'" (San Diego Metropolitan Transit Development Bd. v. Handlery Hotel, Inc. (1999) 73 Cal.App.4th 517, 535, fn. 19.) Resolution of whether the claimed loss was proximately "caused by the taking of the property" (§ 1263.510, subd. (a)(1)) is a question of fact for the trial court. (Emeryville Redevelopment v. Harcros Pigments, Inc., supra, 101 Cal.App.4th at p. 1119.) The evidence supports the court's conclusion.

Defendant testified he did not sign the lease because he did not have the money to pay the first and last months' rent and other incidentals and the rent was higher. He admitted it was his financial circumstances that did not allow him to relocate, although curiously those same circumstances permitted him to incorporate and open a new business the same month he received the 3-day notice to vacate and moved his inventory to storage. Moreover, he concedes in his opening brief "the reason he could not relocate his business and why it suffered lost goodwill" was because "he lacked the resources to consummate the leases plus he feared that the business could not sustain the increased expense of the dramatically higher rents." Defendant's contentions regarding the court's ruling are nothing more than a request that we reweigh the evidence, which we will not do. Because the trial court's determination is supported by substantial evidence, we affirm the judgment.


The judgment is affirmed. In the interest of justice, the parties shall bear their own costs on appeal.



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