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The Recovery of Business Damages In An Eminent Domain Action

By Kevin M. Wagner, Esq.

  Florida is one of the fastest growing states in the United States, and that growth causes a need for more roads and facilities. Expanding highways and city projects will often force local and state governments to "take" property from citizens. This taking will sometimes destroy businesses or greatly damage them. While, the government must compensate a person for taking the property, it does not always have to pay for the damaged or destroyed business. The recovery of business damages often requires a complex and occasionally difficult analysis of the law.

  Damages from the destruction of a business are recoverable as a matter of statute. Both the state and federal constitution require compensation for the land taken. Damages to a business located on land appropriated in an eminent domain proceeding are not part of the constitutionally protected right of just compensation for the public taking of private land. Only if a person meets the strict requirements of the laws of Florida are damages to a business compensable. Tampa?Hillsborough County Expressway Authority v. K.E. Morris Alignment Service, Inc., 444 So.2d 926 (Fla.1983).

  Because of this limitation, business owners whose land is being taken, should carefully review the requirements for business damages. They are:

1. The business must be 5 years old . . . .
2. The taking must be for right of way purposes . . . .
3. The business must be located on the land taken and adjoining lands for five years.

[Citing, §73.071 (3)(b), Fla. Stat. (1999)] (See also, Florida Eminent Domain Practice and Procedure Section 9.28, page 9-47)

  The Florida Supreme Court has explained that the purpose of the law is to permit the recovery of business damages for businesses having a physical existence for more than five years at the location where a partial taking is alleged to have caused business damages. Morris, 444 So.2d 926 (Fla.1983). If a business does not meet all of the requirements set forth above, the business owner will not receive compensation for the destruction of their business.

  The application of the statute and the recovery of business damages is dependent on the facts of each case. In each situation the jury must make a determination as to the operation of a business, the ownership of the business, the exact location of the business activities, and the age of the business at that location. Once the facts are established they are applied to the statutory requirements.

  Often the most difficult question raised in a business damages dispute is whether the business was operating on both the land taken and the remaining land. This is a very important issue because there must be only be a partial taking of the business for there to be compensation. Though it might seem unfair, the law does not allow a business owner to recover business damages for a business that was taken in its entirety. This requirement has been criticized but many people including some judges. See, e.g. Tampa-Hillsborough County Expressway Authority v. Campoamor Modern Dairy, Inc., 436 So.2d 922 (Fla. 2nd DCA 1983), Judge Lehan dissenting. Nonetheless, the requirement was upheld by the Florida Supreme Court in State Road Department v. Bramlet, 189 So.2d 481 (Fla. 1966). The business would have to be at least in part on the adjoining land and not entirely on the portion of the land taken by the State.

  Grappling with this issue has caused some problems for the courts. The question for the jury is whether a business was being conducted, accepted or solicited on the remaining lands. When all of the buildings have been taken the state will often argue that the entire business has been taken and there cannot be compensation for the business. However, the taking of the buildings is not the end of the argument. Even with the buildings gone, if the business owner can show that at least a portion of the business occurred on the remaining land they could recover damages for the entire business. Not all business activities occur indoors. Attorneys from this firm successfully challenged the State on this issue and were successful in clarifying that owners may recover business damages for businesses that operate at least in part outside of the buildings and on the remaining land. One Stop 76, Inc. v. Florida, 25 Fla. L. Weekly D1248 (Fla. 4th DCA 2000). A business owner would be wise to review the full activities of the business with his or her legal counsel.

  Once the business owner has established that the business operates at least in part on the remaining lands, the owner may recover all of the damages to the business. If the business is totally destroyed because of a taking, not only may there be an award for lost profits, but even for costs involved in moving, selling one's equipment, and loss of good will. The damages will be decided by a jury. Establishing the damages will often call for the testimony of financial experts including accountants and/or land planners. Business owners should work closely with their legal counsel on these issues.

  The recovery of business damages in an eminent domain proceeding is a complex, and often difficult process. But, careful planning and an understanding of the law will go a long way to achieving the compensation that the business owner deserves. A business owner should carefully consider the qualifications and experience of an attorney in dealing with these difficult legal issues.

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