blog home Eminent Domain Was Your Business Impacted by a Public Project in LA? Understanding Eminent Domain and Your Rights

Was Your Business Impacted by a Public Project in LA? Understanding Eminent Domain and Your Rights

By Peterson Law Group on June 15, 2026

In Los Angeles, Metro rail expansions, freeway improvements, road-widening projects, and preparations for major events like the 2028 Olympics are reshaping neighborhoods across the city. These projects can create serious financial consequences for local businesses.

Under California law, businesses affected by eminent domain projects may have the right to seek compensation for lost goodwill, reduced customer traffic, and other business interruption losses.

John Peterson is the Los Angeles eminent domain attorney at Peterson Law Group PC. He has decades of experience representing property owners in California. Our firm understands how government projects can affect the value of your business.

What Is Eminent Domain?

Eminent domain is the government’s authority to take private property for public use, provided just compensation is paid. Public projects that may involve eminent domain include Metro Rail expansions, highway construction, street widening, utility installations, public transit projects, Olympic-related redevelopment, and infrastructure modernization.

While eminent domain cases often focus on land value, businesses can also suffer significant economic losses beyond the value of the real estate. California law recognizes that these losses can be substantial.

For example:

• Customer access may become limited
• Parking may disappear
• Construction may reduce visibility
• Traffic patterns may change
• Businesses may lose long-established customer relationships

Understanding Business Goodwill in Eminent Domain Cases

Goodwill generally refers to the intangible value of a business beyond its physical assets. Under California Code of Civil Procedure §1263.510, certain businesses may recover compensation when an eminent domain project damages the goodwill associated with the business.

Loss of goodwill may include damage to your:

• Reputation
• Brand recognition
• Customer loyalty
• Repeat customer traffic
• Established location advantages
• Community presence
• Long-term business relationships

For many Los Angeles businesses, location itself is a major part of the company’s success. A restaurant near a busy entertainment district, for example, may rely heavily on pedestrian traffic and local visibility developed over many years.

Seeking Compensation for Loss of Goodwill Under California Law

California Code of Civil Procedure 1263.510 allows eligible business owners to pursue compensation for goodwill losses caused by eminent domain. To recover damages, the business generally must prove:

1. The loss was caused by the government project or the taking
2. The loss cannot reasonably be prevented through relocation or other mitigation efforts
3. Compensation would not otherwise be duplicated
4. The losses are supported by evidence

These claims may be highly contested because goodwill is more difficult to measure than physical property value. Government agencies frequently attempt to downplay or dispute these losses entirely.

What Counts as Compensable Goodwill?

Not every business loss automatically qualifies for compensation. But several types of business value may support eminent domain claims in Los Angeles.

• Location-Based Value. Many businesses depend heavily on a specific location. Examples include restaurants, retail stores, service businesses, medical practices, and entertainment venues. If construction or property acquisition reduces visibility, accessibility, or foot traffic, the business may permanently lose customers.
• Repeat Customer Relationships. Businesses that rely on loyal local customers may suffer substantial harm if disruptions to access or relocation disrupt those patterns. Examples include a coffee shop losing morning commuter traffic, a salon losing neighborhood walk-in clients, or a restaurant affected by long-term road closures
• Brand Recognition and Community Reputation. Some businesses build goodwill within a community over decades. A forced relocation or ongoing construction project may weaken customer familiarity and market presence.

Proving Loss of Goodwill Requires Strong Evidence

One of the biggest challenges in these cases is proving the extent of business losses. Government agencies may argue that the business was already declining, economic conditions caused your losses, or your revenue losses are only temporary. That’s when strong documentation becomes essential.

Experienced eminent domain counsel may work with financial experts and valuation professionals to build persuasive evidence of goodwill loss. This can include:

• Tax returns
• Profit and loss statements
• Sales reports
• Customer traffic data
• Marketing records
• Expert business valuations
• Real estate appraisals
• Before-and-after financial comparisons

Business Damages Caused by Partial Takings

A partial taking occurs when the government acquires only part of a property. For businesses that depend on convenience and visibility, these changes may lead to declining revenue and customer losses.

Government agencies may argue that the business can continue operating normally despite these disruptions. But actual financial performance could tell a different story.

Examples of damages from a partial taking include:

• Loss of parking spaces
• Reduced building frontage
• Restricted signage visibility
• Limited access points
• Reduced drive-by traffic
• Outdoor seating reductions
• Loading dock interference

Business Losses and Inverse Condemnation

In an inverse condemnation case, the property owner or business initiates legal action seeking compensation for losses caused by the government. These losses may result when government activity damages property or business value without formally initiating condemnation proceedings. Examples may include:

• Repeated flooding caused by public infrastructure
• Construction damage
• Permanent access limitations
• Long-term utility disruptions
• Road design changes harming business access

Why Relocation Does Not Always Solve the Problem

Government agencies might argue that relocating a business eliminates the need for goodwill compensation. In reality, relocation may not fully restore business value. California law recognizes that some goodwill losses cannot be reasonably prevented solely through relocation.

For example:

• Customers may not follow the business
• The new location may lack comparable visibility
• Foot traffic patterns may differ
• Brand familiarity tied to the original neighborhood may disappear
• Relocation expenses may strain operations

Speak With an Experienced Los Angeles Public Domain Lawyer

At Peterson Law Group PC, we represent business owners facing complex eminent domain disputes throughout Los Angeles and Southern California. Our firm understands the financial, operational, and reputational harm that public projects can create, and we work to pursue full compensation for both tangible and intangible losses.

If a government project has impacted your business, contact Peterson Law Group PC today to discuss your rights and legal options with an experienced eminent domain attorney whom business owners trust.

John S. Peterson has decades of eminent domain experience and has been recognized by Best Lawyers and Super Lawyers through peer reviews and independent research.

Call (213) 236-9720 to learn more today.

Frequently Asked Questions About Eminent Domain and Business Losses in Los Angeles

Can I recover compensation if my business loses customers because of a public project?

Under California Code of Civil Procedure 1263.510 goodwill provisions, eligible business owners may pursue compensation for business losses tied to reduced customer traffic, damaged reputation, or declining revenue caused by an eminent domain project.

What qualifies as business goodwill in an eminent domain case?

Business goodwill generally refers to the intangible value of a company beyond its physical property. This may include repeat customer relationships, brand recognition, location-based value, reputation, and long-standing community presence. Businesses that rely heavily on visibility and local traffic are often especially vulnerable to goodwill losses.

Can I seek compensation even if the government only takes part of my property?

Yes. Business damages from partial takings can significantly affect operations. Losing parking spaces, access points, signage visibility, or customer convenience may support compensation claims even when the entire property is not acquired.

What evidence is needed to prove loss of goodwill or business interruption losses?

Strong documentation is critical. Businesses often use tax returns, profit and loss statements, customer traffic data, expert business valuations, financial comparisons, and marketing records to support claims for compensation for business losses related to eminent domain.