blog home Inverse Condemnation When a Utility Project Impacts Your Business: Temporary Takings and Compensation in California

When a Utility Project Impacts Your Business: Temporary Takings and Compensation in California

By Peterson Law Group on August 26, 2025

It’s not fair for your business to lose foot traffic, access, or visibility for weeks or even months because of a nearby government utility project. If your California business has suffered due to road closures, blocked entryways, or construction-related disruptions, you may be entitled to compensation.

This type of situation may fall under what’s called a temporary taking—and California law offers pathways to recover lost revenue and damages through legal action. At Peterson Law Group PC, we help business owners assert their rights and pursue full compensation when public works impair commercial property and operations.

What Is a Temporary Taking?

In eminent domain and inverse condemnation law, a taking refers to any government action that deprives a property owner of the use, value, or access to their land. Most people associate takings with permanent land acquisition for highways, schools, or public utilities.

But not all takings involve land being seized. In fact, temporary takings in California business compensation cases often arise when construction activity:

• Blocks vehicle or pedestrian access to your storefront
• Obstructs visibility to signage or windows
• Creates dust, noise, or vibration that disrupts business operations
• Impairs delivery schedules, parking, or ADA compliance

Even if the interference is not permanent, it may still trigger your right to compensation under California’s Constitution.

The Legal Basis for Compensation

California Constitution Article I, Section 19 guarantees that when private property is taken or damaged for public use, the owner is entitled to just compensation. This includes business owners who may not own the land itself but suffer loss of use or value during public works projects.

Key Legal Concepts:

• Inverse condemnation claim: A legal action where the property or business owner initiates a lawsuit because the government failed to compensate them for damage or loss caused by a public project.
• Business loss eminent domain: Compensation for loss of income or interruption of business tied to government activity—even if land title is not transferred.

You don’t need to prove that the public agency acted negligently. You only need to show that the utility project caused a substantial impairment to the use or enjoyment of your property, or to your business operations.

Common Utility Disruption Lawsuits and Scenarios

Businesses affected by infrastructure improvements or utility projects are often surprised by how disruptive these initiatives can be. Here are a few common examples that may justify compensation:

Street Closures Impact on Business

A roadwork project closes access to your street, forcing customers to take detours—or worse, causing them to go elsewhere. If your business is reliant on foot traffic or drive-up access, this can result in real, measurable revenue loss.

Blocked Entrances or Parking

Contractors for a city water or telecom project park heavy equipment in front of your building or dig trenches that block all access points. If clients can’t reach you, deliveries are delayed, or employees are forced to park off-site, your ability to operate suffers.

Extended Noise, Dust, and Utility Shutoffs

Even if access is maintained, excessive noise, dust, or vibration from construction can create an inhospitable environment. Interruptions in water, power, or Wi-Fi due to project work can also affect your business’s ability to serve customers or maintain online systems.

Reduced Visibility or Signage Obstruction

Scaffolding, fencing, or detours may prevent people from seeing your storefront or signage, especially in retail or service-based businesses. If the interference is substantial and prolonged, it may qualify as a compensable taking.

What You Must Prove to Win

To succeed in a temporary takings California business compensation case, you generally need to demonstrate:

• Public agency involvement: The disruption must be related to a government project or a utility operating under government authority.
• Substantial interference: The disruption must materially affect access, visibility, or operational functionality—not just inconvenience.
• Public use connection: The project must serve a public purpose (e.g., sewer installation, road repaving, broadband expansion).
• Causation: Your business losses must be clearly tied to the disruption, not other economic factors.

How to Build a Strong Case

The sooner you begin documenting the impact of the disruption, the stronger your position becomes. Here’s how to protect your claim:

Track Financial Losses

Keep clear and dated records of revenue trends before, during, and after the disruption. Monthly income reports, tax filings, payroll logs, and client cancellation rates can all help establish loss.

Collect Evidence of Interference

Photograph blocked access points, construction equipment, signs, detour maps, and other barriers. Take note of how long each interference lasted.

Get Expert Opinions

Consult with an accountant, appraiser, or economic loss expert to calculate your damages. In legal proceedings, these evaluations carry weight.

Act Within Legal Deadlines

You generally have three years to file an inverse condemnation claim in California. However, related claims (like negligence or nuisance) may have shorter deadlines. If the project involves a state or municipal agency, you may also need to file a formal government claim within six months under the Government Claims Act.

Reasons to Choose Peterson Law Group PC

Government entities and contractors often argue that business losses are temporary and therefore not compensable. But California law doesn’t excuse government action just because it’s short-term.

At Peterson Law Group PC, we have the knowledge and experience to investigate your claim thoroughly and identify all responsible agencies or contractors. We can also quantify your business damages with supporting evidence. The next step is negotiating a fair settlement or litigating in court if necessary.

John Peterson is one of the leading business property rights attorneys in California.

• Over 38 years of experience
• Member: The American Board of Trial Advocates
• Elected Member: American Board of Trial Advocates (ABOTA
• AV Rating from Martindale-Hubbell® AV
• Listed by Super Lawyers in Southern California
• Named “Lawyer of the Year” for Los Angeles by Best Lawyers for Eminent Domain and Condemnation Law

Speak With an Experienced Temporary Takings Lawyer in Los Angeles

Whether you’re considering a utility disruption lawsuit, filing a business loss eminent domain claim, or seeking compensation for access interference, Peterson Law Group PC is ready to advocate for your business every step of the way.

Call Peterson Law Group PC today to schedule a consultation with a Los Angeles inverse condemnation attorney—(213) 236-9720