Loss of Income and Eminent Domain

Business owners faced with eminent domain takings may be entitled to more than the value of the land.

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Loss of Income: How Georgia Eminent Domain Law Can Help Business Owners

If you’re a business owner or own income property, an eminent domain taking could damage or destroy your business and the income you rely on.

There is a way to get compensation for lost business income, but the Georgia Department of Transportation (GDOT) won’t simply hand it to you. You have to prove your loss, and fight for that compensation. Here’s how.

Can a business owner get compensation for lost profits in a Georgia eminent domain case?

One of the biggest questions many business owners have when faced with an eminent domain taking is, “Can I seek compensation for the damage done to my business and my lost profits?” The answer is yes.

Businesses can seek recovery for relocation expenses and loss of income if the taking of their property hurts or even destroys their business, whether it was a total property loss or a small piece. Georgia’s constitution states that private property shall not be taken or damaged for public purposes without adequate compensation being paid.

Of course, there’s a good bit of wiggle room. What “damage” is done is up for debate. If a utility easement is taken across a piece of vacant property, the condemning utility may argue virtually no harm was done. The property owner, who may have been planning to develop the land, could argue the opposite.

Road closed to thru traffic sign blocking a street with construction.

Example case: Bowers v. Fulton County

One case we can point to for businesses is the Bowers case. A man owned a parcel of land on which he’d built a successful business. The state took the entire parcel, and offered him the value of the land. He appealed, arguing that the compensation offered was not adequate. The court agreed:

In Bowers v. Fulton County, 221 Ga. 731 (146 S.E.2d 884) (1966), (the Georgia Supreme Court) construed the Georgia Constitution to require that a business be compensated for all damages caused by the condemnation of the property on which the business was located, including damages caused by loss of profits and diminution of the business.

–Summary of this case from Marta v. Ply-Marts, Inc.

What is required for a property owner to seek business damages?

There are three basic requirements that a property owner must meet in order to seek business damages as a result of an eminent domain taking in Georgia:

They must operate a business on the subject property as of the date of the taking.
The loss caused by the taking is not “remote” or “speculative” (the loss must be proven).
The property must be “unique.”

Again, you’ll need to fight for any compensation you believe you’re owed. If a property owner can prove these three criteria, they may be able to recover business damages. The business need not be completely destroyed to seek compensation — even if a business continues to operate, the owner may seek compensation for the damage suffered due to the condemnation.

The tricky words from a legal perspective are “remote,” “speculative,” and “unique.” These all invite interpretation, but that should not scare you. Contact an experienced eminent domain attorney if you believe your business loss qualifies.

Silver pen on a financial spreadsheet with several items in red.

Example case: Carroll County Water Authority v. L.J.S. Grease and Tallow

A good example case for seeking business damages is the Carroll v. LJS case. The county water authority took land belonging to a grease company. They offered the “market value” of the land as compensation, and the company fought back, arguing that the taking put them out of business. The land was unique and no reasonably comparable parcel existed. On appeal, the court sided with the property owner.

The lesson from this case is that the court connected the business on the property at the time of the taking with the compensable loss. If you own a business and the land left after the taking can’t be used for that business, the remaining land’s possible use isn’t relevant to the losses you suffer. The court went on:

“If the property must be duplicated for the business to survive, and if there is no substantially comparable property within the area, then the loss of the forced seller is such that market value does not represent just and adequate compensation to him.”

In other words, if the property is unique and has characteristics required for the business to survive, “market value” is not adequate compensation. The business can seek compensation for its losses.

May I seek compensation as a landowner or as a tenant?

In Georgia, both the landowner and the tenant who leases the property and operates the business are able to seek compensation. The key here is that this part of compensation is separate from the value of the land and you must, as landowner or lessee, provide evidence of business income loss.

If it comes down to it, you need to be able to prove your losses to a jury.

Assuming the business was not destroyed as in the previously mentioned case, you must show how the alterations to the property materially harmed your business, resulting in loss of income.

Aerial view of a long line of cars waiting to turn into a gas station, backing up traffic.

Example case: Dixie Highway Bottle Shop v. Department of Transportation

When GDOT makes changes to a parcel, it is not unusual for the changes made to be detrimental to the property and the people using it. And while GDOT may claim that the changes are minor, the effect on a business can be catastrophic.

In this case, a bottle shop argued that GDOT’s taking cost it parking spaces, snarled traffic, and made entry and egress difficult and – in wintry conditions – dangerous. The business owner did not dispute the value of the land but argued that the damage to the business should be awarded. When denied, they appealed. The Georgia Court of Appeals agreed with the bottle shop:

“[T]he lessee … accepted the ‘fair evaluation’ of the property by the condemnor’s expert witness, but this action did not result in the waiver of the right to show consequential damages as to the market value of the remaining property nor was it an acceptance of the expert witness’ testimony that there were no consequential damages.”

In other words, you may agree with the value of the land, but the damages to business and income are a separate arm of the claim. Complicating matters, the location of this bottle shop, adjacent to two dry counties and therefore inviting business from both, made it somewhat unique. The decision belonged to the jury. According to the Court of Appeals (paraphrased for clarity):

“This condemnee, as lessee, offered testimony as to business losses… and evidence that the location of the business was unique in respect to the sale of alcoholic beverages. The issue of special or unique value was for jury determination, and the trial court erred in excluding this consideration from the jury.” (emphasis added)

The trial court was wrong to prevent a jury from hearing the business’s case.

Does GDOT have to consider my business losses when making me an offer?

The Department of Transportation or other condemning authority only has to offer you compensation for the property it is taking. As stated above, any consequential damages to your business must be proven by you.

Additionally, GDOT has no access to your business records nor interest in them. It is interested solely in the property itself. And what happens to your business as a result of GDOT’s machinations won’t necessarily be clear until at least after the project is announced, and most often after it has commenced.

When you get that initial offer, view it in its intended context: the value of the land. The damage to business is a separate consideration.

Proposed easement plan which would affect a portion of a commercial property.

Example case: Lil Champ Food Stores v. Department of Transportation

A food store lessee, sharing a commercial parcel, wanted to plead its case for damages to its business. To make a long story short, it missed the statute of limitations. However, the court did use prior case law to clarify the expectations of businesses in cases such as these.

The court said, in no uncertain terms, that the DOT is not required to include business losses in its initial offer. That does not mean you, as business owner, don’t have a case to seek compensation for lost profits. It simply means that compensation won’t be part of the initial offer. It’s just one more reason to call an eminent domain attorney!

It’s worth remembering that the plaintiff’s case here was doomed mainly because they did not timely appeal the condemnation offer from GDOT. If your property is condemned, you have just 30 days to appeal the offer.

A business owner is not required to specifically claim business damages in their notice of appeal of the condemnation valuation. You just need a short declaration that you disagree with the valuation and to request a jury trial. If you need help, call us at 1-888-391-1339.

How is loss of business income calculated in Georgia eminent domain takings?

The burden of proving loss of business income lies solely on the property owner and lessee. There is not a set formula that will apply in all cases. Your bookkeeping and organization, filed taxes, and a host of other documentation could come into play – whatever you can do to prove a level income that is damaged as a result of the taking.

That may be a simple task for a privately owned shop with no employees on land it owns. More often, there is a maze of commercial leases – of which there are several types. Those agreements can run into the hundreds of pages. In commercial complexes, there may be the question of who suffered how much harm.

While we often can help property owners regardless of circumstance, the complex cases are when you can really benefit from the experience of a dedicated eminent domain attorney. Some other firms represent GDOT as well as representing property owners and businesses. We never represent GDOT or a condemning authority. We’re on your side, and your side only.

A calendar with dates marked off in red, going past a marked due date.

How can an attorney help with my eminent domain case?

Never underestimate the value of an experienced eminent domain attorney. GDOT doesn’t have to negotiate. It has the resources most property owners can only dream of. If they choose to, they will employ attorneys to fight on their behalf.

Furthermore, the law is complicated and has its own deadlines that could sink your case before it even starts. Why face those obstacles alone, especially if you have no knowledge of them?

We only represent property owners, and our eminent domain attorneys focus exclusively on eminent domain cases. We’ve won millions on behalf of our clients, and our firm has, on average, increased the amount of the DOT’s initial offer by more than 197%.¹

And because we work on a contingency fee basis, our assistance doesn’t cost you a dime. We only collect an attorney’s fee from any amount we’re able to increase the DOT’s initial offer. If we can’t increase their offer, you pay nothing – including the costs we front to fight your case.²

If your business has been harmed by an eminent domain taking, call us any time at 1-888-391-1339 or contact us online for a free case evaluation.

We front all costs & guarantee you'll pay nothing if we don't get you more than the government's offer.

Get a free case
evaluation today.

There are only a handful of attorneys in GA who practice eminent domain exclusively. And even fewer with DOT experience. That’s why it’s always worth it to get a free case evaluation.

Here’s how it works:

1) Tell us about your situation.

2) We research your property as needed, using DOT maps, our own technology, and experience to see the exact effects.

3) We let you know what we think a fair offer would be. This evaluation is free, and there’s no
pressure or obligation to hire us after.

But please don’t wait to act. Waiting can hurt your case, and the cost is the same: free.

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