Metropolitan News-Enterprise


Thursday, February 28, 2019


Page 1


Court of Appeal:

Yum Yum Did Not Forfeit All Recompense for Lost Goodwill by Not Relocating Donut Shop

Opinion Says That in Light of Uncontroverted Testimony That a Loss Has Been Suffered Based on MTA Condemnation, Jury Must Set Amount of Damages


By a MetNews Staff Writer


A donut shop company did not forfeit all entitlement to recompense for loss of goodwill when one of its locations was taken by the Los Angeles County Metropolitan Transportation Authority, through the power of eminent domain, and it found unsuitable any of the three sites to which the condemning authority proposed that it relocate, the Court of Appeal has held.

Tuesday’s opinion, by Justice Helen Bendix of this district’s Div. One, reverses a judgment by Los Angeles Superior Court Judge Mark V. Mooney denying any compensation for the loss of goodwill suffered by Yum Yum Donut Shops, Inc. based on the taking of its shop at 3642 Crenshaw Boulevard, in the Leimert Park area of Los Angeles.

Yum Yum had been operating at the location, under a long-term lease, for more than 30 years. It vacated the premises on Dec; 4, 2013; it is now the site of construction of a rail line.

Mooney’s Reasoning

Mooney had reasoned that if “the condemnee cannot establish the facts showing it took reasonable steps to preserve its goodwill, it will not be entitled to any compensation for alleged loss of goodwill,” imposing on it a duty to relocate if this would mitigate its loss of goodwill.

Based on that finding, Mooney denied a jury trial on the amount of Yum Yum’s loss.

Bendix said that in light of uncontroverted testimony showing that there was a loss, Yum Yum was entitled, under Code of Civil Procedure section 1263.510, to a jury’s determination as to the extent of the loss.

Statutory Interpretation

She wrote:

“Nothing in section 1263.510’s language provides that the condemnee is entitled to no compensation at all for lost goodwill if the condemnee fails to mitigate a portion of that loss. We believe the statute’s legislative history, the Law Review Commission Comments, and case law applying the statute support this interpretation. The legislative history recounted above establishes that the statute is remedial, and thus to be construed liberally in favor of compensating business owners for lost goodwill.”

The jurist said “the general rule of mitigation of tort damages is instructive,” pointing out:

“Tort law does not preclude a plaintiff from recovering damages altogether simply because a plaintiff has failed to mitigate some of its damages.”

No Relocation Duty

Bendix disagreed with Mooney that Yum Yum had a duty to relocate. She noted its estimate that the cost of relocating would have been between $250,000 and $300,000, most of which would not have been recoverable under the Relocation Act, and said:

“We are aware of no authority compelling a condemnee to relocate when the investment required to relocate would make it diseconomic to do so. Indeed, the authority is to the contrary.

The opinion reveals Yum Yum’s exacting standards in selecting locations, including the requirement that it be on the side of the street with heavy morning traffic and be near a freeway.

The case is Los Angeles County Metropolitan Transportation Authority v. Yum Yum Donut Shops, 2019 S.O.S. 917.

Arguing for Yum Yum were Douglas J. Evertz and Emily L. Madueno of the Costa Mesa firm of Murphy & Evertz. The MTA was represented by David Graeler, chair of Nossaman LLP’s Litigation Department and co-chair of its Real Estate Practice Group, and Jennifer L. Meeker, also of Nossaman.


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