BY MICHAEL F. YOSHIBA, ESQ.
The impact of minor details on major cases
As I sit here in a very complex trial lasting several weeks with 30
witnesses and several thousand documents, I am reminded of
another case I was involved in a few years ago. After three years of
preparation, one missed detail became the defining difference for a
judgment in favor of my client.
The California Department of Transportation, better known as
Caltrans, planned and designed a freeway widening project in
Orange County, California. The property and business owner
(one in the same) rejected the State’s offer of compensation and
the matter became a condemnation of a small part-take area in
fee and a permanent easement from property occupied by a gas
station along a busy offramp. Caltrans needed a 500-square foot
permanent easement and a 100-square foot area in fee for the
freeway widening and offramp realignment project. The fee take
area was needed for relocation of a traffic signal switch box and the
permanent easement was required for relocation of the sidewalk,
curb and gutters. The proposed new public improvements were
identified and depicted in the project construction plans.
Pre-trial tasks included written discovery of documents and
depositions of the business owner, accountant, appraisers,
architect and business valuation experts. There were negotiations,
offers, demands and a voluntary settlement conference, yet the
parties remained nearly $500,000 apart in valuing the case. The
difference in values was due to the opinions of the opposing
business goodwill appraisers. The property owner’s appraiser
found that the loss of business goodwill was $450,000.
The Caltrans appraiser found no loss of business
goodwill at all. Both appraisers were well-qualified
with appropriate education and experience credentials.
However, it was noted at deposition that the property
owner’s business goodwill appraiser missed the one
project detail that would lead to a pivotal moment
Business Goodwill Valuation
Valuation of loss of business goodwill requires the
comparison of the before and after conditions of the
business impacted by the property taken for the public
project. From there, it must be determined if there
has been a loss in the business goodwill caused by the
Before trial in this case, the appraiser’s deposition
was taken. His working files and all the documents
he acquired for this assignment were reviewed. The
appraiser was questioned about each opinion made and
how each document supported his final conclusions.
The appraiser’s working files contained several hundred
documents, including financial records of the business,
research of recently sold gas station businesses and
reconciliation worksheets. Additionally, the files
contained the planning, design and construction
documents for the public project.