Galardi Group Franchise & Leasing, LLC v. City of El Cajon

Only the owner of the business conducted on condemned property may claim compensation for lost goodwill. (Code Civ. Proc., § 1263.510, subd. (a); undesignated statutory references are to this code.) In this inverse condemnation proceeding, we conclude that the trial court correctly held that the lessor of a business was not entitled to compensation for lost goodwill because it did not own the business located on the condemned property. Nonetheless, we conclude the trial court erroneously interpreted a clause in the agreement between the lessor and lessee purporting to “waive” the lessee’s right to any condemnation award as benefiting the condemning authority. Thus, the trial court erred when it found a subsequent assignment of any condemnation award from the lessee to the lessor to be ineffectual. Accordingly, we reverse the judgment and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

Galardi Group Franchise & Leasing, LLC (Galardi), is listed with the California Department of Corporations as a franchisor doing business under *283 the name Wienerschnitzel. Galardi offers franchises as a “full franchise” where an individual or legal entity purchases,…