Thee Aguila, Inc. v. Century Law Group, LLP
Facts: A commercial property is condemned under the power of eminent domain. Both the landlord and the tenant occupying the property receive compensation from the condemning agency for the property and loss of business goodwill, respectively. A provision in the lease states in the event of a condemnation, the landlord is entitled to any award the tenant receives as compensation for the reduction of the leasehold value as a result of the condemnation.
Claim: The landlord seeks the compensation the tenant was awarded in the condemnation proceedings from the tenant, claiming it is their property since the terms of the lease state they are entitled to any money awarded as a result of condemnation.
Counterclaim: The tenant claims they are not required to give their portion of the compensation to the landlord since the tenant was awarded for loss of business goodwill rather than any leasehold interest in the property.
Holding: A California appeals court holds the landlord is not entitled to the tenant’s compensation since it was awarded for loss of business goodwill unrelated to the diminution in value of the tenant’s leasehold interest in the property. [Thee Aguila, Inc. v. Century Law Group, LLP (June 20, 2019)_CA6th_]