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CONDEMNATION ACTION DOOMS BUSINESS

When the District of Columbia condemned property on which it planned to construct a municipal office building, the corporation that owned the land received an award compensating it for the property, “including all interest therein.” The quoted phrase was relevant, because the property had been occupied by the owner of a gas station and convenience store business under a franchise agreement with the landowner. Unfortunately for the holder of the franchise, the agreement’s terms heavily favored the landowner insofar as the impact of a condemnation was concerned.

First, in the event of a condemnation, the agreement would terminate 10 days before the effective date of the condemnation. This meant that the agreement ended before the condemnation, leaving the business with no remaining legal interest in the property for which it could receive compensation. Second, the agreement provided that the landowner would receive all of the money awarded in the condemnation proceedings.

Left without a share of the condemnation award for the property itself by the terms of its agreement, the owner of the business argued that, as part of the condemnation action, it nonetheless should receive compensation for the business’s losses, for its goodwill, and for other consequential damages that flowed from the condemnation. The argument failed.

It could have been within the power of the District of Columbia to authorize such an award for nonowners situated on condemned property but, in fact, the relevant statute contained no such provision. As a result, the claim by the business fell under the rule, announced by the United States Supreme Court in a previous case, that “absent a statutory mandate the sovereign must pay only for what it takes, not for opportunities which the owner [or, in this case, franchise holder] may lose.”