California Code of Civil Procedure Section 1263.510
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(a) The owner of a business conducted on the property taken, or on the remainder if the property is part of a larger parcel, shall be compensated for loss of goodwill if the owner proves all of the following:
(1) The loss is caused by the taking of the property or the injury to the remainder.
(2) The loss cannot reasonably be prevented by a relocation of the business or by taking steps and adopting procedures that a reasonably prudent person would take and adopt in preserving the goodwill.
(3) Compensation for the loss will not be included in payments under Section 7262 of the Government Code.
(4) Compensation for the loss will not be duplicated in the compensation otherwise awarded to the owner.
(b) Within the meaning of this article, “goodwill” consists of the benefits that accrue to a business as a result of its location, reputation for dependability, skill or quality, and any other circumstances resulting in probable retention of old or acquisition of new patronage.
(c) If the public entity and the owner enter into a leaseback agreement pursuant to Section 1263.615, the following shall apply:
(1) No additional goodwill shall accrue during the lease.
(2) The entering of a leaseback agreement shall not be a factor in determining goodwill. Any liability for goodwill shall be established and paid at the time of acquisition of the property by eminent domain or subsequent to notice that the property may be taken by eminent domain.
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