Can You Receive Money for the Government Shutting Your Business Down?

A number of my esteemed colleagues have suggested the government’s actions in ordering businesses to be shut down equates to a regulatory taking.  As all of us are aware, the COVID-19 virus has caused emergency shut down of almost everything including bars, restaurants, offices, etc. – basically anything where citizens frequent.  This is obviously causing great financial strain on all of us. 

The U.S. Constitution in the 5th and 14th Amendments, and the Texas Constitution, provide protections for all citizens from the government’s taking of private property.  In times of emergency though, it has been found that the government – via the Police Powers – are able to take or destroy private property without compensation. Similar types of case law are the following:

• In Strickland v. Department of Agriculture, 922 So.2d 1022 (Fla. Ct. App. 2006) wildfires in Florida were threatening large numbers of citizens.  The court found that Strickland was not entitled to compensation for the taking of his trees and wood fencing.  Therefore, “[t]o prevent the spreading of fire, property may be destroyed without compensation to the owner.”
• Bowditch v. Boston, 101 U.S. 16, 25 L.Ed. 980 (1879); see also State Plant Bd. v. Smith, 110 So.2d 401, 406-07 (Fla.1959) (“When, in the exercise of the police power, the State through its agents destroys … [property] in the path of a conflagration, it is clear that the constitutional requirement of ‘just compensation’ does not compel the State to reimburse the owner whose property is destroyed.”). Bowditch v. Boston goes further to say that there are other instances other than fire when the destruction of life itself where the government has the ability to take or destroy personal property without compensation.

Thus, it is NOT likely that a bar, restaurant, or business owner would be entitled to compensation for the emergency shut down due to the COVID-19 virus. That said, there are many remedies and workouts that The Kelly Legal Group, PLLC can assist business owners with in these troubling and challenging times.  For example, we are negotiating abatements for rent and other expenses using an Act of God or a Force Majeure argument. We want to provide assistance so that all of us can get through this tough and trying time.