NWHC, Inc. v. City of Bellflower

NWHC, INC., Plaintiff, Cross-defendant and Appellant, v. CITY OF BELLFLOWER, Defendant, Cross-complainant and Respondent.

B271590

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

May 22, 2017

ORDER MODIFYING OPINION

THE COURT:

It is ordered that the opinion filed herein on May 22, 2017 be modified as follows:

Counsel listing for appellant shall be corrected to read: Peirano & Associates, Cristian L. Peirano and Sean Raymond Bozarth for Plaintiff, Cross-defendant and Appellant.

There is no change in the judgment.

/s/_________

PERLUSS, P .J.

/s/_________

SEGAL, J.

/s/_________

SMALL, J. (Assigned)

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. VC065128)

APPEAL from an order of the Superior Court of Los Angeles County, Margaret Miller Bernal, Judge. Affirmed.

Peirano & Associates, Christian L. Peirano and Sean Raymond Bozarth for Plaintiff and Appellant.

Dapeer, Rosenblit & Litvak, William Litvak and Caroline K. Castillo for Defendant and Respondent City of Bellflower.

____________________ NWHC, Inc., a California corporation doing business as Bellflower Cannabis Garden, operated a medical marijuana dispensary in the City of Bellflower from October 2015 until the superior court granted the City's motion for a preliminary injunction barring its operation in April 2016. NWHC contends its dispensary was a permitted use under the City's municipal code or, alternatively, provisions of the code relied on by the City were preempted or unconstitutionally applied. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In October 2015 NWHC President Sean Morales submitted an application for a business license to the City to operate a retail/convenience store under the name Bellflower Cannabis Garden. When asked, Morales told the City employee behind the counter the business would be selling medical marijuana. The employee told Morales the City did not issue licenses for medical marijuana and declined to accept any fee to process the license. Morales left the application at the counter.

Bellflower Cannabis Garden opened for business without a license from the City. On October 16, 2015 City inspectors visited the dispensary and confirmed it was selling medical marijuana. On October 26, 2015 the City sent a cease-and-desist letter to NWHC stating that a medical marijuana dispensary was not a permitted use under the Bellflower Municipal Code (BMC) citing two provisions: 1) BMC section 17.04.100, which bars any new use "unless it is permitted by both State and Federal law"; and 2) BMC section 17.44.020, which lists the uses allowed within the general commercial zoning district. A medical marijuana dispensary is not an enumerated use.

On November 5, 2015 NWHC filed this lawsuit seeking declaratory and injunctive relief against the City's attempt toenforce these provisions of the BMC, alleging the dispensary was a permitted use as a drugstore, dry goods store or grocery. NWHC also sought a writ of mandate forcing the City to issue a business license for Bellflower Cannabis Garden and nominal and punitive damages for the arbitrary actions of the City in refusing to process NWHC's application for a business license in violation of article I, section 7, of the California Constitution.

In December 2015 the City began proceedings to adopt an ordinance adding section 17.04.110 to the BMC, banning "commercial cannabis activities" in all zones and specific plan areas within the City and prohibiting the issuance of any "use permit, variance, building permit, or any other entitlement, license, or permit" for such activity. The ordinance was adopted and became effective on January 25, 2016.

On February 15, 2016 the City filed a cross-complaint alleging NWHC had violated the BMC by operating without a business license and operation of a marijuana dispensary constituted a public nuisance. The next day the City moved for a preliminary injunction on those grounds. On March 2, 2016 the City sent a letter to Morales enclosing a copy of the incomplete business license application he had attempted to file in October 2015 and the accompanying incomplete zoning clearance form. The letter advised Morales NWHC must complete the forms and pay the application fee if it wished to proceed with its effort to obtain a business license. NWHC never completed an application.

The City's motion for a preliminary injunction against the operation of the dispensary was granted by the superior court on April 1, 2016. The court stayed the order to allow NWHC to seek a writ of supersedeas from this court. We denied the petition onApril 20, 2016, and Bellflower Cannabis Garden terminated operations soon thereafter.

CONTENTIONS

NWHC contends the City may not rely on federal law to justify banning medical marijuana dispensaries and the superior court lacked subject matter jurisdiction to enter an injunction on that ground. Further, according to NWHC, the City incorporated state law permitting the operation of medical marijuana dispensaries into the BMC and is thus bound by those state law provisions. NWHC also argues its dispensary was a permitted use under the BMC.

NWHC also attacks the City's business licensing scheme as an unconstitutional prior restraint and claims it may not use its own failure to process NWHC's requested license as "a regulatory means" to challenge the dispensary's legality. Moreover, by purposefully blocking NWHC from obtaining a business license, the City was precluded from obtaining any equitable relief by the doctrine of unclean hands.

DISCUSSION

1. Standard of Review

In determining whether to issue a preliminary injunction a trial court weighs two interrelated factors: "[T]he likelihood the moving party ultimately will prevail on the merits, and the relative interim harm to the parties from the issuance or nonissuance of the injunction." (Hunt v. Superior Court (1999) 21 Cal.4th 984, 999; accord, White v. Davis (2003) 30 Cal.4th 528, 554; City of Corona v. AMG Outdoor Advertising, Inc. (2016) 244 Cal.App.4th 291, 298.) When a governmental entity seeks to enjoin illegal activity under an ordinance or law specificallyproviding for injunctive relief and has successfully shown it is reasonably probable it will prevail on the merits, a rebuttable presumption arises that the potential harm to the public outweighs the potential harm to the opposing party. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69-73; People ex rel. Feuer v. FXS Management, Inc. (2016) 2 Cal.App.5th 1154, 1158-1159 (FXS Management); City of Claremont v. Kruse (2009) 177 Cal.App.4th 1153, 1166 (Kruse).)

Generally, the trial court's ruling on an application for a preliminary injunction rests in its sound discretion and will not be disturbed on appeal absent an abuse of discretion. (City of Corona v. AMG Outdoor Advertising, Inc., supra, 244 Cal.App.4th at p. 298; SB Liberty, LLC v. Isla Verde Assn., Inc. (2013) 217 Cal.App.4th 272, 280-281.) Notwithstanding this general standard of review, the specific determinations underlying the superior court's decision are subject to appellate scrutiny under the standard of review appropriate to that type of determination. (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1136-1137; accord, Smith v. Adventist Health System/West (2010) 182 Cal.App.4th 729, 739.) Thus, the superior court's express and implied findings of fact must be accepted by the appellate court if supported by substantial evidence, and its conclusions on issues of pure law are subject to independent review. (FXS Management, supra, 2 Cal.App.5th at pp. 1158-1159; 420 Caregivers, LLC v. City of Los Angeles (2012) 219 Cal.App.4th 1316, 1331.)

The party challenging the preliminary injunction has the burden of demonstrating it was improperly granted. (Costa Mesa City Employees Assn. v. City of Costa Mesa (2012) 209 Cal.App.4th 298, 306; Smith v. Adventist Health System/West, supra,182 Cal.App.4th at p. 739.) The reviewing court is required to presume the trial court's judgment or order is correct and draw all inferences in favor of the trial court's decision. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) When, as here, "there is no indication of the trial court's rationale for [its ruling], the court's decision will be upheld on appeal if reasonable justification for it can be found. 'We uphold judgments if they are correct for any reason, "regardless of the correctness of the grounds upon which the court reached its conclusion."'" (Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 443; accord, Smith, at p. 739; see Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1451 ["[f]or purposes of appellate review, we therefore presume the court considered every pertinent argument and resolved each one consistently with its minute order denying the preliminary injunction"].)

2. The Superior Court Did Not Abuse Its Discretion in Granting the Preliminary Injunction

a. The authority of local jurisdictions to regulate the sale of medical marijuana

At the time of these proceedings,¹ marijuana use by "seriously ill Californians" was decriminalized if "recommended by a physician," under the Compassionate Use Act (CUA). (Health & Saf. Code, § 11362.5, subds. (b)(1)(A), (d).) The 2003 Medical Marijuana Program Act (id., § 11362.7 et seq.) (MMPA) enhancedthe access of qualified patients to medical marijuana. (City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc. (2013) 56 Cal.4th 729, 739 (Riverside).) These state laws have no effect on federal law, which prohibits the possession, distribution or production of marijuana, including marijuana used for medical conditions. (Id. at p. 740 [discu...