People Ex Rel. Feuer v. Progressive Horizon, Inc.

Filed 5/31/16; pub. order 6/24/16 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
THE PEOPLE ex rel. MICHAEL N. B263622
FEUER, as City Attorney, etc.,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BC551645)
v.
PROGRESSIVE HORIZON, INC., et al.,
Defendants and Appellants.
APPEAL from orders of the Superior Court of Los Angeles County. Joanne
O’Donnell, Judge. Affirmed.
Richard H. Gordon, Kiana Sloan-Hillier, and Joel R. Isaacson for Defendants and
Appellants.
Michael N. Feuer, City Attorney, Asha Greenberg, Assistant City Attorney, Anh
Truong, Assistant Supervising Deputy City Attorney, and Ryan Borho, Deputy City
Attorney, for Plaintiff and Respondent.
*********
Because of the proliferation of medical marijuana businesses in the City of Los
Angeles (City), in 2013, City voters approved the Medical Marijuana Regulation and
Taxation Ordinance (Proposition D). (L.A. Mun. Code, § 45.19.6 et seq.) Proposition D
bans medical marijuana businesses, but grants certain qualifying businesses a limited
immunity from enforcement of the ordinance. Immune medical marijuana businesses
may continue their operations if they comply with the numerous restrictions enumerated
in Proposition D. (§ 45.19.6.3.) Among Proposition D’s requirements for limited
immunity is that a medical marijuana business “identify . . . its Managers to the City
Clerk by October 31 of each year and . . . publicly display at the location of the medical
marijuana business the results of an annual LAPD LiveScan background check to be
completed by January 31 of each year.” (§ 45.19.6, subd. M.)1
Defendant Progressive Horizon, Inc. (Progressive), is a medical marijuana
business, claiming the privilege of Proposition D’s limited immunity. Michael Feuer, as
attorney for the City, and on behalf of the People, filed a complaint against Progressive
and defendant James Chingming Chen, Progressive’s director and CEO, to abate a public
nuisance, for injunctive relief, and for civil penalties, based on defendants’ violation of
Proposition D, and sought a preliminary injunction barring defendants from operating
their medical marijuana business. The trial court granted the preliminary injunction,
finding that defendants had not complied with Proposition D’s LiveScan requirement.
(L.A. Mun. Code, § 45.19.6.3, subd. M.) The trial court later denied defendants’ motion
to dissolve the injunction, after defendants attempted to demonstrate they had “cured”
their violation of Proposition D’s LiveScan requirement. The trial court concluded that
defendants’ violation of Proposition D excluded them from limited immunity under the
ordinance.
On appeal, defendants ask us to overturn the injunction, and contend the trial court
erroneously denied their motion to dissolve the injunction. Because defendants did not
1 A LiveScan is a fingerprint background check processed by the California
Department of Justice. (See https://oag.ca.gov/fingerprints.)
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timely appeal the order granting the injunction, the only issue before us is whether the
trial court erred in denying the motion to dissolve the injunction. Defendants’ argument
for reversal turns on whether Proposition D allows a medical marijuana business which
fails to comply with the ordinance to have limited immunity under the ordinance. We
find that it does not, and affirm the orders below.
FACTS
On July 15, 2014, the People filed this lawsuit alleging that defendants’ medical
marijuana business was a nuisance and violated Los Angeles Municipal Code
section 12.21, section 12.24 and section 45.19.6.2; Civil Code section 3480; and Business
and Professions Code section 17200. Contemporaneous with the filing of the complaint,
the People sought an order to show cause (OSC) regarding preliminary injunction. The
People argued (among other arguments not relevant here) that defendants did not meet
the limited immunity requirements of Proposition D, as they did not complete LiveScans
for their managers by the deadline of January 31, 2014, as required by subdivision M of
Los Angeles Municipal Code section 45.19.6.3. Therefore, the People argued that the
operation of defendants’ medical marijuana business constituted a public nuisance, and
that defendants should be enjoined from operating their business.
Defendants Progressive and Mr. Chen opposed the request for a preliminary
injunction, arguing that Progressive timely submitted the names of its then-managers to
the City by October 31, 2013, but that Progressive’s management changed after its
submission. Nevertheless, before January 31, 2014, Progressive’s new managers
requested LiveScans. (The opposition did not contend that all of Progressive’s managers
had actually submitted their fingerprints for a LiveScan check or that the results of the
LiveScans were publicly displayed by January 31, 2014.) Defendants argued that any
failure to comply with subdivision M should not permanently bar them from eligibility
for immunity under Proposition D. They also argued that the injunction would result in
irreparable harm to defendants and their members.
On August 27, 2014, the trial court held a hearing on the OSC. The court granted
the injunction in part, enjoining Progressive from conducting its medical marijuana
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business, finding that defendants “failed to abide by the requirements for limited
immunity under LAMC § 45.19.6.3 (M) and that their operation of a medical marijuana
business in any form is an unpermitted land use, and therefore a public nuisance subject
to abatement by injunction. LAMC § 11.00 (1); Civil Code § 3491.” The court entered
the order granting the injunction on September 17, 2014. Defendants did not appeal the
order granting the injunction.
On February 27, 2015, defendants filed a motion to “Modify, Rescind, or Overturn
[the] Preliminary Injunction.” The motion argued that “[a]t the time the Court issued the
Preliminary Injunction, apart from the LiveScan issue, Progressive qualified for limited
immunity under Prop D. As set forth in the Declarations attached to these moving
papers, Progressive has resolved the LiveScan issue and now fully qualifies for limited
immunity. Consequently, Progressive seeks by this Motion an Order modifying,
rescinding, or overturning the Preliminary Injunction.”
The motion also argued that the ends of justice would be served by the
modification because Progressive employed eight people, served 6,000 qualified patients,
and was at risk of losing its commercial lease.
Defendant Adam Agathakis, Progressive’s manager and CFO (who is not a party
to this appeal), and defendant Mr. Chen, as Progressive’s manager and CEO, submitted
declarations in support of the motion. Mr. Agathakis averred that on October 31, 2014,
Progressive submitted its manager list to the City identifying Mr. Agathakis, Mr. Chen,
and Robert Vittorio as Progressive’s managers. This list was amended on November 3,
2014, to remove Mr. Vittorio. LiveScan approval letters for both Mr. Agathakis and
Mr. Chen were received from the Los Angeles Police Department in December 2014, and
were displayed at Progressive’s location in advance of the January 31, 2015 deadline.
In opposition, the People argued that defendants did not comply with the
requirements of Proposition D in 2013 and 2014, and therefore they did not qualify for
limited immunity under the law, and that allowing belated compliance to restore their
immunity would circumvent the purposes of Proposition D.
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The motion was heard on March 27, 2015. The trial court concluded that because
defendants violated Proposition D in 2013 and 2014, they were ineligible for limited
immunity. The court reasoned that “a violation of any of the business restrictions [in
Proposition D] acts as a continual bar to immunity under Proposition D.”
On April 23, 2015, defendants filed a notice of appeal from the court’s March 27,
2015 order.
DISCUSSION
1. Scope of Appeal
Defendants make numerous arguments of error on appeal, many of which focus on
the order granting the preliminary injunction. However, defendants did not timely appeal
that order. (Code Civ. Proc., § 904.1, subd. (a)(6) [orders granting injunctions are
appealable]; Cal. Rules of Court, rule 8.104(a)(1) [notice of appeal must be filed on or
before the earliest of 60 days following notice of entry of judgment or 180 days after
entry of judgment].) Because defendants did not appeal the order granting the
preliminary injunction, the only issue before us is whether the trial court erred when it
denied defendants’ motion to dissolve the injunction based on defendants’ belated
compliance with the LiveScan requirement of Proposition D in 2015 after having failed
to comply in 2013 and 2014. (Code Civ. Proc., § 904.1, subd. (a)(6) [orders refusing to
dissolve injunctions are appealable]; Malatka v. Helm (2010) 188 Cal. App. 4th 1074,
1084 [When appealing an order denying a motion to dissolve an injunction, defendants
are foreclosed from raising issues which could have been raised in an appeal from the
order granting the injunction. Only matters based on new facts and law addressed in the
motion to dissolve the injunction may be raised on appeal].)
2. Regulation of Medical Marijuana and Proposition D
Generally, the State of California prohibits the cultivation, possession, use, and
distribution of marijuana. (See Health & Saf. Code, §§ 11357-11361, 11366, 11366.5,
11570.) However, in 1996, California voters adopted the Compassionate Use Act
(§ 11362.5). The goal of the Compassionate Use Act was to ensure “that Californians
who obtain and use marijuana for specified medical purposes upon the recommendation
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of a physician are not subject to certain criminal sanctions.” (People v. Wright (2006) 40
Cal. 4th 81, 84; People v. Mower (2002) 28 Cal. 4th 457.)
In 2003, the Legislature enacted the Medical Marijuana Program. (Health & Saf.
Code, §§ 11362.7-11362.83.) The Medical Marijuana Program addressed issues not
addressed in the Compassionate Use Act, giving certain individuals, such as qualified
patients and caregivers, an affirmative defense to prosecution for cultivating,
transporting, and selling marijuana under specified conditions. (Health & Saf. Code,
§ 11362.765; People v. Wright, supra, 40 Cal.4th at p. 85.) Neither the Compassionate
Use Act nor the Medical Marijuana Program, however, eliminated the authority of local
governments to regulate, or even ban, medical marijuana dispensaries within their
localities. (City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc.
(2013) 56 Cal. 4th 729, 738.)
In 2013, City voters approved such a regulatory measure, Proposition D. (L.A.
Mun. Code, § 45.19.6 et seq.). Proposition D was enacted in response to “a proliferation
of medical marijuana establishments citywide” with the hope that “[r]egulations
governing their number, location, and operation may protect residents, businesses, and
patients from potential adverse impacts.” (Ballot Pamp., Gen. Elec. (May 21, 2013)
p. 14.) Proposition D “prohibits medical marijuana businesses, but . . . grants a limited
immunity from the enforcement of its prohibition to those medical marijuana businesses
that do not violate the restrictions set forth in [the] ordinance . . . .” (L.A. Mun. Code,
§ 45.19.6.) The purpose of the ordinance is to “stem the negative impacts and secondary
effects associated with the ongoing medical marijuana businesses in the City . . . .”
(Ibid.) Under Proposition D, it is “unlawful to own, establish, operate, use, or permit the
establishment or operation of a medical marijuana business, or to participate as an
employee, contractor, agent or volunteer, or in any other manner or capacity in any
medical marijuana business.” (§ 45.19.6.2, subd. A.)
Although Proposition D bans all medical marijuana businesses, it does grant
limited immunity from prosecution under Los Angeles Municipal Code
sections 11.00 (code violations) and 12.27.1 (administrative nuisance abatement) to some
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medical marijuana businesses. The limited immunity extends “only [to] a medical
marijuana business at the one location identified in its original or any amended business
tax registration certificate issued by the City, and only if that medical marijuana business
does not violate any of the medical marijuana business restrictions” set forth in
subdivisions A through D and G through O of Los Angeles Municipal Code
section 45.19.6.3. (§ 45.19.6.3.) Section 45.19.6.3 also provides that “[t]he limited
immunity provided by this Section shall not be available to and shall not be asserted as an
affirmative defense to any violation of law except as expressly set forth in this Article.”
Among the relevant business restrictions of Proposition D is subdivision M, which
provides that “[e]very medical marijuana business is prohibited that fails to identify by
name and residence address each of its Managers to the City Clerk by October 31 of each
year and whose Managers fail to successfully pass and publicly display at the location of
the medical marijuana business the results of an annual LAPD LiveScan background
check to be completed by January 31 of each year. A failed LAPD LiveScan is a
LiveScan that includes any felony conviction within the past ten years and/or current
parole or probation for the sale or distribution of a controlled substance.” (L.A. Mun.
Code, § 45.19.6.3, subd. M.)
3. Analysis
“[T]he court may . . . modify or dissolve an injunction . . . upon a showing that
there has been a material change in the facts upon which the injunction . . . was granted,
that the law upon which the injunction . . . was granted has changed, or that the ends of
justice would be served by the modification or dissolution of the injunction . . . .” (Code
Civ. Proc., § 533.) We generally review the trial court’s order denying a motion to
dissolve an injunction for abuse of discretion. (Loeffler v. Medina (2009) 174
Cal. App. 4th 1495, 1505.) However, pure questions of law, such as the interpretation of a
statute, are reviewed de novo. (420 Caregivers, LLC v. City of Los Angeles (2012) 219
Cal. App. 4th 1316, 1331.)
“In interpreting an ordinance or a voter initiative, we rely on the same rules of
statutory construction applicable to statutes.” (Woodland Park Management, LLC v. City
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of East Palo Alto Rent Stabilization Bd. (2010) 181 Cal. App. 4th 915, 919.) “ ‘ “In
construing a statute, our task is to determine the Legislature’s intent and purpose for the
enactment. [Citation.] We look first to the plain meaning of the statutory language,
giving the words their usual and ordinary meaning. [Citation.] If there is no ambiguity in
the statutory language, its plain meaning controls; we presume the Legislature meant
what it said. [Citation.] . . .” [Citations.] We examine the statutory language in the
context in which it appears, and adopt the construction that best harmonizes the statute
internally and with related statutes. [Citations.]’ [Citation.] In addition, we may
examine the statute’s legislative history. [Citation.]” (People v. Whitmer (2014) 230
Cal. App. 4th 906, 917.)
Defendants do not dispute that they were in violation of Proposition D’s LiveScan
requirements at the time the preliminary injunction was granted. Clearly, Progressive’s
failure to timely submit its managers for LiveScans, and to publicly display results by
January 31, 2014, violated subdivision M of Los Angeles Municipal Code section
45.19.6.3. Defendants argue that the violation was merely “technical,” and should not
result in a “permanent loss of immunity” under Proposition D. Defendants argue that
permanent disqualification is an “absurd result.”
Proposition D is quite clear. The ordinance provides that “[e]very medical
marijuana business is prohibited that fails to” comply with subdivision M. (L.A. Mun.
Code, § 45.19.6.3, subd. M, italics added.) It also provides that the “limited immunity is
available and may be asserted as an affirmative defense . . . only if that medical
marijuana business does not violate any of the . . . medical marijuana business
restrictions” identified by section 45.19.6.3, including subdivision M. (§ 45.19.6.3.)
Section 45.19.6.3 also provides that “[t]he limited immunity provided by this Section
shall not be available to and shall not be asserted as an affirmative defense to any
violation of law except as expressly set forth in this Article.”
The ordinance does not provide that immunity, once lost, may be restored. It
provides that a business not complying with the ordinance is prohibited, and that the
immunity is only available to businesses that do not violate the ordinance. (L.A. Mun.
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Code, § 45.19.6.3.) Progressive is such a business. Proposition D was enacted to curtail
the proliferation of medical marijuana businesses, therefore, the loss of immunity for
noncompliance with the act is not “absurd.”
DISPOSITION
The orders are affirmed. Respondent is to recover its costs on appeal.
GRIMES, J.
WE CONCUR:
BIGELOW, P. J.
FLIER, J.
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Filed 6/24/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
THE PEOPLE ex rel. MICHAEL N. B263622
FEUER, as City Attorney, etc.,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BC551645)
v. ORDER CERTIFYING
OPINION FOR PUBLICATION
PROGRESSIVE HORIZON, INC., et al.,
[NO CHANGE IN JUDGMENT]
Defendants and Appellants.
THE COURT:
The opinion in the above-entitled matter filed on May 31, 2016, was not certified
for publication in the Official Reports. For good cause, it now appears that the opinion
should be published in the Official Reports and it is so ordered.
There is no change in the judgment.
________________________________________________________________________
BIGELOW, P. J. FLIER, J. GRIMES, J.
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