CV Amalgamated LLC v. City of Chula Vista

CourtDistrict Court, S.D. California
DecidedFebruary 21, 2025
Docket3:24-cv-01348
StatusUnknown

This text of CV Amalgamated LLC v. City of Chula Vista (CV Amalgamated LLC v. City of Chula Vista) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CV Amalgamated LLC v. City of Chula Vista, (S.D. Cal. 2025).

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 Case No.: 24-cv-1348-RSH-DDL CV AMALGAMATED LLC dba

12 CALIGROWN, a California limited ORDER GRANTING DEFENDANT’S liability company, 13 MOTION TO DISMISS Plaintiff, 14 [ECF No. 7] v. 15 CITY OF CHULA VISTA, a California 16 public entity; and DOES 1 through 100, 17 Defendants. 18 19

20 Pending before the Court is a motion to dismiss plaintiff CV Amalgamated LLC’s 21 First Amended Complaint, filed by defendant City of Chula Vista (the “City”). ECF No. 7. 22 As set forth below, the City’s motion to dismiss is granted. 23 I. BACKGROUND 24 A. The State Case 25 In March 2018, the City enacted an ordinance regulating commercial cannabis 26 businesses (the “Ordinance”) and adopted regulations to implement the Ordinance 27 (collectively the “CO&R”). ECF No. 6 ¶ 18. The Ordinance sets forth a procedure to apply 28 1 for a license to sell cannabis. The City had a maximum of eight licenses for storefront retail 2 cannabis, with two licenses available in each of its four districts for electing City Council 3 members (the “Districts”). ECF No. 7-1 at 3. The license application process is split into 4 two phases. All phase one applications are reviewed by the Finance Director and Police 5 Chief to determine whether the applicant has passed the minimum specified requirements 6 for a license. ECF No. 6 at 4. Applicants approved in phase one are eligible to obtain an 7 application slot for phase two. Applications are scored by Hinderliter, de Llamas & 8 Associates (“HDL”), a third-party contractor hired by the City, based on a merit-based 9 system described in the Ordinance. If the number of eligible applicants in phase one 10 exceeds the number of available phase two slots, then only the applicants with the highest 11 scores are given phase two slots. Id. Ultimately, phase two applicants with the highest- 12 ranking scores receive licenses based on availability. Id. 13 Plaintiff is a California limited liability company. ECF No. 6 ¶ 2. In January 2019, 14 Plaintiff submitted applications for licenses in Districts One, Three, and Four. ECF No. 6 15 at 5. Plaintiff’s phase one applications were all rejected by the City on January 31, 2020 16 for failure to rank high enough in the merit-based evaluation scored by HDL. ECF No. 6 ¶ 17 15. Plaintiff filed an appeal with the City Manager, challenging the rejection of its 18 applications. On July 7, 2020, Plaintiff prevailed on appeal and ordered the City to re-score 19 Plaintiff’s applications. Id. On August 21, 2020, the City sent a letter to Plaintiff with the 20 revised application scores and a decision rejecting Plaintiff’s applications. Id. ¶ 16. 21 On September 22, 2020, Plaintiff filed a lawsuit in the Superior Court of California, 22 County of San Diego, against the City of Chula Vista, captioned CV Amalgamated LLC v. 23 City of Chula Vista, No. 37-2020-00033446 (Cal. Super. 2020) (the “state lawsuit”).1 See 24

25 1 Defendant requests the Court take judicial notice of eight documents consisting of 26 the docket and filings in the state lawsuit, along with meet and confer letters sent to Plaintiff 27 in this lawsuit. Plaintiff does not oppose. The Court grants Plaintiff’s request for judicial notice. 28 1 ECF No. 6 ¶ 16. In the state lawsuit, Plaintiff brought claims against the City of Chula 2 Vista challenging the City’s denial of its applications. Plaintiff’s complaint pleaded four 3 theories of relief: (1) traditional mandamus, (2) administrative mandamus, (3) declaratory 4 relief, and (4) promissory estoppel. ECF No. 7-1 at 5. During the lawsuit, Plaintiff elected 5 to proceed only on its claim for traditional mandamus and dismissed the other three causes 6 of action without prejudice. See CV Amalgamated LLC v. City of Chula Vista, 82 Cal. App. 7 5th 265, 277, as modified on denial of reh’g (Aug. 12, 2022). 8 On January 29, 2021, the Superior Court issued an order denying Plaintiff’s request 9 for traditional mandamus. On July 19, 2022, Plaintiff appealed and requested that the 10 California Court of Appeal direct the city to: (1) rescind its rejection of Plaintiff’s 11 applications in Districts One, Three, and Four; (2) process those applications pursuant to 12 the CO&R; and (3) rescore Plaintiff’s applications in compliance with the City Manager’s 13 directive. ECF No. 7-1 at 6. On September 12, 2022, the Court of Appeal reversed the trial 14 court and ordered it to issue a writ compelling the City to process and rescore Plaintiff’s 15 applications in accordance with the CO&R. Id. Thereafter, in April 2023, the City issued 16 its final license in District Three, the last available license in any of the three districts for 17 which Plaintiff had sought a license. ECF No. 6 ¶ 18. On August 2, 2023, the Superior 18 Court issued a writ of mandamus ordering the City to re-score and rank Plaintiff’s 19 applications. Id. In September 2023, the City re-scored Plaintiff’s applications in Districts 20 One and Three but rejected Plaintiff’s applications because all the licenses had already 21 been issued. Id. ¶ 20. On October 13, 2023, Plaintiff submitted a claim to the City opposing 22 the rejection of its applications. The City rejected the claim, partially based on 23 untimeliness. ECF Nos. 6 ¶¶ 19, 20; 7-1 at 7. 24 B. The Instant Action 25 On May 21, 2024, Plaintiff filed a new complaint against the City in Superior Court. 26 ECF No. 1-2 at 9. The City removed the state lawsuit to this Court on July 30, 2024. ECF 27 No. 6 at 3. The Court thereafter granted a joint motion for leave to file an amended 28 complaint. ECF Nos. 4, 5. On September 5, 2024, Plaintiff filed its First Amended 1 Complaint (the “FAC”). ECF No. 6. 2 The operative pleading alleges that despite having been ordered to process Plaintiff’s 3 applications, the City delayed processing these applications until it had already issued all 4 of its available retail cannabis licenses. The FAC brings two claims, for: (1) violation of 5 civil rights pursuant to 42 U.S.C. § 1983, and (2) negligence. Id. ¶¶ 26–40. Plaintiff seeks 6 money damages, and in the alternative, an order declaring Plaintiff “the highest ranked 7 applicant in District 1 and the second ranked applicant in District 3.” Id. at 13. The matter 8 is fully briefed. ECF Nos. 12 (opposition), 13 (reply). 9 II. LEGAL STANDARD 10 A motion to dismiss under Rule 12(b)(6) “tests the legal sufficiency of a claim.” 11 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and 12 plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 13 8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is 14 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see Fed. R. 15 Civ. P. 12(b)(6). The plausibility standard demands more than a “formulaic recitation of 16 the elements of a cause of action,” or “‘naked assertions’ devoid of ‘further factual 17 enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. 18 at 555, 557). Instead, a complaint “must contain sufficient allegations of underlying facts 19 to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. 20 Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 21 When reviewing a motion to dismiss under Rule 12(b)(6), courts assume the truth of 22 all factual allegations and construe them in the light most favorable to the nonmoving 23 party. Cahill v. Liberty Mut. Ins.

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CV Amalgamated LLC v. City of Chula Vista, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cv-amalgamated-llc-v-city-of-chula-vista-casd-2025.