J. Arthur Props., II, LLC v. City of San Jose

230 Cal. Rptr. 3d 365, 21 Cal. App. 5th 480
CourtCalifornia Court of Appeal, 5th District
DecidedMarch 19, 2018
DocketH042938
StatusPublished
Cited by8 cases

This text of 230 Cal. Rptr. 3d 365 (J. Arthur Props., II, LLC v. City of San Jose) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
J. Arthur Props., II, LLC v. City of San Jose, 230 Cal. Rptr. 3d 365, 21 Cal. App. 5th 480 (Cal. Ct. App. 2018).

Opinion

Grover, J.

*482Plaintiff SV Care operated a medical marijuana collective in a commercial zoning district in San Jose. Plaintiff J. Arthur Properties, II, *483LLC owns the building in which SV Care operated. Defendants City of San Jose and City of San Jose Appeals Hearing Board (collectively, the City) determined that a medical marijuana collective was not an authorized use of the subject property and ordered the collective to close. Plaintiffs appeal the denial of their petition for writ of administrative mandate, arguing that the collective is a legal nonconforming use and that the City should be equitably estopped from forcing plaintiffs to close. For the reasons stated here, we will affirm the trial court's decision. *367I. ADMINISTRATIVE AND TRIAL COURT PROCEEDINGS

Plaintiffs1 own the subject property and the medical marijuana collective at issue. At all relevant times, the subject property was zoned Commercial Office under the City of San Jose Municipal Code (Municipal Code). The Municipal Code defines the Commercial Office zone as a "district in or near residential areas or between residential and commercial areas." The property abuts a residential use.

A. REGULATIONS IN EFFECT WHEN THE COLLECTIVE OPENED

Plaintiffs' collective opened in 2010. At that time, the Municipal Code did not list medical marijuana collectives or any other marijuana-specific uses in the table of permitted uses. (The Municipal Code had formerly listed medical marijuana dispensaries as a use for which an administrative permit could be obtained, but all references to marijuana-related uses were removed from the Municipal Code in 2001.) The Municipal Code specified that "uses not listed on [the applicable table] are not Permitted." That table did list "medical offices" as a permitted use in the Commercial Office zone.

B. MARIJUANA BUSINESS TAX

After the collective opened, voters passed a local measure adding a marijuana business tax to the Municipal Code. The tax applies to anyone "engaging in marijuana business" within the City. The Municipal Code states that the marijuana business tax was "enacted solely to raise revenue for municipal purposes and [was] not intended for regulation."

Businesses are required to obtain a business tax certificate from the City. The Municipal Code states that the certificate tax and marijuana business tax *484are "solely for the purpose of obtaining revenue and are not regulatory permit fees." A Municipal Code section, entitled "Payment of tax does not authorize unlawful business," provides: "The payment of a business tax required by this chapter, and its acceptance by the city, shall not entitle any person to carry on any marijuana business unless the person has complied with all of the requirements of this code and all other applicable laws, nor to carry on any marijuana business in any building or on any premises in the event that such building or premises are situated in a zone or locality in which the conduct of such marijuana business is in violation of any law." The collective's business tax certificate contains the following disclaimer: "Issuance of this certificate is not an endorsement, nor a certificate of compliance with other ordinances or laws, nor an assurance that the proposed use is in conformance with the City's Building/Fire/Zoning regulations." The City does not dispute that plaintiffs paid all applicable marijuana business taxes for the collective.

C. ZONING AMENDMENTS

The Municipal Code was amended in 2011 specifically to regulate medical marijuana collectives, but that regulatory scheme was suspended almost immediately due to a referendum petition challenging the amendments. The Municipal Code was amended again in 2014 specifically to regulate medical marijuana. Under the 2014 amendments, "medical marijuana collective" is not listed as a permissible use in the Commercial Office district. It is, however, *368listed as a restricted use in certain industrial zoning areas.

D. COMPLIANCE ORDER AND ADMINISTRATIVE PROCEEDINGS

Plaintiffs received a compliance order in 2014 stating that a medical marijuana collective "was never an allowed use in the CO Zoning District." The order asserted that plaintiffs' collective "is in violation of the [Municipal Code] and is not allowed." Plaintiffs disputed the compliance order by requesting a Director's Hearing conducted by a City hearing officer. At that hearing, plaintiffs argued their collective was a legal nonconforming use because it met the definition of a medical office, which was a permissible use when the collective opened. A deputy city attorney argued that the collective did not meet the Municipal Code definition of a medical office. He stated that the "property was a priority that's been recognized by the City and the City Council, as there had been prior directions to close medical marijuana collectives from the City Council, which have a zero lot line or abut a ... property with a residential use." The hearing officer upheld the compliance order, and plaintiffs appealed to the City's Appeals Hearing Board.

*485An inspection report prepared before the appeals board hearing noted that one of the City's code enforcement inspectors had met with the collective's business owner in 2010 and told him "this location may not qualify due to the residential use located next door." The City filed a brief with the Appeals Hearing Board that contained additional information about City Council directives regarding medical marijuana. According to the brief, in 2012 the City Council "directed Code Enforcement to focus its enforcement priorities on ... collectives" operating near schools. In 2013, the City Council added to the priority list collectives "located on a parcel that shares a 'zero lot line' with residential uses." The City's code enforcement department had sent compliance orders to several collectives meeting those criteria, including plaintiffs' collective. After a hearing, the Appeals Hearing Board upheld the compliance order.

E. TRIAL COURT WRIT PROCEEDINGS

Plaintiffs petitioned the trial court for a writ of administrative mandate ( Code Civ. Proc., § 1094.5 ), arguing that the collective was a legal nonconforming use because it met the definition of a medical office and that the City should be estopped from enforcing the Municipal Code because they collected taxes from plaintiffs. Plaintiffs appeal from the trial court's order denying their mandate petition.2

II. DISCUSSION

A. LEGAL NONCONFORMING USE

Plaintiffs argue that the collective is a legal nonconforming use because it is a medical office, a use that has been allowed in the Commercial Office zoning district since the collective opened in 2010.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
230 Cal. Rptr. 3d 365, 21 Cal. App. 5th 480, Counsel Stack Legal Research, https://law.counselstack.com/opinion/j-arthur-props-ii-llc-v-city-of-san-jose-calctapp5d-2018.