Laboratories v. Cnty. of San Diego, D074928

CourtCalifornia Court of Appeals
Writing for the CourtO'ROURKE, J.
Decision Date23 June 2020
PartiesOUTCO LABORATORIES, INC. et al., Plaintiffs and Appellants, v. COUNTY OF SAN DIEGO, Defendant and Respondent.
Docket NumberD074928

OUTCO LABORATORIES, INC. et al., Plaintiffs and Appellants,
COUNTY OF SAN DIEGO, Defendant and Respondent.



June 23, 2020


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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 37-2017-00022601-CU-MC-CTL)

APPEALS from a judgment of the Superior Court of San Diego County, Gregory W. Pollack, Judge. Affirmed.

Aguirre & Severson and Michael J. Aguirre, Maria C. Severson for Plaintiffs and Appellants Outco Laboratories, Inc., et al.

Newmeyer & Dillion and Charles S. Krolikowski, Jason Moberly Caruso for Plaintiffs and Appellants Anthony Cioe and Survivormedz.

Thomas E. Montgomery, County Counsel and Timothy M. White and Jeffrey P. Michalowski, Senior Deputy County Counsel for Defendant and Respondent.

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Plaintiffs and appellants, individuals and entities who sought to operate medical marijuana collective facilities in unincorporated areas of San Diego County,1 appeal from a judgment of dismissal entered after the trial court sustained demurrers of the County of San Diego (County) to their first and second amended complaints. Plaintiffs sought declaratory, injunctive and mandamus relief, alleging County took their private property without just compensation when it imposed various building requirements and instructions, required them to pay fees, then banned them from developing medical marijuana cultivation facilities. They alleged in part that County violated their constitutional rights by selectively enforcing its laws and treating them differently than other unlicensed marijuana dispensaries. On County's demurrer to the first amended complaint, the court ruled plaintiffs' claims relating to County's ban were barred by the 90-day statute of limitations of Government Code2 section 65009 but granted leave to amend plaintiffs' equal protection claim. The court thereafter sustained County's

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demurrer to plaintiffs' second amended complaints without leave to amend on grounds plaintiffs did not allege legally cognizable facts of unequal treatment or selective enforcement. Plaintiffs contend the court erred in these rulings, including by applying section 65009 to their takings claims and improperly denying them leave to amend to allege County is equitably estopped from relying on the limitations period. They maintain they adequately alleged that County's selective enforcement of its ban violated the Fourteenth Amendment's Equal Protection clause. We affirm the judgment.


When reviewing a judgment of dismissal after a demurrer sustained without leave to amend, we take the facts from the operative pleadings, accepting as true material allegations but not contentions, deductions or conclusions of law, and considering matters that are judicially noticeable. (Heckart v. A-1 Self Storage, Inc. (2018) 4 Cal.5th 749, 753-754.) This includes the County ordinances at issue in these pleadings, of which County sought judicial notice below. (Evid. Code, §§ 452. subd. (b), 459, subd. (a); Association for Los Angeles Deputy Sheriffs v. County of Los Angeles (2019) 42

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Cal.App.5th 918, 937, fn. 11; Tanimura & Antle Fresh Foods, Inc. v. Salinas Union High School Dist. (2019) 34 Cal.App.5th 775, 797, fn. 13)3

In 2009, County began to adopt a series of ordinances relating to medical marijuana and its use in unincorporated areas. In 2010, County passed ordinances providing regulations for the establishment and operation of facilities known as marijuana collectives, which are operations that allow people to cultivate marijuana for personal, medicinal use and permit members to share the costs of cultivation. In part, County found establishment of marijuana dispensaries could lead to increases in crime, which justified implementation of regulatory and safety measures, and County stated its intent to protect County citizens and "promote their general welfare and safety by ensuring that marijuana is not diverted for illegal purposes or to illicit markets." The

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ordinances required collectives to obtain County planning department approval, an operating certificate issued by the sheriff's department governed by County licensing procedures, and a building permit if necessary. Among other requirements, County imposed various infrastructure requirements for alarms and video monitoring, visibility, windows, entrances/exits, and parking.

In 2014, 2015 and 2016, petitioners began the process to open medical marijuana collective facilities under County's 2010 regulations and later ordinances. Under that process, applicants selected from County-designated eligible properties then purchased or leased a property, applied for zoning verifications to confirm lot lines were recorded or paid for unrecorded properties to redraw lot lines to update County records, arranged for a final occupancy inspection, and obtained an operator's license from the sheriff's department.

Because one of the ordinances limited the areas in which marijuana collective facilities could operate, it sparked a "foot-race" among plaintiffs and others interested in opening medical marijuana cultivation facilities, compelling them to move as quickly as possible and trust that County would not issue later bans on medical marijuana cultivation. Plaintiffs expended substantial funds to comply with County regulations, including by widening roads, re-asphalting, upgrading sewage, adding sidewalks, moving fire hydrants, adding curbs, moving streetlights, and repainting the streets. Though some plaintiffs at County's request obtained approval from one community planning group to permit the collective facilities and County staff was in favor of allowing plaintiffs to proceed with development, County ignored its staff findings and the community support.

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The sheriff's department created an inconsistent and complicated path to development, including by issuing instructions contrary to County ordinances.

In March and April 2016, County adopted ordinances enacting a one-year moratorium on the establishment, commencement of operation or enlargement of medical marijuana collective facilities within its unincorporated areas, effective immediately. County found in part that "[f]acilities which dispense marijuana have proven to have serious harmful effects on the communities in which they are located." It cited papers concluding that "the establishment of marijuana dispensaries can lead to an increase in crime, including burglaries, robberies, use of marijuana by unauthorized persons, sale and distribution of illegal drugs and loitering" and indicating that "marijuana may have harmful effects on the cardiovascular and respiratory systems of users, contributes to lung cancer, and adversely impact [sic] the mental health of individuals."

In August 2016, County's Department of Planning and Development Services sent letters to plaintiffs advising them whether they had obtained vested rights for their projects and the extent of those rights. County granted some plaintiffs vested rights. In November 2016, California voters passed Proposition 64, allowing personal use and possession of specified quantities of marijuana.4

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In March 2017, County approved an ordinance (No. 10461), which repealed the existing medical marijuana collective facility regulations and amended zoning ordinances to ban the establishment of new medical and nonmedical marijuana facilities in unincorporated areas.5 Those facilities that had obtained an operating certificate or vested rights were given a five-year amortization period6 to cease operations. A week later, it approved another ordinance (No. 10474) limiting the issuance of operating certificates in accordance with the ban. The ordinances went into effect 30 days after their passage dates: on April 14, 2017, and April 21, 2017. In part, County's board of supervisors found that in 2013 the California Supreme Court in City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc. (2013) 56 Cal.4th 729 (City of Riverside) held "that cities and counties have the authority to ban medical marijuana land uses." Referring to its past findings, County's Board of Supervisors found that the amendments were "reasonable and necessary for public health, safety and welfare."

County's five-year period was insufficient for plaintiffs to recoup their investments. County staff later destroyed all of the accounting records of expenses,

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improvements, and work that it had asked plaintiffs to submit in making its vested rights determinations.

Plaintiffs sued County in June 2017 but did not serve the complaint. In August 2017, they filed a first amended complaint alleging causes of action for (1) a taking without just compensation under the Fifth Amendment and (2) "unequal enforcement of the law" (capitalization omitted) by virtue of County failing to shut down illegal operations while prohibiting others from obtaining vested rights, and issuing contradictory and confusing instructions via the sheriff's department. Plaintiffs sought a writ of mandate to compel County to permit them to develop their properties for cultivation, alleging the March 2017 ordinance was the result of County's arbitrary and capricious action and was "not supported by the record"; County did not proceed in a manner required by law and acted in excess of its jurisdiction; and they were denied due process. Plaintiffs also sought judicial declarations supportive of these claims.

Plaintiffs attempted service of the summons and first amended complaint in November 2017. The parties later stipulated to deem County served with that pleading and the summons on December 5,...

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