Case Name: ACI, LLC, et al. v. Cookie Company, Inc., et al.

Case No.: 1-14-CV-261050

Demurrer by Defendants Cookie Company, Inc. and Akram C. Hanna to the First and Fourth Causes of Action in Complaint of Plaintiffs ACI, LLC and Access Telecom Systems, Inc. dba Access Communications

Plaintiffs allege that defendant Hanna is the owner of adjacent commercial real property within a commercial-industrial condominium complex (“Rincon Circle”). (See ¶¶6 and 10 of the Complaint.) Hanna allegedly leases the property to defendant Cookie which there operates a medical marijuana dispensary. (See ¶¶11 and 13 of the Complaint.) Plaintiffs further allege that Rincon Circle is subject to a Declaration of Covenants and Restrictions (“DCR”).

On February 21, 2014, Plaintiffs filed a complaint against Defendants asserting causes of action for: (1) breach of condominium owners rights and obligations; (2) ongoing trespass; (3) continuing private nuisance; (4) continuing private nuisance—controlled substances.

On May 15, 2014, Defendants filed this demurrer to the first and fourth causes of action on the ground that these causes of action fail to state a claim for relief. (Code Civ. Proc. § 430.10, subd. (e).)

First Cause of Action: Breach of DCR

Defendants contend that the first cause of action is deficient because Plaintiffs do not allege that the DCR has been recorded or that Defendants otherwise had notice of the DCR prior to taking ownership/possession. Defendants rely, in part, on Soman Properties v. Rikuo Corp. (1994) 24 Cal.App.4th 471, 485 (“Soman”) for the proposition that: “Notice, or the lack thereof, is relevant to the most basic requirement for enforcement of equitable servitudes, that their enforcement must be equitable.”

Plaintiffs’ characterization of Defendants’ argument as on challenging the facts is not well taken. Plaintiffs do not question the rule in Soman, and present no authority that recordation or other notice is not required. Instead, Plaintiffs contend that the pleading is adequate because they allege that: 1) Rincon Center is subject to the DCR; 2) Hanna is the owner; and 3) Cookie is the tenant. However, none of these facts, alone or collectively, address the conceded requirement of recordation or other notice.

Accordingly, the demurrer to the first cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] is SUSTAINED with 10 days’ leave to amend..

Fourth Cause of Action: Nuisance – Standing

With respect to private nuisance, Defendants argue first that Plaintiffs lack standing to assert such a claim based on a violation of Health and Safety Code section 11570 because an action to abate under that section may be brought, according to section 11571, by “the district attorney or county counsel of the county, or the city attorney of any incorporated city or of any city and county, in the name of the people, [] or any citizen of the state resident in the county, in his or her own name.” The term “citizen” is not defined by the particular Division of the Health and Safety Code, but Defendants contend Plaintiffs are not “citizens” because they are corporate entities rather than individuals.

This argument is not persuasive, given the Supreme Court’s guidance in Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 168: “[T]he fact that a corporation is not technically a ‘citizen’ for most purposes [citation] does not necessarily affect its standing to pursue a ‘citizen suit.’ [¶] The term ‘citizen’ in this context is descriptive, not prescriptive. It reflects an understanding that the action is undertaken to further the public interest and is not limited to the plaintiff’s private concerns. Entities that are not technically ‘citizens’ regularly bring citizen suits. [Citations.] Absent compelling policy reasons to the contrary, it would seem that corporate entities should be as free as natural persons to litigate in the public interest.”

The demurrer based on standing is OVERRULED.

Fourth Cause of Action: Nuisance – Statutory Exemption/ Immunity

Distinct from the allegations in the third cause of action based on Civil Code section 3479, Plaintiffs in the fourth cause of action allege specifically that “the building is a private nuisance pursuant to section 11570 of the Health & Safety Code.” Health and Safety Code section 11570 states, “Every building or place used for the purpose of unlawfully selling, serving, storing, keeping, manufacturing, or giving away any controlled substance, precursor, or analog specified in this division, and every building or place wherein or upon which those acts take place, is a nuisance which shall be enjoined, abated, and prevented, and for which damages may be recovered, whether it is a public or private nuisance.” “The so-called ‘drug den’ abatement law … provides that every place used to unlawfully sell, serve, store, keep, manufacture, or give away certain controlled substances is a nuisance that shall be enjoined, abated, and prevented, and for which damages may be recovered.” (City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc. (2013) 56 Cal.4th 729, 739 (Riverside) citing Health & Saf. Code, §11570.)

Defendants argue they are exempt or immune from nuisance abatement proceedings under section 11570 by virtue of Health and Safety Code section 11362.775. That section states, “Qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under Section 11357, 11358, 11359, 11360, 11366, 11366.5, or 11570.” (Emphasis added.) The California Supreme Court in Riverside held, “In section 11362.775, the [Medical Marijuana Program (MMP) (Health & Saf. Code, §11362.7 et seq.)] … removes state law criminal and nuisance sanctions from the conduct described therein. By this means, the MMP has signaled that the state declines to regard the described acts as nuisances or criminal violations, and that the state’s enforcement mechanisms will thus not be available against these acts.” (Riverside, supra, 56 Cal.4th at p. 762.) However, the “MMP’s limited provisions neither expressly nor impliedly restrict or preempt the authority of individual local jurisdictions to choose otherwise for local reasons, and to prohibit collective or cooperative medical marijuana activities within their own borders. A local jurisdiction may do so by declaring such conduct on local land to be a nuisance, and by providing means for its abatement.” (Id.) Thus, the Riverside court interpreted Health and Safety Code section 11362.775 narrowly in creating an exemption/ immunity only for those criminal and nuisance sanctions which the statute enumerated.

The fourth cause of action is specifically premised upon Health and Safety Code section 11570, one of the statutes enumerated by Health and Safety Code section 11362.775. Although Plaintiff contends the cause of action alleges conduct which goes beyond that which is proscribed by Health and Safety Code section 11570 because the fourth cause of action incorporates all prior allegations of the complaint, but then the cause of action simply duplicates the third cause of action.

The demurrer to the fourth cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action is SUSTAINED with 10 days’ leave to amend.