Case Name:   Rincon Circle Commercial Condominium Association v. Hanna, et al.

Case No.:       1-14-CV-261854

 

This action arises from the alleged operation of a marijuana dispensary in violation of the terms of covenants, conditions, and restrictions (“CC&R”s) governing a commercial condominium development.  Plaintiff Rincon Circle Commercial Condominium Association (“Rincon Circle”) is the commercial owners association for the development.  (First Amended Complaint (“FAC”), ¶ 1.)  Defendant Akram C. Hanna (“Hanna”) is the record owner of the development’s Unit 927, which he leased to defendants Cookie Company, Inc. (“Cookie Company”) and Victor Li (“Li,” collectively with Hanna and Cookie Company, “Defendants”).

 

Demurrer

 

Defendants demur to the FAC on the ground that the first, second, fifth, and sixth causes of action fail to state a claim.  (Code Civ. Proc., § 430.10, subd. (e).)  Cookie Company and Li demur to the first, second, and sixth causes of action, while all three defendants demur to the fifth cause of action.

 

Request for Judicial Notice

 

Defendants’ request for judicial notice submitted with their reply brief is DENIED.  The Court’s order in another action is not relevant to its determination of Defendants’ demurrer.  (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [only relevant matters are subject to judicial notice].)

 

First Cause of Action for Breach of Governing Documents and the Second Cause of

Action for Breach of Covenant of Good Faith and Fair Dealing

 

Defendants contend that Rincon Circle fails to state a claim for breach of contract or breach of the covenant of good faith and fair dealing against Cookie Company or Li because it fails to allege that these defendants were parties to the CC&Rs or received any consideration from Rincon Circle as required to support the conclusion that there was a contractual relationship between Rincon Circle and these defendants.

 

Defendants contend that associations have the right to enforce CC&Rs against tenants as well as property owners, citing Mission Shores Assn. v. Pheil (2008) 166 Cal.App.4th 789, 796-797 (hereinafter, “Mission Shores”) [“[T]he Association argues that any tenant should be bound by the CC&R’s to the same extent that the homeowner is bound. In the event the homeowner fails or refuses to take effective measures to assure his or her tenant is complying with the CC&R’s, the Association needs some means to assure compliance. We agree.”].)  However, that case, which rejected an association member’s challenge to an amendment to the association’s CC&Rs that would restrict his ability to lease his property, did not address the issue of whether CC&Rs are directly enforceable against a tenant who is not a party thereto.  Rather, the association in Mission Shores included a provision in the CC&Rs giving it the right to evict a tenant and impose the fees and costs on the member, and the court found such a provision was reasonable in the context of the member’s objection to the provision.

 

It is axiomatic that a claim for breach of contract must allege the existence of a contractual relationship between the parties (see CACI 302 [existence of the contract between the parties a required element of a claim for breach of contract]; Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821 [same]), and Defendants have provided no authority supporting the proposition that this principal should be disregarded in the context of a common interest development.  A claim for breach of the covenant of good faith and fair dealing also depends upon the existence of a contractual relationship.  (See Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 711-712 [existence of a contractual relationship between the parties is a prerequisite to an action for breach of the implied covenant of good faith and fair dealing].)  Here, there is no such allegation.

 

Accordingly, the demurrer to the first and second causes of action is SUSTAINED WITH 10 DAY’S LEAVE TO AMEND as to Cookie Company and Li.

 

Fifth Cause of Action for Continuing Private Nuisance — Controlled Substances

 

In the fifth cause of action for continuing private nuisance – controlled substances, Rincon Circle alleges that Defendants’ use of Unit 972 as a marijuana dispensary is a nuisance pursuant to section 11570 of the Health and Safety Code.  (FAC, ¶ 49.)  Defendants argue that the fifth cause of action fails because Rincon Circle lacks standing to bring a claim pursuant to this section and the operation of a medical marijuana collective is not a nuisance under this section.

 

Health and Safety Code section 11571 provides that “any citizen of the state resident in the county, in his or her own name” may bring an action to abate a nuisance pursuant to section 11570.  Defendants contend that Rincon Circle is not a “citizen” because it is a corporate entity.  The Court disagrees, and finds that Rincon Circle has standing to bring such a claim.  (See 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.”].)

 

Health and Safety Code section 11570, “[t]he 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 (hereinafter, “Riverside”), citing Health & Saf. Code, § 11570.)  Defendants argue they are exempt or immune from nuisance abatement proceedings pursuant to Health and Safety Code section 11362.775, which provides that “[q]ualified 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 … 11570.”  Rincon Circle does not address this issue in its opposition papers, and the Court finds that Defendants are exempt from the fifth cause of action as currently pled pursuant to section 11362.775.  (See County of Los Angeles v. Hill (2011) 192 Cal.App.4th 861, 869 [section 11362.775 “exempts qualified patients and their primary caregivers (who collectively or cooperatively cultivate marijuana for medical purposes) from nuisance laws” where allegations of nuisance are premised “‘solely on the basis of [the] fact’ that they have associated collectively or cooperatively to cultivate marijuana for medical purposes”].)
The demurrer to the fifth cause of action is thus SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

 

Sixth Cause of Action for Negligence

 

Finally, Defendants contend that Rincon Circle fails to state a claim for negligence against Cookie Company or Li because the facts alleged in the FAC do not support the existence of a duty owed by these defendants to Rincon Circle.

 

Rincon Circle contends that Mission Shores and the CC&Rs establish that Cookie Company and Li owe it a duty, but this argument fails for the reasons discussed with respect to the first and second causes of action.  The other cases cited by Rincon Circle do not speak to any duties owed by tenants to an association.  (See McGarry v. Sax (2008) 158 Cal.App.4th 983 [skateboard store owed a duty to spectator injured while watching a skateboard competition hosted by the store]; Eads v. Marks (1952) 39 Cal.2d 807 [milk delivery service owed a duty of care to subscriber’s child as a third party beneficiary of its contract with the parents].)  The violation of the CC&Rs appears to be the only violation of a duty alleged by Rincon Circle, and there is no basis to find that Cookie Company or Li owed Rincon Circle a duty to comply with the CC&Rs.

 

The demurrer to the sixth cause of action is accordingly SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND as to Cookie Company and Li.  Defendants do not contend that the sixth cause of action fails to state a claim as to Hanna.

 

Motion for Preliminary Injunction

 

Rincon Circle’s motion for preliminary injunction is GRANTED as provided herein.  Rincon Circle has shown a likelihood of prevailing on the merits at trial with regard to violations of restrictive covenants to which owners are bound, as well as violations of zoning laws.  Rincon Circle has also demonstrated that a balancing of respective hardships favors granting the requested relief.  Preliminary injunctive relief would require Hanna, his employees, agents, representatives, assignees, successors in interest, and all those acting in concert with him to refrain from violating applicable covenants and restrictions for condominium ownership, and would require Defendants, their employees, agents, representatives, assignees, successors in interest, and all those acting in concert with them from violating applicable zoning laws.

 

Rincon Circle’s request for judicial notice of the documents identified as Exhibits A through L and AA is GRANTED.  (Evid. Code, § 452, subds. (c), (d), and (h).)  Rincon Circle’s request for judicial notice is otherwise DENIED.

 

Rincon Circle’s objections to Declaration of Victor Li in Opposition to Motion for Preliminary Injunction are GRANTED as to numbered objections 1, 2, and 3, and DENIED as to numbered objection 4.

Defendants’ objections to Rincon Circle’s evidence in support of motion for preliminary injunction are GRANTED as to numbered objections 5, 10, 13, 16, 18, 23, 25 and 34, and are otherwise DENIED.