Judge: Carolyn M. Caietti, Case: 37-2022-00042040-CU-CR-CTL, Date: 2023-09-07 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - September 06, 2023

09/07/2023  10:30:00 AM  C-70 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Carolyn Caietti

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Civil - Unlimited  Civil Rights Demurrer / Motion to Strike 37-2022-00042040-CU-CR-CTL DELTA C LP VS SHIMAZU [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 05/19/2023

Defendants Stephanie Shimazu, Nathan Da Valle, Jamin Teague, and the Department of Justice, Bureau of Gambling Control's Demurrer to Plaintiff's First Amended Complaint is OVERRULED.

Background and Preliminary Matters Plaintiff's FAC alleges it operates a card room in San Joaquin County. In 2020 and during the COVID-19 pandemic, Defendants issued an emergency order and initiated an administrative proceeding against Plaintiff for violating public health orders. The FAC asserts causes of action for: (1) declaratory and injunctive relief (v. the Bureau regarding the constitutionality of Bus. & Prof. Code, § 19931); (2) inverse condemnation (v. the Bureau); (3) 42 U.S.C. § 1983 – Fourteenth Amendment/Due Process (v.

'Individual Defendants); (4) 42 USC § 1983 – Fourth Amendment (v. Individual Defendants); (5) 42 USC § 1983 – Fourteenth Amendment/Equal Protection (v. Individual Defendants); 42 USC § 1983 – Procedural Due Process (v. Individual Defendants).

Defendants' unopposed requests for judicial notice is granted and notice will be taken to the extent permitted.

Defendants' reply objections to the Declaration of Scott J. Street and Declaration of Tiffany Lichtig are overruled; however, the Court only considered and relied on facts within the four corners of the First Amended Complaint (FAC) or that are subject to judicial notice as required by the standard on a demurrer.

Discussion A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) No other extrinsic evidence can be considered (i.e., no 'speaking demurrers'). (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) The complaint must be liberally construed and given a reasonable interpretation, with a view to substantial justice between the parties. (Amarel v. Connell (1988) 202 Cal.App.3d 137, 140–141; see also, Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1111-12 [in ruling on demurrers, courts treat as being true 'not only the complaint's material factual allegations, but also facts that may be implied or inferred from those expressly alleged'].) Calendar No.: Event ID:  TENTATIVE RULINGS

2968799  38 CASE NUMBER: CASE TITLE:  DELTA C LP VS SHIMAZU [IMAGED]  37-2022-00042040-CU-CR-CTL For the reasons below, the demurrer to the FAC is overruled. In several instances, the grounds for demurrer do not comport with the standard of law on a demurrer and/or misconstrue the FAC's factual allegations. (C.C.P., § 430.60 ['A demurrer shall distinctly specify the grounds upon which any of the objections to the complaint...are taken. Unless it does so, it may be disregarded.']; ROA 37 – Notice of Demurrer and Demurrer to Plaintiff's First Amended Complaint.) As alleged, the crux of this case is Defendants' issuance of an Emergency Order. (FAC, at Ex. A.) Generally, Plaintiff alleges the California Department of Public Health (CDPH) allowed cardrooms to operate outdoors if they were conducted under a tent, canopy, or other sun shelter but only as long as no more than one side is closed, allowing sufficient outdoor air movement. (FAC, at ¶ 16.) Plaintiff's Kings Card Club reopened on August 21, 2020. Operations were conducted on an existing outdoor patio with walls roughly six feet high. A Bureau field representative inspected the property before reopening to ensure compliance with state requirements and did not raise any concerns. (Ibid.) On September 9, 2020, the CDPH issued updated 'Outdoor Guidance' for cardroom operations, stating that 'any barriers or other solid structures used to create a gaming area perimeter can be no higher than three feet.' (Id., at ¶ 17.) Plaintiff alleges this guidance seemed to refer to new structures used to create an outdoor gaming area and it was not clear whether it applied to existing patios like Plaintiff's. (Ibid. & Id., at ¶ 20.) On October 2, 2020, Plaintiff received an emergency letter of warning (ELOW), alleging the walls did not comply with the Outdoor Guidance. (FAC, at ¶ 18.) The ELOW did not contain a response date. (FAC, at ¶ 20.) Ultimately, Plaintiff agreed to lower the walls to three feet and notified the Bureau. (Id., at ¶ 23.) Plaintiff alleges Defendants ignored this notification and wanted to make an example of Plaintiff. (Id., at ¶ 24.) On October 15, 2020, Defendants, acting unilaterally and without consulting state or county public health officials, sent eight armed agents to shut down Kings Card Club via the Emergency Order that would stay in place until October 20, 2020. (Ibid.) On October 15, Defendants also received a letter from the County health official stating Kings Card Club's outdoor operations were 'substantially in compliance with both local public health orders and the State's industry guidance.' (Id., at ¶ 26.) They continued to execute the Emergency Order anyway. (Id., at ¶ 27.) And, another cardroom in the area, received an identical ELOW about its outdoor patio walls on October 2, but Defendants only shut down Kings Card Room. (Id., at ¶ 30.) All Causes of Action – Judicial Exhaustion and Issue Preclusion Defendants argue each cause of action fails to state sufficient facts because the claims are barred by the principles of judicial exhaustion and issue preclusion and because Plaintiff did not file a timely petition for writ of administrative mandamus before filing this lawsuit.

As explained in Alborzi v. University of Southern California (2020) 55 Cal.App.5th 155, 174–175, under the doctrine of exhaustion of judicial remedies, once an administrative decision has been issued, provided that decision is of a sufficiently 'judicial character to support collateral estoppel, respect for the administrative decisionmaking process requires the prospective plaintiff continue the process to completion, including exhausting any available judicial avenues for reversal of adverse findings. Failure to do so will result in any quasi-judicial administrative findings achieving binding, preclusive effect and may bar further relief on the same claims. (Ibid., citing Runyon v. Board of Trustees of California State University (2010) 48 Cal.4th 760, 773.) The doctrine of exhaustion of judicial remedies applies where 'there has been an adjudicatory, quasi-judicial decision in accordance with established public or private procedures,' and 'the prior administrative proceedings possessed the requisite 'judicial character' such that they yielded decisions or findings that could later be given preclusive effect.' (Alborzi, supra, citing Y.K.A. Industries, Inc. v. Redevelopment Agency of City of San Jose (2009) 174 Cal.App.4th 339, 361.) As Defendants concede here, 'the Commission does not have the authority to consider the constitutionality of a statute...' (Memo., at p. 12:1-3.) Based on the FAC's allegations, the administrative hearing concerned whether Plaintiff's owners should be subject to discipline for the reasons alleged in the Accusation. The constitutional claims were not litigated. 'As explained in the ALJ's decision, Delta C Calendar No.: Event ID:  TENTATIVE RULINGS

2968799  38 CASE NUMBER: CASE TITLE:  DELTA C LP VS SHIMAZU [IMAGED]  37-2022-00042040-CU-CR-CTL could not challenge the validity of the Emergency Order or litigate any constitutional arguments in the hearing on the Accusation. Likewise, neither the ALJ nor the Commission had the power to declare section 11931 of the Business and Professions Code unconstitutional.' (FAC, at 41; see also, FAC, at ¶¶ 39-40, 88.) On this record only and on the standard on demurrer, the administrative decision is not of sufficient judicial character to support application of the doctrine.

First Cause of Action – Declaratory and Injunctive Relief (v. the Bureau) Defendants argue the first cause of action for declaratory and injunctive relief does not state sufficient facts because 'Plaintiff will be unable to show that the law it challenges is unconstitutional.' (Notice of Demurrer, p. 2, ¶ 2.) What Plaintiff 'will be able to show' is not the standard on a demurrer. Rather, the FAC sufficiently pleads an actual controversy exists of whether Business and Professions Code section 19931 is constitutional. (See, C.C.P., § 1060; FAC, at ¶¶ 46-53.) Further, Defendants' mootness and ripeness arguments are not persuasive because whether the 'public health orders' are in effect does not bear on whether the statute is unconstitutional. (Notice of Demurrer, at p. 2, ¶¶ 3-4.) Second Cause of Action – Inverse Condemnation (v. the Bureau) Defendants argue the second cause of action does not state sufficient facts because 'Plaintiff cannot meet its burden of showing it has a protectable property interest, that its property was taken, or that the alleged taking was for a public purpose.' (Notice of Demurrer, at p. 3, ¶ 6.) First, whether Plaintiff can meet its burden is not a grounds for demurrer. Second, takings turn on 'situation-specific factual inquiries.' (Surfrider Found. V. Martins Beach 1, LLC (2017) 14 Cal.App.5th 238, 273.) Here, the FAC alleges 'the Bureau seized – it physically appropriated – Delta C's property for six days,' acknowledged in the Emergency Order that the 'seizure of Delta C's property was for a public purpose' and Delta C 'has not been compensated for the temporary categorical taking of its property.' (FAC, at ¶¶ 59-60.) Defendants cite to 640 Tenth, LP v. Newsom (2022) 78 Cal.App.5th 840, but there, the Fourth District Court of Appeal, Division One made clear the '[o]wners have not alleged a physical taking.' (Id., at p. 860.) Comparatively, Plaintiff did here.

Defendants also argue the second cause of action does not state sufficient facts because the State of California was in a state of emergency due to COVID-19 and the doctrine of necessity obviates the need for compensation. In support, Defendants cite Trinco Investment Company v. United States (2013) 722 F.3d 1375. Trinco explains the doctrine of necessity or the necessity defense absolves the state of liability for destruction of real and personal property in cases of actual necessity to prevent or forestall grave threats to the lives and property of others. (Id., at p. 1377.) It is a defense, requiring a showing of an actual emergency and imminent danger met by a response that is actually necessary. (Id., at p. 1380.

Not every seizure of a private citizen's property will qualify. (Ibid.) Further, in Trinco, the court found the plaintiff plead sufficient facts to state a claim for relief plausible on its face and reversed the decision to grant the government's motion to dismiss, finding every taking by the government 'in the name of fire control' does not automatically qualify as a necessity sufficient to satisfy the requirements of the necessity defense. (Id., at p. 1380.) As discussed below, Plaintiff plead sufficient facts. While the Emergency Order was issued during the pandemic, as framed by the FAC, the Bureau knew the outdoor patio walls exceeded three feet by August 20, 2020, but did not issue the Emergency Order until October 15, 2020. (FAC, at ¶ 61.) Further, at the administrative hearing, Defendant Teague testified the walls were taller than three feet. (Id., at ¶ 62.) Like in TrinCo, 'there are legitimate questions as to imminence, necessity, and emergency,' (ibid.) but the Court declines to resolve this defense on a demurrer.

Third-Sixth Causes of Action – Absolute Prosecutorial Immunity Defendants argue the third through sixth causes of action do not state sufficient facts because the 'Individual Defendants' have absolute prosecutorial immunity. On this record, Defendants have not met their burden. State prosecutors are 'absolutely immune from liability under section 1983 for conduct that Calendar No.: Event ID:  TENTATIVE RULINGS

2968799  38 CASE NUMBER: CASE TITLE:  DELTA C LP VS SHIMAZU [IMAGED]  37-2022-00042040-CU-CR-CTL is 'intimately associated with the judicial phase of the criminal process.' (Citation.) Such conduct includes initiating a prosecution and presenting the state's case (citation) and participating in a probable cause hearing (citation).' (Pitts v. County of Kern (1998) 17 Cal.4th 340, 350, citing Imbler v. Pachtman (1976) 424 U.S. 409.) However, even 'agency officials performing certain functions analogous to those of a prosecutor should be able to claim absolute immunity with respect to such acts' because the 'decision to initiate administrative proceedings against an individual or corporation is very much like the prosecutor's decision to initiate or move forward with a criminal prosecution.' (Butz v. Economou (1978) 438 U.S.

478, 515.) But assuming the truth of the FAC's allegations, the 'Individual Defendants' were 'not working in a prosecutorial, or even quasi-prosecutorial, capacity when they engaged in the actions alleged...' (FAC, at ¶ 6.) As argued in opposition, Plaintiff did not sue the Individual Defendants for filing the Accusation or the attorneys who prosecuted it before the ALJ. Rather, Plaintiff is challenging the investigative acts taken in issuing and enforcing the Emergency Order. As alleged, 'Defendant Shimazu signed the Emergency Order that resulted in the October 15 raid. In doing so, she was not engaging in a prosecutorial function (even though the Bureau is part of the Department of Justice and Shimazu has a law degree) but in an administrative and investigative role, similar to the police. The other defendants are sworn law enforcement officers who were also acting in an administrative/investigative capacity, not in a prosecutorial capacity, in taking the actions related to the issuance and enforcement of the Emergency Order.' (FAC, at ¶ 34.) For purposes of demurrer only, absolute prosecutorial immunity does not apply.

Third-Sixth Causes of Action – Qualified Immunity Defendants argue the third through sixth causes of action do not state sufficient facts because the Individual Defendants have qualified immunity. As Defendants' moving papers acknowledge, qualified immunity shields state officials from money damages 'unless a plaintiff pleads facts' showing: (i) the official violated a statutory or constitutional right; and (ii) the right was 'clearly established' at the time of the challenged conduct.' (Ashcroft v. al-Kidd (2011) 563 U.S. 731, 735.) Here, the FAC identifies several constitutional rights Defendants allegedly violated with respect to the Emergency Order and that Defendants' actions against Plaintiff were 'arbitrary and capricious.' (FAC, at ¶ 30.) As alleged, another cardroom in the area received an identical ELOW about its outdoor patio walls on October 2, did not lower its walls immediately and believed the Outdoor Guidance did not apply to existing patios. (Ibid.) But Defendants only shut down Plaintiff's establishment. (Ibid.) As raised by the opposition, the principle that government actors may not draw irrational or arbitrary classifications is clearly established. (Citing Lazy Y Ranch Ltd. v. Behrens (9th Cir. 2008) 546 F.3d 580, 592-93.) The Court further agrees with Plaintiff that the applicability of qualified immunity is more appropriately evaluated with factual development.

Third-Sixth Causes of Action – Constitutional Violations versus the Individual Defendants 'By the plain terms of § 1983, two – and only two – allegations are required in order to state a cause of action under that statute. First, the plaintiff must allege that some person has deprived him of a federal right. Second, he must allege that the person who has deprived him of that right acted under color of state or territorial law.' (Catsouras v. Dept. of Cal. Highway Patrol (2010) 181 Cal.App.4th 856, 890.) Defendants' ground for demurrer do not accurately reflect the standard on a demurrer. Defendants argue the third cause of action for violation of the Fourteenth Amendment (Due Process) does not state sufficient facts because 'Plaintiff cannot meet its burden of showing the Individual Defendants' actions were so outrageously arbitrary as to constitute a gross abuse of governmental authority.' (Notice of Demurrer, p. 4, ¶ 14 (emphasis added).) The fourth cause of action (violation of the Fourth Amendment) does not state sufficient facts because 'closing a legally non-compliant business during a pandemic is reasonable and non-compensable.' (Id., at p. 5, ¶ 18 (emphasis added).) The fifth cause of action Calendar No.: Event ID:  TENTATIVE RULINGS

2968799  38 CASE NUMBER: CASE TITLE:  DELTA C LP VS SHIMAZU [IMAGED]  37-2022-00042040-CU-CR-CTL (Fourteenth Amendment) does not state sufficient facts because 'Plaintiff cannot meet its burden of pleading a non-conclusory factual allegation plausibly suggesting that no rational basis exists for the Individual Defendants' actions.' (Id., at p. 6, ¶ 22 (emphasis added).) Rather, the FAC's allegations are sufficient. Plaintiff alleges each individual defendant 'was directly involved in and responsible for the decisions that led to the actions alleged to violate Delta's rights' and, when making and undertaking those decisions, 'acted under color of law.' (FAC, at ¶¶ 2-4.) All facts are assumed true and the FAC is liberally construed and given a reasonable interpretation with a view to substantial justice between the parties. At this juncture, the Court cannot assess whether Plaintiff has met its burden of proof or whether actions taken were reasonable.

Sixth Cause of Action – Procedural Due Process (v. Individual Defendants) Defendants argue the sixth cause of action does not state sufficient facts because 'Plaintiff was afforded due process through the administrative case in which it was involved and had the right to seek review of the outcome in state court, a right it chose not to exercise.' (Notice of Demurrer, at p. 7, ¶ 26.) Again, this position does not address the pleadings. Further, Plaintiff's cause of action does not concern the Accusation proceedings, but rather, the Individual Defendants violated Plaintiff's due process rights by forcibly shutting down Kings Card Club for six days, in a non-emergency setting, without notice or opportunity to challenge the legitimacy of the emergency order either before or after the closure. (FAC, at ¶ 87.) Plaintiff sufficiently alleged Defendants denied them notice and an opportunity to be heard before depriving them of a protected liberty or property interest – the foundational requirements of procedural due process. (See, Bottini v. City of San Diego (2018) 27 Cal.App.5th 281, 315.) Defendants also argue the sixth cause of action does not state sufficient facts because 'the public health orders to which Plaintiff complains affected large areas and were not directed at one or a few individuals.' (Notice of Demurrer, at p. 7, ¶ 27.) Defendants cite Halverson v. Skagit County (9th Cir.

1994) 42 F.3d 1257, 1260-61. Halverson explains when an action complained of is legislative in nature, due process is satisfied when the legislative body performs its responsibilities in the normal manner prescribed by law. (Id., at p. 1260.) To determine when a particular governmental action is legislative in nature, the focus is on the character of the action, rather than its label. In doing so, courts have determined that governmental decisions affecting large areas and are not directed at one or a few individuals do not give rise to the constitutional procedural due process requirements of individual notice and hearing and that general notice is sufficient. (Id., at p. 1261.) Defendants' position and reliance on Halverson misconstrues the FAC. Plaintiff's allegations do not concern the notice with regard to the Accusation and the procedures set forth in the Business and Professions Code that followed the Emergency Order. Rather, Plaintiff takes issue with how Defendants shut down Kings Card Club in a 'non-emergency setting, without notice or an opportunity to challenge the legitimacy of the emergency order either before or after the closure.' (FAC, ¶ 87; see also, ¶¶ 18-30, 43-44.) 'While the level of process differs depending on the factual situation, the allegation that no predeprivation process was provided in a non-emergency situation states a claim.' (Williams v. County of San Diego (S.D. Cal., Dec. 21, 2017, No. 17CV815-MMA (JLB)) 2017 WL 6541251, at *9.) Concluding Orders For these reasons, the demurrer to the First Amended Complaint is OVERRULED.

Defendants are ordered to file and serve an answer by September 21, 2023.

If the tentative ruling is confirmed without modification, the minute order will be the Court's final ruling.

Defendants are ordered to serve written notice of the Court's final ruling by September 12, 2023.

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