Judge: Joseph Lipner, Case: 21STCV26110, Date: 2024-11-12 Tentative Ruling

Case Number: 21STCV26110    Hearing Date: November 12, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff City of El Monte (“Plaintiff”) moves for summary adjudication against Defendant Jay Hooper (“Hooper”) on the first, second, third, and fourth claims in Plaintiff’s First Amended Complaint (“FAC”).

The Court GRANTS summary adjudication on the first, third, and fourth claims.

The Court DENIES summary adjudication on the second claim. This claim appears to be merely duplicative of Plaintiff’s narcotics abatement claim, which operates under the theory that the use of the Property for psilocybin production was a nuisance.

While the Court will grant summary adjudication of liability on these claims, the Court requests argument as to whether the record is sufficient to grant the requested damages.  Case law directs the Court to consider the sophistication and net worth of Hooper in setting the penalty.  The Court asks Plaintiff to address whether there is evidence in the record to allow the Court to make this determination.

Background

This case relates to illegal activity that allegedly occurred at a property managed by Hooper. The following facts are taken from Plaintiff’s separate statement. The Court resolves ambiguities of fact in favor of Hooper, the nonmoving party.

 Hooper is and was the manager of Defendant Crown Estate Holding, LLC (“Crown”). (Undisputed Fact (“UF”) 2.)

On April 13, 2017, Crown purchased the real property located at 9860, 9866, 9680, and 9874 Gidley Street, El Monte, California 91731 (the “Property”). (UF 1.) Crown has been the only owner at all relevant times. (UF 1.) In his capacity as manager of Crown, Hooper had control over the Property. (UF 3.)

No Certificate of Occupancy was issued for the Property. (UF 5.)

Crown and Hooper did not conduct regular on-site inspections of the Property to ensure compliance with municipal, building and safety codes, and did not have proper security services monitoring and patrolling the Property, including after business hours. (UF 15.) Hooper and his facility manager Jesus Balthazar were regularly present at the Property during business hours. (UF 16.)

On October 31, 2017, Plaintiff’s Code Enforcement Division (“Code Enforcement”) inspected the Property and found a business operating at the Property without a business license or Certificate of Occupancy. (Donavanik Decl. ¶ 8.) On a re-inspection on November 30, 2017, the business was vacated.

On February 18, 2020, the Los Angeles Regional Water Quality Control Board (“Water Board”) determined that there were elevated levels of chlorinated solvents in the soil, soil gas, and groundwater beneath the Property and required the Property owners to conduct a site assessment and submit a technical report for subsurface investigation. (Donavanik Decl. ¶ 9.)

On April 27, 2020, the El Monte Police Department discovered an illegal marijuana growing operation located at the Property. (Snook Decl. ¶¶ 15-21.) The police found a commercial-grade THC extraction lab. (Snook Decl. ¶ 18.) These types of illegal labs are extremely volatile due to the flammable fuels used as solvents to strip the THC from the marijuana plants and because the process used to burn-off the flammable solvent requires heat and pressure, when incorrectly processed, these types of labs can cause large explosions and fires. (Snook Decl. ¶ 9.)

On July 6, 2020, Plaintiff and the Property owners, Defendants Crown and Hooper, entered into a Settlement Agreement resolving the Plaintiff’s claims against them for the violations of the discovered marijuana operation from April 27, 2020. (Donavanik Decl. ¶ 11.)

On July 30, 2020 and August 10, 2020, Code Enforcement inspected the Property and found the Property was occupied by the business K2 Investment Group without a business license and Certificate of Occupancy. (Donavanik Decl. ¶ 12.) On August 11, 2020, Crown received a Notice of Violation for no Certificate of Occupancy and K2 Investment Group received a Notice of Violation for no Certificate of Occupancy and no business license. (Donavanik Decl. ¶ 12.)

On August 27, 2020, Crown and K2 Investment Group received a citation because there was no Certificate of Occupancy issued for the Property. (Donavanik Decl. ¶ 13.)

On September 16, 2020, Code Enforcement inspected the Property and found several businesses operating at the Property. No business license or Certificate of Occupancy was issued for the businesses. (Donavanik Decl. ¶ 14.)

On February 9, 2021, Code Enforcement inspected the Property and issued a Notice of Violation to Crown and K2 Investment Group because there was no trash

service for the Property. (Donavanik Decl. ¶15.)

On February 22, 2021, Code Enforcement inspected the Property again, together with Hooper, and again found several businesses operating at the Property without a business license or Certificate of Occupancy. (Donavanik Decl. ¶ 16.)

On April 19, 2021, Plaintiff issued Hooper a “Notice of Public Nuisance and Intention to Abate with City Personnel.” (UF 13; Ex. M.) The notice was based on the existence of ongoing business operations at the property without any permits, approvals, or inspections, as well as the presence of elevated levels of chlorinated solvents in the soil and groundwater beneath the Property. (Donavanik Decl. ¶ 17, Ex. M.)

On May 10, 2021, Code Enforcement conducted an inspection of the Property, together with Jay Hooper, and confirmed the presence of at least nine businesses operating without a business license and Certificate of Occupancy. (Donavanik Decl. ¶ 18.)

On May 24, 2021, Plaintiff issued Hooper a “Demand for Cessation of Illegal Activities” indicating that the Property was still not certified for occupancy and that all unauthorized business activities on the Property must cease. (UF 13; Donavanik Decl. ¶ 19, Ex. N.)

On June 1, 2021 and August 2, 2021, Code Enforcement conducted another inspection of the Property and confirmed the businesses were still operating without a business license and Certificate of Occupancy. (Donavanik Decl. ¶ 20.)

On August 31, 2021, Plaintiff’s peer review of the reports by Frey Environmental, Inc. recommended that based on potential cancer risks in some areas of the Property, a contingency plan should be implemented to characterize potential exposure to occupants. (Donavanik Decl. ¶ 21, Ex. P.) Frey recommended an additional 8-hour indoor and outdoor air sampling to determine the indoor air risk. (Donavanik Decl. ¶ 21, Ex. P.) The City never received by Crown the additional sampling requested per Frey’s recommendation. (Donavanik Decl. ¶ 21.)

On August 2, 2021, the El Monte Police Department discovered an illegal psilocybin (“Magic Mushrooms”) operation at the property. (UF 11, see also Snook Decl. ¶¶ 22-32.) The officers responded to a trespass call and met with Hooper, who stated that he believed the building was being used as an illegal marijuana grow house. (Snook Decl. ¶¶ 22-23.) Hooper stated that the locks had been changed by the suspects without permission. (Snook Decl. ¶ 23.)

The officers forced entry into the Property and the locked rooms. (Snook Decl. ¶ 24.) There, they discovered that several rooms contained large packets of soil, seeds, and fungi that were forming that looked similar to Magic Mushrooms. (Snook Decl. ¶ 27.) The officers discovered a number of large pans, ovens, and packaging materials, indicating to them that a Magic Mushroom cultivation operation was taking place. (Snook Decl. ¶ 29.) The officers seized a total approximately 3792 pounds of mushroom spawn bags and other items. (Snook Decl. ¶ 31.) Based on the scale of the operation, the detective on site believed that the operation had run for a period of roughly three months. (Snook Decl. ¶ 32.)

On March 9, 2022 and March 16, 2022, Code Enforcement inspected the Property and found the Property was occupied by several businesses without a business license and a Certificate of Occupancy. (Donavanik Decl. ¶ 13.) Crown received a Notice of Violation. (Donavanik Decl. ¶ 23.) On March 16, 2022, Crown received a citation for no Certificate of Occupancy and four businesses received a citation for no Certificate of Occupancy and no business license. (Donavanik Decl. ¶ 24.)

On March 17, 2022, the El Monte Police Department discovered an illegal nightclub being operated at the Property. (Snook Decl. ¶¶ 33-40.) They raided the location and seized, inter alia, .78 grams of cocaine, 25 grams of ketamine, 6.78 grams of methamphetamine, and 69 ecstasy pills, as well as an additional bag each of methamphetamine, ketamine, and ecstasy. (Snook Decl. ¶ 40.) The police detained 82 people and arrested one person. (Snook Decl. ¶ 11.)

On May 9, 2022, a receiver (the “Receiver”) was appointed to take control of the Property. (Donavanik Decl. ¶ 29.) On May 12, 2022, a large fire broke out at the Property. (Donavanik Decl. ¶ 29.) On May 13, 2022, the Receiver took control of the Property. (Donavanik Decl. ¶ 29.)

Plaintiff filed this action on July 15, 2021. The operative complaint is now the FAC, which raises claims for (1) public nuisance for unpermitted construction and operation (Civ. Code, §§ 731, 3479, 3480, 3491, 3494, 3496; El Monte Municipal Code, § 1.19.020(B)(2)); (2) public nuisance for illegal psilocybin operation (Civ. Code, §§ 3479, et seq.); (3) unpermitted construction and operation (El Monte Municipal Code, §§ 50.04.040; 17.16.010); (4) narcotics abatement for illegal psilocybin operation (Health & Saf. Code, §§ 11570 et. seq.); (5) unfair competition for unpermitted construction and operation (Bus & Prof. Code, §§ 17200, et seq.); and (6) unfair competition for illegal psilocybin operation (Bus & Prof. Code, §§ 17200, et seq.).

Plaintiff filed this motion for summary adjudication on the first four claims on August 22, 2024. No party has filed an opposition.

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) 

“In ruling on the motion, the court must consider all of the evidence and all of the inferences reasonably drawn therefrom [citation] and must view such evidence [citations] and such inferences [citations] in the light most favorable to the opposing party.” (Aguilar, supra, at pp. 844-845 [quotation marks omitted].) 

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) 

“A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The defendant or cross-defendant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (Code Civ. Proc. § 437c, subd. (p)(1).)

To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) “If the [opposing party] cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)

Discussion

As noted above, Plaintiff seeks summary adjudication on four causes of action.  The Court will address them in this order:

Claim 3:  unpermitted construction and operation (El Monte Municipal Code, §§ 50.04.040; 17.16.010);

Claim 1:  public nuisance for unpermitted construction and operation (Civ. Code, §§ 731, 3479, 3480, 3491, 3494, 3496; El Monte Municipal Code, § 1.19.020(B)(2));

Claim 4:  narcotics abatement for illegal psilocybin operation (Health & Saf. Code, §§ 11570 et. seq.);

Claim 2: public nuisance for illegal psilocybin operation (Civ. Code, §§ 3479, et seq.);

First and Third Claims

Third Claim - Unpermitted Construction and Operation

Plaintiff raised this claim under El Monte Municipal Code, section 17.16.010, which prohibits occupancy or use of a building unless a certificate of occupancy is issued for that building. (El Monte Municipal Code, § 17.16.010.) Former section 17.16 has been amended is now section 15.09. (El Monte Municipal Code, § 15.09.) Any person who violates El Monte Municipal Code, Chapter 15.09 is guilty of a misdemeanor. (El Monte Municipal Code, § 15.09.090, subd. (B).) Such violations are subject to a fine not to exceed $1,000, and each day a material violation committed shall continue a separate offense. (El Monte Municipal Code, § 1.24.010, subd. (A).)

“The violation of a city ordinance may be prosecuted by city authorities in the name of the people of the State of California, or redressed by civil action.” (Gov. Code, § 33900, subd. (a).)

Violation of Los Angeles Municipal Code, section 12.21.A.1, subd. (a), a comparable municipal code provision which prohibits the unpermitted use of land, has been deemed a strict liability offense. (People ex rel. Feuer v. Superior Court (Cahuenga's the Spot) (2015) 234 Cal.App.4th 1360, 1385.) “Strict liability offenses are denoted where ‘ “... qualifying words such as knowingly, intentionally, or fraudulently are omitted from provisions creating the offense....” ’ [Citation.]” (People v. Martin (1989) 211 Cal.App.3d 699, 713.) “Also, public welfare offenses are generally considered to not require mens rea”. (People v. Wheeler (2023) 95 Cal.App.5th Supp. 1 [finding that ordinance regulating unlicensed commercial storefront cannabis sales was a strict liability statute].)

The statute here is a land use permitting statute comparable to LAMC section 12.21.A.1, subd. (a) and contains no terms indicating a mens rea requirement. It is thus a strict liability statute.

“[W]hereas managers of limited liability companies may not be held liable for the wrongful conduct of the companies merely because of the managers' status, they may nonetheless be held accountable under Corporations Code section 17158, subdivision (a) for their personal participation in tortious or criminal conduct, even when performing their duties as manager.” (People v. Pacific Landmark, LLC (2005) 129 Cal.App.4th 1203, 1213.)

Here, Plaintiff has met its initial burden to show that all elements of the claim have been met.  Plaintiff has demonstrated that Hooper had control of the Property through Crown. Hooper was in charge of the legal decisions regarding occupancy, tenants, and sale. Hooper was aware of the continued illegal operation of businesses due to both the letters issued to him and his personal presence at some of the Code Enforcement inspections.

While Crown controlled the Property, Hooper allowed continuous commercial operation of the Property from at least July 30, 2020 to May 12, 2022. This was in spite of the lack of a certificate of occupancy and Plaintiff’s repeated notices and warnings to Hooper that businesses were being illegally operated on the Property.

The burden thus shifts to Hooper to show a triable issue of fact.  Hooper has not opposed this motion or demonstrated a triable issue as to any of those facts. Thus, there is no triable issue that Hooper is liable for violation of section 15.09.

Here, the violations continued from at least July 30, 2020, until May 12, 2022 (651 days). Thus, the maximum penalty is $651,000.00.

The Court grants summary adjudication on this claim.

First Claim - Public Nuisance for Unpermitted Construction

Public nuisances are “substantial and unreasonable” “offenses against, or interferences with, the exercise of rights common to the public.” (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 305.)

Under El Monte Municipal Code, section 8.44.030, subd. (FF), it is a public nuisance for any person owning, leasing, occupying, or having charge or possession of any commercial (among other purposes) premise in the city to maintain them in a manner that violates any city or county ordinance, rule, regulation and/or code adopted by reference of the El Monte Municipal Code, or any violation of a state or federal law or regulation. (El Monte Municipal Code, § 8.44.030, subd. (FF).) “The owner of any premises within the city has the primary responsibility for keeping said premises free of public nuisances.” (El Monte Municipal Code, § 8.44.160.)

The owner, the owner's agent, or any other person having charge or control of any premises within the city, who maintains any public nuisance as defined in Chapter 8.44, is guilty of a misdemeanor. (El Monte Municipal Code, § 8.44.180, subd. (A).) Such violations are subject to a fine not to exceed $1,000, and each day a material violation committed shall continue a separate offense. (El Monte Municipal Code, § 1.24.010, subd. (A).)

“The violation of a city ordinance may be prosecuted by city authorities in the name of the people of the State of California, or redressed by civil action.” (Gov. Code, § 33900, subd. (a).)

As discussed above, Plaintiff has demonstrated that Hooper controlled the Property and permitted the operation of a number of businesses on it without an occupancy license. Because the operation of those businesses violated the city ordinance permitting occupation without an occupancy license, it was also a public nuisance. Thus, there is no dispute that Hooper is liable for violation of El Monte Municipal Code, section 8.44.030, subd. (FF).

The burden shifts to Hooper to show a triable issue of fact.  He has not done so.

Here, the violations continued from at least July 30, 2020, until May 12, 2022 (651 days). Thus, the maximum penalty is $651,000.00.

The Court grants summary adjudication on this claim.

Second and Fourth Claims

Fourth Claim - Narcotics Abatement – Fourth Claim

“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.” (Health & Saf. Code, § 11570.) “If there is reason to believe that a nuisance, as described in Section 11570, is kept, maintained, or exists in any county, 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, may, … maintain an action to abate and prevent the nuisance and to perpetually enjoin the person conducting or maintaining it, and the owner, lessee, or agent of the building or place in or upon which the nuisance exists from directly or indirectly maintaining or permitting the nuisance.” (Health & Saf. Code, § 11571.)

“If the existence of the nuisance is established in the action, an order of abatement shall be entered as a part of the judgment, which order shall direct the removal from the building or place of all fixtures, musical instruments, and other movable property used in conducting, maintaining, aiding, or abetting the nuisance and shall direct their sale in the manner provided for the sale of chattels under execution.” (Health & Saf. Code, § 11581, subd. (a).) “[T]he court may assess a civil penalty not to exceed twenty-five thousand dollars ($25,000) against any or all of the defendants, based upon the severity of the nuisance and its duration.” (Health & Saf. Code, § 11581, subd. (b)(2).)

“The order shall provide for the effectual closing of the building or place against its use for any purpose, and for keeping it closed for a period of one year.” (Health & Saf. Code, § 11581, subd. (b)(1).) “If the court finds that any vacancy resulting from closure of the building or place may create a nuisance or that closure is otherwise harmful to the community, in lieu of ordering the building or place closed, the court may order the person who is responsible for the existence of the nuisance, or the person who knowingly permits controlled substances to be unlawfully sold, served, stored, kept, or given away in or from a building or place he or she owns, to pay damages in an amount equal to the fair market rental value of the building or place for one year to the city or county in whose jurisdiction the nuisance is located for the purpose of carrying out drug abuse treatment, prevention, and education programs.” (Health & Saf. Code, § 11581, subd. (c)(1).)

“Nuisance abatement costs are chargeable to responsible persons whether the city's code enforcement actions occur in the absence of formal administrative or judicial proceedings, as well as prior to, during, or subsequent to the initiation of such proceedings.” (El Monte Municipal Code, § 1.19.020, subd. (A).) “As used herein, ‘responsible person’ means and includes any person that causes, creates, allows, permits, suffers, or maintains a public nuisance to exist or continue within the city, by any act or the omission of any act or duty, including, but not limited to, any person having legal title to, or who leases, rents, occupies or has charge, control or possession of, any real property in the city[.]” (El Monte Municipal Code, § 1.19.020, subd. (B).)

“[L]iability [under sections 11570, et seq.] attaches to a possessor of land who ‘knows or has reason to know’ that the activity that causes a nuisance is being carried on.” (People v. Freetown Holdings Co. (2024) 100 Cal.App.5th 1195, 1212.) “This ‘reason to know’ standard is recklessness, not knowledge.” (Ibid.) “ ‘A person acts recklessly with respect to a material element of an offense when he consciously disregards a substantial and unjustifiable risk that the material element exists or will result from his conduct. The risk must be of such a nature and degree that, considering the nature and purpose of the actor’s conduct and the circumstances known to him, its disregard involves a gross deviation from the standard of conduct that a law-abiding person would observe in the actor's situation.’ [Citation.]” (Id. at pp. 1212-1213.)

Section 11570 makes the use a building to manufacture or store narcotics a nuisance per se.

Here, Plaintiff has met its initial burden in showing that all of the elements of the claim have been met.  Hooper controlled the Property. It is undisputed that, although Hooper and his property manager were present during business hours, they did not conduct regular inspections.  It is undisputed that the Property was, in fact, used for the production of narcotics.

Hooper knew that the Property had previously been used for illegal marijuana production, because he entered a settlement with Plaintiff regarding those events.  Hooper met with the police on August 2, 2021 and informed them that he believed the Property was being used for illegal drug production – albeit the wrong drug. Although Hooper apparently reported this conduct to the police when they arrived, the scale of the operation indicated that it would have been going on for months. Given the prior use of the Property for drug production, of which Hooper was aware, and Hooper’s regular presence on the premises and failure to conduct regular inspections, Plaintiff has demonstrated that Hooper acted in conscious disregard of an unjustifiable risk that the Property was being used for drug production.

The burden thus shifts to Hooper to show a triable issue of fact.  He has not done so.

The Court therefore grants summary adjudication on this claim.

Second Claim - Public Nuisance for Illegal Psilocybin Operation

“Anything which is injurious to health, including, but not limited to, the illegal sale of controlled substances, or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property, or unlawfully obstructs the free passage or use, in the customary manner, of any navigable lake, or river, bay, stream, canal, or basin, or any public park, square, street, or highway, is a nuisance.” (Civ. Code, § 3479.)

This claim appears to be duplicative of Plaintiff’s narcotics abatement claim, which operates under the theory that the use of the Property for psilocybin production was a nuisance. The Court is therefore inclined to deny summary adjudication on this basis, subject to any argument as to why this claim represents a distinct legal theory.

Appropriate Penalties

Plaintiff requests civil penalties under the first and third claims in the amount of $651,000 and $651,000 (for a total of $1,302,000) and under the Second and Fourth Cause of Action in the amount of $25,000. This rewards a total civil penalty of $1,327,000.

Factors to consider in determining the appropriate penalty include the sophistication and net worth of the defendant and the proportionality to other such penalties. (City and County of San Francisco v. Sainez (2000) 77 Cal.App.4th 1302, 1318.)

The Court therefore asks Plaintiff to direct the Court to evidence in the record as to Hooper’s sophistication and net worth and to address whether this is sufficient to grant summary adjudication on this issue.