CA: Pot clinic doesn't owe Dana Point $2.4 million, appeals court says

CA: Pot clinic doesn't owe Dana Point $2.4 million, appeals court says

FRANK SHYONG | 4/01/2012 | O.C. Register

An appellate court has decided a closed Dana Point marijuana dispensary doesn't have to pay the city $2.4 million.

The state 4th District Court of Appeal ruled this week that a decision last year by an Orange County Superior Court judge awarding Dana Point damages against Beach Cities Collective was improper because the facts of the case were still in dispute.

The city shut down Beach Cities Collective in January 2011, alleging violations of building codes and state law, and the two sides have been embroiled in a lawsuit for more than two years. Last March, Judge William Monroe ordered the dispensary to pay the city $2.4 million in a summary judgment, meaning the ruling was delivered without a trial. The city had claimed the dispensary failed to produce evidence that it was operating in compliance with state law, which allows nonprofit collectives to distribute marijuana to those who have a medical prescription.

Beach Cities appealed Monroe's ruling. According to the 4th District opinion, trial courts can make summary judgments only when there is no dispute about the facts of the case. Because dispensary owner David Lambert testified in a previous hearing that his business was a nonprofit, checked patients' prescriptions and distributed marijuana only for medical reasons, the appellate court reversed the judgment.

"We simply had a biased judge (referring to Monroe) who was willing to do anything to help the city," Jeffrey Schwartz, attorney for Beach Cities Collective, said Friday. "This is first-year law-school stuff."

The city now can either petition the California Supreme Court for judicial review of the reversal or allow the case to return to Orange County Superior Court for trial.
City Attorney Patrick Munoz said the city hasn't settled on a course of action.

"I haven't read the opinion, but I will take a look at it and figure out the most appropriate action," Munoz said Friday.

Schwartz said it is unlikely the state Supreme Court will review the appeal because no new law was created. If the case returns to trial, Schwartz said he would file a request for a new judge.

Lambert declined to comment.

At one point there were six dispensaries in Dana Point, but none are currently operating. The city red-tagged three dispensaries – The Point Alternative Care, Beach Cities Collective and Holistic Health – in January 2011, alleging violations of building codes and state law.

Since then, Dana Point has won a total of $7 million in court judgments against the three dispensaries. Munoz said the city is trying to collect a $1.9 million judgment from The Point Alternative Care, which has not appealed the judgment. Holistic Health, is appealing a $2.68 million judgment against it. A hearing for that trial has not been scheduled.

The ongoing legal disputes have cost Dana Point at least $400,000 in expenses, and the City Council voted in March 2011 to increase its risk management by $410,000.

The state Supreme Court, as well as two lower courts, dismissed another marijuana-related case from Dana Point in which a disabled San Clemente woman sued the city in 2010 for trying to close Beach Cities Collective, saying the action would harm her fundamental right to life under the California Constitution. The Supreme Court dismissed Malinda Traudt's appeal on grounds that she had no standing to sue the city over the dispensary.

Schwartz, who also is Traudt's attorney, said they have appealed the dismissal to the U.S. Supreme Court