Filed 03/19/18

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

J. ARTHUR PROPERTIES, II, LLC et al.,

Plaintiffs and Appellants,

v.

CITY OF SAN JOSE et al.,

Defendants and Respondents.

 H042938

 (Santa Clara County

 Super. Ct. No. 1-15-CV-279390)

Plaintiff SV Care operated a medical marijuana collective in a commercial zoning 

district in San Jose. Plaintiff J. Arthur Properties, II, LLC owns the building in which SV 

Care operated. Defendants City of San Jose and City of San Jose Appeals Hearing Board 

(collectively, the City) determined that a medical marijuana collective was not an 

authorized use of the subject property and ordered the collective to close. Plaintiffs 

appeal the denial of their petition for writ of administrative mandate, arguing that the 

collective is a legal nonconforming use and that the City should be equitably estopped 

from forcing plaintiffs to close. For the reasons stated here, we will affirm the trial 

court’s decision.

I. ADMINISTRATIVE AND TRIAL COURT PROCEEDINGS

Plaintiffs

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own the subject property and the medical marijuana collective at issue.

At all relevant times, the subject property was zoned Commercial Office under the City 

of San Jose Municipal Code (Municipal Code). The Municipal Code defines the 

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 Plaintiff J. Arthur Properties, II, LLC owns the subject property with another 

owner who is not a party to this appeal. Plaintiff SV Care owned the medical marijuana 

collective at issue with an individual who is not a party to this appeal. 

 
Commercial Office zone as a “district in or near residential areas or between residential 

and commercial areas.” The property abuts a residential use. 

A. REGULATIONS IN EFFECT WHEN THE COLLECTIVE OPENED

Plaintiffs’ collective opened in 2010. At that time, the Municipal Code did not list 

medical marijuana collectives or any other marijuana-specific uses in the table of 

permitted uses. (The Municipal Code had formerly listed medical marijuana dispensaries

as a use for which an administrative permit could be obtained, but all references to 

marijuana-related uses were removed from the Municipal Code in 2001.) The Municipal 

Code specified that “uses not listed on [the applicable table] are not Permitted.” That 

table did list “medical offices” as a permitted use in the Commercial Office zone. 

B. MARIJUANA BUSINESS TAX

After the collective opened, voters passed a local measure adding a marijuana 

business tax to the Municipal Code. The tax applies to anyone “engaging in marijuana 

business” within the City. The Municipal Code states that the marijuana business tax was 

“enacted solely to raise revenue for municipal purposes and [was] not intended for 

regulation.” 

Businesses are required to obtain a business tax certificate from the City. The 

Municipal Code states that the certificate tax and marijuana business tax are “solely for 

the purpose of obtaining revenue and are not regulatory permit fees.” A Municipal Code 

section, entitled “Payment of tax does not authorize unlawful business,” provides: “The 

payment of a business tax required by this chapter, and its acceptance by the city, shall 

not entitle any person to carry on any marijuana business unless the person has complied 

with all of the requirements of this code and all other applicable laws, nor to carry on any 

marijuana business in any building or on any premises in the event that such building or 

premises are situated in a zone or locality in which the conduct of such marijuana 

business is in violation of any law.” The collective’s business tax certificate contains the 

following disclaimer: “Issuance of this certificate is not an endorsement, nor a certificate 

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of compliance with other ordinances or laws, nor an assurance that the proposed use is in 

conformance with the City’s Building/Fire/Zoning regulations.” The City does not 

dispute that plaintiffs paid all applicable marijuana business taxes for the collective. 

C. ZONING AMENDMENTS

The Municipal Code was amended in 2011 specifically to regulate medical 

marijuana collectives, but that regulatory scheme was suspended almost immediately due 

to a referendum petition challenging the amendments. The Municipal Code was 

amended again in 2014 specifically to regulate medical marijuana. Under the 2014 

amendments, “medical marijuana collective” is not listed as a permissible use in the

Commercial Office district. It is, however, listed as a restricted use in certain industrial 

zoning areas.

D. COMPLIANCE ORDER AND ADMINISTRATIVE PROCEEDINGS

Plaintiffs received a compliance order in 2014 stating that a medical marijuana 

collective “was never an allowed use in the CO Zoning District.” The order asserted that

plaintiffs’ collective “is in violation of the [Municipal Code] and is not allowed.” 

Plaintiffs disputed the compliance order by requesting a Director’s Hearing conducted by 

a City hearing officer. At that hearing, plaintiffs argued their collective was a legal 

nonconforming use because it met the definition of a medical office, which was a 

permissible use when the collective opened. A deputy city attorney argued that the 

collective did not meet the Municipal Code definition of a medical office. He stated that 

the “property was a priority that’s been recognized by the City and the City Council, as 

there had been prior directions to close medical marijuana collectives from the City 

Council, which have a zero lot line or abut a ... property with a residential use.” The 

hearing officer upheld the compliance order, and plaintiffs appealed to the City’s Appeals 

Hearing Board.

An inspection report prepared before the appeals board hearing noted that one of 

the City’s code enforcement inspectors had met with the collective’s business owner in 

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2010 and told him “this location may not qualify due to the residential use located next 

door.” The City filed a brief with the Appeals Hearing Board that contained additional 

information about City Council directives regarding medical marijuana. According to the 

brief, in 2012 the City Council “directed Code Enforcement to focus its enforcement 

priorities on ... collectives” operating near schools. In 2013, the City Council added to 

the priority list collectives “located on a parcel that shares a ‘zero lot line’ with 

residential uses.” The City’s code enforcement department had sent compliance orders to 

several collectives meeting those criteria, including plaintiffs’ collective. After a hearing, 

the Appeals Hearing Board upheld the compliance order. 

E. TRIAL COURT WRIT PROCEEDINGS

Plaintiffs petitioned the trial court for a writ of administrative mandate (Code Civ. 

Proc., § 1094.5), arguing that the collective was a legal nonconforming use because it met 

the definition of a medical office and that the City should be estopped from enforcing the 

Municipal Code because they collected taxes from plaintiffs. Plaintiffs appeal from the 

trial court’s order denying their mandate petition.

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II. DISCUSSION

A. LEGAL NONCONFORMING USE

Plaintiffs argue that the collective is a legal nonconforming use because it is a 

medical office, a use that has been allowed in the Commercial Office zoning district since

the collective opened in 2010. The Municipal Code defines medical office as “offices of 

doctors, dentists, chiropractors, physical therapists, acupuncturists, optometrists and other 

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 There is no judgment in the record. As neither party disputes that the order 

denying the petition completely disposed of the matter, we exercise our discretion to treat 

the trial court’s order as appealable. (See Alan v. American Honda Motor Co., Inc.

(2007) 40 Cal.4th 894, 901 [“Reviewing courts have discretion to treat statements of 

decision as appealable.”].)

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similar health related occupations, where patients visit on a daily basis.” The Municipal 

Code defines a legal nonconforming use as: “Any lawful use of land or structure, which 

ceases to conform to the provisions of this Title upon a rezoning or annexation, or 

because of changes in the regulations under this Title.”

1. Standard of Review

The interpretation and application of the Municipal Code’s definition of “medical 

office” is a question of law that we review de novo. (City of Monterey v. Carrnshimba 

(2013) 215 Cal.App.4th 1068, 1081 (Carrnshimba).) Local government laws are 

interpreted consistent with the general rules of statutory interpretation. (Russ Bldg. 

Partnership v. City and County of San Francisco (1988) 44 Cal.3d 839, 847, fn. 8.) We 

look to ascertain the intent of the legislative body to effectuate the purpose of the law. To 

do so, we begin with the plain language of the enactment. (Id. at p. 847.) If the language 

is reasonably susceptible of more than one meaning, we may look to extrinsic aids to 

determine the purpose of the law, “including the statutory scheme of which the provision 

is a part, the history and background of the statute, the apparent purpose, and any 

considerations of constitutionality.” (Hughes v. Board of Architectural Examiners (1998) 

17 Cal.4th 763, 776.) Canons of construction also aid our interpretation, including the 

principle of ejusdem generis: “when a particular class of things modifies general words, 

those general words are construed as applying only to things of the same nature or class 

as those enumerated.” (People v. Arias (2008) 45 Cal.4th 169, 180 (Arias).)

Though we independently judge the text of the Municipal Code, we give 

appropriate respect to a government entity’s interpretation of its own laws. (Yamaha 

Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7–8 (Yamaha).) We

are inclined to defer to a government entity’s interpretation of its own regulation “ ‘since 

the agency is likely to be intimately familiar with regulations it authored and sensitive to 

the practical implications of one interpretation over another.’ ” (Ibid.) We may defer 

especially to interpretations which the government entity has consistently maintained 

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over time. (Id. at p. 13.) Deference may also be appropriate where the entity has 

“ ‘expertise and technical knowledge, especially where the legal text to be interpreted is 

technical, obscure, complex, open-ended, or entwined with issues of fact, policy, and 

discretion.’ ” (Id. at p. 12.) 

2. Municipal Code Definition of Medical Office

Plaintiffs argue that a medical marijuana collective is a medical office because it is 

a health-related occupation. They note that the term medical generally means something 

curative or related to healing, and they cite Health and Safety Code section 11362.5,

subdivision (b)(1)(A), which states that one purpose of the Compassionate Use Act of 

1996 is to “ensure that seriously ill Californians have the right to obtain and use 

marijuana for medical purposes where that medical use ... has been recommended by a 

physician who has determined that the person’s health would benefit from the use of 

marijuana in the treatment” of various ailments. Plaintiffs contend that because medical 

marijuana collectives provide a medical and health-related service, they should be 

considered medical offices under the Municipal Code. 

The City argues that all of the specifically enumerated professions in the 

Municipal Code definition of medical office “have in common the fact that they are 

physicians or similar professions and that they have patients.” The City contrasts those 

characteristics with medical marijuana collectives, which it argues have neither 

physicians nor their own patients because members of collectives “are patients of the 

physicians who prescribed marijuana.”

Though the definition at issue is reasonably susceptible of both proffered 

interpretations, we agree with the City that a medical marijuana collective is not a

“medical office” under the Municipal Code. Because a medical marijuana collective 

does not fall within any of the specifically listed occupations (i.e., doctors, dentists, 

chiropractors, physical therapists, acupuncturists, or optometrists), a collective would 

have to be a “similar health related occupation” to qualify as a medical office. Applying 

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the principle of ejusdem generis, the phrase “similar health related occupations” refers to

occupations of the same nature or class as the listed occupations. (Arias, supra, 45 

Cal.4th at p. 180.) There is no evidence that medical marijuana collectives have doctors 

or similar health care professionals on site treating patients; they are therefore dissimilar

to the examples listed in the Municipal Code definition. And unlike medical marijuana 

collectives, none of the listed occupations provides a good or service that is illegal under 

federal law. (See 21 U.S.C. §§ 812(b)–(c), 841–844.) Thus we find textual support to 

exclude medical marijuana collectives from the definition of medical office.

Plaintiffs argue that we should not defer to the City’s interpretation because the 

“terms ‘medical office’ and ‘other similar health related occupations’ are not technical, 

obscure or complex.” But given that medical marijuana collectives are unique entities 

because marijuana remains illegal for most purposes under federal law, whether such a 

land use is authorized by a catchall provision in a local zoning classification is 

intertwined with issues of fact, policy, and discretion. (See Yamaha, supra, 19 Cal.4th at 

p. 12.)

Further support for deference comes from evidence suggesting the City

consistently interpreted the medical office category to exclude medical marijuana 

collectives. A City inspector informed the collective’s owner the year it opened that the 

location of the collective “may not qualify due to the residential use located next door.” 

The City argued (both orally during the Director’s hearing and in a brief submitted to the 

Appeals Hearing Board) that the City Council had instructed the code enforcement 

department to focus on closing collectives located next to residential uses. As medical 

offices are permitted in Commercial Office districts and the Commercial Office district 

consists of uses “near residential areas or between residential and commercial areas,” the 

City Council’s directive supports a finding that the City never interpreted the medical 

office use to include medical marijuana collectives. The compliance order issued here is 

also consistent with that interpretation. (See Carrnshimba, supra, 215 Cal.App.4th at 

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p. 1091.) And the City’s 2011 and 2014 ordinances specifically regulating medical 

marijuana collectives, though not dispositive, suggest the Council’s intent to regulate a 

use not previously permitted.

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 (See City of Irvine v. Southern California Assn. of 

Governments (2009) 175 Cal.App.4th 506, 522 [When a legislative body amends a law, 

“ ‘we presume it “ ‘indicates that it thereby intended to change the original act by 

creating a new right or withdrawing an existing one.’ ” ’ ”].) 

Anticipating the City’s argument that a medical marijuana collective is not a 

medical office because collectives are not regulated by a state agency with authority to 

license and discipline them, plaintiffs note that starting in 2016 collectives are now 

licensed and regulated under the Business and Professions Code. (See Stats. 2016, 

ch. 32, § 6, p. 1240; see also Bus. & Prof. Code, § 26000 et seq. [amended by Stats. 2017, 

ch. 27, § 3, to replace the 2016 regulatory scheme].) But having determined that a

medical marijuana collective is not a medical office under the Municipal Code, the fact 

that collectives are now regulated under state law does not persuade us otherwise. 

Giving due deference to the City’s interpretation, we conclude that the medical 

office use category in the Municipal Code does not include medical marijuana 

collectives. Because plaintiffs’ collective was not a permitted use when it opened, it

cannot be a legal nonconforming use.

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 In finding the City has consistently interpreted its Municipal Code to exclude 

medical marijuana collectives from the medical office use, we do not rely on exhibits 

four and five to the City’s request for judicial notice. Those exhibits are complaints filed 

against the City in superior court by other medical marijuana collectives, along with 

attachments that appear to be compliance orders issued by the City. They were not 

provided to the Appeals Hearing Board or to the trial court. We granted judicial notice 

because they are court records. (Evid. Code, § 452, subd. (d).) But in taking judicial 

notice of court records, we do not take notice of the truth of any matters stated therein. 

(Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 987–988.) 

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B. ESTOPPEL

Plaintiffs contend that even if the collective is not a legal nonconforming use, the 

City should be equitably estopped from enforcing the Municipal Code because it

unreasonably delayed issuing a compliance order and because it induced detrimental 

reliance by collecting marijuana business taxes from plaintiffs.

1. Standard of Review

To trigger the doctrine of equitable estoppel, plaintiffs must show that: (1) the 

City knew that medical marijuana collectives were an impermissible use; (2) the City 

intended, by delaying enforcement and collecting marijuana business taxes, to induce 

plaintiffs into operating a medical marijuana collective (or acted in a manner entitling

plaintiffs to perceive such an intent); (3) plaintiffs did not know that medical marijuana 

collectives were unauthorized; (4) plaintiffs detrimentally relied on the City’s conduct; 

and (5) the injustice that would result from a failure to estop the City is so great that it 

outweighs the effect the estoppel would have on public policy or the public interest. 

(See Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346, 1359 

(Feduniak).) “Although estoppel is generally a question of fact, where the facts are 

undisputed and only one reasonable conclusion can be drawn from them, whether 

estoppel applies is a question of law,” reviewed de novo. (Id. at p. 1360; accord

Mt. Holyoke Homes, LP v. California Coastal Com. (2008) 167 Cal.App.4th 830, 840.)

2. Reliance on Delayed Enforcement Was Not Reasonable

Plaintiffs argue there is no factual support for the City’s claim that it consistently 

interpreted the Municipal Code to exclude medical marijuana collectives, and contend 

that the City’s delayed enforcement induced detrimental reliance by plaintiffs. As we 

have discussed, evidence that the City consistently interpreted the Municipal Code to 

exclude medical marijuana collectives includes a statement by an inspector directly to the 

collective’s owner the year the collective opened that its location “may not qualify due to 

the residential use located next door.” As plaintiffs did not dispute the accuracy of that 

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statement, uncontradicted evidence in the record shows plaintiffs were on notice in 2010 

that their collective might not be a permissible land use.

Although it took the City multiple years to issue a compliance order, “the mere 

failure to enforce the law, without more, will not estop the government from 

subsequently enforcing it.” (Feduniak, supra, 148 Cal.App.4th at p. 1369; see also 

Golden Gate Water Ski Club v. County of Contra Costa (2008) 165 Cal.App.4th 249, 262 

(Golden Gate) [“[T]he doctrine of equitable estoppel will not be applied to allow a 

landowner to circumvent land use restrictions ... when the public entity simply fails to 

take early action to warn the landowner” of land use violations].)

Plaintiffs received notice from a City inspector that the collective might not be a 

permissible land use, and they point to no affirmative representations by the City to the 

contrary. (See Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1318 [To 

support estoppel, the “ ‘representation, whether by word or act, to justify a prudent man 

in acting upon it, must be plain, not doubtful or matter of questionable inference. 

Certainty is essential to all estoppels.’ ”].) Plaintiffs list a number of actions the City

could have taken to make its position clearer, such as enacting a moratorium on medical 

marijuana collectives, expressly listing medical marijuana collectives as an impermissible 

use, and expressly redefining the term medical office specifically to exclude medical 

marijuana collectives. Those actions would have clarified the City’s position, but their 

absence does not make reliance on delayed enforcement reasonable. 

3. Reliance on Payment of Taxes was Not Reasonable

Plaintiffs argue that by collecting a marijuana business tax and requiring a 

business tax certificate, the City induced reasonable reliance by plaintiffs. The 

inescapable flaw in plaintiffs’ argument is that express disclaimers in the Municipal Code 

and on the business tax certificate unambiguously state that collection of taxes is not 

authorization to operate a medical marijuana collective. Two passages in the Municipal 

Code state that the marijuana business tax was enacted to raise revenue and was not 

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intended to be a regulatory permit fee. Another Municipal Code section, which we have 

previously quoted, is entitled “Payment of tax does not authorize unlawful business.” 

And the business tax certificate issued to plaintiffs states that it is “not an endorsement, 

nor a certificate of compliance with other ordinances or laws, nor an assurance that the 

proposed use is in conformance with the City’s Building/Fire/Zoning regulations.”

Plaintiffs argue the “prolix phrase in a 13-page tax ordinance” was “wholly 

inadequate” to inform them that they were operating illegally. But plaintiffs had 

constructive knowledge (if not actual knowledge) of the disclaimers. They received 

business tax certificates directly from the City, and the marijuana business tax 

disclaimers were in the publicly available Municipal Code, easily found using reasonable 

care or diligence. (John B. v. Superior Court (2006) 38 Cal.4th 1177, 1190 [Constructive 

knowledge is “knowledge ‘that one using reasonable care or diligence should have, and 

therefore is attributed by law to a given person.’ ”].) In light of the express disclaimers, 

reliance on paying required business taxes as authorization to operate a medical 

marijuana collective is unreasonable as a matter of law. 

4. Balancing Estoppel and the Public Interest

Estoppel will be applied “in the land use context in only ‘ “the most extraordinary 

case where the injustice is great and the precedent set by the estoppel is narrow.” ’ ” 

Schafer v. City of Los Angeles (2015) 237 Cal.App.4th 1250, 1263 (Schafer).) Plaintiffs 

acknowledge that applying equitable estoppel against a public entity requires a showing 

that “the avoidance of injustice in the particular case justifies any adverse impact on the 

public interest.” 

Plaintiffs have not demonstrated injustice here. There is no evidence that plaintiff 

J. Arthur Properties, II, LLC will be unable to rent the space formerly occupied by the 

collective to a different tenant. And plaintiff SV Care did not present evidence showing 

it will be unable to open a medical marijuana collective at another location. At most, 

plaintiffs would experience economic hardships in finding a new tenant and relocating 

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the collective. As Schafer noted, courts have found no equitable estoppel against 

government entities in the face of much more significant economic hardships. (Id. at 

pp. 1264–1265, citing West Washington Properties, LLC v. Department of 

Transportation (2012) 210 Cal.App.4th 1136, 1141, 1150 [up to $12 million in lost

revenue from reducing size of an advertising space that had existed for 20 years]; Golden 

Gate, supra, 165 Cal.App.4th at pp. 254, 259–263 [requiring removal of 28 dwellings 

and other structures]; Feduniak, supra, 148 Cal.App.4th at pp. 1358, 1379–1380 

[$100,000 to remove personal three-hole golf course].)

Against plaintiffs’ minimal showing of hardship we must weigh the effect estoppel 

would have on public policy and the public interest. Public policy favors eliminating 

nonconforming uses. (Feduniak, supra, 148 Cal.App.4th at p. 1374.) And the City has a 

fundamental interest in locally determining where medical marijuana collectives are 

authorized. The public interest embodied in these policies outweighs the potential 

impacts to plaintiffs.

III. DISPOSITION

The trial court’s decision denying the petition for writ of mandate is affirmed. The 

City is entitled to its costs on appeal.

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____________________________________

Grover, J.

WE CONCUR:

____________________________

Elia, Acting P. J. 

____________________________

Premo, J. 

H042938 - J. Arthur Properties, II, LLC et al. v. City of San Jose et al.
Trial Court: Santa Clara County Superior Court

Superior Court No. 1-15-CV-279390

Trial Judge: The Honorable Maureen A. Folan

Counsel for Plaintiffs/Appellants: 

J. ARTHUR PROPERTIES, II, LLC 

et al. 

Jeanine G. Strong

Strong Appellate Law

Counsel for Defendant/Respondent: 

CITY OF SAN JOSE et al. 

Richard Doyle, 

 City Attorney

Nora Frimann, 

 Assistant City Attorney

Margo Laskowska, 

 Sr. Deputy City Attorney 

Office of the City Attorney

City of San Jose

H042938 - J. Arthur Properties, II, LLC et al. v. City of San Jose et al.