Court Opinion

ID: 4910783
Source: CourtListenerOpinion
Date Created: 2021-09-14 16:05:42.061994+00
Date Added: 2024-06-11T08:13:18.928827
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                  AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                     IN THE
              ARIZONA COURT OF APPEALS
                                 DIVISION ONE

  CANNABIS RENAISSANCE GROUP LLC, et al., Plaintiffs/Appellants,

                                         v.

           FENNEMORE CRAIG, PC, et al., Defendants/Appellees.

                              No. 1 CA-CV 20-0089
                                FILED 9-14-2021

            Appeal from the Superior Court in Maricopa County
                           No. CV 2016-054776
              The Honorable Theodore Campagnolo, Judge

                                   AFFIRMED

                                    COUNSEL

May, Potenza, Baran & Gillespie PC, Phoenix
By Jesse R. Callahan
Co-Counsel for Plaintiffs/Appellants

Covault Law PC, Phoenix
By Jason M. Covault
Co-Counsel for Plaintiffs/Appellants

Snell & Wilmer LLP, Phoenix
By Patricia Lee Refo, James R. Condo, Matt Jarvey
Counsel for Defendants/Appellees
                CANNABIS, et al. v. FENNEMORE, et al.
                      Decision of the Court

                     MEMORANDUM DECISION

Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Jennifer M. Perkins and Judge David B. Gass joined.

B R O W N, Judge:

¶1             Cannabis Renaissance Group, LLC and Mohit Asnani
(collectively “CRG”) appeal the superior court’s order granting summary
judgment in favor of Fennemore Craig, P.C. dba Fennemore Craig Jones
Vargas and attorney Patrick J. Sheehan (collectively “Fennemore” unless
otherwise noted) on CRG’s legal malpractice claim. For the following
reasons, we affirm.

                            BACKGROUND

¶2            CRG filed three applications for special use permits from the
City of Las Vegas to operate medical marijuana facilities for cultivation,
production, and dispensary facilities. On October 28, 2014, the Las Vegas
City Council (“City Council”) considered CRG’s applications at a special
meeting. City staff recommended approval of the dispensary facility
permit. Staff also recommended approval of the production facility permit,
but suggested tabling that agenda item because the subject site was not in
compliance with certain state requirements.

¶3           In considering the special use permit applications for the
dispensary and production facilities, a City Council member said he did not
support CRG’s applications because he thought CRG’s members lacked the
requisite experience and professionalism. Staff advised that “several
attachments and documents were missing” from CRG’s application for the
dispensary facility. Staff also noted that because CRG’s budget was not
submitted for the dispensary facility, staff “could not determine whether
[CRG’s available funding] was sufficient for the operations they were
proposing.” The City Council denied the permit for the dispensary facility,
and then tabled consideration of the permit for CRG’s production facility.

¶4            Staff recommended approval of the special use permit for the
cultivation facility. In discussing CRG’s application, a City Council
member again expressed concerns about CRG’s lack of experience. The
member specifically noted that some of CRG’s principals included a print

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shop foreman, an insurance agent, and a motel manager. Staff again
advised there were “several required attachments and documents that were
missing from the personal history questionnaires” in the application.
Finally, staff noted that CRG provided inconsistent information about its
proposed cultivation facility’s square footage. The City Council voted to
deny CRG the special use permit for the cultivation facility. But after
recognizing the anomaly in its decision to table the production facility
permit while at the same time denying CRG’s ability to cultivate and
dispense marijuana, the City Council revisited the production facility
permit and denied it.

¶5            On November 24, 2014, CRG hired Sheehan, an attorney with
Fennemore, to represent CRG in Nevada in connection with a petition for
judicial review of the City Council’s denial of the special use permits.
Sheehan filed a petition the next day on behalf of CRG, which the City
moved to dismiss because it was filed one day late. The Clark County
District Court granted the motion and dismissed the petition with
prejudice, finding in part the petition was not timely filed.

¶6            In 2016, CRG filed a legal malpractice action in Maricopa
County Superior Court alleging Fennemore was negligent in failing to
timely petition for review. After Fennemore stipulated to the elements of
duty and breach, the parties filed competing motions for summary
judgment on causation.

¶7              The superior court ruled in favor of Fennemore, concluding
that if Sheehan had timely filed the petition for judicial review, a Nevada
district court judge would have upheld the City Council’s decision denying
the applications as a matter of law because the decision was supported by
substantial evidence. Thus, the court found that CRG could not prove
causation in its legal malpractice case and dismissed CRG’s claims with
prejudice. CRG filed a motion for new trial, which the court denied. We
have jurisdiction of CRG’s timely appeal under A.R.S. § 12-2101(A)(1),
(5)(a).

                               DISCUSSION

¶8             We review de novo a grant of summary judgment, viewing
the facts in the light most favorable to CRG, the party opposing summary
judgment. Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12 (2003). We will affirm
summary judgment when there is no genuine dispute of material fact and
the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P.
56(a); see Orme Sch. v. Reeves, 166 Ariz. 301, 305 (1990).

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¶9              We first note the record before us does not contain all of the
documentation the City Council considered. As the plaintiff in this legal
malpractice case, CRG bears the burden of proving the case-within-a-case,
and CRG’s failure to preserve or later obtain a copy of the applications it
submitted to the City Council substantially weakens its malpractice claim.
See Phillips v. Clancy, 152 Ariz. 415, 418 (App. 1986) (“[P]laintiff must prove
that but for the attorney’s negligence, he would have been successful in the
prosecution or defense of the original suit.”). CRG argues the fault for an
incomplete superior court record lies with Fennemore because the City
Council record would have been preserved, absent the negligence. That
argument is unavailing because Fennemore was not engaged in this matter
until after the application process was completed, and CRG cites no
authority supporting its position that Fennemore was responsible for
CRG’s own failure to retain records that may have been useful in pursuing
this malpractice claim.

¶10           Regardless, to the extent CRG challenges the superior court’s
finding that CRG’s failure to preserve the full applications was “at CRG’s
peril,” the City Council hearing transcript, staff recommendations,
deposition excerpts, responses to interrogatories, and other documents
related to CRG provided sufficient information to sustain the superior
court’s conclusion that substantial evidence supported the City Council’s
denials.

       A.     Deciding the Issue of Causation

¶11           To prevail in a legal malpractice action, the plaintiff must
show causation: that “but for the alleged negligence of the attorney,” the
harm would not have occurred. Molever v. Roush, 152 Ariz. 367, 374 (App.
1986) (quotation and citation omitted). CRG argues the superior court erred
in granting summary judgment to Fennemore because causation should be
decided by a jury. Causation is generally a question of fact for the jury. Id.
In legal malpractice cases, however, causation is a question of law for the
judge when a “legal decision of the original trial judge disposed of the
original claim.” Id. Ultimately, in a legal malpractice case issues of fact in
the underlying action are resolved by a jury or judge as the fact-finder, but
issues of law are resolved by the court. Id.

¶12           Here, to prove causation CRG bore the burden of showing
that if Fennemore had timely filed the petition for judicial review in the
Nevada district court, the petition would have been granted. Phillips, 152
Ariz. at 418; Molever, 152 Ariz. at 374. Under Nevada law, the district
court’s function in reviewing a municipality’s decision is purely legal:

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       The [district] court had before it the same evidence as the
       board. Its function was not to conduct a trial de novo, but
       only to ascertain as a matter of law if there was any substantial
       evidence before the board which would sustain the board’s
       action.

Nova Horizon, Inc. v. City Council of Reno, 105 Nev. 92, 94 (1989) (emphasis
added) (quoting McKenzie v. Shelly, 77 Nev. 237, 241–42 (1961), and
applying this standard in considering the propriety of a city council’s denial
of a special use permit).

¶13            CRG argues the district court’s resolution of the underlying
petition for review was not purely a legal determination because it would
have involved mixed questions of law and fact. Specifically, CRG contends
the district court would have decided whether to take additional evidence
and reviewed facts regarding the City Council’s treatment of CRG
compared to other applicants. Judicial review of an administrative decision
by a state agency permits taking such additional evidence in limited
circumstances. See Nev. Rev. Stat. § 233B.135(1). But judicial review of a
municipal decision by a city council is “limited to a review of the record of
information presented to the city council,” with no extraneous evidence.
See Urban Renewal Agency of Reno v. Iacometti, 79 Nev. 113, 118 (1963); see also
City Council of Reno v. Travelers Hotel, Ltd., 100 Nev. 436, 439–40 (1984).
Although CRG urges us to consider its expert witness’s opinion that the
district court can take additional evidence in considering a petition for
judicial review, we decline to presume that could have been done here,
especially in light of the authorities cited above. Moreover, CRG has not
cited any Nevada authority suggesting additional fact-finding is permitted
when reviewing municipal decisions.

¶14           Relying on Phillips, 152 at Ariz. 415, CRG contends that
because this case involves “trial-level malpractice” and not “appellate level
malpractice,” causation is a factual question for the jury. In Phillips, an
attorney failed to timely request a hearing before an administrative law
judge (“ALJ”), resulting in the denial of his client’s application for social
security benefits. Id. at 417. In the malpractice action that followed, the
superior court granted summary judgment to the defendant attorney,
finding no disputed issue of material fact. Id. at 418. On appeal, this court
distinguished between trial-level and appellate-level legal malpractice. Id.
at 421. We explained that in trial-level malpractice, the attorney’s
negligence either fell below the standard of professional care in presenting
a case or precluded trial; if the underlying case would have been tried to a
jury or judge as the fact finder, the jury in the legal malpractice case should

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decide disputed factual issues. Id. In appellate-level malpractice, however,
an attorney generally fails to timely appeal; in these cases, the plaintiff in a
legal malpractice case must prove they would have been successful on
appeal. Id. We explained that “[r]esolving legal issues on appeal is
reserved for the exclusive province of judges.” Id. Thus, in appellate-level
malpractice cases, if causation depends on a possible appellate outcome, the
trial judge resolves the issue as a question of law. Id.

¶15           Applying the law to the facts in Phillips, we concluded that
even though the underlying proceeding involved an administrative appeal
from a social security examiner’s ruling to an ALJ, the attorney’s
malpractice involved trial-level malpractice. Id. at 422. Had the hearing
request been timely filed, the ALJ would have been sitting as a fact finder
and would have made factual determinations to decide whether the
plaintiff was entitled to disability benefits. Id. Because the jury decides
factual issues in a legal malpractice case, we reversed the trial court’s entry
of summary judgment. Id. at 421–22.

¶16           CRG argues this case involves trial-level malpractice, just as
Phillips, because the underlying lawsuit flows from the failure to seek
judicial review of a decision by a non-judicial body. Unlike Phillips, the
Nevada district court would not have made any factual determinations in
considering CRG’s petition for judicial review. The court’s review would
have been confined to the record before the City Council, with the sole task
of deciding whether substantial evidence supported the denials of the
special use permits. Iacometti, 79 Nev. at 118. Because that question would
have been resolved as a matter of law, the alleged negligence here falls on
the appellate-level malpractice side of the continuum, which is reserved for
the exclusive province of judges. Phillips, 152 Ariz. at 421.

¶17           Finally, CRG urges us to reconsider the exceptions in Molever
and Phillips, contending that causation should always be a jury question
when the parties have identified genuine issues of material fact. However,
neither of those cases deprives a litigant of a jury’s determination of
causation when there are genuine issues of material fact, and the question
of causation here—whether the petition for review would have been
granted if timely filed—is not a factual inquiry. Because the underlying
issue was purely a legal determination, the superior court did not err in
deciding causation as a matter of law.

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                 CANNABIS, et al. v. FENNEMORE, et al.
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       B.     Substantial Evidence

¶18           CRG argues the City Council’s denials of its applications for
special use permits are not supported by substantial evidence. The record
shows otherwise.

¶19            Under the Las Vegas Municipal Code (“LVMC”) in effect
when CRG submitted its applications, “[t]he cultivation, distribution,
production and sale of marijuana is not a matter of right but of privilege,
which would otherwise be unlawful” under local land use regulations.
LVMC 6.95.010(B). Such privileges require special use permits. LVMC
6.95.060, .080. The grant or denial of a special use permit is a discretionary
act by a municipality under Nevada law. See City of Henderson v. Henderson
Auto Wrecking, Inc., 77 Nev. 118, 122 (1961). “Discretionary acts are those
which require the exercise of personal deliberation, decision and
judgment.” Travelers Hotel, Ltd. v. City of Reno, 103 Nev. 343, 345–46 (1987).
If a city council makes a discretionary decision supported by substantial
evidence, no abuse of discretion occurs. Henderson, 77 Nev. at 122; see
McKenzie, 77 Nev. at 242 (explaining the board’s action is “clothed with the
presumption of validity”). Substantial evidence is that which “a reasonable
mind might accept as adequate to support a conclusion.” Stratosphere
Gaming Corp. v. City of Las Vegas, 120 Nev. 523, 528 (2004) (citations and
quotations omitted).

¶20           Our review of the record shows substantial evidence
supported the City Council’s denials of the three special use permit
applications. That evidence included the City Council’s opinion concerning
CRG’s lack of requisite experience and professionalism, various missing
attachments and documents, inconsistent square footage information, and
concerns over an anomalous tabling of the production application when the
corresponding dispensary and cultivation applications were denied.

¶21           CRG makes various arguments disputing the City Council’s
finding that its applications were incomplete. However, CRG failed to
provide the superior court with a full record of what the City Council
considered, including complete copies of its special use permit applications.
See supra ¶ 10. Thus, we cannot conclude the City Council’s finding lacks
substantial supporting evidence when the record before us does not include
all the documentation the City Council presumably considered in reaching
those decisions.

¶22           In addition, the record shows City staff noted at least one of
the applications was incomplete and because the budget was not submitted,

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                 CANNABIS, et al. v. FENNEMORE, et al.
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staff could not determine capitalization of the proposed business. Even
assuming the City Council erred in finding CRG’s applications incomplete,
the other cited deficiencies support the denials under Nevada’s substantial
evidence test. Stratosphere, 120 Nev. at 528. The threshold for what
constitutes the requisite “substantial evidence” to sustain the denials is low;
only when there is no evidence to support the city council’s actions is it
appropriate to find an abuse of discretion. Henderson, 77 Nev. at 122; see
City Council of Reno v. Irvine, 102 Nev. 277, 280 (1986) (defining substantial
evidence as “an apparent absence of any grounds or reasons for the
decision”).

¶23           Next, CRG challenges the City Council’s findings that its
members lacked the requisite experience. Although staff for the zoning
commission recommended approval and noted CRG’s owners had
demonstrated “business experience and knowledge in cultivating medical
marijuana and the needed education to manage such a facility,” the record
also supports the City Council’s findings that some of CRG’s members
worked in non-medical marijuana capacities. And a staff recommendation
is not binding on a city council. Cf. Henderson, 77 Nev. at 122 (recognizing
that a planning board’s recommended approval of permit “was not binding
upon the council in the exercise of the city council’s discretion”).

¶24           Moreover, under Nevada law, “just because there was
conflicting evidence does not compel interference with the Board’s decision
so long as the decision was supported by substantial evidence. It is not the
place of the court to substitute its judgment for that of the Board as to the
weight of the evidence.” Clark Cnty. Liquor & Gaming Licensing Bd. v. Simon
& Tucker, Inc., 106 Nev. 96, 98 (1990) (citations omitted). Even if the City
Council approved other applicants lacking demonstrable medical-
marijuana business experience, that factor alone does not negate the other
cited substantial factors supporting the denials. And to the extent CRG
challenges the superior court’s finding that CRG waived or failed to raise a
claim with the City Council that it received disparate treatment, we do not
address this argument because our conclusion that substantial evidence
supports the City Council’s denials resolves this appeal.

¶25           Finally, CRG argues the superior court erred in making
credibility determinations regarding expert witnesses and the City Council
members’ statements. That argument fails because the only relevant
inquiry on appeal is whether substantial evidence supported the City
Council’s denials.

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                CANNABIS, et al. v. FENNEMORE, et al.
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¶26           In sum, when a malpractice action turns on an attorney’s
failure to timely pursue an appeal, summary judgment is proper if the
plaintiff cannot prove they would have been successful if the appeal had
been timely filed. See Molever, 152 Ariz. at 371. Because substantial
evidence supported the City Council’s denials here, and the district court
would have affirmed those denials, CRG cannot prove causation. Id.

                              CONCLUSION

¶27           We affirm the superior court’s judgment and award taxable
costs to Fennemore upon compliance with ARCAP 21.

                        AMY M. WOOD • Clerk of the Court
                        FILED: AA

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