Superior Court of Santa Clara County, No. CV272374, Maureen
A. Folan, Judge.
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COUNSEL
Gates
Eisenhart Dawson and Nicholas G. Emanuel for Defendants,
Cross-complainants and Appellants
Richard
Doyle, City Attorney, Nora Frimann, Assistant City Attorney,
Margo Laskowska, Kendra E. McGee-Davies and Mark J. Vanni,
Deputy City Attorney, for Plaintiff and Cross-defendant and
Respondent.
Opinion
by Elia, Acting P. J., with Bamattre-Manoukian and Mihara,
JJ., concurring.
OPINION
Page 846
[205
Cal.Rptr.3d 181] Elia, Acting P. J.
The
City of San Jose (City) brought this action to collect unpaid
business taxes from defendants MediMarts, Inc., and its
president, David Armstrong. In the course of the proceedings
defendants sought a preliminary injunction against the
City's attempts to stop them from operating their medical
marijuana collective. On appeal, defendants contend that
payment of the marijuana business tax (San Jose Mun. Code,
§ 4.66.010 et seq.) would force Armstrong to incriminate
himself in violation of his Fifth Amendment privilege by
admitting criminal liability for violating federal drug laws.
We conclude that the privilege against self-incrimination has
no application in these circumstances. We must therefore
affirm the order.
Background
MediMarts
was established in 2009 as a nonprofit collective under the
name Bay Pacific Care, Inc. Bay Pacific Care paid the
marijuana business tax (hereafter, MBT) from March 2011
through July 2011. In August 2011 the collective changed its
name to MediMarts, and it continued paying the tax through
April 2012. In May of 2012, however, MediMarts discontinued
paying the MBT, instead submitting tax returns showing no
money due. The City began sending tax assessments and overdue
notices, while Armstrong maintained that the tax itself was
illegal under federal law. After a hearing before the Acting
Director of Finance, MediMarts was found to owe $58,788.53 as
of August 24, 2012, along with the future accrual of
penalties and interest. Armstrong continued to protest the
assessments to Wendy J. Sollazzi, a revenue management
division manager in the City's finance department.
Another hearing took place on November 15, 2013. On July 11,
2014, the Director of Finance found that MediMarts owed
$215,111.17 as of the November 2013 hearing date.
The
City then brought this action against Armstrong and MediMarts
to collect the unpaid business taxes due under the MBT,
chapter 4.66 of the San Jose Municipal Code (hereafter, SJMC
or the Code). In its first amended complaint, filed December
3, 2014, it alleged that defendants were subject to the MBT
and that by failing to pay the tax they had incurred
collection costs, interest, and penalties. The complaint
specifically alleged that Armstrong " was an agent of
[MediMarts] acting in the scope of such agency and with the
permission and consent of [MediMarts]." Together the
taxes, interest, and penalties claimed by the City totaled
$767,058.60 as of October 10, 2014.
Defendants
answered the complaint and filed a cross-complaint under 42
United States Code sections 1983 and 1988. In this pleading
they alleged that payment of the MBT " would ...