UL Chula Two v. City of Chula Vista CA4/1 ( 2022 )


Menu:
  • Filed 10/24/22 UL Chula Two v. City of Chula Vista CA4/1
    NOT TO BE PUBLISHED IN OFFICIAL REPORTS
    California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
    ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for
    purposes of rule 8.1115.
    COURT OF APPEAL, FOURTH APPELLATE DISTRICT
    DIVISION ONE
    STATE OF CALIFORNIA
    UL CHULA TWO LLC,                                                            D079215
    Plaintiff and Appellant,
    v.                                                                (Super. Ct. No. 37-2020-
    00041554-CU-MC-CTL)
    CITY OF CHULA VISTA et al.
    Defendants and Respondents;
    MARCH AND ASH CHULA VISTA,
    INC. et al.,
    Real Parties in Interest and
    Respondents.
    APPEAL from a judgment of the Superior Court of San Diego County,
    Richard E.L. Strauss, Judge. Affirmed.
    Lewis Brisbois Bisgaard & Smith, Lann G. McIntyre, Gary K. Brucker,
    Jr., Anastasiya Menshikova for Plaintiff and Appellant.
    Colantuono, Highsmith & Whatley, Alena Shamos, Matthew C. Slentz
    for Respondent City of Chula Vista and the Chula Vista City Manager.
    Allen Matkins Leck Gamble Mallory & Natsis, Heather S. Riley,
    Rebecca Williams for Real Party in Interest March and Ash Chula Vista, Inc.
    Tencer Sherman, Philip C. Tencer for Real Party in Interest TD
    Enterprise.
    In accordance with a recently-enacted ordinance, UL Chula Vista
    (UCV) applied for one of a limited number of licenses offered by the City of
    Chula Vista (City) to operate a retail cannabis store. The City rejected UCV’s
    application because the company’s principal had been involved in a medical
    cannabis operation deemed unlawful by the City of San Diego, which was an
    excluding criteria under the new regulations created by the ordinance. UCV
    unsuccessfully appealed to the City. UCV then brought a petition for writ of
    administrative mandate in the superior court challenging the City’s decision.
    The court denied the petition and entered judgment against UCV.
    On appeal, UCV argues that the City abused its discretion in rejecting
    its application by misinterpreting its regulations and considering hearsay
    evidence, and that the City violated its due process rights. UCV also argues
    that the trial court erred by denying its request to consider extra-record
    evidence. As we explain, we reject each of UCV’s arguments and affirm the
    judgment.
    FACTUAL AND PROCEDURAL BACKGROUND
    On March 6, 2018, the City enacted Ordinance No. 3418, which added
    Chapter 5.19 to the Chula Vista Municipal Code. The purpose of the new
    regulations was “to mitigate the negative impacts brought by unregulated
    Commercial Cannabis Activity.” Chapter 5.19 established a mandatory
    license program for engaging in “Commercial Cannabis Activity,” as defined
    by the regulations. The regulations limit the number of cannabis retailers in
    the City to twelve, three for each of the City’s four council districts, and also
    establish a phased application process for obtaining a license to operate one
    2
    of the eight permitted retail operations. (Chula Vista Mun. Code, §§ 5.19.040
    & 5.19.050.)
    The first phase consisted of an application showing compliance with
    certain requirements, including experience managing a lawful commercial
    cannabis business or regulated pharmaceutical business, ownership
    experience, sufficient liquid assets and business plan, and each owner and
    officer of the operation submitting to fingerprinting and a background check
    by the City’s police department. (Chula Vista Mun. Code, § 5.19.050,
    subd. (A).) In addition, applicants were required to provide “[a] statement,
    under penalty of perjury … that he/she has not conducted, facilitated, caused,
    aided, abetted, suffered, or concealed unlawful Commercial Cannabis Activity
    in the City or any other jurisdiction.” (Id., subd. (A)(1)(j).)
    After the submission of the application, the regulations direct a review
    of the applications by the City’s Finance Director and Chief of Police. (Chula
    Vista Mun. Code, § 5.19.050, subd. (A)(4) & (5).) Those officials then have
    discretion to reject applications for specified reasons, including if (1) “[t]he
    Applicant, or any Owner of the Commercial Cannabis Business, Officer, or
    Manager has been adversely sanctioned or penalized by the City, or any other
    city, county, or state, for a material violation of State or local laws or
    regulations related to Commercial Cannabis Activity or to pharmaceutical or
    alcohol licensure” and (2) “[t]he Applicant, or any Owner of the Commercial
    Cannabis Business, Officer, or Manager has conducted, facilitated, caused,
    aided, abetted, suffered, or concealed unlawful Commercial Cannabis Activity
    in the City or any other jurisdiction.” (Chula Vista Mun. Code, § 5.19.050,
    subd. (A)(5)(f) & (g).) If an applicant is rejected during this phase, the
    regulations provide for an appeal to the City Manager. (Chula Vista Mun.
    Code, § 5.19.050, subd. (B)(6).)
    3
    In 2019, UCV applied for a storefront retail license. The application
    included a letter from UCV’s counsel explaining that UCV’s sole shareholder,
    William Senn, had submitted the required affirmation that he “ ‘has not
    conducted, facilitated, caused, aided, abetted, suffered, or concealed unlawful
    Commercial Cannabis Activity in the City or any other jurisdiction.’ ”
    However, counsel also explained that Senn had entered a stipulated
    judgment with the City of San Diego in City of San Diego v. The Holistic Café,
    Inc. et al., Case No. 37-2012-00087648-CU-MC-CTL, and that the judgment
    was related to allegations “ ‘that Senn, along with other defendants, operated
    a medical marijuana dispensary in the City of San Diego in violation of local
    law.’ ”1
    On June 10, 2019, the City notified UCV it was scheduled for an
    interview and requested payment of fees to proceed with background checks.
    The letter warned UCV “that although [its] application [was] being forwarded
    for further assessment within Phase One of City’s application process, [the]
    application ha[d] not been approved at [that] time.” The letter further stated
    that the “City reserve[d] the right to reject or approve any and all
    applications based on the standards set forth in all applicable laws and
    regulations, or otherwise in its sole discretion, taking into account the health,
    safety and welfare of the community, and in accordance with its general
    police powers authority.”
    On May 6, 2020, the City issued a notice of decision rejecting UCV’s
    application for a retail license. As reasons for the rejection, the notice
    explained: (1) that Senn had been sanctioned by the City of San Diego for a
    material violation of state or local laws or regulations related to commercial
    1      UCV’s application included Senn’s resume, describing the Holistic Café
    as “[o]perating in Hillcrest without issue since its inception.”
    4
    cannabis activity, citing Chula Vista Municipal Code section 5.19.050,
    subdivision (A)(5)(f); and (2) that Senn had been “involved in unlawful
    Commercial Cannabis activity in the City of San Diego from approximately
    2010 to 2012,” citing section 5.19.050, subdivision (A)(5)(g). (Italics omitted.)
    In accordance with the Chula Vista Municipal Code, on May 21, 2020,
    UCV appealed the denial of its application. On May 26, 2020, the City
    notified UCV that a hearing was set for June 10, 2020. 2 The City also
    provided UCV with the documentation that it had reviewed in reaching its
    decision to deny the application and that it intended to use at the appeal
    hearing. The materials included the City’s scoring matrix and several
    documents uncovered by a Public Records Act request during the background
    check investigation concerning the Holistic Café matter.
    UCV filed an appeal brief in advance of the hearing, asserting that
    (1) the reasons given for rejecting its application were too vague, violating
    UCV’s due process rights; (2) Senn could not have been sanctioned by the
    City of San Diego or involved in unlawful “Commercial Cannabis activity”
    from 2010 to 2012 because there were no laws or regulations governing such
    activity, as defined by the Chula Vista Municipal Code, at that time in the
    City of San Diego; and (3) there was no relevant, admissible evidence that
    Senn was sanctioned or penalized by the City of San Diego for engaging in
    unlawful activity because the Holistic Café matter was settled by a stipulated
    judgment in which Senn admitted no wrongdoing. UCV also asked the City
    to set aside the rejection on equitable grounds based on the age of the Holistic
    Café matter and the fact that the law surrounding medicinal marijuana sales
    was unsettled at the time of the stipulated judgment.
    2     The City subsequently amended its notice to conduct the hearing by
    video conference due to the Covid-19 pandemic.
    5
    The hearing took place as scheduled. City Manager Gary Halbert acted
    as hearing officer and was advised by Deputy City Attorney Simon Silva.
    Senn, represented by counsel, appeared for UCV. The City was represented
    by Deputy City Attorney Megan McClurg. McClurg offered testimony by
    three witnesses, Chula Vista Police Department Sergeant Mike Varga,
    Developmental Services Director Kelly Broughton, and Matthew Eaton,
    whose employer, HdL Companies, developed the scoring criteria used by the
    City in its application process. Through Varga, the City introduced the
    documents it obtained concerning the Holistic Café matter. Varga explained
    that during the background investigation, Senn was identified as an owner
    operator of the Holistic Café, which prompted a Public Records Act request to
    the City of San Diego for related information.
    The Public Records Act request uncovered the City of San Diego’s
    notice of violation to the Holistic Café, which asserted the business was an
    unlawful, unpermitted medical marijuana dispensary. The notice also stated
    that the owners of the business had misrepresented its activity for purposes
    of its business tax certificate as the sale of herbal remedy teas and health
    products. The notice set forth various violations of the municipal code related
    to the unlawful operation of the dispensary and included a demand to
    immediately cease operations. The City introduced photographs of the
    Holistic Café, showing signage indicative of medical marijuana sales. The
    City also introduced an email exchange between the City of San Diego’s
    building inspector and the Holistic Café’s counsel in which the business
    declined an inspection request.
    Also through Varga, the City introduced a copy of the unlawful
    detainer complaint initiating the legal proceedings to evict Holistic Café filed
    by the property’s owner, as well as the City of San Diego’s complaint seeking
    6
    civil penalties and a permanent injunction requiring the business to cease
    operating the marijuana dispensary in violation of the municipal code. The
    complaint named Senn as a defendant and described him as the president
    and/or chief operating officer of the business. The complaint alleged that City
    officials verified the property was being operated as a marijuana dispensary
    and asserted the defendants were “blatantly and willfully in violation of the
    [San Diego Municipal Code].”
    Also through Varga, the City introduced the stipulated judgment
    ending the City of San Diego’s lawsuit against the Holistic Café. The
    judgment contained a provision stating, “[n]either this Stipulated Judgment
    nor any of the statements or provisions contained herein shall be deemed to
    constitute an admission or an adjudication of any of the allegations of the
    Complaint.” The judgment imposed a permanent injunction enjoining Senn
    from operating a marijuana dispensary and required closure of the Holistic
    Café. The judgment also required payment of $20,000 in civil penalties and
    additional fees.
    UCV presented no evidence at the hearing. UCV’s counsel, however,
    objected to the documents that the City presented concerning the Holistic
    Café matter on the grounds they were unreliable hearsay, not properly
    authenticated, lacked foundation, and were irrelevant. The hearing officer
    overruled the objections, noting after each ruling that the documents would
    be entered into evidence subject to his determination of the documents’
    weight.
    After the presentation of evidence and arguments by counsel, the
    hearing officer took the matter under submission. On August 26, 2020,
    Halbert issued his decision rejecting UCV’s appeal. Specifically, he found no
    due process violation since the denial and documentation provided to UCV by
    7
    the City made clear that the rejection of UCV’s application was based on
    Senn’s involvement in the Holistic Café matter. Halbert also rejected UCV’s
    argument that there were no laws in the City of San Diego related to
    cannabis dispensaries, which UCV asserted precluded the application of
    Chula Vista Municipal Code section 5.19.050, subdivisions (A)(5)(f) and (g).
    Halbert reiterated his decision to overrule UCV’s objections to the evidence
    presented by the City, noting the regulations made clear that the formal
    rules of evidence did not apply to the City’s review of the decision to reject
    UCV’s application. Halbert also found the City had adequately established
    the documents were reliable and relevant to its determination. Finally,
    Halbert denied UCV’s request that he exercise discretion to overrule the
    City’s determination, noting that UCV presented no evidence in support of its
    request.
    UCV filed its petition for writ of mandate in the Superior Court on
    November 13, 2020. Therein, UCV asserted a writ was required because:
    (1) civil zoning violations (the unlawful activity alleged by the City of San
    Diego in its civil complaint) are not disqualifying under the Chula Vista
    Municipal Code as a matter of law; (2) the City violated UCV’s due process
    rights by not disqualifying its application earlier, by providing insufficient
    notice of the hearing, and by having the City Attorney’s office act both as
    advisor to the hearing officer and advocate for the City in the proceeding; and
    8
    (3) substantial evidence did not support Halbert’s decision because all of the
    evidence presented by the City was inadmissible hearsay.3
    Following briefing and a hearing, the trial court issued an order
    rejecting each of UCV’s arguments and denying the petition in its entirety.
    The court found that UCV had failed to establish that the “operation of a
    medicinal marijuana storefront does not fall under the definition of
    ‘Commercial Cannabis Activity.’ ” Additionally, the court concluded ample
    evidence supported the City’s rejection of its application and that UCV had
    not shown that the hearsay evidence was improperly considered by the City
    or the hearing officer. With respect to UCV’s due process arguments, the
    court found there was no evidence to support UCV’s assertion that McClurg
    had acted both as advocate and advisor in the same proceeding and that it
    had waived its argument concerning the hearing notice by not objecting to
    the City.
    After the court entered judgment in favor of the City, UCV filed its
    notice of appeal.
    DISCUSSION
    I
    Standard of Review
    “Review of an administrative decision made as a result of a proceeding
    in which a hearing is required is governed by Code of Civil Procedure
    3      The petition also requested an injunction, which was eventually denied,
    preventing the City from issuing licenses to other operators. UCV also
    amended its petition to add its competitors for the license, real parties March
    and Ash Chula Vista, Inc. and TD Enterprise, LLC, as defendants. After
    briefing in this case was complete, the City filed a request that this court
    take judicial notice of the licenses it issued to the real parties after the trial
    court denied UCV’s petition. Because we find these documents irrelevant to
    the issues on appeal, the request is denied.
    9
    section 1094.5. The standard of review is abuse of discretion. (Id., subd. (b).)
    Subdivision (c) of section 1094.5 provides that where, as here, the proceeding
    does not involve a fundamental vested right, ‘abuse of discretion is
    established if the court determines that the findings are not supported by
    substantial evidence in the light of the whole record.’ ” (Hauser v. Ventura
    County Bd. of Supervisors (2018) 
    20 Cal.App.5th 572
    , 575.) “Under this
    standard, the trial court will affirm the administrative decision if it is
    supported by substantial evidence from a review of the entire record,
    resolving all reasonable doubts in favor of the findings and decision.” (M.N.
    v. Morgan Hill Unified School Dist. (2018) 
    20 Cal.App.5th 607
    , 616.)
    “To the extent that the administrative decision rests on the hearing
    officer’s interpretation or application of the [o]rdinance, a question of law is
    presented for our independent review.” (MHC Operating Limited Partnership
    v. City of San Jose (2003) 
    106 Cal.App.4th 204
    , 219.) While “[t]he
    interpretation of statutes and ordinances ‘is ultimately a judicial function[,]’
    … “the hearing officer’s interpretation of the [o]rdinance is entitled to
    deference. ‘The courts, in exercising independent judgment, must give
    appropriate deference to the agency’s interpretation.’ ” (Ibid.) “ ‘[B]ecause
    the agency will often be interpreting a statute within its administrative
    jurisdiction, it may possess special familiarity with satellite legal and
    regulatory issues. It is this “expertise,” expressed as an interpretation …,
    that is the source of the presumptive value of the agency’s views.’ ” (Ibid.)
    II
    The City’s Findings Were Supported by Substantial Evidence
    and Those Findings Supported Its Decision
    UCV contends that the City’s findings were not supported by
    substantial evidence because none of the evidence relied on by Halbert was
    10
    admissible. It further argues that there was no evidence that Senn had been
    adversely sanctioned for a violation of law related to commercial cannabis
    activity because the stipulated judgment entered by Senn disclaimed any
    liability. In addition, UCV contends there was no evidence of unlawful
    commercial cannabis activity because that legal phrase did not exist until
    2016. As we explain, we reject UCV’s narrow interpretation of the Chula
    Vista Municipal Code and find no abuse of discretion in the City’s hearing
    officer’s decision.
    A
    Admissibility of Evidence
    UCV first argues that the documentation obtained by the City through
    its Public Records Act request was unauthenticated hearsay that was
    improperly relied on by the hearing officer. As an initial matter, the
    Evidence Code does not apply to this administrative proceeding. Rather, the
    City’s hearings are governed by general principles of due process and its own
    regulations. In particular, the regulation the City adopted “to clarify and
    facilitate implementation of [Chula Vista Municipal Code] Chapter 5.19,”
    states that an appeal challenging the City’s rejection of an application “shall
    not be conducted according to technical rules of procedure and evidence
    applicable to judicial proceedings.” Rather, “[e]vidence that might otherwise
    be excluded under the California Evidence Code may be admissible if it is
    relevant and of the kind that reasonable persons rely on in making decisions.
    Irrelevant and unduly repetitious evidence shall be excluded.”
    Thus, by its terms, the City’s regulation authorized the use of hearsay
    evidence in the administrative appeal pursued by UCV. (See In re Lucero L.
    (2000) 
    22 Cal.4th 1227
    , 1244 [Noting that the “admissibility of hearsay
    evidence in various administrative contexts has long been authorized by
    11
    statute.”].) Therefore, contrary to UCV’s contention, the hearing officer’s
    reliance on the documents was not improper. The documents at issue,
    consisting of court filings in the City of San Diego’s lawsuit against Senn and
    the unlawful detainer suit pursued by the landlord of the Holistic Café, are
    not inherently unreliable. Rather, they are documents that “reasonable
    persons rely on in making decisions.”
    To support its evidentiary arguments, UCV relies on a case involving
    an agency that, unlike here, was not authorized to use hearsay evidence. In
    Walker v. City of San Gabriel (1942) 
    20 Cal.2d 879
     (Walker), the court
    reversed a judgment entered after the denial of a petition for writ of
    mandamus to correct the revocation of a license to operate an automobile
    wrecking business. At the hearing on the revocation, which was required by
    ordinance, the City of San Gabriel provided only a hearsay police statement
    alleging various violations of the license’s conditions. (Id. at p. 880.) The
    Supreme Court reversed the judgment, holding the city had failed to carry its
    burden to show its revocation was based on the operator’s violation of a term
    or condition of the license because the hearsay alone was not “substantial
    evidence to support” the ruling. (Id. at p. 881.) The court noted that
    “hearsay, unless specially permitted by statute, is not competent evidence to
    that end.” (Ibid., italics added.) In contrast, the City’s regulations here
    specifically permit hearsay evidence so long as it “is relevant and of the kind
    that reasonable persons rely on in making decisions.” 4
    4     UCV also cites Government Code section 11513, subdivision (d). The
    statute, contained in the Administrative Procedure Act (APA, Gov. Code,
    §§ 11400, et seq.), applies primarily to administrative proceedings of the
    State. The APA does not apply to local agencies, like the City, except to the
    extent its provisions are made applicable to them by statute or when the local
    agency elects to be governed by the APA. (Gov. Code, §§ 11410.30, subd. (b),
    11410.40.) Neither exception applies in this case.
    12
    We also note that UCV failed to offer any evidence to refute the
    information contained in the documents and instead chose to stand on its
    evidentiary objections and regulatory interpretation arguments. Unlike the
    petitioner in Walker, which involved the revocation of a vested right, UCV
    had the evidentiary burden of showing that the City’s decision to reject its
    application was error. UCV’s failure to introduce any evidence in support of
    its assertion that the City’s decision was arbitrary frustrates its evidentiary
    argument. Because it did not establish any affirmative case, UCV cannot
    show the hearing officer’s decision to consider the hearsay evidence was
    prejudicial. (See F.P. v. Monier (2017) 
    3 Cal.5th 1099
    , 1107 [“the California
    Constitution … expressly preclude[s] reversal absent prejudice”].)
    B
    Commercial Cannabis Activity
    UCV next contends that the City’s decision must be overturned
    because, even if the hearsay evidence was properly relied on by Halbert,
    there was no evidence showing Senn was “adversely sanctioned or penalized
    by the City, or any other city, county, or state, for a material violation of state
    or local laws or regulations related to Commercial Cannabis Activity.” UCV
    argues that the hearing officer found “there were no laws related to
    commercial cannabis activity in the state or city … until 2016, four years
    after the City of San Diego entered into a stipulated judgment in Holistic
    Café.” Therefore, Halbert had no basis to reject UCV’s application under
    Chula Vista Municipal Code section 5.19.050, subdivision (A)(5)(f), “which
    requires a material violation of a law or regulation related to commercial
    cannabis activity.”
    First, UCV’s assertion that Halbert found there were no laws in San
    Diego regulating commercial cannabis activity is a distortion of the decision.
    13
    Halbert explains clearly that although “[s]pecific state and local licensing of
    cannabis dispensaries went into effect in 2016,” prior to that time San Diego
    regulated cannabis dispensaries “via zoning laws and in particular in the
    City of San Diego as unpermitted businesses.”5
    Next, UCV’s interpretation of the Chula Vista Municipal Code imports
    a requirement into the regulations that does not exist and fails to account for
    the basis of the complaint filed by the City of San Diego against Senn, which
    asserted that operation of a medical marijuana dispensary within San Diego
    was unlawful because the property where the dispensary was located was not
    zoned for such activity. UCV argues that the zoning regulations at issue in
    that case are unrelated to commercial cannabis activity. We agree with the
    City, the hearing officer, and the trial court, that UCV’s interpretation of the
    regulations is too narrow.
    The regulation defines “Commercial Cannabis Activity” as “the
    commercial Cultivation, possession, furnishing, manufacture,
    distribution, processing, storing, laboratory testing, packaging, labeling,
    transportation, delivery or sale of Cannabis or Cannabis Products.” (Chula
    Vista Mun. Code, § 5.19.020.) The administrative record contains unrefuted
    evidence that the Holistic Café was operating as an unpermitted medical
    marijuana dispensary that sold cannabis, and that the operation was
    unlawful under the City of San Diego’s municipal code. The fact that the
    zoning regulations themselves did not refer specifically to commercial
    cannabis activity does not mean there were no laws related to such activity.
    Rather, as the City and real parties assert in their brief, local governments
    have the constitutional authority “to determine the allowable land uses
    5     UCV’s request for judicial notice of the City of San Diego’s municipal
    code and zoning ordinance is granted.
    14
    within their jurisdictions” and when a use “violates applicable zoning rules,
    the responsible agency may obtain abatement—i.e., removal of the violation
    and restoration of legal use.” (IT Corp. v. Solano County Bd. of Supervisors
    (1991) 
    1 Cal.4th 81
    , 89.)
    Under permissive zoning, “where a particular use of land is not
    expressly enumerated in a city’s municipal code as constituting a permissible
    use, it follows that such use is impermissible.” (City of Corona v. Naulls
    (2008) 
    166 Cal.App.4th 418
    , 433.) As the City of San Diego’s complaint
    stated, “[t]he operation or maintenance of a marijuana dispensary [was] not a
    permitted use in any zone designation under the [municipal code].” Thus,
    Senn’s operation of the dispensary, which involved the commercial enterprise
    of selling medical cannabis, was a material violation of the City of San
    Diego’s regulations, which related to commercial cannabis activity as defined
    by the Chula Vista Municipal Code.
    C
    Stipulated Judgment
    UCV also asserts there was no evidence of a violation of a law or
    regulation related to commercial cannabis activity because the stipulated
    judgment entered in the Holistic Café matter denied any wrongdoing by
    Senn. As noted, the judgment contained a provision stating that it did not
    “constitute an admission or an adjudication of any of the allegations of the
    15
    [City of San Diego’s] Complaint.”6 The City and real parties respond that the
    provision disclaiming liability in the stipulated judgment does not negate the
    fact that the judgment imposes specific sanctions against UCV, including
    requiring the closure of the Holistic Café and the imposition of both an
    injunction prohibiting Senn from operating a marijuana dispensary and civil
    penalties.
    The City correctly points out that the Chula Vista Municipal Code does
    not require a judgment or admission of unlawful conduct for an applicant to
    be disqualified thereunder. Rather, the regulations disqualify applicants
    both (1) who have been “adversely sanctioned or penalized … for a material
    violation of State or local laws or regulations related to Commercial Cannabis
    Activity” (Chula Vista Mun. Code, § 5.19.050, subd. (A)(5)(f)) and (2) those
    who have “conducted, facilitated, caused, aided, abetted, suffered, or
    concealed unlawful Commercial Cannabis Activity in the City or any other
    6      UCV asserts Senn did not admit liability “to a violation of the civil
    zoning laws” because at the time “there was significant uncertainty about
    whether local governments could use zoning regulations to ban legal
    medicinal cannabis storefronts.” UCV explains that after the stipulated
    judgment, the California Supreme Court resolved that uncertainty in City of
    Riverside v. Inland Empire Patients Health & Wellness Center, Inc. (2013) 
    56 Cal.4th 729
     (Riverside), which held that California’s Compassionate Use Act
    and Medical Marijuana Program Act did not preempt local zoning bans on
    medical marijuana dispensaries. (Id. at p. 738.) UCV also points out that the
    stipulated judgment allowed amendments for future changes to the law and
    asserts that the judgment was amended on May 3, 2019 to allow the
    defendants in that case to engage in cannabis activities. The amended
    judgment was submitted as part of UCV’s appellant’s appendix and is
    contained within its request for judicial notice, which was denied by the trial
    court. UCV requests that we take judicial notice of the amended judgment
    and the articles of incorporation for the Holistic Café. The request is denied
    as irrelevant to our decision and outside of the administrative record.
    16
    jurisdiction” without the requirement of a sanction or penalty (id.,
    subd. (A)(5)(g)).
    Even though Senn continues to assert that his operation of the Holistic
    Café was lawful—a possible outcome in the earlier litigation that was later
    foreclosed by the Supreme Court’s decision in Riverside—and that the
    stipulated judgment was not a penalty or adverse sanction, the evidence
    submitted by the City supported the hearing officer’s determination that
    Senn had conducted unlawful commercial cannabis activity. This evidence
    brought Senn within the second category of disqualification. Specifically, the
    photographs of the Holistic Café indicating medical cannabis sales, the
    unlawful detainer action filed by the business’s landlord, and the City of San
    Diego’s notice of violation and complaint for civil penalties, all supported the
    hearing officer’s finding that Senn had engaged in unlawful cannabis activity.
    As discussed, UCV presented no evidence to refute this finding. Thus,
    Halbert did not abuse his discretion by finding UCV failed to carry its burden
    to show the City acted impermissibly by rejecting its application.
    D
    Medical Marijuana
    UCV argues that disqualifying unlawful commercial cannabis activity
    under the Chula Vista Municipal Code does not include the operation of a
    dispensary for medical-use cannabis. The City and real parties respond that
    because this argument was not raised in the administrative proceedings,
    UCV failed to exhaust its remedies and review by this court is not available.
    Alternatively, they assert the distinction advanced by UCV is not supported
    17
    by the language of the Chula Vista Municipal Code. We agree with the City
    and real parties on both accounts.
    The exhaustion of administrative remedies doctrine requires
    “[a]dministrative agencies [to] be given the opportunity to reach a reasoned
    and final conclusion on each and every issue upon which they have
    jurisdiction to act before those issues are raised in a judicial forum.” (Sierra
    Club v. San Joaquin Local Agency Formation Com. (1999) 
    21 Cal.4th 489
    ,
    510.) “The rule is a jurisdictional prerequisite in the sense that it ‘is not a
    matter of judicial discretion, but is a fundamental rule of procedure laid down
    by courts of last resort, followed under the doctrine of stare decisis, and
    binding upon all courts.’ ” (Citizens for Open Government v. City of Lodi
    (2006) 
    144 Cal.App.4th 865
    , 874.)
    Under the doctrine, issues not presented in the administrative
    proceedings cannot be raised for the first time on review. The exhaustion
    doctrine “recognizes and gives due respect to the autonomy of the executive
    and legislative branches, and can secure the benefit of agency expertise,
    mitigate damages, relieve burdens that might otherwise be imposed on the
    court system, and promote the development of a robust record conducive to
    meaningful judicial review. [Citations.] Additionally, absent an exhaustion
    rule, a litigant might have an incentive to ‘sandbag’—in other words, to ‘avoid
    securing an agency decision that might later be afforded deference’ by
    sidestepping an available administrative remedy.” (Hill RHF Housing
    Partners, L.P. v. City of Los Angeles (2021) 
    12 Cal.5th 458
    , 478–479.)
    Further, the doctrine applies even if the only issue is legal rather than
    factual. (Contractors’ State License Bd. v. Superior Court (Black Diamond
    Elec., Inc.) (2018) 
    28 Cal.App.5th 771
    , 782‒783.)
    18
    Contrary to UCV’s assertion, it did not argue in its administrative
    appeal that the sale of medicinal marijuana was outside the Chula Vista
    Municipal Code’s disqualifying factors to receive a retail sales license.
    Rather, it argued that because no law specifically related to commercial
    cannabis activity existed at the time the City of San Diego filed its complaint
    against Senn and the other Holistic Café defendants, the City improperly
    disqualified UCV. This argument did not give the City the opportunity to
    address UCV’s contention, first raised in the trial court, that its regulation
    did not apply to the sale of medicinal marijuana. Thus, we lack authority to
    consider the argument.
    Even if we were to conclude the issue was encompassed within the
    arguments UCV made in the administrative proceeding, we would agree with
    the trial court that the disqualifying regulation, Chula Vista Municipal Code
    section 5.19.050, subdivisions (A)(5)(f) and (g), does not exclude the sale of
    medicinal cannabis in the manner UCV contends. UCV asserts that the
    City’s regulations “make clear that ‘commercial’ cannabis activity does not
    include ‘medicinal cannabis’ ” because “section 5.19.020 separately defines
    ‘commercial’ and ‘medicinal cannabis’ and ‘medicinal cannabis product,’ ” and
    “ ‘the City’s licensing scheme for commercial cannabis activities expressly
    prohibits commercial cannabis storefronts from selling medicinal cannabis
    and products.’ ”
    Again, UCV’s interpretation of the regulations is too narrow.
    Consistent with California’s Uniform Controlled Substance Act (Health &
    Saf. Code, § 11018) and Medicinal and Adult Use Cannabis Regulation and
    Safety Act (Bus. & Prof. Code, § 26001, subd. (e)), the Chula Vista Municipal
    Code’s definitional provision, section 5.19.020, defines “Cannabis” as “all
    parts of the Cannabis sativa Linnaeus, Cannabis indica, or Cannabis
    19
    ruderalis, whether growing or not; the seeds thereof; the resin, whether crude
    or purified, extracted from any part of the plant; and every compound,
    manufacture, salt, derivative, mixture, or preparation of the plant, its seeds,
    or resin. ‘Cannabis’ also means the separated resin, whether crude or
    purified, obtained from cannabis.”
    As stated, the provision defines “Commercial Cannabis Activity” as “the
    commercial Cultivation, possession, furnishing, manufacture, distribution,
    processing, storing, laboratory testing, packaging, labeling, transportation,
    delivery or sale of Cannabis or Cannabis Products.” (Chula Vista Mun. Code,
    § 5.19.020.) The terms “sale” and “sell” are defined as “any transaction
    whereby, for any consideration, title to Cannabis or Cannabis Products is
    transferred from one person to another.” (Ibid.; see also Bus. & Prof. Code,
    § 26001, subd. (au).) “Medicinal Cannabis” is defined as “Cannabis or a
    Cannabis Product for use pursuant to the Compassionate Use Act of 1996
    (Proposition 215), found at California Health and Safety Code
    Section 11362.5, by a medicinal cannabis patient in California who possesses
    a physician’s recommendation.” (Chula Vista Mun. Code, § 5.19.020; Bus. &
    Prof. Code, § 26001, subd. (a).)
    Under these regulations, “Medicinal Cannabis” is a subset of
    “Cannabis,” not, as UCV argues, a different category altogether.
    Additionally, the sale or transfer of medicinal cannabis is not excluded from
    commercial cannabis activity. As the City and real parties point out, this
    understanding of the regulations is also supported by the existence of “M-
    Licenses,” which are “a State License for Commercial Cannabis Activity
    involving Medicinal Cannabis.” (Chula Vista Mun. Code, § 5.19.020; see also
    Bus. & Prof. Code, § 26001, subd. (af).) Under the Chula Vista Municipal
    Code, “Commercial Cannabis Activity” embraces both medicinal and non-
    20
    medicinal licenses: “ ‘State License’ means a License issued by the state of
    California, or one of its departments or divisions, under State Laws to engage
    in Commercial Cannabis Activity. License includes both an ‘A-license’ (adult
    use) and an ‘M-license’ (medicinal use), as defined by State Laws, as well as a
    testing laboratory license.” (Chula Vista Mun. Code, § 5.19.020.)
    UCV also argues that the Chula Vista Municipal Code prohibition on
    storefront retailers selling medicinal cannabis means the sale of medicinal
    cannabis is not commercial cannabis activity. We disagree. This is a
    qualification on the activities of storefront retailers, not a method to
    determine whether a certain prior activity by a license applicant is
    disqualifying. The distinction asserted by UCV does not exist in the Chula
    Vista Municipal Code. As the trial court found, UCV does not “identify any
    language which would exclude the sale [of] medicinal cannabis from being
    subsumed into the definition of commercial cannabis activity. The fact that
    other sections are specific to medicinal marijuana does not exclude it from
    rules which have broader application.”
    III
    The Trial Court Did Not Abuse Its Discretion
    UCV next asserts that the trial court abused its discretion by denying
    its request for judicial notice of documents concerning other rejected
    applicants that UCV obtained through a Public Records Act request. In the
    same section of its brief, it argues that the City abused its discretion because
    it did not choose the most qualified applicant and did not make “additional
    factual findings to demonstrate its reasons to reject” UCV’s application.
    With respect to the request for judicial notice, we do not agree the trial
    court’s failure to grant the request was error. “ ‘The general rule is that a
    hearing on a writ of administrative mandamus is conducted solely on the
    21
    record of the proceeding before the administrative agency. [Citation.]’
    [Citation.] Augmentation of the administrative record is permitted only
    within the strict limits set forth in section 1094.5, subdivision (e) which
    provides as follows: ‘Where the court finds that there is relevant evidence
    which, in the exercise of reasonable diligence, could not have been produced
    or which was improperly excluded at the hearing before respondent, it may
    enter judgment as provided in subdivision (f) remanding the case to be
    reconsidered in the light of that evidence; or, in cases in which the court is
    authorized by law to exercise its independent judgment on the evidence, the
    court may admit the evidence at the hearing on the writ without remanding
    the case.’ ” (Pomona Valley Hospital Medical Center v. Superior Court (1997)
    
    55 Cal.App.4th 93
    , 101 (Pomona Valley).)
    “In the absence of a proper preliminary foundation showing that one of
    the exceptions noted in section 1094.5, subdivision (e) applies, it is error for
    the court to permit the record to be augmented. [Citation.] Determination of
    the question of whether one of the exceptions applies is within the discretion
    of the trial court, and the exercise of that discretion will not be disturbed
    unless it is manifestly abused.” (Pomona Valley, supra, 55 Cal.App.4th at
    p. 101.)
    UCV asserts the trial court abused its discretion by not taking judicial
    notice of rejection letters that the City sent to other applicants and written
    decisions of the City’s hearing officers in two appeals by other applicants.
    The rejection letters all predate UCV’s hearing on June 10, 2020, while the
    appeal decisions are dated in July and August 2020. UCV’s briefing does not
    explain how these documents are relevant to the issues presented here or
    why the letters could not have been sought before UCV’s appeal to the City.
    22
    For these reasons, the trial court did not abuse its discretion by denying
    UCV’s request that it take judicial notice of the documents.7
    We also see no merit in UCV’s assertion that the City abused its
    discretion by “failing to exercise any discretion by rejecting [UCV]’s
    application without making additional factual findings to demonstrate its
    reasons to reject the application.” The City’s rejection letter stated the
    reason for its denial. UCV’s argument amounts to a request for this court to
    overrule the City’s proper exercise of its discretionary authority. That is not
    our role. (See Daily Journal Corp. v. County of Los Angeles (2009) 
    172 Cal.App.4th 1550
    , 1555 [“Although a court may order a government entity to
    exercise its discretion in the first instance when it has refused to act at all,
    the court will not ‘compel the exercise of that discretion in a particular
    manner or to reach a particular result.’ ”].)
    IV
    UCV Has Not Shown Its Due Process Rights Were Violated
    UCV argues it was deprived of a fair appeal of the City’s rejection of its
    application because the hearing officer’s advisor, Simon Silva, was a City
    Attorney and another City Attorney, Megan McClurg, served as counsel for
    the City in the proceeding. Specifically, UCV argues that the City was
    required to show evidence that it took sufficient screening measures to
    separate Silva and McClurg. UCV also contends McClurg’s representation of
    the City was unfair because she was involved in drafting the cannabis
    regulations at issue.
    7    We likewise deny UCV’s request for judicial notice of the same
    documents, and of a published list of cannabis business applicants
    downloaded from chulavista.gov.
    23
    A
    “Absent a financial interest, adjudicators are presumed impartial.
    [Citations.] To show nonfinancial bias sufficient to violate due process, a
    party must demonstrate actual bias or circumstances ‘ “in which experience
    teaches that the probability of actual bias on the part of the judge or
    decisionmaker is too high to be constitutionally tolerable.” ’ [Citation.] The
    test is an objective one. [Citations.] While the ‘degree or kind of interest …
    sufficient to disqualify a judge from sitting “cannot be defined with
    precision” ’ [citation], due process violations generally are confined to ‘the
    exceptional case presenting extreme facts.’ ” (Today’s Fresh Start, Inc. v. Los
    Angeles County Office of Education (2013) 
    57 Cal.4th 197
    , 219 (Today’s Fresh
    Start).)
    “[A] party seeking to show bias or prejudice on the part of an
    administrative decision maker [must] prove the same with concrete facts:
    ‘ “Bias and prejudice are never implied and must be established by clear
    averments.” [Citation.] Indeed, a party’s unilateral perception of an
    appearance of bias cannot be a ground for disqualification unless we are
    ready to tolerate a system in which disgruntled or dilatory litigants can
    wreak havoc with the orderly administration of dispute-resolving tribunals.’ ”
    (BreakZone Billiards v. City of Torrance (2000) 
    81 Cal.App.4th 1205
    , 1237.)
    B
    UCV argues that the City has a burden to show it took sufficient efforts
    to screen McClurg from Silva, and that it failed to do so. UCV’s argument is
    not supported by the law. Rather, the burden is on the party asserting its
    rights were violated to show bias. “[A]n agency’s participation in an
    accusatory portion of administrative proceedings need not give rise to
    constitutional concerns.” (Today’s Fresh Start, supra, 57 Cal.4th at p. 221.)
    24
    “ ‘[B]y itself, the combination of investigative, prosecutorial, and adjudicatory
    functions within a single administrative agency does not create an
    unacceptable risk of bias and thus does not violate the due process rights of
    individuals who are subjected to agency prosecutions.’ ” (Ibid.) “To prove a
    due process violation based on overlapping functions thus requires something
    more. ‘[T]he burden of establishing a disqualifying interest rests on the party
    making the assertion.’ ” (Ibid.)
    “That party must lay a ‘specific foundation’ for suspecting prejudice
    that would render an agency unable to consider fairly the evidence presented
    at the adjudicative hearing [citation]; it must come forward with ‘specific
    evidence demonstrating actual bias or a particular combination of
    circumstances creating an unacceptable risk of bias’ [citations]. Otherwise,
    the presumption that agency adjudicators are people of ‘ “conscience and
    intellectual discipline, capable of judging a particular controversy fairly on
    the basis of its own circumstances” ’ will stand unrebutted.” (Today’s Fresh
    Start, supra, 57 Cal.4th at pp. 221–222.)
    UCV does not point to any specific evidence to support its assertion
    that the hearing officer was biased against it. Instead, UCV argues that the
    City failed to establish that it sufficiently separated Silva and McClurg. This
    argument turns the law on its head, and provides no basis for this court to
    find UCV’s due process rights were violated. UCV relies on Quintero v. City
    of Santa Ana (2003) 
    114 Cal.App.4th 810
     (Quintero) to support its assertion
    that the City had the burden to show it adequately separated McClurg and
    Silva for purposes of the appeal hearing.
    Quintero, criticized in Morongo Band of Mission Indians v. State Water
    Resources Control Bd. (2009) 
    45 Cal.4th 731
    , 740, fn. 2, held that due process
    was violated by the appearance of bias where a deputy city attorney acted as
    25
    prosecutor of the plaintiff, a discharged city employee, before the city’s
    personnel board and concurrently represented the personnel board in civil
    mandate proceedings of other discharged employees. (Quintero, supra, 114
    Cal.App.4th at p. 812.) Quintero does not support UCV’s argument. Unlike
    Quintero, which involved a single attorney simultaneously representing the
    City both as a prosecutor and advisor, the two city attorneys here permissibly
    occupied separate roles. Further, UCV presented no specific evidence that
    McClurg and Silva were insufficiently screened for purposes of the hearing.
    We also decline to reach the merits of UCV’s assertion that because
    McClurg gave presentations to the City Council, including Halbert, on the
    local regulation of cannabis in 2017 and 2018, that Halbert was
    unconstitutionally biased against UCV. As an initial matter, UCV did not
    present this argument in the administrative proceedings, resulting in
    forfeiture of the argument. (Niles Freeman Equipment v. Joseph (2008) 
    161 Cal.App.4th 765
    , 787.)
    In addition, UCV has failed to provide a basis for this court to consider
    the evidence it contends shows bias. The documents UCV references are the
    minutes of four City Council meetings held on August 3, 2017, October 26,
    2017, December 12, 2017, and February 27, 2018. The documents are not
    part of the administrative record, and were presented by UCV in a request
    for judicial notice that was denied by the trial court. In this court, UCV
    relegates the evidentiary issue to a footnote in its opening brief. It states
    without any elaboration or argument that the documents are “admissible
    pursuant to Code of Civil Procedure section 1094.5, subdivision (e).”
    As discussed, this exception to the general rule that reviewing courts
    are bound to the confines of the administrative record applies only where the
    party seeking to augment the record establishes that the new evidence, “in
    26
    the exercise of reasonable diligence, could not have been produced” or “was
    improperly excluded at the hearing.” (Code Civ. Proc., § 1094.5, subd. (e).)
    UCV makes no attempt to show why it could not have included its argument
    and the documents it now relies on (all predating the hearing) in the
    administrative proceeding. Accordingly, we decline to consider this extra-
    record evidence and reject UCV’s argument that the hearing officer was
    unconstitutionally biased based on McClurg’s alleged involvement in the
    City’s cannabis regulations.8 (See Oliveira v. Kiesler (2012) 
    206 Cal.App.4th 1349
    , 1362 [It is appellant’s burden “to present an adequate record for
    review” and failure to do so requires affirmance.].)
    DISPOSITION
    The judgment is affirmed. The costs of appeal are awarded to the City
    of Chula Vista and Real Parties in Interest.
    McCONNELL, P. J.
    WE CONCUR:
    IRION, J.
    DO, J.
    8     UCV’s separate request for judicial notice here includes the minutes.
    As the basis for the request, UCV states that the documents are relevant to
    “demonstrate that the City Attorney’s Office improperly served [UCV] with
    notice of the hearing.” UCV, however, does not argue reversal is required
    based on improper notice. We deny the request for judicial notice of the
    minutes as irrelevant and on the additional grounds the documents are
    outside the administrative record.
    27