NATIONAL CITY, Calif. - Leo Hamel Fine Jewelers is suing the city of National City for $2 million. The lawsuit was filed in the San Diego Superior Court last month.
"My client has eight other locations around the county… all of which have been operating successfully," said attorney Mike McColloch, who represents the local jewelry chain.
McColloch told 10News that success took a big hit in National City where the city has a moratorium on new gold-buying businesses.
10News first reported about the ban last year after National City became worried about a massive influx of businesses looking to buy gold without any city rules or regulations for the trade.
"You're getting a beauty salon that also put a sign up: 'We buy gold,'" said National City Mayor Ron Morrison.
Morrison said the city was concerned about gold being stolen just to be sold and immediately melted down.
"You know you've got no documentation," said Morrison. "You've got no quote, unquote evidence or anything else."
The city was also worried about the aesthetics of the city.
"If you get a pawnshop on every block in your community, guess what? Your community is now defined by that business," said Morrison.
So, National City implemented a temporary moratorium on new gold-buying businesses. The moratorium has lasted more than a year.
Unfortunately for Leo Hamel Fine Jewelers, the moratorium began at the exact same time it tried opening its new National City store.
The lawsuit asks for $2 million in lost profits and $50,000 in fees and rent paid for the National City location, which never opened after the moratorium started.
"A moratorium that has been issued by the city is in our opinion, unconstitutional," said McColloch.
Morrison could not comment on the pending litigation. However, he did say the moratorium gave National City enough time to research and implement regulations for the gold-buying businesses. He expects the moratorium to be lifted in the next few weeks.