Can you sue a neighbor business for opening up competing business right next door
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Not unless it is prohibited by the landlord's rquirements in the lease, or unless it violates any city code requirements.
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Only if the business has a contractual duty not to operate next door to you, or if its landlord has a contractual duty not to lease that space to your competitors. Such clauses are common in shopping center and mall leases, but relatively uncommon elsewhere -- especially where the spaces belong to different landlords.
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Both prior answers should be helpful. I would also add that if one or both businesses are franchisees within franchise operations, there may be franchise contractual applicable issues impacting the rights.
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The right to be free of a nearby competitor arises most often in a shopping center or similar setup where multiple retail spaces are under the control of a single landlord. Shopping center leases often contain clauses protecting a tenant from the landlord's allowing a competitor. For example, a shopping center may allow only one frozen yougurt shop, or only one cell phone dealer. Otherwise, California law and policy encourages competition. Ever see a busy intersection with two, maybe three, gas stations?
Answer
Try selling better quality products and/or lowering your prices.
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