NEWPORT BEACH — In a move that exposes the city to another court challenge, the City Council voted unanimously Tuesday night to revoke an agreement with rehabilitation home operator Morningside Recovery.

The drug and alcohol group home company, which has seven locations in Newport Beach, repeatedly violated its contract that allowed it to operate in the city, officials said.

With its facilities potentially out of compliance, Morningside could sue the city or apply for state licenses, city officials have said. Either way, Newport may end up in court again because its group-homes law essentially prohibits companies like Morningside from running a network of state-licensed facilities.

"I guess that's just the risk we're going to have to take," said Councilman Steve Rosansky.

The council's action Tuesday was primarily fueled by Lido Isle residents, some of whom formed the activist group Maintaining Our Residential Neighborhoods, or MORN, and were present at Tuesday's meeting. They have complained that Morningside was making deliveries at odd hours, among other issues.

Last fall, the operator opened a residence on Via Lido Soud, a residential street zoned for single-family homes.

MORN has sued the city, claiming its agreement with Morningside was invalid. The group's main contention is that a rehab facility doesn't belong in that portion of the city.

Lido Isle resident Michael Brandt-Zawadski, a physician at Hoag Neurosciences Institute, spoke at the meeting. He said Morningside operates its homes like boarding houses, and that the city was giving it preferential treatment. It should be barred from neighborhoods like other such business, he said.

"I spend 60 hours [per week] of my life in a hospital environment," he said. "I would think that living in a single-family residence, I would not have to come home to a hospital environment."

The city's 2008 ordinance was designed to limit proliferation of the homes, especially in residential neighborhoods. But some rehab operators have sued, saying it conflicts with the Federal Fair Housing Act of 1988, which prevents discrimination against people who are in a "protected class."

Recovering drug addicts and alcoholics, courts have found, fall into this classification, as they are considered "disabled" by their addictions.

Newport has spent close to $3 million defending its law and related issues in court.

To avoid more litigation, the city reached a settlement last year with Morningside that stipulated how many beds the company could keep in town. It also imposed limits on noise, second-hand smoke and other matters affecting neighbors.

Morningside attorney Mary Helen Beatificato contends that the company didn't violate the agreement, and that it has complied with city requests to correct problems.