Wilkinson v. Chiwawa Cmtys. Ass'n, Non-Profit Corp.

• Citation: 327 P.3d 614,180 Wash.2d 241
• Decision Date: 17 April 2014
• Docket Number: No. 86870–1.,86870–1.
• Court: United States State Supreme Court of Washington
• Parties: Ross WILKINSON and Cindy Wilkinson; Monte Karnes and Kimberly Karnes; David Bethel and Jeanie Bethel; Darrell McLean; Jim Paulus and Kathy Paulus; Justin Hargis and Tabitha Hargis, Joe Hargis and Linda Hargis; Daniel MacIndoe and Isidra MacIndoe; David Spicer and Martha Spicer, Ted Trepanier and Ruby Akins–Trepanier, Respondents, v. CHIWAWA COMMUNITIES ASSOCIATION, a Washington Non–Profit corporation, Appellant.

180 Wash.2d 241

327 P.3d 614

Ross WILKINSON and Cindy Wilkinson; Monte Karnes and Kimberly Karnes; David Bethel and Jeanie Bethel; Darrell McLean; Jim Paulus and Kathy Paulus; Justin Hargis and Tabitha Hargis, Joe Hargis and Linda Hargis; Daniel MacIndoe and Isidra MacIndoe; David Spicer and Martha Spicer, Ted Trepanier and Ruby Akins–Trepanier, Respondents,

v.CHIWAWA COMMUNITIES ASSOCIATION, a Washington Non–Profit corporation, Appellant.

No. 86870–1.

Supreme Court of Washington,

En Banc.

April 17, 2014.

Philip Albert Talmadge, Talmadge/Fitzpatrick, Tukwila, WA, Yen B. Lam, Galvin Realty Law Group, Mountlake Terrace, WA, Emmelyn Hart, Lewis Brisbois Bisgaard & Smith, Seattle, WA, for Appellants.

Dennis W. Jordan, Attorney at Law, Everett, WA, for Respondents.

STEPHENS, J.

¶ 1 Chiwawa Communities Association (Association) appeals the trial court's grant of summary judgment to owners of homes in the Chiwawa River Pines community. Respondents Ross and Cindy Wilkinson et al. asked the trial court to invalidate a 2011 amendment to the community covenants prohibiting rental of their homes for less than 30 days. We must decide if short-term vacation rentals conflict with the covenants in place prior to 2011, if the Association validly amended the covenants to prohibit them, and if the trial court erred by striking portions of the offered evidence. We hold short-term rentals do not violate the covenants barring commercial use of the property or restricting lots to single-family residential use. We also hold the Association exceeded its power to amend the covenants when it prohibited short-term vacation rentals in 2011, and the trial court did not err by granting in part motions brought by the Wilkinsons to strike evidence. Accordingly, we affirm the trial court.¹

FACTS

¶ 2 Chiwawa River Pines (Chiwawa) is a planned residential community located in Chelan County. Clerk's Papers (CP) at 54–55. The community comprises of a mix of permanent and vacation residents. CP at 134.

¶ 3 As developer Pope & Talbot Inc. completed each of the development's six phases, it recorded a separate set of covenants that purported to establish a “general plan of development” for the community. See, e.g., CP at 55. Under the Pope & Talbot covenants, ownership of the property in Chiwawa automatically carries a right of membership in the Association. CP at 63, 67, 72, 75, 78. In 1988, a majority of the Association's members voted to consolidate the Pope & Talbot covenants into a single set of covenants governing all six phases of the development (1988 covenants). CP at 178, 186. The 1988 covenants preserved much from the earlier Pope & Talbot covenants, including the right of membership in the Association for all landowners, CP at 84, and the power “to change these protective restrictions and covenants in whole or in part” by majority vote, CP at 83. The 1988 covenants also carried over earlier restrictions on construction and land use from phases three through six, CP at 55–57, and restrictions on signage from phase two, compare CP at 63–64, with CP at 82. In 1992, the Association voted to eliminate the clause permitting construction of “one guest cottage” on Chiwawa lots, compare CP at 81, with CP at 85, but made no other material amendments. Thus, the resultant 1988/1992 covenants provide in pertinent part:

4. LAND USE.

Lots shall be utilized solely for single family residential use consisting of single residential dwelling and such out-buildings (garage, patio structure), as consistent with permanent or recreational residence. All habitable structures must be located not nearer than 20 feet to the front lot line. Structures shall be of new construction and shall not be commenced until building permit of appropriate public body is obtained....

5. NUISANCE OR OFFENSIVE USE.

No nuisance or offensive use shall be conducted or suffered as to lots subject hereto, nor shall any lot be utilized for industrial or commercial use (excepting only appropriate real estate sale signs in sale of lots, grantor further reserving to itself, its successors and assigns, the right to operate a conventional real estate sales or agency office upon an unsold lot within such plat), nor as a dump, nor shall there be kept animals or stock of any kind other than conventional, domestic pets with the exception of horses, etc. stabled on the lot for short-term recreational activities complying with non-road usage in Chiwawa River Pines, except for entrance and exit. Lot owners retaining animals must confine their animals from wandering off the lot and must maintain cleanliness of grounds to eliminate animal offensive wastes, odors, flies, etc. at all times....

6. TRASH DISPOSAL.

... No sign of any kind shall be displayed to the public view on any lot, tract or subdivision thereof in the plat, except one sign of not more than 3 feet square giving the names of the occupants of the lot, tract, or approved subdivision thereof, and one sign of not more than 6 square feet advertising the property for sale or rent.

CP at 85–86 (emphasis added). The 1988/1992 covenants remained unchanged until the Association sought to amend them in 2008 and again in 2011 to prohibit short-term rentals.

¶ 4 Chiwawa residents have rented their homes to unrelated persons on a short-term, for-profit basis for decades without controversy.² CP at 59. However, as the number of homes available for short-term rental and the frequency of rentals increased, the Association noted rising concerns among members about vacation rentals. CP at 655, 689.

¶ 5 In response to member complaints, in 2007 the Association distributed a survey to gauge interest in barring what it characterizedas “nightly rentals.” CP at 135. A majority favored such a prohibition and, in September 2008, voted to bar all rentals of less than six months as prohibited commercial uses. CP at 135–36.

¶ 6 In a predecessor case, Ross and Cindy Wilkinson and other homeowners (collectively Wilkinsons) successfully challenged the 2008 amendment in superior court. Wilkinson v. Chiwawa Cmtys. Ass'n, noted at 162 Wash.App. 1005, 2011 WL 1048625, at *1, *3, 2011 Wash.App. LEXIS 1336, at *1, *8. The trial court granted summary judgment in their favor, declaring the prohibition on rentals invalid and unenforceable. Id. at *3, 2011 Wash.App. LEXIS 1336, at *8. The trial court also fashioned sua sponte a new covenant that barred rentals of less than one month in duration. Id. at *4–5, 2011 Wash.App. LEXIS 1336, at *12. The Wilkinsons successfully appealed this judicial rewriting. Id. at *4–5, 2011 Wash.App. LEXIS 1336, at *13–14. The Court of Appeals held that the trial court lacked authority to rewrite the covenants except on motion, and approved, in dicta, the trial court's invalidation of the 2008 amendment. Id. at *4–5, 2011 Wash.App. LEXIS 1336, at *12–14. No review of the decision was sought in this court.

¶ 7 Shortly after the Court of Appeals issued its decision, a majority of the Association again voted to amend the covenants, this time to prohibit rentals “for less than one month[ or] 30 continuous days.” CP at 160–61, 173, 175 (2011 amendment). The Wilkinsons again filed suit in superior court to invalidate the 2011 rental restriction. CP at 3, 60–61. Both sides moved for summary judgment, CP at 88, 442, and the Wilkinsons additionally moved to strike portions of the evidence offered by the Association in support of its motion, CP at 906–07, 1077–80.

¶ 8 The trial court granted the Wilkinsons' motion for summary judgment in full, holding the 2011 bar on short-term rentals invalid and unenforceable. CP at 1087–89; Verbatim Report of Proceedings (Dec. 15, 2011) (1 VRP) at 34–35. The court concluded that the Pope & Talbot and 1988/1992 covenants “contemplated that there could be rentals,” and that “[t]here were no limitations on those rentals.” 1 VRP at 34. The trial court granted the Wilkinsons' motion for summary judgment, holding the 2011 amendment was invalid. 1 VRP at 35. The trial court rejected the Association's arguments that residential rentals of any duration are a “commercial” use of land and that renting a home to unrelated persons violates the single-family residential use covenant. See CP at 1087–89; 1 VRP at 35–37. The court also granted the Wilkinsons' evidentiary motions in part, striking comments from the 2007 member survey and portions of declarations by three Chiwawa residents. CP at 1101–02; 1 VRP at 35–36.

¶ 9 The Association sought direct review in this court under RAP 4.2(a)(3) and (4). See Statement of Grounds for Direct Review at 14. The Association argues that the trial court wrongly ruled that short-term vacation rentals are consistent with single-family residential uses, that a majority of Chiwawa homeowners cannot amend the governing covenants to prohibit short-term vacation rentals, and that the 2007 survey and testimony from several homeowners were inadmissible. Br. of Appellant at 13–15. This court accepted direct review. Order, No. 86870–1 (Wash. Oct. 9, 2012).

ANALYSIS

¶ 10 We review a trial court's order on cross motions for summary judgment and related evidentiary rulings de novo. Davis v. Baugh Indus. Contractors, Inc., 159 Wash.2d 413, 416, 150 P.3d 545 (2007) (citing Folsom v. Burger King, 135 Wash.2d 658, 663, 958 P.2d 301 (1998)). We will affirm the trial court's order granting summary judgment “if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.” Dowler v. Clover Park Sch. Dist. No. 400, 172 Wash.2d 471, 484, 258 P.3d 676 (2011); CR 56(c). “Here, the parties largely agree[ ] on the material facts.” Br. of Appellant at 15 n. 7.

I. Vacation Rentals Are Not Commercial Uses and Are Consistent with Single–Family Residential Use Provisions

¶ 11 The Association argues that short-term vacation rentals are inconsistent with the governing restrictive covenants prohibiting commercial use and restricting lots to single family residential use....