Filed 2 / 7 / 24 Vertical Web Ventures v. Arrowhead Lake Assn. CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

VERTICAL WEB VENTURES, INC. et al.,

Plaintiff s and Respondent s ,

v.
ARROWHEAD LAKE ASSOCIATION et al., Defendants and Appellants. G062727 (Super. Ct. No. CIVSB2120604)

O P I N I O N

Appeal from a n order of the Superior Court of San Bernardino County,
Gilbert G. Ochoa, Judge. Affirmed. Appellant Arrowhead Lake Association ’s Request
for Judicial Notice. Granted in part and denied in part

. Respondents’ Request for
Judicial Notice. Denied.

Best Best & Krieger, Scott W. Ditfurt h , Gregg W. Kettles and Dustin J. Nirschl for Defendant and Appellant Arrowhead Lake Association.2 Law Office of D. Wayne Leech and D. Wayne Leech for Defendants and Appellants Gary Clifford, Robert Mattison, Alan B. Kaitz, Eran Heissler, Anthony O’Keefe and Christopher Wilson.

Arent F ox Schiff, John P. Zaimes, Sara T. Schne ider , Jessica B. Do and Neil
M. Soltman for Plaintiffs and Respondents.

* * * In 1964, the development company that owned Arrowhead Lake (Lake) , along with the entity that owned the Lake’s shoreline , entered into an agreement granting
the surrounding Arrowhead Woods community property owners “[ t ] he right for themselves, their lessees and houseguests” access to and use of the Lake and its surrounding area for recreational activities (1964 Agreement or “ 64 Agreement” ). The
1964 Agreement also provided the owners of the Lake and shoreline the right “ to promulgate and enforce reasonable regulations designed to promote the safety, health, comfort, and convenience of persons in or upon the Lake or in the vicinity thereof with respect to the conduct of such activities.”

In 1975, defendant Arrowhead Lake Association ( Association) acquired the
Lake and shoreline and has since function ed to manage operations and improvements on
and around the Lake

. In 2020, in response to the short

- term rental market’s “internet

fueled go l d rush , ” t he Association amended its bylaws to b ar all short

- term renters, defined as a person who rent s a home in Arrowhead Woods for less than a 30

- day

- term , from accessing the Association’s property

. The Association s imilarly bar s Arrowhead Woods property owners who are not members of the Association from Lake access.

Arrowhead Woods property owners Vertical Web Ventures, Inc., Jackie McKinley, Christopher Lee, and Seline Karak a ya (collectively, plaintiffs) sued the
Association and some of its directors and employees contending, inter alia, the bylaw s amendment and the Association membership requirement for Lake access violate the
terms of the 1964 Agreement

. Shortly after initiating their lawsuit, p laintiffs filed a3

motion for a preliminary injunction. In a 12

- page ruling, the trial court granted the
motion to the ext ent it sought to enjoin the Association from barring Lake access to
short

- term renters who qualify as lessees and to property owners who are not Association
members. We affirm. The trial court did not err by concluding plaintiffs established a
likelihoo d of prevailing on the merits of claims premised on the contention the
Association ’s amendment to its bylaws violated property owner s’ rights granted by the
1964 a greement . The trial court did not abuse its discretion by determining the harm plaintiff s wo uld suffer unless the court issued a preliminary injunction outweigh s the
harm the Association and individual defendants would suffer from the imposition of a preliminary injunction.

FACTS 1

In 1964 , the Arrowhead Woods Property Owners Association, the Lake Arrowhead Development Co., and the Arrowhead Mutual Services Co. entered into the 1964 Agreement “to determine and establish certain rights in the plaintiffs and the property owners of lands in Arro whead Woods in the reserve strips [ shoreline surrounding the Lake] , reserve strip additions, and the Lake.” The Agreement provided it

wa s binding on all “ successors, lessees and assigns of the parties. ”

T he 1964 Agreement states in relevant part : “ Dev elopment Co. and Service Co. hereby grant without warranty express or implied to all owners of lots in
Arrowhead Woods which at any time heretofore have been owned by Service Co

. , Development Co., Los Angeles Turf Club, Inc., Arrowhead Lake Corporation or Arrowhead Lake Company, and to the successors and assign s of such owners, and subject to all recorded conditions, restrictions and reservations, the following non

- exclusive

1 Th is summary of facts is based on the facts cited by the trial court in its ruling on the motion for preliminary injunction.4

rights, easements and servitudes in, over, upon and with respect to the reserve str ips and reserve strips additions, and the Lake, viz:

“(a) The right for themselves, their lessees and house guests to use the strips for private park and reasonable recreational purposes, and for ingress and egress by foot travel, but not for commercial o r business purposes; [¶]

. . . [¶]

“ (c) The right for themselves, their lessees and house guests to use the Lake for reasonable recreational purposes, including but not limited to boating, fishing, swimming and bathing , but not for business or commercial purposes, and subject to the rights expr essed in paragraph 6 of this instrument, [ 2 ] and the right in D evelopment Co.
and Service Co

. or either of them to promulgate and enforce reasonable regulations designed to promote the safety, health, comfort and convenience of persons in or upon
the Lake or in the vicinity thereof with respect to the conduct of such activities.” (Italics added.) In 1975, the Association purchased the Lake and its shoreline (reserve strip s )

. The Association was “ formed with the specific purpose to ‘provide nonprofit

re creational facilities and activities on and around Lake Arrowhead, exclusively for the use and enjoyment of the owners of the real property in Arrowhead W oods, their families, and guests.’” The Association “does not own or control the real properties
with in Arrowhead Woods.” Arrowhead Woods property owners are not required to belong to the Association. (Evidence was presented that only half of such property owners are Association members.)

In 2020, the Association amended its bylaws at a rticle II, s ecti on C (Section C) to preclude access to the Association’s property (the Lake and the reserve

2 Paragraph 6 of the 1964 Agreement entitles the Lake’s owners “ to charge lot owners reasonable fee s for permitting piers and docks to be located and kept on the strips

. . . and/or the Lake ” and to charge reasonable fee s for “the licensing of boats to be used on the Lake and for rental s l ips.”5

strip s ) by short

- term ren t ers , defined as those who rent a home within Arrowhead Woods
for less than 30 days. The Association also took the position a person is not permitted access to the Association’s property , even if an Arrowhead Woods property owner , unless that person is a member of the Association.

PROCEDURAL HISTORY

I.
T HE F IRST A MENDED C OMPLAINT Plaintiff s filed a first amended complaint a gainst the Association and
individual defendant s Gary Clifford, Robert Mattison , Alan B. K a itz, Brian C. Hall, Eran
He issler, Anthony O’Keefe, and Christopher Wilson. 3 The first amended complaint
contain s claims for brea ch of the 19 64 Agreement , infringement of property rights, breach of the covenant of good faith and fair dealing, interference with easement, declaratory relief, injunctive relief, race and national origin discrimination, gender
discrimination and harassme nt, 4 retaliation in violation of public policy, and private and public nuisance

. In the prayer for relief, pla intiffs request declaratory relief, injunctive relief, damages , and reasonable attorney fees.
II.
P LAINTIFFS ’ M OTION FOR A P RELIMINARY I NJUNCTION

3 Defendant Hall did not appeal from the order granting the preliminary injunction. We hereafter refer to Clifford, Mattison, K a i t z , Heissler, O’Keefe, and Wilson collectively as “the individual defendants

. ” We refer to the Association and the individual defendants collective ly as “defendants.”

4 The first amended complaint alleges the defendants’ motivations in restricting access to the lake and the reserve strips “are entirely nefarious, and are grounded in racial and ethnic origin bias and misogyny.” Such allegations, which have been strongly disputed by defendants , are irrelevant to the issues of contractual interpretation presented in this appeal and are not further addressed in this opinion.6 Plaintiffs moved for a preliminary injunction enjoining the Association, its employees, agents, and/or anyone acting on its behalf from: “ 1. Enforcing Article II, Section C of the [Association]’s Bylaws or any other regulation pro hibiting Arrowhead Woods’ guests and lessees from accessing Lake Arrowhead (the ‘Lake’) and its surrounding shoreline area (‘Reserve Strips’) as permitted by paragraph 3 of the 1964 Written Agreement entered into between the Arrowhead Woods property owners , the Lake Arrowhead Development Co., and Arrowhead Mutual Service Co. ( ‘ 64 Agreement’); [¶] 2. Restricting Arrowhead Woods property owners , their guests and their lessees who are not members of the [Association] from accessing the Reserve Strips
and the Lake permitted by paragraph 3 of the ‘ 64 Agreement; [¶] 3. Enforcing rules that violate paragraph 3 of the ‘ 64 Agreement by unreasonably and arbitrarily limiting the number of radio frequency identification (‘RFID’) cards issued to Arrowhead Woods propert y owners; [¶ ] 4. Enforcing rules that violate paragraph 3 of the ‘ 64 Agreement by unreasonably requiring Arrowhead Woods property owners to register their guests by name; [¶] 5. Permitting [Association] enforcement personnel to stop and demand that
Arrow head Woods property owners, their lessees, and their guests provide identification; [and] [¶] 6. Erecting any new fences or gates restricting access to the Lake and the Reserve Strips.” Plaintiffs also prayed for an order that the Association “remove all new fences and gates and RFID access sensors installed in 2020 and 2021.” The motion was based on the declarations of Karakaya and Doug Miller and plaintiffs’ request for judicial
notice. Defendants filed oppositions to the motion for a preliminary in junction

.7 III. T HE T RIAL C OURT G RANTS IN P ART AND D ENIES IN P ART THE M OTION FOR A P RELIMINARY I NJUNCTION The trial court granted in part the motion for a preliminary injunction , stating: “IT IS HEREBY ORDERED that Defendant Arrowhead Lake Association

. . . is enjoined from:

“1. Enforcing Article II, Section C of the [Association]’ s Bylaws or any

o ther regulation prohibiting Arrowhead Woods’ vacation guests an d lessees f r om accessing th e Lake and the Reserve Strips as permitted by paragraph 3 of the ‘ 64 Agreement; “2. Restricting Arrowhead Woods property owners, their guests and their
lessees who are not members of the [Association] from accessing the Reserve Strips and the Lake as permitted by paragraph 3 of the ‘ 64 Agreement;

“Pursuant to Code of Civil Procedure § 529, Plaintiffs shall post a $100, 0 00.00 bond. The Preliminary Injunction shall become effective upon securing
Bond. Th is Preliminary Injunction shall remain in full force and effect until the earlier of the following occurs: (i) a final judgment is ordered in this action; or (ii) further Court order following a noticed motion or stipulation by the parties.” Plaintiffs posted a surety
bond. The plaintiffs’ motion was denied as to the ir request s for an order enjoining
the Association from “[ e ] nforc ing rules that violate paragraph 3 of the ‘ 64 Agreement ” by “ unreasonably and arbitrarily limiting the number of [ radio frequency identification (‘RFID’) ] cards issued to Arrowhead Woods property owners ” ; “ unreasonably requiring Arrowhead Woods property ow ners to register their guests by name ” ; “[p] ermitting [the Association] enforcement officers to stop and demand that Arrowhead Woods property owners, their lessees, and their guests provide identification ” ; and “[e] recting any new fences or gates restricting access to the Lake and the Reserve Strips.” The trial court also8

denied plaintiffs’ motion as to their request for an order requiring the Association to “remove all new fences , gates , and radio frequency identif ication (‘ RFID ’) access sensors installed in 2020 and 2021.”

The Association and the individual defendants appealed ; the plaintiffs did not appeal

. The Association and the individual defendants have retained separate appellate counsel and have filed se parate briefs in this appeal. REQUEST S FOR JUDICIAL NOTICE

I.
W E G RANT IN P ART AND D ENY IN P ART T HE A SSOC IATION ’ S

R EQUEST FOR J UDICIAL N OTICE The Association has requested we take judicial notice under Evidence C ode
section 452 of (1) an Airbnb online fo rm entitled “ Terms of Service ” ; (2) a certified copy of the grant deed , recorded on December 11, 1935 in San Bernardino , which the
Association contends is within McKinley’s Arrowhead Woods property’s chain of title ; (3) legislative history of Civil Code section 1940 and former Government Code section
37101 .1 ; and (4) the San Bernardino County Code of Ordinances chapter 84.28. Plaintiffs filed an opposition to the request.

A recorded deed is an official act of the executive branc h, of which this court may take judicial notice. (Evid. Code, §§ 452, subd. (c), 459, subd. (a).) We therefore grant the request to take judicial notice of the certified copy of the recorded grant deed. Legislative materials underlying the enactment of a statute relevant to our analysis are appropriate matters for judicial notice o n appeal. (Evid. Code §§ 452, subd. (c), 459, subd. (a); Cal. Rules of Court, rule 8.252(a).) For the reasons we explain post , the legislative history of Civil Code section 1 940 and former Government Code
section 37101

. 1 are not relevant to the resolution of the issues in this appeal. (Evid. Code, § 350.) We therefore deny the judicial notice request of the proffered legislative9

history. For the same reason, we deny the req uest as to the Airbnb Terms of Service
online form and as to portions of the San Bernardino County Code of Ordinances

. ( Ibid. )
II.
W E D ENY P LAINTIFFS ’ R EQUEST FOR J UDICIAL N OTICE Plaintiffs filed a request pursuant to Evidence Code section s 452, subdivisions (c) and (h) , and 459, and pursuant to rule 8.252 of the California Rules of Court, that we take judicial notice of the following : (1) Black’s Law Dictionary ’s
definition for the term “‘lessee’”; (2) Black’s Law Dictionary ’s definition f or the term “‘lease’”; (3) Miller and Starr’s definitions for the terms “ ‘ lessee ’ ” and “‘lease’”; (4) the California Department of Real Estate’s definition for “‘guest’”; and (5) San Bernardino County Code of Ordinances section s 84.28.030, 84.28.040, 810.0 1.100 , 82.04.040, and
82.05.040

. We deny plaintiffs’ requests for judicial notice as those documents are irrelevant to the resolution of the issues on appeal. (Evid. Code, § 350.)

DISCUSSION
I.
G OVERNING L EGAL P RINCIPLES AND S TANDARD OF R EVIEW “‘“As its name suggests, a preliminary injunction is an order that is sought by a plaintiff prior to a full adjudication of the merits of [ the plaintiff’s] claim. [Citation.] To obtain a preliminary injunction, a plaintiff ordinarily is required to prese nt evidence of the irreparable injury or interim harm that [ the plaintiff ] will suffer if an injunction is not issued pending an adjudication of the merits.” [Citation.] “In deciding whether to issue a preliminary injunction, a trial court weighs two int errelated factors: the likelihood the moving party ultimately will prevail on the merits, and the relative interim harm to the parties from the issuance or nonissuance of the injunction.”’ [Citation.]

“The ruling on a motion for preliminary injunction g enerally rests in the sound discretion of the trial court and will not be disturbed on appeal absent a showing of10

abuse. [Citation.] ‘“Discretion is abused whenever, in its exercise, the court exceeds the bounds of reason, all of the circumstances before it being considered”’ [citation], or when the court’s ruling ‘is “so irrational or arbitrary that no reasonable person could agree with it”’ [citation].” ( Iloh v. Regents of University of California (2023) 87 Cal.App.5th 513, 522.)

“ ‘ [W]ith respect to questions of construction of statutes and contracts not involving assessment of extrinsic evidence, our standard of review is de novo. ’ [Citation.] ‘“ ‘ [W]hen reviewing the interpretation and application of a statute where the ultimate facts are undisput ed ’ ” an appellate court exercises its independent judgment in determining whether issuance or denial of injunctive relief was proper. ’ ” ( Western Growers Assn. v. Occupational Safety & Health Standards Bd. (2021) 73 Cal.App.5 th 916, 930.)
II.

P LAINTIFFS A R E L IKELY TO P REVAIL ON THE M ERITS
In their opening brief s , de fendants challenge the trial court’s ruling plaintiffs were likely to prevail in establishing Section C of the Association bylaws (excluding short

- term renters from Association property) and the Association membership rule ( barring non

- Association members from Association property ) violate
the grant of rights to property owners and their lessees in the 1964 Agreement

. For the

reason s we explain, the trial court did not err

.

A. The Trial Court Did Not Abuse Its Discretion by Concluding Three Arrowhead Woods Property Owners Could Seek Injunctive Relief

In their opening brief, the individual defendants preliminarily argue under the 1964 Agreement, “injunctive relief requires application by 3 Arrowhead Woods property owners” but “Plaintiffs have not submitted admissible evidence that at least 3 of
them own real property in Arrowhead Woods, mandating that the preliminary injunction11

be reversed.” (Boldface omitted.) Section 4 of the 1964 Agreement provides in relevant part: “Any act or omission inconsistent with said easements and servitudes or any of
them and any violation of breach of any right, condition and/or restriction expressed herein may be prevented by injunction and such remedy may be availed of by not less than three owners of lots or portions of lots in Arrowhead Woods.”

The trial court addr essed and rejected th e argument th is contractual prerequisite for seeking injunctive relief was not satisfied , stating : “Now, the individual Defendants argue Plaintiffs fail to establish they are owners in Arrowhead Woods. However, Miller attests that he is the owner of Plaintiff Vertical, and Vertical owns property in Arrowhead Woods since November 2017

. . . . Similarly, Karakaya attests to owning property in Arrowhead Woods since 2018

. . . . Her statement is verified by [the Association]’s RJN [(reque st for judicial notice)] of her Grant Deed

. . . . Lastly, the [Association]’s RJN includes McKinley’s Grant Deed showing she is also an owner in
the Arrowhead Woods area

. . . . There appear s to be 3 owners.”

The individual defendants mention in the ir opening brief the trial court overruled some of their evidentiary objections regarding “the Plaintiff’s declarations regarding their ownership of property in Arrowhead Woods,” but they do not argue , or discuss how, the trial court might have abused its discretion in overruling any such objections. They do not explain how the evidence cited by the trial court in support of its factual findings is insufficient to show three p laintiffs own property in Arrowhead Woods

so as to satisfy the ownership requirem ent of section 4 of the 1964 Agreement required to seek injunctive relief. We find no error.

B

. Rules of Contract Interpretation

Review of t he trial court’s determination requires the application of the traditional rules of contract interpretation. ( Mo untain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5 th 744, 752.) “ Accordingly, we first consider the mutual12

intention of the parties at the time the contract

. . . w as formed. (Civ. Code, § 1636.) Our initial inquiry is confined to the w riting alone. ( Id. , § 1639; [citation] .) ‘ “ The ‘ clear and explicit ’ meaning of these provisions, interpreted in their ‘ ordinary and popular sense, ’
unless ‘ used by the parties in a technical sense or a special meaning is given to them by
usage ’ ([Civ. Code], § 1644), controls judicial interpretation. ( Id. , § 1638.) Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning. [Citations.] ”’ [Citations.] At the same time, we also recognize the

‘ interpretational principle that a contract must be understood with reference to the
circumstances under which it was made and the matter to which it relates. (Civ. Code, § 1647). ’ ” ( Ibid

. ; see Gilkyson v. Disney Enterprises, Inc

. (2021) 66 Cal.App.5 th 90 0, 916 [ “ [t]he fundamental goal of contract interpretation is to give effect to the mutual intention of the parties as it existed at the time they entered into the contract , ” which “intent is interpreted according to objective, rather than subjective , criteria”] .)

C. Overview of Relevant Caselaw Distinguishing Lessees, Tenants, and Lodger s

Applying the rules of contractual interpretation in our review of the preliminary injunction, we, like the trial court, must determine w hat the parties to the
196 4 Agreement meant in their use of the term “lessee s

. ” That term is not defined in the 1964 Agreement itself.

In Beckett v. City of Paris Dry Goods Co . (1939) 14 Cal.2d 6 3 3, 636, a case decided about 25 years before the 1964 Agreement, the California Sup reme Court
defined a lease as follows : “ A lease is both a contract and a conveyance; under such an agreement there are rights and obligations based upon the relationship of landlord and tenant as well as upon the contractual promises. [Citations.] It is well recognized that no particular legal terminology is required in the making of a lease, but it is essential that the instrument show an intention to establish the relationship of landlord and tenant. ” Citing
Becke t t v. City of Paris Dry Goods Co. , the appellate court in O’Shea v. Claude C. Wood13

Co. (1979) 97 Cal.App.3d 903, 909

– 910 explained: “A lease must include a definite description of the property leased and an agreement for rental to be paid at particular times during a specified term. Where one goes into possession of the premises under a contract containing an ambiguous or uncertain description of property to be occupied and pays the stipulated rent, it will be enforced as a lease if the parties acted upon it as relating to particular premises.”

“ The chief distinction between a lodger and a tenant lies in the character of possession. A ‘ lodger ’ has only the right to use the premises, subject to the landlord ’ s retention of control and right of access. A ‘ tenant ’ has exclusive legal pos session of premises and is responsible for their care and condition. When premises are under the direct control and supervision of the owner and rooms are furnished and attended to by him, he or his servants retaining the keys, a person renting such a roo m is a lodger and

not a tenant .” ( Green v. Watson (1964) 224 Cal.A pp .2 d 184, 190 , citing Stowe v. Fritize Hotels, Inc. (1955) 44 Cal.2d 416, 421 ( Stowe ) .)

D

. The Trial Court’s Ruling on Section C of the Association’s Bylaws

In its ruling, the trial court stated the first question presented by the motion for a preliminary injunction was whether Section C , which preclud es all short

- term

renters access to the Association’s property , runs afoul of the terms of the 1964 Agreement. The trial court concluded plaintiffs are likely to establish Section C breach es the 1964 Agreement for the following reasons :

“ [T] he 64 Agreement provided access to the Lake and Reserve Strip by Arrowhead Wood owners, their lessees , and their houseguests . Does a lessee include a
short

- term renter? Plaintiffs contend it does. Defendants contend short

- term renters are akin to hotel guests and are not, and reference that the County treats short

- t erm renters as transients. But, the issue is not how the County defines short

- term renters for purposes of regulating and licensing owners whose homes are used for short

- term rentals. Th e issue14

is the construction and meaning of lessee within the 64 Agreement at the time of the contract. ( Civ. Code, § 1636.)

“Under ordinary meaning, lessee means a person who has an agreement that allows the use of a house for a period in exchange for payment

. . . . A lease is a contract by which one conveys real estate, equipment, or facilities for a spec ified term and a specified rent

. . . .

“ Based on the above definitions, a short

- [term] renter is a lessee

.

“ Now, case law makes a distinction between a tenant and lodger. ‘A

“ tenant ” has exclusive legal possession of premises and is responsible for their care and condition. A “lodger” has only the right to use the premises, subject to the landlord’s retention of control and right of access to them. To make one a tenant, as respects an owner’s liability for injuries sustained by [the] occupant on the premises, he must have exclusive possession and control. [ Citation.] When premises are under the direct control and supervision o f t h e owner and rooms are furnished and attended to by him, he or his servants retaining the k eys to them, a person renting such a room is a lodger and not a tenant. [Citation.]’ ( Stowe [ , supra ,] 44 Cal.2d [at p.] 421.)

“Under Stowe , if the owner of the home had the right to access the house
while the sho rt

- term renter was present or came in daily (like with a hotel) to clean up and make the beds, then the renter is a lodger. But i f the owner loses the right to access
and contro l the home while the short

- term renter is present and the short

- term renter is responsible for the daily care of the home while in rent, then the short

- term renter is a

tenant. “Applying that here, a short

- term renter would fall under as a tenant versus a lodger. The short

- term renter obtains exclusive access to the home during th e short

term stay with all obligations to maintain the premises during that stay. The short

- term lessees here are not lodgers at a bed and breakfast within the Arrowhead Woods.15 “Additionally, the 64 Agreement does not limit the term of any lease. This

w ould support the 64 Agreement contemplates any person who is allowed exclusive use
of Arrowhead Woods’ property for any period , regardless of how short that period may be, is a lessee.

“Defendants also contend the use by short

- term renters equates to a bu siness or commercial use that is precluded by the 64 Agreement. However, the fact a business or commercial transaction may exist between the Arrowhead Woods’ property
owner and the short

- term renter in the transaction to rent the property that does not eq uate to the renter using the Lake or Reserve Strip in a commercial or business transaction.

“Because of the above, Plaintiffs have a likelihood of establishing the preclusion of the [

Association ] and Individual D efendants of short

- term renters from use of the Lake and Reserve Strip is a breach of the 64 Agreement .” (Italics in original.)

E

. Section C Broadly Bars Access to All Short

- term Renters in Violation of the Terms of the 1964 Agreement

Plaintiffs argue the trial court correctly concluded short

- term renters as defined in Section C qualify as lessees under the 1964 Agreement. Defendants contend
short

- term renters are never lessees, but lodgers , if not transients, who do not qualify for
Lake access under t he Agreement.

Section C of the Association’s b ylaws, entitled “Short Term Rentals”

states: “ The clients of [Association] members who rent their homes in Arrowhead
Woods for less than a 30

- day period (‘Short Term Renters’) cannot access Lake Arrowhead, th e [Association] Beach Clubs, the [Association] trails, any other [Association] facility and/or any dock on Lake Arrowhead owned by any [Association] member renting a home in Arrowhead Woods to the Short Term Renter.” Under Section C, those renters who are precluded from Lake access are determined solely by the length of their stay in Arrowhead Woods ( i.e. , less than 30 days). While the length of a renter ’ s16

stay might shed light on whether the renter is properly classified a lessee or a lodger/transient under the Agreement , d efendants have not cited any legal authority contemporaneous with the 1964 Agreement , and we have found none, showing the length
of a renter’s sta y is determinative of that classification.

Significantly, Section C does not distinguish between short

- term renters who are given exclusive legal possession of premises and are responsible for their care
and condition from those who have only the right to use the premises, subject to the landlord’s retention of control over them . (See Stowe , supra , 44 Cal.2d at p. 421.) Nor
does Section C differentiate between short

- term rental agreements by which the property
owner has the right to access the property “ while the short

- term renter wa s present ” or to

“ c [o] me in daily (like with a hotel) to clean up and make the beds ” from those by which
the property owner loses the right to access the home while the short

- term renter is present , vesting in the renter the responsibility for the daily care of the home “ while in

rent .” Under Section C, Lake access would even be denied to a short

- term renter who signed a lease, so long as the lease was for a duration of less than 30 days. 5

Consequently, Section C casts a wide net . It is broadly written to deny
Lake access to renters who enter rental agreements for a period of less than 30 days
which otherwise contain terms entirely cons istent with a lease , alongside short

- term

renters who may be properly characterized as lodgers or transients instead of lessees within the meaning of the 1964 Agreement

. To the extent Section C denies access rights to renters in the former category, it br eaches the 1964 Agreement’s grant of such rights.

5 Like the trial court, we look to legal authority like Stowe , supra , 44 Cal.2d 416 that preceded t he 1964 Agreement to discern the contracting parties ’ intent in using the term lessee in that agreement. In light of the dramatic changes that have taken place in the short

- term rental market since that time and particularly in the last decade, we questio n how Stowe might be applied in characterizing short

- term rentals in the present day. We do not reach this question because the issue presented in this appeal is limited to determining whether plaintiffs are likely to prevail on their breach of contract c laims concerning the 1964 Agreement.17 In its opening brief, the Association argues Section C does not violate the 1964 Agreement because it constitutes a reasonable regulation , as expressly authorized by the 1964 Agreement , “ to promulgate and enforce reasonable regulations designed to promote the safety, health, comfort, and convenience of persons in or upon the Lake or in the vicinity thereof with respect to the conduct of such ac tivities.” A rule stripping a category of individuals of their right under the 1964 Agreement to Lake access cannot be
reduced to constituting a m ere regulation designed to promote the safety, health, comfort,
and convenience of the recreation activities of persons enjoying the Lake. Otherwise, the power conferred under the Agreement for the Association (as a successor in interest to the contracting parties ) to make reasonable regulations to promote Lake activities could
be further used to deprive propert y owners , their long

- term lessees , and their houseguests
of the ir rights to enjoy the Lake themselves ; such a “regulation” would not be reasonable in light of the 1964 Agreement’s express grant of Lake and reserve strips access rights

.

The Association also argues : “ Because a determination of whether an occupant is a lessee or lodger has a variety of implications, California courts apply one of two tests to determine occupant status. California courts have more recently and consistently applied the length of stay test, particularly to determine tax treatment and occupant rights. For instance, a tenant

—unlike a lodger

— is entitled to statutory notice before a landlord commences eviction proceedings. (See, e.g., Code Civ. Proc., § 1161.) Section 1161 excludes, as tenants, ‘ those persons whose occupancy is described in subdivision (b) of Section 1940 of the Civil Code. ’ (Code Civ. Proc., § 1161, subd. (5).) Section 1940, subdivision (b) expressly excludes ‘ transient occupancy

. . . wh en the transient occupancy is or would be subject to tax under Section 7280 of the Revenue and
Taxation Code ’ and ‘ [o]ccupancy at a hotel or motel where the innkeeper retains a right
to access and control

. . . ’ (Civ. Code, § 1940, subd. (b)(1) , (2).) ”

As discussed ante , this appeal does not present a question of statutory interpretation, but of contractual interpretation. How California statutes define tenants,18

lodgers , and transient occupants , without reference to the state of the law in 1964 , is
irrele vant to interpreting the contracting parties ’ intent as to the scope of those they intended to protect as “lessees” in the 1964 Agreement.

Civil Code s ection 1940 was not added until 1976 , and Revenue and Tax
Code section 7280 , which authorizes a city and/or county to tax “ the privilege of occupying a roo m

. . . in a hotel, inn , tourist home or house, motel , or other lodging unless the occupancy is for a period of more than 30 days , ” was not effective until December 8, 1971

. In its re quest for judicial notice discussed ante , t he Association
offered legislative history showing Revenue and Tax Code section 7280’s predecessor (former Government Code section 37101.1) , which contained essentially the same content as section 7280, was passed about a year before the 1964 Agreement. But there is nothing in the record to suggest the parties to the 1964 Agreement were aware of the new legislation permitting a tax on defined transient occupancy or that it had any effect

on their intent in using the term “lessee” in the Agreement

.

With regard to lodgers, Civil Code section 1946.5, subdivision (c) (added in 1986) provides: “As used in this section, ‘lodger ’ means a person contracting with the owner of a dwelling unit for a room or room an d board within the dwelling unit personally occupied by the owner, where the owner retains a right of access to all areas of the dwelling unit occupied by the lodger and has overall control of the dwelling unit.”
The statut ory definition makes no referenc e to the duration of stay

— which is Section C’s sole criterion for excluding Lake access

.

In its opening brief, the Association argues the trial court erred by refusing to take judicial notice of covenants, conditions, and restrictions (CC&R’s) that applie d to the property owned by plaintiff McKinley by virtue of a 1935 recorded grant deed. The Association argues the relevant portion of those CC&R’s show they “barr[ed] transient uses” on McKinley’s property and 100 other lots in Arrowhead Woods, quoting th e CC&R’s: “‘[U]se [on the subject lots] is also limited by the specific condition that on19

said premises no store, business or profession of any kind shall be maintained or carried on; that no tenement house, hotel, boarding and/or lodging house , or any ce sspool, vault or privy shall be erected, built or used.’” (Italics in original.)

Even if the trial court erred by refusing to take judicial notice of the CC&R’s, any error was harmless because the quoted portion of the CC&R’s beg s the question of what the parties to the 1964 Agreement intended the term “lessee” to mean in the context of the restrictions Section C imposes on renters who rent for less than 30 days. Nothing in the cited portion of the CC&R’s suggest s subject property owners were
restricte d from renting their homes for any particular duration of time , e.g. , for a period less than 30 days. The portion of the CC&R’s relied upon by the Association contain s no temporal requirement in addressing permitted uses of the property.

In its opening brief, the Association also argues “[t]he emergence of internet sites like Airbnb and VRBO (Vacation Rentals by Owner) have led to many California homeowners operating their homes as short vacation rentals.” It further

argues: “The negativ e impacts of STRs [short

- term rentals] have been documented in a number of judicial decisions reviewing local community efforts to regulate or outright prohibit STRs. The California cities of San Francisco, Buena Park, and Santa Monica
found that ordinances banning or restricting STRs were justified in part to ensure the long term availability of housing stock

. . . . The City of Carmel, California found that an ordinance restricting STRs was justified because STRs weaken community ties, and
increa se traffic, noise, and demand on parking and public services

. . . . Santa Monica found that an ordinance banning STRs was justified in order to help preserve the

‘ cultural, ethnic, and economic diversity of its resident population. ’

. . . [¶] Communities throughout California have responded to the negative impacts of STRs.

. . . Restrictions against STRs have been repeatedly upheld by the courts. ”

All but one of the cases cited by the Association in support of its argument
involve a challenge to an or dinance passed by a local governing body. This appeal does20

not address, much less affect, the ability of local government to address concerns surrounding the increasing popularity of short term rentals.

The Association cites Mission Shores Assn. v. Phei l (2008) 166
Cal

. App.4th 789, 798 as an example of an appellate court upholding a homeowners
association ’s “ restriction on short term rentals enacted to ‘ ensure that the [residential community] property would not become akin to a hotel. ’ ” ( Id. at p. 795.) That case
however is inapposite because it involved a challenge to the procedure requisite to amending a homeowners association’s declaration of covenants, conditions , and
restrictions. ( Id. at p. 79 2.)

Citing a n online copy of an Airbnb “ Terms of Service ” agreement ( because
some or all plaintiffs asserted they had used Airbnb in renting out their homes ) , the Association argues “[e]ven under the ‘character of use’ test, the Bylaw Amendment does

not conflict with the 1964 Agreement.” The Association argues the terms in th e Airbnb agreement are not like those of a lease , as the terms of the former agreement refer to the

“ ‘ A ccommodation R eservation ’ ” as “ ‘ a limited license to enter, occupy, and use the
Accommodation ’ ” and further state t he property owner retains the right to re

- enter the
Accommodation under certain circumstances (including when it is reasonably necessary)

. (Italics added.)

The Association ’s argument is no t supported by any evidence any plaintiff

ever used th at form service agreemen t or that any of the short

- term renters of their homes were subject to similar terms. To the contrary , as t he individual defendants in their opening brief acknowledge , “[p]laintiffs failed to provide any of their STR agreements to the Court, which they easily could have done, or present any facts in a declaration as to how their STR businesses operated.”

We agree the record does not come close to containing a complete picture
of the nature and terms of the short

- term rental agreements entered into by plaintiffs or other property owners in Arrowhead Woods. The record does not show the variety of21

such agreemen ts or the extent to which short

- term renters are more akin to lessees versus lodgers or transient occupants. Additionally, the 1964 Agreement did not define the term “lessee , ” and established law at the time th at a greement was entered requires a rather fa ct specific analysis for determining whether a particular renter is a lessee versus a lodger or
transient

. A more developed factual record on the types of Arrowhead Wood s short

- term rental agreements is not necessary at this stage of the litigation for the
resolution of this appeal. As discussed ante , our review is limited to determin ing whether the trial court correctly concluded plaintiffs established a probability of prevailing on its
claims based on breach of cont ract

. As Section C categorically bar s all short

- term renters from Lake access , regardless of the nature and non

- temporal terms of their respective rental agreement s , we agree with the trial court plaintiffs have succe eded in showing
Section C , as written , breaches the 1964 Agreement by violating rights granted in it

.

F. The Association’s Membership Rule

As to the Association’s rule conditioning a property owner’s Lake access on active membership in the Association , the trial court ruled:

“The [Association] is of the position that, unless a member, no access is allowed of its property even if an owner of an Arrowhead Woods property

. . . . The
reason offered is because the [Association] can only enforce its safet y rules, Bylaws, and governing documents against members

. . . .

“The offered reason may be reasonable but is counter to the language of the 64 Agreement. Again, the 64 Agreement provides all Arrowhead Woods’ owners, their lessees, and their guests with the right to access and use, for recreational purposes, the Lake and Reserve Strip. Nothing in such language indicates or requires the owner must
first be a member of the organization holding title to the Lake and Reserve Strip.22 “Defendants point to the [fact the] 64 Agreement provides the Lake and Reserve Strip owner may promulgate and enforce reasonable regulations to promote the
health , safety, comfort, and convenience of persons in or upon the Lake or vicinity thereof with respect to the conduct of s uch activities. But merely because the [ Association ] can promulgate rules and regulations is not going to equate to the right to exclude a person who otherwise has the contractual right of access

.

“To be clear, the fact a non

- [Association] member but an Arrowhead Woods’ owner, guest, or lessee is entitled to access the Lake and Reserve Strip does not mean they would be entitled to store a boat on the Lake, or use a boat on the Lake, or engage in illegal, business, or commercial activities in the area. It merely means the Arrowhead Woods’ owners, guests, and lessees can access the Lake, trails, and beaches for recreational purposes.

“ Thus , Plaintiffs have a likelihood of prevailing on [showing] t he 64 Agreement [was] viol a ted by the Defend a nts by precluding n on

- [Association] members
but Arrowhead Woods’ owners, guests, and lessees from accessing the Lake and Reserve Strip. ” (Italics in original .)

We agree with the trial court’s reasoning and conclusion. The Association
did not exist until 1974

. Arrowhead Woods property owners are not required to join the Association and, according to plaintiffs, most do not.

Nothing in the 1964 Agreement conditions property owners’ right to access
the Lake and reserve strip s upon the payment of a fee (the Association states “[m]embership may be had for as little as $105 per year ” ) or the property owner’s agreement to become a member of an organization tha t owns the Lake property. The 1964 Agreement provides for the owner of the Lake to charge a reasonable fee for permitting piers and docks to be located and kept on the reserve strips or the Lake, and a reasonable fee for licensing boats to be used on the Lake and for rental slips. It did not provide for further charges.23 We agree the Association’s membership rule cannot be construed as a reasonable regulation to promote the safety, health, comfort, and convenience of property

owner s enjoying the Lake. Plaintiffs therefore have demonstrated a probability of prevailing on claims based on a breach of the 1964 Agreement resulting from the Association’s exclusion of property owne rs who are not Association members from access to the Lake and reserve strips

. III.

R ELATIVE I NTERIM H ARM TO THE P ARTIES Balancing the relevant harm to the parties , the trial court ruled: “Plaintiffs argue their relevant harm is the loss of the use and e njoyment of the Lake and trails for themselves and their guests and lessees. The breaches further infringe on their properties ’ value

. . . . Irreparable harm can arise when a home’s value is
diminished or substantial loss occurs in the enjoyment of the h ome. [Citation.] Also, irreparable harm may be demonstrated by an act ‘which is a serious change of , or is destructive to, the property it affects, either physically or in the character in which it has been held and enjoyed.’

. . .

“ Defendant [ the Assoc iation] argues the relevant harm weighs in its balance because it operates on a budget primarily funded by members paying their [Association]
dues

. . . . Yet Defendant offers no evidence that by enjoining it from precluding those with a contractual right of access to the Lake and Reserve Strip means its income will decrease. The Court is not enjoining it from collecting dues or regulating boat slips and usage of boats on the Lake.

“In weighing precluding those who have a contractual right of access and

u se against a potentially affected budget, the harm weighs in Plaintiffs ’ favor.

“Defendant [the Association] also contended that by imposing the requested injunction, the character of the Lake is changed f rom private to public. But allowing those with the contractual right of access is not rendering the Lake open to the24

public. It remains that the Lake is only accessible by the A rrowhead Woods’ property owners, guests, and lessees.

“ Overall, the harm weighs in Plaintiffs’ favor .” (Italics in original.) In its opening brief, citing a district court decision in Montana, the Association argues the trial court misapplied the law because it “incorrectly considered the rights of third parties who are strangers to this lawsuit.” We disagree with the Association’s argument. The 1964 Agreement contemplates property owners might
choose to lease their homes or entertain houseguests. I t is not speculation to conclude
Section C ’s restriction of Lake access to renters who stay less than 30 days reduces the marketability of Arrowhead Woods rentals and thereby directly and negatively impact s property owners

.

Neither the Association nor t he individual defendants dispute the trial
court’s statement in its ruling no evidence shows the issuance of an injunction enjoining the Association from excluding short

- term rental lessees and property owners who are not
Association members from the Lake and reserve strip s would result in a reduction in its
income

. We agree with the trial court’s reasoning and conclude the court did not abuse its discretion in concluding the balance of relative harms favor s issuance of the preliminary injunction.25 DISPOSITION
The order granting a preliminary injunction is affirmed. Respondents to recover costs on appeal.

MOTOIKE, J.

WE CONCUR:

GOETHALS, ACTING P. J.

DELANEY, J.