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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 ordered 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.,

 Plaintiffs and Respondents,

v.

ARROWHEAD LAKE ASSOCIATION 

et al.,

 Defendants and Appellants.

 G062727

 (Super. Ct. No. CIVSB2120604)

 O P I N I O N

Appeal from an 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. Ditfurth, 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.

ArentFox Schiff, John P. Zaimes, Sara T. Schneider, 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 functioned to manage operations and improvements on 

and around the Lake. In 2020, in response to the short-term rental market’s “internetfueled gold rush,” the Association amended its bylaws to bar all short-term renters, 

defined as a person who rents a home in Arrowhead Woods for less than a 30-day-term, 

from accessing the Association’s property. The Association similarly bars 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 Karakaya (collectively, plaintiffs) sued the 

Association and some of its directors and employees contending, inter alia, the bylaws

amendment and the Association membership requirement for Lake access violate the 

terms of the 1964 Agreement. Shortly after initiating their lawsuit, plaintiffs filed a 
3

motion for a preliminary injunction. In a 12-page ruling, the trial court granted the 

motion to the extent 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 

likelihood of prevailing on the merits of claims premised on the contention the

Association’s amendment to its bylaws violated property owners’ rights granted by the 

1964 agreement. The trial court did not abuse its discretion by determining the harm 

plaintiffs would suffer unless the court issued a preliminary injunction outweighs the 

harm the Association and individual defendants would suffer from the imposition of a 

preliminary injunction.

FACTS1

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 Arrowhead Woods in the reserve strips [shoreline 

surrounding the Lake], reserve strip additions, and the Lake.” The Agreement provided it 

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

The 1964 Agreement states in relevant part: “Development 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 assigns of such owners, and subject 

to all recorded conditions, restrictions and reservations, the following non-exclusive 

1

This 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 strips 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 or 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 expressed in paragraph 6 of this instrument,[2]and the right in Development 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 

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

recreational facilities and activities on and around Lake Arrowhead, exclusively for the 

use and enjoyment of the owners of the real property in Arrowhead Woods, their 

families, and guests.’” The Association “does not own or control the real properties 

within 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 article II, section 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 fees for permitting piers and docks to be located and kept on the 

strips . . . and/or the Lake” and to charge reasonable fees for “the licensing of boats to be 

used on the Lake and for rental slips.” 
5

strips) by short-term renters, 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.

THE FIRST AMENDED COMPLAINT

Plaintiffs filed a first amended complaint against the Association and 

individual defendants Gary Clifford, Robert Mattison, Alan B. Kaitz, Brian C. Hall, Eran 

Heissler, Anthony O’Keefe, and Christopher Wilson.3 The first amended complaint 

contains claims for breach of the 1964 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 harassment,

4

retaliation in violation of public policy, and private and 

public nuisance. In the prayer for relief, plaintiffs request declaratory relief, injunctive 

relief, damages, and reasonable attorney fees. 

II.

PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION

3

 Defendant Hall did not appeal from the order granting the preliminary injunction. We

hereafter refer to Clifford, Mattison, Kaitz, Heissler, O’Keefe, and Wilson collectively as 

“the individual defendants.” We refer to the Association and the individual defendants 

collectively 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 prohibiting 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 

property 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 

Arrowhead 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 injunction.
7

III.

THE TRIAL COURT GRANTS IN PART AND DENIES IN PART THE MOTION FOR A 

PRELIMINARY INJUNCTION

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 

other regulation prohibiting Arrowhead Woods’ vacation guests and lessees from 

accessing the 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 

$100,000.00 bond. The Preliminary Injunction shall become effective upon securing 

Bond. This 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 their requests for an order enjoining 

the Association from “[e]nforcing 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 owners 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 also 
8

denied plaintiffs’ motion as to their request for an order requiring the Association to 

“remove all new fences, gates, and radio frequency identification (‘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 separate briefs in this appeal.

REQUESTS FOR JUDICIAL NOTICE

I.

WE GRANT IN PART AND DENY IN PART THE ASSOCIATION’S 

REQUEST FOR JUDICIAL NOTICE

The Association has requested we take judicial notice under Evidence Code 

section 452 of (1) an Airbnb online form 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 branch, 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 on 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 1940 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 legislative 
9

history. For the same reason, we deny the request as to the Airbnb Terms of Service 

online form and as to portions of the San Bernardino County Code of Ordinances. (Ibid.)

II.

WE DENY PLAINTIFFS’ REQUEST FOR JUDICIAL NOTICE

Plaintiffs filed a request pursuant to Evidence Code sections 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 for 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 sections 84.28.030, 84.28.040, 810.01.100, 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.

GOVERNING LEGAL PRINCIPLES AND STANDARD OF REVIEW

“‘“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 present 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 interrelated 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 generally rests in the 

sound discretion of the trial court and will not be disturbed on appeal absent a showing of 
10

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 undisputed’” 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.5th

916, 930.)

II.

PLAINTIFFS ARE LIKELY TO PREVAIL ON THE MERITS

In their opening briefs, defendants 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 

reasons 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 injunction 
11

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 addressed and rejected the argument this 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 [(request 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 appears to be 3 owners.” 

The individual defendants mention in their 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 plaintiffs own property in Arrowhead Woods 

so as to satisfy the ownership requirement of section 4 of the 1964 Agreement required to 

seek injunctive relief. We find no error.

B. Rules of Contract Interpretation

Review of the trial court’s determination requires the application of the 

traditional rules of contract interpretation. (Mountain Air Enterprises, LLC v. Sundowner 

Towers, LLC (2017) 3 Cal.5th 744, 752.) “Accordingly, we first consider the mutual 
12

intention of the parties at the time the contract . . . was formed. (Civ. Code, § 1636.) Our 

initial inquiry is confined to the writing 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.5th 900, 

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 Lodgers

Applying the rules of contractual interpretation in our review of the 

preliminary injunction, we, like the trial court, must determine what the parties to the 

1964 Agreement meant in their use of the term “lessees.” That term is not defined in the 

1964 Agreement itself. 

In Beckett v. City of Paris Dry Goods Co. (1939) 14 Cal.2d 633, 636, a case 

decided about 25 years before the 1964 Agreement, the California Supreme 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 

Beckett v. City of Paris Dry Goods Co., the appellate court in O’Shea v. Claude C. Wood 
13

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 possession 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 room is a lodger and 

not a tenant.” (Green v. Watson (1964) 224 Cal.App.2d 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 precludes 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 breaches

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-term 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. The issue 
14

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 specified 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 of the owner and rooms are furnished and attended to by him, he or his 

servants retaining the keys 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 short-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 if the owner loses the right to access 

and control 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 the shortterm 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 

would 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 

business 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 equate 

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 Defendants 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 the Agreement.

Section C of the Association’s bylaws, 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, the [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’s 
16

stay might shed light on whether the renter is properly classified a lessee or a 

lodger/transient under the Agreement, defendants have not cited any legal authority 

contemporaneous with the 1964 Agreement, and we have found none, showing the length 

of a renter’s stay 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 was 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 consistent 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 breaches 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 the 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 question 

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 claims 

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 activities.” A rule stripping a 

category of individuals of their right under the 1964 Agreement to Lake access cannot be 

reduced to constituting a mere 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 property owners, their long-term lessees, and their houseguests 

of their 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 . . . when 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 

irrelevant to interpreting the contracting parties’ intent as to the scope of those they 

intended to protect as “lessees” in the 1964 Agreement. 

Civil Code section 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 room . . . 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 request for judicial notice discussed ante, the 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 and 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 statutory definition makes no reference 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 applied 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 the 

CC&R’s: “‘[U]se [on the subject lots] is also limited by the specific condition that on 
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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 cesspool, 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 begs 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 suggests subject property owners were 

restricted 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 contains 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 negative 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 

increase 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 ordinance passed by a local governing body. This appeal does 
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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. Pheil (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. 792.) 

Citing an 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 the Airbnb 

agreement are not like those of a lease, as the terms of the former agreement refer to the 

“‘Accommodation Reservation’” as “‘a limited license to enter, occupy, and use the 

Accommodation’” and further state the 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 not supported by any evidence any plaintiff 

ever used that form service agreement or that any of the short-term renters of their homes 

were subject to similar terms. To the contrary, as the 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 of 
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such agreements 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 that agreement was entered requires a rather fact 

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 Woods

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 determining whether 

the trial court correctly concluded plaintiffs established a probability of prevailing on its 

claims based on breach of contract. As Section C categorically bars all short-term renters

from Lake access, regardless of the nature and non-temporal terms of their respective 

rental agreements, we agree with the trial court plaintiffs have succeeded 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 safety 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.
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“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 such 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] the 64 

Agreement [was] violated by the Defendants by precluding non-[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 strips 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 that 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 

owners 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 owners who are not Association members from 

access to the Lake and reserve strips.

III.

RELATIVE INTERIM HARM TO THE PARTIES

Balancing the relevant harm to the parties, the trial court ruled:

“Plaintiffs argue their relevant harm is the loss of the use and enjoyment 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 home. [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 Association] 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

use 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 from private to public. But 

allowing those with the contractual right of access is not rendering the Lake open to the 
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public. It remains that the Lake is only accessible by the Arrowhead 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. It 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 impacts

property owners. 

Neither the Association nor the 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 strips 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 favors issuance of the 

preliminary injunction.
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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.