Wilkinson v. Chiwawa Cmtys. Ass'n ( 2014 )

Fl LE
IN CU!RI162 Wn. App. 1005, 2011
Wash. App. LEXIS 1336, at *1, *8. The trial court granted summary judgment in
their favor, declaring the prohibition on rentals invalid and unenforceable. Id. at *8.
The trial court also fashioned sua sponte a new covenant that barred rentals of less
than one month in duration. !d. at *12. The Wilkinsons successfully appealed this
judicial rewriting. I d. at * 13-14. The Court of Appeals held that the trial court
lacked authority to rewrite the covenants except on motion, and approved, in dicta,
the trial court's invalidation of the 2008 amendment. Id. at *12-14. No review of
the decision was sought in this court.
Shortly after the Court of Appeals issued its decision, a majority of the
Association again voted to amend the covenants, this time to prohibit rentals "for
less than one month[ or] 30 continuous days." CP at 160-61, 173, 175 (2011
amendment). The Wilkinsons again filed suit in superior court to invalidate the 2011
rental restriction. CP at 3, 60-61. Both sides moved for summary judgment, CP at
88, 442, and the Wilkinsons additionally moved to strike portions of the evidence
offered by the Association in support ofits motion, CP at 906-07, 1077-80.
The trial court granted the Wilkinsons' motion for summary judgment in full,
holding the 2011 bar on short-term rentals invalid and unenforceable. CP at 1087-
89; Verbatim Report of Proceedings (Dec. 15, 2011) (1 VRP) at 34-35. The court
concluded that the Pope & Talbot and 1988/1992 covenants "contemplated that there
could be rentals," and that "[t]here were no limitations on those rentals." 1 VRP at
34. The trial court granted the Wilkinsons' motion for summary judgment, holding
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the 2011 amendment was invalid. 1 VRP at 35. The trial court rejected the
Association's arguments that residential rentals of any duration are a "commercial"
use of land and that renting a home to unrelated persons violates the single-family
residential use covenant. See CP at 1087-89; 1 VRP at 35-37. The court also granted
the Wilkinsons' evidentiary motions in part, striking comments from the 2007
member survey and portions of declarations by three Chiwawa residents. CP at
1101-02; 1 VRP at 35-36.
The Association sought direct review in this court under RAP 4.2(a)(3) and
(4). See Statement of Grounds for Direct Review at 14. The Association argues that
the trial court wrongly ruled that short-term vacation rentals are consistent with
single-family residential uses, that a majority of Chiwawa homeowners cannot
amend the governing covenants to prohibit short-term vacation rentals, and that the
2007 survey and testimony from several homeowners were inadmissible. Br. of
Appellant at 13-15. This court accepted direct review. Order, No. 86870-1 (Wash.
Oct. 9, 2012).
ANALYSIS
We review a trial court's order on cross motions for summary judgment and
related evidentiary rulings de novo. Davis v. Baugh Indus. Contractors, Inc., 159
Wn.2d 413, 416, 150 P.3d 545 (2007) (citing Folsom v. Burger King, 135 Wn.2d
658, 663, 958 P.2d 301 (1998)). We will affirm the trial court's order granting
summary judgment "if there are no genuine issues of material fact and the moving
party is entitled to judgment as a matter of law." Dowler v. Clover Park Sch. Dist.
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No. 400, 172 Wn.2d 471, 484, 258 P.3d 676 (2011); CR 56(c). "Here, the parties
largely agree[] on the material facts." Br. of Appellant at 15 n.7.
I Vacation Rentals Are Not Commercial Uses and Are Consistent with
Single-Family Residential Use Provisions
The Association argues that short-term vacation rentals are inconsistent with
the governing restrictive covenants prohibiting commercial use and restricting lots
to single family residential use. See id. at 13. We disagree.
Interpretation of a restrictive covenant presents a question of law. Wimberly
v. Caravello, 136 Wn. App. 327, 336, 149 P.3d 402 (2006). We apply the rules of
contract interpretation. Id. While Washington courts once strictly construed
covenants in favor of the free use of land, we no longer apply this rule where the
dispute is between homeowners who are jointly governed by the covenants. Riss v.
Angel, 131 Wn.2d 612, 621-24, 934 P.2d 669 (1997). This"change in approach was
driven by the recognition that '"[s]ubdivision covenants tend to enhance, not inhibit,
the efficient use of land."' Mains Farm Homeowners Ass'n v. Worthington, 121
Wn.2d 810, 816, 854 P.2d 1072 (1993) (quoting Robert D. Brussack, Group Homes,
Families, and Meaning in the Law ofSubdivision Covenants, 16 GA. L. REv. 33, 42
(1981); see also Green v. Normandy Park Riviera Section Cmty. Club, Inc., 137 Wn.
App. 665, 683, 151 P.3d 1038 (2007). Rather than place a thumb on the scales in
favor of the free use of land, "[t]he court's goal is to ascertain and give effect to
those purposes intended by the covenants." Riss, 131 Wn.2d at 623. Courts "place
'special emphasis on arriving at an interpretation that protects the homeowners'
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collective interests.'" !d. at 623-24 (quoting Lakes at Mercer Island Homeowners
Ass'n v. Witrak, 61 Wn. App. 177, 181, 810 P.2d 27 (1991)).
Thus, our primary objective in contract interpretation is determining the
drafter's intent. Hollis v. Garwall, Inc., 137 Wn.2d 683, 696, 974 P.2d 836 (1999);
Riss, 131 Wn.2d at 623; Mains Farm, 121 Wn.2d at 815. "While interpretation of
the covenant is a question oflaw, the drafter's intent is a question of fact." Ross v.
Bennett, 148 Wn. App. 40, 49,203 P.3d 383 (2009) (citing Wimberly, 136 Wn. App.
at 336). "But where reasonable minds could reach but one conclusion, questions of
fact may be determined as a matter of law." !d. at 49-50 (citing Owen v. Burlington
N Santa Fe R.R., 153 Wn.2d 780, 788, 108 P.3d 1220 (2005)). In determining the
drafter's intent, we give covenant language "its ordinary and common use" and will
not construe a term in such a way "so as to defeat the plain and obvious meaning."
Mains Farm, 121 Wn.2d at 816; Riss, 131 Wn.2d at 623. We examine the language
of the restrictive covenant and consider the instrument in its entirety. Hollis, 137
Wn.2d at 694 (quoting Mountain Park Homeowners Ass'n v. Tydings, 125 Wn.2d
337, 344, 883 P.2d 1383 (1994)); Wimberly, 136 Wn. App. at 336. The lack of an
express term with the inclusion of other similar terms is evidence of the drafters'
intent. See Burton v. Douglas County, 65 Wn.2d 619, 622, 399 P.2d 68 (1965).
"Extrinsic evidence is ... used to illuminate what was written, not what was intended
to be written." Hollis, 137 Wn.2d at 697. We, however, do not consider extrinsic
"[e]vidence that would vary, contradict or modify the written word" or "show an
intention independent of the instrument." !d. at 695.
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As the text of the Chiwawa covenants demonstrates, the drafters included
detailed provisions outlining what residents cannot do. From this it is evident that
had the drafters wanted to prohibit rentals of a particular duration, they would have
done so. The 1988/1992 covenants specify the rights and duties of Chiwawa
residents in painstaking detail, spelling out, inter alia, the animals residents may
keep, the minimum distance houses must be set back from the front lot line, the size
of name signs residents may display, and their authority to bring enforcement
actions. See CP at 81-82, 85-86. Most apparently, the drafters specifically
anticipated and permitted rentals when they restricted the size of rental signs
residents could hang. CP at 82, 86. Indeed, the limit on rental signage proves not
just that the Pope & Talbot and 1988/1992 covenants allow some rentals but that the
drafters anticipated rentals and consciously decided not to limit their duration,
restricting just the appearance of rental signs.
The dissent argues that the restriction on rental signage merely establishes that
the drafters intended to permit some rental activity and that it remains a question of
fact to determine, based on extrinsic evidence, whether the drafters contemplated
long-term or transient rentals, or both. Dissent (Gordon McCloud, J.) at 3-4, 6 n.6,
8. This argument misapprehends Washington law. While extrinsic evidence can be
"used to illuminate what was written," Hollis, 137 Wn.2d at 697, it cannot be used
to "show an intention independent of the instrument." !d. at 695. Had the covenants
expressed a durationallimitation, such as specifying long-term rentals, then extrinsic
evidence would be admissible to elucidate the meaning of the word "long-term."
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See Bauman v. Turpen, 139 Wn. App. 78, 90, 160 P.3d 1050 (2007) (permitting
extrinsic evidence to clarify the meaning of the term "one story"); Wimberly, 136
Wn. App. at 331, 337 (permitting extrinsic evidence to clarify the phrase "simple,
well-proportioned structures"); Day v. Santorsola, 118 Wn. App. 746, 750, 758, 76
P.3d 1190 (2003) (considering extrinsic evidence to determine whether a covenant
that restricted homes to two stories addressed height as opposed to view). Such was
the circumstance in all the cases that the dissent relies upon as support that we should
admit extrinsic evidence in this instance. See dissent (Gordon McCloud, J.) at 8 n.8.
Despite the dissent's belief, silence as to duration does not create ambiguity. !d. at
4. '"It is the duty of the court to declare the meaning of what is written, and not what
was intended to be written."' Bergv. Hudesman, 115 Wn.2d 657,669, 801 P.2d 222(1990) (quotingJ. W. Seavey Hop Corp. v. Pollock, 20 Wn.2d 337,348-49, 147 P.2d
310 (1944)).
Based on the drafters' detailed discussion about what Chiwawa homeowners
could not do, their clear expression that rentals were permissible uses, and the
absence of any durational restriction on such rentals, reasonable minds could reach
but one conclusion-that the drafters intended to permit rentals without any
durationallimitation. It was therefore proper for the trial court to determine the issue
of the drafter's intent as a matter of law.
Not only is it manifestly clear that the drafters intended to permit vacation
rentals without any durational limitation, such rentals are consistent with the
prohibition on commercial use. If a vacation renter uses a home "for the purposes
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of eating, sleeping, and other residential purposes," this use is residential, not
commercial, no matter how short the rental duration. Ross, 148 Wn. App. at 51-52
(holding rental use was commercial not residential because such use "is identical to
[the homeowner's] use of the property, as a residence, or the use made by a long-
term tenant"). "The owner's receipt of rental income either from short- or long-term
rentals in no way detracts or changes the residential characteristics of the use by the
tenant." !d. at 51. Nor does the payment ofbusiness and occupation taxes or lodging
taxes detract from the residential character of such use to make the use commercial
in character. See id. (determining that "whether the short-term rental is subject to
state tax does not alter the nature of the use").
The Association argues that we created in Mains Farm and reaffirmed in
Metzner v. Wojdyla, 125 Wn.2d 445, 866 P.2d 154 (1994), "a bright line rule ...
that prohibits any commercial or business use of a property subject to a residential
use restriction." Reply Br. of Appellant at 7-8. The Association reads these cases
too broadly. In Mains Farm, "[w]e caution[ed] that the interpretation of a particular
covenant is largely dependent upon the facts of the case at hand." 121 Wn.2d at 827.
We held the operation of an adult family home violated a covenant restricting use to
"'single family residential purposes only"' because it was '"more institutional in
nature than ... familial"'; "'[t]he single-family residential nature of defendant's use
of her home [was] destroyed by the elements of commercialism and around-the-
clock care."' !d. at 813, 821 (emphasis omitted). Similarly, in Metzner, we held the
operation of a child day care violated a provision requiring properties '"be used for
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residential purposes only"' because it involved the exchange of money for care of
persons unrelated to the homeowner. 125 Wn.2d at 447, 451 (emphasis omitted).
The Wilkinsons' short-term rental of their properties is distinguishable from
the commercial uses in Mains Farm and Metzner. Both the operations in Mains
Farm and Metzner provided some form of on-site service that the Wilkinsons do not
provide to their guests. Thus, the Wilkinsons' short-term rentals do not, without
more, violate the 1988/1992 covenant prohibiting commercial use. 3
Nor does the 1988/1992 covenants' "single family residential use" restriction
limit to whom vacation rentals may be rented. Reading the restriction, as the
Association does, to prohibit unrelated persons from residing within Chiwawa would
require us to read the provision out of context. The "single family, residential use"
restriction is incorporated into a provision that restricts the type of structures that
3
The dissent criticizes us and the trial court for relying on Ross, arguing that the
Ross court "held only that a particular restrictive covenant limiting property use to
'residence purposes only' was consistent with short-term vacation rentals," and that this
holding was based "on a highly fact-specific record." Dissent (Gordon McCloud, J.) at 7.
But every case is rooted in its facts; the question is whether the relevant facts in Ross are
different from the facts here. They are not. Just as in this case, the residents in Ross leased
their homes to short-term renters and the homeowners' association argued that they were
making commercial use of the land, rather than residential use. 148 Wn. App. at 51. The
court held unequivocally that a residential renter, no matter how short the rental duration,
does not violate a restrictive covenant requiring that '" [a]ll parcels within said property
shall be used for residence purposes only and only one single family residence may be
erected on each such parcel"' because that use is residential, not commercial. Id. at 44, 52
(alteration in original). The court explained that the single family residence restriction
"merely restricts use of the property to residential purposes," id. at 52, which is consistent
with a residential renter who uses a home "for the purposes of eating, sleeping, and other
residential purposes," id., because that use "is identical to [the homeowner's] use of the
property, as a residence, or the use made by a long-term tenant." Id. at 51. The court was
not concerned with whether the drafters intended to permit vacation rentals, which the
dissent emphasizes, but with whether the vacation rentals constituted a prohibited
commercial use. This was the case because extrinsic evidence cannot be used to "vary,
contradict or modify the written word." Hollis, 137 Wn.2d at 695.
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can be built and how far from the front line they must be built. Read in context, the
single-family covenant restricts only the type and appearance of buildings that may
be constructed on the lot, not who may reside there. This reading is preferred as it
"protects the homeowners' collective interest" and is consistent with how other
states interpret single-family covenants. See generally Mark S. Dennison,
Annotation, Construction and Application of "Residential Purposes Only" or
Similar Covenant Restriction to Incidental Use of Dwelling for Business,
Professional, or Other Purposes, 1 A.L.R.6th § 5, at 135 (2005).
Moreover, reading the provision to prohibit unrelated persons from residing
together would produce absurd results. Under the Association's reading, Chiwawa
residents would violate their covenants whenever they host a sleepover for their
children's playmates, share their homes with friends for a weekend, or cohabitate
with a partner outside of marriage. We reject "forced or strained" interpretations of
covenant language if they lead to absurd results. Viking Props., Inc. v. Holm, 155
Wn.2d 112, 122, 118 P.3d 322 (2005).
We emphasize that our holding does not prohibit residential communities
from prohibiting short-term rentals. We merely hold that the Chiwawa River Pines
community did not do so through covenants allowing rentals while prohibiting
commercial uses and limiting homes to single-family structures.
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II A Simple Majority Sought To Deprive Chiwawa Landowners of Their
Property Rights, Inconsistent with the General Plan ofDevelopment.
A prohibition on short-term rentals is unrelated to the 1988/1992 covenants
and therefore cannot be adopted by a simple majority vote. We do not hold that
homeowners can never limit the duration of rentals, as the dissent believes, just that
a majority ofChiwawa homeowners cannot force a new restriction on a minority of
unsuspecting Chiwawa homeowners unrelated to any existing covenant. Dissent
(Gordon McCloud, J.) at 3. While Chiwawa homeowners knew that existing
restrictive covenants could be changed by majority vote so long as the changes were
consistent with the general plan, they did not buy into the creation of new restrictions
unrelated to existing ones.
In Washington, the authority of a simple majority of homeowners to adopt
new covenants or amend existing ones in order to place new restrictions on the use
of private property is limited. When the governing covenants authorize a majority
of homeowners to create new restrictions unrelated to existing ones, majority rule
prevails "provided that such power is exercised in a reasonable manner consistent
with the general plan of the development." Shafer v. Bd. ofTrs. ofSandy Hook Yacht
Club Estates, Inc., 76 Wn. App. 267,273-74,883 P.2d 1387 (1994). However, when
the general plan of development permits a majority to change the covenants but not
create new ones, a simple majority cannot add new restrictive covenants that are
inconsistent with the general plan of development or have no relation to existing
covenants. See Ebel v. Fairwood Park II Homeowners' Ass 'n, 136 Wn. App. 787,
793, 150 P.3d 1163 (2007); Meresse v. Stelma, 100 Wn. App. 857, 865-66,999 P.2d
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1267 (2000); Lakeland Prop. Owners Ass 'n v. Larson, 121 Ill. App. 3d 805, 459
N.E.2d 1164, 77 Ill. Dec. 68 (1984). This rule protects the reasonable, settled
expectation of landowners by giving them the power to block '"new covenants
which have no relation to existing ones"' and deprive them of their property rights.
Meresse, 100 Wn. App. at 866 (emphasis omitted) (quoting Lakeland, 459 N.E.2d
at 1167, 1169). As the Court of Appeals observed, "'[t]he law will not subject a
minority of landowners to unlimited and unexpected restrictions on the use of their
land."' Id. (quoting Boyles v. Hausmann, 246 Neb. 181, 517 N.W.2d 610, 617
(1994)).
While we recognize, as does the dissent, that no Washington case has
described the precise contours of when an amendment would be "consistent with the
general plan of development," we need not provide that guidance here because the
Chiwawa general plan did not authorize a majority of owners to adopt new
covenants. The Chiwawa general plan of development merely authorized a majority
of owners "to change these protective restrictions and covenants in whole or in part."
CP at 83; see Lakeland, 459 N.E.2d at 1167, 1169 (interpreting a covenant that
permitted changes to "'the said covenants in whole or in part'" as permitting changes
"not the add[ition] of new covenants which have no relation to existing ones"); see
also Meresse, 100 Wn. App. at 864-66 (emphasizing that its analysis of a covenant
allowing a majority '"to change or alter [the covenants] in full or in part"' was in
accord with Lakeland, which interpreted a similar provision as allowing changes but
not the addition of new covenants unrelated to existing ones (emphasis omitted)).
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Thus, for amendments by majority vote to be valid in Chiwawa, such amendments
must be consistent with the general plan of development and related to an existing
covenant.
As determined earlier, the Chiwawa general plan of development allows
homeowners to rent their homes without any durational limitation. Homeowners
who took title under these covenants were not on notice that short-term rentals might
be prohibited without their consent. The Association defends its actions as
consistent with the general plan because it did not ban all rentals, just some rentals.
See Reply Br. of Appellant at 5. The Association, however, misses the distinction
between contracts that permit changes to existing covenants by majority vote and
those that allow the creation of new covenants by majority vote. In distinguishing
between these types of contracts, we respect the expectation of the parties and the
contract they entered. While it is true that in Shafer, the court upheld the adoption
of new restrictions on outdoor storage of inoperative motor vehicles and commercial
fishing, even though no such rule had previously existed, the court did so only
because the dissenting homeowners "had notice of the reservation of power" that
allowed the homeowner corporation to create new covenants that benefited the
community. 7 6 Wn. App. at 270, 272, 277. The Chiwawa homeowners did not. We
reject the Association's position in favor of protecting the reasonable and settled
expectation of landowners in their property.
The dissent makes a similar mistake. The dissent contends that we must
remand this case for a factual inquiry to determine whether the 2011 amendment
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was '"consistent with the general plan of development'-by looking to 'the language
of the covenants, their apparent import, and the surrounding facts"' as required by
Meresse. Dissent (Gordon McCloud, J.) at 12, 14 (emphasis omitted) (internal
quotation marks omitted) (quoting Meresse, 100 Wn. App. at 865). While it is true
that when determining whether an amendment is consistent with the general plan of
development we look to the language of the covenants, their apparent import, and
the surrounding facts, the dissent misapprehends the inquiry at issue in Meresse.
Unlike the covenants in Shafer, the covenants in Meresse did not allow a majority
to create new covenants but only to change existing ones. 100 Wn. App. at 864-65.
Thus, for the amendment in Meresse to be valid, it had to be both consistent with the
general plan of development and related to an existing covenant. Accordingly, the
homeowners argued that the amendment regarding the relocation of an access road
was not a new wholesale restriction but rather a change to the preexisting '"road
maintenance"' covenant regarding road '"construction'" and '"repair.'" I d. at 864.
Consequently, the court's inquiry was whether the amendment was sufficiently
related to the existing road maintenance covenant. The court ultimately determined
it was not because the restriction imposing a duty on homeowners to remove
obstructions "d[id] not place a purchaser or owner on notice that he or she might be
burdened, without assent, by road relocation at the majority's whim." Id. at 866-67.
Like the covenants in Meresse, the Chiwawa covenants prohibiting nuisance
or offensive uses or the display of excessive rental signs would not have placed
Chiwawa homeowners on notice that short-term rentals would be prohibited. Thus,
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the 2011 amendment was unrelated to any existing covenant. The Association could
not adopt the restriction without unanimous consent. This is the contract into which
the parties bought and the expectation that we must uphold.
III The 2007 Survey Comments and Testimony ofResidents
Were Properly Excluded
We also affirm the trial court's exclusion of the homeowners' comments in
the 2007 survey and portions of the declarations of three Chiwawa residents: Judy
Van Eyk, James Padden, and Gloria Fisk.
a. 2007 Survey Comments
The 2007 survey comments were inadmissible hearsay. See Smith v. Sturm,
Ruger & Co., 39 Wn. App. 740, 749, 695 P.2d 600 (1985) (surveying opinion-
polling cases and noting survey answers given by interested parties describing past
events "have consistently been held to be double hearsay"). The 2007 survey
comments discussed homeowner support or rejection of the Association's proposed
ban on nightly rentals and projections about the impact short-term rentals have had
on the community. See CP at 153-57.
The Association does not dispute that the 2007 survey comments were hearsay
but argues that they fall within the judge-made exception followed in Simon v. Rib let
Tramway Co., 8 Wn. App. 289, 505 P.2d 1291 (1973). Br. of Appellant at 35-36.
This is incorrect. Simon rests on a hearsay exception fashioned in Nordstrom v.
White Metal Rolling & Stamping Corp., 75 Wn.2d 629, 632-34, 453 P.2d 619-18-
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, 86870-1
(1969), 4 regarding the inherent trustworthiness and reliability of surveys compiled
by disinterested authorities in published materials. In Nordstrom, this court held a
published industry manual on the safety ofladders was admissible, although hearsay,
because it was "produced by persons or groups having special knowledge regarding
the subject under discussion, and having no motive to falsify, but having rather every
reason to state the facts as they are known to the author or authors." Id. at 633.
Similarly, in Simon, the National Society of Professional Engineers' survey of
salaries among engineers was "trustworthy and reliable" because it was "published
by a reputable society ... without any apparent reason to falsify it." Simon, 8 Wn.
App. at 294. In contrast, here, the 2007 survey comments were made by interested
homeowners as part of a contentious vote over property rights and compiled by an
organization that was interested in the outcome. As such, the comments do not have
the hallmarks of inherently reliable evidence. We affirm the trial court's decision to
strike these hearsay comments.
b. Individual Residents' Declarations
The trial court also properly struck various portions of declarations by Judy
Van Eyk, James Padden, and Gloria Fisk. An affidavit supporting a motion for
summary judgment "shall be made on personal knowledge [and] shall set forth such
facts as would be admissible in evidence." CR 56(e). A lay witness may testify to
4
Although both Simon and Nordstrom predate the adoption of Washington's
Evidence Rules, they are based on principles "substantially in accord with" ER 803(a)(l7),
ROBERT H. ARONSON, THE LAW OF EVIDENCE IN WASH. § 803.02, at 803-8.1 (4th ed.
2012), which creates a hearsay exception for "[m]arket quotations, tabulations, lists,
directories, or other published compilations generally used and relied upon by the public
or by persons in particular occupations," id. at§ 803.01, at 803-5.
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her opinions and inferences, but this testimony must be "rationally based on the
perception of the witness." ER 701.
The trial court properly excluded portions of Ms. Van Eyk' s and Mr. Padden's
declarations because they lacked personal knowledge. In her declaration, Ms. Van
Eyk comments that homeowners who rent their residences "make more money
renting weekends this time of year and do not want a full-time tenant," and states
that that her long-term tenant had a friend that was willing to pay a premium for a
three-month term rental, and opines that "[p ]laintiffs' goal in this lawsuit is to protect
their businesses and bottom line." CP at 1082-83. Mr. Padden's declaration
similarly consists of opinions. Mr. Padden conjectures that "it was clear that the
developer, Pope & Talbot, intended to create a community of single families," that
in the early days of the development, "[n]o one ... was renting" or "advertising their
homes" or "had a commercial license for their rental businesses," that "[t]he
community's focus was on providing an enjoyable refuge for families, not to provide
an opportunity to make money," and that the current state of affairs "is not [what]
the developer intended." CP at 1085-86. Neither the developers' intent, the activities
of all other residents, the motivations of other Chiwawa homeowners, nor the desires
of strangers to move into the community are within Ms. Van Eyk's or Mr. Padden's
personal knowledge or perceptions. Therefore, the trial court correctly struck them.
The trial court also properly excluded Ms. Fisk's statement that the board had
threatened enforcement action against a homeowner for renting out his property "for
less than one month-the same type of activity at issue in this lawsuit." CP at 992.
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Although Ms. Frisk, as the Association's then-president, had personal knowledge of
the threatened action, her statement was false and misleading. The record shows
that the Board sent this homeowner a letter advising him that daily rentals would
violate the covenants, CP at 180, 221; see Wilkinson, 2011 LEXIS 1336, at *7, which
is not "the same type of activity at issue in this lawsuit." CP at 992. The trial judge
did not err by excluding Ms. Fisk's misleading statements.
CONCLUSION
The trial court properly excluded inadmissible testimony offered by the
Association and granted summary judgment in favor of the Wilkinsons. The
covenants in effect before the 20 11 amendment allowed Chiwawa homeowners to
rent their homes without limitations on duration. Such short-term rentals do not
violate the ban on commercial use or the requirement that structures be suitable for
single-family residential use. Because a durational restriction on rentals would be
inconsistent with the 198811992 covenants, it cannot be adopted by a simple majority
vote ofChiwawa homeowners. Therefore, the 2011 amendment barring short-term
rentals was invalid. We affirm.
-21-
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, 86870-1
WE CONCUR:
-22-
Wilkinson, et a!. v. Chiwawa Communities Ass 'n
No. 86870-1
MADSEN, C.J. (dissenting)-The issue is whether the Chiwawa Communities
Association (Association) validly amended the communities' restrictive covenants to
prohibit the homeowners within the communities from renting their homes for less than
30 days at a time, short-term rentals. The majority decides as a matter of law that an
existing restriction limiting the number and size of "for rent" signs that a resident may
display on the property conclusively proves intent that rentals of any duration were
consciously considered when the covenants were written. I cannot agree with this
incredible supposition.
The majority also concludes as a matter of law that the covenants did not reserve
authority to a majority of association members to ban rentals of under 30 days because
this durational restriction is "unrelated" to any existing covenant. "Relatedness" to an
existing covenant involves an artificial distinction between changes to restrictive
covenants and creation of new restrictive covenants. Although some courts recognize the
distinction, the better analysis is presented by courts that have wisely rejected it. This
court should reject the distinction as well.
No. 86870-1
Madsen, C.J. (dissenting)
Both the question of what the existing covenants mean in regard to duration, if
anything, and the question whether the covenants reserved power to a majority to impose
a durational ban on rentals should be remanded so that the parties may submit extrinsic
evidence, if any is available, to illuminate the meaning of the covenants.
Discussion
The questions posed by this case are twofold: What, if anything, did the restrictive
covenants say about renting property for short terms prior to adoption of the explicit ban
on short-term rentals, and did the reservation of power provision in the covenants
authorize a majority of homeowners to adopt the ban on short-term rentals.
The primary responsibility of a court when faced with a dispute about the meaning
of restrictive covenants is to determine the intent of the parties who established the
covenants. Riss v. Angel, 131 Wn.2d 612,621,934 P.2d 669 (1997). The court examines
the language used as indicating the parties' intent, with the language given its ordinary
and common meaning. !d.; Metzner v. Wojdyla, 125 Wn.2d 445, 450, 886 P.2d 154(1994); Mains Farm Homeowners Ass'n v. Worthington, 121 Wn.2d 810, 815, 854 P.2d
1072 (1993). 1
1
There is no rule that requires construing the restrictive covenants here favorably to the free use
ofland. By the time this court decided Riss, 131 Wn.2d 612, that rule had been either
disregarded or questioned in a number of cases. In Riss, the court expressly held that in cases
involving disputes "among homeowners in a subdivision governed by the restrictive covenants
[the] rule[] of strict construction ... in favor ofthe free use ofland [is] inapplicable." Riss, 131
Wn.2d at 623. Headnote 7 (regional reporter) in Viking Properties, Inc. v. Holm, 118 P.3d 322(2005), accordingly, is incorrect.
2
No. 86870-1
Madsen, C.J. (dissenting)
Whether the existing covenants addressed duration of rentals
The existing covenants recognized that property may be rented. A covenant
restricting the number and size of "for rent" signs that homeowners may place on their
property says in part:
No sign of any kind shall be displayed to the public view on any lot, tract or
subdivision thereof in the plat, except one sign of not more than 3 feet
square giving the names of the occupants of the lot, tract, or approved
subdivision thereof, and one sign of not more than 6 square feet advertising
the property for sale or rent.
Clerk's Papers (CP) at 86.
This restriction begins with a general rule-no signs allowed-and then lists
certain specific, detailed exceptions for signs of limited size and number. The obvious
purpose is to prevent multiple or large signs and the immediate concern is also obvious-
addressing the appearance (aesthetics) of the properties and the residential
neighborhoods. This interpretation is fortified by the placement of the restrictive
language in a covenant titled "TRASH DISPOSAL" that also provides that "[n]o trash,
garbage, ashes or other refuse may be thrown, dumped, or otherwise disposed of on any
lot, vacant or otherwise." I d. Plainly, the covenant is concerned primarily with property
upkeep and appearance.
The restriction also implicitly acknowledges that home rentals may occur. On its
face, however, this is all it does.
3
No. 86870-1
Madsen, C.J. (dissenting)
But, astonishingly, the majority concludes that the sign restriction ''proves ... that
the drafters anticipated rentals and consciously decided not to limit their duration."
Majority at 9 (emphasis added). The majority's reading is not consistent with the
ordinary language used and is far from reasonable. The specific reference to "for rent"
signs reflects the fact that both selling and renting homes are common occurrences in
residential neighborhoods when homeowners decide not to live in their homes and
predictably will place signs on their property to advertise its availability.
To interpret the reference to "for rent" signs to mean as a matter of law that rentals
were considered and allowed for any duration, including short-term rentals (vacation
rentals), is truly extraordinary.
Nonetheless, the reference to rent is in the restriction and because no more is
apparent from the restriction itself, deciding whether the parties to the covenants intended
anything by it about the duration of rentals will depend on extrinsic evidence. As with
other contracts, extrinsic evidence may be admissible to aid in determining the intended
meaning of restrictive covenants under Berg v. Hudesman, 115 Wn.2d 657, 801 P.2d 222(1990), and its progeny. In Hollis v. Garwall, Inc., 137 Wn.2d 683, 695, 974 P.2d 836( 1999), the court held that extrinsic evidence may be relevant to determining the intent of
restrictive covenants provided that the extrinsic evidence is relevant in giving meaning to
the words used in the covenants. In applying the Berg principles in this context, just as
with other contracts, such evidence cannot include evidence of a party's unilateral or
4
No. 86870-1
Madsen, C.J. (dissenting)
subjective intent, evidence to show intent independent of the written document, or
2
evidence that would alter or contradict what is written. Id.Remand to allow the parties an opportunity to submit extrinsic evidence about
what was intended by the language regarding signs and whether it is relevant to duration
is necessary before any conclusion can be made about intent to address length of rentals.
When extrinsic evidence is to be considered under the Berg line of cases, it is
generally for the trier of fact. In Berg, 115 Wn.2d at 667, the court adopted Restatement
(Second) of Contracts§ 212 (1981), which provides:
"( 1) The interpretation of an integrated agreement is directed to the
meaning of the terms of the writing or writings in the light of the
circumstances, in accordance with the rules stated in this Chapter.
(2) A question of interpretation of an integrated agreement is to be
determined by the trier offact if it depends on the credibility of extrinsic
evidence or on a choice among reasonable inferences to be drawn from
extrinsic evidence. Otherwise a question of interpretation of an integrated
agreement is to be determined as a question of law."
Berg, 115 Wn.2d at 667-68 (emphasis added) (quoting RESTATEMENT§ 212).
Whether the trier of fact must make these determinations does not require that
ambiguity appear on the face of the document. "[A] party may offer extrinsic evidence in
a contract dispute to help the fact finder interpret a contract term and determine the
contracting parties' intent regardless of whether the contract's terms are ambiguous.
Extrinsic evidence is not admissible, however, to show intention independent of the
2
Berg addresses parol evidence (extrinsic evidence) used to interpret the meaning of what is
actually contained in a contract. DePhillips v. Zolt Constr. Co., 136 Wn.2d 26, 32, 959 P.2d
1104 (1998). In contrast, "the 'parol evidence rule' precludes use of parol evidence [(extrinsic
evidence)] to add to, subtract from, modify, or contradict the terms of a fully integrated written
contract." ld.
5
No. 86870-1
Madsen, C.J. (dissenting)
contract." Brogan & Anensen, LLC v. Lamphiear, 165 Wn.2d 773, 775-76, 202 P.3d
960 (2009) (citation omitted) (citing Berg, 115 Wn.2d at 667-69; Hollis, 137 Wn.2d at
695).
In summary on this issue, I very strongly disagree with the majority's conclusion
that the restriction on the size of "for rent" signs proves a conscious decision to permit
rentals of any duration. The sign restrictions do not on their face disclose anything about
duration of permitted rentals. If relevant intent is to be found in the restrictive covenants
prior to adoption of the ban, it must be found by a trier of fact based on extrinsic
evidence.
Whether the reservation ofpower in the covenants authorized a majority
of the members of the association to adopt a ban on short-term rentals
The second question is whether the Association had the authority to adopt the ban
on short-term rentals by majority vote. At the outset, I do not agree with the Court of
Appeals' artificial distinction in Meresse v. Stelma, 100 Wn. App. 857, 999 P.2d
1267 (2000), that dictates a difference in reserved authority depending on whether a
change in covenants or a new restriction is at issue. This is the ill-advised theory adopted
by the majority.
For this theory, Meresse relies on Lakeland Property Owners Ass 'n v. Larson, 121
Ill. App. 3d 805, 459 N.E.2d 1164, 1167, 1169, 77 Ill. Dec. 68 (1984)). Meresse, 100
Wn. App. at 859. Referring to Lakeland Property Owners and other cases, the Colorado
Supreme Court recognized a split in jurisdictions on the matter. Evergreen Highlands
Ass 'n v. West, 73 P.3d 1, 4-7 (Colo. 2003).
6
No. 86870-1
Madsen, C .J. (dissenting)
The relevant language in the covenants here authorizes a majority of the
association members to agree "to change these protective restrictions and covenants in
whole or in part." CP at 87. Instead of reading this language to mean that the reserved
authority extends only to making changes to the existing covenants, the Colorado court
said that such a construction "seems illogically narrow." Evergreen Highlands, 73 P.3d
at 6. The court explained that "from a linguistic standpoint, the Lakeland conclusion that
'change or modify' can only apply to the alteration of existing covenants, and not the
addition of new and different ones, is not well-founded. Webster defines 'change' as 'to
make different."' !d. (quoting Webster's Third New International Dictionary 373
(1986)); see also Ticor Title Ins. Co. v. Rancho Santa Fe Ass 'n, 177 Cal. App. 3d 726,
223 Cal. Rptr. 175, 179 (1986) ("the words 'changed' and 'modified' include any
alteration whether involving an increase or decrease") "[C]ovenants could certainly be
changed or made different either by the addition, subtraction, or modification of a term."
Evergreen Highlands, 73 P.3d at 6. 3
I do not agree with the majority's view that we should treat reservation of power
provisions differently depending on whether a change or amendment is made to an
existing restriction or is by way of a new restriction. In either case, a modification is
made to the covenants, and in the latter case, the modification is to the entire set of
restrictions. Moreover, the distinction followed by the majority is flawed because the
3
The Colorado court speculated that the differing outcomes in the cases were actually based on
the different factual circumstances and the severity of the consequences presented rather than
merely on the distinction between a change to a covenant and creation of a new covenant. Id.
7
No. 86870-1
Madsen, C.J. (dissenting)
result can be that a relatively minor new restriction can be precluded if there is no
unanimous agreement, while a major change can be made by a simple majority vote.
The important guideline is that the change or addition must be reasonably
consistent with the general plan of development, and it should make no difference
whether a change is made to an existing restriction or a new restriction is added.
Here, the question is whether the restrictive covenants, as they existed before the
ban, permitted a majority of the homeowners to approve a restriction limiting the
minimum period for which homeowners may rent their houses in the communities.
When covenants reserve power to less than all of the affected homeowners to adopt
additional restrictions, then less than all may adopt restrictions provided this power is
exercised in a reasonable manner and is consistent with the general plan of development.
E.g., Shafer v. Bd. ofTrs. of Sandy Hook Yacht Club Estates, Inc., 76 Wn. App. 267, 273-
74, 883 P.2d 1387 (1994)). The reason for this rule is that
[i]n a sense, there is an inherent inconsistency between an elaborate set of
restrictive covenants designed to provide for a general scheme or plan of
development (generally considered to be for the benefit of the respective
grantees), and a clause therein whereby the grantor reserves to itself the
power at any time in its sole discretion to change or even arbitrarily
abandon any such general scheme or plan of development (a power which
is solely for the benefit of the grantor).
Flamingo Ranch Estates, Inc. v. Sunshine Ranches Homeowners, Inc., 303 So. 2d 665,
666 (Fla. App. 197 4), quoted in Lakemoor Cmty. Club, Inc. v. Swanson, 24 Wn. App. 10,
15, 600 P.2d 1022 (1979); see also Shafer, 76 Wn. App. at 273. Or, to put it another
way, the rule ensures that a neighborhood will retain its essential nature and character as
8
No. 86870-1
Madsen, C.J. (dissenting)
originally developed. Homeowners' legitimate expectations based on the covenants
governing at the time they acquired their property will in general be protected.
As Justice Gordon McCloud's dissent notes, there may be circumstances where a
court may be able to make this determination as a matter of law. But in many cases
extrinsic evidence will be available that bears on the matter of whether an amendment to
the restrictive covenants is reasonably consistent with the covenants. Under Berg's
context rule, such evidence includes "the circumstances leading to the execution of the
contract, the subsequent conduct of the parties and the reasonableness of the parties'
respective interpretations. Berg, [15 Wn.2d] at 667-69." Shafer, 76 Wn. App. at 275.
The trial court realized that extrinsic evidence may well be relevant and
admissible, but there is no indication that such evidence was considered here. In
particular, evidence of surrounding facts may be highly relevant, i.e., in what
environment were the restrictive covenants written. Particularly where the propriety of
short-term rentals is concerned, the nature and character of the area and of other nearby
developments may shed light on what is reasonably consistent with the restrictive
covenants and what the property owners could reasonably expect.
If, for example, the development is in an area where short-term rentals are usually
allowed in nearby, similar developments because of recreational activity in the vicinity
that homeowners can take advantage of by making short-term rentals, it will be less likely
that a ban on short-term rentals is reasonably consistent with the restrictive covenants.
9
No. 86870-1
Madsen, C.J. (dissenting)
The court should acknowledge the possibility that there will be insufficient
evidence to draw any conclusions about durationallimits in the existing covenants or
whether they are reasonably consistent with the existing covenants. If this proves to be
the case, then the ban adopted by the Association cannot be given effect because it is in
excess of the authority reserved by the covenants.
But at this point, remand for consideration of the question of consistency with the
existing covenants, including whether possible extrinsic evidence sheds light on this
question, is appropriate as well.
I turn next, briefly, to another concern.
Whether a ban on short-term rentals is relevant to the restriction that lots
must be utilized solely for single family residential use
Although not my reason for writing separately, I am troubled by the conclusion
that because renters for short terms live in, eat in, sleep in, and so on, in the residence,
there is no distinction to be drawn between a short-term rental, essentially renting to
others for vacation use, and longer-term rentals where renters use the home as their
primary residence. Individuals on vacation are not limited by constraints of the same
kind as other renters. It seems odd to ignore the fact that many people equate vacations
with freedom to act in ways outside their normal conduct. It is to be expected that spirits
may be higher and conduct more uninhibited. Noise levels, for example, could well be
higher as a consequence. Vacationers might not be as considerate of neighbors and their
neighbors' peace and quiet as if they were residents on a more permanent basis. It cannot
be gainsaid that some on vacation consume alcoholic beverages to a greater degree than
10
No. 86870-1
Madsen, C.J. (dissenting)
they ordinarily would, with consequent effects on their behavior. I do not doubt that
many of these behaviors occur with residents as well as vacationers, but it seems to be to
be putting blinders on to conclude that there is no meaningful distinction relevant to the
commercial versus residential uses distinction. Certainly, in any given case, the
vacationer may behave in every significant respect like a resident. But over the course of
a year, over the course of seasonal changes, there will undoubtedly be a cumulative effect
of noise, traffic, and disruption of neighborhoods from successive short-term rentals.
I recognize that many courts have refused to accept the distinction, and without
factual, almost scientific evidence, my view is not likely to prevail. Nonetheless, I think
it almost disingenuous to act as if rentals for under 30 days are the same as renting to
persons who use homes in the communities as their primary residences.
In conclusion, remand should be directed to permit submission of extrinsic
evidence on the questions of whether the reference to rent signs in the covenants shows
any intent about rental duration and whether the ban on short-term rentals is reasonably
consistent with the existing covenants.
For the reasons stated, I dissent.
11
No. 86870-1
Madsen, C.J. (dissenting)
l
12
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n
No. 86870-1
GORDON McCLOUD, J. ( dissenting)-The original restrictive covenants in
this case permitted future amendments by majority vote. The homeowners knew
that when they bought in. The original restrictive covenants also limited rental
advertising, prohibited nuisances and offensive uses, and barred commercial and
nonresidential uses. The homeowners also knew that when they bought in. A
majority of the homeowners then voted to amend their covenants to limit short-term
rentals.
The question presented by this case is whether the homeowner-majority can
do that, or whether this amendment is so inconsistent with the original covenants
that the court should require homeowner unanimity to make this change. The
majority answers this with a broad legal holding that all rental activity-presumably
including hourly rentals-is protected by covenants like the ones at issue here, which
certainly contemplated some rental activity but are actually silent on the topic of
rental duration. This extremely broad holding ignores the limited and fact-specific
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
nature of the question presented in this case. Because I would remand for a proper
factual inquiry, I respectfully dissent.
1. The majority's holding is so broad that it prospectively invalidates any
limit on the duration of rentals
Before I address the majority opinion in detail, I pause to note the breadth of
the trial court order it affirms. The majority characterizes this dispute as limited to
the validity of the 2011 amendment prohibiting rentals of less than 30 days, majority
at 5, but in fact, the Wilkinsons sought and obtained four separate rulings from the
trial court:
(A) That the Plan of Development of Chiwawa River Pines
(hereinafter "the Plan") for phase 2 and for phases 3-6 each
allow residential rentals of any duration - including
residential rentals of less than 30 days.
(B) That specifically the Pope & Talbot Protective Covenants and
the 1988 and 1992 Protective Covenants allow residential
rentals of any duration - including residential rentals of less
than 30 days.
(C) That a prohibition on commercial uses of lots as expressed by
the Protective Covenants as set forth in the Pope & Talbot
Covenants for phase [2] and for phases 3-6 and the 1988 and
1992 Covenants described above does not include residential
rentals of any duration - including residential rentals for less
than 30 days.
(D) That to the extent that the 2011 Amendment ... seeks to bar
residential rentals of any duration, including those ofless than
30 days, it is unenforceable.
2
Wilkinson, et ux., eta!. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
Clerk's Papers (CP) at 442-43. By affirming the trial court's order in its entirety,
the majority not only invalidates the 2011 amendment barring rentals ofless than 30
days, it also prospectively invalidates any limit on the duration of rentals in Chiwawa
River Pines. 1
1
According to the majority, the Association has asked us to consider only part of
the trial court's order, and the majority has accordingly limited its opinion consistent with
Rule of Appellate Procedure (RAP) 12.1(a), which states that "the appellate court will
decide a case only on the basis ofissues set forth by the parties in their briefs." See majority
at 2 n.l. Unfortunately, the majority does not tell us which parts of the trial court's order
it has declined to address. This is sure to cause considerable confusion, both as to the
meaning of the majority's opinion and as to the purpose and effect of RAP 12.1(a).
The purpose of RAP 12.1(a) is to encourage efficiency and fairness and to give
parties a certain degree of control over the theory of their case. To these ends, RAP 12.1(a)
prevents an appellate court from finding an error that the parties did not assign. State v.
Hubbard, 103 Wn.2d 570, 573-74,693 P.2d 718 (1985). It also prevents appellate courts
from deciding legal issues the parties have not argued "[unless] necessary to reach a proper
decision." Harris v. Dep't of Labor & Indus., 120 Wn.2d 461, 467-68, 843 P.2d 1056(1993) (citing Alverado v. Wash. Pub. Power Supply Sys., 111 Wn.2d 424, 429-30, 759
P.2d 427 (1988)); see also RAP 12.1(b). But RAP 12.1(a) does not require this court to
ignore portions of the summary judgment order to which the Association assigned error in
this case.
This is so for two reasons. First, as the majority concedes, the Association assigned
error to the trial court's entire summary judgment order. See majority at 2 n.l (citing Br.
of Appellant at 3-4). Having done so, the Association will surely be surprised to learn that
the majority has decided not to address every issue in that order. As noted above, the trial
court's summary judgment order stated that "to the extent that the 2011 Amendment ...
seeks to bar residential rentals of any duration, including those of less than 30 days, it is
unenforceable." CP at 443 (emphasis added). Clearly, the Association hoped that this
court would recognize its authority to ban rentals of 30 days. I see no indication that it
wanted this court, in the event that we upheld the trial court's ruling on the 30-day rental
ban, to quietly leave in place the rest of the trial court's order banning rental limits of "any
duration." !d. Certainly, RAP 12.l(a) is not a license to do so.
3
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
2. The majority errs in holding that it is manifestly clear as a purely legal
matter that the original covenants, which are silent on the topic of rental
duration, allow rentals of any duration
As the majority correctly observes, a court's primary objective in interpreting
restrictive covenants is to determine the drafter's intent, 2 and if that intent is not clear
from the covenants' plain language, then the court may consider extrinsic evidence. 3
According to the majority, however, the language of the covenants makes it
"manifestly clear that the drafters [of the Chiwawa River Pines covenants] intended
Second, despite the majority's protestations to the contrary, its reasoning does
affirm the trial court's summary judgment in its entirety. The effect of this reasoning is a
blanket prohibition on any amendments to the Chiwawa River Pines covenants that limit
rental activity by duration. The majority leaves open the possibility that vacation rental
activity may be limited in Chiwawa River Pines in other ways-perhaps by a ban on the
provision of room service because that is too "commercial" under Mains Farm
Homeowners Ass'n v. Worthington, 121 Wn.2d 810, 816, 854 P.2d 1072 (1993)-but it
absolutely prohibits any purely durationallimit.
This is so because the majority's decision turns entirely on the "use" to which the
property is put during the rental term. According to the majority, if that use is '"eating,
sleeping, and other residential purposes,"' it is permitted "'no matter how short the rental
duration."' Majority at 11 (quoting Ross v. Bennett, 148 Wn. App. 40, 51-52, 203 P.3d
383 (2008)). Thus, according to the majority, there is no legal distinction in this case
between a 30-day residential rental and a one-night residential rental.
If the majority believes that shorter term bans can be distinguished from bans on 30-
day rentals, it should explain how. The Association came to this court assigning error to
the trial court's contrary ruling, and this court accepted review.
2
Majority at 8 (citing Hollis v. Garwall, Inc., 137 Wn.2d 683, 696, 974 P.2d 836(1999); Riss v. Angel, 131 Wn.2d 612, 623, 934 P.2d 669 (1997)).
3
Majority at 8 (quoting Hollis, 137 Wn.2d at 697).
4
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
to permit vacation rentals." Majority at 11.
I disagree. Instead, those covenants make it manifestly clear that the drafters
intended to permit some rental activity, but it is not clear what type of rental activity
the drafters contemplated-long-term, transient, or both. Because the covenants are
ambiguous in this respect, extrinsic evidence is admissible to, in the majority's
words, '"illuminate what was written."' Majority at 8 (quoting Hollis, 137 Wn.2d
at 697).
Further, because extrinsic evidence is admissible to clarify an ambiguity in a
restrictive covenant, the meaning of the ambiguous language is at least in part a
question of fact. Some lower courts, however, have erroneously characterized the
interpretation of a restrictive covenant as solely a question of law. 4 Both the trial
court and the majority made that error here.
In the trial court, the Wilkinsons argued that any amendment "seek[ing] to bar
residential rentals of any duration, including those of less than 30 days . . . is
unenforceable" under Ross v. Bennett, 148 Wn. App. 40, 52, 203 P.3d 383 (2008).
CP at 442-43, 466-67. They reasoned that because Ross held that "short-term
4
See Wimberly v. Caravello, 136 Wn. App. 327,336, 149 P.3d 402 (2006); Meresse
v. Stelma, 100 Wn. App. 857, 864, 999 P.2d 1267 (2000); Parry v. Hewitt, 68 Wn. App.
664, 668, 847 P.2d 483 (1992). But see Ross, 148 Wn. App. at 46.
5
Wilkinson, et ux., eta!. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
vacation rentals" were consistent with the residential use covenant at issue in that
case, 5 short-term rentals must also be consistent with the Chiwawa River Pines
covenants, which limit lots to "single family residential use." 6 The trial court agreed,
concluding that "there really [we ]ren 't any facts ... in dispute, particularly when
one reads the Ross case" and granted summary judgment for the plaintiffs. Verbatim
Report ofProceedings (Dec. 15, 2011) (1 VRP) at 34-35.
The trial court thus treated the meaning of a residential use provision as a
question of law and foreclosed any factual inquiry into the intent embodied in the
Pope & Talbot and 1988/1992 Chiwawa River Pines covenants. The majority
repeats this error by stating that, under Ross, "[i]f a vacation renter uses a home 'for
the purposes of eating, sleeping, and other residential purposes,' this use is
residential, not commercial, no matter how short the rental duration." Majority at
11 (quoting Ross, 148 Wn. App. at 51-52).
The majority misapprehends Ross's significance to this case and to the law of
restrictive covenants in general. Ross was not a broad holding applicable to every
5 The covenants at issue in Ross provided that "'[a]ll parcels within said property
shall be used for residence purposes only and only one single family residence may be
erected on each such parcel."' Ross, 148 Wn. App. at 44. They also authorized "'[a]ny
member [to] delegate ... his right of enjoyment to the common areas and facilities to the
members of his family, friends, and tenants."' !d. (first alteration in original).
6 CP at 85.
6
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
covenant that distinguishes residential from commercial activity. The Ross court
held only that a particular restrictive covenant limiting property use to "residence
purposes only" was consistent with short-term vacation rentals. And it based that
holding on a highly fact-specific record. 7 That record contained a declaration by one
of the covenant's drafters showing that the drafters had '"modeled"' the disputed
covenants on those from a neighboring community where '"vacation rentals'" did
occur. Ross, 148 Wn. App. at 47-48. Thus, the Ross court did not hold that
restrictive covenants limiting lots to "residential" use are always consistent with
vacation rentals. Rather, the Ross court held that a residential use provision is not
so plainly incompatible with vacation rentals that it will override clear evidence that
the drafters intended to permit such rentals.
In contrast to the Ross court, the trial court in this case had very little
evidence before it regarding the intent embodied in the original Pope & Talbot and
1988/1992 Chiwawa River Pines covenants. The trial court therefore ruled as a
matter of law that short-term vacation rentals are always consistent with residential
and single-family use.
7
Indeed, the Ross court acknowledged the factual nature of the question before it,
noting that "[w]hile interpretation of the covenant is a question oflaw, the drafter's intent
is a question of fact." Ross, 148 Wn. App. at 49.
7
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
Had this in fact been the question presented, the trial court's decision might
well be correct. 8 But the question before the trial court was different. It was whether
the Association could validly limit short-term rentals pursuant to the Pope & Talbot
and 1988/1992 restrictive covenants, which prohibited nuisances and offensive uses,
banned commercial and nonresidential uses, permitted limited rental signage,
restricted lots to "single family" use, and reserved to the Association the power to
adopt new land-use restrictions by majority vote. CP at 13, 30. These covenants
clearly permit some rental activity, because they allow residents to post signs
advertising their properties for rent. They also clearly contemplate restrictions on
8
Both Ross and persuasive out-of-state authority indicate that short-term vacation
rentals may be consistent with covenants limiting members to "single family" and
"residential" use. See Ross, 148 Wn. App. at 52; see, e.g., Slaby v. Mountain River Estates
Residential Ass 'n, 100 So. 3d 569, 578-79 (Ala. Civ. App. 20 12) (holding that "property is
used for 'residential purposes' when those occupying it do so for ordinary living purposes"
and therefore "so long as the renters continue to relax, eat, sleep, bathe, and engage in other
incidental activities ... , they are using the cabin for residential purposes"); Applegate v.
Colucci, 908 N.E.2d 1214, 1220 (Ind. Ct. App. 2009) (holding rental use is residential use
because the occupants "use the structures for eating, sleeping, and other typical activities
associated with a residence or dwelling place"); Lowden v. Bosley, 395 Md. 58, 69, 909
A.2d 261, 267-68 (2006) (holding that "[w]hen property is used for a residence, there
simply is no tension between such use and a commercial benefit accruing to someone
else"); Mullin v. Silvercreek Condominium Owner's Ass'n, 195 S.W.3d 484,490 (Mo. Ct.
App. 2006) ("'The plain and ordinary meaning of 'residential purposes' is 'one in which
people reside or dwell, or which they make their homes, as distinguished from one which
is used for commercial or business purposes'" (quoting Blevins v. Barry-Lawrence County
Ass'nfor Retarded Citizens, 707 S.W.2d 407, 408 (Mo. 1986)). While we acknowledge
this authority, however, we reiterate that the legitimacy of the amendment at issue in this
case is a question of fact.
8
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
rental advertising, because they limit rental signage to one sign per lot. For the most
part, however, these covenants raise questions: what constitutes a nuisance; what
constitutes an offensive use; when rentals might conflict with single-family
residential usage; and whether there are any specific limits on the majority's power
to amend the covenants.
To answer these questions, a court cannot simply rely on a prior appellate
court's interpretation of one similar covenant provision in a case with different facts.
Rather, the court must consider the disputed covenants in their entirety, along with
any extrinsic evidence relevant to their interpretation. The majority refuses to
acknowledge the admissibility of any extrinsic evidence at all in this case, because
it concludes (apparently as a matter of law) that the drafters of the original and
1988/1992 Chiwawa River Pines covenants "anticipated rentals and consciously
decided not to limit their duration." Majority at 9 (emphasis added). This constitutes
a major departure from precedent. 9
9
See, e.g., Ross, 148 Wn. App. at 50 (permitting extrinsic evidence to clarify the
terms "residential" and "residence purposes" in restrictive covenant); Bauman v. Turpen,
139 Wn. App. 78, 87-90, 160 P.3d 1050 (2007) (permitting extrinsic evidence to clarify
the meaning of the term "one story" in restrictive covenant); Wimberly, 136 Wn. App. at
at 331, 407 (~ermitting extrinsic evidence to clarify the phrase "simple, well-proportioned
structure"); Day v. Santorsola, 118 Wn. App. 746, 755-57, 76 P.3d 1190 (2003) (to
determine whether restrictive covenant provision addressed "height" as opposed to "view,"
the trial court properly considered extrinsic evidence of the way the provision had
historically been enforced).
9
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
3. Whether the homeowner-majority had the authority to amend the
restrictive covenants here is, instead, a question of fact.
For at least a decade, Washington courts have held that where a set of
restrictive covenants empowers residents to adopt amendments by majority vote,
those amendments are valid only so long as they are adopted "'in a reasonable
manner [and are] consistent with the general plan of development."' Majority at 14
(quoting Shafer v. Bd. ofTrs. of Sandy Hook Yacht Club Estates, Inc., 76 Wn. App.
267, 273-74, 883 P.2d 1387 (1994)). Our courts have also recognized that an
amendment is unreasonable as a matter of law where it imposes an obligation that
differs fundamentally from those contemplated in the original covenants. Meresse,
100 Wn. App. at 866-67 (amendment authorizing access road's "relocation"
unreasonable where original covenants addressed only "'maintenance, repairs"' and
"'additional constructions"' involving said road, and the clause permitting future
amendments was limited to certain topics).
In applying these holdings, our cases have never distinguished between
amendments that "change" existing covenants and amendments that "create new
restrictions." Majority at 14 (emphasis added). But in today's opinion, the majority
adopts that distinction as a new rule. This new rule contrasts covenants that permit
homeowners to "change" existing covenants with covenants that permit
10
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
homeowners to "create new" covenants. Majority at 15 (emphasis omitted). 10
According to the majority, where a set of restrictive covenants permits a majority of
homeowners to create new covenants, these covenants need have "no relation to
[the] existing covenants." !d. By adopting this rule, the majority is able to
distinguish this case from Shafer, in which the Court of Appeals found the creation
of an entirely new covenant to be "consistent with the general plan of development."
Shafer, 76 Wn. App. at 273. I would not depart from precedent in this manner.
Instead, I would stick with current precedent, which holds that a court
determines whether a restrictive covenant amendment is permissible-that IS,
10
The majority cites Ebel v. Fairwood Park II Homeowners' Ass 'n, 136 Wn. App.
787,793, 150 P.3d 1163 (2007), andMeresse, 100 Wn. App. at 865-66, for this distinction.
Majority at 15. The majority's theory is that the court in Meresse applied a different-and
more restrictive-rule than that articulated in Shafer, because the covenants in Shafer
permitted more radical innovations than does a generic amendment provision. !d. at 17.
But Meresse in fact addresses Shafer at length, relying extensively on its reasoning and
rule statement and pausing to "add a caveat appropriate to the different facts [at hand]."
Meresse, 100 Wn. App. at 865. Significantly, that caveat does not distinguish the language
of the covenants at issue in Shafer. See id. at 865-66. Rather, it distinguishes the "nature"
of the disputed amendment, i.e., its relation to existing covenants. !d. ("In Shafer, the
existing covenants were extended to a restriction of a similar nature .... Shafer does not
address changes in restrictive covenants that differ in nature from those already in
existence.") And in Ebel, any seeming distinction between changes and new covenants is
dicta. Ebel's reasoning makes clear that it regards Meresse and Shafer as two cases
applying the same rule, according to which an amendment is permissible so long as it is
reasonable and consistent with the general plan of development. See Ebel, 136 Wn. App.
at 793 (citing Meresse and Shafer for the rule that "an amendment may not create a new
covenant that has no relation to the existing covenants"). That is the rule I would apply
here.
11
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
whether it is '"consistent with the general plan of development"'-by looking to "the
language of the covenants, their apparent import, and the surrounding facts."
Meresse, 100 Wn. App. at 865 (emphasis added and omitted) (quoting Shafer, 76
Wn. App. at 274). In some cases, a court will be able to ascertain the reasonableness
of a disputed amendment as a matter law, without undertaking any factual inquiry. 11
For the reasons outlined above, however, this is not such a case.
In its oral summary judgment ruling, the trial court below acknowledged the
factual component of the "reasonable and consistent" inquiry. 12 That court's orders,
however, do not reveal any consideration of the facts "surrounding" the drafting of
the original Pope & Talbot covenants or their consolidation in 1988/1992. This
omission may reflect a need for guidance; unfortunately, the majority provides none.
11
An amendment is unreasonable as a matter of law if, for example, it plainly
contradicts language in the·original covenants. See Wright v. Cypress Shores Dev. Co.,
413 So. 2d 1115, 1118, 1124 (Ala. 1982) ("cancellation of the [residential use] restrictions
so as to permit the construction of a convenience store" was "unreasonable exercise of
[developer's] authority" to "annul, cancel, modify or amend" restrictive covenants). It is
also unreasonable if it differs fundamentally from the obligations described in the original
covenants. Meresse, 100 Wn. App. at 866-67 (amendment authorizing access road's
"relocation" unreasonable where original covenants addressed only "'maintenance,
repairs'" and "'additional constructions"' involving said road, and the clause permitting
future amendments was limited to certain topics). But where an amendment is not
unreasonable as a matter of law, its validity can be determined only in light of "the
surrounding facts." Id. at 865 (citing Shafer, 76 Wn. App. at 271).
12
See 1 VRP at 31-32 ("[I]n assessing what constitutes a reasonable manner
consistent with the general plan of development, a court should look to the language of the
covenants, their apparent import, and the surrounding facts.").
12
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
I would take this opportunity to clarify what "surrounding facts" are relevant to the
"reasonable and consistent" inquiry.
While no Washington case precisely describes the scope of the "surrounding
facts" inquiry, the North Carolina Supreme Court provides a useful guide:
A disputing party will necessarily argue that an amendment is
reasonable if he believes that it benefits him and unreasonable if he
believes that it harms him. However, the court may ascertain
reasonableness from the language of the original declaration of
covenants, deeds, and plats, together with other objective
circumstances surrounding the parties' bargain, including the nature
and character of the community. For example, it may be relevant that
a particular geographic area is known for its resort, retirement, or
seasonal 'snowbird' population. Thus, it may not be reasonable to
retroactively prohibit rentals in a mountain community during ski
season or in a beach community during the summer. Similarly, it may
not be reasonable to continually raise assessments in a retirement
community where residents live primarily on a fixed income. Finally,
a homeowners' association cannot unreasonably restrict property rental
by implementing a garnishment or 'taking' of rents (which is essentially
an assessment); although it may be reasonable to restrict the frequency
of rentals to prevent rented property from becoming like a motel.
Armstrong v. Ledges Homeowners Ass 'n, 360 N.C. 547, 559-60, 633 S.E.2d 78(2006) (emphasis added). This approach rightly focuses on landowners' reasonable
expectations. "The character of the community" necessarily informs these
expectations; it should therefore inform a court's assessment of what is reasonable
13
Wilkinson, et ux., et al. v. Chiwawa Cmtys. Ass 'n, No. 86870-1
(Gordon McCloud, J., Dissenting)
and consistent with the covenants by which a community's members agreed to
abide. 13
CONCLUSION
The trial court erred in concluding that the meaning of the disputed covenants
in this case was a question oflaw controlled by prior precedent. The majority makes
the same error. This deprives the parties of an opportunity to present evidence on
how to interpret the original covenants and how to determine the homeowners'
reasonable expectations about how those covenants might be amended. This also
substitutes the values of this court's majority for the values of the drafters and
homeowners. Instead, I would remand for a proper factual inquiry. I therefore
dissent.
13
In light of the need to protect the property owner's legitimate expectations, courts
have considered the "character of the community" at the time the property was purchased
and whether the covenants were enforced so as to maintain this character over time. Se.
Jurisdictional Admin. Council, Inc. v. Emerson, 363 N.C. 590, 597-98, 683 S. E. 2d 366(2009) (considering character of the community "at the time the plaintiff property owners
purchased their lots" and noting that this character was maintained "consistently since the
first lots were sold"); Armstrong, 360 N.C. at 560 (considering the character of the
community at the time the plaintiffs purchased their properties).
14
Wilkinson, et ux., et al. v. Chiwawa Comtys. Ass 'n, No. 86870-1
Gordon McCloud, J., Dissenting