Tuesday, March 24, 2015

Watts v. Oak Shores Community Ass'n (Cal. Ct. App. - March 24, 2015)

This is justice?!

I'm not saying that Justice Gilbert's opinion is unambiguously wrong.  Maybe it even reaches the legally correct result.

But the thing leaves an incredibly bad taste in my mouth.  If it's indeed the "right" result, maybe the system that gives rise to that result needs changing.

The facts are simple, at least when sufficiently condensed.  Oak Shores is a homeowner's association in a community of 650 or so homes.  From the opinion, it looks like the place is on a lake or at some other vacation-like spot in San Luis Obispo county -- I think this one.  Of the 650 homes, only a tiny fraction -- around twenty percent -- are occupied full time.  Most of 'em are just vacation homes.

Some of those owners -- around 66 of 'em -- occasionally rent their places out as vacation rentals.  No problem.  You're allowed to do that.  Defrays the cost of your vacation home.  For what it's worth, the practice is also socially beneficial.  Allows people not rich enough to afford a second home to vacation in a nice place.  Stops nice properties from being vacant most of the year.  Good for everyone.

But many people in the HOA who live there full-time -- and (presumably) some of those who have their vacation houses there -- don't necessarily like having riff-raff around who can't afford a second home.  They don't like the short-term rentals.  Because they don't do it and, being rich enough, don't need it.  Plus it puts more people in the community pool, the lake, makes for extra garbage, etc. that wouldn't be there if the homes were simply vacant.

So the HOA adopts some rules.  Some of which, I think, are potentially reasonable.  There's a $325 fee for owners who rent their homes out.  I'm not sure that's really necessary, since one person (albeit "riff-raff") presumably creates a similar amount of garbage etc. as a rich person.  But okay.  It's a fairly small fee in the scheme of things -- probably offset by a day or two's worth of rental.  There are some other restrictions as well; a limit on the number of watercraft on the property, etc.  Things that seem fine.

But the one that struck me as the most restrictive -- and absurd -- is one that said that any rental has to be for a minimum of seven days.  That one stops the overwhelming majority of rentals.  And it is clearly designed to keep out the "weekend riff-raff".  You know:  People who actually have jobs and who can't afford to take off a full week and hang out at a fancy place on the lake.

So one of the owners sues.  Claiming that this restriction is unreasonable.  Why shouldn't he be allowed to rent his place for three days instead of seven?  Same number of people in the house.  The owner's ultimately responsible for any damage, garbage, etc.  Why should anyone care?

Or, more accurately, why should anyone legitimately -- i.e., "reasonably" -- care whether the rental is for three or seven days?  Sure, maybe the weekend renters wear prefer tee-shirts and sneakers to polo shirts and boat shoes.  But that's not a good reason to exclude 'em.

Or so asserts the plaintiff.  Plausibly, in my view.

What does the Court of Appeal do?  Two things.

First, it upholds the restriction.  Finding it "obviously" reasonable.  Here's the money quote from Justice Gilbert:

"That short-term renters cost the Association more than long-term renters or permanent residents is not only supported by the evidence but experience and common sense places the matter beyond debate. Short-term renters use the common facilities more intensely; they take more staff time in giving directions and information and enforcing the rules; and they are less careful in using the common facilities because they are not concerned with the long-term consequences of abuse."  (Emphasis added).


Three-day renters "use the common facilities more intensely" than seven-day renters?  Three day renters violate the rules more than seven day renters?  That's really so "beyond debate"?

My sense is that, on a daily basis, a renter for three days would use, say, the pool, the lake or the garbage can roughly, oh, once a day.  Just like a seven day renter would.  Their use is roughly the same.

Indeed, if anything, a seven day renter uses the facilities more.  Because he uses it for seven days, whereas a three-day renter uses 'em for roughly three.  That's around double, if my math's anywhere near right.

Sure, you could fit in two three-day renters for one seven day renter.  But practically, who gets a three day rental in the middle of the week?  We all know full well that we're talking about either having a family in there for a whole week or a family in there for the weekend.  And which one of these two groups makes more garbage, uses the pool more, etc.?  That's right.  The group there for the whole week.  So the HOA's limitation actually increases the use of community resources.  The antithesis of what the regulation purports to do.

Unless you count the practical reality of the whole thing.  Which seems designed just to stop rentals.  Or at least rentals to riff-raff; read, less wealthy folks.  Make it noneconomical for the owners to rent it out as well as for the riff-raff to afford the place.

That's what the plaintiff says is going on here.  Which seems fairly "common sense" to me.  Justice Gilbert, by contrast, seems to think that the converse is not only true, but "beyond debate".

I'd respectfully disagree.

It's not that I would disagree that renters are (at least slightly) more of a hassle than owners.  But that's not the dispute.  The dispute is about seven-day renters, who are allowed, versus two- or three-day renters, who aren't.  There's no substantial distinction between these groups, in my mind, with respect to how much they "use the common facilities" or are "careful in using the common facilities because they are not concerned with the long-term consequences of abuse."  They are both renters.  Yes, they are (somewhat) more burdensome than owners.  But the owners are ultimately responsible for any damage etc., pay a fee for 'em, and are replacing their own use for that of the renters.  The distinction between three- and seven-day renters seems far from indisputably legitimate.

But Justice Gilbert nonetheless sees it starkly differently.

So that's the first thing the Court of Appeal does.

What's the second?  It awards the HOA its attorney's fees.

Legally, that's perhaps appropriate.  The HOA agreement says the prevailing party gets fees.  Fair enough.

How much attorney's fees does the trial court award to the HOA?  An award that the Court of Appeal (largely) affirms?  How much attorney's fees is the HOA legitimately entitled to in order to defend the lawsuit of a guy who says that he should be allowed to rent his place for a weekend rather than for a week?


Oh, yeah.  That's reasonable.  Awards like that don't totally squash the little guy's ability to sue an HOA over unreasonable restrictions on the use of his property.  Lots of people are willing to risk a million-dollar-plus judgment against them rather than simply submit to whatever limits the HOA places on 'em.  There's no systemic problem with such a regime at all.

*Retroactive Sarcasm Alert*

Am I wrong?  Is anyone else troubled, even in just the slightest, with either the reasoning or the result here?

Again, I'm not necessarily saying that the legal doctrines applied here are wrong.  But the net result is exceptionally troubling to me.  A regime that creates this outcome seems a regime in need of serious improvement.

Because I think that the plaintiff, Mr. Watts, had a darn good point.  As well as a darn good reason for bringing this action.

And I say that as someone who just returned from two weeks of renting someone else's vacation home in an HOA in Hawaii.  So I'm not even the riff-raff that the HOA is trying to keep out.  Or at least I'm  their kind of riff-raff; e.g., the classless nouveau riche.