Opinion
No. 60590-9-I.
August 18, 2008.
Appeal from a judgment of the Superior Court for San Juan County, No. 04-2-05182-8, Vickie I. Churchill, J., entered June 26, 2007.
Affirmed by unpublished opinion per Ellington, J., concurred in by Lau and Leach, JJ.
A covenant requiring that premises be used only for purposes of a private dwelling residence and prohibiting trade or business use except for certain home businesses prohibits use of the home as a vacation rental. The trial court did not abuse its discretion when it enjoined such use. We affirm.
BACKGROUND
Leslie Rae and Doris Brain own homes in Vusario Plat on Orcas Island. All Vusario properties are subject to the following covenant:
That the Grantee or Grantees, under any conveyance, shall not at anytime conduct, or permit to be conducted, on said premises, any trade or business of any description, nor shall said premises be used for any other purpose whatsoever except for the purpose of a private dwelling residence.
Clerk's Papers at 99.
In October 2004, Rae obtained a conditional use permit from San Juan County and began to use her home as a vacation rental for periods of less than 30 days. Brain filed a claim seeking declaratory relief and a permanent injunction, contending such rentals constitute a business use in violation of the covenant.
In July 2005, while Rae's motion for summary judgment was pending, the Vusario Maintenance Association "clarified" the covenants. The private dwelling residence limitation remained unchanged, but certain types of home businesses were expressly allowed and rentals of less than 30 days were expressly prohibited:
[Owners] shall not at anytime conduct, or permit to be conducted, on said premises, any trade or business of any description, except that home businesses completely compatible with residential use, which must be kept within the home and shall not result in increased vehicle or pedestrian traffic or increased activity outside the home, shall be permitted. Said premises shall not be used for any other purpose whatsoever except for the purpose of a private dwelling residence.
Transient rentals shall not be permitted. Transient rental [is] occupancy of residence by non-owner where owner is paid monetary consideration for a term of less than thirty days.
Id. In a comment accompanying the clarification, a list of approved home occupations included writer, artist, computer programmer, consultant architect, and graphic artist.
In November 2005, the court granted Brain's request and enjoined Rae from "further transient rental of her property." Clerk's Papers at 227. The injunction defined transient rental as "a tenancy of less than 30 days." Id.
Rae continued to rent her property, but for rental terms of 30 days or more. In March 2007, Brain moved for contempt and for modification of the injunction to preclude all vacation rentals. The court initially denied the motion and awarded fees to Rae. Brain moved for reconsideration. Relying on Civil Rule (CR) 60, the court granted the motion for reconsideration, modified the injunction to prohibit all vacation rentals, and reversed the fee award to Rae. Rae appeals.
ANALYSIS
Rae contends the covenants do not prohibit vacation rentals of 30 days or more. When we construe restrictive covenants, our primary task is to determine the drafter's intent. Wimberly v. Caravello, 136 Wn. App. 327, 336, 149 P.3d 402 (2006). While interpretation of the covenant is a question of law, the drafter's intent is a question of fact. Id. We examine the language of the covenant and consider the instrument in its entirety. Bauman v. Turpen, 139 Wn. App. 78, 89, 160 P.3d 1050 (2007). We may also consider surrounding circumstances reflecting the intent of the drafter. Id. Extrinsic evidence is admissible "to determine the meaning of the specific words and terms used in the covenants." Hollis v. Garwall, Inc., 137 Wn.2d 683, 696, 974 P.2d 836 (1999). We review questions of law de novo. Thompson v. Hanson, 142 Wn. App. 53, 60, 174 P.3d 120 (2007). Questions of fact are reviewed for substantial evidence. Bauman, 139 Wn. App. at 87. But where reasonable minds could reach but one conclusion, questions of fact may be determined as a matter of law. Owen v. Burlington Northern and Santa Fe R.R. Co., 153 Wn.2d 780, 788, 108 P.3d 1220 (2005).
Rae contends the covenant prohibits only rentals lasting less than 30 days. She argues longer rentals are allowed because they are not expressly forbidden and are an incidental, not business, use of the property.
The court ruled that the covenant prohibited all vacation rentals, including those lasting longer than 30 days. This amounts to an implicit finding that the association did not intend to narrow the scope of the original covenant when it expressly prohibited transient rentals lasting less than 30 days.
We have reviewed the covenant and the undisputed extrinsic evidence, and agree this is the only reasonable reading. Meeting minutes show that when the association expressly prohibited 30 day rentals, it had no intent to create an indirect authorization of longer term rentals. During the meeting, the "historical and present use of Vusario homes for private, personal residential purposes was reiterated," and members approved a motion to "reaffirm" that "commercial usage[,] including transient rental of homes[,] is business use, which violates the 'purpose of a private dwelling residence.'" Clerk's Papers at 15. The focus upon 30 days appears a specific response to Rae's planned rental term, not a change in the underlying policy expressed in the covenant.
Moreover, such a reading would create a conflict with the covenant's emphatic requirement that homes at Vusario not be used "for any other purpose whatsoever except for the purpose of a private dwelling residence." Clerk's Papers at 6. This language is the equivalent of "residential" and "residential purposes only," which courts have consistently interpreted to preclude business use. Hollis v. Garwall, Inc., 137 Wn.2d 683, 698, 974 P.2d 836 (1999) ("a residential use restriction prohibits any commercial or business use on the property"); Metzner v. Wojdyla, 125 Wn.2d 445, 452, 886 P.2d 154 (1994) (covenant restricting property to "residential purposes only" prohibited home day care business);Mains Farm Homeowners Ass'n v. Worthington, 121 Wn.2d 810, 854 P.2d 1072 (1993) (covenant requiring that lots "shall be used for single family residential purposes only" prohibited adult family home business); Hagemann v. Worth, 56 Wn. App. 85, 91, 782 P.2d 1072 (1989) (covenant requiring property to be used "for single family residential purposes only" prohibited group home for the elderly). Rae rents her home to vacationers who are paying for the temporary use of her property. This is a business use prohibited by the covenant.Hagemann, 56 Wn. App. At 91 (1989) ("to provide residence to paying customers is not synonymous with a residential purpose").
Rae argues the rentals are allowed as an incidental use. She cites to the transient rental permit, which limited rentals to six months of the year. But when a covenant prohibits virtually all business use, a commercial use for half a year is not incidental. Wash. Sec. and Inv. Corp. v. Horse Heaven Heights, Inc., 132 Wn. App. 188, 200, 130 P.3d 880 (2006) (incidental uses must be consistent with land use restrictions);compare Hunter Tract, 98 Wash. at 115 (occasionally inviting public to home as guests is an incidental use of residential property).
Nor does Rae's use fall within the home business exception, which applies to residents of Vusario who work out of their homes. The covenant allows work that involves providing professional services to offsite clients, such as computer programming or graphic arts.
Rae further argues that Brain did not demonstrate the required change of circumstances to justify modification of the injunction, and that the court erred in relying upon CR 60(b)(6). When circumstances change, the court has the inherent power to modify an injunction not accomplishing its intended purpose. CR 60(b)(6) is an appropriate vehicle by which to invoke this power. State ex rel. Bradford v. Stubblefield, 36 Wn.2d 664, 674-75, 220 P.2d 305 (1950);see Pacific Sec. Cos. v. Tanglewood, Inc., 57 Wn. App. 817, 820-21, 790 P.2d 643 (1990). We review the grant or denial of CR 60(b) motions for abuse of discretion. Topliff v. Chicago Ins. Co., 130 Wn. App. 301, 304-05, 122 P.3d 922 (2005). A court abuses its discretion when its decision is manifestly unreasonable or based on untenable grounds.Mayer v. Sto Industries, Inc., 156 Wn.2d 677, 684, 132 P.3d 115 (2006).
CR 60(b)(6) authorizes the court to "relieve a party or his legal representative from a final judgment, order, or proceeding" if "it is no longer equitable that the judgment should have prospective application."
The purpose of the injunction was not just to prohibit 30 day vacation rentals, but to enforce the private dwelling requirement. Once the circumstances of Rae's renting changed, modifying the injunction to fulfill the second purpose as well as the first was not an abuse of discretion.
Rae also contends the court should have awarded attorney fees based on CR 11 because Brain's motion contained factual errors and was not well grounded in fact and law.
CR 11 is meant to prevent baseless filings and filings made for an improper purpose. MacDonald v. Korum Ford, 80 Wn. App. 877, 884, 912 P.2d 1052 (1996). "A filing is 'baseless' when it is '(a) not well grounded in fact, or (b) not warranted by (i) existing law or (ii) a good faith argument for the alteration of existing law.'" Id. at 883-84 (quoting Hicks v. Edwards, 75 Wn. App. 156, 163, 876 P.2d 953 (1994)). To impose sanctions for a baseless filing, the trial court must find that a party filed a claim without a factual or legal basis and that the attorney who signed the filing did not conduct an objectively reasonable inquiry. Id. at 884. Because CR 11 sanctions have a potential chilling effect, courts may impose sanctions only when it is "patently clear that a claim has absolutely no chance of success." Skimming v. Boxer, 119 Wn. App. 748, 755, 82 P.3d 707 (2004). We review decisions to impose or deny CR 11 sanctions for an abuse of discretion.Id. at 754.
Though Brain's initial motion contained incorrect information, it was not baseless. It cited CR 60 and included evidence that Rae was offering her home as a monthly vacation rental. Brain corrected the errors in her motion for reconsideration and, after reconsideration, the court declined to award fees to either party because Brain prevailed on the injunction issue and Rae prevailed on the contempt issue. This decision was not manifestly unreasonable.
Affirmed.