Twin W. Owners' Association v. Andrew Murphy and Jennifer Murphy

Waterville, Washington civil litigation lawyer represented Defendant sued by a homeowners' association seeking to enforce a restrictive covenant restricting vacation rental of residence for vacation.



We swim across the Columbia River from Chelan County, the situs of the land in

Wilkinson v. Chiwawa Communities Association, 180 Wn.2d 241, 327 P.3d 614 (2014),

2

to Douglas County, the location of the property in this appeal. We address the same

question resolved by the Washington Supreme Court in Wilkinson: whether a homeowner

association may amend its restrictive covenants to ban or highly regulate the use of a

residence as a vacation rental. Since we are an intermediate appellate court, we decline

to usurp our limited authority and to overrule Supreme Court precedent. We deem the

precedent controlling in this appeal brought by Twin W Owners' Association. We affirm

the superior court's summary judgment ruling, favoring homeowners Andrew and

Jennifer Murphy, that declared amended restrictive covenants void. We also affirm a

ruling by the superior court that awarded reasonable attorney fees and costs to the

Murphys for work incurred before the state Supreme Court.

FACTS

Twin W Owners' Association (Twin W or homeowner association) is a

Washington nonprofit corporation that governs ninety-four properties in rustic Douglas

County. The properties oversee the prodigious Columbia River. In 2004, the homeowner

association adopted and recorded a set of covenants, conditions, and restrictions

encumbering all lots.

We quote some of the Twin W, then known as Twin WW Ranch, protective

covenants relevant to this appeal. The 2004 covenants introduce, in an initial section

labeled "preamble,” a theme of maintaining a rural character and protecting property

values:

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1.1 Sometimes there is a fine line drawn between protecting

property owners and inhibiting their life style. To fully understand the

following protective covenants, it is necessary to examine the underlying

theme or intent of Twin WW Ranch as a collection of properties: rural

living with insured [sic] quality and protected life style in the midst of

productive fruit orchards.

1.2 Twin WW Ranch lies in a rural setting offering small acreages

with a tremendous view of the Columbia River. The parcels were designed

so the purchaser could feel comfortable in building a quality home and

estate without fear of devaluation due to his neighbor's action. In most

cases, homes lack protection and are subject to devaluation. However,

Twin WW Ranch has the ability to protect itself from devaluation and

insure increasing value for its homeowners. More importantly, these

covenants are designed to create and maintain a protected rural life style.

Clerk's Papers (CP) at 15.

The Twin W covenants constrain, in vague terms, some uses of a lot.

2.1 Reasonable Use. No lot shall ever be used in a fashion which

unreasonably interferes with the other lot owners' use and enjoyment of

their respective properties.

. . . .

2.4 Offensive Activities. No noxious or offensive activity shall be

carried on upon any lot, nor shall anything be done or maintained thereon

which may be, or become, an annoyance or nuisance, or adversely effect

the use, value, occupation and enjoyment of any adjoining property in the

development.

. . . .

2.12 Businesses. No store or business shall be carried on upon said

premises or permitted thereon which involves on-premises sales, or which

constitutes a nuisance.

CP at 15-18.

The 2004 restrictive covenants address administration of the homeowner

association:

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3.1 Approval. When these covenants require owner approval such

approval shall be by sixty percent (60%) vote, with one vote per lot (a

"Lot”).

3.2 Amendment. Amendment of these covenants shall be by sixty

percent (60%) vote, with one vote per Lot. Amendments shall be in writing

and recorded in the same manner as these covenants.

CP at 18. No provision expressly reserves to the homeowner association the power to

add new covenants. Finally, the 2004 covenants provide for an award of attorney fees to

a substantially prevailing party in litigation:

3.4 Enforcement. Enforcement shall be by proceedings at law or in

equity against any person or persons violating or attempting to violate any

covenant either to restrain violation or to recover damages. The

substantially prevailing party in any dispute of the enforcement of these

covenants shall be entitled to recover reasonable attorney's fees.

CP at 19.

Enter Andrew and Jennifer Murphy. In 2007, the Murphys purchased a lot within

Twin W. In 2009, the Murphys built a $1.2 million home on the lot for the purpose of

generating income as short-term rental property.

Other Twin W homeowners complain about the rental nature of Andrew and

Jennifer Murphy's residence. A neighbor declared that, at times, as many as twenty

people and a dozen cars have occupied the Murphys' rental property. The large groups

have partied late and emitted loud noise into the early hours of the morning. On one New

Year's weekend, renters exploded mortar fireworks between 1:00 a.m. and 1:20 a.m. A

call to the Murphys after the fireworks went unanswered.

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Renters of Andrew and Jennifer Murphy's vacation rental have deposited, in the

road, garbage in excess of the residence's garbage can's capacity. The wind has blown

the garbage into neighbors' lots. Murphy renters have also abandoned, on a boat dock,

full gas cans at risk of being blown into the Columbia River.

In 2020, Twin W passed, by supermajority vote, new protracted covenants

restricting and regulating short-term rentals. We quote most of the new covenants in

order to illustrate their stretched and painstaking nature:

2.21 Short-Term Rental Properties. Pursuant to Section 1.1

(Preamble), Section 1.2 (Preamble), Section 2.1 (Reasonable Use), and

Section 2.4 (Offensive Activity), the rental of Lots for periods of less than

thirty days at a time to any person ("Short-Term Rental”), other than the

rental of an accessory dwelling unit, shall be subject to the following

regulations intended to protect the other Lot owners from unreasonable

interference with their use and enjoyment of their Lots:

In order to be eligible to engage in Short Term Rental activity, a Lot

must have a completed residence constructed; no Lot without a completed

residence shall engage in Short Term Rental activity (i.e.—no renting

vacant lots, motorhomes, trailers, etc.). Commencing in 2021, prior to

renting their properties, all Lot owners desiring to use their Lot for a ShortTerm Rental shall apply to the Twin W board on or before October 15 of

the year prior to renting for permission to engage in Short-Term Rentals for

the upcoming calendar year, using an application to be provided by the

Twin W board and paying the associated processing fee.

For 2021, each applicant desiring to engage in Short-Term Rentals

shall be granted permission by the Twin W board to do so. A Lot owner

must continuously apply for a Short-Term Rental in each year, starting in

2021, or that Lot will forever lose its eligibility to be used as a Short-Term

Rental. All Lots shall forever lose their eligibility to apply to engage in

Short-Term Rentals upon a change of ownership (including a change in the

ownership of shares or units in an entity that owns the Lot) that occurs after

October 15, 2020. A Lot may also lose its eligibility to apply to engage in

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Short-Term Rentals upon violation of and pursuant to the Short-Term

Rental Rules and Regulations attached as Exhibit A.

Each Lot authorized to engage in Short-Term Rentals shall maintain

a policy of general liability insurance applicable to its Short-Term Rental

with limits of $1,000,000 per occurrence, and which names Twin W, Twin

W's association administrator at that time, and all Lot owners that

immediately surround the applicant's Lot as well as all Lot owners who

share joint use of a dock, as additional insureds. Each Lot authorized to

engage in Short-Term Rentals shall pay an administration fee to Twin W to

cover the additional expenses associated with oversight of the Short-Term

Rentals such that no general association dues paid by all Lot owners will be

used for administering Short-Term Rentals. No Lot owner shall rent any

portion of its Lot as a Short-Term Rental at the same time as it is rented as

an ADU [accessory dwelling unit] Rental.

Twin W adopts the Short-Term Rental Rules and Regulations

attached as Exhibit A and incorporated herein to govern Short-Term

Rentals, which may be amended by Twin W's board from time to time

upon written notice to Lot owners, but without a vote of the Lot owners, to

aid in the efficient administration of Short-Term Rentals, however, no

amendment of the Short-Term Rental Rules and Regulations shall change

the number of annual Short-Term Rentals without a vote of the Lot owners.

. . . 2.22 Accessory Dwelling Unit Rental Properties. Pursuant to

Section 1.1 (Preamble), Section 1.2 (Preamble), Section 2.1 (Reasonable

Use), and Section 2.4 (Offensive Activity), the rental of accessory dwelling

units on any Lot to any person ("ADU Rental”) shall be subject to the

following regulations intended to protect the other Lot owners from

unreasonable interference with their use and enjoyment of their Lots:

Prior to renting their property, all Lot owners desiring to use their

Lot for an ADU Rental shall apply annually on or before October 1 to the

Twin W board for permission of an ADU Rental for the following calendar

year, using an application to be provided by the Twin W board. Up to five

Lots may be used as an ADU Rental in a given year. If Twin W receives

more than five timely ADU Rental applications, all applicants shall be

placed into a lottery and five Lots shall be chosen for approval for the

upcoming calendar year. Each ADU Rental applicant shall maintain a

policy of general liability insurance applicable to its ADU Rental with

limits of $1,000,000 per occurrence, and which names Twin W, Twin W's

association administrator at that time, and all Lot owners that immediately

surround the applicant's Lot as well as all Lot owners who share joint use

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of a dock, as additional insureds. Each ADU Rental applicant shall pay an

administration fee to Twin W to cover the additional expenses associated

with oversight of the ADU Rentals such that no general association dues

paid by all Lot owners will be used for administering ADU Rentals. No

Lot owner shall rent any portion of its Lot as a short term rental at the same

time as it is rented as an ADU Rental. Lot owners are advised to refer to

Douglas County Code 18.16.170, which provides, "The property owner

(which shall include title holders and contract purchasers) shall occupy

either the primary unit or the accessory unit as their permanent residence.”

Twin W adopts the ADU Rental Rules and Regulations attached as Exhibit

A and incorporated herein to govern ADU Rentals, which may be amended

by Twin W's board from time to time upon written notice to Lot owners,

but without a vote of the Lot owners, to aid in the efficient administration

of ADU Rentals, however, no amendment of the ADU Rental Rules and

Regulations shall change the number of annual ADU Rentals without a vote

of the Lot owners.

. . . .

2.23 Prohibition of Leasing Residences to Multiple Tenants and

Subleasing Residences. No residence shall be leased to more than one

tenant at any time. No residence shall be subleased.

CP at 36-38.

Lot owners in Twin W voted separately on each of the paragraphs of the new

covenants rather than in the aggregate. Covenant 2.21 received sixty-two yes votes and

twenty-three no votes. Covenant 2.22 received fifty-nine yes votes and twenty-seven no

votes. Covenant 2.23 received seventy yes votes and fifteen no votes.

Other property owners in the homeowner association, besides Andrew and

Jennifer Murphy, rent their property on short terms. In 2020, the Murphys' residence

generated income of $103,171.

Affirmed