Court Defers to HOA Board on Owner’s Right to Operate Winery within Community

This case involved a dispute between a group of homeowners (“Plaintiffs”), their homeowners association (“Association”), individual members of Association’s board of directors (“Directors”), and other homeowners who were operating a vineyard on their property for the purpose of making wine that was being sold to the public (“Defendant Owners”). The property in question, where the vineyard was being cultivated, is a 1.75 acre lot that is part of a 28 lot residential subdivision located in Thousand Oaks, California.  The subdivision is a common interest development that is subject to a recorded declaration of CC&Rs and is governed by a homeowners association through its board of directors. Provisions contained in Association’s CC&Rs prohibit the use of property within the development for any business or commercial activity. The CC&Rs also allow deviations from the applicable deed restrictions “to avoid unnecessary hardships or expense,” but further state that, “no deviation shall be allowed to authorize a business or commercial use.”

In 2005, Defendant Owners planted a 600 plant vineyard on a portion of their lot. Before planting the grape vines, Defendant Owners submitted a landscape plan to Association’s board of directors which reflected the plan to create three separate vineyards, but did not reflect the number of grape vines to be planted and which did not disclose that the grapes to be grown on the property would be used to make wine that would be offered for sale to the public. Defendant Owners had their first harvest of the grapes in 2008, which they intended to use to commence a wine business.

In 2009, Defendant Owners filed a fictitious business name statement which reflected that they were doing business at their property under the names, “Los Robles Hills Winery” and “Puerta del Cielo Vineyards.” They also obtained a business license and a license from the Department of Alcoholic Beverage Control to sell their wine over the internet. Initially, the licenses reflected the address for the business at their residential property, but that was later changed to a different address that was not within the community where the vineyard was located. Defendant Owners then began selling the wine in 2010. The operation of the business included transporting the grapes that were harvested on the property to a location in Camarillo where the actual wine making took place and the wine was bottled with Defendant Owners’ personal label. The bottles of wine were then stored in and shipped from a different facility located in Malibu, California. Defendant Owners also use a truck in connection with the wine business that advertises their logo, “Los Robles Hills Winery” and their website on the exterior which is parked in the driveway of their property. Defendant Owners contended that the truck was kept covered while on the property. Defendant Owners also hosted periodic wine tastings by appointment at in their home tasting room.

Commencing in or about 2011, Plaintiffs began complaining that the operation of Defendant Owners’ vineyard on their property was commercial enterprise being conducted in violation of the CC&Rs and demanded that Defendant Owners cease operating a commercial vineyard. Association’s five person board of directors investigated the complaints and three out of five of the directors concluded that Defendant Owners were not using their property for a non-residential purpose in violation of the CC&Rs and that there was no prohibited business or commercial activity being conducted on the property. Upset with the decision made by Association’s board of directors, Plaintiffs filed their lawsuit against Association, Directors, and Defendant Owners in which they sought a judicial determination and decree that the subject CC&Rs and deed restrictions prohibit Defendant Owners from operating their vineyard on their property, and an injunction prohibiting the continued operations of Defendant Owners’ business on the subject property. Prior to trial, Plaintiffs dismissed the case against Association and Directors and proceeded to trial on their claims against Defendant Owners.

The trial court ruled: