AARON, J.
Defendants Steve Garcia and Rena Marrocco, sued in their capacities as co-trustees of the Nirvana Trust (jointly the defendants), appeal from a judgment of the trial court entered in favor of plaintiff Acqua Vista Homeowners Association (the Association). The Association filed an action against the defendants seeking to restrain the defendants from continuing to lease out their unit in the Acqua Vista complex for periods of less than six months, in violation of the terms of the Acqua Vista Declaration of Covenants, Conditions and Restrictions (CC&Rs).
A jury found that the defendants had violated the CC&Rs with respect to renting the unit out for periods of less than six months, and the trial court issued a permanent injunction restraining the defendants from doing so in the future.
On appeal, the defendants contend that the trial court erred in admitting hearsay evidence regarding statements that were allegedly made by one of the defendants' tenants to the general manager of the Acqua Vista complex.
We conclude that the defendants have not demonstrated reversible error. Even if we were to assume that the trial court should not have admitted the evidence in question, there remains abundant evidence that the defendants leased the unit for periods of less than six months, and we are confident that the jury would have reached the same result even if the challenged evidence had not been admitted. We therefore affirm the judgment.
The Acqua Vista residential condominium complex is a twin-tower high-rise building, comprised of 382 residential units, located in downtown San Diego. The Association is led by a board of directors (the Board), who "have [a] fiduciary responsibility to . . . make sure that the HOA doesn't go bankrupt," and to "[p]rotect, enhance, and to maintain the building."
The defendants are co-trustees of the Nirvana Trust, which owns a condominium unit in the Acqua Vista complex. The defendants purchased the condominium, as trustees, in February 2005.
The Association's CC&Rs were recorded in June 2004. The CC&Rs include the following provision:
In addition, paragraph No. 4.3.4 of the CC&Rs grants the Board "the power to adopt, amend and repeal the rules and regulations set forth in the Association['s] rules as it deems reasonable," and further authorizes the Board to, "in its discretion, promulgate rules applicable to the Owners."
Rule No. 20.4 of the Association's rules and regulations states that "Leases shall be for a minimum of six (6) months," and elsewhere further indicates that "No condominium shall be leased for a term less than six months."
In March 2013, the Board sent the defendants a letter indicating that the Association had become aware that the defendants had been renting their unit for periods of less than six months. The Association requested that the defendants attend a hearing, scheduled for April 17, 2013, to address the matter.
In response, the defendants sent a letter to the Board denying that they had in the past or were currently violating any of the rules applicable to their condominium. The defendants indicated that they would not appear at the scheduled hearing, and also stated that "it [was their] contention that [the Board members] are singling us out for this treatment because of Mr. Garcia's Hispanic surname." The letter further indicated that if the Board attempted to pursue "these issues," the defendants would "fil[e] a complaint with the Office of Fair Housing and Equal Opportunity."
At the April 17, 2013 meeting, the Board voted to fine the defendants and sent them a letter notifying them of the imposition of the fine.
In late April 2013, the Board requested a copy of a six-month lease from the defendants, with the understanding that if the defendants "had, in fact, produced a six-month lease, the Board would have dropped the entire matter."
In approximately September 2013, the Association received additional information suggesting that the defendants may have been soliciting additional short-term renters for their unit. Specifically, the general manager for the Association, A.J. Swinton, had seen online advertisements for vacation/short-term rental of the defendants' unit.
On September 10, 2013, the Board sent the defendants another hearing notice and notice of violation.
During late September 2013, Marrocco and Swinton corresponded by e-mail. Swinton was attempting to obtain a copy of the defendants' lease with a tenant. Marrocco refused to comply with this request.
In October 2013, the defendants rented their unit to M.J. Webb for a period of 40 days, beginning at the end of October 2013. Webb testified that she "had a month's lease," and that she subsequently "signed—I had an extension for another week." Webb negotiated the month-long lease with "AMSI." She never intended to rent the unit out for six months; rather, she "rented short-term." Webb never told anyone that she planned to stay for six months, and no one at "AMSI" told her that there was a six-month minimum rental period for the unit.
Webb rented the unit again from March 1, 2014 through April 3, 2014. This tenancy was also negotiated through "AMSI." Webb denied that she ever told anyone at "AMSI" that she needed a place to stay for a six-month period, and explained that she would not have told anyone this because at that time, she was in the process of purchasing another condominium and needed a place to stay for only a short-term period, until the purchase closed.
The defendants rented their unit to P. Callabe beginning on May 24, 2014, through "AMSI."
At trial, Garcia admitted that the defendants used a marketing company named "American Marketing Systems, Inc." or "AMSI" to market their unit for rent. Garcia signed a document with AMSI that states that AMSI "is a vacation, corporate, and extended-stay housing provider for short-term stays as an alternative to hotels."
At trial, the Association produced an exhibit that purported to be a lease of defendants' unit to Webb. The exhibit indicated a lease term of March 1, 2014 through September 1, 2014—i.e., a six-month lease. Webb testified that she did not sign a document that had that lease period on it. She stated that she did not recognize the first page of the document that was being shown to her at trial, and that she had never seen it, even though her signature appeared on the second page of the document.
In addition, a former employee of AMSI produced a number of AMSI reservation contracts related to renting the unit at issue in this case. Several of the contracts had overlapping rental terms.
The Association filed a complaint against the defendants on January 14, 2014.
In response to the Association's complaint, the defendants not only denied the allegations in the complaint, but filed a cross-complaint alleging that the Association had breached fiduciary duties owed to the defendants, and also alleging that the Association had "`targeted'" the defendants based on Garcia's Hispanic surname.
The case proceeded to a mixed jury and bench trial, beginning on March 7, 2016. The jury found that the defendants had violated the short-term rental restrictions set forth in the CC&Rs, and rejected the defendants' contentions that the Association had discriminated against the defendants or breached a fiduciary duty owed to the defendants. Based on the jury's findings, the trial court issued a permanent injunction prohibiting the defendants from "[l]easing the real property that is the subject of this action . . . for less than six (6) months," and entered judgment in favor of the Association.
The trial court subsequently determined that the Association was the prevailing party in the action and awarded the Association its attorney fees and costs.
The defendants filed a timely notice of appeal from the judgment.
The defendants argue that the trial court prejudicially erred in admitting the hearsay statements that an individual named D. O'Neill made to Swinton, regarding the fact that O'Neill was renting the defendants' unit for a period of less than six months.
Prior to trial, the Association filed a motion in limine, seeking a ruling to admit the testimony of Swinton regarding a conversation he had engaged in with a tenant of the defendants, D. O'Neill. According to Swinton, O'Neill told Swinton that he was staying at the defendants' condominium at Acqua Vista for only "a couple of months." The Association explained that it had made arrangements to take O'Neill's deposition in New York, his state of residence, but that prior to the scheduled deposition, O'Neill had been contacted by the defendants' counsel and then attempted to "back out of his deposition." The Association subpoenaed O'Neill, and he sat for a deposition, but he testified that he did not recall what his original lease term had been for the unit at Acqua Vista, and that he had no recollection of the conversation with Swinton.
The Association argued that O'Neill's statement to Swinton was admissible as "non-hearsay" to help establish that the Association "had a reasonable basis to believe that the Defendants were engaging in short-term rentals" and also to "prove Mr. Swinton's knowledge and belief and action in conformity with that knowledge." The Association also argued that the hearsay statement was admissible, through Swinton, because it was being offered "to prove, by inference, Mr. O'Neill's state of mind and conduct in conformity therewith."
The trial court considered the admissibility of O'Neill's hearsay statement, both before and during the trial. Relying on Evidence Code section 1250, an exception to the hearsay rule that permits hearsay testimony in order to establish a declarant's state of mind, the trial court ultimately overruled the defendants' objections and allowed the Association's attorney to ask Swinton about his conversation with O'Neill. Swinton testified that O'Neill had told him that he was planning to stay at Acqua Vista "only for a couple of weeks."
The defendants contend that the trial court abused its discretion in permitting Swinton to testify as to what O'Neill said to him regarding the length of his planned stay in the defendants' unit. Specifically, the defendants argue that in order for the hearsay statements to have been admissible pursuant to Evidence Code section 1250, as evidence of O'Neill's state of mind or intention, the evidence of O'Neill's state of mind or intent had to be relevant to the issues in the case. The defendants argue that whether O'Neill planned to stay for a few weeks, a few months, or the full term of his six-month lease, was not relevant to the question whether they had violated the CC&Rs regarding the short-term lease prohibition.
We conclude that we need not consider whether the trial court erred in admitting Swinton's testimony regarding his conversation with O'Neill because even if we assume that the trial court should not have admitted this evidence, the defendants have not demonstrated that such a presumed error was prejudicial. Code of Civil Procedure section 475 provides that no appealed judgment or order shall be "reversed or affected by reason of any error, ruling, instruction, or defect" unless the record demonstrates that the error was "prejudicial" and caused appellant "substantial injury," and that a "different result would have been probable." "Prejudice is not presumed." (In re Marriage of Shimkus (2016) 244 Cal.App.4th 1262, 1269.)
The defendants attempt to demonstrate prejudice through the following argument: "[T]he only evidence Acqua Vista had to commence litigation was Mr. O'Neill's hearsay statement and some online advertisement that was in no way connected to Appellants. By allowing the hearsay statement in, the Court gave the jury the only real purported evidence that renters stay there less than six months." (Italics added.) However, as our recitation of the facts of this case indicates, there was an abundance of additional evidence actually presented at trial that established that the defendants in fact leased their unit for periods of less than six months. What information the Association had available to it when it commenced internal proceedings against the defendants is irrelevant.
The defendants appear to acknowledge in their briefing on appeal that the Association presented additional evidence at trial, but suggest that the testimony of one of the strongest witnesses, Webb, "was far less than sufficient to meet [the Association's] burden" because she "lacked credibility." The defendants' contend that Webb "lacked credibility" because "admitting to the lease would have exposed her to potential liability for breach of [the] lease that, up to that point, Appellants had not pursued." This contention lacks merit. Webb provided reasons for her need for short-term rentals, and defense counsel did not ask her a single question related to her stays or specifically, their length. Rather, he simply asked her whether her signature appeared on one of the lease documents.
In addition, there was evidence that even during the pendency of this litigation, the defendants rented their unit for a period of less than six months. Specifically, there was evidence that they rented the unit to Callabe, pursuant to a lease that was for a term of only 26 days. Further, the evidence demonstrated that the defendants utilized a management company that marketed itself as specializing in "vacation, corporate, and extended-stay housing . . . for short-term stays as an alternative to hotels" (italics added), and that a number of the purported six-month lease contracts prepared by this company with respect to the defendants' unit had overlapping rental terms, which called into question their authenticity, or, at least, the authenticity of the terms of these leases. Given the picture that emerges from the evidence presented at trial, we can say with confidence that there is no reasonable probability that the defendants would have obtained a more favorable result if the trial court had not allowed Swinton to testify about the conversation he had had with O'Neill in which O'Neill indicated that it was his intention to stay at Acqua Vista for a period of less than six months.
The judgment is affirmed. The Association is entitled to its costs on appeal.
O'ROURKE, Acting P. J. and DATO, J., concurs.
