Robert K. Lee, a Manhattan Beach attorney, got permits to rent both of his homes in Palm Desert as short-term rentals in 2016. But he began to believe many neighboring rentals were operating illegally – that is, hosting guests for a few days or weeks, even without the required permits.

“It’s unfair to everyone,” Lee said.

The attorney spent more than a year researching local short-term rentals, he said, trying to determine which properties were flouting the law.

Then, he sued more than 40 rentals in Palm Desert and Rancho Mirage.

“It’s a win for everyone – except for the illegal rentals,” he said.

But people on the receiving end of the lawsuit say the case feels less like a quest for justice and more like the pursuit of profit. And in its current form, the lawsuit could spread to more cities: Lee listed up to 1,000 John Doe defendants on the case, and said he plans to sue vacation rentals in the seven remaining Coachella Valley cities next.

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As the market for vacation rentals has boomed, Coachella Valley municipalities have tried to strike a regulatory balance, crafting city ordinances meant to prevent tourists from overwhelming residential neighborhoods while harnessing vacation rentals as a source of tax revenue.

Each of the nine cities in the Coachella Valley now requires homeowners to get permits, like the ones Lee holds, before leasing their homes for less than a month. Homeowners caught violating the city ordinances face fines and citations.

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Lee argues his lawsuit will help relieve local cities burdened with policing noise and nuisances at unlicensed rentals, and level the playing field for landlords following the rules.

But two attorneys with experience in unfair competition law say aspects of Lee’s case strike them as unusual, including a letter attached to the lawsuit, which seems to nudge defendants to lawyer up or settle quickly.

Meanwhile, homeowners and property managers named as defendants – ranging from midsized companies to single homeowners – say they think Lee’s real purpose is to spook them into paying him money to settle the lawsuit.

“This is strictly a fishing expedition intended to enrich the attorney,” said Jim Pearce, whose company Fairway Vacation Rentals manages 130 rentals in the Coachella Valley.

Dixie Hall, another Palm Desert homeowner named in the lawsuit, said she thinks Lee is using the courts to profit. “We’re just normal, mom-and-pop people,” she said. “They’re basically taking advantage of the system. It just shouldn’t be.”

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Lee filed the case on July 23 on behalf of the limited liability company that owns his houses, Destination Vacation Rentals, alleging each of the Coachella Valley defendants failed to get short-term rental permits required by Palm Desert.

The lawsuit is filed under Section 17200 of the state Business and Professions Code, which seeks to protect against unfair business competition.

Destination Vacation Rentals claims the defendants in its case are competing with it unfairly because they allegedly operate without valid permits, advertise their rentals without posting permit numbers, don’t post their permit numbers inside their homes or fail to pay city bed tax.

Alexander E. Papaefthimiou, a Camarillo attorney, said Destination Vacation Rentals will have to prove it has been directly harmed by the unfair practices it alleges.

“It can’t be some tangential consequence,” Papaefthimiou said.

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Destination Vacation Rentals claims illegal rentals nick its business in a few ways: It argues unpermitted rentals dilute market share, depress rental rates and increase overhead for permitted rentals. The company also contends illegal rentals harm cities, since they don’t pay city bed taxes, but use city resources and reduce the number of long-term rentals in the Coachella Valley.

In a lengthy appendix, Destination Vacation Rentals then makes specific allegations about each defendant, listing the names of alleged renters and the dates of their stays.

The lawsuit aims to get a permanent injunction to stop the defendants from using their homes as vacation rentals. It also seeks attorneys’ fees and costs.

Papaefthimiou said the most unusual part of the case is a letter attached to the lawsuit and addressed to defendants, which advises them of the typical cost of hiring an attorney, tells them that “over 90 percent of cases end in a victory for the individual who brought a lawsuit” and warns them a court “can order the sale of a property, attachment of wages, or a levy on a bank account” to pay a judgment.

Papaefthimiou called it “a little bit coercive” – and added that even if defendants settle with Lee, another plaintiff could sue them again if they remain out of compliance with short-term rental rules.

Alex Mashiri, a San Diego consumer advocacy attorney, said Lee’s hardest challenge will be showing a direct economic injury, such as evidence that his rental is more expensive than illegal rentals because of taxes. He also said it would be unusual for an attorney to represent a business he owns.

“Most lawyers don’t like to represent themselves,” he said. “If he’s the sole member of the LLC, they can take his deposition.”

Defendants said the lawsuit surprises them, too.

Phillip Godbold, one of the defendants in the lawsuit, said he and his wife have managed her parents’ condominium in Palm Desert for over a dozen years. When they were served with the lawsuit, they started calling the city and their homeowners’ association to figure out if they needed a permit. Except for a weekend or two around Coachella, Godbold said the couple usually rents the home to guests staying longer than a month.

“We didn’t even know we needed to get something like this through the city,” he said.

Other co-defendants denied the lawsuit’s allegations.

“They’re referencing a property that has been licensed as a short-term rental and is licensed as a short-term rental," said Quinn Tamm, owner of California Vacation Villas, which manages 70 rentals and is named in the lawsuit.

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Denean Koren, a Redondo Beach resident with a two-bedroom home in Desert Falls, said the lawsuit caught her in a technicality, as she switched her permit from a vacation rental company to her own name.

“The thing is, we’re already in compliance,” she said. “I’ve been filing my taxes with the city.”

In separate email statements, the vacation rental management companies, Vacasa and TurnKey Vacation Rentals, said they believe Lee's case is unmerited. Vacasa's statement called the lawsuit "solely a shakedown scheme intended to prompt defendants to make settlement payments to the plaintiff's attorney for less than the cost of defending the lawsuit."

According to Palm Desert city records, the city has issued 56 citations to short-term rentals since the beginning of this year. The city confirmed Destination Vacation Rentals owns two properties in the city and that both have held short-term rental permits since 2016.

Lee doesn’t plan to stop at Palm Desert and Rancho Mirage.

“Our goal is to expand to every single city in the Coachella Valley, and investigate, and join them in this lawsuit,” he said.

Amy DiPierro covers real estate and business news at The Desert Sun in Palm Springs. Send her a message at amy.dipierro@desertsun.com or 760-218-2359. Follow her on Twitter @amydipierro.