Aimco, which owns and manages about 50,000 properties, sued Airbnb in February 2017 for deliberately incentivising people to breach their leases.
However, Airbnb had argued that Aimco's ban on subleasing was not enforceable under California law.
Airbnb also argued that it can't be held responsible for the conduct of Aimco's tenants and their guests.
Aimco had asserted that Airbnb is an information content provider, which makes the company legally responsible for the content on its platform.
The court, however, concluded that Airbnb is not an information content provider, as it hosts content rather than creating it.