Article XII — Breach and Default

Section 12.01 — Remedy at Law Inadequate

Except for the nonpayment of any Assessment, it is hereby expressly declared and agreed that the remedy at law to recover damages for the breach, default or violation of any of the covenants, conditions, restrictions, limitations, reservations, grants of easements, rights, rights-of-way, liens, charges or equitable servitudes contained in this Master Declaration are inadequate and that the failure of any Owner, tenant, occupant or user of any Lot, to comply with any provision of the Governing Documents may be enjoined by appropriate legal proceedings instituted by Declarant, any Owner, the Master Association, its officers or Board of Directors, or by their respective successors in interest.

Section 12.02 — Nuisance

Without limiting the generality of the foregoing Section 12.01, the result of every act or omission whereby any covenant contained in this Master Declaration is violated in whole or in part is hereby declared to be a nuisance, and every remedy against nuisance, either public or private, shall be applicable against every such act or omission.

Section 12.03 — Attorneys’ Fees

Reasonable attorneys’ fees and costs shall be awarded to the prevailing party in any procedure to enforce the Governing Documents or a party’s rights arising under the Governing Documents. Such enforcement procedure includes an action brought in any court having jurisdiction over any alternative dispute resolution procedure implemented pursuant to the Governing Documents. In any enforcement procedure, such as mediation or arbitration in which there is not an agreement between all of the parties that attorneys will represent them, recoverable costs are limited to attorneys’ fees and costs incurred in providing the notices required under such statute.

Section 12.04 — Cumulative Remedies; Adoption of Fine Schedule

The respective rights and remedies provided by this Master Declaration or by law shall be cumulative, and the exercise of any one or more of such rights or remedies shall not preclude or affect the exercise, at the same or at different times, of any other such rights or remedies for the same or any different default or breach or for the same or any different failure of any Owner or others to perform or observe any provision of this Master Declaration. The Board may implement a schedule of reasonable fines and penalties for particular offenses that are common or recurring in nature and for which a uniform fine schedule is appropriate (such as fines for late payment of Assessments or illegally parked vehicles). Once imposed, a fine or penalty may be collected as a Special Individual Assessment.

Section 12.05 — Failure Not a Waiver

The failure of Declarant, any Owner, the Board of Directors, the Master Association or its officers or agents to enforce any of the covenants, conditions, restrictions, limitations, reservations, grants or easements, rights, rights-of-way, liens, charges or equitable servitudes contained in this Master Declaration shall not constitute a waiver of the right to enforce the same thereafter, nor shall such failure result in or impose any liability upon the Declarant, the Master Association or the Board, or any of its officers or agents.

Section 12.06 — Legal Principles Applicable to Enforcement

Although the Master Association is not subject to the Davis-Stirling Act, in any action to enforce this Master Declaration or any other Governing Documents, the Master Association and each Owner acknowledges and agrees to be bound by the legal principles and legal presumptions governing covenant enforcement in the context of common interest developments and the enforcement of equitable servitudes in such developments. As an example, and without limiting the foregoing, those legal principles and legal presumptions shall include the holdings and precedents of the following cases, unless and until any of the listed judicial decisions are overturned or modified by subsequent case law or statutory enactments:

(a) Nahrstedt v. Lakeside Village Condominium Association (1994) 8 Cal 4th 361. (CC&Rs are presumed reasonable; burden is on the party challenging provision to show that provision is unreasonable).

(b) Villa De Las Palmas Homeowners Association v. Terifaj (2004) 33 Cal 4th 73. (Amendments are as valid as the original Declaration, and duly adopted Rules are enforceable).

(c) Rancho Santa Fe Association v. Dolan-King (2004) 115 Cal. App. 4th 28. (Architectural rules and review by Board are subject to requirements that decisions be made in good faith good faith judgments have been made, the courts will not second guess the decisions of the Board).

(d) La Jolla Shores Clubdominium Association v. Lamden (1999) 21 Cal 4th 249. (Courts won’t overrule Board decisions, so long as decisions were made in good faith, in the best interest of the community, and based upon reasonable inquiry).

Section 12.07 — Due Process Requirements for Disciplinary Proceedings

Except as otherwise provided in Section 4.10, above (relating to disputes over the collection and payment of delinquent Assessments) and 12.09, below (relating to disputes with the Declarant), disputes of the kind described in subparagraph (a), below, among Owners, or among Owners and other residents who are not Owners, or between an Owner or Owners and the Master Association, shall be resolved as provided in this Section 12.07:

(a) Mediation or Other Informal Resolution of Disputes Among Owners. If an Owner believes that another Owner or resident of the Development is in violation of any covenant or restriction contained in this Master Declaration or any of the other Governing Documents of the Master Association, or if an Owner believes that the Board of Directors of the Master Association is failing to properly discharge the Master Association’s responsibilities under this Master Declaration or other Governing Documents of the Master Association, the Owner shall provide written notice (a “Notice of Violation”) of the alleged violation to the other party (Owner, resident, or the Master Association Board). The Notice of Violation shall contain a general description of the condition, action or activity that the noticing Owner believes to be in violation of the Declaration/Governing Document and the notice shall cite the Section of the Declaration or of another Governing Document of the Master Association that is allegedly being violated. The Owner or Owners who are alleging that a violation of the Declaration/Governing Documents has occurred and the noticed parties shall be referred to collectively as the “Disputing Parties” and the alleged violation shall be referred to as the “Dispute.”

Disputing Parties are encouraged to resolve the Dispute through clear communication and neighborly courtesy, if at all possible. In the case of a Dispute that involves the Master Association, within fifteen (15) days after receipt of the Notice of Violation the Board shall set the matter for a hearing before the Board and shall provide the complaining Owner(s) with written notice of the date, time and location of that hearing. The hearing may be conducted in executive session if requested by the complaining Owner(s) and the date of the hearing shall be no sooner than ten (10) days following the date of the Master Association’s notice. The Board of Directors of the Master Association shall also have the discretion to serve as a mediating body to hear, and attempt to resolve, Disputes among Owners and residents that do not involve the Master Association directly, if all Disputing Parties desire the Board to act as a mediator. Disputing Parties who are unable to resolve the Dispute through communication or other informal means may also agree among themselves to retain the services of a third-party mediator, with the scheduling and cost of those proceedings being determined by agreement among the Disputing Parties.

(b) Arbitration of Owner Disputes. If a Dispute cannot be resolved through informal means or mediation in accordance with subparagraph (a), above, all Disputing Parties (including the Master Association, if the Master Association is a party) shall resolve such Dispute by arbitration in accordance with this subparagraph (b). The Dispute between the Disputing Parties shall be resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) before an arbitrator(s) selected from the panels of the arbitrators of the AAA. Any fees or costs in initiating arbitration which must be paid prior to such arbitration shall be borne equally by the Disputing Parties; provided, however, that all such costs or fees and all other costs of the arbitration, including without limitation, reasonable attorneys’ fees, shall be borne by the Disputing Parties in such amounts and such proportions as shall be determined by the arbitrator(s).

(c) Remedies Available for Resolving Disputes. In any proceedings conducted pursuant to this Section 12.06, the arbitrator or arbitrators shall be empowered to do any one or more of the following: (i) issue a ruling or decision interpreting the meaning and intent of this Master Declaration or any other Governing Document of the Master Association, as applied to the Dispute in question; (ii) awarding injunctive or other equitable relief to the prevailing party; (iii) awarding actual damages (but not punitive damages), including reasonable attorneys’ fees and costs, to the prevailing party; (iv) ordering a suspension of membership voting privileges with respect to any Member who is a Disputing Party; (v) imposing a fine against any Disputing Party so long as the Master Association has adopted and distributed to its members a schedule of fines that can be imposed for enumerated categories of Governing Document violations (and the awarded fine is in accordance with the written fine schedule); and (vi) making a determination as to which Disputing Party is the prevailing party in the Dispute.

(d) Effect of Arbitration. The decision of the Arbitration Panel or AAA arbitrator(s), as applicable, shall be binding upon all Disputing Parties (except where the Arbitration Panel fails to act in good faith or acts arbitrarily or capriciously) and may, as long as not otherwise prohibited by applicable law, be entered as a judgment or order in any court of competent jurisdiction. The cost for the entry of such judgment shall be borne by the Disputing Party or Disputing Parties that do not prevail in the arbitration.

Section 12.08 — Enforcement by the City

The City shall be a third-party beneficiary to the duties and covenants imposed in this Master Declaration and shall be entitled to, without obligation, take appropriate legal action to enforce these duties and covenants. If an action is commenced, the City shall be entitled to recover costs including reasonable attorneys’ fees. The provisions of this Section 12.08 may not be amended or rescinded without the prior written consent of the City.

Section 12.09 — Assessment Collection Actions

The notice and hearing procedures set forth in Section 12.06 shall not apply to any actions by the Master Association or its duly authorized agents to collect delinquent assessments. Assessment collections shall be subject to Section 4.10, above, and any other notice, hearing and/or dispute resolution requirements or procedures as may be specifically applicable by law to Association assessment collection efforts.

Section 12.10 — Dispute Resolution Procedures Applicable to Declarant Disputes

Reference is made to Exhibit “C,” attached hereto and incorporated herein by reference.