First Amended Class Action Complaint (00442475-2)

DEPAR
MICHAEL E. VINDING (SBN 178359)

BRADY & VINDING
400
Capitol Mall, Suite 2640
2
Sacramento, CA 95814
3 Telephone: (916) 446-3400
Facsimile: (916)446-7159
FiLEP
SuperSof Court Of CaBifoiriniSjjD,
DAVID A. DIEPENBROCK (SBN 215679)

5 DIEPENBROCK ELKIN LLP
500 Capitol Mall, Suite 2200
6 Sacramento, CA 95814-4413
Telephone: (916) 492-5073 5048
7 Facsimile: (916) 446-2640
8 Attorneys for Plaintiffs

9
SUPERIOR COURT OF THE STATE OF CALIFORNI A
10
IN AND FOR THE COUNTY OF SACRAIVIENTO
11
RONALD F. COLEY, an individual; and
12 KAREN B. LORINI, an individual;

13
individually and on behalf of all others

similarly situated,
14
Plaintiffs,
15
16
vs.
17 ESKATON, a California non-profit public

benefit corporation;
18 ESKATON VILLAGE-GRASS VALLEY, a

California non-profit public benefit
19 corporation;
20 ESKATON PROPERTIES,
21
22
23
24
25
26
INCORPORATED, a California non-profit

public benefit corporation;
ESKATON VILLAGE, GRASS VALLEY
HOMEOWNERS ASSOCIATION, a
California non-profit public benefit
corporation;
MARK T. CULLEN, an individual;
ELIZABETH L. DONOVAN, an individual;
TREVOR HAMMOND, an individual;
TODD MURCH; and
DOES 1 through 10 inclusive.
Case No.:
CLASS ACTION COMPLAINT FOR:
(1) BREACH OF FIDUCIARY DUTY;
(2) BREACH OF FIDUCIARY DUTY;
(3) VOIDABLE TRANSATION - CORP
CODE 7233;
(4) VOIDABLE TRANSATION - CORP
CODE 7233;
(5) FINANCIAL ELDER ABUSE - WEI. &
INST. CODE 15610.30 ET SEQ.;
(6) ACCOUNTING;
(7) UNFAIR BUSINESS PRACTICES BUS. & PROF. CODE 17200;
(8) BREACH OF FIDUCIARY DUTY; AND
(9) NEGLIGENCE
27
Defendants.
28
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CLASS ACTION COIVIPLAINT
This action concerns a senior-only common interest community Icnown as Eskaton Village
2 Grass Valley ("Village"), which includes 267 housing units, of which 130 are owned separately by
3 individual homeowners. These 130 individually owned condominium units are sometimes referred to
4 below as the "Patio Homes." The remaining 137 units are located on a parcel that is owned
5 separately by Eskaton Village Grass Valley, a California non-profit public benefit corporation. The
6 structure that contains the 137 apartment units, also includes dining rooms, community rooms, and
7 other congregate living facilities, all of which are collectively referred to as the "Lodge." The parcel
8 that contains the Lodge is identified as "Lot 1" in the First Amended and Restated Declaration of
9 Covenants, Conditions and Restrictions for Eskaton Village-Grass Valley Homeowners Association
10 ("CC&R's), a true and correct copy of which is attached as Exhibit A. Lot 1 also includes parking
11 spaces, landscaping, and other improvements. The Lodge's 137 housing units comprise a mixture of
12 assisted living and independent living apartments. The Eskaton Village-Grass Valley Homeowners
13 Association is responsible for managing the Village's common areas, as defined under the CC&R's.
14 A map showing the areas owned by EVGV, the HOA, and the individual homeowners is attached as
15 Exhibit B.
16
17
PARTIES
1.
Plaintiff Ronald F. Coley, an individual, has held a beneficial ownership interest in
18 one of the Village's 130 Patio Homes from 2004 through the present. As such, Plaintiff is a member
19 of the HOA, and is subject to all HOA assessments imposed on Patio Home owners.
20
2.
Plaintiff Karen B. Lorini, an individual, has held a beneficial ownership interest in
21 one of the Village's 130 Patio Homes from 2005 through the present. As such, Plaintiff is a member
22 of the HOA, and is subject to all HOA assessments imposed on Patio Home owners.
23
3.
Plaintiffs are informed and believe and thereon allege that Defendant Eskaton is a
24 California non-profit public benefit corporation, and that its principal place of business is located in
25 Sacramento County, California.
26
4.
Plaintiffs are informed and believe and thereon allege that Defendant Eskaton
27 Properties, Incorporated ("EPI") is a California non-profit public benefit corporation, and that its
28 principal place of business is located in Sacramento County, California.
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CLASS ACTION COMPLAINT
5.
Plaintiffs are informed and believe and thereon allege that Eskaton Village-Grass
2 Valley ("EVGV") is a California non-profit public benefit corporation, and that its principal place of
3 business is located in Sacramento County, California.
4
6.
Plaintiffs are informed and believe and thereon allege that Defendant Eskaton Village,
5 Grass Valley Homeowners Association ("HOA") is a California non-profit corporation, public

6 benefit corporation, and that its principal place of business is located in Sacramento County,
7 Califomia.
8
7.
Defendant Mark T. Cullen, an individual, served as Eskaton's Director of Operations
9 and was a member of the HOA's Board of Directors from 2003 through 2012. Plaintiffs are informed
10 and believe and thereon allege that Mr. Donovan resides in El Dorado County.
11
8.
Defendant Elizabeth ("Betsy") L. Donovan, an individual, is an Eskaton Senior Vice
12 President and serves as its Chief Operating Officer. She currently serves on the HOA's Board of
13 Directors. Plaintiffs are informed and believe and thereon allege that Ms. Donovan resides in Placer
14 County.
15
9.
Defendant Trevor Hammond, an individual, is a former Chief Operating Officer of
16 Eskaton. served as President of the HOA's Board of Directors from 2003 through the middle of
17 2011. Plaintiffs are informed and believe and thereon allege that Mr. Hammond resides in Placer
18 County.
19
10.
Defendant Todd Murch, an individual, is the President and CEO of Eskaton, and
20 currently serves on the HOA's Board of Directors. Plaintiffs are informed and believe and thereon
21 allege that Mr. Murch resides in Placer County.
22
11.
Defendants Cullen, Donovan, Hammond, and Murch are sometimes collectively
23 referred to herein as the "Individual Defendants" or the "Eskaton Directors."

24
12.
Plaintiffs are further informed and believe, and thereon allege that Eskaton is the
25 "parent" corporation of EVGV and EPI, and that Eskaton, EVGV, EPI, and the HOA have been
26 controlled by Eskaton's officers and directors, including but not limited to Trevor Hammond, Todd
27 Murch, and Betsy Donovan.
28
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13.
Plaintiffs are informed and believed, and thereon allege, that Eskaton has disregarded
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1 the separate corporate existence of EVGV, EPI, and the HOA. Among other things, Eskaton has:
2 treated HOA property as its own; merged and/or combined job functions across affiliates; allowed
3 Eskaton employees to sign contracts on behalf of the HOA even though, on information and belief,
4 those Eskaton employees were not authorized to sign on behalf of the HOA. Plaintiffs thus allege
5 that adherence to the existence of EVGV and EPI as distinct corporate entities would lead to an
6 inequitable and unjust result, and therefore pray that the separate corporate existence of EVGV and
7 EPI should be disregarded, that Eskaton should be considered the alter ego of EVGV and/or EPI, and
8 therefore be held liable for all of the unlawful conduct alleged below.
9
14.
Plaintiffs are informed and believe and thereon allege that at all times relevant herein
10 Defendants, and each of them, were the agents, servants and employees of their co-Defendants, and
11 in doing the things hereinafter mentioned, each was acting in the scope ofhis, her, or its authority as
12 such agent, servant and employee and with the permission and consent of each other co-Defendant.
13 Plaintiffs further allege on information and belief that at all times material herein, Cullen, Donovan,
14 Hammond, Murch, and each of them, together with each other agent, servant, or employee of
15 Eskaton, EPI, or EVGV, was acting in the scope of their authority as the agent, servant or employee
16 and with the permission and consent of each Defendant.
17
15.
Plaintiffs further allege that the true names, identities and capacities of Defendants
18 sued herein as DOES 1 through 25 inclusive, are currently unknown to Plaintiffs; Plaintiffs are
19 informed and believe and on such information and belief allege that said fictitiously named
20 defendants are in some manner responsible for and liable for the damages complained of herein;
21 Plaintiffs pray leave to amend this complaint to allege the true names, identities and capacities of
22 said fictitiously named defendants when such names, identities and capacities become known.
23
24
JURISDICTION AND VENUE

16.
This Court has jurisdiction over all causes of action asserted in this Complaint. The
25 amount in controversy exceeds the jurisdictional minimum of this Court, and the Complaint seeks
26 injunctive relief
27
17.
Venue is proper in Sacramento County under sections 395.5 and 395(a) of the Code
28 of Civil Procedure because some of the Defendants reside in Sacramento County.

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CLASS ACTION ALLEGATIONS
1
2
18.
Plaintiffs bring this action under section 382 ofthe Code of Civil Procedure on behalf
3 of a class that includes all individuals who, like Plaintiffs, have held and still hold a beneficial
4 ownership interest in one of the Village's 130 Patio Homes between 2002 and the present.
5
19.
The class is ascertainable from the business records of the HOA, as well as Nevada
6 County land records. Class members also can identify themselves based on the definition set forth
7 immediately above.
8
20.
Membership in the class is so numerous that joinder of all members of the Class is
9 impracticable. Because the class is defined as all persons who hold a beneficial ownership interest in
10 any of the 130 Village Patio Homes, and some Patio Homes are owned by more than one person, the
U
12
number of class members likely exceeds 130.

21.
Each owner of the 130 Patio Homes is subject to the same HOA assessments
13 discussed more ftilly below. Those assessments are all determined by the HOA Board, which is
14 dominated and controlled by the Eskaton. Because Plaintiffs' claims concern the propriety of the
15 assessments, common questions substantially predominate over any questions that may affect
16 individual Class members. Thus, Plaintiffs share a community of interest with the class members.
17
22.
Plaintiffs' claims are typical of the claims of the members ofthe Class they represent
18 Because the Plaintiffs have paid the same assessments as every other class member, their claims are
19 necessarily typical of every other class member concerning those assessments.
20
23.
Plaintiffs will fairly and adequately protect and represent the interests of each class
21 member. Plaintiffs are both year-round residents of the Village. Additionally, Coley is very active in
22 the affairs of the owners' association, having served on the HOA Board from August 2005 through
23 the present.
24
24.
A class action is superior to other available means for the fair and efficient
25 adjudication of this controversy. As alleged above, questions of law and fact common to the Classes
26 predominate over any questions that affect only individual Class members. Plaintiffs are informed
27 and believe that because the damage to each individual Class member is relatively small, it is
28 economically infeasible for individuals to pursue the claims alleged herein individually. Separate
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1 actions could also establish inconsistent standards of conduct for Defendants. Thus, class action
2 treatment will permit a large number of similarly-situated persons to prosecute their common claims
3 in a single forum simultaneously, efficiently and without the unnecessaiy duplication of effort and
4 expense that numerous individual actions would engender, thereby providing a means for relief that
5 is most efficient and economical for the parties and the judicial system.
6
FIRST CAUSE OF ACTION
(Aiding And Abetting Breach Of Fiduciary Duty)
(Against Eskaton, EVGV & Individual Defendants)
25.
Plaintiffs re-allege and incorporate by reference each of the allegations set forth in
10 paragraphs 1 through 24 above, as though fully set forth in this place.

11
26.
Under Article V of the CC&Rs, EVGV holds a permanent majority position on the
12 five-member HOA Board. EVGV is the Eskaton subsidiary that developed the Village, is a
13 "Declarant" under the CC&Rs, and owns and operates the Lodge. As alleged above, the Individual
14 Defendants have served on the HOA Board, nominally on behalf of EVGV. Additional Eskaton
15 employees have also served with the Individual Defendants on the HOA Board. The Individual
16 Defendants and all other Eskaton employees who have served with them on the HOA Board are
17 collectively referred to herein as the "Eskaton Directors." Ronald F. Coley and Robert Brennan
18 currently hold the two positions available to representatives of the 130 homeowners; the two of
19 them, and all other individuals who have represented the Patio Home owners on the HOA Board, are
20 referred to below as the "Minority Directors."
21
27.
The Eskaton Directors have fiduciary responsibilities toward the Minority Directors
22 and to the Patio Home owners the Minority Directors represent. By virtue of the permanent majority
23 position they hold on the HOA Board, the Eskaton Majority board members either singly or acting in
24 concert to accomplish a joint purpose, have a fiduciary responsibility to the minority and to the HOA
25 to use their ability to control the HOA in a fair, just, and equitable manner. Put differently, where a
26 developer or sponsor (such as Eskaton/EVGV) dominates an HOA, those exercising actual control
27 over the HOA's affairs are under a duty not to use their power in such a way as to harm a dominated
28 faction, like the Patio Flome owners.
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28.
The CC&Rs require the HOA to retain EPI (an Eskaton affiliate) to provide
2 management of the Village, "including but not limited to operation, maintenance and replacement of
3 (a) the Common Area; (b) the exterior of the dwellings located on the Lots; and (c) the landscaping
4 located on the Lots; and (d) to provide those services and programs more particularly described on
5 Exhibit C." Exhibit C ofthe CC&Rs lists the "Eskaton Services" EVGV is required to provide to the
6 HOA "as part of the Homeowners' Association fee." Those "Eskaton Services" include
7 Security/Emergency Response, On-site Shuttle Service, and the Fitness/Wellness Program. EPI
8 provides these services under a "Management Services Agreement" that authorizes EPI to arrange
9 for contracts between the HOA and third parties for maintenance and landscaping services.
10
29.
The HOA is responsible for collecting from the Patio Home owners their allocated
11 share of the Eskaton Services. The allocated share of the Eskaton Services was disclosed to
12 prospective buyers of the Patio Homes in Form 623 (which was part of the public report Eskaton
13 filed in 2001 with the Bureau of Real Estate (formerly DRE)), along with other seller disclosure
14 documents, by the Village's co-developer "Treasure Homes." Plaintiffs are informed and believe and
15 thereon allege that Treasure Homes was the successor to Grass Valley Builders, LLC, which was
16 listed, along with EVGV, as a "Declarant" in the CC&Rs. The Homeowner Expense Allocation on
17 this Form 623 listed the "Share Basis Allocated to Patio Homes" as follows: 50% of the annual cost
18 for Security/Emergency Response & On-site Shuttle Service; 50% of the cost of the Fitness/Wellness
19 Program Director; 10% of the annual cost of the Recreation Coordinator; and 100% of the cost for
20 Dining Room Access. A true and correct copy of the Form 623 included in the disclosure package
21 Mr. Coley received and relied upon before purchasing his Patio Home in 2004 is attached hereto as
22 Exhibit C.
23
30.
Unlike the Patio Home owners, residents ofthe Lodge do not own the housing units
24 they occupy. Those units are still owned by EVGV, which rents them to individuals. Plaintiffs are
25 informed and believe and thereon allege that EVGV does not inform Lodge unit residents of the
26 amount they are being charged for the Eskaton Services they receive; rather, those services are
27 incorporated into the monthly rent EVGV charges for occupancy of the Lodge's housing units
28 without itemization.
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31.
Plaintiffs are informed and believe and thereon allege that Eskaton has controlled and
2 dictated the policies of EVGV and the HOA policies since the Village was created in such a way as
3 to benefit its own interests at the expense of the HOA and the Patio Home owners. Eskaton has done
4 this by, among other things, approving, renewing, and overseeing the Management Services
5 Agreement so as to impose excessive, unjust, and unfair financial burdens on the Patio Home
6 owners.
7
32.
The Eskaton Directors, acting pursuant to Eskaton's direction and control, have
8 breached fiduciary duties they owed and/or still owe to the Patio Home owners by diverting
9 substantial functions of the HOA to affiliates of Eskaton and EVGV in a way that Plaintiffs are
10 informed and believe and thereon allege has operated to deprive the Patio Home owners of
11 substantial benefits. More particularly, the Eskaton Directors have breached these fiduciary duties
12 by, among other things:
13
a. Voting repeatedly to impose three (3) percent annual increases on the Patio Home
14
owners for all of the Eskaton Services listed on Exhibit C of the CC&Rs, on the
15
grounds that such increases were supposedly needed to pay for increased
16
personnel costs. Plaintiffs learned for the first time in 2014, however, that EVGV
17
employees have received no raises since 2010. Thus, the increases were
18
unjustified and improper for nonexistent wage increases. Prior to 2014, Plaintiffs
19
had no reason doubt EVGV had not been providing raises to its employees.
20
b. Voting repeatedly to assess the Patio Home owners a disproportionate amount for
21
the services of the Fitness/Wellness Program Director. As reflected in Form 623
22
it was intended and expected that the services of the Fitness/Wellness Program
23
Director would be devoted evenly based on the number of Village Housing Units
24
and that as a result Patio Home owners would pay 50 percent of the cost of that
25
position. Plaintiffs are informed and believe and thereon allege that the
26
Fitness/Wellness Program Director, however, has devoted substantially less than
27
50 percent of her time serving the homeowners. The Fitness/Wellness Program
28
Director has performed many tasks that benefit only the Lodge, and not the HOA
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The Interested Majority Directors rebuffed the Minority Directors' request that the
Fitness/Wellness Program Director provide written documentation (such as time
cards) that would reveal the percentage of work performed for the sole benefit of
the Lodge.
c. Voting repeatedly as a block to impose assessments on the homeowners for an
"Environmental Services" staff person during the years from 2005 tlirough 2013,
even though the position is not listed in Exhibit C of the CC&Rs as a service that
would be compensated from fees collected from the Patio Home owners
Furthermore, the services Eskaton stated that the Director of Environmental
10
Services provided for the HOA are among the functions customarily provided by a
11
management services company. Because the HOA pays separately for both
12
property management services and routine maintenance of the HOA property,
13
paying for the Director of Environmental Services was equivalent to paying twice
14
for the same services. Plaintiffs are informed and believe and thereon allege that
15
the services of the Director of Environmental Services were actually duplicative
16
of management services paid for by other HOA assessments. The total amount of
17
the assessments that the Patio Home owners paid for the Director of
18
Environmental Services total $308,141. The amount paid from 2011-2013 totals
19
approximately $97,310.
20
d. Voting as a block to raise the Homeowner Expense Allocation from 50 to 83.3
21
percent of the 4.2 PTEs budgeted for Security/Emergency Response & On-site
22
Shuttle Service, effective January 2013. This 67 percent increase represented a
23
material change from the 50 percent listed on Form 623. Increasing the Patio
24
Home owner allocation above 50 percent is wholly unjustified because
25
homeowner demands are no greater than their approximately 49 percent share of
26
the Village's housing units. Indeed, Plaintiffs have recently learned that Campus
27
Patrol
28
Security/Emergency Response & On-site Shuttle Service services) have devoted
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employees
(who are
primarily
-8CLASS ACTION COMPLAINT
responsible
for furnishing the
no more than 25 percent oftheir time serving the Patio Home owners.
1
2
e. Voting as a block to defeat a motion the Minority Directors introduced at an
October 25, 2013 HOA Board meeting, proposing that the HOA Board adhere to
Section 7233 ofthe Corporations Code for any transaction that involved the HOA
compensating "Eskaton" for services provided to the HOA, which include: the
Security Emergency Shuttle; the Director of Resident Services (formerly the
Fitness/Wellness Program); the Recreation Coordinator; and Lodge Access. As
alleged more fully below, Section 7233 of the Corporations Code protects against
self-dealing where conflicts of interest exist.
10
Voting as a block to defeat a second motion the Minority Directors introduced at
11
the October 25, 2013 HOA Board meeting, proposing that the "Homeowner
12
Expense Allocation" for Eskaton Services be limited to the allocations listed in
13
the Form 623 Eskaton submitted to the Department of Real Estate in 2001, i.e.:
14
50% of the annual cost for Security/Emergency Response & On-site Shuttle
15
Service; 50% of the cost of the Fitness/Wellness Program Director; 10% of the
16
annual cost ofthe Recreation Coordinator; and 100% of the cost for Dining Room
17
Access.
18
33.
Among other things, the foregoing breaches of fiduciary duty have resulted in unjust
19 and unfair HOA assessments being imposed on the Patio Home owners, which have forced a
20 curtailment of services that would otherwise have been available to the Patio Homes owners, and
21 have resulted in the Patio Home owners subsidizing the maintenance and operation of the Lodge and
22 other property owned separately by EVGV.
23
34.
California law provides that liability may be imposed on one who aids and abets the
24 breach of a fiduciary duty if the person either (a) knows the other's conduct constitutes a breach of
25 duty and gives substantial assistance or encouragement to so act, or (b) gives substantial assistance to
26 the other in accomplishing a tortious result and the person's own conduct, separately considered
27 constitutes a breach of duty to the third person. A defendant may be liable for aiding and abetting a
28 breach of fiduciary duty in the absence of an independent duty owed to the plaintiff,
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35.
Eskaton is presumed to know what its officers and directors know. And, it is
2 vicariously liable for the actions taken by its officers, directors and/or employees while acting within
3 the course and scope of their employment. Plaintiffs are informed and believe and thereon allege that
4 all of the actions that the Eskaton Directors have taken while serving on the HOA Board were within
5 the course and scope of their employment as officers, directors, and/or employees of Eskaton
6 Plaintiffs are informed and believed and thereon allege that Todd Murch, among other Eskaton
7 Directors, knew or should have known that he and the other Eskaton Directors owed afiduciaryduty
8 to the HOA as well as to the Patio Home owners who have been relegated under the CC&R's to a
9 permanent minority position on the HOA Board. Eskaton provided substantial assistance to each
10 breach of fiduciary duty alleged herein by, among other things, allowing its officers, directors and/or
11 employees to serve as the Eskaton Directors. Thus, Eskaton is liable for aiding and abetting the
12 Majority Directors in breaching the fiduciary duty they owe to the Minority Directors and to the
13 homeowners the Minority Directors represent.
14
36.
As a direct and proximate result of each breach of fiduciary duty, as herein alleged
15 Plaintiffs have been damaged in an amount to be determined at trial.

16
37.
The assistance Eskaton provided to each breach of fiduciary duty alleged herein was a
17 substantial factor in causing the harm Plaintiffs have suffered.

18
38.
Defendants' wrongful conduct, as described above, was done willfully, oppressively
19 maliciously, with conscious disregard of the Patio Home owners' rights, and with the intent to annoy,
20 harass, and injure the Patio Home owners such that Plaintiffs are entitled to recover punitive
21 damages in an amount to be determined at trial.
22
WHEREFORE, Plaintiffs pray for judgment as set forth below.
23
SECOND CAUSE OF ACTION
24
(Aiding & Abetting Breach of Fiduciary Duty)
25
(Against Eskaton, EVGV, EPI & All Individual Defendants Except Donovan)
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By virtue of the permanent majority position they have held on the HOA Board, the
- 10 CLASS ACTION COMPLAlTvlT
Eskaton Directors, either singly or acting in concert to accomplish a joint purpose, have a fiduciary
responsibility to the Patio Home owners and the Minority Directors to use their ability to control the
HOA in a fair, just, and equitable manner. Put differently, where a developer or sponsor (such as
4 Eskaton/EVGV) dominates an HOA, those exercising actual control over the HOA's affairs are
5 under a duty not to use their power in such a way as to harm a dominated faction, like the Patio
6 Home owners. The Eskaton Directors thus have fiduciary responsibilities toward the Minority
7 Directors and to the Patio Home owners the Minority Directors represent.
8
41.
Under the CC&Rs, the HOA was required to retain EPI under a Management Services
9 Agreement to provide, among other things, maintenance and replacement of (a) the Common Area;
10 (b) the exterior of the dwellings located on the Lots; and (c) the landscaping located on the Lots
11 Plaintiffs are informed and believe and thereon allege that under the Management Services
12 Agreement, EPI arranged for third parties to perform street, lighting and grounds maintenance; and
13 to perform exterior maintenance of patio homes, apartment and community buildings.
14
42.
EPI and the Eskaton Directors breached their fiduciary duty by failing to administer
15 two landscape maintenance contracts in a just, fair, and equitable manner. The Landscape
16 Maintenance Contracts at issue state that they were entered into with "Mile High Gardening and
17 Landscape." Plaintiffs are informed and believe and thereon allege that the first of these two
18 contracts is dated May 27, 2003, and that the second was entered into effective January 10, 2006
19 Plaintiffs are informed and believe and thereon allege that Mile High Gardening and Landscape
20 performed under the January 2006 contract through the end of 2011. Mark Cullen, an Eskaton
21 Director, purported to sign the 2003 contract on behalf of the HOA. Plaintiffs are informed and
22 believe that the HOA did not authorize Mr. Cullen to sign that contract on its behalf The January
23 2006 contract is signed by an "Administrator" of EVGV. Plaintiffs are informed and believe that the
24 HOA did not authorize this "Administrator" to sign the contract on its behalf
25
43.
As a result of Defendants failure to administer the Landscape Maintenance Contracts
26 in a just, fair, and equitable manner, the Patio Home owners paid 100 percent of the cost for
27 "Hardscape Maintenance;" i.e., blowing and sweeping all parking areas and sidewalks. Plaintiffs are
28 informed and believe and thereon allege that the Hardscape Maintenance should have been allocated
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as follows: 72.25 percent to the Patio Homes, and 27.75 percent to the HOA, instead of 100 percent
2 to the Patio Homes.

3
44.
As a direct and proximate result of the breach of the duty of care, alleged herein, the
4 Patio Home owners were overcharged for Hardscape Maintenance performed under the Landscape
5 Maintenance Contracts a total of $214,227; for the last two years of the contract (2010 and 2011)
6 Plaintiffs estimate the overcharge at $47,606.
7
45.
Assistance Eskaton provided for the breach of fiduciary duty alleged herein was a

9
10
THIRD CAUSE OF ACTION
11
(VOIDABLE TRANSACTION - CORP. CODE 7233)
12
(Against Eskaton, EVGV, EPI & HOA)
13
46.

15
47.
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Section 7233 ofthe Corporations Code provides in pertinent part as follows:

(a) No contract or other transaction between a corporation and one or more
of its directors, or between a corporation and any domestic or foreign
corporation, firm or association in which one or more of its directors has a
material financial interest, is either void or voidable because such director
or directors or such other corporation, business corporation, firm or
association are parties or because such director or directors are present at
the meeting of the board or a committee thereof which authorizes,
approves or ratifies the contract or transaction, if:
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(1) The material facts as to the transaction and as to such director's interest
are fully disclosed or known to the members and such contract or
transaction is approved by the members (Section 5034) in good faith, with
any membership owned by any interested director not being entitled to
vote thereon;
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(2) The material facts as to the transaction and as to such director's interest
are fully disclosed or known to the board or committee, and the board or
committee authorizes, approves or ratifies the contract or transaction in
good faith by a vote sufficient without counting the vote of the interested
director or directors and the contract or transaction is just and reasonable
as to the corporation at the time it is authorized, approved or ratified; or
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(3) As to contracts or transactions not approved as provided in paragraph

(1) or (2) of this subdivision, the person asserting the validity of the
contract or transaction sustains the burden of proving that the contract or
transaction was just and reasonable as to the corporation at the time it was
authorized, approved or ratified.
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48.
Taken together, the foregoing provisions express a legislative preference that board
members with a conflict of interest abstain from voting on matters in which they have a material
financial interest, or that their votes not be counted; it therefore provides that if such individuals vote
on such transactions, they have the burden of proving that the transaction is just and reasonable. The
challenged transaction may be voided if the interested directors fail to carry their burden of proving
the transaction is just and reasonable.
49.
When an interested director dominates or controls the other directors, it precludes a
finding of disinterested director approval. Plaintiffs are informed and believe and thereon allege that
the Hammond and/or Murch has directed and/or influenced the other Eskaton Directors who have
served within them on the HOA Board to vote as a block.
50.
The Eskaton Directors' votes to impose these three (3) percent annual increases for all
of the Eskaton Services listed on Exhibit C of the CC&Rs was subject to Section 7233 of the
Corporations Code because it concerned a contract between two Eskaton-controlled entities (the
HOA and EPI). Plaintiffs are informed and believe and thereon allege that the Eskaton Directors
possessed a material financial interest in maximizing revenue earned by Eskaton affiliate EPI, and
minimizing costs incurred by EVGV. Plaintiffs are informed and believe and thereon allege that the
Eskaton Directors therefore have a material financial interest in seeking to maximize HOA
assessments imposed on the Patio Home owners, and using that revenue to subsidize EVGV's
operations.
51.
The Eskaton Directors violated Section 7233 of the Corporations Code each time they
voted to approve annual HOA budgets that imposed three (3) percent annual increases for the
Eskaton Services listed on E.xhibit C of the CC&Rs.
52.
Because, as alleged more fully herein, only the Patio Home owners are assessed by
the HOA for the Eskaton Services listed on Exhibit C of the CC&Rs, the three (3) percent increases
{00437391;?}
13
1 applied only to the Patio Home owners. Plaintiffs thus bring this claim directly, rather than
2 derivatively.
3
53.
Each vote by the Eskaton Directors to impose three (3) percent annual increases for
4 all of the Eskaton Services listed on Exhibit C of the CC&Rs was unjust and unreasonable, and
5 therefore voidable because the Eskaton Directors' justification for the increases (to pay for both
6 increased employee wages, and for increased overhead and employee benefits) was false. Plaintiffs
7 are informed and believe and thereon allege that Eskaton employees received no raises between 2010
8 and 2014.
9
54.
Plaintiffs did not know, and had no reason to know, that the justification the Eskaton
10 Directors provided was false before they leamed for the first time in 2014 that Eskaton employees
11 had receive no raises between 2010 and 2014. Plaintiffs allege that the falsity of the justification for
12 the three (3) percent raises provides circumstantial evidence that the Interested Eskaton Directors had
13 a material financial interest in the transaction.
14
55.
The increased assessments imposed on the homeowners for these nonexistent wage
15 increases are thus voidable and invalid.

16
56.
Plaintiffs seek on behalf of themselves, and others similarly situated, a refund and/or
17 credit for the amount they were unjustly and unreasonably forced to pay for purported increased
18 employee wages, increased overhead and employee benefits to the greatest extent allowable by law,
19 according to proof at trial.
20
21
FOURTH CAUSE OF ACTION
22
(VOIDABLE TRANSACTION - CORP. CODE 7233)
23
24
57.
25 paragraphs 1 through 56 above, as though ftilly set forth in this place.

26
58.
As alleged above. Section 7233 of the Corporations Code expresses a preference for
27 board members with a conflict of interest to abstain from voting on matters in which they have a
28 material financial interest, or that their votes not be counted; it therefore provides that if such
DIEPENBROCK
ELKIN LLP
{00437391;?}
- 14 -
1 individuals vote on such transactions, they have the burden of proving that the transaction is just and
2 reasonable. The transaction may be voided if the interested directors fail to carry their burden of
3 proving the transaction is just and reasonable.
4
59.
The Eskaton Directors' votes to increase the Homeowner Expense Allocation (i.e., the
5 percentage payable by the Patio Home Owners) from 50 to 83.3 percent of the 4.2 PTEs budgeted for
6 Security/Emergency Response & On-site Shuttle Service, was subject to Section 7233 because it
7 concerned the "Eskaton Services" furnished by Eskaton affiliate EPI. Plaintiffs are informed and
8 believe and thereon allege that the Eskaton Directors possessed a material financial interest in using
9 HOA assessments collected from the Patio Home owners to subsidize EVGV operations.
10
60.
The Eskaton Directors violated Section 7233 of the Corporations Code by voting to
11 increase the Homeowner Expense Allocation from 50 to 83.3 percent of the 4.2 PTEs budgeted for
12 Security/Emergency Response & On-site Shuttle Service, effective January 2013.
13
61.
The vote was unjust, unreasonable, and therefore voidable under Section 7233 of the
14 Corporation's Code for the following reasons, among others:

15
a. The 67 percent increase represented a material change from the 50 percent listed
16
on Form 623.
17
b. The 130 Patio Homes have at all times relevant herein comprised approximately
18
19
c. The individual homeowners' demands on the Campus Patrol (which is primarily
20
responsible for furnishing the Security/Emergency Response & On-site Shuttle
21
Service services referenced in the Form 623) is less than their 49 percentage
22
ownership of Village residential units. Indeed, Plaintiffs are informed and believe
23
and thereon allege that Campus Patrol employees have devoted no more than 25
24
percent of their time providing Security/Emergency Response & On-site Shuttle
25
Service services to the Patio Homes.
26
d. As alleged above, the Patio Home owners were overcharged a total of $214,227
27
between 2003 and 2011 for services provided under the Landscape Maintenance
28
Contracts.
DIEPENBROCK
ELKIN LLP
49 percent of the Village's 267 residences.
{00437391; 7}
- 15 -
e. As alleged above, the Patio Home owners have been overcharged for services of
the Fitness/Wellness Program Director, and were for several years forced to pay
part of the cost of the Environmental Services Director who was primarily
responsible for managing EVGV's separate property.
62.
Since January 2013, Plaintiffs and the other Patio Homes owners have been forced to
6 pay an additional 33.3 percent of the cost for Security/Emergency Response & On-site Shuttle
7 Service services than they were rightftiUy required to pay.
8
63.
Plaintiffs bring this claim directly, rather than derivatively, because the vote at issue
9 in this claim harmed only the Patio Home owners.

10
64.
Plaintiffs are entitled to a return of the additional monies they have been unjustly and
11 unreasonably forced to pay for Security/Emergency Response & On-site Shuttle Service since
12 January 2013 through the date of trial herein.
13
14
FIFTH CAUSE OF ACTION
15
(Financial Elder Abuse - Welf. & Inst. Code 15610.30 et seq.)
16
(Against Eskaton, EVGV & EPI)
17
65.

19
66.
Based on the facts discussed above. Plaintiffs allege on information and belief that
20 Esktaon, EVGV, and EPI have, acting through their authorized agents, the Eskaton Directors,
21 "taken," "appropriated" and/or "obtained" personal property from elders by means of "undue
22 influence" for a wrongful use within the meaning of the Elder Abuse and Dependent Adult Civi
23 Protection Act ("Act"). Cal. Wei. & Inst. Code 15610.30, 15610.30, 15610.70.
24
67.
Plaintiffs are elders as within the meaning of the Act. Plaintiffs and the other Class
25 members are vulnerable by virtue of their age, and because they are relegated to a permanent
26 minority position on the HOA Board.
27
68.
The Eskaton Directors hold actual authority on the HOA Board, and by virtue of their
28 majority position hold the status of a fiduciary vis a vis each Patio Home owner.
DIEPENBROCK
ELKIN LLP
{00437391;?}
- 16 CLASS ACTION COMPLAINT
69.
As also shown above, the Eskaton Directors have abused their majority position to the
2 substantial detriment ofthe Patio Home owners.

3
70;
Those actions by the Eskaton Majority initiated changes in the personal property
4 rights of the Patio Home owners.

5
71.
The result has been grossly inequitable to the Patio Home owners, and the actions
6 alleged herein constitute multiple violations of the Act.

7
72.
Defendants' wrongful conduct, as described above, was done willfully, oppressively
8 maliciously, with conscious disregard of the Patio Home owners' rights, and with the intent to annoy
9 harass, and injure the Patio Home owners such that Plaintiffs are entitled to recover punitive
10 damages in an amount to be determined at trial.
11
12
SIXTH CAUSE OF ACTION
13
(Accounting)
14
15
73.
Plainfiffs re-allege and incorporate by reference each of the allegations set forth in

17
74.
Exhibit C to the CC&R's provides that as part of the HOA fee, Eskaton will furnish
18 "Eskaton Services," which include the following: "Security/emergency response 24 hours per day,"
19 "On-site shuttle service among homes, fitness center and Eskaton Village Grass Valley Lodge," and
20 "Fitness/wellness program." In the Homeowner Expense Allocation for Eskaton Services that EVGV
21 provided to the Department of Real Estate, which was included in the seller disclosure package
22 provided to prospective buyers of Patio Homes, EVGV represented that 50 percent of the cost of
23 "Security/Emergency Response & On-site Shuttle Service" and the "Fitness/Wellness Program
24 Director" would be allocated to the Patio Home owners.
25
75.
By letter, dated September 28, 2006, Eskaton's Director of Operations, Mark T
26 Cullen, confirmed that Eskaton had agreed to honor the percentage allocations included in the seller
27 disclosure packets provided to prospective buyers of Patio Homes. Among other things, the letter
28 states with regard to Security/Emergency Response & On-site Shuttle Service, that "the Home
DIEPENBROCK
ELKIN LLP
{00437391;?}
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Owners are only billed for one half of the cost, Eskaton pays the other half" With respect to the
2 Fitness/Wellness Program, Cullen likewise stated: "Once again, this amount is split in half wherein
3 the Homes owners [sic] pay one half and Eskaton pays the other half"
4
76.
These disclosed percentage allocations could have been just and reasonable if the
5 Patio Home owners had received 50 percent of these Eskaton Services. However, as alleged above,
6 the Patio Home owners have received substantially less than 50 percent of these Eskaton Services
7 Plaintiffs are informed and believe and thereon allege that the Fitness/Wellness Program Director
8 devotes substantially less than 50 percent of work time serving the Patio Home owners, and performs
9 many tasks that benefit only EVGV. Plaintiffs are further informed and believe that the Campus
10 Patrol (the individuals who provide most of the "Security/Emergency Response & On-site Shuttle
11 Service" services) devote no more than 25 percent of their time providing such services to the
12 homeowners. The Eskaton Directors made what was already an unjust and unreasonable situation
13 substantially worse by increasing the cost allocation for Security/Emergency Response & On-site
14 Shuttle Service from 50 percent to 83.3 percent, effective January 2013.
15
77.
Plaintiff Coley has made requests at HOA Board meetings for an accounting for these
16 services. Specifically, he has asked for time cards or other documentation regarding the work
17 performed by the Fitness/Wellness Program Director in order to determine whether the Patio Home
18 owners are subsidizing the operation of the Lodge. Mr. Coley has made the same request for
19 "Security/Emergency Response & On-site Shuttle Service" services. The Eskaton Directors,
20 however, have refused those requests in an apparent attempt to keep this information from the
21 Minority Directors and the other Patio Home owners.
22
78.
Plaintiffs, lacking an adequate remedy at law, therefore seek a full and complete
23 accounting regarding the Security/Emergency Response & On-site Shuttle Service services provided
24 to Patio Home owners under the Management Services Agreement as well as the services provided
25 to Patio Home owners by the Fitness/Wellness Program Director.
26
27
28
DIEPENBROCK
ELKIN LLP
{00437391;?}
I!
SEVENTH CAUSE OF ACTION
1
2
(Unfair Business Practices - Bus. & Prof. Code 17200 et seq.)
79.

6
80.
The above-alleged acfions of Defendants, and each of them, constitute:
a. Unlawful business practices within the meaning of secfion 17200 of the Business
and Professions Code et seq. ("Unfair Competition Law") because, as alleged
above, and among other things. Defendants violated the Act. Cal. Wei. & Inst
10
Code 15610.30, 15610.30, 15610.70.
11
b. Fraudulent within the meaning ofthe Unfair Competition Law in that members of
12
the public, including but not limited to Plaintiffs, were likely to be deceived and
13
actually were deceived by the Homeowner Expense Allocation included in the
14
seller disclosure package provided to prospective buyers of the Patio Homes;
15
c. Unfair business practices within the meaning of the Unfair Competition Law
16
because they caused substantial injury to consumers which were not outweighed
17
by any countervailing benefits, and the consumers could not have reasonably
18
avoided the injuries; and/or
19
d. Unfair, Deceptive, Untrue, or Misleading Advertising within the meaning of the
20
Unfair Competition Law because members of the public, including Plaintiffs,
21
were actually deceived by the Homeowner Expense Allocation included in the
22
seller disclosure package provided to prospective buyers of the Patio Homes.
23
81.
As a proximate result of the foregoing unlawful and otherwise wrongful acts,
24 Eskaton, EVGV, and/or EPI received monies from Plaintiffs and other Patio Home owners based on
25 unjust and unreasonable HOA assessments imposed by Eskaton, acting through EVGV or EPI, and
26 the Eskaton Directors.
27
82.
Plaintiffs have suffered and will continue to suffer loss of monies in an amount to be
28 determined at trial, and have suffered a reduction in services they would have been able to fund, were
DIEPENBROCK
ELKIN LLP
{00437391;?}
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1 it not for the unjust and unfair assessments imposed on them by the Eskaton Directors. Plaintiffs
2 seek to restore to themselves from Defendants the funds wrongfully received by EVGV and EPI.
3
EIGHTH CAUSE OF ACTION
(Derivative Breach of Fiduciary Claim on Behalf of HOA)
(Against All Defendants)
83.
Plaintiffs re-allege and incorporate by reference each of the allegafions set forth in

9
84.
Plaintiffs were members of the HOA at the time of transactions alleged herein.
10
85.
The Eskaton Directors have fiduciary responsibilities toward the Minority Directors
11 and to the homeowners the Minority Directors represent. The Eskaton Directors have a fiduciary
12 responsibility to the HOA to exercise their powers in good faith, with undivided loyalty to the
13 interests of the association.
14
86.
Plaintiffs are informed and believe and thereon allege that the Eskaton Directors
15 breached their fiduciary duty to the HOA, and harmed the HOA, as follows:
16
a. They failed to exercise their powers with undivided loyalty to the HOA, and
17
18
b. They allowed the HOA to be overcharged for services provided by the Campus
19
Patrol. More parficularly, the Campus Patrol has been spending approximately 75
20
percent of its time providing services to the Lodge, which is EVGV's separate
21
interest. EVGV has not paid for the services provided directly to it by the Campus
22
Patrol. As a result of such failure, the HOA has been improperly subsidizing the
23
Lodge's operafions.
24
c. From approximately August 2004 through August 2014, the Eskaton Directors
25
allowed EVGV to use and occupy the HOA's maintenance building and parking
26
lot, without paying rent. As a result, the HOA has been deprived of the reasonable
27
rental value of the HOA maintenance building in an amount to be proven at trial.
28
DIEPENBROCK
ELKIN LLP
instead placed the interests of EVGV, EPI, and Eskaton above those of the HOA
87.
{00437391;?}
As a result of the Eskaton Director's breach of their fiduciary duty to the HOA, the
- 20 -
1 HOA has incurred attorney's fees responding to a demand letter Plainfiffs issued to it relating to the
2 claims alleged herein. The HOA will incur additional attorney's fees, and costs, defending against
3 this action. Because the HOA has incurted costs and will incur additional costs as a result of the
4 unlawful actions taken by the Eskaton Majority, the HOA should be indemnified by Eskaton and/or
5 EVGV for all costs of responding to Plaintiffs' demand letter, any and all costs of defense, including
6 attorney's fees in this action, as well as any monies paid in settlement or in satisfaction of judgment
7 obtained herein.
8
88.
By letter, dated August 29, 2014, Plaintiffs made a demand on the FlOA board of
9 directors, through its counsel of record, to pursue the claims alleged immediately above. The letter
10 set forth the ultimate facts of each cause of action herein alleged, and demanded that the HOA take
11 such action as is necessary for the HOA to prosecute the cause of action against Eskaton and EVGV
12 The letter urged the HOA Board to take action within 30 days.
13
89.
As of this date, the HOA Board has failed to provide a substanfive response to
14 Plaintiffs' August 29, 2014 demand letter. Plaintiffs are informed and believe and thereon allege that
15 the HOA Board will fail and reftise to prosecute the claims alleged herein because the HOA Board
16 failed to form a disinterested committee to evaluate and respond to Plaintiffs' August 29, 2014
17 demand letter. Rather, the litigation committee the HOA Board purported to form is comprised of
18 Robert Brennan and the Eskaton Directors. Accordingly, Plaintiffs are informed and believe and
19 thereon allege that waiting for a formal response from the HOA Board would be futile. Moreover
20 the Eskaton Director's control of the litigation committee means that any response by the HOA
21 Board would be invalid and non-binding on the HOA, and would simply constitute another breach of
22 fiduciary duty by the Eskaton Directors.
23
90.
Assistance Eskaton provided for the breach of fiduciary duty alleged herein was a

25
91.
If Plainfiffs are successful in this action, a substantial benefit will result to the HOA
26 on whose behalf this claim is prosecuted, and Plaintiffs are entitled to recover the reasonable attorney
27 fees they incur prosecuting this claim on behalf of the HOA.
28
DIEPENBROCK
ELKIN LLP

{00437391; 7}
-21 -
NINTH CAUSE OF ACTION

(Derivative Negligence Claim on Behalf of HOA)
(Against All Defendants)
92.

6
93.
A director of a common interest community must perform his or her duties to the
7 HOA in good faith, in a manner the director believes to be in the best interests of the HOA, and
8 exercising the same level of due care as an ordinarily prudent person would use in similar
9 circumstances.
10
The Eskaton Directors have breached their duty of care to the HOA as follows:
11
a. They approved and renewed a Management Services Agreement that fails to
12
properly distinguish between services provided to HOA property on one hand, and
13
services provided to non-HOA property', on the other.
14
b. They failed to require appropriate record keeping that would ensure that Patio
15
Home owners were not overcharged, which failure resulted in the HOA incurring
16
legal fees and costs.
17
c. They failed to investigate numerous matters of concern raised by the Minority
18
Directors, and failed to correct many of these problems after they were brought to
19
their attention by Minority Directors.
20
d. They allowed HOA property to be used by EVGV without compensation.
21
e. Likewise, the October 2013 vote regarding the Homeowner Expense Allocation
22
constituted a breach of the duty of care because Director Donovan stated that she
23
did not believe Section 7233 was applicable, and that she did not believe DRE
24
Form 623 "constituted a legal obligafion to allocation formulas going forward.'
25
Plaintiffs allege on information and belief that Ms. Donovan is not an attorney,
26
and that she made the statement without first obtaining a written opinion from an
27
attomey, as required under the standard of care applicable to such situations. And,
28
because the percentages listed under "Share Basis Allocated To Patio Homes" in
DIEPENBROCK
ELKIN LLP
94.
{00437391;?}
- 22 CLASS ACTION COMPLAINT
the Form 623 are properly construed as a forward looking representation to
purchasers of those homes, Donvan's contention to the contrary was manifestly
unreasonable.
95.
By letter, dated August 29, 2014, Plaintiffs made a demand on the HOA board of
5 directors to pursue the claims alleged immediately above. The letter set forth the ultimate facts of
6 each cause of action herein alleged, and demanded that the HOA take such action as is necessary for
7 the HOA to prosecute the cause of action against Eskaton and EVGV. The letter urged the HOA
8 Board to take action within 30 days.
9
96.
As of this date, the HOA Board has failed and refused to provide a substantive
10 response to Plaintiffs' August 29, 2014 demand letter. Plaintiffs are informed and believe and
11 thereon allege that the HOA Board will fail and refuse to prosecute the claims alleged herein because
12 the HOA Board failed to form a disinterested committee to evaluate and respond to Plaintiffs'
13 August 29, 2014 demand letter. Rather, the litigation committee the HOA Board purported to form is
14 comprised of Robert Brennan and the Eskaton Directors. Accordingly, Plaintiffs are informed and
15 believed and thereon allege that v/aiting for a formal response from the HOA Board would be futile
16 Moreover, the Eskaton Director's control of the litigation committee means that any response by the
17 HOA Board would be invalid and non-binding on the HOA, and would simply constitute a further
18 example of bad faith and a breach of fiduciary duty by the Eskaton Directors, aided and abetted by
19 Eskaton and EVGV.
20
97.
If Plainfiffs are successfial in this action, a substantial benefit will result to the HOA
21 on whose behalf this claim is prosecuted, and Plaintiffs are entitled to recover the reasonable attorney
22 fees they incur prosecuting this claim on behalf of the HOA.
23
98.
As a direct and proximate result of the negligence, as herein alleged. Plaintiffs have
24 been damaged in an amount to be determined at trial.

25
26
///
27
///
28
///
DIEPENBROCK
ELKIN LLP
WHEREFORE, Plainfiffs pray for judgment as set forth below.
{00437391; 7}
-23 -
PRAYER FOR R E L I E F
Plaintiffs pray for judgment against Defendants as follows:
2
3 ON
4
1.
For general and special damages in an amount to be proven prior to judgment, plus
prejudgment interest at the maximum legal rate;
5
6
IE FIRST CAUSE OF ACTION (Breach of Fiduciary Duty)
2.
For punitive damages in an amount to be proven prior to judgment, plus interest at the
maximum legal rate and as otherwise provided by law;
7
8
3.
For a finding that Eskaton is liable for aiding and abetting breach of fiduciary duty;
4.
For a finding that Eskaton is the alter ego of EVGV, and that the separate corporate existence
of Eskaton and EVGV should be disregarded;
10
11
5.
An order making Eskaton and EVGV jointly and severally liable for all damages awarded;
12
6.
For attorney's fees and costs of suit incurred herein pursuant to section 1021.5 of the Code of
Civil Procedure;
13
14
7.
15 ON
For such other and further relief as the Court deems just and proper.
IE SECOND CAUSE OF ACTION (Breach of Fiduciary Duty)
16 1.
17
18 2.
19 3.
For a finding that Eskaton is the alter ego of EVGV and EPI, and that the separate corporate
20
existence of Eskaton, EVGV and EPI should be disregarded;
21 4.
An order making Eskaton, EVGV, and EPI jointly and severally liable for all damages
22
awarded;
23 5.
For attorneys' fees and costs of suit incurred herein pursuant to section 1021.5 of the Code of
24
Civil Procedure;
25 6.
26 ON
27 1.
For an order finding the challenged transaction was unjust and unreasonable are therefore
28
void based on the Eskaton Directors' failure to comply with Section 7233 of the Corporations
DIEPENBROCK
ELKIN LLP
{00437391; 7}
- 24 -
Code;
2 2.
4 3.
6 4.
An order making Eskaton, EVGV, and EPI joinfiy and severally liable for all damages
awarded;
8 5.
For attorneys' fees and costs of suit incurred herein pursuant to section 1021.5 ofthe Code of
Civil Procedure;
10 6.
11 ON THE FOURTH CAUSE OF ACTION (Voidable Transaction)

12 1.
For an order finding the challenged transaction was unjust and unreasonable are therefore
13
void based on the Eskaton Directors' failure to comply with Section 7233 of the Corporations
14
Code;
15 2.
16
17 3.
18
19 4.
20
awarded;
21 5.
22
Civil Procedure;
23 6.
24 ON
[E FIFTH CAUSE OF ACTION (Financial Elder Abuse)
25
26
27 2.
For punitive damages in an amount to be proven prior to judgment, plus interest at the
28
maximum legal rate and as otherwise provided by law;
DIEPENBROCK
ELKIN LLP
1.
{00437391;?}
- 25 -
3.
3 4.
awarded;
5 5.
For attorneys' fees and costs of suit herein pursuant to secfion 1021.5 of the Code of Civil
Procedure and under section 15657.5 of the Welfare and Institutions Code; and
7 6.
8 ON THE SIXTH CAUSE OF ACTION (Accounting)

9
A finding that Plaintiffs lack an adequate remedy at law to accurately determine the full
10
extent to which they have improperly charged for Security/Emergency Response & On-site
11
Shuttle Service and for the Fitness/Wellness Program Director;
12 2.
An order requiring Defendants to restore to the Patio Home owners the assessment monies
13
that were improperly obtained from them for "Security/Emergency Response & On-site
14
Shuttle Service" and for the Fitness/Wellness Program services;
15
3.
An order requiring Defendants to create, maintain, and distribute to the Minority Directors
16
adequate records (such as through time cards or time entry billing) that will allow Patio
17
Home owners to ensure that they are provided services for Security/Emergency Response &
18
On-site Shuttle Service" and for the Fitness/Wellness Program that are commensurate vvith
19
the 50 percent allocation for such services and programs in the Form 623.
20 4.
For attorneys' fees and costs of suit herein pursuant to section 1021.5 of the Code of Civil
21
Procedure; and
22
5.
23
ON THE SEVENTH CAUSE OF ACTION (Unfair Business Practices)
24
1.
Pursuant to Business and Professions Code section 17204 and 17535, and pursuant to the
25
equitable powers of this Court, for an order enjoining Defendants, and each of them, causing
26
the Patio Home owners to be assessed for services provided on or for the benefit of EVGV
27
property;
28
DIEPENBROCK
ELKIN LLP
1.
2.
Pursuant to Business and Professions Code section 17204 and 17535, and pursuant to the
{00437391; 7}
-26CLASS ACTION COMPLAINT
equitable powers of this Court, for an order directing Eskaton, EVGV, and the HOA, and
each of them, to take all steps necessary for the HOA to adopt: (i) a rigorous conflict of
interest policy under which the Eskaton Directors must recuse themselves from votes on any
transactions and/or contracts with Eskaton or any Eskaton affiliate; and (ii) a policy requiring
the HOA to adhere to the Homeowner Expense Allocation for Eskaton Services included in
the seller disclosure package distributed to purchasers of the Patio Homes;
7 3.
Pursuant to Business and Professions Code secfion 17204 and 17535, and pursuant to the
equitable powers of this Court, for an order directing Eskaton, EVGV, and the HOA, and
each of them, to ensure, that when the HOA governing documents are amended (a process
10
that is now underway), those documents must clearly provide: (i) that the HOA has
11
responsibilities only for common area property, and for the 130 homeowner lots, and that
12
EVGV has sole responsibility for maintaining the separate interests it owns; and (ii) the HOA
13
is not obligated to contract with EVGV, or any Eskaton affiliate for property management
14
services, for the maintenance of common area property, for the maintenance of the
15
homeowner lots, for the maintenance of the exteriors of those 130 homes, or for all ofthe
16
services listed in Exhibit C of the currently operafive CC&Rs.
17 4.
Restitution of all assessments that were unfairly and unjustly imposed on and collected from
18
the Patio Home owners, according to proof at trial;
19 5.
For attorneys' fees and costs of suit herein pursuant to section 1021.5 of the Code of Civil
20
Procedure and under secfion 15657.5 of the Welfare and Insfitutions Code; and
21 6.
22 ON THE EIGHTH CAUSE OF ACTION (Derivative Breach of Fiduciary Duty)

23 1.
For damages the HOA has sustained by reason of the unlawful conduct alleged in this claim,
24
plus prejudgment interest at the maximum legal rate;
25 2.
26 3.
27
28 4.
DIEPENBROCK
ELKIN LLP
{00437391; 7}
.27.
awarded;
2 5.
Civil Procedure;
4 6.
5 ON THE NINTH CAUSE OF ACTION (Derivative Negligence Claim)

6 1.
For damages the HOA has sustained by reason of the unlawful conduct alleged in this claim,
plus prejudgment interest at the maximum legal rate;
8 2.
10 3.
11
awarded;
12 4.
13
Civil Procedure;
14 5.
15 Respectfully submitted,
16 Dated: November 19,2014
17
BRADY & VINDING

DIEPENBROCK ELKIN LLP
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By:
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Michael E. Vinding
David A. Diepenbrock
Attorneys for Plaintiffs RONALD F. COLEY
and KAREN B. LORINI
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DIEPENBROCK
ELKIN LLP
{00437391;7}
-28-
VERTFICATION
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I, Ronald F. Coley, declare:
1.
1 am a party to the above-captioned lawsuit. 1 have held a beneficial ownership
interest in one ofthe 130 Patio Homes in the Eskaton Village Grass Valley ("Village") development
from 2004 through the present. As such, I am a member of the Home Owners Association ("HOA")
for the Village. I have served on the HOA's Board of Directors since August 2005.
7
8
2.
T have read the foregoing CLASS ACTION COMPLAINT FOR: (I) BREACH OF
FIDUCIARY DUTY; (2) BREACH OF FIDUCIARY DUTY; (3) VOIDABLE TRANSATION -
9 CORP. CODE 7233; (4) VOIDABLE TRANSATION - CORP. CODE 7233; (5) FINANCIAL
10 ELDER ABUSE - WELF. & INST. CODE 15610.30 ET SEQ.; (6) ACCOUNTING; (7) UNFAIR
11
BUSINESS PRACTICES - BUS. & PROF. CODE 17200; (8) BREACH OF FIDUCIARY
12 DUTY; AND (9) NEGLIGENCE and know the contents thereof 1 certify that the allegations
13 contained in the Complaint are true of my own knowledge, e.\cept as to those matters which are
14 therein alleged on information and belief, and, as to those matters, 1 believe them to be true.
15
3.
1 declare linder penalty of perjury under the laws of the State of California that the
16 foregoing is true and correct.

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Executed on this i ^ day of November, 2014, at Gra.ss Valley, Califomia.
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Ronald F. Coley
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DIEPENBROCK
ELKIN LLP
{00437391; 7}
1
VERIFICATION
Exhibit A
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Nbr-0000200527
ECY/EY/l-55
DOCUMENT TITLE
THIS PAGE A D D E D TO PROVIDE ADEQUATE SPACE POR RECORDING INFORMATION

(Govt. Code 27361.6)
Additional Recording Fee Applies
^5
001297
Partner- Q Limited General

Attorney-in-Fact
Trustee
Guardian or Conservator
Other:
Signer is Representing:
RECORDING RECORDED, RETURN TO;

Hefner, Stark & Marois, LLP
2150 River Plaza Drive, Suite 450
Sacramento, California 95833-3883
Attn: Timothy M. Cronan, Esq.
(SPACE ABOVE THIS LINE RESE.^VED FOR RECORDER'S USE)
FIRST AMENDED AND RESTATED

DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
OF
ESKATON VILLAGE-GRASS VALLEY HOMEOWNERS ASSOCIATION
1 1297
T A B L E OF CONTENTS
Page
RECITALS
DECLARATION
ARTICLE I
DEFINITIONS
ARTICLE II
PROPERTY RIGHTS, RIGHTS OF ENJOYMENT AND EASEMENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
Ownership
Conveyance of Common Area
Encroachments
Easements Held by Association
Easements Granted by Association
Easements
Easements Upon Adjacent Lots
Common Wall, Etc
Retention Basin Easement
3
3
4
4
5
5
5
5
6
10.
Other Easements
ARTICLE III
ARTICLE IV
USE RESTRICTIONS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
6
6
6
7
7
7
7
7
8
8
8
8
8
8
8
9
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9
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Residential Use
Senior-Only Community
Commercial Use
Offensive Conduct, Nuisances
Parking Restrictions
Signs
Awnings, Etc
Animals
Trash Disposal
Outside Drying and Laundering
Exterior Alterations
Compliance with Laws, Etc
Indemnification
Owner's Obligation for Taxes
Oil Drilling
Basketball Hoops; Antennas
Wood Burning Stoves
Fencing
Nevada Union Joint High School
Enforcement
THE ASSOCIATION
1.
2.
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Formation
'.
Association Action; Board of Directors and Officers
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Page
3.
ARTICLE V
ARTICLE VI
4.
5.
6.
7.
8.
9.
Powers and Duties of Association

(a)
Powers
(b)
Duties of the Association
(c)
Limitations on Authority of Board
Personal Liability
Financial Statements of the Association
Review of Financial Statements
Withdrawal of Funds
Reserve Funds
Inspection of Association Books and Records
10.
Transfer of Lots
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13
15
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MEMBERSHIP AND VOTING RIGHTS
23
1.
Membership
(a)
Qualifications
(b)
Members' Rights and Duties
(c)
Transfer of Membership
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2.
Voting
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(a)
Number of Votes
(b)
Joint Owner Votes
3.
Limitations on Declarant's Voting Power
ASSESSMENTS
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1.
2.
3.
4.
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27
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5.
6.
7.
8.
ARTICLE VII
Agreement to Pay
Personal Obligations
Purpose of Assessments
Assessments
(a)
Regular Assessments
(b)
Special Assessments
(c)
Cost Center Assessment Component
(d)
Notice of Increase in Assessments
(e)
Annual and Special Assessment Increases
(f)
Quorum Requirements
(g)
Declarant's Assessment
Rate of Assessment
Assessment Period
Notice and Assessment Installment Due Dates
Estoppel Certificate
COLLECTION OF ASSESSMENTS: LIENS
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1.
2.
3.
4.
5.
6.
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29
30
30
30
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Right to Enforce
Creation of Lien
Notice of Default; Foreclosure
Waiver of Exemptions
Transfer of Lot by Sale or Foreclosure
Right of Association to Bid al Foreclosure Sale
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Pags.
ARTICLE VIII INSURANCE

1.
2.
3.
4.
5.
6.
7.
8.
ARTICLE IX
ARTICLE X
ARTICLE XI
ARTICLE Xll
Liability Insurance
Fire and Extended Coverage Insurance
Trustee
Other Insurance
Owner's Insurance
Mortgage Clause, Etc
Insurance Carrier Rating, Etc
Review of Policies
31
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32
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DESTRUCTION OF IMPROVEMENTS
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1.
2.
3.
4.
5.
6.
Destruction; Proceeds Exceed 85% of Reconstruction Costs

Destruction; Proceeds Less than 85% of Reconstruction Costs
Rebuilding Procedures
Rebuilding Contract
Rebuilding Not Authorized
Minor Repair and Reconstruction
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7.
Arbitration
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8.
Negligentiy or Willfully Caused Damage
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CONDEMNATION
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1.
2.
Common Area Awards

Distribution of Proceeds of Sale
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3.
Distribution of Condemnation Award
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NON-SEVERABILITY OF COMPONENT INTERESTS IN COMMON AREA . . . 35

1.
Prohibition Against Severance
35
2.
Conveyances
35
TERM OF DECLARATION
35
1.
35
Term of Declaration
ARTICLE XIII PROTECTION OF MORTGAGEES

1.
2.
3.
4.
5.
6.
7.
8.
Effect of Breach
Notices to First Mortgagees of Record
Inapplicability of Right of First Refusal
Foreclosure
Action after Condemnation or Destruction
Inspection of Documents, Books and Records
Reserve for Replacement
Taxes and Liens on Individual Lots/Units
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9.
10.
Subordination
Distribution of Insurance and Condemnation Proceeds
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11.
12.
13.
14.
15.
Common Area
Payments by Mortgagees
Non-Curable Breach
Loan to Facilitate
Appearance al Meetings
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16.
Right to Furnish Information
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ARTICLE XIV AMENDMENT
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1.
2.
3.
Amendment Prior to Close of First Sale

Amendment After Close of First Sale
Business and Professions Code Section 11018.7
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4.
Reliance on Amendments
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ARTICLE XV ARCHITECTURAL CONTROL

1.
2.
3.
4.
Architectural Control
Architectural Control Committee
Architectural Control Committee Rules
Waiver
5.
Liability
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ARTICLE XVI ANNEXATION OF ADDITIONAL PROPERTY

1.
39
40
Annexation
(a)
GVB's Annexation Rights
(b)
Rights and Obligations of Owners
(c)
Other Annexation of Property
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40
41
41
(d)
41
Approval of the Department of Real Estate
ARTICLE XVII GENERAL PROVISIONS
41
1.
Headings
2.
Severability
41
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Cumulative Remedies
Violations as Nuisance
Discrimination
Access to Books
Liberal Construction
Notification of Sale of Lot
Number; Gender
Exhibits
Easements Reserved and Granted
Binding Effect
Unsegregated Real Estate Taxes
Attorney's Fees
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42
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001297
FIRST AMENDED AND R E S T A T E D

D E C L A R A T I O N O F C O V E N A N T S , CONDITIONS AND R E S T R I C T I O N S F O R
E S K A T O N V I L L A G E - G R A S S V A L L E Y HOMEOWNERS ASSOCIATION
THIS DECLARATION ("Declaration") ismadethis_jL(iâyof January.2003, by ESKATON

a California non-profit, public benefit corporation ("Eskaton"), and by
GRASS VALLEY BUILDERS, LLC, a Califomia limited liability company ("GVB") (hereinafter
collectively referred to as "Declarant").
VILLAGE-GRASS VALLEY,
RECITALS
On or about November 30, 2001, Eskaton executed that certain Declaration of Covenants,
Conditions and Restrictions of Eskaton Village-Grass Valley Homeowners Association which was
recorded December 14, 2001 as Document No. 2001-0045443-00, in the Official Records of
Nevada County ("Original CC&R's"). Declarant desires to amend and restate the provisions of the
Original CC&R's by this First Amended and Restated Declaration of Covenants, Conditions and
Restrictions for Eskaton Village-Grass Valley Homeowners Association (hereafter referred to as the
"Declaration").
Eskaton is the owner of Lot 1 and GVB is the owner of Lots 7 through 18, and 120
through 131, and eight (8) Common Area Lots located in the County of Nevada, State of California,
described in Exhibit "A" attached hereto and made a part hereof (the "Real Property"). Declarant
intends to improve the Development as a fully integrated senior-only, residential development in
which GVB will construct senior-only, single-family homes designed for independent living, and
Eskaton intends to develop a multi-residential structure containing one hundred thirty-seven (137)
residential units designed for senior-only, assisted living, congregate housing, and other supportive
residential services for seniors. GVB will construct single-family homes and sell the homes and
Lots. Eskaton intends to develop, own and manage the Units.
Eskaton and GVB have improved or intend to improve the Real Property by constructing
improvements thereon, and by creating a planned development thereon, which Development may
be increased in size, at the sole option of Declarant, its successor and assigns, and provided
herein, by the addition (subject to the provisions of Section 2792.27 of the regulations of the Real
Estate Commissioner) of one or more additional phases consisting of Lots, Units, and Common
Area to be constructed thereon, and more particularly described on Exhibit "B," which is attached
hereto and made a part hereof. By adoption of this Declaration, Declarant is not committing itself
to the annexation of any additional property. An Owner who acquires a Lot in the Development shall
not have any legal right to insist that there be any such annexation other than as specifically provided
in this Declaration and in instruments which hereafter may be filed subjecting other property to this
Declaration.
pECL,ARATION
Declarant declares that the Real Property is, and shall be, held, conveyed, hypothecated,
encumbered, leased, rented, used and occupied, sold and improved subject to the following
limitations, restrictions, easements, covenants, conditions, liens and charges, all of which are
declared and agreed to be enforceable equitable servitudes and in furtherance of a plan for the
individual ownership of the Lots and the Units located within the Development, and for the common
ownership and maintenance ofthe Common Area lots, and all of which are declared and agreed to
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be for the purpose of enhancing, maintaining and protecting the value and attractiveness of the Real
Property. All ofthe limitations, restrictions, easements, covenants, conditions, liens and charges
shall run with the land, shall be binding on and inure to the benefit of all parties having or acquiring
any right, title or interest in the Real Property, and shall be binding on and inure to the benefit ofthe
successors in interest of such parties.
ARTICLE I
DEFINITIONS
1.
"Annexed Property" shall mean and refer to any and all real property which is
annexed to the Development pursuant to a Declaration of Annexation.
2.
"Articles" shall mean the Articles of Incorporation of the Association, and as said
Articles may be amended from time to time.
3.
"Association" shall mean and refer to the ESKATON VILLAGE-GRASS VALLEY
HOMEOWNERS ASSOCIATION, a California nonprofit mutual benefit corporation created for the
purpose of managing the Development, and its successors and assigns.
4.
"Board" shall mean the Board of Directors of the Association.
5.
"Bylaws" shall mean the Bylaws of the Association, and as such Bylaws may be
amended from time to time.
6.
"City" shall mean the City of Grass Valley, California.
7.
"Common Area" shall mean all real property (including the improvements thereto)
and any mutual or reciprocal easement rights hereafter described appurtenant to each Lot) owned
by the Association for the common use and enjoyment of the Owners and the residents of the Units.
The Common Area to be owned by the Association at the time of the conveyance of the first Lot
shall mean and refer to Lots A, C, D, I, K, N, O and X, as shown on the Map.
8.
"Cost Center" shall be a designation assigned by the Association to a discrete portion
of the Development (and to the Owners of Lots located herein) for the purpose of expense
accounting and assessments, all as more particularly provided in Article VI, below. A Cost Center
is to be created when the Association is maintaining Common Area or facilities located within the
designated Cost Center area which are fully or partially restricted to Owners of the Lots within the
Cost Center. The Cost Center Assessments is, and shall continue to be, specifically identified in
the operating budgets ofthe Association.
9.
"County" shall mean the County of Nevada, State of California.
10.
"Declarant" shall mean ESKATON and GVB, and their successors and assigns. At
such time as GVB sells all of its Lots, GVB's status as a Declarant under this Declaration shall
cease.
11.
"Development" means all of the real property described in Exhibit "A", and any
additional real property annexed to this Declaration under Article XVI pursuant to any recorded
Declaration of Annexation.
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12.
"Lot" shall mean and refer to Lots 7 through 18, and 120 through 131 as described
on Exhibit "A," and Lots 2 through 6, and 19 through 119, as described on Exhibit " B , " upon which
it is intended there will be constructed a single-family home designed for senior-only, independent
living. A "Lot" shall not include Lot 1, as described on Exhibit "A," nor shall it include any Common
Area lots.
13.
"Map" shall mean and refer to that certain parcel map filed for record on
December 14, 2001, in Book 8 of Maps at page 92, Nevada County Official Records.
14.
"Member" shall mean every person or entity who holds a membership in the
Association by virtue of being an Owner of a Lot or a Unit in the Development.
15.
"Mortgage" shall mean a Mortgage, Deed of Trust, bond indenture, or similar
financing encumbering a Lot, a Unit, or other portion of the Development. A "Mortgagee" shall
include the beneficiary under a Deed of Trust, a mortgage or the Veteran Affairs or the State of
California under an installment land contract. An "institutional" Mortgagee is a Mortgagee that is a
bank or savings and loan association, or established mortgage company or other entity chartered
or licensed under federal or state laws, any corporation or insurance company, or any federal or
state agency.
16.
"Owner" means each person or entity holding a record ownership interest in a Lot
or a Unit, including Eskaton and GVB. Owner shall also include a contract purchaser pursuant to
a contract of sale recorded in the Office of the County Recorder, provided that the vendor under
such contract of sale has assigned all of his rights, title and interest to participate in the Association
to the contract purchaser thereunder, and such assignment is either contained in said contract of
sale or is otherwise recorded in the Office of the County Recorder. "Owner" shall not include
persons or entities who hold an interest in a Lot or Unit merely as security for the performance of
an obligation or as a contract purchaser under a contract of sale which does not satisfy the
conditions set forth in the preceding sentence.
17.
"Phase" means any Lot or Unit of real property which becomes a part of the
Development pursuant to the annexation provisions of this Declaration.
18.
"Unit" as used in this Declaration refers to the one hundred thirty-seven (137) units
constructed by Eskaton on Lot 1, as more particularly described in Exhibit "A," which is designed
for senior-only, assisted living, congregate housing, or other supportive residential services for
seniors.
ARTICLE II
PROPERTY RIGHTS. RIGHTS OF ENJOYMENT AND EASEMENTS
1.
Ownership. Ownership of each Lot and each Unit within the Development shall
include membership in the Association.
2.
Conveyance of Common Area. Upon conveyance of the first Lot in a phase from
GVB to an Owner, Eskaton shall convey to the Association in fee the Common Area in thai phase.
The Association shall use the Common Area for the benefit and enjoyment of the Members of the
Association and the residents of the Units. Each Owner shall have a non-exclusive easement for
ingress, egress and support over and through the Common Area. Each such right to said
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non-exclusive easement shall be appurtenant to and pass with the title to every Lot, subject to the
following rights and restrictions:
(a)
The right of the Association to limit the number of guests, and to adopt
Association rules and regulations regulating the use and enjoyment of the Common Area.
(b)
the Common Area.
The right of the Association to borrow money to improve, repair or maintain
(c)
The right of the Declarant, its contractors, subcontractors, or designees to
enter over and upon the Development for the purposes of:
(1)
Completing improvements of the Development;
(2)
Making repairs and remedying construction defects;
(3)
Erecting, constructing, and maintaining on any part or parts of the
Development, such structures as may be reasonable and necessary for the conduct of Declarant's
business of completing said work and establishing said Development as a residential community
and disposing ofthe same in parcels by sale, lease or othenwise;
(4)
Conducting on any part of the Development Declarant's business or
completing said work and of disposing of the Development by sale, lease or othenA/ise; and
(5)
Erecting and maintaining such sign or signs on any portion of the
Development as may be necessary for the improvement, development, sale, lease or disposition
thereof.
3.
Encroachments. Each Lot is hereby declared to have an easement over all
adjoining Lots, and the Common Area, and the Association, as the owner of the Common Area, is
hereby declared to have an easement over all adjoining Lots, forthe purpose of accommodating any
encroachment due to engineering errors, errors in original construction, settlement or shifting of a
building, fences or other structures, or any other cause. There shall be valid easements for the
maintenance of said encroachments as long as they shall exist, and the rights and obligations of
Owners and the Association shall not be altered in any way by said encroachment, settlement or
shifting; provided, however, that in no event shall a valid easement for encroachment be created in
favor of an Owner or the Association if said encroachment occurred due to the willful misconduct
of said Owner or the Association. In the event a structure is partially or totally destroyed, and then
repaired or rebuilt, the Owners and the Association of each Lot agree that minor encroachments
over adjoining Lots or Common Area shall be permitted and that there shall be a valid easement for
the maintenance of said encroachments so long as they shall exist
4.
Easements Held by Association. The Association, or its agents, shall have the
right after giving the Owner of a Lot twenty-four (24) hours prior notice, to enter any Lot to perform
its obligations under this Declaration, including (i) obligations with respect to construction,
maintenance or repair for the benefit ofthe Common Area; (ii) construction, maintenance or repair
of the exteriors of dwellings and landscaping as described in Article IV, Section 3(b)(1) herein; or
(iii) to make necessary repairs or maintenance that an Owner has failed to perform. The right shall
be immediate in case of an emergency originating in or threatening such Lot, and the obligation can
be performed whether or not the Owner is present. The right shall also be immediate where the
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Association has the primary obligation to perform such construction, maintenance or repair lo the
exteriors of dwellings and landscaping as provided in Article IV, Seciion 3(b)(1) herein.
5.
Easements Granted bv Association. The Association shall have the power to grant
and convey to any third party permits, licenses, easements and rights of way, in, on, over or under
the Common Area and the Lots for the purpose of constructing, erecting, operating or maintaining
thereon, therein or thereunder overhead or underground lines, cables, wires, conduits, or other
devices for electricity, cable television, power, telephone and other communication systems that
may now or hereafter exist, public sewers, storm water drains and pipes, water syslems, sprinkling
systems, water, healing and gas lines or pipes, and any similar public or quasi-public improvements
or facilities, and each purchaser, in accepting a deed to a Lol, expressly consents hereto.
6.
Easements. There are hereby specifically reserved for the benefit of the Lot
Owners, in common and for each Owner severally, as their respective inlerest shall obtain, the
easements, reciprocal negative easements, secondary easements, and rights-of-way as particularly
identified in this Declaration:
(a)
There is reserved for the benefit of each Lot as dominant tenement, an
easement for utility sen/ices over, under and Ihrough the Common Area and the olher Lots as the
servient tenements.
(b)
The Association shall have an easement appurtenant lo the Common Area
Ihrough each Lol for Ihe maintenance and repair ofthe Common Area, including maintaining the
irrigation syslem and landscaping located in the Common Area.
(c)
The Association and Owners of adjoining Lots shall have an easement for
entry upon and access to slopes and drainage ways located upon a Lot when such access is
essential for the maintenance or stabilization of slopes or drainage, or both, on such adjoining Lots,
provided requests for entry are made in advance and that entry is al all times convenient to the
Owner whose Lot is being entered upon. In case of emergency, the right of entry shall be
immediate.
7.
Easements Upon Adjacent Lots. Every Owner shall have a right and easement
of ingress and egress in, over, across and upon the Lol which is adjacent to the Lol of such Owner,
for the purpose of improvement, maintenance and repair of the Lol of such Owner and the dwelling
located upon such Lol. In no event shall such easement extend lo or encroach upon the dwelling
located upon such adjacent Lot. In utilizing such easement, the Owner shall take all precautions
lo avoid doing any damage to said adjacent Lot or any of Ihe improvements located thereon, and
each Owner in utilizing such easement agrees lo indemnify, defend and hold harmless the Owner
of such adjacent Lot of and from all damage which arises from his entry upon and use of said Lol.
8.
Common Wall. Etc. Each Lot that shares improvements, including but not limited
lo a common wall, common roof, walkway, fence, retaining wall, or party wall with an adjoining Lot
and its Owner is declared to have an easement appurtenant, and the same is granted by Declarant,
on, over, and upon such adjoining Lol for such common wall, common roof, or party wall, including
Ihe right to enter upon such adjoining Lol lo service and maintain such easement and to service,
maintain, repair or replace improvements constituting such common wall, common roof, or party
wall. Such entry shall be al reasonable times after prior nolice, except and in case of emergency
the right of entry shall be immediate. No Owner shall alter the shape, size, constmction or use, or
use any materials different from those included in the initial construction of any such common wall,
common roof, or party wall without the written consent ofthe Association.
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9.
Retention Basin Easement. The Association shall have and is granted an
exclusive easement in, on, over, and under each Lol for the purpose of constructing, improving,
maintaining and repairing retention basins.
10.
Other Easements. Each Lot and ils Owner and the Association, as the case may
be, is declared to be subject lo all easements, dedications and rights-of-way granted or reserved
in, on, over, and under the Real Property as shown on the Map.
ARTICLE lit
USE RESTRICTIONS
1.
Residential Use. The Lots shall be used for senior-only, single-family, independent
living residential purposes, and the Units shall be used for senior-only, assisted living, congregate
housing, and other supportive residential services for senior purposes only. Provided, however, that
any lease or rental agreement for any Lot shall be in writing and any lessee thereof shall abide by
and be subject lo all terms and provisions of this Declaration, the Articles, Bylaws, and the
Association njles, and any such lease agreement shall specify lhat failure to abide by such
provisions shall be a default under said lease; and provided further thai except for a mortgagee in
possession of a Lot following a default in a first mortgage, a foreclosure proceeding or acceptance
of a deed or other arrangement in lieu of foreclosure, no Owner shall rent, lease or lel his Lot for an
inilial term of less than thirty (30) days.
2.
Senior-Only Community. This Development shall be a senior citizen project. At
least one resident in each Lot or Unit must be fifty-five (55) years orolder (the "Senior Citizen"), and
every olher resident must be al least forty-five (45) years or older except for the spouse or
cohabitant of the Senior Citizen or a person who resides with and provides the primary physical or
financial support for the Senior Citizen (a "Qualified Permanent Resident"). A person is a
"cohabitant" of the Senior Citizen if the person and Ihe Senior Citizen live together as husband and
wife. Ifthe Senior Citizen dies, is hospitalized, or is absent from the Development for a prolonged
period, or if the marriage between the Senior Citizen and his or her spouse is dissolved, any
Qualified Permanent Resident may continue to reside in the Lot or Unit previously occupied by the
Senior Citizen withoul regard lo the age restriction that applied to lhal person, provided that the
person otherwise has the legal right to continue lo reside in the Lol or Unit and provided that at least
eighty percent (80%) of all of the Lots and Units in the Development are occupied by at least one
Senior Citizen. The Association is and shall be empowered to and shall lake the necessary steps
to enforce this provision.
3.
Commercial Use. Except for Eskaton's operation of the Units as senior-only,
assisted living, congregate housing, and olher supportive residential services forseniors, and further
except as otherwise provided in this Declaration, no part of the Development shall be used or
caused, allowed, or authorized to be used in any way, directly or indirectly, for any business,
commercial, manufacturing, mercantile, storing, or other such non-residenlial purpose, except lhat
an Owner or other resident of a Lot or Unit may conduct a business activity wiihin a Lot or Unit so
long as: (i) the existence or operation of the business activity is not apparent or detectable by sight,
sound or smell from outside the Lol or Unit; (ii) the business activity conforms to all applicable
zoning ordinances or requirements for the Lot or Unit; (iii) the business activity does not involve
persons coming onto the Lol or Unit or the door-to-door solicitation of Owners or other residents in
the Development; and (iv) the business activity does nol conslilule a nuisance or a hazardous or
offensive use or threaten security or safely of olher residents in the Development, as may be
determined from time to lime in the sole discretion ofthe Board. The terms "business" and "trade"
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as used in this section shall be construed to have ordinary, generally accepted meanings, and shall
include, without limitation, any occupation, work or activity undertaken on an ongoing basis which
involves the provision of goods or services to persons other than the provider's family and for which
the provider receives a fee, compensation or other form of consideration, regardless of whether:
(a) such activity is engaged in full or part time; (b) such activity is intended or does generate a profit;
or (c) a license is required for such activity.
4.
Offensive Conduct. Nuisances. No noxious or offensive aclivilies, including but
nol limited to, repair of automobiles orolher motorized vehicles outside of an Owner's dwelling, shall
be carried on, upon, or within the Development, nor shall anything be done Ihereon which may be
or become an annoyance or nuisance lo the residents of the Development, or which shall in any
way interfere wilh the quiet enjoyment of olher Owners.
5.
Parking Restrictions. No boat, trailer, recreational vehicle, camper, truck or
commercial vehicle shall be parked or left on any part of a Lot, unless the same are fully enclosed
within the garage located on such Lot or in a location specifically designated by the Architectural
Review Committee; provided, however, parking by commercial vehicles forthe purpose of making
deliveries, and commercial vehicles used by Declarant and the Association in connection wilh the
operation of any services or activities provided forthe Owners shall be permitted in accordance with
the Association rules.
6.
Signs. No signs of any kind shall be displayed lo the public view on or from any Lot
or Unit or on or from the Common Area without the approval of the Board, excepting such signs as
may be used by the Declarant or its designees for a period of three (3) years from and after ihe date
of recordation of the deed of the first Lot sold in the last phase in the Development for Ihe purpose
of developing, selling and improving Lots and Units within Ihe Development. Notwithstanding the
foregoing, one sign of customary and reasonable dimensions, advertising a Lot for rent or for sale,
may be placed within a Lol by the Owner thereof, the location and design thereof to be subject to
approval by the Architectural Committee.
7.
Awnings. Etc. No detached buildings, fences, awnings, ornamental screens,
trellises, screen doors, sunshades or walls of any nature shall be erected or maintained on or
around any portion of or elsewhere within the Development, except such as are inslalled in
accordance wilh the original construction of the Development, and any replacement thereof, or as
are authorized and approved by the Architectural Control Committee.
8.
Animals. No animals, dogs, reptiles, rodents, birds, fish, livestock or poultry shall
be kept on any Lol or elsewhere wiihin the Development, except lhal two usual and ordinary
household pels such as a dog or cal, may be kept as a household pel wiihin any Lot, provided such
animals are not kept, bred or raised therein for commercial purposes and they are kept under
reasonable control al all times. The Association shall have the right lo prohibit maintenance of any
animal which constitutes, in the sole and exclusive opinion ofthe Board after notice and a hearing
held pursuant to Article IV, Section 3(a)(2) hereof, a nuisance to any other Owner. Each person
bringing or keeping a pel upon the Development shall be absolutely liable to each and all olher
Owners, their family members, guests, invitees, and conlract purchasers, and their respective
family members, guests, invitees for any damage lo persons or property caused by any pel brought
upon or kept upon the Development by such person or by members of his family, his guests or
invitees. No pet shall be allowed on the Common Area, except while on a leash which is held by a
person capable of controlling it. Owners shall prevent their pets from soiling any portion of the
Common Area.
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9.
Trash Disposal. Trash, garbage or olher waste shall be kepi only in sanitary
containers. No Owner of a Lot shall pennit or cause any trash or refuse to be kept on any portion
of the Development subject to this Declaration other than in the receptacles customarily used
therefor located in places specifically designated for such purpose. Such containers shall be
exposed to the view of other Lots only when set oul for a reasonable period of time (not lo exceed
twenty-four (24) hours) before and after scheduled trash colleclion hours. No Owner of a Lot shall
permit or cause any household trash or refuse lo be placed in any litter containers located in the
Common Area.
10.
Outside Drying and Laundering. No exterior clothesline shall be erected or
maintained and there shall be no exterior drying or laundering of clothes in the Development which
is visible from any street wiihin the Development.
11.
Extenor Alterations. No Owner shall, al his expense or otherwise, make any
alterations or modifications to the exterior of his dwelling located on his Lot wilhout the prior wrillen
consent of the Architectural Control Committee.
12.
Compliance with Laws. Etc. Nolhing shall be done or kept on any Lot. Unit or in the
Common Area which might increase the rate of, or cause the cancellation of, insurance on the
Development, or any portion thereof, without the prior written consent of the Association. No Owner
shall permit anything to be done or kept on his Lot or Unit which is in violation of any law, ordinance,
statute, rule or regulation of any local, county, slale or federal body. No Owner shall allow furniture
of such Owner to remain within any portion of the Common Area.
13.
Indemnification. Each Owner shall be liable to the remaining Owners for any
damage to the Common Area which may be sustained by reason of the negligence of said Owner,
members of the Owner's family, the Owner's residents, contract purchasers, lessees, guests or
invitees, to the extent lhat any such damage shall nol be covered by insurance. Each Owner does
further, by acceptance of their Deed, agree for themselves and for the members of their family, their
residents contract purchasers, lessees, guests or invitees, lo indemnify each and every olher
Owner, and to hold him or her harmless from, and to defend him or her against, any claim of any
person or persons for personal injury or property damage occurring within the Lol of that particular
Owner from any cause, including, but not limited lo those arising out of the concurrent act or
negligence or fault of any remaining Owner or Owners. Only such injury or harm as may be caused
solely and exclusively by the fault or negligence of any remaining Owner or Owners shall be
excepted from the provisions of this seciion.
14.
Owner's Obligation for Taxes. To the extent allowed by local law, all Lots, Units,
the Common Area, and the membership of an Owner in fhe Association, shall be separately
assessed and taxed so that all taxes, assessments and charges which may become liens prior to
first mortgages under local law shall relate only lo Ihe individual Lots and Unils, and nol to the
Development as a whole. Each Owner shall be obligated lo pay any taxes or assessments
assessed by the County Assessor of said Counly against his Lol or Unit, and against his personal
property.
15.
Oil Drilling. No oil drilling, oil development operations, oil refining, quarrying, or
mining operations of any kind shall be permitted on or in the Development, and no oil wells, tanks,
tunnels or mineral excavations or shafts shall be permitted on the surface of the Development or
wiihin five hundred (500) feet below the surface of the Development. No derrick or olher structure
designed for use in boring for water, oil or natural gas shall be erected, mainlained or permitted on
the Development.
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16.
Basketball Hoops: Antennas. Fixed-in-place basketball goals and backboards,
whether free standing or attached lo the dwelling located on a Lot, are prohibited. No masts, towers,
poles, video, television or radio antennas, including satellite reception dishes, shall be placed or
constructed on any Lol withoul the prior approval of the Architectural Control Committee. The
Architectural Control Committee shall implement rules and regulations consistent wilh California
Civil Code Section 1376 in dealing with applications for approval of videos or television antennas,
including satellite dishes.
17.
Wood Burning Stoves. Wilh the exception of the main lodge and the Recreation
Facility, no wood burning stoves or like heating appliances shall be allowed within the Development.
18.
Fencing. Any fencing shall be constructed in a manner so thatthe fencing does nol
impede the existing drainage patterns within the Development.
19.
Nevada Union Joint High School. The Nevada Union Joint Unified School
recreational field abuts the west property line of the Development. Outdoor recreational activities
occur on this field on a regular basis. These activities produce noise, light and other impacts
commonly associaied with sporting and olher events. These events will continue and may intensify,
and Owners and residents of the Development acknowledge these activities.
20.
Enforcement. The failure of any Owner to comply wilh the provisions of this
Article III, or wilh any other provision of this Declaration or the Articles or Bylaws shall give rise to
a cause of action in the Association and any aggrieved Owner for the recovery of damages, or for
injunctive relief, or bolh.
ARTICLE IV
THE ASSOCIATION
1.
Formation. The Association shall be incorporated as a nonprofit mutual benefit
corporation under the laws of the Slate of California and, upon Ihe close and recordation of the first
Lot sale lo an Owner, shall be and become charged wilh the duties and invested wilh the powers
set forth in the Articles, the Bylaws and this Declaration, including, but nol limited to, control and
maintenance of the Common Area and any Common Area facilities.
2.
Association Action: Board of Directors and Officerg. Except as to matters
expressly requiring the approval of Members as set forth in this Declaration, the Articles or the
Bylaws, the affairs of the Association shall in all instances be conducted by the Board and such
officers as the Board may elect or appoint, such election or appointment to be in accordance wilh
the Bylaws, as the same may be amended from time lo lime. Except as otherwise expressly
provided in this Declaration, the Articles or the Bylaws, all matters requiring the approval of Members
shall be deemed approved if Members holding a majority of the lotal voting rights assent thereto by
written consent or othenwise as provided herein or in the Bylaws, or if approved by a majority vote
of a quorum of Members al any regular or special meeting called or otherwise as provided herein
or in the Bylaws.
3.
Powers and Duties of Association.
(a)
Powers. The Association shall have all the powers of a nonprofit mutual
benefit corporation organized under the Nonprofit Mutual Benefit Corporalion Law of California,
subject only to such limitations upon the exercise of such powers as are expressly set forth in the
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Articles, the Bylaws and this Declaration. II shall have the power to do any and all lawftjl things
which maybe authorized, required or permitted to be done by the Association under this Declaration,
the Articles and the Bylaws, and lo do and perform any and all acts which may be necessary or
proper for or incidental to the exercise of any of the express powers of the /Association, including,
without limilalion the following;
(1)
Assessments. The Association shall have the power to establish,
fix and levy assessments against the Owners of Lots, Unils and to enforce payment of such
assessments, all in accordance wilh the provisions of this Declaration; provided, however, the
approval of Members shall be required as to the amounts of all regular and special assessments
except as otherwise hereinafter specifically provided.
(2)
Enforcement of Rules. The Association in its own name and on its
own behalf, or on behalf of any Owner who consents, or any aggrieved Owner, can commence and
maintain actions for damages or to restrain and enjoin any actual or threatened breach of any
provisions of this Declaration or of the Articles or Bylaws, or of the Association rules or any
resolutions of the Board, and to enforce by mandalory injunction, or othenwise, all of these
provisions. In addition, the Association can suspend the voting rights, can suspend use privileges
of the Common Area or can assess monetary penalties against any Owner or other person entilled
to exercise such rights or privileges for any violation of this Declaration or the Articles, Bylaws,
Association rules, or Board resolutions. However, any such suspension of use privileges cannot
exceed a period of thirty (30) days for any one violalion and any monetary penally must be
reasonable in light of the violation, but in no event shall the penalty exceed Five Hundred Dollars
($500.00). Any action imposing fine or suspension shall be ineffective unless:
(i)
The fine or suspension shall be approved by a majority of all
Board Members al a regular or special meeting of the Board.
(ii)
A notice shall be sent by mail by prepaid, first-class, or
registered mail to the most recent address ofthe Member as shown on the Association's records,
setting forth the suspension or fine and the reasons therefor. Such notice shall be sent at least
fifteen (15) days before the proposed effective date of the expulsion.
(iii)
The Member being suspended or fined shall be given an
opportunity to be heard, either orally or in writing, at a hearing to be held not fewer than five (5) days
before the effective date ofthe proposed suspension or fine. The hearing will be held by a special
member judicial committee composed of not fewer than three Members appointed by the president.
The nolice to the Member of his proposed suspension or fine shall slale the dale, time, and place
of the hearing on his proposed suspension or fine.
(iv)
Following the hearing, the judicial committee shall decide
whether or not the Member should in fact be suspended or fined. The decision of the committee
shall be final.
(v)
In the event lhat a Member shall correct an alleged violation
prior to the hearing date, the Board shall discontinue the proceedings.
Except as provided in this section, the Association does not have the power or authority to cause
a forfeiture or abridgement of an Owner's right lo the full use and enjoyment of such Owner's Lol
if the Owner does not comply with provisions of this Declaration or of the Articles or Bylaws or the
Association rules, except when the loss or forfeiture is the resull of a court judgment or arbitration
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decision or a foreclosure or sale under a power of sale based on failure of the Owner to pay
assessments levied by the Association.
(3)
required, to perform any act
alternative dispute resolution
arbitration proceedings. The
Alternative Dispute Resolution. The Board is authorized, but not

reasonably necessary lo resolve any civil claim or action Ihrough
proceedings such as mediation, binding arbitration, or non-binding
Board is authorized, but not required, to perform the following acts:
(i)
Providing, or in good faith attempting to provide, one hundred
twenty (120) days advance notice of the Board's intent lo initiate the prosecution of any civil action
and of the nature and basis of the claim to every Member and every enlily or person who is a
prospective party to the civil action, provided thai nolice can be given (A) more than one hundred
twenty (120) days prior to the expiration of any pertinent statute of limitations, and (B) withoul
prejudice to the Association's right lo enforce this Declaration, and further provided that no such
nolice need be given prior lo the filing of an action in small claims court or an action solely lo enforce
assessment obligations.
(ii)
Prior to initiating the prosecution of a civil action solely for
declaratory relief or injunctive relief to enforce this Declaration, or for declaratory relief or injunctive
relief to enforce this Declaration in conjunction with a claim for monetary damages not in excess
of Five Thousand Dollars ($5,000.00), lo endeavor lo submit the matter lo alternative dispute
resolution in compliance wilh the provisions of Section 1354(b) of the Civil Code.
(iii)
Immediately after initiating the prosecution or defense of any
civil action, making a reasonable effort, in good faith, to meet and confer with every person who is
a party concerning appropriate processes for resolving the civil action, including available alternative
dispute resolution proceedings; concerning appropriale processes for avoiding or reducing costs
or losses by the parties associated wilh the action; providing an opportunity lo cure any alleged
defect in Common Areas which is the basis for the action; and providing for the scope of discovery,
if any, lo be conducted prior lo the inception of any alternative dispute resolution procedure.
(iv)
Considering diversion ofthe prosecution or defense of any civil
action to alternative dispute resolution proceedings such as mediation, non-binding arbitration, or
binding arbitration.
(v)
Agreeing to participate and participating fully and in good faith
in the resolution of any civil action Ihrough any alternative dispute resolution proceedings, including
but not limited lo mediation, non-binding arbitration, and binding arbitration, and paying costs
reasonably incurred by the Association on account of those alternative dispute resolution
proceedings.
(4)
do any of the following:
Initiation of Actions. The Board shall not ordinarily be required to
(i)
As a prerequisite lo initiating any civil action, to conduct
inspections, maintain inspection records, exhaust applicable casually insurance coverage
mainlained by the Association, provide an opportunity lo cure, meet wilh Members, or obtain the
consent of the Members.
(ii)
Except in compliance with the provisions of Seciion 1354(b)
of the Civil Code, to submit civil claims of any kind lo binding or non-binding alternative dispute
resolution procedures.
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(5)
Notice of Action Against Declarant. Not later than thirty (30) days
prior to the filing of any civil action by the Association against Declarant, GVB, or any olher developer
of the Development for alleged damage lo the Common Areas, alleged damage to the separate
interests lhal the Association is obligated to maintain or repair, or alleged damage to the separate
interests lhat arises oul of, or is integrally related to, damage lo the Common Areas or separate
interests that the Association is obligated to mainlain or repair, the Board shall provide written nolice
to each Member who appears on the records of the Association when the notice is provided. This
nolice shall specify all of the following:
(i)
lead lo the filing of a civil action.
That a meeting will take place to discuss problems that may
(ii)
The options, including civil actions, that are available to
(iii)
The lime and place of this meeting.
address the problems.
(iv)
Notwithstanding the preceding paragraph, if the Association
has reason to believe that the applicable statute of limitations will expire before the Association files
the civil action, the Association may give the notice, as described above, within thirty (30) days after
the filing of the action.
(6)
Compliance With Civil Code Section 1375. Before the Association
commences an action against Eskaton, GVB or any other developer or builder of the Development
based on a claim for defects in the design or constmction ofthe Common Area, the requirements
of California Civil Code Section 1375 shall be met.
(7)
Delegation of Powers. The Association acting by and through the
Board shall have the authority to delegate its powers, duties and responsibilities to committees,
officers or employees, including a professional managing agent. The Association shall initially retain
Eskaton Properties, Incorporated, a California non-profit public benefit corporation ("EPI") by a
separale wriiten agreement to provide managemenl of the Development ("Management
Agreement"), including but not limited to the operation, maintenance and replacement of: (a) the
Common Area; (b) the exterior of the dwellings located on the Lois; and (c) the landscaping located
on the Lots; and (d) to provide those services and programs more particularty described on
Exhibit "C," attached hereto and incorporated herein by reference. The inilial tenn of the
Management Agreement shall be for a period of five (5) years, and the Management Agreement shall
provide for automatic extensions of three (3) years each. Provided however, at least six (6) months
prior to the expiration of either the initial term or any extended term of the Managemenl Agreemeni,
the Members other than Declarant may prevent the automatic extension of the Management
Agreement, withoul cause, by a vole of two-thirds (2/3) of such Members. Notwithstanding the
foregoing, if al any lime during the term of the Managemenl Agreemeni, EPI is deemed to be in
malerial default of ils obligations under the Management Agreemeni, the Management Agreemeni
shall terminate.
Any action lo terminate the Managemenl Agreemeni shall be ineffective unless:
(i)
The termination of the Management Agreement shall be
approved by two-thirds (2/3) of all Members other than Eskaton at a regular or special meeting of
the Association, and by the head of the Subdivision Department of the California Department of Real
Estate.
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(ii)
A notice shall be sent by mail by prepaid, first-class, or
registered mail to the most recent address of Eskaton setting forth the facts constituting the malerial
default of the Management Agreement. Such nolice shall be sent al least sixty (60) days before the
proposed effective date of the termination.
(iii)
Eskaton shall be given an opportunity lo be heard, either orally
or in writing, at a hearing to be held nol fewer than thirty (30) days before the effective date of the
proposed termination. The hearing will be held by a special Member judicial committee composed
of not fewer than three Members appointed by Members ofthe Board who are not representatives
of Eskaton. The notice to Eskaton shall stale the date, time, and place of the hearing on the
proposed termination ofthe Management Agreement.
(iv)
Following the hearing, the judicial committee shall decide
whether or not Eskaton is in malerial breach of the Managemenl Agreemeni and if the Managemenl
Agreemeni should be terminated.
(v)
In the event that Eskaton shall correct an alleged breach ofthe
Management Agreemeni prior to the hearing date, or if such correction can not be completed by
the hearing date but Eskaton has commenced and is diligently pursuing correction of such breach,
the Board shall discontinue the proceedings.
(8)
Association Rules. The Association shall have the power to adopt,
amend and repeal such rules and regulations as il deems reasonable (hereinafter sometimes
referred to as the "Association Rules"). The Association Rules shall govern the use ofthe Common
Area by an Owner, the family members of an Owner, or by any guest, invitee, tenant, lessee, or
contract purchaser, or their respective family members, guests or invitees; provided, however, lhat
the Association Rules shall nol be inconsistent wilh or materially alter any other provisions of this
Declaration, the Articles or Bylaws. A copy of the Associalion Rules as the same may from lime
lo time be adopied, amended or repealed, shall be mailed or otherwise delivered to each Owner and
a copy shall be posted in a conspicuous place within the Development. In the event of any conflict
beiween any such Associalion Rules and any olher provisions ofthis Declaration, the Articles or
Bylaws, the provisions of this Declaration shall prevail; thereafter, priority shall be given lo the
aforementioned documents in the following order: Articles; Bylaws; and the Association Rules.
(b)
Duties of the Association. In addition to the powers delegated to it by the
Articles or in the Bylaws, and withoul limiting the generality thereof, the Association acting by and
Ihrough the Board, or by and through persons or entities described in Paragraph (a)(3) above, if
applicable, shall have the obligation lo conduct all business affairs of common interesl to all
Owners, and to perform each of the following duties:
(1)
Operation and Maintenance of Common Area and Lots. Operate,
repair, replace, maintain and otherwise manage or provide for the operation, repair, replacement,
maintenance and managemenl of the Common Area, including but nol limited lo the streets, storm
drainage syslem, facilities, improvements, landscaping and in-igation systems thereof, and all other
property acquired by the Association, including personal property.
Water, plant, cut, remove, and otherwise care for the landscaping, including caring for the
native trees located on each of the Lots, and paint, repair, replace, or otherwise mainlain good
condition and repair each roof, gutter, downspout, and exterior building surface (other than a glass
surface). The siandards of landscaping and exierior maintenance shall be determined by the
Association. The cost of general landscaping and exterior maintenance for all Lots shall be included
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in the annual budget and levied as a general assessment against all Lois. The cost of any additional
landscaping and exterior maintenance thatthe Association determines is necessary for a particular
Lot or Lois shall be charged to that or those Lol or Lots in the month in which performed. Unless
it is otherwise specified by the Association, the charge shall be paid by the Owner to the Association
thirty (30) calendar days after the charge is made. If an Owner fails to pay the charge, the
Association may take any action it considers appropriate to enforce colleclion, and shall be entitled
to recover any costs incurred in connection with such action, including reasonable attorneys' fees,
and interesl al the rate of ten percent (10%) per annum on the unpaid charge from the due dale
through the dale of payment.
(2)
Services and Programs. Provide those services and programs
more particularty described in Exhibit "C," which shall ultimately include an emergency response
syslem for each Lol and Unit, shuttle services, special events and an event coordinator to plan such
events, a fitness director and a healthcare advice nurse. The Board shall have the authority lo
determine when such services and programs will be implemented and the level that such serv/ices
and programs will be provided.
(3)
Taxes and Assessments. Pay all real and personal property taxes
and assessments and all other taxes levied againsi the Common Area, or personal property owned
by the Associalion, or against the Association, if any. Such taxes and assessments may be
contested or compromised by the Association; provided, however, that they are paid or a bond
insuring payment is posted prior lo the sale or the disposition of any property lo satisfy the payment
of such taxes.
(4)
Water and Other Utilities. Acquire, provide and/or pay for waler,
sewer, garbage disposal, refuse and rubbish colleclion, electrical, and gas and olher necessary
utility services for the Common Area and for Lots when the Lots are not separately billed therefor.
The term of any contract to supply any of the listed services shall not exceed one (1) year or, if the
supplier is a regulated public utility, the shortest term for which the supplier will contract al the
applicable regulated rate.
(5)
Insurance. Oblain from reputable insurance companies, and
maintain in effect, the insurance described in Article VIII hereof.
(6)
Enforcement of Restrictions ^nd Rules. Perform such other acts,
whether or not expressly authorized by this Declaration, as may be reasonably necessary lo enforce
any ofthe provisions of this Declaration, the Articles and Bylaws, and the Association Rules and
Board resolutions.
(7)
Enforcement of Bonded Obligations. When the California Real
Estate Commissioner issues a final subdivision public report ("Public Report") for the Development,
if any of the Common Area improvements in the Development have nol been completed, and if the
Association is the obligee under a bond or other arrangement ("Bond") to secure performance of
a commitment of the Declarant or its successors or assigns lo complete such Common Area
improvements, then the Board shall consider and vote on the question of action by the Association
to enforce the obligations under the Bond with respect to any improvement for which a nolice of
completion has not been filed within sixty (60) days after the completion dale specified for lhal
improvement in the "planned conslruclion slatemeni" appended to the Bond. However, if the
Association has given an extension in writing for the completion of any Common Area improvement,
the Board shall consider and vote on fhe action to enforce the obligations under the Bond only if a
nolice of completion has nol been flied within thirty (30) days after the expiration of the extension.
If the Board fails to consider and vote on the action to enforce the obligations under the Bond, or if
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the Board decides not to initiate action lo enforce the obligations under the Bond, after request
therefor by those representing not less than five percent (5%) of the total voting power of the
Association, the Board shall call a special meeting of Members for the purpose of voting to override
the decision ofthe Board nol to initiate action or lo compel the Board to lake action to enforce the
obligations under the Bond. The meeting shall be called by the Board by fixing a dale not less than
thirty-five (35) days or more than forty-flve (45) days after receipt by the Board of said petition and
by giving wrillen notice to all Owners entilled to vole in the manner provided in this Declaration or
in the Bylaws for notices of special meetings of Members of the Association. Al the meeting, the
vote in person or by proxy of a majority of the Owners entitled to vote, in favor of taking action to
enforce the obligations under the Bond shall be deemed lo be the decision of the Association and
Board shall then implement this decision by initiating and pursuing appropriate action in the name
of the Association.
(8)
Acguisition of Property. Acquire (by gift, purchase or othenwise),
own, hold, improve, build upon, operate, maintain, convey, sell, lease, transfer, dedicate for public
use or otherwise dispose of real or personal property in connection wilh the affairs of the
Association.
(9)
Loans. Borrow money, and only with the assent (by vole or wrillen
consent) of three-fourths (3/4) of the Members, lo mortgage, pledge, deed in trust, or hypothecate
any or all of its real or personal property as security for money borrowed or debl incurred.
(10)
Dedication. Dedicate, sell or transfer all or any portion of the
Common Area to any public agency, authority, or utility for such purposes and subject to such
conditions as may be agreed to by the Members. No such dedication or transfer shall be effective
unless an instrument has been signed by three-fourths (3/4) of the Members, agreeing lo such
dedication, sale or transfer.
(11)
Easements. To grant easements pursuant to Article II, Section 6 of
this Declaration.
(c)
Limitations on Authority of Board. Except with the assent by vote at a
meeting of the Association or by written ballot wilhoul a meeting pursuant lo Corporations Code
Section 7513 of a simple majority of the Members constituting a quorum consisting of more than
fifty percent (50%) of the voting power of the Association, the Board shall not take any of the
following actions:
(1)
Incur aggregate expenditures for capital improvements to the
Common Area in any fiscal year in excess of five percent (5%) of the budgeted gross expenses of
the Association for that fiscal year; or
(2)
Sell during any fiscal year property of the Associalion having an
aggregate fair market value greater than five percent (5%) of the budgeted gross expenses of the
Association for that fiscal year; or
(3)
Enter inlo a contract wilh a third person where-in the third person will
furnish goods or services for the Common Area or the Association for a lerm longer than one year
wilh the following exceptions:
(i)
The Managemenl Agreement described in Article IV,
Section 3(a)(7).
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(ii)
Acontracl with a public utility company if the rates charged for
the materials or services are regulated by the Public Uliiilies Commission provided, however, that
the lerm of the contract shall not exceed the shortest lerm for which the supplier will conlract al the
regulated rate.
(iii)
Prepaid casually and/or liability insurance policies of not to
exceed three (3) years duration provided that the policy permits for short rate cancellation by the
insured.
(iv)
Lease agreements for laundry room fixlures and equipment
of nol to exceed five years duration; provided lhat the lessor under the agreemeni is not an entity
in which the Declarant has a direct or indirect ownership interest often percent (10%) or more.
(v)
Agreements for cable television services and equipment or
satellite dish television services and equipmenl of a term nol lo exceed five (5) years duration
provided that the supplier is not an entity in which Declarant has a direct or indirect ownership
interest of ten percent (10%) or more.
(vi)
A contract for a lerm nol lo exceed three (3) years lhat is
terminable by the Association after no longer than one (1) year without cause, penalty or other
obligation upon ninety (90) days' written nolice of termination to the other party.
(4)
Pay compensation lo Members of the Board or to officers of the
Association for sen/ices performed in the conduct of the Association's business. However, the
Board may cause a Member of the Board or an officer to be reimbursed for reasonable expenses
incurred in carrying on the business of the Association.
(5)
Fill a vacancy on the Board created by the removal of a Member of
the Board.
4.
Personal Liability. No Member of the Board, or any committee of the Associalion,
or any officer of the Associalion, or the manager, or Declarant, or any agent of Declarant, shall be
personally liable to any Owner, or to any other party, including the Association, for any damage, loss
or prejudice suffered or claimed on account of any act, omission, error or negligence of any such
person or entity, provided that such person or enlily has, upon the basis of such information as may
be possessed by him or il, acted in good faith without willful or intentional misconduct.
5.
Financial Statements of the Association. The following financial and related
information shall be regularly prepared and distributed by the Board to all Members of the
Association:
(a)
A pro fonna operating budget for the immediately ensuing fiscal year
consisting of at least the following infonnation shall be distributed nol less than forty-five (45) days
nor more than sixty (60) days prior lo the beginning of the fiscal year:
(1)
Estimated revenue and expenses on an accrual basis.
(2)
A summary of the Association's reserves based upon the most recent
review or study conducted pursuant to Section 1355.5 of the Civil Code which shall be printed in
bold type and include all of the following:
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(i)
The current estimated replacement cost, estimated remaining
life and estimated useful life of each major component.
(ii)
As of the end ofthe fiscal year for which the study is prepared:
(A)
The current estimate of the amount of cash reserves
necessary to repair, replace, restore or maintain major components.
(B)
The current amounl of accumulated cash reserves
actually set aside to repair, replace, restore or maintain major componenls.
(iii)
The percentage that accumulated cash reserves actually set
aside is of the current estimate of cash reserves necessary.
(3)
A statement as to whether the Board has determined or anticipates
that the levy of one or more special assessments will be required to repair, replace or restore any
major componeni or lo provide adequate reserves therefor.
(4)
A general statement setting forth the procedures used by the Board
in the calculation and establishment of reserves to defray the costs of repair, replacement or
additions to major components of the Common Areas and facilities for which the Associalion is
responsible.
(b)
A balance sheet as of the accounting date which is the last day of the month
closest in time to six months from the date of closing of the firsl sale of an inlerest in the
Development, and an operating statement for the period from the date of the firsl closing lo the said
accounting date, shall be distributed within sixty (60) days after the accounting date. This operating
statement shall include a schedule of assessments received and receivable identified by the
number of the subdivision interest and the name of the entity assessed.
(c)
A report consisting of the following shall be distributed within one hundred
twenty (120) days after the close of the fiscal year:
(1)
A balance sheet as of the end of the fiscal year.
(2)
An operating (income) stalemeni for the fiscal year.
(3)
A statement of changes in financial position for the fiscal year.
(4)
For any fiscal year in which the gross income lo the Association
exceeds $75,000.00, a copy ofthe review of the annual report prepared in accordance with generally
accepted accounting principles by a licensee ofthe California Slale Board of Accountancy.
(d)
If the report referred to in Article IV, Seciion 5(c)(4) is not prepared by an
independent accountant, il shall be accompanied by the certificate of an authorized officer of the
Association that the statement was prepared from the books and records of the Association without
independent audit or review. In lieu ofthe distribution of the pro forma operating budget required by
Article IV, Section 5(a), the Board may elect to distribute a summary of the statements lo all
Members of the Association with a written notice lhat the budget is available at the business office
of the Association or at another suitable location within the boundaries of the Development and lhal
copies will be provided upon request and at the expense of the Associalion. If any Member requests
copies of the pro forma operating budget to be mailed to the Member, the Association shall provide
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the copy to the Member by first-class United Stales mail al the expense of the Associafion and
delivered within five (5) days. The written notice that is distributed to each of the Members shall be
in at least 10-point boldface type on the front page of the summary of the statements.
(e)
In addition lo financial statements, the Board shall annually distribute within
sixty (60) days prior lo the beginning of the fiscal year, a statement ofthe Association's policies and
practices in enforcing its remedies against Members for defaults in the paymenl of regular and
special assessments including the recording and foreclosing of liens againsi Members' subdivision
interests.
(f)
A summary of the Association's general liability policy that stales all of the
following:
(1)
The name of the insurer.
(2)
The policy limits of the insurance.
(3)
If an insurance agent, as defined in Seciion 1621 of the California
Insurance Code, an insurance broker, as defined in Section 1623 ofthe California Insurance Code,
or an agent of an insurance agent or insurance broker has assisted the Associalion in the
development ofthe general liability policy limits and ifthe recommendations ofthe insurance agent
or insurance broker were followed.
(4)
The insurance deductibles.
(5)
The person or entity that is responsible for paying the insurance
deductible in the event of loss.
(6)
Whether or not the insurance coverage extends to the real property
improvements lo the separale interests.
(g)
A summary ofthe Association's earthquake and flood insurance policy, if one
has been issued, that states all of the following:
(1)
(2)
The policy limits of the insurance.
(3)
The insurance deductibles.
(4)
The person or entity that is responsible for paying the insurance
deductible in the event of loss,
(h)
A summary of the liability coverage policy for the director and officers ofthe
Association lhal lists all ofthe following:
(1)
(2)
The limits of the insurance.
(i)
Notwithstanding subdivisions (f), (g) and (h), the Association shall, as soon
as reasonably practical, notify the Members by first-class mail if any of the policies have been
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canceled and not immediately replaced. If the Association renews any of the policies or a new
policy is issued to replace an insurance policy of the Association, and where there is no lapse in
coverage, the Associalion shall notify its Members of that fact in the next available mailing to all
Members pursuant to Section 5016 of the California Corporations Code.
(j)
To the extent that the informalion to be disclosed pursuant lo
subdivisions (f), (g) and (h) is specified in the insurance policy declaration page, the Association
may meet the requirements of those subdivisions by making copies of lhat page and distributing il
to all its Members.
Copies of such balance sheet, operating statement, pro forma operating statement, and
audited annual report, if such report is audited, for the Associalion shall be mailed, upon written
request, within a reasonable lime to FHA, FNMA, FHLMC, VA or to any mortgagee which has an
interesl or prospective inlerest in the Development.
6.
Review of Financial Statements. The governing body shall do the following nol
less frequentty than quarterly:
(a)
Cause a current reconciliation ofthe Association's operafing accounts lo be
made and review the same.
(b)
Cause a curreni reconciliation of the Association's reserve accounts to be
made and review the same.
(c)
Review the curreni year's actual reserve revenues and expenses compared
to the current year's budget.
(d)
Review the most current account statements prepared by the financial
institution where the Association has ils operating and reserve accounts.
(e)
reserve accounts.
Review an income and expense stalemeni forthe Association's operating and
7.
Withdrawal of Funds. Withdrawal offunds from the Association's reserve accouni
shall require the signatures of either:
(a)
Two Members of the Board; or
(b)
One Member of the Board and an officer of the Association who is not also
a Member of the Board.
8.
Reserve Funds.
(a)
The Board shall not expend funds designated as reserve funds for any
purpose olher than the repair, restoration, replacement, or maintenance of, or litigation involving the
repair, restoration, replacement, or maintenance of, major components ofthe Common Area which
the Association is obligated to repair, restore, replace, or maintain and for which the reserve fund
was established. However, the Board may authorize the temporary transfer of money from a
reserve fund to the Association's general operating fund lo meet short-term cash-flow requirements
or other expenses, provided the Board has made a written finding, recorded in the Board's minutes,
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explaining the reasons that the transfer is needed, and describing when and how the money will be
repaid to the reserve fund. The transferred funds shall be restored to the reserve fund within one
(1) year of the date of the initial transfer, except that the Board may, upon making a finding
supported by documentation, lhat a delay would be in the best interests of the Development,
temporarily delay the restoration until the time which the Board reasonably determines to be
necessary. The Board shall exercise prudent fiscal managemenl in delaying reslorafion of these
funds and in restoring the expended funds to the reserve account, and shall, if necessary, levy a
special assessment lo recover the full amount ofthe expended funds wiihin the fime limits required
by this section. Such a special assessment shall be subject to the limilalion imposed by California
Civil Code Secfion 1366. The Board may, al ils discretion, extend the dale the payment on the
special assessment is due. Any extension shall nol prevent the Board from pursuing any legal
remedy lo enforce the collection of an unpaid special assessment. When the decision is made to
use reserve funds or to temporarily transfer money from the reserve fund to pay for litigation, the
Associafion shall notify the Membersof the Associalion of lhat decision in the next available mailing
lo all Members pursuant lo Section 5016 of the California Corporations Code, and ofthe availability
of an accounting of those expenses. The Associafion shall make an accounfing of expenses related
lo the liligafion on at least a quarterly basis. The accounting shall be made available for inspecfion
by Members of the Association at the Association's office.
(b)
At least once every three (3) years the Board shall cause a study of the
reserve accouni requirements ofthe Development to be conducted if the curreni replacemeni value
of the major components of Common Area which the Association is obligated lo repair, replace,
restore, or maintain is equal lo or greater than one-half (YT) of the gross budget of the Associalion
for any fiscal year. The Board shall review this study annually and shall consider and implement
necessary adjustments to the Board's analysis ofthe reserve accouni requirements as a result of
lhat review.
(c)
The study required by this Section shall at minimum include:
(1)
Identification of the major componenls of Common Area which the
Association is obligated to repair, replace, restore, or maintain which, as ofthe date of the study,
have a remaining useful life of less than thirty (30) years.
(2)
Identification of the probable remaining useful life of the componenls
idenfified in Article IV, Secfion 8(c)(1) as of the date ofthe study.
(3)
An estimate of the cost of repair, replacement, restoration, or
maintenance of each major component identified in Article IV, Secfion 8(c)(1) during and atthe end
of ils useful life.
(4)
An estimate of the total annual contribufion necessary to defray the
cost to repair, replace, restore, or maintain each major component during and atthe end of its useful
life, after subtracting lolal reserve funds as of the date of the study.
(d)
As used in this seciion, "reserve accounts" means moneys that the Board
has identified for use to defray the future repair or replacement of, or additions to, those major
components of Common Area which the Associafion is obligated to maintain.
(e)
As used in this seciion. "reserve account requirements" means the estimated
funds which the Board has determined are required to be available at a specified point in lime lo
repair, replace, or restore those major componenls of Common Area which the Associafion is
obligated to maintain.
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9.
Inspection of Association Books and Records.
(a)
Commencing nol later than ninety (90) days after the close of escrow ofthe
first inlerest in the Development, copies of the documents listed below, as soon as readily
obtainable, shall be delivered by Declarant to the Board at the office of the Association, or at such
other place as the Board shall prescribe. The obligation to deliver the documents listed below shall
apply to any documents oblained by Declarant no matter when oblained, provided, however, such
obligafion shall terminate upon the earlier of (i) the conveyance of the last subdivision interesl
covered by a subdivision public report or (ii) three (3) years after the expirafion of the most recent
public report, on the Development:
(1)
The recorded subdivision map or maps for the Development.
(2)
The deeds and easements executed by Declarant conveying the
Common Area or other interest lo the Association, lo the extent applicable.
(3)
The recorded covenants, conditions and restrictions for the
Development, including all amendments and annexations thereto.
(4)
The Association's filed Articles of Incorporation, if any, and all
(5)
The Association's Bylaws and all amendments thereto.
amendments thereto.
(6)
All architectural guidelines and all other rules regulating the use of an
Owner's inlerest in the Development or use ofthe Common Area which have been promulgated by
the Associafion.
(7)
The plans approved by the local agency or counly where the
Development is located for the construction or improvement of facilities lhal the Associalion is
obligated to maintain or repair; provided, however, thatthe plans need not be as-built plans and that
the plans may bear appropriate restrictions on their commercial exploitation or use and may contain
appropriate disclaimers regarding their accuracy.
(8)
All nofice of complefion certificates issued for Common Area
improvements (olher than residential structures).
(9)
Any bond or other security device in which the Associalion is the
beneficiary.
(10) Any written warranty being transferred to the Associalion for Common
Area equipment, fixtures or improvements.
(11) Any insurance policy procured for the benefit of the Association, ils
governing board or the Common Area.
(12)
Any lease or contract to which the Association is a party.
(13)
The membership register, including mailing addresses and telephone
numbers, books of account and minutes of meefings of the Members, of the Board and of
committees of the Board.
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(14) Any instrument referred lo in Business and Professions Code

Secfion 11018.6(d) but not described above which establishes or defines the common, mutual or
reciprocal righls or responsibilities of Members.
(b)
Commencing not lalerlhan ninety (90) days after the annexation of additional
phases to the Development, copies of those documenls listed under subdivision (a) which are
applicable to that phase, shall, as soon as readily obtainable, be delivered by Declarant lo the Board
at the office ofthe Association, or at such other place as the Board shall prescribe. The obligation
to deliver the documents listed in subsection (a) shall apply to all documents obtained by Declarant
no matter when obtained, provided, however, such obligation shall terminate upon the earlier of
(i) the conveyance of the last subdivision interest covered by a subdivision public report or (ii) three
(3) years after the expiration ofthe most recent public report, on the subdivision.
(c)
Any membership register, including mailing addresses and telephone
numbers, books of account and minutes of meefings ofthe Members, the Board and committees
of the Board of the Associafion shall be made available for inspecfion and copying by any Member
ofthe Association, or their duly appointed representative, or any Mortgagee, at any reasonable lime
and for a purpose reasonably related lo his inlerest as a Member, at the office of the Associafion or
al such other place wiihin the Development as the Board prescribes.
(d)
The minutes, minutes proposed for adoption lhat are marked to indicate draft
status, or a summary of the minutes, of any meefing of the Board olher than an executive session,
shall be available to Members within thirty (30) days of the meefing. The minutes, proposed
minutes, or summary of the minutes shall be distributed to any Member upon request and upon
reimbursement of the Association's costs in making that distribution.
(e)
Members shall be notified in writing at the time thai the pro forma budget
described in Article IV, Section 5(a) of the Declaration, and required by California Civil Code
Section 1365 is distributed or at the fime of any general mailing to the entire membership of the
Associafion of their right to have copies of the minutes of meetings of the Board and how and where
those minutes may be oblained.
(f)
The Board shall establish by resolution reasonable rules with respect lo:
(1)
Notice to be given lo the custodian of the records of the Association
by the Member, representafive or Mortgagee desiring to make an inspecfion.
(2)
Hours and days of the week when an inspecfion may be made.
(3)
Payment of the cost of reproducing copies of documents requested
by a Member or by a representative or Mortgagee.
(g)
Every director of the Board shall have the absolute right at any reasonable
time to inspect all books, records and documenls of the Associalion and the physical properties
owned or controlled by the Associafion. The right of inspecfion by a director of the Board includes
the right to make extracts and copies of documents.
10.
Transfer of Lots.
(a)
Upon written request, the Associafion shall, within ten (10) days of the mailing
or delivery of the request, provide an Owner with a copy of:
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(i)
the Declaration, Bylaws and Articles of Incorporation;
(ii)
the most recent financial statement;
(iii)
a true statement in writing from an authorized representative
of the Association as to the amounl of the Associafion's curreni regular and special assessments
and fees, as well as any assessments levied upon the Owner's Lol which are unpaid on the date
of the statement. Such statement shall also include true information on late charges, interesl and
costs of collecfion which, as of the date of the statement, are or may be made a lien upon the
Owner's Lol;
(iv)
Any change in the Associafion's curreni regular and special
assessments and fees which have been approved by Ihe Board, but have nol become due and
payable as of the date disclosure is provided pursuant to this subdivision.
(b)
The Association shall nol impose or collect any assessment, penalty or fee
in connection with a transfer of fitle or any olher interest in a Lot, except that the Associafion may
charge a fee for the Association's actual costs to change its records, and the Association may
charge a fee forthe Association's reasonable cost to prepare and reproduce those requested items
listed in Article IV(9)(a)(1)-(14).
ARTICLE V
MEMBERSHIP AND VOTING RIGHTS
1.
Membership.
(a)
Qualifications. Each Owner of a Lot, and Eskaton, as the Owner of the
Unils. shall be a Member of the Associalion. If a Lol is owned by more than one person, each such
person shall be a Member of the Associafion. Each Owner, including Declarant, shall hold one
membership in the Association for each Lol and each Unit owned. Ownership of a Lol or Unit shall
be the sole qualificafion for and entitlement to membership in the Association. Each Owner shall
remain a Member of the Associalion unlil such lime as his ownership or ownership interest in all
Lots and Units in the Development ceases for any reason, al which fime his membership in the
Associafion shall automatically cease. A Member is not intended to include (i) persons or entifies
who hold an interest in a Lot or Unit merely as security for performance of an obligation, (ii) contract
purchasers nol qualifying as Owners under the definition conlained in Article I hereof, or (iii) trustees
under any instrument securing performance of an obligation.
(b)
Members' Rights and Duties. Each Member shall have the rights, dufies
and obligations set forth in this Declaration, the Articles, the Bylaws and the Associalion Rules, as
the same may from fime to fime be amended.
(c)
Transfer of Membershio. The Associafion membership of each person or
entity who owns, or owns an interesl in, one or more Lots or Unils shall be appurtenant to each such
Lot or Unit, and shall nol be assigned, transferred, pledged, hypothecated, conveyed or alienated
in any way except upon a transfer of tifie to each such Lot or Unit and then only lo the transferee
thereof. Any attempt to make a prohibited transfer shall be void. Any transfer of title to a Lot or Unit
shall operate automatically lo transfer the membership righls in the Association appurtenant thereto
to the new Owner thereof except that the transferee thereof may be obligated to pay a reasonable
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fee lo the Associafion for transfer of a certificate evidencing membership in the Associafion as sel
forth in the Bylaws.
2.
Voting.
(a)
Number of Votes. Each Member shall be entified lo one (1) vote for each
Lot or Unit in which such Member owns an interest. However, when more than one Member owns
an interest in a Lot or Unit, the vote for such Lol or Unit shall be exercised as they themselves
determine, but in no case shall more than one (I) vote be cast with respect to any one Lot or Unit.
(b)
Joint Owner Votes. The voting righls for each Lol or Unit may not be cast
on a fracfional basis. In the event that only one joint Owner of a Lot or Unit votes on a particular
matter, such act shall bind all joint Owners with respect to such matter. If more than one joint
Owner votes on a particular matter, the act of the majority of such joint Owners shall bind all as to
such matier. In the event that a majority of the joint owners of a Lot or Unit are unable lo agree
among themselves as to how their voting rights shall be cast, they shall forfeit same as to the matter
in question. If any Owner or Owners cast the voting rights of a particular Lot or Unit as hereinabove
set forth, it will thereafter be conclusively presumed for all purposes that they were acfing wilh the
authority and consent of all other Owners of the same Lot or Unit.
3.
Limitations on Declarant's Voting Power. Except for the section enfitled
"Enforcement of Bonded Obligafions", as provided for in this Declarafion, the Bylaws, and the
Articles of Incorporation, no seciion which requires the approval of a prescribed majority ofthe vofing
power of Members of the Associafion olher than the Declarant for acfion to be taken by the
Associafion is intended to preclude the Declarant from casting votes attribulable lo Lots or Units
which the Declarant owns.
ARTICLE VI
ASSESSMENTS
1.
Agreement to Pay. The Declarant, for each Lol or Unit owned by it in the
Development which is expressly made subject lo assessment as sel forth in this Declaration,
hereby covenants and agrees, and each Owner of a Lol or Unit by his acceptance of a deed or upon
the recordation of a conlract of sale therefor, whether or nol it is so expressed in such deed or
conlract of sale, is deemed to covenant and agree, for each Lot or Unit owned, to pay to the
Association regular assessments and special assessments, such assessments lo be established,
made and collected as provided in this Declarafion.
2.
Personal Obligations. Each such assessment or installment thereof, together with
any late charge, inlerest Ihereon, colleclion costs and reasonable attorneys fees, shall also be the
personal obligation of the person or enlily who was an Owner al the fime such assessment, or
installment thereof, became due and payable. In the event more than one person or entity was the
Owner of a Lot or Unit, the personal obligafion to pay such assessment, or installment thereof,
respecfing such Lot or Unit shall be both joint and several. The personal obligation for delinquent
assessments, or delinquent installments thereof, and such olher sums, shall not pass to an
Owner's successors in interest unless expressly assumed by Ihem. No Owner of a Lol or Unit may
exempt themselves from paymenl of assessments, or inslallmenls thereof, by waiver of the use or
enjoyment of all or any portion of the Common Area or by waiver of the use or enjoyment of, or by
abandonment of, their Lot or Unit.
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3.
Purpose of Assessments. The assessments levied by the Association shall be
used exclusively to promole the recreafion, health, safety and welfare of the Members of the
Association, the improvement, replacemeni, repair, operafion and maintenance of the Common
Area, and the performance of the duties of the Associalion and the Members as set forth in this
Declarafion. Annual Assessments shall include an adequate reserve fund for maintenance, repairs
and replacemeni ofthe Common Area as provided in Section 8 of Article IV.
4.
Assessments.
(a)
Regular Assessments. Unfil January 1 of the year immediately following the
close of escrow on the sale of the first Lot in the Development, the maximum regular annual
assessment per Lot shall be such amount as is set forth in the Development budget approved by
the Department of Real Estate, which amounl shall be prorated based on the number of months
remaining before January 1 of such year. Thereafter, the Board shall determine and fix the amounl
ofthe maximum annual assessment against each Lot or Unit at least forty-five (45) days in advance
of each annual assessment.
(b)
Special Assessments. If the Board determines lhal the estimated total
amount of funds necessary lo defray the common expenses of the Association for a given fiscal
year is, or will become, inadequate to meet expenses for any reason (including, but not limited to,
unanficipaled delinquencies, costs of services and programs described in Exhibit "C," costs of
maintenance, new construction, reconstruction to the extent the same is nol covered by the
provisions for reconstruction assessments herein), or unexpected maintenance or repairs the Board
shall determine the approximate amount necessary lo defray such expenses, and ifthe amount is
approved by a majority vote ofthe Board it shall become a special assessment. Provided however,
that any portion of a special assessment which would pay for any item of expense normally covered
by that year's regular assessments, when combined with the increase of lhal year's regular annual
assessments shall nol exceed more than twenty percent (20%) ofthe regular annual assessments
for the immediately preceding fiscal year. The Board may, in its discrefion, prorate such special
assessment over the remaining months of the fiscal year or levy the assessment immediately
againsi each Lot and Unit. Unless exempt from federal or slale income taxation, all proceeds from
any special assessment shall be segregated and deposited into a special accouni and shall be used
solely for the purpose or purposes for which it was levied, or it shall be otherwise handled and used
in a manner authorized by law or regulations of the Internal Revenue Service or the California
Franchise Tax Board in order to avoid, if possible, its taxation as income of the Associafion.
(c)
Cost Center Assessment Component. Whenever it is determined by the
Declarant thai a Cost Center should be designated to fairty allocate the expenses incurred or to be
incurred by the Association lo operate, mainlain, repair and replace a particular Common Area
Improvemenl(s) or maintenance areas (the "Cost Center AssessmenlComponenl"). each Lot within
a designated Cost Center shall be allocated an equal share of the Cost Center Assessment
Componeni of the Associafion's Common Expenses chargeable to the Cost Center. Reserves
attributable to the Cost Center Budget must be separately identified and may nol be commingled
with the reserve elements of the General Assessment Componeni. Separale accounting methods
shall be used for the funds that are collected and expensed on behalf of a Cost Center, and for
annual review and disclosure of Cost Center Resen/es and its reserve study. The use of Cost
Center Budget monies is restricted and documenlation shall be required lo disclose such use for
any purpose olher than as intended by this Declaration. The Associalion shall have the power and
authority lo designate Lots and Common Areas within the Development as Cost Centers for
purposes of expense accounfing and the equitable allocation of regular assessments. A Cost
Center is likely to be designated when one of the following occurs: (i) the maintenance or use of a
particular improvement or maintenance area wiihin the designated Cost Center is fully or partially
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restricted to Owners of Lots located within the area designated a "Cost Center", or (ii) when certain
Owners of Lots within a designated Cost Center are receiving services from the Associalion lhat
are in addifion to, or significantly greater than the services provided to olher Owners or residents.
Ordinarily, a Cost Center shall be established whenever it is reasonable lo anficipale lhat any Owner
or group of Owners yvill derive as much as 10 percent more than Owners in general in the value of
a common service(s) supplied by the Association. II is contemplated lhal the Lots will comprise
Cost Center No. 1 of the Associafion. Cost Center No. 1 shall provide for the maintenance and
repair of the exierior of the Lots and the landscaping for the Lots including, but not limited to roof and
painting of the residenfial structures constructed on the Lots. The Assessments applicable to Cost
Center No. 1 shall be allocated equally among the Lots.
(d)
Notice of Increase in Assessments. The Associalion shall provide nofice
by first-class mail to the Owners of any increase in the regular or special assessments of the
Associafion, not less than thirty (30) nor more than sixty (60) days prior to the increased
assessment becoming due.
(e)
Anpual and Special Assessment Increases.
(1)
Prior to imposing any increase in either general or special
assessments, the Board must do one ofthe following:
(A)
Prepare and distribute to all Members a copy of the operating
budget not less than forty-five (45) days nor more than sixty (60) days prior lo the beginning of the
Association's fiscal year, which operating budget shall incluiie:
(i)
The esfimaled revenue and expenses on an accrual
basis.
(ii)
Asummary of the Associafion's resen/es based upon
the most recent review or study conducted pursuant to Section 1365.5 of the Civil Code, which shall
be printed in bold type and include all of the following: (a) the current esfimaled replacemeni cost,
estimated remaining life, and esfimaled useful life of each major component; (b) the curreni
estimate of the amount of cash reserves necessary, and the current amount of accumulated cash
reserves actually set aside, to repair, replace, restore, or maintain major components, as ofthe end
of the fiscal year; and (c) the percentage that such actual reserves bear to such necessary
reserves.
(iii)
A stalemeni as to whether the Board has determined
or anficipates that the levy of one or more special assessments will be required to repair, replace,
or restore any major component or to provide adequate reserves therefor.
(iv)
Ageneral siatement addressing the procedures used
for the calculafion and establishment of those reserves lo defray the future repair, replacemeni, or
addifions to those major components lhat the Association is obligated to mainlain;
(B)
Oblain the approval of Owners constituting a quorum, casting
a majority of the votes at a meeting or elecfion of the Associalion conducted in accordance wilh
subsection (e) below.
(2)
Notwithstanding Section 4(d)(1) above, the Board may nol impose a
regular annual assessment which is more than twenty percent (20%) greater than the regular
annual assessment for the immediately preceding fiscal year (except for the first fiscal year of the
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Association if it should be less than twelve months) without the approval by vote or written consent
of Members, consfituting a quorum, casfing a majority ofthe votes at a meeting or elecfion of the
Association, nor may the Board impose any special assessments which in the aggregate exceed
five percent (5%) of the budgeted gross expense of the Associafion for the fiscal year in which a
special assessment is levied wilhoul approval by vote or the wriiten assent of Members, constituting
a quorum, casfing a majority of the votes al a meefing or election of the Associalion.
(3)
The restricfions imposed upon the Board pursuant to Article VI,
Sections 4(d)(1) and 4(d)(2) concerning maximum percentage increase of annual and special
assessments shall nol apply lo assessments for the following purposes:
(A)
Addressing emergency situafions. An emergency situation
is any one ofthe following:

(i)
/\n extraordinary expense required by an order of a
court.
(ii)
/Vl extraordinary expense necessary lo repair or
mainlain the Development or any part of it for which the Associafion is responsible where a threat
lo personal safety on the property is discovered.
(iii)
An extraordinary expense necessary to repair or
mainlain the Development or any part of il for which the Associafion is responsible that could nol
have been reasonably foreseen by the Board in preparing and distribufing the pro forma operating
budget. However, prior to the imposition or collecfion of an assessment under this subdivision, the
Board shall pass a resolution containing wrillen findings as to the necessity of the extraordinary
expense involved and why the expense was nol or could not have been reasonably foreseen in the
budgefing process, and the resolution shall be distributed to the Members wilh the nofice of
assessment.
(f)
Quorum Requirements. For the purposes of Article Vl(4)(e), a quorum
means more than fifty percent (50%) ofthe Members ofthe Associafion, and any meefing or election
of the Associalion for purposes of complying with said subsections shall be conducted in
accordance wilh Chapter 5 (commencing with Section 7510) of Part 3, Division 2 of Tifie 1 of the
Corporation's Code and Seciion 7613 of the Corporafion's Code.
(g)
Declarant's Assessment. Notwithstanding any olher provision of this
Declaration or the Bylaws which may be or appear to be contrary. Declarant shall be temporarily
exempted from the payment of thai portion of regular and special assessments assessed againsi
Lots which do not include a slructural improvement completed for human occupancy ("Vacant
Lots"), for the purpose of defraying expenses attributable to the existence and the use of structural
improvements including, wilhoul limitation, expenses attribulable lo roof replacement, landscape
and exterior maintenance, walkway and exterior lighting, refuse disposal, insurance, cable television,
irrigation and domestic water. Such exemption shall confinue for each such Lol unfil the eariiesl of
the following events:
(1)
A nolice of completion of the structural improvements has been
(2)
Occupation or use of the dwellings; or
recorded;
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(3)
Completion of all elemenls of the residential structures which the
Association is obliged to maintain.
Such temporary partial exemption shall not deprive Declarant of any vofing righls wilh respect to the
Lots lo which the exempfion applies. Except for the provisions in this Article VI, Section 4(g)
permitfing Declarant a temporary exemption from a portion ofthe regular and special assessments
assessed against Vacant Lots, Declarant shall be fully responsible lo pay to the Association each
and every other portion ofthe regular and special assessments assessed againsi said Vacant Lots.
Declarant and any other Owner of a Lot is exempt from the paymenl of lhal portion of any
assessment which is for the purpose of defraying expenses and reserves direcfiy attributable to the
existence and use of a common facility that is not complete at the fime assessments commence.
This exemption from the payment of assessments shall be in effect until the eariiesl of the following
events:
(i)
A nolice of completion of the common facility has been
(ii)
The common facility has been placed into use.
recorded; or
Declarant and any other Owner of a Lot is exempt from the paymenl of lhat portion of any
assessment which is for the purpose of defraying expenses directly attributable to those services
and programs described in Exhibit "C," until such time as said services and programs are offered
to the Owners of the Lots and residents of the Units.
5.
Rate of Assessment. Regular and special assessments shall be fixed al a rale for
all Lots and Units as set forth in the Budget inifially approved by the Department of Real Estate.
6.
Assessment Period. The regularassessment period shall commenceon January 1
of each year and shall terminate on December 31 of such year. However, the inifial regular
assessment period for each phase of Lots shall commence on the first day ofthe month following
the first conveyance of a Lot in lhat phase (the "initiation dale") and shall terminate on December 31
of the year in which the initial conveyance is made. The inilial regular assessment period for each
Unit shall commence on the first day ofthe month following the first conveyance of a Lol in the first
phase and shall terminate on December 31 of the year in which such assessment commenced.
The first regular assessment and all special assessments shall be adjusted according lo the
number of months remaining in the fiscal year and shall be payable in equal monthly installments
unless the Board adopts some other basis for collection.
7.
Notice and Assessment Installment Due Dates. Asingleten(10)daypriorwritten
nolice of each annual regular assessment and each special assessment shall be given to any
Owner of every Lot and Unit subject to assessment in which the due dates for the payments of
installments shall be specified. As provided herein the due dates for the payment of installments
shall be the first day of each month unless some other due date is established by the Board. Each
installment of regular assessments and special assessments shall become delinquent if not paid
wiihin fifteen (15) days after its due date. Any delinquent assessment shall be subject to a lale
charge equal lo an amounl which shall nol exceed ten percent (10%) ofthe delinquent assessment
or Ten Dollars ($10.00), whichever is greater.
8.
Estoppel Certificate. The Board or manager, on not less than twenty (20) days
prior written request, shall execute, acknowledge and deliver to the party making such request a
statement in writing slafing whether or not, to the knowledge ofthe Association, a particular Owner
is in default in paying assessments as to their Lot under the provisions of this Declaration and
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further stafing the dates to which installments of assessments, regular or special, have been paid
as to such Lot. Any such certificate may be relied on by any prospective purchaser or Mortgagee
of the Lot, but reliance on such certificate may nol extend to any default nol involving the payment
of assessments of which the signer had no actual knowledge.
ARTICLE VII
COLLECTION OF ASSESSMENTS: LIENS
1.
Right to Enforce. The right to collect and enforce assessments is hereby vested
in the Board acfing by and on behalf of the Associafion. The Board or its authorized representative,
including the manager, if any, may enforce the obligafions of the Owners to pay assessments
provided for in this Declaration by commencement and maintenance of a suit at law or in equity or
the Board may foreclose by judicial proceedings or through the exercise of the power of sale
pursuant to Article VII, Secfion 2 hereof to enforce the lien rights created hereby. A suit lo recover
a moneyjudgment for unpaid assessments together wilh all other amounts described in Sections 2
and 7 of Article VI hereof may be maintained wilhout foreclosing or waiving said lien rights.
2.
Creation of Lien.
(a)
In the event of a delinquency in the paymenl of any assessment, or
installment thereof, respecting a Lot or Unit, as described in Seciion 7 of Article VI hereof, such
amounts as may be delinquent, together with the late charge described in said Section 7, all costs
which may be incurred by the Board or ils authorized representative in the colleclion of said
amounls including reasonable attorneys' fees, and interesl Ihereon al the rale of twelve
percent (12%) per annum commencing thirty (30) days after the assessment becomes due shall
be and become a lien againsi such Lot or Unit from and after the recordafion in the Office of the
County Recorder of said County of a Nofice of Delinquent Assessment as provided in Secfion 1367
of the Califomia Civil Code. The Nofice of Delinquent Assessment shall not be recorded unless and
unfil the Board or ils authorized representative has delivered to the delinquent Owner or Owners of
such Lol or Unit, not less than fifteen (15) days prior to the recordation of said Nofice of Delinquent
Assessment, a written nofice of default and demand for paymenl, and such delinquency has not
been cured within fifteen (15) days after delivery thereof. Said lien shall expire and be null and void
unless, within one (1) year after recordafion of said Nolice of Delinquent Assessment, the Board or
its authorized representafive records a nofice of default as hereinafter provided or insfitutes judicial
foreclosure proceedings.
(b)
Notwithstanding paragraph (a) of this Article Vll, Secfion 2, a monetary penalty
imposed by the Associalion as a disciplinary measure against an Owner pursuant to Article IV.
Section 3(a)(2) may nol become a lien againsi the Owner's Lot or Unit enforceable by a sale of the
Lol or Unit. The provisions ofthis paragraph (b) do not apply to charges imposed againsi an Owner
consisfing of reasonable late payment penalfies for delinquent assessments and/or charges to
reimburse the Associafion for the loss of interest and for costs reasonably incurred, including
attorneys' fees, in ils efforts to collect delinquent assessments.
3.
Notice of Default: Foreclosure. Nol less than fifteen (15) days nor more than
one (1) year after the recording of said Nofice of Assessment, the Board or its authorized
representative may record a nolice of default and thereafter may cause such Lot or the legal parcel
upon which the Unit is located lo be sold in the same manner as a sale is conducted as provided
by Secfions 2924, 2924b and 2924c, inclusive, of the California Civil Code, or through judicial
foreclosure; provided, however, that as a condition precedent lo the holding of any such sale under
said Secfion 2924c appropriate publicafion shall be made; and provided, further lhal in connecfion
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with any sale pursuant thereto the Board is hereby authorized to appoint its attorney, any officer or
director, or any tifie insurance company authorized to do business in California as Trustee for
purposes of conducfing such sale. If any such delinquency is cured prior to sale, or prior lo
complefing a judicial foreclosure, the Board or ils authorized representative shall cause to be
recorded in the Office of the County Recorder of said County a certificate setting forth the
satisfacfion of such claim and release of such lien upon payment of actual expenses incurred,
including reasonable attorneys' fees by such delinquent Owner.
4.
Waiver of Exemptions. Each Owner, to the extent permitted by law, does hereby
waive, lo the extent of any liens created pursuant to this Article Vll, the benefit of any homestead or
exemption laws of the Stale of California in effect al the lime any assessment, or installment thereof,
becomes delinquent or any lien is imposed pursuant to the terms hereof
5.
Transfer of Lot by Sale or Foreclosure. Sale or transfer of any Lot or the legal
parcel upon which a Unit is located shall nol affect the assessment lien. However, the sale or
transfer of any Lot or the legal parcel upon which a Unit is located pursuant to the foreclosure of a
First Mortgage shall exfinguish the lien of such assessments as to payments which become due
prior to such sale or transfer (except for assessment liens recorded prior to the Mortgage). No sale
or transfer shall relieve such Lot or the legal parcel upon which a Unit is located from liability for any
assessments thereafter becoming due or from the lien thereof.
Where the Mortgagee of a First Mortgage of record or other purchaser of a Lot or the legal
parcel upon which a Unit is located obtains title to the same as a result of foreclosure of any such
First Mortgage, such acquired of title, his successor and assigns, shall not be liable for the share
of the common expenses or assessments by the Association chargeable to such Lol or the legal
parcel upon which a Unit is located which became due prior to the acquisition of tifie to such Lot or
the legal parcel upon which a Unit is located by such acquirer. No sale or transfer shall relieve such
Lol or the legal parcel upon which a Unit is located from liability for any assessments thereafter
becoming due or from the lien thereof. Such unpaid share of common expenses or assessments
shall be deemed to be common expenses collecfible from all ofthe Lois and Units including such
acquirer, his successors and assigns.
In a voluntary conveyance of a Lot or the legal parcel upon which a Unit is located, the
grantee of the same shall be jointly and severally liable with the grantor for all unpaid assessments
by the Associafion against the latter for his share of the common expenses up lo the lime of the
grant or conveyance, wilhoul prejudice to the grantee's right lo recover from the grantor the amounls
paid by the grantee therefor. However, any such grantee shall be entilled lo a statement from the
Associafion, setting forth the amount of the unpaid assessments againsi the grantor due the
Association and such grantee shall not be liable for, nor shall the Lot or the legal parcel upon which
a Unit is located conveyed be subject lo a lien for, any unpaid assessments made by the
Association against the grantor in excess of the amount set forth in the statement provided,
however, the grantee shall be liable for any such assessment becoming due after the dale of any
such assessment.
6.
Riqht of Association to Bid at Foreclosure Sale. The Association, acting on
behalf ofthe Owners, shall have the power lo bid for the Lol or the legal parcel upon which a Unit
is located at a foreclosure sale, and to acquire and hold, lease, mortgage and convey the same.
During the period a Lol or the legal parcel upon which a Unit is located is owned by the Associalion,
following foreclosure:
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(a)
No right to vote shall be exercised on behalf of the Lot or Unit;
(b)
No assessment shall be assessed or levied on the Lol or Unit; and
(c)
Each other Lot and Unit shall be charged, in addition to its usual assessments
its proportionate share ofthe assessment lhat would have been charged to such Lot or Unit had it
not been acquired by the Association as a result of foreclosure.
After acquiring title to the Lot or the legal parcel upon which a Unit is located at foreclosure
sale following nofice and publicafion, the Association may execute, acknowledge and record a deed
conveying tifie to the Lot which deed shall be binding upon the Owners, successors, and all olher
parties.
ARTICLE VIII
INSURANCE
1.
Liability Insurance. The Associafion shall obtain and mainlain in force
comprehensive public liability insurance insuring the Associalion, any manager, the Declarant and
the Owners and occupants of Lots and Units, and their respective family members, guests and
invitees, and the agents and employees of each, against any liability incident to the ownership or use
ofthe Common Area, any commercial spaces, and any public ways and including if obtainable, a
cross-liability or severability of interest indorsement insuring each insured against liability to each
olher insured. The limits of such insurance shall nol be less than One Million Dollars ($1,000,000.00)
covering all claims for death, personal injury and property damage arising out of a single
occurrence. Such insurance shall include coverage against water damage liability, liability for
nonowned and hired automobiles, liability for property of others and any other liability or risk
customarily required to be covered by inslilulional Firsl Mortgagees wilh respect lo projects similar
in construcfion, locafion. and use.
2.
Fire and Extended Coverage Insurance. The Associafion shall nol be obligated
lo oblain or to maintain any fire and/or extended coverage insurance on individual Lots or Units, or
any improvements Ihereon, and any such fire and/or extended coverage insurance shall be
procured and maintained by the Owner of any Lot or Unit, or the improvements thereon. The
Associafion shall obtain and mainlain a master or blanket policy of fire insurance for the full
replacement value of all ofthe improvements wiihin the Common Area. The form, content, and lerm
of the policy and its endorsements and issuing company must be safisfactory to all holders, insurers
or guarantors of any Firsl Mortgages. If more than one institufional Firsl Mortgagee has a loan of
record against a Lot or Unit in the Development, the policy and endorsement shall meet the
maximum standards of the various institufional First Mortgagees represented in the Development.
The policy shall contain an agreed amount indorsement or ils equivalent, an increased cost of
construction indorsement or a confingenl liability from operation of building laws indorsement or their
equivalent, and extended coverage indorsement, vandalism, malicious mischief coverage, and a
special form indorsement. The policy shall name as insured the Associafion, the Owners, and
Declarant, as long as Declarant is the Owner of any Lol or Unit, and all Mortgagees as their
respective interests may appear, and may contain a loss payable indorsement in favor of the Irustee
described hereinafter.
3.
Trustee. All insurance proceeds payable under Secfion 2 above shall be paid lo a
trustee, to be held and expended for the benefit of the Owners, Mortgagees and others, as their
respective interests shall appear. Said trustee shall be a commercial bank, or branch thereof,
located in the Counly in which the Development is located lhat has agreed in wrifing to accept such
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trust. In the event repair or reconstruction is authorized, the Board shall have the duly lo contract
for such work as provided for herein.
4.
Other Insurance. The Board may and, if required by any Mortgagee, shall purchase
and mainlain in force demolifion insurance in adequate amounls lo cover demolition ofthe Common
Area in the event of total or partial destruction and a decision not to rebuild, and a blanket policy of
flood insurance. The Board shall also purchase and maintain workmen's compensation insurance,
to the extent that the same shall be required by law, for all employees or uninsured contractors of
the Development. The Board shall also purchase and mainlain fidelity bonds or insurance (which
shall be in an amounl not less than 150% of each year's estimated annual operating expenses and
reserves and shall contain an indorsement of coverage of any person who may serve without
compensation) sufficient lo meet the requirements of any Mortgagee and shall purchase such
insurance on personal property owned by the Associafion, and such other insurance, as il deems
necessary or as is required by any Mortgagee.
5.
Owner's Insurance. An Owner may carry such personal liability insurance
respecfing his Lol or Unit as he may desire; provided, however, any such policy shall include a
waiver of subrogation clause.
6.
Mortgage Clause. Etc. All policies of hazard insurance obtained pursuant to this
Declaration shall contain or have attached the standard Mortgage clause commonly accepted by
insfilutional Firsl Mortgagee investors in this counly. Said clause shall be properiy endorsed and
shall provide lhat the insurance carrier shall notify the named firsl Mortgagee at least ten (10) days
in advance of any reduction, material modification, or cancellation of the policy. Said policies shall
also include agreed amount and inflation guard indorsements if available.
7.
Insurance Carrier Rating. Etc. Each hazard insurance policy obtained pursuant
lo this Declaration shall be written by a hazard insurance carrier which has a current rafing by
Best's Insurance Reports of B/VI or better; or a hazard insurance carrier which has a current rating
of Class V, provided the insurance carrier has a general policy holder's rating of at least "A". Each
insurance carrier must be specifically licensed or authorized by law to transact business wiihin the
Slate of California.
8.
Reviewof Policies. The Board shall review annually the various insurance policies
required by this Declaration, and shall verify the adequacy ofthe monetary limits required herein.
ARTICLE IX
DESTRUCTION OF IMPROVEMENTS
1.
Destruction: Proceeds Exceed 85% of Reconstruction Costs. In the event of
a total or partial destrucfion ofthe improvements in the Common Area, and ifthe available proceeds
of the insurance carried pursuant to Article VIII are sufficient to cover not less than eighty-five
percent (85%) ofthe costs of repair and reconstnjction thereof, the same shall be promptly rebuilt
unless, within ninety (90) days from the date of such destrucfion, Members then holding al least
seventy-five percent (75%) of the total vofing power present and entilled lo vote, in person or by
proxy, at a duly constituted meefing, determine lhat such repair and reconstruction shall not take
place. If repair and reconstruction is lo lake place, the Board shall be required to execute,
acknowledge and record in the office of the County Recorder, nol later than one hundred twenty
(120) days from the date of such destruction, a certificate declaring the intention of the Members
lo rebuild.
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2.
Destruction: Proceeds Lessthan 85% of Reconstruction Costs. Ifthe proceeds
of such insurance are less than eighty-five percent (85%) of the costs of repair and reconslrucfion,
such repair and reconslrucfion may nevertheless take place if, within ninety (90) days from the dale
of said destruction. Members then holding at least a majority of total vofing power of Members
present and entified lo vole, in person or by proxy, al a duly constituted meeting, determine lhat such
repair and reconstruction shall take place. If repair and reconstruction are lo take place, the Board
shall be required to execute, acknowledge and record in the office of the County Recorder, not later
than one hundred twenty (120) days from the dale of such destruction, a certificate declaring the
intention of the Members to rebuild.
3.
Rebuilding Procedures. If the Members determine to rebuild, pursuant lo
Sections 1 or 2, above, the Owner or Owners of each Lot or Unit shall be obligated to contribute
such funds as shall be necessary to pay their proportionate share ofthe cost of reconstruction, over
and above the available insurance proceeds, and the proportionate share of each such Owner or
Owners shall be equal lo the proportionate share such Owner pays in regular assessments relative
to all other Owners. In the event of the failure or refusal of such Owner of Owners to pay their
proportionate share, the Board may levy a special assessment againsi each Lol and Unit of such
Owner or Owners which may be enforced under the lien provisions contained in Article Vll hereof
or in any other manner provided in this Declaration. If any Owner disputes the amount of his
proportionate liability unider the Section, such Owner may contesl the amount of his liability by
submitting lo the Board within thirty (30) days after notice to the Owner of his share of the liability
written objecfions supported by cost esfimates or other informafion that the Owner deems lo be
material and may request a hearing before the Board at which they may be represented by counsel.
Following such hearing, the Board shall give written nolice of ils decision to all Owners, including
any recommendation that adjustments be made with respect to the liability of any Owners. If such
adjustments are recommended the notice shall schedule a special meefing of Members for the
purposeof acfing on the Board's recommendation, including making further adjustments, if deemed
by the Members lo be necessary or appropriale. All adjustments shall be affirmed or modified by
a majority of the total vofing power of the Members of the Associafion. If no adjustments are
recommended by the Board, the decision of the Board shall be final and binding on all Owners,
including any Owner filing objections.
4.
Rebuilding Contract. If the Members determine to rebuild, the Board or ils
authorized representafive shall oblain bids from al least two reputable contractors and shall award
the repair and reconstruction work to the lowest bidder. The Board shall have the authority lo enter
into a written contract wilh the contractor for such repair and reconstruction, and the insurance
proceeds held by the trustee shall be disbursed to the contractor according lo the terms of the
agreement. It shall be the obligafion of the Board lo take all steps necessary lo assure the
commencement and complefion of authorized repair and reconstruction al the eariiesl possible
date.
5.
Rebuilding Not Authorized. Ifthe Members determine nol lo rebuild, then, subject
to the rights of Mortgagees therein, any insurance proceeds then available for such rebuilding shall
be spent firsl to remove the destroyed improvements, wilh any remaining funds distributed lo the
Owner or Owners of each Lot and Unit proportionately in accordance wilh the fair market value of
each such Lot and Unit as determined by an independent appraisal conducted by a qualified real
estate appraiser, such appraisal to be at the expense of the Associalion. The Board shall have the
duty, wiihin one hundred twenty (120) days ofthe dale of such destruction, lo execute, acknowledge
and record in the office of the Counly Recorder a certificate declaring the intention ofthe Members
nol to rebuild.
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6.
MinorRepairand Reconstruction. The foregoing notwithstanding, in all instances
of partial destruction where the estimated cost of repair and reconstruction does not exceed Two
Thousand Five Hundred Dollars ($2,500), the Board shall have the duty lo repair and reconstruct
improvements without the consent of Members, providing the amount of available insurance
proceeds is adequate to cover the cost of such repair or reconstruction. In the event the insurance
proceeds are not adequate lo cover the cost of such repair or reconslrucfion, the Board is expressly
empowered to levy a special assessment available therefor, such assessment to be levied as
described in the manner provided in Article VI hereof.
7.
Arbitration. In the event of a dispute among the Owners or Mortgagees with respect
to the provisions of this Article IX, any Owner may cause the same lo be referred to arbitration in
accordance wilh the then prevailing mles of the American Arbitration Associafion. In the event of
arbitration, nofice thereof shall be given to the Members of the Board and to all other Owners and
their respective Mortgagees as promptly thereafter as possible, giving all Board Members, Owners
and Mortgagees an opportunity to appear in such arbitrafion proceedings. The decision of such
arbitrator in the matter shall be final and conclusive upon all parties. The arbitrator may include in
his decision an award for costs and/or attorneys fees against any one or more parties to the
arbitrafion. The award or decision may be confirmed and enforced by any court of competent
jurisdiction.
8.
Negligently or Willfully Caused Damage. Any Owner or other person negligently
or willfully causing damage to the Development shall be liable therefor, and shall be subject to an
enforcement assessment forthe costs of repairing such damage.
ARTICLE X
CONDEMNATION
1.
Common Area Awards. In the event lhat any action for condemnation of all or a
portion of the Common Area brought by any governmental agency having the right of eminent
domain, the award for such taking shall be payable as hereinafter set forth.
2.
Distributionof Proceeds of Sale. Upon a sale occurring as described in Section 1
hereof, the proceeds resulting therefrom shall be distributed to the Owner or Owners and their
Mortgagees of each Lot and Unit as their respective interests may appear proportionately in
accordance with the fair market value of each such Lot and Unit at the time of taking as determined
by an independent appraisal by a qualified real estate appraiser, such appraisal to be at the expense
of the Association. In the event of a disagreement regarding the distribution as determined by the
appraiser, within ninety (90) days after the proceeds of sale become available for distribution, the
matter shall be submitted lo arbitration under the rules ofthe American Arbitration Associafion.
3.
Distribution of Condemnation Award. In the event the Common Area, or such
portion thereof, is not sold but is instead taken, the judgment of condemnation shall by its lerms
apportion the award among the Owners and their respective Mortgagees, as their interests may
appear. In the event of the occun-ence of a disagreement within ninety (90) days after the proceeds
of the sale become available for distribution, the matter shall be submitted to arbitrafion under the
rules of the American ArtDitration Associalion.
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ARTICLE XI
NON.SEVERABILITY OF COMPONENT INTERESTS IN COMMON AREA
1.
Prohibition Against Severance. An Owner shall nol be entilled lo sever his Lot or
Unit from his membership in the Association, and shall not be entitled lo sever his Lot or Unit and
his membership from his undivided interesl in the Common Area. None of the component interests
can be severally sold, conveyed, encumbered, hypothecated or otherwise dealt with, and any
attempt so to do shall be null and void and of no effect.
2.
Conveyances. After the initial sales of the Lots, any conveyance of a Lot or Unit,
or of the component inlerest in the Common Area, by the Owner of the Lot or Unit, shall be
presumed to convey the enfire Lot or Unit and component interest in the Common Area. However,
nothing contained in this seciion shall preclude the Owner of any Lol or Unit from creafing a
co-tenancy or joint tenancy in the ownership of the Lot or Unit wilh any other person or persons.
ARTICLE Xll
TERM OF DECLARATION
1.
Term of Declaration. This Declarafion shall run wilh the land, and shall confinue
in full force and effect for a period offifty(50) years from and after the date on which this Declaration
is executed. Thereafter, this Declaration and all covenants, conditions, restrictions and olher
provisions herein conlained shall be in full force and effect for successive ten (10) year intervals
unless terminated by an instrument executed by the then Owners of nol less than two-thirds (2/3)
ofthe total number of Lots and Units in the Development, which instrument shall be recorded in the
office of the County Recorder. The "then Owners" referred to in the preceding sentence shall be
those purchasers who are Owners of Lots and Units at the beginning of each successive ten (10)
year interval.
ARTICLE XIII
PROTECTION OF MORTGAGEES
1.
Effect of Breach. No breach of any provisions of these covenants, conditions and
restrictions shall invalidate the lien of any Firsl Mortgage made in good faith and for value, but all of
the covenants, conditions and restrictions shall be binding on any Owner whose lille is derived
through foreclosure sale, trustee's sale, or otherwise.
2.
Noticesto First Mortgagees of Record. A holder, insurer or guarantor of any First
Mortgage, upon written request to the Associalion, identifying ils name and address and the Lot
number or address shall be enfified to fimely written nofice of:
(a)
Any condemnation loss or any casualty loss which affects a material portion
of the Development or any Lot in which there is a First Mortgage held, insured, or guaranteed by
such eligible mortgage holder or eligible insurer or guarantor, as applicable;
(b)
Any delinquency in the payment of assessments or charges owed by an
Owner of a Lot subject to a Firsl Mortgage held, insured or guaranteed by such eligible holder or
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eligible insurer or guarantor, or a default by an Owner of a Lot of any other obligafion required by this
Declaration, which remains uncured for a period of sixty (60) days;
(c)
Any lapse, cancellafion or material modificafion of any insurance policy or
fidelity bond maintained by the Associafion; and
(d)
Any proposed action which would require the consent of a specified
percentage of eligible mortgage holders as specified in this Declaration.
3.
Inapplicability of Right of First Refusal. The Declaration, Articles, and the Bylaws
contain no provisions creating a "right of firsl refusal" or similar restricfions, and an Owner may
transfer his Lol free of any such right or restriction, but should any such righls or restricfions be
created in the future, any First Mortgagee who obtains lille lo a Lol pursuant to the remedies
provided in the Mortgage, or foreclosure of Mortgage, or deed (or assignment) in lieu of foreclosure,
or sells, or leases a Lot acquired by the Mortgage, will be exempt from "the right of first refusal" or
similar righls or restrictions conlained in this Declaration or Articles or Bylaws of the Association,
or any amendments thereto.
4.
Foreclosure. If any Lol or any legal parcel upon which a Unit is located is
encumbered by a Firsl Mortgage made in good faith and for value, the foreclosure of any lien created
by any provision sel forth in this Declaration for assessments, or inslallmenls of assessments, shall
not operate to affect or impair the lien of such First Mortgage. On foreclosure ofthe First Mortgage,
the lien for assessments, or installments thai has accrued up lo the fime of foreclosure shall be
subordinate to the lien ofthe Mortgage, with the foreclosure-purchaser taking title to the Lol or Unit
free of the lien for assessments or inslallmenls, lhal has accrued up to the lime of foreclosure sale.
On taking tifie to the Lot or Unit, the foreclosure-purchaser shall only be obligated lo pay
assessments for their charges levied or assessed by the Associafion after the
foreclosure-purchaser acquired tifie to the Lot or Unit. The subsequenfiy levied assessments or
olher charges may include previously unpaid assessments, provi(jed all Owners, including the
foreclosure-purchaser, and his successors and assigns are required to pay their proportionate
share as provided hereinabove. However, the holder of a Firsl Mortgage encumbering any Lol or
Unit who obtains fille lo a Lot or Unit pursuant lo a deed in lieu of foreclosure shall remain fully liable
for any unpaid dues, assessments or charges againsi such Lol or Unit which accrue prior to the
acquisition of such fifie.
5.
Action after Condemnation or Destruction.
(a)
Any restoration or repair of the Development after a partial condemnafion or
damage due lo an insurable hazard shall be substantially in accordance wilh this Declaration and
the original plans and specifications, unless the approval ofthe holders, insurers or guarantors, of
the First Mortgages on Lots or the legal parcels upon which the Units are located to which at least
fifty-one percent (51%) of the votes of Lots and Units subject to Mortgages held by such holders,
insurers, or guarantors are allocated, is obtained.
(b)
Any elecfion to lemninale the Development after substantial destruction or a
substantial taking in condemnafion ofthe Development must require the approval of the holders,
insurers, or guarantors of the Firsl Mortgages on Lots and Units lo which at least fifty-one
percent (51%) ofthe votes of Lots and Unils subject to Mortgages held by such holders, insurers,
or guarantors, are allocated, is obtained.
6.
Inspection of Documents. Books and Records. The Association shall be required
to make available for inspection and copying by any Owners and lenders, and by holders, insurers
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or guarantors of any First Mortgages, current copies of this Declaration, the Bylaws, other rules
concerning the Development, the books, records and the annual report (as provided in Article IV,
Seciion 5) of the Associalion; and any membership register, books of accouni, and minutes of the
Members, the Board and committees of the Board, at any reasonable time and for a purpose
reasonably related to his interest in the Development, at the office ofthe Association or such olher
place wiihin the Development as the Board prescribes.
(a)
The Board shall establish by resolution reasonable rules wilh respect to:
(1)
Nofice lo be given lo the custodian ofthe records of the Association
by the Owner, lender, holder, insurer or guarantor of any Firsl Mortgage desiring lo make an
inspecfion.
(2)
Hours and days of the week when an inspection may be made.
(3)
Payments ofthe cost of reproducing copies of documents requested
by the Owner, lender, holder, insurer or guarantor, except as hereinafter provided.
(b)
Every director of the Association shall have the absolute right al any
reasonable fime to inspecl all books, records and documents of the Association and the physical
properties owned or controlled by the Associafion. The right of inspection by a director includes the
right lo make extracts and copies of documenls.
(c)
If the Development contains fifty (50) or more Lots and Units, any holder,
insurer or guarantor of a First Mortgage shall be entified upon writlen request, to an audited annual
report for the immediately preceding fiscal year, free of charge to the parly so requesting.
(d)
If Ihe Development contains less than fifty (50) Lots and Units, the holders
of fifty-one percent (51 %) or more of Firsl Mortgages shall be, upon wriiten request, entified lo have
such an audited annual report for the preceding fiscal year prepared al their expense if one is nol
othen/vise available.
7.
Reserve for Replacement. Association assessments, dues or charges shall
include an adequate reserve fund for maintenance, repairs, and replacement of those elements of
the Common Area that must be replaced on a periodic basis, and shall be payable in regular
installments rather than by special assessments.
8.
Taxes and Liens on Individual Lots/Units. All taxes, assessments and charges
which become liens prior lo the Firsl Mortgage under local law shall relate only lo the individual Lots
and the parcels upon which the Units are located and nol lo the Development as a whole.
9.
Subordination. Any lien created or claimed underlhe provisions ofthis Declarafion
is expressly made subject and subordinate to the rights of any First Mortgage that encumbers all
or a portion of the Development or any Lot or the legal parcel upon which a Unit is located, made
in good faith and for value, and no such lien shall in any way defeat, invalidate, or impair the
obligafions or priority of such First Mortgage unless the mortgagee expressly subordinates his
interest, in wrifing, lo such lien.
10.
Distribution of Insurance and Condemnation Proceeds. No Owner, or any other
party shall have priority over any right of institutional First Mortgagees of Lots or Unils pursuant to
their mortgages in case of a distribufion lo Owners of insurance proceeds or condemnation awards
for losses lo or a taking of Lots, Units or Common Area. Any provisions to the contrary in this
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Declaration or in the Bylaws or olher documenls relating lo the Development is to such extent void.
All applicable fire and all physical loss or extended coverage insurance policies shall contain loss
payable clauses acceptable to the affected insfilutional Firsl Mortgagees naming the Mortgagees,
as their interests may appear.
11.
Common Area. All Common Area shall be available for use by Owners. All such
Common Area shall be owned in fee by the Associafion free of encumbrances except for any
easements granted for public utilities or for other public purposes consistent with the intended use
of such property by the Owners or by the Association.
12.
Payments by Mortgagees. Mortgageesof Lots and Units may, jointly or singularly,
pay taxes or other charges which are in default and which may or have become a charge against
the Common Area and may pay overdue premiums on hazard insurance policies, or secure new
hazard insurance coverage on the lapse of a policy, for Common Area improvements or olher
insured property ofthe Associafion and, upon making any such payments, such Mortgagees shall
be owed immediate reimbursement therefor from the associalion. This provision shall constitute
an agreement by the Association for the express benefit of all Mortgagees and upon request of any
Mortgagee the Associafion shall execute and deliver to such Mortgagee separate wriiten agreemeni
embodying the provision ofthis Article XIII, Seciion 13.
13.
Non-Curable Breach. Any Mortgagee who acquires fille lo a Lot or Unit by
foreclosure shall nol be obligated lo cure any breach ofthis Declarafion that is non-curable or of a
type that is not pracfical or feasible to cure.
14.
Loan to Facilitate. Any First Mortgage given lo secure a loan to facilitate the resale
of a Lot or Unit after acquisition by foreclosure or by a deed-in-lieu of foreclosure or by an
assignmenl-in-lieu of foreclosure shall be deemed lo be a loan made in good faith and for value and
enfitled to all of the rights and prolecfions of this Article XIII.
15.
Appearance at Meetings. Because of its financial interest in the Development, any
Mortgagee may appear (but cannot vote) at meefings of the Members and the Board to draw
attention to violations of this Declarafion that have not been corrected or made the subject of a
remedial proceedings or assessments.
16.
Right to Furnish Information. Any Mortgagee can ftjrnish informafion lo the Board
concerning the status of any Mortgage.
ARTICLE XIV
AMENDMENT
1.
Amendment Prior to Close of First Sale. Prior lo the recordation of the first sale
of a Lot in the Development lo a purchaser olher than Declarant, the Declaration and any
amendments thereto may (subject to the approval of the California Department of Real Estate) be
amended or revoked in any respect by the execution by Declarant of an instrument amending or
revoking same, which instrument shall make appropriate reference lo this Declaration and any
amendment thereto and which instnjment shall be acknowledged and recorded in the office of the
County Recorder.
2.
Amendment After Close of First Sale. After the recordation of the first sale of a
Lot in the Development to a purchaser other than Declarant, this Declaration can be amended or
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revoked only wilh the vole or written assent of the holders of not less than fifty-one percent (51 %)
ofthe vofing rights ofthe Members ofthe Association. However, if any provision ofthis Declaration
requires a greater or lesser percentage of the voting rights of the Associalion in order to take
affirmative or negative acfion under such provision, the same percentage of Members shall be
required to amend or revoke such provision. Ifthe consent or approval of Mortgagees or any other
person, firm, agency or entity is required under this Declarafion wilh respect to any amendment or
revocafion of any provision of this Declarafion, no such amendment or revocafion shall become
effective unless such consent or approval is oblained. Any amendment or revocation subsequent
lo the recordation of such first sale shall be evidenced by an instrument certified by the secretary
or other duly authorized officer of the Associalion and shall make appropriate reference to this
Declarafion and its amendments and shall be acknowledged and recorded in the office of the
Counly Recorder. Notwithstanding the foregoing, any amendment lo Article III, Sections 17, 18 or
19 shall also require the written consent ofthe City
3.
Business and Professions Code Section 11018.7. All amendments or
revocafions ofthis Declaration shall comply with the provisions of Seciion 11018.7 ofthe California
Business and Professions Code to the extent such secfion is applicable thereto.
4.
Reliance on Amendments. Any amendments made in accordance wilh the lerms
of this Declarafion shall be presumed valid as lo anyone relying Ihereon in good faith.
ARTICLE XV
ARCHITECTURAL CONTROL
1.
Architectural Control. No building, fence, mailbox, wall, obstruction, balcony,
screen, pafio, patio cover, tent awning, carport, carport cover, pool, spa, improvement, or structure
of any kind shall be commenced, erected, painted or mainlained upon any Lot, nor shall any
alteration or improvement of any kind be made thereto unless and until the same has been approved
in writing by the Architectural Control Committee (sometimes hereafter referred to as the
"Committee"). Plans and specifications showing the nature, kind, shape, color, size, materials and
locafion of such improvements, alterations, etc., shall be submitted to the Committee for approval
as to quality of workmanship and design and harmony of external design with exisling structures,
and as to locafion in relafion to surrounding structures, topography, andfinishgrade elevafion. No
permission or approval shall be required to repair in accordance wilh Declarant's original plans and
specificafions. No permission or approval shall be required lo repaint in accordance wilh a color
scheme previously approved by the Committee, or to rebuild in accordance with plans and
specificafions previously approved by the Committee. No permission or approval shall be required
forthe improvements Eskaton constructs, repairs or replaces on Lot 1 ofthe Development, as more
particularty described in Exhibit "A."
No new landscaping or substantial relandscaping of yards visible from the street or from the
Common Area shall be undertaken by any Owner unless and unfil the plans and specificafions
showing the nature, kind, shape, and location of the materials shall have been submitted to and
approved in writing by the Committee.
2.
Architectural Control Committer. The Architectural Control Committee shall
consist of not less than three (3) nor more than five (5) Members. Eskaton may appoint all of the
original Members of the Committee and all replacements unlil the firsl (1^') anniversary of the
issuance of a final public report forthe project. Thereafter, Eskaton reserves lo itself the power to
appoint a majority of the Members to the Committee. Members appointed to the Committee by the
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Eskaton need not be Members of the Associalion. A majority of the Committee may designate a
representafive to act for il. In the event of death or resignafion of any Member of the Committee, the
successor shall be appointed by remaining Members of the Committee which shall have full
authority to designate such a successor. Neither the Members of the Committee nor ils designated
representatives shall be entitled lo any compensation for services performed pursuant thereto.
3.
Architectural Control Committee Rules. The Committee may, from fime lo fime,
adopt amend and repeal by majority vote, rules and regulations, lo be known as "Architectural
Control Committee Rules" which interpret or implement the provisions of Article XV hereof, which
rules and regulafions shall be subject to the approval ofthe Board. Such rules and regulations may
be amended or repealed at any fime by the vote of a majority of the voting power of the Association.
4.
Waiver. The approval by the Committee of any plans, drawings, or specifications
for any work done or proposed, or in connection wilh any other matter requiring the approval ofthe
Committee under this Declaration shall nol be deemed lo consfitute a waiver of any right lo withhold
approval as to any similar plan, drawing, specification or matter whenever subsequently or
addifionally submitted for approval.
5.
Liability. Neither the Committee nor any Member thereof shall be liable to the
Associafion, or to any Member, Owner or other person or body for any damage, loss or prejudice
suffered or claimed on account of (a) the approval of any plans, drawings and specifications,
whether or nol defective, (b) the construction or performance of any work, whether or not pursuant
to approved plans, drawings and specificafions or (c) the development of any property within the
Development provided, however, that such Committee Member has, with the actual knowledge
possessed by him acted in good faith. Without in any way limifing the generality of the foregoing,
the Committee, or any Member thereof, shall consult with the Board ofthe Associafion, if requested,
wilh respect lo any plans, drawings or specificafions. of any olher proposal submitted lo the
Committee.
ARTICLE XVI
ANNEXATION OF ADDITIONAL PROPERTY
1.
Annexation. Additional property may be annexed to the Development only as
specified in the following subparagraphs:
(a)
GVB's Annexation Rights. GVB may, but shall not be required to, annex
all or any portion of the property described in Exhibit " B " to the Development at any fime wilhoul
the vote or approval of any olher Owners or the Associalion; provided, however, that if such
annexation is not effected prior lo the third anniversary of the original issuance of the most recenfiy
issued Public Report of the Stale of California Department of Real Estate for a phase of the
Development, such annexation shall require the vole or wriiten assent of two-thirds (2/3) of the
Members of the Associalion. The annexation of any such property by GVB shall be effected by the
fulfillment of the following procedures:
(1)
GVB shall have recorded a Declaration of Annexation reviewed and
reasonably approved by Eskaton describing the property to be annexed and providing for such
additional covenants, condilions and restrictions on such annexed property as may be necessary
to include such property in the Development and specifying lhat all ofthe covenants, condifions anij
restrictions of the Declaration shall apply to such annexed property in the same manner as if il were
originally covered by the Declaration as part of the Development. No Declarafion of Annexation shall
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in any event revoke, modify or add lo the limitations, restrictions and covenants established by this
Declaration nor shall it discriminate between some Owners of such property and olher Owners of
any other property within the Development, except as othenwise provided herein. No such
amendment, addition, change or deletion shall alter or change the general common plan or scheme
created by this Declarafion, nor affect the provisions hereof or thereof as covenants running with
the land or equitable servitudes, il being the express desire and intention of Declarant lo establish
a cohesive plan or such covenants and servitudes lo be uniformly applicable to all portions of the
Development, including those portions added thereto by annexation.
(2)
GVB shall be obligated lo pay lo the Association an appropriate
amounl for certain reserves which may arise out of the use and occupancy of the residences
located on Lots wiihin such annexed property which are under a rental program in effect for a period
of al least one year from the date of the close of escrow of the firsl sale of a Lol in the annexed
property.
(b)
Rights and Obligations of Owners. After the required annexafion
procedures are fulfilled, all Owners in the Development shall be enfitled to use of all the Common
Area, in the Development, including the Common Area, in such annexed property, subject to the
provisions of the Declaration, and Owners of such annexed property shall Ihereupon be subject to
the Declaration and be enfitled lo membership in the Association. After each annexafion, the
assessments shall be reassessed with the annexed property being assessed for a proportionate
share of the lotal expenses of the Development on the same basis as the other property in the
Development.
(c)
Other Annexation of Property. Additional property adjacent lo the
Development which does nol qualify for annexation pursuant to the lerms of subparagraph (1) above
may be annexed to the Development upon the written vote or consent of not less than two-thirds
(2/3) of the lotal votes of the Association, along wilh the written consent of the Owner of such
property and upon fulfillment of procedures by the Owner of such property substantially similar to
those sel forth in subparagraph (a) above.
(d)
Approval of the Department of Real Estate. The annexafion and
development of annexed property shall be in accordance wilh a plan of development approved by
the Department of Real Estate of the Slale of California. Unless approved by the Department of
Real Estate, no annexation may, withoul the approval of a majority of the Members of the
Association, cause a substantial increase in the Common Area cost and expense then being borne
by the Owners which are not disclosed in the final subdivision public report for the phase of the
Development in which the Owner purchased his LoL
ARTICLE XVII
GENERAL PROVISIONS
1.
Headings. The headings used in this Declaration are for convenience only and are
nol to be used in inlerprefing the meaning of any of the provisions ofthis Declarafion, or othenwise.
2.
Severability. The provisions of this Declarafion shall be deemed independent and
severable, and the invalidity or partial invalidity or unenforceability of any provisions or provisions
hereof shall not invalidate any other provisions hereof
K:\E3katontGrass Valley ORE Pubkc Report (Otto) (0O32-O06t)\a9mt first amended A restated ded A c l i n (ver S).wpd
1,^/03 4-58 PM
1 1297
3.
Cumulative Remedies. Each remedy provided for in this Declaration shall be
cumulafive and not exclusive. Failure to exercise any remedy provided for in this Declaration shall
not, under any circumstances, be construed as a waiver thereof.
4.
Violations as Nuisance. Every act or omission in violalion of the provisions of this
Declaration shall constitute a nuisance and, in addition to all other remedies herein set forth, may
be abated or enjoined by any Owner, any Member of the Board or the Associafion.
5.
Discrimination. No Owner shall execute or cause to be recorded any instrument
which imposes a restriction upon the sale, leasing or occupancy oftheir Lol on the basis of race,
sex, color, creed, religion, marital status, national origin, or ancestry.
6.
Access to Books. Any Owner may, al any reasonable fime and upon reasonable
nolice lo the Board, al his own expense, cause an audit or inspection lo be made of the books and
financial records ofthe Association.
7.
Liberal Construction. The provisions of this Declaration shall be liberally construed
to effectuate ils purpose as set forth in the Declarafion herein. Failure to enforce any provision
hereof shall nol consfitute a waiver of the right to enforce said provision thereafter.
8.
Notification of Sale of Lot. Concurrently with the consummation of the sale of any
Lot or of any parcel containing Units under circumstances whereby the transferee becomes an
Owner thereof, or within five (5) business days thereafter, the transferee shall notify the Board in
writing of such sale. Such nolificafion shall sel forth the name ofthe transferee and their Mortgagee
and transferor, the street address of the Lot or parcel purchased by the transferee, the transferee's
and the Mortgagee's mailing address, and the dale of sale. Prior lo the receipt of such nofificafion,
any and all communications required or permitted to be given by the Associalion, the Board shall
be deemed lo be duly made and given to the transferee if duly and timely made and given lo said
transferee's transferor. Mailing addresses may be changed al any lime upon wrillen nolificafion to
the Board. Notices shall be deemed received twenty-four (24) hours after mailing if mailed to the
transferee, or lo his transferor ifthe Board has received no notice of transfer as above provided, by
certified mail, return receipt requested, at the mailing address above specified. Notices shall also
be deemed received twenty-four (24) hours after being sent by telegram.
9.
Number: Gender. The singular shall include the plural and the plural the singular
unless the context requires the contrary, and the masculine, feminine and neuter shall each include
the masculine, feminine or neuter, as the context requires.
10.
Exhibits. Any and all exhibits attached hereto shall be deemed made a part hereof
and incorporated by reference herein.
11.
Easements Reserved and Granted. Any and all easements referred lo herein
shall be deemed reserved or granted by reference to this Declaration in a deed to any Lot or any
parcel containing Unils.
12.
Binding Effect. This Declarafion shall inure to the benefit of and be binding upon
the successors and assigns of the Declarant, and the heirs, personal representatives, grantees,
lessees, successors and assigns ofthe Owners.
13.
Unsegregated Real Estate Taxes. Unlil such time as real estate taxes have been
segregated by the County Assessor, such taxes shall be paid by the respective Owners of Lots.
K.''tEskaloni.<â3s Va loy DRE Public Report (Ctto) (0032-O381jtagm; firsl amended A restated dec!
(ver Sj.wpd
h-^m 4:53 PM
001297
14.
Attorney's Fees. In any action by the Association or any Owner to enforce, by any
proceeding at law or in equity, any or all ofthe restrictions, conditions, covenants, reservations, liens
and charges now or hereafter imposed by the provisions of this Declarafion, the prevailing party
shall be entitled to recover reasonable costs and attorney's fees as determined by the court.
IN WITNESS WHEREOF, Declarant has executed this instrument as ofthis
day of
January, 2003.
ESKATON VILLAGE-GRASS VALLEY, a
California non-profit, public benefit
corporation
By: ^--^Constance T. Batterson

Its:
Secretary
GRASS VALLEY BUILDERS, LLC,
a Calipcrtia^lirruted liability company
K:iE5t.atonlGrass Valley ORE Public Report (Otto) (0222-0061 Hajml first amecdetf A restaed decl of i A 3 (ver 41.OT1
I/9/OJ 2:46 PM
001297
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT

Stale of California
) ss.
County of "Sd^ramoi-h}
On
Id.nuarU
9 rÔQ^
I
'
before me, <^'g^/

'
A- ^CJO^, iJcMry
PtJibjiC.,
Name and Tide of Officer (e.g-, "Jane Doe. Notary

Nota Public")
personally appeared
Name of Signer
121 personally known lo me

proved to me on Ihe basis of satisfactory evidence
lo be the person whose name is subscribed lo the
wiihin instrument and acknowledged to me that-he/she
executed the same in his/her authorized capacity, and
lhat by-hta/her signature on Ihe instalment the person,
or the enfily upon behalf of which the person acted,
executed the instrument.
CAiK3LA.SCOn
Commtelon* 1271754
Notoy PObHc -CoBonda
Sacramenio Counfy
I^CtamnriBgtaAuBaUBM
WITNESS my hand and official seal.
Place Notary Seal Above
Signature ol Notary Public
OPTIONAL
Though the information below is nol required by law, it may prove valuable to persons relying on Ihe document
and could prevent fraudulent removal and reattachment of this form to another document.
Description Of Attached Docujnent^^
^.ÔXKxiicn
Title or Type of Document: dl-fioAi, nr\ci f^st-rt'cHom^
Document Date: tindnftsl C h r u f J i j
fshihnî/laff^mSiVaJli^
of Cc^tnonU,
Ccn'
^li)n7C6u)n/^ A&sn
Number of Pages:
Signer Other Than Named Above:
^-/IVTI/
a/ yig-forif/iJôy^
RIGHT THUMBPRINT
OF SIGNER
Capacity Claimed by Signer

Signer's MQ^^
0
îJii
Top of thumb here
TT
SoMerôr)
Individual
Corporate Officer- Title(s): '^W^^'^
Partner - Limited General
Attorney-in-Fact
Trustee
Other:
'
K:t!:slialon\Gr2ss Valley DHE Put>lic Reoon (Cloj (O032-0061)iagml lirsI imenaeil I nymi ita ol<xAr> (ver <).wpd
m m 2:16 PM
001297
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
ss.
Counly of
c/l^câMA,A/;d>
On j4^4^/7y/^
(J
l6 TUd^. before me, 'TYj.gifCL' /L//êi,

atHf
'
personally appeared
'
yYljl/t^
(2
Tlofa/Ijif
Pid(?l(^.)
Name anO Tide afpllicer (e.g.. "JanC6e, Nolory PuDlic")
"UJf^JpJ
N,ime(^ ol SigneiCs}
Ik;' personally known lo me

i... proved lo me on the basis of satisfactory
evidence
i
iii
i
Ii
i
i
MAYl DUONG
Commission # 1216524
Notary Public - California |
Saaamento Counfy
nfy
r
My Ccmm. Expires Apr22.2003
V W W W IJI 2Z2Q03i
to be the person(s^ whose name(^) is/afe

subscribed lo the wiihin instrument and
acknowledged to me lhal he/she/they executed
the
same
in
his/>iei7llnjir
authorized
capacilyfis), and lhal by his/her/lhek
slgnature(e)-on the instrument the person(jBO, or
the enfily upon behalf of which the person(a1
acted, executed the instrument.
i
\
WITNESS my hand and official seal.
Place Notary Seal Above
OPTIONAL
Though the information below is not required by law. it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reattachment of this form to another document
Description of Attache
Title or Type of Document
Document Date:
I t K i ^ H ^
C ' ^ ^ ^ ' ^ ^ ^ Jl^'JO^)
Signer(s) Ottier Than Named Above: Gr/lshtytrC^.,
Number of Pages;
y^J/a^^-Ay^
Capacity(les) Claimed by Signer

Signer's Name; 1^/2Â
/2. lUiCê..
IJ Individual
L. Corporate Officer Tltle(s):
''2 Partner IJ Limited i i General
...I Attorney in Fact
l l Trustee
Other; nYjXJUf^.rfQ.
-TYI^^hJiA^
RIGHT THUfiUBPRlNT
OF SIGNER
Too ol inumb fiere
Signer Is Representing;
S tD97 National Notarv Associalion 9353 De Solo Ave . P.O. B M 2402 Chotswonil, CA 9131.1-2402
Prod No 5907
Rooroer: Coll ToD-Froo 1.800.876-6627
001297
-GUSlvVS-
Exhibit "A"
Legal Description
That certain real property situated in the City of Grass Valley, County of Nevada,
State of California, described as follovys;
Residential Lots 1, 7 through 18,120 through 1.31 and Common Area Parcels A
(Recreation Facility), Parcel N, O, and X (Roads), and Parcel C, D, I, and K
(Open Space) as shown on Grass Valley Final Map No. 00-02 entitled "Eskaton
Village", filed in the office of the County Recorder of Nevada County. California,
on the J d ^ ot o g r f = r ( \ a o r . 2001 in Book
of Subdivisions, at P a g ^ ^ .
C;WVINDOWS\TEMP\CC&R Legal Desaiptions.doc
001297
^ ^,,.5.,,.,^
Exhibit "B"
Legal Description
That certain real property situated in the City of Grass Valley, County of Nevada,
State of California, described as follows:
Residential Lots 2 through 6. 19 through 119, and Common Area Parcels B
(Maintenance Facility), Parcel P, Q, R, S, T, U, V, W. Y, Z, AA. BB. and CC
(Roads), and Parcel E, F, G, H, J, L, and DD (Open Space) as shown on Grass
Valley Final Map No. 00-02 entitled "Eskaton Village", filed in the office ofthe
County Recorder of Nevada County, California, on the /(Jf*^f Qie.<$ P fCxbcH"
2001 in Book _sL of Subdivisions, at Page99-.
C.\WINDOWS\TEMP\CC&R Legal Descriptions.doc
001297
EXHIBIT C
ESKATON VILLAGE GRASS VALLEY
HOMEOWNERS' ASSOCIATION
ESKATON SERVICES
Eskaton will provide the following services to the Eskaton Village Grass Valley Homeowners'
Associalion as pari of the Homeowners' Associafion fee:
Security/emergency response 24 hours per day
On-site shuttle service among homes, fitness center and Eskaton Village Grass Valley Lodge
Fitness/wellness program
Recreafion coordinator
Access lo Eskaton Village Grass Valley Lodge dining room
Use of community rooms in the Eskaton Village Grass Valley Lodge (e.g. library, game
rooms, technology center, gifl shop, etc.)
These addifional Eskaton services will be available to homeowners on a fee-for-service basis:

Meals in the Eskaton Village Grass Valley Lodge dining room
Home-delivered meals
Housekeeping services
Bed and/or bath linen services
Scheduled off-site transportafion
Inlerior home maintenance services
On-site beauty shop
Advice nurse
Nutrifion consultant
END OF DOCUMENT
Exhibit B
L
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S;
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J,
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17 '
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COLOR CODE:
/^^^^^
owned by:
ESKATON
(a corporafion)
2 owned by:
ESKATON VILLAGE G f ^ S S
VALLEY HOiVIEOWNERS
ASSOCIATION (a corporation)
IO
owned by:
PRIVATE HOMEOWNERS
J
j Rev
2:o\\\o^\
' s
Exhibit C
RE 623 (Rev. 2/00) IDff623G0200B009
Esteton Village Phase 3

Cost Center
_,r.'\TEOFC.UIFORMA
BUDGET WORKSr-rEET
Page 1 of 15
DEPAJITMENT OF RAL ESTATE

BUDGET REVIEW
R 623 (Rev. I'OO) ID i62300200B009

GE^fERAL INFORMATION
This budget is a good faith estimate from plans prior to constniction and/or completion (for new projects) or from
a combination of plans and/or site inspections (for existing projects). For existing projects, there may have been
historical data as support for some line items, but changes to the project may make historical data not applicable or
reliable. This budget was prepared for the purposes of obtaining a public report.
The Association must adopt a budget in accordance with the California Civil Code. If that budget is less tlun 10%
or greater than 20% from this budget, you should contact the Department of Real Estate. The Association may
increase or decrease its budgeL It is typical for costs to increase as the project ages. The Association should
conduct a reser^'e snidy after its first year of operation to adjust the reserve fiinding plan for any changes which
may have taken place during construction.
ORE FILE NVMBER (IF ICSOAV)
.^.lASl'ER DS RLE*
OEPUTY ASSICatED HL (IF KNOM'N)
SUBDIVISION DDENTIFICATION .A^ND LOCATION

Eskaton Village
' IT.V-X'MBEHS
,jts 2-6. 43-62, 78-119
'
STREET ADDRESS (If .<.N"*T

R<.IN ACCESS ftOADfSI
.OTTf
Grass Valley
MEARESTTO'VuaTY
COUWTY
Nevada
(CLESmrRECnON FROMTOWraTY
Via Colina Drive and Esicaton Circle

TYPE OF SUBDIVISION
Planned Development Land Project
Planned Development Mobile Home
Community Apartment
Out-of-State
Undivided Interest
Undivided Interest Land Project
Condominium
Condominium Conversion
Stock Cooperative
Stock Cooperative Conversion
Liinited Equity Housing Corporation
P lanned Development
NU).<BER OF W T t W r i S
67 Phase 3; 130 Total
PHASF./r
TOTAL IN fBD/ECr
PRVI(XISMnLE<
OFAOUiS
3
BUDGET PREPARER
ATTENTiOH
TELH'HONE NUMBER
VierraMoore, Inc.
Rita Williams
(916)925-9000
A30RESS
OTY
ZIP CODE
P. 0. Box 348600
Sacramento
95834-8600
CERTIFICATION
I declare under penally ofperjury that the representations and answers to questions in this document and all
' -cuments submined as part of the homeowners budget are tnte and complete to tlie best of my knowledge
-t.-rirf heliej. Tlie undersigned certifies lhat this electronic recreation of Department of Real Instate fonn RE
623 coniains.ai least the same infonnation as the DRE approved form ID ^RE62300200D009.
j;c.v.< ruRf. Of BLCcrr .^î.^^Rs
DATE
l/QI ; Revised 5/01; 12/01
RE 623 (Rev. 2/00) ID#62300200B005
Eskaton Village Phase 3

Cost Center
Pagc2ofI5
IMPROVEMENTS Y/ORJKSHEET
*If this phase will have any line items shown on pagt^s 3,4 and 5 hereof exemptedfrompayment of assessments
under Regulation 2792.16(c), asterisk those items on pages 3,4, and 5 and list any partially deferred costs on a
separate sheet showing calculations andatfacL All exempted improvements mi^stbc covered by reasonable
arrangemenls for completion. Include Planned Construction Statement (RE 611 A) for review.
24
1. Number of buildings containing residential units

2. Estimated completion date for the residential units included
in this phase
12/03
3. Estimated completion date for the common area and

facilities included in this phase
12/03
" 4rTypeof TesidentliirBtiiHings'forffiTsproject (I.e., highrise

cluster, garden, etc.)
Cluster
5. Type of constmction for these buildings (i.e., steel, concrete,

woodframe,etc.)
Wood Frame
6! Typeofroof(i.e., shake, etc.)
Comp Shingles
7. Type of paving used in the project
Asphalt
8. Type of exterior wall for residenllal biiildtngs
Wood Siding
9. Number of residential units per building

10. Number offloorsper building
11. Number of bedrooms pcr unit
12. Square footage of units (list number and size of each unit
type)
13. Type of parking facilities and number of spaces (Le.,
detached garage, tuck-under, subterranean, carport,
open, etc.)
Attached garage
Complete Hand 15 for Phased CondomMum projects only

14. Have you submined budgets for all phases to be completed
within the next tlirce calendar years and a built-out budget?
15. If this condominium project involves phasing with a smgle
. lol, submit z budget for each phase plus a budget which
will be used (/fcturephases are not completed.
YES
NO
RE 623 (Rev. 2/00) 1D2300200B009

Cost Center
Page 3 of 15
BUDGET SUMMARY
VkSEKUMIlER
3
KUwaEROFLOTSrWrrS
130
DATEOFOUDCET
ORE R U NUMDER
I/Ol; Revised 5/01; 12/01

TRACT NUMBElWWMn OF PRO/ECT
Eskaton Village
100 FDCED COSTS

101 Property Taxes
102 Corporation Franchise Taxes
103 Insurance (attach proposal)
104 Local License & Inspection Fees
105 Estimated Income Taxes
100-Sub Total
200 OPERATING COSTS
201 Elecfricity (attach work sheet)
Lighting: Leased
202 Gas (attach work sheet)
203 Water (attach work sheet)
204 Sewer/Septic Tanks (mclude if not in 203)
205 Cable TV/Master Antenna
207 Custodial Area
Number of Restrocms:
208 Landscape Area (see page 15)
209 Refuse Dispo.'=;al
Vender Name;
Telephone Number
210 Elevators
Number Type:
211 Private Streets, Driveways, Parking Areas
Area:
212 Heating & Air Conditioning Maintenance
Area:
213 Swimming Pool
Number:
Size:
Mths. Heated:
Spa
Number:
Size:
214 Tennis Coun
Number:
215 Access Control
Guard Hours per Day:
No. of Motorized Gates:
Type:
No. of Intercoms/Telephone Eniry:
fERLOT/Wtr
TOTAL
TOTAL
PERMOKTH
MONTHLY
AIJNUAL
31.51
4096.67
C
4916C
31.51
4096.67
4916C
C
2.80
.
364.14
437C
30.79
13.45
4002.92
1748.50
4803:
20982
RE 623 (Rev. 2/00) #623002003009
Eskaton Village Pliase 3

Cost Center
PHI MONTH
216 Reserve Study*

217 Miscellaneous
Minor Repairs
Eskaton Services
Dining Room Access - Eskaton Services
200-Sub Total
300 RESERVES
301-313 (attach reserve work sheet)
3Q0 - Sub Total
400 ADMINISTRATION
401 Management **
402 Legal Services
403 Accounting
404 Education
405 Miscellaneous, office expense
400.- Sub Total
TOTAL (100-400)
500 CONTINGENCY
501 New Construction 3%
502 Conversions 5%
503 Revenue Ofifscts (attach docuinentatioa)
TOTAL BUDGET
Page 4 of IS
TOTAL
TOTAL
MOKTHtr
ANNUAL
0-51
66.67
800
3.00
80.65
14.08
390.00
10485.00
1830.42
,
4680
125820
21965
145.29
18887.64
226652
45.67
45.67
5936.71
5936.71
71240
71240
0
0
0
0
222.47
28921.01
347052
6.68
867,.92
10415
229.15
29788.93
357467
construction and may vary slightlyfromactualfieldconditions. The calculated budget is a good faith estimate ofthe
projected costs and should be deemed reliable forno more than one year. The Board of Directors should conduct an
annual review of the Association's actual costs and revise the budget accordingly.
DRE regulations allow the use of variable assessments against units only if one unit will derive as much as 10% more than
another unit in the. value of common goods and services supplied by the AssociatiorL After determining the percent of benefit
derived &om services provided (page 14) by the Association, an easy chart to follow would, be:
Less dian 10%...:
from 10% to 20%
ON'er 20%
The budget and management documents indicate

equal assessments
(check appropriate box):
variable or equal
X equal assessments
variable a-ssessments
variable assessments
Reserve Study to be conducted every thjree years for an estimated loul cost of 52400. The above figxirc represents 1/3 the total cosi.
' Depending upon the level of service selected by the ^ssociarion, ibc amount shown may be iosufficicnt to cover the cost and
:i3y be higher.
RE 623 (Rev. 2/00) ID#62300200B009

Cost Center
Pace 5 of 15
RESERVES WORKSHEET
TRACT NUMBER
ORE FILE NUMBER
Item
Wood Siding (paint/stain)
Roof - Type: Composition Shingles
Unallocated Reserves
(4)*
Sq. Ft. or
(2)'
Unit Cost
Replacement
Remaining
Number
HOA Manual
Cost
Life
(!)
245800
309934
0.15
0.09
Use either Columns 1 and 2 or 3 and 4, but not both for a paaicular item
Cost
Co(uxnns \i2or
36870.00
17 27894.06
6476.41
TOTAL RESERVES
71240.47
Pcr LotAJtiit
Per Momh
23.63
17.88
4.15
45.67
tSSICATON VILLAGE, GRASS YAJLLEY

Homeowner r.-vpcnsc Allocntloa for Eskaton Services
Service Component
S ecuri ty/Emergency
Response
ij^Xplnitnlion
Annunl Cost
Share Basis
AUocnted to
Patio Homes
Monthly Fee
For Patio
Homes
24 hrs/7 days + 4.2 PTEs

4.2 FTEs at S9.00/ hr ^ 37..8/hr X 2080 = $78,624/yr
plusbcncnts of 32%= $103,784
$103,784
50% =
$51,892
$ 4,324
$33.26
On-site Shuttle Service
7:00 nni lo 9:00 pm, 7 days per week
OO-silc scheduled
Iransporliilion
Availahlo option
Nomiiuil cos! biisis fee
Fitness/Wclhiess
Program Director
\ FTE@$lO.J25/lir = 521,060 plus benefits =

COST IS DELAYIi:D UNTIL FITNESS CENTER
IS COMPLETED
1 I'TE @ $12.32/hr = S25.626 phis benefits =
Recreation Coordinator
Advice Nurse
Nutrition Consultant
Dining room access Homeowners

Totnl.s
Monthy Ffor Iiuiivicl

Homes ( v i ;
$ 27,799
50%
$13,899.50
510,00
$36,000
10%
S3,600
S300,00
S2.50
Scheduled consultations iwailable

Nominal cost basis fee
Scheduled consultations available

Nominal cost basis fee
0 .
Additional 1 FTE to ensure homeowners service

available, $8.00/lir = SI6,640 plus bciicnts =
$21,965
$187,374,00
100%
S 1,830.40
$14.25
$12,315.40
$60.00

First Amended Class Action Complaint (00442475-2)

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First Amended Class Action Complaint (00442475-2)

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DEPAR

MICHAEL E. VINDING (SBN 178359)

DAVID A. DIEPENBROCK (SBN 215679)

8 Attorneys for Plaintiffs

12 KAREN B. LORINI, an individual;

individually and on behalf of all others

17 ESKATON, a California non-profit public

18 ESKATON VILLAGE-GRASS VALLEY, a

INCORPORATED, a California non-profit

CLASS ACTION COIVIPLAINT

Plaintiff Ronald F. Coley, an individual, has held a beneficial ownership interest in

Plaintiff Karen B. Lorini, an individual, has held a beneficial ownership interest in

CLASS ACTION COMPLAINT

5 Grass Valley Homeowners Association ("HOA") is a California non-profit corporation, public

Defendant Mark T. Cullen, an individual, served as Eskaton's Director of Operations

Defendant Elizabeth ("Betsy") L. Donovan, an individual, is an Eskaton Senior Vice

Defendant Trevor Hammond, an individual, is a former Chief Operating Officer of

Defendants Cullen, Donovan, Hammond, and Murch are sometimes collectively

23 referred to herein as the "Individual Defendants" or the "Eskaton Directors."

JURISDICTION AND VENUE

28 of Civil Procedure because some of the Defendants reside in Sacramento County.

CLASS ACTION COMPLAINT

CLASS ACTION ALLEGATIONS

number of class members likely exceeds 130.

CLASS ACTION COMPLAINT

FIRST CAUSE OF ACTION

(Aiding And Abetting Breach Of Fiduciary Duty)

(Against Eskaton, EVGV & Individual Defendants)

10 paragraphs 1 through 24 above, as though fully set forth in this place.

CLASS ACTION COMPLAINT

the services of the Fitness/Wellness Program Director. As reflected in Form 623

Fitness/Wellness Program Director, however, has devoted substantially less than

50 percent of her time serving the homeowners. The Fitness/Wellness Program

c. Voting repeatedly as a block to impose assessments on the homeowners for an

Furthermore, the services Eskaton stated that the Director of Environmental

property management services and routine maintenance of the HOA property,

the services of the Director of Environmental Services were actually duplicative

d. Voting as a block to raise the Homeowner Expense Allocation from 50 to 83.3

Shuttle Service, effective January 2013. This 67 percent increase represented a

Home owner allocation above 50 percent is wholly unjustified because

homeowner demands are no greater than their approximately 49 percent share of

Security/Emergency Response & On-site Shuttle Service services) have devoted

-8CLASS ACTION COMPLAINT

for furnishing the

e. Voting as a block to defeat a motion the Minority Directors introduced at an

Security Emergency Shuttle; the Director of Resident Services (formerly the

Fitness/Wellness Program); the Recreation Coordinator; and Lodge Access. As

self-dealing where conflicts of interest exist.

Voting as a block to defeat a second motion the Minority Directors introduced at

Expense Allocation" for Eskaton Services be limited to the allocations listed in

CLASS ACTION COMPLAINT

15 Plaintiffs have been damaged in an amount to be determined at trial.

17 substantial factor in causing the harm Plaintiffs have suffered.

Defendants' wrongful conduct, as described above, was done willfully, oppressively

WHEREFORE, Plaintiffs pray for judgment as set forth below.

SECOND CAUSE OF ACTION

(Aiding & Abetting Breach of Fiduciary Duty)

27 paragraphs 1 through 38 above, as though fully set forth in this place.

As a result of Defendants failure to administer the Landscape Maintenance Contracts

CLASS ACTION COMPLAINT

2 to the Patio Homes.

8 substantial factor in causing the harm Plaintiffs have suffered.