Article XIV Dispute Resolution and Limitation on Litigation
14.1. Dispute Resolution Methods. The provisions of this Article shall govern the resolution of all Claims between any Bound Party. Claims, disputes and controversies shall be resolved pursuant to the Arbitration Agreements described in Section 14.4, unless specifically exempted from the Arbitration Agreements by Section 14.3; if exempt from the Arbitration Agreements, the Exempt Claims may be litigated in a court of competent jurisdiction. Before any Claims are brought by the Association against any Person, the Association shall comply with the requirements of Sections 14.5.
14.2. Claims and Exempt Claims. Unless specifically identified as an Exempt Claim in this Section, all claims or disputes arising out of or relating to (a) the interpretation, application or enforcement of the Governing Documents; (b) the rights, obligations and duties of any Bound Party under the Governing Documents; (c) relating to the design or construction of improvements on the Properties, (d) breach of contract, (e) negligent or intentional misrepresentations or nondisclosure in the inducement, (f) execution or performance of any contract related to the Condominium, including the Arbitration Agreements described in this Article, (g) any alleged statutory violation, (h) any claim of bodily injury related to the design or construction of the Units and the Common Elements, and (i) any claim made under the Washington State Consumer Protection Act (collectively, "Claims") shall be subject to the provisions of Section 14.4, which require the Claims to be arbitrated. Unless all necessary parties otherwise agree, the following list of exemptions ("Exempt Claims") shall not be Claims, and shall not be subject to the provisions of Section 14.4 requiring arbitration, nor shall Exempt Claims be subject to the provisions of Section 14.5 - 14.7:
14.2.1 any suit by the Association against any Bound Party to collect assessments, enforce liens, enforce the provisions of the Governing Documents;
14.2.2 any suit by the Association to obtain equitable relief (i.e., temporary restraining order, injunction, or specific performance) and such other ancillary relief as the court may deem necessary in order to maintain the status quo and preserve the Association's ability to enforce the provisions of Articles III, Article IV and Article V;
14.2.3 any suit brought by the Association to challenge tax assessments;
14.2.4 any suit brought by the Association against any contractor or vendor arising out of a contract for services or supplies between the Association and such contractor or vendor;
14.2.5 counterclaims brought by the Association in proceedings instituted against the Association;
14.2.6 any suit by a Bound Party for declaratory or injunctive relief which seeks a determination as to applicability, enforcement, clarification, or interpretation of any provisions of the Declaration;
14.2.7 any suit between Owners, which does not include Declarant or the Association as a party, if such suit asserts a Claim which would constitute a cause of action independent of the Governing Documents if the amount in controversy exceeds $10,000.00;
14.2.8 any suit in which any indispensable party is not a Bound Party; and
14.2.9 any suit as to which any applicable statute of limitations would expire within 180 days of giving the Notice required by Section 14.4(a), unless the party or parties against whom the Claim is made agree to toll the statute of limitations as to such Claim for such period as may reasonably be necessary to comply with this Article.
With the consent of all parties thereto, any of the above exemptions voluntarily may be submitted to the arbitration procedures set forth in Section 14.4. if the Association seeks to litigate items 14.2.1 through 14.2.5, such litigation shall require the majority vote of the Board of Directors.
14.3. Bound Parties. Declarant, the Association, its officers, directors, and committee members, all Persons subject to this Declaration, any Builder, and any Person not otherwise subject to this Declaration who agrees to submit to this Article by contract with a Bound Party or by stipulation shall be a "Bound Party" for the purposes of this Article XIV.
14.4. Arbitration Agreements. Each Bound Party covenants and agrees to submit all Claims to the arbitration procedures set forth in this Section 14.4, in lieu of filing suit in any court. Any dispute concerning the interpretation or the enforceability of the Arbitration Agreements described in this paragraph, including, without limitation, revocability or voidability for any cause, the scope of arbitrable issues, and any defense based upon waiver or estoppel, shall be decided by the Arbitrator. The decision of the Arbitrator shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. These Arbitration Agreements shall inure to the benefit of, and be enforceable by, Declarant and Declarant's subcontractors, agents, vendors, suppliers, design professionals, insurers and any other person alleged to be liable for any defect in or to any Unit or the Common Elements; and shall be binding upon all family members and tenants of the Owners and the Association. No participation of a party in a judicial proceeding involving a matter which is arbitrable under these Arbitration Agreements shall be deemed a waiver of the right of such party to enforce the Arbitration Agreements. If any provision of these Arbitration Agreements shall be determined by the Arbitrator or any court to be unenforceable or to have been waived, the remaining provisions shall be deemed to be severable therefrom and enforceable according to their terms. Any party shall be entitled to recover reasonable attorney's fees, litigation expenses and costs incurred in enforcing the Arbitration Agreements, as provided in Section 14.8.
14.4.1 Arbitration Agreement for Non-Warranty Claims. The Bound Parties agree that any Claim which is not a Claim covered by a Warranty (as described in Section 14.4.2) shall be settled and resolved by arbitration as described herein. The Arbitration shall be conducted by the American Arbitration Association, Construction Arbitrations Services, Inc., DeMars & Associates, Ltd., or another arbitration service selected by the parties in writing, pursuant to the arbitration service's applicable arbitration rules to the extent such rules are not inconsistent with this Arbitration Agreement. If the parties fail to agree on the selection of an arbitration service, the choice of arbitration service shall be that of the Claimant. All administrative fees of the arbitration service and fees of the Arbitrator shall be borne equally by the parties to the arbitration, subject to the discretion of the Arbitrator to reallocate such fees in the interest of justice.
The Arbitrator shall take such steps as may be necessary to hold a hearing within ninety (90) days of the initial demand for arbitration and to conclude the hearing within three (3) days; and the Arbitrator's written decision shall be made not later than fourteen (14) calendar days after the hearing. These time limits are included in order to expedite the proceeding, but they are not jurisdictional, and the Arbitrator may for good cause afford or permit reasonable extensions or delays, which shall not affect the validity of the award. The written decision shall contain a brief statement of the claim determined and the award made on each claim. In making the decision and award, the Arbitrator shall apply applicable substantive law. The Arbitrator may award injunctive relief or any other remedy available from a judge, including without limitation joinder of parties or consolidation of this arbitration with any other involving common issues of law or fact, or which may promote judicial economy, but shall not have the power to award punitive or exemplary damages.
The parties expressly agree that this Arbitration Agreement involves and concerns interstate commerce, and is governed by the Federal Arbitration Act (9 U.S.C. §1, et. seq.) to the exclusion of any different or inconsistent state or local law, ordinance or judicial rule; and to the extent that any state or local law, ordinance or judicial rule shall be inconsistent with any provision of the rules of the arbitration service under which the arbitration proceeding shall be conducted, the arbitration service rules shall govern the conduct of the proceeding.
14.4.2 Arbitration Agreement for Warranty Claims. The Bound Parties agree that any Claim which is a Claim covered by a Warranty shall be settled and resolved by arbitration as described in this Subsection 14.4.2. A Warranty Claim is a Claim, dispute or controversy between Bound Parties arising from or related to alleged defects in the Unit or the Common Elements which are asserted after the closing of the transfer of title to a Unit, and which are covered by a contractual warranty supplied to the buyer of the Unit by the seller of the Unit. Warranty Claims shall be submitted to binding arbitration commenced and conducted in accordance with the arbitration provision of the Warranty, even if such provisions are inconsistent with the provisions of this Subsection 14.4.
14.4.3 Limitation Upon Amendments. The Declarant, the Association and all Owners hereby acknowledge and agree that no amendment of this Declaration shall modify, alter or delete any portion of the Arbitration Agreements in Section 14.4 of this Declaration without the written consent of the Declarant attached to and recorded with such amendment, regardless of whether Declarant continues to maintain an ownership interest in any Unit or membership in the Association.
14.4.4 Binding Upon Successors and Assigns. The Declarant, the Association and all Owners acknowledge and agree that, by virtue of the recording of the Declaration, these Arbitration Agreements shall run with title to the real property subject to the Declaration and all additional phases, and shall be binding upon all Persons having any right, title or interest in all or any portion of the real property subject to the Declaration their respective heirs, legal representatives, successors, successors in-title, and assigns, and shall be for the benefit of the Declarant and all Owners of Units and Common Elements subject to this Declaration, regardless of whether Declarant continues to maintain an ownership interest in any Unit or membership in the Association.
14.5. Consensus for Association Litigation of Claims. The Association shall not commence arbitration, judicial or administrative proceedings to resolve a Claim without the approval of Members representing at least 67% of the total votes in the Association. In the event the judicial or administration proceeding is against the Declarant or any former Declarant, 75% of the total votes in the Association are required to commence such proceeding. This Section shall not be amended unless such amendment is approved by the percentage of votes, and pursuant to the same procedures, necessary to institute proceedings as provided above.
14.6. Mandatory Procedures for Litigation of Claims.
14.6.1 Notice. Any Bound Party having a Claim ("Claimant") against any other Bound Party ("Respondent") (collectively, the "Parties") shall notify each Respondent in writing (the "Notice"), stating plainly and concisely: (a) the nature of the Claim, including the Persons involved and Respondent's role in the Claim; (b) the legal basis of the Claim (i.e., the specific authority out of which the Claim arises); (c) Claimant's proposed remedy; and (d) that Claimant will meet with Respondent to discuss in good faith ways to resolve the Claim.
14.6.2 Negotiation and Mediation. The Parties shall make every reasonable effort to meet in person and confer for the purpose of resolving the Claim by good faith negotiation. If requested in writing, accompanied by a copy of the Notice, the Association's Board may appoint a representative to assist the Parties in negotiation. If the Parties do not resolve the Claim within 30 days of the date of the Notice (or within such other period as may be agreed upon by the Parties) ("Termination of Negotiations"), Claimant shall have 30 additional days to submit the Claim to mediation under the auspices of any Local Jurisdiction dispute resolution center or, if the Parties otherwise agree, to an independent agency providing dispute resolution services in the area. If Claimant does not submit the Claim to mediation within such time, or does not appear for the mediation, Claimant shall be deemed to have waived the Claim, and Respondent shall be released and discharged from any and all liability to Claimant on account of such Claim; provided, nothing herein shall release or discharge Respondent from any liability to any Person other than the Claimant.
Any settlement of the Claim through mediation shall be documented in writing by the mediator and signed by the Parties. If the Parties do not settle the Claim within 30 days after submission of the matter to the mediation, or within such time as determined by the mediator, the mediator shall issue a notice of termination of the mediation proceedings ("Termination of Mediation"). The Termination of Mediation notice shall set forth that the Parties are at an impasse and the date that mediation was terminated.
Within five (5) days of the Termination of Mediation, the Claimant shall make a final written settlement demand ("Settlement Demand") to the Respondent, and the Respondent shall make a final written settlement offer ("Settlement Offer") to the Claimant. If the Claimant fails to make a Settlement Demand, Claimant's original Notice shall constitute the Settlement Demand. If the Respondent fails to make a Settlement Offer, Respondent shall be deemed to have made a "zero" or "take nothing" Settlement Offer.
14.6.3 Final and Binding Arbitration. If the Parties do not agree in writing to a settlement of the Claim within 15 days of the Termination of Mediation, the Claimant shall have 15 additional days to submit the Claim to arbitration in accordance with Section 14.4. If not timely submitted to arbitration or if the Claimant fails to appear for the arbitration proceeding, the Claim shall be deemed abandoned, and Respondent shall be released and discharged from any and all liability to Claimant arising out of such Claim; provided, nothing herein shall release or discharge Respondent from any liability to Persons other than Claimant. This subsection is an agreement to arbitrate and is specifically enforceable under federal and state arbitration laws. The arbitration award (the "Award") shall be final and binding, and judgment may be entered upon it in any court of competent jurisdiction to the fullest extent permitted under federal and Washington State laws.
14.7 Allocation of Costs of Resolving Claims. Each Party shall bear its own costs, including attorney's fees, and each Party shall share equally all charges rendered by the mediator(s) and all filing fees and costs of conducting the arbitration proceeding ("Post Mediation Costs"), except as otherwise ordered by the arbitrator pursuant to Section 14.4. Any Award which is equal to or more favorable to Claimant than Claimant's Settlement Demand shall add Claimant's Post Mediation Costs to the Award, such costs to be borne equally by all Respondents. Any Award which is equal to or less favorable to Claimant than any Respondent's Settlement Offer shall award to such Respondent its Post Mediation Costs, except as otherwise provided in this subsection.
14.8 Enforcement of Resolution - Attorney's Fees and Costs. If the Parties agree to a resolution of any Claim through negotiation or mediation in accordance with Section 14.4 and any Party thereafter fails to abide by the terms of such agreement, or if the Parties agree to accept the Award following arbitration and any Party thereafter fails to comply with such Award, then any abiding or complying Party may file suit or initiate administrative proceedings to enforce such agreement or Award without the need to again comply with the procedures set forth in Section 14.4. In such event, the Party taking action to enforce the agreement or Award shall be entitled to recover from the non-complying Party (or if more than one non-complying Party, from all such Parties pro rata) all costs incurred in enforcing such agreement or Award, including, without limitation, attorneys' fees and court costs. If the Bound Parties litigate an Exempt Claim, the prevailing party in such litigation shall be entitled to payment of all attorney's fees, litigation and costs by the non-prevailing party.