AFFIRM;     Opinion   issued November 13, 2012




                                               In The
                                 Qtønrt øf \ppiata
                         Fifth thtrict uf ixwi at Ja11a
                                       No. 05-1 1-00520-CV


                                 NICHOLAS SMITH, Appellant

                                                 V.

                                TOWN NORTH BANK, Appellee


                        On Appeal from the 298th Judicial District Court
                                    Dallas County, Texas
                             Trial Court Cause No. 09-14445-M


                              MEMORANDUM OPINION
                           I3efore Justices Morris, Francis, and Murphy
                                     Opinion By Justice Morris

       In this appeal, Nicholas Smith challenges the trial court’s summary judgment in favor of

Town North Bank. Smith brings three issues contending the trial court erred in concluding that he

waived his right to a fair market value offset under section 5 1 .003 of the Texas Property Code.

Because we conclude Smith’s arguments are without merit, we affirm the trial court’s judgment.



       The facts in this case are undisputed. In February 2007. 5 & K Construction. inc. entered into

a loan agreement with Town North Bank. Nicholas Smith, as majority owner and president of S &

K, signed the promissory note on S & K’s behalf. The loan related to interim construction financing

for a house located on I)ove Road in Tarrant County and was secured by a deed of trust on the realty.
In addition to the note and deed of trust. Smith executed a personal guaranty of payment tor the Dove

Road note.

        During construction ot the house on Dove Road. Smith entered into an agreement with Thang

Nguyen to develop three lots in a subdivision in Denton County known as the Bluffs. Town North

again provided the financing and received three promissory notes secured by the realty. The notes

named S & K as the borrower and were signed S and K Construction. Inc.. By: Nicholas Smith

[signaturel, By: Thang Nguyen [signature].”        Both Smith and Nguyen also signed personal

guaranties.

       Unlike the Dove Road note guaranty. the guaranties signed as part of the Bluffs subdivision

loan financing stated that they were not specific “to any particular loan or item.” Instead, the

guaranties stated that they were “continuing” guaranties under which Smith and Nguyen agreed to

“guarantee the full and punctual payment, performance, and satisfaction of the indebtedness of

borrower to lender, now existing or hereafter arising or acquired, on an open and continuing basis.”

The continuing guaranties also contained waivers not found in the Dove Road note guaranty. The

continuing guaranties stated that Smith and Nguyen agreed to waive

               any and all rights or defenses based on suretyship or impairment of
               collateral including, but not limited to, any rights or defenses arising
               by reason of (A) any “one action” or “anti-deficiency” law or any
               other law which may prevent [Town Northi from bringing any action,
               including a claim for deficiency, against Guarantor. before or after
               [Town North’s] commencement or completion of any foreclosure
               action, either judicially or by exercise of a power of sale; .   .or (F)
                                                                                    .




               any defenses given to guarantors at law or in equity other than actual
               payment and performance of the indebtedness.

Smith and Nguyen further

               waive[d] and agree[d] not to assert or claim at any time any
               deductions to the amount guaranteed under this Guaranty for any
               claim of setoff. counterclaim, counter demand, recoupment or similar
               right. whether such claim. demand or right may be asserted by [S &
                Kj. ISmith and Nguvenj. or both.

        S & K later defaulted on the Dove Road note and          one of   the Bluffs subdivision notes. Town

North foreclosed on the properties but the proceeds from the foreclosures were insufficient to cover

the debt. On October 23. 2009. Town North tiled this suit against Smith and Nguyen as guarantors

to recover the deficiency amount. The trial court severed Town North’s claims against Nguyen and

this cause proceeded against Smith as the sole defendant.

        Smith tiled a general denial and a motion to determine the fair market value of the foreclosed

properties under section 5 1 .003 of the Texas Property Code. Under section 5 1 .003.

                [ajny person against whom [a deficiencyj recovery is sought by
                motion may request that the court in which the action is pending
                determine the fair market value of the real property as of the date of
                the foreclosure sale ....if the court determines that the fair market
                value is greater than the sale price of the real property at the
                foreclosure sale, the persons against whom recovery of the deficiency
                is sought are entitled to an offset against the deficiency in the amount
                by which the fair market value       .exceeds the sale price.
                                                         .   .




TEx. PROP. CODE ANN.      § 51 .003 (West 2007). Pursuant to section 5 1.003, Smith requested the trial
court to determine the amount of the alleged deficiency on the basis of the fair market value of the

properties rather than the sale prices paid at the foreclosures.

        In response to the motion, Town North moved for summary judgment arguing that the

continuing guaranty signed by Smith included a waiver of his right to claim any deductions or offsets

from the   amount   guaranteed including   any   right to seek a reduction in the deficiency under section

5 1 .003. Smith responded that the waiver language in the guaranty did not waive his rights under

section 51.003 and the continuing guaranty made the basis of the suit was only applicable to the

Bluffs subdivision note. The trial court granted Town North’s motion for summary judgment and

denied Smiths request for a fair market valuation of the properties under section 51.003.

       Town North then moved for a final summary judgment on its deficiency claim. The trial
court granted the motion and ordered that Town North recover $474251 as the total deficiency

amount along with post-judgment interest and costs of court. Smith now brings this appeal

challenging the summary judgment in favor of Town North on the issue of his request for a fair

market valuation under section 51.003.

                                                    II.

          Smith raises three issues contending the trial court erred in concluding that he waived his

rights under section 51.003 ofthe Texas Property Code. We begin by addressing Smith’s third issue

in which he contends the rights afforded by section 51.003 are not subject to waiver.

          Smith contends that public policy considerations and the principle that remedial statutes

should be construed liberally compels the conclusion that the rights and protections provided by

section 51.003 cannot be waived. We have recently addressed these same arguments in interstate

35/Chisam Road LI’.       it.   Moayedi, No. 05-1 l-00209-CV, 2012 WL 3125148 (Tex. App.—Dallas

Aug. 2. 2012, no pet. h.). After reviewing section 5 1.003’s legislative history, public policy

considerations, and the opinions of other Texas courts, we concluded that the rights provided by

section 51.003 are subject to waiver. See Id. at 8; see also King it. Park Cities Bank;, No. 05-11-

00593-CV, 2012 WL 3144881, at ‘3 (rex. App.—Dallas Aug. 3, 2012, no pet It). Based on our

holding in Moayedi, we resolve Smith’s third issue against him. See Mobile Virion Imaging Servs.

it.   L4/iCare Hosps. ofNorth Texas, LP., 260 S.W.3d 561, 566 flex. App.—DaIlas 2008, no pet)

(earlier decision ofthis Court binding absent intervening change in law by legislature, higher court,

or this Court sitting en banc).

          Inhis first issue, Smithargues that the language inthe continuing guaranty was not sufficiently

specific to constitute an effective waiver of his rights under section 51.003. Smith stresses that the

guaranty’s waiver ofany claim of”setoff’ should not be extended to include a waiver ofthe right of




                                                  -4-
“oitset’ provided by the statute. Again, however, this Court has addressed these arguments in earlier

opinions and Ibund them to he without merit. In King v. Park ( /ties Bank. we held that the identical

waiver language at issue in this case was sufticient to waive the guarantor’s right of offset under

section 51.003 as a matter of law. See King. 2012 WL 3144881 at *3, We noted that the language

in the guaranty waiving mny defenses given to guarantors at law or in equity other than actual

payment and performance of the indebtedness’ encompassed a waiver of section 5L003’s right of

offset despite the guaranty’s later reference to a “claim of setoff” Id. The waiver language in the

continuing guaranty was sufficient to apprise Smith of the rights he was relinquishing and specifically

conveyed the intent that Smith’s responsibilities as guarantor would not be subject to any defense

other than payment. See Moayedi, 2012 WL 3125148 at *7 (section 5 1.003 offset provision

constitutes a deti.nse): see also Toor v. PNCBank, Vat lAss   ii.   05-1 1-0001 2-CV. 2012 WL 3637284.

at *3 (Tex. App.—l)allas Aug. 24, 2012. no pet. h.). We resolve Smith’s first issue against him.

       Finally, in his second issue. Smith contends that the trial court erred in granting summary

judgment because the evidence does not conclusively show that the continuing guaranty applies to

the Dove Road note. Smith argues that the execution of the Bluffs subdivision note by Nguyen

renders the guaranty’s definition of the indebtedness covered ambiguous. We disagree.

       The continuing guaranty defines the indebtedness for which Smith may be held liable as “all

of the principal amount outstanding from time to time and at any one or more times    ...   that Borrower

individually or collectively or interchangeably with others, owes or will owe Lender.” Smith contends

that because Nguyen signed the Bluffs subdivision note, he could be construed as ajoint borrower on

that note. According to Smith, Nguyen’s status as a joint borrower means that he must be included

in the continuing guaranty’s use of the term “Borrower” and it is reasonable to conclude that the

continuing guaranty was meant to cover only thejoint indebtedness of S & K and Nguyen rather than
debts owed solely by S & K. such as the l)ove Road note. lfthe continuing guaranty does not cover

the Dove Road note, then the waivers in the continuing guaranty are not effective with respect to

Smith’s liability as a guarantor of that note. Smith’s contention that Nguyen can be viewed as a

borrower has no support. however, either in the note or the continuing guaranty.

       Both the Bluffs subdivision note and the continuing guaranty name S & K as the sole

borrower. Smith relies entirely on the fact that Nguyen signed the Bluffs subdivision note as evidence

that he may be held liable as a borrower. But the signature block on the note again names S & K as

the sole borrower and both Smith’s and 1’ guyen’s signatures are preceded by the preposition “by.”

The use of the term “by” indicates unambiguously that Smith and Nguyen were signing only as

representatives or as purported representatives of S & K. See TEx. Bus. & Covi. CoDE ANN.     § 3.402
cmt. 2 (West 2002) (use of term “by” unambiguously shows that signature is made on behalf of

identified represented person). Nothing in the note or the guaranty can be construed as indicating

there is any borrower other than S & K or any indebtedness other than that which is owed by S & K

alone. Because the guaranty unambiguously applies to the indebtedness of S & K, which includes

both the Bluffi subdivision note and the Dove Road note, we resolve Smith’s second issue against

him.

       Based on the foregoing, we conclude that the trial court correctly granted Town North’s

motion for summary judgment on the issue of Smith’s waiver of any right of setoff under section

51.003 of the Texas Property Code. We affirm the trial court’s judgment.


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                                                      JOSJ41HI B MORRIS
                                                 -    TUSfICE

1 10520F.P05
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                        fiftIi tIiitrirt uf ixa at )aItai

                                       JUDGMENT
NICHOLAS SMITH. Appellant                           Appeal from the 2 qgth
                                                                           Judicial i)istrict Court
                                                    of Dallas County. Texas. (Tr.Ct.No. 09-
No. 05-11-00520-CV           V.                     14445-M),
                                                    Opinion delivered by Justice Morris.
TOWN NORTH BANK. Appel lee                          Justices Francis and Murphy participating.


       In accordance with this Courts opinion of this date, the judgment of the trial court is
AFFIRMED. It is ORDERED that appellee Town North Bank recover its costs of this appeal
from appellant Nicholas Smith.


Judgment entered November 13. 2012.




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                                                   JOSEYIi BivlORRS
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