AFFIRM; Opinion Filed May 21, 2014.




                                        S     In The
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                     No. 05-13-00081-CV

                              BARRY NUSSBAUM, Appellant
                                        V.
                              ONEWEST BANK, FSB, Appellee

                      On Appeal from the 44th Judicial District Court
                                  Dallas County, Texas
                          Trial Court Cause No. DC-11-05740-B

                            MEMORANDUM OPINION
                            Before Justices Lang, Myers, and Brown
                                   Opinion by Justice Myers
       Barry Nussbaum appeals the trial court’s judgment granting OneWest Bank, FSB’s

motion for summary judgment. OneWest foreclosed on collateral, an apartment complex, and

sued Nussbaum, the guarantor, for the deficiency. Nussbaum brings three issues on appeal

asserting the trial court erred by determining Nussbaum had waived his right to a fair market

valuation of the property and to have the amount of the deficiency determined from the fair

market value, and that the court erred by holding Nussbaum responsible for the deficiency when

OneWest failed to mitigate its damages by refusing to sell the property for the amount of the

debt. We affirm the trial court’s judgment.

                                       BACKGROUND

       In 2009, Watersong Apartments borrowed $9,495,300 from La Jolla Bank to purchase

property in Dallas County. Nussbaum signed a guaranty agreement for the loan. In February
2010, La Jolla Bank was closed, and the FDIC transferred some of the assets, including the

Watersong Apartments note, guaranty, and related documents, to OneWest.                  Watersong

Apartments defaulted on the note, and OneWest demanded payment under the guaranty from

Nussbaum. When Nussbaum failed to pay and Watersong Apartments filed for bankruptcy,

OneWest filed suit against Nussbaum alleging Nussbaum breached the guaranty agreement.

       OneWest moved for summary judgment on its claim, seeking damages of over $11

million.   In April 2012, the trial court granted OneWest’s motion for summary judgment

awarding damages of $10,747,543.13 for unpaid principal, interest, and late charges. In July

2012, the property securing the note was sold at a foreclosure auction for $4 million.

       On July 31, 2012, OneWest moved for final judgment for $6,747,543.13, which was the

amount of the April 2012 summary judgment less the $4 million credit. Nussbaum filed a

response to the motion for final judgment asserting the foreclosure sale price was below the

appraised market value of $8,160,000, requested that the trial court determine the fair market

value of the property, and asserted that the deficiency should be computed from the fair market

value instead of the foreclosure sale price. See TEX. PROP. CODE ANN. § 51.003 (West 2007).

Nussbaum also asserted OneWest failed to mitigate its damages because, prior to the foreclosure,

Nussbaum received two letters of intent to purchase the property, one for $8 million and the

other for $9.5 million, but OneWest refused to entertain either offer. The trial court denied

OneWest’s motion for final judgment.

       In September 2012, OneWest again moved for summary judgment, asserting Nussbaum

had waived all defenses to the guaranty except payment. Nussbaum then amended his answer to

assert the defense of payment and stated that OneWest’s refusal to accept the $9.5 million offer

to purchase the property before foreclosure barred OneWest’s claims. In his response to the

September 2012 motion for summary judgment, Nussbaum asserted he did not waive his

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affirmative defenses of failure to mitigate damages, payment, and the right to have the deficiency

determined from the fair market value of the property. Nussbaum also asserted that OneWest

failed to mitigate its damages by refusing to sell the property to the prospective purchasers for $8

million or $9.5 million.

       The trial court granted OneWest’s motion for summary judgment and awarded OneWest

$6,747,543.13, which was the amount of the April 2012 summary judgment minus the $4 million

foreclosure sale price.

                                   STANDARD OF REVIEW

       The standard for reviewing a traditional summary judgment is well established. See

Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985); McAfee, Inc. v. Agilysys,

Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.). The movant has the burden of

showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter

of law. TEX. R. CIV. P. 166a(c). In deciding whether a disputed material fact issue exists

precluding summary judgment, evidence favorable to the nonmovant will be taken as true.

Nixon, 690 S.W.2d at 549; In re Estate of Berry, 280 S.W.3d 478, 480 (Tex. App.—Dallas 2009,

no pet.). Every reasonable inference must be indulged in favor of the nonmovant and any doubts

resolved in its favor. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). If the movant’s

summary judgment proof establishes the right to judgment as a matter of law, then the burden

shifts to the nonmovant to raise an issue of fact on one of the elements of the movant’s claim or

on each element of an affirmative defense. Lunsford Consulting Group, Inc. v. Crescent Real

Estate Funding VIII, L.P., 77 S.W.3d 473, 475 (Tex. App.—Houston [1st Dist.] 2002 no pet.).

We review a summary judgment de novo to determine whether a party’s right to prevail is

established as a matter of law. Dickey v. Club Corp., 12 S.W.3d 172, 175 (Tex. App.—Dallas

2000, pet. denied).


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                                           WAIVER

       In his first and second issues, Nussbaum argues the trial court erred by granting

OneWest’s motion for summary judgment on the ground that Nussbaum had waived his right

under section 51.003 of the property code to have the amount of the deficiency determined from

the fair market value of the property instead of the foreclosure sale price. Section 51.003 states

that a person from whom a deficiency after foreclosure is sought may request that the trial court

determine the fair market value of the property. PROP. § 51.003(b). The statute then states,

       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, less the amount of any claim, indebtedness, or
       obligation of any kind that is secured by a lien or encumbrance on the real
       property that was not extinguished by the foreclosure, exceeds the sale price. If
       no party requests the determination of fair market value or if such a request is
       made and no competent evidence of fair market value is introduced, the sale price
       at the foreclosure sale shall be used to compute the deficiency.

Id. § 51.003(c). Nussbaum requested that the trial court make this valuation and asserted that the

$4 million foreclosure sale price was “well below” the fair market value.

       OneWest argued that Nussbaum was not entitled to the valuation because he had waived

his right to any setoff. In the guaranty, Nussbaum agreed that:

       Guarantor also waives 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 Lender from bringing any action, including a claim for
       deficiency, against Guarantor, before or after Lender’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. . . .

       Guarantor further waives and agrees 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 the Borrower, the Guarantor, or both.

(Emphasis added.) Nussbaum argues these waiver terms did not apply because section 51.003 is

not a right or defense “based on suretyship or impairment of collateral” and the right “to an
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offset” under section 51.003(c) is not a “claim of setoff, counterclaim, counter demand,

recoupment or similar right” waived by the guaranty.

       Citing Vastine v. Bank of Dallas, 808 S.W.2d 463 (Tex. 1991), Nussbaum asserts that a

right or defense “based on suretyship” must be a right or defense such as the surety’s/guarantor’s

right to be released from liability when there is a material alteration in, and deviation from, the

terms of the contract without the surety’s consent. See id. at 464–65. Although Vastine states a

material alteration releases the surety or guaranty, nothing in Vastine indicates that section

51.003(c)’s entitlement to an offset cannot be a right or defense “based on suretyship.”

       Nussbaum argues that a right of “setoff” means the right of a defendant in a suit for debt

to raise a debt that the plaintiff owes the defendant as a defense or counterclaim. Bandy v. First

State Bank, Overton, Tex., 835 S.W.2d 609, 618 (Tex. 1992). He asserts that the right under

section 51.003 to an “offset” is not a right to a “setoff.” The terms “offset” and “setoff” are

commonly used interchangeably. See Satis Vacuum Indus. Vertriebs, AG v. Optovision Techs.,

Inc., No. Civ. A. 399CV2147-M, 2001 WL 1142803, *13 n.9 (N.D. Tex. Sept. 24, 2001) (“The

terms ‘offset’ and ‘setoff’ are used interchangeably under Texas law. However, ‘setoff’ is the

more commonly used term.”). Moreover, this Court has concluded that a guaranty that waives

the guarantor’s right to assert a “setoff” waives the right to an “offset” under section 51.003. See

Cleveland v. Live Oak State Bank, No. 05-11-00665-CV, 2013 WL 1803733, *3 (Tex. App.—

Dallas Apr. 26, 2013, no pet.) (mem. op.).

       In Smith v. Town North Bank, No. 05-11-00520-CV, 2012 WL 5499406 (Tex. App.—

Dallas Nov. 13, 2012, pet. denied) (mem. op.), this Court concluded that language in a

continuing guaranty that was identical to the waiver provisions in the guaranty in this case




                                                –5–
waived the rights provided by section 51.003(c) and any defense other than payment. 1 See id. at

*2, 3. We determined that “[t]he 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.” Id. at *3.

Having concluded in Smith that the guarantor waived his right to an offset under section 51.003,

we must conclude Nussbaum waived his entitlement to an offset in this case. We overrule

Nussbaum’s first and second issues.

                                                    FAILURE TO MITIGATE

            In his third issue, Nussbaum asserts OneWest failed to mitigate its damages by not selling

the property to prospective purchasers who executed letters of intent to purchase the property for

$8 million and $9.5 million. 2 Nussbaum asserted he forwarded the letters of intent to OneWest

but that OneWest refused to entertain either offer. Nussbaum presented these allegations in his

response to OneWest’s September 2012 motion for summary judgment. However, Nussbaum

did not attach the letters of intent or any other evidence of an offer to purchase the property to its

response. In its reply to Nussbaum’s response, OneWest pointed out that Nussbaum presented

no evidence in support of these allegations. The record does not show that Nussbaum presented


     1
         The guaranty in Smith stated the guarantors, 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 North] 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 [the borrower], [Smith and Nguyen], or both.
Smith, at *1.


     2
        In his appellant’s brief, Nussbaum asserts that $9.5 million was “the amount of the debt.” Although that may have been the approximate
amount of the original loan, it was over $1.2 million less than the damages awarded in the April 2012 summary judgment for principal, interest,
and late charges. Thus, $9.5 million was not “the amount of the debt” owing under the note.



                                                                       –6–
any evidence of the letters of intent to purchase the property prior to the court’s granting the

September 2012 motion for summary judgment. 3                                   See TEX. R. CIV. P. 166a(c) (summary

judgment based on evidence “on file at the time of the hearing, or filed thereafter and before

judgment with permission of the court”). Accordingly, Nussbaum did not raise a genuine issue

of material fact concerning this defense. We overrule Nussbaum’s third issue.

                                                           CONCLUSION

          We affirm the trial court’s judgment.




                                                                          /Lana Myers/
                                                                          LANA MYERS
                                                                          JUSTICE


130081F.P05




     3
       Nussbaum attached the letter of intent to purchase the property for $9.5 million to his motion for new trial, but it was not part of the
evidence before the court when it rendered judgment. The record does not contain a copy of the $8 million offer. Nussbaum does not contend in
his appellant’s brief that the trial court abused its discretion by failing to grant his motion for new trial.



                                                                    –7–
                                         S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

BARRY NUSSBAUM, Appellant                            On Appeal from the 44th Judicial District
                                                     Court, Dallas County, Texas
No. 05-13-00081-CV         V.                        Trial Court Cause No. DC-11-05740-B.
                                                     Opinion delivered by Justice Myers.
ONEWEST BANK, FSB, Appellee                          Justices Lang and Brown participating.

       In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
       It is ORDERED that appellee ONEWEST BANK, FSB recover its costs of this appeal
from appellant BARRY NUSSBAUM.


Judgment entered this 21st day of May, 2014.




                                                     /Lana Myers/
                                                     LANA MYERS
                                                     JUSTICE




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