Waterway Ranch, LLC and Michael P. Olson v. Texas Bank Financial F/K/A the Bank of Weatherford

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH

NO. 02-13-00350-CV

WATERWAY RANCH, LLC AND APPELLANTS
MICHAEL P. OLSON

V.

TEXAS BANK FINANCIAL F/K/A APPELLEE
THE BANK OF WEATHERFORD

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FROM THE 43RD DISTRICT COURT OF PARKER COUNTY

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MEMORANDUM OPINION 1

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Appellants appeal from the trial court’s order granting summary judgment

in favor of Appellees. We affirm.

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See Tex. R. App. P. 47.4.
 I. BACKGROUND

The facts relevant to this appeal are not disputed. On August 14, 2008,

appellant Waterway Ranch, LLC executed a note promising to pay the principal

amount of $1,950,000. The note was secured by a deed of trust covering real

property located in Parker County and by guaranties signed by appellant Michael

P. Olson, Denese Egger, Dr. Nadeem A. Khan, and Sidney J. Whitener

(collectively, the guarantors). Each guaranty included a waiver of the right “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.”

Waterway Ranch defaulted on the note. Appellee Texas Bank Financial,

the holder and beneficiary of the note, sold the real property that secured the

note at a nonjudicial foreclosure sale for $720,000, which resulted in a deficiency

of $782,208.64. Texas Bank filed suit against Waterway Ranch and the

guarantors, seeking to recover the deficiency amount. Whitener and Egger filed

general-denial answers; Waterway Ranch, Olson, and Khan generally denied

Texas Bank’s allegations and asserted their right to claim an offset against their

liability for the deficiency based on the difference between the fair market value

of the mortgage property at the time of the foreclosure and the foreclosure sales

price. See Tex. Prop. Code Ann. § 51.003(c) (West 2007); Tex. R. Civ. P. 92.

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 On June 12, 2013, Texas Bank moved for summary judgment against the

guarantors based on the express waiver language contained in each guaranty,

which specifically waived any claim for an offset or any defense to Texas Bank’s

right to recover any post-foreclosure deficiency. See Tex. R. Civ. P. 166a(a), (c).

Olson and Khan jointly responded to the summary-judgment motion and argued

that their liability could not exceed Waterway Ranch’s liability. On July 18, 2013,

Texas Bank filed a notice of nonsuit as to Waterway Ranch and served the notice

on the guarantors and Waterway Ranch. See Tex. R. Civ. P. 162. On August 1,

2013, the trial court granted summary judgment in Texas Bank’s favor, holding

that the guarantors were jointly indebted to Texas Bank for Waterway Ranch’s

debt under the terms of the guaranties. In its judgment, the trial court awarded

Texas Bank the principal amount of $782,208.64 plus accrued interest, property

taxes paid, costs, and attorneys’ fees. The trial court sent notices of judgment to

the guarantors and Waterway Ranch. See Tex. R. Civ. P. 306a(3).

Waterway Ranch and Olson appealed the judgment and now raise two

issues: (1) the August 1, 2013 judgment was interlocutory and (2) because the

waivers contained in the guaranties were unenforceable as violative of public

policy, Olson’s statutory right to an offset prevented judgment as a matter of law

in favor of Texas Bank. Egger, Khan, and Whitener do not appeal from the trial

court’s judgment.

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 II. DISCUSSION

A. JURISDICTION

As we must, we first address whether we have jurisdiction over this

attempted appeal. Waterway Ranch and Olson assert that the trial court’s

judgment was interlocutory because it (1) contained no language purporting to

dispose of all parties and claims, (2) did not address Texas Bank’s nonsuit of

Waterway Ranch, (3) and did not address Waterway Ranch and Olson’s request

for an offset. 2

Unless otherwise statutorily authorized, an appeal may be made only from

a final judgment. See Tex. Civ. Prac. & Rem. Code Ann. §§ 51.012, 51.014;

Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). To be final, a

judgment must dispose of all parties and issues in the lawsuit. Lehmann, 39

S.W.3d at 195; Schlipf v. Exxon Corp., 644 S.W.2d 453, 454 (Tex. 1982) (op. on

reh’g). On appeal, the finality of a judgment is determined on its face by the

language of the judgment. Lehmann, 39 S.W.3d at 195. Although it is generally

presumed that all pleaded issues were disposed of by a judgment rendered after

a conventional trial on the merits, this presumption does not apply to default or

2
We pause to note that we cannot agree with Texas Bank’s argument that
Waterway Ranch and Olson, by filing a notice of appeal from the judgment,
conceded that the judgment was final. Our jurisdiction cannot be conferred by a
party’s consent, agreement, or waiver. Our jurisdiction is based on the rules and
statutes applicable to appeals and the deadlines provided therein. See, e.g.,
Tex. Civ. Prac. & Rem. Code Ann. §§ 51.012, 51.014 (West Supp. 2013); Tex. R.
App. P. 25.1, 26.1, 26.3.

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summary judgments. See id. at 199; Houston Health Clubs, Inc. v. First Court of

Appeals, 722 S.W.2d 692, 693 (Tex. 1986) (orig. proceeding); Teer v.

Duddlesten, 664 S.W.2d 702, 704 (Tex. 1984); N. E. Indep. Sch. Dist. v.

Aldridge, 400 S.W.2d 893, 897–98 (Tex. 1966). Thus, we must determine

whether Texas Bank’s nonsuit of its claims against Waterway Ranch and the trial

court’s subsequent summary judgment conferred jurisdiction on this court.

A nonsuit is effective as soon as the plaintiff files a notice of nonsuit, and

no court order is required. Epps v. Fowler, 351 S.W.3d 862, 868 (Tex. 2011).

However, a nonsuit does not operate to extinguish the affected defendant’s

pending claim for affirmative relief. Tex. R. Civ. P. 162; City of Dallas v. Albert,

354 S.W.3d 368, 375 (Tex. 2011). However, to qualify as a claim for affirmative

relief under rule 162, the claim must constitute a cause of action upon which the

defendant can recover independent of the plaintiff’s claim, even if the plaintiff

abandons or is unable to establish its claims. Univ. of Tex. Med. Branch at

Galveston v. Estate of Blackmon ex rel. Shultz, 195 S.W.3d 98, 101 (Tex. 2006).

Waterway Ranch and Olson’s alleged right of offset is an affirmative defense and

not an independent claim for relief. See Tex. R. Civ. P. 94; Bonham State Bank

v. Beadle, 907 S.W.2d 465, 470 (Tex. 1995); Martin v. PlainsCapital Bank, 402

S.W.3d 805, 811 (Tex. App.—Dallas 2013, pet. filed). Thus, Texas Bank’s

claims against Waterway Ranch were dismissed when Texas Bank filed its notice

of nonsuit.

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 The trial court’s subsequent summary judgment disposed of all of Texas

Bank’s remaining claims, which were against the guarantors, and entered

judgment as a matter of law in Texas Bank’s favor. See Tex. R. Civ. P. 166a(a),

(c). The trial court specifically referenced Texas Bank’s nonsuit of its claims

against Waterway Ranch in the judgment. Thus, the nonsuit disposed of Texas

Bank’s claims against Waterway Ranch, and the subsequent summary judgment

disposed of Texas Bank’s remaining claims against the guarantors. All issues

and parties were finally disposed of in either the nonsuit or the judgment. “A

judgment that finally disposes of all remaining parties and claims, based on the

record in the case, is final, regardless of its language.” Lehmann, 39 S.W.3d at

200. In short, the subsequent judgment after Texas Bank’s nonsuit that

determined Texas Bank’s remaining claims was final. See id. The lack of any

“Mother Hubbard” language or other language purporting to make the judgment

final did not render the judgment interlocutory. See id. Thus, the judgment was

final and appealable, and we overrule Waterway Ranch and Olson’s first issue.

B. ENFORCEABILITY OF WAIVER

In the second issue, Olson 3 asserts that the offset waiver included in the

guaranty is not enforceable as against public policy. Presumably, Olson is

3
Although Waterway Ranch joins Olson in arguing this appellate issue,
Waterway Ranch was not a guarantor subject to the challenged waiver. Further,
Texas Bank nonsuited its claims against Waterway Ranch; thus, the summary
judgment, which solely addressed the guarantors, did not apply to Texas Bank’s
claims against Waterway Ranch. Olson is the only appellant that was affected by
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attacking the propriety of the summary judgment by asserting that Texas Bank

failed to conclusively prove all essential elements of its claims against Olson

based on the unenforceable waiver provision, which would entitle Olson to an

offset.

1. Waiver

As argued by Texas Bank, Olson has waived any error in the summary

judgment on the basis of the unenforceability of the waiver contained in the

guaranty. In his summary-judgment response and at the summary-judgment

hearing, Olson exclusively argued that summary judgment was inappropriate

because his liability as a guarantor could not exceed the liability of Waterway

Ranch as the principal debtor. See Tex. R. Civ. P. 31. He failed to assert that

the waiver was unenforceable as against public policy. Because waiver applies

to constitutional arguments, Olson waived his public-policy argument by failing to

raise it to the trial court in the context of Texas Bank’s motion for summary

judgment. See Tex. R. App. P. 33.1(a); Tex. R. Civ. P. 166a(c); Marin Real

Estate Partners, L.P. v. Vogt, 373 S.W.3d 57, 92–93 (Tex. App.—San Antonio

2011, no pet.).

2. Propriety of Summary Judgment

Even if Olson had appropriately raised his claim in the trial court, we would

conclude that the waiver was enforceable and that it did not violate public policy.

the trial court’s summary judgment and, therefore, is the only appellant that can
attack the summary judgment.

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We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315

S.W.3d 860, 862 (Tex. 2010). We indulge every reasonable inference and

resolve any doubts in the nonmovant’s favor. 20801, Inc. v. Parker, 249 S.W.3d

392, 399 (Tex. 2008). A plaintiff is entitled to summary judgment on a cause of

action if it conclusively proves all essential elements of the claim. See Tex. R.

Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986).

Questions of law, as were presented to the trial court in this case, are appropriate

matters for summary judgment. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d

217, 222 (Tex. 1999).

To establish an action on a guaranty, Texas Bank had to show (1) the

existence and ownership of the guaranty contract, (2) the terms of the underlying

contract, (3) the occurrence of the conditions upon which liability is based, and

(4) the failure or refusal to perform by the guarantor. See Gold’s Gym

Franchising LLC v. Brewer, 400 S.W.3d 156, 160 (Tex. App.—Dallas 2013, no

pet.). It is important to note that Olson does not dispute that he personally

guaranteed the note or that he failed to pay the amount Texas Bank alleged

remained after Waterway Ranch’s default and the property’s foreclosure sale.

Instead, he defends against Texas Bank’s deficiency claim by asserting the right

of offset under section 51.003 of the property code. Therefore, Olson conceded

that Texas Bank met its summary-judgment burden to conclusively show there

were no genuine issues as to any material fact on its claim to enforce the

guaranty, causing the summary-judgment burden to shift to Olson to present to

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the trial court any issue that would preclude summary judgment—here, the

unenforceability of the waiver included in the guaranty. See Hackberry Creek

Country Club, Inc. v. Hackberry Creek Home Owners Ass’n, 205 S.W.3d 46, 50

(Tex. App.—Dallas 2006, pet. denied).

As Olson concedes, some appellate courts have held that an offset waiver

contained in a guaranty is enforceable and does not violate public policy. E.g.,

LaSalle Bank Nat’l Ass’n v. Sleutel, 289 F.3d 837, 839–42 (5th Cir. 2002);

Interstate 35/Chisam Rd., L.P. v. Moayedi, 377 S.W.3d 791, 796–99 (Tex.

App.—Dallas 2012, pet. granted); Segal v. Emmes Capital, L.L.C., 155 S.W.3d

267, 279 (Tex. App.—Houston [1st Dist.] 2004, pet. dism’d). As did those courts,

we conclude that the strong policy favoring freedom of contract and the

legislature’s repeated failure to prohibit waivers of section 51.003 show that the

public policy of Texas does not prohibit waiver of section 51.003 rights. E.g.,

Moayedi, 377 S.W.3d at 801.

Olson asserts, however, that because the supreme court has granted a

petition for review in Moayedi, we should “reserve” our “decision on this matter

until the Supreme Court of Texas rules.” We conclude that such a delay in the

determination of this appeal would not be appropriate. This is especially true

given that the petition for review in Moayedi presents a different issue—whether

a general waiver contained in a guaranty may be construed to include a waiver of

section 51.003 rights. The waiver included in Olson’s guaranty specifically

waived the right to offset under section 51.003; the guaranty in Moayedi provided

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that the guaranty “shall not be discharged, impaired or affected by . . . any

defense . . ., each and every such defense being hereby waived by the

undersigned Guarantor.” Id. at 794. Thus, the petition for review does not raise

the same issue and does not suggest that we should “reserve” our decision. We

overrule issue two.

III. CONCLUSION

Having overruled Waterway Ranch and Olson’s first issue and Olson’s

second issue, we affirm the trial court’s judgment. See Tex. R. App. P. 43.2(a).

/s/ Lee Gabriel
LEE GABRIEL
JUSTICE

PANEL: WALKER, MEIER, and GABRIEL, JJ.

DELIVERED: April 10, 2014

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