Opinion issued July 26, 2016

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-15-00192-CV

———————————

DANIEL MANDARINO, CARRIE MANDARINO, LAURA DOYLE, 

ROBERT CHURCH, BRETT BEALS AND LINDA BEALS AS TRUSTEES 

OF THE BEALS FAMILY REVOCABLE TRUST, ROBERT A. SCHALBE, 

WILLIAM H. GAY, JR., RICCARDIO D. GAY, ERIC JOHNSTONE, 

RAFAL ZIELINSKI, AND VALLY MESTRONI, Appellants

V.

SHERWOOD LANE INVESTMENTS, LLC, Appellee

On Appeal from the 164th District Court

Harris County, Texas

Trial Court Case No. 2014-32347

MEMORANDUM OPINION

Appellee Sherwood Lane Investments, LLC brought this action against the 

appellants to recover sums allegedly due under a wraparound promissory note. The 
2

trial court granted Sherwood Lane’s motion for summary judgment and rendered 

judgment against the appellants for the amount of the note plus interest, postjudgment interest, and attorney’s fees. 

The appellants challenge the summary judgment based on: (1) the 

admissibility of the note as summary-judgment evidence; (2) an alleged fact issue 

regarding the principal and interest due on the note; (3) Sherwood Lane’s alleged 

inability to enforce the note as its holder; (4) the statute of limitations; and 

(5) alleged fact issues regarding affirmative defenses.

Finding no reversible error, we affirm the judgment of the trial court.

Background

Sherwood Pines, Ltd. was a limited partnership that owned an interest in an 

apartment complex in Harris County, Texas. In 1999, Sherwood Pines amended its 

certificate of partnership to allow John Gilmore, formerly a general partner, to 

withdraw and convert his interest to a limited partnership interest. On February 6, 

2006, the Secretary of State canceled Sherwood Pines’s certificate of partnership 

because it failed to file a required periodic report under the Texas Revised Limited 

Partnership Act. 

On October 16, 2006, the appellants purchased Sherwood Pines’s interest in 

the apartment complex. To secure the purchase, they signed a promissory note as 

makers, with Sherwood Pines as payee. Sherwood Pines still owed a portion of the 
3

principal from its original purchase of the property (the “First Lien Principal”), 

which it incorporated into the new promissory note. The additional balance that 

appellants owed to Sherwood Pines (the “Second Lien Principal”) was described in 

the note as “Five Hundred and Sixty-Five Thousand Dollars” in words but 

$569,529.87 in numbers. The original note on the First Lien Principal was 

designated the “wrapped note” and the note signed by appellants was named the

“wraparound note.” The wraparound note stated that a deed and deed of trust 

conveying the property would be transferred in exchange for the note, and the legal 

description of the property was provided in an attached exhibit. 

The wraparound note was structured to provide for monthly payments that 

included portions of both the First and Second Lien Principal amounts, plus 

associated interest. The amounts owed under both the wrapped note and 

wraparound note, with interest, were to be paid in full by June 1, 2011. The 

wraparound note contained a provision requiring the appellants to make best 

efforts to formally assume the wrapped note within six months. If the appellants 

did not assume liability on the wrapped note, the wraparound note required that 

they pay Sherwood Pines two percent of the outstanding total loan balance. The 

wraparound note allowed for acceleration of full payment in the event of default at 

the holder’s option. 
4

The wraparound note’s signature page contained the following clause in 

capital letters:

This note represents the final agreement between the payee and the 

maker and except as otherwise expressly indicated above may not be 

contradicted by evidence of prior, contemporaneous, or subsequent 

agreements of the parties and maker agrees there are no unwritten oral 

agreements between payee and maker.

The appellants each signed the wraparound note, with all except Brett and Linda 

Beals signing in their personal capacities. The appellants did not assume liability 

on the wrapped note in the time required by the wraparound note or pay 2% of the 

total loan balance, but Sherwood Pines did not accelerate the note based on this 

default.

In 2008, Sherwood Pines endorsed the wraparound note to Lee Wallis, Inc. 

The appellants ceased making payments on the note on July 1, 2009. Lee Wallis 

issued a demand for payment on August 26, 2009, but the appellants did not 

respond. This resulted in a default on the wrapped note, and the holder of the 

wrapped note foreclosed on the apartment property on April 10, 2010 in order to 

satisfy the First Lien Principal amount. Lee Wallis subsequently endorsed the 

wraparound note to appellee Sherwood Lane Investments on May 19, 2014. 

Sherwood Lane’s managing member, Herbert B. Richardson, was formerly a 

general partner of Sherwood Pines and admitted that he had personal knowledge of 

the original sale of the apartment interest as well as the appellants’ prior default. 
5

Sherwood Lane filed suit to collect on the unpaid balance and interest from 

the wraparound note on June 5, 2014. It moved for summary judgment, attaching 

affidavits from former Sherwood Pines general partners Gilmore and Richardson,

another affidavit from a representative of Lee Wallis, as well as a copy of the note. 

Sherwood Lane also attached an affidavit by an accountant retained to calculate the 

interest due on the wraparound note. The initial affidavit signed by the accountant 

calculated the principal amount based on the numerical loan amount recited in the 

wraparound note ($569,529.87). After the appellants objected, Sherwood Lane 

submitted a second affidavit by the accountant which recalculated the interest 

based on the principal amount as stated in words ($565,000.00). Sherwood Lane 

contends that it mistakenly gave the accountant incorrect information for the first 

affidavit, and that the corrected affidavit was submitted “purely for the Court’s 

convenience and assistance in determining the final judgment amount.” 

The appellants objected to the affidavits from Gilmore, Richardson, and the 

Lee Wallis representative based on hearsay, relevance, and competence to testify. 

They also objected to the evidence of the wraparound note as being incomplete, 

because the copy attached by Sherwood Lane did not include the note’s Exhibit A, 

which was the legal description of the property securing the note. The trial court 

did not rule on these objections.
6

The appellants replied to the motion for summary judgment with its own set 

of affidavits from each appellant, as well as the broker for the transaction, each 

asserting that the terms of the loan were intended to be nonrecourse. The appellants 

also attached a copy of the deed of trust that conveyed the property. Sherwood 

Lane objected to this evidence based on the parol evidence rule, but it did not 

obtain a ruling on its objection. In their response, the appellants generally claimed 

that the wraparound note was unenforceable, and they denied that Sherwood Pines 

was a viable legal entity at the time of the note’s creation on the ground that its 

certificate of partnership had been canceled. The appellants also asserted the 

affirmative defenses of estoppel, laches, waiver, and fraudulent inducement. 

The trial court granted a final summary judgment for Sherwood Lane in the 

amount of $1,044,481.18, with post-judgment interest, and it awarded $16,537.50 

in attorney’s fees. The appellants filed a motion for new trial which was overruled 

by operation of law, then they appealed.

Analysis

This court reviews a trial court’s grant of summary judgment de novo. Buck 

v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012). We must reverse if there is more than 

a scintilla of probative evidence that raises a genuine issue of material fact. Id.; see 

also TEX. R. CIV. P. 166a(c). Less than a scintilla of evidence exists if the evidence 

creates no more than a mere surmise or suspicion of a fact regarding a challenged 
7

element. Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 

2003). We review the record “in the light most favorable to the nonmovant, 

indulging every reasonable inference and resolving any doubts against the motion.” 

City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). Once a plaintiff 

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

to the defendant as nonmovant to present evidence that raises a genuine issue of 

material fact, thereby precluding summary judgment. Parker v. Dodge, 98 S.W.3d 

297, 299 (Tex. App.—Houston [1st Dist.] 2003, no pet.).

I. Admissibility of promissory note

The appellants first contend that the copy of the wraparound note submitted 

by Sherwood Lane was inadmissible, and that this should have prevented summary 

judgment. The appellants contend that the affidavits submitted by Sherwood Lane 

were insufficient to authenticate the note. They also claim that the copy of the note 

was incomplete because it did not contain a copy of Exhibit A. Sherwood Lane 

responds that it presented conclusive evidence of the wraparound note’s existence 

and terms, and that the appellants did not produce any evidence that would 

controvert these claims.

To collect on a promissory note, the plaintiff must establish that (1) there is a 

note, (2) the plaintiff is the legal owner and holder of the note, (3) the defendant is 

the maker of the note, and (4) a certain balance on the note is due. Suttles v. 
8

Thomas Bearden Co., 152 S.W.3d 607, 611 (Tex. App.—Houston [1st Dist.] 2004, 

no pet.). 

A photocopy of the note and an attached affidavit that swears it is a true and 

correct copy is sufficient summary-judgment proof for the note’s existence, absent 

controverting evidence. Life Ins. Co. of Virginia v. Gar–Dal, Inc., 570 S.W.2d 378, 

380 (Tex. 1978); Affordable Motor Co., Inc. v. LNA, LLC, 351 S.W.3d 515, 520

(Tex. App.—Dallas 2011, pet. denied). The payee can establish ownership by 

attesting in an affidavit that he is the owner of the note, when the note or other 

appropriate evidence shows that it was issued or assigned to him. See Zarges v. 

Bevan, 652 S.W.2d 368, 369 (Tex. 1983) (per curiam); Blankenship v. Robins, 899 

S.W.2d 236, 238 (Tex. App.—Houston [14th Dist.] 1994, no writ). If the maker 

does not deny the genuineness of his signature, he is established as the maker. 

Blankenship, 899 S.W.2d at 238. Statements by affidavit can establish that a 

balance is due and owing. See id. at 238–39.

To be considered by the trial court or reviewing court, summary-judgment 

evidence must be presented in a form that would be admissible at trial. Hidalgo v. 

Surety Sav. & Loan Ass’n, 462 S.W.2d 540, 545 (Tex. 1971); Vice v. Kasprzak, 

318 S.W.3d 1, 11 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). To preserve 

a complaint about the form of summary-judgment evidence on appeal, a party must 

have objected in writing and secured a ruling on the objection. Grand Prairie 
9

Indep. Sch. Dist. v. Vaughan, 792 S.W.2d 944, 945 (Tex. 1990); Hung Tan Phan v. 

An Dinh Le, 426 S.W.3d 786, 792 (Tex. App.—Houston [1st Dist.] 2012, no pet.); 

Vice, 318 S.W.3d at 11. A trial court’s order granting summary judgment does not 

impliedly rule on an objection to summary-judgment evidence. See Delfino v. 

Perry Homes, 223 S.W.3d 32, 35 (Tex. App.—Houston [1st Dist.] 2006, no pet.).

“Unauthenticated or unsworn documents, or documents not supported by 

any affidavit, are not entitled to consideration as summary judgment evidence.”

Mackey v. Great Lakes Investments, Inc., 255 S.W.3d 243, 252 (Tex. App.—San 

Antonio 2008, pet. denied); see also TEX. R. CIV. P. 166a(f). A complete absence 

of authentication is a defect of substance which may be raised for the first time on 

appeal. Blanche v. First Nationwide Mortg. Corp., 74 S.W.3d 444, 451 (Tex. 

App.—Dallas 2002, no pet.).

Because the appellants failed to obtain a ruling from the trial court, the 

objections to the adequacy of the affidavits to authenticate the promissory note 

were waived. See Vice, 318 S.W.3d at 11; Delfino, 223 S.W.3d at 35. The 

appellants nevertheless claim that the note was not proper summary-judgment 

evidence because it did not contain the referenced exhibit describing the property. 

The appellants argue that this defect rendered the note incomplete and incapable of 

authentication. We disagree.
10

Sherwood Lane submitted a photocopy of the note attached to the affidavit 

of its holder, the managing partner of the company, who swore that it was a true 

and correct copy. Absent controverting summary-judgment proof, this was 

competent summary-judgment evidence to prove the note’s existence and the 

appellants’ status as makers. See Zarges, 652 S.W.2d at 369. The appellants did 

not submit any evidence to controvert the affidavit’s claim that this was a true and 

correct copy of the wraparound note. 

We conclude that the copy of the promissory note was proper summaryjudgment evidence that established the note’s existence, Sherwood Pines as the 

payee of the note, and the appellants as its maker. See id.; McLernon v. Dynegy, 

347 S.W.3d 315, 326 (Tex. App.—Houston [14th Dist.] 2011, no pet.). We 

overrule appellant’s first issue.

II. Principal and interest calculations

The appellants argue that the two affidavits from Sherwood Lane’s 

accountant, which differed with respect to the principal amount of the wraparound 

note, created an issue of material fact regarding the amount of the principal and 

interest due on the note. Sherwood Lane replies that there was no actual question 

of fact over the principal and interest due because the words of the contract 

controlled the amount of the principal by statute. It asserts that the first affidavit 
11

was incompetent for lacking a proper legal basis, and the second was the only 

affidavit that was properly submitted.

“If an instrument contains contradictory terms, typewritten terms prevail 

over printed terms, handwritten terms prevail over both, and words prevail over 

numbers.” TEX. BUS. & COM. CODE § 3.114. In Guthrie v. National Homes Corp., 

394 S.W.2d 494 (Tex. 1965), the Supreme Court of Texas considered a case in 

which an instrument stated that the obligor would pay “$5,780,” which was written 

out as “Five Thousand Eighty and 00/100 *** Dollars.” Guthrie, 394 S.W.2d at 

495. The Court held that the words “Five Thousand Eighty and 00/100 ***

Dollars” were unambiguous and controlled over the numerals. Id. at 495–96. 

The rule that words control over numerals applies to remove any ambiguity 

that may result from a difference between the written and numerical terms. See id.; 

see also Charles R. Tips Family Trust v. P.B. Commercial LLC, 459 S.W.3d 147, 

154 (Tex. App.—Houston [1st Dist.] 2015, no pet.). We therefore conclude that, 

based on Guthrie and the Texas Business and Commercial Code, the words used in 

the note to express the amount of the principal unambiguously controlled over the 

inconsistent numerals, and the amount of the initial principal was $565,000.00. See 

Guthrie, 394 S.W.2d at 495–96; TEX. BUS. & COM. CODE § 3.114. 

The appellants also argue that the two affidavits submitted by Sherwood 

Lane’s accountant create a fact issue that should preclude summary judgment. 
12

When a statement in an affidavit contradicts the affiant’s prior testimony, this can 

create an issue of material fact. See Randall v. Dallas Power & Light Co., 752

S.W.2d 4, 5 (Tex. 1988). If the affidavit does not explain the change in testimony, 

it may be struck as a “sham” affidavit that does not raise an actual fact issue. See 

Tejada v. Gernale, 363 S.W.3d 699, 707 (Tex. App.—Houston [1st Dist.] 2011, no 

pet.); Farroux v. Denny’s Rests., Inc., 962 S.W.2d 108, 111 (Tex. App.—Houston 

[1st Dist.] 1997, no pet.). When a proper explanation for the change is proffered, 

the trial court need not strike the affidavit, and may consider it as summaryjudgment evidence. Tejada, 363 S.W.3d at 707.

The second affidavit in this case did not explain the change in testimony, but 

counsel noted in its reply that the corrected affidavit was solely for the court’s 

convenience and that all essential terms for the calculation of the interest and 

principal were already in the note. The trial court did not strike the second affidavit 

as a “sham affidavit.” However, even if the trial court refused to consider either of 

the accountant’s affidavits as proper summary-judgment evidence, it would have 

been able to reach the same mathematical conclusions in rendering its judgment 

from the principal amount, maturity date, and interest rate stated unambiguously in 

the note. Thus, regardless of whether the trial court considered the affidavits, they 

would not have created an issue of material fact, and they could not have
13

contributed to reversible error on appeal. See TEX. R. APP. P. 44.1(a)(1) (error is 

only reversible if it “probably caused the rendition of an improper judgment”).

We overrule the appellants’ second issue.

III. Sherwood Lane’s status as holder of note

In their third issue, the appellants contend that Sherwood Lane could not be 

the legal holder of the note. The appellants’ key assertion is that Sherwood Pines 

was not a legal entity with the right to do business at the time of the note’s 

creation, because its certificate of partnership had been canceled and Gilmore had 

withdrawn as a general partner, which could trigger dissolution by statute. On this 

theory, because Sherwood Pines had no right to do business, the note was facially 

invalid and never could be endorsed. In the alternative, the appellants argue that 

Sherwood Lane cannot be a holder in due course, because it had notice of the 

appellants’ default before receiving the note. 

Sherwood Lane responds that the mere fact that Sherwood Pines’s certificate 

was canceled did not dissolve the partnership. It argues that Sherwood Pines was 

still capable of executing a valid contract, and Sherwood Lane is the lawful holder 

of the note based on conclusive evidence of endorsement.

A. Existence of Sherwood Pines at time of note’s making

At the outset, we note that the appellants did not present to the trial court 

their theory that Gilmore’s withdrawal triggered a dissolution of Sherwood Pines. 
14

Issues that the nonmovant contends “avoid the movant’s entitlement to summary 

judgment must be expressly presented by written answer to the motion or by other 

written response to the motion and are not expressly presented by mere reference 

to summary judgment evidence.” McConnell v. Southside Indep. Sch. Dist., 858 

S.W.2d 337, 341 (Tex. 1993). If the summary-judgment response does not state the 

specific grounds for avoiding summary judgment, those grounds are not preserved 

for appeal. See id.; TEX. R. CIV. P. 166a(c). Rather than specifically presenting this 

ground for Sherwood Pines’s invalidity to the trial court, the appellants’ summaryjudgment response only discussed the cancellation of the certificate of partnership. 

Accordingly, the theory that Gilmore’s withdrawal as general partner caused the 

dissolution of Sherwood Pines has not been preserved for appellate review. See 

McConnell, 858 S.W.2d at 341.

All parties agree that because Sherwood Pines was formed prior to the 

adoption of the Texas Business Organizations Code, it was governed by the Texas 

Revised Limited Partnership Act (RLPA). See TEX. REV. CIV. STAT. art. 6132a-1, 

Act of May 31, 1993, 73rd Leg., R.S., ch. 917m § 8, 1993 Tex. Gen Laws 3887, 

3915–16 (expired Jan. 1, 2010). 

When statutory language is unambiguous, we interpret it according to its 

plain meaning. See, e.g., State ex rel. State Dep’t of Highways & Pub. Transp. v. 

Gonzales, 82 S.W.3d 322, 327 (Tex. 2002). The RLPA required a limited 
15

partnership to file a periodic report to the secretary of state in order to maintain the 

right to transact business. See RLPA § 13.05. Failing to file the report when due 

led to a forfeiture of the right to transact business, but that forfeiture did not 

“impair the validity of a contract or act of the limited partnership.” Id. § 13.06(c). 

The right to transact business could be restored if the partnership filed the required 

report and paid the required fee. Id. § 13.07. Upon cancellation of the limited 

partnership’s certificate, the status of the limited partnership was changed to 

inactive in the records of the secretary of state, and active status similarly could be 

revived by filing the report and associated fees. See id. §§ 13.08–09.

The appellants argue that the RLPA’s language regarding the “right to 

transact business” precluded Sherwood Pines from entering into a new contract to 

assign its rights as holder of the wraparound note. However, this is contrary to the 

plain language of the statute, which stated that the forfeiture of the right to transact 

business “does not impair the validity of a contract or act of the limited 

partnership.” Id. § 13.06(c). Under the terms of the statute, the forfeiture of the 

right to transact business only prevented the partnership from maintaining an 

action, suit, or proceeding in the courts, and it did not prevent the partnership from 

forming new, valid contracts. Id.

Section 13.06 does not aid the appellants’ argument regarding the nonexistence of the partnership either. Dissolution of a limited partnership was 
16

governed by Section 8.01 of the RLPA, which provided for dissolution only on the 

occurrence of events specified in the partnership agreement, written consent of all 

partners, judicial decree, or the withdrawal of a general partner (unless the 

partnership agreement permitted otherwise or the remaining general partners 

agreed in writing to continue). RLPA § 8.01; cf. Collin County v. Hixon Family 

Partnership, Ltd., 365 S.W.3d 860, 868 & n.4 (Tex. App.—Dallas 2012, pet. 

denied) (holding that partnership was still in existence and capable of defending 

suit under statute). Under the statute, neither forfeiture of the right to do business 

nor cancellation of the partnership certificate results in dissolution of the 

partnership. RLPA §§ 13.06–.09. As stated above, the appellants waived their 

argument regarding withdrawal of a general partner by failing to raise it in the trial

court. See TEX. R. CIV. P. 166a(c); McConnell, 858 S.W.2d at 341. Accordingly, 

we conclude that Sherwood Pines was a legal entity at the time of the wraparound 

note’s creation, and the contract was not invalidated due to the invalidation of its 

certificate of partnership. 

B. Sherwood Lane’s ownership of note

As noted above, the appellants failed to preserve their evidentiary objections 

to the form of the affidavits accompanying Sherwood Lane’s motion for summary 

judgment. See Vice, 318 S.W.3d at 11. The affidavits executed by Gilmore and the 

representative from Lee Wallis and the attachments to these affidavits established 
17

the endorsement of the note from Sherwood Pines to Lee Wallis, and finally to 

Sherwood Lane. The appellants argue that the wraparound note was incomplete 

when endorsed, but they did not submit any summary-judgment evidence to 

support this claim or controvert Sherwood Lane’s evidence of endorsement. 

Accordingly, we conclude that the affidavits establish that Sherwood Lane was the 

lawful owner and holder of the note. See McLernon, 347 S.W.3d at 324; cf. 

Blankenship, 899 S.W.2d at 238.

The appellants contend that Sherwood Lane could not have the status of 

holder in due course. A holder in due course is a holder who takes the instrument 

(1) for value, (2) in good faith, (3) without notice that the instrument is overdue or 

has been dishonored, (4) without notice that the instrument contains an 

unauthorized signature or has been altered, (5) without notice of any claim to the 

instrument, and (6) without notice that any party has an affirmative defense or 

claim in recoupment. See TEX. BUS. & COM. CODE § 3.302. A holder in due course 

can enforce a note subject only to the defenses of infancy, duress, fraud that 

induced the obligor to sign the instrument with neither knowledge nor reasonable 

opportunity to learn its character or essential terms, or discharge in insolvency. See 

id. § 3.305. In other words, a holder in due course can enforce a note without being 

subject to contract defenses such as fraudulent inducement. See Strickland v. 

Coleman, 824 S.W.2d 188, 192 (Tex. App.—Houston [1st Dist.] 1991, no writ).
18

Sherwood Lane does not deny that it had notice of the appellants’ prior 

default, and thus it was not a holder in due course, but merely a holder of the note. 

As holder, Sherwood Lane was still able to enforce the note, albeit subject to the 

defenses that would be available for a simple contract. See id.

Because the evidence established that Sherwood Lane was the legal owner 

and holder of the note, we overrule the appellants’ third issue.

IV. Statute of limitations

In their fourth issue, the appellants argue that Sherwood Lane was barred 

from suit by Texas Property Code section 51.003, the statute of limitations for a 

deficiency judgment. The appellants assert that the foreclosure of the underlying 

property created a deficiency in the overall indebtedness secured by the real 

property, and that this renders Sherwood Lane’s suit a deficiency claim which 

needed to be brought within two years of foreclosure, making the deadline for 

filing April 10, 2012. Sherwood Lane responds that this case should be governed 

by Texas Business and Commerce Code section 3.118 as a standard suit on a 

promissory note, making the relevant statute of limitations six years from the date 

the note was overdue. Sherwood Lane asserts the note became overdue on June 1, 

2011, making the deadline for filing June 1, 2017.

The relevant portion of Section 51.003 provides:

If the price at which real property is sold at a foreclosure sale under 

Section 51.002 is less than the unpaid balance of the indebtedness 
19

secured by the real property, resulting in a deficiency, any action 

brought to recover the deficiency must be brought within two years of 

the foreclosure sale and is governed by this section.

TEX. PROP. CODE § 51.003(a). The Supreme Court of Texas has interpreted this 

statute as follows:

Read as a whole and in context with the remainder of § 51.003, 

§ 51.003(a) provides that whenever a borrower is sued after real 

property is sold at a foreclosure sale as permitted by and described in 

§ 51.002, and judgment is sought against the borrower because the 

foreclosure sales price is less than the amount owed, then (1) the suit 

is for a “deficiency judgment,” (2) the suit must be brought within two 

years of the foreclosure sale, and (3) the suit is governed by § 51.003.

PlainsCapital Bank v. Martin, 459 S.W.3d 550, 555 (Tex. 2015).

In Mays v. Bank One, N.A., 150 S.W.3d 897 (Tex. App.—Dallas 2004, no 

pet.), the appellant executed two different promissory notes to different lenders. 

Mays, 150 S.W.3d at 898. When the appellant defaulted, the senior lienholder 

foreclosed, but it was only able to satisfy the first debt. Id. No proceeds were left 

for the junior lienholder, so that holder sued for the value of its promissory note. 

Id. The appellant aimed to use the property’s fair market value to offset the 

claimed deficiency under Texas Property Code section 51.005, which only applies 

after a foreclosure sale results in a deficiency. See id. at 899; TEX. PROP. CODE § 

51.005. However, the court found the statute inapplicable, noting that “the only 

foreclosure was of the lien held by” the senior lienholder. Mays, 150 S.W.3d at 
20

900. Because the second lien remained wholly unsatisfied and the second lien was 

extinguished by the foreclosure, the court held that the statute did not apply. Id.

The factual situation in this case is similar to the one in Mays. Here, the 

senior lienholder, who had possession of the wrapped note, foreclosed on the lien 

after appellants defaulted on their obligations to both notes, leading to Lee Wallis’s 

default on the wrapped note. However, the proceeds of that sale did not satisfy any 

of the debt from the junior lien, the wraparound note at issue in this suit. Just as 

there was no foreclosure by the junior lienholder in Mays, so was there no 

foreclosure by Sherwood Lane in the instant case. See id. 

We conclude that the statute of limitations for deficiency judgments is 

similarly inapplicable. While Mays dealt with a different subsection of the Property 

Code, we aim to harmonize the provisions in any statute and assign an undefined 

statutory term a meaning that is consistent throughout. See Tex. Dep’t of Transp. v. 

Needham, 82 S.W.3d 314, 318 (Tex. 2002). Mays’s interpretation of the statute is 

thus relevant to our interpretation of section 51.003. Based on this analysis and the 

plain language of the statute, we conclude that Sherwood Lane was not seeking a 

deficiency judgment when it sued on the promissory note, and it was not subject to 

the statute of limitations for deficiency judgments. See TEX. PROP. CODE § 51.003; 

PlainsCapital Bank, 459 S.W.3d at 555; Mays, 150 S.W.3d at 900.
21

The appellants attempt to distinguish Mays on the basis that it dealt with a 

different subsection of the Property Code. Mays, 150 S.W.3d at 900. However, 

Mays is factually similar and contains a relevant interpretation of what is and is not 

considered a deficiency after foreclosure under section 51.002 of the Property 

Code, which is also the basis of deficiency judgments under section 51.003. See id.

at 899–900; see also TEX. PROP. CODE §§ 51.002–.003. 

Sherwood Lane asserts that section 3.118 of the Texas Business and 

Commerce Code was the appropriate statute of limitations. We agree. 

Section 3.118 states that an action to enforce a promissory note “must be 

commenced within six years after the due date . . . stated in the note, or if a due 

date is accelerated, within six years after the accelerated due date.” TEX. BUS. &

COM. CODE § 3.118(a). The due date stated in the wraparound note was June 1, 

2011. This means that the statute of limitations for this case was June 1, 2017, 

because there is no evidence that the note was accelerated. Sherwood Lane filed 

suit on June 5, 2014, which was within the statute of limitations. See id.

We overrule appellants’ fourth issue.

V. Affirmative defenses

The appellants raised the affirmative defenses of fraud, fraudulent 

inducement, and fraud in a real estate transaction. In their fifth issue, they claim 

that this created a question of material fact that should have barred summary 
22

judgment. When a defendant wishes to assert an affirmative defense to defeat 

summary judgment on the plaintiff’s claim, he must present sufficient evidence to 

create a fact issue on each element. See Brownlee v. Brownlee, 665 S.W.2d 111, 

112 (Tex. 1984); Anglo–Dutch Petroleum Int’l, Inc. v. Haskell, 193 S.W.3d 87, 95 

(Tex. App.—Houston [1st Dist.] 2006, pet. denied).

The appellants argue that Sherwood Pines made misrepresentations that the 

promissory note holder would not have recourse to them personally, and that this 

constituted fraudulent inducement because they would not have signed the note if 

they knew they would be personally liable. Sherwood Lane responds that the terms 

of the note contradicted any oral representations. The note also included a merger 

clause expressly disavowing such representations, which prevented the appellants 

from justifiably relying on alleged extra-contractual representations.

To prevail on a defense of fraudulent inducement, a party must establish the 

elements of fraud “as they relate to an agreement between the parties.” Haase v. 

Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001). Fraud requires “a material 

misrepresentation, which was false, and which was either known to be false when 

made or was asserted without knowledge of its truth, which was intended to be 

acted upon, which was relied upon, and which caused injury.” Formosa Plastics 

Corp. USA v. Presidio Eng’rs and Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 
23

1998) (quoting Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 

1994)).

The “recipient of a fraudulent misrepresentation is not justified in relying 

upon its truth if he knows that it is false or its falsity is obvious to him.” Nat’l 

Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 425 (Tex. 2015) (quoting 

Restatement (Second) of Torts § 541 (1977)). A failure to exercise reasonable 

diligence to review a written agreement that directly contradicts an oral 

representation can render reliance on the oral representations unjustifiable. See id.

at 424; Miller Global Props., LLC v. Marriott Int’l Inc., 418 S.W.3d 342, 350 

(Tex. App.—Dallas 2013, pet. denied).

The Supreme Court of Texas has held that this is particularly true when the 

only alleged fraudulent inducement is “a representation to a maker, or surety, by 

the payee that he will not be liable.” Town N. Nat. Bank v. Broaddus, 569 S.W.2d 

489, 491 (Tex. 1978). When the alleged fraudulent inducement is a representation 

that the maker would not be liable on the note, there must be “a showing of some 

type of trickery, artifice, or device employed by the payee in addition to the 

showing that the payee represented to the maker he would not be liable on such 

note.” Id. at 494. 

Without such evidence of trickery, the parol evidence rule operates to 

exclude evidence of prior representations that a maker would not be liable on a 
24

promissory note, even for tort claims such as fraudulent inducement. See id. at 491. 

The parol evidence rule is a rule of substantive law that bars a court from 

considering evidence that violates it, even if that evidence is admitted without 

objection. Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 32 (1958);

Jarvis v. K & E Re One, LLC, 390 S.W.3d 631, 638 (Tex. App.—Dallas 2011, no 

pet.).

In this case, the appellants’ evidence of fraudulent inducement was 

presented through affidavits from the makers, an affidavit from the broker who 

represented them, and a copy of the sales contract that was executed at the same 

time as the note. The appellants claim that this extrinsic evidence raises an issue of 

material fact as to whether they would be personally liable on the note. However, 

as established in Broaddus, that extrinsic evidence is barred by the parol evidence 

rule. See 569 S.W.2d at 491. The appellants have not brought forward any 

evidence of “trickery, artifice, or device” in addition to the alleged oral 

misrepresentation that would allow the trial court to consider that extrinsic 

evidence. Id.

Sherwood Lane did not preserve its objection to the affidavits and sales 

contract by obtaining a ruling from the trial court. See Grand Prairie Indep. Sch. 

Dist. v. Vaughan, 792 S.W.2d 944, 945 (Tex. 1990); Hung Tan Phan v. An Dinh 

Le, 426 S.W.3d 786, 792 (Tex. App.—Houston [1st Dist.] 2012, no pet.). 
25

However, because the parol evidence rule is a substantive rule rather than one of 

form, we nevertheless may consider it on appeal. See Hubacek, 317 S.W.2d at 32. 

Accordingly, we conclude that the appellants’ evidence of an alleged 

misrepresentation that they would not be liable on the note was parol evidence that 

was inadmissible as a matter of law. See Broaddus, 569 S.W.2d at 491. Without

this evidence, the appellants have not raised an issue of material fact regarding 

their alleged affirmative defenses of fraud, fraudulent inducement, and fraud in a 

real estate transaction. See Brownlee, 665 S.W.2d at 112.

We overrule the appellants’ fifth issue.

Conclusion

We conclude that there was sufficient summary-judgment evidence to 

establish Sherwood Lane’s right to summary judgment as a matter of law. We 

affirm the judgment of the trial court.

Michael Massengale

Justice

Panel consists of Justices Jennings, Massengale, and Huddle.