Affirmed and Memorandum Opinion filed February 10, 2015.

In The

Fourteenth Court of Appeals

NO. 14-13-01052-CV

BARRY S. NUSSBAUM, I-10 BNC OFFICE BUILDING, L.P. D/B/A I-10 

OFFICE BUILDING, I-10 BNC, L.P., BNC SOUTH LOOP ASSOCIATES,

L.P., BNC HOUSTON SOUTH LOOP, L.P. AND BNC INVESTMENTS, 

L.L.C., Appellants

V.

CITY NATIONAL BANK, Appellee

On Appeal from the 129th District Court

Harris County, Texas

Trial Court Cause No. 2012-57161

M E M O R A N D U M O P I N I O N

In three issues, appellants challenge the trial court’s summary judgment 

against them for deficiencies under two notes secured by commercial real estate 

that had been foreclosed on by the holder of the notes. Appellants argue they were 

entitled to valuations of the subject properties at the time of the foreclosures and 
2

offsets of the values of the properties against the deficiencies. Concluding that 

appellants contractually waived these rights, we affirm.

Background

Appellant BNC South Loop Associates, L.P. is the maker of a deed of trust 

on commercial property on the South Loop in Houston, Texas (South Loop Deed 

of Trust) to secure payment of a $7,725,000 note (South Loop Note). The South 

Loop Note was signed on behalf of BNC South Loop Associates, L.P. by

appellants BNC Houston South Loop, L.P., General Partner and BNC Investments, 

LLC, General Partner (collectively “BNC South Loop”). Nussbaum personally 

guaranteed payment of the South Loop Note up to $3,862,500. The South Loop 

Deed of Trust and South Loop Note were assigned to appellee City National Bank.

Appellant I-10 BNC Office Building, L.P. is the maker of a deed of trust on 

commercial property on Interstate 10 in Houston, Texas (I-10 Deed of Trust), to 

secure payment of a $3,150,000 note (I-10 Note). The I-10 Note was signed on 

behalf of I-10 BNC Office Building, L.P. by appellants I-10 BNC, L.P., General 

Partner, and BNC Investments, LLC, General Partner (collectively I-10 BNC). 

Nussbaum guaranteed payment of the I-10 Note. The I-10 Deed of Trust and I-10

Note were assigned to City National Bank.

1

The BNC Parties defaulted on their notes and deeds of trust. City National 

Bank foreclosed on the subject properties and filed this lawsuit asserting a breach 

of contract claim to collect the deficiency balances on both debts and related 

damages. City National Bank filed a motion for partial summary judgment 

asserting, in relevant part (1) BNC South Loop is liable for the deficiency as maker 

of the South Loop Note, BNC Houston and BNC Investments are liable as general 

 

1

For clarity, we refer to all appellant entities collectively as the “BNC Parties.”
3

partners of BNC South Loop, and Nussbaum is liable as guarantor; (2) I-10 BNC 

Office Building is liable for the deficiency as maker of the I-10 Note, I-10 BNC 

and BNC Investments are liable as general partners, and Nussbaum is liable as 

guarantor; and (3) appellants waived their right to offset the deficiencies against

the fair market value of the properties under section 51.003 of the Property Code.

2

Appellants filed a motion for determination of fair market value of the properties

under section 51.003, which the trial court apparently denied.

3 City National Bank

subsequently filed a second motion for partial summary judgment asserting the 

same bases as the first motion but also adding a no-evidence ground, arguing there 

is no evidence appellants were entitled to an affirmative defense under section 

51.003. The trial court granted the second motion for partial summary judgment

and rendered an order severing City National Bank’s remaining claims, making the 

summary judgment order final and appealable. See G & H Towing Co. v. Magee, 

347 S.W.3d 293, 295 (Tex. 2011).

Discussion

In three issues, appellants challenge the trial court’s granting summary 

judgment, contending (1) they did not waive their rights to valuations and offsets

under section 51.003 of the Property Code; (2) the amount of the deficiencies has 

not been ascertained because the trial court has not determined the fair market 

value of the properties; and (3) an adequate amount of time for discovery had not 

 

2

Section 51.003, discussed in more detail below, allows a defendant in a deficiency 

action to file a motion requesting the trial court to determine the fair market value of the real 

property on the date of the foreclosure sale. Tex. Prop. Code § 51.003(b). If the court determines 

that the fair market value is greater than the sale price of the real property at the foreclosure sale, 

the defendant generally is entitled to an offset against the deficiency in the amount by which the 

fair market value, less certain expenses, exceeds the sale price. Id. § 51.003(c).

3 An order denying the motion is not in the record, but, for reasons discussed below, the 

trial court effectively denied it when it granted summary judgment in favor of City National 

Bank.
4

passed before the trial court granted summary judgment based on no evidence. We 

conclude that appellants contractually waived their rights to valuations of the 

properties and offsets under section 51.003 of the Property Code. Accordingly, the 

trial court was not required to determine the fair market value of the properties. 

We review the trial court’s granting of summary judgment de novo. Valence 

Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Pipkin v. Kroger Tex., 

L.P., 383 S.W.3d 655, 661 (Tex. App.—Houston [14th Dist.] 2012, pet. denied). 

When, as here, a trial court grants a summary judgment involving both noevidence and traditional grounds, we usually address first the no-evidence grounds. 

See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004); PAS, Inc. v. 

Engel, 350 S.W.3d 602, 607 (Tex. App.—Houston [14th Dist.] 2011, no pet.). 

However, if we conclude that we must affirm the trial court’s summary judgment

ruling on traditional grounds, we need not review the no-evidence grounds. See 

Wilkinson v. USAA Fed. Sav. Bank Trust Servs., No. 14-13-00111-CV, 2014 WL 

3002400, at *5 (Tex. App.—Houston [14th Dist.] Jul. 1, 2014, pet. denied) (mem. 

op.); see Tex. R. App. P. 47.1.

A party moving for traditional summary judgment bears the burden of 

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

matter of law. Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. 

v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). When reviewing a traditional 

summary judgment, we take as true all evidence favorable to the nonmovant, 

indulging every reasonable inference and resolving any doubt in the nonmovant’s 

favor. Valence Operating Co., 164 S.W.3d at 661.

I. Waiver of Section 51.003 Defenses by BNC Parties

In their first issue, appellants assert that the trial court erred in concluding 

that the BNC Parties waived the application of section 51.003. Appellants argue 
5

that they asserted their right to offsets against the deficiencies based on the fair 

market values of the properties and that they were entitled to a determination from 

the trial court of such values. See Tex. Prop. Code §§ 51.003-.004; Grace Interest, 

LLC v. Wallis State Bank, 431 S.W.3d 110, 114 n.1 (Tex. App.—Houston [14th 

Dist.] 2013, pet. denied). Because we conclude that the BNC Parties contractually 

waived their rights to valuations and offsets under section 51.003, we further 

conclude that the trial court did not err in refusing to determine the fair market 

values of the properties. See Wasserberg v. RES-TX One, LLC, No. 14-13-00674-

CV, 2014 WL 6922545, at *7 (Tex. App.—Houston [14th Dist.] Dec. 9, 2014, no. 

pet. h.) (mem. op.).

A deficiency judgment is based on the amount of the note, interest, and 

attorney’s fees, less the amount received at the foreclosure sale and other 

legitimate credits. Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1, 4

(Tex. 2014). Section 51.003 protects borrowers and guarantors when lenders are 

the sole bidders at a foreclosure sale and thus can control the foreclosure sale price. 

Id. at 4-5. Under the statute, a deficiency judgment is still the amount by which the 

debt and foreclosure costs exceed the foreclosure sale price. Id. at 5. However, 

under section 51.003, if the factfinder determines that the fair market value is 

greater than the foreclosure sale price, the party obligated on the debt may ask the 

trial court to offset the deficiency owed by that difference. Id.

Accordingly, if section 51.003 applies, the trial court was required to hear 

evidence regarding and determine the fair market values of the properties at the 

time of the foreclosure sales. See id. If the fair market values exceeded the sale 

prices, the court was required to offset the deficiencies by that difference. See id. In 

this connection, the Texas Supreme Court has characterized section 51.003 as a 

defense in the form of an offset. Id. at 6. However, the court recently confirmed
6

that parties may contractually waive a section 51.003 defense and broad language 

waiving “any,” “each,” and “every” defense accomplishes that purpose. Id. at 7–8; 

Wasserberg, 2014 WL 6922545, at *7.

A waiver must be clear and specific. Moayedi, 438 S.W.3d at 6. Waiver is 

the “intentional relinquishment of a known right or intentional conduct inconsistent 

with claiming that right.” Id. Whether there has been a waiver depends on the 

circumstances of the case, but “[t]here can be no waiver unless so intended by one 

party and so understood by the other.” Id. at 6-7. We examine and consider the 

entire contract to determine the parties’ intentions as expressed in the instrument. 

See id. at 7.

The notes at issue here contain the following language:

No Offsets. No indebtedness evidenced by this Note shall be offset by 

all or part of any claim, cause of action, or cross-action of any kind, 

whether liquidated or unliquidated, which Maker now has or may 

hereafter acquire or allege to have acquired against the Holder. To the 

fullest extent permitted by law, Maker waives the benefits of any 

applicable law, regulation, or procedure which provides, in substance, 

that where cross demands for money exist between the parties at any 

point in time when neither demand is barred by the applicable statute 

of limitations, and an action is thereafter commenced by one such 

party, the other party may assert the defense of payment in that the 

two demands are compensated so far as they equal each other, 

notwithstanding that an independent action asserting the claim would 

at the time of filing the response be barred by the applicable statute of 

limitations.

Thus, the BNC Parties agreed that their indebtedness would not be “offset” by 

“any claim, cause of action, or cross-action.” 

Appellants argue, however, that waiving claims, causes of action, and

cross-actions for offset is not the same as waiving defenses under section 51.003. 

See Vill. Place, Ltd. v. VP Shopping, LLC, 404 S.W.3d 115, 131-32 (Tex. App.—
7

Houston [1st Dist.] 2013, no pet.) (holding waiver language in guaranty waived 

offset rights of guarantor against borrower but not against lender). Assuming 

without deciding that appellants are correct in that regard, in the deeds of trust, the 

BNC Parties waived their rights to valuations of the properties, as follows:

Waiver. To the full extent Trustor may do so, Trustor agrees that 

Trustor will not at any time insist upon, plead, claim, or take the 

benefit or advantage of any law now or hereafter in force . . . 

providing for any appraisement, valuation, stay, extension or 

redemption, and Trustor . . . to the extent permitted by law, hereby 

waives and releases all rights of redemption, valuation, appraisement, 

stay of execution, notice of intention to mature or declare due the 

whole of the Obligations and all rights to a marshaling of the assets of 

the Trustor, including, without limitation, the Property . . . .

Accordingly, the BNC Parties agreed not to seek valuations of the properties under 

“any law” and waived their rights to do so.

As set forth above, section 51.003 establishes the right of a defendant in a 

deficiency action to seek a valuation of the foreclosed property and an offset, and 

that right can be waived by contract. Because the BNC Parties waived their rights

to valuations of the properties under “any law,” we conclude that they 

contractually waived their rights to valuations and offsets under section 51.003. 

See Moayedi, 438 S.W.3d at 8 (concluding that waiver of “any,” “each,” and 

“every” defense in guaranty, though broad, included rights to valuation and offset 

under section 51.003). Thus, the trial court did not err in entering a deficiency 

judgment against the BNC Parties.

We overrule appellants’ first issue.

II. No Error in Rendering Deficiency Judgment against Nussbaum

In their second issue, appellants argue the trial court erred in entering 

summary judgment against Nussbaum, as guarantor of the notes, because the trial 
8

court has not determined the fair market values of the properties to offset the 

deficiencies. Because we conclude that the BNC Parties waived their rights to 

valuations and offsets under section 51.003, the trial court did not err in entering a 

judgment against Nussbaum as guarantor for the deficiencies.4See Wasserberg, 

2014 WL 6922545, at *7 (declining to address whether plaintiff was required to 

present evidence of fair market value when defendant had contractually waived 

right to valuation and offset under section 51.003).

We overrule appellant’s second issue. Because we were required to analyze 

as a matter of law whether appellants waived their rights under section 51.003, we 

need not address whether the trial court erred in rendering summary judgment on 

no-evidence grounds. See Wilkinson, 2014 WL 3002400, at *5.

We affirm the judgment of the trial court.

/s/ Martha Hill Jamison

Justice

Panel consists of Justices Boyce, Jamison, and Donovan.

 

4 We further note that in the guaranties, Nussbaum waived any rights he may have had 

under section 51.003. Nussbaum waived “any and all rights and defenses that guarantor may 

have because the borrower’s debt is secured by real property collateral.” See Moayedi, 438

S.W.3d at 8 (holding broad language waiving “any,” “each,” and “every” defense waives a 

defense under section 51.003); Wasserberg, 2014 WL 6922545, at *8 (holding guarantor’s 

waiver of “all defenses given to sureties or guarantor at law or in equity other than actual 

payment of the Liabilities” waived right to section 51.003 offset).