### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 14

- 10182

HOMETOWN 2006

- 1 1925 VALLEY VIEW, L.L.C., a Texas Limited Liability Company,

Plaintiff

- Appellee

v. PRIME INCOME ASSET MANAGEMENT, L.L.C.,

Defendant

- Appellant

Appeal from the United States District Court for the Northern District of Texas USDC No. 3:11

- CV

- 2 6 33

Before HIGGINBOTHAM, CLEMENT , and HIGGINSON, Circuit Judges

. STEPHEN A. HIGGINSON, Circuit Judge : * Prime Income Asset Management , L.L.C. (“Prime”) is the guarantor of a note held by Hometown 2006

- 1 1925 Valley View, L.L.C. (“Hometown”) and secured by real property in Texas

. After the borrower defaulted, the property was sold in foreclosure , and Hometown sought a deficiency judgment against Prime . Prime then sought an offset equal to the amount that the property’s fair

* Pursuant to 5 TH C IR . R. 47.5, the court has determined that this opinion should not be published and i s not precedent except under the limited circumstances set forth in 5 TH C IR . R. 47.5.4. United States Court of Appeals Fifth Circuit 

### FILED December 11, 2014 Lyle W. Cayce Clerk Case: 14-10182 Document: 00512866616 Page: 1 Date Filed: 12/11/2014No. 14

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market value e xcee ded its sale price . The district court denied Prime’s motion for a determination of the property’s fair market value, finding that Prime waived its offset rights in its contract with Hometown. Prime appeals that decision, as well as the district court’s award to Hometown of attorney’s fees for work to protect the loan before Hometown sued Prime

. We affirm both rulings by the district court.

FACTS AND PROCEEDINGS In October 2006, Tra nscontinental Brewery , Inc. (“ Borrower ”) purchased real estate i n Farmers Branch, Texas. The Borrower financed the acquisition of the property with a $2,450,000 loan from Hometown Commercial Capital,
L

. L

. C

. (“ HCC ”) and executed a promissory note for $2,450,000 (“Note”), payable to HCC

. Repayment of the Note was secured by a Deed of Trust and Security Agree ment (“Deed of Trust”). In a guaranty a greement (“Guaranty”) , Prime guaranteed to HCC and “ its successors and assigns” the performance of obligations that the Borrower owed under the Note and Deed of Trust. In November 2006, HCC assigned t he Note and Deed of Trust (“Loan Documents”)
to LaSalle Bank National Association (“LaSalle Bank”) , as trustee under an indentu re between Hometown Commercial Trust 2006

- 1 (“Trust”) and LaSalle Bank

. Bank of America, N.A. (“Bank of America”), the successor by merger to LaSalle Bank, later became the holder of the Loan Documents. In June and July 2010, the Borrower failed to make timely payments on the loan. In July 2010, Midland Loan Services , Inc., a special servicer , sent a notice of default to the Borrower and offered the Borrower an opportunity to cure the default. When the Borrower did not cure, the law firm Thompson & Knight, acting on behalf of Bank of America, sent the Borrower a notice that the balance on the Note was payable in full, and that a foreclosure sale had

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been scheduled for the Farmers Branch property

. Around the same time, the
Borrower demolished a buildi ng on the Farmers Branch property. In September 2010, the Borrower conveyed the Farmers Branch property to EQK Bridgeview Plaza, Inc. (“EQK”), an action that the district court characterized as an “event of default” under the Deed of Trust. EQK filed for b ankruptcy in October 2010 , triggering an automatic stay of any foreclosure sale

. In March 2011, Bank of America obtain ed relief from the stay in bankruptcy court. In June 2011, Bank of America assigned the Loan Documents to Hometown , a limited liability company. A non
- judicial foreclosure sale of the Farmers Branch pr operty was conducted in July 2011

. At the foreclosure sale, Hometown was the only bidder and purchased the property for $1,370,000 , which was applied to the loan balance. In October 2011, Ho metown sued Prime for the post

- foreclosure deficiency. Hometown moved for partial summary judgment. Prime moved for

a determination of the fair market value of the Farmers Branch property under section 51.003 of the Texas Property Code. That section entitles a debtor to offset the deficiency amount by the difference between the sale price of the property and its fair market value. The district court granted Hometown’s motion for partial summary judgment, finding that Prime was liable to Hometown , as owner and holder of the Note and Guaranty, for the Borrower ’s payment and defaults. The district court denied Prime’s motion for a determination of the fair market value of the property, finding that Prime had waived its right to an offset through the fol lowing language in the Guaranty: Section 1.4 Guaranteed Obligations Not Reduced by Offset

. The G uaranteed Obligations and the liabilities and obligations of Guarantor to Lender h ereunder, shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or de fense of Borrower, or any other party, against Lender

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o r against payment of any of the Debt or the Guaranteed Ob ligations, whether such offset, claim or defense arises in connection with the Loan (o r the transactions creating the Loan) or otherwise. The parties stipulated that Hometown suffered actual damages of $1,469,698.05, subject to Prime’s reservation of its right to appeal the district court’s ruling. The district court awarded Ho metown $612, 791.20 in attorney’s fees , including $278,108.80 for work to protect the loan before the federal lawsuit and $334,682.40 for the federal lawsuit.

DISCUSSION The Guaranty between Prime and Hometown is a contract. See McLane Foodservice, Inc. v. Table Rock Res ts. , L.L.C. , 736 F.3d 375, 377 (5th Cir. 2013). “The interpretation of a contract

— including whether the contract is ambiguous

— is a question of law, which we review de novo . If a contract is ambiguous, the district court’s findings of fact as to the intent of the parties are reviewed for clear error.” Id. (citation omitted). In diversity cases, we interpret the contract by applying the substantive law of the forum state. Id

. Following principles of contract interpretation articulated by the Texas Supreme Court, we must “ ascertain the true intentions of the parties as expressed in the instrument.” Moa yedi v. Interstate 35/Chisam R d

. , L.P. , 438 S.W.3d 1, 7 (Tex. 2014) (internal quotation mark omitted)

. “ When parties disagree over the meaning of an unambiguous con tract, we determine the parties’ intent by e xamining the entire agreement. Moreover, u nless the agreement shows the parties used a term in a technical or different sense, the terms are given their plain, ordinary, and generally accepted meaning. ” Id

. (footnotes omitted).

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Both Hometown and Prime claim that the Guaranty is unambiguous , but they dispute its meaning. Prime argues on appeal that the Guaranty ’s language i s not sufficiently specific to constitute a knowing and intentional waiver of offset rights under section 51.003 of the Texas Property Code

. In addition, Prime challenges the district court’s interpretation of the Guaranty as requiring Prime to pay for attorney’s fees incurred before Hometown filed the federal lawsuit.
I. Offset Rights S ection 51.003 of the Texas Property Code is “ designed to ensure that debtors receive credit when their foreclosed property is sold at an unre asonably low price. ” Moayedi , 438 S.W.3d at 6. When real property is sold in foreclosure for less than the unpaid balance of the indebtedness secured by the property, the lender may sue the guarantor to recover the deficiency

. See Tex. Prop. Code Ann. § 51.003 (a)

. However, section 51.003(c) entitles the guarantor to an offset against his liability equal to the amount that the property’s fair market value exceeds its sale price. Tex. Prop. Code Ann. § 51.003(c); Moayedi , 438 S.W.3d
at 5. The Texas Supreme Court has held that g uarantors may , by contract , waive their offset rights under section 51.003. Moayedi , 438 S.W.3d at 6. In Moayedi , the Texas Supreme Court held that the guarantor unambiguously waived his right to an offset through the following language in the guaranty agreement: “Guarantor further agrees that this Guaranty shall not be discharged, impaired or affected by . . . any defense (other than the full payment of the indebtedness hereby guaranteed in accordance with the terms hereof) that the Guarantor may or might have as to Guarantor’s respective undertakings, liabilities and obligations hereunder, each and every such defen se being hereby waived by the undersigned Guarantor.” Id . at 3

.

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The court in Moayedi acknowledged that “[t]o be effective, a waiver must be clear and specific.” Id . at 6. The court defined “waiver” as the “intentional relinquishment of a known right or in tentional conduct inconsistent with claiming that right.” Id

. (internal quotation marks and citation omitted). The
court nevertheless found that language waiving “any , ” “each , ” and “every” defense was sufficientl y specific to effect a waiver of offset rights under section
51.003. Id . at 8. The court noted that “[j]ust because the waiver is all encompassing does not mean that it is unclear or vague.” Id

. The language in Prime’s Guaranty is even more specific than the language in the agreement at issue i n Moayedi . The Guaranty provided, in relevant part, that “the liabilities and obligations of Guarantor to Lender hereunder, shall not be reduced

. . . by reason of any existing or future offset, claim or defense of Borrower, or any other party, against Len der or against payment of any of the Debt or t he Guaranteed Obligations .” Guaranty § 1.4

. If language in the Moayedi gu aranty waiving “every

. . . defense ” was sufficiently specific to waive offset rights, so too was language in Prime’s Guaranty waiving “any . . . offset, claim or defense

. ” See Moayedi , 438 S.W.3d at 7 & n.31 (noting that language in a guaranty agreement that waived the “right of off set” was more specific than the language at issue in Moayedi ). 1

1 Prime effectively argues that Moayedi was wrongly decided because the waiver at issue in that case was not sufficiently specific. However, under the Erie doctrine, we are bound to apply principles of contract interpretation articulated by the Texas Supreme Court and to make an informed judgment as to how a Texas court would rule if presented with the same facts. Erie R.R. Co. v. Tompkins , 304 U.S. 64 (1938 ); Quorum Health Res.
, L.L.C. v. Maverick Cnty. Hosp. Dist. , 308 F.3d 451, 458 (5th Cir. 2002) (“ Although there is no Texas Supreme Court case involving the exact contract language at issue here, Texas Supreme Court cases applying the applicable rules of c ontract construction to similar indemnity provisions provide ample guidance fo r this court to substitute an informed judgment for an informed g uess as to how a Texas court would rul e if presented with these facts .” (internal quotation marks, alteration s , a nd citation omitted)). I n deed, in an unsuccessful motion to stay the appeal pending the issuance of a decision in Moayedi , Prime acknowledged candidly

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Nor do the identities of the parti es provide a sufficient basis to distinguish this case from Moayedi

. The Moayedi court noted that there was no “indication that Moayedi [the guarantor] was not a sophisticated businessman. After all, he was the president of Villages’ [the b orrower’s] general partner.” Id. at 8. Similarly, there is no indication that Prime , an asset management company, is not a sophisticated party. 2 A finding of waiver here is also con sistent with our own precedent

. In LaSalle Bank National Ass ’ n v. Sleutel, 289 F.3d 83 7, 839

– 42 (5th Cir. 2002), we held that the gu arantor waived his section 51.00 3 rights based on the following langua ge in the guaranty agreement: To the extent allowed by applicable law, Guarantor expressly waives and relinquishes all rights and remedies now or hereafter accorded by applicable law to guarantors or sureties, including, without limitation : . . . any defense, right of offset or other claim which Guarantor may have against Borrower or which Borrower may have against Lender or the Holder of the Note. If a waiver of “any . . . right of offset” in the Sleutel guaranty constitutes a waiver of section 51.003 rights, then so too does language in Prime’s Guaranty that “obligations of Guarantor . . . shall not be reduced . . . by reason of any existing or future offset.” See also Haggard v. Bank of the Ozarks
, Inc. , 668 F.3d 196, 202 (5th Cir. 2012) (holding that the guarantor waived his offset rights through language providing that the guarantor’s obligation “shall not be impaired or released, without written consent of the Bank, based on: ‘any defenses, set

- offs or counterclaims which may be available to Borrower or any other person or entity’”).

that the Texas Supreme Court in Moayedi was “considering the very issue which would provide dispositive guidance relevant to this case to this Court, sitting as an Erie court.”
2 The record reflects that Prime had contracts to advise various companies th at invested in real estate.

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However, our analysis does not end with section 1.4 of the Guaranty; we must look to the entire contract t o determine the parties’ intent. See Moayedi , 438 S.W. 3d. at 8

. Prime points to the following language in the Guaranty: “Guarantor WAIVES each and every right to which it may be entitled by virtue of any suretyship law , including any rights it may have pursuant to . . . S ection 51.005 of the Texas Property Code. ” 3 Guaranty § 5.13

. Prime argues that the express waiver of section 51.005 rights , compared to the absence of an explicit reference to section 51.003, indicates that the parties did not intend for Prime
to waive its offset rights under section 51.003. See CKB & Assocs. , Inc. v. Moore McCormack Petrol

. , Inc. , 734 S.W.2d 653, 655 (Tex. 1987) ( relying on the rule of contract construction “ expressio unius est exclusio alterius , meaning that the naming of one thing excludes another ” ). However, the word s “any” and “including” indic ate that the list of waived rights in section 5.13 of the Guaranty is illustrative, and not exhaustive. See Tex. Prop. & Cas. Ins. Gu ar

. Ass’n /Sw. Aggregates, Inc. v. Sw. Aggregates
, Inc. , 982 S.W.2d 600, 608 (Tex. App. 1998) (“ It is hornbook law that the use of the word including indicates that the specified list

. . . is illustrative, not exclusive .” (alteration in original) (internal quotatio n marks and citation omitted ) ) ; cf . Tex. Gov’t Code Ann. § 311.005(13) (providing that in the context of statutory construction, “‘[i]ncludes’ and ‘including’ are terms of enlargement and not of limitation or exclusive enumeration, and use of the terms doe s not create a presumption that compon ents not expressed are excluded”). In addition, the expressio unius canon is only “an aid to the resolution of ambiguities,” and does not trump the

3 Section 51.005 of the Texas Property Code provides for offset rights if the foreclosure sale takes place after the debt holder obtains a judgment against the guarantor. See Tex. Prop. Code Ann. § 51.005(a). Because the foreclosure sale of the Farmers Bran ch property took place before Hometown obtained a judgment against Prime, section 51.005 does not apply to their dispute.

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Guaranty’s clear lan guage precluding “ any existing or future offset, claim or defense. ” Guaranty § 1.4. S ee S mith v. Stonebridge Life Ins. Co. , 217 F. App’x
360 , 361 (5th Cir. 2007) (“ Smith argues that we should apply the canon expressio unius est exclusio alterius, but that canon is only an aid to the resolution of ambigui ties

. Here there is no ambiguity .” ( citation omitted)) ; Keystone Equity Mgmt. v. Thoen , 730 S.W.2d 339, 340 (Tex. App. 1987) (declining to apply the expressio unius canon where the plain meaning of a contract supported the opposite interpretation). Prime further argues that the Deed of Trust establishes th at Prime did not waive offset rights in the Guaranty. The Deed of Trust provides a mechanism for determining the fair market value of the Farmers Branch property in the context of a deficiency action

. Dee d of Trust § 23.17. However, the mechanism provided by the Deed of Trust d iffers from and replaces the procedure that section 51.003 provides for calc ulating fair market value

. Given that Prime moved in the district court for a determination of fair market value under section 51.003 , Prime cannot now assert that it is bound by

— and may benefit from

— the procedure outline d in the Deed of Trust. In addition, while Prime , under the Guaranty, assumed the Borrower’s obligations set forth in the Deed of Trust, see Guaranty §§ 1.1, 1.2 , the Guaranty does not entitle Prime to assert the Borrower’s defenses, including the defense of offset. Indeed, the Guaranty provides: Guarantor hereby . . . waives any common law, equit able, statutory or other rights . . . which Guar antor might otherwise have . . . in connection with any of the following: [ inter alia ,] [t]he invalidity, illegality or unenforceability of all or any part of the Loan or the Guaranteed Obligation s . . . including without limitation the fact that . . . the Borrower has valid defenses, claims or offsets . . . which render the Loan or the Guaranteed Obligations wholly or partially uncollectible from Borrower . . . it being agreed that Guarantor

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shall remain liable hereon regardless of whether Borrower or any other person be found not liable on the Loan . . . . Guaranty § 2.4. The Guaranty therefore precludes Prime from enforcing the offset rights to which the Borrower is entitled under the Deed of Trus t. Section 2.12 of the Guaranty further corroborates Prime’s intent to waive offset rights. That section provides: “ it is the unambiguous and unequivocal intention of Guarantor that Guarantor shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and fi nal payment and satisfaction of the Guaranteed Obligations

. ” Guaranty § 2.12 (emphasis added). The Texas C ourt of Appeals, in an analysis cited approvingly by the Texas Supreme Court, found that Moayedi ’s promise to

“ ‘ unconditionally ’ . . . guarantee[] payment of [the] debt ” corroborated his intent to waive offset rights under section 51.003. Interstate 35/Chisam R d

. , L.P. v. Moayedi , 377 S.W.3d 791 , 800 (Tex. App. 2012) , aff’d , 438 S.W.3d 1, 8 (Tex. 2014 ) (“ We agree with Moayedi that the meaning of the waiver in paragraph 7 depends on the rest of the agreement, but we agree with the court of appeals that these provisions indicate an intent that the guaranty would not be subject to any defense other than full payment. ”). Prime’s g uarantee of “full . . . payment” therefore further corroborates Prime’s clear waiver, in section 1.4 of the Guaranty, of its offset rights under section 51.003 of the Texas Property Code. It was therefore proper for the district court to deny Prime’s motio n for a determination of the fair market value of the property sold in foreclosure.

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II. Attorney’s F ees Prime also challenges the district court’s award to Hometown of $278,108.80 for attorney’s fees incurred between July 2010 and Jul y 5, 2011 (the “pre

- foreclosure ” period). During that time, the law firm Thompson & Knight , acting on a contingency fee basis for Bank of America , sent the
Borrower a notice of foreclosure sale , post ed the Farmers Branch property for foreclosure sale, and liti gate d in E Q K ’s bankruptcy proceeding to obtain relief from an automatic stay of the foreclosure sale

. The district court awarded these fees to Hometown based on time sheets submitted by Thompson & Knight

. The court rejected Prime’s argument that these fees a re not recoverable under the language of the Guaranty

. Under Texas law, “[a] person may recover reasonable attorney’s fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for . . . an oral or writte n contract.” Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (8)

. However, “[p] arties are free to contract for a fee

recovery standard either loo ser or stricter than Chapter 38’ s .” Intercont’l Grp. P’ship v. KB Home Lone Star L.P. , 295 S.W.3d 650, 653 (Tex. 2009) ; s ee also Spillm an v. Self

- Serv Fixture Co

. , 693 S.W.2d 656, 657 (Tex. App. 1985) (interpreting the langu age of a guaranty to decide the extent of the guarantor’s obligation to pay attorn ey’s fees to the creditor )

. We review the district court’s interpretation of a contract de novo

. McLane Foodservice, Inc. , 736 F.3d at 377. The Guaranty provides: “In the event that Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantor shall,
i mmediately upon demand by Lender, pay Lender all costs and expenses (including court costs and attorneys’ fees) incurred by Lender in the enforcement hereof or the preservation of Lender’s rights hereunder.” Guaranty § 1.8. “Lender’s rights hereunder,” i.e., under the Guaranty, include

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“ the payment and performance of . . . the full amount of the Debt and all other obligations of Borrower to Lender under th e Loan Documents, ” which include the Note and Deed of Trust. Guaranty §§ 1.1, 1.2; Deed of Trust § 2.6. Because the pre

- foreclosure attorney’s fees represent work to enforce the Note and Deed of Trust, these fees were incurred in “the preservation of Lender’s rights” under the Guaranty. The district court therefore properly awarded Hometown attorney’s fees for action to protect the loan before the foreclosure and ensuing federal court litigation. 4

CONCLUSION For the foregoing reasons, we AFFIRM the district court’s order den ying Prime’s motion for a determination of fair mar ket value and its award to Hometown of attorney’s fees of $278,108.80 for the pre

- foreclosure period.

4 Prime argues only that the Guaranty does not cover fees incurred during the pre

foreclosure period; Prime does not argue on appeal that Hometown is not the proper party to collect these fees because these fees were incurred before the Loan Documents were assigned to Hometown. The district court considered and rejected that argument, concluding that Hometown was entitled to these fees because Hometown had a “right to enforce the Loan Documents” as their current owner and holder.

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