Opinion ID: 2831384
Heading Depth: 2
Heading Rank: 3

Heading: Whether Moayedi Waived Section 51.003

Text: Texans have long embraced the principle of freedom of contract.15 And this Court’s decisions respect the strong public policy of respecting parties’ freedom to design agreements according to their wishes.16 15 See Tex. Const. art. I, § 16. 16 See Fortis Benefits v. Cantu, 234 S.W.3d 642, 649 (Tex. 2007). 7 Whether Moayedi can waive section 51.003 is not disputed by the parties. And although this Court has not addressed whether section 51.003 may be waived, other courts have consistently held so.17 We agree. In general, parties may waive statutory and even constitutional rights.18 Occasionally, the Legislature decides that some benefits are too important—and thus may not allow them—to be waived. But, when it does decide to prohibit waiver, we ask that the Legislature speak clearly. And indeed, other provisions in the Property Code do include anti-waiver language.19 This anti-deficiency law, however, nowhere prohibits waiver. So, Moayedi could waive section 51.003. The question is whether he did. We agree with the court of appeals that the general waiver in paragraph 7 of the guaranty agreement waives the application of section 51.003. To be effective, a waiver must be clear and specific. The United States Supreme Court has defined waiver as an “intentional relinquishment or abandonment of a known right or privilege.”20 This Court has defined waiver as the “intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.”21 Determining whether there has been an “intelligent waiver” depends on the circumstances of the case.22 Waiver is a matter of intent as “[t]here can be no waiver unless so intended by one party and so understood by the other.”23 17 See, e.g., LaSalle Bank Nat’l Ass’n v. Sleutel, 289 F.3d 837, 842 (5th Cir. 2002); Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267, 278 (Tex. App.—Houston [1st Dist.] 2004, pet. denied). 18 See In re Prudential Ins. Co., 148 S.W.3d 124 (Tex. 2004). 19 See, e.g., TEX. PROP. CODE §§ 28.006(a), 54.043(b), 59.004, 91.006. 20 Johnson v. Zerbst, 304 U.S. 458, 464 (1938). 21 Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987). 22 See Mass. Bonding & Ins. Co. v. Orkin Exterminating Co., 416 S.W.2d 396, 401–02 (Tex. 1967). 23 Lesikar v. Rappeport, 33 S.W.3d 282, 300 (Tex. App.—Texarkana 2000, pet. denied). 8 Courts construe unambiguous guaranty agreements as any other contract.24 If the meaning of a guaranty agreement is uncertain, “its terms should be given a construction which is most favorable to the guarantor.”25 The interpretation of an unambiguous contract, however, is a question of law for the court.26 “In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument.”27 Courts must “examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument.”28 When parties disagree over the meaning of an unambiguous contract, we determine the parties’ intent by examining the entire agreement.29 Moreover, unless 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.30 Until now, this Court has not addressed the level of specificity required to waive section 51.003. Most cases in which courts have concluded section 51.003 was waived involved language with more specificity than the language at issue here.31 24 Coker v. Coker, 650 S.W.2d 391, 393–94 (Tex. 1983). 25 Id. at 394 n.1. 26 MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999). 27 J.M. Davidson v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). 28 Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006) (emphasis in original). 29 Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). 30 Id. 31 See, e.g., LaSalle, 289 F.3d at 840 (guaranty waived “right of offset”); Segal, 155 S.W.3d at 278 (guaranty waived “all rights, remedies, claims and defenses based upon or related to Sections 51.003, 51.004 and 51.005 of the Texas Property Code”). 9 Moayedi argues that our decision in Shumway v. Horizon Credit Corp.32 should apply here. Shumway addresses the necessary specificity of a debtor’s waiver of rights to presentment, notice of the note holder’s intent to accelerate, and notice of acceleration of the balance due upon default. In Shumway, we noted that a lender can neither create nor exercise its right to accelerate a debt unless the provisions creating that right are clear and unequivocal. Having held that a lender has no right to accelerate a debt without saying so in clear and unequivocal language, it necessarily followed that a debtor could waive notice of acceleration only by meeting the same exacting standard of clarity and precision. Thus, the specificity required to waive notice of acceleration in Shumway was premised on the rule that the right itself was not created unless the lender initially met the high standard of specificity and precision. “To meet this standard,” we held, “a waiver provision must state specifically and separately the rights surrendered.”33 Moayedi relies on Shumway to argue that just as “all notice” or “any notice whatsoever” is ineffective to waive notice of acceleration and notice of intent to accelerate, here, the general waiver language in his guaranty contract is similarly ineffective. Moayedi argues that he cannot be said to have knowingly and intentionally waived section 51.003, but we must ask, if that’s the case, then what did Moayedi think he was waiving when he waived “any,” “each,” and “every” defense? We have no doubt that the waiver would include the UCC defenses under the Business and Commerce Code, and Moayedi conceded in oral argument that it does operate to waive ordinary, common-law defenses. Thus, the waiver is not meaningless. Nor is there any indication that Moayedi was not a sophisticated businessman. After all, he was the president of Villages’ general partner. But, we can see no principled way to distinguish common- 32 801 S.W.2d 890 (Tex. 1991). 33 Id. at 893. 10 law defenses from that created by section 51.003. It is true that unlike the ordinary common-law defenses, section 51.003 is a legislative creature. But that distinction gets us nowhere. As the court of appeals concluded, the plain meaning of “any,” “each,” and “every” used in paragraph 7 results in a broad waiver of all possible defenses. Just because the waiver is all encompassing does not mean that it is unclear or vague. To waive all possible defenses seems to very clearly indicate what defenses are included: all of them. Indeed, a waiver provision such as this one may be more descriptive to a layperson than a waiver referencing Property Code section numbers. The parties disagree about the effect of other waivers and statements of liability in the agreement. 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. In particular, Moayedi agreed that I-35 could enforce the guaranty without first resorting to or exhausting any security or collateral and waived diligence on I-35’s part in the collection of payment from Villages. Read as a whole, then, we think the waiver in paragraph 7, though broad, is not without meaning and is intended to include all defenses.