Court Opinion

ID: 2986105
Source: CourtListenerOpinion
Date Created: 2015-09-23 00:25:35.49903+00
Date Added: 2024-06-11T18:01:06.968403
License: Public Domain

Affirmed and Opinion filed August 29, 2013.

                                      In The

                     Fourteenth Court of Appeals

                               NO. 14-12-00105-CV

                       DONALD W. SOWELL, Appellant

                                         V.
                INTERNATIONAL INTERESTS, LP, Appellee

                    On Appeal from the 334th District Court
                             Harris County, Texas
                      Trial Court Cause No. 2009-07184

                                 OPINION
      In this case we address an issue of apparent first impression in Texas:
whether an action brought against a guarantor of payment to recover a deficiency
after a non-judicial foreclosure is barred by the four-year statute of limitations in
section 16.004 of the Texas Practices and Remedies Code if the action is filed
more than four years after the claim on the guaranty accrued but less than two
years after the foreclosure sale. We conclude that, under section 51.003(a) of the
Texas Property Code, such an action is not barred by the statute of limitations. On
appeal, the guarantor asserts that the creditor’s claim against him is barred by the
statute of limitations and by the lender’s alleged failure to mitigate damages. We
affirm the trial court’s judgment.

                  I. FACTUAL AND PROCEDURAL BACKGROUND

      On May 30, 2002, DSI-HP 2002, Ltd. (“DSI”) executed a promissory note
payable to Bank One, N.A. (“Bank One”) in the original principal amount of
$12,823,000 (the “Hobby Place Note”). The Hobby Place Note was secured by a
Construction Deed of Trust (with Security Agreement and Assignment of Rents
and Leases) recorded against a 596-unit apartment complex located at 11911
Martin Luther King, Jr. Blvd., Houston, Texas 77048 (the “Hobby Place
Property”). The same day, appellant/defendant Donald W. Sowell executed a
Guaranty Agreement for the benefit of Bank One guarantying repayment of the
Hobby Place Note and all renewals, rearrangements, and extensions thereof (the
“Guaranty”).    The Guaranty is an absolute and unconditional guaranty of the
obligations under the loan documents.
      Exactly two years later, on May 30, 2004, the maturity date of the Hobby
Place Note was extended to November 30, 2004 (the “Maturity Date”). On that
date, the Hobby Place Note reached maturity and was not paid. According to
Sowell, in December 2004, he transferred all of his ownership interest in DSI to
Cobalt Capital Companies. For more than two years after the Maturity Date, Bank
One and later its successor in interest JP Morgan Chase Bank, N.A. (“Chase”)
made no attempt to collect on the Hobby Place Note or to foreclose the lien on the
Hobby Place Property. During this period, the Hobby Place Property fell into
disrepair. Then, on December 22, 2006, Chase, successor by merger to Bank One,
sold and assigned to appellee/plaintiff International Interests, L.P. (“International”)
the Hobby Place Note, the Guaranty, and the other loan documents, and assigned
all of its rights to International. The balance owing on the Hobby Place Note at the
                                          2
time of sale to International was $11,816,865.02. In addition, $658,120.94 in
delinquent property taxes was owed on the Hobby Place Property in February
2007. This sum did not include penalties and fees. No payments were made to
International by DSI or Sowell.

      The following year, on February 6, 2007, International foreclosed its lien on
the Hobby Place Property and sold it for $3,000,000 in a non-judicial foreclosure
sale. A deficiency balance of $8,816,865.02 remained after crediting the sales
price at foreclosure against the balance remaining on the Hobby Place Note.
Almost two years later, on February 4, 2009, International filed this suit against
DSI and Sowell seeking to recover the deficiency. Following a bench trial, the
trial court rendered judgment against DSI and Sowell for the full deficiency
amount, plus reasonable and necessary attorney’s fees, court costs, and
prejudgment and postjudgment interest.

                              II. ISSUES PRESENTED

      On appeal, Sowell asserts two issues: (1) International’s claim against
Sowell is a claim on the Guaranty and is barred by the four-year statute of
limitations in section 16.004 of the Texas Practices and Remedies Code, because
the claim accrued by December 30, 2004, yet International filed suit on February 4,
2009; and (2) International’s claim is barred because the trial evidence
conclusively proved that International and its predecessors in interest breached
their duty under Texas law to mitigate and avoid unnecessary damages by delaying
foreclosure; according to Sowell, if there had been a prompt foreclosure, there
would have been no deficiency.

                                         3
                                   III. STANDARD OF REVIEW

          Sowell’s appellate issues deal with two defenses he asserted, as to which he
had the burden of proof.              Thus, as to each of these defenses, Sowell must
demonstrate on appeal that the trial evidence conclusively established all facts
necessary to support the defense. See Dow Chem. Co. v. Francis, 46 S.W.3d 237,
241 (Tex. 2001).           When reviewing the legal sufficiency of the evidence, we
consider the evidence in the light most favorable to the challenged finding and
indulge every reasonable inference that would support it. City of Keller v. Wilson,
168 S.W.3d 802, 823 (Tex. 2005).                   We must credit favorable evidence if a
reasonable factfinder could and disregard contrary evidence unless a reasonable
factfinder could not. See id. at 827. We must determine whether the evidence at
trial would enable reasonable and fair-minded people to find the facts at issue. See
id. The factfinder is the only judge of witness credibility and the weight to give to
testimony. See id. at 819.

                                           IV. ANALYSIS

A.        Does Property Code section 51.003 give International an independent
          claim against Sowell that accrued on the date of foreclosure?
          International asserts that Property Code section 51.003,1 entitled “Deficiency
Judgment,” provides it with an independent claim against Sowell that accrued on
the date of the foreclosure sale. To address this issue and the issue of whether
International’s claims are barred under section 16.004 of the Texas Practices and
Remedies Code (“section 16.004”), we must interpret section 51.003, which
provides in its entirety as follows:

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

1
    Unless otherwise stated, all statutory references in this opinion are to the Texas Property Code.

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      under Section 51.002 is less than the unpaid balance of the
      indebtedness 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.

      (b) Any person against whom such a recovery is sought by motion
      may request that the court in which the action is pending determine
      the fair market value of the real property as of the date of the
      foreclosure sale. The fair market value shall be determined by the
      finder of fact after the introduction by the parties of competent
      evidence of the value. Competent evidence of value may include, but
      is not limited to, the following: (1) expert opinion testimony; (2)
      comparable sales; (3) anticipated marketing time and holding costs;
      (4) cost of sale; and (5) the necessity and amount of any discount to be
      applied to the future sales price or the cashflow generated by the
      property to arrive at a current fair market value.

      (c) If the court determines that the fair market value is greater than the
      sale price of the real property at the foreclosure sale, the persons
      against whom recovery of the deficiency is sought are entitled to an
      offset against the deficiency in the amount by which the fair market
      value, less the amount of any claim, indebtedness, or obligation of any
      kind that is secured by a lien or encumbrance on the real property that
      was not extinguished by the foreclosure, exceeds the sale price. If no
      party requests the determination of fair market value or if such a
      request is made and no competent evidence of fair market value is
      introduced, the sale price at the foreclosure sale shall be used to
      compute the deficiency.
      (d) Any money received by a lender from a private mortgage guaranty
      insurer shall be credited to the account of the borrower prior to the
      lender bringing an action at law for any deficiency owed by the
      borrower. Notwithstanding the foregoing, the credit required by this
      subsection shall not apply to the exercise by a private mortgage
      guaranty insurer of its subrogation rights against a borrower or other
      person liable for any deficiency.
Tex. Prop. Code Ann. § 51.003 (West 2013).
      We review the trial court’s interpretation of applicable statutes de novo. See
Johnson v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex. 1989). In construing a

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statute, the court’s objective is to determine and give effect to legislative intent.
Nat’l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). If possible,
we must ascertain that intent from the language the Legislature used in the statute
and not look to extraneous matters for an intent not stated in the statute. Id. If the
meaning of the statutory language is unambiguous, we adopt the interpretation
supported by the plain meaning of the provision’s words. St. Luke’s Episcopal
Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex. 1997). We must not engage in forced
or strained construction, but instead, we must yield to the plain sense of the words
the Legislature chose. Id.
      If the price at which real property is sold at a nonjudicial foreclosure sale
under section 51.002 is less than the unpaid balance of the indebtedness secured by
the real property, resulting in a deficiency, any action to recover this deficiency
must be brought within two years of the foreclosure sale and is governed by
section 51.003. See Tex. Prop. Code Ann. § 51.003(a). In an action governed by
section 51.003, if the court determines that the fair market value of the real
property on the date of foreclosure is greater than the sale price of the real property
at the foreclosure sale, a defendant is entitled to an offset against the deficiency as
provided under section 51.003(c). See id. § 51.003(c). In an action governed by
section 51.003, under certain circumstances the borrower is entitled to a credit
based upon money received by the lender from an insurer. See id. § 51.003(d).

      If a deficiency remains after a nonjudicial foreclosure sale under section
51.002, any action to recover this deficiency must be brought within two years of
the foreclosure sale and a defendant in such an action may be entitled to an offset
under 51.003(c) or a credit under 51.003(d). See id. § 51.003. Based on the
unambiguous language of section 51.003, the Legislature did not create a claim or
other basis upon which a person may be liable for a deficiency. See id. Any such

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liability arises from a different source, for example, a person’s liability under a
promissory note or a guaranty agreement.              In section 51.003, the Legislature
addressed the statute of limitations for such an action and a potential offset and
credit; the Legislature did not address the source of the liability itself. See id. For
the foregoing reasons, we conclude that section 51.003 does not create an
independent claim.2 See Martin v. PlainsCapital Bank, No. 05-10-00235-CV, —
S.W.3d—,—, 2013 WL 1313770, at *5 (Tex. App.—Dallas Mar. 28, 2013. pet.
filed) (holding that section 51.003 did not create a right to sue for a deficiency and
that it merely regulates a right that arises from a different source); Trunkhill
Capital, Inc. v. Jansma, 905 S.W.3d 464, 468 (Tex. App.—Waco 1995, writ
denied) (same as Martin). A deficiency remained after the nonjudicial foreclosure
sale under section 51.002 on February 6, 2007, and International’s claim against
Sowell for breach of the Guaranty is an action to recover this deficiency that is
governed by section 51.003. See Tex. Prop. Code Ann. § 51.003(a); Village Place,
Ltd. v. VP Shopping, LLC,           No. 01-12-00364-CV, —S.W.3d—,—, 2013 WL
2181371, at *9–12 (Tex. App.—Houston [1st Dist.] May 21, 2013, no pet.). Under
the unambiguous language of section 51.003, International had to file this action
within two years of February 6, 2007, the date of the foreclosure sale. See Tex.
Prop. Code Ann. § 51.003(a); National Enterprise, Inc. v. E.N.E. Properties, 167
S.W.3d 39, 42–43 (Tex. App.—Waco 2005, no pet.); Trunkhill Capital, Inc., 905
S.W.3d at 468. International filed this suit on February 4, 2009, within two years
of the foreclosure sale.

2
 Some language in National Enterprise, Inc. v. E.N.E. Properties indicates that a creditor has a
deficiency claim under section 51.003 that accrues on the date of foreclosure. See 167 S.W.3d
39, 42–43 (Tex. App.—Waco 2005, no pet.). To the extent the National Enterprise court
concluded that section 51.003 creates an independent claim, we decline to follow its reasoning.

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B.    Does the four-year statute of limitations under section 16.004 of the
      Texas Practices and Remedies Code bar International’s deficiency
      action against Sowell?
      Under his first issue, Sowell argues that International cannot recover the
deficiency, following the foreclosure sale, because the claim is barred by the
statute of limitations in section 16.004. See Tex. Civ. Prac. & Rem. Code Ann.
§16.004(a) (West 2013). Sowell asserts that the claim against him on the Guaranty
accrued by December 30, 2004. When a claim accrues is a question of law. See
Moreno v. Sterling Drug, 787 S.W.2d 348, 351 (Tex. 1990). A claim generally
accrues when facts come into existence that authorize a claimant to seek a judicial
remedy. Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990).
Sowell unconditionally and absolutely guaranteed payment of DSI’s debt, the
guaranteed indebtedness. In the Guaranty, Sowell waived any requirement that the
creditor make demand for payment on him. Under this type of guaranty, the
creditor’s claim against Sowell accrues if the debt reaches maturity and DSI
defaults by not paying it. See Mid-South Telecommunications Co. v. Best, 184
S.W.3d 386, 391 (Tex. App.—Austin 2006, no pet.). The guaranteed indebtedness
matured on November 30, 2004, and DSI defaulted by not paying this
indebtedness. Because Sowell did not pay the indebtedness, we agree with Sowell
that by December 30, 2004, facts had come into existence that authorized the
creditor to seek a judicial remedy against Sowell on the Guaranty, and the
Guaranty claim had accrued. See id.
      Sowell asserts that the only basis for his liability to International is under the
Guaranty and that International’s claim on the Guaranty is governed by the four-
year statute of limitations in section 16.004. If this four-year statute of limitations
applies to International’s claim against Sowell on the Guaranty, then this claim is
time-barred because International filed suit more than four years after this claim

                                           8
accrued. The relevant facts are undisputed. The issue is whether the limitations
period in section 51.003(a) applies or the limitations period in section 16.004
applies. Research has not revealed, and the parties have not cited, any cases
addressing this issue.
      Under section 16.004, entitled “Four Year Limitations Period,” “[a] person
must bring suit on the following actions not later than four years after the day the
cause of action accrues: . . . (3) debt . . . .” Tex. Civ. Prac. & Rem. Code Ann. §
16.004(a) (West 2013). Under section 16.035 of the Texas Practices and Remedies
Code, entitled “Lien on Real Property,” a nonjudicial foreclosure sale of real
property under a power of sale in a mortgage or deed of trust must be conducted
not later than four years after the day the claim accrued. Tex. Civ. Prac. & Rem.
Code Ann. § 16.035(b) (West 2013). On expiration of this four-year limitations
period, the real-property lien and power of sale to enforce the real-property lien
become void. Id. § 16.035(d) (West 2013).
      There are fact patterns in which the limitations provision in section
51.003(a) and the limitations provision in section 16.004 do not conflict. If a
creditor elects not to exercise its right to conduct a nonjudicial foreclosure sale and
sues a guarantor under a guaranty agreement, then there is no conflict and the suit
on the guaranty is governed by the four-year statute of limitations under section
16.004. See Tex. Civ. Prac. & Rem. Code Ann. § 16.004(a); Tex. Prop. Code Ann.
§ 51.003(a). See generally Exxon Corp. v. West Texas Gathering Co., 868 S.W.2d
299, 306 (Tex. 1993) (noting general proposition that, in situation not involving an
action to recover a deficiency remaining after real property is sold at a foreclosure
sale under section 51.002, a suit against a guarantor for breach of his obligations
under a guaranty agreement is subject to the four-year statute of limitations under
section 16.004). If a creditor sues a guarantor under a guaranty agreement and
obtains a judgment before the creditor conducts a nonjudicial foreclosure sale, then
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there is no conflict and the suit on the guaranty is governed by the four-year statute
of limitations under section 16.004.3 See Tex. Civ. Prac. & Rem. Code Ann. §
16.004(a); Tex. Prop. Code Ann. § 51.003(a); West Texas Gathering Co., 868
S.W.2d at 306. If a creditor sues a guarantor under a guaranty agreement and the
suit is still pending when the creditor conducts a nonjudicial foreclosure sale, then
there is no conflict and the suit on the guaranty is governed by the four-year statute
of limitations under section 16.004.4 See Tex. Civ. Prac. & Rem. Code Ann.
§16.004(a); Tex. Prop. Code Ann. § 51.003(a); West Texas Gathering Co., 868
S.W.2d at 306.
       But, in the fact pattern presented to the court today there is an irreconcilable
conflict between section 51.003(a) and the limitations period in section 16.004.
Under the unambiguous language of section 51.003(a), this statute applies, and
International’s suit is timely because International filed it within two years of the
foreclosure sale. See Tex. Prop. Code Ann. § 51.003(a). Under the unambiguous
language of section 16.004, this statute applies and International’s suit is time-
barred because International filed it more than four years after the day the claim
accrued. See Tex. Civ. Prac. & Rem. Code Ann. § 16.004(a).

       Government Code section 311.026, entitled “Special or Local Provision
Prevails Over General,” reads in its entirety as follows:

3
  In this situation, the limitations provision of section 51.003(a) is not triggered, and section
51.005 provides a procedure by which the guarantor can seek the offset or the credit contained in
section 51.003. See Tex. Prop. Code Ann. § 51.005 (West 2013).
4
  The nonjudicial foreclosure sale would have to have been conducted within four years of the
day the claim accrued. See Tex. Civ. Prac. & Rem. Code Ann. § 16.035(b). Because, in this
situation, suit was filed before the nonjudicial foreclosure sale, the suit was filed within the four-
year limitations period of section 16.004 and was pending when the foreclosure sale occurred.

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      (a) If a general provision conflicts with a special or local provision,
      the provisions shall be construed, if possible, so that effect is given to
      both.

      (b) If the conflict between the general provision and the special or
      local provision is irreconcilable, the special or local provision prevails
      as an exception to the general provision, unless the general provision
      is the later enactment and the manifest intent is that the general
      provision prevail.

Tex. Gov’t Code Ann. § 311.026 (West 2013). The rule of statutory construction
contained in Government Code section 311.026(b) applies only if the general
provision and the special provision irreconcilably conflict with each other. In
today’s fact pattern there is an irreconcilable conflict, and the general provision,
section 16.004, is not the later enactment. Therefore, section 51.003, the special
provision, prevails as an exception to the general provision. See id.; In re Allcat
Claims Serv., Inc., 356 S.W.3d 455, 471 (Tex. 2011).           In this situation, if a
deficiency remains after a nonjudicial foreclosure sale under section 51.002
conducted before the creditor files suit against a guarantor, then the effect of
section 51.003 is to extend the limitations period under section 16.004 so that it
ends two years after the date of the foreclosure sale. See Tex. Civ. Prac. & Rem.
Code Ann. § 16.004(a); Tex. Prop. Code Ann. § 51.003(a).

      Sowell argues that this court should harmonize these two statutes and hold
that if a lender conducts a nonjudicial foreclosure sale before suing a guarantor, the
statute of limitations for filing an action to recover any deficiency should be the
lesser of two years after the foreclosure sale or the time remaining under the four-
year statute under section 16.004. But, under the fact pattern in today’s case there
is an irreconcilable conflict between section 51.003 and section 16.004, and under
Government Code section 311.026(b), we resolve this conflict by giving effect to
section 51.003, the special provision. See Tex. Gov’t Code Ann. § 311.026; In re
                                         11
Allcat Claims Serv., Inc., 356 S.W.3d at 471. We decline to adopt Sowell’s
analysis, which is contrary to these authorities and would give effect to section
16.004, the general provision.

       Sowell asserts that interpreting section 51.003 to extend the limitations
period under the fact pattern in today’s case is inconsistent with public policy and
provides no certainty to defendants.             Though in this context the two statutes
irreconcilably conflict, they still are unambiguous, and we are giving effect to the
plain meaning of the more specific statute under section 311.026 of the Texas
Government Code. It is not this court’s function to question the wisdom of these
statutes or to seek to rewrite them based upon our view of public policy. See Nat’l
Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000); Lee v. City of
Houston, 807 S.W.2d 290, 293 (Tex. 1991). In any event, under the current
statutory framework, guarantors are on notice that they may be sued for breach of
their guaranty obligations within four years after the claim accrues and that this
limitations period may be extended to two years after the date of foreclosure if a
deficiency remains after a nonjudicial foreclosure sale under section 51.002.5

       For the foregoing reasons, we conclude that, under section 51.003(a), the
limitations period for International’s claims against Sowell under the Guaranty
expired two years after the date of the foreclosure sale, which occurred less than
four years after these claims accrued. See Tex. Prop. Code Ann. §51.003(a).
Because International filed suit within this period, the trial court did not err in

5
  Sowell also asserts that interpreting section 51.003 to extend the limitations period under the fact
pattern in today’s case is contrary to the legislative history of section 51.003. But, we cannot use
legislative history to interpret a statute in a way that contradicts the statute’s unambiguous
language. See Fleming Foods of Texas, Inc. v. Rylander, 6 S.W.3d 278, 283–84 (Tex.1999).

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concluding that International’s claims against Sowell are not barred by the statute
of limitations. Accordingly, we overrule Sowell’s first issue.

C.    Did Sowell conclusively prove that International’s claims against him
      are barred due to International’s alleged failure to mitigate damages?
      Under his second issue, Sowell argues International’s claims are barred
because the trial evidence conclusively proved that International and its
predecessors in interest breached their duty to mitigate and avoid unnecessary
damages by delaying foreclosure. According to Sowell, if there had been a prompt
foreclosure, then there would have been no deficiency. We presume for the sake
of argument that International and its predecessors-in-interest generally would
have a duty to mitigate and avoid unnecessary damages by delaying foreclosure.
International asserts that Sowell waived any right he had to assert this defense
under the unambiguous language of the Guaranty.

      In construing contracts, our primary objective is to ascertain and give effect
to the intentions of the parties as expressed in the contract. Kelley–Coppedge, Inc.
v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998). Whether a contract is
ambiguous is a question of law for the court. Heritage Res., Inc. v. NationsBank,
939 S.W.2d 118, 121 (Tex. 1996). Ambiguity does not arise simply because the
parties offer conflicting interpretations. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124
S.W.3d 154, 157 (Tex. 2003). A contract is ambiguous when its meaning is
uncertain and doubtful or is reasonably susceptible to more than one interpretation.
Heritage Res., Inc., 939 S.W.2d at 121. But, when a written contract is worded so
that it can be given a certain or definite legal meaning or interpretation, it is
unambiguous, and the court construes it as a matter of law. Am. Mfrs. Mut. Ins.
Co., 124 S.W.3d at 157.

      Under the Guaranty, Sowell agreed as follows:
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      7.     Guarantor waives any right to require Lender to (a) proceed
      against, or make any effort at the collection of the Guaranteed
      Indebtedness from Borrower or any other guarantor or party liable for
      the Guaranteed Indebtedness; (b) proceed against or exhaust any
      collateral held by Lender; or (c) pursue any other remedy in Lender’s
      power whatsoever . . . Guarantor waives any defense arising by reason
      of any disability, lack of corporate authority or power, or other
      defense of Borrower or any other guarantor of the Guaranteed
      Indebtedness, and Guarantor shall remain liable under this Guaranty
      regardless of whether Borrower or any other guarantor be found not
      liable on the Guaranteed indebtedness for any reason including,
      without limitation, insanity, minority, disability, bankruptcy,
      insolvency, death or corporate dissolution even though rendering the
      Guaranteed Indebtedness void or unenforceable or uncollectible as
      against Borrower or any other guarantor. . . .
      11.    The liability and obligations of Guarantor hereunder is a
      guaranty of payment and not of collectability and is not conditioned or
      contingent upon the genuineness, validity, regularity or enforceability
      of the Loan Documents and shall not be affected or impaired by (a)
      the failure of Lender or any other party to exercise diligence or
      reasonable care in the preservation, protection or other handling or
      treatment of all or any part of the collateral securing payment of all or
      any part of the Guaranteed Indebtedness, (b) the failure of any
      security interest or lien intended to be granted or created to secure the
      Guaranteed Indebtedness to be properly perfected or created or the
      unenforceability of any security interest or lien for any other reason,
      or (c) the subordination of any such security interest or lien to any
      other security interest or lien.
      Under the unambiguous language of the Guaranty, Sowell waived his right
to assert the failure-to-mitigate-damages defense that he raises in his second issue.
See Tran v. Compass Bank, No. 02-11-00189-CV, 2012 WL 117859, at *2 (Tex.
App.—Fort Worth Jan. 12, 2012, no pet.) (holding that, under plain meaning of
language in guaranty, guarantor had waived any rights or defenses based upon
offset) (mem. op.); Compass Bank v. 288/59 GP, LLC, No. H-09-4099, 2011 WL
13688, at *2–3 (S.D. Tex. Jan. 4, 2011) (applying Texas law and holding that,
under guaranty’s unambiguous language, guarantors had waived their rights to
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offset under section 51.003 with respect to the guaranties and properties at issue).

      Sowell argues that the failure-to-mitigate-damages defense reflects
fundamental Texas public policy and therefore cannot be waived. Sowell cites no
cases in which courts have held that that this defense reflects fundamental Texas
public policy or that it cannot be waived. We conclude that allowing a contracting
party to choose to waive this defense does not violate Texas public policy. See
LaSalle Bank National Ass’n v. Sleutel, 289 F.3d 837, 840–41 (5th Cir. 2002)
(applying Texas law); Interstate 35/Chisam Road, L.P. v. Moayedi, 377 S.W.3d
791, 801 (Tex. App.—Dallas 2012, pet. filed); Segal v. Emmes Capital, L.L.C., 155
S.W.3d 267, 278–79 (Tex. App.—Houston [1st Dist.] 2004, pet. dism’d). By
entering into the Guaranty, Sowell waived his right to assert the failure-to-
mitigate-damages defense that he raises in his second issue. See Tran, 2012 WL
117859, at *2; Compass Bank, 2011 WL 13688, at *2–3. Accordingly, we overrule
Sowell’s second issue.

                                  V. CONCLUSION

      Under section 51.003(a), the limitations period for International’s claims
against Sowell under the Guaranty expired two years after the date of the
foreclosure sale. Because International filed suit within this period, the trial court
did not err in concluding that International’s claims against Sowell were not barred
by statute of limitations. Under the Guaranty, Sowell waived his right to assert the
failure-to-mitigate-damages defense.

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      The trial court’s judgment is affirmed.

                                       /s/      Kem Thompson Frost
                                                Justice

Panel consists of Justices Frost, Christopher, and Jamison.

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