NO. 05-11-000520-CV
ACCEPTED
225EFJ016527912
FIFTH COURT OF APPEALS
DALLAS, TEXAS
11 October 4 P3:58
Lisa Matz
CLERK
COURT OF APPEALS
FOR THE FIFTH APPELLATE
DISTRICT OF TEXAS
______________________________________________
NICHOLAS SMITH
Appellant
vs.
TOWN NORTH BANK
Appellee
On Appeal from the 298th Judicial District Court of
Dallas County, Texas, Cause No. 09-14445-M
The Honorable Emily Tobolowsky, Presiding
______________________________________________________________________________
APPELLEE’S REPLY BRIEF
______________________________________________________________________________
George S. Henry
State Bar No. 09479400
LAW OFFICE OF GEORGE S. HENRY
4201 Spring Valley Road, Suite 1102
Dallas, Texas 75244
972/788-0811 Telephone
972/702-0705 Facsimile
[email protected]
ATTORNEYS FOR APPELLEE
TOWN NORTH BANK
ORAL ARGUMENT REQUESTED
TABLE OF CONTENTS
PAGE
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii, iii
STATEMENT OF THE CASE
APPELLEE HAS NO DISAGREEMENT WITH APPELLANT’S
STATEMENT OF THE CASE.
ISSUES PRESENTED FOR REVIEW
APPELLEE PRESENTS NO ISSUES FOR REVIEW. APPELLEE
DENIES THAT THE TRIAL COURT MADE ANY ERROR
STATEMENT OF THE FACTS
APPELLEE HAS NO DISAGREEMENT WITH APPELLANT’S
STATEMENT OF THE FACTS
SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STANDARD OF REVIEW
APPELLEE HAS NO DISAGREEMENT WITH APPELLANT’S
STATEMENT OF THE STANDARD OF REVIEW
LEGAL ARGUMENTS AND AUTHORITIES/REPLY TO ARGUMENT . . . . . . . . . . . . . . . . 3
PRAYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
APPENDIX
i
TABLE OF AUTHORITIES
Cases:
Page
Coker v. Coker, 630 S.W.2d 391, 394 (Tex. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
E.H. Stafford Mfg. Co. v. Wichita School Supply Co., 188 Tex. 850, 655 (1930) . . . . . . . . . . . . . 7
Home Savings Association of Dallas County v Crow, 522 S.W.2d 457 (Tex. 1975) . . . . . . . . . . 7
Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 32 (1958) . . . . . . . . . . . . . . . 10, 11
In re A.M., 312 S.W.3d 76 (Tex. App. - San Antonio 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 13
LaSalle Bank National Ass 'n. v. Sleutel, 289 F.3d 837 (5th Cir. 2002) . . . . . . . . . . . . . . . . . . . . 3
Lyons v. Montgomery, 701 S.W.2d 641, 643 (Tex.1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
National Union Fire Ins. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) . . . . . . . 8, 10, 11
Segal v. Emmes, L.L.C., 155 S.W.3d 267 (Tex. App.-Houston [1st Dist.] 2004, pet. dism'd) 3, 13
Statutes and Codes:
Tex. Prop. Code § 51.003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 6, 7, 13
Other Authorities:
Black’s Law Dictionary (9th Edition, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 5
Black's Law Dictionary (Definition of Offset; Recoupment) . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 6
Merriam-Webster Online Dictionary (Definition of Setoff) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Webster’s Online Dictionary (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
World English Dictionary (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Webster's New World College Dictionary (Definition of Setoff) . . . . . . . . . . . . . . . . . . . . . . 5, 6
Dictionary.Law.com (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ii
Nolo.Com/Dictionary (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Thesaurus.com (Offset and Setoff Synonymous) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Webster’s Collegiate Thesaurus (Offset and Setoff Synonymous . . . . . . . . . . . . . . . . . . . . . . . . . 6
The American Heritage Dictionary (Definition of Offset and Setoff) . . . . . . . . . . . . . . . . . . . . . . 6
iii
NO. 05-11-000520-CV
COURT OF APPEALS
FOR THE FIFTH APPELLATE
DISTRICT OF TEXAS
______________________________________________
NICHOLAS SMITH
Appellant
vs.
TOWN NORTH BANK
Appellee
On Appeal from the 298th Judicial District Court of
Dallas County, Texas, Cause No. 09-14445-M
The Honorable Emily Tobolowsky, Presiding
______________________________________________________________________________
__________________________________________________________________
APPELLEE’S REPLY BRIEF
__________________________________________________________________
TO THE HONORABLE COURT OF APPEALS:
COMES NOW, Appellee, Town North Bank, and submits this Reply Brief in response to the
appeal of the judgment of the 298th District Court, Dallas County, Texas, and in support thereof
would show the following:
SUMMARY OF ARGUMENT
On Motion for Summary Judgment the 298th Judicial District Court of Dallas County, Texas,
found that Appellant Nicholas Smith is guarantor of debts due Appellee Town North Bank by S & K
Construction, Inc. and was liable for a sum of money determined by subtracting from the amount
due
-1-
on S & K Construction, Inc.’s promissory notes the amount bid at foreclosure sales of the real
property that secured those notes. Appellant Smith contends that the trial court should have allowed
him to establish by a valuation hearing the fair market value of the property as an offset against the
notes’ indebtedness.
A right to a fair market valuation of property in a case to establish a deficiency owed after
foreclosure sale is provided by Tex. Prop. Code § 51.003. However, it is the law of Texas that the
Tex. Prop. Code § 51.003 valuation rights may be contractually waived by a person otherwise so
entitled.
Appellee’s Motion for Summary Judgment proof established conclusively that Appellant
waived his valuation rights by signing a guaranty agreement wherein Appellant guaranteed any and
all indebtedness of S & K Construction, Inc.; and “waives and agrees not to assert or claim at any
time any deductions to the amount guaranteed under this guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right” “...guarantor also waives any and all
rights or defenses based on ... but not limited to any rights or defenses arising by reason of ... a claim
for deficiency against guarantor, before or after lender’s commencement or completion of any
foreclosure action, ... or any defenses given to guarantors at law or in equity other than actual
payment and performance of the Indebtedness.” The guaranty further provided “Guarantor’s
understanding with respect to waivers. Guarantor warrants and agrees that each of the waivers set
forth above is made with guarantor’s full knowledge of its significance and consequences and that,
under the circumstances, the waivers are reasonable and not contrary to public policy or law.” The
document referred to by Appellant and Appellee is the “Bluffs’ Note” guaranty and by its express
terms is a guaranty of “any and all debts of borrower, S & K Construction, Inc.
-2-
In the face of Appellant’s contractual undertaking, Appellant claims that he did not waive
his Tex. Prop. Code § 51.003 right on the sole basis that the one word of the Bluffs’ Note guaranty’s
broad description of rights waived; “setoff” is something different from a § 51.003 “offset.”
Appellant’s argument is supported by one (1) citation to one (1) part of Black’s Law Dictionary (9th
Edition 2009) definition of “setoff.” However, Appellant’s sole authority defines “setoff” as a
synonym of “offset” and the overwhelming majority of dictionary authority expressly defines offset
and setoff as synonyms, whether used as noun or verb.
Appellant claims there is an ambiguity in the related note document by claiming that the
indebtedness in the related note is the indebtedness of S & K Construction, Inc. and Thang Nguyen.
An examination of the document supports only an identity of the borrower as S & K Construction,
Inc. which defeats Appellant’s claim that the document can be reasonably construed to evidence an
indebtedness of two (2) borrowers.
Appellant’ s third point of error is a simple plea for overturning the existing law established
by LaSalle Bank National Ass'n. v. Sleutel, 289 F.3d 837 (5th Cir. 2002) and Segal v. Emmes, L.L.C.,
55 S.W.3d 267 (Tex. App.-Houston [1st Dist.] 2004, pet. dism'd) upon a policy argument devoid of
any analysis of why the reversal Appellant desires should be made retroactively and, therefore,
robbing Appellee of the benefit of its contractual bargain made under the law that existed at the time
of the contract’s formation.
LEGAL ARGUMENT AND AUTHORITIES
REPLY TO ARGUMENT
APPELLANT’S POINT OF ERROR I (RESTATED):
granting a summary judgment on the waiver issue because:
-3-
Did the trial court err in
(A)
The evidence does not conclusively show Smith had knowledge at the time he
signed the guaranty of his right to an offset of the fair market value of property in the event
of a suit for deficiency after foreclosure.
(B)
The evidence does not conclusively show Smith had an actual intent to relinquish
his right to an offset of the fair market value of property in the event of a suit for deficiency
after foreclosure.
Appellant’s argument rests principally upon the claim that the guaranty agreement language
waiving “claim of setoff”, CR 871, is “something different from the ‘offset’ provided by Section
51.003.” Appellant’s Brief, p.11.
For this contention Appellant cites only one (1) authority, the
Black’s Law Dictionary (9th Edition, 2009) definition of “setoff.” An essential device of Appellant’s
argument is to focus on his authority’s definition of “setoff” as being a thing “arising out of a
transaction independent of the Plaintiff’s claims,” language which is found in his authority’s first
definition.
Appellant ignores his authority’s second and third definition, in fact Appellant chooses to
ignore each and every word following the end of the definition’s first sentence. Appellant’s
authority’s second definition is “A debtor’s rights to reduce the amount of a debt by any sum
creditor owes the debtor (this author’s emphasis); the counterbalancing sum owed by the creditor.
...Also termed (in civil law) compensation; stoppage. See counterclaim; offset. Cf. recoupment”
(this author’s emphasis). Thus, Appellant conveniently ignores his authority’s recognition of
“offset” and “counterclaim” as synonyms of “setoff.”
Reading further through the historical footnotes detailing the etymology of “setoff” (the
origin and historical development of the word as shown by its earliest known use and changes in
1
Appellee’s cites are to the summary judgment record. Appellant’s cites to all documents outside of CR 75-257 are
cites to documents that were no part of the summary judgment evidence.
-4-
form and meaning to the present), it is clear that the characteristic “arising out of a transaction
independent from the Plaintiff’s claim” is not only ancient, but currently abandoned.
Appellant’s authority’s definition #3 also defines “setoff” as “the balancing of mutual
liabilities with respect to a pledge relationship.” This definition clearly abandons the concept that
a “setoff” arises only out of a transaction independent of the claim asserted. (Note: it is important
to note that while definition #1 describes the counter demand as one which arises out of a transaction
independent, there is no limiting language. In other words, setoff is never defined as a counter
demand that can arise only out of an independent transaction). Definition #3 clearly includes within
its meaning a counter demand growing from “A” (singular) “pledge relationship,” which we must
relate here to the deed of trust pledge of the property foreclosed.
It is important to note that Appellant’s claim of this distinction lies upon one and only one
authority, Black’s Law Dictionary (9th Edition 2009). This authority has been chosen from the
universe of authorities available. Appellant has ignored virtually every authority that defines each
word as a synonym of the other.
Appellant cites Black's Law Dictionary for the proposition that the word “setoff” is not the
same as “offset” and that, therefore, Appellant's contractual waiver of all claims of “setoff”, CR 87,
does not amount to a waiver of Appellant's § 51.003 “offset” rights. Appellant's contention is
unavailing for two independent reasons: first, the dictionary definition of “setoff” treats “offset” as
a synonym for “setoff” and the dictionary definition of “offset” treats “setoff” as a synonym for
“offset.” See Merriam-Webster Online Dictionary (Definition of Setoff; Appellee's Appendix, p. 5);
Webster’s Online Dictionary (Definition of Offset; Appellee's Appendix, p. 5); World English
Dictionary (Definition of Offset; Appellee's Appendix p. 5); Webster's New World College
-5-
Dictionary (Definition of Setoff; Appellee's Appendix, pp. 5-6); Dictionary.Law.com (Definition
of offset; Appellee's Appendix, p. 6); Nolo.Com/Dictionary (Definition of Offset; Appellee's
Appendix, p. 6); Thesaurus.com, (Offset and setoff synonymous; Appellee’s Appendix, p.6);
Webster’s Collegiate Thesaurus,(Offset and setoff synonymous; Appellee’s Appendix, p. 6 ); The
American Heritage Dictionary, (Definition of offset and setoff; Appellee’s Appendix, p. 6).
Most significantly, the Black's Law Dictionary states unequivocally that “offset” and “setoff”
mean the same thing. (See Appellee's Appendix, pp.5-6).
However, secondly, even if the term “setoff” does not mean the same thing as “offset” in that
setoff signifies an offset arising from an independent transaction and whereas the offset in this case
arose out of the same transaction, the Appellant's contention is still unavailing, because Appellant
contractually waived not only “claims of setoff” but also “recoupment.” CR 87. As made clear in
the Black's Law Dictionary definition of Appellant, a recoupment is an offset arising in the “same
transaction.” (Appellee's Appendix, pp. 5- 6). Therefore, because a setoff and an offset mean the
same thing; or, instead, that a recoupment is the same as an offset arising in the same transaction,
Appellant clearly contractually waived his Tex. Prop. Code § 51.003 offset rights.
Appellant has not attempted to demonstrate how the Bluffs’ guaranty language “Guarantor
further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed
under this guaranty for any... counterclaim, counter demand, recoupment or similar right, ...”, CR
87, is insufficient, when Appellant’s own authority uses counterclaim, counter demand and
recoupment as synonyms for “setoff.”
Further, Appellant fails to address the guaranty agreement’s waiver “Guarantor also waives
any and all rights or defenses based on (A) any ‘one action’ or ‘anti-deficiency’ law or any other law
-6-
which may prevent lender from bringing any action, including a claim for deficiency against
guarantor, before or after lender’s commencement or completion of any foreclosure action, either
judicially or by exercise of a power of sale; ... (F) any defenses given to guarantor at law or in equity
other than actual payment and performance of the Indebtedness.” CR 87
Appellant further fails to provide any analysis of the Bluffs’ guaranty document language
“GUARANTOR’S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor’s full knowledge of its
significance and consequences and that, under the circumstances, the waivers are reasonable and not
contrary to public policy or law.” CR 87.
Appellee’s Bluffs’ Note guaranty document’s language is more than sufficient and ample
to describe the offset rights of Tex. Prop. Code § 51.003 clearly and objectively coupled with the
express warranty and agreement of Appellant as to his full knowledge of both the languages’
significance and the consequences that follow. Appellant did not assert any defense of fraud or
duress. It is the law of Texas that every person who signs a contract is conclusively presumed to
have consented to its terms and is charged with knowledge of its legal effect. In re A.M., 312
S.W.3d 76 (Tex. App. - San Antonio 2010). “The rule is too elementary to require the citation of
authority that all persons are conclusively presumed to know the law.” E.H. Stafford Mfg. Co. v.
Wichita School Supply Co., 188 Tex. 850, 655 (1930); see also, Home Savings Association of Dallas
County v Crow, 522 S.W.2d 457 (Tex. 1975). Appellant waived and relinquished his Tex. Prop.
Code § 51.003 offset rights as determined by the trial court.
APPELLANT’S POINT OF ERROR II (RESTATED): Did the trial court err in
granting summary judgment on the waiver issue with regard to the Dove Road note because
the evidence does not conclusively show the Bluffs’ guaranty applies to the Dove Road note?
-7-
Appellant claims that documents which Town North Bank sued upon contained either a
latent or patent ambiguity in the definition of the indebtedness guaranteed. Whether a contract is
ambiguous is a question of law for the court to decide. National Union Fire Ins. v. CBI Indus., Inc.,
907 S.W.2d 517, 520 (Tex. 1995); Coker v. Coker, 630 S.W.2d 391, 394 (Tex. 1983). This
determination is made by looking at the contract as a whole in light of the circumstances present
when the parties entered the contract. National Union, 907 S.W.2d at 520. If a contract is worded
in such a manner that it can be given a definite or certain legal meaning, then it is not ambiguous.
National Union, 907 S.W.2d at 520; Coker, 650 S.W.2d at 393. An ambiguity in a contract may be
either patent or latent. A patent ambiguity is one evident on the face of the contract. National
Union, 907 S.W.2d at 520.
The guaranty defines the indebtedness guaranteed as being the indebtedness of the
“Borrower: S & K Construction, Inc.” CR 103. Appellant claims the ambiguity is demonstrated by
his summary judgment evidence that the agreement that he describes as The Bluff Property Note is
an agreement on behalf of a borrower that is not S & K Construction, Inc. CR 103-104; Appellant’s
App., Tab D “the Bluffs’ Note.” Appellant claims that the Bluffs’ Note document can be construed
to be the direct obligation of both S & K Construction, Inc. and Thang Nguyen. Appellant omits
any analysis of that key portion of the document, the signature block that Appellant’s entire legal
theory of ambiguity relies. Appellee reproduces that signature block, CR 104, below:
BORROWER:
S AND K CONSTRUCTION, INC.
By:
By:
Nicholas Smith
Thang Nguyen
-8-
The only person set forth as a borrower after the word Borrower is S & K Construction, Inc.
S & K Construction, Inc., being a corporation, can only affix its signature to the document by and
through its human representatives. The signature block clearly shows two (2) humans who have
signed their names, Nicholas Smith and Thang Nguyen. Each of those two (2) humans have signed
their name on a signature line which line is preceded by the preposition “By”. “By” is the beginning
of a prepositional phrase. A prepositional phrase begins with a preposition, here “by”, and ends with
a noun, pronoun, gerund or clause, the “object” of the preposition. This prepositional phrase ends
with the noun “Thang Nguyen.”
A prepositional phrase functions as either an adjective or adverb. The above prepositional
phrase functions as an adverb and answers the question: Who signs for “S & K Construction, Inc?”
This prepositional phrase is a signature block, constructed in a customary, easy to understand and
unambiguous manner identifying the borrower (here S & K Construction, Inc.) and providing for
two (2) signatures to be made by representatives (here Nicholas Smith and Thang Nguyen) on behalf
of the represented person (here S & K Construction, Inc.) who is identified in the signature block
immediately above its representatives’ signatures.
The Bluffs’ Note document provides no evidence whatsoever that the document upon which
Appellee sues is susceptible to the alternative meaning necessary to support Appellant’s argument,
to-wit: that Thang Nguyen is a co-maker and borrower together with S & K Construction, Inc.
Patent ambiguity exists only when a document is reasonably susceptible of two (2) or more
meanings . Appellant admits that “in the body of the note only S & K Construction, Inc. is identified
as the borrower.” Appellant’s Brief, p.13; CR 103. Appellant offers no analysis of how the
signature block can be reasonably understood to identify Thang Nguyen as a borrower and co-maker
-9-
with S & K Construction, Inc. for the simple reason that the signature block cannot, reasonably, be
so understood.
A latent ambiguity exists when a contact is unambiguous on its face, but fails by reason of
some collateral matter when it is applied to the subject matter with which it deals. National Union
Fire Ins. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). Only after a contract is found to be
ambiguous may parol evidence be admitted for the purpose of ascertaining the true intentions of the
parties expressed in the contract. National Union, 907 S.W.2d at 521.
The statement of Nicholas Smith in his affidavit “executed by S & K Construction, Inc. and
Thang Nguyen as borrowers”, CR 195, however, is parol evidence that the document is executed
by S & K Construction, Inc. and Thang Nguyen. Smith’s interpretation, however, is parol evidence,
and parol evidence of intent2 cannot be admitted for the purpose of creating an ambiguity. National
Union, 907 S.W.2d at 520. Additionally, the fact that Thang Nguyen had not in other documents
guaranteed S & K Construction, Inc.’s Dove note obligation alone does not make the otherwise
unambiguous explicit statement in the Bluffs’ Note document (that S & K Construction, Inc. is the
borrower) ambiguous.
Extrinsic evidence may, indeed, be admissible to give the words of a contract a meaning
consistent with that to which they are reasonable susceptible, i.e., to “interpret” contractual terms.
If the contract language is not fairly susceptible of more than one legal meaning or construction,
however, extrinsic evidence is inadmissible to contradict or vary the meaning of the explicit
language of the parties’ written agreement. National Union, 907 S.W.2d at 521 (citing Hubacek v.
Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 32 (1958)) (footnote omitted). If a contract called
2
Intent is the most that Smith’s averment can import. Smith’s claim of what the physical document is constitutes no
evidence.
- 10 -
for goods to be delivered to “the green house on Pecan Street,” and there were in fact two green
houses on the street, it would be latently ambiguous. National Union, 907 S.W.2d at 520 n. 4.
Applying the Bluffs’ Note document language to the subject matter with which it deals does not
produce an uncertain or ambiguous result. The Bluffs’ Note document is not latently ambiguous
and, therefore, the guarantee sued upon is not latently ambiguous.
Because the Bluffs’ Note document contains neither patent or latent ambiguities, the trial
court gave the contract its plain grammatical meaning. Lyons v. Montgomery, 701 S.W.2d 641, 643
(Tex.1985). The contract unequivocally excludes Thang Nguyen from the definition of borrower,
thus leaving the definition of indebtedness guaranteed conclusively established to be the
indebtedness of S & K Construction, Inc. By the Bluffs’ Note’s document and the Bluffs’ Note’s
guaranty, Appellee conclusively established that Appellant guaranteed the indebtedness sued upon.
The trial court properly rendered summary judgment for Appellee.
Appellee will adopt Appellant’s argument that “instruments pertaining to the same
transaction are read together to ascertain the parties’ intent and the court may determine as a matter
of law that multiple documents comprise a written contract. The court may construe all documents
as if they were part of a single, unified instrument. When one considers Mr. Thang Nguyen’s
guaranty2 of the Bluffs’ Note, CR 17-20, clearly signed as evidenced by its signature block:
2
Appellant’s Affidavit in Response to Appellee’s Motion for Summary Judgment states “...We (referring to Appellant
and Thang Nguyen) executed, individually, guaranties with respect to the Bluffs’ Property Note.” CR 195. However, the
Bluffs’ Note guaranty that is CR 17-20 as cited above and by Appellant here is not part of the summary judgment evidence.
- 11 -
GUARANTOR:
x
Thang Nguyen
the construction that Appellant advances that Thang Nguyen is a borrower and co-maker on the
Bluffs’ Note is further removed from the realm of the reasonable.
Appellant argues his point rhetorically “why would the bank have Thang Nguyen sign a
guaranty if he already signed the note as a borrower, primarily liable for the entire debt?”
Appellant’s Brief, p. 14. The answer to Appellant’s rhetorical question is obvious, and contained
in the summary judgment record: Thang Nguyen did not sign the note as a borrower.
Appellant’s rhetorical argument: “Why would Thang Nguyen guarantee other obligations
of S & K Construction, Inc., which did not involve him?”, Appellant’s Brief, p. 13-14, is answered
by the very documents themselves. It is a further assurance to Appellee that all loans made to S &
K Construction, Inc. including the Bluffs’ Note would be paid and was the promised consideration,
the bargained for contract rights, which Appellee received in exchange for the advance of its loan
proceeds under the Bluffs’ Note.
Appellant’s call for “the consideration of the evidence of intent of the parties to resolve this
ambiguity...” is answered by the indisputable fact that no ambiguity exists in “the Bluffs’
documents”, Appellant’s Brief, p. 14, to be resolved.
Since Appellant’s only attack on the evidentiary record (which depends on a finding of
ambiguity, i.e., that the guaranty’s definition of indebtedness may only refer to the indebtedness of
S & K Construction, Inc. and Thang Nguyen as co-borrowers) has no evidentiary support, the trial
- 12 -
court’s determination that the Bluffs’ guaranty effected a waiver of Smith’s right to an offset of the
fair market value of property in a suit for deficiency following foreclosure of the Dove Road
property is correct.
APPELLANT’S POINT OF ERROR III (RESTATED): Did the trial court err in
holding Smith waived the right to offset the fair market value of property in the event of a suit
for deficiency after foreclosure because said right, granted by § 51.003 of the Tex. Prop. Code,
is not subject to waiver?
Appellant’s third point of error advances a policy argument requesting this court to reverse
that which has previously been decided by the LaSalle and Segal courts. Appellant correctly
concedes that the dispositive reasoning of these courts was the simple fact that the Texas legislature
clearly expressed its intention that Tex. Prop. Code § 51.0003 and its related statutes were
waiveable by omitting any anti-waiver provision of that law. Appellant’s argument is limited to a
simple plea that this court deem “the principle that remedial statutes should be construed
liberally”(Appellant’s Brief, p.16) is insufficient to overcome the prerogative of the Texas
legislature clearly expressed in Tex. Prop. Code § 51.003, et seq.
Appellant inferentially requests that this court effect a retroactive change in the law.
Appellee humbly submits that a retroactive application would unjustly deny Appellee the benefit
of its bargain and determine that Appellee who gave 100% of its consideration under the contract
is not entitled to the benefit of its bargain.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Appellee, Town North Bank, respectfully prays
that this Court grant the following relief:
1.
That the judgment of the trial court be affirmed with all costs of this appeal taxed
against Appellant; and
- 13 -
2.
For such other and further relief as suits the ends of justice.
Respectfully submitted,
THE LAW OFFICE OF GEORGE S. HENRY
By:______________________________________
George S. Henry
State Bar No. 09479400
4201 Spring Valley Road, Suite 1102
Dallas, Texas 7524
Telephone: (972) 788-0811
Facsimile: (972) 702-0705
[email protected]
ATTORNEY FOR APPELLEE
TOWN NORTH BANK
CERTIFICATE OF SERVICE
I certify that on the ____ day of October, 2011, a true and correct copy of the above and
foregoing APPELLEE’S REPLY BRIEF was served on Appellant, by and though his counsel of
record, Ross Foster, via:
facsimile
certified mail, return receipt requested
hand delivery
first class U.S. mail
George S. Henry
- 14 -
NO. 05-11-000520-CV
COURT OF APPEALS
FOR THE FIFTH APPELLATE
DISTRICT OF TEXAS
______________________________________________
NICHOLAS SMITH
Appellant
vs.
TOWN NORTH BANK
Appellee
On Appeal from the 298th Judicial District Court of
Dallas County, Texas, Cause No. 09-14445-M
The Honorable Emily Tobolowsky, Presiding
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APPELLEE’S APPENDIX
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Merriam-Webster Online Dictionary (Definition of Setoff) . . . . . . . . . . . . . . . . . . . . . . . . TAB A
Webster’s Online Dictionary (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAB B
World English Dictionary (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAB C
Webster's New World College Dictionary (Definition of Setoff) . . . . . . . . . . . . . . . . . . . TAB D
Dictionary.Law.com (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAB E
Nolo.Com/Dictionary (Definition of Offset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAB F
Thesaurus.com (Offset and Setoff Synonymous) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAB G
Webster’s Collegiate Thesaurus (Offset and Setoff Synonymous . . . . . . . . . . . . . . . . . . . . TAB H
The American Heritage Dictionary (Definition of Offset and Setoff) . . . . . . . . . . . . . . . . . TAB I
Black’s Law Dictionary (9th Edition 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAB J
ACCEPTED
225EFJ016527912
FIFTH COURT OF APPEALS
DALLAS, TEXAS
11 October 4 P3:58
Lisa Matz
CLERK