Gerald Godoy v. Wells Fargo Bank, N.A., No. 18-0071 (Tex. May 10, 2019)
When Godot's appeal was heard by the Fourteenth Court of Appeals in 2017, the Chief of that Court vigorously dissented on the key issue in the case, a contractual provision in a guaranty agreement purporting to waive the statute of limitations, concluding that the contractual waiver of the two-year statute of limitations governing deficiency claims -- TEX. PROP. CODE § 51.003(a) -- was void on public policy grounds, and that the summary judgment in the bank's favor should accordingly have been reversed.
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| Dissent by Chief Justice Frost |
The supreme court agreed with Chief Justice Frost's dissent to an extent. This included the issue of whether it was enough for Godoy to raise the public policy defense at the summary judgment stage, when he had not expressly raised it in his pleadings (on top of pleading limitations as an affirmative defense). But the partial vindication of Chief Frost's take on the void-as-against-public-policy issue in the case wasn't enough to change the outcome.
Blanket pre-dispute waivers of all statutes of limitation are unenforceable, but waivers of a particular limitations period for a defined and reasonable amount of time may be enforced.Rather than reversing the judgment grant for Wells Fargo, as unsuccessfully urged by Chief Justice Frost on her own court, or agreeing that the statute of limitations had been rendered inapplicable by the fine print in the Bank's shrewdly and self-servingly drafted guaranty agreement, the Texas High Court ended up taking what might look like a middling position.
In an opinion written by Justice Blacklock, the Court concluded, without any dissent, that the contractual waiver in the contract at issue substituted a four-year limitations period for the statutory limitations period of two years that governs deficiency suits, and that the contractual doubling to a four-year period (the SOL generally applicable to suits on debt) was not contrary to Texas public policy.
Because the Bank had filed suit against Godot within the four-year period, limitations did not bar its claim. The supreme court accordingly affirmed the summary judgment for Wells Fargo, albeit on a different basis.
The Supreme Court further noted that the waiver language in the guaranty agreement contained a savings provision, buy declined to decide whether a blanket waiver of all statutes of limitations (as opposed to the specific one governing deficiency claims) could be made compliant with public policy by judicially limiting it to four years, as opposed to striking the contractual waiver as void and therefore ineffective in its entirety because it would allow the bank to bring claims in perpetuity.
Once section 51.003(a)’s two-year statute of limitations is waived by operation of section (A), the four-year statute of limitations applying to suits to collect debts found in section 16.004(a)(3) of the Civil Practice and Remedies Code becomes applicable. The concern about litigating long stale claims is absent, and Godoy does not contend that a four-year limitations period is unreasonable. The backstop of section 16.004(a)(3) is sufficient to satisfy the requirement that contractual statute-of-limitations waivers must be only “for a reasonable time.”The bottom line here is that the Bank prevailed; that the statute of limitations was not expressly gutted, but that Wells Fargo and other banks have been given a green light to work their way around it.
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| Old Harris County Courthouse, now the seat of the First and Fourteenth Courts of Appeals |
The message to financial institutions is that they are free to require customers to agree to a contractual extension of the otherwise applicable limitations periods as long as the contracted-for limitations period is not unreasonable as ultimately judged by the Texas Supreme Court in case of a subsequent dispute.
The Godoy opinion won't lay to rest all questions that might arise, though. Case-dispositive here was the Court's substitution of the four-year statute of limitations governing debt for the statute of limitations that would govern deficiency suits (which is a special subcategory of suit on debt with its own statute of limitations) in the absence of a contractual waiver. That does not cover all scenarios. So there may be appellate litigation forthcoming on limitations waivers in other scenarios, such as when a contract purports to waive the four-year statute of limitations governing "debt" or the six-year statute of limitations governing promissory notes that meet the definition of negotiable instruments under the Texas version of the UCC. It is by no means clear how many contracted-for additional years would amount to too many years in the Supremes' estimation, thereby offending the state's public policy under the "reasonableness" criterion.
Note also that Godoy opinion does not address the matter of contractual choice of law. In Godoy, the obligation arose from a guaranty Godoy had signed for a mortgage loan made to a corporation. There is no mention whether the contract was governed by Texas law or some other state's law. There is little doubt that it was Texas law. In credit card card agreements, however, Wells Fargo's contractual choice of law is South Dakota, not Texas, and federal laws also applies to extensions of consumer credit. That, and any distinctions between commercial vs. consumer credit cases, may create additional supreme litigation opportunities that remain for another day.
Corrected: Godoy, not Godot. There was quite a bit of wait, but not for Godot.
Clink hyperlink to opinion [in PDF] here ---> Godoy v. Wells Fargo Bank, N.A.
SCOTX Docket sheet with hotlinks to briefs here --> 18-0071
IN THE SUPREME COURT OF TEXAS
══════════
No. 18-0071
══════════
GERALD GODOY, PETITIONER,
v.
WELLS FARGO BANK, N.A., RESPONDENT
══════════════════════════════════════════
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
══════════════════════════════════════════
Argued February 19, 2019
Godoy v. Wells Fargo Bank, N.A., No. 18-0071 (Tex. May 10, 2019)
JUSTICE BUSBY did not participate in the decision.
Seventy-five years ago in Simpson v. McDonald, this Court held that “an agreement in
advance to waive or not plead the statutes of limitation is void as against public policy.” 179
S.W.2d 239, 243 (Tex. 1944). We reaffirm that longstanding principle today, although we agree
with the courts of appeals that have since interpreted Simpson to allow a contractual waiver of the
statute of limitations if the waiver is “specific and for a reasonable time.” E.g., Am. Alloy Steel,
Inc. v. Armco, Inc., 777 S.W.2d 173, 177 (Tex. App.—Houston [14th Dist.] 1989, no writ). The
court of appeals found that Gerald Godoy waived the argument that his contractual waiver of the
statute of limitations is void as against public policy. 542 S.W.3d 50, 54 (Tex. App.—Houston
[14th Dist.] 2017). We hold that the court of appeals erred by declining to reach Godoy’s
argument, but we nonetheless agree with its ultimate disposition of the case. While portions of
2
Godoy’s contractual waiver are unenforceable under Simpson, other portions are sufficiently
specific and result only in the substitution of a four-year limitations period for a two-year period
rather than the abandonment of all limitations prohibited by Simpson. When the enforceable
portions of Godoy’s contractual waiver are applied, limitations do not bar Wells Fargo’s suit
against him. We therefore affirm the judgment of the court of appeals.
I. Background
GDG Mortgage, Inc., borrowed $250,000 from Wachovia Bank. The loan was secured by
real property owned by GDG Mortgage. Gerald Godoy guaranteed the loan. The guaranty
agreement Godoy signed included the following waiver of defenses:
GUARANTOR’S WAIVERS.
Guarantor also waives any and all rights or defenses arising by reason of (A) any
“one action” or “anti-deficiency” law or any other law 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; (B) any election of remedies by
Lender which destroys or otherwise adversely affects Guarantor’s subrogation
rights or Guarantor’s rights to proceed against Borrower for reimbursement,
including without limitation, any loss of rights Guarantor may suffer by reason of
any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or
other defense of Borrower, of any other guarantor, or of any other person, or by
reason of the cessation of Borrower’s liability from any cause whatsoever, other
than payment in full in legal tender, of the Indebtedness; (D) any right to claim
discharge of the Indebtedness on the basis of unjustified impairment of any
collateral for the Indebtedness; (E) any statute of limitations, if at any time any
action or suit brought by Lender against Guarantor is commenced, there is
outstanding indebtedness of Borrower to Lender which is not barred by any
applicable statute of limitations; or (F) any defenses given to guarantors at law or
in equity other than actual payment and performance of the Indebtedness. . . .
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. If any such waiver is determined to be contrary to any applicable law or public
3
policy, such waiver shall be effective only to the extent permitted by law or public
policy.
GDG Mortgage defaulted. Wells Fargo, Wachovia’s successor, foreclosed on GDG
Mortgage’s real property securing the loan. Wells Fargo purchased the property at the foreclosure
sale, which took place in November 2011. The purchase price of the property was not enough to
satisfy GDG Mortgage’s unpaid balance. Wells Fargo sued Godoy to recover the deficiency in
June 2015. Godoy moved for summary judgment, arguing that Wells Fargo’s claim was barred
by the Property Code’s two-year statute of limitations for deficiency claims, which provides:
If the price at which real property is sold at a 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 brought to recover the deficiency
must be brought within two years of the foreclosure sale and is governed by this
section.
TEX. PROP. CODE § 51.003(a). In response, Wells Fargo moved for partial summary judgment,
arguing that Godoy waived section 51.003’s two-year statute of limitations when he signed the
guaranty agreement. The trial court denied Godoy’s motion for summary judgment and granted
Wells Fargo’s motion for partial summary judgment. Wells Fargo moved for final summary
judgment on its deficiency claim, and the trial court granted that motion.
Godoy appealed. He argued that, under court of appeals decisions applying Simpson v.
McDonald, a statute-of-limitations defense can only be waived if the language in the waiver is
specific and for a defined period of time. See Am. Alloy Steel, Inc., 777 S.W.2d at 177; Duncan v.
Lisenby, 912 S.W.2d 857, 859 (Tex. App.—Houston [14th Dist.] 1995, no writ); Squyres v.
Christian, 253 S.W.2d 470, 472 (Tex. App.—Fort Worth 1952, writ ref’d n.r.e.). Godoy claimed
that the waiver he agreed to was indefinite and thus void as against public policy because, he
contended, it allowed Wells Fargo to bring suit at any time in the future. 542 S.W.3d at 52. Citing
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our decision in Moayedi v. Interstate 35/Chisam Road, L.P., 438 S.W.3d 1 (Tex. 2014), Wells
Fargo argued that, by signing a broad waiver of all defenses, a party such as Godoy can waive all
statute-of-limitations defenses indefinitely. Id.
The court of appeals affirmed. Id. at 51. It held that, under Moayedi, Godoy’s agreement
to waive “all rights or defenses arising by reason of . . . any . . . anti-deficiency law” was sufficient
to waive section 51.003(a)’s two-year statute of limitations. Id. at 53. The court of appeals did
not consider Godoy’s argument that his contractual waiver of the limitations period was void as
against public policy under Simpson. It determined that Godoy waived this public-policy argument
by failing to affirmatively plead it as a “matter constituting an avoidance” under Rule 94. Id. at
54; TEX. R. CIV. P. 94.
Although it did not consider Godoy’s public-policy arguments against enforcement of the
waivers, the court of appeals did not decide whether the guaranty agreement’s waiver provision
was sufficient to waive all Godoy’s possible statute-of-limitations defenses. Because Wells Fargo
sued within the four-year limitations period applying generically to suits to collect debts, the court
of appeals concluded that its suit was timely even if Godoy could not contractually waive all
limitations defenses. 542 S.W.3d at 55; see TEX. CIV. PRAC. & REM. CODE § 16.004(a)(3). The
court of appeals decided only that Godoy waived the two-year statute of limitations and that Wells
Fargo’s suit—filed three-and-a-half years after the foreclosure sale—was not barred by the fouryear limitations period that would apply in the absence of the two-year period. 542 S.W.3d at 55.
One court of appeals justice dissented. With respect to waiver, the dissent concluded that,
under Phillips v. Phillips, Godoy did not need to plead his public-policy defense in his answer
because the complete waiver of the statute of limitations “appears on the face of the petition” and
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its voidness “is established as a matter of law.” 542 S.W.3d at 62–63 (Frost, C.J., dissenting)
(citing Phillips, 820 S.W.2d 785, 789–90 (Tex. 1991) (holding that a defense “is not waived by
the failure to plead it if it is apparent on the face of the petition and established as a matter of
law”)). The dissent also argued that Wells Fargo tried the defense by consent by not objecting to
Godoy’s alleged pleading defect before the trial court rendered judgment. Id. at 65 (citing Via Net
v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex. 2006) (per curiam)). With respect to the statute of
limitations, the dissent argued that Simpson prohibits enforcement of Godoy’s contractual waiver
of section 51.003(a)’s two-year statute of limitations. Id. at 58. The dissent reasoned that nothing
in Moayedi’s general holding regarding a contractual waiver of all defenses alters the specific rule
in Simpson governing contractual waiver of statutes of limitation. Id. at 60–61. The dissent
concluded that, because Godoy’s waiver of the two-year statute of limitations was void under
Simpson, the trial court’s summary judgment enforcing that waiver should be reversed. Id. at 57.
Before this Court, Godoy contends that he did not waive the argument that his contractual
abandonment of the statute of limitations is void as against public policy. Further, he continues to
argue that, under Simpson, his agreement to waive section 51.003(a)’s two-year limitations period
is void unless it is specific and for a pre-determined length of time. In Godoy’s view, if the court
of appeals is correct that he waived the two-year limitations period, then Wells Fargo could bring
its deficiency claims at any time in the distant future. However, Wells Fargo no longer argues that
the guaranty agreement waived all statute-of-limitations defenses such that it could bring suit in
perpetuity. Wells Fargo now asserts only that Godoy waived all defenses under section 51.003 of
the Property Code, including the two-year statute of limitations. The effect of waiving the twoyear limitations period, Wells Fargo contends, is that the four-year limitations period of section
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16.004(a)(3) of the Civil Practice and Remedies Code applies as a backstop in the absence of the
waived two-year period. If a four-year limitations period applies, Wells Fargo’s suit—brought
three-and-a-half years after the foreclosure sale—is not barred by limitations.
II. Discussion
A. Standard of Review
“We review the trial court’s summary judgment de novo.” Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). “As the parties dispute not the facts” but questions of
law, we “determin[e] all legal questions presented.” Guynes v. Galveston Cty., 861 S.W.2d 861,
862 (Tex. 1993). As always, “[w]e review legal questions de novo.” Tex. Dep’t of Transp. v.
Needham, 82 S.W.3d 314, 318 (Tex. 2002).
B. Waiver
We first consider whether, by failing to plead it in his answer, Godoy waived the argument
under Simpson that his contractual abandonment of the statute of limitations is void. Rule 94 of
the Texas Rules of Civil Procedure requires that “[i]n a pleading to a preceding pleading, a party
shall set forth affirmatively” any matter “constituting an avoidance or affirmative defense.” An
affirmative defense is “[a] defendant’s assertion of facts and arguments that, if true, will defeat the
plaintiff’s or prosecution’s claim, even if all the allegations in the complaint are true.” Zorrilla v.
Aypco Constr. II, LLC, 469 S.W.3d 143, 155–56 (Tex. 2015) (quoting affirmative defense,
BLACK’S LAW DICTIONARY (10th ed. 2009)). An avoidance “derives from the historic English
common-law pleas of ‘confession and avoidance’” and means “a plea in which a defendant admits
allegations but pleads additional facts that deprive the admitted facts of an adverse legal effect.”
Id. at 156 (quoting confession and avoidance, BLACK’S LAW DICTIONARY (10th ed. 2009)). “[A]
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statute of limitations is an affirmative defense . . . .” Id. Godoy pleaded the two-year statute of
limitations as an affirmative defense in his original answer. His argument about contractual
invalidity was not its own affirmative defense but rather an argument in support of his affirmative
statute-of-limitations defense. The need to make the argument arose in the course of summary
judgment briefing. It was a purely legal argument that did not involve “plead[ing] additional facts
that deprive the admitted facts of an adverse legal effect.” Id. The court of appeals nevertheless
strictly applied its precedent, under which “[a]n allegation that a provision in a contract is void,
unenforceable, or unconscionable is a matter in the nature of avoidance and must be affirmatively
pleaded.” 542 S.W.3d at 54 (quoting 950 Corbindale, L.P. v. Knotts Capital Holdings Ltd. P’ship,
316 S.W.3d 191, 196 (Tex. App—Houston [14th Dist.] 2010, no pet.)).
“Whenever possible, we reject form-over-substance requirements that favor procedural
machinations over reaching the merits of a case.” Dudley Constr., Ltd. v. Act Pipe & Supply, Inc.,
545 S.W.3d 532, 538 (Tex. 2018). We question whether a legal argument in support of an alreadypleaded affirmative defense amounts to its own “matter constituting an avoidance or affirmative
defense” under Rule 94. Requiring Godoy, on pain of waiver, to amend his answer just to make a
purely legal argument during summary judgment briefing—related to a matter he has already
pleaded—does not serve the stated purpose of the Rules of Civil Procedure, which is to “obtain a
just, fair, equitable and impartial adjudication of the rights of litigants under established principles
of substantive law.” TEX. R. CIV. P. 1.1
1 “‘This court has labored long and hard to remove as many procedural traps from our rules as possible.
Litigants are entitled to have their disputes resolved on the merits, not on unnecessary and arcane points that can sneak
up on even the most diligent of attorneys.’ Tricky procedural rules threaten substantive rights.” In re Brookshire
Grocery Co., 250 S.W.3d 66, 73–74 (Tex. 2008) (Hecht, J., dissenting) (quoting Donwerth v. Preston II ChryslerDodge, Inc., 775 S.W.2d 634, 643 (Tex. 1989) (Ray, J., concurring)).
8
Ultimately, we need not decide whether Rule 94 required Godoy to amend his answer to
plead his public-policy argument based on Simpson. Even if it did, the dissenting justice in the
court of appeals was correct that under our decision in Roark v. Stallworth Oil & Gas, Inc., Wells
Fargo waived Godoy’s alleged pleading error by not raising it in the trial court prior to judgment.
813 S.W.2d 492, 495 (Tex. 1991). Wells Fargo did not alert the trial court to Godoy’s alleged
pleading defect during summary judgment proceedings or at any other time prior to judgment.
Instead, Wells Fargo waited until its response to Godoy’s motion for new trial to argue that Rule
94 required some of Godoy’s arguments to appear in his pleadings. Under Roark, this is too late.
Roark involved a scenario nearly identical to this case. Stallworth, the defendant, moved for
summary judgment, which the trial court granted based on an affirmative defense. Id. at 494.
Roark, the plaintiff, complained that Stallworth had failed to plead the affirmative defense as
required by Rule 94. Id. However, just like Wells Fargo in this case, Roark complained about this
pleading defect for the first time in new-trial briefing. Id. We held that this was too late, stating
that the party opposing summary judgment must “object to the lack of a rule 94 pleading in either
its written response [to a summary judgment motion] or before the rendition of judgment.” Id.
Because Wells Fargo did not alert the trial court to the alleged pleading defect before judgment, it
waived its complaint about Godoy’s pleadings. The court of appeals therefore erred by declining
to consider Godoy’s void-as-against-public-policy argument.
C. Statute of Limitations
Having determined Godoy did not waive his argument, we now consider it. Godoy
contends that his contractual waiver of limitations defenses is void as against public policy. In
Simpson v. McDonald, we stated: “It appears to be well settled that an agreement in advance to
9
waive or not plead the statutes of limitation is void as against public policy.” 179 S.W.2d at 243;
see also Nunn v. Edmiston, 9 Tex. Civ. App. 562, 563 (1895, no writ) (“It has been held that a
person may, by contract, waive the right to plead the statute of limitations. Such agreements are,
however, in our opinion, contrary to public policy, and subversive of a wholesome statute, and
should not be upheld.” (citation omitted)). Since Simpson was decided, courts of appeals have
built upon its holding to require that a waiver of a statute of limitations is void unless the waiver
is “specific and for a reasonable time.” Am. Alloy Steel, Inc., 777 S.W.2d at 177. See also Duncan,
912 S.W.2d at 859 (“The agreement must be specific and for a pre-determined length of time.”).
Indeed, the requirement that in order to be enforceable the statute-of-limitations waiver must be
“specific” and “only for a reasonable time” was already understood to be part of the law at the
time Simpson was decided. See Titus v. Wells Fargo Bank & Union Tr. Co., 134 F.2d 223, 224
(5th Cir. 1943) (“[W]aiver before the bar has fallen must be specific and only for a reasonable
time, and [] the purpose of such statutes may not be thwarted by general agreements to waive the
benefit of the statute permanently. The Texas courts have adopted this view.” (citation omitted)).
The courts of appeals have never understood Simpson as Godoy does, as an absolute bar
on contractual waivers of statutes of limitation. Instead, from even before Simpson was decided,
the general rule has been that such waivers must be specific and for a reasonable time. We agree
with the courts of appeals that have applied this understanding of Simpson’s holding. See, e.g.,
Am. Alloy Steel, Inc., 777 S.W.2d at 177. Blanket pre-dispute waivers of all statutes of limitation
are unenforceable, but waivers of a particular limitations period for a defined and reasonable
amount of time may be enforced.
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This holding does not conflict with our recent decision in Moayedi v. Interstate 35/Chisam
Road, L.P. In Moayedi, we held that by agreeing to a general waiver of all defenses in a guaranty
agreement, a party waived the right of offset provided by section 51.003(c) of the Property Code.
438 S.W.3d at 2. However, Moayedi did not consider whether a party could waive the statute of
limitations provided by section 51.003(a) or whether such a waiver would run afoul of Simpson.
The fact that Moayedi did not consider waiver of statutes of limitation is important, because “[a]
limitations bar differs materially from a debtor’s or guarantor’s rights to valuation and offset under
chapter 51.” Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267, 281 (Tex. App.—Houston [1st
Dist.] 2004, pet. dism’d). Statutes of limitation are “the Legislature’s procedural device for
establishing a point of repose for past actions and for ‘ensur[ing] that the search for truth is not
impaired by stale evidence or the loss of evidence.’” Id. (quoting Childs v. Haussecker, 974
S.W.2d 31, 38–39 (Tex. 1998)). On the other hand, “a guarantor’s valuation and offset rights
under chapter 51 are substantive rights, not procedural bars to suit.” Id.
While “[i]n general, parties may waive statutory and even constitutional rights,” Moayedi,
438 S.W.3d at 6, a statute of limitations is not solely a right belonging to the party asserting it. It
“protect[s] defendants and the courts from having to deal with cases in which the search for truth
may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses,
fading memories, disappearance of documents or otherwise.” Murray v. San Jacinto Agency, Inc.,
800 S.W.2d 826, 828 (Tex. 1990) (emphasis added). In addition to affording comfort and repose
to the defendant, statutes of limitation protect the courts and the public from the perils of
adjudicating stale claims. Although this Court has “long recognized a strong public policy in favor
of preserving the freedom of contract,” Fortis Benefits v. Cantu, 234 S.W.3d 642, 649 (Tex. 2007)
11
(quoting Lawrence v. CDB Servs., Inc., 44 S.W.3d 544, 553 (Tex. 2001)), under our precedent that
freedom does not include the authority to unqualifiedly waive statutes of limitation and thereby
require the courts to attempt to adjudicate claims long after they have become stale. Simpson
continues to prohibit enforcement of open-ended pre-dispute waivers that eliminate the limitations
period.
We turn now to whether Godoy’s contractual waiver of the two-year limitations period is
enforceable. The “Guarantor’s Waivers” section of the agreement contains three discrete sections
that potentially waive statutes of limitation: sections (E), (F), and (A). We analyze each separately.
Section (E) states that the guarantor “waives any and all rights or defenses arising by reason of . . .
any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is
commenced, there is outstanding indebtedness of Borrower to Lender which is not barred by any
applicable statute of limitations.” Section (F) purports to waive “any defenses given to guarantors
at law or in equity other than actual payment and performance of the Indebtedness.” Under
Simpson, sections (E) and (F) are both unenforceable with respect to statutes of limitation because
they purport to completely waive all limitations periods. See 179 S.W.2d at 243. Neither section
is “specific” to a particular limitations period, and neither section has a “reasonable time” period
limiting the waiver. See Am. Alloy Steel, Inc., 777 S.W.2d at 177 (“[A]ny agreement made before
the statutory bar has fallen must be specific and for a reasonable time.”). Instead, application of
either section (E) or section (F) would enable Wells Fargo to sue Godoy any time in the future, no
matter how distant. Godoy is correct that sections (E) and (F) are unenforceable as applied to
statutes of limitation.
Section (A) states:
12
Guarantor also waives any and all rights or defenses arising by reason of (A) any
“one action” or “anti-deficiency” law or any other law 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 . . . .
Unlike sections (E) and (F), section (A) is both “specific” and “for a reasonable time.” Id. As for
specificity, section (A) waives a particular, identifiable statute of limitations—the two-year period
provided by section 51.003. It does so by waiving all “defenses” arising from any “antideficiency” law. Section 51.003 is Texas’s “anti-deficiency law.” See Moayedi, 438 S.W.3d at 6
(referring to section 51.003 as “[t]his anti-deficiency law”). Its two-year limitations period is a
“defense” arising from this “anti-deficiency” law. Section (A) does not purport to waive all
statutes of limitation or any other statute of limitations. It waives one statute of limitations, and it
does so with sufficient specificity.
Section (A) also satisfies the “for a reasonable time” requirement. It does not state a
substitute limitations period or provide a specific end-date for the waiver, defects which might
make other such agreements unenforceable. In this instance, however, the law provides a
reasonable four-year limitations period as a backstop. Once section 51.003(a)’s two-year statute
of limitations is waived by operation of section (A), the four-year statute of limitations applying
to suits to collect debts found in section 16.004(a)(3) of the Civil Practice and Remedies Code
becomes applicable. The concern about litigating long stale claims is absent, and Godoy does not
contend that a four-year limitations period is unreasonable. The backstop of section 16.004(a)(3)
is sufficient to satisfy the requirement that contractual statute-of-limitations waivers must be only
“for a reasonable time.” Am. Alloy Steel, Inc., 777 S.W.2d at 177.
13
The guaranty agreement’s savings clause further supports this conclusion. It states, “[i]f
any such waiver is determined to be contrary to any applicable law or public policy, such waiver
shall be effective only to the extent permitted by law or public policy.” Enforcing the section (A)
waiver “to the extent permitted by law or public policy,” as the parties agreed we should, we
conclude that the four-year statute of limitations applying to suits to collect debts applies as a
backstop. See TEX.CIV. PRAC. &REM.CODE § 16.004(a)(3). With respect to statutes of limitation,
section (A) is effectively an agreement to move the limitations period for Wells Fargo’s deficiency
suit from two years to four years. Such an agreement does not run afoul of the policy concerns
animating Simpson because it is specific and for a reasonable time. Section (A) of the “Guarantor’s
Waivers” is enforceable.
2
III. Conclusion
The court of appeals correctly concluded that Godoy contractually waived the two-year
statute of limitations and that a four-year statute of limitations applied to Wells Fargo’s claims.
Because Wells Fargo sued Godoy within that four-year period, limitations did not bar the suit.
Although we disagree with portions of the court of appeals’ reasoning, its judgment is affirmed.
2 Because we conclude that Section (A) is sufficient to waive the limitations period on which Godoy relies,
we do not address whether the otherwise unenforceable waiver of all statutes of limitation in Section (E) could be
enforceable on a limited basis by virtue of the guaranty agreement’s savings clause. The savings clause provides, “If
any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective
only to the extent permitted by law or public policy.” It could be argued that, under this clause, the Section (E)
waiver—while generally unenforceable on public-policy grounds under Simpson—should nevertheless be enforced to
the greatest extent public policy allows. Whatever that greatest extent is, it likely includes a two-year extension of the
statutory two-year limitations period. We do not address the validity of this argument, however, because it is not
necessary to the disposition of the case.
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__________________________________
James D. Blacklock
Justice
OPINION DELIVERED: May 10, 2019
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