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Godoy v. Wells Fargo Bank, N.A.

Supreme Court of Texas

May 10, 2019

Gerald Godoy, Petitioner,
v.
Wells Fargo Bank, N.A., Respondent

          Argued February 19, 2019

          On Petition for Review from the Court of Appeals for the Fourteenth District of Texas.

          Justice Busby did not participate in the decision.

          OPINION

          James D. Blacklock Justice.

         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 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 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 ยง 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 ...


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