Second Court of Appeals

Summaries of Civil Opinions and Published Criminal Opinions Issued - Week of October 24, 2022.

NOTE: Summaries are prepared by the court's staff attorneys and law clerks for public information only and reflect his or her interpretation alone of the facts and legal issues. The summaries are not part of the court's opinion in the case and should not be cited to, quoted, or relied upon as the opinion of the court.

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CL III Funding Holding Co., LLC v. Steelhead Midstream Partners, LLC, No. 02-21-00188-CV (Oct. 27, 2022) (Sudderth, C.J., joined by Birdwell and Womack, JJ.).

Held:  Appellees’ breach of contract action against Appellant was a collateral attack on the prior, final foreclosure judgment issued in Appellant’s favor.  Appellees claimed that Appellant’s foreclosure action had breached its contractual commitment to pay its own obligations because Appellant was the sole, principal debtor responsible for the debt underlying the foreclosed-upon lien on Appellees’ property.  According to Appellees, Appellant shifted its sole liability to Appellees by acquiring the lien by assignment and foreclosing. 

But if Appellant had been the sole, principal debtor, then Appellees would have effectively been sureties, and a principal debtor cannot collect its own debt from its sureties—even if it acquires its own debt by assignment.  Thus, the foreclosure judgment necessarily established that, as between Appellant and Appellees, Appellant was not the sole, principal debtor responsible for the debt secured by Appellees’ property.  Because Appellees’ breach of contract suit sought to avoid the binding force of the foreclosure judgment, it was an impermissible collateral attack.