Opinion ID: 573910
Heading Depth: 3
Heading Rank: 2

Heading: Third Party Beneficiary Status.

Text: 18 The issue presented by Appellants is not whether they had notice of the Subordination Agreements, but, rather, whether Appellants could claim the benefit of the Subordination Agreements. The fact of recordation alone certainly does not confer the right to such a benefit on subsequent individual purchasers. Under Texas law, only actual parties to a contract or intended third-party beneficiaries can claim the benefit of a contract. Old Stone Bank v. Fidelity Bank, 749 F.Supp. 147, 152 (N.D.Tex.1990); cf. Talman Home Fed. Sav. & Loan Assoc. v. American Bankers Ins., 924 F.2d 1347, 1350-51 (5th Cir.1991); Cunningham v. Healthco, Inc., 824 F.2d 1448, 1455 (5th Cir.1987). 19 Appellants were not parties to the Subordination Agreements, which the district court found were executed solely between Chisholm and Hiawatha. As non-parties, then, Appellants had to prove third-party beneficiary status as a precondition to enforcing the Partial Release Provisions of the Subordination Agreements. Old Stone Bank, 749 F.Supp. at 152 & n. 13 (citing Sowell v. Northwest Cent. Pipeline Corp., 703 F.Supp. 575, 581 (N.D.Tex.1988)). Texas law imposes a heavy burden on non-parties, like Appellants--Texas law requires that a party claiming third-party beneficiary status must prove from the terms of the contracts that the contracting parties made the contracts for the benefit of the third party and intended to benefit the third party at the time the parties entered into the contracts. Talman, 924 F.2d at 1351 (citing Hellenic Inv., Inc. v. Kroger Co., 766 S.W.2d 861, 864-65 (Tex.App.--Houston [1st Dist.] 1989, n.w.h.); Republic Nat'l Bank v. National Bankers Life Ins. Co., 427 S.W.2d 76, 79 (Tex.Civ.App.--Dallas 1968, writ ref'd n.r.e.)); Healthco, 824 F.2d at 1455 (quoting Corpus Christi Bank and Trust v. Smith, 525 S.W.2d 501, 503 (Tex.1975)). Interpretation of an unambiguous contract represents a matter of law for the court to decide. REO Indus., Inc. v. Natural Gas Pipeline Co., 932 F.2d 447, 453 (5th Cir.1991) (citations omitted). Unless it clearly appears that the contracting parties intended to benefit the third party, a court interpreting a contract pursuant to Texas law must construe the agreement consistent with the presumption that parties contract for themselves. Talman, 924 F.2d at 1351 (citing Republic Nat'l Bank, 427 S.W.2d at 79). 20 The district court properly looked to the language of the Subordination Agreements to discern whether Chisholm and Hiawatha intended to benefit the Appellants when they entered into the contracts. Id. The court found that the parties conspicuously fail[ed] to mention the Appellants in the Subordination Agreements; it concluded that Appellants provided no such proof of third-party beneficiary status. Because the parties did not intend the Agreement to benefit the Appellants, the district court concluded that the Appellants had no standing to enforce its release provisions. Since  'any doubt should be resolved against'  finding an intent to benefit a third party, we hold that the district court properly resolved this issue. Healthco, 824 F.2d at 1456 (quoting Texas Bank & Trust v. Lone Star Life Ins. Co., 565 S.W.2d 353, 357 (Tex.Civ.App.--Tyler 1978, no writ)); see Talman, 924 F.2d at 1351 (citing Republic Nat'l Bank, 427 S.W.2d at 80). The district court correctly refused to allow the Appellants to enforce the Subordination Agreements as a means of precluding judicial foreclosure. We affirm the district court's summary judgment allowing Chisholm to foreclose its liens on the Property.