Wells Fargo Bank, N.A. v. Ballestas, No. 01‑10‑00020-CV, 2011 Tex. App. LEXIS ___ (Tex. App.—Houston [1st Dist.], May 12, 2011, no pet. h.). 

The Houston First Court of Appeals held that a bank could not file a second lawsuit to foreclose on a note and deed of trust where it previously lost on the issue of whether it owned a note and deed of trust in a previous litigation.

In this case, a bank lost a trial against the owners of a home because it failed to prove that it owned the note by which it sought to foreclose.  It did not appeal or otherwise challenge that judgment.  The bank then sued the owners again, contending once more that it owned the disputed note.  The owners responded in a second suit that the bank's claims were barred by res judicata and collateral estoppel.  The trial court granted summary judgment for the homeowner based on those defenses.  The bank then appealed, arguing that by granting the summary judgment, the trial court erred because the first suit's final judgment was void for lack of subject matter jurisdiction and because res judicata and collateral estoppel were inapplicable.

The court of appeals noted that a trial court's judgment is void if the court lacked jurisdiction over the subject matter of the claim.  A trial court has jurisdiction over the subject matter of a claim only if the claimant has standing to assert the claim.  To collect from a promissory note, a plaintiff must establish: (1) the existence of the note in question, (2) the defendant signed the note, (3) the plaintiff is the owner and holder of the note, and (4) a certain balance is due and owing on the note.  The court of appeals held that the homeowner had standing in the first suit to seek a declaratory judgment that the bank did not own the promissory note and did not have the right to foreclose in the first lawsuit.  Because the homeowner had standing, the court had subject-matter jurisdiction to determine those issues.  The court also noted that the question of whether a party is entitled to sue on a contract is sometimes informally referred to as an issue of standing.  Nevertheless, the issue does not affect the court's jurisdiction, and it is not truly one of standing, but one on the merits of the contract claim itself.  Because ownership of the promissory not was an essential element of the bank's right to collect on it, the first court's determination that the bank did not own the promissory note is a determination on the merits, not one of jurisdiction.  Thus, the court found that the first judgment was not void.  Being a determination on the merits, the court found that the prior final judgment barred the same claims in the second suit under the doctrine of res judicata and/or collateral estoppel because there were no changed circumstances pled.  The court held that the trial court properly granted summary judgment for the homeowner.