Coles

—Plaintiff Kevin A. Coles filed this action against defendants Barney G. Glaser and Fred Taylor for allegedly breaching a settlement agreement the parties had entered in a prior lawsuit. Coles brought the prior suit to recover an overdue loan that he had extended to a real estate investment company, Cascade Acceptance Corporation (Cascade), and that was guaranteed by Glaser and Taylor. That case was settled when Cascade ostensibly paid off the loan, and Coles, in return, executed a release. But shortly after the settlement, Cascade filed for bankruptcy, and Coles was forced to surrender most of the settlement proceeds to the bankruptcy trustee as a preferential payment. The trial court in this case found that Glaser and Taylor had breached the settlement agreement, and it entered judgment in favor of Coles. We affirm, holding that a debt of a contractual co-obligor is not extinguished by another co-obligor’s pre-bankruptcy payment to a creditor that is later determined to be a bankruptcy preference.

F

Factual and Procedural Background

In 2005, Coles lent money to Cascade, and defendants guaranteed the loan’s repayment. In early 2009, Glaser—Cascade’s president and…