Don’t Try to Enforce the Note You Have Always Contended Was Unenforceable

Jacque Evans and her new husband, Guy Gilliland, formed Nine Syllables, LLC for the purpose of purchasing a note signed by Jacque and her previous husband, Gary Evans. When Jacque and Gary divorced, the note went into default, and the lender sought to foreclose. Jacque joined the lender to the divorce proceeding to enjoin the foreclosure sale, arguing (based on law that has since been amended) the note was an impermissible lien against the homestead, and that the penalty for an illegal lien was forfeiture of all principal and interest due under the note. In the meantime, the lender filed a separate lawsuit against Jacque for payment of the note, and she took the same position in that case. The divorce case eventually settled, with Jacque taking the alleged homestead and Gary assuming liability for the note. The collections case also settled, with Nine Syllables agreeing to purchase the note from the lender. Nine then sought to collect on the note from Gary, despite Jacque’s consistent position in the previous lawsuits that it was illegal and unenforceable. After a bench trial, the trial court agreed with Gary that Nine’s claim was barred by judicial estoppel, and the Court of Appeals affirmed. Although Nine Syllables had not been a party to the previous lawsuits, Jaque was in privity with Nine and had consistently testified and argued that the note was unenforceable.

Nine Syllables, LLC v. Evans, No. 05-13-01677-CV