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06/16/94 CHRISTOPHER A. GREEN AND TINA M. GREEN v.

June 16, 1994

CHRISTOPHER A. GREEN AND TINA M. GREEN, PLAINTIFFS-APPELLEES,
v.
BANK ONE LAGRANGE, F/K/A FIRST LAGRANGE BANK AND TRUST, DEFENDANT-APPELLANT, AND BANK ONE LAGRANGE, F/N/A FIRST ILLINOIS BANK AND TRUST, NOT PERSONALLY BUT AS TRUSTEE UNDER AGREEMENT DATED JANUARY 29, 1990, AND KNOWN AS TRUST NO. 9701, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois. No. 3-94-0201. Honorable Herman S. Haase, Judge, Presiding.

Present - Honorable Allan L. Stouder, Justice, Honorable Peg Breslin, Justice, Honorable Tobias Barry, Justice

The opinion of the court was delivered by: Breslin

JUSTICE BRESLIN delivered the opinion of the court:

The plaintiffs, Christopher A. Green and Tina M. Green, won 12 million dollars in the 1988 Illinois lottery and became real estate developers. They entered into an agreement with the defendant, Bank One LaGrange, whereby the Bank agreed to loan money to the Greens for a development project. The Bank asserted that when itlearned that Mr. Green had attempted to defraud a Las Vegas hotel on a gambling scheme it refused to continue to loan the money requested by the Greens. Thereafter, the Greens filed a five-count complaint against the Bank to recover for the Bank's alleged breach of a commitment to loan money. The Bank filed a demand for arbitration of the dispute and a motion to compel arbitration. The trial court denied the motion to compel arbitration. The Bank appeals from that decision pursuant to Supreme Court Rule 307(a) (134 Ill. 2d R. 307(a)). We reverse, finding that the arbitration clause at issue is clear and the parties' dispute falls within its parameters. However, we further find that only Mr. Green can be compelled to arbitrate.

The facts are numerous. Since the main issue before us is the arbitrability of the dispute, we will confine our Discussion of the facts to those that primarily relate to that issue.

The various pleadings on file show that in 1990, Mr. Green and the Bank executed a loan commitment letter for the initial loan on a real estate development project in Joliet, Illinois. The parties agreed that Mr. Green would attempt to develop the property in phases, selling a specified number of lots in each successive phase. They also agreed that Mr. Green would submit requests for loans to the Bank on a phase-by-phase basis, and that the Bank would act on each request separately.

In connection with the first loan, a number of separate documents were executed by Mr. Green, all dated February 7, 1990. Mrs. Green's signature, however, does not appear on any of the documents. The documents included, inter alia, a document entitled "Guaranty of Payment and Performance" (the Guaranty).

The Guaranty contained a clause providing for arbitration of any claim relating to the Guaranty or any document delivered in connection with it. Additionally, the Guaranty contained a waiver of venue provision placing venue in the county where the principal office of the Bank was located.

After the first advance of funds in early 1990, Mr. Green submitted proposals to the Bank for additional funds. Pursuant to the agreement, the Bank considered each request for additional funds separately. Sometime in 1990, Mr. Green sought approval of a loan to pay for the development of phases II and III of the project. The Bank approved that loan also.

Then in 1992, Mr. Green requested an additional loan of $220,000 to pay for site improvements for phase IV and certain other costs. The request was approved by the Bank. For this phase IV loan, Mr. and Mrs. Green and the Bank each signed a loan commitment document which was entitled "Fourth Mortgage Modification Agreement." The Bank filed the Fourth Mortgage Modification Agreement with the Will County Recorder of Deeds.

Thereafter, the Greens' relationship with the Bank broke down. The Greens heard that the Bank had told a potential lot purchaser that phase IV infrastructure financing had not been approved. This was important to the Greens because a prospective purchaser would not want to buy if he knew that there was a chance that the infrastructure would not be completed. When Mr. Green confronted the Bank, the Bank denied the existence of an executed loan commitment. Thereafter, the Bank continued to refuse to loan the remaining funds earmarked for phase IV of the infrastructure. Consequently, all sales at the development ground to a halt.

According to the Bank, it believed that Mr. Green had attempted to defraud a hotel in Las Vegas and on that basis refused to loan the Greens the remaining funds for phase IV. The hotel had submitted four drafts to the Bank to cover Mr. Green's gambling debts and the Bank paid them from an escrow account connected with the financing for the construction development.

When monthly installments of interest under the loan documents became due in May and June 1993, there were insufficient funds in the escrow account because of the Bank's payment to the hotel. On June 8, 1993, the Bank sent Green a letter stating that if the interest reserve in the escrow account was not replenished, it would be an event of default. On June 17, the Bank declared the mortgage and note in default and sought the entire principal due under the loan, plus attorney fees, late fees and interest. The Bank also informed Green that if it did not receive payment of the above by June 30, it would file suit.

In response, the Greens filed a five-count lawsuit of their own. Count I alleged that the Bank breached the Fourth Mortgage Modification Agreement by not disbursing the balance of the $220,000 loan amount. Count II alleged that the Bank made fraudulent misstatements in connection with the loan agreement. Count III alleged that the Bank tortiously interfered with an economic advantage. Count IV alleged a tortious ...


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