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Northbrook Bank & Trust Co. v. 300 Level, Inc.

Court of Appeals of Illinois, First District, First Division

June 15, 2015

NORTHBROOK BANK AND TRUST COMPANY, an Illinois State-Chartered Bank, as Successor to First Chicago Bank and Trust, Successor to Labe Bank, Plaintiff-Appellee,
300 LEVEL, INC., Defendant-Appellant (2000-2006 W. Warren, LLC, an Illinois Limited Liability Company; Edward Gobbo; Hillside Lumber, Inc., an Illinois Corporation; GT Electric, Inc., an Illinois Corporation; Unknown Owners and Nonrecord Claimants, Defendants)

Page 858

Appeal from the Circuit Court of Cook County. No. 11 CH 23097. Honorable Alfred M. Swanson, Jr., Judge Presiding.

For APPELLANT, Stephen D. Richek, Chicago, IL.

For APPELLEES, Freeborn & Peters, Chicago, IL (Edward Filer, Adam C. Toosley, of counsel).

Cunningham and Harris, Justices concurred in the judgment and opinion.


Page 859


[¶1] The issue presented in this commercial mortgage foreclosure case is whether a process server employed by an agency effectuated valid service on one of the defendants. We hold that the service was proper and accordingly affirm.


[¶3] In 2006, defendant 2000-2006 W. Warren, LLC (Warren), entered into a $4,575,000 construction loan agreement with plaintiff's predecessor in interest, Labe Bank. The loan was secured by a mortgage on an eponymous Warren Boulevard property in Chicago. The property contained 2 first-floor commercial units and 16 " to-be-sold" condominium units on higher floors. By 2011, after Warren had entered into a series of six different modification agreements with the bank, the loan became delinquent. First Chicago Bank & Trust (First Chicago), also a predecessor of plaintiff, filed this suit to foreclose on the mortgage and collect on the loan. First Chicago also sued a group of others including defendant Edward Gobbo, the loan guarantor; various lienholders; and defendant-appellant 300 Level, Inc. (300 Level), which was a tenant holding a lease to a first-floor commercial space that was to contain a bar.

[¶4] 300 Level's lease began on September 3, 2010, and provided for a 15-year term, with an option to renew for an additional 15 years. The rent varied over the term, but it averaged about $2,500 per month, so the lease was worth about $450,000 to the landlord. 300 Level recorded the lease in January 2011, five years after Warren signed the original mortgage and note, but a few months before the foreclosure lawsuit was filed. Accordingly, 300 Level's leasehold interest was significantly junior to that of the mortgagee. See 765 ILCS 5/30 (West 2010) (first to record a lien generally has priority). The lease was signed for the landlord by defendant Edward Gobbo as managing member of Warren, and for the tenant by Edward Vito Gobbo as president of 300 Level.[1]

[¶5] On June 28, 2011, First Chicago filed a routine motion requesting that the court appoint Cadillac Investigations, Inc. (Cadillac), as a special process server. The court order granting the motion states, in relevant part:

" A special process server, of lawful age, employed or retained by Cadillac Investigations, Inc., *** License No. 115-000924, an Illinois corporation, is appointed as special process server for all Defendants in this matter."

[¶6] On August 18, 2011, Jack King, an employee of Cadillac, personally served a copy of the summons and complaint upon 300 Level's registered agent, Daniel Lauer. Northbrook moved for appointment

Page 860

of a receiver. The order appointing the receiver was eventually agreed to, as evidenced by signatures of an attorney for Northbrook and an attorney from the law firm of Daniel G. Lauer & Associates, P.C., for Warren. On the same day the court appointed the receiver, an attorney appeared for 300 Level and was granted leave to file an appearance. Attorney Timothy Fitzgerald filed a written appearance for 300 Level, erroneously labeled as an " additional" appearance, a week later. The complaint was later amended to substitute plaintiff Northbrook Bank & Trust (Northbrook) as successor to First Chicago.

[¶7] The receiver quickly became suspicious regarding 300 Level's lease. On May 31, 2012, he filed a third report which, in part, requested authority to retain legal counsel to review the validity of the lease. The report stated that " requested documentation for build-out to begin has not been provided, liquor license has not been presented, no rent is being paid, and it has [ sic ] does not appear to be arm's length." The third report, and later reports, also stated that 300 Level's first-floor commercial space was vacant. When this report was ...

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