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Bowling Green Sports Center, Inc. v. G.A.G. LLC

Court of Appeals of Illinois, Second District

April 27, 2017

BOWLING GREEN SPORTS CENTER, INC., Plaintiff-Appellant,
v.
G.A.G. LLC, JAMES P. GOCHIS, and PETER GOCHIS, Defendants-Appellees Gold Coast Bank, Intervenor-Appellee.

         Appeal from the Circuit Court of Du Page County. No. 15-L-302 Honorable Patrick J. O'Shea Judge, Presiding.

          JUSTICE SCHOSTOK delivered the judgment of the court, with opinion. Justices Jorgensen and Spence concurred in the judgment and opinion.

          OPINION

          SCHOSTOK JUSTICE.

         ¶ 1 The instant controversy is a dispute between a senior lender and a junior lender. The senior lender, Gold Coast Bank, loaned over $3.4 million to the defendants, G.A.G. LLC, James P. Gochis, and Peter Gochis. The junior lender, Bowling Green Sports Center Inc. (Bowling Green), loaned $405, 000 to the defendants. Gold Coast Bank and Bowling Green executed an intercreditor agreement that provided that Bowling Green would not sue to recover any money from the defendants until the defendants had repaid Gold Coast Bank in full. The intercreditor agreement also provided that Gold Coast Bank agreed not to increase its loan to the defendants without first receiving Bowling Green's consent. Despite that provision, Gold Coast Bank subsequently increased its loan to the defendants by $51, 000, without Bowling Green's knowledge or consent. After the defendants failed to timely repay Bowling Green, Bowling Green filed a breach-of-contract claim against the defendants. Gold Coast Bank intervened in the proceedings and sought to have Bowling Green's complaint dismissed on the basis of the intercreditor agreement. The circuit court of Du Page County found that, although Gold Coast Bank had breached the intercreditor agreement, the agreement still required that Bowling Green's complaint be dismissed. Bowling Green appeals from that order. For the reasons that follow, we affirm as modified.

         ¶ 2 BACKGROUND

         ¶ 3 In 2008, the defendants entered into an agreement with Bowling Green to purchase a bowling alley in West Chicago. The defendants borrowed money from Gold Coast Bank and Bowling Green to finance the purchase of the property. On January 14, 2008, Gold Coast Bank and Bowling Green executed the intercreditor agreement. The agreement identified Gold Coast Bank as the senior lender and Bowling Green as the junior, or subordinated, lender. The agreement provided in pertinent part:

"4. The Senior Lender agrees as follows:
** *
d. Senior Lender will not amend or otherwise modify the Notes or the Loan Agreement or otherwise permit the terms of the Notes or the Loan Agreement to be changed without the prior consent of [Bowling Green].
** *
11. Obligation Hereunder Not Affected: All rights and interest of the Senior Lender hereunder, and all agreements and obligations of the Subordinated Lender under this Agreement, shall remain in full force and effect irrespective of:
* * *
b. Any change in the time, manner or place of payment of, or in any other term of, all or any of the Senior Indebtedness, or any other amendment or waiver of or any consent to departure from the Senior Loan Documents[.]"

         ¶ 4 On January 15, 2008, G.A.G. executed promissory notes in favor of Gold Coast Bank for a total of $3, 412, 750. That same day, G.A.G. executed a promissory note in favor of Bowling Green for $405, 000. James ...


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