Midland Funding, LLC v. Raney ( 2018 )

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Appellate Court Date: 2018.02.27
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Midland Funding, LLC v. Raney, 2018 IL App (5th) 160479Appellate Court MIDLAND FUNDING, LLC, Plaintiff and Counterdefendant-
Caption Appellant, v. TERESA RANEY and SHIRLEY DARNELL,
Defendants and Counterplaintiffs-Appellees.
District & No. Fifth District
Docket No. 5-16-0479
Filed January 4, 2018
Decision Under Appeal from the Circuit Court of St. Clair County, No. 15-L-442; the
Review Hon. Christopher T. Kolker, Judge, presiding.
Judgment Affirmed.
Counsel on Heather L. Kramer, Rosa M. Tumialán, and Jennifer A. Warner, of
Appeal Dykema Gossett PLLC, of Chicago, and Theodore W. Seitz, of
Dykema Gossett PLLC, of Lansing, Michigan, for appellant.
David I. Cates and Chad M. Mooney, of Cates Mahoney, LLC, of
Swansea, and Brendan M. Nester and Sean K. Cronin, of Donovan
Rose Nester, P.C., of Belleville, for appellees.
Panel JUSTICE OVERSTREET delivered the judgment of the court, with
opinion.
Presiding Justice Barberis and Justice Goldenhersh concurred in the
judgment and opinion.
OPINION
¶1 In this interlocutory appeal brought pursuant to Illinois Supreme Court Rule 307(a)(1) (eff.
Feb. 26, 2010), the plaintiff-counterdefendant, Midland Funding, LLC (Midland Funding),
appeals the circuit court’s order denying its motion to dismiss and to compel arbitration of
counterclaims filed by the defendants-counterplaintiffs, Teresa Raney and Shirley Darnell. For
the reasons that follow, we affirm.
¶2 BACKGROUND
¶3 Darnell and Raney acquired consumer credit card accounts issued by Citibank, N.A.
(Citibank), wherein they were provided with specified lines of credit for consumer purchases
in exchange for paying at least the minimum amounts shown on monthly billing statements.
On June 11, 2015, Midland Funding, as Citibank’s assignee, filed complaints against Darnell
and Raney, seeking judgments in the sums of $5848.91, and $16,843.42, respectively, plus
court costs, for the amounts due and owing via the Citibank lines of credit. Midland Funding
alleged that it was the successor in interest to the Citibank accounts, that Midland Funding had
purchased Darnell’s and Raney’s credit card account obligations from Citibank in the regular
course of business, that Darnell and Raney had failed to make the monthly payments on said
accounts and were in default on the accounts, and that Midland Funding was entitled to a
judgment for the unpaid balances plus costs. Midland Funding alleged that it had purchased the
accounts from Citibank on October 14, 2014 (Darnell), and April 23, 2014 (Raney), for good
and valuable consideration, as evidenced by an attached bill of sale and assignment. Midland
Funding also attached account statements showing a $5848.91 Sears MasterCard account
balance for Darnell and a $16,843.47 Sears Premier MasterCard balance for Raney.
¶4 Midland Funding attached to its complaint against Darnell the affidavit of Andrew Lankey.
In the affidavit dated April 16, 2015, Lankey stated that he was employed as a legal specialist
with access to pertinent account records for Midland Credit Management, Inc. (MCM),
servicer of Darnell’s account on behalf of Midland Funding. Based upon his personal
knowledge of the account records, Lankey stated that Midland Funding was the current owner
of the obligation and was assigned all rights, title, and interest to Darnell’s Citibank account.
Lankey stated that MCM’s records showed that Darnell owed a balance of $5848.91, as of
April 13, 2015. Lankey stated that Darnell opened the Citibank account on November 1, 1986,
the last payment posted to the account on December 17, 2013, and the account was charged off
on July 29, 2014.
¶5 Midland Funding attached to its complaint against Raney the affidavit of Rhonda
Schubloom. In the affidavit dated April 16, 2015, Schubloom stated that she was employed as
a legal specialist with access to pertinent account records for MCM, servicer of Raney’s
account on behalf of Midland Funding. Based on her personal knowledge of the account
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records maintained on Midland Funding’s behalf, Schubloom stated that Midland Funding was
the current owner of the obligation and was assigned all rights, title, and interest to Raney’s
Citibank account. Schubloom stated that MCM’s records showed that Raney owed a balance
of $16,843.42 as of April 14, 2015. Schubloom stated that Raney opened the Citibank account
on February 1, 1994, the last payment posted to the account on March 1, 2013, and the account
was charged off on October 7, 2013.
¶6 In July 2015, Raney and Darnell filed answers and affirmative defenses. They also filed
class action counterclaims seeking to certify statewide and nationwide classes and seeking
damages based on purported violations of the Collection Agency Act (225 ILCS 425/1 et seq.
(West 2014)), the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1
et seq. (West 2014)), and the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.
(2012)). The counterclaims challenged Midland Funding’s alleged practice of suing to collect
debt purchased from others without sufficient proof of ownership of the debt.
¶7 On November 18, 2015, and December 1, 2015, Midland Funding filed motions to dismiss
the counterclaims pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619
(West 2014)) and to compel arbitration. Midland Funding argued that because the
counterclaims were within the scope of a binding card agreement that included an agreement to
arbitrate and a class action waiver provision (the Card Agreement), the class claims were
barred and should be dismissed. Midland Funding argued that the arbitration provision in the
Card Agreement was subject to the Federal Arbitration Act (9 U.S.C. § 1 et seq. (2012)) and
that Midland Funding was entitled to elect arbitration as the forum within which to address the
putative class claims alleged in the counterclaims. To its motions, Midland Funding attached
account statements and a November 25, 2015, declaration of Michael Burger, senior manager
of operations for MCM. In the declaration, Burger stated, in pertinent part:
“1. *** I am currently employed as the Sr. Manager, Operations for [MCM]. MCM
is the servicer and authorized agent for Midland Funding and manages the debt that
Midland Funding purchases.
2. In my capacity as Sr. Manager, Operations for MCM, I am responsible for,
among other things, maintaining and overseeing ‘media’, i.e., the loan agreements,
account purchase and transfer information, debt collection records and other account
information pertinent to accounts and debts that MCM manages for Midland Funding. I
make this Declaration from my own personal knowledge of the matters set forth herein,
or on information and belief based upon my review of the business records that MCM
maintains for Midland Funding. If called as a witness, I could and would testify
competently to the matters set forth in this Declaration.
***
5. As part of the sale of the Citibank Account to Midland Funding, Citibank
transferred electronic records and other records for the Account to MCM, which
included an Excel file identifying the Account. Attached hereto as Exhibit B is an
abstract of the true and correct data from the Excel file pertaining to the Citibank
Account. Citibank also provided certain account statements [attached as Exhibit C].
***
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7. As reflected in Exhibit A, Citibank assigned all interest in the Citibank Account
to Midland Funding. Midland Funding currently owns all rights, title[,] and interest in
the purchased account.
8. The records produced by Citibank included the Card Agreement applicable to the
Citibank Account. See Exhibit E.
9. At the time MCM received the records in Exhibits A-E and maintained them on
behalf of Midland [Funding], MCM incorporated those records into its business
records that MCM keeps in the ordinary course of the regularly conducted business
activity for such accounts, and it is the regular practice of MCM to make and rely upon
such records, and MCM has routinely relied upon those records in conducting business.
See Exhibits A-E.”
¶8 Midland Funding attached the Card Agreement referenced in paragraph 8 of the
declaration identified as Exhibit E. The language of the Card Agreement stated, “We are
changing your card agreement and replacing it with a new one. The effective date of these
changes is shown on your statement in the message titled ‘Important Changes to Your Account
Terms’.” Arbitration was identified as a section change to the Card Agreement. In the
arbitration section of the Card Agreement, it stated, in relevant part:
“ARBITRATION
PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. IT
PROVIDES THAT ANY DISPUTE MAY BE RESOLVED BY BINDING
ARBITRATION. ARBITRATION REPLACES THE RIGHT TO GO TO COURT,
INCLUDING THE RIGHT TO A JURY AND THE RIGHT TO PARTICIPATE IN A
CLASS ACTION OR SIMILAR PROCEEDING. IN ARBITRATION, A DISPUTE
IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY.
ARBITRATION PROCEDURES ARE SIMPLER AND MORE LIMITED THAN
COURT PROCEDURES.
Agreement to Arbitrate: Either you or we may, without the other’s consent, elect
mandatory, binding arbitration for any claim, dispute, or controversy between you and
us ***.
Claims Covered
What Claims are subject to arbitration? All Claims relating to your account, a prior
related account, or our relationship are subject to arbitration, including Claims
regarding the application, enforceability, or interpretation of this Agreement and this
arbitration provision. All Claims are subject to arbitration, no matter what legal theory
they are based on or what remedy (damages, or injunctive or declaratory relief) they
seek. This includes Claims based on contract, tort (including intentional tort), fraud,
agency, your or our negligence, statutory or regulatory provisions, or any other sources
of law; Claims made as counterclaims, cross-claims, third-party claims, interpleaders
or otherwise; and Claims made independently or with other claims. A party who
initiates a proceeding in court may elect arbitration with respect to any Claim advanced
in that proceeding by any other party. Claims and remedies sought as part of a class
action, private attorney general or other representative action are subject to arbitration
on an individual (non-class, non-representative) basis, and the arbitrator may award
relief only on an individual (non-class, non-representative) basis.
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***
*** This arbitration provision is governed by the Federal Arbitration Act ***.
What about Claims field [sic] in Small Claims Court? Claims filed in a small claims
court are not subject to arbitration, so long as the matter remains in such court and
advances only an individual (non-class, non-representative) Claim.
What about debt collections? We and anyone to whom we assign your debt will not
initiate an arbitration proceeding to collect a debt from you unless you assert a Claim
against us or our assignee. We and any assignee may seek arbitration on an individual
basis of any Claim asserted by you, whether in arbitration or any proceeding, including
in a proceeding to collect a debt. You may seek arbitration on an individual basis of any
Claim asserted against you, including in a proceeding to collect a debt.
***
Who can be a party? Claims must be brought in the name of an individual person or
entity and must proceed on an individual (non-class, non-representative) basis. The
arbitrator will not award relief for or against anyone who is not a party. If you or we
require arbitration of a Claim, neither you, we, nor any other person may pursue the
Claim in arbitration as a class action, private attorney general action or other
representative action, nor may such Claim be pursued on your or our behalf in any
litigation in any court.” (Emphases in original.)
The Card Agreement referenced variable annual percentage rates as of September 15, 2010,
and listed a copyright date of 2010. The Card Agreement did not reference Darnell or Raney by
name, signature, account number, address, or any other means.
¶9 In response to the motion to dismiss and to compel arbitration, Raney filed a motion to
strike Burger’s declaration, challenging the Card Agreement. Raney claimed that nothing in
Burger’s declaration established that the Card Agreement on which Midland Funding relied
for its motion to dismiss was associated with Raney’s account, was ever received by Raney, or
that Raney agreed to its terms.
¶ 10 Prior to the filing of the motion to dismiss, the parties had not engaged in discovery. On
March 29, 2016, the parties entered a stipulation and agreed order regarding discovery,
allowing for the depositions of Burger and Schubloom. The agreed order provided that
Midland Funding’s “agreement to this order or the stipulation cannot and will not be used
against it for purposes of its Motion to Dismiss and Compel Arbitration, i.e., [to determine]
that Midland Funding *** has waived its right to compel arbitration based on its participation
in discovery.”
¶ 11 In a discovery deposition taken on May 4, 2016, Burger testified that, as director of
operations for MCM, he supervised the media operations team, which was responsible for
obtaining documentation for accounts and processing that documentation and uploading it to
the document portal. Burger identified the Card Agreement attached to his declaration as
Exhibit E and stated that “Citibank told us that this is the card agreement associated with that
account.” Burger acknowledged that no account number, name, or signature was included on
the Card Agreement.
¶ 12 When questioned about the Darnell account, Burger testified that he had no personal
knowledge regarding whether or not the Card Agreement was applicable and did not know if
Darnell had ever seen or received the Card Agreement. Burger testified that he did not know if
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or when the Card Agreement was ever sent to Darnell and had not seen documentation that
indicated that the Card Agreement had been sent to Darnell. Burger testified that he was not
aware of any evidence that the Card Agreement was ever sent to Darnell or that she saw it.
Likewise, Burger did not testify if or when the Card Agreement was mailed or otherwise
communicated to Raney.
¶ 13 On June 15, 2016, Darnell and Raney executed affidavits stating that they had “never seen”
the Card Agreement, had never agreed to the terms of the Card Agreement, and had never
agreed to the arbitration provision in the Card Agreement. In discovery depositions taken on
August 12, 2016, Raney testified that she could not recall having received the Card Agreement,
and Darnell testified that she had not seen a credit card agreement applicable to her case and
did not know if she had ever received updated terms and conditions. On July 18, 2016, the
circuit court entered an order consolidating the Darnell and Raney cases.
¶ 14 On August 29, 2016, Burger executed a supplemental declaration in support of Midland
Funding’s motion to dismiss and to compel arbitration. Attached to Burger’s supplemental
declaration were Raney’s credit card account statements from January 2010 through October
2013 and Darnell’s statements from December 2009 through July 2014. Although not found in
Darnell’s account statements, a page titled “Important Changes to Your Account Terms” was
included in Raney’s November 2010 credit card account statement, a statement which
referenced her name, account number, and address. This statement provided that certain
changes were being made to Raney’s account terms, which would take effect on December 7,
2010, and which would include an arbitration provision modification. This statement provided:
“For more detailed information, please refer to the enclosed Notice of Change in Terms and
Right to Opt Out.” The statement itself did not include the language of the arbitration
provision, and neither the Card Agreement nor another document titled “Notice of Change in
Terms and Right to Opt Out” was attached to Raney’s statement in the record.
¶ 15 On October 14, 2016, the circuit court entered its order denying Midland Funding’s motion
to dismiss and to compel arbitration. The circuit court found, inter alia, that Raney and Darnell
were not subject to arbitration because there was no competent evidence that the Card
Agreement containing the arbitration provision applied to them. The circuit court noted that
the Card Agreement did not include the signature of any party, did not include information that
it related to Darnell’s or Raney’s account, and did not indicate that Darnell or Raney had
received it or had agreed to its terms. The circuit court noted, however, that Darnell and Raney
had executed sworn statements that they had not seen the Card Agreement nor agreed to its
terms. The circuit court found that although Burger in his declaration had stated that the Card
Agreement was applicable to Darnell and Raney, he testified at his deposition that he had no
personal knowledge regarding whether or not the alleged Card Agreement was applicable. The
circuit court further noted that Raney’s credit card statement, which provided that revised
terms were being distributed, did not identify the Card Agreement as the revised terms so
distributed.
¶ 16 On November 14, 2016, Midland Funding filed a notice of interlocutory appeal pursuant to
Illinois Supreme Court Rule 307(a)(1) (eff. Feb. 26, 2010).
¶ 17 ANALYSIS
¶ 18 “Generally, the standard of review for a decision on a motion to compel arbitration is
whether there was a showing sufficient to sustain the circuit court’s order.” Keefe v. Allied
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Home Mortgage Corp., 393 Ill. App. 3d 226, 229 (2009). However, where the circuit court’s
decision is based on a legal analysis, the decision to deny the motion to compel arbitration is
reviewable de novo. Vassilkovska v. Woodfield Nissan, Inc., 358 Ill. App. 3d 20, 24 (2005). In
this case, the circuit court did not hold an evidentiary hearing where it determined credibility
issues but decided the issue as a matter of law. Thus, our review is de novo. See id.; see also
Peach v. CIM Insurance Corp., 352 Ill. App. 3d 691, 694 (2004) (“review of a trial court’s
construction of the arbitration agreement states a question of law that is subject to a de novo
standard”); Travis v. American Manufacturers Mutual Insurance Co., 335 Ill. App. 3d 1171,
1174 (2002) (“where the trial court renders its decision without an evidentiary hearing and
without findings on any factual issues, de novo review is appropriate”). We consider anew the
pleadings, declarations, depositions, and exhibits on file to determine whether the circuit
court’s decision was correct. See generally Jackson v. Graham, 323 Ill. App. 3d 766, 779
(2001).
¶ 19 “The Uniform Arbitration Act *** (710 ILCS 5/1 et seq. (West 2000)) empowers courts,
upon application of a party showing an agreement to arbitrate, to compel or stay court action
pending arbitration. 710 ILCS 5/2 (West 2000).” Vassilkovska, 358 Ill. App. 3d at 24-25.
Likewise, the Federal Arbitration Act provides that a court, upon being satisfied that an issue
involved in a proceeding is subject to arbitration pursuant to a written arbitration agreement,
shall on application stay the trial of the action. 9 U.S.C. § 3 (2012). However, “[w]hile
arbitration is a favored method of dispute resolution, courts have consistently cautioned that an
agreement to submit to arbitration is a matter of contract.” United Cable Television Corp. v.
Northwest Illinois Cable Corp., 128 Ill. 2d 301, 306 (1989). Whether under federal rules or
state law, there can be no forced arbitration without a valid contract to arbitrate. Tortoriello v.
Gerald Nissan of North Aurora, Inc., 379 Ill. App. 3d 214, 226 (2008); Vassilkovska, 358 Ill.
App. 3d at 25; Ervin v. Nokia, Inc., 349 Ill. App. 3d 508, 538 (2004); Aste v. Metropolitan Life
Insurance Co., 312 Ill. App. 3d 972, 975 (2000).
¶ 20 “An agreement to arbitrate is treated like any other contract.” Vassilkovska, 358 Ill. App.
3d at 24. Accordingly, when deciding whether there is a valid agreement to arbitrate, courts
apply state law principles that govern the formation of contracts. Id. at 25. “Our courts have
held that the issuance of a credit card and cardholder agreement is a standing offer to extend
credit that may be revoked at any time.” Portfolio Acquisitions, L.L.C. v. Feltman, 391 Ill.
App. 3d 642, 649 (2009); see also Garber v. Harris Trust & Savings Bank, 104 Ill. App. 3d
675, 679 (1982). “When the cardholder makes a purchase, the bank advances funds to the
merchant and this arrangement constitutes a loan between the bank and cardholder.” Portfolio
Acquisitions, L.L.C., 391 Ill. App. 3d at 649. “Therefore, each time the credit card is used, a
separate contract is formed between the cardholder and bank.” Id.
¶ 21 “The issuance of a credit card is only an offer to extend credit; acceptance of the credit
offer occurs each time a credit purchase is made by the cardholder.” Asset Acceptance, LLC v.
Tyler, 2012 IL App (1st) 093559, ¶ 47. “Consistent with the treatment of each credit card
purchase as a separate offer and acceptance, modifications to credit card terms are binding
between the parties when, after notice of the modifications, the cardholder uses his credit
card.” Id.¶ 22 Accordingly “each time a credit card is used, a new contract exists between the parties
according to the terms ‘in effect’ (i.e., having been communicated to the defendant in a
reasonable manner) at the time of the use.” Razor Capital v. Antaal, 2012 IL App (2d) 110904,
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¶ 35; see also Garber, 104 Ill. App. 3d at 678. Those terms might include a provision regarding
arbitration. Submission of disputes to arbitration is completely dependent on the private will of
the parties as embodied in whatever contract they may have entered into. Asset Acceptance,
LLC, 2012 IL App (1st) 093559, ¶ 41. To compel arbitration as a term or modification of a
credit card agreement, however, the card issuer must allege what the terms were at the time of
each use, that those terms were communicated to the cardholder in a reasonable manner, and
that the cardholder thereafter accepted those terms by using the card. See generally Razor
Capital, 2012 IL App (2d) 110904, ¶ 35. “[M]odified terms of an agreement, once
communicated to the cardholder, are deemed accepted when the card is used after the
modifications.” Id. ¶ 32.
¶ 23 In Asset Acceptance, LLC, the credit card holder contended that Asset Acceptance, as the
credit card issuer, failed to present a prima facie case for confirmation of an arbitration award
under section 13 of the Federal Arbitration Act (9 U.S.C. § 13 (2006)) because it failed to show
that an arbitration agreement existed between the parties. Asset Acceptance, LLC, 2012 IL App
(1st) 093559, ¶ 40. Asset Acceptance’s motion to dismiss the cardholder’s counterclaims
attached two purported bank card documents, each of which contained an arbitration clause.
Id. ¶ 43. However, neither document contained the cardholder’s name or his credit card
account number. Id. The appellate court found it problematic that the documents provided no
evidence that they pertained to the cardholder’s account, that the cardholder had received the
papers, or that the cardholder had agreed to the terms set forth in the papers by making a credit
purchase after he was mailed the attached papers. Id. ¶ 48. The appellate court noted that
Illinois courts had deemed similar documents insufficient to establish a contract. See id.;
Velocity Investments, LLC v. Alston, 397 Ill. App. 3d 296, 299 (2010) (“Cardmember
Agreement and Disclosure Statement” was legally insufficient to collect on a credit card debt
because the document offered no evidence that defendant agreed to be bound by the terms or
that the terms applied to this particular account). The appellate court determined that the
documents did not support the conclusion that the parties had entered into a contract to
arbitrate their disputes. Asset Acceptance, LLC, 2012 IL App (1st) 093559, ¶ 48. Thus, the
appellate court concluded that absent such an arbitration agreement, Asset Acceptance had
failed to satisfy its burden to establish a prima facie case to confirm the arbitration award under
section 13 of the Federal Arbitration Act. Id. ¶¶ 57-60.
¶ 24 In the present case, Midland Funding also did not demonstrate when or how the generic
Card Agreement containing the arbitration provision pertained to Darnell or Raney or that it
was communicated to Darnell or Raney prior to subsequent credit card use. See Razor Capital,
2012 IL App (2d) 110904, ¶ 32 (in absence of allegations or affidavits explaining when and
how generic agreement attached to the complaint was communicated to the defendant, via mail
to defendant’s most recent billing address or in another similar manner by which it would be
reasonable to presume that defendant received it, and showing that the defendant used the card
thereafter, thereby accepting the terms, the plaintiff cannot recover pursuant to those terms).
As noted by the circuit court, the Card Agreement itself did not contain any signature, name, or
account information and included no indication that it was mailed or in any way communicated
to Darnell or Raney. Instead, Darnell and Raney executed sworn statements that they had never
seen the Card Agreement nor agreed to its terms. Moreover, Burger did not attest or testify that
the records he was allegedly responsible for maintaining and overseeing revealed that the Card
Agreement’s arbitration provision had been communicated to Darnell or Raney prior to
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subsequent credit card use. Burger, in his declaration, stated that “[t]he records produced by
Citibank included the Card Agreement applicable to the” accounts; however, when deposed,
Burger testified that he had no personal knowledge regarding whether or not the Card
Agreement was applicable, he did not know and was unaware of any document or other
evidence to determine if the arbitration provision had been communicated to Darnell, and he
did not testify otherwise regarding Raney. Accordingly, Midland Funding failed to show that it
had communicated the arbitration provision to Darnell or Raney as a modification of the
agreement or that Darnell or Raney received the arbitration provision modification before
charging additional funds and accepting it as a modification of their agreements. See Asset
Acceptance, LLC, 2012 IL App (1st) 093559, ¶ 48.
¶ 25 Raney’s November 2010 account statement referenced an enclosed “Notice of Change in
Terms and Right to Opt Out” document that purportedly contained arbitration provision
modifications. However, no such document was attached to Raney’s account statement in the
record. Although the Card Agreement, which was attached to Midland Funding’s motion to
dismiss and to compel arbitration, is also titled “Notice of Change in Terms and Right to Opt
Out,” the circuit court correctly concluded that there was no evidence that the generic Card
Agreement attached to the motion had been enclosed with Raney’s November 2010 account
statement or that it was ever mailed or communicated to Darnell or Raney.
¶ 26 Midland Funding argues that the circuit court was not permitted to determine the validity
of the Card Agreement or the arbitration provision therein. Midland Funding cites the
arbitration provision in the Card Agreement that provides: “All Claims *** are subject to
arbitration, including Claims regarding the application, enforceability, or interpretation of this
Agreement and this arbitration provision.” Midland Funding argues that the parties clearly and
unmistakably contracted for a gateway issue, i.e., the issue of arbitrability, and therefore, the
circuit court was bound by the agreement and should have deferred the decision of this
threshold matter to an arbitrator.
¶ 27 We have just held, however, that the parties did not clearly and unmistakably enter into an
agreement regarding arbitration. Darnell and Raney challenged the arbitration clause itself and
whether it was communicated to them as a modification of their credit card agreement. Having
concluded that Midland Funding failed to demonstrate that Darnell or Raney was subject to the
generic Card Agreement in the record, we decline to adopt Midland Funding’s view that the
Card Agreement’s arbitration language controls and requires claims regarding its application
to be subject to arbitration. In failing to demonstrate when or how the Card Agreement’s
arbitration provisions were communicated to Raney or Darnell, Midland Funding failed to
demonstrate that the agreement between it and Raney and the agreement between it and
Darnell included the arbitration provisions found in the Card Agreement. Thus, we cannot
conclude that the agreements governing the Darnell and Raney accounts contained mandatory
arbitration clauses requiring the enforceability of the arbitration agreements to be decided by
the arbitrator. See In re Arbitration Between Teleserve Systems, Inc. & MCI
Telecommunications Corp., 659 N.Y.S.2d 659, 664 (App. Div. 1997) (“under either Federal or
New York law, to the extent that petitioner challenges the arbitration clauses themselves or
their inclusion in the agreements, those challenges are for the court to determine”); see also
Donaldson, Lufkin & Jenrette Futures, Inc. v. Barr, 124 Ill. 2d 435, 445 (1988) (party should
not be compelled to go to the expense, trouble, and hazard to the arbitration process when he
has not agreed to do so); Bess v. DirecTV, Inc., 381 Ill. App. 3d 229, 237 (2008) (“independent
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claims specifically challenging the procedural unconscionability of an arbitration provision
*** should be decided by the court rather than an arbitrator” (emphasis omitted)); Tortoriello,
379 Ill. App. 3d at 227 (issue of whether contract to arbitrate exists must be determined by the
court, not an arbitrator).
¶ 28 In sum, we conclude that the circuit court properly determined that Midland Funding failed
to demonstrate that it had communicated the arbitration provision to Darnell or Raney in order
to modify their agreements. In light of our conclusion that Midland Funding failed to show that
Darnell or Raney agreed to the arbitration provision in the Card Agreement, we need not
address Midland Funding’s remaining arguments on appeal.
¶ 29 CONCLUSION
¶ 30 For the foregoing reasons, we affirm the judgment of the circuit court of St. Clair County.
¶ 31 Affirmed.
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