Discover Bank v. Marcus Miller

Opinion issued November 22, 2024
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-23-00513-CV
———————————
DISCOVER BANK, Appellant
V.
MARCUS MILLER, Appellee
On Appeal from County Court at Law No. 3
Brazoria County, Texas
Trial Court Case CI64294
DISSENTING OPINION
Discover Bank established the existence of a valid arbitration agreement and
that Marcus Miller’s claims fall within the scope of the arbitration clause. Miller did
not assert a valid defense to arbitration or otherwise submit any evidence challenging
the existence of the agreement. The majority thus erred in affirming the trial court’s
denial of Discover Bank’s Motion to Compel Arbitration. I respectfully dissent.
The Underlying Lawsuit
In 2018, Marcus Miller applied for and received a personal loan from
Discover Bank in the amount of $35,000. After Miller defaulted on his obligations
to repay the loan, Discover closed his account due to nonpayment. In 2022, Discover
sued Miller for breach of contract seeking to recover $29,903.97, representing the
remaining balance due on the account.
Miller filed a general denial, but later asserted a counterclaim against Discover
for the bank’s alleged failure to display the loan’s “Annual Percentage Rate” and
“Finance Charge” more conspicuously on its loan disclosures as required by the
Truth in Lending Act (“TILA”) and Regulation Z. See 15 U.S.C. § 1632(a); 12
C.F.R. § 1026.17(a)(2). Miller asserted the counterclaim on his own behalf and on
behalf of a putative class of Discover customers. Miller later amended his
counterclaim to assert an individual claim for violation of Regulation Z claiming
Discover had understated the annual percentage rate of the loan in its loan
disclosures.
Discover responded by filing a Motion to Compel Arbitration arguing that
Miller’s account was governed by a written, valid arbitration agreement, which
required arbitration of disputes with Discover and prohibited Miller from pursuing
2
class claims. Discover requested that Miller’s individual counterclaim against
Discover be compelled to arbitration, and that his purported class claims be
dismissed.
Discover attached to its Motion to Compel Arbitration the declaration of Dan
Matysik, its Vice President for Personal Loans. Attached to Matysik’s declaration
was a copy of Miller’s purported Loan Agreement. Matysik stated he had
“personally reviewed the account history and record relating to the personal loan
account” for Miller. He stated that according to Discover’s record, Miller applied
for a personal loan with Discover on March 24, 2018. Discover approved Miller for
a $35,000 loan “[o]n or about March 27, 2018” and “Discover then sent Miller a
copy of his Loan Agreement.” Matysik explained that consistent with Discover’s
standard practice, “when Miller’s application was approved, the loan proceeds were
disbursed to him and the applicable Loan Agreement was mailed to him, postage
prepaid, at the address Miller provided on his application.” Matysik stated that in
connection with the loan, “Miller [had] agreed to abide by the terms and conditions
applicable to the Loan, which were contained in [the] Loan Agreement” attached at
Exhibit 1 to his Declaration.
The Loan Agreement attached to Matysik’s declaration provided that Miller
agree[d] to [its] terms . . . and promise[d] to pay to [Discover] the
Principal Amount Advanced (the Amount Financed), with interest at
the Interest Rate disclosed with the Truth in Lending Disclosure
Statement. Interest w[ould] begin to accrue on the entire Principal
3
Amount Advanced from the date of the first disbursement and w[ould]
continue to accrue on the unpaid balance of the principal amount until
[Miller] . . . repaid all of the Principal Amount Advanced.
The Loan Agreement included terms for minimum payments, late fees, prepayment,
default, and acceleration. Relevant to the issue here, the Loan Agreement included
an arbitration provision, which stated:
Agreement to arbitrate. In the event of a dispute between you and us
arising under or relating to this Account, either may choose to resolve
the dispute by binding arbitration, as described below, instead of in
court. Any claim (except for a claim challenging the validity or
enforceability of this arbitration agreement, including the Class Action
Waiver) may be resolved by binding arbitration if either side requests
it. THIS MEANS IF EITHER YOU OR WE CHOOSE
ARBITRATION, NEITHER PARTY SHALL HAVE THE RIGHT TO
LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY
TRIAL. ALSO DISCOVERY AND APPEAL RIGHTS ARE
LIMITED IN ARBITRATION.
....
CLASS ACTION WAIVER. ARBITRATION MUST BE ON AN
INDIVIDUAL BASIS. THIS MEANS NEITHER YOU NOR WE
MAY CONSOLIDATE CLAIMS IN ARBITRATION BY OR
AGAINST OTHER ACCOUNTHOLDERS, OR LITIGATE IN
COURT OR ARBITRATE ANY CLAIMS AS A REPRESENTATIVE
OR MEMBER OF A CLASS OR IN A PRIVATE ATTORNEY
GENERAL CAPACITY. Only a court, and not an arbitrator, shall
determine the validity and effect of the Class Action Waiver. Even if
all parties have opted to litigate a claim in court, you or we may elect
arbitration with respect to any claim made by a new party or any new
claims later asserted in that lawsuit.
4
The arbitration provision also provided it was governed by the Federal Arbitration
Act. In conspicuous print, it notified Miller that:
You Have the Right to Reject Arbitration for this Account. You
may reject the arbitration agreement but only if we receive from
you a written notice of rejection within 30 days of your receipt of
this Agreement. . . . Your rejection notice must include your name,
address, phone number, Account number and personal signature. No
one else may sign the rejection notice for you. Your rejection notice
also must not be sent with any other correspondence. Rejection of
arbitration will not affect your other rights or responsibilities under this
Agreement. If you reject arbitration, neither you nor we will be subject
to the arbitration provisions for this Account.
(Emphasis in original).1 Discover argued Miller had not opted out of the arbitration
agreement.
Miller filed a response to Discover’s Motion to Compel Arbitration. In his
response, Miller did not dispute the existence of the arbitration agreement, nor did
he contest receiving or agreeing to the terms of the Loan Agreement, including the
arbitration clause. Indeed, he conceded that “Discover sent Miller initial
disclosures” and that in “these disclosures, Discover provided the terms of the
loan[.]” Miller’s primary argument was waiver. He argued that the Motion to
1
The Loan Agreement also included a “30-Day Guarantee” stating:
If you return the loan proceeds (all amounts advanced to you or on your
behalf) within 30 days of the date of disbursement of your loan, we will not
charge you any interest or origination fees (if applicable) and your loan will
be canceled. You must submit your request to cancel to us in writing, along
with a single check for the amount of the loan proceeds . . . . We must
receive this request to cancel and the loan proceeds within 30 days of the date
of disbursement of your loan disbursement of the loan proceeds.
5
Compel should be denied because Discover had “substantially invoke[d]” the
judicial process to Miller’s detriment” or had taken “action inconsistent with the
right to arbitration.” Miller argued that Discover had shown “no signs of wanting to
arbitrate” and that “Discover routinely use[d] the courts to collect debts from its
customers.”2 Miller also argued that the arbitration agreement was illusory because
Discover “consistently chooses to ignore this [arbitration] clause in their contracts
until it is favorable for them to do so.” No evidence was attached to Miller’s
response.
Discover replied arguing it had not waived arbitration because it had not
substantially invoked the judicial process and Miller had not established prejudice.
It noted that aside from initiating the lawsuit against Miller, Discover had taken no
other action in the trial court to invoke the judicial process.3 Discover further argued
that the arbitration clause was not illusory because Miller and Discover each had a
contractual right to pursue arbitration under the Loan Agreement. Thus, it argued,
2
In his appellate brief, Miller argues that Discover filed its Motion to Compel
Arbitration seventy-seven days after Miller filed his original counterclaims and
sixty-four days after Miller filed his first amended counterclaims. Timing alone,
however, is insufficient to establish waiver. See Richmont Holdings, Inc. v.
Superior Recharge Sys., L.L.C., 455 S.W.3d 573, 576 (Tex. 2014) (“[M]ere delay
in moving to compel arbitration is not enough for waiver.”). And Miller does not
identify any of Discover’s pleadings or trial conduct to support its argument that
Discover substantially invoked the judicial process.
3
When it filed its Motion to Compel Arbitration, Discover had not served any
discovery, nor had it responded to Miller’s discovery requests.
6
the arbitration agreement “equally binds Miller and Discover as either may elect to
pursue arbitration and both parties are bound by that decision.”
Discover’s Motion to Compel was set for hearing on April 28, 2023. The day
before the hearing, Miller field a sur-reply arguing for the first time that Discover
had “produced no evidence that Miller [had] signed the arbitration agreement.”
Miller did not dispute receiving the Loan Agreement. Rather, Miller argued he
applied for the loan on March 24, 2018, and that three days later, on March 27, 2018,
“Discover approved [his] loan application, the funds were disbursed” and “then
Discover sent [him] a copy of the loan agreement.” (Emphasis in original.) Miller
did not expressly deny signing the Loan Agreement nor did he submit any evidence
in support of his arguments. He merely argued there was no evidence he was “aware
of, signed, or consented to the terms of the arbitration agreement before the monies
were disbursed to him.”
The trial court denied Miller’s Motion to Compel Arbitration, but four days
later, the court granted Discover’s Motion for Reconsideration resetting the hearing
on the Motion to Compel for June 5, 2023.4 After the trial court granted the Motion
for Reconsideration, but prior to the second hearing, Discover filed a combined
4
Discover argues in its appellate brief that the trial court denied its Motion to Compel
because its counsel was “2 minutes late to the hearing,” and that “[u]pon Discover’s
motion for rehearing, the Court reset the oral hearing for June 5, 2023.”
7
Motion to Strike Miller’s Sur-reply and Response in Opposition to Miller’s Sur-
reply.
Discover moved to strike Miller’s sur-reply because (1) Miller had not sought
or been granted leave to file the sur-reply, and (2) in it, Miller raised new arguments
not previously raised.5 Alternatively, in response to the sur-reply, Discover argued
Miller’s arguments lacked merit because Miller had not submitted an affidavit
verifying his claim that he had not signed or agreed to the terms of the loan. Discover
argued it had presented Miller with the terms of the Loan Agreement both before
and after approval of his loan application. Before approval of the loan, Discover
argued Miller accepted the terms of the Loan Agreement twice: first when he
reviewed the terms of the Loan Agreement, including the arbitration agreement,
online and consented to the terms electronically by clicking “Continue” and
submitting his loan application to Discover for consideration, and a second time by
5
Miller later filed a motion for retroactive leave to file his sur-reply. The clerk’s
record does not include a ruling on the Motion to Strike Miller’s sur-reply or
Miller’s motion for retroactive leave. But the second order denying Miller’s Motion
to Compel Arbitration from which Discover appeals states the trial court considered
“the Motion, any responses, other briefing and pleadings, and all matters of record.”
The trial court thus implicitly denied Discover’s Motion to Strike and considered
the sur-reply. See generally Iacono v. Stanley Black & Decker, Inc., No. 01-15-
00427-CV, 2016 WL 2745401, at *3 n.7 (Tex. App.—Houston [1st Dist.] May 10,
2016, no pet.) (mem. op.) (although trial court did not expressly rule on objection
to untimely petition filed without leave of court, because order stated it considered
“all matters of record,” appellate court presumed trial court granted leave to file late
pleading).
8
completing the loan process over the phone with Discover at which time Miller
verified his identity and again “confirmed the terms of the loan” and “verbally agreed
to them.” After the loan was approved, Discover argued Miller was again presented
with the terms of the Loan Agreement. Discover argued that Miller admitted he had
“applied for and received the funds for a personal loan with Discover along with the
terms and conditions for the loan.”
In support of its response, Discover attached the unsworn declaration of Satish
Bhatt, a Discover employee “familiar with the processes through which borrowers
apply for and enter the agreements that govern the borrowers’ personal loan
accounts.” Bhatt’s title at Discover was Director, DPL Acquisition Operations.
Bhatt explained he “had personally reviewed the account history and records relating
to the personal loan account of Marcus Miller.” Bhatt stated that according to
Discover’s records, “on March 24, 2018, Miller applied online for a personal loan
with Discover,” and
[b]efore Miller submitted his application, Discover presented Miller
with an e-signature agreement. In order to proceed to the next step,
Miller had to click “Continue.” Discover’s records reflect that Miller
accepted the terms of the e-signature agreement by clicking
“Continue.”
After Miller accepted the e-signature agreement, Discover provided
Miller with the terms and conditions of the loan, including the
arbitration agreement. In order to proceed with the loan application
process, Miller had to select “Continue.” Discover’s records reflect that
Miller accepted these terms by clicking “Continue.” Once Miller had
9
accepted the terms and conditions, including the arbitration agreement,
Miller could submit his application to Discover for consideration.
Miller also completed the loan process over the phone, and the call was
recorded.
Bhatt stated he reviewed the recording, which reflects that during the call:
Miller verified his identity by, among other things, providing his name
date of birth, and Social Security Number. The agent provided the
amount of the loan, the interest rate, and the length of the loan term
requested as part of the loan acceptance disclosures, and Miller verbally
agreed to them.
Miller filed a response arguing that Discover had waited too long to compel
arbitration and it was thus not entitled to the relief requested. Miller argued that
Bhatt’s declaration should be stricken because Discover “had ample time to produce
evidence” supporting its claims for arbitration.6 Miller did not respond to Discover’s
arguments that Miller had several times been provided with the Loan Agreement and
had agreed to its terms. Nor did Miller provide any evidence in support of his
arguments or to controvert Bhatt’s and Matysik’s declarations.
6
The clerk’s record does not include a ruling on Miller’s objections to Discover’s
evidence or motion to strike. The second order denying Miller’s Motion to Compel
Arbitration from which Discover appeals states the trial court considered “the
Motion, any responses, other briefing and pleadings, and all matters of record.” The
trial court thus implicitly denied Miller’s objections and motion to strike, and
considered Discover’s evidence. See generally Fortitude Energy, LLC v. Sooner
Pipe LLC, 564 S.W.3d 167, 179 (Tex. App.—Houston [1st Dist.] 2018, no pet.)
(holding when summary judgment order stated court considered all pleadings, all
evidence, arguments of counsel, record, and applicable law, objections to summary
judgment evidence were implicitly overruled).
10
During the second hearing on Discover’s Motion to Compel, Miller appeared
to concede he may have signed the arbitration agreement, yet he continued to argue
he did not agree to arbitrate:
So the other side said that we are contesting that we did not sign [the
arbitration agreement]. We’re not saying we didn’t sign it. We’re
saying they can’t prove that Mr. Miller signed it or agreed to it, and that
goes to contract formation in the [S]tate of Texas. Contract formation
is, Your Honor, is where –requires a meeting of the minds. The parties
have to assent to the terms, and they can’t show that Mr. Miller did
agree to arbitration.
Despite Discover’s uncontroverted evidence that Miller was presented with
the Loan Agreement, including the arbitration agreement, and agreed to its terms
three times (1) first when he submitted his loan application electronically; (2) a
second time over the phone during the loan application process; and (3) last when
his loan was approved, the trial court denied Discover’s Motion to Compel
Arbitration.
In its sole issue, Discover contends the trial court erred in denying its Motion
to Compel Arbitration because there was a binding arbitration agreement requiring
that Miller’s claims be resolved by arbitration. Because Discover provided
uncontroverted evidence that Miller received and consented to the arbitration
agreement both before and after the loan was approved, I disagree with the
majority’s holding there was no valid arbitration agreement. I would sustain
Discover’s issue and reverse the trial court’s judgment.
11
Applicable Legal Standard
A party seeking to compel arbitration must establish the existence of a valid
arbitration agreement and that the claims in dispute fall within the scope of the
agreement. Venture Cotton Coop. v. Freeman, 435 S.W.3d 222, 227 (Tex. 2014);
In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011) (orig. proceeding). If the party
seeking arbitration carries its initial burden, the burden shifts to the non-movant to
present evidence on its defenses to the arbitration agreement. Williams Indus., Inc.
v. Earth Dev. Sys. Corp., 110 S.W.3d 131, 134–35 (Tex. App.—Houston [1st Dist.]
2003, no pet.) (citing Mohamed v. Auto Nation USA Corp., 89 S.W.3d 830, 835 (Tex.
App.—Houston [1st Dist.] 2002, no writ) (citing In re Oakwood Mobile Homes, Inc.,
987 S.W.2d 571, 573 (Tex. 1999)).
Was there a valid agreement to arbitrate?
For an arbitration agreement to be valid, the parties must have consented to
the agreement. Aerotek, Inc. v. Boyd, 624 S.W.3d 199, 204 (Tex. 2021); see also
TotalEnergies E&P USA, Inc. v. Gulf of Mexico, LLC, 667 S.W.3d 694, 701 (Tex.
2023) (explaining that because arbitration is a matter of contract, “parties cannot be
compelled to arbitrate any controversy unless they have contractually agreed to do
so”).
The majority concludes there was no valid arbitration agreement because
Discover’s “initial solicitation was not an offer; it was only an invitation for Miller
12
to enter negotiations with Discover to determine if he qualified for a loan and, if so,
how much.” Discover Bank v. Miller, No. 01-23-00513-CV, 2024 WL 3973436, *5
(Tex. App.—Houston [1st Dist.] Aug. 29, 2024, no pet. h.) (mem. op.). The opinion
continues, “Discover did not extend an offer to loan Miller $35,000.00 under definite
terms and conditions until after it had approved its loan application.” Id. But the
only evidence before the trial court established that Discover offered the loan to
Miller under definite terms and conditions multiple times, and that Miller accepted
the offer first when he applied for the loan and later when he accepted and used the
loan proceeds. There was no evidence that Miller accepted the loan proceeds before
he received the Loan Agreement nor did Miller submit any evidence disclaiming his
acceptance of the Loan Agreement or disputing his electronic signature when he
applied for the loan. Discover’s evidence was thus uncontroverted and established
the existence of a valid arbitration agreement.
The Texas Supreme Court’s opinion in Aerotek, Inc. v. Boyd is instructive and
should have guided the majority’s analysis. 624 S.W.3d 199 (Tex. 2021). In that
case, four employees were terminated from Aerotek soon after they were hired.
They sued Aerotek and others for racial discrimination and retaliation. Aerotek
moved to compel arbitration, arguing the employees were required to arbitrate their
claims pursuant to the arbitration agreement they had each signed electronically
13
when submitting their employment applications.7 Id. at 201-02. The employees
argued in sworn declarations attached to their responses to the motion to compel that
although they had completed the online hiring application, they had not “seen, signed
or been presented” with the arbitration agreement. Id. at 202. During an evidentiary
hearing on the motion to compel, Aerotek presented testimony from a program
manager who “helped design and develop the [electronic Aerotek employment]
application.” Id. at 202. The program manager testified there was no way the
employees could have completed their job applications without executing the
arbitration agreement. Id. at 203. She testified that job applicants “have to complete
everything in that section before they can get to the finalize-and-submit section. So
everything has to be signed and completed before they get there.” Id.The trial court denied the motion to compel arbitration and a divided panel of
the court of appeals affirmed. Id. In affirming, the appellate court concluded that
Aerotek’s program manager had “insufficient capacity to establish the system was
failsafe” because she was “not an IT expert.” Id. The dissent argued the majority
was setting “a standard that would make electronic contract formation practically
7
Aerotek exclusively used a computerized hiring application to guide employment
candidates through the hiring process. Aerotek, Inc. v. Boyd, 624 S.W.3d 199, 201
(Tex. 2021).
14
impossible” and would invalidate the Uniform Electronic Transaction Act, which
determines whether an electronic signature is binding.8 Id. at 204.
The Texas Supreme Court reversed the court of appeals, explaining that
“[a]side from their denials, [the employees had] offered no evidence to support their
allegation that they [had] not electronically sign[ed] the [arbitration agreements] that
Aerotek introduced into evidence.” Id. at 206. The employees conceded they had
“completed Aerotek’s computerized hiring application and electronically signed the
documents included—save for one, [the arbitration agreement].” Id. The court held
that Aerotek’s evidence establishing the procedures “its hiring application used to
verify that a candidate electronically signed” the arbitration agreement was
uncontroverted and established that employment applicants must necessarily sign
the arbitration agreement before completing their job applications. Id. “The
applications’ business rules made it so that the application could not be submitted
until all steps were completed and all required signatures provided, including on the
[arbitration agreement].” Id. The majority disagreed with the dissent’s “suggestion
that merely denying an electronic signature qualifies as some evidence in showing
8
The focus of the Uniform Electronic Transaction Act “is on the efficacy of the
security procedures inherent in the electronic transaction itself.” Houston ANUSA,
LLC v. Shattenkirk, 693 S.W.3d 513, 518 (Tex. App.—Houston [14th Dist.] 2023,
no pet.) (citing TEX. BUS. & COM. CODE § 322.009(a)). A party who seeks to
enforce a contract signed electronically must proffer evidence “to establish the
efficacy of the security procedures” used in the transactions. Id. (citing Aerotek,
Inc., 624 S.W.3d at 204).
15
an electronically signed arbitration agreement’s invalidity,” stating that “[o]nce
Aerotek proved its security procedures, the burden shifted to the Employees to
demonstrate how their electronic signatures could have wound up on the [arbitration
agreements] without their having placed them there themselves. Mere denials do
not suffice.” Id. at 208–09. The court concluded that “reasonable people could not
differ in concluding that the Employees could not have completed their hiring
applications without signing the [arbitration agreements]. The Employees’ simple
denials are no evidence otherwise.” Id. at 209.
The holding in Aerotek applies with stronger force here. The only evidence
before the trial court established that Miller completed a loan application with
Discover online that required him to evince his acquiescence to the terms of the Loan
Agreement, which included the arbitration provision. By clicking “Continue” after
being presented with the terms of the Loan Agreement, Miller agreed to the terms of
the loan and submitted his loan application. As Bhatt stated in his declaration,
Miller, like the four employees in Aerotek, simply could not have completed the loan
application or obtained the loan without agreeing to the terms of the Loan
Agreement, including the arbitration agreement. Miller did not dispute that he
agreed to use an electronic signature to submit his loan application online or that he
clicked “Continue” when presented with the terms of the Loan Agreement online.
16
Not only did Miller accept the terms of the Loan Agreement by clicking
“Continue” when he was first presented with the terms online, he again agreed to the
terms over the phone during the loan application process. As Bhat explained, after
Miller submitted his loan application, he completed the loan application process over
the phone. As part of that process, Discover verified Miller’s identify and again
confirmed he agreed to the terms and conditions of the loan. The majority concludes
that the “parties’ evidence of Miller’s online and telephone contacts with Discover
during the application process is [] not relevant to the issue of whether Discover and
Miller entered an enforceable agreement to arbitrate.” I disagree.
As the Supreme Court held in Aerotek, Aerotek conclusively established that
the employees had “signed, and therefore consented to, the [arbitration agreement]”
when they first submitted their job applications online. Id. at 210. The employees
in that case were presented with and signed the arbitration agreement electronically
when they first applied for their jobs before being hired by Aerotek. Id. at 201–02.
The same is true here. Discover conclusively established that Miller electronically
signed and thus consented to the terms of the Loan Agreement, including the
arbitration agreement, when he first submitted his loan application, which he would
not have been able to submit without such consent. Unlike the employees in Aerotek,
Miller submitted no evidence rejecting his electronic signature or his consent to the
terms of the loan. Indeed, he submitted no evidence at all, relying instead on the
17
argument of his counsel. “Because arguments are not evidence, no evidence
supports [his argument that no valid arbitration exists].” See id. at 208.
Miller relies on Aerotek to argue that Bhatt’s affidavit is not sufficient
evidence of his electronic signature.9 He argues that neither Bhatt’s declaration nor
the “sample” mailer provided by Discover established that “Discover made a valid
offer to Miller” because the “sample” did not provide “clear and definite” terms to
an agreement. The “sample” to which Miller refers is the loan solicitation Discover
sent to Miller “sometime prior to March 24, 2019.” As Bhatt explained, “as part of
the solicitation, Miller would have received a copy of the terms and conditions for a
loan with Discover, as well as a code to use when applying online.” Miller is correct
that the solicitation was nothing more than an invitation for him to apply for a
Discover loan at a future date. But that is inconsequential.
Setting aside the solicitation, the key here is that later, on March 24, 2019,
Miller applied for a Discover loan online and in doing so, he electronically consented
to the terms of the Loan Agreement, which Miller does not dispute are the same
terms he received again on March 27, 2019, when the loan was approved. Indeed,
the terms of the Loan Agreement, which include the arbitration provision, form the
9
Aerotek is distinguishable in that there, the employees argued and submitted
declarations stating they had not signed the arbitration agreement, whereas Miller
did not submit any evidence, and conceded during the hearing that he was “not
saying [he] didn’t sign [the arbitration agreement],” he was merely arguing there
was no meeting of the minds with respect to arbitration.
18
basis of the counterclaims Miller asserts against Discover. That is, while Miller
claims he never agreed to the terms of the Loan Agreement, he nonetheless asserts
individual and class claims against Discover based on the Loan Agreement for the
bank’s alleged failure to display the loan’s “Annual Percentage Rate” and “Finance
Charge” more conspicuously on its loan disclosures, as required by TILA and
Regulation Z. Indeed, in his latest amended pleading, Miller copied and pasted a
portion of the Loan Agreement Discover mailed to him on March 27, 2018, stating:
Miller thus does not dispute receiving the Loan Agreement. Rather, Miller
argues he applied for the loan on March 24, 2018, and that three days later, on March
27, 2018, “Discover approved [his] loan application, the funds were disbursed” and
“then Discover sent [him a copy of the loan agreement.” But Miller does not argue,
nor did he submit a declaration stating that, he accepted the disbursed loan proceeds
before he received the Loan Agreement in the mail. Nor did he submit a declaration
19
stating he did not agree to the arbitration clause or denying his electronic signature
online during the application process. Miller’s focus was on the purported lack of
evidence provided by Discover reflecting his agreement to the arbitration
agreement.10 In other words, he focused on the sufficiency of Discover’s evidence.
As in Aerotek, Discover provided evidence that its loan application process
would have prevented Miller from completing his loan application without him first
reviewing and electronically agreeing to the Loan Agreement, including the
arbitration agreement. See Aerotek, Inc., 624 S.W.3d at 209–10 (holding employees
had “signed, and therefore consented to, the [arbitration agreement]” when they first
submitted their job applications online and “reasonable people could not differ in
concluding that the Employees could not have completed their hiring applications
without signing the [arbitration agreements]”). Bhatt testified that Miller had to e-
sign a Loan Agreement that included the arbitration provision before he could
complete his loan application and that Miller agreed to the terms and provisions of
10
Even if Miller had submitted a declaration denying he provided his electronic
signature during the application process, the court in Aerotek disagreed “with the
dissent’s suggestion that merely denying an electronic signature qualified as some
evidence in showing an electronically signed arbitration agreement’s invalidity.”
Aerotek, Inc., 624 S.W.3d at 208–09 (holding “mere denials do not suffice”); see
also Northpointe LTC, Ltd. v. Durant, No. 01-22-00215-CV, 2022 WL 17835223,
at *1 (Tex. App.—Houston [1st Dist.] Dec. 22, 2022, no pet.) (mem. op.)
(explaining that “mere denial by the nonmovant that [s]he did not sign the
[arbitration] agreement, without more, fails to create a genuine issue of material
fact.”) (citing Knox Waste Serv., LLC v. Sherman, No. 11-19-00407-CV, 2021 WL
4470876, *8 (Tex. App.—Eastland Sept. 20, 2021, no pet.) (mem. op.).
20
the agreement on the phone before completing the loan application and receiving the
loan. As in Aerotek, Discover’s evidence establishing its loan procedures and the
security measures it implemented11 to verify a loan applicant received and agreed
with the Loan Agreement was “uncontroverted.” See id. at 206. “The application’s
business rules made it so that the application could not be submitted until all steps
were completed and all required signatures provided, including on the [arbitration
agreement].” Id. Contrary to Miller’s assertion and the majority’s holding, Aerotek
does not require proof beyond that provided by Discover.
Acceptance by Conduct
The majority’s opinion that there was no acceptance of the arbitration
agreement violates a well-settled tenet of contract law.12, 13 “Under Texas law, if
11
For example, Discover’s application required Miller to provide his name, date of
birth, social security number, address, and phone number. See Aerotek, 624 S.W.3d
at 205 (noting that, among others, “security procedures [in an electronic contract]
may include requiring personal identifying information—such as a social security
number or an address—to register for an account”). In addition, security measures
may also include “requir[ing] users to complete all steps in [an online] program
before moving on or completing it.” Id. at 206.
12
The majority states there is “no evidence of any conduct by Miller that manifests an
unequivocal intent to form an enforceable agreement to arbitrate any dispute under
the loan agreement.”
13
Miller argues on appeal that the solicitation for the loan was not an offer, but rather
an invitation to enter into negotiations. He did not make that argument in the trial
court. As such, the majority should not have considered that argument. TEX. R.
APP. P. 33.1(a). In any event, the argument is inconsequential because
notwithstanding the solicitation, Miller was provided with the Loan Agreement at
least twice during the loan application process and again after the loan was
21
one party signs a contract, the other may accept by her acts, conduct, or acquiescence
to the terms of the contract, making it a binding agreement on both parties.” Jones
v. Citibank (S.D.), N.A., 235 S.W.3d 333, 338 (Tex. App.—Fort Worth 2007, no
pet.) (citing MG Bldg. Materials, Ltd. v. Moses Lopez Custom Homes, Inc., 179
S.W.3d 51, 61–62 (Tex. App.—San Antonio 2005, pet. denied)).
In addition to his acceptance of the loan terms during the loan application
process, Miller’s receipt and acceptance of the disbursed funds constituted an
acceptance of the Loan Agreement and all its terms. Miller does not dispute that he
received, accepted, and used the disbursed loan proceeds. And he offered no
evidence that he accepted the funds before receiving or knowing about the Loan
Agreement. The evidence thus established an offer and acceptance. See Mock v.
Nat’l Collegiate Student Loan Tr. 2007-4, No. 01-17-00216-CV, 2018 WL 3352913,
at *6 (Tex. App.—Houston [1st Dist.] July 10, 2018, no pet.) (mem. op.) (“[T]he
evidence shows that the Mocks applied for a loan from Union, Union offered them
a loan on the terms set forth in the Credit Agreement and Disclosure Statement, and
the Mocks accepted the offer by depositing the check.”); Savoy v. Nat’l Collegiate
Student Loan Tr. 2005-3, 557 S.W.3d 825, 836 (Tex. App.—Houston [1st Dist.]
2018, no pet.) (“[T]he evidence shows that the Savoys applied for a loan from
approved. Miller was given the option to opt out of the arbitration agreement, which
option he never took.
22
JPMorgan Chase, JPMorgan Chase offered the Savoys a loan on the terms set forth
in the Credit Agreement and Disclosure Statement, and the Savoys accepted the offer
by allowing the loan proceeds to be used . . . without objection.”); see also Jones,
235 S.W.3d at 338–39 (“[A]ppellant does not dispute that she used her Citibank
credit card to purchase goods for over six years. Thus, even if appellant never signed
the card agreement, under Texas law, she entered into a contract with appellee by
accepting the benefits of their arrangement.”); Winchek v. Am. Exp. Travel Related
Servs. Co., Inc., 232 S.W.3d 197, 204 (Tex. App.—Houston [1st Dist.] 2007, no
pet.) (holding appellant’s use of credit card and making of payments on account for
purchases and charges reflected on monthly billing statements “manifested her intent
that the contract become effective”).
Miller’s defenses
Miller argues on appeal that the arbitration provision was not binding because
it was illusory, and that Discover failed to satisfy its burden to show Miller signed
the arbitration agreement. With respect to the illusory argument, Miller argues that
because Discover “regularly uses the courts to pursue customers who had defaulted
on their loans,” the arbitration agreement “may not be illusory in form, but it is
illusory in practice.” Miller does not cite any cases in support of his argument. He
23
further complains that Discover’s attempt to compel Miller’s counterclaims to
arbitration, but not its own claim, renders the arbitration agreement illusory.
“[A]n arbitration clause is not illusory unless one party can avoid its promise
to arbitrate by amending the provision or terminating it altogether.” In re 24R, Inc.,
324 S.W.3d 564, 567 (Tex. 2010) (orig. proceeding) (citing In re Odyssey
Healthcare, Inc., 310 S.W.3d 419, 424 (Tex. 2010) (orig. proceeding); Royston,
Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494, 505 (Tex. 2015) (“An
arbitration agreement is illusory if it binds one party to arbitrate, while allowing the
other to choose whether to arbitrate.”). Further, the fact that “the scope of an
arbitration provision binds parties to arbitrate only certain disagreements does not
make it illusory.” Id. Here, the arbitration provision provides that either Miller or
Discover can “choose to resolve the[ir] dispute by binding arbitration . . . instead of
in court.” The arbitration provision is mutual, and neither side can avoid arbitration
by amending or terminating the arbitration clause. The arbitration provision is thus
not illusory.
As for Miller’s second defensive argument, Discover established that Miller
electronically signed and verbally consented to the arbitration agreement to be
approved for the loan.14 Bhatt’s uncontroverted declaration explained that the loan
14
“The party opposing the enforcement of an electronic agreement may come forward
with evidence that the security procedures utilized in the transaction ‘lack[ed]
integrity or effectiveness,’ and that therefore, the party’s signature on the contract
24
application could not have been completed unless Miller acquiesced to the terms of
the Loan Agreement, including the arbitration agreement. Miller argues the
declaration of Matysik and Bhatt are conclusory because both “assert legal
conclusions without providing admissible factual evidence and neither declaration
attaches sworn or certified copies of the referenced documents to the declarations.”
Although Miller objected in the trial court to Matysik’s declaration, he did not
obtain a ruling on the objections. He thus waived any objections as to form. See
McMahan v. Greenwood, 108 S.W.3d 467, 498 (Tex. App.—Houston [14th Dist.]
2003, pet. denied) (holding objections to form in summary judgment affidavits were
waived because appellees failed to obtain written rulings on objections); Hicks v.
Group & Pension Administrators, Inc., 473 S.W.3d 518, 535 (Tex. App.—Corpus
Christi–Edinburg 2015, no pet.) (“A defect in the form of a declaration must be
objected to in the trial court and failure to obtain a ruling from the trial court on an
objection to the form of a declaration waives the objection.”). The challenge to
Bhatt’s declaration, which is largely predicated on the failure to attach records, was
not raised below. The failure to attach sworn or certified documents to a declaration
is a defect in form that may not be raised for the first time on appeal. See Mathis v.
Bocell, 982 S.W.2d 52, 60 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (“[W]e
cannot reliably be attributed to him.” Solcius, LLC v. Meraz, No. 08-22-00146-CV,
2023 WL 2261414, at *5 (Tex. App.—El Paso Feb. 27, 2023, no pet.) (mem. op.)
(citing Aerotek, 624 S.W.3d at 210). Miller did not proffer any such evidence.
25
conclude that the failure of Westerband to attach the medical records on which he
relied is a defect of form.”); Morales v. JP Morgan Chase Bank, N.A., No. 01-10-
00553-CV, 2011 WL 2624047, at *4 (Tex. App.—Houston [1st Dist.] June 30, 2011,
no pet.) (mem. op.) (following Mathis); Jones v. WKB Value Partners, L.P., No. 04-
07-00865-CV, 2008 WL 2261192, at *2 (Tex. App.—San Antonio June 4, 2008, no
pet.) (noting split of authority but holding party’s failure to attach documents
referenced in affidavit is defect in form). Miller also argues that Bhatt’s declaration
is conclusory, but that argument is premised on Bhatt’s failure to attach records to
his declaration.
Miller raised other defenses on appeal that were not raised in the trial court.
For example, he argues for the first time in his brief that the documents attached to
Bhatt’s declaration violate the best evidence rule,15 that “no agreement existed at the
end of the application process,” and that the arbitration provision is not conspicuous.
Because Miller did not make these arguments in the trial court, they are waived.
TEX. R. APP. P. 33.1(a); see also Allen v. St. Paul Fire & Marine Ins. Co., 960
S.W.2d 909, 913 (Tex. App.—Texarkana 1998, no pet.) (holding best evidence rule
15
See TEX. R. EVID. 1002 (“An original writing, recording, or photograph is required
in order to prove its content unless these rules or other law provides otherwise.”);
TEX. R. EVID. 1003 (“A duplicate is admissible to the same extent as the original
unless a question is raised about the original’s authenticity or the circumstances
make it unfair to admit the duplicate.”); TEX. R. EVID. 1004 (explaining when
original is not required and “other evidence of the content of a writing, recording or
photograph is admissible”).
26
objection waived if not argued in trial court); Vera v. N. Star Dodge Sales, Inc., 989
S.W.2d 13, 16 (Tex. App.—San Antonio 1998, no pet.) (holding conspicuousness
argument waived because not argued in trial court).
Miller also argues that the evidence offered by Discover consist of “blank
sample pages neither connected to nor related to its loan agreement or the arbitration
agreement between it and Miller.” The sample pages to which Miller refers are
attached to Bhatt’s declaration at Exhibit 2. In his declaration, Bhatt explained that
Ex. 2 is a “screenshot[] of a sample of the online loan application process in place
in 2018.” The screenshots depict what Bhatt avers in his affidavit: (1) that when
Miller submitted his application, “Discover presented Miller with a e-signature
agreement;” (2) that to proceed, Miller “had to click ‘Continue’”, (3) that after
“Miller accepted the e-signature agreement, Discover provided Miller with the terms
of the conditions of the loan, including the arbitration agreement,” and (4) that to
proceed, Miller had to select “Continue.” Had Discover merely submitted these
sample pages without more, Miller’s argument would carry more weight. But in
addition to submitting the screenshots and explaining how they illustrate Discover’s
general loan application process as it existed in 2018, Bhatt also reviewed Discover’s
records and he averred that the “records reflect[ed] that Miller accepted the terms of
the e-signature agreement by clicking ‘Continue’” and that he “accepted the[] terms
[and conditions including the arbitration agreement] by clicking ‘Continue.’” This
27
uncontroverted evidence satisfied Discover’s burden to establish the existence of a
valid arbitration agreement. See Aerotek, Inc., 624 S.W.3d at 206–07 (rejecting non-
movant’s argument that because in-court demonstration of hiring application process
“showed only how [the process] had worked that day, not how it worked” when non-
movants used it, evidence was insufficient to establish valid arbitration agreement,
and further holding that employer’s “uncontroverted” evidence showing security
procedures used for its hiring application and to verify that candidate electronically
signed his arbitration agreement met employer’s burden to establish valid arbitration
agreement).
Did the claims fall within the scope of the arbitration agreement?
In addition to establishing the existence of a valid arbitration agreement,
Discover must also establish that Miller’s counterclaims fall within the scope of the
agreement. Discover satisfied its burden and Miller does not challenge the scope of
the arbitration agreement or argue on appeal that his claims do not fall within the
purview of the arbitration provision.
Conclusion
Because the evidence before the trial court established the existence of a valid
arbitration agreement and no one disputes that Miller’s claims falls within the scope
of the agreement, the trial court erred in denying Discover’s Motion to Compel
28
Arbitration. I would sustain Discover’s sole issue and reverse the trial court’s
judgment.
Because the majority does not so hold, I respectfully dissent.
Veronica Rivas-Molloy
Justice
Panel consists of Justices Kelly, Countiss, and Rivas-Molloy.
Justice Rivas-Molloy, dissenting.
29