Court Opinion

ID: 4251570
Source: CourtListenerOpinion
Date Created: 2018-03-02 21:12:02.060907+00
Date Added: 2024-06-11T14:43:38.770265
License: Public Domain

Digitally signed by
                                                                               Reporter of Decisions
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                             Illinois Official Reports                         accuracy and
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                                                                               document
                                    Appellate Court                            Date: 2018.02.27
                                                                               08:04:02 -06'00'

                  Midland Funding, LLC v. Raney, 2018 IL App (5th) 160479

Appellate 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,

                                                    -7-
       ¶ 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

                                                    -8-
       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

                                                   -9-
       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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