Midland Funding, LLC v. Raney

• Decision Date: 04 January 2018
• Docket Number: NO. 5–16–0479,5–16–0479
• Citation: 93 N.E.3d 724,2018 IL App (5th) 160479
• Parties: MIDLAND FUNDING, LLC, Plaintiff and Counterdefendant–Appellant, v. Teresa RANEY and Shirley Darnell, Defendants and Counterplaintiffs–Appellees.
• Court: United States Appellate Court of Illinois

2018 IL App (5th) 160479

93 N.E.3d 724

MIDLAND FUNDING, LLC, Plaintiff and Counterdefendant–Appellant,

v.Teresa RANEY and Shirley Darnell, Defendants and Counterplaintiffs–Appellees.

NO. 5–16–0479

Appellate Court of Illinois, Fifth District.

Opinion Filed: January 4, 2018

Heather L. Kramer, Rosa M. Tumialán, and Jennifer A. Warner, of 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.

JUSTICE OVERSTREET delivered the judgment of the court, with 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 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. Schobloom 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].

* * *

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

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