1 We will use “M’Lady” to refer to the dealership and “Jim

M’Lady” to refer to the individual who was the principal owner

and president of the M’Lady dealership at all relevant times.

In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 05-1786

NISSAN NORTH AMERICA,

INCORPORATED,

Plaintiff-Appellant,

v.

JIM M’LADY OLDSMOBILE,

INCORPORATED d/b/a JIM

M’LADY NISSAN,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 01 C 1290—Joan B. Gottschall, Judge.

____________

ARGUED JUNE 5, 2006—DECIDED MAY 11, 2007

____________

Before BAUER, ROVNER and WILLIAMS, Circuit Judges.

ROVNER, Circuit Judge. In this successive appeal,

Nissan North America, Inc. (“Nissan”) challenges the

district court’s grant of summary judgment in favor of

Jim M’Lady Oldsmobile d/b/a/ Jim M’Lady Nissan

(“M’Lady”).1

 The first time the case was before us, we

vacated the district court’s order compelling arbitration,
2 No. 05-1786

finding that Nissan had failed to produce sufficient

evidence of arbitrability and the court had not given

M’Lady an adequate opportunity to rebut Nissan’s evidence. See Nissan North America, Inc. v. Jim M’Lady

Oldsmobile, Inc., d/b/a Jim M’Lady Nissan, 307 F.3d 601

(7th Cir. 2002) (hereafter “Nissan I”). With the benefit of

a more developed record on remand, the district court

found that Nissan failed to demonstrate that it was

entitled to arbitration and entered judgment in favor of

M’Lady. We affirm.

I.

Because the record is considerably more developed than

when last we visited this dispute, we recount the relevant facts anew. See Nissan I, 307 F.3d at 602-03. Nissan

filed this suit to compel arbitration of a dispute regarding Nissan’s termination of M’Lady’s car dealership. In

1992, Nissan and M’Lady entered into a written dealership

contract that allowed M’Lady to operate as an authorized

dealer of Nissan cars and trucks. This initial agreement,

titled “Nissan Dealer Term Sales & Service Agreement,”

(hereafter “Dealer Agreement”) was set to expire on April

1, 1995. The Dealer Agreement specified that it would

automatically terminate at the end of the stipulated term

without any action by either party. Another provision

required that any amendments be made in a writing

executed by both parties. In 1994, the parties extended the

termination date to November 1, 1996 by executing

“Amendment No. 1 to Nissan Dealer Term Sales and

Service Agreement.” Second and third amendments

effected changes to certain terms of the Dealer Agreement

that are not at issue here, but did not modify the termination date. November 1, 1996 came and went without the

parties signing any extension to the Dealer Agreement.

Until May 1998, M’Lady continued operating as a dealer of
No. 05-1786 3

Nissan products without a written contract in place to

govern the parties’ relationship.

On May 8, 1998, the parties entered into “Amendment

No. 4 to Nissan Dealer Term Sales and Service Agreement”

(“Amendment 4”). Amendment 4 changed the expiration

date of the Dealer Agreement to May 1, 1999 and changed

certain deadlines for M’Lady to complete construction of

an exclusive Nissan showroom. To effect the latter of

these changes, “Article Twelfth” of the original Dealer

Agreement was amended to provide that M’Lady would (1)

submit for Nissan’s approval plans for the construction of

the new showroom by July 1, 1998; (2) submit to Nissan a

signed contract for the construction of the showroom by

September 1, 1998; (3) commence construction of the new

showroom by November 1, 1998; and (4) complete construction of the new showroom by May 1, 1999. Amendment

4 also contained a provision subjecting the parties to

binding arbitration as the “exclusive mechanism for

resolving any dispute, controversy or claim arising out of

or relating in any way to this agreement and Amendment

No. 4, including but not limited to claims under any

state or federal statutes (hereinafter “Disputes”).” All

Disputes were to be submitted to the independent arbitration service JAMS/ENDISPUTE unless arbitration

was waived in writing by both parties. Amendment 4

marked the first time the parties agreed to arbitration.

On April 14, 1999, two weeks before the Dealer Agreement was set to expire, Nissan sent M’Lady a “Notice of

Default,” charging M’Lady with failing to meet three of the

four Amendment 4 deadlines for constructing the exclusive

Nissan showroom. The Notice of Default required M’Lady

to either complete the showroom within sixty days or

provide a commitment within sixty days to complete the

showroom in an acceptable amount of time. If M’Lady

failed to complete these new requirements within sixty

days, Nissan stated it would consider the Dealer Agree-
4 No. 05-1786

2 M’Lady’s May 17th letter began by stating, in relevant part,

“As you are aware, Jim M’Lady Nissan has agreed to provide

an extensive showroom area for our Nissan line to fulfill our

original agreement.” The letter then explained the cause of

the delays and a new tentative schedule for the showroom.

ment to be in breach and that this breach “may result

in Nissan issuing a Notice of Termination” under the

relevant provisions of the Dealer Agreement. This was a

curious threat given that the agreement was set to expire

on its own terms approximately two weeks later, on May

1, 1999. On May 17, 1999, M’Lady responded to the

Notice of Default by explaining that a lawsuit with its

landlord delayed construction, that the suit had been

resolved six months earlier and that M’Lady had since

contracted with an architect to begin the planning process

for the new facility. M’Lady hoped to have a final set of

plans by August 1999 and planned to begin construction by

the end of 1999 or the spring of 2000.2

 Nissan responded

on June 25, 1999, by offering “an additional period to

substantially correct [M’Lady’s] failure to fulfill its responsibilities under Article Twelfth (d) of the Agreement

with respect to the new exclusive Nissan Showroom.” The

June 25th letter offered “an additional one hundred-eighty

(180) day extension, expiring on December 14, 1999, upon

which to either commence construction or provide Nissan

with a new Nissan Exclusive Showroom Facility.” Nothing

in this letter addressed the larger issue of the expiration

of the Dealer Agreement and its amendments.

M’Lady apparently did not meet the new deadlines set

by the June 25th letter, and Nissan consequently sent a

“Notice of Termination Pursuant to the Nissan Dealer

Sales and Service Agreement and Chapter 815, Sections

710 et seq. of the Illinois Compiled Statutes” (hereafter

“Notice of Termination”) on January 19, 2000. This letter

purported to terminate the Dealer Agreement and also to
No. 05-1786 5

terminate M’Lady as a dealer, effective sixty days from

receipt of the letter. The Notice of Termination directed

M’Lady, among other things, to stop selling Nissan

products, and to remove the Nissan name and trademark

from the dealership, including from all signs and all

advertising materials.

Jim M’Lady met with representatives of Nissan on April

14, 2000, and informed them that he was trying to sell the

Nissan dealership. As a result, on May 8, 2000, Nissan

sent M’Lady a letter that purported to extend the effective

date of the termination by ninety days to give M’Lady an

opportunity to complete negotiations and to present an

acceptable buy-sell agreement to Nissan. Specifically, the

letter stated, “Nissan will extend the Notice of Termination and stay the effective date of termination for 90 days

commencing from the April 14, 2000 meeting, to and

including July 14, 2000, to provide you an opportunity

to submit an acceptable proposed transfer of assets.”

Again, there was no mention of the expiration of the

Dealer Agreement and its amendments.

The next correspondence between the parties was a

letter from Nissan to M’Lady on June 27, 2000, offering

four possible scenarios to resolve the parties’ dispute. The

first option, which Nissan labeled the status quo, was

that M’Lady would provide a proposal to sell the dealership to a buyer acceptable to Nissan by July 14, 2000. If

M’Lady failed to present an acceptable buyer candidate by

July 14, 2000, under the second option, Nissan would

proceed with termination. Under the third option, M’Lady

would agree to enter into a new dealer term sales and

service agreement, which would entail M’Lady removing

the Oldsmobile and Isuzu lines from the premises and

providing an exclusive Nissan dealership. The fourth

option was the one on which the parties reached some

agreement. Under the fourth option, Nissan agreed to

further extend the “effective date of termination,” listed
6 No. 05-1786

as July 14, an additional ninety days in order to provide

M’Lady an opportunity to accomplish one of three things:

(1) M’Lady would submit a proposal to sell the dealership

to a buyer acceptable to Nissan; (2) if no acceptable buyer

was procured, M’Lady would remove all other lines,

including Oldsmobile and Isuzu, from the dealership

premises within 180 days after July 14th; or (3) if M’Lady

failed to procure a buyer and also failed to remove the

other lines from his dealership, M’Lady would “Voluntarily

Terminate.” M’Lady “reluctantly accept[ed]” scenario

four in a letter faxed to Nissan on July 6, 2000.

In early August 2000, Nissan sent M’Lady a draft

Amendment 5. Amendment 5 proposed extending the

“Expiration Date” in the final article of the Dealer Agreement to January 8, 2001. It also required M’Lady to find

a buyer for the dealership by October 1, 2000 or remove

the Oldsmobile and Isuzu lines by January 1, 2001.

Finally, Amendment 5 stated that the parties would

resolve any disputes arising out of the Dealer Agreement,

including Amendment 5, through mediation and binding

arbitration. M’Lady did not respond to Nissan’s request to

execute Amendment 5, and Nissan sent M’Lady a letter on

August 18, 2000, asking M’Lady again to sign the new

terms and informing M’Lady that it would revoke the offer

and pursue termination unless M’Lady complied. M’Lady

responded with an August 22, 2000 letter declining

Amendment 5 and specifically objecting to, among other

things, the arbitration clause. Nissan then revised Amendment 5 to eliminate the arbitration provision but M’Lady

declined to sign the new draft as well.

On October 3, 2000, Nissan sent M’Lady a letter (hereafter “Final Termination Letter”) setting forth its version of

the sequence of events up to that date. Nissan opined that

M’Lady breached the Dealer Agreement in a manner that

warranted termination of the Dealer Agreement. Nissan

thus considered the Dealer Agreement to be “rescinded.”
No. 05-1786 7

Nissan hereby gives Dealer notice of its intent to

terminate Dealer pursuant to Section 12.A, effective

thirty (30) days from Dealer’s receipt of this Notice.

Please be further advised that Dealer had a right to

file a written protest with the Illinois Motor Vehicle

Board within thirty (30) days of receipt on January 22,

2000 of Nissan’s Notice of Termination dated January

19, 2000. Since Dealer has not filed any such written

protest, Nissan refers Dealer to and incorporates

herein by reference Nissan’s Termination Requirements set forth on Pages 3 and 4 in its Notice of

Termination dated January 19, 2000.

M’Lady then filed a Notice of Protest under the Illinois

Motor Vehicle Franchise Act with the Illinois Motor

Vehicle Review Board (hereafter “Board”) on October 20,

2000. On the form cover sheet for the Notice of Protest,

M’Lady listed the “Date of current franchise/service

agreement” as “5/21/92, amended 9/12/94, 9/27/94, 4/27/95,

5/18/98.” In an attached description of the alleged violation, M’Lady charged that Nissan notified M’Lady of its

intention to terminate the Dealer Agreement for the

reasons stated in Nissan’s October 3, 2000 letter, that

the facts asserted in the letter were in error, that there

was no good cause to terminate the Dealer Agreement, and

that Nissan was barred from terminating the Dealer

Agreement by reason of its own conduct.

On November 17, 2000, Nissan submitted the dispute

to JAMS/ENDISPUTE, citing the arbitration provision of

Amendment 4. A few days later, Nissan moved to stay

the proceedings with the Board so that the arbitration

could proceed. The Board denied the motion to stay and

Nissan then filed this action in federal court to compel

arbitration. The district court originally granted Nissan’s

petition to compel arbitration, a decision we vacated in our

first opinion in this matter. See Nissan I, 307 F.3d at 605.

Given the procedural posture of the case at the time, we
8 No. 05-1786

remanded so that the record could be more fully developed.

After the parties further developed the record on remand,

the district court entertained cross-motions for summary

judgment. The court found that Amendment 4, the only

agreement to arbitrate, had expired in 1999, and thus

did not govern the parties’ current relationship. Accordingly the district court granted M’Lady’s motion for

summary judgment, denied Nissan’s petition to compel

arbitration, and denied Nissan’s motion for summary

judgment on its petition to compel arbitration. Nissan

appeals.

II.

Nissan raises four arguments on appeal, each a variation

on the theme that Amendment 4 continues to govern the

parties’ relationship. First, Nissan contends that, contrary

to M’Lady’s representations to this court in the prior

appeal, the parties did not form an oral agreement that

expressly abandoned Amendment 4. Second, Nissan

maintains that because M’Lady filed a protest with the

Board to enforce the Dealer Agreement, M’Lady is now

estopped from repudiating the arbitration clause in

Amendment 4. Third, Nissan argues that it repeatedly

waived the expiration of the Dealer Agreement and that

M’Lady should be estopped from denying those waivers.

Finally, Nissan alleges that the parties impliedly agreed

to extend the Dealer Agreement.

We review de novo the district court’s grant of summary

judgment, viewing the facts and all reasonable inferences

drawn from those facts in the light most favorable to the

party opposing judgment, in this case Nissan. Corley v.

Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990, 1001 (7th

Cir. 2004). Nissan brought its petition to compel arbitration under 9 U.S.C. § 4, which provides:
No. 05-1786 9

A party aggrieved by the alleged failure, neglect, or

refusal of another to arbitrate under a written agreement for arbitration may petition any United States

district court which, save for such agreement, would

have jurisdiction under Title 28, in a civil action or in

admiralty of the subject matter of a suit arising out of

the controversy between the parties, for an order

directing that such arbitration proceed in the manner

provided for in such agreement.

As we noted in our prior opinion, under the plain language

of this provision, agreements to arbitrate must be in

writing. Nissan I, 307 F.3d at 604-05; see also IDS Life Ins.

Co. v. SunAmerica, Inc., 103 F.3d 524, 529 (7th Cir. 1996).

In the first appeal, Nissan pointed to Amendment 4, which

contained an expiration date of May 1, 1999, as the

relevant written agreement to arbitrate. But we also

noted that “a contract that by its own terms expired in

1999 cannot possibly be the basis of the parties’ current

dealership arrangement, and thus the termination of the

current relationship cannot, at least absent additional

evidence, be said to relate in any way to the expired

contract.” Nissan I, 307 F.3d at 604. We rejected Nissan’s

argument that Amendment 4 never expired because

Nissan repeatedly waived the expiration date, finding

that there was no evidence in the record that M’Lady

accepted Nissan’s offers to extend the expiration date. Id.

In the alternative, Nissan argued that although Amendment 4 expired, the parties continued to operate under an

identical agreement as evidenced by the parties’ course of

dealing. Because this agreement was not in writing, we

declined to accept it as the writing required by 9 U.S.C.

§ 4. M’Lady argued that it had not been allowed to present

evidence of the parties’ post-expiration oral agreement

and we remanded so that the record could be further

developed on the issue of a written agreement to arbitrate.
10 No. 05-1786

Nissan has failed again to demonstrate that the parties

had a written agreement to arbitrate that covered the

subject of the termination dispute. Nissan’s first argument is that M’Lady failed to show on remand that the

parties formed an oral agreement that specifically abandoned the terms of Amendment 4. This argument misses

the mark, though, because M’Lady’s only burden on

summary judgment was to demonstrate that Amendment

4, the written agreement to arbitrate, expired and that

there was no subsequent written agreement governing

the parties’ relationship that contained an arbitration

clause. True, the parties continued to conduct business

after May 1, 1999. Nissan continued to supply the M’Lady

dealership with cars and trucks, and M’Lady continued to

sell Nissan cars and trucks. Some kind of agreement

governed the relationship but there is no evidence that

part of that agreement was a promise to arbitrate any

disputes. The references to an oral agreement by both this

court and by M’Lady in the prior appeal were merely

shorthand for whatever unwritten agreement arose

subsequent to the expiration of Amendment 4. The salient

fact is that there is no evidence of a written agreement to

arbitrate that survived the expiration of Amendment 4.

M’Lady’s failure to prove the terms of any oral agreement

is irrelevant to that issue, especially in light of the provision in the Dealer Agreement requiring that all modifications to the contract be in a writing signed by both parties.

Nissan next contends that M’Lady is estopped from

repudiating the arbitration clause in Amendment 4

because M’Lady listed Amendment 4, along with the date

of the original contract and the dates of all of the other

amendments, on the Notice of Protest form on a line

requesting the “Date of current franchise/service agreement.” Nissan complains that M’Lady was accepting the

benefit of Amendment 4 by naming it in the protest and

thus is estopped from denying the continuing vitality of
No. 05-1786 11

Amendment 4. As M’Lady points out, this is the agreement

that Nissan purported to terminate in its Final Termination Letter. M’Lady’s protest simply mirrored that letter.

M’Lady made no substantive admission that Amendment

4 remained in effect. The franchise relationship between

Nissan and M’Lady following the expiration of Amendment 4 was governed by some other agreement as we noted

above; we need not concern ourselves with the terms of

that agreement or how it was formed except to say that

Nissan has failed to produce a written arbitration agreement covering that period of time. It was the franchise

relationship that M’Lady sought to protect in the protest,

not the expired Amendment 4. Nissan protests that

franchise agreements must be in writing and that M’Lady

would have had no franchise to protect had it not

invoked Amendment 4. Illinois law appears to permit oral

franchise agreements, however. See 815 ILCS 710/2(i). But

even if oral franchise agreements are unenforceable

under Illinois law, that fact is irrelevant to the dispute we

have before us, which is whether these parties had a

written agreement to arbitrate. Without such an agreement, it is for the Board to decide whether M’Lady has

enforceable franchise rights.

We similarly reject Nissan’s claim that M’Lady is

estopped from denying the continuing validity of Amendment 4 because Nissan repeatedly waived the expiration of

the Dealer Agreement. In our prior opinion, we tentatively

rejected this argument for two reasons. First, although

Nissan produced a number of letters it sent to M’Lady

offering to extend certain dates, it produced no evidence

that M’Lady accepted those offers. Nissan I, 307 F.3d at

604. In this second appeal, Nissan has yet to demonstrate

that M’Lady accepted any of these offers. Second, we noted

that some of the letters on which Nissan relies contain

offers to forbear early termination of the contract based on

M’Lady’s purported breaches rather than offers to extend
12 No. 05-1786

the term of the Dealer Agreement. Nissan I, 307 F.3d at

604. Nothing in the record as it is now developed changes

our view. M’Lady did not accept any offers to extend the

term of the Dealer Agreement. Instead, as Nissan acknowledged in its own internal correspondence, after May 1,

1999, M’Lady was running the franchise without the

benefit of a written agreement. We thus reject any claim of

estoppel.

Finally, Nissan argues that the parties impliedly agreed

to extend the term of the Dealer Agreement. Nissan

contends that the continued performance of an expired

agreement is sufficient to show that the parties impliedly agreed to extend that agreement. The parties

squabble about whether the question of implied contract is

governed by Illinois or California law. Nissan urges us to

use California law. The Dealer Agreement provided that

the contract was to be deemed “to have been entered into

in the State of California, and all questions concerning

the validity, interpretation or performance of any of its

terms or provisions, or of any rights or obligations of the

parties hereof, shall be governed by and resolved in

accordance with the internal laws of the State of California, including, without limitation, the statute of limitations.” Under California law, the existence and terms of

an implied contract are manifested by conduct rather

than words. Cal. Civ. Code 1621. M’Lady argues that

because the Dealer Agreement had expired, the federal

courts should apply Illinois choice of law rules and use

Illinois law to determine the existence and terms of any

agreement that arose subsequent to the Dealer Agreement.

Like California, Illinois law also recognizes contracts

which owe their existence to and whose terms are defined

by the parties’ conduct or actions. Brody v. Finch University of Health Sciences/The Chicago Medical School, 698

N.E.2d 257, 265 (Ill. App. Ct. 1998).
No. 05-1786 13

Under either Illinois or California law, we find that

Nissan has failed to demonstrate the existence of an

implied agreement to extend the expiration date of the

Dealer Agreement as amended by Amendment 4. Under

both California and Illinois law, in order to prove an

implied contract, Nissan must prove the same elements as

an express contract. See Division of Labor Law Enforcement v. Transpacific Transportation Co., 137 Cal. Rptr.

855, 859 (Cal. Ct. App. 1977) (“As to the basic elements,

there is no difference between an express and implied

contract.”); Brody, 698 N.E.2d at 265 (“A contract implied in fact contains all of the elements of an express

contract as well as a meeting of the minds.”). That is,

Nissan must show offer, acceptance and consideration.

Brody, 698 N.E.2d at 265; Transpacific, 137 Cal. Rptr. at

855. Both Illinois and California emphasize that the

plaintiff must show a mutual intent to contract, a meeting

of the minds. Brody, 698 N.E.2d at 265 (an implied

contract arises where “circumstances under common

understanding show a mutual intent to contract”); Transpacific, 137 Cal. Rptr. at 855 (“the very heart of this

kind of agreement is an intent to promise”).

To show this intent to extend the expiration date of the

Dealer Agreement and Amendment 4, Nissan relies

heavily on the fact that the parties continued to do business after the expiration of Amendment 4, and continue to

do business together to this day. Nissan also notes that

Jim M’Lady indicated after the May 1, 1999 expiration

date that he still intended to provide the exclusive

Nissan showroom referenced in Amendment 4. Nissan’s

argument would render meaningless the provision of the

Dealer Agreement that required all changes to the agreement to be made in a writing signed by both parties. There

is no evidence that the parties ever agreed to alter that

requirement to allow oral modifications or modifications

implied in fact. The uncontested evidence reveals there
14 No. 05-1786

is no written modification extending the Dealer Agreement beyond the expiration date contained in Amendment 4. The sole California case on which Nissan relies

for its argument that continued performance establishes

an implied extension to the original agreement makes no

mention of a contract term requiring modifications to be

made in writing. See British Motor Car Distributors, Ltd.

v. New Motor Vehicle Board, 239 Cal. Rptr. 280 (Cal. Ct.

App. 1987). Because the Dealer Agreement contained a

provision requiring modifications to be made in writing,

we find the British Motor Car case to be inapposite.

More importantly, Nissan here is confusing the existence of an implied agreement with the terms of such an

agreement. As we noted above, after the expiration of

Amendment 4, Nissan continued to provide cars and trucks

to M’Lady and M’Lady continued to sell those products

while using the Nissan name in the dealership. Even if we

assume that a contractual relationship can be implied from

that conduct, there is no indication in any of the uncontested evidence that either party agreed to extend the

agreement to arbitrate beyond the expiration date of

Amendment 4. Indeed, all of the available evidence points

to the contrary. Amendment 4 marked the first time the

parties agreed to resolve their disputes through binding

arbitration. When Nissan subsequently proposed an

arbitration clause in the draft Amendment 5, M’Lady

immediately rejected that term and Nissan prepared a new

draft excluding the arbitration clause. In the interim,

Nissan indicated its belief in both internal memoranda and

in meetings with Jim M’Lady that Amendment 4 had

expired on May 1, 1999 and that the parties were subsequently operating without an agreement in effect. Neither

party manifested an intent to commit disputes to binding

arbitration following the expiration of Amendment 4. Thus,

Nissan has failed to demonstrate the existence of an
No. 05-1786 15

implied contract that included an arbitration clause among

its terms.

III.

All of Nissan’s arguments are variations on the theme

that Amendment 4 continued to govern the parties’

relationship even after the agreement expired by its

own terms. Because we conclude that there is no written

agreement containing an arbitration clause that governed the parties’ relationship at the time of termination,

we affirm the judgment of the district court in every

respect.

AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—5-11-07