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The Seventh Circuit Court of Appeals upheld a district court order denying a motion to compel arbitration where the contract containing the arbitration clause had expired by its terms before the dispute arose.
In Nissan North America, Inc. v. Jim M'Lady Oldsmobile, Inc., No. 05-1786, 2007 WL 1374759 (7th Cir. May 11, 2007), Jim M'Lady Oldsmobile (JMO) sold Nissan vehicles under a dealer agreement that expired by its terms on May 1, 1999. JMO continued to sell Nissan vehicles after the dealer agreement had expired.
After some failed attempts to renegotiate and extend the dealer agreement, Nissan sent notice of intent to terminate the dealer agreement. In response, JMO filed a notice of protest with the Illinois Motor Vehicle Review Board (the Board). When the Board refused to stay further proceedings, Nissan filed a petition to compel arbitration in federal court. The district court denied the motion on the ground that the dealer agreement, and its arbitration clause, had expired in 1999.
Nissan raised several arguments on appeal, all premised on the notion that the expired dealer agreement continued to govern the parties' relationship. The Court rejected each argument.
First, the Court rejected Nissan's argument that it effectively waived the agreement's expiration date because there was no evidence that JMO accepted an offer of waiver. Second, the Court rejected Nissan's argument that the agreement continued in effect after the expiration date, either through course of dealing or an oral agreement, because the Federal Arbitration Act requires arbitration agreements to be in writing. Finally, the Court rejected Nissan's theory of an implied contract because JMO specifically rejected the inclusion of an arbitration clause in a renegotiated contract.
Since the dealer agreement had expired by its terms, and since there was no other evidence of a written arbitration agreement, the Court affirmed the order denying Nissan's petition to compel arbitration.
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