By Glaze H.B. No. 1896
Substitute the following for H.B. No. 1896:
By Clemons C.S.H.B. No. 1896
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of certain vehicle dealers and the sale,
1-3 titling, and registration of certain vehicles.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section (a)(1-A)(vii), Article 6686, Revised
1-6 Statutes, is amended to read as follows:
1-7 (vii) In addition to other requirements provided
1-8 by law, the Department may not issue or renew a general
1-9 distinguishing number as a motor vehicle dealer or a wholesale
1-10 motor vehicle auction to an applicant until the applicant shows
1-11 proof satisfactory to the Department that the applicant has
1-12 complied with Article 6686-2, Revised Statutes. <purchased a
1-13 properly executed surety bond in the amount of $25,000 with good
1-14 and sufficient surety approved by the Department. The bond shall
1-15 be approved as to form by the attorney general and shall be
1-16 conditioned on the applicant's payment of all valid bank drafts,
1-17 including checks, drawn by the applicant for the purchase of motor
1-18 vehicles and the applicant's transfer of good title to each motor
1-19 vehicle the applicant offers for sale. In lieu of the bond
1-20 otherwise required by this subdivision, the Department may accept
1-21 and receive the pledge of cash, a cash deposit, a certificate of
1-22 deposit, or other instrument determined by the Department to be
1-23 adequate security for the obligations of the bond. Recovery
2-1 against the bond or other security may be made by a person who
2-2 obtains a judgment against a dealer or wholesale motor vehicle
2-3 auction assessing damages and reasonable attorney's fees for an act
2-4 or omission on which the bond is conditioned if the act or omission
2-5 occurred during the term for which the general distinguishing
2-6 number will be valid. The liability imposed on the surety under
2-7 this section is limited to the face amount of the bond for the
2-8 amount of the valid bank drafts, including checks, drawn by the
2-9 applicant for the purchase of motor vehicles or the amount paid to
2-10 the applicant for the motor vehicle for which good title was not
2-11 delivered, and for attorney's fees which are reasonable in relation
2-12 to the work performed and which are incurred in the recovery of a
2-13 judgment for an act or omission on which the bond was conditioned.
2-14 The surety on a bond shall not be liable for successive claims in
2-15 excess of the bond amount, regardless of the number of claims made
2-16 against the bond or the number of years the bond remains in force.>
2-17 The requirements of this subdivision do not apply to a person
2-18 licensed by the Motor Vehicle Board of the Texas Department of
2-19 Transportation.
2-20 SECTION 2. Chapter 1, Title 116, Revised Statutes, is
2-21 amended by adding Article 6686-2 to read as follows:
2-22 Art. 6686-2. MOTOR VEHICLE TRANSACTION RECOVERY FUND
2-23 Sec. 1. DEFINITIONS. In this article:
2-24 (1) "Applicant" means a person who applies for
2-25 issuance or renewal of a license.
3-1 (2) "Department" means the Texas Department of
3-2 Transportation.
3-3 (3) "Executive director" means the executive director
3-4 of the Texas Department of Transportation or an employee of the
3-5 department designated by the executive director.
3-6 (4) "Fund" means the Motor Vehicle Transaction
3-7 Recovery Fund.
3-8 (5) "Judgment creditor" means a person who is eligible
3-9 under Section 3 of this article for recovery from the fund.
3-10 (6) "License" means:
3-11 (A) a general distinguishing number issued by
3-12 the department under Section (a)(1-A), Article 6686, Revised
3-13 Statutes; or
3-14 (B) a wholesale motor vehicle auction general
3-15 distinguishing number issued by the department under Section
3-16 (a)(2-A), Article 6686, Revised Statutes.
3-17 (7) "License holder" means a person who holds a
3-18 license.
3-19 (8) "Person" means an individual, corporation,
3-20 partnership, firm, or other legal entity.
3-21 Sec. 2. ASSESSMENT; EXEMPTION. (a) In addition to other
3-22 fees required by law, an applicant shall pay an assessment of $350
3-23 before issuance of a license. Except as provided by Subsection (c)
3-24 of this section, an applicant shall pay an initial assessment plus
3-25 additional assessments payable at the time of license renewal for
4-1 three consecutive renewal periods until the license holder has paid
4-2 assessments totaling $1,400. The department shall use the
4-3 assessments to establish the fund.
4-4 (b) The department shall deposit all assessments for the
4-5 fund in a special account in the state treasury, to be used only to
4-6 pay claims against the fund and costs directly related to the
4-7 administration of the fund. Interest earned on money deposited in
4-8 the fund accrues to the fund. The executive director shall
4-9 administer the fund and maintain an accurate record of all
4-10 transactions involving the fund.
4-11 (c) If, on the fourth anniversary of the date the fund is
4-12 established the balance of the fund is less than $10 million, each
4-13 applicant and license holder shall at the time of issuance or
4-14 renewal of a license pay an additional assessment in the amount
4-15 provided by Subsection (a) of this section until the fund balance
4-16 is at least $10 million.
4-17 (d) A person licensed by the Motor Vehicle Board of the
4-18 department is not required to pay an assessment as provided by this
4-19 article.
4-20 Sec. 3. RECOVERY FROM FUND. (a) Recovery from the fund may
4-21 be made by a person other than a person who floorplanned the motor
4-22 vehicle(s) in question for the applicant or license holder who
4-23 obtains a final judgment that is enforceable in the courts of this
4-24 state against an applicant or license holder and that assesses
4-25 damages for an act or omission arising from the applicant's or
5-1 license holder's failure to pay a draft, including checks, drawn
5-2 for the purchase of a vehicle or the applicant's or license
5-3 holder's failure to deliver good title.
5-4 (b) Recovery from the fund entitles a person to recover
5-5 attorney's fees that are included as part of the final judgment and
5-6 have been determined by the court to be reasonable in relation to
5-7 the work performed and are incurred in the recovery of the
5-8 judgment.
5-9 (c) The fund is not liable for payment of that portion of a
5-10 final judgment against an applicant or license holder that is
5-11 awarded for punitive or exemplary damages.
5-12 (d) A judgment creditor may file a claim with the executive
5-13 director requesting payment from the fund of the amount of the
5-14 unpaid judgment. For payment under this article, the judgment
5-15 creditor must file the claim after the 30th day after the date on
5-16 which the judgment is final and before the first anniversary of
5-17 that date.
5-18 (e) A claim filed pursuant to this section must be submitted
5-19 on a form approved by the department and must include a document
5-20 issued by the clerk of the trial court certifying that the judgment
5-21 is final.
5-22 Sec. 4. MAXIMUM CLAIMS. (a) The maximum claim that a
5-23 single judgment creditor may present against the fund based on an
5-24 unpaid final judgment involving a single transaction is $50,000.
5-25 (b) The maximum aggregate of claims that a single judgment
6-1 creditor may present against the fund involving the same applicant
6-2 or license holder in any 12-month period is $100,000.
6-3 (c) If the executive director has reasonable grounds to
6-4 suspect that an additional claim may be made against the fund
6-5 involving the same applicant or license holder, the executive
6-6 director, for a period not to exceed 90 days after the receipt of
6-7 the claim, may withhold payment from the fund with respect to a
6-8 transaction involving that applicant or license holder. After the
6-9 expiration of that period, the executive director shall pay all
6-10 claims in full unless the claims in the aggregate exceed $200,000.
6-11 If the aggregate of claims against the applicant or license holder
6-12 exceeds $200,000, the executive director shall pay from the fund
6-13 each claimant's pro rata share of $200,000 in proportion to the
6-14 amounts of the unpaid final judgments against the applicant or
6-15 license holder.
6-16 (d) On receipt of a claim filed against the fund, the
6-17 executive director shall notify the applicant or license holder who
6-18 is the subject of the unpaid judgment that a claim has been filed
6-19 and that the applicant or license holder must satisfy the judgment
6-20 debt. If the judgment debt is not fully satisfied before the 31st
6-21 day after the date of the notification by the executive director,
6-22 the executive director shall make the payment from the fund as
6-23 provided by this article.
6-24 (e) Before payment of a claim from the fund, the claimant
6-25 shall assign to the department the claimant's right to recover from
7-1 the affected applicant or license holder the amount that the
7-2 claimant is to be compensated from the fund. On the claimant's
7-3 execution and delivery to the executive director of that
7-4 assignment, the executive director shall pay to the claimant from
7-5 the fund the lesser of the amount of the unpaid final judgment or
7-6 the maximum amount allowed under this section.
7-7 Sec. 5. REIMBURSEMENT REQUIRED. On payment under this
7-8 article, the executive director shall immediately notify the
7-9 applicant or license holder in writing, return receipt requested,
7-10 of the payment to the claimant and demand that the applicant or
7-11 license holder fully reimburse the fund or request a hearing not
7-12 later than the 30th day after the date of the receipt of the
7-13 notification. If the applicant or license holder does not
7-14 reimburse the fund in full or request a hearing within that period,
7-15 the executive director shall immediately revoke the license of the
7-16 applicant or license holder whose violation of this article
7-17 resulted in the payment from the fund. A person whose license is
7-18 revoked is not eligible for a new license as a dealer or wholesale
7-19 motor vehicle auction until the person has reimbursed in full the
7-20 amount paid from the fund on the person's behalf, plus interest
7-21 computed at the rate of eight percent per year from the date of
7-22 payment from the fund to the claimant until the date on which the
7-23 person reimburses the fund in full. Hearings required by this
7-24 section shall be conducted by the Motor Vehicle Board of the
7-25 department.
8-1 Sec. 6. RULES; FORMS. The department may adopt rules and
8-2 prescribe forms as necessary to implement this article.
8-3 SECTION 3. (a) The change in law made by this Act to
8-4 Section (a)(1-A)(vii), Article 6686, Revised Statutes, applies only
8-5 to the issuance or renewal of a general distinguishing number as a
8-6 dealer or a wholesale motor vehicle auction on or after the
8-7 effective date of this Act.
8-8 (b) The bond requirement of Section (a)(1-A)(vii), Article
8-9 6686, Revised Statutes, as amended by this Act, continues to apply
8-10 to a general distinguishing number as a dealer or a wholesale motor
8-11 vehicle auction in effect on the effective date of this Act until
8-12 the general distinguishing number expires or is renewed, and that
8-13 previous law continues in effect for that purpose.
8-14 SECTION 4. This Act takes effect January 1, 1996.
8-15 SECTION 5. The importance of this legislation and the
8-16 crowded condition of the calendars in both houses create an
8-17 emergency and an imperative public necessity that the
8-18 constitutional rule requiring bills to be read on three several
8-19 days in each house be suspended, and this rule is hereby suspended.