By Glaze H.B. No. 1896
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of certain motor vehicle dealers and the
1-3 sale, titling, and registration of certain motor vehicles.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subdivision (vii), Subsection (1-A), Section (a),
1-6 Article 6686, Revised Statutes is amended to read as follows:
1-7 (vii) In addition to other requirements provided by law, the
1-8 Department may not issue or renew a general distinguishing number
1-9 as a motor vehicle dealer or a wholesale motor vehicle auction to
1-10 an applicant until the applicant shows proof satisfactory to the
1-11 Department that the applicant has complied with Article 6686-2 of
1-12 this chapter <purchased a properly executed surety bond in the
1-13 amount of $25,000 with good and sufficient surety approved by the
1-14 Department. The bond shall be approved as to form by the attorney
1-15 general and shall be conditioned on the applicant's payment of all
1-16 valid bank drafts, including checks, drawn by the applicant for the
1-17 purchase of motor vehicles and the applicant's transfer of good
1-18 title to each motor vehicle the applicant offers for sale. In lieu
1-19 of the bond otherwise required by this subdivision, the Department
1-20 may accept and receive the pledge of cash, a cash deposit, a
1-21 certificate of deposit, or other instrument determined by the
1-22 Department to be adequate security for the obligations of the
1-23 bond). Recovery against the bond or other security may be made by
2-1 a person who obtains a judgment against a dealer or wholesale motor
2-2 vehicle auction assessing damages and attorney's fees for an act or
2-3 omission on which the bond is conditioned if the act or omission
2-4 occurred during the term for which the general distinguishing
2-5 number will be valid>. The requirements of this subdivision do not
2-6 apply to a person licensed by the <Texas> Motor Vehicle Board of
2-7 the Texas Department of Transportation <Commission>.
2-8 SECTION 2. Title 116, Revised Statutes, is amended by adding
2-9 Article 6686-2 to read as follows:
2-10 Art. 6686-2. MOTOR VEHICLE TRANSACTION RECOVERY FUND
2-11 Sec. 1. In this article:
2-12 (1) "Person" means an individual, corporation, partnership,
2-13 firm, or other legal entity.
2-14 (2) "Licensee" means a person who holds a general
2-15 distinguishing number issued by the Department under Article
2-16 6686(a)(1-A), Revised Statutes, or a wholesale motor vehicle
2-17 auction license issued by the Department under Article
2-18 6686(a)(2-A), Revised Statutes.
2-19 (3) "Applicant" means a person who applies for or applies
2-20 for a renewal of a general distinguishing number issued by the
2-21 Department under Article 6686(a)(1-A), Revised Statutes. or a
2-22 wholesale motor vehicle auction license issued by the Department
2-23 under Article 6686(a)(2-A), Revised Statutes.
2-24 (4) "Executive Director" means the Executive Director of the
2-25 Texas Department of Transportation.
3-1 (5) "Judgment creditor" means a person who is eligible under
3-2 Section 3 of this article for recovery from the fund.
3-3 (6) "Department" means the Texas Department of
3-4 Transportation.
3-5 (7) "General distinguishing number" means a general
3-6 distinguishing number issued by the department.
3-7 (8) "License" means a wholesale motor vehicle auction
3-8 license issued by the department.
3-9 (9) ""Fund" means the Motor Vehicle Transaction Recovery
3-10 Fund.
3-11 Sec. 2 (a) In addition to other fees required by law, an
3-12 applicant shall pay an assessment fee of $350 prior to issuance of
3-13 a general distinguishing number or license. Except as provided in
3-14 Subsection (c) of this Section, a licensee shall pay the assessment
3-15 fee for four consecutive renewal periods until the licensee has
3-16 paid assessment fees totaling $1,400. Assessment fees shall be
3-17 used to establish the fund. The fund shall be used as provided by
3-18 this article.
3-19 (b) All assessments for the fund shall be deposited as a
3-20 special fund in the state treasury to be expended to pay claims
3-21 against the fund and to pay the cost directly related to the
3-22 administration of the fund and for no other purpose. Any interest
3-23 income accrues to the fund. The executive director shall
3-24 administer the fund and maintain an accurate record of all
3-25 transactions involving the fund.
4-1 (c) If after four years from the date the fund was
4-2 established the balance of the fund is less than $10,000,000 each
4-3 applicant and licensee shall at the time of issuance or renewal of
4-4 a general distinguishing number or license pay an assessment fee as
4-5 provided by Subsection (a) of this Section until the fund balance
4-6 is at least $10,000,000.
4-7 Sec. 3. (a) Recovery from the fund may be made by a person
4-8 who obtains a final judgment that is enforceable in the courts of
4-9 this state against an applicant or licensee assessing damages for
4-10 an act or omission arising from the applicant's or licensee's
4-11 failure to pay a draft, including checks, drawn for the purchase of
4-12 a motor vehicle or the applicant's or licensee's failure to deliver
4-13 good title. Recovery from the fund entitles a person to recover
4-14 attorney's fees that are reasonable in relation to the work
4-15 performed and are incurred in the recovery of the judgment. The
4-16 fund is not liable for payment of that portion of a final judgment
4-17 against an applicant or licensee that is awarded for punitive or
4-18 exemplary damages.
4-19 (b) A judgment creditor may file a verified claim with the
4-20 executive director requesting payment from the fund of the amount
4-21 of the unpaid judgment.
4-22 (c) The claim shall be filed with the executive director no
4-23 sooner than thirty days and no later than twelve months after the
4-24 judgment becomes final.
4-25 Sec. 4 (a) The maximum claim of one judgment creditor
5-1 against the fund based on an unpaid final judgment involving a
5-2 single transaction is $50,000.
5-3 (b) The maximum aggregate of claims of one judgment creditor
5-4 against the fund in a 12 month period is $100,000.
5-5 (c) If the executive director has reasonable grounds to
5-6 suspect that an additional claim may be made against the fund
5-7 involving the same applicant or licensee, the executive director
5-8 may for a period not to exceed one year after the receipt of the
5-9 claim withhold any payment from the fund with respect to a
5-10 transaction involving an applicant or licensee. After this period
5-11 the executive director shall pay all claims in full unless the
5-12 claims in aggregate exceed $200,000. If the aggregate of claims
5-13 against the applicant or licensee exceeds $200,000, the executive
5-14 director shall prorate the total of $200,000 among the claimants
5-15 and pay from the fund each claimant's pro rata share in proportion
5-16 to the amounts of the unpaid final judgments against the applicant
5-17 or licensee.
5-18 (d) On receipt of a verified claim filed against the fund,
5-19 the executive director shall notify the applicant or licensee who
5-20 is the subject of the unpaid judgment that a verified claim has
5-21 been filed and that the applicant or licensee must satisfy the
5-22 judgment debt. If the judgment debt is not fully satisfied 30 days
5-23 from the date of the notification by the executive director, the
5-24 executive director shall make payment from the fund as provided by
5-25 this Article.
6-1 Sec. 5. Prior to payment of a claim from the fund, a
6-2 claimant shall assign to the department the claimant's rights to
6-3 recover from the relevant applicant or licensee in an amount up to
6-4 the amount by which the claimant is to be compensated from the
6-5 fund. Subject to the provisions of this Article and on the
6-6 claimant's execution and delivery to the executive director of that
6-7 assignment the executive director shall pay the claimant from the
6-8 fund the amount of the unpaid final judgment.
6-9 Sec. 6. On payment by the executive director to a claimant
6-10 from the fund as provided in this Article, the executive director
6-11 shall immediately notify the applicant or licensee in writing of
6-12 the fund's payment to the claimant and request that the applicant
6-13 or licensee fully reimburse the fund within 30 days after receipt
6-14 of notification. Failure to reimburse the fund in full within the
6-15 specified period shall cause the executive director to immediately
6-16 revoke the general distinguishing number or license of the
6-17 applicant or licensee whose violation of this Article resulted in
6-18 this payment. Any person whose general distinguishing number or
6-19 license is revoked may not apply for a license as a dealer or
6-20 wholesale motor vehicle auction until the person has repaid in full
6-21 the amount paid from the fund on his account, plus interest at the
6-22 rate of eight percent per year from the date of payment.
6-23 Sec. 7 The Department may promulgate forms and adopt rules
6-24 to implement this Article.
6-25 Sec. 8. A person who holds a license issued by the Motor
7-1 Vehicle Board of the department is not required to pay a fee as
7-2 provided by this Article.
7-3 SECTION 2. This bill is effective January 1, 1996. A bond
7-4 purchased as required by Subdivision (vii), Subsection (1-A),
7-5 Section (a), Article 6686, Revised Statutes that is in effect on
7-6 that date remains in effect until it expires according to its own
7-7 terms.
7-8 SECTION 3. The importance of this legislation and the
7-9 crowded condition of the calendars in both houses create an
7-10 emergency and an imperative public necessity that the
7-11 constitutional rule requiring bills to be read on three several
7-12 days in each house be suspended, and this rule is hereby suspended.