S.B. No. 1139
AN ACT
1-1 relating to the duties and responsibilities of the Motor Vehicle
1-2 Board of the Texas Department of Transportation and of persons
1-3 under the board's authority; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1.02, Texas Motor Vehicle Commission Code
1-6 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-7 read as follows:
1-8 Sec. 1.02. POLICY AND PURPOSE. The distribution and sale of
1-9 <new> motor vehicles in this State vitally affects the general
1-10 economy of the State and the public interest and welfare of its
1-11 citizens. It is the policy of this State and the purpose of this
1-12 Act to exercise the State's police power to insure a sound system
1-13 of distributing and selling <new> motor vehicles through licensing
1-14 and regulating manufacturers, distributors, converters, and dealers
1-15 of those vehicles, and enforcing this Act as to other persons, in
1-16 order to provide for compliance with manufacturer's warranties, and
1-17 to prevent frauds, unfair practices, discriminations, impositions,
1-18 and other abuses of our citizens.
1-19 SECTION 2. Section 1.03, Texas Motor Vehicle Commission Code
1-20 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-21 read as follows:
1-22 Sec. 1.03. DEFINITIONS. In this Act:
1-23 (1) "Motor vehicle" means:
2-1 (A) every fully self-propelled vehicle which has
2-2 as its primary purpose the transport of a person or persons, or
2-3 property, on a public highway, and having two or more wheels;
2-4 (B) every two or more wheeled fully
2-5 self-propelled, titled vehicle which has as its primary purpose the
2-6 transport of a person or persons or property and is not
2-7 manufactured for use on public streets, roads, or highways; or
2-8 (C) an engine, transmission, or rear axle
2-9 manufactured for installation in a vehicle having as its primary
2-10 purpose the transport of a person or persons or property on a
2-11 public highway and having a gross vehicle weight rating of more
2-12 than 16,000 pounds, whether or not attached to a vehicle chassis.
2-13 (2) "New motor vehicle" means a motor vehicle which
2-14 has not been the subject of a "retail sale" without regard to the
2-15 mileage of the vehicle.
2-16 (3) "Person" means a natural person, partnership,
2-17 corporation, association, trust, estate, or any other legal entity.
2-18 (4) "Franchised dealer <Dealer>" means any person who
2-19 holds a general distinguishing number issued by the Department
2-20 pursuant to the terms of Article 6686, Revised Statutes, and who is
2-21 engaged in the business of buying, selling, or exchanging new motor
2-22 vehicles and servicing or repairing motor vehicles pursuant to the
2-23 terms of a franchise and a manufacturer's warranty at an
2-24 established and permanent place of business pursuant to a franchise
2-25 in effect with a manufacturer or distributor.
3-1 (5) "Manufacturer" means any person who manufactures
3-2 or assembles new motor vehicles either within or without this
3-3 State.
3-4 (6) "Distributor" means any person who distributes
3-5 and/or sells new motor vehicles to franchised dealers and who is
3-6 not a manufacturer.
3-7 (7) "Representative" means any person who is or acts
3-8 as an agent, employee or representative of a manufacturer,
3-9 distributor, or converter who performs any duties in this State
3-10 relating to promoting the distribution and/or sale of new motor
3-11 vehicles or contacts dealers in this State on behalf of a
3-12 manufacturer, distributor, or converter.
3-13 (8) "Franchise" means one or more contracts between a
3-14 franchised dealer as franchisee, and either a manufacturer or a
3-15 distributor as franchisor under which (A) the franchisee is granted
3-16 the right to sell and service new motor vehicles manufactured or
3-17 distributed by the franchisor or only service motor vehicles
3-18 pursuant to the terms of a franchise and a manufacturer's warranty;
3-19 (B) the franchisee as an independent business is a component of
3-20 franchisor's distribution system; (C) the franchisee is
3-21 substantially associated with franchisor's trademark, tradename and
3-22 commercial symbol; (D) the franchisee's business is substantially
3-23 reliant on franchisor for a continued supply of motor vehicles,
3-24 parts, and accessories for the conduct of its business; or (E) any
3-25 right, duty, or obligation granted or imposed by this Act is
4-1 affected. The term includes a written communication from a
4-2 franchisor to a franchisee by which a duty is imposed on the
4-3 franchisee.
4-4 (9) <(10)> "Broker" means a person who, for a fee,
4-5 commission, or other valuable consideration, arranges or offers to
4-6 arrange a transaction involving the sale, for purposes other than
4-7 resale, of a new motor vehicle, and who is not:
4-8 (A) a franchised dealer or bona fide employee of
4-9 a franchised dealer when acting on behalf of a franchised dealer;
4-10 (B) a representative or bona fide employee of a
4-11 representative when acting on behalf of a representative;
4-12 (C) a distributor or bona fide employee of a
4-13 distributor when acting on behalf of a distributor; or
4-14 (D) at any point in the transaction the bona
4-15 fide owner of the vehicle involved in the transaction.
4-16 (10) <(11)> "Motor home" means a motor vehicle which
4-17 is designed to provide temporary living quarters and which:
4-18 (A) is built onto as an integral part of, or is
4-19 permanently attached to, a motor vehicle chassis; and
4-20 (B) contains at least four of the following
4-21 independent life support systems if each is permanently installed
4-22 and designed to be removed only for purposes of repair or
4-23 replacement and meets the standards of the American National
4-24 Standards Institute, Standards for Recreational Vehicles:
4-25 (i) a cooking facility with an on-board
5-1 fuel source;
5-2 (ii) a gas or electric refrigerator;
5-3 (iii) a toilet with exterior evacuation;
5-4 (iv) a heating or air conditioning system
5-5 with an on-board power or fuel source separate from the vehicle
5-6 engine;
5-7 (v) a potable water supply system that
5-8 includes at least a sink, a faucet, and a water tank with an
5-9 exterior service supply connection;
5-10 (vi) a 110-125 volt electric power supply.
5-11 (11) <(12)> "Conversion" means a motor vehicle, other
5-12 than a motor home, ambulance, or fire-fighting vehicle, which has
5-13 been substantially modified by a person other than the manufacturer
5-14 or distributor of the chassis of the motor vehicle and which has
5-15 not been the subject of a retail sale.
5-16 (12) <(13)> "Motor home manufacturer" means a person
5-17 other than the manufacturer of the chassis of a motor vehicle who,
5-18 prior to the retail sale of the motor vehicle, performs
5-19 modifications on the chassis that result in the finished product
5-20 being classified as a motor home.
5-21 (13) <(14)> "Chassis manufacturer" means a person who
5-22 manufactures and produces the frame upon which is mounted the body
5-23 of a motor vehicle.
5-24 (14) <(15)> "Converter" means a person who prior to
5-25 the retail sale of a motor vehicle, assembles, installs, or affixes
6-1 a body, cab, or special equipment to a chassis, or who
6-2 substantially adds, subtracts from, or modifies a previously
6-3 assembled or manufactured motor vehicle.
6-4 (15) <(16)> "Rule" means a statement by the Commission
6-5 of general and future applicability that implements, interprets, or
6-6 prescribes law or policy or describes the organization or
6-7 procedural practice requirements of the Commission. The term
6-8 includes the amendment or repeal of a prior rule, but does not
6-9 include statements concerning only the internal management of the
6-10 Commission which do not affect the rights of a person not connected
6-11 with the Commission.
6-12 (16) <(17)> "Party" means each person or agency named
6-13 or admitted as a party and whose legal rights, duties, or
6-14 privileges are to be determined by the Commission after an
6-15 opportunity for adjudicative hearing.
6-16 (17) <(18)> "Relocation" means the transfer of an
6-17 existing dealership operation to facilities at a different
6-18 location, including a transfer which results in a consolidation or
6-19 dualing of an existing dealer's operation.
6-20 (18) <(19)> "Retail sale" means the sale of a motor
6-21 vehicle except:
6-22 (A) a sale in which the purchaser acquires a
6-23 vehicle for the purpose of resale; or
6-24 (B) a sale of a vehicle that is operated under
6-25 and in accordance with Article 6686, Revised Statutes.
7-1 (19) <(20)> "Warranty work" means parts, labor, and
7-2 any other expenses incurred by a franchised dealer in complying
7-3 with the terms of a manufacturer's or distributor's warranty.
7-4 (20) <(21)> "Department" means the Texas Department of
7-5 Transportation.
7-6 (21) <(22)> "Transportation Commission" means the
7-7 Texas Transportation Commission of the Texas Department of
7-8 Transportation.
7-9 (22) "Nonfranchised dealer" means a person, other than
7-10 a franchised dealer, who holds a general distinguishing number
7-11 issued by the Department pursuant to the terms of Article 6686,
7-12 Revised Statutes.
7-13 (23) "Dealer" means a person who holds a general
7-14 distinguishing number issued by the Department pursuant to the
7-15 terms of Article 6686, Revised Statutes.
7-16 (24) "Dealership" means the physical premises and
7-17 business facilities on which a franchised dealer operates his
7-18 business, including the sale and repair of motor vehicles. The
7-19 term includes premises or facilities at which a person engages only
7-20 in the repair of motor vehicles if repairs are performed pursuant
7-21 to the terms of a franchise and a motor vehicle manufacturer's
7-22 warranty.
7-23 (25) "Licensee" means a person who holds a license
7-24 issued by the Board under the terms of this Act or a general
7-25 distinguishing number issued by the Department pursuant to the
8-1 terms of Article 6686, Revised Statutes.
8-2 (26) "Ambulance" means a vehicle used exclusively for
8-3 providing emergency medical care to an injured or ill person or
8-4 transporting an injured or ill person, if the vehicle provides:
8-5 (A) a driver's compartment;
8-6 (B) a compartment to accommodate an emergency
8-7 medical care technician or paramedic and two injured or ill persons
8-8 so positioned that one of the injured or ill persons can be given
8-9 intensive life-support during transit;
8-10 (C) equipment and supplies for emergency care of
8-11 an injured or ill person where the ill person is located or at the
8-12 scene of an injury-producing incident as well as in transit;
8-13 (D) two-way radio communication capability; and
8-14 (E) equipment for light rescue or extrication
8-15 procedures.
8-16 (27) "Fire-fighting vehicle" means a motor vehicle
8-17 which has as its sole purpose transporting fire fighters to the
8-18 scene of a fire and providing equipment to fight the fire, if the
8-19 vehicle is built on a truck chassis with a gross carrying capacity
8-20 of at least 10,000 pounds, to which the following have been
8-21 permanently affixed or mounted:
8-22 (A) a water tank with a minimum combined
8-23 capacity of 500 gallons; and
8-24 (B) a centrifugal water pump with a minimum
8-25 capacity of not less than 750 gallons per minute at 150 pounds per
9-1 square inch net pump pressure.
9-2 SECTION 3. Subsection (a), Section 2.10, Texas Motor Vehicle
9-3 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
9-4 is amended to read as follows:
9-5 (a) Notwithstanding a law to the contrary, including without
9-6 limitation the provisions of Section 403.094(h), Government Code,
9-7 all <All> money paid to the Commission under this Act shall be
9-8 deposited in the State Treasury to the credit of the state highway
9-9 fund.
9-10 SECTION 4. Section 3.01, Texas Motor Vehicle Commission Code
9-11 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
9-12 read as follows:
9-13 Sec. 3.01. JURISDICTION. (a) The Commission is hereby
9-14 delegated and vested with, in the exercise of the State's police
9-15 power, the general and original power and jurisdiction to regulate
9-16 all aspects of the distribution and sale of <new> motor vehicles
9-17 and to do all things, whether specifically designated in this Act
9-18 or implied herein, or necessary or convenient to the exercise of
9-19 this power and jurisdiction, including the original jurisdiction to
9-20 determine questions of its own jurisdiction. In addition to the
9-21 other duties placed on the Commission by this Act, the Commission
9-22 shall enforce and administer the terms of Article 6686, Revised
9-23 Statutes.
9-24 (b) Unless otherwise specifically provided by Texas law not
9-25 in conflict with the terms of this Act, all aspects of the
10-1 distribution and sale of <new> motor vehicles shall be governed
10-2 exclusively by the provisions of this Act.
10-3 SECTION 5. Subsection (a), Section 3.02, Texas Motor Vehicle
10-4 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
10-5 is amended to read as follows:
10-6 (a) The Commission shall, in accordance with this Act,
10-7 administer the provisions of this Act, establish the qualifications
10-8 of manufacturers, distributors, converters, and dealers, ensure
10-9 that the distribution and sale of motor vehicles is conducted as
10-10 provided herein and under the Commission's rules, provide for
10-11 compliance with warranties, and otherwise prevent fraud, unfair
10-12 practices, discriminations, impositions, and other abuses in
10-13 connection with the distribution and sale of <new> motor vehicles.
10-14 SECTION 6. Subsection (a), Section 3.03, Texas Motor Vehicle
10-15 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
10-16 is amended to read as follows:
10-17 (a) The Commission shall have and may, in its discretion and
10-18 notwithstanding any other provision of law that is inconsistent
10-19 with this Act, exercise the powers set forth in this Act, and shall
10-20 have all other powers necessary, incidental, or convenient to carry
10-21 out its duties and effectuate its express powers and duties. These
10-22 powers and duties include the power to initiate and conduct
10-23 proceedings, investigations, and hearings, administer oaths,
10-24 receive evidence and pleadings, issue subpoenas to compel the
10-25 attendance of any person, order the production of any tangible
11-1 property, including papers, records, and documents, make findings
11-2 of fact on all factual issues arising out of any proceeding
11-3 initiated under this Act, specify, govern, and control appearance,
11-4 practice, and procedure before the Commission, issue rules,
11-5 conclusions of law, decisions, including declaratory decisions or
11-6 orders, enter into contracts or execute instruments, retain
11-7 counsel, utilize the services of the Attorney General of the State
11-8 of Texas and thereafter institute and direct the conduct of legal
11-9 proceedings in any forum or obtain other professional services as
11-10 may be necessary and convenient, sanction for contempt, assess and
11-11 collect fees and costs including attorney's fees, issue, suspend,
11-12 and revoke licenses, prohibit and regulate acts and practices in
11-13 connection with the distribution and sale of <new> motor vehicles
11-14 and warranty performance obligations, issue cease and desist orders
11-15 in the nature of temporary and permanent injunctions, and levy
11-16 civil penalties.
11-17 SECTION 7. Subsection (j), Section 3.08, Texas Motor Vehicle
11-18 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
11-19 is amended to read as follows:
11-20 (j) On motion of any party the Commission may, by final
11-21 order, and in accordance with the terms and procedures set forth in
11-22 Rule 166a, Texas Rules of Civil Procedure, dismiss a complaint,
11-23 protest, or response without holding a contested case hearing <The
11-24 Commission may dismiss a complaint or protest if it determines that
11-25 the complaint or protest is frivolous or was made for purposes of
12-1 harassment>.
12-2 SECTION 8. Section 4.01, Texas Motor Vehicle Commission Code
12-3 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
12-4 read as follows:
12-5 Sec. 4.01. LICENSE REQUIRED. (a) No person shall engage in
12-6 business as, serve in the capacity of, or act as a dealer,
12-7 manufacturer, distributor, converter, or representative in this
12-8 State or perform or offer to perform repair services on a motor
12-9 vehicle pursuant to the terms of a franchise and a motor vehicle
12-10 manufacturer's warranty, whether or not the person sells or offers
12-11 to sell motor vehicles at the same location, without obtaining a
12-12 license therefor as provided in this Act and the rules of the
12-13 Commission. All new license applications shall be reviewed and, in
12-14 the discretion of the Commission, investigated to determine
12-15 compliance with the provisions of this Act. License renewals may
12-16 be administratively granted unless protested. Licenses issued by
12-17 the Commission shall expire one year from date of issuance. All
12-18 <Notwithstanding the effective date of any franchise agreement,
12-19 all> licenses and renewals thereof are issued subject to all
12-20 provisions of this Act and rules of the Commission in effect upon
12-21 the date of issuance as well as all future provisions of this Act
12-22 and rules which may become effective during the term of the
12-23 license.
12-24 (b) In the case of a nonfranchised dealer, the term
12-25 "license" in this Act means a general distinguishing number issued
13-1 by the Department pursuant to the authority of Article 6686,
13-2 Revised Statutes. A nonfranchised dealer may not operate as a
13-3 dealer without a valid general distinguishing number but is not
13-4 required to obtain an additional license under the terms of this
13-5 Act. A franchised dealer shall have both a general distinguishing
13-6 number and a separate license issued under the terms of this Act.
13-7 SECTION 9. Subsection (a), Section 4.02, Texas Motor Vehicle
13-8 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
13-9 is amended to read as follows:
13-10 (a) An application for a dealer license shall be on a form
13-11 prescribed by the Commission which shall include the information
13-12 required by Article 6686, Revised Statutes, and information on the
13-13 applicant's financial resources, business integrity, business
13-14 ability and experience, franchise agreement if applicable, physical
13-15 facilities, <for sales and service, parts and accessories
13-16 inventory, new> vehicle inventory, and other factors the Commission
13-17 considers necessary to determine an applicant's qualifications to
13-18 adequately serve the motoring public.
13-19 SECTION 10. Subdivisions (1) and (2), Subsection (c), and
13-20 Subsection (d), Section 4.02, Texas Motor Vehicle Commission Code
13-21 (Article 4413(36), Vernon's Texas Civil Statutes), are amended to
13-22 read as follows:
13-23 (1) A franchised dealer may carry on the business of
13-24 his dealership at more than one location; however, a separate
13-25 location for the display and sale of new motor vehicles may not be
14-1 established and maintained by a franchised dealer unless expressly
14-2 authorized by the franchised dealer's franchise and license. An
14-3 application for a franchised dealer's license or to amend a
14-4 franchised dealer's license which proposes the establishment of a
14-5 separate display and sales location is subject to all of the
14-6 provisions of this Act. A separate license shall be required for
14-7 each separate and distinct dealership as determined by the
14-8 Commission.
14-9 (2) Except as provided in this subdivision, no
14-10 licensee may participate in a new motor vehicle show or exhibition
14-11 unless the Commission has first had written notice at least 30 days
14-12 prior to the opening day of the show or exhibition and its written
14-13 approval has been granted. A licensee may not sell or offer for
14-14 sale a new motor vehicle at a show or exhibition; however,
14-15 dealership personnel may be present to aid in the showing or
14-16 exhibiting of new motor vehicles. This subdivision does not
14-17 prohibit the sale of a motor home, ambulance, or fire-fighting
14-18 vehicle at a show or exhibition if the show or exhibition is
14-19 approved by the Commission and if the sale does not otherwise
14-20 violate a provision of law.
14-21 (d) A dealer licensed hereunder shall promptly notify the
14-22 Commission of any proposed change in its ownership, location,
14-23 franchise, or any other matters the Commission may require by rule.
14-24 Prior to a change in a dealer's location <of a dealership>, a
14-25 dealer shall obtain a new license for that location.
15-1 SECTION 11. Subsections (a), (b), (c), and (d), Section
15-2 4.03, Texas Motor Vehicle Commission Code (Article 4413(36),
15-3 Vernon's Texas Civil Statutes), is amended to read as follows:
15-4 (a) An application for a manufacturer's, distributor's,
15-5 converter's, or representative's license shall be on a form
15-6 prescribed by the Commission which form shall contain such
15-7 information as the Commission deems necessary to fully determine
15-8 the qualifications of an applicant for a license, including
15-9 financial resources, business integrity and experience, facilities
15-10 and personnel for serving franchised dealers and such other
15-11 information as the Commission considers to be pertinent to
15-12 safeguard the public interest and welfare.
15-13 (b) An applicant for a manufacturer's license shall furnish
15-14 a list of all distributors, representatives acting for applicant,
15-15 and all dealers franchised to sell the applicant's products in this
15-16 State and their respective locations. All applicants for
15-17 manufacturer's licenses and all licensed manufacturers shall
15-18 thereafter advise the Commission within 15 days of any change in
15-19 their list of distributors, representatives, and franchised
15-20 dealers. This information shall become part of the application.
15-21 (c) Each application for a manufacturer's license shall
15-22 include an instrument setting forth the terms and conditions of all
15-23 warranty agreements in force and effect on the products it sells in
15-24 this State so that the Commission may ascertain the degree of
15-25 protection afforded the retail purchasers of its products and the
16-1 obligations of its franchised dealers in connection therewith as
16-2 well as the basis for compensating its franchised dealers for
16-3 labor, parts and other expenses incurred in connection with such
16-4 manufacturer's warranty agreements. Each application shall include
16-5 a statement regarding the manufacturer's compliance with Section
16-6 5.02 of this Act. In addition, each manufacturer's license
16-7 application shall specify the delivery and preparation obligations
16-8 of its franchised dealers prior to delivery of a new motor vehicle
16-9 to a retail purchaser and the schedule of compensation to be paid
16-10 to its franchised dealers for the work and service performed by
16-11 them in connection with such delivery.
16-12 (d) An application for a distributor's license shall
16-13 disclose the manufacturer for whom the distributor will act,
16-14 whether the manufacturer is licensed in this State, the warranty
16-15 covering the vehicles to be sold, the persons in this State who
16-16 will be responsible for compliance with that warranty, and the
16-17 terms of the contract under which the distributor will act for a
16-18 manufacturer. A distributor's license application must disclose
16-19 the franchised dealers with whom the distributor will do business.
16-20 If the distributor is to have any responsibility for warranties,
16-21 the distributor shall furnish the same information pertaining
16-22 thereto as is required of a manufacturer. The Commission shall be
16-23 advised of any change in any such information within 15 days from
16-24 the date thereof and any such new information shall become part of
16-25 the application.
17-1 SECTION 12. Subsection (b), Section 4.04, Texas Motor
17-2 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
17-3 Statutes), is amended to read as follows:
17-4 (b) A manufacturer whose products are offered for sale in
17-5 this State pursuant to a franchise entered into between its
17-6 distributor or representative and a franchised dealer is bound by
17-7 the terms of the franchise agreement and the provisions of this Act
17-8 as if it had executed the franchise agreement. A manufacturer that
17-9 changes its distributor or the method of distribution of its
17-10 products in this State in a manner that results in unlawful
17-11 termination or noncontinuance of a franchise may not directly or
17-12 indirectly distribute its products in this State.
17-13 SECTION 13. Subsection (a), Section 4.05, Texas Motor
17-14 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
17-15 Statutes), is amended to read as follows:
17-16 (a) The annual license fees for licenses issued hereunder
17-17 shall be as follows:
17-18 (1) For each manufacturer and distributor, $900 plus
17-19 $20 for each individual dealer franchised by the manufacturer or
17-20 distributor <$825>.
17-21 (2) For each franchised dealer who sold 200 or fewer
17-22 new motor vehicles during the preceding calendar year, $175 <$165>.
17-23 (3) For each franchised dealer who sold more than 200,
17-24 but not more than 400 <500>, new motor vehicles during the
17-25 preceding calendar year, $275.
18-1 (4) For each franchised dealer who sold more than 400
18-2 <500>, but not more than 800 <1,000>, new motor vehicles during the
18-3 preceding calendar year, $400 <$385>.
18-4 (5) For each franchised dealer who sold more than 800
18-5 but not more than 1,200 <1,000> new motor vehicles during the
18-6 preceding calendar year, $500 <$495>.
18-7 (6) For each franchised dealer who sold more than
18-8 1,200 but not more than 1,600 new motor vehicles during the
18-9 preceding calendar year, $625.
18-10 (7) For each franchised dealer who sold more than
18-11 1,600 new motor vehicles during the preceding calendar year, $750.
18-12 (8) For each representative, $100 <$85>.
18-13 (9) <(7)> For each converter, $375 <$275>.
18-14 (10) <(8)> For each amendment to a dealer's license,
18-15 $25.
18-16 SECTION 14. Section 4.06, Texas Motor Vehicle Commission
18-17 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
18-18 to read as follows:
18-19 Sec. 4.06. Sanctions; denial, revocation, or suspension of
18-20 license. (a) The Commission may deny an application for a
18-21 license, revoke or suspend an outstanding license, or place on
18-22 probation a person whose license has been suspended, or reprimand a
18-23 licensee, for any of the following reasons:
18-24 (1) Unfitness of an applicant or licensee under
18-25 standards set out in this Act or in Commission rules.
19-1 (2) Material misrepresentation in any application or
19-2 other information filed under this Act or Commission rules.
19-3 (3) Failure to comply with this Act or any Commission
19-4 rule or order promulgated by the Commission.
19-5 (4) Failure to maintain the qualifications for a
19-6 license.
19-7 (5) Willfully defrauding any retail buyer.
19-8 (6) Violation of any law relating to the sale,
19-9 distribution, financing, or insuring of <new> motor vehicles.
19-10 (7) Any act or omission by an officer, director,
19-11 partner, trustee, or other person acting in a representative
19-12 capacity for a licensee which act or omission would be cause for
19-13 denying, revoking, or suspending a license to an individual
19-14 licensee.
19-15 (8) Failure to fulfill written agreements between the
19-16 licensee and a retail buyer of a <new> motor vehicle.
19-17 (b) The revocation of a license previously held under this
19-18 Act may be grounds for denying a subsequent application for a
19-19 license.
19-20 (c) The Commission may deny an <a dealer> application to
19-21 establish a dealership if, after protest, the applicant fails to
19-22 establish good cause therefor. In determining good cause, the
19-23 Commission shall consider:
19-24 (1) whether the manufacturer or distributor of the
19-25 same line-make of new motor vehicle is being adequately represented
20-1 as to sales and service;
20-2 (2) whether the protesting franchised dealer
20-3 representing the same line-make of new motor vehicle is in
20-4 substantial compliance with his franchise agreement;
20-5 (3) the desirability of a competitive marketplace;
20-6 (4) any harm to the protesting franchised dealer; and
20-7 (5) the public interest.
20-8 (d) A franchised dealer <person> shall have standing under
20-9 Subsection (c) of this section to protest an <a dealer's>
20-10 application to establish or relocate a dealership if the person
20-11 filing the protest:
20-12 (1) <it> is a franchised dealer of the same line-make
20-13 whose dealership is located in the county in which the proposed
20-14 dealership site is to be located; or
20-15 (2) <it> is a franchised dealer of the same line-make
20-16 whose dealership is located within a 15 mile radius of the proposed
20-17 dealership site.
20-18 (e) Notwithstanding the provisions of Subsection (d) of this
20-19 section, the relocation of a dealership is not subject to protest
20-20 by a franchised dealer whose dealership is not closer to the
20-21 proposed location than it is to the location from which the
20-22 relocated dealership is being relocated.
20-23 (f) The revocation or suspension of a manufacturer's or
20-24 distributor's license may be limited to one or more municipalities
20-25 or counties or any other defined area, or may be revoked or
21-1 suspended in a defined area only as to certain aspects of its
21-2 business, or as to a specified franchised dealer or franchised
21-3 dealers.
21-4 (g) <(f)> No license shall be denied, revoked, or suspended,
21-5 or disciplinary action taken under this section, except on order of
21-6 the Commission after a hearing. The Commission may inspect the
21-7 books and records of a licensee in connection with the performance
21-8 of its duties under this Act.
21-9 (h) <(g)> If a suspension of a license is probated, the
21-10 Commission may:
21-11 (1) require the licensee to report regularly to the
21-12 Commission on matters that are the basis of the probation; or
21-13 (2) limit activities to those prescribed by the
21-14 Commission.
21-15 SECTION 15. Subsection (a), Section 4.07, Texas Motor
21-16 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
21-17 Statutes), is amended to read as follows:
21-18 (a) A franchised dealer licensed under this Act shall
21-19 provide notice of the complaint procedures provided by Sections
21-20 3.08(i) and 6.07 of this Act to each person to whom the franchised
21-21 dealer sells a new motor vehicle.
21-22 SECTION 16. Section 5.01, Texas Motor Vehicle Commission
21-23 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
21-24 to read as follows:
21-25 Sec. 5.01. FRANCHISED DEALERS. It is <shall be> unlawful
22-1 for any franchised dealer to:
22-2 (1) Require a retail purchaser of a new motor vehicle
22-3 as a condition of sale and delivery thereof to purchase special
22-4 features, equipment, parts, or accessories not ordered or desired
22-5 by the purchaser, provided such features, equipment, parts, or
22-6 accessories are not already installed on the new motor vehicle at
22-7 the time of sale.
22-8 (2) <Use false, deceptive, or misleading advertising.>
22-9 <(3)> Fail to perform the obligations placed on the
22-10 selling franchised dealer in connection with the delivery and
22-11 preparation of a new motor vehicle for retail sale as provided in
22-12 the manufacturer's preparation and delivery agreements on file with
22-13 the Commission and applicable to such vehicle.
22-14 (3) <(4)> Fail to perform the obligations placed on
22-15 the franchised dealer in connection with the manufacturer's
22-16 warranty agreements on file with the Commission.
22-17 (4) <(5) Operate as a dealer without a currently valid
22-18 license from the Commission or otherwise violate this Act or rules
22-19 promulgated by the Commission hereunder.>
22-20 <(6)> Operate without appropriate signs readily and
22-21 easily visible to the public, identifying the franchised dealer's
22-22 place of business and the products the franchised dealer offers for
22-23 sale. In the event of a conflict with another law or ordinance,
22-24 this Subdivision prevails, and in the event of a dispute, the Board
22-25 has exclusive jurisdiction to determine whether a sign or signs are
23-1 in compliance with the terms of this Subdivision. In the event of
23-2 a dispute, the Board shall uphold local ordinances of a home-rule
23-3 city and protect franchised dealers from retribution by
23-4 manufacturers or distributors for having complied with local
23-5 ordinances.
23-6 SECTION 17. The Texas Motor Vehicle Commission Code (Article
23-7 4413(36), Vernon's Texas Civil Statutes) is amended by adding
23-8 Section 5.01A to read as follows:
23-9 Sec. 5.01A. DEALERS. No dealer may:
23-10 (1) use false, deceptive, or misleading advertising;
23-11 (2) operate as a dealer without a currently valid
23-12 license or general distinguishing number issued by the Board;
23-13 (3) violate a rule of the Board; or
23-14 (4) aid or abet a person who violates this Act.
23-15 SECTION 18. Section 5.02, Texas Motor Vehicle Commission
23-16 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
23-17 to read as follows:
23-18 Sec. 5.02. MANUFACTURERS; DISTRIBUTORS; REPRESENTATIVES.
23-19 (a) In this section, "dealer" means franchised dealer.
23-20 (b) It is <shall be> unlawful for any manufacturer,
23-21 distributor, or representative to:
23-22 (1) Require or attempt to require any dealer to order,
23-23 accept delivery of or pay anything of value, directly or
23-24 indirectly, for any motor vehicle, appliance, part, accessory or
23-25 any other commodity unless voluntarily ordered or contracted for by
24-1 such dealer.
24-2 (2) Refuse or fail to deliver, in reasonable
24-3 quantities and within a reasonable time, to a dealer having a
24-4 franchise agreement for the retail sale of any motor vehicles sold
24-5 or distributed by such manufacturer, distributor, or
24-6 representative, any new motor vehicle or parts or accessories to
24-7 new motor vehicles as are covered by such franchise if such
24-8 vehicle, parts or accessories are publicly advertised as being
24-9 available for delivery or are actually being delivered; provided,
24-10 however, this provision is not violated if such failure is caused
24-11 by acts of God, work stoppage or delays due to strikes or labor
24-12 disputes, freight embargoes or other causes beyond the control of
24-13 the manufacturer, distributor, or representative.
24-14 (3) Notwithstanding the terms of any franchise
24-15 agreement:
24-16 (A) Terminate or refuse to continue any
24-17 franchise with a dealer or directly or indirectly force or attempt
24-18 to force a dealer to discontinue a line-make or parts or products
24-19 related to that line-make unless all of the following conditions
24-20 are met:
24-21 (i) the dealer and the Commission have
24-22 received written notice by registered or certified mail from the
24-23 manufacturer, distributor, or representative not less than 60 days
24-24 before the effective date of termination or noncontinuance setting
24-25 forth the specific grounds for termination or noncontinuance; and
25-1 (ii) the written notice contains on the
25-2 first page thereof a conspicuous statement which reads as follows:
25-3 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
25-4 TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS, AND HAVE A HEARING
25-5 IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR NONCONTINUANCE
25-6 OF YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
25-7 COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
25-8 (iii) the manufacturer, distributor, or
25-9 representative has received the informed, written consent of the
25-10 affected dealer or the appropriate period for the affected dealer
25-11 to protest the proposed franchise termination or noncontinuance has
25-12 lapsed; or
25-13 (iv) if the affected dealer files a
25-14 protest with the Commission within the greater of (1) 60 days after
25-15 receiving its 60-day notice of proposed termination or
25-16 noncontinuance or (2) the time specified in such notice, the
25-17 Commission determines that the party seeking to terminate or not
25-18 continue a dealer's franchise has established by a preponderance of
25-19 the evidence, at a hearing called by the Commission, that there is
25-20 good cause for the proposed termination or noncontinuance.
25-21 (v) Notwithstanding Subdivisions (3)(A)(i)
25-22 and (3)(A)(iv) of this section, notice may be made not less than 15
25-23 days prior to the effective date of termination or noncontinuance
25-24 if a licensed dealer fails to conduct its customary sales and
25-25 service operations during its customary business hours for seven
26-1 consecutive business days unless such failure is caused by an act
26-2 of God, work stoppage or delays due to strikes or labor disputes,
26-3 an order of the Commission, or other causes beyond the control of
26-4 the dealer.
26-5 (B) Whenever a dealer files a timely protest to
26-6 a proposed franchise termination or noncontinuance, the Commission
26-7 shall notify the party seeking to terminate or to not continue the
26-8 protesting dealer's franchise that a timely protest has been filed,
26-9 that a hearing is required in accordance with this Act, and that
26-10 the party who gave the dealer notice of termination or
26-11 noncontinuance of the franchise may not terminate or refuse to
26-12 continue the franchise until the Commission issues its final
26-13 decision or order.
26-14 (C) If a franchise is terminated or not
26-15 continued, another franchise in the same line-make will be
26-16 established within a reasonable time unless it is shown to the
26-17 Commission by a preponderance of the evidence that the community or
26-18 trade area cannot reasonably support such a dealership. If this
26-19 showing is made, no dealer license shall be thereafter issued in
26-20 the same area unless a change in circumstances is established.
26-21 (4) Notwithstanding the terms of any franchise
26-22 agreement, modify or replace a franchise with a succeeding
26-23 franchise if the modification or replacement would adversely
26-24 affect, to a substantial degree, the dealer's sales, investment, or
26-25 obligations to provide service to the public, unless the
27-1 manufacturer, distributor, or representative has first given the
27-2 Commission and each affected dealer written notice by registered or
27-3 certified mail of any such action 60 days in advance of the
27-4 modification or replacement. The written notice shall contain on
27-5 the first page thereof a conspicuous statement which reads as
27-6 follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST
27-7 WITH THE TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS, AND HAVE
27-8 A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED MODIFICATION OR
27-9 REPLACEMENT OF YOUR FRANCHISE WITH A SUCCEEDING FRANCHISE UNDER THE
27-10 TERMS OF THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS
27-11 ACTION." Within the greater of (1) 60 days after receipt of such
27-12 notice or (2) the time specified in such notice, a dealer may file
27-13 a protest with the Commission and the modification or replacement
27-14 shall not become effective unless and until the Commission
27-15 determines that the party seeking to modify or replace a franchise
27-16 with a succeeding franchise has demonstrated by a preponderance of
27-17 the evidence that there is good cause for the modification or
27-18 replacement. The prior franchise shall continue in effect until
27-19 the protest is resolved by the Commission.
27-20 (5) Notwithstanding the terms of any franchise
27-21 agreement, in determining whether good cause has been established
27-22 for modifying, replacing, terminating, or refusing to continue a
27-23 franchise, or for forcing or attempting to force a dealer to
27-24 discontinue a line-make or parts or products related to that
27-25 line-make, the Commission shall consider all the existing
28-1 circumstances including, without limitation by the enumeration
28-2 herein, all the following:
28-3 (A) the dealer's sales in relation to the sales
28-4 in the market;
28-5 (B) the dealer's investment and obligations;
28-6 (C) injury to the public welfare;
28-7 (D) the adequacy of the dealer's service
28-8 facilities, equipment, parts, and personnel in relation to those of
28-9 other dealers of new motor vehicles of the same line-make;
28-10 (E) whether warranties are being honored by the
28-11 dealer;
28-12 (F) the parties' compliance with their franchise
28-13 agreement; and
28-14 (G) the enforceability of the franchise
28-15 agreement from a public policy standpoint, including, without
28-16 limitation, issues of the reasonableness of the franchise
28-17 agreement's terms, oppression, adhesion, and the relative
28-18 bargaining power of the parties.
28-19 Good cause shall not be shown solely by the desire of a
28-20 manufacturer, distributor, or representative for market
28-21 penetration.
28-22 (6) Use any false, deceptive or misleading
28-23 advertising.
28-24 (7) Notwithstanding the terms of any franchise
28-25 agreement, prevent any dealer from reasonably changing the capital
29-1 structure of his dealership or the means by or through which he
29-2 finances the operation thereof, provided that the dealer meets
29-3 reasonable capital requirements.
29-4 (8) Notwithstanding the terms of any franchise
29-5 agreement, fail to give effect to or attempt to prevent any sale or
29-6 transfer of a dealer, dealership or franchise or interest therein
29-7 or management thereof unless, after complaint or protest, it is
29-8 demonstrated to the Commission after hearing that the result of any
29-9 such sale or transfer will be detrimental to the public or the
29-10 representation of the manufacturer or distributor.
29-11 (9) Notwithstanding the terms of any franchise
29-12 agreement, require or attempt to require that a dealer assign to or
29-13 act as an agent for any manufacturer, distributor or representative
29-14 in the securing of promissory notes and security agreements given
29-15 in connection with the sale or purchase of new motor vehicles or
29-16 the securing of policies of insurance on or having to do with the
29-17 operation of vehicles sold.
29-18 (10) Notwithstanding the terms of any franchise
29-19 agreement, fail or refuse, after complaint and hearing, to perform
29-20 the obligations placed on the manufacturer in connection with the
29-21 delivery, preparation and warranty of a new motor vehicle as
29-22 provided in the manufacturer's warranty, preparation, and delivery
29-23 agreements on file with the Commission.
29-24 (11) Notwithstanding the terms of any franchise
29-25 agreement, fail to compensate its dealers for the work and services
30-1 they are required to perform in connection with the dealer's
30-2 delivery and preparation obligations according to the agreements on
30-3 file with the Commission which must be found by the Commission to
30-4 be reasonable, or fail to adequately and fairly compensate its
30-5 dealers for labor, parts and other expenses incurred by such dealer
30-6 to perform under and comply with a manufacturer's or a
30-7 distributor's warranty agreement, or require, as a prerequisite to
30-8 the manufacturer's or distributor's payment of a claim for
30-9 reimbursement as required by this section, that a dealer file with
30-10 the manufacturer or distributor the actual time spent in the
30-11 performance of labor unless actual time is the basis for
30-12 reimbursement. In no event shall any manufacturer or distributor
30-13 pay its dealers an amount of money for warranty work that is less
30-14 than that charged by the dealer to the retail customers of the
30-15 dealer for nonwarranty work of like kind. All claims made by
30-16 dealers for compensation for delivery, preparation, and warranty
30-17 work shall be paid within 30 days after approval and shall be
30-18 approved or disapproved within 30 days after receipt. When any
30-19 claim is disapproved, the dealer shall be notified in writing of
30-20 the grounds for disapproval. No claim which has been approved and
30-21 paid may be charged back to the dealer unless it can be shown that
30-22 the claim was false or fraudulent, that the repairs were not
30-23 properly made or were unnecessary to correct the defective
30-24 condition, or that the dealer failed to reasonably substantiate the
30-25 claim in accordance with reasonable written requirements of the
31-1 manufacturer or distributor, if the dealer has been notified of the
31-2 requirements prior to the time the claim arose, and if the
31-3 requirements were in effect at the time the claim arose. A
31-4 manufacturer or distributor may not audit a claim after the
31-5 expiration of two years following the submission of the claim
31-6 unless the manufacturer or distributor has reasonable grounds to
31-7 suspect that a claim was fraudulent. Notwithstanding the terms of
31-8 a franchise agreement or provision of law in conflict with this
31-9 section, the dealer's delivery, preparation, and warranty
31-10 obligations as filed with the Commission shall constitute the
31-11 dealer's sole responsibility for product liability as between the
31-12 dealer and manufacturer or distributor, and, except for a loss
31-13 caused by the dealer's failure to adhere to these obligations, a
31-14 loss caused by the dealer's negligence or intentional misconduct,
31-15 or a loss caused by the dealer's modification of a product without
31-16 manufacturer or distributor authorization, the manufacturer or
31-17 distributor shall reimburse the dealer for all loss incurred by the
31-18 dealer, including legal fees, court costs, and damages, as a result
31-19 of the dealer having been named a party in a product liability
31-20 action.
31-21 (12) Operate as a manufacturer, distributor, or
31-22 representative without a currently valid license from the
31-23 Commission or otherwise violate this Act or rules promulgated by
31-24 the Commission hereunder.
31-25 (13) Notwithstanding the terms of any franchise
32-1 agreement, to prevent or refuse to honor the succession to a
32-2 dealership by any legal heir or devisee under the will of a dealer
32-3 or under the laws of descent and distribution of this State unless
32-4 it is shown to the Commission, after notice and hearing, that the
32-5 result of such succession will be detrimental to the public
32-6 interest and to the representation of the manufacturer or
32-7 distributor; provided, however, nothing herein shall prevent a
32-8 dealer, during his lifetime, from designating any person as his
32-9 successor dealer, by written instrument filed with the manufacturer
32-10 or distributor.
32-11 (14) Notwithstanding the terms of any franchise
32-12 agreement, require that a dealer pay or assume, directly or
32-13 indirectly, any part of any refund, rebate, discount, or other
32-14 financial adjustment made by the manufacturer, distributor, or
32-15 representative to, or in favor of, any customer of a dealer, unless
32-16 voluntarily agreed to by such dealer.
32-17 (15) Notwithstanding the terms of any franchise
32-18 agreement, deny or withhold approval of a written application to
32-19 relocate a franchise unless (A) the applicant has received written
32-20 notice of the denial or withholding of approval within 60 <90> days
32-21 after receipt of the application containing information reasonably
32-22 necessary to enable the manufacturer or distributor to adequately
32-23 evaluate the application, and if (B) the applicant files a protest
32-24 with the Commission and the manufacturer or distributor establishes
32-25 by a preponderance of the evidence at a hearing called by the
33-1 Commission that the grounds for the denial or withholding of
33-2 approval<, and distance> of<,> the relocation are reasonable.
33-3 (16) Notwithstanding the terms of any franchise
33-4 agreement, fail to pay to a dealer or any lienholder in accordance
33-5 with their respective interest after the termination of a
33-6 franchise:
33-7 (A) the dealer cost of each new motor vehicle in
33-8 the dealer's inventory with mileage of 6,000 miles or less, reduced
33-9 by the net discount value of each, where "net discount value" is
33-10 determined according to the following formula: net cost multiplied
33-11 by total mileage divided by 100,000, and where "net cost" equals
33-12 the dealer cost plus any charges by the manufacturer, distributor,
33-13 or representative for distribution, delivery, and taxes, less all
33-14 allowances paid to the dealer by the manufacturer, distributor, or
33-15 representative for new, unsold, undamaged, and complete motor
33-16 vehicles of current model year or one year prior model year in the
33-17 dealer's inventory, except that if a vehicle cannot be reduced by
33-18 the net discount value, the manufacturer or distributor shall pay
33-19 the dealer the net cost of the vehicle;
33-20 (B) the dealer cost of each new, unused,
33-21 undamaged, and unsold part or accessory if the part or accessory is
33-22 in the current parts catalogue and is still in the original,
33-23 resalable merchandising package and in unbroken lots, except that
33-24 in the case of sheet metal, a comparable substitute for the
33-25 original package may be used, and if the part or accessory was
34-1 purchased by the dealer either directly from the manufacturer or
34-2 distributor or from an outgoing authorized dealer as a part of the
34-3 dealer's initial inventory;
34-4 (C) the fair market value of each undamaged sign
34-5 owned by the dealer which bears a trademark or tradename used or
34-6 claimed by the manufacturer, distributor, or representative if the
34-7 sign was purchased from or purchased at the request of the
34-8 manufacturer, distributor, or representative;
34-9 (D) the fair market value of all special tools,
34-10 data processing equipment, and automotive service equipment owned
34-11 by the dealer which were recommended in writing and designated as
34-12 special tools and equipment and purchased from or purchased at the
34-13 request of the manufacturer, distributor, or representative, if the
34-14 tools and equipment are in usable and good condition except for
34-15 reasonable wear and tear;
34-16 (E) the cost of transporting, handling, packing,
34-17 storing, and loading of any property subject to repurchase under
34-18 this section;
34-19 (F) except as provided by this subdivision, any
34-20 sums due as provided by Paragraph (A) of this subdivision within 60
34-21 days after termination of a franchise and any sums due as provided
34-22 by Paragraphs (B) through (E) of this subdivision within 90 days
34-23 after termination of a franchise. As a condition of payment, the
34-24 dealer is to comply with reasonable requirements with respect to
34-25 the return of inventory as are set out in the terms of the
35-1 franchise agreement. A manufacturer or distributor shall reimburse
35-2 a dealer for the dealer's cost for storing any property covered by
35-3 this subdivision beginning 90 days following termination. A
35-4 manufacturer or distributor shall reimburse a dealer for the
35-5 dealer's cost of storing any property covered by this subdivision
35-6 before the expiration of 90 days from the date of termination if
35-7 the dealer notifies the manufacturer or distributor of the
35-8 commencement of storage charges within that period. On receipt of
35-9 notice of the commencement of storage charges, a manufacturer or
35-10 distributor may immediately take possession of the property in
35-11 question by repurchasing the property as provided by this
35-12 subdivision. A manufacturer, distributor, or representative who
35-13 fails to pay those sums within the prescribed time or at such time
35-14 as the dealer and lienholder, if any, proffer good title prior to
35-15 the prescribed time for payment, is liable to the dealer for:
35-16 (i) <(1)> the greatest of dealer cost,
35-17 fair market value, or current price of the inventory;
35-18 (ii) <(2)> interest on the amount due
35-19 calculated at the rate applicable to a judgment of a court; and
35-20 (iii) <(3)> reasonable attorney's fees and
35-21 costs.
35-22 (17) Notwithstanding the terms of any franchise
35-23 agreement, change its distributor, its method of distribution of
35-24 its products in this state, or its business structure or ownership
35-25 in a manner that results in the termination or noncontinuance of a
36-1 franchise without good cause. The manufacturer, distributor, or
36-2 representative shall issue the same notice to the dealer and to the
36-3 Commission as is provided in Subdivisions (3)(A) and (B) of this
36-4 section and said same procedures shall apply to the parties.
36-5 (18) Notwithstanding the terms of any franchise
36-6 agreement, require a dealer to submit to arbitration on any issue
36-7 unless the dealer and the manufacturer, distributor, or
36-8 representative and their respective counsel agree to arbitrate
36-9 after a controversy arises. The arbitrator shall apply the
36-10 provisions of this Act in resolving the pertinent controversy.
36-11 Either party may appeal to the Commission a decision of an
36-12 arbitrator on the ground that the arbitrator failed to apply this
36-13 Act.
36-14 (19) Notwithstanding the terms of any franchise
36-15 agreement, require that a dealer join, contribute to, or affiliate
36-16 with, directly or indirectly, any advertising association.
36-17 (20) Notwithstanding the terms of a franchise
36-18 agreement:
36-19 (A) require adherence to unreasonable sales or
36-20 service standards;
36-21 (B) directly or indirectly, discriminate against
36-22 a dealer or otherwise treat dealers differently as a result of a
36-23 formula or other calculation or process intended to gauge the
36-24 performance of a dealership, except a sales contest or other
36-25 recognition program based on reasonable sales and service criteria;
37-1 (C) unreasonably require that a dealer purchase
37-2 special tools or equipment; or
37-3 (D) fail to compensate a dealer for all costs
37-4 incurred by the dealer as required by the manufacturer in complying
37-5 with the terms of a product recall by the manufacturer or
37-6 distributor, including the costs, if any, incurred by the dealer in
37-7 notifying vehicle owners of the existence of the recall.
37-8 (21) Discriminate unreasonably between or among
37-9 franchisees in the sale of a motor vehicle owned by the
37-10 manufacturer or distributor.
37-11 (22) Directly or indirectly, or through a subsidiary
37-12 or agent, require, as a condition for obtaining financing for a
37-13 motor vehicle, the purchaser of a vehicle to purchase any product
37-14 other than the motor vehicle from the manufacturer or distributor,
37-15 or from an entity owned or controlled by the manufacturer or
37-16 distributor.
37-17 (23) Directly or indirectly, or through a subsidiary
37-18 or agent, require, as a condition of its or its subsidiary's
37-19 agreement to provide financing for a motor vehicle, that any
37-20 insurance policy or service contract purchased by the motor vehicle
37-21 purchaser be purchased from a specific source.
37-22 (24) Compel a dealer through a financing subsidiary of
37-23 the manufacturer or distributor to agree to unreasonable operating
37-24 requirements or directly or indirectly to terminate a dealer
37-25 through the actions of a financing subsidiary of the manufacturer
38-1 or distributor. This subdivision does not limit the right of a
38-2 financing entity to engage in business practices in accordance with
38-3 the usage of trade in retail and wholesale motor vehicle financing.
38-4 (25) Operate as a dealer except on a temporary basis
38-5 and only if:
38-6 (A) the dealership was previously owned by a
38-7 franchised dealer and is currently for sale at a reasonable price;
38-8 or
38-9 (B) the manufacturer, distributor, or
38-10 representative operates the dealership in a bona fide relationship
38-11 with a franchised dealer who is required to make a significant
38-12 investment in the dealership, subject to loss, and who reasonably
38-13 expects to acquire full ownership of the dealership under
38-14 reasonable terms and conditions.
38-15 (26) Notwithstanding the terms of a franchise
38-16 agreement, deny or withhold approval of a dealer's application to
38-17 add a line-make or parts or products related to that line-make
38-18 unless, within 60 days of receipt of the dealer's written
38-19 application to add the line-make, the manufacturer or distributor
38-20 gives the dealer written notice of the denial or withholding of
38-21 approval. After receipt of notice, the dealer may file a protest
38-22 with the Commission. If the dealer files a protest as provided by
38-23 this subdivision, the Commission may uphold the manufacturer's or
38-24 distributor's decision to deny or withhold approval of the addition
38-25 of the line-make only if the manufacturer or distributor proves by
39-1 a preponderance of the evidence that the denial or withholding of
39-2 approval was reasonable. In determining whether or not the
39-3 manufacturer or distributor has met its burden to show that its
39-4 denial or withholding of approval is reasonable, the Commission
39-5 shall consider all existing circumstances, including, without
39-6 limitation, the following:
39-7 (A) the dealer's sales in relation to the sales
39-8 in the market;
39-9 (B) the dealer's investment and obligations;
39-10 (C) injury to the public welfare;
39-11 (D) the adequacy of the dealer's sales and
39-12 service facilities, equipment, parts, and personnel in relation to
39-13 those of other dealers of new motor vehicles of the same line-make;
39-14 (E) whether warranties are being honored by the
39-15 dealer agreement;
39-16 (F) the parties' compliance with their franchise
39-17 agreement;
39-18 (G) the enforceability of the franchise
39-19 agreement from a public policy standpoint, including without
39-20 limitation, issues of the reasonableness of the franchise
39-21 agreement's terms, oppression, adhesion, and the relative
39-22 bargaining power of the parties;
39-23 (H) whether the dealer complies with reasonable
39-24 capitalization requirements or will be able to comply with
39-25 reasonable capitalization requirements within a reasonable time;
40-1 (I) the harm, if any, to the manufacturer if the
40-2 denial or withholding of approval is not upheld; and
40-3 (J) the harm, if any, to the dealer if the
40-4 denial or withholding of approval is upheld.
40-5 SECTION 19. Subsection (a), Section 5.04, Texas Motor
40-6 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
40-7 Statutes), is amended to read as follows:
40-8 (a) No person may engage in the business of buying, selling,
40-9 or exchanging new motor vehicles unless that person:
40-10 (1) holds a valid franchised dealer's license issued
40-11 by the Commission for the make or makes of new motor vehicles being
40-12 bought, sold, or exchanged; or
40-13 (2) is acting as a bona fide employee of the licensee.
40-14 SECTION 20. Subsection (a), Section 6.01, Texas Motor
40-15 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
40-16 Statutes), is amended to read as follows:
40-17 (a) In the event the Commission determines, after a
40-18 proceeding conducted in accordance with this Act and the rules of
40-19 the Commission, that any person is violating or has violated any
40-20 provision of this Act or any rule or order of the Commission issued
40-21 pursuant to this Act, the Commission may levy a civil penalty not
40-22 to exceed $10,000.00 for each day of violation and for each act of
40-23 violation. Notwithstanding a law to the contrary, including
40-24 without limitation the provisions of Section 403.094(h), Government
40-25 Code, all <All> civil penalties recovered under this Act shall be
41-1 deposited in the state treasury to the credit of the state highway
41-2 fund <paid to the General Revenue Fund of the State of Texas>.
41-3 SECTION 21. Section 6.06, Texas Motor Vehicle Commission
41-4 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
41-5 by amending Subsection (a) and by adding Subsection (f) to read as
41-6 follows:
41-7 (a) Notwithstanding any other provision of law, including
41-8 the terms of Subchapter E, Chapter 17, Business & Commerce Code, in
41-9 addition to the other remedies provided by this subchapter, a
41-10 person who has sustained actual damages as a result of a violation
41-11 of Section 5.01 or Section 5.01A of this Act, or a franchised
41-12 dealer who has sustained actual damages as a result of a violation
41-13 of <or> Section 5.02 of this Act, or a violation of Subchapter E,
41-14 Chapter 17, Business & Commerce Code, may maintain an action
41-15 pursuant to the terms of Subchapter E, Chapter 17, Business & <and>
41-16 Commerce Code or any successor statute thereto and shall be
41-17 entitled to all procedures and remedies provided for therein. In
41-18 any action brought under this section, and in the interest of
41-19 judicial economy and efficiency, a judgment rendered pursuant to
41-20 this section shall pay due deference to the findings of fact and
41-21 conclusions of law of the Commission contained in a final order
41-22 which forms the basis of the action.
41-23 (f) A reference in other law to a dealer licensed by the
41-24 Texas Motor Vehicle Commission or a dealer licensed by the Motor
41-25 Vehicle Board of the Texas Department of Transportation means a
42-1 franchised dealer.
42-2 SECTION 22. Section 6.07, Texas Motor Vehicle Commission
42-3 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
42-4 by amending Subsections (b), (d), (g), and (j) and by adding
42-5 Subsection (l) to read as follows:
42-6 (b) If a new motor vehicle does not conform to all
42-7 applicable manufacturer's, converter's, or distributor's express
42-8 warranties, the manufacturer, converter, or distributor shall make
42-9 the repairs necessary to conform the vehicle to the applicable
42-10 express warranties, notwithstanding that the repairs are made after
42-11 the expiration of the warranties, if: (1) the owner or the owner's
42-12 designated agent reported the nonconformity to the manufacturer,
42-13 converter, or distributor, its agent, or its franchised
42-14 <authorized> dealer during the term of such express warranties; or
42-15 (2) a rebuttable presumption relating to the vehicle was created
42-16 under Subsection (d) of this section. This section does not in any
42-17 way limit the remedies available to an owner under a new motor
42-18 vehicle warranty that extends beyond the provisions of this
42-19 section.
42-20 (d) There is a rebuttable presumption that a reasonable
42-21 number of attempts have been undertaken to conform a motor vehicle
42-22 to the applicable express warranties if (1) the same nonconformity
42-23 has been subject to repair four or more times by the manufacturer,
42-24 converter, or distributor, its agent, or its franchised
42-25 <authorized> dealer and two of the repair attempts have been made
43-1 within a period of 12 months following the date of original
43-2 delivery to an owner, or 12,000 miles, whichever occurs first, and
43-3 the other two repair attempts occur within the 12 months or 12,000
43-4 miles immediately following the date of the second repair attempt,
43-5 whichever occurs first, but such nonconformity continues to exist;
43-6 (2) the same nonconformity creates a serious safety hazard and has
43-7 caused the vehicle to have been subject to repair two or more times
43-8 by the manufacturer, converter, or distributor, or an authorized
43-9 agent or franchised dealer, and at least one attempt to repair the
43-10 nonconformity was made in the period of 12 months or 12,000 miles,
43-11 whichever occurs first, and at least one other attempt made in the
43-12 period of 12 months or 12,000 miles after the first repair attempt,
43-13 whichever occurs first, but the nonconformity continues to exist;
43-14 or (3) the vehicle is out of service for repair for a cumulative
43-15 total of 30 or more days in the 24 months or 24,000 miles,
43-16 whichever occurs first, and at least two repair attempts were made
43-17 in the first 12 months or 12,000 miles immediately following the
43-18 date of original delivery to an owner and a nonconformity still
43-19 exists that substantially impairs the vehicle's use or market
43-20 value. The initial 12-month period or 12,000 mile limit, the
43-21 subsequent 12-month period or 12,000 mile limit, and the 30-day
43-22 period shall be extended by any period of time during which repair
43-23 services are not available to the owner because of a war, invasion,
43-24 strike or fire, flood, or other natural disaster. During any
43-25 period of time that the manufacturer or distributor lends a
44-1 comparable motor vehicle to the owner during the time the vehicle
44-2 is being repaired by a franchised <an authorized> dealer, the
44-3 30-day period provided for in this subsection is tolled.
44-4 (g) In a hearing under this section, the Executive Director
44-5 shall make its order with respect to responsibility for payment of
44-6 the cost of any refund or replacement and no manufacturer,
44-7 converter, or distributor may cause any franchised dealer to pay
44-8 directly or indirectly any sum not specifically so ordered by the
44-9 Executive Director. If the Executive Director orders a
44-10 manufacturer, converter, or distributor to refund or replace a
44-11 motor vehicle because it meets the criteria set forth in this
44-12 section, the Executive Director may order the franchised dealer to
44-13 reimburse the owner, lienholder, manufacturer, converter, or
44-14 distributor only for items or options added to the vehicle by the
44-15 franchised dealer and only to the extent that one or more of such
44-16 items or options contributed to the defect that served as the basis
44-17 for the Executive Director's order of refund or replacement. In a
44-18 case involving a leased vehicle, the Executive Director may
44-19 terminate the lease and apportion the allowance for use and other
44-20 allowances or refunds between the lessee and lessor of the vehicle.
44-21 (j)(1) A manufacturer, distributor, or converter that has
44-22 been ordered to repurchase or replace a vehicle shall, through its
44-23 franchised <representative> dealer, issue a disclosure statement
44-24 stating that the vehicle was repurchased or replaced by the
44-25 manufacturer, distributor, or converter under this section. The
45-1 disclosure statement must accompany the vehicle through the first
45-2 retail purchase. The manufacturer, distributor, or converter must
45-3 restore the cause of the repurchase or replacement to factory
45-4 specifications and issue a new 12-month, 12,000-mile warranty on
45-5 the vehicle. The disclosure statement must include a toll-free
45-6 telephone number of the Commission that will enable a purchaser of
45-7 a repurchased or replaced vehicle to obtain information about the
45-8 condition or defect that was the basis of the order for repurchase
45-9 or replacement. The Commission shall adopt rules for the
45-10 enforcement of this subdivision.
45-11 (2) The Commission shall provide a toll-free telephone
45-12 number for providing information to persons who request information
45-13 about a condition or defect that was the basis for repurchase or
45-14 replacement by an order of the Executive Director. The Commission
45-15 shall maintain an effective method of providing information to
45-16 persons who make the requests.
45-17 (l) Information filed with the Board under this section is
45-18 not a public record and is not subject to release under the open
45-19 records law, Chapter 552, Government Code, until the complaint is
45-20 finally resolved by order of the Board.
45-21 SECTION 23. (a) In the event of a conflict between the
45-22 terms of this Act and Article 6686, Revised Statutes, the terms of
45-23 this Act prevail.
45-24 (b) The executive director of the Motor Vehicle Board of the
45-25 Texas Department of Transportation shall oversee the transition of
46-1 duties and responsibilities provided by this Act.
46-2 (c) Except as provided by this section, all general
46-3 distinguishing numbers issued pursuant to Article 6686, Revised
46-4 Statutes, expire one year from the date of issuance. On or before
46-5 March 31, 1996, the Motor Vehicle Board of the Texas Department of
46-6 Transportation shall adopt a rule by which general distinguishing
46-7 numbers expire on various dates during the year. For the year in
46-8 which the expiration date is changed, a general distinguishing
46-9 number may be issued for a term less than one year. If a general
46-10 distinguishing number is issued for a term of less than one year,
46-11 the fee payable on the date of issuance shall be prorated on a
46-12 monthly basis so that the licensee shall pay only that portion of
46-13 the license fee which is allocable to the number of months during
46-14 which the license is valid. On renewal of the general
46-15 distinguishing number on the new expiration date, the total fee is
46-16 payable and the general distinguishing number is valid for a term
46-17 of one year.
46-18 SECTION 24. The transfer of licensing and regulatory duties
46-19 to the Motor Vehicle Board of the Texas Department of
46-20 Transportation required by this Act shall be completed not later
46-21 than January 1, 1996.
46-22 SECTION 25. The importance of this legislation and the
46-23 crowded condition of the calendars in both houses create an
46-24 emergency and an imperative public necessity that the
46-25 constitutional rule requiring bills to be read on three several
47-1 days in each house be suspended, and this rule is hereby suspended,
47-2 and that this Act take effect and be in force from and after its
47-3 passage, and it is so enacted.