1-1 AN ACT
1-2 relating to the regulation of motor vehicle dealers and
1-3 manufacturers, including the regulation of certain retail
1-4 installment transactions by dealers.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-7 (Article 4413(36), Vernon's Texas Civil Statutes), as amended by
1-8 Chapters 345 and 357, Acts of the 74th Legislature, Regular
1-9 Session, 1995, is amended to read as follows:
1-10 Sec. 1.03. Definitions. In this Act:
1-11 (1) [(26)] "Ambulance" means a vehicle used
1-12 exclusively for providing emergency medical care to an injured or
1-13 ill person or transporting an injured or ill person, if the vehicle
1-14 provides:
1-15 (A) a driver's compartment;
1-16 (B) a compartment to accommodate an emergency
1-17 medical care technician or paramedic and two injured or ill persons
1-18 so positioned that one of the injured or ill persons can be given
1-19 intensive life-support during transit;
1-20 (C) equipment and supplies for emergency care of
1-21 an injured or ill person where the ill person is located or at the
1-22 scene of an injury-producing incident as well as in transit;
1-23 (D) two-way radio communication capability; and
1-24 (E) equipment for light rescue or extrication
2-1 procedures.
2-2 (2) "Board" means the Motor Vehicle Board of the Texas
2-3 Department of Transportation.
2-4 (3) [(9)] "Broker" means a person who, for a fee,
2-5 commission, or other valuable consideration, arranges or offers to
2-6 arrange a transaction involving the sale, for purposes other than
2-7 resale, of a new motor vehicle, and who is not:
2-8 (A) a franchised dealer or bona fide employee of
2-9 a franchised dealer when acting on behalf of a franchised dealer;
2-10 (B) a representative or bona fide employee of a
2-11 representative when acting on behalf of a representative;
2-12 (C) a distributor or bona fide employee of a
2-13 distributor when acting on behalf of a distributor; or
2-14 (D) at any point in the transaction the bona
2-15 fide owner of the vehicle involved in the transaction.
2-16 (4) [(13)] "Chassis manufacturer" means a person who
2-17 manufactures and produces the frame upon which is mounted the body
2-18 of a motor vehicle.
2-19 (5) [(11)] "Conversion" means a motor vehicle, other
2-20 than a motor home, ambulance, or fire-fighting vehicle, which has
2-21 been substantially modified by a person other than the manufacturer
2-22 or distributor of the chassis of the motor vehicle and which has
2-23 not been the subject of a retail sale.
2-24 (6) [(14)] "Converter" means a person who prior to the
2-25 retail sale of a motor vehicle, assembles, installs, or affixes a
2-26 body, cab, or special equipment to a chassis, or who substantially
2-27 adds, subtracts from, or modifies a previously assembled or
3-1 manufactured motor vehicle.
3-2 (7) [(23)] "Dealer" means a person who holds a general
3-3 distinguishing number issued by the Department pursuant to the
3-4 terms of Chapter 503, Transportation Code [Article 6686, Revised
3-5 Statutes].
3-6 (8) [(24)] "Dealership" means the physical premises
3-7 and business facilities on which a franchised dealer operates his
3-8 business, including the sale and repair of motor vehicles. The
3-9 term includes premises or facilities at which a person engages only
3-10 in the repair of motor vehicles if repairs are performed pursuant
3-11 to the terms of a franchise and a motor vehicle manufacturer's
3-12 warranty.
3-13 (9) [(20)] "Department" means the Texas Department of
3-14 Transportation.
3-15 (10) "Director" means the director of the board.
3-16 (11) [(6)] "Distributor" means any person who
3-17 distributes and/or sells new motor vehicles to franchised dealers
3-18 and who is not a manufacturer.
3-19 (12) "Executive Director" means the Executive Director
3-20 of the Texas Department of Transportation.
3-21 (13) [(27)] "Fire-fighting vehicle" means a motor
3-22 vehicle which has as its sole purpose transporting fire fighters to
3-23 the scene of a fire and providing equipment to fight the fire, if
3-24 the vehicle is built on a truck chassis with a gross carrying
3-25 capacity of at least 10,000 pounds, to which the following have
3-26 been permanently affixed or mounted:
3-27 (A) a water tank with a minimum combined
4-1 capacity of 500 gallons; and
4-2 (B) a centrifugal water pump with a minimum
4-3 capacity of not less than 750 gallons per minute at 150 pounds per
4-4 square inch net pump pressure.
4-5 (14) [(8)] "Franchise" means one or more contracts
4-6 between a franchised dealer as franchisee, and either a
4-7 manufacturer or a distributor as franchisor under which (A) the
4-8 franchisee is granted the right to sell and service new motor
4-9 vehicles manufactured or distributed by the franchisor or only
4-10 service motor vehicles pursuant to the terms of a franchise and a
4-11 manufacturer's warranty; (B) the franchisee as an independent
4-12 business is a component of franchisor's distribution system; (C)
4-13 the franchisee is substantially associated with franchisor's
4-14 trademark, tradename and commercial symbol; (D) the franchisee's
4-15 business is substantially reliant on franchisor for a continued
4-16 supply of motor vehicles, parts, and accessories for the conduct of
4-17 its business; or (E) any right, duty, or obligation granted or
4-18 imposed by this Act is affected. The term includes a written
4-19 communication from a franchisor to a franchisee by which a duty is
4-20 imposed on the franchisee.
4-21 (15) [(4)] "Franchised dealer" means any person who
4-22 holds a franchised motor vehicle dealer's general distinguishing
4-23 number issued by the Department pursuant to the terms of Chapter
4-24 503, Transportation Code [Article 6686, Revised Statutes], and who
4-25 is engaged in the business of buying, selling, or exchanging new
4-26 motor vehicles and servicing or repairing motor vehicles pursuant
4-27 to the terms of a franchise and a manufacturer's warranty at an
5-1 established and permanent place of business pursuant to a franchise
5-2 in effect with a manufacturer or distributor.
5-3 (16) "General distinguishing number" means a dealer
5-4 license issued by the Department pursuant to the terms of Chapter
5-5 503, Transportation Code.
5-6 (17) [(23)] "Lease" means a transfer of the right to
5-7 possession and use of a motor vehicle for a term in excess of 180
5-8 days in return for consideration.
5-9 (18) [(25)] "Lease facilitator" means a person, other
5-10 than a dealer or a bona fide employee of a dealer, or a vehicle
5-11 lessor or a bona fide employee of a vehicle lessor, who:
5-12 (A) holds himself out to any person as a "motor
5-13 vehicle leasing company" or "motor vehicle leasing agent" or uses a
5-14 similar title, for the purpose of soliciting or procuring a person
5-15 to enter into a contract or agreement to become the lessee of a
5-16 vehicle that is not, and will not be, titled in the name of and
5-17 registered to the lease facilitator; or
5-18 (B) otherwise solicits a person to enter into a
5-19 contract or agreement to become a lessee of a vehicle that is not,
5-20 and will not be, titled in the name of and registered to the lease
5-21 facilitator, or who is otherwise engaged in the business of
5-22 securing lessees or prospective lessees of motor vehicles that are
5-23 not, and will not be, titled in the name of and registered to the
5-24 facilitator.
5-25 (19) [(24)] "Lessor" means a person who acquires title
5-26 to a [new] motor vehicle for the purpose of leasing the vehicle to
5-27 another person.
6-1 (20) [(25)] "Licensee" means a person who holds a
6-2 license or general distinguishing number issued by the Board under
6-3 the terms of this Act or Chapter 503, Transportation Code [a
6-4 general distinguishing number issued by the Department pursuant to
6-5 the terms of Article 6686, Revised Statutes].
6-6 (21) [(5)] "Manufacturer" means any person who
6-7 manufactures or assembles new motor vehicles either within or
6-8 without this State.
6-9 (22) [(26)] "Manufacturer's statement of origin" means
6-10 a certificate on a form prescribed by the Department showing the
6-11 original transfer of a new motor vehicle from the manufacturer to
6-12 the original purchaser.
6-13 (23) [(10)] "Motor home" means a motor vehicle which
6-14 is designed to provide temporary living quarters and which:
6-15 (A) is built onto as an integral part of, or is
6-16 permanently attached to, a motor vehicle chassis; and
6-17 (B) contains at least four of the following
6-18 independent life support systems if each is permanently installed
6-19 and designed to be removed only for purposes of repair or
6-20 replacement and meets the standards of the American National
6-21 Standards Institute, Standards for Recreational Vehicles:
6-22 (i) a cooking facility with an on-board
6-23 fuel source;
6-24 (ii) a gas or electric refrigerator;
6-25 (iii) a toilet with exterior evacuation;
6-26 (iv) a heating or air conditioning system
6-27 with an on-board power or fuel source separate from the vehicle
7-1 engine;
7-2 (v) a potable water supply system that
7-3 includes at least a sink, a faucet, and a water tank with an
7-4 exterior service supply connection;
7-5 (vi) a 110-125 volt electric power supply.
7-6 (24) [(12)] "Motor home manufacturer" means a person
7-7 other than the manufacturer of the chassis of a motor vehicle who,
7-8 prior to the retail sale of the motor vehicle, performs
7-9 modifications on the chassis that result in the finished product
7-10 being classified as a motor home.
7-11 (25) [(1)] "Motor vehicle" means:
7-12 (A) every fully self-propelled vehicle which has
7-13 as its primary purpose the transport of a person or persons, or
7-14 property, on a public highway, and having two or more wheels;
7-15 (B) every two or more wheeled fully
7-16 self-propelled, titled vehicle which has as its primary purpose the
7-17 transport of a person or persons or property and is not
7-18 manufactured for use on public streets, roads, or highways; or
7-19 (C) an engine, transmission, or rear axle
7-20 manufactured for installation in a vehicle having as its primary
7-21 purpose the transport of a person or persons or property on a
7-22 public highway and having a gross vehicle weight rating of more
7-23 than 16,000 pounds, whether or not attached to a vehicle chassis.
7-24 (26) [(2)] "New motor vehicle" means a motor vehicle
7-25 which has not been the subject of a "retail sale" without regard to
7-26 the mileage of the vehicle.
7-27 (27) [(22)] "Nonfranchised dealer" means a person[,
8-1 other than a franchised dealer,] who holds an independent motor
8-2 vehicle dealer's general distinguishing number or a wholesale motor
8-3 vehicle dealer's general distinguishing number issued by the
8-4 Department pursuant to the terms of Chapter 503, Transportation
8-5 Code [Article 6686, Revised Statutes].
8-6 (28) [(16)] "Party" means each person or agency named
8-7 or admitted as a party and whose legal rights, duties, or
8-8 privileges are to be determined by the Commission after an
8-9 opportunity for adjudicative hearing.
8-10 (29) [(3)] "Person" means a natural person,
8-11 partnership, corporation, association, trust, estate, or any other
8-12 legal entity.
8-13 (30) [(17)] "Relocation" means the transfer of an
8-14 existing dealership operation to facilities at a different
8-15 location, including a transfer which results in a consolidation or
8-16 dualing of an existing dealer's operation.
8-17 (31) [(7)] "Representative" means any person who is or
8-18 acts as an agent, employee or representative of a manufacturer,
8-19 distributor, or converter who performs any duties in this State
8-20 relating to promoting the distribution and/or sale of new motor
8-21 vehicles or contacts dealers in this State on behalf of a
8-22 manufacturer, distributor, or converter.
8-23 (32) [(18)] "Retail sale" means the sale of a motor
8-24 vehicle except:
8-25 (A) a sale in which the purchaser acquires a
8-26 vehicle for the purpose of resale; or
8-27 (B) a sale of a vehicle that is operated under
9-1 and in accordance with Section 503.061, Transportation Code
9-2 [Article 6686, Revised Statutes].
9-3 (33) [(15)] "Rule" means a statement by the Commission
9-4 of general and future applicability that implements, interprets, or
9-5 prescribes law or policy or describes the organization or
9-6 procedural practice requirements of the Commission. The term
9-7 includes the amendment or repeal of a prior rule, but does not
9-8 include statements concerning only the internal management of the
9-9 Commission which do not affect the rights of a person not connected
9-10 with the Commission.
9-11 (34) [(21)] "Transportation Commission" means the
9-12 Texas Transportation Commission of the Texas Department of
9-13 Transportation.
9-14 (35) [(19)] "Warranty work" means parts, labor, and
9-15 any other expenses incurred by a franchised dealer in complying
9-16 with the terms of a manufacturer's or distributor's warranty.
9-17 SECTION 2. Section 2.01, Texas Motor Vehicle Commission Code
9-18 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
9-19 read as follows:
9-20 Sec. 2.01. Texas Motor Vehicle Board [Commission]. (a) In
9-21 conducting the policy-making and regulatory functions and duties
9-22 imposed on the board by this Act, whether mandatory or
9-23 discretionary, and unless otherwise provided by this Act, the board
9-24 is an independent entity within the department and is not an
9-25 advisory body to the department. The board [Texas Motor Vehicle
9-26 Commission] shall carry out the functions and duties conferred upon
9-27 it by this Act and by other provision of law.
10-1 (b) A reference in this Act to the "commission" or the Texas
10-2 Motor Vehicle Commission means the board [Motor Vehicle Board of
10-3 the Texas Department of Transportation]. A reference in other law,
10-4 rule or regulation to the Texas Motor Vehicle Commission means the
10-5 board [Motor Vehicle Board of the Texas Department of
10-6 Transportation].
10-7 (c) [A reference in this Act to the "Executive Director" or
10-8 the Executive Director of the Texas Motor Vehicle Commission means
10-9 the Director of the Motor Vehicle Division of the Texas Department
10-10 of Transportation.] A reference in other law, rule or regulation
10-11 to the Executive Director of the Texas Motor Vehicle Commission
10-12 means the Director [of the Motor Vehicle Division of the Texas
10-13 Department of Transportation].
10-14 (d) A reference in law, rule or regulation to the Texas
10-15 Motor Vehicle Commission Code means this Act.
10-16 SECTION 3. Section 2.02, Texas Motor Vehicle Commission Code
10-17 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
10-18 read as follows:
10-19 Sec. 2.02. Members of Board. (a) The Motor Vehicle Board
10-20 of the Texas Department of Transportation consists of nine [six]
10-21 persons appointed by the Governor with the advice and consent of
10-22 the Senate.
10-23 (b) The Executive Director is a member of the board ex
10-24 officio. The Executive Director may attend a meeting of the board
10-25 and may confer with and advise the board, the chairman, or the
10-26 director. The Executive Director may not vote on a matter coming
10-27 before the board and is not counted in the determination of a
11-1 quorum at a meeting of the board. Except as provided by this
11-2 subsection, the provisions of this Act relating to members of the
11-3 board do not apply to the Executive Director.
11-4 (c) The membership of the board includes:
11-5 (1) two dealers licensed pursuant to the terms of this
11-6 Act, at least one of whom must be a franchised dealer; and
11-7 (2) one representative of a motor vehicle manufacturer
11-8 or distributor licensed pursuant to the terms of this Act.
11-9 SECTION 4. Section 2.03, Texas Motor Vehicle Commission Code
11-10 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
11-11 read as follows:
11-12 Sec. 2.03. Qualifications of Members. (a) A person is
11-13 eligible to be appointed to the board [Commission] if:
11-14 (1) he is a citizen of the United States and a
11-15 resident of this State; and
11-16 (2) except for a member appointed pursuant to the
11-17 terms of Section 2.02(c), he has no interest in a business that
11-18 manufactures, distributes, converts, leases, or sells motor
11-19 vehicles.
11-20 (b) Except as provided by this section, the [The] office of
11-21 a member is automatically vacated and shall be filled as any other
11-22 vacancy, if:
11-23 (1) the member becomes a licensee under this Act;
11-24 (2) the member acquires an interest in a business that
11-25 manufactures, distributes, converts, leases, or sells motor
11-26 vehicles;
11-27 (3) the member becomes an officer, employee, or paid
12-1 consultant of a trade association in the motor vehicle industry; or
12-2 (4) a person related to the member within the first
12-3 degree by consanguinity or affinity, as determined under Chapter
12-4 573, Government Code [Article 5996h, Revised Statutes], becomes an
12-5 officer, employee, or paid consultant of a trade association in the
12-6 motor vehicle industry, becomes a licensee under this Act, or
12-7 acquires an interest in a business that manufactures, distributes,
12-8 converts, leases, or sells motor vehicles.
12-9 (c) Notwithstanding the terms of Subsection (b) of this
12-10 section, the office of a member appointed to the board pursuant to
12-11 the terms of Section 2.02(c)(1) of this Act is not vacated by
12-12 virtue of the fact that the member, or a person related to the
12-13 member within the first degree by consanguinity or affinity, as
12-14 determined under Chapter 573, Government Code, subsequently
12-15 acquires an interest in a dealership.
12-16 SECTION 5. Section 2.04, Texas Motor Vehicle Commission Code
12-17 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
12-18 read as follows:
12-19 Sec. 2.04. Terms of Members. [(a)] The members of the
12-20 board [Commission] shall hold office for terms of six years, with
12-21 the terms of three [two] members expiring on January 31 of each
12-22 odd-numbered year. No person shall serve two consecutive full
12-23 six-year terms as a member of the board [Commission].
12-24 SECTION 6. Section 2.07, Texas Motor Vehicle Commission Code
12-25 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
12-26 read as follows:
12-27 Sec. 2.07. Per diem; expenses. Each member of the board
13-1 [Commission] shall be entitled to $50.00 per day for each day
13-2 actually engaged in the duties of the office, including time spent
13-3 in necessary travel to and from meetings and otherwise, together
13-4 with all travel and other necessary expenses incurred while
13-5 performing official duties.
13-6 SECTION 7. Section 2.08, Texas Motor Vehicle Commission Code
13-7 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by
13-8 amending Subsection (a) and by adding Subsection (d) to read as
13-9 follows:
13-10 (a) The Governor shall designate one member of the board,
13-11 other than a member appointed pursuant to the terms of Section
13-12 2.02(c) of this Act, [Commission] as Chairman [of the Commission]
13-13 to serve in that capacity at the pleasure of the Governor. The
13-14 board [Commission] shall hold a regular annual meeting in September
13-15 of each year and elect a Vice-chairman to serve for the ensuing
13-16 year. The board [Commission] shall have regular meetings as the
13-17 majority of the members may specify and special meetings at the
13-18 request of the Chairman, any two members, or the [Executive]
13-19 Director. Reasonable notice of all meetings shall be given as
13-20 board [Commission] rules prescribe. A majority of the board
13-21 [Commission] constitutes a quorum to transact business, except that
13-22 a member appointed under Section 2.02 of this Act is not counted in
13-23 the calculation of a quorum for purposes of the determination of an
13-24 issue with respect to which the member is prohibited from voting.
13-25 The Chairman, or in his absence, the Vice-chairman, shall preside
13-26 at all meetings of the board [Commission]. In the absence of both
13-27 the Chairman and the Vice-chairman, the members [of the Commission]
14-1 present shall select one of their number to serve as chairman for
14-2 the meeting.
14-3 (d) A member of the board appointed pursuant to the terms of
14-4 Section 2.02(c) of this Act may not vote on an issue involving a
14-5 dispute in which both a dealer and a manufacturer are named
14-6 parties.
14-7 SECTION 8. Section 2.08A(c), Texas Motor Vehicle Commission
14-8 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
14-9 to read as follows:
14-10 (c) If the [Executive] Director has knowledge that a
14-11 potential ground for removal exists, the [Executive] Director shall
14-12 notify the Chairman of the Commission of the ground. The Chairman
14-13 shall then notify the Governor that a potential ground for removal
14-14 exists.
14-15 SECTION 9. Section 2.09, Texas Motor Vehicle Commission Code
14-16 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
14-17 read as follows:
14-18 Sec. 2.09. [Executive] director; staff; contracts;
14-19 indemnity. (a) The Executive Director [of the Texas Department of
14-20 Transportation] shall appoint the Director, [of the Motor Vehicle
14-21 Division] who is [shall be] the board's [division's] chief
14-22 executive and administrative officer. The Director, who shall be
14-23 an attorney licensed to practice law in this state, is charged with
14-24 administering, enforcing, and carrying out the provisions of this
14-25 Act. The Director serves at the pleasure of the Executive Director
14-26 [of the Texas Department of Transportation].
14-27 (b) The [Executive] Director or his designated
15-1 representative shall meet with the board [Commissioners] in an
15-2 advisory capacity without vote in all proceedings of the board
15-3 [Commission]. The [Executive] Director shall submit the reports to
15-4 the board [Commission] as may be required by the board's
15-5 [Commission's] rules or by this Act.
15-6 (c) The [Executive] Director or his designee shall maintain
15-7 all minutes of board [Commission] proceedings and shall serve as
15-8 the custodian of the files and records of the board [Commission].
15-9 (d) The [Executive] Director, or his designee, on behalf of
15-10 the board [Commission], may negotiate with and, with the consent of
15-11 a majority of the board [Commissioners], enter into contracts or
15-12 other agreements with the United States or any of its agencies,
15-13 with states and political subdivisions thereof, or any other entity
15-14 for the purpose of carrying out the powers, duties, and
15-15 responsibilities of the board [Commission].
15-16 (e) The [Executive] Director shall appoint and employ such
15-17 board [Commission] staff as are necessary to carry out the duties
15-18 and functions of the [Executive] Director and the board
15-19 [Commission] under this Act. The board [Commission] shall develop
15-20 and implement policies that clearly define the respective
15-21 responsibilities of the board [Commission] and the staff of the
15-22 board [Commission].
15-23 (f) An employee of the board [Commission] is subject to
15-24 dismissal who has an interest in or is related within the first
15-25 degree by consanguinity or affinity, as determined under Chapter
15-26 573, Government Code [Article 5996h, Revised Statutes], to a person
15-27 who has an interest in a business that manufactures, distributes,
16-1 converts, [or] sells, or leases motor vehicles.
16-2 (g) [(h)] Notwithstanding any other provision of law, the
16-3 [Executive] Director, each member of the board [Texas Motor Vehicle
16-4 Commission], each Hearing Examiner and all other employees of the
16-5 board [Texas Motor Vehicle Commission] are not personally liable
16-6 for damages occasioned by their official acts or omissions except
16-7 when such acts or omissions constitute intentional or malicious
16-8 malfeasance. The Attorney General shall defend any action brought
16-9 against a member or employee of the board [Commission] in
16-10 connection with an official act or omission, whether or not at the
16-11 time of the institution of the action the defendant has previously
16-12 ceased to serve the Commission in any capacity, and the State of
16-13 Texas shall indemnify any such person from and against a judgment
16-14 entered against the person in any such actions though the State may
16-15 seek contribution if liability is otherwise permitted by this
16-16 subsection.
16-17 (h) [(i)] Unless otherwise provided by this Act or by board
16-18 [Commission] rules, all applications, petitions, or other documents
16-19 requiring action by the board [Commission] shall be directed to the
16-20 [Executive] Director.
16-21 (i) [(j)] The board [Commission] shall provide to its
16-22 members and employees, as often as necessary, information regarding
16-23 their qualifications for office or employment under this Act and
16-24 their responsibilities under applicable laws relating to standards
16-25 of conduct for state officers or employees.
16-26 SECTION 10. Section 2.09B, Texas Motor Vehicle Commission
16-27 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-1 by adding Subsection (e) to read as follows:
17-2 (e) No member of the board may vote on an issue coming
17-3 before the board for determination if that issue directly affects
17-4 the member or if the issue directly affects an entity in which the
17-5 member has a financial interest.
17-6 SECTION 11. Section 3.01(a), Texas Motor Vehicle Commission
17-7 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-8 to read as follows:
17-9 (a) The board [Commission] has the general and original
17-10 power and jurisdiction to regulate all aspects of the distribution,
17-11 sale, and leasing of motor vehicles and to do all things, whether
17-12 specifically designated in this Act or implied herein, or necessary
17-13 or convenient to the exercise of this power and jurisdiction,
17-14 including the original jurisdiction to determine questions of its
17-15 own jurisdiction. In addition to the other duties placed on the
17-16 board [Commission] by this Act, the board [Commission] shall
17-17 enforce and administer the terms of Chapter 503, Transportation
17-18 Code [Article 6686, Revised Statutes].
17-19 SECTION 12. The Texas Motor Vehicle Commission Code (Article
17-20 4413(36), Vernon's Texas Civil Statutes) is amended by adding
17-21 Section 3.01A to read as follows:
17-22 Sec. 3.01A. INTERACTION WITH DEPARTMENT. (a) In
17-23 coordination with the department, the board shall develop and
17-24 implement policies that clearly delineate the policy-making
17-25 responsibilities of the board and the management responsibilities
17-26 of the department.
17-27 (b) The department, by agreement with the board, may provide
18-1 personnel and services to the board as needed to carry out
18-2 purposes, powers, and duties of the board. The board may delegate
18-3 authority to personnel as needed.
18-4 SECTION 13. Section 3.03(b), Texas Motor Vehicle Commission
18-5 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
18-6 to read as follows:
18-7 (b) The board [commission] may conduct hearings in
18-8 contested cases brought pursuant to, and as provided by, Chapter
18-9 503, Transportation Code [Article 6686, Revised Statutes]. The
18-10 procedures applicable to a hearing conducted under this Subsection,
18-11 and the disposition of a final order after a hearing conducted
18-12 under this Subsection, are those applicable to a hearing conducted
18-13 as provided by Section 6.07(e)(2) of this Act. A decision or final
18-14 order issued under this Subsection is final, and no appeal may, as
18-15 a matter of right, be made to the Texas Transportation Commission.
18-16 The department may adopt rules applicable to procedures, hearings,
18-17 and enforcement proceedings in an action brought pursuant to this
18-18 Subsection.
18-19 SECTION 14. Section 3.04, Texas Motor Vehicle Commission
18-20 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
18-21 to read as follows:
18-22 Sec. 3.04. DELEGATION OF BOARD [COMMISSION] POWERS. The
18-23 board [Commission] may delegate any power which it holds or derives
18-24 under this Act to:
18-25 (1) one or more of its members [of the Commission];
18-26 (2) the [Executive] Director; or
18-27 (3) one or more of its employees [of the Commission].
19-1 SECTION 15. Section 3.05, Texas Motor Vehicle Commission
19-2 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
19-3 to read as follows:
19-4 Sec. 3.05. INVESTIGATION; ENFORCEMENT. (a) Whenever the
19-5 board [Commission] has reason to believe, through receipt of a
19-6 complaint or otherwise, that a violation of this Act or a board
19-7 [Commission] rule, order, or decision has occurred or is likely to
19-8 occur, the board [Commission] shall conduct an investigation unless
19-9 it determines that a complaint is frivolous or for the purpose of
19-10 harassment. If the board's [Commission's] investigation
19-11 establishes that a violation of this Act or a board [Commission]
19-12 rule, order or decision has occurred or is likely to occur, the
19-13 board [Commission] shall institute proceedings as it deems
19-14 appropriate to enforce this Act or its rules, orders, and
19-15 decisions.
19-16 (b) Notwithstanding Subsection (a) of this section or
19-17 another provision of this Act or board rule, the board may not file
19-18 a complaint alleging a violation of this Act or a board rule
19-19 relating to advertising until the board has notified the licensee
19-20 involved of the alleged violation and given the licensee an
19-21 opportunity to cure the violation without further proceedings or
19-22 liability.
19-23 SECTION 16. Section 3.06, Texas Motor Vehicle Commission
19-24 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
19-25 to read as follows:
19-26 Sec. 3.06. RULES. The authority to issue rules pursuant to
19-27 this Act shall be vested in the board [Commission]. After notice
20-1 and hearing conducted by the board [Commission] or by the
20-2 [Executive] Director or his delegee in accordance with Chapter
20-3 2001, Government Code, [the Administrative Procedure and Texas
20-4 Register Act (Article 6252 13a, Vernon's Texas Civil Statutes)] and
20-5 in compliance with this Act and the rules, decisions, and orders of
20-6 the board [Commission], the board [Commission] shall adopt such
20-7 rules and amendments thereto and deletions therefrom as may be
20-8 necessary or convenient to effectuate the provisions of this Act
20-9 and to govern practice and procedure before the board [Commission].
20-10 Such rules shall become effective as soon as the board
20-11 [Commission], acting by and through its [Executive] Director,
20-12 complies with the requirements of Chapter 2001, Government Code,
20-13 [the Administrative Procedure and Texas Register Act] regarding
20-14 publication of official agency rules.
20-15 SECTION 17. Section 3.07, Texas Motor Vehicle Commission
20-16 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
20-17 to read as follows:
20-18 Sec. 3.07. ORDERS AND DECISIONS. (a) An order or decision
20-19 shall:
20-20 (1) include a separate finding of fact with respect to
20-21 each specific issue the board is required by law to consider in
20-22 reaching a decision;
20-23 (2) set forth additional [the] findings of fact and
20-24 conclusions of law on which the order or decision is based; and
20-25 (3) [shall] give the reasons for the particular
20-26 actions taken.
20-27 (b) Except as provided by Section 6.07 of this Act, all
21-1 orders and decisions shall be signed on behalf of the board
21-2 [Commission] by the Chairman or Vice-chairman and attested by the
21-3 [Executive] Director and shall have the seal affixed.
21-4 SECTION 18. The Texas Motor Vehicle Commission Code (Article
21-5 4413(36), Vernon's Texas Civil Statutes) is amended by adding
21-6 Section 3.07A to read as follows:
21-7 Sec. 3.07A. MEDIATION. (a) In this section, "mediation"
21-8 means a nonbinding forum in which an impartial person, the
21-9 mediator, facilitates communication between parties to promote
21-10 reconciliation, settlement, or understanding among them. A
21-11 mediator may not impose his own judgment on the issues for that of
21-12 the parties.
21-13 (b) In an action brought by a franchised dealer whose
21-14 franchise agreement provides for arbitration in compliance with the
21-15 terms of this Act, against a manufacturer or distributor under
21-16 Section 5.02(b) of this Act, the board shall order the parties to
21-17 submit the dispute to mediation in the manner provided by this
21-18 section. The requirements of this subsection apply only if the
21-19 dealer's franchise agreement contains no arbitration provision in
21-20 conflict with the terms of this Act.
21-21 (c) If the applicability of Subsection (b) of this section
21-22 is in dispute, the board shall enter an order either that the
21-23 franchise agreement in question contains a provision in conflict
21-24 with the terms of this Act or that it does not. If the board finds
21-25 that the franchise agreement in question contains no arbitration
21-26 provision in conflict with this Act, the board shall order the
21-27 parties to proceed to mediation as provided by this section. An
22-1 order issued under this subsection is not appealable.
22-2 (d) The parties shall by agreement select a venue and
22-3 schedule for a mediation proceeding conducted under this section.
22-4 Except as provided by this subsection, if the parties are unable to
22-5 agree on a venue and schedule, the mediator shall select a venue
22-6 and schedule. Except by written agreement of all parties, a
22-7 mediation proceeding under this section must be held in Texas.
22-8 (e) A person is qualified to serve as a mediator as provided
22-9 by this section if the person is qualified to serve as a mediator
22-10 under Section 154.052(a), Civil Practice and Remedies Code. The
22-11 provisions of Sections 154.053 and 154.055, Civil Practice and
22-12 Remedies Code, apply to a person employed to mediate a dispute as
22-13 provided by this section.
22-14 (f) A mediation proceeding under this section must be
22-15 complete not later than the 60th day after the board orders the
22-16 parties to mediate. The deadline imposed by this subsection may be
22-17 extended by the board at the request of all parties.
22-18 (g) Except as provided by this subsection, the provisions of
22-19 Section 154.073, Civil Practice and Remedies Code, apply to a
22-20 mediation proceeding conducted under this section. If Section
22-21 154.073, Civil Practice and Remedies Code, is in conflict with
22-22 another legal requirement for disclosure of communications or
22-23 materials, the issue of confidentiality may be presented to the
22-24 board to determine, in camera, whether the facts, circumstances,
22-25 and context of the communications or materials sought to be
22-26 disclosed warrant a protective order of the board or whether the
22-27 communications or materials are subject to disclosure.
23-1 (h) By agreement, the parties shall select and compensate a
23-2 mediator employed under the terms of this section. The board is
23-3 not liable for the compensation paid or to be paid to a mediator
23-4 employed as provided by this section. Without regard to the outcome
23-5 of the mediation proceeding or subsequent regulatory or judicial
23-6 proceedings, costs incurred by a party in a mediation proceeding
23-7 required by this section may not be taxed against the opposing
23-8 party.
23-9 (i) The board retains jurisdiction of the subject matter of
23-10 and parties to the dispute during the pendency of a mediation
23-11 proceeding and may, on the motion of a party or on its own motion,
23-12 enter appropriate orders.
23-13 (j) Except as provided by this section, a mediation
23-14 proceeding maintained as provided by this section does not affect
23-15 procedural rights and duties conferred by this Act or by rules of
23-16 the board. Procedural time limits imposed by this Act or pursuant
23-17 to the authority of this Act are tolled during the pendency of a
23-18 mediation proceeding brought under this section. A mediation
23-19 proceeding maintained as provided by this section does not affect
23-20 the rights of a person who is not a party to the mediation
23-21 proceeding. The board shall stay proceedings involving the parties
23-22 under mediation until receipt by the board of the mediator's
23-23 certification that the mediation process is concluded.
23-24 (k) If a mediation proceeding brought under this section
23-25 results in the resolution of the dispute, the board shall enter an
23-26 order incorporating the terms of the agreement reached in
23-27 mediation. If the mediation does not result in a resolution of the
24-1 dispute, the board shall proceed to a contested case hearing or
24-2 other appropriate exercise of its jurisdiction.
24-3 (l) This section does not apply to an action brought by the
24-4 board to enforce the terms of this Act.
24-5 (m) This section controls any other provision of law
24-6 relating to or requiring mediation between or among licensees.
24-7 SECTION 19. Section 3.08, Texas Motor Vehicle Commission
24-8 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
24-9 to read as follows:
24-10 Sec. 3.08. HEARINGS; NOTICE; HEARING PROCEDURES; COMPLAINTS.
24-11 (a) In this section, the term "contested case" has the meaning
24-12 given it in Chapter 2001, Government Code. A hearing shall be
24-13 conducted in all contested cases[, as defined in the Administrative
24-14 Procedure and Texas Register Act (Article 6252 13a, Vernon's Texas
24-15 Civil Statutes),] which arise in connection with this Act or any
24-16 rule of the board [Commission]. All hearings shall be conducted in
24-17 accordance with this Act, the orders, decisions, or rules of the
24-18 board [Commission], and Chapter 2001, Government Code, [the
24-19 Administrative Procedure and Texas Register Act] to the extent that
24-20 Chapter 2001, Government Code, [the Administrative Procedure and
24-21 Texas Register Act] does not conflict with this Act. A hearing may
24-22 be informally disposed of in accordance with Chapter 2001,
24-23 Government Code [the Administrative Procedure and Texas Register
24-24 Act]. Any hearing held under this section shall be conducted by
24-25 the [Executive] Director or any Hearing Examiner, each of whom may
24-26 be referred to in this Act as the "Examiner." The person or
24-27 persons serving as Examiner in any contested case hearing are
25-1 hereby delegated all the power and authority which the board
25-2 [Commission] has under this Act regarding the conduct of hearings,
25-3 including, without limitation, the power to hold hearings,
25-4 administer oaths, receive pleadings and evidence, issue subpoenas
25-5 to compel the attendance of witnesses, compel the production of
25-6 papers and documents, issue interlocutory orders, including cease
25-7 and desist orders in the nature of temporary restraining orders and
25-8 temporary injunctions, make findings of fact and conclusions of
25-9 law, and issue proposals for decision and recommended final orders.
25-10 (b) Notice of a hearing shall describe in summary form the
25-11 purpose of the hearing and its date, time, and place.
25-12 (c) Notice of a rulemaking hearing shall be given in
25-13 accordance with Chapter 2001, Government Code, [the Administrative
25-14 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
25-15 Civil Statutes)] and the rules of the board [Commission] not less
25-16 than 30 days before the hearing date. Notice of a contested case
25-17 hearing involving a licensee [license] shall be given in accordance
25-18 with this Act and the rules of the board [Commission].
25-19 (d) Notice of a contested case hearing shall be deemed to
25-20 have been received by any person if notice of the hearing was
25-21 mailed to the last known address, of any person known to have legal
25-22 rights, duties, or privileges that could be determined at the
25-23 hearing, not less than 10 days before the hearing date. Notice of
25-24 a hearing shall be given by certified mail, return receipt
25-25 requested. Notice may be given to any officer, agent, employee,
25-26 legal representative, or attorney of any person. Notice of any
25-27 hearing may be waived by any person.
26-1 (e) A hearing shall be convened [conducted] at the time and
26-2 place stated in the hearing notice [or the hearing shall be
26-3 rescheduled and an amended notice given]. Any hearing may be
26-4 recessed until a time and place certain without further notice if
26-5 the time and place is [continued from time to time and place to
26-6 place as] announced openly before the hearing is recessed. If the
26-7 time and place determined for the resumption of the hearing is not
26-8 announced openly before the hearing is recessed, the hearing may be
26-9 recessed to a time and place certain[, without further notice, or
26-10 otherwise,] by giving advance notice as required by Chapter 2001,
26-11 Government Code [the Administrative Procedure and Texas Register
26-12 Act (Article 6252-13a, Vernon's Texas Civil Statutes)].
26-13 (f) Unless otherwise limited by this Act, any person whose
26-14 legal rights, duties, or privileges are to be determined at any
26-15 hearing shall have the right to appear personally and by counsel,
26-16 to cross-examine adverse witnesses, and to produce evidence and
26-17 witnesses in the person's own behalf.
26-18 (g) In all contested cases the examiner shall serve on all
26-19 parties a copy of the examiner's proposal for decision and
26-20 recommended order containing findings of fact and conclusions of
26-21 law. A [shall be served on all parties and each] party may file
26-22 exceptions and replies to the board [Commission]. In its review of
26-23 the case, the board may [After replies and exceptions have been
26-24 timely filed, the Commission shall] consider only the materials
26-25 timely submitted [by all parties]. The board [Commission] may
26-26 receive such oral argument from any party as the board [Commission]
26-27 may allow. The board [Commission] shall take such further actions
27-1 as are conducive to the issuance of a final order and shall
27-2 thereafter issue a written final decision or order. The board's
27-3 [Commission's] written final decision or order shall be signed on
27-4 behalf of the board [Commission] by the [Executive] Director. A
27-5 majority vote of a quorum of the board [Commissioners] shall be
27-6 required to adopt final decisions or orders of the board
27-7 [Commission].
27-8 (h) A party who seeks a rehearing of an order shall do so in
27-9 accordance with the terms of Chapter 2001, Government Code [the
27-10 Administrative Procedure and Texas Register Act (Article 6252-13a,
27-11 Vernon's Texas Civil Statutes)].
27-12 (i) The owner of a motor vehicle or the owner's designated
27-13 agent may make a complaint concerning defects in a motor vehicle
27-14 which are covered by a manufacturer's, converter's, or
27-15 distributor's warranty agreement applicable to the vehicle. Any
27-16 such complaint must be made in writing to the applicable dealer,
27-17 manufacturer, converter, or distributor and must specify the
27-18 defects in the vehicle which are covered by the warranty. The
27-19 owner may also invoke the board's [Commission's] jurisdiction by
27-20 sending the board [Commission] a copy of the complaint. A hearing
27-21 may be scheduled on all complaints arising under this subsection
27-22 which are not privately resolved between the owner and the dealer,
27-23 manufacturer, converter, or distributor.
27-24 (j) On motion of any party the board [Commission] may, by
27-25 final order, and in accordance with the terms and procedures set
27-26 forth in Rule 166a, Texas Rules of Civil Procedure, dismiss a
27-27 complaint, protest, or response without holding a contested case
28-1 hearing.
28-2 SECTION 20. Section 3.09, Texas Motor Vehicle Commission
28-3 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
28-4 to read as follows:
28-5 Sec. 3.09. PROCEDURAL SUPREMACY [EFFECT ON ADMINISTRATIVE
28-6 PROCEDURE AND TEXAS REGISTER ACT]. In the event of any conflict
28-7 between Chapter 2001, Government Code, [the Administrative
28-8 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
28-9 Civil Statutes)] and this Act, the provisions of this Act shall
28-10 prevail.
28-11 SECTION 21. Section 4.01, Texas Motor Vehicle Commission
28-12 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
28-13 by amending Subsection (b) and by adding Subsections (c) and (d) to
28-14 read as follows:
28-15 (b) In the case of a nonfranchised dealer, the term
28-16 "license" in this Act means a general distinguishing number [issued
28-17 by the Department pursuant to the authority of Article 6686,
28-18 Revised Statutes]. A nonfranchised dealer may not operate as a
28-19 dealer without a valid general distinguishing number but is not
28-20 required to obtain an additional license under the terms of this
28-21 Act. A franchised dealer shall have both a general distinguishing
28-22 number and a separate license issued under the terms of this Act.
28-23 (c) Notwithstanding the terms of this Act, a franchised
28-24 dealer is not required to have a lessor license or lease
28-25 facilitator license to engage in any capacity in the business of
28-26 leasing motor vehicles that the dealer owns and is licensed by this
28-27 Act to sell.
29-1 (d) A manufacturer or distributor that directly or
29-2 indirectly reimburses another person to perform warranty repair
29-3 services on a vehicle is engaged in business in this state whether
29-4 or not the manufacturer sells or offers for sale new motor vehicles
29-5 in this state.
29-6 SECTION 22. Section 4.02(a), Texas Motor Vehicle Commission
29-7 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
29-8 to read as follows:
29-9 (a) An application for a dealer license shall be on a form
29-10 prescribed by the board [Commission] which shall include the
29-11 information required by Chapter 503, Transportation Code [Article
29-12 6686, Revised Statutes], and information on the applicant's
29-13 financial resources, business integrity, business ability and
29-14 experience, franchise agreement if applicable, physical facilities,
29-15 vehicle inventory, and other factors the board [Commission]
29-16 considers necessary to determine an applicant's qualifications to
29-17 adequately serve the motoring public.
29-18 SECTION 23. Section 4.03, Texas Motor Vehicle Commission
29-19 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
29-20 by adding a new Subsection (e) to read as follows and by
29-21 redesignating current Subsection (e) as Subsection (f):
29-22 (e) The terms and conditions of a franchise agreement are
29-23 subject to the terms of this Act. A term or condition of a
29-24 franchise agreement inconsistent with the terms of this Act is not
29-25 enforceable.
29-26 (f) [(e)] All licensees may apply for issuance of a license
29-27 for each succeeding year by complying with the application process
30-1 specified by this Act and the Commission's rules.
30-2 SECTION 24. Section 4.03A, Texas Motor Vehicle Commission
30-3 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
30-4 to read as follows:
30-5 Sec. 4.03A. Lessor Application. An application for a lessor
30-6 license shall be on a form prescribed by the board [Commission] and
30-7 shall contain evidence of compliance with Chapter 503,
30-8 Transportation Code [Article 6686, Revised Statutes], if
30-9 applicable, and other information prescribed by the board
30-10 [Commission]. This Act does not require a separate license for
30-11 each individual employee of a lessor.
30-12 SECTION 25. Section 4.05(a), Texas Motor Vehicle Commission
30-13 Code (Article 4413(36), Vernon's Texas Civil Statutes), as amended
30-14 by Chapters 345 and 357, Acts of the 74th Legislature, Regular
30-15 Session, 1995, is amended to read as follows:
30-16 (a) The annual license fees for licenses issued hereunder
30-17 shall be as follows:
30-18 (1) For each manufacturer and distributor, $900 plus
30-19 $20 for each individual dealer franchised by the manufacturer or
30-20 distributor.
30-21 (2) For each franchised dealer who sold 200 or fewer
30-22 new motor vehicles during the preceding calendar year, $175.
30-23 (3) For each franchised dealer who sold more than 200,
30-24 but not more than 400, new motor vehicles during the preceding
30-25 calendar year, $275.
30-26 (4) For each franchised dealer who sold more than 400,
30-27 but not more than 800, new motor vehicles during the preceding
31-1 calendar year, $400.
31-2 (5) For each franchised dealer who sold more than 800
31-3 but not more than 1,200 new motor vehicles during the preceding
31-4 calendar year, $500.
31-5 (6) For each franchised dealer who sold more than
31-6 1,200 but not more than 1,600 new motor vehicles during the
31-7 preceding calendar year, $625.
31-8 (7) For each franchised dealer who sold more than
31-9 1,600 new motor vehicles during the preceding calendar year, $750.
31-10 (8) For each location separate from his dealership at
31-11 which a franchised dealer offers no motor vehicle for sale, but
31-12 performs warranty service on vehicles the dealer is franchised and
31-13 licensed to sell, $100.
31-14 (9) [(10)] For each amendment to a dealer's license,
31-15 $25.
31-16 (10) [(8)] For each representative, $100.
31-17 (11) [(9)] For each converter, $375.
31-18 (12) [(9)] For each lessor who leased 200 or fewer
31-19 motor vehicles during the preceding calendar year, $175.
31-20 (13) [(10)] For each lessor who leased more than 200
31-21 but not more than 400 motor vehicles during the preceding calendar
31-22 year, $275.
31-23 (14) [(11)] For each lessor who leased more than 400
31-24 but not more than 800 motor vehicles during the preceding calendar
31-25 year, $400.
31-26 (15) [(12)] For each lessor who leased more than 800
31-27 but not more than 1,200 motor vehicles during the preceding
32-1 calendar year, $500.
32-2 (16) [(13)] For each lessor who leased more than 1,200
32-3 but not more than 1,600 motor vehicles during the preceding
32-4 calendar year, $625.
32-5 (17) [(14)] For each lessor who leased more than 1,600
32-6 motor vehicles during the preceding calendar year, $750.
32-7 (18) [(15)] For each lease facilitator, $375.
32-8 SECTION 26. Section 4.06, Texas Motor Vehicle Commission
32-9 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
32-10 to read as follows:
32-11 Sec. 4.06. Sanctions; denial, revocation, or suspension of
32-12 license. (a) The board [Commission] may deny an application for a
32-13 license, revoke or suspend an outstanding license, or place on
32-14 probation a person whose license has been suspended, or reprimand a
32-15 licensee, for any of the following reasons:
32-16 (1) Unfitness of an applicant or licensee under
32-17 standards set out in this Act or in board [Commission] rules.
32-18 (2) Material misrepresentation in any application or
32-19 other information filed under this Act or board [Commission] rules.
32-20 (3) Failure to comply with this Act or any board
32-21 [Commission] rule or order promulgated by the board [Commission].
32-22 (4) Failure to maintain the qualifications for a
32-23 license.
32-24 (5) Willfully defrauding any retail buyer.
32-25 (6) Violation of any law relating to the sale,
32-26 distribution, financing, or insuring of motor vehicles.
32-27 (7) Any act or omission by an officer, director,
33-1 partner, trustee, or other person acting in a representative
33-2 capacity for a licensee which act or omission would be cause for
33-3 denying, revoking, or suspending a license to an individual
33-4 licensee.
33-5 (8) Failure to fulfill written agreements between the
33-6 licensee and a retail buyer of a motor vehicle.
33-7 (b) The revocation of a license previously held under this
33-8 Act may be grounds for denying a subsequent application for a
33-9 license.
33-10 (c) The board [Commission] may deny an application to
33-11 establish a dealership if, after protest, the applicant fails to
33-12 establish good cause therefor. In determining good cause, the
33-13 board [Commission] shall consider:
33-14 (1) whether the manufacturer or distributor of the
33-15 same line-make of new motor vehicle is being adequately represented
33-16 as to sales and service;
33-17 (2) whether the protesting franchised dealer
33-18 representing the same line-make of new motor vehicle is in
33-19 substantial compliance with his franchise agreement, to the extent
33-20 that the franchise agreement is not in conflict with this Act;
33-21 (3) the desirability of a competitive marketplace;
33-22 (4) any harm to the protesting franchised dealer; and
33-23 (5) the public interest.
33-24 (d) A franchised dealer shall have standing under Subsection
33-25 (c) of this section to protest an application to establish or
33-26 relocate a dealership if the person filing the protest:
33-27 (1) is a franchised dealer of the same line-make whose
34-1 dealership is located in the county in which the proposed
34-2 dealership site is to be located; or
34-3 (2) is a franchised dealer of the same line-make whose
34-4 dealership is located within a 15 mile radius of the proposed
34-5 dealership site.
34-6 (e) Notwithstanding the terms [provisions] of Subsection (d)
34-7 of this section, the relocation of a dealership is not subject to
34-8 protest by a franchised dealer:
34-9 (1) if the proposed relocation site is not farther
34-10 than one mile from the site from which the dealership is being
34-11 relocated; or
34-12 (2) whose dealership is not closer to the proposed
34-13 location than it is to the location from which the relocated
34-14 dealership is being relocated.
34-15 (f) The revocation or suspension of a manufacturer's or
34-16 distributor's license may be limited to one or more municipalities
34-17 or counties or any other defined area, or may be revoked or
34-18 suspended in a defined area only as to certain aspects of its
34-19 business, or as to a specified franchised dealer or franchised
34-20 dealers.
34-21 (g) No license shall be denied, revoked, or suspended, or
34-22 disciplinary action taken under this section, except on order of
34-23 the board [Commission] after a hearing. The board [Commission] may
34-24 inspect the books and records of a licensee in connection with the
34-25 performance of its duties under this Act.
34-26 (h) If a suspension of a license is probated, the board
34-27 [Commission] may:
35-1 (1) require the licensee to report regularly to the
35-2 board [Commission] on matters that are the basis of the probation;
35-3 or
35-4 (2) limit activities to those prescribed by the board
35-5 [Commission].
35-6 SECTION 27. Section 5.01, Texas Motor Vehicle Commission
35-7 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
35-8 to read as follows:
35-9 Sec. 5.01. Franchised dealers. It is unlawful for any
35-10 franchised dealer to:
35-11 (1) Require a retail purchaser of a new motor vehicle
35-12 as a condition of sale and delivery thereof to purchase special
35-13 features, equipment, parts, or accessories not ordered or desired
35-14 by the purchaser, provided such features, equipment, parts, or
35-15 accessories are not already installed on the new motor vehicle at
35-16 the time of sale.
35-17 (2) Fail to perform the obligations placed on the
35-18 selling franchised dealer in connection with the delivery and
35-19 preparation of a new motor vehicle for retail sale as provided in
35-20 the manufacturer's preparation and delivery agreements on file with
35-21 the Commission and applicable to such vehicle.
35-22 (3) Fail to perform the obligations placed on the
35-23 franchised dealer in connection with the manufacturer's warranty
35-24 agreements on file with the Commission.
35-25 (4) Operate without appropriate signs readily and
35-26 easily visible to the public, identifying the franchised dealer's
35-27 place of business and the products the franchised dealer offers for
36-1 sale. In the event of a conflict with another law or ordinance,
36-2 this Subdivision prevails, and in the event of a dispute, the Board
36-3 has exclusive jurisdiction to determine whether a sign or signs are
36-4 in compliance with the terms of this Subdivision. In the event of
36-5 a dispute, the Board shall uphold local ordinances of a home-rule
36-6 city and protect franchised dealers from retribution by
36-7 manufacturers or distributors for having complied with local
36-8 ordinances.
36-9 (5) [(7)] Directly or indirectly pay a fee to a lessor
36-10 or lease facilitator.
36-11 SECTION 28. Section 5.01A, Texas Motor Vehicle Commission
36-12 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
36-13 to read as follows:
36-14 Sec. 5.01A. Dealers. No dealer may:
36-15 (1) use false, deceptive, or misleading advertising;
36-16 (2) [operate as a dealer without a currently valid
36-17 license or general distinguishing number issued by the Board;]
36-18 [(3)] violate a rule of the Board; or
36-19 (3) [(4)] aid or abet a person who violates this Act.
36-20 SECTION 29. The Texas Motor Vehicle Commission Code (Article
36-21 4413(36), Vernon's Texas Civil Statutes) is amended by adding
36-22 Section 5.01B to read as follows:
36-23 Sec. 5.01B. TRANSFER OF OWNERSHIP BY DEALER; REJECTION;
36-24 HEARING. (a) In order to transfer, assign, or sell a franchise
36-25 agreement or controlling interest in the dealership to another
36-26 person, a dealer shall notify the manufacturer or distributor whose
36-27 vehicles the dealer is franchised to sell of the dealer's decision
37-1 to transfer, assign, or sell the dealership. The notification
37-2 required by this subsection must be by certified mail, return
37-3 receipt requested, and is the application by the dealer for
37-4 approval by the manufacturer or distributor of the transfer. The
37-5 notice must be in writing and must include:
37-6 (1) the prospective transferee's name, address,
37-7 financial qualifications, and business experience;
37-8 (2) a copy of pertinent agreements regarding the
37-9 proposed transfer, assignment, or sale;
37-10 (3) completed application forms and related
37-11 information generally utilized by the manufacturer or distributor
37-12 in reviewing prospective dealers, if the forms are on file with the
37-13 board; and
37-14 (4) the prospective transferee's written agreement to
37-15 comply with the terms of the franchise agreement to the extent that
37-16 the franchise agreement is not in conflict with the terms of this
37-17 Act.
37-18 (b) Not later than the 60th day after receiving notice and
37-19 application as provided by Subsection (a) of this section, a
37-20 manufacturer or distributor shall determine whether or not the
37-21 dealer's prospective transferee is qualified and shall send a
37-22 letter by certified mail, return receipt requested, informing the
37-23 dealer of the approval of the prospective transferee or the
37-24 unacceptability of the prospective transferee. If the prospective
37-25 transferee is not acceptable, the manufacturer or distributor shall
37-26 include a statement setting forth the material reasons for the
37-27 rejection. An application filed by a dealer as provided by
38-1 Subsection (a) of this section is approved unless rejected by the
38-2 manufacturer or distributor in the manner provided by this
38-3 subsection.
38-4 (c) Approval by a manufacturer or distributor of an
38-5 application filed under Subsection (a) of this section may not be
38-6 unreasonably withheld. It is unreasonable for a manufacturer or
38-7 distributor to reject a prospective transferee who is of good moral
38-8 character and who otherwise meets the manufacturer's or
38-9 distributor's written, reasonable, and uniformly applied standards
38-10 or qualifications, if any, relating to the prospective
38-11 transferee's:
38-12 (1) business experience; and
38-13 (2) financial qualifications.
38-14 (d) A dealer whose application to transfer is rejected may
38-15 file a protest with the board in the manner provided by this Act.
38-16 In an action brought under this subsection, the burden is on the
38-17 manufacturer or distributor to prove that the prospective
38-18 transferee is not qualified. A protest filed under this subsection
38-19 is a contested case.
38-20 (e) The issue in an action filed under this section is
38-21 whether or not the prospective transferee is qualified. The board
38-22 shall enter an order holding that the prospective transferee either
38-23 is qualified or is not qualified. If the board's order is that the
38-24 prospective transferee is qualified, the dealer's franchise
38-25 agreement is amended to reflect the change in franchisee and the
38-26 manufacturer or distributor shall accept the transfer for all
38-27 purposes. If the board's order is that the prospective transferee
39-1 is not qualified, the board may include specific reasons why the
39-2 prospective transferee is not qualified and may include specific
39-3 conditions under which the prospective transferee would be
39-4 qualified.
39-5 (f) If the board's order that a prospective transferee is
39-6 not qualified includes specific conditions under which the
39-7 prospective transferee would be qualified, the board may retain
39-8 jurisdiction of the dispute for a time certain to allow the dealer
39-9 and prospective transferee to meet the conditions set forth.
39-10 SECTION 30. Section 5.02(b), Texas Motor Vehicle Commission
39-11 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
39-12 to read as follows:
39-13 (b) It is unlawful for any manufacturer, distributor, or
39-14 representative to:
39-15 (1) Require or attempt to require any dealer to order,
39-16 accept delivery of or pay anything of value, directly or
39-17 indirectly, for any motor vehicle, appliance, part, accessory or
39-18 any other commodity unless voluntarily ordered or contracted for by
39-19 such dealer.
39-20 (2) Refuse or fail to deliver, in reasonable
39-21 quantities and within a reasonable time, to a dealer having a
39-22 franchise agreement for the retail sale of any motor vehicles sold
39-23 or distributed by such manufacturer, distributor, or
39-24 representative, any new motor vehicle or parts or accessories to
39-25 new motor vehicles as are covered by such franchise if such
39-26 vehicle, parts or accessories are publicly advertised as being
39-27 available for delivery or are actually being delivered; provided,
40-1 however, this provision is not violated if such failure is caused
40-2 by acts of God, work stoppage or delays due to strikes or labor
40-3 disputes, freight embargoes or other causes beyond the control of
40-4 the manufacturer, distributor, or representative.
40-5 (3) Notwithstanding the terms of any franchise
40-6 agreement:
40-7 (A) Terminate or refuse to continue any
40-8 franchise with a dealer or directly or indirectly force or attempt
40-9 to force a dealer to discontinue a line-make or parts or products
40-10 related to that line-make unless all of the following conditions
40-11 are met:
40-12 (i) the dealer and the board [Commission]
40-13 have received written notice by registered or certified mail from
40-14 the manufacturer, distributor, or representative not less than 60
40-15 days before the effective date of termination or noncontinuance
40-16 setting forth the specific grounds for termination or
40-17 noncontinuance; and
40-18 (ii) the written notice contains on the
40-19 first page thereof a conspicuous statement which reads as follows:
40-20 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
40-21 TEXAS MOTOR VEHICLE BOARD [COMMISSION] IN AUSTIN, TEXAS, AND HAVE A
40-22 HEARING IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR
40-23 NONCONTINUANCE OF YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR
40-24 VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
40-25 (iii) the manufacturer, distributor, or
40-26 representative has received the informed, written consent of the
40-27 affected dealer or the appropriate period for the affected dealer
41-1 to protest the proposed franchise termination or noncontinuance has
41-2 lapsed; or
41-3 (iv) if the affected dealer files a
41-4 protest with the board [Commission] within the greater of (1) 60
41-5 days after receiving its 60-day notice of proposed termination or
41-6 noncontinuance or (2) the time specified in such notice, the board
41-7 [Commission] determines that the party seeking to terminate or not
41-8 continue a dealer's franchise has established by a preponderance of
41-9 the evidence, at a hearing called by the board [Commission], that
41-10 there is good cause for the proposed termination or noncontinuance.
41-11 (v) Notwithstanding Subdivisions (3)(A)(i)
41-12 and (3)(A)(iv) of this section, notice may be made not less than 15
41-13 days prior to the effective date of termination or noncontinuance
41-14 if a licensed dealer fails to conduct its customary sales and
41-15 service operations during its customary business hours for seven
41-16 consecutive business days unless such failure is caused by an act
41-17 of God, work stoppage or delays due to strikes or labor disputes,
41-18 an order of the board [Commission], or other causes beyond the
41-19 control of the dealer.
41-20 (B) Whenever a dealer files a timely protest to
41-21 a proposed franchise termination or noncontinuance, the board
41-22 [Commission] shall notify the party seeking to terminate or to not
41-23 continue the protesting dealer's franchise that a timely protest
41-24 has been filed, that a hearing is required in accordance with this
41-25 Act, and that the party who gave the dealer notice of termination
41-26 or noncontinuance of the franchise may not terminate or refuse to
41-27 continue the franchise until the board [Commission] issues its
42-1 final decision or order.
42-2 (C) If a franchise is terminated or not
42-3 continued, another franchise in the same line-make will be
42-4 established within a reasonable time unless it is shown to the
42-5 board [Commission] by a preponderance of the evidence that the
42-6 community or trade area cannot reasonably support such a
42-7 dealership. If this showing is made, no dealer license shall be
42-8 thereafter issued in the same area unless a change in circumstances
42-9 is established.
42-10 (4) Notwithstanding the terms of any franchise
42-11 agreement, modify or replace a franchise [with a succeeding
42-12 franchise] if the modification or replacement would adversely
42-13 affect, to a substantial degree, the dealer's sales, investment, or
42-14 obligations to provide service to the public, unless the
42-15 manufacturer, distributor, or representative has first given the
42-16 board [Commission] and each affected dealer written notice by
42-17 registered or certified mail of any such action 60 days in advance
42-18 of the modification or replacement. The written notice shall
42-19 contain on the first page thereof a conspicuous statement which
42-20 reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE
42-21 A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD [COMMISSION] IN
42-22 AUSTIN, TEXAS, AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE
42-23 PROPOSED MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE [WITH A
42-24 SUCCEEDING FRANCHISE] UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
42-25 COMMISSION CODE IF YOU OPPOSE THIS ACTION." Within the greater of
42-26 (1) 60 days after receipt of such notice or (2) the time specified
42-27 in such notice, a dealer may file a protest with the board
43-1 [Commission] and the modification or replacement shall not become
43-2 effective unless and until the board [Commission] determines that
43-3 the party seeking to modify or replace a franchise [with a
43-4 succeeding franchise] has demonstrated by a preponderance of the
43-5 evidence that there is good cause for the modification or
43-6 replacement. The prior franchise shall continue in effect until
43-7 the protest is resolved by the board [Commission].
43-8 (5) Notwithstanding the terms of any franchise
43-9 agreement, in determining whether good cause has been established
43-10 for modifying, replacing, terminating, or refusing to continue a
43-11 franchise, or for forcing or attempting to force a dealer to
43-12 discontinue a line-make or parts or products related to that
43-13 line-make, the board [Commission] shall consider all the existing
43-14 circumstances including, without limitation by the enumeration
43-15 herein, all the following:
43-16 (A) the dealer's sales in relation to the sales
43-17 in the market;
43-18 (B) the dealer's investment and obligations;
43-19 (C) injury to the public welfare;
43-20 (D) the adequacy of the dealer's service
43-21 facilities, equipment, parts, and personnel in relation to those of
43-22 other dealers of new motor vehicles of the same line-make;
43-23 (E) whether warranties are being honored by the
43-24 dealer;
43-25 (F) the parties' compliance with their franchise
43-26 agreement except to the extent that the franchise agreement is in
43-27 conflict with this Act; and
44-1 (G) the enforceability of the franchise
44-2 agreement from a public policy standpoint, including, without
44-3 limitation, issues of the reasonableness of the franchise
44-4 agreement's terms, oppression, adhesion, and the relative
44-5 bargaining power of the parties.
44-6 Good cause shall not be shown solely by the desire of a
44-7 manufacturer, distributor, or representative for market
44-8 penetration.
44-9 (6) Use any false, deceptive or misleading
44-10 advertising.
44-11 (7) Notwithstanding the terms of any franchise
44-12 agreement, prevent any dealer from reasonably changing the capital
44-13 structure of his dealership or the means by or through which he
44-14 finances the operation thereof, provided that the dealer meets
44-15 reasonable capital requirements.
44-16 (8) Notwithstanding the terms of any franchise
44-17 agreement, fail to give effect to or attempt to prevent any sale or
44-18 transfer of a dealer, dealership or franchise or interest therein
44-19 or management thereof except as provided by Section 5.01B [unless,
44-20 after complaint or protest, it is demonstrated to the Commission
44-21 after hearing that the result of any such sale or transfer will be
44-22 detrimental to the public or the representation of the manufacturer
44-23 or distributor].
44-24 (9) Notwithstanding the terms of any franchise
44-25 agreement, require or attempt to require that a dealer assign to or
44-26 act as an agent for any manufacturer, distributor or representative
44-27 in the securing of promissory notes and security agreements given
45-1 in connection with the sale or purchase of new motor vehicles or
45-2 the securing of policies of insurance on or having to do with the
45-3 operation of vehicles sold.
45-4 (10) Notwithstanding the terms of any franchise
45-5 agreement, fail or refuse, after complaint and hearing, to perform
45-6 the obligations placed on the manufacturer in connection with the
45-7 delivery, preparation and warranty of a new motor vehicle as
45-8 provided in the manufacturer's warranty, preparation, and delivery
45-9 agreements on file with the board [Commission].
45-10 (11) Notwithstanding the terms of any franchise
45-11 agreement, fail to compensate its dealers for the work and services
45-12 they are required to perform in connection with the dealer's
45-13 delivery and preparation obligations according to the agreements on
45-14 file with the board [Commission] which must be found by the board
45-15 [Commission] to be reasonable, or fail to adequately and fairly
45-16 compensate its dealers for labor, parts and other expenses incurred
45-17 by such dealer to perform under and comply with a manufacturer's or
45-18 a distributor's warranty agreement, or require, as a prerequisite
45-19 to the manufacturer's or distributor's payment of a claim for
45-20 reimbursement as required by this section, that a dealer file with
45-21 the manufacturer or distributor the actual time spent in the
45-22 performance of labor unless actual time is the basis for
45-23 reimbursement. In no event shall any manufacturer or distributor
45-24 pay its dealers an amount of money for warranty work that is less
45-25 than that charged by the dealer to the retail customers of the
45-26 dealer for nonwarranty work of like kind. All claims made by
45-27 dealers for compensation for delivery, preparation, and warranty
46-1 work shall be paid within 30 days after approval and shall be
46-2 approved or disapproved within 30 days after receipt. When any
46-3 claim is disapproved, the dealer shall be notified in writing of
46-4 the grounds for disapproval. No claim which has been approved and
46-5 paid may be charged back to the dealer unless it can be shown that
46-6 the claim was false or fraudulent, that the repairs were not
46-7 properly made or were unnecessary to correct the defective
46-8 condition, or that the dealer failed to reasonably substantiate the
46-9 claim in accordance with reasonable written requirements of the
46-10 manufacturer or distributor, if the dealer has been notified of the
46-11 requirements prior to the time the claim arose, and if the
46-12 requirements were in effect at the time the claim arose. A
46-13 manufacturer or distributor may not audit a claim after the
46-14 expiration of two years following the submission of the claim
46-15 unless the manufacturer or distributor has reasonable grounds to
46-16 suspect that a claim was fraudulent. Notwithstanding the terms of
46-17 a franchise agreement or provision of law in conflict with this
46-18 section, the dealer's delivery, preparation, and warranty
46-19 obligations as filed with the board [Commission] shall constitute
46-20 the dealer's sole responsibility for product liability as between
46-21 the dealer and manufacturer or distributor, and, except for a loss
46-22 caused by the dealer's failure to adhere to these obligations, a
46-23 loss caused by the dealer's negligence or intentional misconduct,
46-24 or a loss caused by the dealer's modification of a product without
46-25 manufacturer or distributor authorization, the manufacturer or
46-26 distributor shall reimburse the dealer for all loss incurred by the
46-27 dealer, including legal fees, court costs, and damages, as a result
47-1 of the dealer having been named a party in a product liability
47-2 action.
47-3 (12) Operate as a manufacturer, distributor, or
47-4 representative without a currently valid license from the board
47-5 [Commission] or otherwise violate this Act or rules promulgated by
47-6 the board [Commission] hereunder.
47-7 (13) Notwithstanding the terms of any franchise
47-8 agreement, to prevent or refuse to honor the succession to a
47-9 dealership by any legal heir or devisee under the will of a dealer
47-10 or under the laws of descent and distribution of this State unless
47-11 it is shown to the board [Commission], after notice and hearing,
47-12 that the result of such succession will be detrimental to the
47-13 public interest and to the representation of the manufacturer or
47-14 distributor; provided, however, nothing herein shall prevent a
47-15 dealer, during his lifetime, from designating any person as his
47-16 successor dealer, by written instrument filed with the manufacturer
47-17 or distributor.
47-18 (14) Notwithstanding the terms of any franchise
47-19 agreement, require that a dealer pay or assume, directly or
47-20 indirectly, any part of any refund, rebate, discount, or other
47-21 financial adjustment made by the manufacturer, distributor, or
47-22 representative to, or in favor of, any customer of a dealer, unless
47-23 voluntarily agreed to by such dealer.
47-24 (15) Notwithstanding the terms of any franchise
47-25 agreement, deny or withhold approval of a written application to
47-26 relocate a franchise unless (A) the applicant has received written
47-27 notice of the denial or withholding of approval within 60 days
48-1 after receipt of the application containing information reasonably
48-2 necessary to enable the manufacturer or distributor to adequately
48-3 evaluate the application, and if (B) the applicant files a protest
48-4 with the board [Commission] and the manufacturer or distributor
48-5 establishes by a preponderance of the evidence at a hearing called
48-6 by the board [Commission] that the grounds for the denial or
48-7 withholding of approval of the relocation are reasonable.
48-8 (16) Notwithstanding the terms of any franchise
48-9 agreement, fail to pay to a dealer or any lienholder in accordance
48-10 with their respective interest after the termination of a
48-11 franchise:
48-12 (A) the dealer cost of each new motor vehicle in
48-13 the dealer's inventory with mileage of 6,000 miles or less, reduced
48-14 by the net discount value of each, where "net discount value" is
48-15 determined according to the following formula: net cost multiplied
48-16 by total mileage divided by 100,000, and where "net cost" equals
48-17 the dealer cost plus any charges by the manufacturer, distributor,
48-18 or representative for distribution, delivery, and taxes, less all
48-19 allowances paid to the dealer by the manufacturer, distributor, or
48-20 representative for new, unsold, undamaged, and complete motor
48-21 vehicles of current model year or one year prior model year in the
48-22 dealer's inventory, except that if a vehicle cannot be reduced by
48-23 the net discount value, the manufacturer or distributor shall pay
48-24 the dealer the net cost of the vehicle;
48-25 (B) the dealer cost of each new, unused,
48-26 undamaged, and unsold part or accessory if the part or accessory is
48-27 in the current parts catalogue and is still in the original,
49-1 resalable merchandising package and in unbroken lots, except that
49-2 in the case of sheet metal, a comparable substitute for the
49-3 original package may be used, and if the part or accessory was
49-4 purchased by the dealer either directly from the manufacturer or
49-5 distributor or from an outgoing authorized dealer as a part of the
49-6 dealer's initial inventory;
49-7 (C) the fair market value of each undamaged sign
49-8 owned by the dealer which bears a trademark or tradename used or
49-9 claimed by the manufacturer, distributor, or representative if the
49-10 sign was purchased from or purchased at the request of the
49-11 manufacturer, distributor, or representative;
49-12 (D) the fair market value of all special tools,
49-13 data processing equipment, and automotive service equipment owned
49-14 by the dealer which were recommended in writing and designated as
49-15 special tools and equipment and purchased from or purchased at the
49-16 request of the manufacturer, distributor, or representative, if the
49-17 tools and equipment are in usable and good condition except for
49-18 reasonable wear and tear;
49-19 (E) the cost of transporting, handling, packing,
49-20 storing, and loading of any property subject to repurchase under
49-21 this section;
49-22 (F) except as provided by this subdivision, any
49-23 sums due as provided by Paragraph (A) of this subdivision within 60
49-24 days after termination of a franchise and any sums due as provided
49-25 by Paragraphs (B) through (E) of this subdivision within 90 days
49-26 after termination of a franchise. As a condition of payment, the
49-27 dealer is to comply with reasonable requirements with respect to
50-1 the return of inventory as are set out in the terms of the
50-2 franchise agreement. A manufacturer or distributor shall
50-3 reimburse a dealer for the dealer's cost for storing any property
50-4 covered by this subdivision beginning 90 days following
50-5 termination. A manufacturer or distributor shall reimburse a
50-6 dealer for the dealer's cost of storing any property covered by
50-7 this subdivision before the expiration of 90 days from the date of
50-8 termination if the dealer notifies the manufacturer or distributor
50-9 of the commencement of storage charges within that period. On
50-10 receipt of notice of the commencement of storage charges, a
50-11 manufacturer or distributor may immediately take possession of the
50-12 property in question by repurchasing the property as provided by
50-13 this subdivision. A manufacturer, distributor, or representative
50-14 who fails to pay those sums within the prescribed time or at such
50-15 time as the dealer and lienholder, if any, proffer good title prior
50-16 to the prescribed time for payment, is liable to the dealer for:
50-17 (i) the greatest of dealer cost, fair
50-18 market value, or current price of the inventory;
50-19 (ii) interest on the amount due calculated
50-20 at the rate applicable to a judgment of a court; and
50-21 (iii) reasonable attorney's fees and
50-22 costs.
50-23 (17) Notwithstanding the terms of any franchise
50-24 agreement, change its distributor, its method of distribution of
50-25 its products in this state, or its business structure or ownership
50-26 in a manner that results in the termination or noncontinuance of a
50-27 franchise without good cause. The manufacturer, distributor, or
51-1 representative shall issue the same notice to the dealer and to the
51-2 board [Commission] as is provided in Subdivisions (3)(A) and (B) of
51-3 this section and said same procedures shall apply to the parties.
51-4 (18) Notwithstanding the terms of any franchise
51-5 agreement, require a dealer to submit to arbitration on any issue
51-6 unless the dealer and the manufacturer, distributor, or
51-7 representative and their respective counsel agree to arbitrate
51-8 after a controversy arises. The arbitrator shall apply the
51-9 provisions of this Act in resolving the pertinent controversy.
51-10 Either party may appeal to the board [Commission] a decision of an
51-11 arbitrator on the ground that the arbitrator failed to apply this
51-12 Act.
51-13 (19) Notwithstanding the terms of any franchise
51-14 agreement, require that a dealer join, contribute to, or affiliate
51-15 with, directly or indirectly, any advertising association.
51-16 (20) Notwithstanding the terms of a franchise
51-17 agreement:
51-18 (A) require adherence to unreasonable sales or
51-19 service standards;
51-20 (B) directly or indirectly, discriminate against
51-21 a dealer or otherwise treat dealers differently as a result of a
51-22 formula or other calculation or process intended to gauge the
51-23 performance of a dealership[, except a sales contest or other
51-24 recognition program based on reasonable sales and service
51-25 criteria];
51-26 (C) unreasonably require that a dealer purchase
51-27 special tools or equipment; or
52-1 (D) fail to compensate a dealer for all costs
52-2 incurred by the dealer as required by the manufacturer in complying
52-3 with the terms of a product recall by the manufacturer or
52-4 distributor, including the costs, if any, incurred by the dealer in
52-5 notifying vehicle owners of the existence of the recall.
52-6 (21) Discriminate unreasonably between or among
52-7 franchisees in the sale of a motor vehicle owned by the
52-8 manufacturer or distributor.
52-9 (22) Directly or indirectly, or through a subsidiary
52-10 or agent, require, as a condition for obtaining financing for a
52-11 motor vehicle, the purchaser of a vehicle to purchase any product
52-12 other than the motor vehicle from the manufacturer or distributor,
52-13 or from an entity owned or controlled by the manufacturer or
52-14 distributor.
52-15 (23) Directly or indirectly, or through a subsidiary
52-16 or agent, require, as a condition of its or its subsidiary's
52-17 agreement to provide financing for a motor vehicle, that any
52-18 insurance policy or service contract purchased by the motor vehicle
52-19 purchaser be purchased from a specific source.
52-20 (24) Compel a dealer through a financing subsidiary of
52-21 the manufacturer or distributor to agree to unreasonable operating
52-22 requirements or directly or indirectly to terminate a dealer
52-23 through the actions of a financing subsidiary of the manufacturer
52-24 or distributor. This subdivision does not limit the right of a
52-25 financing entity to engage in business practices in accordance with
52-26 the usage of trade in retail and wholesale motor vehicle financing.
52-27 (25) Operate as a dealer except on a temporary basis
53-1 and only if:
53-2 (A) the dealership was previously owned by a
53-3 franchised dealer and is currently for sale at a reasonable price;
53-4 or
53-5 (B) the manufacturer, distributor, or
53-6 representative operates the dealership in a bona fide relationship
53-7 with a franchised dealer who is required to make a significant
53-8 investment in the dealership, subject to loss, and who reasonably
53-9 expects to acquire full ownership of the dealership under
53-10 reasonable terms and conditions.
53-11 (26) Notwithstanding the terms of a franchise
53-12 agreement, deny or withhold approval of a dealer's application to
53-13 add a line-make or parts or products related to that line-make
53-14 unless, within 60 days of receipt of the dealer's written
53-15 application to add the line-make, the manufacturer or distributor
53-16 gives the dealer written notice of the denial or withholding of
53-17 approval. After receipt of notice, the dealer may file a protest
53-18 with the board [Commission]. If the dealer files a protest as
53-19 provided by this subdivision, the board [Commission] may uphold the
53-20 manufacturer's or distributor's decision to deny or withhold
53-21 approval of the addition of the line-make only if the manufacturer
53-22 or distributor proves by a preponderance of the evidence that the
53-23 denial or withholding of approval was reasonable. In determining
53-24 whether or not the manufacturer or distributor has met its burden
53-25 to show that its denial or withholding of approval is reasonable,
53-26 the board [Commission] shall consider all existing circumstances,
53-27 including, without limitation, the following:
54-1 (A) the dealer's sales in relation to the sales
54-2 in the market;
54-3 (B) the dealer's investment and obligations;
54-4 (C) injury to the public welfare;
54-5 (D) the adequacy of the dealer's sales and
54-6 service facilities, equipment, parts, and personnel in relation to
54-7 those of other dealers of new motor vehicles of the same line-make;
54-8 (E) whether warranties are being honored by the
54-9 dealer agreement;
54-10 (F) the parties' compliance with their franchise
54-11 agreement to the extent that the franchise agreement is not in
54-12 conflict with this Act;
54-13 (G) the enforceability of the franchise
54-14 agreement from a public policy standpoint, including without
54-15 limitation, issues of the reasonableness of the franchise
54-16 agreement's terms, oppression, adhesion, and the relative
54-17 bargaining power of the parties;
54-18 (H) whether the dealer complies with reasonable
54-19 capitalization requirements or will be able to comply with
54-20 reasonable capitalization requirements within a reasonable time;
54-21 (I) the harm, if any, to the manufacturer if the
54-22 denial or withholding of approval is not upheld; and
54-23 (J) the harm, if any, to the dealer if the
54-24 denial or withholding of approval is upheld.
54-25 (27) Fail or refuse to offer to its same line-make
54-26 franchised dealers all models manufactured for that line-make, or
54-27 require a dealer to pay any extra fee, purchase unreasonable
55-1 advertising displays or other materials, or remodel, renovate, or
55-2 recondition the dealer's existing facilities as a prerequisite to
55-3 receiving a model or series of vehicles.
55-4 (28) Require a dealer to compensate the manufacturer
55-5 or distributor for any court costs, attorney's fees, or other
55-6 expenses incurred in an administrative or civil proceeding arising
55-7 under this Act, except that this subdivision does not prohibit a
55-8 manufacturer and dealer from entering into an agreement to share
55-9 costs in a proceeding in which the dealer and manufacturer have the
55-10 same or similar interests.
55-11 SECTION 31. Section 6.02, Texas Motor Vehicle Commission
55-12 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
55-13 to read as follows:
55-14 Sec. 6.02. INJUNCTION. Whenever it appears that a person
55-15 has violated, is violating, or is threatening to violate any
55-16 provision of this Act or of any rule or order of the board
55-17 [Commission] issued pursuant to this Act [then] the board
55-18 [Commission], or the [Executive] Director when authorized by the
55-19 board [Commission], may cause a suit to be instituted in any court
55-20 for injunctive relief to restrain any such person from continuing
55-21 the violation or threat of violation or for the assessment and
55-22 recovery of a civil penalty as provided for in this Act or for both
55-23 injunctive relief and a civil penalty.
55-24 SECTION 32. Section 6.03, Texas Motor Vehicle Commission
55-25 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
55-26 to read as follows:
55-27 Sec. 6.03. SUIT. At the request of the board [Commission],
56-1 or the [Executive] Director when authorized by the board
56-2 [Commission], the Attorney General shall institute and conduct a
56-3 suit in the name of the State of Texas for injunctive relief or to
56-4 recover a civil penalty or for both injunctive relief and penalty.
56-5 SECTION 33. Section 6.06, Texas Motor Vehicle Commission
56-6 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
56-7 by adding Subsection (g) to read as follows:
56-8 (g) A writ of error is allowed from the supreme court for an
56-9 appeal from an interlocutory order described by Section 51.014(3)
56-10 or 51.014(6), Civil Practice and Remedies Code, in a civil action
56-11 involving a licensee. The writ of error shall be given precedence
56-12 by the supreme court over other writs of error. The right to writ
56-13 of error appeal is without prejudice to the right of any party to
56-14 seek relief by application for leave to file petition for writ of
56-15 mandamus with respect to the order.
56-16 SECTION 34. Subsections (e), (g), and (j), Section 6.07,
56-17 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
56-18 Texas Civil Statutes), are amended to read as follows:
56-19 (e)(1) The board [Commission] shall adopt rules for the
56-20 enforcement and implementation of this section.
56-21 (2) The [Executive] Director shall, in accordance with
56-22 rules adopted by the board [Commission], conduct hearings and issue
56-23 final orders for the enforcement and implementation of this
56-24 section. Orders issued by the [Executive] Director under this
56-25 section are considered final orders of the board [Commission].
56-26 (3) Except as provided by Subdivision (6) of this
56-27 subsection, the provisions of this section are not available to an
57-1 owner in an action seeking a refund or replacement based upon the
57-2 alleged nonconformity of a motor vehicle to an express warranty
57-3 applicable to the motor vehicle unless the owner has first
57-4 exhausted the administrative remedies provided herein.
57-5 (4) The provisions of this section are not available
57-6 to a party in an action against a seller under Chapter 2 or Chapter
57-7 17, Business & Commerce Code, as amended.
57-8 (5) Except as provided by Subdivision (6) of this
57-9 subsection, the provisions of this section are available in an
57-10 action against a manufacturer, converter, or distributor brought
57-11 under Chapter 17, Business & Commerce Code, after the owner has
57-12 exhausted the administrative remedies provided by this section.
57-13 (6) If, after a complaint has been filed under this
57-14 section, the Hearing Examiner has not issued a proposal for
57-15 decision and recommended to the [Executive] Director a final order
57-16 before the expiration of the 150th day after the date the complaint
57-17 was filed, the [Executive] Director shall, in writing sent by
57-18 certified mail, so inform the complainant and the manufacturer,
57-19 converter, or distributor of the expiration of the 150-day period
57-20 and of the complainant's right to file a civil action. The board
57-21 [Commission] shall extend the 150-day period if a delay is
57-22 requested or is caused by the complainant.
57-23 (7) After receipt of the notice of the right to file a
57-24 civil action, the complainant may file a civil action against one
57-25 or more of the persons complained of in the complaint.
57-26 (8) A failure by the board [Commission] to issue a
57-27 notice of the right to file a civil action does not affect a
58-1 complainant's right to bring an action under this Act.
58-2 (9) Any party to a proceeding under this section
58-3 before the [Executive] Director that is affected by a final order
58-4 of the [Executive] Director is entitled to judicial review of the
58-5 order under the substantial evidence rule in a District Court of
58-6 Travis County, Texas. The judicial review is subject to Chapter
58-7 2001, Government Code, [the Administrative Procedure and Texas
58-8 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)]
58-9 except to the extent that that Act is inconsistent with this Act.
58-10 (g) In a hearing under this section, the [Executive]
58-11 Director shall make its order with respect to responsibility for
58-12 payment of the cost of any refund or replacement and no
58-13 manufacturer, converter, or distributor may cause any franchised
58-14 dealer to pay directly or indirectly any sum not specifically so
58-15 ordered by the [Executive] Director. If the [Executive] Director
58-16 orders a manufacturer, converter, or distributor to refund or
58-17 replace a motor vehicle because it meets the criteria set forth in
58-18 this section, the [Executive] Director may order the franchised
58-19 dealer to reimburse the owner, lienholder, manufacturer, converter,
58-20 or distributor only for items or options added to the vehicle by
58-21 the franchised dealer and only to the extent that one or more of
58-22 such items or options contributed to the defect that served as the
58-23 basis for the [Executive] Director's order of refund or
58-24 replacement. In a case involving a leased vehicle, the [Executive]
58-25 Director may terminate the lease and apportion the allowance for
58-26 use and other allowances or refunds between the lessee and lessor
58-27 of the vehicle.
59-1 (j)(1) A manufacturer, distributor, or converter that has
59-2 been ordered to repurchase or replace a vehicle shall, through its
59-3 franchised dealer, issue a disclosure statement stating that the
59-4 vehicle was repurchased or replaced by the manufacturer,
59-5 distributor, or converter under this section. The disclosure
59-6 statement must accompany the vehicle through the first retail
59-7 purchase. The manufacturer, distributor, or converter must restore
59-8 the cause of the repurchase or replacement to factory
59-9 specifications and issue a new 12-month, 12,000-mile warranty on
59-10 the vehicle. The disclosure statement must include a toll-free
59-11 telephone number of the board [Commission] that will enable a
59-12 purchaser of a repurchased or replaced vehicle to obtain
59-13 information about the condition or defect that was the basis of the
59-14 order for repurchase or replacement. The board [Commission] shall
59-15 adopt rules for the enforcement of this subdivision.
59-16 (2) The board [Commission] shall provide a toll-free
59-17 telephone number for providing information to persons who request
59-18 information about a condition or defect that was the basis for
59-19 repurchase or replacement by an order of the [Executive] Director.
59-20 The board [Commission] shall maintain an effective method of
59-21 providing information to persons who make the requests.
59-22 SECTION 35. Subsections (a), (c), and (d), Section 7.01,
59-23 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
59-24 Texas Civil Statutes), are amended to read as follows:
59-25 (a) Any party to a proceeding before the board [Commission]
59-26 that is affected by a final order, rule, decision, or other final
59-27 action of the board [Commission] is entitled to judicial review of
60-1 any such final board [Commission] action, under the substantial
60-2 evidence rule, in a District Court of Travis County, Texas, or in
60-3 the Court of Appeals for the Third Court of Appeals District, and
60-4 to the extent not inconsistent herewith, pursuant to Chapter 2001,
60-5 Government Code [the Administrative Procedure and Texas Register
60-6 Act (Article 6252-13a, Vernon's Texas Civil Statutes)]. Except as
60-7 otherwise provided by this Act, an appeal [Appeals] initiated in
60-8 the District Courts of Travis County shall be removable to the
60-9 Court of Appeals upon notice of removal to any such district court
60-10 by any party at any time prior to trial in the district court.
60-11 Appeals initiated in or removed to the Court of Appeals shall be
60-12 initiated under Chapter 2001, Government Code, [the Administrative
60-13 Procedure and Texas Register Act] as if initiated in a Travis
60-14 County District Court and shall, upon the filing thereof, be
60-15 thereafter governed by the Texas Rules of Appellate Procedure.
60-16 (c) Citation must be served on the [Executive] Director.
60-17 Citation must also be served on all other parties of record before
60-18 the board [Commission]. For appeals initiated in the Court of
60-19 Appeals, the court shall cause citation to be issued.
60-20 (d) Appeals in which evidence outside the board's
60-21 [Commission's] record is to be taken under Chapter 2001, Government
60-22 Code [Section 19(d)(3), Administrative Procedure and Texas Register
60-23 Act (Article 6252-13a, Vernon's Texas Civil Statutes)], or
60-24 otherwise, shall be initiated in a Travis County District Court, or
60-25 having been initiated in the Court of Appeals, shall be subject to
60-26 remand to a Travis County District Court for proceedings in
60-27 accordance with instructions from the Court of Appeals.
61-1 SECTION 36. Section (9), Article 7.02, Title 79, Revised
61-2 Statutes (Article 5069-7.02, Vernon's Texas Civil Statutes), is
61-3 amended by amending Subsection (b) and adding Subsection (c) to
61-4 read as follows:
61-5 (b) Section (9)(a) of this Article does not apply to:
61-6 (i) a lease;
61-7 (ii) a retail installment transaction for a vehicle to
61-8 be used primarily for purposes other than personal, family, or
61-9 household use;
61-10 (iii) a transaction for which the payment schedule is
61-11 adjusted to the seasonal or irregular income or scheduled payments
61-12 or obligations of the buyer; [or]
61-13 (iv) a transaction of a kind determined by the
61-14 Commissioner as not requiring the protection of the buyer provided
61-15 in Section (9)(a) of this Article; or
61-16 (v) a retail installment transaction for the sale of a
61-17 new vehicle by a seller who is a franchised dealer licensed under
61-18 the Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
61-19 Texas Civil Statutes), in which the buyer is entitled, at the end
61-20 of the term of the retail installment contract, to choose any one
61-21 of the following:
61-22 (A) sell the vehicle back to the holder
61-23 according to a written agreement entered into between the buyer and
61-24 holder concurrently with or as a part of the transaction and under
61-25 which the buyer will be released from liability or obligation for
61-26 the final scheduled payment under the contract on compliance with
61-27 the agreement;
62-1 (B) to pay the final scheduled payment under the
62-2 contract; or
62-3 (C) if the buyer is not in default under the
62-4 contract, to refinance the final scheduled payment with the holder
62-5 for repayment in not less than 24 equal monthly installment
62-6 payments or on other terms agreed to by the buyer and holder at the
62-7 time of refinancing and at a rate of time price differential not to
62-8 exceed the lesser of:
62-9 (1) a rate of time price differential
62-10 equivalent to the maximum rate authorized under Article 7.03 of
62-11 this Title; or
62-12 (2) an annual percentage rate of five
62-13 percent per annum more than the annual percentage rate of the
62-14 original contract.
62-15 (c) A retail installment contract under Section (9)(b)(v)
62-16 shall contain a disclosure that the refinancing may also be for any
62-17 other period of time and payment schedule to which the buyer and
62-18 holder may mutually agree.
62-19 SECTION 37. (a) Notwithstanding the terms of Section
62-20 5.02(b)(25), Texas Motor Vehicle Commission Code (Article 4413(36),
62-21 Vernon's Texas Civil Statutes), a person who, on June 7, 1995,
62-22 held both a motor home dealer's license and a motor home
62-23 manufacturer's license issued pursuant to the terms of the Texas
62-24 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
62-25 Civil Statutes), may hold both a motor home dealer's license and a
62-26 motor home manufacturer's license as those terms are defined by the
62-27 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
63-1 Texas Civil Statutes).
63-2 (b) Subsection (a) of this section authorizes a person to
63-3 operate as a manufacturer and a dealer of no vehicle or type of
63-4 vehicle except a motor home as that term is defined by the Texas
63-5 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
63-6 Civil Statutes).
63-7 SECTION 38. Notwithstanding the terms of Section 2.04, Texas
63-8 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
63-9 Civil Statutes), of the members of the Motor Vehicle Board first
63-10 appointed as a result of the increase in the size of the board to
63-11 nine members, as provided by provisions of this Act amending
63-12 Section 2.02, Texas Motor Vehicle Commission Code (Article
63-13 4413(36), Vernon's Texas Civil Statutes), to terms that begin on
63-14 February 1, 1998, the governor shall appoint:
63-15 (1) one dealer to a term that expires January 31,
63-16 2003;
63-17 (2) one dealer to a term that expires January 31,
63-18 2001; and
63-19 (3) one representative of a manufacturer or
63-20 distributor to a term that expires January 31, 1999.
63-21 SECTION 39. (a) Section 33 of this Act applies to a civil
63-22 action:
63-23 (1) commenced on or after the effective date of this
63-24 Act; or
63-25 (2) commenced before the effective date of this Act
63-26 but pending on the effective date of this Act and in which the
63-27 trial, or any new trial or retrial following motion, or appeal, or
64-1 otherwise, begins on or after the effective date of this Act,
64-2 provided that the application for a writ of error under Section 33
64-3 of this Act must be filed not later than the later of 30 days after
64-4 the effective date of this Act, or the time specified by the Texas
64-5 Rules of Appellate Procedure.
64-6 (b) An action commenced before the effective date of this
64-7 Act and in which the trial or any new trial or retrial is in
64-8 progress on the effective date of this Act is governed by the law
64-9 applicable to the action immediately before the effective date of
64-10 this Act, and that law is continued in effect for that purpose.
64-11 SECTION 40. The importance of this legislation and the
64-12 crowded condition of the calendars in both houses create an
64-13 emergency and an imperative public necessity that the
64-14 constitutional rule requiring bills to be read on three several
64-15 days in each house be suspended, and this rule is hereby suspended,
64-16 and that this Act take effect and be in force from and after its
64-17 passage, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1595 was passed by the House on April
16, 1997, by the following vote: Yeas 145, Nays 0, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 1595 on May 22, 1997, by the following vote: Yeas 131, Nays 0,
1 present, not voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1595 was passed by the Senate, with
amendments, on May 20, 1997, by the following vote: Yeas 31, Nays
0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor