1-1 By: Alexander (Senate Sponsor - Cain) H.B. No. 1595
1-2 (In the Senate - Received from the House April 17, 1997;
1-3 April 18, 1997, read first time and referred to Committee on State
1-4 Affairs; May 18, 1997, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 13, Nays 0; May 18, 1997,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1595 By: Cain
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the regulation of motor vehicle dealers and
1-11 manufacturers.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-14 (Article 4413(36), Vernon's Texas Civil Statutes), as amended by
1-15 Chapters 345 and 357, Acts of the 74th Legislature, Regular
1-16 Session, 1995, is amended to read as follows:
1-17 Sec. 1.03. Definitions. In this Act:
1-18 (1) [(26)] "Ambulance" means a vehicle used
1-19 exclusively for providing emergency medical care to an injured or
1-20 ill person or transporting an injured or ill person, if the vehicle
1-21 provides:
1-22 (A) a driver's compartment;
1-23 (B) a compartment to accommodate an emergency
1-24 medical care technician or paramedic and two injured or ill persons
1-25 so positioned that one of the injured or ill persons can be given
1-26 intensive life-support during transit;
1-27 (C) equipment and supplies for emergency care of
1-28 an injured or ill person where the ill person is located or at the
1-29 scene of an injury-producing incident as well as in transit;
1-30 (D) two-way radio communication capability; and
1-31 (E) equipment for light rescue or extrication
1-32 procedures.
1-33 (2) "Board" means the Motor Vehicle Board of the Texas
1-34 Department of Transportation.
1-35 (3) [(9)] "Broker" means a person who, for a fee,
1-36 commission, or other valuable consideration, arranges or offers to
1-37 arrange a transaction involving the sale, for purposes other than
1-38 resale, of a new motor vehicle, and who is not:
1-39 (A) a franchised dealer or bona fide employee of
1-40 a franchised dealer when acting on behalf of a franchised dealer;
1-41 (B) a representative or bona fide employee of a
1-42 representative when acting on behalf of a representative;
1-43 (C) a distributor or bona fide employee of a
1-44 distributor when acting on behalf of a distributor; or
1-45 (D) at any point in the transaction the bona
1-46 fide owner of the vehicle involved in the transaction.
1-47 (4) [(13)] "Chassis manufacturer" means a person who
1-48 manufactures and produces the frame upon which is mounted the body
1-49 of a motor vehicle.
1-50 (5) [(11)] "Conversion" means a motor vehicle, other
1-51 than a motor home, ambulance, or fire-fighting vehicle, which has
1-52 been substantially modified by a person other than the manufacturer
1-53 or distributor of the chassis of the motor vehicle and which has
1-54 not been the subject of a retail sale.
1-55 (6) [(14)] "Converter" means a person who prior to the
1-56 retail sale of a motor vehicle, assembles, installs, or affixes a
1-57 body, cab, or special equipment to a chassis, or who substantially
1-58 adds, subtracts from, or modifies a previously assembled or
1-59 manufactured motor vehicle.
1-60 (7) [(23)] "Dealer" means a person who holds a general
1-61 distinguishing number issued by the Department pursuant to the
1-62 terms of Chapter 503, Transportation Code [Article 6686, Revised
1-63 Statutes].
1-64 (8) [(24)] "Dealership" means the physical premises
2-1 and business facilities on which a franchised dealer operates his
2-2 business, including the sale and repair of motor vehicles. The
2-3 term includes premises or facilities at which a person engages only
2-4 in the repair of motor vehicles if repairs are performed pursuant
2-5 to the terms of a franchise and a motor vehicle manufacturer's
2-6 warranty.
2-7 (9) [(20)] "Department" means the Texas Department of
2-8 Transportation.
2-9 (10) "Director" means the director of the board.
2-10 (11) [(6)] "Distributor" means any person who
2-11 distributes and/or sells new motor vehicles to franchised dealers
2-12 and who is not a manufacturer.
2-13 (12) "Executive Director" means the Executive Director
2-14 of the Texas Department of Transportation.
2-15 (13) [(27)] "Fire-fighting vehicle" means a motor
2-16 vehicle which has as its sole purpose transporting fire fighters to
2-17 the scene of a fire and providing equipment to fight the fire, if
2-18 the vehicle is built on a truck chassis with a gross carrying
2-19 capacity of at least 10,000 pounds, to which the following have
2-20 been permanently affixed or mounted:
2-21 (A) a water tank with a minimum combined
2-22 capacity of 500 gallons; and
2-23 (B) a centrifugal water pump with a minimum
2-24 capacity of not less than 750 gallons per minute at 150 pounds per
2-25 square inch net pump pressure.
2-26 (14) [(8)] "Franchise" means one or more contracts
2-27 between a franchised dealer as franchisee, and either a
2-28 manufacturer or a distributor as franchisor under which (A) the
2-29 franchisee is granted the right to sell and service new motor
2-30 vehicles manufactured or distributed by the franchisor or only
2-31 service motor vehicles pursuant to the terms of a franchise and a
2-32 manufacturer's warranty; (B) the franchisee as an independent
2-33 business is a component of franchisor's distribution system; (C)
2-34 the franchisee is substantially associated with franchisor's
2-35 trademark, tradename and commercial symbol; (D) the franchisee's
2-36 business is substantially reliant on franchisor for a continued
2-37 supply of motor vehicles, parts, and accessories for the conduct of
2-38 its business; or (E) any right, duty, or obligation granted or
2-39 imposed by this Act is affected. The term includes a written
2-40 communication from a franchisor to a franchisee by which a duty is
2-41 imposed on the franchisee.
2-42 (15) [(4)] "Franchised dealer" means any person who
2-43 holds a franchised motor vehicle dealer's general distinguishing
2-44 number issued by the Department pursuant to the terms of Chapter
2-45 503, Transportation Code [Article 6686, Revised Statutes], and who
2-46 is engaged in the business of buying, selling, or exchanging new
2-47 motor vehicles and servicing or repairing motor vehicles pursuant
2-48 to the terms of a franchise and a manufacturer's warranty at an
2-49 established and permanent place of business pursuant to a franchise
2-50 in effect with a manufacturer or distributor.
2-51 (16) "General distinguishing number" means a dealer
2-52 license issued by the Department pursuant to the terms of Chapter
2-53 503, Transportation Code.
2-54 (17) [(23)] "Lease" means a transfer of the right to
2-55 possession and use of a motor vehicle for a term in excess of 180
2-56 days in return for consideration.
2-57 (18) [(25)] "Lease facilitator" means a person, other
2-58 than a dealer or a bona fide employee of a dealer, or a vehicle
2-59 lessor or a bona fide employee of a vehicle lessor, who:
2-60 (A) holds himself out to any person as a "motor
2-61 vehicle leasing company" or "motor vehicle leasing agent" or uses a
2-62 similar title, for the purpose of soliciting or procuring a person
2-63 to enter into a contract or agreement to become the lessee of a
2-64 vehicle that is not, and will not be, titled in the name of and
2-65 registered to the lease facilitator; or
2-66 (B) otherwise solicits a person to enter into a
2-67 contract or agreement to become a lessee of a vehicle that is not,
2-68 and will not be, titled in the name of and registered to the lease
2-69 facilitator, or who is otherwise engaged in the business of
3-1 securing lessees or prospective lessees of motor vehicles that are
3-2 not, and will not be, titled in the name of and registered to the
3-3 facilitator.
3-4 (19) [(24)] "Lessor" means a person who acquires title
3-5 to a [new] motor vehicle for the purpose of leasing the vehicle to
3-6 another person.
3-7 (20) [(25)] "Licensee" means a person who holds a
3-8 license or general distinguishing number issued by the Board under
3-9 the terms of this Act or Chapter 503, Transportation Code [a
3-10 general distinguishing number issued by the Department pursuant to
3-11 the terms of Article 6686, Revised Statutes].
3-12 (21) [(5)] "Manufacturer" means any person who
3-13 manufactures or assembles new motor vehicles either within or
3-14 without this State.
3-15 (22) [(26)] "Manufacturer's statement of origin" means
3-16 a certificate on a form prescribed by the Department showing the
3-17 original transfer of a new motor vehicle from the manufacturer to
3-18 the original purchaser.
3-19 (23) [(10)] "Motor home" means a motor vehicle which
3-20 is designed to provide temporary living quarters and which:
3-21 (A) is built onto as an integral part of, or is
3-22 permanently attached to, a motor vehicle chassis; and
3-23 (B) contains at least four of the following
3-24 independent life support systems if each is permanently installed
3-25 and designed to be removed only for purposes of repair or
3-26 replacement and meets the standards of the American National
3-27 Standards Institute, Standards for Recreational Vehicles:
3-28 (i) a cooking facility with an on-board
3-29 fuel source;
3-30 (ii) a gas or electric refrigerator;
3-31 (iii) a toilet with exterior evacuation;
3-32 (iv) a heating or air conditioning system
3-33 with an on-board power or fuel source separate from the vehicle
3-34 engine;
3-35 (v) a potable water supply system that
3-36 includes at least a sink, a faucet, and a water tank with an
3-37 exterior service supply connection;
3-38 (vi) a 110-125 volt electric power supply.
3-39 (24) [(12)] "Motor home manufacturer" means a person
3-40 other than the manufacturer of the chassis of a motor vehicle who,
3-41 prior to the retail sale of the motor vehicle, performs
3-42 modifications on the chassis that result in the finished product
3-43 being classified as a motor home.
3-44 (25) [(1)] "Motor vehicle" means:
3-45 (A) every fully self-propelled vehicle which has
3-46 as its primary purpose the transport of a person or persons, or
3-47 property, on a public highway, and having two or more wheels;
3-48 (B) every two or more wheeled fully
3-49 self-propelled, titled vehicle which has as its primary purpose the
3-50 transport of a person or persons or property and is not
3-51 manufactured for use on public streets, roads, or highways; or
3-52 (C) an engine, transmission, or rear axle
3-53 manufactured for installation in a vehicle having as its primary
3-54 purpose the transport of a person or persons or property on a
3-55 public highway and having a gross vehicle weight rating of more
3-56 than 16,000 pounds, whether or not attached to a vehicle chassis.
3-57 (26) [(2)] "New motor vehicle" means a motor vehicle
3-58 which has not been the subject of a "retail sale" without regard to
3-59 the mileage of the vehicle.
3-60 (27) [(22)] "Nonfranchised dealer" means a person[,
3-61 other than a franchised dealer,] who holds an independent motor
3-62 vehicle dealer's general distinguishing number or a wholesale motor
3-63 vehicle dealer's general distinguishing number issued by the
3-64 Department pursuant to the terms of Chapter 503, Transportation
3-65 Code [Article 6686, Revised Statutes].
3-66 (28) [(16)] "Party" means each person or agency named
3-67 or admitted as a party and whose legal rights, duties, or
3-68 privileges are to be determined by the Commission after an
3-69 opportunity for adjudicative hearing.
4-1 (29) [(3)] "Person" means a natural person,
4-2 partnership, corporation, association, trust, estate, or any other
4-3 legal entity.
4-4 (30) [(17)] "Relocation" means the transfer of an
4-5 existing dealership operation to facilities at a different
4-6 location, including a transfer which results in a consolidation or
4-7 dualing of an existing dealer's operation.
4-8 (31) [(7)] "Representative" means any person who is or
4-9 acts as an agent, employee or representative of a manufacturer,
4-10 distributor, or converter who performs any duties in this State
4-11 relating to promoting the distribution and/or sale of new motor
4-12 vehicles or contacts dealers in this State on behalf of a
4-13 manufacturer, distributor, or converter.
4-14 (32) [(18)] "Retail sale" means the sale of a motor
4-15 vehicle except:
4-16 (A) a sale in which the purchaser acquires a
4-17 vehicle for the purpose of resale; or
4-18 (B) a sale of a vehicle that is operated under
4-19 and in accordance with Section 503.061, Transportation Code
4-20 [Article 6686, Revised Statutes].
4-21 (33) [(15)] "Rule" means a statement by the Commission
4-22 of general and future applicability that implements, interprets, or
4-23 prescribes law or policy or describes the organization or
4-24 procedural practice requirements of the Commission. The term
4-25 includes the amendment or repeal of a prior rule, but does not
4-26 include statements concerning only the internal management of the
4-27 Commission which do not affect the rights of a person not connected
4-28 with the Commission.
4-29 (34) [(21)] "Transportation Commission" means the
4-30 Texas Transportation Commission of the Texas Department of
4-31 Transportation.
4-32 (35) [(19)] "Warranty work" means parts, labor, and
4-33 any other expenses incurred by a franchised dealer in complying
4-34 with the terms of a manufacturer's or distributor's warranty.
4-35 SECTION 2. Section 2.01, Texas Motor Vehicle Commission Code
4-36 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
4-37 read as follows:
4-38 Sec. 2.01. Texas Motor Vehicle Board [Commission]. (a) In
4-39 conducting the policy-making and regulatory functions and duties
4-40 imposed on the board by this Act, whether mandatory or
4-41 discretionary, and unless otherwise provided by this Act, the board
4-42 is an independent entity within the department and is not an
4-43 advisory body to the department. The board [Texas Motor Vehicle
4-44 Commission] shall carry out the functions and duties conferred upon
4-45 it by this Act and by other provision of law.
4-46 (b) A reference in this Act to the "commission" or the Texas
4-47 Motor Vehicle Commission means the board [Motor Vehicle Board of
4-48 the Texas Department of Transportation]. A reference in other law,
4-49 rule or regulation to the Texas Motor Vehicle Commission means the
4-50 board [Motor Vehicle Board of the Texas Department of
4-51 Transportation].
4-52 (c) [A reference in this Act to the "Executive Director" or
4-53 the Executive Director of the Texas Motor Vehicle Commission means
4-54 the Director of the Motor Vehicle Division of the Texas Department
4-55 of Transportation.] A reference in other law, rule or regulation
4-56 to the Executive Director of the Texas Motor Vehicle Commission
4-57 means the Director [of the Motor Vehicle Division of the Texas
4-58 Department of Transportation].
4-59 (d) A reference in law, rule or regulation to the Texas
4-60 Motor Vehicle Commission Code means this Act.
4-61 SECTION 3. Section 2.02, Texas Motor Vehicle Commission Code
4-62 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
4-63 read as follows:
4-64 Sec. 2.02. Members of Board. (a) The Motor Vehicle Board
4-65 of the Texas Department of Transportation consists of nine [six]
4-66 persons appointed by the Governor with the advice and consent of
4-67 the Senate.
4-68 (b) The Executive Director is a member of the board ex
4-69 officio. The Executive Director may attend a meeting of the board
5-1 and may confer with and advise the board, the chairman, or the
5-2 director. The Executive Director may not vote on a matter coming
5-3 before the board and is not counted in the determination of a
5-4 quorum at a meeting of the board. Except as provided by this
5-5 subsection, the provisions of this Act relating to members of the
5-6 board do not apply to the Executive Director.
5-7 (c) The membership of the board includes:
5-8 (1) two dealers licensed pursuant to the terms of this
5-9 Act, at least one of whom must be a franchised dealer; and
5-10 (2) one representative of a motor vehicle manufacturer
5-11 or distributor licensed pursuant to the terms of this Act.
5-12 SECTION 4. Section 2.03, Texas Motor Vehicle Commission Code
5-13 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
5-14 read as follows:
5-15 Sec. 2.03. Qualifications of Members. (a) A person is
5-16 eligible to be appointed to the board [Commission] if:
5-17 (1) he is a citizen of the United States and a
5-18 resident of this State; and
5-19 (2) except for a member appointed pursuant to the
5-20 terms of Section 2.02(c), he has no interest in a business that
5-21 manufactures, distributes, converts, leases, or sells motor
5-22 vehicles.
5-23 (b) Except as provided by this section, the [The] office of
5-24 a member is automatically vacated and shall be filled as any other
5-25 vacancy, if:
5-26 (1) the member becomes a licensee under this Act;
5-27 (2) the member acquires an interest in a business that
5-28 manufactures, distributes, converts, leases, or sells motor
5-29 vehicles;
5-30 (3) the member becomes an officer, employee, or paid
5-31 consultant of a trade association in the motor vehicle industry; or
5-32 (4) a person related to the member within the first
5-33 degree by consanguinity or affinity, as determined under Chapter
5-34 573, Government Code [Article 5996h, Revised Statutes], becomes an
5-35 officer, employee, or paid consultant of a trade association in the
5-36 motor vehicle industry, becomes a licensee under this Act, or
5-37 acquires an interest in a business that manufactures, distributes,
5-38 converts, leases, or sells motor vehicles.
5-39 (c) Notwithstanding the terms of Subsection (b) of this
5-40 section, the office of a member appointed to the board pursuant to
5-41 the terms of Section 2.02(c)(1) of this Act is not vacated by
5-42 virtue of the fact that the member, or a person related to the
5-43 member within the first degree by consanguinity or affinity, as
5-44 determined under Chapter 573, Government Code, subsequently
5-45 acquires an interest in a dealership.
5-46 SECTION 5. Section 2.04, Texas Motor Vehicle Commission Code
5-47 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
5-48 read as follows:
5-49 Sec. 2.04. Terms of Members. [(a)] The members of the
5-50 board [Commission] shall hold office for terms of six years, with
5-51 the terms of three [two] members expiring on January 31 of each
5-52 odd-numbered year. No person shall serve two consecutive full
5-53 six-year terms as a member of the board [Commission].
5-54 SECTION 6. Section 2.07, Texas Motor Vehicle Commission Code
5-55 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
5-56 read as follows:
5-57 Sec. 2.07. Per diem; expenses. Each member of the board
5-58 [Commission] shall be entitled to $50.00 per day for each day
5-59 actually engaged in the duties of the office, including time spent
5-60 in necessary travel to and from meetings and otherwise, together
5-61 with all travel and other necessary expenses incurred while
5-62 performing official duties.
5-63 SECTION 7. Section 2.08, Texas Motor Vehicle Commission Code
5-64 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by
5-65 amending Subsection (a) and by adding Subsection (d) to read as
5-66 follows:
5-67 (a) The Governor shall designate one member of the board,
5-68 other than a member appointed pursuant to the terms of Section
5-69 2.02(c) of this Act, [Commission] as Chairman [of the Commission]
6-1 to serve in that capacity at the pleasure of the Governor. The
6-2 board [Commission] shall hold a regular annual meeting in September
6-3 of each year and elect a Vice-chairman to serve for the ensuing
6-4 year. The board [Commission] shall have regular meetings as the
6-5 majority of the members may specify and special meetings at the
6-6 request of the Chairman, any two members, or the [Executive]
6-7 Director. Reasonable notice of all meetings shall be given as
6-8 board [Commission] rules prescribe. A majority of the board
6-9 [Commission] constitutes a quorum to transact business, except that
6-10 a member appointed under Section 2.02 of this Act is not counted in
6-11 the calculation of a quorum for purposes of the determination of an
6-12 issue with respect to which the member is prohibited from voting.
6-13 The Chairman, or in his absence, the Vice-chairman, shall preside
6-14 at all meetings of the board [Commission]. In the absence of both
6-15 the Chairman and the Vice-chairman, the members [of the Commission]
6-16 present shall select one of their number to serve as chairman for
6-17 the meeting.
6-18 (d) A member of the board appointed pursuant to the terms of
6-19 Section 2.02(c) of this Act may not vote on an issue involving a
6-20 dispute in which both a dealer and a manufacturer are named
6-21 parties.
6-22 SECTION 8. Section 2.08A(c), Texas Motor Vehicle Commission
6-23 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
6-24 to read as follows:
6-25 (c) If the [Executive] Director has knowledge that a
6-26 potential ground for removal exists, the [Executive] Director shall
6-27 notify the Chairman of the Commission of the ground. The Chairman
6-28 shall then notify the Governor that a potential ground for removal
6-29 exists.
6-30 SECTION 9. Section 2.09, Texas Motor Vehicle Commission Code
6-31 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
6-32 read as follows:
6-33 Sec. 2.09. [Executive] director; staff; contracts;
6-34 indemnity. (a) The Executive Director [of the Texas Department of
6-35 Transportation] shall appoint the Director, [of the Motor Vehicle
6-36 Division] who is [shall be] the board's [division's] chief
6-37 executive and administrative officer. The Director, who shall be
6-38 an attorney licensed to practice law in this state, is charged with
6-39 administering, enforcing, and carrying out the provisions of this
6-40 Act. The Director serves at the pleasure of the Executive Director
6-41 [of the Texas Department of Transportation].
6-42 (b) The [Executive] Director or his designated
6-43 representative shall meet with the board [Commissioners] in an
6-44 advisory capacity without vote in all proceedings of the board
6-45 [Commission]. The [Executive] Director shall submit the reports to
6-46 the board [Commission] as may be required by the board's
6-47 [Commission's] rules or by this Act.
6-48 (c) The [Executive] Director or his designee shall maintain
6-49 all minutes of board [Commission] proceedings and shall serve as
6-50 the custodian of the files and records of the board [Commission].
6-51 (d) The [Executive] Director, or his designee, on behalf of
6-52 the board [Commission], may negotiate with and, with the consent of
6-53 a majority of the board [Commissioners], enter into contracts or
6-54 other agreements with the United States or any of its agencies,
6-55 with states and political subdivisions thereof, or any other entity
6-56 for the purpose of carrying out the powers, duties, and
6-57 responsibilities of the board [Commission].
6-58 (e) The [Executive] Director shall appoint and employ such
6-59 board [Commission] staff as are necessary to carry out the duties
6-60 and functions of the [Executive] Director and the board
6-61 [Commission] under this Act. The board [Commission] shall develop
6-62 and implement policies that clearly define the respective
6-63 responsibilities of the board [Commission] and the staff of the
6-64 board [Commission].
6-65 (f) An employee of the board [Commission] is subject to
6-66 dismissal who has an interest in or is related within the first
6-67 degree by consanguinity or affinity, as determined under Article
6-68 5996h, Revised Statutes, to a person who has an interest in a
6-69 business that manufactures, distributes, converts, [or] sells, or
7-1 leases motor vehicles.
7-2 (g) [(h)] Notwithstanding any other provision of law, the
7-3 [Executive] Director, each member of the board [Texas Motor Vehicle
7-4 Commission], each Hearing Examiner and all other employees of the
7-5 board [Texas Motor Vehicle Commission] are not personally liable
7-6 for damages occasioned by their official acts or omissions except
7-7 when such acts or omissions constitute intentional or malicious
7-8 malfeasance. The Attorney General shall defend any action brought
7-9 against a member or employee of the board [Commission] in
7-10 connection with an official act or omission, whether or not at the
7-11 time of the institution of the action the defendant has previously
7-12 ceased to serve the Commission in any capacity, and the State of
7-13 Texas shall indemnify any such person from and against a judgment
7-14 entered against the person in any such actions though the State may
7-15 seek contribution if liability is otherwise permitted by this
7-16 subsection.
7-17 (h) [(i)] Unless otherwise provided by this Act or by board
7-18 [Commission] rules, all applications, petitions, or other documents
7-19 requiring action by the board [Commission] shall be directed to the
7-20 [Executive] Director.
7-21 (i) [(j)] The board [Commission] shall provide to its
7-22 members and employees, as often as necessary, information regarding
7-23 their qualifications for office or employment under this Act and
7-24 their responsibilities under applicable laws relating to standards
7-25 of conduct for state officers or employees.
7-26 SECTION 10. Section 2.09B, Texas Motor Vehicle Commission
7-27 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
7-28 by adding Subsection (e) to read as follows:
7-29 (e) No member of the board may vote on an issue coming
7-30 before the board for determination if that issue directly affects
7-31 the member or if the issue directly affects an entity in which the
7-32 member has a financial interest.
7-33 SECTION 11. Section 3.01(a), Texas Motor Vehicle Commission
7-34 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
7-35 to read as follows:
7-36 (a) The board [Commission] has the general and original
7-37 power and jurisdiction to regulate all aspects of the distribution,
7-38 sale, and leasing of motor vehicles and to do all things, whether
7-39 specifically designated in this Act or implied herein, or necessary
7-40 or convenient to the exercise of this power and jurisdiction,
7-41 including the original jurisdiction to determine questions of its
7-42 own jurisdiction. In addition to the other duties placed on the
7-43 board [Commission] by this Act, the board [Commission] shall
7-44 enforce and administer the terms of Chapter 503, Transportation
7-45 Code [Article 6686, Revised Statutes].
7-46 SECTION 12. The Texas Motor Vehicle Commission Code (Article
7-47 4413(36), Vernon's Texas Civil Statutes) is amended by adding
7-48 Section 3.01A to read as follows:
7-49 Sec. 3.01A. INTERACTION WITH DEPARTMENT. (a) In
7-50 coordination with the department, the board shall develop and
7-51 implement policies that clearly delineate the policy-making
7-52 responsibilities of the board and the management responsibilities
7-53 of the department.
7-54 (b) The department, by agreement with the board, may provide
7-55 personnel and services to the board as needed to carry out
7-56 purposes, powers, and duties of the board. The board may delegate
7-57 authority to personnel as needed.
7-58 SECTION 13. Section 3.03(b), Texas Motor Vehicle Commission
7-59 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
7-60 to read as follows:
7-61 (b) The board [commission] may conduct hearings in
7-62 contested cases brought pursuant to, and as provided by Chapter
7-63 503, Transportation Code [, Article 6686, Revised Statutes]. The
7-64 procedures applicable to a hearing conducted under this Subsection,
7-65 and the disposition of a final order after a hearing conducted
7-66 under this Subsection, are those applicable to a hearing conducted
7-67 as provided by Section 6.07(e)(2) of this Act. A decision or final
7-68 order issued under this Subsection is final, and no appeal may, as
7-69 a matter of right, be made to the Texas Transportation Commission.
8-1 The department may adopt rules applicable to procedures, hearings,
8-2 and enforcement proceedings in an action brought pursuant to this
8-3 Subsection.
8-4 SECTION 14. Section 3.04, Texas Motor Vehicle Commission
8-5 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-6 to read as follows:
8-7 Sec. 3.04. DELEGATION OF BOARD [COMMISSION] POWERS. The
8-8 board [Commission] may delegate any power which it holds or derives
8-9 under this Act to:
8-10 (1) one or more of its members [of the Commission];
8-11 (2) the [Executive] Director; or
8-12 (3) one or more of its employees [of the Commission].
8-13 SECTION 15. Section 3.05, Texas Motor Vehicle Commission
8-14 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-15 to read as follows:
8-16 Sec. 3.05. INVESTIGATION; ENFORCEMENT. (a) Whenever the
8-17 board [Commission] has reason to believe, through receipt of a
8-18 complaint or otherwise, that a violation of this Act or a board
8-19 [Commission] rule, order, or decision has occurred or is likely to
8-20 occur, the board [Commission] shall conduct an investigation unless
8-21 it determines that a complaint is frivolous or for the purpose of
8-22 harassment. If the board's [Commission's] investigation
8-23 establishes that a violation of this Act or a board [Commission]
8-24 rule, order or decision has occurred or is likely to occur, the
8-25 board [Commission] shall institute proceedings as it deems
8-26 appropriate to enforce this Act or its rules, orders, and
8-27 decisions.
8-28 (b) Notwithstanding Subsection (a) of this section or
8-29 another provision of this Act or board rule, the board may not
8-30 initiate a proceeding alleging a violation of this Act or a board
8-31 rule relating to advertising until the board has notified the
8-32 licensee involved of the alleged violation and given the licensee
8-33 an opportunity to cure the violation without further proceedings or
8-34 liability.
8-35 SECTION 16. Section 3.06, Texas Motor Vehicle Commission
8-36 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-37 to read as follows:
8-38 Sec. 3.06. RULES. The authority to issue rules pursuant to
8-39 this Act shall be vested in the board [Commission]. After notice
8-40 and hearing conducted by the board [Commission] or by the
8-41 [Executive] Director or his delegee in accordance with Chapter
8-42 2001, Government Code, [the Administrative Procedure and Texas
8-43 Register Act (Article 6252 13a, Vernon's Texas Civil Statutes)] and
8-44 in compliance with this Act and the rules, decisions, and orders of
8-45 the board [Commission], the board [Commission] shall adopt such
8-46 rules and amendments thereto and deletions therefrom as may be
8-47 necessary or convenient to effectuate the provisions of this Act
8-48 and to govern practice and procedure before the board [Commission].
8-49 Such rules shall become effective as soon as the board
8-50 [Commission], acting by and through its [Executive] Director,
8-51 complies with the requirements of Chapter 2001, Government Code,
8-52 [the Administrative Procedure and Texas Register Act] regarding
8-53 publication of official agency rules.
8-54 SECTION 17. Section 3.07, Texas Motor Vehicle Commission
8-55 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-56 to read as follows:
8-57 Sec. 3.07. ORDERS AND DECISIONS. (a) An order or decision
8-58 shall:
8-59 (1) include a separate finding of fact with respect to
8-60 each specific issue the board is required by law to consider in
8-61 reaching a decision;
8-62 (2) set forth additional [the] findings of fact and
8-63 conclusions of law on which the order or decision is based; and
8-64 (3) [shall] give the reasons for the particular
8-65 actions taken.
8-66 (b) Except as provided by Section 6.07 of this Act, all
8-67 orders and decisions shall be signed on behalf of the board
8-68 [Commission] by the Chairman or Vice-chairman and attested by the
8-69 [Executive] Director and shall have the seal affixed.
9-1 SECTION 18. The Texas Motor Vehicle Commission Code (Article
9-2 4413(36), Vernon's Texas Civil Statutes) is amended by adding
9-3 Section 3.07A to read as follows:
9-4 Sec. 3.07A. MEDIATION. (a) In this section, "mediation"
9-5 means a nonbinding forum in which an impartial person, the
9-6 mediator, facilitates communication between parties to promote
9-7 reconciliation, settlement, or understanding among them. A
9-8 mediator may not impose his own judgment on the issues for that of
9-9 the parties.
9-10 (b) In an action brought by a franchised dealer whose
9-11 franchise agreement provides for arbitration in compliance with the
9-12 terms of this Act, against a manufacturer or distributor under
9-13 Section 5.02(b) of this Act, the board shall order the parties to
9-14 submit the dispute to mediation in the manner provided by this
9-15 section. The requirements of this subsection apply only if the
9-16 dealer's franchise agreement contains no arbitration provision in
9-17 conflict with the terms of this Act.
9-18 (c) If the applicability of Subsection (b) of this section
9-19 is in dispute, the board shall enter an order either that the
9-20 franchise agreement in question contains a provision in conflict
9-21 with the terms of this Act or that it does not. If the board finds
9-22 that the franchise agreement in question contains no arbitration
9-23 provision in conflict with this Act, the board shall order the
9-24 parties to proceed to mediation as provided by this section. An
9-25 order issued under this subsection is not appealable.
9-26 (d) The parties shall by agreement select a venue and
9-27 schedule for a mediation proceeding conducted under this section.
9-28 Except as provided by this subsection, if the parties are unable to
9-29 agree on a venue and schedule, the mediator shall select a venue
9-30 and schedule. Except by written agreement of all parties, a
9-31 mediation proceeding under this section must be held in Texas.
9-32 (e) A person is qualified to serve as a mediator as provided
9-33 by this section if the person is qualified to serve as a mediator
9-34 under Section 154.052(a), Civil Practice and Remedies Code. The
9-35 provisions of Sections 154.053 and 154.055, Civil Practice and
9-36 Remedies Code, apply to a person employed to mediate a dispute as
9-37 provided by this section.
9-38 (f) A mediation proceeding under this section must be
9-39 complete not later than the 60th day after the board orders the
9-40 parties to mediate. The deadline imposed by this subsection may be
9-41 extended by the board at the request of all parties.
9-42 (g) Except as provided by this subsection, the provisions of
9-43 Section 154.073, Civil Practice and Remedies Code, apply to a
9-44 mediation proceeding conducted under this section. If Section
9-45 154.073, Civil Practice and Remedies Code, is in conflict with
9-46 another legal requirement for disclosure of communications or
9-47 materials, the issue of confidentiality may be presented to the
9-48 board to determine, in camera, whether the facts, circumstances,
9-49 and context of the communications or materials sought to be
9-50 disclosed warrant a protective order of the board or whether the
9-51 communications or materials are subject to disclosure.
9-52 (h) By agreement, the parties shall select and compensate a
9-53 mediator employed under the terms of this section. The board is
9-54 not liable for the compensation paid or to be paid to a mediator
9-55 employed as provided by this section. Without regard to the outcome
9-56 of the mediation proceeding or subsequent regulatory or judicial
9-57 proceedings, costs incurred by a party in a mediation proceeding
9-58 required by this section may not be taxed against the opposing
9-59 party.
9-60 (i) The board retains jurisdiction of the subject matter of
9-61 and parties to the dispute during the pendency of a mediation
9-62 proceeding and may, on the motion of a party or on its own motion,
9-63 enter appropriate orders.
9-64 (j) Except as provided by this section, a mediation
9-65 proceeding maintained as provided by this section does not affect
9-66 procedural rights and duties conferred by this Act or by rules of
9-67 the board. Procedural time limits imposed by this Act or pursuant
9-68 to the authority of this Act are tolled during the pendency of a
9-69 mediation proceeding brought under this section. A mediation
10-1 proceeding maintained as provided by this section does not affect
10-2 the rights of a person who is not a party to the mediation
10-3 proceeding. The board shall stay proceedings involving the parties
10-4 under mediation until receipt by the board of the mediator's
10-5 certification that the mediation process is concluded.
10-6 (k) If a mediation proceeding brought under this section
10-7 results in the resolution of the dispute, the board shall enter an
10-8 order incorporating the terms of the agreement reached in
10-9 mediation. If the mediation does not result in a resolution of the
10-10 dispute, the board shall proceed to a contested case hearing or
10-11 other appropriate exercise of its jurisdiction.
10-12 (l) This section does not apply to an action brought by the
10-13 board to enforce the terms of this Act.
10-14 (m) This section controls any other provision of law
10-15 relating to or requiring mediation between or among licensees.
10-16 SECTION 19. Section 3.08, Texas Motor Vehicle Commission
10-17 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
10-18 to read as follows:
10-19 Sec. 3.08. HEARINGS; NOTICE; HEARING PROCEDURES; COMPLAINTS.
10-20 (a) In this section, the term "contested case" has the meaning
10-21 given it in Chapter 2001, Government Code. A hearing shall be
10-22 conducted in all contested cases[, as defined in the Administrative
10-23 Procedure and Texas Register Act (Article 6252 13a, Vernon's Texas
10-24 Civil Statutes),] which arise in connection with this Act or any
10-25 rule of the board [Commission]. All hearings shall be conducted in
10-26 accordance with this Act, the orders, decisions, or rules of the
10-27 board [Commission], and Chapter 2001, Government Code, [the
10-28 Administrative Procedure and Texas Register Act] to the extent that
10-29 Chapter 2001, Government Code, [the Administrative Procedure and
10-30 Texas Register Act] does not conflict with this Act. A hearing may
10-31 be informally disposed of in accordance with Chapter 2001,
10-32 Government Code [the Administrative Procedure and Texas Register
10-33 Act]. Any hearing held under this section shall be conducted by
10-34 the [Executive] Director or any Hearing Examiner, each of whom may
10-35 be referred to in this Act as the "Examiner." The person or
10-36 persons serving as Examiner in any contested case hearing are
10-37 hereby delegated all the power and authority which the board
10-38 [Commission] has under this Act regarding the conduct of hearings,
10-39 including, without limitation, the power to hold hearings,
10-40 administer oaths, receive pleadings and evidence, issue subpoenas
10-41 to compel the attendance of witnesses, compel the production of
10-42 papers and documents, issue interlocutory orders, including cease
10-43 and desist orders in the nature of temporary restraining orders and
10-44 temporary injunctions, make findings of fact and conclusions of
10-45 law, and issue proposals for decision and recommended final orders.
10-46 (b) Notice of a hearing shall describe in summary form the
10-47 purpose of the hearing and its date, time, and place.
10-48 (c) Notice of a rulemaking hearing shall be given in
10-49 accordance with Chapter 2001, Government Code, [the Administrative
10-50 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
10-51 Civil Statutes)] and the rules of the board [Commission] not less
10-52 than 30 days before the hearing date. Notice of a contested case
10-53 hearing involving a licensee [license] shall be given in accordance
10-54 with this Act and the rules of the board [Commission].
10-55 (d) Notice of a contested case hearing shall be deemed to
10-56 have been received by any person if notice of the hearing was
10-57 mailed to the last known address, of any person known to have legal
10-58 rights, duties, or privileges that could be determined at the
10-59 hearing, not less than 10 days before the hearing date. Notice of
10-60 a hearing shall be given by certified mail, return receipt
10-61 requested. Notice may be given to any officer, agent, employee,
10-62 legal representative, or attorney of any person. Notice of any
10-63 hearing may be waived by any person.
10-64 (e) A hearing shall be convened [conducted] at the time and
10-65 place stated in the hearing notice [or the hearing shall be
10-66 rescheduled and an amended notice given]. Any hearing may be
10-67 recessed until a time and place certain without further notice if
10-68 the time and place is [continued from time to time and place to
10-69 place as] announced openly before the hearing is recessed. If the
11-1 time and place determined for the resumption of the hearing is not
11-2 announced openly before the hearing is recessed, the hearing may be
11-3 recessed to a time and place certain[, without further notice, or
11-4 otherwise,] by giving advance notice as required by Chapter 2001,
11-5 Government Code [the Administrative Procedure and Texas Register
11-6 Act (Article 6252-13a, Vernon's Texas Civil Statutes)].
11-7 (f) Unless otherwise limited by this Act, any person whose
11-8 legal rights, duties, or privileges are to be determined at any
11-9 hearing shall have the right to appear personally and by counsel,
11-10 to cross-examine adverse witnesses, and to produce evidence and
11-11 witnesses in the person's own behalf.
11-12 (g) In all contested cases the examiner shall serve on all
11-13 parties a copy of the examiner's proposal for decision and
11-14 recommended order containing findings of fact and conclusions of
11-15 law. A [shall be served on all parties and each] party may file
11-16 exceptions and replies to the board [Commission]. In its review of
11-17 the case, the board may [After replies and exceptions have been
11-18 timely filed, the Commission shall] consider only the materials
11-19 timely submitted [by all parties]. The board [Commission] may
11-20 receive such oral argument from any party as the board [Commission]
11-21 may allow. The board [Commission] shall take such further actions
11-22 as are conducive to the issuance of a final order and shall
11-23 thereafter issue a written final decision or order. The board's
11-24 [Commission's] written final decision or order shall be signed on
11-25 behalf of the board [Commission] by the [Executive] Director. A
11-26 majority vote of a quorum of the board [Commissioners] shall be
11-27 required to adopt final decisions or orders of the board
11-28 [Commission].
11-29 (h) A party who seeks a rehearing of an order shall do so in
11-30 accordance with the terms of Chapter 2001, Government Code [the
11-31 Administrative Procedure and Texas Register Act (Article 6252-13a,
11-32 Vernon's Texas Civil Statutes)].
11-33 (i) The owner of a motor vehicle or the owner's designated
11-34 agent may make a complaint concerning defects in a motor vehicle
11-35 which are covered by a manufacturer's, converter's, or
11-36 distributor's warranty agreement applicable to the vehicle. Any
11-37 such complaint must be made in writing to the applicable dealer,
11-38 manufacturer, converter, or distributor and must specify the
11-39 defects in the vehicle which are covered by the warranty. The
11-40 owner may also invoke the board's [Commission's] jurisdiction by
11-41 sending the board [Commission] a copy of the complaint. A hearing
11-42 may be scheduled on all complaints arising under this subsection
11-43 which are not privately resolved between the owner and the dealer,
11-44 manufacturer, converter, or distributor.
11-45 (j) On motion of any party the board [Commission] may, by
11-46 final order, and in accordance with the terms and procedures set
11-47 forth in Rule 166a, Texas Rules of Civil Procedure, dismiss a
11-48 complaint, protest, or response without holding a contested case
11-49 hearing.
11-50 SECTION 20. Section 3.09, Texas Motor Vehicle Commission
11-51 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
11-52 to read as follows:
11-53 Sec. 3.09. PROCEDURAL SUPREMACY [EFFECT ON ADMINISTRATIVE
11-54 PROCEDURE AND TEXAS REGISTER ACT]. In the event of any conflict
11-55 between Chapter 2001, Government Code, [the Administrative
11-56 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
11-57 Civil Statutes)] and this Act, the provisions of this Act shall
11-58 prevail.
11-59 SECTION 21. Section 4.01, Texas Motor Vehicle Commission
11-60 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
11-61 by amending Subsection (b) and by adding Subsections (c) and (d) to
11-62 read as follows:
11-63 (b) In the case of a nonfranchised dealer, the term
11-64 "license" in this Act means a general distinguishing number [issued
11-65 by the Department pursuant to the authority of Article 6686,
11-66 Revised Statutes]. A nonfranchised dealer may not operate as a
11-67 dealer without a valid general distinguishing number but is not
11-68 required to obtain an additional license under the terms of this
11-69 Act. A franchised dealer shall have both a general distinguishing
12-1 number and a separate license issued under the terms of this Act.
12-2 (c) Notwithstanding the terms of this Act, a franchised
12-3 dealer is not required to have a lessor license or lease
12-4 facilitator license to engage in any capacity in the business of
12-5 leasing motor vehicles that the dealer owns and is licensed by this
12-6 Act to sell.
12-7 (d) A manufacturer or distributor that directly or
12-8 indirectly reimburses another person to perform warranty repair
12-9 services on a vehicle is engaged in business in this state whether
12-10 or not the manufacturer sells or offers for sale new motor vehicles
12-11 in this state.
12-12 SECTION 22. Section 4.02(a), Texas Motor Vehicle Commission
12-13 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
12-14 to read as follows:
12-15 (a) An application for a dealer license shall be on a form
12-16 prescribed by the board [Commission] which shall include the
12-17 information required by Chapter 503, Transportation Code [Article
12-18 6686, Revised Statutes], and information on the applicant's
12-19 financial resources, business integrity, business ability and
12-20 experience, franchise agreement if applicable, physical facilities,
12-21 vehicle inventory, and other factors the board [Commission]
12-22 considers necessary to determine an applicant's qualifications to
12-23 adequately serve the motoring public.
12-24 SECTION 23. Section 4.03, Texas Motor Vehicle Commission
12-25 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
12-26 by adding a new Subsection (e) to read as follows and by
12-27 redesignating current Subsection (e) as Subsection (f):
12-28 (e) The terms and conditions of a franchise agreement are
12-29 subject to the terms of this Act. A term or condition of a
12-30 franchise agreement inconsistent with the terms of this Act is not
12-31 enforceable.
12-32 (f) [(e)] All licensees may apply for issuance of a license
12-33 for each succeeding year by complying with the application process
12-34 specified by this Act and the Commission's rules.
12-35 SECTION 24. Section 4.03A, Texas Motor Vehicle Commission
12-36 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
12-37 to read as follows:
12-38 Sec. 4.03A. Lessor Application. An application for a lessor
12-39 license shall be on a form prescribed by the board [Commission] and
12-40 shall contain evidence of compliance with Chapter 503,
12-41 Transportation Code [Article 6686, Revised Statutes], if
12-42 applicable, and other information prescribed by the board
12-43 [Commission]. This Act does not require a separate license for
12-44 each individual employee of a lessor.
12-45 SECTION 25. Section 4.05(a), Texas Motor Vehicle Commission
12-46 Code (Article 4413(36), Vernon's Texas Civil Statutes), as amended
12-47 by Chapters 345 and 357, Acts of the 74th Legislature, Regular
12-48 Session, 1995, is amended to read as follows:
12-49 (a) The annual license fees for licenses issued hereunder
12-50 shall be as follows:
12-51 (1) For each manufacturer and distributor, $900 plus
12-52 $20 for each individual dealer franchised by the manufacturer or
12-53 distributor.
12-54 (2) For each franchised dealer who sold 200 or fewer
12-55 new motor vehicles during the preceding calendar year, $175.
12-56 (3) For each franchised dealer who sold more than 200,
12-57 but not more than 400, new motor vehicles during the preceding
12-58 calendar year, $275.
12-59 (4) For each franchised dealer who sold more than 400,
12-60 but not more than 800, new motor vehicles during the preceding
12-61 calendar year, $400.
12-62 (5) For each franchised dealer who sold more than 800
12-63 but not more than 1,200 new motor vehicles during the preceding
12-64 calendar year, $500.
12-65 (6) For each franchised dealer who sold more than
12-66 1,200 but not more than 1,600 new motor vehicles during the
12-67 preceding calendar year, $625.
12-68 (7) For each franchised dealer who sold more than
12-69 1,600 new motor vehicles during the preceding calendar year, $750.
13-1 (8) For each location separate from his dealership at
13-2 which a franchised dealer offers no motor vehicle for sale, but
13-3 performs warranty service on vehicles the dealer is franchised and
13-4 licensed to sell, $100.
13-5 (9) [(10)] For each amendment to a dealer's license,
13-6 $25.
13-7 (10) [(8)] For each representative, $100.
13-8 (11) [(9)] For each converter, $375.
13-9 (12) [(9)] For each lessor who leased 200 or fewer
13-10 motor vehicles during the preceding calendar year, $175.
13-11 (13) [(10)] For each lessor who leased more than 200
13-12 but not more than 400 motor vehicles during the preceding calendar
13-13 year, $275.
13-14 (14) [(11)] For each lessor who leased more than 400
13-15 but not more than 800 motor vehicles during the preceding calendar
13-16 year, $400.
13-17 (15) [(12)] For each lessor who leased more than 800
13-18 but not more than 1,200 motor vehicles during the preceding
13-19 calendar year, $500.
13-20 (16) [(13)] For each lessor who leased more than 1,200
13-21 but not more than 1,600 motor vehicles during the preceding
13-22 calendar year, $625.
13-23 (17) [(14)] For each lessor who leased more than 1,600
13-24 motor vehicles during the preceding calendar year, $750.
13-25 (18) [(15)] For each lease facilitator, $375.
13-26 SECTION 26. Section 4.06, Texas Motor Vehicle Commission
13-27 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
13-28 to read as follows:
13-29 Sec. 4.06. Sanctions; denial, revocation, or suspension of
13-30 license. (a) The board [Commission] may deny an application for a
13-31 license, revoke or suspend an outstanding license, or place on
13-32 probation a person whose license has been suspended, or reprimand a
13-33 licensee, for any of the following reasons:
13-34 (1) Unfitness of an applicant or licensee under
13-35 standards set out in this Act or in board [Commission] rules.
13-36 (2) Material misrepresentation in any application or
13-37 other information filed under this Act or board [Commission] rules.
13-38 (3) Failure to comply with this Act or any board
13-39 [Commission] rule or order promulgated by the board [Commission].
13-40 (4) Failure to maintain the qualifications for a
13-41 license.
13-42 (5) Willfully defrauding any retail buyer.
13-43 (6) Violation of any law relating to the sale,
13-44 distribution, financing, or insuring of motor vehicles.
13-45 (7) Any act or omission by an officer, director,
13-46 partner, trustee, or other person acting in a representative
13-47 capacity for a licensee which act or omission would be cause for
13-48 denying, revoking, or suspending a license to an individual
13-49 licensee.
13-50 (8) Failure to fulfill written agreements between the
13-51 licensee and a retail buyer of a motor vehicle.
13-52 (b) The revocation of a license previously held under this
13-53 Act may be grounds for denying a subsequent application for a
13-54 license.
13-55 (c) The board [Commission] may deny an application to
13-56 establish a dealership if, after protest, the applicant fails to
13-57 establish good cause therefor. In determining good cause, the
13-58 board [Commission] shall consider:
13-59 (1) whether the manufacturer or distributor of the
13-60 same line-make of new motor vehicle is being adequately represented
13-61 as to sales and service;
13-62 (2) whether the protesting franchised dealer
13-63 representing the same line-make of new motor vehicle is in
13-64 substantial compliance with his franchise agreement, to the extent
13-65 that the franchise agreement is not in conflict with this Act;
13-66 (3) the desirability of a competitive marketplace;
13-67 (4) any harm to the protesting franchised dealer; and
13-68 (5) the public interest.
13-69 (d) A franchised dealer shall have standing under Subsection
14-1 (c) of this section to protest an application to establish or
14-2 relocate a dealership if the person filing the protest:
14-3 (1) is a franchised dealer of the same line-make whose
14-4 dealership is located in the county in which the proposed
14-5 dealership site is to be located; or
14-6 (2) is a franchised dealer of the same line-make whose
14-7 dealership is located within a 15 mile radius of the proposed
14-8 dealership site.
14-9 (e) Notwithstanding the terms [provisions] of Subsection (d)
14-10 of this section, the relocation of a dealership is not subject to
14-11 protest by a franchised dealer:
14-12 (1) if the proposed relocation site is not farther
14-13 than one mile from the site from which the dealership is being
14-14 relocated; or
14-15 (2) whose dealership is not closer to the proposed
14-16 location than it is to the location from which the relocated
14-17 dealership is being relocated.
14-18 (f) The revocation or suspension of a manufacturer's or
14-19 distributor's license may be limited to one or more municipalities
14-20 or counties or any other defined area, or may be revoked or
14-21 suspended in a defined area only as to certain aspects of its
14-22 business, or as to a specified franchised dealer or franchised
14-23 dealers.
14-24 (g) No license shall be denied, revoked, or suspended, or
14-25 disciplinary action taken under this section, except on order of
14-26 the board [Commission] after a hearing. The board [Commission] may
14-27 inspect the books and records of a licensee in connection with the
14-28 performance of its duties under this Act.
14-29 (h) If a suspension of a license is probated, the board
14-30 [Commission] may:
14-31 (1) require the licensee to report regularly to the
14-32 board [Commission] on matters that are the basis of the probation;
14-33 or
14-34 (2) limit activities to those prescribed by the board
14-35 [Commission].
14-36 SECTION 27. Section 5.01, Texas Motor Vehicle Commission
14-37 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
14-38 to read as follows:
14-39 Sec. 5.01. Franchised dealers. It is unlawful for any
14-40 franchised dealer to:
14-41 (1) Require a retail purchaser of a new motor vehicle
14-42 as a condition of sale and delivery thereof to purchase special
14-43 features, equipment, parts, or accessories not ordered or desired
14-44 by the purchaser, provided such features, equipment, parts, or
14-45 accessories are not already installed on the new motor vehicle at
14-46 the time of sale.
14-47 (2) Fail to perform the obligations placed on the
14-48 selling franchised dealer in connection with the delivery and
14-49 preparation of a new motor vehicle for retail sale as provided in
14-50 the manufacturer's preparation and delivery agreements on file with
14-51 the Commission and applicable to such vehicle.
14-52 (3) Fail to perform the obligations placed on the
14-53 franchised dealer in connection with the manufacturer's warranty
14-54 agreements on file with the Commission.
14-55 (4) Operate without appropriate signs readily and
14-56 easily visible to the public, identifying the franchised dealer's
14-57 place of business and the products the franchised dealer offers for
14-58 sale. In the event of a conflict with another law or ordinance,
14-59 this Subdivision prevails, and in the event of a dispute, the Board
14-60 has exclusive jurisdiction to determine whether a sign or signs are
14-61 in compliance with the terms of this Subdivision. In the event of
14-62 a dispute, the Board shall uphold local ordinances of a home-rule
14-63 city and protect franchised dealers from retribution by
14-64 manufacturers or distributors for having complied with local
14-65 ordinances.
14-66 (5) [(7)] Directly or indirectly pay a fee to a lessor
14-67 or lease facilitator.
14-68 SECTION 28. Section 5.01A, Texas Motor Vehicle Commission
14-69 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
15-1 to read as follows:
15-2 Sec. 5.01A. Dealers. No dealer may:
15-3 (1) use false, deceptive, or misleading advertising;
15-4 (2) [operate as a dealer without a currently valid
15-5 license or general distinguishing number issued by the Board;]
15-6 [(3)] violate a rule of the Board; or
15-7 (3) [(4)] aid or abet a person who violates this Act.
15-8 SECTION 29. The Texas Motor Vehicle Commission Code (Article
15-9 4413(36), Vernon's Texas Civil Statutes) is amended by adding
15-10 Section 5.01B to read as follows:
15-11 Sec. 5.01B. TRANSFER OF OWNERSHIP BY DEALER; REJECTION;
15-12 HEARING. (a) In order to transfer, assign, or sell a franchise
15-13 agreement or controlling interest in the dealership to another
15-14 person, a dealer shall notify the manufacturer or distributor whose
15-15 vehicles the dealer is franchised to sell of the dealer's decision
15-16 to transfer, assign, or sell the dealership. The notification
15-17 required by this subsection must be by certified mail, return
15-18 receipt requested, and is the application by the dealer for
15-19 approval by the manufacturer or distributor of the transfer. The
15-20 notice must be in writing and must include:
15-21 (1) the prospective transferee's name, address,
15-22 financial qualifications, and business experience;
15-23 (2) a copy of pertinent agreements regarding the
15-24 proposed transfer, assignment, or sale;
15-25 (3) completed application forms and related
15-26 information generally utilized by the manufacturer or distributor
15-27 in reviewing prospective dealers, if the forms are on file with the
15-28 board; and
15-29 (4) the prospective transferee's written agreement to
15-30 comply with the terms of the franchise agreement to the extent that
15-31 the franchise agreement is not in conflict with the terms of this
15-32 Act.
15-33 (b) Not later than the 60th day after receiving notice and
15-34 application as provided by Subsection (a) of this section, a
15-35 manufacturer or distributor shall determine whether or not the
15-36 dealer's prospective transferee is qualified and shall send a
15-37 letter by certified mail, return receipt requested, informing the
15-38 dealer of the approval of the prospective transferee or the
15-39 unacceptability of the prospective transferee. If the prospective
15-40 transferee is not acceptable, the manufacturer or distributor shall
15-41 include a statement setting forth the material reasons for the
15-42 rejection. An application filed by a dealer as provided by
15-43 Subsection (a) of this section is approved unless rejected by the
15-44 manufacturer or distributor in the manner provided by this
15-45 subsection.
15-46 (c) Approval by a manufacturer or distributor of an
15-47 application filed under Subsection (a) of this section may not be
15-48 unreasonably withheld. It is unreasonable for a manufacturer or
15-49 distributor to reject a prospective transferee who is of good moral
15-50 character and who otherwise meets the manufacturer's or
15-51 distributor's written, reasonable, and uniformly applied standards
15-52 or qualifications, if any, relating to the prospective
15-53 transferee's:
15-54 (1) business experience; and
15-55 (2) financial qualifications.
15-56 (d) A dealer whose application to transfer is rejected may
15-57 file a protest with the board in the manner provided by this Act.
15-58 In an action brought under this subsection, the burden is on the
15-59 manufacturer or distributor to prove that the prospective
15-60 transferee is not qualified. A protest filed under this subsection
15-61 is a contested case.
15-62 (e) The issue in an action filed under this section is
15-63 whether or not the prospective transferee is qualified. The board
15-64 shall enter an order holding that the prospective transferee either
15-65 is qualified or is not qualified. If the board's order is that the
15-66 prospective transferee is qualified, the dealer's franchise
15-67 agreement is amended to reflect the change in franchisee and the
15-68 manufacturer or distributor shall accept the transfer for all
15-69 purposes. If the board's order is that the prospective transferee
16-1 is not qualified, the board may include specific reasons why the
16-2 prospective transferee is not qualified and may include specific
16-3 conditions under which the prospective transferee would be
16-4 qualified.
16-5 (f) If the board's order that a prospective transferee is
16-6 not qualified includes specific conditions under which the
16-7 prospective transferee would be qualified, the board may retain
16-8 jurisdiction of the dispute for a time certain to allow the dealer
16-9 and prospective transferee to meet the conditions set forth.
16-10 SECTION 30. Section 5.02(b), Texas Motor Vehicle Commission
16-11 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
16-12 to read as follows:
16-13 (b) It is unlawful for any manufacturer, distributor, or
16-14 representative to:
16-15 (1) Require or attempt to require any dealer to order,
16-16 accept delivery of or pay anything of value, directly or
16-17 indirectly, for any motor vehicle, appliance, part, accessory or
16-18 any other commodity unless voluntarily ordered or contracted for by
16-19 such dealer.
16-20 (2) Refuse or fail to deliver, in reasonable
16-21 quantities and within a reasonable time, to a dealer having a
16-22 franchise agreement for the retail sale of any motor vehicles sold
16-23 or distributed by such manufacturer, distributor, or
16-24 representative, any new motor vehicle or parts or accessories to
16-25 new motor vehicles as are covered by such franchise if such
16-26 vehicle, parts or accessories are publicly advertised as being
16-27 available for delivery or are actually being delivered; provided,
16-28 however, this provision is not violated if such failure is caused
16-29 by acts of God, work stoppage or delays due to strikes or labor
16-30 disputes, freight embargoes or other causes beyond the control of
16-31 the manufacturer, distributor, or representative.
16-32 (3) Notwithstanding the terms of any franchise
16-33 agreement:
16-34 (A) Terminate or refuse to continue any
16-35 franchise with a dealer or directly or indirectly force or attempt
16-36 to force a dealer to discontinue a line-make or parts or products
16-37 related to that line-make unless all of the following conditions
16-38 are met:
16-39 (i) the dealer and the board [Commission]
16-40 have received written notice by registered or certified mail from
16-41 the manufacturer, distributor, or representative not less than 60
16-42 days before the effective date of termination or noncontinuance
16-43 setting forth the specific grounds for termination or
16-44 noncontinuance; and
16-45 (ii) the written notice contains on the
16-46 first page thereof a conspicuous statement which reads as follows:
16-47 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
16-48 TEXAS MOTOR VEHICLE BOARD [COMMISSION] IN AUSTIN, TEXAS, AND HAVE A
16-49 HEARING IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR
16-50 NONCONTINUANCE OF YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR
16-51 VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
16-52 (iii) the manufacturer, distributor, or
16-53 representative has received the informed, written consent of the
16-54 affected dealer or the appropriate period for the affected dealer
16-55 to protest the proposed franchise termination or noncontinuance has
16-56 lapsed; or
16-57 (iv) if the affected dealer files a
16-58 protest with the board [Commission] within the greater of (1) 60
16-59 days after receiving its 60-day notice of proposed termination or
16-60 noncontinuance or (2) the time specified in such notice, the board
16-61 [Commission] determines that the party seeking to terminate or not
16-62 continue a dealer's franchise has established by a preponderance of
16-63 the evidence, at a hearing called by the board [Commission], that
16-64 there is good cause for the proposed termination or noncontinuance.
16-65 (v) Notwithstanding Subdivisions (3)(A)(i)
16-66 and (3)(A)(iv) of this section, notice may be made not less than 15
16-67 days prior to the effective date of termination or noncontinuance
16-68 if a licensed dealer fails to conduct its customary sales and
16-69 service operations during its customary business hours for seven
17-1 consecutive business days unless such failure is caused by an act
17-2 of God, work stoppage or delays due to strikes or labor disputes,
17-3 an order of the board [Commission], or other causes beyond the
17-4 control of the dealer.
17-5 (B) Whenever a dealer files a timely protest to
17-6 a proposed franchise termination or noncontinuance, the board
17-7 [Commission] shall notify the party seeking to terminate or to not
17-8 continue the protesting dealer's franchise that a timely protest
17-9 has been filed, that a hearing is required in accordance with this
17-10 Act, and that the party who gave the dealer notice of termination
17-11 or noncontinuance of the franchise may not terminate or refuse to
17-12 continue the franchise until the board [Commission] issues its
17-13 final decision or order.
17-14 (C) If a franchise is terminated or not
17-15 continued, another franchise in the same line-make will be
17-16 established within a reasonable time unless it is shown to the
17-17 board [Commission] by a preponderance of the evidence that the
17-18 community or trade area cannot reasonably support such a
17-19 dealership. If this showing is made, no dealer license shall be
17-20 thereafter issued in the same area unless a change in circumstances
17-21 is established.
17-22 (4) Notwithstanding the terms of any franchise
17-23 agreement, modify or replace a franchise [with a succeeding
17-24 franchise] if the modification or replacement would adversely
17-25 affect, to a substantial degree, the dealer's sales, investment, or
17-26 obligations to provide service to the public, unless the
17-27 manufacturer, distributor, or representative has first given the
17-28 board [Commission] and each affected dealer written notice by
17-29 registered or certified mail of any such action 60 days in advance
17-30 of the modification or replacement. The written notice shall
17-31 contain on the first page thereof a conspicuous statement which
17-32 reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE
17-33 A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD [COMMISSION] IN
17-34 AUSTIN, TEXAS, AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE
17-35 PROPOSED MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE [WITH A
17-36 SUCCEEDING FRANCHISE] UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
17-37 COMMISSION CODE IF YOU OPPOSE THIS ACTION." Within the greater of
17-38 (1) 60 days after receipt of such notice or (2) the time specified
17-39 in such notice, a dealer may file a protest with the board
17-40 [Commission] and the modification or replacement shall not become
17-41 effective unless and until the board [Commission] determines that
17-42 the party seeking to modify or replace a franchise [with a
17-43 succeeding franchise] has demonstrated by a preponderance of the
17-44 evidence that there is good cause for the modification or
17-45 replacement. The prior franchise shall continue in effect until
17-46 the protest is resolved by the board [Commission].
17-47 (5) Notwithstanding the terms of any franchise
17-48 agreement, in determining whether good cause has been established
17-49 for modifying, replacing, terminating, or refusing to continue a
17-50 franchise, or for forcing or attempting to force a dealer to
17-51 discontinue a line-make or parts or products related to that
17-52 line-make, the board [Commission] shall consider all the existing
17-53 circumstances including, without limitation by the enumeration
17-54 herein, all the following:
17-55 (A) the dealer's sales in relation to the sales
17-56 in the market;
17-57 (B) the dealer's investment and obligations;
17-58 (C) injury to the public welfare;
17-59 (D) the adequacy of the dealer's service
17-60 facilities, equipment, parts, and personnel in relation to those of
17-61 other dealers of new motor vehicles of the same line-make;
17-62 (E) whether warranties are being honored by the
17-63 dealer;
17-64 (F) the parties' compliance with their franchise
17-65 agreement except to the extent that the franchise agreement is in
17-66 conflict with this Act; and
17-67 (G) the enforceability of the franchise
17-68 agreement from a public policy standpoint, including, without
17-69 limitation, issues of the reasonableness of the franchise
18-1 agreement's terms, oppression, adhesion, and the relative
18-2 bargaining power of the parties.
18-3 Good cause shall not be shown solely by the desire of a
18-4 manufacturer, distributor, or representative for market
18-5 penetration.
18-6 (6) Use any false, deceptive or misleading
18-7 advertising.
18-8 (7) Notwithstanding the terms of any franchise
18-9 agreement, prevent any dealer from reasonably changing the capital
18-10 structure of his dealership or the means by or through which he
18-11 finances the operation thereof, provided that the dealer meets
18-12 reasonable capital requirements.
18-13 (8) Notwithstanding the terms of any franchise
18-14 agreement, fail to give effect to or attempt to prevent any sale or
18-15 transfer of a dealer, dealership or franchise or interest therein
18-16 or management thereof except as provided by Section 5.01B [unless,
18-17 after complaint or protest, it is demonstrated to the Commission
18-18 after hearing that the result of any such sale or transfer will be
18-19 detrimental to the public or the representation of the manufacturer
18-20 or distributor].
18-21 (9) Notwithstanding the terms of any franchise
18-22 agreement, require or attempt to require that a dealer assign to or
18-23 act as an agent for any manufacturer, distributor or representative
18-24 in the securing of promissory notes and security agreements given
18-25 in connection with the sale or purchase of new motor vehicles or
18-26 the securing of policies of insurance on or having to do with the
18-27 operation of vehicles sold.
18-28 (10) Notwithstanding the terms of any franchise
18-29 agreement, fail or refuse, after complaint and hearing, to perform
18-30 the obligations placed on the manufacturer in connection with the
18-31 delivery, preparation and warranty of a new motor vehicle as
18-32 provided in the manufacturer's warranty, preparation, and delivery
18-33 agreements on file with the board [Commission].
18-34 (11) Notwithstanding the terms of any franchise
18-35 agreement, fail to compensate its dealers for the work and services
18-36 they are required to perform in connection with the dealer's
18-37 delivery and preparation obligations according to the agreements on
18-38 file with the board [Commission] which must be found by the board
18-39 [Commission] to be reasonable, or fail to adequately and fairly
18-40 compensate its dealers for labor, parts and other expenses incurred
18-41 by such dealer to perform under and comply with a manufacturer's or
18-42 a distributor's warranty agreement, or require, as a prerequisite
18-43 to the manufacturer's or distributor's payment of a claim for
18-44 reimbursement as required by this section, that a dealer file with
18-45 the manufacturer or distributor the actual time spent in the
18-46 performance of labor unless actual time is the basis for
18-47 reimbursement. In no event shall any manufacturer or distributor
18-48 pay its dealers an amount of money for warranty work that is less
18-49 than that charged by the dealer to the retail customers of the
18-50 dealer for nonwarranty work of like kind. All claims made by
18-51 dealers for compensation for delivery, preparation, and warranty
18-52 work shall be paid within 30 days after approval and shall be
18-53 approved or disapproved within 30 days after receipt. When any
18-54 claim is disapproved, the dealer shall be notified in writing of
18-55 the grounds for disapproval. No claim which has been approved and
18-56 paid may be charged back to the dealer unless it can be shown that
18-57 the claim was false or fraudulent, that the repairs were not
18-58 properly made or were unnecessary to correct the defective
18-59 condition, or that the dealer failed to reasonably substantiate the
18-60 claim in accordance with reasonable written requirements of the
18-61 manufacturer or distributor, if the dealer has been notified of the
18-62 requirements prior to the time the claim arose, and if the
18-63 requirements were in effect at the time the claim arose. A
18-64 manufacturer or distributor may not audit a claim after the
18-65 expiration of two years following the submission of the claim
18-66 unless the manufacturer or distributor has reasonable grounds to
18-67 suspect that a claim was fraudulent. Notwithstanding the terms of
18-68 a franchise agreement or provision of law in conflict with this
18-69 section, the dealer's delivery, preparation, and warranty
19-1 obligations as filed with the board [Commission] shall constitute
19-2 the dealer's sole responsibility for product liability as between
19-3 the dealer and manufacturer or distributor, and, except for a loss
19-4 caused by the dealer's failure to adhere to these obligations, a
19-5 loss caused by the dealer's negligence or intentional misconduct,
19-6 or a loss caused by the dealer's modification of a product without
19-7 manufacturer or distributor authorization, the manufacturer or
19-8 distributor shall reimburse the dealer for all loss incurred by the
19-9 dealer, including legal fees, court costs, and damages, as a result
19-10 of the dealer having been named a party in a product liability
19-11 action.
19-12 (12) Operate as a manufacturer, distributor, or
19-13 representative without a currently valid license from the board
19-14 [Commission] or otherwise violate this Act or rules promulgated by
19-15 the board [Commission] hereunder.
19-16 (13) Notwithstanding the terms of any franchise
19-17 agreement, to prevent or refuse to honor the succession to a
19-18 dealership by any legal heir or devisee under the will of a dealer
19-19 or under the laws of descent and distribution of this State unless
19-20 it is shown to the board [Commission], after notice and hearing,
19-21 that the result of such succession will be detrimental to the
19-22 public interest and to the representation of the manufacturer or
19-23 distributor; provided, however, nothing herein shall prevent a
19-24 dealer, during his lifetime, from designating any person as his
19-25 successor dealer, by written instrument filed with the manufacturer
19-26 or distributor.
19-27 (14) Notwithstanding the terms of any franchise
19-28 agreement, require that a dealer pay or assume, directly or
19-29 indirectly, any part of any refund, rebate, discount, or other
19-30 financial adjustment made by the manufacturer, distributor, or
19-31 representative to, or in favor of, any customer of a dealer, unless
19-32 voluntarily agreed to by such dealer.
19-33 (15) Notwithstanding the terms of any franchise
19-34 agreement, deny or withhold approval of a written application to
19-35 relocate a franchise unless (A) the applicant has received written
19-36 notice of the denial or withholding of approval within 60 days
19-37 after receipt of the application containing information reasonably
19-38 necessary to enable the manufacturer or distributor to adequately
19-39 evaluate the application, and if (B) the applicant files a protest
19-40 with the board [Commission] and the manufacturer or distributor
19-41 establishes by a preponderance of the evidence at a hearing called
19-42 by the board [Commission] that the grounds for the denial or
19-43 withholding of approval of the relocation are reasonable.
19-44 (16) Notwithstanding the terms of any franchise
19-45 agreement, fail to pay to a dealer or any lienholder in accordance
19-46 with their respective interest after the termination of a
19-47 franchise:
19-48 (A) the dealer cost of each new motor vehicle in
19-49 the dealer's inventory with mileage of 6,000 miles or less, reduced
19-50 by the net discount value of each, where "net discount value" is
19-51 determined according to the following formula: net cost multiplied
19-52 by total mileage divided by 100,000, and where "net cost" equals
19-53 the dealer cost plus any charges by the manufacturer, distributor,
19-54 or representative for distribution, delivery, and taxes, less all
19-55 allowances paid to the dealer by the manufacturer, distributor, or
19-56 representative for new, unsold, undamaged, and complete motor
19-57 vehicles of current model year or one year prior model year in the
19-58 dealer's inventory, except that if a vehicle cannot be reduced by
19-59 the net discount value, the manufacturer or distributor shall pay
19-60 the dealer the net cost of the vehicle;
19-61 (B) the dealer cost of each new, unused,
19-62 undamaged, and unsold part or accessory if the part or accessory is
19-63 in the current parts catalogue and is still in the original,
19-64 resalable merchandising package and in unbroken lots, except that
19-65 in the case of sheet metal, a comparable substitute for the
19-66 original package may be used, and if the part or accessory was
19-67 purchased by the dealer either directly from the manufacturer or
19-68 distributor or from an outgoing authorized dealer as a part of the
19-69 dealer's initial inventory;
20-1 (C) the fair market value of each undamaged sign
20-2 owned by the dealer which bears a trademark or tradename used or
20-3 claimed by the manufacturer, distributor, or representative if the
20-4 sign was purchased from or purchased at the request of the
20-5 manufacturer, distributor, or representative;
20-6 (D) the fair market value of all special tools,
20-7 data processing equipment, and automotive service equipment owned
20-8 by the dealer which were recommended in writing and designated as
20-9 special tools and equipment and purchased from or purchased at the
20-10 request of the manufacturer, distributor, or representative, if the
20-11 tools and equipment are in usable and good condition except for
20-12 reasonable wear and tear;
20-13 (E) the cost of transporting, handling, packing,
20-14 storing, and loading of any property subject to repurchase under
20-15 this section;
20-16 (F) except as provided by this subdivision, any
20-17 sums due as provided by Paragraph (A) of this subdivision within 60
20-18 days after termination of a franchise and any sums due as provided
20-19 by Paragraphs (B) through (E) of this subdivision within 90 days
20-20 after termination of a franchise. As a condition of payment, the
20-21 dealer is to comply with reasonable requirements with respect to
20-22 the return of inventory as are set out in the terms of the
20-23 franchise agreement. A manufacturer or distributor shall
20-24 reimburse a dealer for the dealer's cost for storing any property
20-25 covered by this subdivision beginning 90 days following
20-26 termination. A manufacturer or distributor shall reimburse a
20-27 dealer for the dealer's cost of storing any property covered by
20-28 this subdivision before the expiration of 90 days from the date of
20-29 termination if the dealer notifies the manufacturer or distributor
20-30 of the commencement of storage charges within that period. On
20-31 receipt of notice of the commencement of storage charges, a
20-32 manufacturer or distributor may immediately take possession of the
20-33 property in question by repurchasing the property as provided by
20-34 this subdivision. A manufacturer, distributor, or representative
20-35 who fails to pay those sums within the prescribed time or at such
20-36 time as the dealer and lienholder, if any, proffer good title prior
20-37 to the prescribed time for payment, is liable to the dealer for:
20-38 (i) the greatest of dealer cost, fair
20-39 market value, or current price of the inventory;
20-40 (ii) interest on the amount due calculated
20-41 at the rate applicable to a judgment of a court; and
20-42 (iii) reasonable attorney's fees and
20-43 costs.
20-44 (17) Notwithstanding the terms of any franchise
20-45 agreement, change its distributor, its method of distribution of
20-46 its products in this state, or its business structure or ownership
20-47 in a manner that results in the termination or noncontinuance of a
20-48 franchise without good cause. The manufacturer, distributor, or
20-49 representative shall issue the same notice to the dealer and to the
20-50 board [Commission] as is provided in Subdivisions (3)(A) and (B) of
20-51 this section and said same procedures shall apply to the parties.
20-52 (18) Notwithstanding the terms of any franchise
20-53 agreement, require a dealer to submit to arbitration on any issue
20-54 unless the dealer and the manufacturer, distributor, or
20-55 representative and their respective counsel agree to arbitrate
20-56 after a controversy arises. The arbitrator shall apply the
20-57 provisions of this Act in resolving the pertinent controversy.
20-58 Either party may appeal to the board [Commission] a decision of an
20-59 arbitrator on the ground that the arbitrator failed to apply this
20-60 Act.
20-61 (19) Notwithstanding the terms of any franchise
20-62 agreement, require that a dealer join, contribute to, or affiliate
20-63 with, directly or indirectly, any advertising association.
20-64 (20) Notwithstanding the terms of a franchise
20-65 agreement:
20-66 (A) require adherence to unreasonable sales or
20-67 service standards;
20-68 (B) directly or indirectly, discriminate against
20-69 a dealer or otherwise treat dealers differently as a result of a
21-1 formula or other calculation or process intended to gauge the
21-2 performance of a dealership[, except a sales contest or other
21-3 recognition program based on reasonable sales and service
21-4 criteria];
21-5 (C) unreasonably require that a dealer purchase
21-6 special tools or equipment; or
21-7 (D) fail to compensate a dealer for all costs
21-8 incurred by the dealer as required by the manufacturer in complying
21-9 with the terms of a product recall by the manufacturer or
21-10 distributor, including the costs, if any, incurred by the dealer in
21-11 notifying vehicle owners of the existence of the recall.
21-12 (21) Discriminate unreasonably between or among
21-13 franchisees in the sale of a motor vehicle owned by the
21-14 manufacturer or distributor.
21-15 (22) Directly or indirectly, or through a subsidiary
21-16 or agent, require, as a condition for obtaining financing for a
21-17 motor vehicle, the purchaser of a vehicle to purchase any product
21-18 other than the motor vehicle from the manufacturer or distributor,
21-19 or from an entity owned or controlled by the manufacturer or
21-20 distributor.
21-21 (23) Directly or indirectly, or through a subsidiary
21-22 or agent, require, as a condition of its or its subsidiary's
21-23 agreement to provide financing for a motor vehicle, that any
21-24 insurance policy or service contract purchased by the motor vehicle
21-25 purchaser be purchased from a specific source.
21-26 (24) Compel a dealer through a financing subsidiary of
21-27 the manufacturer or distributor to agree to unreasonable operating
21-28 requirements or directly or indirectly to terminate a dealer
21-29 through the actions of a financing subsidiary of the manufacturer
21-30 or distributor. This subdivision does not limit the right of a
21-31 financing entity to engage in business practices in accordance with
21-32 the usage of trade in retail and wholesale motor vehicle financing.
21-33 (25) Operate as a dealer except on a temporary basis
21-34 and only if:
21-35 (A) the dealership was previously owned by a
21-36 franchised dealer and is currently for sale at a reasonable price;
21-37 or
21-38 (B) the manufacturer, distributor, or
21-39 representative operates the dealership in a bona fide relationship
21-40 with a franchised dealer who is required to make a significant
21-41 investment in the dealership, subject to loss, and who reasonably
21-42 expects to acquire full ownership of the dealership under
21-43 reasonable terms and conditions.
21-44 (26) Notwithstanding the terms of a franchise
21-45 agreement, deny or withhold approval of a dealer's application to
21-46 add a line-make or parts or products related to that line-make
21-47 unless, within 60 days of receipt of the dealer's written
21-48 application to add the line-make, the manufacturer or distributor
21-49 gives the dealer written notice of the denial or withholding of
21-50 approval. After receipt of notice, the dealer may file a protest
21-51 with the board [Commission]. If the dealer files a protest as
21-52 provided by this subdivision, the board [Commission] may uphold the
21-53 manufacturer's or distributor's decision to deny or withhold
21-54 approval of the addition of the line-make only if the manufacturer
21-55 or distributor proves by a preponderance of the evidence that the
21-56 denial or withholding of approval was reasonable. In determining
21-57 whether or not the manufacturer or distributor has met its burden
21-58 to show that its denial or withholding of approval is reasonable,
21-59 the board [Commission] shall consider all existing circumstances,
21-60 including, without limitation, the following:
21-61 (A) the dealer's sales in relation to the sales
21-62 in the market;
21-63 (B) the dealer's investment and obligations;
21-64 (C) injury to the public welfare;
21-65 (D) the adequacy of the dealer's sales and
21-66 service facilities, equipment, parts, and personnel in relation to
21-67 those of other dealers of new motor vehicles of the same line-make;
21-68 (E) whether warranties are being honored by the
21-69 dealer agreement;
22-1 (F) the parties' compliance with their franchise
22-2 agreement to the extent that the franchise agreement is not in
22-3 conflict with this Act;
22-4 (G) the enforceability of the franchise
22-5 agreement from a public policy standpoint, including without
22-6 limitation, issues of the reasonableness of the franchise
22-7 agreement's terms, oppression, adhesion, and the relative
22-8 bargaining power of the parties;
22-9 (H) whether the dealer complies with reasonable
22-10 capitalization requirements or will be able to comply with
22-11 reasonable capitalization requirements within a reasonable time;
22-12 (I) the harm, if any, to the manufacturer if the
22-13 denial or withholding of approval is not upheld; and
22-14 (J) the harm, if any, to the dealer if the
22-15 denial or withholding of approval is upheld.
22-16 (27) Fail or refuse to offer to its same line-make
22-17 franchised dealers all models manufactured for that line-make, or
22-18 require a dealer to pay any extra fee, purchase unreasonable
22-19 advertising displays or other materials, or remodel, renovate, or
22-20 recondition the dealer's existing facilities as a prerequisite to
22-21 receiving a model or series of vehicles.
22-22 (28) Require a dealer to compensate the manufacturer
22-23 or distributor for any court costs, attorney's fees, or other
22-24 expenses incurred in an administrative or civil proceeding arising
22-25 under this Act, except that this subdivision does not prohibit a
22-26 manufacturer and dealer from entering into an agreement to share
22-27 costs in a proceeding in which the dealer and manufacturer have the
22-28 same or similar interests.
22-29 SECTION 31. Section 6.02, Texas Motor Vehicle Commission
22-30 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
22-31 to read as follows:
22-32 Sec. 6.02. INJUNCTION. Whenever it appears that a person
22-33 has violated, is violating, or is threatening to violate any
22-34 provision of this Act or of any rule or order of the board
22-35 [Commission] issued pursuant to this Act [then] the board
22-36 [Commission], or the [Executive] Director when authorized by the
22-37 board [Commission], may cause a suit to be instituted in any court
22-38 for injunctive relief to restrain any such person from continuing
22-39 the violation or threat of violation or for the assessment and
22-40 recovery of a civil penalty as provided for in this Act or for both
22-41 injunctive relief and a civil penalty.
22-42 SECTION 32. Section 6.03, Texas Motor Vehicle Commission
22-43 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
22-44 to read as follows:
22-45 Sec. 6.03. SUIT. At the request of the board [Commission],
22-46 or the [Executive] Director when authorized by the board
22-47 [Commission], the Attorney General shall institute and conduct a
22-48 suit in the name of the State of Texas for injunctive relief or to
22-49 recover a civil penalty or for both injunctive relief and penalty.
22-50 SECTION 33. Section 6.06, Texas Motor Vehicle Commission
22-51 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
22-52 by adding Subsection (g) to read as follows:
22-53 (g) A writ of error is allowed from the supreme court for an
22-54 appeal from an interlocutory order described by Section 51.014(3)
22-55 or 51.014(6), Civil Practice and Remedies Code, in a civil action
22-56 involving a licensee. The writ of error shall be given precedence
22-57 by the supreme court over other writs of error. The right to writ
22-58 of error appeal is without prejudice to the right of any party to
22-59 seek relief by application for leave to file petition for writ of
22-60 mandamus with respect to the order.
22-61 SECTION 34. Subsections (e), (g), and (j), Section 6.07,
22-62 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
22-63 Texas Civil Statutes), are amended to read as follows:
22-64 (e)(1) The board [Commission] shall adopt rules for the
22-65 enforcement and implementation of this section.
22-66 (2) The [Executive] Director shall, in accordance with
22-67 rules adopted by the board [Commission], conduct hearings and issue
22-68 final orders for the enforcement and implementation of this
22-69 section. Orders issued by the [Executive] Director under this
23-1 section are considered final orders of the board [Commission].
23-2 (3) Except as provided by Subdivision (6) of this
23-3 subsection, the provisions of this section are not available to an
23-4 owner in an action seeking a refund or replacement based upon the
23-5 alleged nonconformity of a motor vehicle to an express warranty
23-6 applicable to the motor vehicle unless the owner has first
23-7 exhausted the administrative remedies provided herein.
23-8 (4) The provisions of this section are not available
23-9 to a party in an action against a seller under Chapter 2 or Chapter
23-10 17, Business & Commerce Code, as amended.
23-11 (5) Except as provided by Subdivision (6) of this
23-12 subsection, the provisions of this section are available in an
23-13 action against a manufacturer, converter, or distributor brought
23-14 under Chapter 17, Business & Commerce Code, after the owner has
23-15 exhausted the administrative remedies provided by this section.
23-16 (6) If, after a complaint has been filed under this
23-17 section, the Hearing Examiner has not issued a proposal for
23-18 decision and recommended to the [Executive] Director a final order
23-19 before the expiration of the 150th day after the date the complaint
23-20 was filed, the [Executive] Director shall, in writing sent by
23-21 certified mail, so inform the complainant and the manufacturer,
23-22 converter, or distributor of the expiration of the 150-day period
23-23 and of the complainant's right to file a civil action. The board
23-24 [Commission] shall extend the 150-day period if a delay is
23-25 requested or is caused by the complainant.
23-26 (7) After receipt of the notice of the right to file a
23-27 civil action, the complainant may file a civil action against one
23-28 or more of the persons complained of in the complaint.
23-29 (8) A failure by the board [Commission] to issue a
23-30 notice of the right to file a civil action does not affect a
23-31 complainant's right to bring an action under this Act.
23-32 (9) Any party to a proceeding under this section
23-33 before the [Executive] Director that is affected by a final order
23-34 of the [Executive] Director is entitled to judicial review of the
23-35 order under the substantial evidence rule in a District Court of
23-36 Travis County, Texas. The judicial review is subject to Chapter
23-37 2001, Government Code, [the Administrative Procedure and Texas
23-38 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)]
23-39 except to the extent that that Act is inconsistent with this Act.
23-40 (g) In a hearing under this section, the [Executive]
23-41 Director shall make its order with respect to responsibility for
23-42 payment of the cost of any refund or replacement and no
23-43 manufacturer, converter, or distributor may cause any franchised
23-44 dealer to pay directly or indirectly any sum not specifically so
23-45 ordered by the [Executive] Director. If the [Executive] Director
23-46 orders a manufacturer, converter, or distributor to refund or
23-47 replace a motor vehicle because it meets the criteria set forth in
23-48 this section, the [Executive] Director may order the franchised
23-49 dealer to reimburse the owner, lienholder, manufacturer, converter,
23-50 or distributor only for items or options added to the vehicle by
23-51 the franchised dealer and only to the extent that one or more of
23-52 such items or options contributed to the defect that served as the
23-53 basis for the [Executive] Director's order of refund or
23-54 replacement. In a case involving a leased vehicle, the [Executive]
23-55 Director may terminate the lease and apportion the allowance for
23-56 use and other allowances or refunds between the lessee and lessor
23-57 of the vehicle.
23-58 (j)(1) A manufacturer, distributor, or converter that has
23-59 been ordered to repurchase or replace a vehicle shall, through its
23-60 franchised dealer, issue a disclosure statement stating that the
23-61 vehicle was repurchased or replaced by the manufacturer,
23-62 distributor, or converter under this section. The disclosure
23-63 statement must accompany the vehicle through the first retail
23-64 purchase. The manufacturer, distributor, or converter must restore
23-65 the cause of the repurchase or replacement to factory
23-66 specifications and issue a new 12-month, 12,000-mile warranty on
23-67 the vehicle. The disclosure statement must include a toll-free
23-68 telephone number of the board [Commission] that will enable a
23-69 purchaser of a repurchased or replaced vehicle to obtain
24-1 information about the condition or defect that was the basis of the
24-2 order for repurchase or replacement. The board [Commission] shall
24-3 adopt rules for the enforcement of this subdivision.
24-4 (2) The board [Commission] shall provide a toll-free
24-5 telephone number for providing information to persons who request
24-6 information about a condition or defect that was the basis for
24-7 repurchase or replacement by an order of the [Executive] Director.
24-8 The board [Commission] shall maintain an effective method of
24-9 providing information to persons who make the requests.
24-10 SECTION 35. Subsections (a), (c), and (d), Section 7.01,
24-11 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
24-12 Texas Civil Statutes), are amended to read as follows:
24-13 (a) Any party to a proceeding before the board [Commission]
24-14 that is affected by a final order, rule, decision, or other final
24-15 action of the board [Commission] is entitled to judicial review of
24-16 any such final board [Commission] action, under the substantial
24-17 evidence rule, in a District Court of Travis County, Texas, or in
24-18 the Court of Appeals for the Third Court of Appeals District, and
24-19 to the extent not inconsistent herewith, pursuant to Chapter 2001,
24-20 Government Code [the Administrative Procedure and Texas Register
24-21 Act (Article 6252-13a, Vernon's Texas Civil Statutes)]. Except as
24-22 otherwise provided by this Act, an appeal [Appeals] initiated in
24-23 the District Courts of Travis County shall be removable to the
24-24 Court of Appeals upon notice of removal to any such district court
24-25 by any party at any time prior to trial in the district court.
24-26 Appeals initiated in or removed to the Court of Appeals shall be
24-27 initiated under Chapter 2001, Government Code, [the Administrative
24-28 Procedure and Texas Register Act] as if initiated in a Travis
24-29 County District Court and shall, upon the filing thereof, be
24-30 thereafter governed by the Texas Rules of Appellate Procedure.
24-31 (c) Citation must be served on the [Executive] Director.
24-32 Citation must also be served on all other parties of record before
24-33 the board [Commission]. For appeals initiated in the Court of
24-34 Appeals, the court shall cause citation to be issued.
24-35 (d) Appeals in which evidence outside the board's
24-36 [Commission's] record is to be taken under Chapter 2001, Government
24-37 Code [Section 19(d)(3), Administrative Procedure and Texas Register
24-38 Act (Article 6252-13a, Vernon's Texas Civil Statutes)], or
24-39 otherwise, shall be initiated in a Travis County District Court, or
24-40 having been initiated in the Court of Appeals, shall be subject to
24-41 remand to a Travis County District Court for proceedings in
24-42 accordance with instructions from the Court of Appeals.
24-43 SECTION 36. (a) Notwithstanding the terms of Section
24-44 5.02(b)(25), Texas Motor Vehicle Commission Code (Article 4413(36),
24-45 Vernon's Texas Civil Statutes), a person who, on June 7, 1995,
24-46 held both a motor home dealer's license and a motor home
24-47 manufacturer's license issued pursuant to the terms of the Texas
24-48 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
24-49 Civil Statutes), may hold both a motor home dealer's license and a
24-50 motor home manufacturer's license as those terms are defined by the
24-51 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
24-52 Texas Civil Statutes).
24-53 (b) Subsection (a) of this section authorizes a person to
24-54 operate as a manufacturer and a dealer of no vehicle or type of
24-55 vehicle except a motor home as that term is defined by the Texas
24-56 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
24-57 Civil Statutes).
24-58 SECTION 37. Notwithstanding the terms of Section 2.04, Texas
24-59 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
24-60 Civil Statutes), of the members of the Motor Vehicle Board first
24-61 appointed as a result of the increase in the size of the board to
24-62 nine members, as provided by provisions of this Act amending
24-63 Section 2.02, Texas Motor Vehicle Commission Code (Article
24-64 4413(36), Vernon's Texas Civil Statutes), to terms that begin on
24-65 February 1, 1998, the governor shall appoint:
24-66 (1) one dealer to a term that expires January 31,
24-67 2003;
24-68 (2) one dealer to a term that expires January 31,
24-69 2001; and
25-1 (3) one representative of a manufacturer or
25-2 distributor to a term that expires January 31, 1999.
25-3 SECTION 38. (a) Section 33 of this Act applies to a civil
25-4 action:
25-5 (1) commenced on or after the effective date of this
25-6 Act; or
25-7 (2) commenced before the effective date of this Act
25-8 but pending on the effective date of this Act and in which the
25-9 trial, or any new trial or retrial following motion, or appeal, or
25-10 otherwise, begins on or after the effective date of this Act,
25-11 provided that the application for a writ of error under Section 33
25-12 of this Act must be filed not later than the later of 30 days after
25-13 the effective date of this Act, or the time specified by the Texas
25-14 Rules of Appellate Procedure.
25-15 (b) An action commenced before the effective date of this
25-16 Act and in which the trial or any new trial or retrial is in
25-17 progress on the effective date of this Act is governed by the law
25-18 applicable to the action immediately before the effective date of
25-19 this Act, and that law is continued in effect for that purpose.
25-20 SECTION 39. The importance of this legislation and the
25-21 crowded condition of the calendars in both houses create an
25-22 emergency and an imperative public necessity that the
25-23 constitutional rule requiring bills to be read on three several
25-24 days in each house be suspended, and this rule is hereby suspended,
25-25 and that this Act take effect and be in force from and after its
25-26 passage, and it is so enacted.
25-27 * * * * *