75R12882 BEM-D
By Lewis of Orange H.B. No. 2037
Substitute the following for H.B. No. 2037:
By Bosse C.S.H.B. No. 2037
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to discontinuing boat and outboard motor franchise
1-3 agreements.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 3, Chapter 479, Acts of the 72nd
1-6 Legislature, Regular Session, 1991 (Article 8911, Vernon's Texas
1-7 Civil Statutes), is amended by amending Subsections (c), (d), and
1-8 (p) and adding Subsections (q) and (r) to read as follows:
1-9 (c) A [An agreement may not be terminated by a] manufacturer
1-10 or distributor may not terminate or fail to renew an agreement
1-11 unless:
1-12 (1) the manufacturer or distributor has given the
1-13 dealer written notice of termination or nonrenewal in clear,
1-14 concise terms;
1-15 (2) the notice sets forth the reasons for the
1-16 termination or nonrenewal of the agreement;
1-17 (3) the dealer has been given 30 days to exert good
1-18 faith efforts to cure the causes listed in the notice; and
1-19 (4) there is good cause in the public interest for the
1-20 termination or nonrenewal.
1-21 (d) For purposes of Subsection (c)(4) of this section, good
1-22 cause in the public interest is to be determined according to the
1-23 following:
1-24 (1) good cause may be shown by showing inadequate
2-1 dealer performance or capabilities based on sales, financial
2-2 strength, inventory depth, facilities and personnel, warranty
2-3 obligations, and other relevant circumstances;
2-4 (2) determinations concerning sales adequacy may
2-5 encompass the dealer's sales in relation to sales in the market,
2-6 the dealer's sales in prior years, sales of competing products in
2-7 the market, and failure by the dealer to achieve reasonable market
2-8 penetration;
2-9 (3) financial strength may be shown by the maintenance
2-10 of adequate capital or credit lines to purchase reasonable
2-11 quantities of product;
2-12 (4) inventory depth may be shown by the acquisition of
2-13 sufficient inventory to reasonably represent and market the product
2-14 line;
2-15 (5) determinations concerning facilities and personnel
2-16 may involve whether sales facilities, display facilities, service
2-17 facilities, equipment, parts inventories, and dealer personnel are
2-18 reasonably capable of meeting the dealer's obligations for sales
2-19 and service;
2-20 (6) warranty obligation determinations may involve the
2-21 dealer's willingness, capabilities, and customer satisfaction
2-22 levels with respect to undertaking warranty work relating to the
2-23 product line; and
2-24 (7) good cause also may be shown by the dealer's
2-25 substantial breach of material provisions of the agreement. [In
2-26 this section, "good cause" does not include the fact that a dealer
2-27 holds a dealer agreement involving another line, make, or brand of
3-1 new boat or new outboard motor. Good cause is not required in the
3-2 case of nonrenewal of a dealer agreement except for an agreement
3-3 for which the original term of the agreement is for a period of
3-4 less than one year.]
3-5 (p) A person who violates this Act or any term of an
3-6 agreement regulated by this Act is liable to an injured party for
3-7 actual damages caused by the violation and, if litigation is
3-8 commenced in connection with the violation, reasonable legal fees
3-9 and court costs, and the person forfeits the right to conduct
3-10 business in this state as a manufacturer, distributor, or dealer,
3-11 as the case may be.
3-12 (q) At the request of either party to an agreement, a
3-13 determination of good cause may be submitted to binding
3-14 arbitration. On application of the party seeking arbitration, an
3-15 arbitrator shall be appointed by the presiding judge of the
3-16 administrative region in which the dealer's business is located.
3-17 The arbitrator must be a resident of this state who is licensed to
3-18 practice law in this state, and may not have an interest in the
3-19 outcome of the proceeding. The arbitrator shall hold a hearing and
3-20 render a decision not later than the 30th day after the date the
3-21 arbitrator is appointed. The arbitration shall be conducted
3-22 according to Chapter 171, Civil Practice and Remedies Code, and is
3-23 governed by the rules of evidence requirements adopted under
3-24 Section 2001.081, Government Code. The parties shall share equally
3-25 the cost of the arbitrator and of the proceeding. Each party shall
3-26 pay for the party's own attorneys and experts. The parties shall
3-27 be bound by the decision of the arbitrator without an appeal.
4-1 (r) If an agreement is not renewed and the arbitrator
4-2 determines that there is good cause for nonrenewal, the agreement
4-3 expires on the later of the last day of the agreement's term or the
4-4 date on which the arbitrator issues the determination that there is
4-5 good cause for nonrenewal. If the arbitrator determines that there
4-6 is not good cause for the nonrenewal of the agreement, the
4-7 agreement shall be renewed at the end of its term or on the date
4-8 that the arbitrator issues the determination that there is not good
4-9 cause for the nonrenewal of the agreement, whichever is later, for
4-10 the same term as the agreement being renewed.
4-11 SECTION 2. This Act takes effect September 1, 1997.
4-12 SECTION 3. The importance of this legislation and the
4-13 crowded condition of the calendars in both houses create an
4-14 emergency and an imperative public necessity that the
4-15 constitutional rule requiring bills to be read on three several
4-16 days in each house be suspended, and this rule is hereby suspended.