By Siebert H.B. No. 3092
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the authority and duties of the Texas Motor Vehicle
1-3 Board.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-6 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-7 read as follows:
1-8 Sec. 1.03. DEFINITIONS. In this Act:
1-9 (1) "Ambulance" means a vehicle used exclusively for
1-10 providing emergency medical care to an injured or ill person or
1-11 transporting an injured or ill person, if the vehicle provides:
1-12 (A) a driver's compartment;
1-13 (B) a compartment to accommodate an emergency
1-14 medical care technician or paramedic and two injured or ill persons
1-15 so positioned that one of the injured or ill persons can be given
1-16 intensive life-support during transit;
1-17 (C) equipment and supplies for emergency care of
1-18 an injured or ill person where the ill person is located or at the
1-19 scene of an injury-producing incident as well as in transit;
1-20 (D) two-way radio communication capability; and
1-21 (E) equipment for light rescue or extrication
2-1 procedures.
2-2 (2) "Board" means the Motor Vehicle Board of the Texas
2-3 Department of Transportation.
2-4 (3) "Broker" means a person who, for a fee,
2-5 commission, or other valuable consideration, arranges or offers to
2-6 arrange a transaction involving the sale[, for purposes other than
2-7 resale,] of a new motor vehicle, and who is not:
2-8 (A) a franchised dealer or bona fide employee of
2-9 a franchised dealer when acting on behalf of a franchised dealer;
2-10 (B) a representative or bona fide employee of a
2-11 representative when acting on behalf of a representative;
2-12 (C) a distributor or bona fide employee of a
2-13 distributor when acting on behalf of a distributor; or
2-14 (D) at any point in the transaction the bona
2-15 fide owner of the vehicle involved in the transaction.
2-16 (4) "Chassis manufacturer" means a person who
2-17 manufactures and produces the frame upon which is mounted the body
2-18 of a motor vehicle.
2-19 (5) "Conversion" means a motor vehicle, other than a
2-20 motor home, ambulance, or fire-fighting vehicle, which has been
2-21 substantially modified by a person other than the manufacturer or
2-22 distributor of the chassis of the motor vehicle and which has not
2-23 been the subject of a retail sale.
2-24 (6) "Converter" means a person who prior to the retail
2-25 sale of a motor vehicle, assembles, installs, or affixes a body,
3-1 cab, or special equipment to a chassis, or who substantially adds,
3-2 subtracts from, or modifies a previously assembled or manufactured
3-3 motor vehicle.
3-4 (7) "Dealer" means a person who holds a general
3-5 distinguishing number issued by the Department pursuant to the
3-6 terms of Chapter 503, Transportation Code.
3-7 (8) "Dealership" means the physical premises and
3-8 business facilities on which a franchised dealer operates his
3-9 business, including the sale and repair of motor vehicles. The
3-10 term includes premises or facilities at which a person engages only
3-11 in the repair of motor vehicles if repairs are performed pursuant
3-12 to the terms of a franchise and a motor vehicle manufacturer's
3-13 warranty.
3-14 (9) "Department" means the Texas Department of
3-15 Transportation.
3-16 (10) "Director" means the director of the board.
3-17 (11) "Distributor" means any person who distributes
3-18 and/or sells new motor vehicles to franchised dealers and who is
3-19 not a manufacturer.
3-20 (12) "Executive Director" means the Executive Director
3-21 of the Texas Department of Transportation.
3-22 (13) "Fire-fighting vehicle" means a motor vehicle
3-23 which has as its sole purpose transporting fire fighters to the
3-24 scene of a fire and providing equipment to fight the fire, if the
3-25 vehicle is built on a truck chassis with a gross carrying capacity
4-1 of at least 10,000 pounds, to which the following have been
4-2 permanently affixed or mounted:
4-3 (A) a water tank with a minimum combined
4-4 capacity of 500 gallons; and
4-5 (B) a centrifugal water pump with a minimum
4-6 capacity of not less than 750 gallons per minute at 150 pounds per
4-7 square inch net pump pressure.
4-8 (14) "Franchise" means one or more contracts between
4-9 [a franchised dealer as franchisee, and either] a manufacturer or a
4-10 distributor as franchisor, and another person as franchisee under
4-11 which (A) the franchisee is granted the right to sell and service
4-12 new motor vehicles manufactured or distributed by the franchisor or
4-13 only service motor vehicles pursuant to the terms of a franchise
4-14 and a manufacturer's warranty; (B) the franchisee as an independent
4-15 business is a component of franchisor's distribution system; (C)
4-16 the franchisee is substantially associated with franchisor's
4-17 trademark, trade name and commercial symbol; (D) the franchisee's
4-18 business is substantially reliant on franchisor for a continued
4-19 supply of motor vehicles, parts, and accessories for the conduct of
4-20 its business; or (E) any right, duty, or obligation granted or
4-21 imposed by this Act is affected. The term includes a written
4-22 communication from a franchisor to a franchisee by which a duty is
4-23 imposed on the franchisee.
4-24 (15) "Franchised dealer" means any person who holds a
4-25 franchised motor vehicle dealer's general distinguishing number
5-1 issued by the Department pursuant to the terms of Chapter 503,
5-2 Transportation Code, and who is engaged in the business of buying,
5-3 selling, or exchanging new motor vehicles and servicing or
5-4 repairing motor vehicles pursuant to the terms of a franchise and a
5-5 manufacturer's warranty at an established and permanent place of
5-6 business pursuant to a franchise in effect with a manufacturer or
5-7 distributor.
5-8 (16) "General distinguishing number" means a dealer
5-9 license issued by the Department pursuant to the terms of Chapter
5-10 503, Transportation Code.
5-11 (17) "Lease" means a transfer of the right to
5-12 possession and use of a motor vehicle for a term in excess of 180
5-13 days in return for consideration.
5-14 (18) "Lease facilitator" means a person, other than a
5-15 franchised dealer or a bona fide employee of a dealer, or a vehicle
5-16 lessor or a bona fide employee of a vehicle lessor, who:
5-17 (A) holds himself out to any person as a "motor
5-18 vehicle leasing company" or "motor vehicle leasing agent" or uses
5-19 a similar title, for the purpose of soliciting or procuring a
5-20 person to enter into a contract or agreement to become the lessee
5-21 of a vehicle that is not, and will not be, titled in the name of
5-22 and registered to the lease facilitator; or
5-23 (B) otherwise solicits a person to enter into a
5-24 contract or agreement to become a lessee of a vehicle that is not,
5-25 and will not be, titled in the name of and registered to the lease
6-1 facilitator, or who is otherwise engaged in the business of
6-2 securing lessees or prospective lessees of motor vehicles that are
6-3 not, and will not be, titled in the name of and registered to the
6-4 facilitator.
6-5 (19) "Lessor" means a person who, pursuant to the
6-6 terms of a lease, transfers to another person the right to
6-7 possession and use of a motor vehicle titled in the name of the
6-8 lessor [acquires title to a motor vehicle for the purpose of
6-9 leasing the vehicle to another person].
6-10 (20) "Licensee" means a person who holds a license or
6-11 general distinguishing number issued by the Board under the terms
6-12 of this Act or Chapter 503, Transportation Code.
6-13 (21) "Manufacturer" means any person who manufactures
6-14 or assembles new motor vehicles [either within or without this
6-15 State].
6-16 (22) "Manufacturer's statement of origin" means a
6-17 certificate on a form prescribed by the Department showing the
6-18 original transfer of a new motor vehicle from the manufacturer to
6-19 the original purchaser.
6-20 (23) "Motor home" means a motor vehicle which is
6-21 designed to provide temporary living quarters and which:
6-22 (A) is built onto as an integral part of, or is
6-23 permanently attached to, a motor vehicle chassis; and
6-24 (B) contains at least four of the following
6-25 independent life support systems if each is permanently installed
7-1 and designed to be removed only for purposes of repair or
7-2 replacement and meets the standards of the American National
7-3 Standards Institute, Standards for Recreational Vehicles:
7-4 (i) a cooking facility with an on-board
7-5 fuel source;
7-6 (ii) a gas or electric
7-7 refrigerator;
7-8 (iii) a toilet with exterior
7-9 evacuation;
7-10 (iv) a heating or air
7-11 conditioning system with an on-board power or fuel source separate
7-12 from the vehicle engine;
7-13 (v) a potable water supply system that
7-14 includes at least a sink, a faucet, and a water tank with an
7-15 exterior service supply connection;
7-16 (vi) a 110-125 volt electric
7-17 power supply.
7-18 (24) "Motor home manufacturer" means a person other
7-19 than the manufacturer of the chassis of a motor vehicle who, prior
7-20 to the retail sale of the motor vehicle, performs modifications on
7-21 the chassis that result in the finished product being classified as
7-22 a motor home.
7-23 (25) "Motor vehicle" means:
7-24 (A) every fully self-propelled vehicle which has
7-25 as its primary purpose the transport of a person or persons, or
8-1 property, on a public highway, and having two or more wheels;
8-2 (B) every two or more wheeled fully
8-3 self-propelled, titled vehicle which has as its primary purpose the
8-4 transport of a person or persons or property and is not
8-5 manufactured for use on public streets, roads, or highways;
8-6 (C) an engine, transmission, or rear axle
8-7 manufactured for installation in a vehicle having as its primary
8-8 purpose the transport of a person or persons or property on a
8-9 public highway and having a gross vehicle weight rating of more
8-10 than 16,000 pounds, whether or not attached to a vehicle chassis;
8-11 or
8-12 (D) a towable recreational vehicle.
8-13 (26) "New motor vehicle" means a motor vehicle which
8-14 has not been the subject of a "retail sale" without regard to the
8-15 mileage of the vehicle.
8-16 (27) "Nonfranchised dealer" means a person who holds
8-17 an independent motor vehicle dealer's general distinguishing number
8-18 or a wholesale motor vehicle dealer's general distinguishing number
8-19 issued by the Department pursuant to the terms of Chapter 503,
8-20 Transportation Code.
8-21 (28) "Party" means each person or agency named or
8-22 admitted as a party and whose legal rights, duties, or privileges
8-23 are to be determined by the board [Commission] after an opportunity
8-24 for adjudicative hearing.
8-25 [(28) "Towable recreational vehicle" means a
9-1 nonmotorized vehicle that is designed and originally manufactured
9-2 for temporary human habitation as its primary purpose for
9-3 recreational, camping, or seasonal use and:]
9-4 [(A) is titled and registered with the Texas
9-5 Department of Transportation as a travel trailer through the county
9-6 tax assessor-collector;]
9-7 [(B) is permanently built on a single chassis;]
9-8 [(C) contains one or more life support systems;
9-9 and]
9-10 [(D) is designed to be towable by another motor
9-11 vehicle.]
9-12 (29) "Person" means a natural person, partnership,
9-13 corporation, association, trust, estate, or any other legal entity.
9-14 (30) "Relocation" means the transfer of an existing
9-15 dealership operation to facilities at a different location,
9-16 including a transfer which results in a consolidation or dualing of
9-17 an existing dealer's operation.
9-18 (31) "Representative" means any person who is or acts
9-19 as an agent, employee or representative of a manufacturer,
9-20 distributor, or converter who performs any duties in this State
9-21 relating to promoting the distribution and/or sale of new motor
9-22 vehicles or contacts dealers in this State on behalf of a
9-23 manufacturer, distributor, or converter.
9-24 (32) "Retail sale" means the sale of a motor vehicle
9-25 except:
10-1 (A) a sale in which the purchaser acquires a
10-2 vehicle for the purpose of resale; or
10-3 (B) a sale of a vehicle that is operated under
10-4 and in accordance with Section 503.061, Transportation Code.
10-5 (33) "Rule" means a statement by the board
10-6 [Commission] of general and future applicability that implements,
10-7 interprets, or prescribes law or policy or describes the
10-8 organization or procedural practice requirements of the board
10-9 [Commission]. The term includes the amendment or repeal of a prior
10-10 rule, but does not include statements concerning only the internal
10-11 management of the board [Commission] which do not affect the rights
10-12 of a person not connected with the board [Commission].
10-13 (34) "Towable recreational vehicle" means a
10-14 nonmotorized vehicle originally designed and manufactured for the
10-15 primary purpose of providing temporary human habitation in
10-16 conjunction with recreational, camping, or seasonal use and:
10-17 (A) is titled and registered with the Texas
10-18 Department of Transportation as a travel trailer through the county
10-19 tax assessor-collector;
10-20 (B) is permanently built on a single chassis;
10-21 (C) contains one or more life support systems;
10-22 and
10-23 (D) is designed to be towable by another motor
10-24 vehicle.
10-25 (35) [(34)] "Transportation Commission" means the
11-1 Texas Transportation Commission of the Texas Department of
11-2 Transportation.
11-3 (36) [(35)] "Warranty work" means parts, labor, and
11-4 any other expenses incurred by a franchised dealer in complying
11-5 with the terms of a manufacturer's or distributor's warranty.
11-6 SECTION 2. Section 2.02, Texas Motor Vehicle Commission Code
11-7 (Article 4413(36), Vernon's Texas Civil Statutes) is amended by
11-8 adding Subsection (d) to read as follows:
11-9 "(d) A person is eligible for appointment to the board as
11-10 provided by Subsection (c)(1) of this section if the person is
11-11 otherwise eligible as provided by this Act and is a natural person
11-12 who is either himself or herself a dealer or is the bona fide owner
11-13 of at least 20 percent of an entity that is a dealer.
11-14 Notwithstanding the terms of this subsection, a person is not
11-15 eligible to serve on the board as provided by Subsection (c)(1) of
11-16 this section if the person's status as dealer is derived from a
11-17 dealer or dealership in which a manufacturer or distributor owns an
11-18 interest.
11-19 SECTION 3. Subsections (a), (b) and (c), Section 2.08, Texas
11-20 Motor Vehicle Commission code (Article 4413(36), Vernon's Texas
11-21 Civil Statutes), are amended to read as follows:
11-22 Section 2.08. COMMISSION MEETINGS. (a) The Governor shall
11-23 designate one member of the board, other than a member appointed
11-24 pursuant to the terms of Section 2.02(c) of this Act, as Chairman
11-25 to serve in that capacity at the pleasure of the Governor. The
12-1 board shall hold a regular annual meeting in September of each year
12-2 and elect a Vice-chairman to serve for the ensuing year. The board
12-3 shall have regular meetings as the majority of the members may
12-4 specify and special meetings at the request of the Chairman, any
12-5 two members, or the Director. Reasonable notice of all meetings
12-6 shall be given as board rules prescribe. A majority of the board
12-7 constitutes a quorum to transact business, except that a member
12-8 appointed under Section 2.02(b) [Section 2.02] of this Act is not
12-9 counted in the calculation of a quorum for purposes of the
12-10 determination of an issue with respect to which the member is
12-11 prohibited from voting. The Chairman, or in his absence, the
12-12 Vice-chairman, shall preside at all meetings of the board. In the
12-13 absence of both the Chairman and the Vice-chairman, the members
12-14 present shall select one of their number to serve as chairman for
12-15 the meeting.
12-16 (b) The board [Commission] is subject to Chapters 551 and
12-17 2001, Government Code.
12-18 (c) The board [Commission] shall develop and implement
12-19 policies that provide the public with a reasonable opportunity to
12-20 appear before the Commission and to speak on any issue under the
12-21 jurisdiction of the Commission.
12-22 SECTION 4. Section 2.08A(c), Texas Motor Vehicle Commission
12-23 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
12-24 to read as follows:
12-25 (c) If the Director has knowledge that a potential ground
13-1 for removal exists, the Director shall notify the Chairman of the
13-2 board [Commission] of the ground. The Chairman shall then notify
13-3 the Governor and the Attorney General that a potential ground for
13-4 removal exists. If the potential ground for removal relates to the
13-5 Chairman of the board [Commission], the [Executive] Director shall
13-6 notify the Vice-chairman of the Commission, who shall notify the
13-7 Governor and the Attorney General that a potential ground for
13-8 removal exists.
13-9 SECTION 5. Section 3.02, Texas Motor Vehicle Commission Code
13-10 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
13-11 read as follows:
13-12 Section 3.02. DUTIES. (a) The board [Commission] shall, in
13-13 accordance with this Act, administer the provisions of this Act,
13-14 establish the qualifications of licensees, ensure that the
13-15 distribution, sale, and leasing of motor vehicles is conducted as
13-16 provided herein and under the board's [Commission's] rules, provide
13-17 for compliance with warranties, and otherwise prevent fraud, unfair
13-18 practices, discriminations, impositions, and other abuses in
13-19 connection with the distribution and sale of motor vehicles.
13-20 (b) The board [Commission] shall prepare and maintain
13-21 a written plan that describes how a person who does not speak
13-22 English or who has a physical, mental, or developmental disability
13-23 can be provided reasonable access to the Commission's programs.
13-24 SECTION 6. Section 3.08(g), Texas Motor Vehicle Commission
13-25 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
14-1 to read as follows:
14-2 (g) In all contested cases the examiner shall serve on all
14-3 parties a copy of the examiner's proposal for decision and
14-4 recommended order containing findings of fact and conclusions of
14-5 law. A party may file exceptions and replies to the board. In its
14-6 review of the case, the board may consider only the materials
14-7 timely submitted. The board may receive such oral argument from any
14-8 party as the board may allow. The board shall take such further
14-9 actions as are conducive to the issuance of a final order and shall
14-10 thereafter issue a written final decision or order. The board's
14-11 written final decision or order shall be signed on behalf of the
14-12 board by the chairman or vice chairman [Director]. A majority vote
14-13 of a quorum of the board shall be required to adopt final decisions
14-14 or orders of the board.
14-15 SECTION 7. Section 4.02, Texas Motor Vehicle Commission Code
14-16 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
14-17 read as follows:
14-18 Section 4.02. DEALER APPLICATION. (a) An application for a
14-19 dealer license shall be on a form prescribed by the board which
14-20 shall include the information required by Chapter 503,
14-21 Transportation Code, and information on the applicant's financial
14-22 resources, business integrity, business ability and experience,
14-23 franchise agreement if applicable, physical facilities, vehicle
14-24 inventory, and other factors the board considers necessary to
14-25 determine an applicant's qualifications to adequately serve the
15-1 [motoring] public.
15-2 (b) A dealer shall renew his license annually on an
15-3 application prescribed by the board [Commission]. If a material
15-4 change occurs in the information included in a dealer's application
15-5 for a license or renewal of a license, the dealer shall, within a
15-6 reasonable time but not later than the next annual renewal, notify
15-7 the board [Commission] of those changes. The board [Commission]
15-8 shall prescribe a form for the disclosure of the changes and shall
15-9 include in the renewal application a request for disclosure of
15-10 material changes.
15-11 (c) [(1)] A franchised dealer may carry on the business of
15-12 his dealership at more than one location; however, a separate
15-13 location for the display and sale of new motor vehicles may not be
15-14 established and maintained by a franchised dealer unless expressly
15-15 authorized by the franchised dealer's franchise and license. An
15-16 application for a franchised dealer's license or to amend a
15-17 franchised dealer's license which proposes the establishment of a
15-18 separate display and sales location is subject to all of the
15-19 provisions of this Act. A separate license shall be required for
15-20 each separate and distinct dealership as determined by the board
15-21 [Commission].
15-22 (d) [(2)] Except as provided in this subsection
15-23 [subdivision], no licensee may participate in a new motor vehicle
15-24 show or exhibition unless the board [Commission] has first had
15-25 written notice at least 30 days prior to the opening day of the
16-1 show or exhibition and its written approval has been granted. A
16-2 licensee may not sell or offer for sale a new motor vehicle at a
16-3 show or exhibition; however, dealership personnel may be present to
16-4 aid in the showing or exhibiting of new motor vehicles. This
16-5 subsection [subdivision] does not prohibit the sale of a towable
16-6 recreational vehicle, motor home, ambulance, or fire-fighting
16-7 vehicle at a show or exhibition if the show or exhibition is
16-8 approved by the board [Commission] and if the sale does not
16-9 otherwise violate a provision of law. If the board adopts[;
16-10 provided that, should the Commission adopt] a rule regulating
16-11 off-site display or sale of towable recreational vehicles, the
16-12 board [Commission] shall, as part of that rule, authorize the
16-13 display and sale of towable recreational vehicles at a private
16-14 event in a trade area [private events in trade areas (counties,
16-15 cities, or towns) where] that would not otherwise qualify for the
16-16 private event under the application of general participation
16-17 requirements for organized dealer shows and exhibitions [would
16-18 effectively preclude such an organized show or exhibition].
16-19 (e) [(3)] The board [Commission] shall, under its general
16-20 rule-making authority granted in this Act, establish rules and
16-21 guidelines for the implementation and enforcement of this section
16-22 [subsection].
16-23 (f) [(d)] A dealer licensed hereunder shall promptly notify
16-24 the board [Commission] of any proposed change in its ownership,
16-25 location, franchise, or any other matters the board [Commission]
17-1 may require by rule. Prior to a change in a dealer's location, a
17-2 dealer shall obtain a new license for that location.
17-3 SECTION 8. Section 4.03(b), Texas Motor Vehicle Commission
17-4 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-5 to read as follows:
17-6 (b) An applicant for a manufacturer's license shall furnish
17-7 a list of all distributors, representatives acting for applicant,
17-8 and all dealers franchised to sell the applicant's products in this
17-9 State and their respective locations. The applicant shall
17-10 separately set forth a list of dealers in which the applicant, or
17-11 an entity owned or controlled by the applicant, owns an interest,
17-12 whether or not the dealer is also included in the applicant's list
17-13 of franchised dealers. All applicants for manufacturer's licenses
17-14 and all licensed manufacturers shall thereafter advise the
17-15 Commission within 15 days of any change in their list of
17-16 distributors, representatives, and franchised dealers. This
17-17 information shall become part of the application.
17-18 SECTION 9. Section 5.01B(a), Texas Motor Vehicle Commission
17-19 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-20 to read as follows:
17-21 (a) In order to transfer, assign, or sell a franchise
17-22 agreement or controlling interest in the dealership to another
17-23 person, a dealer shall notify the manufacturer or distributor whose
17-24 vehicles the dealer is franchised to sell of the dealer's decision
17-25 to transfer, assign, or sell the dealership. The notification
18-1 required by this subsection must be by certified mail, return
18-2 receipt requested, and is the application by the dealer for
18-3 approval by the manufacturer or distributor of the transfer. The
18-4 notice must be in writing and must include:
18-5 (1) the prospective transferee's name, address,
18-6 financial qualifications, and business experience;
18-7 (2) a copy of pertinent agreements regarding the
18-8 proposed transfer, assignment, or sale;
18-9 (3) completed application forms and related
18-10 information generally utilized by the manufacturer or distributor
18-11 in reviewing prospective dealers, if the forms are on file with the
18-12 board; [and]
18-13 (4) the prospective transferee's written agreement to
18-14 comply with the terms of the franchise agreement to the extent that
18-15 the franchise agreement is not in conflict with the terms of this
18-16 Act; and
18-17 (5) if the prospective transferee is an entity owned
18-18 or controlled by a manufacturer or distributor, a statement
18-19 identifying the manufacturer that owns or controls the entity.
18-20 SECTION 10. Section 5.02(b), Texas Motor Vehicle Commission
18-21 code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
18-22 to read as follows;
18-23 (b) It is unlawful for any manufacturer, distributor, or
18-24 representative to:
18-25 (1) Require or attempt to require any dealer to order,
19-1 accept delivery of or pay anything of value, directly or
19-2 indirectly, for any motor vehicle, appliance, part, accessory or
19-3 any other commodity unless voluntarily ordered or contracted for by
19-4 such dealer.
19-5 (2) Refuse or fail to deliver, in reasonable
19-6 quantities and within a reasonable time, to a dealer having a
19-7 franchise agreement for the retail sale of any motor vehicles sold
19-8 or distributed by such manufacturer, distributor, or
19-9 representative, any new motor vehicle or parts or accessories to
19-10 new motor vehicles as are covered by such franchise if such
19-11 vehicle, parts or accessories are publicly advertised as being
19-12 available for delivery or are actually being delivered; provided,
19-13 however, this provision is not violated if such failure is caused
19-14 by acts of God, work stoppage or delays due to strikes or labor
19-15 disputes, freight embargoes or other causes beyond the control of
19-16 the manufacturer, distributor, or representative.
19-17 (3) Notwithstanding the terms of any franchise
19-18 agreement:
19-19 (A) Terminate or refuse to continue any
19-20 franchise with a dealer or directly or indirectly force or attempt
19-21 to force a dealer to relocate or discontinue a line-make or parts
19-22 or products related to that line-make unless all of the following
19-23 conditions are met:
19-24 (i) the dealer and the board have received
19-25 written notice by registered or certified mail from the
20-1 manufacturer, distributor, or representative not less than 60 days
20-2 before the effective date of termination or noncontinuance setting
20-3 forth the specific grounds for termination or noncontinuance; and
20-4 (ii) the written notice contains on the
20-5 first page thereof a conspicuous statement which reads as follows:
20-6 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
20-7 TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS, AND HAVE A HEARING IN
20-8 WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR NONCONTINUANCE OF
20-9 YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
20-10 COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
20-11 (iii) the manufacturer, distributor, or
20-12 representative has received the informed, written consent of the
20-13 affected dealer or the appropriate period for the affected dealer
20-14 to protest the proposed franchise termination or noncontinuance has
20-15 lapsed; or
20-16 (iv) if the affected dealer files a
20-17 protest with the board within the greater of (1) 60 days after
20-18 receiving its 60-day notice of proposed termination or
20-19 noncontinuance or (2) the time specified in such notice, the board
20-20 determines that the party seeking to terminate or not continue a
20-21 dealer's franchise has established by a preponderance of the
20-22 evidence, at a hearing called by the board, that there is good
20-23 cause for the proposed termination or noncontinuance.
20-24 (v) Notwithstanding Subdivisions (3)(A)(i)
20-25 and (3)(A)(iv) of this section, notice may be made not less than 15
21-1 days prior to the effective date of termination or noncontinuance
21-2 if a licensed dealer fails to conduct its customary sales and
21-3 service operations during its customary business hours for seven
21-4 consecutive business days unless such failure is caused by an act
21-5 of God, work stoppage or delays due to strikes or labor disputes,
21-6 an order of the board, or other causes beyond the control of the
21-7 dealer.
21-8 (B) Whenever a dealer files a timely protest to
21-9 a proposed franchise termination or noncontinuance, the board shall
21-10 notify the party seeking to terminate or to not continue the
21-11 protesting dealer's franchise that a timely protest has been filed,
21-12 that a hearing is required in accordance with this Act, and that
21-13 the party who gave the dealer notice of termination or
21-14 noncontinuance of the franchise may not terminate or refuse to
21-15 continue the franchise until the board issues its final decision or
21-16 order.
21-17 (C) If a franchise is terminated or not
21-18 continued, another franchise in the same line-make will be
21-19 established within a reasonable time unless it is shown to the
21-20 board by a preponderance of the evidence that the community or
21-21 trade area cannot reasonably support such a dealership. If this
21-22 showing is made, no dealer license shall be thereafter issued in
21-23 the same area unless a change in circumstances is established.
21-24 (4) Notwithstanding the terms of any franchise
21-25 agreement, modify or replace a franchise if the modification or
22-1 replacement would adversely affect, to a substantial degree, the
22-2 dealer's sales, investment, or obligations to provide service to
22-3 the public, unless the manufacturer, distributor, or representative
22-4 has first given the board and each affected dealer written notice
22-5 by registered or certified mail of any such action 60 days in
22-6 advance of the modification or replacement. The written notice
22-7 shall contain on the first page thereof a conspicuous statement
22-8 which reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO
22-9 FILE A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS,
22-10 AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED
22-11 MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE UNDER THE TERMS OF
22-12 THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."
22-13 Within the greater of (1) 60 days after receipt of such notice or
22-14 (2) the time specified in such notice, a dealer may file a protest
22-15 with the board and the modification or replacement shall not become
22-16 effective unless and until the board determines that the party
22-17 seeking to modify or replace a franchise has demonstrated by a
22-18 preponderance of the evidence that there is good cause for the
22-19 modification or replacement. The prior franchise shall continue in
22-20 effect until the protest is resolved by the board.
22-21 (5) Notwithstanding the terms of any franchise
22-22 agreement, in determining whether good cause has been established
22-23 for modifying, replacing, terminating, or refusing to continue a
22-24 franchise, or for forcing or attempting to force a dealer to
22-25 relocate or discontinue a line-make or parts or products related to
23-1 that line-make, the board shall consider all the existing
23-2 circumstances including, without limitation by the enumeration
23-3 herein, all the following:
23-4 (A) the dealer's sales in relation to the sales
23-5 in the market;
23-6 (B) the dealer's investment and obligations;
23-7 (C) injury to the public welfare;
23-8 (D) the adequacy of the dealer's service
23-9 facilities, equipment, parts, and personnel in relation to those of
23-10 other dealers of new motor vehicles of the same line-make;
23-11 (E) whether warranties are being honored by the
23-12 dealer;
23-13 (F) the parties' compliance with their franchise
23-14 agreement except to the extent that the franchise agreement is in
23-15 conflict with this Act; and
23-16 (G) the enforceability of the franchise
23-17 agreement from a public policy standpoint, including, without
23-18 limitation, issues of the reasonableness of the franchise
23-19 agreement's terms, oppression, adhesion, and the relative
23-20 bargaining power of the parties.
23-21 Good cause shall not be shown solely by the desire of a
23-22 manufacturer, distributor, or representative for market
23-23 penetration.
23-24 (6) Use any false, deceptive or misleading
23-25 advertising.
24-1 (7) Notwithstanding the terms of any franchise
24-2 agreement, prevent any dealer from reasonably changing the capital
24-3 structure of his dealership or the means by or through which he
24-4 finances the operation thereof, provided that the dealer meets
24-5 reasonable capital requirements.
24-6 (8) Notwithstanding the terms of any franchise
24-7 agreement, fail to give effect to or attempt to prevent any sale or
24-8 transfer of a dealer, dealership or franchise or interest therein
24-9 or management thereof except as provided by Section 5.01B.
24-10 (9) Notwithstanding the terms of any franchise
24-11 agreement, require or attempt to require that a dealer assign to or
24-12 act as an agent for any manufacturer, distributor or representative
24-13 in the securing of promissory notes and security agreements given
24-14 in connection with the sale or purchase of new motor vehicles or
24-15 the securing of policies of insurance on or having to do with the
24-16 operation of vehicles sold.
24-17 (10) Notwithstanding the terms of any franchise
24-18 agreement, fail or refuse, after complaint and hearing, to perform
24-19 the obligations placed on the manufacturer in connection with the
24-20 delivery, preparation and warranty of a new motor vehicle as
24-21 provided in the manufacturer's warranty, preparation, and delivery
24-22 agreements on file with the board .
24-23 (11) Notwithstanding the terms of any franchise
24-24 agreement[, fail to compensate its dealers for the work and
24-25 services they are required to perform in connection with the
25-1 dealer's delivery and preparation obligations according to the
25-2 agreements on file with the board which must be found by the board
25-3 to be reasonable, or fail to adequately and fairly compensate its
25-4 dealers for labor, parts and other expenses incurred by such dealer
25-5 to perform under and comply with a manufacturer's or a
25-6 distributor's warranty agreement, or require, as a prerequisite to
25-7 the manufacturer's or distributor's payment of a claim for
25-8 reimbursement as required by this section, that a dealer file with
25-9 the manufacturer or distributor the actual time spent in the
25-10 performance of labor unless actual time is the basis for
25-11 reimbursement. In no event shall any manufacturer or distributor
25-12 pay its dealers an amount of money for warranty work that is less
25-13 than that charged by the dealer to the retail customers of the
25-14 dealer for nonwarranty work of like kind. All claims made by
25-15 dealers for compensation for delivery, preparation, and warranty
25-16 work shall be paid within 30 days after approval and shall be
25-17 approved or disapproved within 30 days after receipt. When any
25-18 claim is disapproved, the dealer shall be notified in writing of
25-19 the grounds for disapproval. No claim which has been approved and
25-20 paid may be charged back to the dealer unless it can be shown that
25-21 the claim was false or fraudulent, that the repairs were not
25-22 properly made or were unnecessary to correct the defective
25-23 condition, or that the dealer failed to reasonably substantiate the
25-24 claim in accordance with reasonable written requirements of the
25-25 manufacturer or distributor, if the dealer has been notified of the
26-1 requirements prior to the time the claim arose, and if the
26-2 requirements were in effect at the time the claim arose. A
26-3 manufacturer or distributor may not audit a claim after the
26-4 expiration of two years following the submission of the claim
26-5 unless the manufacturer or distributor has reasonable grounds to
26-6 suspect that a claim was fraudulent. Notwithstanding the terms of a
26-7 franchise agreement] or provision of law in conflict with this
26-8 section, the dealer's delivery, preparation, and warranty
26-9 obligations as filed with the board shall constitute the dealer's
26-10 sole responsibility for product liability as between the dealer and
26-11 manufacturer or distributor, and, except for a loss caused by the
26-12 dealer's failure to adhere to these obligations, a loss caused by
26-13 the dealer's negligence or intentional misconduct, or a loss caused
26-14 by the dealer's modification of a product without manufacturer or
26-15 distributor authorization, the manufacturer or distributor shall
26-16 reimburse the dealer for all loss incurred by the dealer, including
26-17 legal fees, court costs, and damages, as a result of the dealer
26-18 having been named a party in a product liability action.
26-19 (12) Operate as a manufacturer, distributor, or
26-20 representative without a currently valid license from the board or
26-21 otherwise violate this Act or rules promulgated by the board
26-22 hereunder.
26-23 (13) Notwithstanding the terms of any franchise
26-24 agreement, to prevent or refuse to honor the succession to a
26-25 dealership by any legal heir or devisee under the will of a dealer
27-1 or under the laws of descent and distribution of this State unless
27-2 it is shown to the board, after notice and hearing, that the result
27-3 of such succession will be detrimental to the public interest and
27-4 to the representation of the manufacturer or distributor; provided,
27-5 however, nothing herein shall prevent a dealer, during his
27-6 lifetime, from designating any person as his successor dealer, by
27-7 written instrument filed with the manufacturer or distributor.
27-8 (14) Notwithstanding the terms of any franchise
27-9 agreement, require that a dealer pay or assume, directly or
27-10 indirectly, any part of any refund, rebate, discount, or other
27-11 financial adjustment made by the manufacturer, distributor, or
27-12 representative to, or in favor of, any customer of a dealer, unless
27-13 voluntarily agreed to by such dealer.
27-14 (15) Notwithstanding the terms of any franchise
27-15 agreement, deny or withhold approval of a written application to
27-16 relocate a franchise unless (A) the applicant has received written
27-17 notice of the denial or withholding of approval within 60 days
27-18 after receipt of the application containing information reasonably
27-19 necessary to enable the manufacturer or distributor to adequately
27-20 evaluate the application, and if (B) the applicant files a protest
27-21 with the board and the manufacturer or distributor establishes by a
27-22 preponderance of the evidence at a hearing called by the board that
27-23 the grounds for the denial or withholding of approval of the
27-24 relocation are reasonable.
27-25 (16) Notwithstanding the terms of any franchise
28-1 agreement, fail to pay to a dealer or any lienholder in accordance
28-2 with their respective interest after the termination of a
28-3 franchise:
28-4 (A) the dealer cost of each new motor vehicle in
28-5 the dealer's inventory with mileage of 6,000 miles or less, reduced
28-6 by the net discount value of each, where "net discount value" is
28-7 determined according to the following formula: net cost multiplied
28-8 by total mileage divided by 100,000, and where "net cost" equals
28-9 the dealer cost plus any charges by the manufacturer, distributor,
28-10 or representative for distribution, delivery, and taxes, less all
28-11 allowances paid to the dealer by the manufacturer, distributor, or
28-12 representative for new, unsold, undamaged, and complete motor
28-13 vehicles of current model year or one year prior model year in the
28-14 dealer's inventory, except that if a vehicle cannot be reduced by
28-15 the net discount value, the manufacturer or distributor shall pay
28-16 the dealer the net cost of the vehicle;
28-17 (B) the dealer cost of each new, unused,
28-18 undamaged, and unsold part or accessory if the part or accessory is
28-19 in the current parts catalogue and is still in the original,
28-20 resalable merchandising package and in unbroken lots, except that
28-21 in the case of sheet metal, a comparable substitute for the
28-22 original package may be used, and if the part or accessory was
28-23 purchased by the dealer either directly from the manufacturer or
28-24 distributor or from an outgoing authorized dealer as a part of the
28-25 dealer's initial inventory;
29-1 (C) the fair market value of each undamaged sign
29-2 owned by the dealer which bears a trademark or tradename used or
29-3 claimed by the manufacturer, distributor, or representative if the
29-4 sign was purchased from or purchased at the request of the
29-5 manufacturer, distributor, or representative;
29-6 (D) the fair market value of all special tools,
29-7 data processing equipment, and automotive service equipment owned
29-8 by the dealer which were recommended in writing and designated as
29-9 special tools and equipment and purchased from or purchased at the
29-10 request of the manufacturer, distributor, or representative, if the
29-11 tools and equipment are in usable and good condition except for
29-12 reasonable wear and tear;
29-13 (E) the cost of transporting, handling, packing,
29-14 storing, and loading of any property subject to repurchase under
29-15 this section;
29-16 (F) except as provided by this subdivision, any
29-17 sums due as provided by Paragraph (A) of this subdivision within 60
29-18 days after termination of a franchise and any sums due as provided
29-19 by Paragraphs (B) through (E) of this subdivision within 90 days
29-20 after termination of a franchise. As a condition of payment, the
29-21 dealer is to comply with reasonable requirements with respect to
29-22 the return of inventory as are set out in the terms of the
29-23 franchise agreement. A manufacturer or distributor shall reimburse
29-24 a dealer for the dealer's cost for storing any property covered by
29-25 this subdivision beginning 90 days following termination. A
30-1 manufacturer or distributor shall reimburse a dealer for the
30-2 dealer's cost of storing any property covered by this subdivision
30-3 before the expiration of 90 days from the date of termination if
30-4 the dealer notifies the manufacturer or distributor of the
30-5 commencement of storage charges within that period. On receipt of
30-6 notice of the commencement of storage charges, a manufacturer or
30-7 distributor may immediately take possession of the property in
30-8 question by repurchasing the property as provided by this
30-9 subdivision. A manufacturer, distributor, or representative who
30-10 fails to pay those sums within the prescribed time or at such time
30-11 as the dealer and lienholder, if any, proffer good title prior to
30-12 the prescribed time for payment, is liable to the dealer for:
30-13 (i) the greatest of dealer cost, fair
30-14 market value, or current price of the inventory;
30-15 (ii) interest on the amount due calculated
30-16 at the rate applicable to a judgment of a court; and
30-17 (iii) reasonable attorney's fees and
30-18 costs.
30-19 (17) Notwithstanding the terms of any franchise
30-20 agreement, change its distributor, its method of distribution of
30-21 its products in this state, or its business structure or ownership
30-22 in a manner that results in the termination or noncontinuance of a
30-23 franchise without good cause. The manufacturer, distributor, or
30-24 representative shall issue the same notice to the dealer and to the
30-25 board as is provided in Subdivisions (3)(A) and (B) of this section
31-1 and said same procedures shall apply to the parties.
31-2 (18) Notwithstanding the terms of any franchise
31-3 agreement, require a dealer to submit to arbitration on any issue
31-4 unless the dealer and the manufacturer, distributor, or
31-5 representative and their respective counsel agree to arbitrate
31-6 after a controversy arises. The arbitrator shall apply the
31-7 provisions of this Act in resolving the pertinent controversy.
31-8 Either party may appeal to the board a decision of an arbitrator on
31-9 the ground that the arbitrator failed to apply this Act.
31-10 (19) Notwithstanding the terms of any franchise
31-11 agreement, require that a dealer join, contribute to, or affiliate
31-12 with, directly or indirectly, any advertising association.
31-13 (20) Notwithstanding the terms of a franchise
31-14 agreement:
31-15 (A) require adherence to unreasonable sales or
31-16 service standards;
31-17 (B) directly or indirectly, discriminate against
31-18 a dealer or otherwise treat dealers differently as a result of a
31-19 formula or other calculation or process intended to gauge the
31-20 performance of a dealership;
31-21 (C) unreasonably require that a dealer purchase
31-22 special tools or equipment; or
31-23 (D) fail to compensate a dealer for all costs
31-24 incurred by the dealer as required by the manufacturer in complying
31-25 with the terms of a product recall by the manufacturer or
32-1 distributor, including the costs, if any, incurred by the dealer in
32-2 notifying vehicle owners of the existence of the recall.
32-3 (21) Discriminate unreasonably between or among
32-4 franchisees in the sale of a motor vehicle owned by the
32-5 manufacturer or distributor.
32-6 (22) Directly or indirectly, or through a subsidiary
32-7 or agent, require, as a condition for obtaining financing for a
32-8 motor vehicle, the purchaser of a vehicle to purchase any product
32-9 other than the motor vehicle from the manufacturer or distributor,
32-10 or from an entity owned or controlled by the manufacturer or
32-11 distributor.
32-12 (23) Directly or indirectly, or through a subsidiary
32-13 or agent, require, as a condition of its or its subsidiary's
32-14 agreement to provide financing for a motor vehicle, that any
32-15 insurance policy or service contract purchased by the motor vehicle
32-16 purchaser be purchased from a specific source.
32-17 (24) Compel a dealer through a financing subsidiary of
32-18 the manufacturer or distributor to agree to unreasonable operating
32-19 requirements or directly or indirectly to terminate a dealer
32-20 through the actions of a financing subsidiary of the manufacturer
32-21 or distributor. This subdivision does not limit the right of a
32-22 financing entity to engage in business practices in accordance with
32-23 the usage of trade in retail and wholesale motor vehicle financing.
32-24 (25) [Operate as a dealer except on a temporary basis
32-25 and only if:]
33-1 [(A) the dealership was previously owned by a
33-2 franchised dealer and is currently for sale at a reasonable price;
33-3 or]
33-4 [(B) the manufacturer, distributor, or
33-5 representative operates the dealership in a bona fide relationship
33-6 with a franchised dealer who is required to make a significant
33-7 investment in the dealership, subject to loss, and who reasonably
33-8 expects to acquire full ownership of the dealership under
33-9 reasonable terms and conditions.]
33-10 [(26)] Notwithstanding the terms of a franchise
33-11 agreement, deny or withhold approval of a dealer's application to
33-12 add a line-make or parts or products related to that line-make
33-13 unless, within 60 days of receipt of the dealer's written
33-14 application to add the line-make, the manufacturer or distributor
33-15 gives the dealer written notice of the denial or withholding of
33-16 approval. After receipt of notice, the dealer may file a protest
33-17 with the board. If the dealer files a protest as provided by this
33-18 subdivision, the board may uphold the manufacturer's or
33-19 distributor's decision to deny or withhold approval of the addition
33-20 of the line-make only if the manufacturer or distributor proves by
33-21 a preponderance of the evidence that the denial or withholding of
33-22 approval was reasonable. In determining whether or not the
33-23 manufacturer or distributor has met its burden to show that its
33-24 denial or withholding of approval is reasonable, the board shall
33-25 consider all existing circumstances, including, without limitation,
34-1 the following:
34-2 (A) the dealer's sales in relation to the sales
34-3 in the market;
34-4 (B) the dealer's investment and obligations;
34-5 (C) injury or benefit to the public [welfare];
34-6 (D) the adequacy of the dealer's sales and
34-7 service facilities, equipment, parts, and personnel in relation to
34-8 those of other dealers of new motor vehicles of the same line-make;
34-9 (E) whether warranties are being honored by the
34-10 dealer agreement;
34-11 (F) the parties' compliance with their franchise
34-12 agreement to the extent that the franchise agreement is not in
34-13 conflict with this Act;
34-14 (G) the enforceability of the franchise
34-15 agreement from a public policy standpoint, including without
34-16 limitation, issues of the reasonableness of the franchise
34-17 agreement's terms, oppression, adhesion, and the relative
34-18 bargaining power of the parties;
34-19 (H) whether the dealer complies with reasonable
34-20 capitalization requirements or will be able to comply with
34-21 reasonable capitalization requirements within a reasonable time;
34-22 (I) the harm, if any, to the manufacturer if the
34-23 denial or withholding of approval is not upheld; and
34-24 (J) the harm, if any, to the dealer if the
34-25 denial or withholding of approval is upheld.
35-1 (26)[(27)] Fail or refuse to offer to its same
35-2 line-make franchised dealers all models manufactured for that
35-3 line-make, or require a dealer to pay any extra fee, purchase
35-4 unreasonable advertising displays or other materials, or remodel,
35-5 renovate, or recondition the dealer's existing facilities as a
35-6 prerequisite to receiving a model or series of vehicles.
35-7 (27)[(28)] Require a dealer to compensate the
35-8 manufacturer or distributor for any court costs, attorney's fees,
35-9 or other expenses incurred in an administrative or civil proceeding
35-10 arising under this Act, except that this subdivision does not
35-11 prohibit a manufacturer and dealer from entering into an agreement
35-12 to share costs in a proceeding in which the dealer and manufacturer
35-13 have the same or similar interests.
35-14 SECTION 11. The Texas Motor Vehicle Commission Code (Article
35-15 4413(36), Vernon's Texas Civil Statutes), is amended by adding
35-16 Sections 5.02A, 5.02B and 5.02C to read as follows:
35-17 Section 5.02A. WARRANTY REIMBURSEMENT. (a) A manufacturer
35-18 or distributor shall file with the board a copy of the current
35-19 requirements the manufacturer or distributor places on its dealers
35-20 with respect to the dealer's:
35-21 (1) duties under the manufacturer or distributor's
35-22 warranty; and
35-23 (2) vehicle delivery and preparation obligations.
35-24 (b) Warranty or delivery and preparation requirements are
35-25 not enforceable unless they are reasonable and are disclosed and
36-1 filed in compliance with Subsection (a). The board shall insure
36-2 that the requirements set forth in Subsection (a) are reasonable.
36-3 (c) A manufacturer or distributor shall fairly and
36-4 adequately compensate its dealers for:
36-5 (1) all warranty work; and
36-6 (2) labor, parts, and other expenses necessarily
36-7 incurred by the dealer in the performance of warranty work.
36-8 (d) In no event may a manufacturer or distributor pay or
36-9 reimburse a dealer an amount of money for warranty work that is
36-10 less than that charged by the dealer to the dealer's retail
36-11 customers for nonwarranty work of like kind.
36-12 (e) A manufacturer or distributor shall pay a dealer's claim
36-13 for reimbursement for warranty work or dealer preparation and
36-14 delivery work within 30 days after approval of the claim. A claim
36-15 not disapproved within 30 days after the manufacturer or
36-16 distributor receives it is approved. If the claim is disapproved,
36-17 the manufacturer or distributor shall provide the dealer written
36-18 notice of the reasons for the disapproval.
36-19 (f) Except as provided by this section, a manufacturer or
36-20 distributor may not charge a dealer back to recoup money paid to
36-21 the dealer to satisfy a claim approved and paid as provided by this
36-22 section. A manufacturer or distributor may recoup from a dealer
36-23 money paid to the dealer to satisfy a claim approved and paid as
36-24 provided by this section if the manufacturer or distributor can
36-25 show that:
37-1 (1) the claim was false or fraudulent;
37-2 (2) repair work was not properly performed or was
37-3 unnecessary to correct a defective condition; or
37-4 (3) the dealer who made the claim failed to provide
37-5 substantiation of the claim in the manner provided by the
37-6 manufacturer's or distributor's requirements if those requirements
37-7 were on file with the board at the time the claim was filed and if
37-8 those requirements are reasonable as provided by this section.
37-9 (g) A manufacturer or distributor may not:
37-10 (1) audit a claim filed under this section after the
37-11 expiration of one year from the submission of the claim unless the
37-12 manufacturer or distributor has reasonable grounds to suspect that
37-13 a claim was fraudulent; or
37-14 (2) require, as a prerequisite to the payment of a
37-15 claim for reimbursement, that a dealer file a statement of actual
37-16 time spent in performance of labor, unless actual time is the basis
37-17 for reimbursement.
37-18 Section 5.02B. MANUFACTURER OR DISTRIBUTOR INCENTIVE
37-19 PROGRAMS: PROCEDURES. (a) In this section, "incentive program"
37-20 means a temporary program adopted by a manufacturer or distributor
37-21 that offers a monetary reward or other thing of value to a dealer,
37-22 a dealer's employee or a dealer's customer, for the attainment of
37-23 certain stated sales or other objectives within certain stated time
37-24 limits. This subsection does not render legal a program otherwise
37-25 prohibited by this Act.
38-1 (b) Prior to implementation of an incentive program, a
38-2 manufacturer or distributor shall file with the board a copy of the
38-3 rules and procedures of the program, and the duties of dealers
38-4 under the program.
38-5 (c) Except as provided by this subsection, and
38-6 notwithstanding the terms of an incentive program, a manufacturer
38-7 or distributor may not charge a dealer back to recoup money or the
38-8 cash value of another thing of value paid or conveyed to a dealer
38-9 in connection with an incentive program. A manufacturer or
38-10 distributor may recoup from a dealer money or the cash value of
38-11 another thing of value paid to a dealer in connection with an
38-12 incentive program if the manufacturer or distributor can show that:
38-13 (1) the information filed by the dealer in connection
38-14 with the incentive program contained a material, substantive
38-15 mistake but for which the manufacturer or distributor would not
38-16 have conveyed money or other thing of value to the dealer in
38-17 connection with the incentive program, if the mistake was not
38-18 subject to discovery prior to the conveyance of the money or other
38-19 thing of value, despite the use of due diligence by the
38-20 manufacturer or distributor; or
38-21 (2) the dealer committed fraud with respect to a
38-22 material fact or other material evidentiary matter upon which the
38-23 manufacturer or distributor relied in making the decision to pay
38-24 the dealer money or other thing of value in connection with the
38-25 incentive program.
39-1 (d) After the expiration of one year following the date on
39-2 which a manufacturer or distributor conveyed money or other thing
39-3 of value to a dealer in connection with an incentive program, the
39-4 manufacturer or distributor may not audit the records of the dealer
39-5 for the purpose of determining compliance with the rules of the
39-6 program unless the manufacturer or distributor has reasonable
39-7 grounds to suspect that the dealer committed fraud. In this
39-8 section, clerical error is not fraud.
39-9 Section 5.02C. MANUFACTURER OWNERSHIP OF DEALERSHIP.
39-10 (a) In this section the term "manufacturer" includes:
39-11 (1) a distributor;
39-12 (2) a representative; or
39-13 (3) a person or entity who is affiliated with a
39-14 manufacturer, distributor, or representative, or, who, directly or
39-15 indirectly through an intermediary, is controlled by, or is under
39-16 common control with, the manufacturer.
39-17 (b) For purposes of Subsection (a)(3), a person or entity is
39-18 controlled by a manufacturer if the manufacturer has the authority
39-19 directly or indirectly, by law or by agreement of the parties, to
39-20 direct or influence the management and policies of the person or
39-21 entity.
39-22 (c) Except as provided by this section, a manufacturer may
39-23 not directly or indirectly:
39-24 (1) own an interest in a dealer or dealership;
39-25 (2) operate or control a dealer or dealership; or
40-1 (3) act in the capacity of a dealer.
40-2 (d) A manufacturer may own an interest in a franchised
40-3 dealer, or otherwise control a dealership, for a period not to
40-4 exceed 12 months from the date the manufacturer acquires the
40-5 dealership if:
40-6 (1) the person from whom the manufacturer acquired the
40-7 dealership was a franchised dealer; and
40-8 (2) the dealership is for sale by the manufacturer at
40-9 a reasonable price and on reasonable terms and conditions.
40-10 (e) For the purpose of broadening the diversity of its
40-11 dealer body and enhancing opportunities for qualified persons who
40-12 are part of a group who have historically been underrepresented in
40-13 its dealer body, or other qualified persons who lack the resources
40-14 to purchase a dealership outright, but for no other purpose, a
40-15 manufacturer may temporarily own an interest in a dealership if the
40-16 manufacturer's participation in the dealership is in a bona fide
40-17 relationship with a franchised dealer who:
40-18 (1) has made a significant investment in the
40-19 dealership, subject to loss;
40-20 (2) has an ownership interest in the dealership; and
40-21 (3) operates the dealership under a plan to acquire
40-22 full ownership of the dealership within a reasonable time and under
40-23 reasonable terms and conditions.
40-24 SECTION 12. Section 6.01, Texas Motor Vehicle Commission
40-25 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
41-1 to read as follows:
41-2 Section 6.01. CIVIL PENALTY. (a) In the event the board
41-3 [Commission] determines, after a proceeding conducted in accordance
41-4 with this Act and the rules of the board [Commission], that any
41-5 person is violating or has violated any provision of this Act, any
41-6 rule or order of the board [Commission] issued pursuant to this
41-7 Act, or Section 503.038(a), or Subchapter A, Chapter 728,
41-8 Transportation code, the board [Commission] may levy a civil
41-9 penalty not to exceed $10,000 for each day of violation and for
41-10 each act of violation. Notwithstanding a law to the contrary, all
41-11 civil penalties recovered under this Act shall be deposited in the
41-12 state treasury to the credit of the state highway fund.
41-13 (b) In determining the amount of a civil penalty levied
41-14 under this Act, the board [Commission] shall consider:
41-15 (1) the seriousness of the violation, including but
41-16 not limited to the nature, circumstances, extent, and gravity of
41-17 the prohibited acts, and the harm or potential harm created to the
41-18 safety of the public;
41-19 (2) the economic damage to the public caused by the
41-20 violation;
41-21 (3) the history of the previous violations;
41-22 (4) the amount necessary to deter future violations;
41-23 (5) efforts made to correct the violations; and
41-24 (6) any other matters that justice may require.
41-25 SECTION 13. Section 6.07(a), Texas Motor Vehicle Commission
42-1 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
42-2 to read a follows:
42-3 (a) In addition to the other powers and duties provided for
42-4 in this Act, the board [Commission] shall cause manufacturers,
42-5 converters, and distributors to perform the obligations imposed by
42-6 this section. In this section "owner" means a Texas resident who:
42-7 (1) purchased a vehicle at retail from a licensee and
42-8 is entitled to enforce the terms of a manufacturer's warranty with
42-9 respect to the vehicle;
42-10 (2) is a lessor or lessee, other than a sublessee, who
42-11 purchased or leased the vehicle from a licensee; or
42-12 (3) is the transferee or assignee of any of the
42-13 persons described in Subdivisions (1)or (2) of this subsection if
42-14 the transferee or assignee is a Texas resident and is entitled to
42-15 enforce the terms of a manufacturer's warranty. [For purposes of
42-16 this section, the term "owner" means a retail purchaser, lessor,
42-17 lessee other than a sublessee, or the person so designated on the
42-18 certificate of title to a motor vehicle issued by the Texas
42-19 Department of Transportation, or an equivalent document issued by
42-20 the duly authorized agency of any other state, or any person to
42-21 whom such motor vehicle is legally transferred during the duration
42-22 of a manufacturer's or distributor's express warranty applicable to
42-23 such motor vehicle, and any other person entitled by the terms of
42-24 the manufacturer's, converter's, or distributor's express warranty
42-25 to enforce the obligations thereof.]
43-1 SECTION 14. Section 7.01(f), Texas Motor Vehicle Commission
43-2 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
43-3 to read as follows:
43-4 (f) Appeal shall not affect the enforcement of a final board
43-5 [Commission] order unless its enforcement is enjoinable under
43-6 Section 65.001 et seq., Civil Practice and Remedies Code, and under
43-7 principles of primary jurisdiction. Notwithstanding the terms of
43-8 this section, the board may, in the interest of justice, suspend
43-9 the enforcement of its order pending final determination of an
43-10 appeal of that order as provided by this section.
43-11 SECTION 15. EMERGENCY. The importance of this legislation
43-12 and the crowded condition of the calendars in both houses create an
43-13 emergency and an imperative public necessity that the
43-14 constitutional rule requiring bills to be read on three several
43-15 days in each house be suspended, and this rule is hereby suspended,
43-16 and that this Act take effect and be in force from and after its
43-17 passage, and it is so enacted.