1-1 By: Siebert, et al. (Senate Sponsor - Cain) H.B. No. 3092
1-2 (In the Senate - Received from the House April 23, 1999;
1-3 April 26, 1999, read first time and referred to Committee on State
1-4 Affairs; May 10, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 9, Nays 0; May 10, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 3092 By: Cain
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the authority and duties of the Texas Motor Vehicle
1-11 Board.
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), is amended to
1-15 read as follows:
1-16 Sec. 1.03. Definitions. In this Act:
1-17 (1) "Ambulance" means a vehicle used exclusively
1-18 for providing emergency medical care to an injured or ill person or
1-19 transporting an injured or ill person, if the vehicle provides:
1-20 (A) a driver's compartment;
1-21 (B) a compartment to accommodate an
1-22 emergency medical care technician or paramedic and two injured or
1-23 ill persons so positioned that one of the injured or ill persons
1-24 can be given intensive life-support during transit;
1-25 (C) equipment and supplies for emergency
1-26 care of an injured or ill person where the ill person is located or
1-27 at the scene of an injury-producing incident as well as in transit;
1-28 (D) two-way radio communication
1-29 capability; and
1-30 (E) equipment for light rescue or
1-31 extrication procedures.
1-32 (2) "Board" means the Motor Vehicle Board of the
1-33 Texas Department of Transportation.
1-34 (3) "Broker" means a person who, for a fee,
1-35 commission, or other valuable consideration, arranges or offers to
1-36 arrange a transaction involving the sale[, for purposes other than
1-37 resale,] of a new motor vehicle, and who is not:
1-38 (A) a franchised dealer or bona fide
1-39 employee of a franchised dealer when acting on behalf of a
1-40 franchised dealer;
1-41 (B) a representative or bona fide employee
1-42 of a representative when acting on behalf of a representative;
1-43 (C) a distributor or bona fide employee of
1-44 a distributor when acting on behalf of a distributor; or
1-45 (D) at any point in the transaction the
1-46 bona fide owner of the vehicle involved in the transaction.
1-47 (4) "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) "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) "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) "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.
1-63 (8) "Dealership" means the physical premises and
1-64 business facilities on which a franchised dealer operates his
2-1 business, including the sale and repair of motor vehicles. The
2-2 term includes premises or facilities at which a person engages only
2-3 in the repair of motor vehicles if repairs are performed pursuant
2-4 to the terms of a franchise and a motor vehicle manufacturer's
2-5 warranty.
2-6 (9) "Department" means the Texas Department of
2-7 Transportation.
2-8 (10) "Director" means the director of the board.
2-9 (11) "Distributor" means any person who
2-10 distributes and/or sells new motor vehicles to franchised dealers
2-11 and who is not a manufacturer.
2-12 (12) "Executive Director" means the Executive
2-13 Director of the Texas Department of Transportation.
2-14 (13) "Fire-fighting vehicle" means a motor
2-15 vehicle which has as its sole purpose transporting fire fighters to
2-16 the scene of a fire and providing equipment to fight the fire, if
2-17 the vehicle is built on a truck chassis with a gross carrying
2-18 capacity of at least 10,000 pounds, to which the following have
2-19 been permanently affixed or mounted:
2-20 (A) a water tank with a minimum combined
2-21 capacity of 500 gallons; and
2-22 (B) a centrifugal water pump with a
2-23 minimum capacity of not less than 750 gallons per minute at 150
2-24 pounds per square inch net pump pressure.
2-25 (14) "Franchise" means one or more contracts
2-26 between a franchised dealer as franchisee, and either a
2-27 manufacturer or a distributor as franchisor under which (A) the
2-28 franchisee is granted the right to sell and service new motor
2-29 vehicles manufactured or distributed by the franchisor or only
2-30 service motor vehicles pursuant to the terms of a franchise and a
2-31 manufacturer's warranty; (B) the franchisee as an independent
2-32 business is a component of franchisor's distribution system;
2-33 (C) the franchisee is substantially associated with franchisor's
2-34 trademark, trade name and commercial symbol; (D) the franchisee's
2-35 business is substantially reliant on franchisor for a continued
2-36 supply of motor vehicles, parts, and accessories for the conduct of
2-37 its business; or (E) any right, duty, or obligation granted or
2-38 imposed by this Act is affected. The term includes a written
2-39 communication from a franchisor to a franchisee by which a duty is
2-40 imposed on the franchisee.
2-41 (15) "Franchised dealer" means any person who
2-42 holds a franchised motor vehicle dealer's general distinguishing
2-43 number issued by the Department pursuant to the terms of Chapter
2-44 503, Transportation Code, and who is engaged in the business of
2-45 buying, selling, or exchanging new motor vehicles and servicing or
2-46 repairing motor vehicles pursuant to the terms of a franchise and a
2-47 manufacturer's warranty at an established and permanent place of
2-48 business pursuant to a franchise in effect with a manufacturer or
2-49 distributor.
2-50 (16) "General distinguishing number" means a
2-51 dealer license issued by the Department pursuant to the terms of
2-52 Chapter 503, Transportation Code.
2-53 (17) "Lease" means a transfer of the right to
2-54 possession and use of a motor vehicle for a term in excess of 180
2-55 days in return for consideration.
2-56 (18) "Lease facilitator" means a person, other
2-57 than a franchised dealer or a bona fide employee of a dealer, or a
2-58 vehicle lessor or a bona fide employee of a vehicle lessor, who:
2-59 (A) holds himself out to any person as a
2-60 "motor vehicle leasing company" or "motor vehicle leasing agent" or
2-61 uses a similar title, for the purpose of soliciting or procuring a
2-62 person to enter into a contract or agreement to become the lessee
2-63 of a vehicle that is not, and will not be, titled in the name of
2-64 and registered to the lease facilitator; or
2-65 (B) otherwise solicits a person to enter
2-66 into a contract or agreement to become a lessee of a vehicle that
2-67 is not, and will not be, titled in the name of and registered to
2-68 the lease facilitator, or who is otherwise engaged in the business
2-69 of securing lessees or prospective lessees of motor vehicles that
3-1 are not, and will not be, titled in the name of and registered to
3-2 the facilitator.
3-3 (19) "Lessor" means a person who, pursuant to
3-4 the terms of a lease, transfers to another person the right to
3-5 possession and use of a motor vehicle titled in the name of the
3-6 lessor [acquires title to a motor vehicle for the purpose of
3-7 leasing the vehicle to another person].
3-8 (20) "Licensee" means a person who holds a
3-9 license or general distinguishing number issued by the Board under
3-10 the terms of this Act or Chapter 503, Transportation Code.
3-11 (21) "Manufacturer" means any person who
3-12 manufactures or assembles new motor vehicles [either within or
3-13 without this State].
3-14 (22) "Manufacturer's statement of origin" means
3-15 a certificate on a form prescribed by the Department showing the
3-16 original transfer of a new motor vehicle from the manufacturer to
3-17 the original purchaser.
3-18 (23) "Motor home" means a motor vehicle which is
3-19 designed to provide temporary living quarters and which:
3-20 (A) is built onto as an integral part of,
3-21 or is permanently attached to, a motor vehicle chassis; and
3-22 (B) contains at least four of the
3-23 following independent life support systems if each is permanently
3-24 installed and designed to be removed only for purposes of repair or
3-25 replacement and meets the standards of the American National
3-26 Standards Institute, Standards for Recreational Vehicles:
3-27 (i) a cooking facility with
3-28 an on-board fuel source;
3-29 (ii) a gas or electric
3-30 refrigerator;
3-31 (iii) a toilet with
3-32 exterior evacuation;
3-33 (iv) a heating or air
3-34 conditioning system with an on-board power or fuel source separate
3-35 from the vehicle engine;
3-36 (v) a potable water supply
3-37 system that includes at least a sink, a faucet, and a water tank
3-38 with an exterior service supply connection;
3-39 (vi) a 110-125 volt
3-40 electric power supply.
3-41 (24) "Motor home manufacturer" means a person
3-42 other than the manufacturer of the chassis of a motor vehicle who,
3-43 prior to the retail sale of the motor vehicle, performs
3-44 modifications on the chassis that result in the finished product
3-45 being classified as a motor home.
3-46 (25) "Motor vehicle" means:
3-47 (A) every fully self-propelled vehicle
3-48 which has as its primary purpose the transport of a person or
3-49 persons, or property, on a public highway, and having two or more
3-50 wheels;
3-51 (B) every two or more wheeled fully
3-52 self-propelled, titled vehicle which has as its primary purpose the
3-53 transport of a person or persons or property and is not
3-54 manufactured for use on public streets, roads, or highways;
3-55 (C) an engine, transmission, or rear axle
3-56 manufactured for installation in a vehicle having as its primary
3-57 purpose the transport of a person or persons or property on a
3-58 public highway and having a gross vehicle weight rating of more
3-59 than 16,000 pounds, whether or not attached to a vehicle chassis;
3-60 or
3-61 (D) a towable recreational vehicle.
3-62 (26) "New motor vehicle" means a motor vehicle
3-63 which has not been the subject of a "retail sale" without regard to
3-64 the mileage of the vehicle.
3-65 (27) "Nonfranchised dealer" means a person who
3-66 holds an independent motor vehicle dealer's general distinguishing
3-67 number or a wholesale motor vehicle dealer's general distinguishing
3-68 number issued by the Department pursuant to the terms of Chapter
3-69 503, Transportation Code.
4-1 (28) "Party" means each person or agency named
4-2 or admitted as a party and whose legal rights, duties, or
4-3 privileges are to be determined by the board [Commission] after an
4-4 opportunity for adjudicative hearing.
4-5 [(28) "Towable recreational vehicle" means a
4-6 nonmotorized vehicle that is designed and originally manufactured
4-7 for temporary human habitation as its primary purpose for
4-8 recreational, camping, or seasonal use and:]
4-9 [(A) is titled and registered with the
4-10 Texas Department of Transportation as a travel trailer through the
4-11 county tax assessor-collector;]
4-12 [(B) is permanently built on a single
4-13 chassis;]
4-14 [(C) contains one or more life support
4-15 systems; and]
4-16 [(D) is designed to be towable by another
4-17 motor vehicle.]
4-18 (29) "Person" means a natural person,
4-19 partnership, corporation, association, trust, estate, or any other
4-20 legal entity.
4-21 (30) "Relocation" means the transfer of an
4-22 existing dealership operation to facilities at a different
4-23 location, including a transfer which results in a consolidation or
4-24 dualing of an existing dealer's operation.
4-25 (31) "Representative" means any person who is or
4-26 acts as an agent, employee or representative of a manufacturer,
4-27 distributor, or converter who performs any duties in this State
4-28 relating to promoting the distribution and/or sale of new motor
4-29 vehicles or contacts dealers in this State on behalf of a
4-30 manufacturer, distributor, or converter.
4-31 (32) "Retail sale" means the sale of a motor
4-32 vehicle except:
4-33 (A) a sale in which the purchaser acquires
4-34 a vehicle for the purpose of resale; or
4-35 (B) a sale of a vehicle that is operated
4-36 under and in accordance with Section 503.061, Transportation Code.
4-37 (33) "Rule" means a statement by the board
4-38 [Commission] of general and future applicability that implements,
4-39 interprets, or prescribes law or policy or describes the
4-40 organization or procedural practice requirements of the board
4-41 [Commission]. The term includes the amendment or repeal of a prior
4-42 rule, but does not include statements concerning only the internal
4-43 management of the board [Commission] which do not affect the rights
4-44 of a person not connected with the board [Commission].
4-45 (34) "Towable recreational vehicle" means a
4-46 nonmotorized vehicle originally designed and manufactured for the
4-47 primary purpose of providing temporary human habitation in
4-48 conjunction with recreational, camping, or seasonal use and:
4-49 (A) is titled and registered with the
4-50 Texas Department of Transportation as a travel trailer through the
4-51 county tax assessor-collector;
4-52 (B) is permanently built on a single
4-53 chassis;
4-54 (C) contains one or more life support
4-55 systems; and
4-56 (D) is designed to be towable by another
4-57 motor vehicle.
4-58 (35)[(34)] "Transportation Commission" means the
4-59 Texas Transportation Commission of the Texas Department of
4-60 Transportation.
4-61 (36)[(35)] "Warranty work" means parts, labor,
4-62 and any other expenses incurred by a franchised dealer in complying
4-63 with the terms of a manufacturer's or distributor's warranty.
4-64 SECTION 2. Section 2.02, Texas Motor Vehicle Commission Code
4-65 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by
4-66 repealing Subsection (b) and by renumbering Subsection (c) as
4-67 Subsection (b).
4-68 SECTION 3. Section 2.02, Texas Motor Vehicle Commission Code
4-69 (Article 4413(36), Vernon's Texas Civil Statutes) is amended by
5-1 adding Subsection (c) to read as follows:
5-2 "(c) A person is eligible for appointment to the board
5-3 as provided by Subsection (b)(1) of this section if the person is
5-4 otherwise eligible as provided by this Act and is a natural person
5-5 who is either himself or herself a dealer or is the bona fide owner
5-6 of at least 20 percent of an entity that is a dealer.
5-7 Notwithstanding the terms of this subsection, a person is not
5-8 eligible to serve on the board as provided by Subsection (b)(1) of
5-9 this section if the person's status as dealer is derived from a
5-10 dealer or dealership in which a manufacturer or distributor owns an
5-11 interest.
5-12 SECTION 4. Subsections (a), (b) and (c), Section 2.08, Texas
5-13 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
5-14 Civil Statutes), are amended to read as follows:
5-15 (a) The Governor shall designate one member of the board,
5-16 other than a member appointed pursuant to the terms of Section
5-17 2.02(b) [2.02(c)] of this Act, as Chairman to serve in that
5-18 capacity at the pleasure of the Governor. The board shall hold a
5-19 regular annual meeting in September of each year and elect a
5-20 Vice-chairman to serve for the ensuing year. The board shall have
5-21 regular meetings as the majority of the members may specify and
5-22 special meetings at the request of the Chairman, any two members,
5-23 or the Director. Reasonable notice of all meetings shall be given
5-24 as board rules prescribe. A majority of the board constitutes a
5-25 quorum to transact business, except that a member appointed under
5-26 Section 2.02(b) [Section 2.02] of this Act is not counted in the
5-27 calculation of a quorum for purposes of the determination of an
5-28 issue with respect to which the member is prohibited from voting.
5-29 The Chairman, or in his absence, the Vice-chairman, shall preside
5-30 at all meetings of the board. In the absence of both the Chairman
5-31 and the Vice-chairman, the members present shall select one of
5-32 their number to serve as chairman for the meeting.
5-33 (b) The board [Commission] is subject to Chapters 551
5-34 and 2001, Government Code.
5-35 (c) The board [Commission] shall develop and implement
5-36 policies that provide the public with a reasonable opportunity to
5-37 appear before the board [Commission] and to speak on any issue
5-38 under the jurisdiction of the board [Commission].
5-39 SECTION 5. Section 2.08A(c), Texas Motor Vehicle Commission
5-40 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
5-41 to read as follows:
5-42 (c) If the Director has knowledge that a potential
5-43 ground for removal exists, the Director shall notify the Chairman
5-44 of the board [Commission] of the ground. The Chairman shall then
5-45 notify the Governor and the Attorney General that a potential
5-46 ground for removal exists. If the potential ground for removal
5-47 relates to the Chairman of the board [Commission], the [Executive]
5-48 Director shall notify the Vice-chairman of the board [Commission],
5-49 who shall notify the Governor and the Attorney General that a
5-50 potential ground for removal exists.
5-51 SECTION 6. Section 2.09(a) and (e), Texas Motor Vehicle
5-52 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
5-53 are amended to read as follows:
5-54 (a) The [Executive Director shall appoint the] Director
5-55 [who] is the board's chief executive and administrative officer.
5-56 The Director, who shall be an attorney licensed to practice law in
5-57 this state, is charged with administering, enforcing, and carrying
5-58 out the provisions of this Act. The Director serves at the
5-59 pleasure of the board [Executive Director].
5-60 (e) The Director shall appoint and employ such board staff
5-61 as are necessary to carry out the duties and functions of the
5-62 Director and the board under this Act. [The board shall develop
5-63 and implement policies that clearly separate the policy-making
5-64 responsibilities of the board and the management responsibilities
5-65 of the Executive director and staff of the board.]
5-66 SECTION 7. Section 2.13, Texas Motor Vehicle Commission Code
5-67 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
5-68 read as follows:
5-69 Sec. 2.13. Intraagency career ladder program; annual
6-1 performance evaluations; information; equal opportunity
6-2 implementation plan; public information. (a) The [Executive]
6-3 Director or his designee shall develop an intraagency career ladder
6-4 program that addresses opportunities for mobility and advancement
6-5 of employees in the Commission. The program shall require
6-6 intraagency postings of all positions concurrently with any public
6-7 posting.
6-8 (b) The [Executive] Director or his designee shall develop a
6-9 system of annual performance evaluations that are based on
6-10 documented employee performance. All merit pay for board
6-11 [Commission] employees must be based on the system established
6-12 under this subsection.
6-13 (c) The [Executive] Director or his designee shall prepare
6-14 information describing the functions of the board [Commission] and
6-15 describing the procedures by which complaints or protests are filed
6-16 with and resolved by the board [Commission]. The board
6-17 [Commission] shall make the information available to the general
6-18 public and appropriate state agencies.
6-19 (d) The [Executive] Director or his designee shall prepare
6-20 and maintain a written policy statement to assure implementation of
6-21 a program of equal employment opportunity under which all personnel
6-22 transactions are made without regard to race, color, disability,
6-23 sex, religion, age, or national origin. The policy statement must
6-24 include:
6-25 (1) personnel policies, including policies relating to
6-26 recruitment, evaluation, selection, appointment, training, and
6-27 promotion of personnel that comply with Chapter 21, Labor Code;
6-28 (2) a comprehensive analysis of the Commission work
6-29 force that meets federal and state laws, rules, and regulations and
6-30 instructions directly adopted under those laws, rules, or
6-31 regulations;
6-32 (3) procedures by which a determination can be made of
6-33 significant underuse in the Commission work force of all persons
6-34 for whom federal or state laws, rules, and regulations and
6-35 instructions directly adopted under those laws, rules, or
6-36 regulations, encourage a more equitable balance; and
6-37 (4) reasonable methods to appropriately address those
6-38 areas of significant underuse.
6-39 A policy statement prepared under this subsection must cover
6-40 an annual period, be updated at least annually, be reviewed by the
6-41 Texas Commission on Human Rights for compliance with Subdivision
6-42 (1) of this subsection, and be filed with the Governor's office.
6-43 The Governor's office shall deliver a biennial report to the
6-44 legislature based on the information received under this
6-45 subsection. The report may be made separately or as a part of
6-46 other biennial reports made to the legislature.
6-47 (e) The board [Commission] shall comply with Section
6-48 4(a)(2), Administrative Procedure and Texas Register Act (Article
6-49 6252-13a, Vernon's Texas Civil Statutes), by indexing and making
6-50 available for public inspection all rules and all other written
6-51 statements of policy or interpretations formulated, adopted, or
6-52 used by the Commission in the discharge of its functions.
6-53 (f) The board [Commission] shall comply with Section
6-54 4(a)(3), Administrative Procedure and Texas Register Act (Article
6-55 6252-13a, Vernon's Texas Civil Statutes), by indexing and making
6-56 available for public inspection all of the board's [Commission's]
6-57 final orders, decisions, and opinions.
6-58 SECTION 8. Section 3.01A, Texas Motor Vehicle Commission
6-59 Code (Article 4413(36), Vernon's Texas Civil Statutes), is
6-60 repealed.
6-61 SECTION 9. Section 3.02, Texas Motor Vehicle Commission Code
6-62 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
6-63 read as follows:
6-64 Sec. 3.02. Duties. (a) The board [Commission] shall, in
6-65 accordance with this Act, administer the provisions of this Act,
6-66 establish the qualifications of licensees, ensure that the
6-67 distribution, sale, and leasing of motor vehicles is conducted as
6-68 provided herein and under the board's [Commission's] rules, provide
6-69 for compliance with warranties, and otherwise prevent fraud, unfair
7-1 practices, discriminations, impositions, and other abuses in
7-2 connection with the distribution and sale of motor vehicles.
7-3 (b) The board [Commission] shall prepare and maintain
7-4 a written plan that describes how a person who does not speak
7-5 English or who has a physical, mental, or developmental disability
7-6 can be provided reasonable access to the Commission's programs.
7-7 SECTION 10. Section 3.08(g), Texas Motor Vehicle Commission
7-8 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
7-9 to read as follows:
7-10 (g) In all contested cases the examiner shall serve on
7-11 all parties a copy of the examiner's proposal for decision and
7-12 recommended order containing findings of fact and conclusions of
7-13 law. A party may file exceptions and replies to the board. In its
7-14 review of the case, the board may consider only the materials
7-15 timely submitted. The board may receive such oral argument from
7-16 any party as the board may allow. The board shall take such
7-17 further actions as are conducive to the issuance of a final order
7-18 and shall thereafter issue a written final decision or order. [The
7-19 board's written final decision or order shall be signed on behalf
7-20 of the board by the Director]. A majority vote of a quorum of the
7-21 board shall be required to adopt final decisions or orders of the
7-22 board.
7-23 SECTION 11. Section 4.01B(a), Texas Motor Vehicle Commission
7-24 Code (Article 4413(36), Vernon's Texas Civil Statutes, is amended
7-25 to read as follows:
7-26 (a) The board [Commission] by rule may implement a system
7-27 under which licenses expire on various dates during the year. The
7-28 board may also issue a license for a term of less than one year for
7-29 the purpose of coordinating the expiration dates of licenses in
7-30 instances where a licensee must obtain more than one licensee to
7-31 perform activities under this Act.
7-32 SECTION 12. Section 4.02, Texas Motor Vehicle Commission
7-33 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
7-34 to read as follows:
7-35 Sec. 4.02. Dealer Application. (a) An application for a
7-36 dealer license shall be on a form prescribed by the board which
7-37 shall include the information required by Chapter 503,
7-38 Transportation Code, and information on the applicant's financial
7-39 resources, business integrity, business ability and experience,
7-40 franchise agreement if applicable, physical facilities, vehicle
7-41 inventory, and other factors the board considers necessary to
7-42 determine an applicant's qualifications to adequately serve the
7-43 [motoring] public.
7-44 (b) A dealer shall renew his license annually on an
7-45 application prescribed by the board [Commission]. If a material
7-46 change occurs in the information included in a dealer's application
7-47 for a license or renewal of a license, the dealer shall, within a
7-48 reasonable time but not later than the next annual renewal, notify
7-49 the board [Commission] of those changes. The board [Commission]
7-50 shall prescribe a form for the disclosure of the changes and shall
7-51 include in the renewal application a request for disclosure of
7-52 material changes.
7-53 (c) [(1)] A franchised dealer may carry on the
7-54 business of his dealership at more than one location; however, a
7-55 separate location for the display and sale of new motor vehicles
7-56 may not be established and maintained by a franchised dealer unless
7-57 expressly authorized by the franchised dealer's franchise and
7-58 license. An application for a franchised dealer's license or to
7-59 amend a franchised dealer's license which proposes the
7-60 establishment of a separate display and sales location is subject
7-61 to all of the provisions of this Act. A separate license shall be
7-62 required for each separate and distinct dealership as determined by
7-63 the board [Commission].
7-64 (d) [(2)] Except as provided in this subsection
7-65 [subdivision], no licensee may participate in a new motor vehicle
7-66 show or exhibition unless the board [Commission] has first had
7-67 written notice at least 30 days prior to the opening day of the
7-68 show or exhibition and its written approval has been granted. A
7-69 licensee may not sell or offer for sale a new motor vehicle at a
8-1 show or exhibition; however, dealership personnel may be present to
8-2 aid in the showing or exhibiting of new motor vehicles. This
8-3 subsection [subdivision] does not prohibit the sale of a towable
8-4 recreational vehicle, motor home, ambulance, or fire-fighting
8-5 vehicle at a show or exhibition if the show or exhibition is
8-6 approved by the board [Commission] and if the sale does not
8-7 otherwise violate a provision of law. If the board adopts[;
8-8 provided that, should the Commission adopt] a rule regulating
8-9 off-site display or sale of towable recreational vehicles, the
8-10 board [Commission] shall, as part of that rule, authorize the
8-11 display and sale of towable recreational vehicles at a private
8-12 event in a trade area [private events in trade areas (counties,
8-13 cities, or towns) where] that would not otherwise qualify for the
8-14 private event under the application of general participation
8-15 requirements for organized dealer shows and exhibitions [would
8-16 effectively preclude such an organized show or exhibition].
8-17 (e) [(3)] The board [Commission] shall, under its
8-18 general rule-making authority granted in this Act, establish rules
8-19 and guidelines for the implementation and enforcement of this
8-20 section [subsection].
8-21 (f) [(d)] A dealer licensed hereunder shall promptly
8-22 notify the board [Commission] of any proposed change in its
8-23 ownership, location, franchise, or any other matters the board
8-24 [Commission] may require by rule. Prior to a change in a dealer's
8-25 location, a dealer shall obtain a new license for that location.
8-26 SECTION 13. Section 5.02(b), Texas Motor Vehicle Commission
8-27 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-28 to read as follows:
8-29 (b) It is unlawful for any manufacturer, distributor,
8-30 or representative to:
8-31 (1) Require or attempt to require any dealer to
8-32 order, accept delivery of or pay anything of value, directly or
8-33 indirectly, for any motor vehicle, appliance, part, accessory or
8-34 any other commodity unless voluntarily ordered or contracted for by
8-35 such dealer.
8-36 (2) Refuse or fail to deliver, in reasonable
8-37 quantities and within a reasonable time, to a dealer having a
8-38 franchise agreement for the retail sale of any motor vehicles sold
8-39 or distributed by such manufacturer, distributor, or
8-40 representative, any new motor vehicle or parts or accessories to
8-41 new motor vehicles as are covered by such franchise if such
8-42 vehicle, parts or accessories are publicly advertised as being
8-43 available for delivery or are actually being delivered; provided,
8-44 however, this provision is not violated if such failure is caused
8-45 by acts of God, work stoppage or delays due to strikes or labor
8-46 disputes, freight embargoes or other causes beyond the control of
8-47 the manufacturer, distributor, or representative.
8-48 (3) Notwithstanding the terms of any franchise
8-49 agreement:
8-50 (A) Terminate or refuse to continue any
8-51 franchise with a dealer or directly or indirectly force or attempt
8-52 to force a dealer to relocate or discontinue a line-make or parts
8-53 or products related to that line-make unless all of the following
8-54 conditions are met:
8-55 (i) the dealer and the
8-56 board have received written notice by registered or certified mail
8-57 from the manufacturer, distributor, or representative not less than
8-58 60 days before the effective date of termination or noncontinuance
8-59 setting forth the specific grounds for termination or
8-60 noncontinuance; and
8-61 (ii) the written notice
8-62 contains on the first page thereof a conspicuous statement which
8-63 reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE
8-64 A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS, AND
8-65 HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR
8-66 NONCONTINUANCE OF YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR
8-67 VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
8-68 (iii) the manufacturer,
8-69 distributor, or representative has received the informed, written
9-1 consent of the affected dealer or the appropriate period for the
9-2 affected dealer to protest the proposed franchise termination or
9-3 noncontinuance has lapsed; or
9-4 (iv) if the affected dealer
9-5 files a protest with the board within the greater of (1) 60 days
9-6 after receiving its 60-day notice of proposed termination or
9-7 noncontinuance or (2) the time specified in such notice, the board
9-8 determines that the party seeking to terminate or not continue a
9-9 dealer's franchise has established by a preponderance of the
9-10 evidence, at a hearing called by the board, that there is good
9-11 cause for the proposed termination or noncontinuance.
9-12 (v) Notwithstanding
9-13 Subdivisions (3)(A)(i) and (3)(A)(iv) of this section, notice may
9-14 be made not less than 15 days prior to the effective date of
9-15 termination or noncontinuance if a licensed dealer fails to conduct
9-16 its customary sales and service operations during its customary
9-17 business hours for seven consecutive business days unless such
9-18 failure is caused by an act of God, work stoppage or delays due to
9-19 strikes or labor disputes, an order of the board, or other causes
9-20 beyond the control of the dealer.
9-21 (B) Whenever a dealer files a timely
9-22 protest to a proposed franchise termination or noncontinuance, the
9-23 board shall notify the party seeking to terminate or to not
9-24 continue the protesting dealer's franchise that a timely protest
9-25 has been filed, that a hearing is required in accordance with this
9-26 Act, and that the party who gave the dealer notice of termination
9-27 or noncontinuance of the franchise may not terminate or refuse to
9-28 continue the franchise until the board issues its final decision or
9-29 order.
9-30 (C) If a franchise is terminated or not
9-31 continued, another franchise in the same line-make will be
9-32 established within a reasonable time unless it is shown to the
9-33 board by a preponderance of the evidence that the community or
9-34 trade area cannot reasonably support such a dealership. If this
9-35 showing is made, no dealer license shall be thereafter issued in
9-36 the same area unless a change in circumstances is established.
9-37 (4) Notwithstanding the terms of any franchise
9-38 agreement, modify or replace a franchise if the modification or
9-39 replacement would adversely affect, to a substantial degree, the
9-40 dealer's sales, investment, or obligations to provide service to
9-41 the public, unless the manufacturer, distributor, or representative
9-42 has first given the board and each affected dealer written notice
9-43 by registered or certified mail of any such action 60 days in
9-44 advance of the modification or replacement. The written notice
9-45 shall contain on the first page thereof a conspicuous statement
9-46 which reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO
9-47 FILE A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS,
9-48 AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED
9-49 MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE UNDER THE TERMS OF
9-50 THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."
9-51 Within the greater of (1) 60 days after receipt of such notice or
9-52 (2) the time specified in such notice, a dealer may file a protest
9-53 with the board and the modification or replacement shall not become
9-54 effective unless and until the board determines that the party
9-55 seeking to modify or replace a franchise has demonstrated by a
9-56 preponderance of the evidence that there is good cause for the
9-57 modification or replacement. The prior franchise shall continue in
9-58 effect until the protest is resolved by the board.
9-59 (5) Notwithstanding the terms of any franchise
9-60 agreement, in determining whether good cause has been established
9-61 for modifying, replacing, terminating, or refusing to continue a
9-62 franchise, or for forcing or attempting to force a dealer to
9-63 relocate or discontinue a line-make or parts or products related to
9-64 that line-make, the board shall consider all the existing
9-65 circumstances including, without limitation by the enumeration
9-66 herein, all the following:
9-67 (A) the dealer's sales in relation to the
9-68 sales in the market;
9-69 (B) the dealer's investment and
10-1 obligations;
10-2 (C) injury or benefit to the public
10-3 [welfare];
10-4 (D) the adequacy of the dealer's service
10-5 facilities, equipment, parts, and personnel in relation to those of
10-6 other dealers of new motor vehicles of the same line-make;
10-7 (E) whether warranties are being honored
10-8 by the dealer;
10-9 (F) the parties' compliance with their
10-10 franchise agreement except to the extent that the franchise
10-11 agreement is in conflict with this Act; and
10-12 (G) the enforceability of the franchise
10-13 agreement from a public policy standpoint, including, without
10-14 limitation, issues of the reasonableness of the franchise
10-15 agreement's terms, oppression, adhesion, and the relative
10-16 bargaining power of the parties.
10-17 Good cause shall not be shown solely by the desire of a
10-18 manufacturer, distributor, or representative for market
10-19 penetration.
10-20 (6) Use any false, deceptive or misleading
10-21 advertising.
10-22 (7) Notwithstanding the terms of any franchise
10-23 agreement, prevent any dealer from reasonably changing the capital
10-24 structure of his dealership or the means by or through which he
10-25 finances the operation thereof, provided that the dealer meets
10-26 reasonable capital requirements.
10-27 (8) Notwithstanding the terms of any franchise
10-28 agreement, fail to give effect to or attempt to prevent any sale or
10-29 transfer of a dealer, dealership or franchise or interest therein
10-30 or management thereof except as provided by Section 5.01B.
10-31 (9) Notwithstanding the terms of any franchise
10-32 agreement, require or attempt to require that a dealer assign to or
10-33 act as an agent for any manufacturer, distributor or representative
10-34 in the securing of promissory notes and security agreements given
10-35 in connection with the sale or purchase of new motor vehicles or
10-36 the securing of policies of insurance on or having to do with the
10-37 operation of vehicles sold.
10-38 (10) Notwithstanding the terms of any franchise
10-39 agreement, fail or refuse, after complaint and hearing, to perform
10-40 the obligations placed on the manufacturer in connection with the
10-41 delivery, preparation and warranty of a new motor vehicle as
10-42 provided in the manufacturer's warranty, preparation, and delivery
10-43 agreements on file with the board .
10-44 (11) Notwithstanding the terms of any franchise
10-45 agreement[, fail to compensate its dealers for the work and
10-46 services they are required to perform in connection with the
10-47 dealer's delivery and preparation obligations according to the
10-48 agreements on file with the board which must be found by the board
10-49 to be reasonable, or fail to adequately and fairly compensate its
10-50 dealers for labor, parts and other expenses incurred by such dealer
10-51 to perform under and comply with a manufacturer's or a
10-52 distributor's warranty agreement, or require, as a prerequisite to
10-53 the manufacturer's or distributor's payment of a claim for
10-54 reimbursement as required by this section, that a dealer file with
10-55 the manufacturer or distributor the actual time spent in the
10-56 performance of labor unless actual time is the basis for
10-57 reimbursement. In no event shall any manufacturer or distributor
10-58 pay its dealers an amount of money for warranty work that is less
10-59 than that charged by the dealer to the retail customers of the
10-60 dealer for nonwarranty work of like kind. All claims made by
10-61 dealers for compensation for delivery, preparation, and warranty
10-62 work shall be paid within 30 days after approval and shall be
10-63 approved or disapproved within 30 days after receipt. When any
10-64 claim is disapproved, the dealer shall be notified in writing of
10-65 the grounds for disapproval. No claim which has been approved and
10-66 paid may be charged back to the dealer unless it can be shown that
10-67 the claim was false or fraudulent, that the repairs were not
10-68 properly made or were unnecessary to correct the defective
10-69 condition, or that the dealer failed to reasonably substantiate the
11-1 claim in accordance with reasonable written requirements of the
11-2 manufacturer or distributor, if the dealer has been notified of the
11-3 requirements prior to the time the claim arose, and if the
11-4 requirements were in effect at the time the claim arose. A
11-5 manufacturer or distributor may not audit a claim after the
11-6 expiration of two years following the submission of the claim
11-7 unless the manufacturer or distributor has reasonable grounds to
11-8 suspect that a claim was fraudulent. Notwithstanding the terms of
11-9 a franchise agreement] or provision of law in conflict with this
11-10 section, the dealer's delivery, preparation, and warranty
11-11 obligations as filed with the board shall constitute the dealer's
11-12 sole responsibility for product liability as between the dealer and
11-13 manufacturer or distributor, and, except for a loss caused by the
11-14 dealer's failure to adhere to these obligations, a loss caused by
11-15 the dealer's negligence or intentional misconduct, or a loss caused
11-16 by the dealer's modification of a product without manufacturer or
11-17 distributor authorization, the manufacturer or distributor shall
11-18 reimburse the dealer for all loss incurred by the dealer, including
11-19 legal fees, court costs, and damages, as a result of the dealer
11-20 having been named a party in a product liability action.
11-21 (12) Operate as a manufacturer, distributor, or
11-22 representative without a currently valid license from the board or
11-23 otherwise violate this Act or rules promulgated by the board
11-24 hereunder.
11-25 (13) Notwithstanding the terms of any franchise
11-26 agreement, to prevent or refuse to honor the succession to a
11-27 dealership by any legal heir or devisee under the will of a dealer
11-28 or under the laws of descent and distribution of this State unless
11-29 it is shown to the board, after notice and hearing, that the result
11-30 of such succession will be detrimental to the public interest and
11-31 to the representation of the manufacturer or distributor; provided,
11-32 however, nothing herein shall prevent a dealer, during his
11-33 lifetime, from designating any person as his successor dealer, by
11-34 written instrument filed with the manufacturer or distributor.
11-35 (14) Notwithstanding the terms of any franchise
11-36 agreement, require that a dealer pay or assume, directly or
11-37 indirectly, any part of any refund, rebate, discount, or other
11-38 financial adjustment made by the manufacturer, distributor, or
11-39 representative to, or in favor of, any customer of a dealer, unless
11-40 voluntarily agreed to by such dealer.
11-41 (15) Notwithstanding the terms of any franchise
11-42 agreement, deny or withhold approval of a written application to
11-43 relocate a franchise unless (A) the applicant has received written
11-44 notice of the denial or withholding of approval within 60 days
11-45 after receipt of the application containing information reasonably
11-46 necessary to enable the manufacturer or distributor to adequately
11-47 evaluate the application, and if (B) the applicant files a protest
11-48 with the board and the manufacturer or distributor establishes by a
11-49 preponderance of the evidence at a hearing called by the board that
11-50 the grounds for the denial or withholding of approval of the
11-51 relocation are reasonable.
11-52 (16) Notwithstanding the terms of any franchise
11-53 agreement, fail to pay to a dealer or any lienholder in accordance
11-54 with their respective interest after the termination of a
11-55 franchise:
11-56 (A) the dealer cost of each new motor
11-57 vehicle in the dealer's inventory with mileage of 6,000 miles or
11-58 less, reduced by the net discount value of each, where "net
11-59 discount value" is determined according to the following formula:
11-60 net cost multiplied by total mileage divided by 100,000, and where
11-61 "net cost" equals the dealer cost plus any charges by the
11-62 manufacturer, distributor, or representative for distribution,
11-63 delivery, and taxes, less all allowances paid to the dealer by the
11-64 manufacturer, distributor, or representative for new, unsold,
11-65 undamaged, and complete motor vehicles of current model year or one
11-66 year prior model year in the dealer's inventory, except that if a
11-67 vehicle cannot be reduced by the net discount value, the
11-68 manufacturer or distributor shall pay the dealer the net cost of
11-69 the vehicle;
12-1 (B) the dealer cost of each new, unused,
12-2 undamaged, and unsold part or accessory if the part or accessory is
12-3 in the current parts catalogue and is still in the original,
12-4 resalable merchandising package and in unbroken lots, except that
12-5 in the case of sheet metal, a comparable substitute for the
12-6 original package may be used, and if the part or accessory was
12-7 purchased by the dealer either directly from the manufacturer or
12-8 distributor or from an outgoing authorized dealer as a part of the
12-9 dealer's initial inventory;
12-10 (C) the fair market value of each
12-11 undamaged sign owned by the dealer which bears a trademark or trade
12-12 name used or claimed by the manufacturer, distributor, or
12-13 representative if the sign was purchased from or purchased at the
12-14 request of the manufacturer, distributor, or representative;
12-15 (D) the fair market value of all special
12-16 tools, data processing equipment, and automotive service equipment
12-17 owned by the dealer which were recommended in writing and
12-18 designated as special tools and equipment and purchased from or
12-19 purchased at the request of the manufacturer, distributor, or
12-20 representative, if the tools and equipment are in usable and good
12-21 condition except for reasonable wear and tear;
12-22 (E) the cost of transporting, handling,
12-23 packing, storing, and loading of any property subject to repurchase
12-24 under this section;
12-25 (F) except as provided by this
12-26 subdivision, any sums due as provided by Paragraph (A) of this
12-27 subdivision within 60 days after termination of a franchise and any
12-28 sums due as provided by Paragraphs (B) through (E) of this
12-29 subdivision within 90 days after termination of a franchise. As a
12-30 condition of payment, the dealer is to comply with reasonable
12-31 requirements with respect to the return of inventory as are set out
12-32 in the terms of the franchise agreement. A manufacturer or
12-33 distributor shall reimburse a dealer for the dealer's cost for
12-34 storing any property covered by this subdivision beginning 90 days
12-35 following termination. A manufacturer or distributor shall
12-36 reimburse a dealer for the dealer's cost of storing any property
12-37 covered by this subdivision before the expiration of 90 days from
12-38 the date of termination if the dealer notifies the manufacturer or
12-39 distributor of the commencement of storage charges within that
12-40 period. On receipt of notice of the commencement of storage
12-41 charges, a manufacturer or distributor may immediately take
12-42 possession of the property in question by repurchasing the property
12-43 as provided by this subdivision. A manufacturer, distributor, or
12-44 representative who fails to pay those sums within the prescribed
12-45 time or at such time as the dealer and lienholder, if any, proffer
12-46 good title prior to the prescribed time for payment, is liable to
12-47 the dealer for:
12-48 (i) the greatest of dealer
12-49 cost, fair market value, or current price of the inventory;
12-50 (ii) interest on the amount
12-51 due calculated at the rate applicable to a judgment of a court; and
12-52 (iii) reasonable attorney's
12-53 fees and costs.
12-54 (17) Notwithstanding the terms of any franchise
12-55 agreement, change its distributor, its method of distribution of
12-56 its products in this state, or its business structure or ownership
12-57 in a manner that results in the termination or noncontinuance of a
12-58 franchise without good cause. The manufacturer, distributor, or
12-59 representative shall issue the same notice to the dealer and to the
12-60 board as is provided in Subdivisions (3)(A) and (B) of this section
12-61 and said same procedures shall apply to the parties.
12-62 (18) Notwithstanding the terms of any franchise
12-63 agreement, require a dealer to submit to arbitration on any issue
12-64 unless the dealer and the manufacturer, distributor, or
12-65 representative and their respective counsel agree to arbitrate
12-66 after a controversy arises. The arbitrator shall apply the
12-67 provisions of this Act in resolving the pertinent controversy.
12-68 Either party may appeal to the board a decision of an arbitrator on
12-69 the ground that the arbitrator failed to apply this Act.
13-1 (19) Notwithstanding the terms of any franchise
13-2 agreement, require that a dealer join, contribute to, or affiliate
13-3 with, directly or indirectly, any advertising association.
13-4 (20) Notwithstanding the terms of a franchise
13-5 agreement:
13-6 (A) require adherence to unreasonable
13-7 sales or service standards;
13-8 (B) directly or indirectly, discriminate
13-9 against a dealer or otherwise treat dealers differently as a result
13-10 of a formula or other calculation or process intended to gauge the
13-11 performance of a dealership;
13-12 (C) unreasonably require that a dealer
13-13 purchase special tools or equipment; or
13-14 (D) fail to compensate a dealer for all
13-15 costs incurred by the dealer as required by the manufacturer in
13-16 complying with the terms of a product recall by the manufacturer or
13-17 distributor, including the costs, if any, incurred by the dealer in
13-18 notifying vehicle owners of the existence of the recall.
13-19 (21) Discriminate unreasonably between or among
13-20 franchisees in the sale of a motor vehicle owned by the
13-21 manufacturer or distributor.
13-22 (22) Directly or indirectly, or through a
13-23 subsidiary or agent, require, as a condition for obtaining
13-24 financing for a motor vehicle, the purchaser of a vehicle to
13-25 purchase any product other than the motor vehicle from the
13-26 manufacturer or distributor, or from an entity owned or controlled
13-27 by the manufacturer or distributor.
13-28 (23) Directly or indirectly, or through a
13-29 subsidiary or agent, require, as a condition of its or its
13-30 subsidiary's agreement to provide financing for a motor vehicle,
13-31 that any insurance policy or service contract purchased by the
13-32 motor vehicle purchaser be purchased from a specific source.
13-33 (24) Compel a dealer through a financing
13-34 subsidiary of the manufacturer or distributor to agree to
13-35 unreasonable operating requirements or directly or indirectly to
13-36 terminate a dealer through the actions of a financing subsidiary of
13-37 the manufacturer or distributor. This subdivision does not limit
13-38 the right of a financing entity to engage in business practices in
13-39 accordance with the usage of trade in retail and wholesale motor
13-40 vehicle financing.
13-41 (25) [Operate as a dealer except on a temporary
13-42 basis and only if:]
13-43 [(A) the dealership was previously owned by
13-44 a franchised dealer and is currently for sale at a reasonable
13-45 price; or]
13-46 [(B) the manufacturer, distributor, or
13-47 representative operates the dealership in a bona fide relationship
13-48 with a franchised dealer who is required to make a significant
13-49 investment in the dealership, subject to loss, and who reasonably
13-50 expects to acquire full ownership of the dealership under
13-51 reasonable terms and conditions.]
13-52 [(26)] Notwithstanding the terms of a franchise
13-53 agreement, deny or withhold approval of a dealer's application to
13-54 add a line-make or parts or products related to that line-make
13-55 unless, within 60 days of receipt of the dealer's written
13-56 application to add the line-make, the manufacturer or distributor
13-57 gives the dealer written notice of the denial or withholding of
13-58 approval. After receipt of notice, the dealer may file a protest
13-59 with the board. If the dealer files a protest as provided by this
13-60 subdivision, the board may uphold the manufacturer's or
13-61 distributor's decision to deny or withhold approval of the addition
13-62 of the line-make only if the manufacturer or distributor proves by
13-63 a preponderance of the evidence that the denial or withholding of
13-64 approval was reasonable. In determining whether or not the
13-65 manufacturer or distributor has met its burden to show that its
13-66 denial or withholding of approval is reasonable, the board shall
13-67 consider all existing circumstances, including, without limitation,
13-68 the following:
13-69 (A) the dealer's sales in relation to the
14-1 sales in the market;
14-2 (B) the dealer's investment and
14-3 obligations;
14-4 (C) injury or benefit to the public
14-5 [welfare];
14-6 (D) the adequacy of the dealer's sales and
14-7 service facilities, equipment, parts, and personnel in relation to
14-8 those of other dealers of new motor vehicles of the same line-make;
14-9 (E) whether warranties are being honored
14-10 by the dealer agreement;
14-11 (F) the parties' compliance with their
14-12 franchise agreement to the extent that the franchise agreement is
14-13 not in conflict with this Act;
14-14 (G) the enforceability of the franchise
14-15 agreement from a public policy standpoint, including without
14-16 limitation, issues of the reasonableness of the franchise
14-17 agreement's terms, oppression, adhesion, and the relative
14-18 bargaining power of the parties;
14-19 (H) whether the dealer complies with
14-20 reasonable capitalization requirements or will be able to comply
14-21 with reasonable capitalization requirements within a reasonable
14-22 time;
14-23 (I) the harm, if any, to the manufacturer
14-24 if the denial or withholding of approval is not upheld; and
14-25 (J) the harm, if any, to the dealer if the
14-26 denial or withholding of approval is upheld.
14-27 (26)[(27)] Fail or refuse to offer to its same
14-28 line-make franchised dealers all models manufactured for that
14-29 line-make, or require a dealer to pay any extra fee, purchase
14-30 unreasonable advertising displays or other materials, or remodel,
14-31 renovate, or recondition the dealer's existing facilities as a
14-32 prerequisite to receiving a model or series of vehicles.
14-33 (27)[(28)] Require a dealer to compensate the
14-34 manufacturer or distributor for any court costs, attorney's fees,
14-35 or other expenses incurred in an administrative or civil proceeding
14-36 arising under this Act, except that this subdivision does not
14-37 prohibit a manufacturer and dealer from entering into an agreement
14-38 to share costs in a proceeding in which the dealer and manufacturer
14-39 have the same or similar interests.
14-40 SECTION 14. The Texas Motor Vehicle Commission Code (Article
14-41 4413(36), Vernon's Texas Civil Statutes), is amended by adding
14-42 Sections 5.02A, 5.02B and 5.02C to read as follows:
14-43 Sec. 5.02A. WARRANTY REIMBURSEMENT. (a) A
14-44 manufacturer or distributor shall file with the board a copy of the
14-45 current requirements the manufacturer or distributor places on its
14-46 dealers with respect to the dealer's:
14-47 (1) duties under the manufacturer or
14-48 distributor's warranty; and
14-49 (2) vehicle delivery and preparation
14-50 obligations.
14-51 (b) Warranty or delivery and preparation requirements
14-52 placed on a dealer by a manufacturer are not enforceable unless
14-53 they are reasonable and are disclosed and filed in compliance with
14-54 Subsection (a).
14-55 (c) A manufacturer or distributor shall fairly and
14-56 adequately compensate its dealers for warranty work.
14-57 (d) In no event may a manufacturer or distributor pay
14-58 or reimburse a dealer an amount of money for warranty work that is
14-59 less than that charged by the dealer to the dealer's retail
14-60 customers for nonwarranty work of like kind. In computing the
14-61 amount of money charged by the dealer to the dealer's retail
14-62 customers for labor of like kind, the manufacturer or distributor
14-63 shall use the greater of:
14-64 (1) the average labor rate charged by the dealer
14-65 on 100 sequential nonwarranty repair orders, exclusive of routine
14-66 maintenance, during the preceding 6 months; or
14-67 (2) the average labor rate charged by the dealer
14-68 for nonwarranty repairs, exclusive of routine maintenance, for 90
14-69 consecutive days during the preceding 6 months.
15-1 (e) A dealer may request an adjustment in the dealer's
15-2 warranty labor rate. A request under this subsection shall be by
15-3 certified mail, return receipt requested. In a request for an
15-4 adjustment of a warranty labor rate under this subsection, the
15-5 requesting dealer shall set forth the requested rate and shall
15-6 include information reasonably necessary to enable the manufacturer
15-7 or distributor adequately to evaluate the request as provided by
15-8 this section. A manufacturer or distributor shall, within 60 days
15-9 after receipt of a request for a rate adjustment under this
15-10 subsection, notify the requesting dealer, in writing, of the
15-11 approval or disapproval of the request. If the manufacturer or
15-12 distributor disapproves the request, the manufacturer or
15-13 distributor shall set forth the reasons for the disapproval. If
15-14 the manufacturer or distributor disapproves the request or fails to
15-15 respond within the time provided by this subsection, the requesting
15-16 dealer is entitled to file a protest.
15-17 (f) If a dealer files a protest under Subsection (e),
15-18 the board may uphold the manufacturer's or distributor's decision
15-19 only if the manufacturer or distributor proves by a preponderance
15-20 of the evidence that the disapproval of the requestor failure to
15-21 respond was reasonable. If the board finds that the disapproval of
15-22 the request or failure to respond was unreasonable the board shall
15-23 put the requested rate into effect as of the 60th day after the
15-24 receipt of the request by the manufacturer or distributor.
15-25 (g) Except by agreement of the parties, a warranty
15-26 labor rate established as provided by this section may be adjusted
15-27 no more often than annually.
15-28 (h) A manufacturer or distributor shall pay a dealer's
15-29 claim for reimbursement for warranty work or dealer preparation and
15-30 delivery work within 30 days after approval of the claim. A claim
15-31 not disapproved within 30 days after the manufacturer or
15-32 distributor receives it is approved. If the claim is disapproved,
15-33 the manufacturer or distributor shall provide the dealer written
15-34 notice of the reasons for the disapproval.
15-35 (i) Except as provided by this section, a manufacturer
15-36 or distributor may not charge a dealer back money paid to the
15-37 dealer to satisfy a claim approved and paid as provided by this
15-38 section. A manufacturer or distributor may charge back to a dealer
15-39 money paid to the dealer to satisfy a claim approved and paid as
15-40 provided by this section if the manufacturer or distributor can
15-41 show that:
15-42 (1) the claim was false or fraudulent;
15-43 (2) repair work was not properly performed or
15-44 was unnecessary to correct a defective condition; or
15-45 (3) the dealer who made the claim failed to
15-46 provide substantiation of the claim in the manner provided by the
15-47 manufacturer's or distributor's requirements if those requirements
15-48 were on file with the board at the time the claim was filed and if
15-49 those requirements are reasonable as provided by this section.
15-50 (j) A manufacturer or distributor may not:
15-51 (1) audit a claim filed under this section after
15-52 the expiration of one year from the submission of the claim unless
15-53 the manufacturer or distributor has reasonable grounds to suspect
15-54 that a claim was fraudulent; or
15-55 (2) require, as a prerequisite to the payment of
15-56 a claim for reimbursement, that a dealer file a statement of actual
15-57 time spent in performance of labor, unless actual time is the basis
15-58 for reimbursement.
15-59 Section 5.02B. MANUFACTURER OR DISTRIBUTOR INCENTIVE
15-60 PROGRAMS; PROCEDURES. (a) Except as provided by Subsection (b),
15-61 after the first anniversary of the ending date of a manufacturer or
15-62 distributor incentive program, a manufacturer or distributor may
15-63 not:
15-64 (1) charge back to a dealer money paid by the
15-65 manufacturer or distributor as a result of the incentive program;
15-66 (2) charge back to a dealer the cash value of a
15-67 prize or other thing of value awarded to the dealer as a result of
15-68 the incentive program; or
15-69 (3) audit the records of a dealer to determine
16-1 compliance with the terms of the incentive program, unless the
16-2 manufacturer or distributor has reasonable grounds to believe the
16-3 dealer committed fraud with respect to the incentive program.
16-4 (b) Notwithstanding Subsection (a), a manufacturer or
16-5 distributor may make charge-backs to a dealer if after audit the
16-6 manufacturer or distributor has reasonable grounds to conclude that
16-7 the dealer committed fraud with respect to the incentive program.
16-8 Section 5.02C. MANUFACTURER OR DISTRIBUTOR OWNERSHIP,
16-9 OPERATION, OR CONTROL OF DEALERSHIP. (a) In this section the term
16-10 "manufacturer" includes:
16-11 (1) a representative; or
16-12 (2) a person or entity who is affiliated with a
16-13 manufacturer or representative, or, who, directly or indirectly
16-14 through an intermediary, is controlled by, or is under common
16-15 control with, the manufacturer.
16-16 (b) For purposes of Subsection (a)(3), a person or
16-17 entity is controlled by a manufacturer if the manufacturer has the
16-18 authority directly or indirectly, by law or by agreement of the
16-19 parties, to direct or influence the management and policies of the
16-20 person or entity.
16-21 (c) Except as provided by this section, a manufacturer
16-22 or distributor may not directly or indirectly:
16-23 (1) own an interest in a dealer or dealership;
16-24 (2) operate or control a dealer or dealership;
16-25 or
16-26 (3) act in the capacity of a dealer.
16-27 (d) A manufacturer or distributor may own an interest
16-28 in a franchised dealer, or otherwise control a dealership, for a
16-29 period not to exceed 12 months from the date the manufacturer or
16-30 distributor acquires the dealership if:
16-31 (1) the person from whom the manufacturer or
16-32 distributor acquired the dealership was a franchised dealer; and
16-33 (2) the dealership is for sale by the
16-34 manufacturer or distributor at a reasonable price and on reasonable
16-35 terms and conditions.
16-36 (e) For the purpose of broadening the diversity of its
16-37 dealer body and enhancing opportunities for qualified persons who
16-38 are part of a group who have historically been under-represented in
16-39 its dealer body, or other qualified persons who lack the resources
16-40 to purchase a dealership outright, but for no other purpose, a
16-41 manufacturer or distributor may temporarily own an interest in a
16-42 dealership if the manufacturer's or distributor's participation in
16-43 the dealership is in a bona fide relationship with a franchised
16-44 dealer who:
16-45 (1) has made a significant investment in the
16-46 dealership, subject to loss;
16-47 (2) has an ownership interest in the dealership;
16-48 and
16-49 (3) operates the dealership under a plan to
16-50 acquire full ownership of the dealership within a reasonable time
16-51 and under reasonable terms and conditions.
16-52 (f) On a showing by a manufacturer or distributor of
16-53 good cause, the board may extend the time limit set forth in
16-54 subsection (d)(1). An extension under this subsection may not
16-55 exceed 12 months. An application for an extension after the first
16-56 extension is granted is subject to protest by a dealer of the same
16-57 line-make whose dealership is located in the same county as, or
16-58 within 15 miles of the dealership owned or controlled by the
16-59 manufacturer or distributor.
16-60 (g) Notwithstanding any other provision of this
16-61 section, a person who, on June 7, 1995, held both a motor home
16-62 dealer's license and a motor home manufacturer's license issued
16-63 under this Act may:
16-64 (1) hold both a motor home dealer's license and
16-65 a motor home manufacturer's license; and
16-66 (2) operate as both a manufacturer and dealer of
16-67 motor homes but of no other type of vehicle.
16-68 SECTION 15. Section 6.07(a), Texas Motor Vehicle Commission
16-69 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-1 to read a follows:
17-2 (a) In addition to the other powers and duties
17-3 provided for in this Act, the board [Commission] shall cause
17-4 manufacturers, converters, and distributors to perform the
17-5 obligations imposed by this section. In this section "owner" means
17-6 a person who:
17-7 (1) purchased a vehicle at retail from a licensee and
17-8 is entitled to enforce the terms of a manufacturer's warranty with
17-9 respect to the vehicle;
17-10 (2) is a lessor or lessee, other than a sublessee, who
17-11 purchased or leased the vehicle from a licensee; or
17-12 (3) is the transferee or assignee of any of the
17-13 persons described in Subdivisions (1) or (2) of this subsection if
17-14 the transferee or assignee is a Texas resident and is entitled to
17-15 enforce the terms of a manufacturer's warranty. [For purposes of
17-16 this section, the term "owner" means a retail purchaser, lessor,
17-17 lessee other than a sublessee, or the person so designated on the
17-18 certificate of title to a motor vehicle issued by the Texas
17-19 Department of Transportation, or an equivalent document issued by
17-20 the duly authorized agency of any other state, or any person to
17-21 whom such motor vehicle is legally transferred during the duration
17-22 of a manufacturer's or distributor's express warranty applicable to
17-23 such motor vehicle, and any other person entitled by the terms of
17-24 the manufacturer's, convertor's, or distributor's express warranty
17-25 to enforce the obligations thereof.]
17-26 SECTION 16. Section 7.01(f), Texas Motor Vehicle Commission
17-27 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-28 to read as follows:
17-29 (f) Appeal shall not affect the enforcement of a final
17-30 board [Commission] order unless its enforcement is enjoinable under
17-31 Section 65.001 et seq., Civil Practice and Remedies Code, and under
17-32 principles of primary jurisdiction. Notwithstanding the terms of
17-33 this section, the board may, in the interest of justice, suspend
17-34 the enforcement of its order pending final determination of an
17-35 appeal of that order as provided by this section.
17-36 SECTION 17. Section 1A.01, Chapter 7, Acts of the 72nd
17-37 Legislature, First Called Session, 1991 (Article 4413(36a),
17-38 Vernon's Texas Civil Statutes), is amended by adding Subdivision
17-39 (5) to read as follows:
17-40 (5) "Executive director" means the executive director
17-41 of the Texas Department of Transportation.
17-42 SECTION 18. Section 1A.02, Chapter 7, Acts of the 72nd
17-43 Legislature, First Called Session, 1991 (Article 4413(36a),
17-44 Vernon's Texas Civil Statutes), is amended to read as follows:
17-45 Sec. 1A.02. (a) The Board shall:
17-46 (1) except as provided by Subsection (b) or (c),
17-47 exercise the authority and perform the duties placed on the Board
17-48 by this article or other provision of law independent of the Texas
17-49 Transportation Commission and the executive director; and
17-50 (2) advise, by and through the director, the
17-51 department on:
17-52 (A) [matters arising under the body of law known
17-53 as the Texas Motor Vehicle Commission code or its successor and
17-54 other matters relating to the licensing and regulation of motor
17-55 vehicle manufacturers, distributors, convertors, and dealers;]
17-56 [(B) personnel needs of the Board and division;]
17-57 [(C)] budgetary needs of the Board and division;
17-58 (B) [(D)] equipment needs of the Board and
17-59 division;
17-60 (C) [(E)] data processing needs of the Board and
17-61 division;
17-62 (D) [(F)] the purchase or other acquisition of
17-63 facilities and property for the Board and division.
17-64 (b) Personnel of the division are personnel of the
17-65 Texas Department of Transportation and are subject to the human
17-66 resource rules and policies of the department and the Texas
17-67 Transportation commission, except that, as applied to employees of
17-68 the division, any and all powers granted to the executive director
17-69 by those rules and policies shall reside with the director.
18-1 (c) The executive director shall, by and through the
18-2 various offices of the department, provide equipment, facilities,
18-3 property, and services necessary to carry out the division's
18-4 purposes, powers, and duties. The executive director shall be
18-5 responsible for allocating department resources as the executive
18-6 director deems necessary and appropriate to meet the needs of both
18-7 the division and the other offices of the department.
18-8 SECTION 19. EMERGENCY. The importance of this legislation
18-9 and the crowded condition of the calendars in both houses create an
18-10 emergency and an imperative public necessity that the
18-11 constitutional rule requiring bills to be read on three several
18-12 days in each house be suspended, and this rule is hereby suspended,
18-13 and that this Act take effect and be in force from and after its
18-14 passage, and it is so enacted.
18-15 * * * * *