By: Cain, Brown S.B. No. 1250
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the authority and duties of the Texas Motor Vehicle
1-2 Board.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-5 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-6 read as follows:
1-7 Sec. 1.03. Definitions. In this Act:
1-8 (1) "Ambulance" means a vehicle used exclusively
1-9 for providing emergency medical care to an injured or ill person or
1-10 transporting an injured or ill person, if the vehicle provides:
1-11 (A) a driver's compartment;
1-12 (B) a compartment to accommodate an
1-13 emergency medical care technician or paramedic and two injured or
1-14 ill persons so positioned that one of the injured or ill persons
1-15 can be given intensive life-support during transit;
1-16 (C) equipment and supplies for emergency
1-17 care of an injured or ill person where the ill person is located or
1-18 at the scene of an injury-producing incident as well as in transit;
1-19 (D) two-way radio communication
1-20 capability; and
1-21 (E) equipment for light rescue or
1-22 extrication procedures.
2-1 (2) "Board" means the Motor Vehicle Board of the
2-2 Texas Department of Transportation.
2-3 (3) "Broker" means a person who, for a fee,
2-4 commission, or other valuable consideration, arranges or offers to
2-5 arrange a transaction involving the sale[, for purposes other than
2-6 resale,] of a new motor vehicle, and who is not:
2-7 (A) a franchised dealer or bona fide
2-8 employee of a franchised dealer when acting on behalf of a
2-9 franchised dealer;
2-10 (B) a representative or bona fide employee
2-11 of a representative when acting on behalf of a representative;
2-12 (C) a distributor or bona fide employee of
2-13 a distributor when acting on behalf of a distributor; or
2-14 (D) at any point in the transaction the
2-15 bona 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
2-20 than a motor home, ambulance, or fire-fighting vehicle, which has
2-21 been substantially modified by a person other than the manufacturer
2-22 or distributor of the chassis of the motor vehicle and which has
2-23 not been the subject of a retail sale.
2-24 (6) "Converter" means a person who prior to the
2-25 retail sale of a motor vehicle, assembles, installs, or affixes a
2-26 body, cab, or special equipment to a chassis, or who substantially
3-1 adds, subtracts from, or modifies a previously assembled or
3-2 manufactured motor vehicle.
3-3 (7) "Dealer" means a person who holds a general
3-4 distinguishing number issued by the Department pursuant to the
3-5 terms of Chapter 503, Transportation Code.
3-6 (8) "Dealership" means the physical premises and
3-7 business facilities on which a franchised dealer operates his
3-8 business, including the sale and repair of motor vehicles. The
3-9 term includes premises or facilities at which a person engages only
3-10 in the repair of motor vehicles if repairs are performed pursuant
3-11 to the terms of a franchise and a motor vehicle manufacturer's
3-12 warranty.
3-13 (9) "Department" means the Texas Department of
3-14 Transportation.
3-15 (10) "Director" means the director of the board.
3-16 (11) "Distributor" means any person who
3-17 distributes and/or sells new motor vehicles to franchised dealers
3-18 and who is not a manufacturer.
3-19 (12) "Executive Director" means the Executive
3-20 Director of the Texas Department of Transportation.
3-21 (13) "Fire-fighting vehicle" means a motor
3-22 vehicle which has as its sole purpose transporting fire fighters to
3-23 the scene of a fire and providing equipment to fight the fire, if
3-24 the vehicle is built on a truck chassis with a gross carrying
3-25 capacity of at least 10,000 pounds, to which the following have
3-26 been permanently affixed or mounted:
4-1 (A) a water tank with a minimum combined
4-2 capacity of 500 gallons; and
4-3 (B) a centrifugal water pump with a
4-4 minimum capacity of not less than 750 gallons per minute at 150
4-5 pounds per square inch net pump pressure.
4-6 (14) "Franchise" means one or more contracts
4-7 between [a franchised dealer as franchisee, and either] a
4-8 manufacturer or a distributor as franchisor, and another person as
4-9 franchisee under which (A) the franchisee is granted the right to
4-10 sell and service new motor vehicles manufactured or distributed by
4-11 the franchisor or only service motor vehicles pursuant to the terms
4-12 of a franchise and a manufacturer's warranty; (B) the franchisee as
4-13 an independent business is a component of franchisor's distribution
4-14 system; (C) the franchisee is substantially associated with
4-15 franchisor's trademark, trade name and commercial symbol; (D) the
4-16 franchisee's business is substantially reliant on franchisor for a
4-17 continued supply of motor vehicles, parts, and accessories for the
4-18 conduct of its business; or (E) any right, duty, or obligation
4-19 granted or imposed by this Act is affected. The term includes a
4-20 written communication from a franchisor to a franchisee by which a
4-21 duty is imposed on the franchisee.
4-22 (15) "Franchised dealer" means any person who
4-23 holds a franchised motor vehicle dealer's general distinguishing
4-24 number issued by the Department pursuant to the terms of Chapter
4-25 503, Transportation Code, and who is engaged in the business of
4-26 buying, selling, or exchanging new motor vehicles and servicing or
5-1 repairing motor vehicles pursuant to the terms of a franchise and a
5-2 manufacturer's warranty at an established and permanent place of
5-3 business pursuant to a franchise in effect with a manufacturer or
5-4 distributor.
5-5 (16) "General distinguishing number" means a
5-6 dealer license issued by the Department pursuant to the terms of
5-7 Chapter 503, Transportation Code.
5-8 (17) "Lease" means a transfer of the right to
5-9 possession and use of a motor vehicle for a term in excess of 180
5-10 days in return for consideration.
5-11 (18) "Lease facilitator" means a person, other
5-12 than a franchised dealer or a bona fide employee of a dealer, or a
5-13 vehicle lessor or a bona fide employee of a vehicle lessor, who:
5-14 (A) holds himself out to any person as a
5-15 "motor vehicle leasing company" or "motor vehicle leasing agent" or
5-16 uses a similar title, for the purpose of soliciting or procuring a
5-17 person to enter into a contract or agreement to become the lessee
5-18 of a vehicle that is not, and will not be, titled in the name of
5-19 and registered to the lease facilitator; or
5-20 (B) otherwise solicits a person to enter
5-21 into a contract or agreement to become a lessee of a vehicle that
5-22 is not, and will not be, titled in the name of and registered to
5-23 the lease facilitator, or who is otherwise engaged in the business
5-24 of securing lessees or prospective lessees of motor vehicles that
5-25 are not, and will not be, titled in the name of and registered to
5-26 the facilitator.
6-1 (19) "Lessor" means a person who, pursuant to
6-2 the terms of a lease, transfers to another person the right to
6-3 possession and use of a motor vehicle titled in the name of the
6-4 lessor [acquires title to a motor vehicle for the purpose of
6-5 leasing the vehicle to another person].
6-6 (20) "Licensee" means a person who holds a
6-7 license or general distinguishing number issued by the Board under
6-8 the terms of this Act or Chapter 503, Transportation Code.
6-9 (21) "Manufacturer" means any person who
6-10 manufactures or assembles new motor vehicles [either within or
6-11 without this State].
6-12 (22) "Manufacturer's statement of origin" means
6-13 a certificate on a form prescribed by the Department showing the
6-14 original transfer of a new motor vehicle from the manufacturer to
6-15 the original purchaser.
6-16 (23) "Motor home" means a motor vehicle which is
6-17 designed to provide temporary living quarters and which:
6-18 (A) is built onto as an integral part of,
6-19 or is permanently attached to, a motor vehicle chassis; and
6-20 (B) contains at least four of the
6-21 following independent life support systems if each is permanently
6-22 installed and designed to be removed only for purposes of repair or
6-23 replacement and meets the standards of the American National
6-24 Standards Institute, Standards for Recreational Vehicles:
6-25 (i) a cooking facility with
6-26 an on-board fuel source;
7-1 (ii) a gas or electric
7-2 refrigerator;
7-3 (iii) a toilet with
7-4 exterior evacuation;
7-5 (iv) a heating or air
7-6 conditioning system with an on-board power or fuel source separate
7-7 from the vehicle engine;
7-8 (v) a potable water supply
7-9 system that includes at least a sink, a faucet, and a water tank
7-10 with an exterior service supply connection;
7-11 (vi) a 110-125 volt
7-12 electric power supply.
7-13 (24) "Motor home manufacturer" means a person
7-14 other than the manufacturer of the chassis of a motor vehicle who,
7-15 prior to the retail sale of the motor vehicle, performs
7-16 modifications on the chassis that result in the finished product
7-17 being classified as a motor home.
7-18 (25) "Motor vehicle" means:
7-19 (A) every fully self-propelled vehicle
7-20 which has as its primary purpose the transport of a person or
7-21 persons, or property, on a public highway, and having two or more
7-22 wheels;
7-23 (B) every two or more wheeled fully
7-24 self-propelled, titled vehicle which has as its primary purpose the
7-25 transport of a person or persons or property and is not
7-26 manufactured for use on public streets, roads, or highways;
8-1 (C) an engine, transmission, or rear axle
8-2 manufactured for installation in a vehicle having as its primary
8-3 purpose the transport of a person or persons or property on a
8-4 public highway and having a gross vehicle weight rating of more
8-5 than 16,000 pounds, whether or not attached to a vehicle chassis;
8-6 or
8-7 (D) a towable recreational vehicle.
8-8 (26) "New motor vehicle" means a motor vehicle
8-9 which has not been the subject of a "retail sale" without regard to
8-10 the mileage of the vehicle.
8-11 (27) "Nonfranchised dealer" means a person who
8-12 holds an independent motor vehicle dealer's general distinguishing
8-13 number or a wholesale motor vehicle dealer's general distinguishing
8-14 number issued by the Department pursuant to the terms of Chapter
8-15 503, Transportation Code.
8-16 (28) "Party" means each person or agency named
8-17 or admitted as a party and whose legal rights, duties, or
8-18 privileges are to be determined by the board [Commission] after an
8-19 opportunity for adjudicative hearing.
8-20 [(28) "Towable recreational vehicle" means a
8-21 nonmotorized vehicle that is designed and originally manufactured
8-22 for temporary human habitation as its primary purpose for
8-23 recreational, camping, or seasonal use and:]
8-24 [(A) is titled and registered with the
8-25 Texas Department of Transportation as a travel trailer through the
8-26 county tax assessor-collector;]
9-1 [(B) is permanently built on a single
9-2 chassis;]
9-3 [(C) contains one or more life support
9-4 systems; and]
9-5 [(D) is designed to be towable by another
9-6 motor vehicle.]
9-7 (29) "Person" means a natural person,
9-8 partnership, corporation, association, trust, estate, or any other
9-9 legal entity.
9-10 (30) "Relocation" means the transfer of an
9-11 existing dealership operation to facilities at a different
9-12 location, including a transfer which results in a consolidation or
9-13 dualing of an existing dealer's operation.
9-14 (31) "Representative" means any person who is or
9-15 acts as an agent, employee or representative of a manufacturer,
9-16 distributor, or converter who performs any duties in this State
9-17 relating to promoting the distribution and/or sale of new motor
9-18 vehicles or contacts dealers in this State on behalf of a
9-19 manufacturer, distributor, or converter.
9-20 (32) "Retail sale" means the sale of a motor
9-21 vehicle except:
9-22 (A) a sale in which the purchaser acquires
9-23 a vehicle for the purpose of resale; or
9-24 (B) a sale of a vehicle that is operated
9-25 under and in accordance with Section 503.061, Transportation Code.
9-26 (33) "Rule" means a statement by the board
10-1 [Commission] of general and future applicability that implements,
10-2 interprets, or prescribes law or policy or describes the
10-3 organization or procedural practice requirements of the board
10-4 [Commission]. The term includes the amendment or repeal of a prior
10-5 rule, but does not include statements concerning only the internal
10-6 management of the board [Commission] which do not affect the rights
10-7 of a person not connected with the board [Commission].
10-8 (34) "Towable recreational vehicle" means a
10-9 nonmotorized vehicle originally designed and manufactured for the
10-10 primary purpose of providing temporary human habitation in
10-11 conjunction with recreational, camping, or seasonal use and:
10-12 (A) is titled and registered with the
10-13 Texas Department of Transportation as a travel trailer through the
10-14 county tax assessor-collector;
10-15 (B) is permanently built on a single
10-16 chassis;
10-17 (C) contains one or more life support
10-18 systems; and
10-19 (D) is designed to be towable by another
10-20 motor vehicle.
10-21 (35)[(34)] "Transportation Commission" means the
10-22 Texas Transportation Commission of the Texas Department of
10-23 Transportation.
10-24 (36)[(35)] "Warranty work" means parts, labor,
10-25 and any other expenses incurred by a franchised dealer in complying
10-26 with the terms of a manufacturer's or distributor's warranty.
11-1 SECTION 2. Section 2.02, Texas Motor Vehicle Commission Code
11-2 (Article 4413(36), Vernon's Texas Civil Statutes) is amended by
11-3 adding Subsection (d) to read as follows:
11-4 "(d) A person is eligible for appointment to the board
11-5 as provided by Subsection (c)(1) of this section if the person is
11-6 otherwise eligible as provided by this Act and is a natural person
11-7 who is either himself or herself a dealer or is the bona fide owner
11-8 of at least 20 percent of an entity that is a dealer.
11-9 Notwithstanding the terms of this subsection, a person is not
11-10 eligible to serve on the board as provided by Subsection (c)(1) of
11-11 this section if the person's status as dealer is derived from a
11-12 dealer or dealership in which a manufacturer or distributor owns an
11-13 interest.
11-14 SECTION 3. Subsections (a), (b) and (c), Section 2.08, Texas
11-15 Motor Vehicle Commission code (Article 4413(36), Vernon's Texas
11-16 Civil Statutes), are amended to read as follows:
11-17 Sec. 2.08. Commission Meetings. (a) The Governor shall
11-18 designate one member of the board, other than a member appointed
11-19 pursuant to the terms of Section 2.02(c) of this Act, as Chairman
11-20 to serve in that capacity at the pleasure of the Governor. The
11-21 board shall hold a regular annual meeting in September of each year
11-22 and elect a Vice-chairman to serve for the ensuing year. The board
11-23 shall have regular meetings as the majority of the members may
11-24 specify and special meetings at the request of the Chairman, any
11-25 two members, or the Director. Reasonable notice of all meetings
11-26 shall be given as board rules prescribe. A majority of the board
12-1 constitutes a quorum to transact business, except that a member
12-2 appointed under Section 2.02(b) [Section 2.02] of this Act is not
12-3 counted in the calculation of a quorum for purposes of the
12-4 determination of an issue with respect to which the member is
12-5 prohibited from voting. The Chairman, or in his absence, the
12-6 Vice-chairman, shall preside at all meetings of the board. In the
12-7 absence of both the Chairman and the Vice-chairman, the members
12-8 present shall select one of their number to serve as chairman for
12-9 the meeting.
12-10 (b) The board [Commission] is subject to Chapters 551
12-11 and 2001, Government Code.
12-12 (c) The board [Commission] shall develop and implement
12-13 policies that provide the public with a reasonable opportunity to
12-14 appear before the Commission and to speak on any issue under the
12-15 jurisdiction of the Commission.
12-16 SECTION 4. Section 2.08A(c), Texas Motor Vehicle Commission
12-17 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
12-18 to read as follows:
12-19 (c) If the Director has knowledge that a potential
12-20 ground for removal exists, the Director shall notify the Chairman
12-21 of the board [Commission] of the ground. The Chairman shall then
12-22 notify the Governor and the Attorney General that a potential
12-23 ground for removal exists. If the potential ground for removal
12-24 relates to the Chairman of the board [Commission], the [Executive]
12-25 Director shall notify the Vice-chairman of the Commission, who
12-26 shall notify the Governor and the Attorney General that a potential
13-1 ground for removal exists.
13-2 SECTION 5. Section 3.02, Texas Motor Vehicle Commission Code
13-3 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
13-4 read as follows:
13-5 Sec. 3.02. Duties. (a) The board [Commission] shall, in
13-6 accordance with this Act, administer the provisions of this Act,
13-7 establish the qualifications of licensees, ensure that the
13-8 distribution, sale, and leasing of motor vehicles is conducted as
13-9 provided herein and under the board's [Commission's] rules, provide
13-10 for compliance with warranties, and otherwise prevent fraud, unfair
13-11 practices, discriminations, impositions, and other abuses in
13-12 connection with the distribution and sale of motor vehicles.
13-13 (b) The board [Commission] shall prepare and maintain
13-14 a written plan that describes how a person who does not speak
13-15 English or who has a physical, mental, or developmental disability
13-16 can be provided reasonable access to the Commission's programs.
13-17 SECTION 6. Section 3.08(g), Texas Motor Vehicle Commission
13-18 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
13-19 to read as follows:
13-20 (g) In all contested cases the examiner shall serve on
13-21 all parties a copy of the examiner's proposal for decision and
13-22 recommended order containing findings of fact and conclusions of
13-23 law. A party may file exceptions and replies to the board. In its
13-24 review of the case, the board may consider only the materials
13-25 timely submitted. The board may receive such oral argument from
13-26 any party as the board may allow. The board shall take such
14-1 further actions as are conducive to the issuance of a final order
14-2 and shall thereafter issue a written final decision or order. The
14-3 board's written final decision or order shall be signed on behalf
14-4 of the board by the chairman or vice chairman [Director]. A
14-5 majority vote of a quorum of the board shall be required to adopt
14-6 final decisions or orders of the board.
14-7 SECTION 7. Section 4.02, Texas Motor Vehicle Commission Code
14-8 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
14-9 read as follows:
14-10 Sec. 4.02. Dealer Application. (a) An application for a
14-11 dealer license shall be on a form prescribed by the board which
14-12 shall include the information required by Chapter 503,
14-13 Transportation Code, and information on the applicant's financial
14-14 resources, business integrity, business ability and experience,
14-15 franchise agreement if applicable, physical facilities, vehicle
14-16 inventory, and other factors the board considers necessary to
14-17 determine an applicant's qualifications to adequately serve the
14-18 [motoring] public.
14-19 (b) A dealer shall renew his license annually on an
14-20 application prescribed by the board [Commission]. If a material
14-21 change occurs in the information included in a dealer's application
14-22 for a license or renewal of a license, the dealer shall, within a
14-23 reasonable time but not later than the next annual renewal, notify
14-24 the board [Commission] of those changes. The board [Commission]
14-25 shall prescribe a form for the disclosure of the changes and shall
14-26 include in the renewal application a request for disclosure of
15-1 material changes.
15-2 (c)[(1)] A franchised dealer may carry on the business
15-3 of his dealership at more than one location; however, a separate
15-4 location for the display and sale of new motor vehicles may not be
15-5 established and maintained by a franchised dealer unless expressly
15-6 authorized by the franchised dealer's franchise and license. An
15-7 application for a franchised dealer's license or to amend a
15-8 franchised dealer's license which proposes the establishment of a
15-9 separate display and sales location is subject to all of the
15-10 provisions of this Act. A separate license shall be required for
15-11 each separate and distinct dealership as determined by the board
15-12 [Commission].
15-13 (d)[(2)] Except as provided in this subsection
15-14 [subdivision], no licensee may participate in a new motor vehicle
15-15 show or exhibition unless the board [Commission] has first had
15-16 written notice at least 30 days prior to the opening day of the
15-17 show or exhibition and its written approval has been granted. A
15-18 licensee may not sell or offer for sale a new motor vehicle at a
15-19 show or exhibition; however, dealership personnel may be present to
15-20 aid in the showing or exhibiting of new motor vehicles. This
15-21 subsection [subdivision] does not prohibit the sale of a towable
15-22 recreational vehicle, motor home, ambulance, or fire-fighting
15-23 vehicle at a show or exhibition if the show or exhibition is
15-24 approved by the board [Commission] and if the sale does not
15-25 otherwise violate a provision of law. If the board adopts[;
15-26 provided that, should the Commission adopt] a rule regulating
16-1 off-site display or sale of towable recreational vehicles, the
16-2 board [Commission] shall, as part of that rule, authorize the
16-3 display and sale of towable recreational vehicles at a private
16-4 event in a trade area [private events in trade areas (counties,
16-5 cities, or towns) where] that would not otherwise qualify for the
16-6 private event under the application of general participation
16-7 requirements for organized dealer shows and exhibitions [would
16-8 effectively preclude such an organized show or exhibition].
16-9 (e)[(3)] The board [Commission] shall, under its
16-10 general rule-making authority granted in this Act, establish rules
16-11 and guidelines for the implementation and enforcement of this
16-12 section [subsection].
16-13 (f)[(d)] A dealer licensed hereunder shall promptly
16-14 notify the board [Commission] of any proposed change in its
16-15 ownership, location, franchise, or any other matters the board
16-16 [Commission] may require by rule. Prior to a change in a dealer's
16-17 location, a dealer shall obtain a new license for that location.
16-18 SECTION 8. Section 4.03(b), Texas Motor Vehicle Commission
16-19 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
16-20 to read as follows:
16-21 (b) An applicant for a manufacturer's license shall
16-22 furnish a list of all distributors, representatives acting for
16-23 applicant, and all dealers franchised to sell the applicant's
16-24 products in this State and their respective locations. The
16-25 applicant shall separately set forth a list of dealers in which the
16-26 applicant, or an entity owned or controlled by the applicant, owns
17-1 an interest, whether or not the dealer is also included in the
17-2 applicant's list of franchised dealers. All applicants for
17-3 manufacturer's licenses and all licensed manufacturers shall
17-4 thereafter advise the Commission within 15 days of any change in
17-5 their list of distributors, representatives, and franchised
17-6 dealers. This information shall become part of the application.
17-7 SECTION 9. Section 5.01B(a), Texas Motor Vehicle Commission
17-8 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-9 to read as follows:
17-10 (a) In order to transfer, assign, or sell a franchise
17-11 agreement or controlling interest in the dealership to another
17-12 person, a dealer shall notify the manufacturer or distributor whose
17-13 vehicles the dealer is franchised to sell of the dealer's decision
17-14 to transfer, assign, or sell the dealership. The notification
17-15 required by this subsection must be by certified mail, return
17-16 receipt requested, and is the application by the dealer for
17-17 approval by the manufacturer or distributor of the transfer. The
17-18 notice must be in writing and must include:
17-19 (1) the prospective transferee's name, address,
17-20 financial qualifications, and business experience;
17-21 (2) a copy of pertinent agreements regarding the
17-22 proposed transfer, assignment, or sale;
17-23 (3) completed application forms and related
17-24 information generally utilized by the manufacturer or distributor
17-25 in reviewing prospective dealers, if the forms are on file with the
17-26 board; [and]
18-1 (4) the prospective transferee's written
18-2 agreement to comply with the terms of the franchise agreement to
18-3 the extent that the franchise agreement is not in conflict with the
18-4 terms of this Act; and
18-5 (5) if the prospective transferee is an entity
18-6 owned or controlled by a manufacturer or distributor, a statement
18-7 identifying the manufacturer that owns or controls the entity.
18-8 SECTION 10. Section 5.02(b), Texas Motor Vehicle Commission
18-9 code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
18-10 to read as follows:
18-11 (b) It is unlawful for any manufacturer, distributor,
18-12 or representative to:
18-13 (1) Require or attempt to require any dealer to
18-14 order, accept delivery of or pay anything of value, directly or
18-15 indirectly, for any motor vehicle, appliance, part, accessory or
18-16 any other commodity unless voluntarily ordered or contracted for by
18-17 such dealer.
18-18 (2) Refuse or fail to deliver, in reasonable
18-19 quantities and within a reasonable time, to a dealer having a
18-20 franchise agreement for the retail sale of any motor vehicles sold
18-21 or distributed by such manufacturer, distributor, or
18-22 representative, any new motor vehicle or parts or accessories to
18-23 new motor vehicles as are covered by such franchise if such
18-24 vehicle, parts or accessories are publicly advertised as being
18-25 available for delivery or are actually being delivered; provided,
18-26 however, this provision is not violated if such failure is caused
19-1 by acts of God, work stoppage or delays due to strikes or labor
19-2 disputes, freight embargoes or other causes beyond the control of
19-3 the manufacturer, distributor, or representative.
19-4 (3) Notwithstanding the terms of any franchise
19-5 agreement:
19-6 (A) Terminate or refuse to continue any
19-7 franchise with a dealer or directly or indirectly force or attempt
19-8 to force a dealer to relocate or discontinue a line-make or parts
19-9 or products related to that line-make unless all of the following
19-10 conditions are met:
19-11 (i) the dealer and the
19-12 board have received written notice by registered or certified mail
19-13 from the manufacturer, distributor, or representative not less than
19-14 60 days before the effective date of termination or noncontinuance
19-15 setting forth the specific grounds for termination or
19-16 noncontinuance; and
19-17 (ii) the written notice
19-18 contains on the first page thereof a conspicuous statement which
19-19 reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE
19-20 A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS, AND
19-21 HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR
19-22 NONCONTINUANCE OF YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR
19-23 VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
19-24 (iii) the manufacturer,
19-25 distributor, or representative has received the informed, written
19-26 consent of the affected dealer or the appropriate period for the
20-1 affected dealer to protest the proposed franchise termination or
20-2 noncontinuance has lapsed; or
20-3 (iv) if the affected dealer
20-4 files a protest with the board within the greater of (1) 60 days
20-5 after receiving its 60-day notice of proposed termination or
20-6 noncontinuance or (2) the time specified in such notice, the board
20-7 determines that the party seeking to terminate or not continue a
20-8 dealer's franchise has established by a preponderance of the
20-9 evidence, at a hearing called by the board, that there is good
20-10 cause for the proposed termination or noncontinuance.
20-11 (v) Notwithstanding
20-12 Subdivisions (3)(A)(i) and (3)(A)(iv) of this section, notice may
20-13 be made not less than 15 days prior to the effective date of
20-14 termination or noncontinuance if a licensed dealer fails to conduct
20-15 its customary sales and service operations during its customary
20-16 business hours for seven consecutive business days unless such
20-17 failure is caused by an act of God, work stoppage or delays due to
20-18 strikes or labor disputes, an order of the board, or other causes
20-19 beyond the control of the dealer.
20-20 (B) Whenever a dealer files a timely
20-21 protest to a proposed franchise termination or noncontinuance, the
20-22 board shall notify the party seeking to terminate or to not
20-23 continue the protesting dealer's franchise that a timely protest
20-24 has been filed, that a hearing is required in accordance with this
20-25 Act, and that the party who gave the dealer notice of termination
20-26 or noncontinuance of the franchise may not terminate or refuse to
21-1 continue the franchise until the board issues its final decision or
21-2 order.
21-3 (C) If a franchise is terminated or not
21-4 continued, another franchise in the same line-make will be
21-5 established within a reasonable time unless it is shown to the
21-6 board by a preponderance of the evidence that the community or
21-7 trade area cannot reasonably support such a dealership. If this
21-8 showing is made, no dealer license shall be thereafter issued in
21-9 the same area unless a change in circumstances is established.
21-10 (4) Notwithstanding the terms of any franchise
21-11 agreement, modify or replace a franchise if the modification or
21-12 replacement would adversely affect, to a substantial degree, the
21-13 dealer's sales, investment, or obligations to provide service to
21-14 the public, unless the manufacturer, distributor, or representative
21-15 has first given the board and each affected dealer written notice
21-16 by registered or certified mail of any such action 60 days in
21-17 advance of the modification or replacement. The written notice
21-18 shall contain on the first page thereof a conspicuous statement
21-19 which reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO
21-20 FILE A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS,
21-21 AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED
21-22 MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE UNDER THE TERMS OF
21-23 THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."
21-24 Within the greater of (1) 60 days after receipt of such notice or
21-25 (2) the time specified in such notice, a dealer may file a protest
21-26 with the board and the modification or replacement shall not become
22-1 effective unless and until the board determines that the party
22-2 seeking to modify or replace a franchise has demonstrated by a
22-3 preponderance of the evidence that there is good cause for the
22-4 modification or replacement. The prior franchise shall continue in
22-5 effect until the protest is resolved by the board.
22-6 (5) Notwithstanding the terms of any franchise
22-7 agreement, in determining whether good cause has been established
22-8 for modifying, replacing, terminating, or refusing to continue a
22-9 franchise, or for forcing or attempting to force a dealer to
22-10 relocate or discontinue a line-make or parts or products related to
22-11 that line-make, the board shall consider all the existing
22-12 circumstances including, without limitation by the enumeration
22-13 herein, all the following:
22-14 (A) the dealer's sales in relation to the
22-15 sales in the market;
22-16 (B) the dealer's investment and
22-17 obligations;
22-18 (C) injury to the public welfare;
22-19 (D) the adequacy of the dealer's service
22-20 facilities, equipment, parts, and personnel in relation to those of
22-21 other dealers of new motor vehicles of the same line-make;
22-22 (E) whether warranties are being honored
22-23 by the dealer;
22-24 (F) the parties' compliance with their
22-25 franchise agreement except to the extent that the franchise
22-26 agreement is in conflict with this Act; and
23-1 (G) the enforceability of the franchise
23-2 agreement from a public policy standpoint, including, without
23-3 limitation, issues of the reasonableness of the franchise
23-4 agreement's terms, oppression, adhesion, and the relative
23-5 bargaining power of the parties.
23-6 Good cause shall not be shown solely by the desire of a
23-7 manufacturer, distributor, or representative for market
23-8 penetration.
23-9 (6) Use any false, deceptive or misleading
23-10 advertising.
23-11 (7) Notwithstanding the terms of any franchise
23-12 agreement, prevent any dealer from reasonably changing the capital
23-13 structure of his dealership or the means by or through which he
23-14 finances the operation thereof, provided that the dealer meets
23-15 reasonable capital requirements.
23-16 (8) Notwithstanding the terms of any franchise
23-17 agreement, fail to give effect to or attempt to prevent any sale or
23-18 transfer of a dealer, dealership or franchise or interest therein
23-19 or management thereof except as provided by Section 5.01B.
23-20 (9) Notwithstanding the terms of any franchise
23-21 agreement, require or attempt to require that a dealer assign to or
23-22 act as an agent for any manufacturer, distributor or representative
23-23 in the securing of promissory notes and security agreements given
23-24 in connection with the sale or purchase of new motor vehicles or
23-25 the securing of policies of insurance on or having to do with the
23-26 operation of vehicles sold.
24-1 (10) Notwithstanding the terms of any franchise
24-2 agreement, fail or refuse, after complaint and hearing, to perform
24-3 the obligations placed on the manufacturer in connection with the
24-4 delivery, preparation and warranty of a new motor vehicle as
24-5 provided in the manufacturer's warranty, preparation, and delivery
24-6 agreements on file with the board .
24-7 (11) Notwithstanding the terms of any franchise
24-8 agreement[, fail to compensate its dealers for the work and
24-9 services they are required to perform in connection with the
24-10 dealer's delivery and preparation obligations according to the
24-11 agreements on file with the board which must be found by the board
24-12 to be reasonable, or fail to adequately and fairly compensate its
24-13 dealers for labor, parts and other expenses incurred by such dealer
24-14 to perform under and comply with a manufacturer's or a
24-15 distributor's warranty agreement, or require, as a prerequisite to
24-16 the manufacturer's or distributor's payment of a claim for
24-17 reimbursement as required by this section, that a dealer file with
24-18 the manufacturer or distributor the actual time spent in the
24-19 performance of labor unless actual time is the basis for
24-20 reimbursement. In no event shall any manufacturer or distributor
24-21 pay its dealers an amount of money for warranty work that is less
24-22 than that charged by the dealer to the retail customers of the
24-23 dealer for nonwarranty work of like kind. All claims made by
24-24 dealers for compensation for delivery, preparation, and warranty
24-25 work shall be paid within 30 days after approval and shall be
24-26 approved or disapproved within 30 days after receipt. When any
25-1 claim is disapproved, the dealer shall be notified in writing of
25-2 the grounds for disapproval. No claim which has been approved and
25-3 paid may be charged back to the dealer unless it can be shown that
25-4 the claim was false or fraudulent, that the repairs were not
25-5 properly made or were unnecessary to correct the defective
25-6 condition, or that the dealer failed to reasonably substantiate the
25-7 claim in accordance with reasonable written requirements of the
25-8 manufacturer or distributor, if the dealer has been notified of the
25-9 requirements prior to the time the claim arose, and if the
25-10 requirements were in effect at the time the claim arose. A
25-11 manufacturer or distributor may not audit a claim after the
25-12 expiration of two years following the submission of the claim
25-13 unless the manufacturer or distributor has reasonable grounds to
25-14 suspect that a claim was fraudulent. Notwithstanding the terms of
25-15 a franchise agreement] or provision of law in conflict with this
25-16 section, the dealer's delivery, preparation, and warranty
25-17 obligations as filed with the board shall constitute the dealer's
25-18 sole responsibility for product liability as between the dealer and
25-19 manufacturer or distributor, and, except for a loss caused by the
25-20 dealer's failure to adhere to these obligations, a loss caused by
25-21 the dealer's negligence or intentional misconduct, or a loss caused
25-22 by the dealer's modification of a product without manufacturer or
25-23 distributor authorization, the manufacturer or distributor shall
25-24 reimburse the dealer for all loss incurred by the dealer, including
25-25 legal fees, court costs, and damages, as a result of the dealer
25-26 having been named a party in a product liability action.
26-1 (12) Operate as a manufacturer, distributor, or
26-2 representative without a currently valid license from the board or
26-3 otherwise violate this Act or rules promulgated by the board
26-4 hereunder.
26-5 (13) Notwithstanding the terms of any franchise
26-6 agreement, to prevent or refuse to honor the succession to a
26-7 dealership by any legal heir or devisee under the will of a dealer
26-8 or under the laws of descent and distribution of this State unless
26-9 it is shown to the board, after notice and hearing, that the result
26-10 of such succession will be detrimental to the public interest and
26-11 to the representation of the manufacturer or distributor; provided,
26-12 however, nothing herein shall prevent a dealer, during his
26-13 lifetime, from designating any person as his successor dealer, by
26-14 written instrument filed with the manufacturer or distributor.
26-15 (14) Notwithstanding the terms of any franchise
26-16 agreement, require that a dealer pay or assume, directly or
26-17 indirectly, any part of any refund, rebate, discount, or other
26-18 financial adjustment made by the manufacturer, distributor, or
26-19 representative to, or in favor of, any customer of a dealer, unless
26-20 voluntarily agreed to by such dealer.
26-21 (15) Notwithstanding the terms of any franchise
26-22 agreement, deny or withhold approval of a written application to
26-23 relocate a franchise unless (A) the applicant has received written
26-24 notice of the denial or withholding of approval within 60 days
26-25 after receipt of the application containing information reasonably
26-26 necessary to enable the manufacturer or distributor to adequately
27-1 evaluate the application, and if (B) the applicant files a protest
27-2 with the board and the manufacturer or distributor establishes by a
27-3 preponderance of the evidence at a hearing called by the board that
27-4 the grounds for the denial or withholding of approval of the
27-5 relocation are reasonable.
27-6 (16) Notwithstanding the terms of any franchise
27-7 agreement, fail to pay to a dealer or any lienholder in accordance
27-8 with their respective interest after the termination of a
27-9 franchise:
27-10 (A) the dealer cost of each new motor
27-11 vehicle in the dealer's inventory with mileage of 6,000 miles or
27-12 less, reduced by the net discount value of each, where "net
27-13 discount value" is determined according to the following formula:
27-14 net cost multiplied by total mileage divided by 100,000, and where
27-15 "net cost" equals the dealer cost plus any charges by the
27-16 manufacturer, distributor, or representative for distribution,
27-17 delivery, and taxes, less all allowances paid to the dealer by the
27-18 manufacturer, distributor, or representative for new, unsold,
27-19 undamaged, and complete motor vehicles of current model year or one
27-20 year prior model year in the dealer's inventory, except that if a
27-21 vehicle cannot be reduced by the net discount value, the
27-22 manufacturer or distributor shall pay the dealer the net cost of
27-23 the vehicle;
27-24 (B) the dealer cost of each new, unused,
27-25 undamaged, and unsold part or accessory if the part or accessory is
27-26 in the current parts catalogue and is still in the original,
28-1 resalable merchandising package and in unbroken lots, except that
28-2 in the case of sheet metal, a comparable substitute for the
28-3 original package may be used, and if the part or accessory was
28-4 purchased by the dealer either directly from the manufacturer or
28-5 distributor or from an outgoing authorized dealer as a part of the
28-6 dealer's initial inventory;
28-7 (C) the fair market value of each
28-8 undamaged sign owned by the dealer which bears a trademark or trade
28-9 name used or claimed by the manufacturer, distributor, or
28-10 representative if the sign was purchased from or purchased at the
28-11 request of the manufacturer, distributor, or representative;
28-12 (D) the fair market value of all special
28-13 tools, data processing equipment, and automotive service equipment
28-14 owned by the dealer which were recommended in writing and
28-15 designated as special tools and equipment and purchased from or
28-16 purchased at the request of the manufacturer, distributor, or
28-17 representative, if the tools and equipment are in usable and good
28-18 condition except for reasonable wear and tear;
28-19 (E) the cost of transporting, handling,
28-20 packing, storing, and loading of any property subject to repurchase
28-21 under this section;
28-22 (F) except as provided by this
28-23 subdivision, any sums due as provided by Paragraph (A) of this
28-24 subdivision within 60 days after termination of a franchise and any
28-25 sums due as provided by Paragraphs (B) through (E) of this
28-26 subdivision within 90 days after termination of a franchise. As a
29-1 condition of payment, the dealer is to comply with reasonable
29-2 requirements with respect to the return of inventory as are set out
29-3 in the terms of the franchise agreement. A manufacturer or
29-4 distributor shall reimburse a dealer for the dealer's cost for
29-5 storing any property covered by this subdivision beginning 90 days
29-6 following termination. A manufacturer or distributor shall
29-7 reimburse a dealer for the dealer's cost of storing any property
29-8 covered by this subdivision before the expiration of 90 days from
29-9 the date of termination if the dealer notifies the manufacturer or
29-10 distributor of the commencement of storage charges within that
29-11 period. On receipt of notice of the commencement of storage
29-12 charges, a manufacturer or distributor may immediately take
29-13 possession of the property in question by repurchasing the property
29-14 as provided by this subdivision. A manufacturer, distributor, or
29-15 representative who fails to pay those sums within the prescribed
29-16 time or at such time as the dealer and lienholder, if any, proffer
29-17 good title prior to the prescribed time for payment, is liable to
29-18 the dealer for:
29-19 (i) the greatest of dealer
29-20 cost, fair market value, or current price of the inventory;
29-21 (ii) interest on the amount
29-22 due calculated at the rate applicable to a judgment of a court; and
29-23 (iii) reasonable attorney's
29-24 fees and costs.
29-25 (17) Notwithstanding the terms of any franchise
29-26 agreement, change its distributor, its method of distribution of
30-1 its products in this state, or its business structure or ownership
30-2 in a manner that results in the termination or noncontinuance of a
30-3 franchise without good cause. The manufacturer, distributor, or
30-4 representative shall issue the same notice to the dealer and to the
30-5 board as is provided in Subdivisions (3)(A) and (B) of this section
30-6 and said same procedures shall apply to the parties.
30-7 (18) Notwithstanding the terms of any franchise
30-8 agreement, require a dealer to submit to arbitration on any issue
30-9 unless the dealer and the manufacturer, distributor, or
30-10 representative and their respective counsel agree to arbitrate
30-11 after a controversy arises. The arbitrator shall apply the
30-12 provisions of this Act in resolving the pertinent controversy.
30-13 Either party may appeal to the board a decision of an arbitrator on
30-14 the ground that the arbitrator failed to apply this Act.
30-15 (19) Notwithstanding the terms of any franchise
30-16 agreement, require that a dealer join, contribute to, or affiliate
30-17 with, directly or indirectly, any advertising association.
30-18 (20) Notwithstanding the terms of a franchise
30-19 agreement:
30-20 (A) require adherence to unreasonable
30-21 sales or service standards;
30-22 (B) directly or indirectly, discriminate
30-23 against a dealer or otherwise treat dealers differently as a result
30-24 of a formula or other calculation or process intended to gauge the
30-25 performance of a dealership;
30-26 (C) unreasonably require that a dealer
31-1 purchase special tools or equipment; or
31-2 (D) fail to compensate a dealer for all
31-3 costs incurred by the dealer as required by the manufacturer in
31-4 complying with the terms of a product recall by the manufacturer or
31-5 distributor, including the costs, if any, incurred by the dealer in
31-6 notifying vehicle owners of the existence of the recall.
31-7 (21) Discriminate unreasonably between or among
31-8 franchisees in the sale of a motor vehicle owned by the
31-9 manufacturer or distributor.
31-10 (22) Directly or indirectly, or through a
31-11 subsidiary or agent, require, as a condition for obtaining
31-12 financing for a motor vehicle, the purchaser of a vehicle to
31-13 purchase any product other than the motor vehicle from the
31-14 manufacturer or distributor, or from an entity owned or controlled
31-15 by the manufacturer or distributor.
31-16 (23) Directly or indirectly, or through a
31-17 subsidiary or agent, require, as a condition of its or its
31-18 subsidiary's agreement to provide financing for a motor vehicle,
31-19 that any insurance policy or service contract purchased by the
31-20 motor vehicle purchaser be purchased from a specific source.
31-21 (24) Compel a dealer through a financing
31-22 subsidiary of the manufacturer or distributor to agree to
31-23 unreasonable operating requirements or directly or indirectly to
31-24 terminate a dealer through the actions of a financing subsidiary of
31-25 the manufacturer or distributor. This subdivision does not limit
31-26 the right of a financing entity to engage in business practices in
32-1 accordance with the usage of trade in retail and wholesale motor
32-2 vehicle financing.
32-3 (25) [Operate as a dealer except on a temporary
32-4 basis and only if:]
32-5 [(A) the dealership was previously owned by
32-6 a franchised dealer and is currently for sale at a reasonable
32-7 price; or]
32-8 [(B) the manufacturer, distributor, or
32-9 representative operates the dealership in a bona fide relationship
32-10 with a franchised dealer who is required to make a significant
32-11 investment in the dealership, subject to loss, and who reasonably
32-12 expects to acquire full ownership of the dealership under
32-13 reasonable terms and conditions.]
32-14 [(26)] Notwithstanding the terms of a franchise
32-15 agreement, deny or withhold approval of a dealer's application to
32-16 add a line-make or parts or products related to that line-make
32-17 unless, within 60 days of receipt of the dealer's written
32-18 application to add the line-make, the manufacturer or distributor
32-19 gives the dealer written notice of the denial or withholding of
32-20 approval. After receipt of notice, the dealer may file a protest
32-21 with the board. If the dealer files a protest as provided by this
32-22 subdivision, the board may uphold the manufacturer's or
32-23 distributor's decision to deny or withhold approval of the addition
32-24 of the line-make only if the manufacturer or distributor proves by
32-25 a preponderance of the evidence that the denial or withholding of
32-26 approval was reasonable. In determining whether or not the
33-1 manufacturer or distributor has met its burden to show that its
33-2 denial or withholding of approval is reasonable, the board shall
33-3 consider all existing circumstances, including, without limitation,
33-4 the following:
33-5 (A) the dealer's sales in relation to the
33-6 sales in the market;
33-7 (B) the dealer's investment and
33-8 obligations;
33-9 (C) injury or benefit to the public
33-10 [welfare];
33-11 (D) the adequacy of the dealer's sales and
33-12 service facilities, equipment, parts, and personnel in relation to
33-13 those of other dealers of new motor vehicles of the same line-make;
33-14 (E) whether warranties are being honored
33-15 by the dealer agreement;
33-16 (F) the parties' compliance with their
33-17 franchise agreement to the extent that the franchise agreement is
33-18 not in conflict with this Act;
33-19 (G) the enforceability of the franchise
33-20 agreement from a public policy standpoint, including without
33-21 limitation, issues of the reasonableness of the franchise
33-22 agreement's terms, oppression, adhesion, and the relative
33-23 bargaining power of the parties;
33-24 (H) whether the dealer complies with
33-25 reasonable capitalization requirements or will be able to comply
33-26 with reasonable capitalization requirements within a reasonable
34-1 time;
34-2 (I) the harm, if any, to the manufacturer
34-3 if the denial or withholding of approval is not upheld; and
34-4 (J) the harm, if any, to the dealer if the
34-5 denial or withholding of approval is upheld.
34-6 (26)[(27)] Fail or refuse to offer to its same
34-7 line-make franchised dealers all models manufactured for that
34-8 line-make, or require a dealer to pay any extra fee, purchase
34-9 unreasonable advertising displays or other materials, or remodel,
34-10 renovate, or recondition the dealer's existing facilities as a
34-11 prerequisite to receiving a model or series of vehicles.
34-12 (27)[(28)] Require a dealer to compensate the
34-13 manufacturer or distributor for any court costs, attorney's fees,
34-14 or other expenses incurred in an administrative or civil proceeding
34-15 arising under this Act, except that this subdivision does not
34-16 prohibit a manufacturer and dealer from entering into an agreement
34-17 to share costs in a proceeding in which the dealer and manufacturer
34-18 have the same or similar interests.
34-19 SECTION 11. The Texas Motor Vehicle Commission Code (Article
34-20 4413(36), Vernon's Texas Civil Statutes), is amended by adding
34-21 Sections 5.02A, 5.02B and 5.02C to read as follows:
34-22 Section 5.02A. WARRANTY REIMBURSEMENT. (a) A
34-23 manufacturer or distributor shall file with the board a copy of the
34-24 current requirements the manufacturer or distributor places on its
34-25 dealers with respect to the dealer's:
34-26 (1) duties under the manufacturer or
35-1 distributor's warranty; and
35-2 (2) vehicle delivery and preparation
35-3 obligations.
35-4 (b) Warranty or delivery and preparation requirements
35-5 are not enforceable unless they are reasonable and are disclosed
35-6 and filed in compliance with Subsection (a). The board shall
35-7 insure that the requirements set forth in Subsection (a) are
35-8 reasonable.
35-9 (c) A manufacturer or distributor shall fairly and
35-10 adequately compensate its dealers for:
35-11 (1) all warranty work; and
35-12 (2) labor, parts, and other expenses necessarily
35-13 incurred by the dealer in the performance of warranty work.
35-14 (d) In no event may a manufacturer or distributor pay
35-15 or reimburse a dealer an amount of money for warranty work that is
35-16 less than that charged by the dealer to the dealer's retail
35-17 customers for nonwarranty work of like kind.
35-18 (e) A manufacturer or distributor shall pay a dealer's
35-19 claim for reimbursement for warranty work or dealer preparation and
35-20 delivery work within 30 days after approval of the claim. A claim
35-21 not disapproved within 30 days after the manufacturer or
35-22 distributor receives it is approved. If the claim is disapproved,
35-23 the manufacturer or distributor shall provide the dealer written
35-24 notice of the reasons for the disapproval.
35-25 (f) Except as provided by this section, a manufacturer
35-26 or distributor may not charge a dealer back to recoup money paid to
36-1 the dealer to satisfy a claim approved and paid as provided by this
36-2 section. A manufacturer or distributor may recoup from a dealer
36-3 money paid to the dealer to satisfy a claim approved and paid as
36-4 provided by this section if the manufacturer or distributor can
36-5 show that:
36-6 (1) the claim was false or fraudulent;
36-7 (2) repair work was not properly performed or
36-8 was unnecessary to correct a defective condition; or
36-9 (3) the dealer who made the claim failed to
36-10 provide substantiation of the claim in the manner provided by the
36-11 manufacturer's or distributor's requirements if those requirements
36-12 were on file with the board at the time the claim was filed and if
36-13 those requirements are reasonable as provided by this section.
36-14 (g) A manufacturer or distributor may not:
36-15 (1) audit a claim filed under this section after
36-16 the expiration of one year from the submission of the claim unless
36-17 the manufacturer or distributor has reasonable grounds to suspect
36-18 that a claim was fraudulent; or
36-19 (2) require, as a prerequisite to the payment of
36-20 a claim for reimbursement, that a dealer file a statement of actual
36-21 time spent in performance of labor, unless actual time is the basis
36-22 for reimbursement.
36-23 Section 5.02B. MANUFACTURER OR DISTRIBUTOR INCENTIVE
36-24 PROGRAMS: PROCEDURES.
36-25 (a) In this section, "incentive program" means a
36-26 temporary program adopted by a manufacturer or distributor that
37-1 offers a monetary reward or other thing of value to a dealer, a
37-2 dealer's employee or a dealer's customer, for the attainment of
37-3 certain stated sales or other objectives within certain stated time
37-4 limits. This subsection does not render legal a program otherwise
37-5 prohibited by this Act.
37-6 (b) Prior to implementation of an incentive program, a
37-7 manufacturer or distributor shall file with the board a copy of the
37-8 rules and procedures of the program, and the duties of dealers
37-9 under the program.
37-10 (c) Except as provided by this subsection, and
37-11 notwithstanding the terms of an incentive program, a manufacturer
37-12 or distributor may not charge a dealer back to recoup money or the
37-13 cash value of another thing of value paid or conveyed to a dealer
37-14 in connection with an incentive program. A manufacturer or
37-15 distributor may recoup from a dealer money or the cash value of
37-16 another thing of value paid to a dealer in connection with an
37-17 incentive program if the manufacturer or distributor can show that:
37-18 (1) the information filed by the dealer in
37-19 connection with the incentive program contained a material,
37-20 substantive mistake but for which the manufacturer or distributor
37-21 would not have conveyed money or other thing of value to the dealer
37-22 in connection with the incentive program, if the mistake was not
37-23 subject to discovery prior to the conveyance of the money or other
37-24 thing of value, despite the use of due diligence by the
37-25 manufacturer or distributor; or
37-26 (2) the dealer committed fraud with respect to a
38-1 material fact or other material evidentiary matter upon which the
38-2 manufacturer or distributor relied in making the decision to pay
38-3 the dealer money or other thing of value in connection with the
38-4 incentive program.
38-5 (d) After the expiration of one year following the
38-6 date on which a manufacturer or distributor conveyed money or other
38-7 thing of value to a dealer in connection with an incentive program,
38-8 the manufacturer or distributor may not audit the records of the
38-9 dealer for the purpose of determining compliance with the rules of
38-10 the program unless the manufacturer or distributor has reasonable
38-11 grounds to suspect that the dealer committed fraud. In this
38-12 section, clerical error is not fraud.
38-13 Section 5.02C. MANUFACTURER OWNERSHIP OF DEALERSHIP.
38-14 (a) In this section the term "manufacturer" includes:
38-15 (1) a distributor;
38-16 (2) a representative; or
38-17 (3) a person or entity who is affiliated with a
38-18 manufacturer, distributor, or representative, or, who, directly or
38-19 indirectly through an intermediary, is controlled by, or is under
38-20 common control with, the manufacturer.
38-21 (b) For purposes of Subsection (a)(3), a person or
38-22 entity is controlled by a manufacturer if the manufacturer has the
38-23 authority directly or indirectly, by law or by agreement of the
38-24 parties, to direct or influence the management and policies of the
38-25 person or entity.
38-26 (c) Except as provided by this section, a manufacturer
39-1 may not directly or indirectly:
39-2 (1) own an interest in a dealer or dealership;
39-3 (2) operate or control a dealer or dealership;
39-4 or
39-5 (3) act in the capacity of a dealer.
39-6 (d) A manufacturer may own an interest in a franchised
39-7 dealer, or otherwise control a dealership, for a period not to
39-8 exceed 12 months from the date the manufacturer acquires the
39-9 dealership if:
39-10 (1) the person from whom the manufacturer
39-11 acquired the dealership was a franchised dealer; and
39-12 (2) the dealership is for sale by the
39-13 manufacturer at a reasonable price and on reasonable terms and
39-14 conditions.
39-15 (e) For the purpose of broadening the diversity of its
39-16 dealer body and enhancing opportunities for qualified persons who
39-17 are part of a group who have historically been underrepresented in
39-18 its dealer body, or other qualified persons who lack the resources
39-19 to purchase a dealership outright, but for no other purpose, a
39-20 manufacturer may temporarily own an interest in a dealership if the
39-21 manufacturer's participation in the dealership is in a bona fide
39-22 relationship with a franchised dealer who:
39-23 (1) has made a significant investment in the
39-24 dealership, subject to loss;
39-25 (2) has an ownership interest in the dealership;
39-26 and
40-1 (3) operates the dealership under a plan to
40-2 acquire full ownership of the dealership within a reasonable time
40-3 and under reasonable terms and conditions.
40-4 SECTION 12. Section 6.01, Texas Motor Vehicle Commission
40-5 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
40-6 to read as follows:
40-7 Sec. 6.01. Civil penalty. (a) In the event the board
40-8 [Commission] determines, after a proceeding conducted in accordance
40-9 with this Act and the rules of the board [Commission], that any
40-10 person is violating or has violated any provision of this Act, any
40-11 rule or order of the board [Commission] issued pursuant to this
40-12 Act, or Section 503.038(a), or Subchapter A, Chapter 728,
40-13 Transportation code, the board [Commission] may levy a civil
40-14 penalty not to exceed $10,000 for each day of violation and for
40-15 each act of violation. Notwithstanding a law to the contrary, all
40-16 civil penalties recovered under this Act shall be deposited in the
40-17 state treasury to the credit of the state highway fund.
40-18 (b) In determining the amount of a civil penalty
40-19 levied under this Act, the board [Commission] shall consider:
40-20 (1) the seriousness of the violation, including
40-21 but not limited to the nature, circumstances, extent, and gravity
40-22 of the prohibited acts, and the harm or potential harm created to
40-23 the safety of the public;
40-24 (2) the economic damage to the public caused by
40-25 the violation;
40-26 (3) the history of the previous violations;
41-1 (4) the amount necessary to deter future
41-2 violations;
41-3 (5) efforts made to correct the violations; and
41-4 (6) any other matters that justice may require.
41-5 SECTION 13. Section 6.07(a), Texas Motor Vehicle Commission
41-6 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
41-7 to read a follows:
41-8 (a) In addition to the other powers and duties
41-9 provided for in this Act, the board [Commission] shall cause
41-10 manufacturers, converters, and distributors to perform the
41-11 obligations imposed by this section. In this section "owner" means
41-12 a Texas resident who:
41-13 (1) purchased a vehicle at retail from a licensee and
41-14 is entitled to enforce the terms of a manufacturer's warranty with
41-15 respect to the vehicle;
41-16 (2) is a lessor or lessee, other than a sublessee, who
41-17 purchased or leased the vehicle from a licensee; or
41-18 (3) is the transferee or assignee of any of the
41-19 persons described in Subdivisions (1) or (2) of this subsection if
41-20 the transferee or assignee is a Texas resident and is entitled to
41-21 enforce the terms of a manufacturer's warranty. [For purposes of
41-22 this section, the term "owner" means a retail purchaser, lessor,
41-23 lessee other than a sublessee, or the person so designated on the
41-24 certificate of title to a motor vehicle issued by the Texas
41-25 Department of Transportation, or an equivalent document issued by
41-26 the duly authorized agency of any other state, or any person to
42-1 whom such motor vehicle is legally transferred during the duration
42-2 of a manufacturer's or distributor's express warranty applicable to
42-3 such motor vehicle, and any other person entitled by the terms of
42-4 the manufacturer's, converter's, or distributor's express warranty
42-5 to enforce the obligations thereof.]
42-6 SECTION 14. Section 7.01(f), Texas Motor Vehicle Commission
42-7 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
42-8 to read as follows:
42-9 (f) Appeal shall not affect the enforcement of a final
42-10 board [Commission] order unless its enforcement is enjoinable under
42-11 Section 65.001 et seq., Civil Practice and Remedies Code, and under
42-12 principles of primary jurisdiction. Notwithstanding the terms of
42-13 this section, the board may, in the interest of justice, suspend
42-14 the enforcement of its order pending final determination of an
42-15 appeal of that order as provided by this section.
42-16 SECTION 15. EMERGENCY. The importance of this legislation
42-17 and the crowded condition of the calendars in both houses create an
42-18 emergency and an imperative public necessity that the
42-19 constitutional rule requiring bills to be read on three several
42-20 days in each house be suspended, and this rule is hereby suspended,
42-21 and that this Act take effect and be in force from and after its
42-22 passage, and it is so enacted.