By Alexander H.B. No. 1665
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the duties and authority of the Texas Motor Vehicle
1-3 Board and to the regulation of the sale of motor vehicles.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-6 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-7 read as follows:
1-8 Sec. 1.03. DEFINITIONS. In this Act:
1-9 (1) "Ambulance" means a vehicle used exclusively for
1-10 providing emergency medical care to an injured or ill person or
1-11 transporting an injured or ill person, if the vehicle provides:
1-12 (A) a driver's compartment;
1-13 (B) a compartment to accommodate an emergency
1-14 medical care technician or paramedic and two injured or ill persons
1-15 so positioned that one of the injured or ill persons can be given
1-16 intensive life-support during transit;
1-17 (C) equipment and supplies for emergency care of
1-18 an injured or ill person where the ill person is located or at the
1-19 scene of an injury-producing incident as well as in transit;
1-20 (D) two-way radio communication capability; and
1-21 (E) equipment for light rescue or extrication
1-22 procedures.
1-23 (2) "Board" means the Motor Vehicle Board of the Texas
1-24 Department of Transportation.
2-1 (3) "Broker" means a person who, for a fee,
2-2 commission, or other valuable consideration, arranges or offers to
2-3 arrange a transaction involving the sale of a new motor vehicle,
2-4 and who is not:
2-5 (A) a franchised dealer or bona fide employee of
2-6 a franchised dealer when acting on behalf of a franchised dealer;
2-7 (B) a representative or bona fide employee of a
2-8 representative when acting on behalf of a representative;
2-9 (C) a distributor or bona fide employee of a
2-10 distributor when acting on behalf of a distributor; or
2-11 (D) at any point in the transaction the bona
2-12 fide owner of the vehicle involved in the transaction.
2-13 (4) "Chassis manufacturer" means a person who
2-14 manufactures and produces the frame upon which is mounted the body
2-15 of a motor vehicle.
2-16 (5) "Conversion" means a motor vehicle, other than a
2-17 motor home, ambulance, or fire-fighting vehicle, which has been
2-18 substantially modified by a person other than the manufacturer or
2-19 distributor of the chassis of the motor vehicle and which has not
2-20 been the subject of a retail sale.
2-21 (6) "Converter" means a person who prior to the retail
2-22 sale of a motor vehicle, assembles, installs, or affixes a body,
2-23 cab, or special equipment to a chassis, or who substantially adds,
2-24 subtracts from, or modifies a previously assembled or manufactured
2-25 motor vehicle other than a motor home.
2-26 (7) "Dealer" means a person who holds a general
2-27 distinguishing number issued by the Department pursuant to the
3-1 terms of Chapter 503, Transportation Code.
3-2 (8) "Dealership" means the physical premises and
3-3 business facilities on which a franchised dealer operates his
3-4 business, including the sale and repair of motor vehicles. The
3-5 term includes premises or facilities at which a person engages only
3-6 in the repair of motor vehicles if repairs are performed pursuant
3-7 to the terms of a franchise and a motor vehicle manufacturer's
3-8 warranty.
3-9 (9) "Department" means the Texas Department of
3-10 Transportation.
3-11 (10) "Director" means the director of the board.
3-12 (11) "Distributor" means any person who distributes
3-13 and/or sells new motor vehicles to franchised dealers and who is
3-14 not a manufacturer.
3-15 (12) "Executive Director" means the Executive Director
3-16 of the Texas Department of Transportation.
3-17 (13) "Fire-fighting vehicle" means a motor vehicle
3-18 which has as its sole purpose transporting fire fighters to the
3-19 scene of a fire and providing equipment to fight the fire, if the
3-20 vehicle is built on a truck chassis with a gross carrying capacity
3-21 of at least 10,000 pounds, to which the following have been
3-22 permanently affixed or mounted:
3-23 (A) a water tank with a minimum combined
3-24 capacity of 500 gallons; and
3-25 (B) a centrifugal water pump with a minimum
3-26 capacity of not less than 750 gallons per minute at 150 pounds per
3-27 square inch net pump pressure.
4-1 (14) "Franchise" means one or more contracts between a
4-2 franchised dealer as franchisee, and either a manufacturer or a
4-3 distributor as franchisor under which (A) the franchisee is granted
4-4 the right to sell and service new motor vehicles manufactured or
4-5 distributed by the franchisor or only service motor vehicles
4-6 pursuant to the terms of a franchise and a manufacturer's warranty;
4-7 (B) the franchisee as an independent business is a component of
4-8 franchisor's distribution system; (C) the franchisee is
4-9 substantially associated with franchisor's trademark, tradename and
4-10 commercial symbol; (D) the franchisee's business is substantially
4-11 reliant on franchisor for a continued supply of motor vehicles,
4-12 parts, and accessories for the conduct of its business; or (E) any
4-13 right, duty, or obligation granted or imposed by this Act is
4-14 affected. The term includes a written communication from a
4-15 franchisor to a franchisee by which a duty is imposed on the
4-16 franchisee.
4-17 (15) "Franchised dealer" means any person who holds a
4-18 franchised motor vehicle dealer's license [general distinguishing
4-19 number] issued by the Department pursuant to the terms of Chapter
4-20 503, Transportation Code, and who is engaged in the business of
4-21 buying, selling, or exchanging new motor vehicles and servicing or
4-22 repairing motor vehicles pursuant to the terms of a franchise and a
4-23 manufacturer's warranty at an established and permanent place of
4-24 business pursuant to a franchise in effect with a manufacturer or
4-25 distributor.
4-26 (16) "General distinguishing number" means a dealer
4-27 license issued by the Department pursuant to the terms of Chapter
5-1 503, Transportation Code.
5-2 (17) "Lease" means a transfer of the right to
5-3 possession and use of a motor vehicle for a term in excess of 180
5-4 days in return for consideration.
5-5 (18) "Lease facilitator" means a person, other than a
5-6 franchised dealer or a bona fide employee of a dealer, or a vehicle
5-7 lessor or a bona fide employee of a vehicle lessor, who:
5-8 (A) holds himself out to any person as a "motor
5-9 vehicle leasing company" or "motor vehicle leasing agent" or uses
5-10 a similar title, for the purpose of soliciting or procuring a
5-11 person to enter into a contract or agreement to become the lessee
5-12 of a vehicle that is not, and will not be, titled in the name of
5-13 and registered to the lease facilitator; or
5-14 (B) otherwise solicits a person to enter into a
5-15 contract or agreement to become a lessee of a vehicle that is not,
5-16 and will not be, titled in the name of and registered to the lease
5-17 facilitator, or who is otherwise engaged in the business of
5-18 securing lessees or prospective lessees of motor vehicles that are
5-19 not, and will not be, titled in the name of and registered to the
5-20 facilitator.
5-21 (19) "Lessor" means a person who, pursuant to the
5-22 terms of a lease, transfers to another person the right to
5-23 possession and use of a motor vehicle titled in the name of the
5-24 lessor.
5-25 (20) "Licensee" means a person who holds a license or
5-26 general distinguishing number issued by the Board under the terms
5-27 of this Act or Chapter 503, Transportation Code.
6-1 (21) "Manufacturer" means any person who manufactures
6-2 or assembles new motor vehicles.
6-3 (22) "Manufacturer's statement of origin" means a
6-4 certificate on a form prescribed by the Department showing the
6-5 original transfer of a new motor vehicle from the manufacturer to
6-6 the original purchaser.
6-7 (23) "Motor home" means a motor vehicle which is
6-8 designed to provide temporary living quarters and which:
6-9 (A) is built onto as an integral part of, or is
6-10 permanently attached to, a motor vehicle chassis; and
6-11 (B) contains at least four of the following
6-12 independent life support systems if each is permanently installed
6-13 and designed to be removed only for purposes of repair or
6-14 replacement and meets the standards of the American National
6-15 Standards Institute, Standards for Recreational Vehicles:
6-16 (i) a cooking facility with an on-board
6-17 fuel source;
6-18 (ii) a gas or electric refrigerator;
6-19 (iii) a toilet with exterior evacuation;
6-20 (iv) a heating or air conditioning system
6-21 with an on-board power or fuel source separate from the vehicle
6-22 engine;
6-23 (v) a potable water supply system that
6-24 includes at least a sink, a faucet, and a water tank with an
6-25 exterior service supply connection;
6-26 (vi) a 110-125 volt electric power supply.
6-27 (24) "Motor home manufacturer" means a person other
7-1 than the manufacturer of the chassis of a motor vehicle who, prior
7-2 to the retail sale of the motor vehicle, performs modifications on
7-3 the chassis that result in the finished product being classified as
7-4 a motor home.
7-5 (25) "Motor vehicle" means:
7-6 (A) every fully self-propelled vehicle which has
7-7 as its primary purpose the transport of a person or persons, or
7-8 property, on a public highway, and having two or more wheels;
7-9 (B) every two or more wheeled fully
7-10 self-propelled, titled vehicle which has as its primary purpose the
7-11 transport of a person or persons or property and is not
7-12 manufactured for use on public streets, roads, or highways;
7-13 (C) an engine, transmission, or rear axle
7-14 manufactured for installation in a vehicle having as its primary
7-15 purpose the transport of a person or persons or property on a
7-16 public highway and having a gross vehicle weight rating of more
7-17 than 16,000 pounds, whether or not attached to a vehicle chassis;
7-18 or
7-19 (D) a towable recreational vehicle.
7-20 (26) "New motor vehicle" means a motor vehicle which
7-21 has not been the subject of a "retail sale" without regard to the
7-22 mileage of the vehicle.
7-23 (27) "Nonfranchised dealer" means a person who holds
7-24 an independent motor vehicle dealer's general distinguishing number
7-25 or a wholesale motor vehicle dealer's general distinguishing number
7-26 issued by the Department pursuant to the terms of Chapter 503,
7-27 Transportation Code.
8-1 (28) "Party" means each person or agency named or
8-2 admitted as a party and whose legal rights, duties, or privileges
8-3 are to be determined by the board after an opportunity for
8-4 adjudicative hearing.
8-5 (29) "Person" means a natural person, partnership,
8-6 corporation, association, trust, estate, or any other legal entity.
8-7 (30) "Relocation" means the transfer of an existing
8-8 dealership operation to facilities at a different location,
8-9 including a transfer which results in a consolidation or dualing of
8-10 an existing dealer's operation.
8-11 (31) "Representative" means any person who is or acts
8-12 as an agent, employee or representative of a manufacturer,
8-13 distributor, or converter who performs any duties in this State
8-14 relating to promoting the distribution and/or sale of new motor
8-15 vehicles or contacts dealers in this State on behalf of a
8-16 manufacturer, distributor, or converter.
8-17 (32) "Retail sale" means the sale of a motor vehicle
8-18 except:
8-19 (A) a sale in which the purchaser acquires a
8-20 vehicle for the purpose of resale; or
8-21 (B) a sale of a vehicle that is operated under
8-22 and in accordance with Section 503.061, Transportation Code.
8-23 (33) "Rule" means a statement by the board of general
8-24 and future applicability that implements, interprets, or prescribes
8-25 law or policy or describes the organization or procedural practice
8-26 requirements of the board. The term includes the amendment or
8-27 repeal of a prior rule, but does not include statements concerning
9-1 only the internal management of the board which do not affect the
9-2 rights of a person not connected with the board.
9-3 (34) "Towable recreational vehicle" means a
9-4 nonmotorized vehicle originally designed and manufactured for the
9-5 primary purpose of providing temporary human habitation in
9-6 conjunction with recreational, camping, or seasonal use and:
9-7 (A) is titled and registered with the Texas
9-8 Department of Transportation as a travel trailer through the county
9-9 tax assessor-collector;
9-10 (B) is permanently built on a single chassis;
9-11 (C) contains one or more life support systems;
9-12 and
9-13 (D) is designed to be towable by another motor
9-14 vehicle.
9-15 (35) "Transportation Commission" means the Texas
9-16 Transportation Commission of the Texas Department of
9-17 Transportation.
9-18 (36) "Warranty work" means parts, labor, and any other
9-19 expenses incurred by a franchised dealer in complying with the
9-20 terms of a manufacturer's or distributor's warranty.
9-21 SECTION 2. Section 2.03, Texas Motor Vehicle Commission Code
9-22 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by
9-23 amending Subsections (b) and (c) and by adding Subsection (d) to
9-24 read as follows:
9-25 (b) Except as provided by this section, the office of a
9-26 member is automatically vacated and shall be filled as any other
9-27 vacancy, if:
10-1 (1) the member becomes a licensee under this Act;
10-2 (2) the member acquires an interest in a business that
10-3 manufactures, distributes, converts, leases, or sells motor
10-4 vehicles;
10-5 (3) the member becomes an [officer,] employee[,] or
10-6 paid consultant of a trade association in the motor vehicle
10-7 industry; or
10-8 (4) a person related to the member within the first
10-9 degree by consanguinity or affinity, as determined under Chapter
10-10 573, Government Code, becomes an [officer,] employee[,] or paid
10-11 consultant of a trade association in the motor vehicle industry,
10-12 becomes a licensee under this Act, or acquires an interest in a
10-13 business that manufactures, distributes, converts, leases, or sells
10-14 motor vehicles.
10-15 (c) Notwithstanding the terms of Subsection (b) of this
10-16 section, the office of a member appointed to the board pursuant to
10-17 the terms of Section 2.02(b)(1) [2.02(c)(1)] of this Act is not
10-18 vacated by virtue of the fact that the member, or a person related
10-19 to the member within the first degree by consanguinity or affinity,
10-20 as determined under Chapter 573, Government Code, subsequently
10-21 acquires an interest in a dealership.
10-22 (d) Notwithstanding the terms of this section, a person is
10-23 not disqualified to be appointed to or serve on the board because
10-24 that person, or another person, owns, directly or indirectly,
10-25 shares of stock in a publicly traded company that manufactures or
10-26 distributes motor vehicles, if the ownership interest is not
10-27 substantial.
11-1 SECTION 3. Section 2.08(d), Texas Motor Vehicle Commission
11-2 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
11-3 to read as follows:
11-4 (d) A member of the board appointed pursuant to the terms of
11-5 Section 2.02(b) [2.02(c)] of this Act may not vote on an issue
11-6 involving a dispute in which both a dealer and a manufacturer are
11-7 named parties.
11-8 SECTION 4. Section 2.12(c), Texas Motor Vehicle Commission
11-9 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
11-10 to read as follows:
11-11 (c) With regard to each complaint filed by the board for the
11-12 purpose of enforcing this Act [with the Commission], the board
11-13 [Commission] shall keep the following information:
11-14 (1) the date the complaint is filed;
11-15 (2) the name of the person filing the complaint;
11-16 (3) the subject matter of the complaint;
11-17 (4) a record of each person contacted in relation to
11-18 the complaint;
11-19 (5) a summary of the results of the review or
11-20 investigation of the complaint; and
11-21 (6) if the Commission takes no action on the
11-22 complaint, an explanation of the reasons that no action was taken.
11-23 SECTION 5. Section 3.01(a), Texas Motor Vehicle Commission
11-24 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
11-25 to read as follows:
11-26 (a) The board has the [general] exclusive, [and] original
11-27 [power and] jurisdiction to regulate those [all] aspects of the
12-1 distribution, sale, and leasing of motor vehicles as governed by
12-2 this Act and to do all things, whether specifically designated in
12-3 this Act or implied herein, or necessary or convenient to the
12-4 exercise of this power and jurisdiction, including the original
12-5 jurisdiction to determine questions of its own jurisdiction. In
12-6 addition to the other duties placed on the board by this Act, the
12-7 board shall enforce and administer the terms of Chapter 503,
12-8 Transportation Code.
12-9 SECTION 6. Section 3.03, Texas Motor Vehicle Commission Code
12-10 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
12-11 read as follows:
12-12 Sec. 3.03. GENERAL BOARD [COMMISSION] POWERS. (a) The board
12-13 [Commission] shall have and may, in its discretion and
12-14 notwithstanding any other provision of law that is inconsistent
12-15 with this Act, exercise the powers set forth in this Act, and shall
12-16 have all other powers necessary, incidental, or convenient to carry
12-17 out its duties and effectuate its express powers and duties. These
12-18 powers and duties include the power to initiate and conduct
12-19 proceedings, investigations, and hearings, administer oaths,
12-20 receive evidence and pleadings, issue subpoenas to compel the
12-21 attendance of any person, order the production of any tangible
12-22 property, including papers, records, and documents, make findings
12-23 of fact on all factual issues arising out of any proceeding
12-24 initiated under this Act, specify, govern, and control appearance,
12-25 practice, and procedure before the Commission, issue rules,
12-26 conclusions of law, decisions, including declaratory decisions or
12-27 orders, enter into contracts or execute instruments, retain
13-1 counsel, utilize the services of the Attorney General of the State
13-2 of Texas and thereafter institute and direct the conduct of legal
13-3 proceedings in any forum or obtain other professional services as
13-4 may be necessary and convenient, sanction for contempt, assess and
13-5 collect fees and costs including attorney's fees, issue, suspend,
13-6 and revoke licenses, prohibit and regulate acts and practices in
13-7 connection with the distribution and sale of motor vehicles and
13-8 warranty performance obligations, issue cease and desist orders in
13-9 the nature of temporary and permanent injunctions, and levy civil
13-10 penalties. The board has the authority to enforce its order. The
13-11 authority vested in the board by this section includes the
13-12 authority to enter an order requiring that a person:
13-13 (1) pay costs and expenses of a party in connection
13-14 with an order entered pursuant to the authority of Section
13-15 5.02(b)(16);
13-16 (2) perform an act other than the payment of money; or
13-17 (3) refrain from performing an act.
13-18 (b) The board may conduct hearings in contested cases
13-19 brought pursuant to, and as provided by, Chapter 503,
13-20 Transportation Code. The procedures applicable to a hearing
13-21 conducted under this Subsection, and the disposition of a final
13-22 order after a hearing conducted under this Subsection, are those
13-23 applicable to a hearing conducted as provided by Section 6.07(e)(2)
13-24 of this Act. A decision or final order issued under this
13-25 Subsection is final, and no appeal may, as a matter of right, be
13-26 made to the Texas Transportation Commission. The board
13-27 [department] may adopt rules applicable to procedures, hearings,
14-1 and enforcement proceedings in an action brought pursuant to this
14-2 Subsection.
14-3 SECTION 7. Section 3.05(a), Texas Motor Vehicle Commission
14-4 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
14-5 to read as follows:
14-6 (a) Whenever the Board has reason to believe, through
14-7 receipt of a complaint or otherwise, that a violation of this Act
14-8 or a Board rule, order, or decision has occurred or is likely to
14-9 occur, the Board shall conduct an investigation unless it
14-10 determines that a complaint is frivolous or for the purpose of
14-11 harassment. If the Board's investigation establishes that a
14-12 violation of this Act or a Board rule, order, or decision has
14-13 occurred or is likely to occur, the Board shall institute
14-14 proceedings as it deems appropriate to enforce this Act or its
14-15 rules, orders, and decisions. Notwithstanding other provisions of
14-16 this Act, the Board is not required to pay a filing fee when filing
14-17 a complaint or other enforcement action.
14-18 SECTION 8. Section 3.08, Texas Motor Vehicle Commission Code
14-19 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by
14-20 adding Subsection (k) to read as follows:
14-21 (k) Except as provided by this subsection, a licensee may
14-22 not file an action with the board after the expiration of four
14-23 years after the date the action accrues. The limitations period
14-24 provided by this subsection may be extended for a period not to
14-25 exceed 180 days on a showing that the failure timely to commence an
14-26 action was caused by reliance on fraudulent statements or
14-27 inducements made by a party for the purpose of inducing a party to
15-1 refrain from bringing an action. This subsection does not apply
15-2 to:
15-3 (1) an action with respect to which this code or rules
15-4 of the board establish specific procedural time limits; or
15-5 (2) an action brought under Subsection (i) of this
15-6 section.
15-7 SECTION 9. Section 4.01(a), Texas Motor Vehicle Commission
15-8 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
15-9 to read as follows:
15-10 (a) Except as provided by this Section, no person shall
15-11 engage in business as, serve in the capacity of, or act as a
15-12 dealer, manufacturer, distributor, converter, representative,
15-13 lessor, or lease facilitator in this State or perform or offer to
15-14 perform repair services on a motor vehicle pursuant to the terms of
15-15 a franchise and a motor vehicle manufacturer's warranty, whether or
15-16 not the person sells or offers to sell motor vehicles at the same
15-17 location, without obtaining a license therefor as provided in this
15-18 Act and the rules of the board [Commission]. All new license
15-19 applications shall be reviewed and, in the discretion of the board
15-20 [Commission], investigated to determine compliance with the
15-21 provisions of this Act. License renewals may be administratively
15-22 granted unless protested. Licenses issued by the board
15-23 [Commission] shall expire one year from date of issuance. All
15-24 licenses and renewals thereof are issued subject to all provisions
15-25 of this Act and rules of the board [Commission] in effect upon the
15-26 date of issuance as well as all future provisions of this Act and
15-27 rules which may become effective during the term of the license. A
16-1 lessor or lease facilitator is not required to obtain a lessor or
16-2 lease facilitator license or pay a license fee under this code if
16-3 the lessor or lease facilitator is a state or federally chartered
16-4 financial institution or a regulated subsidiary of a state or
16-5 federally chartered financial institution. A trust or other entity
16-6 that owns an interest in a lease and the vehicle that is the
16-7 subject of the lease is not required to obtain a lessor license or
16-8 lease facilitator license or pay a license fee with respect to a
16-9 lease initiated, managed, serviced, and administered by a licensed
16-10 lessor. A franchised dealer licensed under this code is not
16-11 required to obtain a lessor or lease facilitator license or pay a
16-12 license fee under this code to engage in the business of leasing
16-13 motor vehicles, including new motor vehicles, that the dealer is
16-14 licensed to sell. The board may issue a duplicate license for any
16-15 other license it issues, charge a fee for the issuance of a
16-16 duplicate license, and adopt rules applicable to the issuance of a
16-17 duplicate license.
16-18 SECTION 10. Section 4.03(c), Texas Motor Vehicle Commission
16-19 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
16-20 read as follows:
16-21 (c) Each application for a manufacturer's license shall
16-22 include an instrument setting forth the terms and conditions of all
16-23 warranty agreements in force and effect on the products it sells in
16-24 this State so that the board [Commission] may ascertain the degree
16-25 of protection afforded the retail purchasers of its products and
16-26 the obligations of its franchised dealers in connection therewith
16-27 as well as the basis for compensating its franchised dealers for
17-1 labor, parts and other expenses incurred in connection with such
17-2 manufacturer's warranty agreements. Each application shall include
17-3 a statement regarding the manufacturer's compliance with Sections
17-4 [Section] 5.02, 5.02A, 5.02B, and 5.02C of this Act. In addition,
17-5 each manufacturer's license application shall specify the delivery
17-6 and preparation obligations of its franchised dealers prior to
17-7 delivery of a new motor vehicle to a retail purchaser and the
17-8 schedule of compensation to be paid to its franchised dealers for
17-9 the work and service performed by them in connection with such
17-10 delivery.
17-11 SECTION 11. Section 4.05(a), Texas Motor Vehicle Commission
17-12 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-13 to read as follows:
17-14 (a) The annual license fees for licenses issued hereunder
17-15 shall be as follows:
17-16 (1) For each manufacturer and distributor, $900 plus
17-17 $20 for each individual dealer franchised by the manufacturer or
17-18 distributor.
17-19 (2) For each franchised dealer who sold 200 or fewer
17-20 new motor vehicles during the preceding calendar year, $175.
17-21 (3) For each franchised dealer who sold more than 200,
17-22 but not more than 400, new motor vehicles during the preceding
17-23 calendar year, $275.
17-24 (4) For each franchised dealer who sold more than 400,
17-25 but not more than 800, new motor vehicles during the preceding
17-26 calendar year, $400.
17-27 (5) For each franchised dealer who sold more than 800
18-1 but not more than 1,200 new motor vehicles during the preceding
18-2 calendar year, $500.
18-3 (6) For each franchised dealer who sold more than
18-4 1,200 but not more than 1,600 new motor vehicles during the
18-5 preceding calendar year, $625.
18-6 (7) For each franchised dealer who sold more than
18-7 1,600 new motor vehicles during the preceding calendar year, $750.
18-8 (8) For each location separate from his dealership at
18-9 which a franchised dealer offers no motor vehicle for sale, but
18-10 performs warranty service on vehicles the dealer is franchised and
18-11 licensed to sell, $100.
18-12 (9) For each amendment to a [dealer's] license, $25.
18-13 (10) For each representative, $100.
18-14 (11) For each converter, $375.
18-15 (12) For each lessor who leased 200 or fewer motor
18-16 vehicles during the preceding calendar year, $175.
18-17 (13) For each lessor who leased more than 200 but not
18-18 more than 400 motor vehicles during the preceding calendar year,
18-19 $275.
18-20 (14) For each lessor who leased more than 400 but not
18-21 more than 800 motor vehicles during the preceding calendar year,
18-22 $400.
18-23 (15) For each lessor who leased more than 800 but not
18-24 more than 1,200 motor vehicles during the preceding calendar year,
18-25 $500.
18-26 (16) For each lessor who leased more than 1,200 but
18-27 not more than 1,600 motor vehicles during the preceding calendar
19-1 year, $625.
19-2 (17) For each lessor who leased more than 1,600 motor
19-3 vehicles during the preceding calendar year, $750.
19-4 (18) For each lease facilitator, $375.
19-5 (19) For each duplicate license, $50.
19-6 SECTION 12. Section 4.06(a), Texas Motor Vehicle Commission
19-7 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
19-8 to read as follows:
19-9 (a) The board may deny an application for a license, revoke
19-10 or suspend an outstanding license, or place on probation a person
19-11 whose license has been suspended, or reprimand a licensee, for any
19-12 of the following reasons:
19-13 (1) Unfitness of an applicant or licensee under
19-14 standards set out in this Act or in board rules.
19-15 (2) Material misrepresentation in any application or
19-16 other information filed under this Act or board rules.
19-17 (3) Failure to comply with this Act or any board rule
19-18 or order promulgated by the board.
19-19 (4) Failure to maintain the qualifications for a
19-20 license.
19-21 (5) Willfully defrauding any [retail] buyer.
19-22 (6) Violation of any law relating to the sale,
19-23 distribution, financing, or insuring of motor vehicles.
19-24 (7) Any act or omission by an officer, director,
19-25 partner, trustee, or other person acting in a representative
19-26 capacity for a licensee which act or omission would be cause for
19-27 denying, revoking, or suspending a license to an individual
20-1 licensee.
20-2 (8) Failure to fulfill written agreements between the
20-3 licensee and a retail buyer of a motor vehicle.
20-4 SECTION 13. Section 5.02(b), Texas Motor Vehicle Commission
20-5 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
20-6 to read as follows:
20-7 (b) It is unlawful for any manufacturer, distributor, or
20-8 representative to:
20-9 (1) Require or attempt to require any dealer to order,
20-10 accept delivery of or pay anything of value, directly or
20-11 indirectly, for any motor vehicle, appliance, part, accessory or
20-12 any other commodity unless voluntarily ordered or contracted for by
20-13 such dealer.
20-14 (2) Refuse or fail to deliver, in reasonable
20-15 quantities and within a reasonable time, to a dealer having a
20-16 franchise agreement for the retail sale of any motor vehicles sold
20-17 or distributed by such manufacturer, distributor, or
20-18 representative, any new motor vehicle or parts or accessories to
20-19 new motor vehicles as are covered by such franchise if such
20-20 vehicle, parts or accessories are publicly advertised as being
20-21 available for delivery or are actually being delivered; provided,
20-22 however, this provision is not violated if such failure is caused
20-23 by acts of God, work stoppage or delays due to strikes or labor
20-24 disputes, freight embargoes or other causes beyond the control of
20-25 the manufacturer, distributor, or representative.
20-26 (3) Notwithstanding the terms of any franchise
20-27 agreement:
21-1 (A) Terminate or refuse to continue any
21-2 franchise with a dealer or directly or indirectly force or attempt
21-3 to force a dealer to relocate or discontinue a line-make or parts
21-4 or products related to that line-make unless all of the following
21-5 conditions are met:
21-6 (i) the dealer and the board have received
21-7 written notice by registered or certified mail from the
21-8 manufacturer, distributor, or representative not less than 60 days
21-9 before the effective date of termination or noncontinuance setting
21-10 forth the specific grounds for termination or noncontinuance; and
21-11 (ii) the written notice contains on the
21-12 first page thereof a conspicuous statement which reads as follows:
21-13 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
21-14 TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS, AND HAVE A HEARING IN
21-15 WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR NONCONTINUANCE OF
21-16 YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
21-17 COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
21-18 (iii) the manufacturer, distributor, or
21-19 representative has received the informed, written consent of the
21-20 affected dealer or the appropriate period for the affected dealer
21-21 to protest the proposed franchise termination or noncontinuance has
21-22 lapsed; or
21-23 (iv) if the affected dealer files a
21-24 protest with the board within the greater of (1) 60 days after
21-25 receiving its 60-day notice of proposed termination or
21-26 noncontinuance or (2) the time specified in such notice, the board
21-27 determines that the party seeking to terminate or not continue a
22-1 dealer's franchise has established by a preponderance of the
22-2 evidence, at a hearing called by the board, that there is good
22-3 cause for the proposed termination or noncontinuance.
22-4 (v) Notwithstanding Subdivisions (3)(A)(i)
22-5 and (3)(A)(iv) of this section, notice may be made not less than 15
22-6 days prior to the effective date of termination or noncontinuance
22-7 if a licensed dealer fails to conduct its customary sales and
22-8 service operations during its customary business hours for seven
22-9 consecutive business days unless such failure is caused by an act
22-10 of God, work stoppage or delays due to strikes or labor disputes,
22-11 an order of the board, or other causes beyond the control of the
22-12 dealer.
22-13 (B) Whenever a dealer files a timely protest to
22-14 a proposed franchise termination or noncontinuance, the board shall
22-15 notify the party seeking to terminate or to not continue the
22-16 protesting dealer's franchise that a timely protest has been filed,
22-17 that a hearing is required in accordance with this Act, and that
22-18 the party who gave the dealer notice of termination or
22-19 noncontinuance of the franchise may not terminate or refuse to
22-20 continue the franchise until the board issues its final decision or
22-21 order.
22-22 (C) If a franchise is terminated or not
22-23 continued, another franchise in the same line-make will be
22-24 established within a reasonable time unless it is shown to the
22-25 board by a preponderance of the evidence that the community or
22-26 trade area cannot reasonably support such a dealership. If this
22-27 showing is made, no dealer license shall be thereafter issued in
23-1 the same area unless a change in circumstances is established.
23-2 (4) Notwithstanding the terms of any franchise
23-3 agreement, modify or replace a franchise if the modification or
23-4 replacement would adversely affect, to a substantial degree, the
23-5 dealer's sales, investment, or obligations to provide service to
23-6 the public, unless the manufacturer, distributor, or representative
23-7 has first given the board and each affected dealer written notice
23-8 by registered or certified mail of any such action 60 days in
23-9 advance of the modification or replacement. The written notice
23-10 shall contain on the first page thereof a conspicuous statement
23-11 which reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO
23-12 FILE A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS,
23-13 AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED
23-14 MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE UNDER THE TERMS OF
23-15 THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."
23-16 Within the greater of (1) 60 days after receipt of such notice or
23-17 (2) the time specified in such notice, a dealer may file a protest
23-18 with the board and the modification or replacement shall not become
23-19 effective unless and until the board determines that the party
23-20 seeking to modify or replace a franchise has demonstrated by a
23-21 preponderance of the evidence that there is good cause for the
23-22 modification or replacement. The prior franchise shall continue in
23-23 effect until the protest is resolved by the board.
23-24 (5) Notwithstanding the terms of any franchise
23-25 agreement, in determining whether good cause has been established
23-26 for modifying, replacing, terminating, or refusing to continue a
23-27 franchise, or for forcing or attempting to force a dealer to
24-1 relocate or discontinue a line-make or parts or products related to
24-2 that line-make, the board shall consider all the existing
24-3 circumstances including, without limitation by the enumeration
24-4 herein, all the following:
24-5 (A) the dealer's sales in relation to the sales
24-6 in the market;
24-7 (B) the dealer's investment and obligations;
24-8 (C) injury or benefit to the public;
24-9 (D) the adequacy of the dealer's service
24-10 facilities, equipment, parts, and personnel in relation to those of
24-11 other dealers of new motor vehicles of the same line-make;
24-12 (E) whether warranties are being honored by the
24-13 dealer;
24-14 (F) the parties' compliance with their franchise
24-15 agreement except to the extent that the franchise agreement is in
24-16 conflict with this Act; and
24-17 (G) the enforceability of the franchise
24-18 agreement from a public policy standpoint, including, without
24-19 limitation, issues of the reasonableness of the franchise
24-20 agreement's terms, oppression, adhesion, and the relative
24-21 bargaining power of the parties.
24-22 Good cause shall not be shown solely by the desire of a
24-23 manufacturer, distributor, or representative for market
24-24 penetration.
24-25 (6) Use any false, deceptive or misleading
24-26 advertising.
24-27 (7) Notwithstanding the terms of any franchise
25-1 agreement, prevent any dealer from reasonably changing the capital
25-2 structure of his dealership or the means by or through which he
25-3 finances the operation thereof, provided that the dealer meets
25-4 reasonable capital requirements.
25-5 (8) Notwithstanding the terms of any franchise
25-6 agreement, fail to give effect to or attempt to prevent any sale or
25-7 transfer of a dealer, dealership or franchise or interest therein
25-8 or management thereof except as provided by Section 5.01B.
25-9 (9) Notwithstanding the terms of any franchise
25-10 agreement, require or attempt to require that a dealer assign to or
25-11 act as an agent for any manufacturer, distributor or representative
25-12 in the securing of promissory notes and security agreements given
25-13 in connection with the sale or purchase of new motor vehicles or
25-14 the securing of policies of insurance on or having to do with the
25-15 operation of vehicles sold.
25-16 (10) Notwithstanding the terms of any franchise
25-17 agreement, fail or refuse, after complaint and hearing, to perform
25-18 the obligations placed on the manufacturer in connection with the
25-19 delivery, preparation and warranty of a new motor vehicle as
25-20 provided in the manufacturer's warranty, preparation, and delivery
25-21 agreements on file with the board.
25-22 (11) Notwithstanding the terms of any franchise
25-23 agreement or provision of law in conflict with this section, the
25-24 dealer's delivery, preparation, and warranty obligations as filed
25-25 with the board shall constitute the dealer's sole responsibility
25-26 for product liability as between the dealer and manufacturer or
25-27 distributor, and, except for a loss caused by the dealer's failure
26-1 to adhere to these obligations, a loss caused by the dealer's
26-2 negligence or intentional misconduct, or a loss caused by the
26-3 dealer's modification of a product without manufacturer or
26-4 distributor authorization, the manufacturer or distributor shall
26-5 reimburse the dealer for all loss incurred by the dealer, including
26-6 legal fees, court costs, and damages, as a result of the dealer
26-7 having been named a party in a product liability action.
26-8 (12) Operate as a manufacturer, distributor, or
26-9 representative without a currently valid license from the board or
26-10 otherwise violate this Act or rules promulgated by the board
26-11 hereunder.
26-12 (13) Notwithstanding the terms of any franchise
26-13 agreement, to prevent or refuse to honor the succession to a
26-14 dealership by any legal heir or devisee under the will of a dealer
26-15 or under the laws of descent and distribution of this State unless
26-16 it is shown to the board, after notice and hearing, that the result
26-17 of such succession will be detrimental to the public interest and
26-18 to the representation of the manufacturer or distributor; provided,
26-19 however, nothing herein shall prevent a dealer, during his
26-20 lifetime, from designating any person as his successor dealer, by
26-21 written instrument filed with the manufacturer or distributor.
26-22 (14) Notwithstanding the terms of any franchise
26-23 agreement, require that a dealer pay or assume, directly or
26-24 indirectly, any part of any refund, rebate, discount, or other
26-25 financial adjustment made by the manufacturer, distributor, or
26-26 representative to, or in favor of, any customer of a dealer, unless
26-27 voluntarily agreed to by such dealer.
27-1 (15) Notwithstanding the terms of any franchise
27-2 agreement, deny or withhold approval of a written application to
27-3 relocate a franchise unless (A) the applicant has received written
27-4 notice of the denial or withholding of approval within 60 days
27-5 after receipt of the application containing information reasonably
27-6 necessary to enable the manufacturer or distributor to adequately
27-7 evaluate the application, and if (B) the applicant files a protest
27-8 with the board and the manufacturer or distributor establishes by a
27-9 preponderance of the evidence at a hearing called by the board that
27-10 the grounds for the denial or withholding of approval of the
27-11 relocation are reasonable.
27-12 (16) Notwithstanding the terms of any franchise
27-13 agreement, fail to pay to a dealer or any lienholder in accordance
27-14 with their respective interest after the termination of a
27-15 franchise:
27-16 (A) the dealer cost of each new motor vehicle in
27-17 the dealer's inventory with mileage of 6,000 miles or less,
27-18 exclusive of mileage placed on the motor vehicle before it was
27-19 delivered to the dealer, reduced by the net discount value of each,
27-20 where "net discount value" is determined according to the following
27-21 formula: net cost multiplied by total mileage, exclusive of
27-22 mileage placed on the motor vehicle before it was delivered to the
27-23 dealer, divided by 100,000, and where "net cost" equals the dealer
27-24 cost plus any charges by the manufacturer, distributor, or
27-25 representative for distribution, delivery, and taxes, less all
27-26 allowances paid to the dealer by the manufacturer, distributor, or
27-27 representative for new, unsold, undamaged, and complete motor
28-1 vehicles of current model year or one year prior model year in the
28-2 dealer's inventory, except that if a vehicle cannot be reduced by
28-3 the net discount value, the manufacturer or distributor shall pay
28-4 the dealer the net cost of the vehicle;
28-5 (B) the dealer cost of each new, unused,
28-6 undamaged, and unsold part or accessory if the part or accessory is
28-7 in the current parts catalogue and is still in the original,
28-8 resalable merchandising package and in unbroken lots, except that
28-9 in the case of sheet metal, a comparable substitute for the
28-10 original package may be used, and if the part or accessory was
28-11 purchased by the dealer either directly from the manufacturer or
28-12 distributor or from an outgoing authorized dealer as a part of the
28-13 dealer's initial inventory;
28-14 (C) the fair market value of each undamaged sign
28-15 owned by the dealer which bears a trademark or tradename used or
28-16 claimed by the manufacturer, distributor, or representative if the
28-17 sign was purchased from or purchased at the request of the
28-18 manufacturer, distributor, or representative;
28-19 (D) the fair market value of all special tools,
28-20 data processing equipment, and automotive service equipment owned
28-21 by the dealer which were recommended in writing and designated as
28-22 special tools and equipment and purchased from or purchased at the
28-23 request of the manufacturer, distributor, or representative, if the
28-24 tools and equipment are in usable and good condition except for
28-25 reasonable wear and tear;
28-26 (E) the cost of transporting, handling, packing,
28-27 storing, and loading of any property subject to repurchase under
29-1 this section;
29-2 (F) except as provided by this subdivision, any
29-3 sums due as provided by Paragraph (A) of this subdivision within 60
29-4 days after termination of a franchise and any sums due as provided
29-5 by Paragraphs (B) through (E) of this subdivision within 90 days
29-6 after termination of a franchise. As a condition of payment, the
29-7 dealer is to comply with reasonable requirements with respect to
29-8 the return of inventory as are set out in the terms of the
29-9 franchise agreement. A manufacturer or distributor shall reimburse
29-10 a dealer for the dealer's cost for storing any property covered by
29-11 this subdivision beginning 90 days following termination. A
29-12 manufacturer or distributor shall reimburse a dealer for the
29-13 dealer's cost of storing any property covered by this subdivision
29-14 before the expiration of 90 days from the date of termination if
29-15 the dealer notifies the manufacturer or distributor of the
29-16 commencement of storage charges within that period. On receipt of
29-17 notice of the commencement of storage charges, a manufacturer or
29-18 distributor may immediately take possession of the property in
29-19 question by repurchasing the property as provided by this
29-20 subdivision. A manufacturer, distributor, or representative who
29-21 fails to pay those sums within the prescribed time or at such time
29-22 as the dealer and lienholder, if any, proffer good title prior to
29-23 the prescribed time for payment, is liable to the dealer for:
29-24 (i) the greatest of dealer cost, fair
29-25 market value, or current price of the inventory;
29-26 (ii) interest on the amount due calculated
29-27 at the rate applicable to a judgment of a court; and
30-1 (iii) reasonable attorney's fees and
30-2 costs.
30-3 (17) Notwithstanding the terms of any franchise
30-4 agreement, change its distributor, its method of distribution of
30-5 its products in this state, or its business structure or ownership
30-6 in a manner that results in the termination or noncontinuance of a
30-7 franchise without good cause. The manufacturer, distributor, or
30-8 representative shall issue the same notice to the dealer and to the
30-9 board as is provided in Subdivisions (3)(A) and (B) of this section
30-10 and said same procedures shall apply to the parties.
30-11 (18) Notwithstanding the terms of any franchise
30-12 agreement, require a dealer to submit to arbitration on any issue
30-13 unless the dealer and the manufacturer, distributor, or
30-14 representative and their respective counsel agree to arbitrate
30-15 after a controversy arises. The arbitrator shall apply the
30-16 provisions of this Act in resolving the pertinent controversy.
30-17 Either party may appeal to the board a decision of an arbitrator on
30-18 the ground that the arbitrator failed to apply this Act.
30-19 (19) Notwithstanding the terms of any franchise
30-20 agreement, require that a dealer join, contribute to, or affiliate
30-21 with, directly or indirectly, any advertising association.
30-22 (20) Notwithstanding the terms of a franchise
30-23 agreement:
30-24 (A) require adherence to unreasonable sales or
30-25 service standards;
30-26 (B) directly or indirectly, discriminate against
30-27 a dealer or otherwise treat dealers differently as a result of a
31-1 formula or other calculation or process intended to gauge the
31-2 performance of a dealership;
31-3 (C) unreasonably require that a dealer purchase
31-4 special tools or equipment; or
31-5 (D) fail to compensate a dealer for all costs
31-6 incurred by the dealer as required by the manufacturer in complying
31-7 with the terms of a product recall by the manufacturer or
31-8 distributor, including the costs, if any, incurred by the dealer in
31-9 notifying vehicle owners of the existence of the recall.
31-10 (21) Discriminate unreasonably between or among
31-11 franchisees in the sale of a motor vehicle owned by the
31-12 manufacturer or distributor.
31-13 (22) Directly or indirectly, or through a subsidiary
31-14 or agent, require, as a condition for obtaining financing for a
31-15 motor vehicle, the purchaser of a vehicle to purchase any product
31-16 other than the motor vehicle from the manufacturer or distributor,
31-17 or from an entity owned or controlled by the manufacturer or
31-18 distributor.
31-19 (23) Directly or indirectly, or through a subsidiary
31-20 or agent, require, as a condition of its or its subsidiary's
31-21 agreement to provide financing for a motor vehicle, that any
31-22 insurance policy or service contract purchased by the motor vehicle
31-23 purchaser be purchased from a specific source.
31-24 (24) Compel a dealer through a financing subsidiary of
31-25 the manufacturer or distributor to agree to unreasonable operating
31-26 requirements or directly or indirectly to terminate a dealer
31-27 through the actions of a financing subsidiary of the manufacturer
32-1 or distributor. This subdivision does not limit the right of a
32-2 financing entity to engage in business practices in accordance with
32-3 the usage of trade in retail and wholesale motor vehicle financing.
32-4 (25) Notwithstanding the terms of a franchise
32-5 agreement, deny or withhold approval of a dealer's application to
32-6 add a line-make or parts or products related to that line-make
32-7 unless, within 60 days of receipt of the dealer's written
32-8 application to add the line-make, the manufacturer or distributor
32-9 gives the dealer written notice of the denial or withholding of
32-10 approval. After receipt of notice, the dealer may file a protest
32-11 with the board. If the dealer files a protest as provided by this
32-12 subdivision, the board may uphold the manufacturer's or
32-13 distributor's decision to deny or withhold approval of the addition
32-14 of the line-make only if the manufacturer or distributor proves by
32-15 a preponderance of the evidence that the denial or withholding of
32-16 approval was reasonable. In determining whether or not the
32-17 manufacturer or distributor has met its burden to show that its
32-18 denial or withholding of approval is reasonable, the board shall
32-19 consider all existing circumstances, including, without limitation,
32-20 the following:
32-21 (A) the dealer's sales in relation to the sales
32-22 in the market;
32-23 (B) the dealer's investment and obligations;
32-24 (C) injury or benefit to the public;
32-25 (D) the adequacy of the dealer's sales and
32-26 service facilities, equipment, parts, and personnel in relation to
32-27 those of other dealers of new motor vehicles of the same line-make;
33-1 (E) whether warranties are being honored by the
33-2 dealer agreement;
33-3 (F) the parties' compliance with their franchise
33-4 agreement to the extent that the franchise agreement is not in
33-5 conflict with this Act;
33-6 (G) the enforceability of the franchise
33-7 agreement from a public policy standpoint, including without
33-8 limitation, issues of the reasonableness of the franchise
33-9 agreement's terms, oppression, adhesion, and the relative
33-10 bargaining power of the parties;
33-11 (H) whether the dealer complies with reasonable
33-12 capitalization requirements or will be able to comply with
33-13 reasonable capitalization requirements within a reasonable time;
33-14 (I) the harm, if any, to the manufacturer if the
33-15 denial or withholding of approval is not upheld; and
33-16 (J) the harm, if any, to the dealer if the
33-17 denial or withholding of approval is upheld.
33-18 (26) Fail or refuse to offer to its same line-make
33-19 franchised dealers all models manufactured for that line-make, or
33-20 require a dealer to pay any extra fee, purchase unreasonable
33-21 advertising displays or other materials, or remodel, renovate, or
33-22 recondition the dealer's existing facilities as a prerequisite to
33-23 receiving a model or series of vehicles.
33-24 (27) Require a dealer to compensate the manufacturer
33-25 or distributor for any court costs, attorney's fees, or other
33-26 expenses incurred in an administrative or civil proceeding arising
33-27 under this Act, except that this subdivision does not prohibit a
34-1 manufacturer and dealer from entering into an agreement to share
34-2 costs in a proceeding in which the dealer and manufacturer have the
34-3 same or similar interests.
34-4 SECTION 14. The Texas Motor Vehicle Commission Code (Article
34-5 4413(36), Vernon's Texas Civil Statutes) is amended by adding
34-6 Section 5.02D to read as follows:
34-7 Sec. 5.02D. CERTAIN TIME LIMITS TOLLED UNDER CERTAIN
34-8 CIRCUMSTANCES. A time limit relating to board proceedings imposed
34-9 on the board or on a dealer by the terms of this Act is tolled
34-10 during the pendency of mandatory mediation proceedings required by
34-11 this Act or by a franchise agreement.
34-12 SECTION 15. This Act takes effect immediately if it receives
34-13 a vote of two-thirds of all the members elected to each house, as
34-14 provided by Section 39, Article III, Texas Constitution. If this
34-15 Act does not receive the vote necessary for immediate effect, this
34-16 Act takes effect September 1, 2001.