By: Kuempel H.B. No. 3404

A BILL TO BE ENTITLED

AN ACT

relating to the regulation and sale of certain trailers, including cargo and livestock trailers, and cargo and livestock trailers with living quarters.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 2301, Occupations Code, is amended by adding Subchapter S to read as follows:

SUBCHAPTER S. MANUFACTURERS, DISTRIBUTORS, AND DEALERS OF CARGO OR

LIVESTOCK TRAILERS OR CARGO OR LIVESTOCK TRAILERS WITH LIVING

QUARTERS

Sec. 2301.901. DEFINITIONS. Notwithstanding Sections 2301.002(7) and (19), in this subchapter:

(1) "Agreement" means a written agreement between a manufacturer or distributor and a dealer for the purchase and sale of new cargo or livestock trailers, and cargo or livestock trailers with living quarters.

(2) "Dealer" means a person engaged in the business of buying, selling, selling on consignment, displaying for sale, or exchanging at least five cargo or livestock trailers or cargo or livestock trailers with living quarters in a calendar year.

(3) "Cargo or livestock trailer, and cargo or livestock trailer with living quarters" means a towable recreational vehicle that is also designed, constructed, or used to transport animals or cargo.

(4) "Manufacturer" means a person or entity engaged in the business of manufacturing cargo or livestock trailers and cargo or livestock trailers with living quarters for the purpose of sale or trade.

(5) "Territory" means:

(A) for the sale of a manufacturer's cargo or livestock trailer and cargo or livestock trailers with living quarters, a defined geographical area within which a dealer is appointed by the manufacturer as the sole authorized dealer; or

(B) for the sale of all other manufacturer products, a market area within which a dealer is appointed by the manufacturer as an authorized dealer.

Sec. 2301.902. AGREEMENT REQUIRED. A manufacturer or distributor contracting with a dealer may not sell or offer for sale, and a dealer may not purchase or offer to purchase, a new cargo or livestock trailer or a cargo or livestock trailer with living quarters unless the manufacturer or distributor and the dealer enter into an agreement that complies with this subchapter.

Sec. 2301.903. TERMS OF AGREEMENT. (a) An agreement under this subchapter must include:

(1) the dealer's defined territory and permitted dealership locations;

(2) the length of the agreement, which may not be less than two years;

(3) provisions for termination or nonrenewal of the agreement;

(4) the obligations of the manufacturer, distributor, and dealer in the preparation and delivery of and warranty service on new cargo or livestock trailers and cargo or livestock trailers with living quarters; and

(5) the obligations of the manufacturer, distributor, and dealer on termination of the agreement, including with respect to unsold inventory of new cargo or livestock trailers and cargo or livestock trailers with living quarters.

(b) Notwithstanding Subsection (a)(2), an initial agreement between a manufacturer or distributor and a dealer may not have a term of less than two years. An extension or renewal of the initial agreement or a subsequent agreement under this subchapter between the same manufacturer or distributor and dealer must be for a term of two or more years.

Sec. 2301.904. DEALER TERRITORY. (a) A dealer agreement must describe a dealer's territory in terms of:

(1) a radius measured in miles from the dealer's place of business; or

(2) identification of one or more counties in this state.

(b) During the term of an agreement, a manufacturer may not appoint another authorized dealer for the sale of the manufacturer's cargo or livestock trailers and cargo or livestock trailers with living quarters in a dealer's territory.

(c) Except for purposes of advertising without an advertised price or with a manufacturer's suggested retail price, a dealer may not advertise or promote the sale of the manufacturer's cargo or livestock trailers, and cargo or livestock trailers with living quarters outside the dealer's territory, including through the Internet.

(d) A dealer may not use a broker or dealer in another dealer's territory to sell a manufacturer's cargo or livestock trailers and cargo or livestock trailer's with living quarters.

(e) This subchapter does not prohibit a dealer from selling a cargo or livestock trailer and cargo or livestock trailers with living quarters to a customer residing outside of the dealer's territory who independently visits the dealership and seeks to purchase a cargo or livestock trailer and cargo or livestock trailer with living quarters from the dealer.

Sec. 2301.905. COMPENSATION FOR WARRANTY SERVICE. (a) A manufacturer or distributor shall fairly compensate a dealer for the work and services the dealer performs and for expenses the dealer incurs to comply with a manufacturer's or distributor's warranty.

(b) Except as provided by Subsection (c), a manufacturer or distributor may not pay a dealer a labor rate for warranty work that is less than the rate the dealer charges retail customers for nonwarranty work of the same kind by similar technicians.

(c) A manufacturer or distributor who has a warranty program shall reimburses a dealer at 100 percent of the dealer's retail labor rate if the dealer complies with reasonable and objective criteria

(d) A manufacturer or distributor shall approve or deny a dealer's written claim for warranty work not later than the second business day after the date of receipt of the claim. If the claim is approved, the manufacturer or distributor shall pay the claim not later than the 30th day after the date of receipt of the dealer's written invoice or written proof of completion of the warranty work. If the claim is denied, the manufacturer or distributor shall notify the dealer of the grounds for denial.

(e) A manufacturer or distributor may not audit a claim filed for warranty work after the first anniversary of the date the claim is submitted.

(f) A manufacturer shall act as the single source of contact for the dealer for the manufacturer's component part product warranties, other than engine-related product warranties.

Sec. 2301.906. REPURCHASE BY MANUFACTURER OR DISTRIBUTOR. (a) A manufacturer or distributor who terminates or non renews an agreement shall repurchase on demand from the dealer any of the following items, purchased by the dealer from the manufacturer or distributor, that are free and clear of a lien or encumbrance notwithstanding floorplans:

(1) a new, unsold, and complete cargo or livestock trailer and cargo or livestock trailer with living quarters, with accessories and packaged trailers sold with the trailer, that:

(A) is in the dealer's inventory; and

(B) was purchased during the two years preceding the date of the termination; and

(2) any new, current, unsold, and undamaged parts or accessories purchased from the manufacturer in the original, resalable package.

(b) A demand for repurchase must be made in writing not later than the 90th day after the date the manufacturer or distributor terminates the agreement. The dealer shall provide the manufacturer or distributor with a complete list of the items to be repurchased. The manufacturer or distributor shall complete the repurchase not later than the 30th day after the date the dealer demands the repurchase.

(c) The manufacturer or distributor shall:

(1) repurchase an item described by Subsection (a)(1) at the dealer's invoiced cost plus freight, less any allowance paid to the dealer;

(2) repurchase an item described by Subsection (a) (2) at the dealer's invoiced cost; and

(3) it shall be the responsibility of the manufacturer or distributor to remove the trailers from the dealership and to pay the cost incurred to remove all products from the dealership and to transport an item described by Subsection (a) to the manufacturer or distributor.

Sec. 2301.907. CIVIL LIABILITY. A person who violates this subchapter or an agreement regulated by this subchapter is liable to an injured party for:

(1) the actual damages caused by the violation; and

(2) reasonable legal fees and court costs if litigation is commenced in connection with the violation.

Sec. 2301.908. VENUE FOR DISPUTE. Venue for a dispute under an agreement is in the county of the dealer's principal place of business as stated in the agreement.

SECTION 2. Section 501.002(17), Transportation Code, is amended to read as follows:

(17) "Motor vehicle" means:

(A) any motor driven or propelled vehicle required to be registered under the laws of this state;

(B) a trailer or semitrailer, other than manufactured housing [, that has a gross vehicle weight that exceeds 4,000 pounds];

(C) a travel trailer;

(D) an all-terrain vehicle or a recreational off-highway vehicle, as those terms are defined by Section 502.001, designed by the manufacturer for off-highway use that is not required to be registered under the laws of this state; or

(E) a motorcycle, motor-driven cycle, or moped that is not required to be registered under the laws of this state.

SECTION 3. Section 501.004(b), Transportation Code, is amended to read as follows:

(b) This chapter does not apply to:

(1) a [trailer or] semitrailer used only for the transportation of farm products if the products are not transported for hire;

(2) the filing or recording of a lien that is created only on an automobile accessory, including a tire, radio, or heater;

(3) a motor vehicle while it is owned or operated by the United States; or

(4) a new motor vehicle on loan to a political subdivision of the state for use only in a driver education course conducted by an entity exempt from licensure under Section 1001.002, Education Code.

SECTION 4. Section 501.037, Transportation Code, is repealed.

SECTION 5. Subchapter S, Chapter 2301, Occupations Code, as added by this Act, applies only to an agreement, as defined by Section 2301.901, Occupations Code, as added by this Act, entered into on or after the effective date of this Act. An agreement entered into before the effective date of this Act is governed by the law in effect on the date the agreement was entered into, and the former law is continued in effect for that purpose.

SECTION 6. This Act takes effect September 1, 2017.