1-1 AN ACT
1-2 relating to the operation of the Texas Motor Vehicle Board and the
1-3 regulation of motor vehicle dealers, manufacturers, and
1-4 distributors.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-7 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-8 read as follows:
1-9 Sec. 1.03. Definitions. In this Act:
1-10 (1) "Ambulance" means a vehicle used exclusively for
1-11 providing emergency medical care to an injured or ill person or
1-12 transporting an injured or ill person, if the vehicle provides:
1-13 (A) a driver's compartment;
1-14 (B) a compartment to accommodate an emergency
1-15 medical care technician or paramedic and two injured or ill persons
1-16 so positioned that one of the injured or ill persons can be given
1-17 intensive life-support during transit;
1-18 (C) equipment and supplies for emergency care of
1-19 an injured or ill person where the ill person is located or at the
1-20 scene of an injury-producing incident as well as in transit;
1-21 (D) two-way radio communication capability; and
1-22 (E) equipment for light rescue or extrication
1-23 procedures.
1-24 (2) "Board" means the Motor Vehicle Board of the Texas
2-1 Department of Transportation.
2-2 (3) "Broker" means a person who, for a fee,
2-3 commission, or other valuable consideration, arranges or offers to
2-4 arrange a transaction involving the sale[, for purposes other than
2-5 resale,] of a new motor vehicle, and who is not:
2-6 (A) a franchised dealer or bona fide employee of
2-7 a franchised dealer when acting on behalf of a franchised dealer;
2-8 (B) a representative or bona fide employee of a
2-9 representative when acting on behalf of a representative;
2-10 (C) a distributor or bona fide employee of a
2-11 distributor when acting on behalf of a distributor; or
2-12 (D) at any point in the transaction the bona
2-13 fide owner of the vehicle involved in the transaction.
2-14 (4) "Chassis manufacturer" means a person who
2-15 manufactures and produces the frame upon which is mounted the body
2-16 of a motor vehicle.
2-17 (5) "Conversion" means a motor vehicle, other than a
2-18 motor home, ambulance, or fire-fighting vehicle, which has been
2-19 substantially modified by a person other than the manufacturer or
2-20 distributor of the chassis of the motor vehicle and which has not
2-21 been the subject of a retail sale.
2-22 (6) "Converter" means a person who prior to the retail
2-23 sale of a motor vehicle, assembles, installs, or affixes a body,
2-24 cab, or special equipment to a chassis, or who substantially adds,
2-25 subtracts from, or modifies a previously assembled or manufactured
2-26 motor vehicle.
2-27 (7) "Dealer" means a person who holds a general
3-1 distinguishing number issued by the Department pursuant to the
3-2 terms of Chapter 503, Transportation Code.
3-3 (8) "Dealership" means the physical premises and
3-4 business facilities on which a franchised dealer operates his
3-5 business, including the sale and repair of motor vehicles. The
3-6 term includes premises or facilities at which a person engages only
3-7 in the repair of motor vehicles if repairs are performed pursuant
3-8 to the terms of a franchise and a motor vehicle manufacturer's
3-9 warranty.
3-10 (9) "Department" means the Texas Department of
3-11 Transportation.
3-12 (10) "Director" means the director of the board.
3-13 (11) "Distributor" means any person who distributes
3-14 and/or sells new motor vehicles to franchised dealers and who is
3-15 not a manufacturer.
3-16 (12) "Executive Director" means the Executive Director
3-17 of the Texas Department of Transportation.
3-18 (13) "Fire-fighting vehicle" means a motor vehicle
3-19 which has as its sole purpose transporting fire fighters to the
3-20 scene of a fire and providing equipment to fight the fire, if the
3-21 vehicle is built on a truck chassis with a gross carrying capacity
3-22 of at least 10,000 pounds, to which the following have been
3-23 permanently affixed or mounted:
3-24 (A) a water tank with a minimum combined
3-25 capacity of 500 gallons; and
3-26 (B) a centrifugal water pump with a minimum
3-27 capacity of not less than 750 gallons per minute at 150 pounds per
4-1 square inch net pump pressure.
4-2 (14) "Franchise" means one or more contracts between a
4-3 franchised dealer as franchisee, and either a manufacturer or a
4-4 distributor as franchisor under which (A) the franchisee is granted
4-5 the right to sell and service new motor vehicles manufactured or
4-6 distributed by the franchisor or only service motor vehicles
4-7 pursuant to the terms of a franchise and a manufacturer's warranty;
4-8 (B) the franchisee as an independent business is a component of
4-9 franchisor's distribution system; (C) the franchisee is
4-10 substantially associated with franchisor's trademark, tradename and
4-11 commercial symbol; (D) the franchisee's business is substantially
4-12 reliant on franchisor for a continued supply of motor vehicles,
4-13 parts, and accessories for the conduct of its business; or (E) any
4-14 right, duty, or obligation granted or imposed by this Act is
4-15 affected. The term includes a written communication from a
4-16 franchisor to a franchisee by which a duty is imposed on the
4-17 franchisee.
4-18 (15) "Franchised dealer" means any person who holds a
4-19 franchised motor vehicle dealer's general distinguishing number
4-20 issued by the Department pursuant to the terms of Chapter 503,
4-21 Transportation Code, and who is engaged in the business of buying,
4-22 selling, or exchanging new motor vehicles and servicing or
4-23 repairing motor vehicles pursuant to the terms of a franchise and a
4-24 manufacturer's warranty at an established and permanent place of
4-25 business pursuant to a franchise in effect with a manufacturer or
4-26 distributor.
4-27 (16) "General distinguishing number" means a dealer
5-1 license issued by the Department pursuant to the terms of Chapter
5-2 503, Transportation Code.
5-3 (17) "Lease" means a transfer of the right to
5-4 possession and use of a motor vehicle for a term in excess of 180
5-5 days in return for consideration.
5-6 (18) "Lease facilitator" means a person, other than a
5-7 franchised dealer or a bona fide employee of a dealer, or a vehicle
5-8 lessor or a bona fide employee of a vehicle lessor, who:
5-9 (A) holds himself out to any person as a "motor
5-10 vehicle leasing company" or "motor vehicle leasing agent" or uses a
5-11 similar title, for the purpose of soliciting or procuring a person
5-12 to enter into a contract or agreement to become the lessee of a
5-13 vehicle that is not, and will not be, titled in the name of and
5-14 registered to the lease facilitator; or
5-15 (B) otherwise solicits a person to enter into a
5-16 contract or agreement to become a lessee of a vehicle that is not,
5-17 and will not be, titled in the name of and registered to the lease
5-18 facilitator, or who is otherwise engaged in the business of
5-19 securing lessees or prospective lessees of motor vehicles that are
5-20 not, and will not be, titled in the name of and registered to the
5-21 facilitator.
5-22 (19) "Lessor" means a person who, pursuant to the
5-23 terms of a lease, transfers to another person the right to
5-24 possession and use of a motor vehicle titled in the name of the
5-25 lessor [acquires title to a motor vehicle for the purpose of
5-26 leasing the vehicle to another person].
5-27 (20) "Licensee" means a person who holds a license or
6-1 general distinguishing number issued by the Board under the terms
6-2 of this Act or Chapter 503, Transportation Code.
6-3 (21) "Manufacturer" means any person who manufactures
6-4 or assembles new motor vehicles [either within or without this
6-5 State].
6-6 (22) "Manufacturer's statement of origin" means a
6-7 certificate on a form prescribed by the Department showing the
6-8 original transfer of a new motor vehicle from the manufacturer to
6-9 the original purchaser.
6-10 (23) "Motor home" means a motor vehicle which is
6-11 designed to provide temporary living quarters and which:
6-12 (A) is built onto as an integral part of, or is
6-13 permanently attached to, a motor vehicle chassis; and
6-14 (B) contains at least four of the following
6-15 independent life support systems if each is permanently installed
6-16 and designed to be removed only for purposes of repair or
6-17 replacement and meets the standards of the American National
6-18 Standards Institute, Standards for Recreational Vehicles:
6-19 (i) a cooking facility with an on-board
6-20 fuel source;
6-21 (ii) a gas or electric refrigerator;
6-22 (iii) a toilet with exterior evacuation;
6-23 (iv) a heating or air conditioning system
6-24 with an on-board power or fuel source separate from the vehicle
6-25 engine;
6-26 (v) a potable water supply system that
6-27 includes at least a sink, a faucet, and a water tank with an
7-1 exterior service supply connection;
7-2 (vi) a 110-125 volt electric power supply.
7-3 (24) "Motor home manufacturer" means a person other
7-4 than the manufacturer of the chassis of a motor vehicle who, prior
7-5 to the retail sale of the motor vehicle, performs modifications on
7-6 the chassis that result in the finished product being classified as
7-7 a motor home.
7-8 (25) "Motor vehicle" means:
7-9 (A) every fully self-propelled vehicle which has
7-10 as its primary purpose the transport of a person or persons, or
7-11 property, on a public highway, and having two or more wheels;
7-12 (B) every two or more wheeled fully
7-13 self-propelled, titled vehicle which has as its primary purpose the
7-14 transport of a person or persons or property and is not
7-15 manufactured for use on public streets, roads, or highways;
7-16 (C) an engine, transmission, or rear axle
7-17 manufactured for installation in a vehicle having as its primary
7-18 purpose the transport of a person or persons or property on a
7-19 public highway and having a gross vehicle weight rating of more
7-20 than 16,000 pounds, whether or not attached to a vehicle chassis;
7-21 or
7-22 (D) a towable recreational vehicle.
7-23 (26) "New motor vehicle" means a motor vehicle which
7-24 has not been the subject of a "retail sale" without regard to the
7-25 mileage of the vehicle.
7-26 (27) "Nonfranchised dealer" means a person who holds
7-27 an independent motor vehicle dealer's general distinguishing number
8-1 or a wholesale motor vehicle dealer's general distinguishing number
8-2 issued by the Department pursuant to the terms of Chapter 503,
8-3 Transportation Code.
8-4 (28) "Party" means each person or agency named or
8-5 admitted as a party and whose legal rights, duties, or privileges
8-6 are to be determined by the board [Commission] after an opportunity
8-7 for adjudicative hearing.
8-8 [(28) "Towable recreational vehicle" means a
8-9 nonmotorized vehicle that is designed and originally manufactured
8-10 for temporary human habitation as its primary purpose for
8-11 recreational, camping, or seasonal use and:]
8-12 [(A) is titled and registered with the Texas
8-13 Department of Transportation as a travel trailer through the county
8-14 tax assessor-collector;]
8-15 [(B) is permanently built on a single chassis;]
8-16 [(C) contains one or more life support systems;
8-17 and]
8-18 [(D) is designed to be towable by another motor
8-19 vehicle.]
8-20 (29) "Person" means a natural person, partnership,
8-21 corporation, association, trust, estate, or any other legal entity.
8-22 (30) "Relocation" means the transfer of an existing
8-23 dealership operation to facilities at a different location,
8-24 including a transfer which results in a consolidation or dualing of
8-25 an existing dealer's operation.
8-26 (31) "Representative" means any person who is or acts
8-27 as an agent, employee or representative of a manufacturer,
9-1 distributor, or converter who performs any duties in this State
9-2 relating to promoting the distribution and/or sale of new motor
9-3 vehicles or contacts dealers in this State on behalf of a
9-4 manufacturer, distributor, or converter.
9-5 (32) "Retail sale" means the sale of a motor vehicle
9-6 except:
9-7 (A) a sale in which the purchaser acquires a
9-8 vehicle for the purpose of resale; or
9-9 (B) a sale of a vehicle that is operated under
9-10 and in accordance with Section 503.061, Transportation Code.
9-11 (33) "Rule" means a statement by the board
9-12 [Commission] of general and future applicability that implements,
9-13 interprets, or prescribes law or policy or describes the
9-14 organization or procedural practice requirements of the board
9-15 [Commission]. The term includes the amendment or repeal of a prior
9-16 rule, but does not include statements concerning only the internal
9-17 management of the board [Commission] which do not affect the rights
9-18 of a person not connected with the board [Commission].
9-19 (34) "Towable recreational vehicle" means a
9-20 nonmotorized vehicle originally designed and manufactured for the
9-21 primary purpose of providing temporary human habitation in
9-22 conjunction with recreational, camping, or seasonal use and:
9-23 (A) is titled and registered with the Texas
9-24 Department of Transportation as a travel trailer through the county
9-25 tax assessor-collector;
9-26 (B) is permanently built on a single chassis;
9-27 (C) contains one or more life support systems;
10-1 and
10-2 (D) is designed to be towable by another motor
10-3 vehicle.
10-4 (35) [(34)] "Transportation Commission" means
10-5 the Texas Transportation Commission of the Texas Department of
10-6 Transportation.
10-7 (36) [(35)] "Warranty work" means parts, labor,
10-8 and any other expenses incurred by a franchised dealer in complying
10-9 with the terms of a manufacturer's or distributor's warranty.
10-10 SECTION 2. Sections 2.02(b) and (c), Texas Motor Vehicle
10-11 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
10-12 are amended to read as follows:
10-13 (b) [The Executive Director is a member of the board ex
10-14 officio. The Executive Director may attend a meeting of the board
10-15 and may confer with and advise the board, the chairman, or the
10-16 director. The Executive Director may not vote on a matter coming
10-17 before the board and is not counted in the determination of a
10-18 quorum at a meeting of the board. Except as provided by this
10-19 subsection, the provisions of this Act relating to members of the
10-20 board do not apply to the Executive Director.]
10-21 [(c)] The membership of the board includes:
10-22 (1) two dealers licensed pursuant to the terms of this
10-23 Act, at least one of whom must be a franchised dealer; and
10-24 (2) one representative of a motor vehicle manufacturer
10-25 or distributor licensed pursuant to the terms of this Act.
10-26 SECTION 3. Section 2.02, Texas Motor Vehicle Commission Code
10-27 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by
11-1 adding Subsection (c) to read as follows:
11-2 (c) A person is eligible for appointment to the board as
11-3 provided by Subsection (b)(1) of this section if the person is
11-4 otherwise eligible as provided by this Act and is a natural person
11-5 who is either himself or herself a dealer or is the bona fide owner
11-6 of at least 20 percent of an entity that is a dealer.
11-7 Notwithstanding the terms of this subsection, a person is not
11-8 eligible to serve on the board as provided by Subsection (b)(1) of
11-9 this section if the person's status as dealer is derived from a
11-10 dealer or dealership in which a manufacturer or distributor owns an
11-11 interest.
11-12 SECTION 4. Sections 2.08(a), (b), and (c), Texas Motor
11-13 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
11-14 Statutes), are amended to read as follows:
11-15 (a) The Governor shall designate one member of the board,
11-16 other than a member appointed pursuant to the terms of Section
11-17 2.02(b) [2.02(c)] of this Act, as Chairman to serve in that
11-18 capacity at the pleasure of the Governor. The board shall hold a
11-19 regular annual meeting in September of each year and elect a
11-20 Vice-chairman to serve for the ensuing year. The board shall have
11-21 regular meetings as the majority of the members may specify and
11-22 special meetings at the request of the Chairman, any two members,
11-23 or the Director. Reasonable notice of all meetings shall be given
11-24 as board rules prescribe. A majority of the board constitutes a
11-25 quorum to transact business, except that a member appointed under
11-26 Section 2.02(b) [2.02] of this Act is not counted in the
11-27 calculation of a quorum for purposes of the determination of an
12-1 issue with respect to which the member is prohibited from voting.
12-2 The Chairman, or in his absence, the Vice-chairman, shall preside
12-3 at all meetings of the board. In the absence of both the Chairman
12-4 and the Vice-chairman, the members present shall select one of
12-5 their number to serve as chairman for the meeting.
12-6 (b) The board [Commission] is subject to Chapters 551 and
12-7 2001, Government Code.
12-8 (c) The board [Commission] shall develop and implement
12-9 policies that provide the public with a reasonable opportunity to
12-10 appear before the board [Commission] and to speak on any issue
12-11 under the jurisdiction of the board [Commission].
12-12 SECTION 5. Section 2.08A(c), Texas Motor Vehicle Commission
12-13 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
12-14 to read as follows:
12-15 (c) If the Director has knowledge that a potential ground
12-16 for removal exists, the Director shall notify the Chairman of the
12-17 board [Commission] of the ground. The Chairman shall then notify
12-18 the Governor and the Attorney General that a potential ground for
12-19 removal exists. If the potential ground for removal relates to the
12-20 Chairman of the board [Commission], the [Executive] Director shall
12-21 notify the Vice-chairman of the board [Commission], who shall
12-22 notify the Governor and the Attorney General that a potential
12-23 ground for removal exists.
12-24 SECTION 6. Sections 2.09(a) and (e), Texas Motor Vehicle
12-25 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
12-26 are amended to read as follows:
12-27 (a) The [Executive Director shall appoint the] Director
13-1 [who] is the board's chief executive and administrative officer.
13-2 The Director, who shall be an attorney licensed to practice law in
13-3 this state, is charged with administering, enforcing, and carrying
13-4 out the provisions of this Act. The Director serves at the
13-5 pleasure of the board [Executive Director].
13-6 (e) The Director shall appoint and employ such board staff
13-7 as are necessary to carry out the duties and functions of the
13-8 Director and the board under this Act. [The board shall develop
13-9 and implement policies that clearly separate the policy-making
13-10 responsibilities of the board and the management responsibilities
13-11 of the Executive Director and staff of the board.]
13-12 SECTION 7. Section 2.13, Texas Motor Vehicle Commission Code
13-13 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
13-14 read as follows:
13-15 Sec. 2.13. Intraagency career ladder program; annual
13-16 performance evaluations; information; equal opportunity
13-17 implementation plan; public information. (a) The [Executive]
13-18 Director or his designee shall develop an intraagency career ladder
13-19 program that addresses opportunities for mobility and advancement
13-20 of employees in the Commission. The program shall require
13-21 intraagency postings of all positions concurrently with any public
13-22 posting.
13-23 (b) The [Executive] Director or his designee shall develop a
13-24 system of annual performance evaluations that are based on
13-25 documented employee performance. All merit pay for board
13-26 [Commission] employees must be based on the system established
13-27 under this subsection.
14-1 (c) The [Executive] Director or his designee shall prepare
14-2 information describing the functions of the board [Commission] and
14-3 describing the procedures by which complaints or protests are filed
14-4 with and resolved by the board [Commission]. The board
14-5 [Commission] shall make the information available to the general
14-6 public and appropriate state agencies.
14-7 (d) The [Executive] Director or his designee shall prepare
14-8 and maintain a written policy statement to assure implementation of
14-9 a program of equal employment opportunity under which all personnel
14-10 transactions are made without regard to race, color, disability,
14-11 sex, religion, age, or national origin. The policy statement must
14-12 include:
14-13 (1) personnel policies, including policies relating to
14-14 recruitment, evaluation, selection, appointment, training, and
14-15 promotion of personnel that comply with Chapter 21, Labor Code;
14-16 (2) a comprehensive analysis of the Commission work
14-17 force that meets federal and state laws, rules, and regulations and
14-18 instructions directly adopted under those laws, rules, or
14-19 regulations;
14-20 (3) procedures by which a determination can be made of
14-21 significant underuse in the board [Commission] work force of all
14-22 persons for whom federal or state laws, rules, and regulations and
14-23 instructions directly adopted under those laws, rules, or
14-24 regulations, encourage a more equitable balance; and
14-25 (4) reasonable methods to appropriately address those
14-26 areas of significant underuse.
14-27 A policy statement prepared under this subsection must cover
15-1 an annual period, be updated at least annually, be reviewed by the
15-2 Texas Commission on Human Rights for compliance with Subdivision
15-3 (1) of this subsection, and be filed with the Governor's office.
15-4 The Governor's office shall deliver a biennial report to the
15-5 legislature based on the information received under this
15-6 subsection. The report may be made separately or as a part of
15-7 other biennial reports made to the legislature.
15-8 (e) The board [Commission] shall comply with Section
15-9 4(a)(2), Administrative Procedure and Texas Register Act (Article
15-10 6252-13a, Vernon's Texas Civil Statutes), by indexing and making
15-11 available for public inspection all rules and all other written
15-12 statements of policy or interpretations formulated, adopted, or
15-13 used by the Commission in the discharge of its functions.
15-14 (f) The board [Commission] shall comply with Section
15-15 4(a)(3), Administrative Procedure and Texas Register Act (Article
15-16 6252-13a, Vernon's Texas Civil Statutes), by indexing and making
15-17 available for public inspection all of the board's [Commission's]
15-18 final orders, decisions, and opinions.
15-19 SECTION 8. Section 3.01A, Texas Motor Vehicle Commission
15-20 Code (Article 4413(36), Vernon's Texas Civil Statutes), is
15-21 repealed.
15-22 SECTION 9. Section 3.02, Texas Motor Vehicle Commission Code
15-23 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
15-24 read as follows:
15-25 Sec. 3.02. Duties. (a) The board [Commission] shall, in
15-26 accordance with this Act, administer the provisions of this Act,
15-27 establish the qualifications of licensees, ensure that the
16-1 distribution, sale, and leasing of motor vehicles is conducted as
16-2 provided herein and under the board's [Commission's] rules, provide
16-3 for compliance with warranties, and otherwise prevent fraud, unfair
16-4 practices, discriminations, impositions, and other abuses in
16-5 connection with the distribution and sale of motor vehicles.
16-6 (b) The board [Commission] shall prepare and maintain a
16-7 written plan that describes how a person who does not speak English
16-8 or who has a physical, mental, or developmental disability can be
16-9 provided reasonable access to the Commission's programs.
16-10 SECTION 10. Section 3.08(g), Texas Motor Vehicle Commission
16-11 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
16-12 to read as follows:
16-13 (g) In all contested cases the examiner shall serve on all
16-14 parties a copy of the examiner's proposal for decision and
16-15 recommended order containing findings of fact and conclusions of
16-16 law. A party may file exceptions and replies to the board. In its
16-17 review of the case, the board may consider only the materials
16-18 timely submitted. The board may receive such oral argument from
16-19 any party as the board may allow. The board shall take such
16-20 further actions as are conducive to the issuance of a final order
16-21 and shall thereafter issue a written final decision or order. [The
16-22 board's written final decision or order shall be signed on behalf
16-23 of the board by the Director.] A majority vote of a quorum of the
16-24 board shall be required to adopt final decisions or orders of the
16-25 board.
16-26 SECTION 11. Section 4.01B(a), Texas Motor Vehicle Commission
16-27 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-1 to read as follows:
17-2 (a) The board [Commission] by rule may implement a system
17-3 under which licenses expire on various dates during the year. The
17-4 board may also issue a license for a term of less than one year for
17-5 the purpose of coordinating the expiration dates of licenses in
17-6 instances where a licensee must obtain more than one license to
17-7 perform activities under this Act.
17-8 SECTION 12. Section 4.02, Texas Motor Vehicle Commission
17-9 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
17-10 to read as follows:
17-11 Sec. 4.02. Dealer Application. (a) An application for a
17-12 dealer license shall be on a form prescribed by the board which
17-13 shall include the information required by Chapter 503,
17-14 Transportation Code, and information on the applicant's financial
17-15 resources, business integrity, business ability and experience,
17-16 franchise agreement if applicable, physical facilities, vehicle
17-17 inventory, and other factors the board considers necessary to
17-18 determine an applicant's qualifications to adequately serve the
17-19 [motoring] public.
17-20 (b) A dealer shall renew his license annually on an
17-21 application prescribed by the board [Commission]. If a material
17-22 change occurs in the information included in a dealer's application
17-23 for a license or renewal of a license, the dealer shall, within a
17-24 reasonable time but not later than the next annual renewal, notify
17-25 the board [Commission] of those changes. The board [Commission]
17-26 shall prescribe a form for the disclosure of the changes and shall
17-27 include in the renewal application a request for disclosure of
18-1 material changes.
18-2 (c) [(1)] A franchised dealer may carry on the business of
18-3 his dealership at more than one location; however, a separate
18-4 location for the display and sale of new motor vehicles may not be
18-5 established and maintained by a franchised dealer unless expressly
18-6 authorized by the franchised dealer's franchise and license. An
18-7 application for a franchised dealer's license or to amend a
18-8 franchised dealer's license which proposes the establishment of a
18-9 separate display and sales location is subject to all of the
18-10 provisions of this Act. A separate license shall be required for
18-11 each separate and distinct dealership as determined by the board
18-12 [Commission].
18-13 (d) [(2)] Except as provided in this subsection
18-14 [subdivision], no licensee may participate in a new motor vehicle
18-15 show or exhibition unless the board [Commission] has first had
18-16 written notice at least 30 days prior to the opening day of the
18-17 show or exhibition and its written approval has been granted. A
18-18 licensee may not sell or offer for sale a new motor vehicle at a
18-19 show or exhibition; however, dealership personnel may be present to
18-20 aid in the showing or exhibiting of new motor vehicles. This
18-21 subsection [subdivision] does not prohibit the sale of a towable
18-22 recreational vehicle, motor home, ambulance, or fire-fighting
18-23 vehicle at a show or exhibition if the show or exhibition is
18-24 approved by the board [Commission] and if the sale does not
18-25 otherwise violate a provision of law. If the board adopts[;
18-26 provided that, should the Commission adopt] a rule regulating
18-27 off-site display or sale of towable recreational vehicles, the
19-1 board [Commission] shall, as part of that rule, authorize the
19-2 display and sale of towable recreational vehicles at a private
19-3 event in a trade area that would not otherwise qualify for the
19-4 private event under the [private events in trade areas (counties,
19-5 cities, or towns) where] application of general participation
19-6 requirements for organized dealer shows and exhibitions [would
19-7 effectively preclude such an organized show or exhibition].
19-8 (e) [(3)] The board [Commission] shall, under its general
19-9 rule-making authority granted in this Act, establish rules and
19-10 guidelines for the implementation and enforcement of this section
19-11 [subsection].
19-12 (f) [(d)] A dealer licensed hereunder shall promptly notify
19-13 the board [Commission] of any proposed change in its ownership,
19-14 location, franchise, or any other matters the board [Commission]
19-15 may require by rule. Prior to a change in a dealer's location, a
19-16 dealer shall obtain a new license for that location.
19-17 SECTION 13. Section 5.02(b), Texas Motor Vehicle Commission
19-18 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
19-19 to read as follows:
19-20 (b) It is unlawful for any manufacturer, distributor, or
19-21 representative to:
19-22 (1) Require or attempt to require any dealer to order,
19-23 accept delivery of or pay anything of value, directly or
19-24 indirectly, for any motor vehicle, appliance, part, accessory or
19-25 any other commodity unless voluntarily ordered or contracted for by
19-26 such dealer.
19-27 (2) Refuse or fail to deliver, in reasonable
20-1 quantities and within a reasonable time, to a dealer having a
20-2 franchise agreement for the retail sale of any motor vehicles sold
20-3 or distributed by such manufacturer, distributor, or
20-4 representative, any new motor vehicle or parts or accessories to
20-5 new motor vehicles as are covered by such franchise if such
20-6 vehicle, parts or accessories are publicly advertised as being
20-7 available for delivery or are actually being delivered; provided,
20-8 however, this provision is not violated if such failure is caused
20-9 by acts of God, work stoppage or delays due to strikes or labor
20-10 disputes, freight embargoes or other causes beyond the control of
20-11 the manufacturer, distributor, or representative.
20-12 (3) Notwithstanding the terms of any franchise
20-13 agreement:
20-14 (A) Terminate or refuse to continue any
20-15 franchise with a dealer or directly or indirectly force or attempt
20-16 to force a dealer to relocate or discontinue a line-make or parts
20-17 or products related to that line-make unless all of the following
20-18 conditions are met:
20-19 (i) the dealer and the board have received
20-20 written notice by registered or certified mail from the
20-21 manufacturer, distributor, or representative not less than 60 days
20-22 before the effective date of termination or noncontinuance setting
20-23 forth the specific grounds for termination or noncontinuance; and
20-24 (ii) the written notice contains on the
20-25 first page thereof a conspicuous statement which reads as follows:
20-26 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
20-27 TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS, AND HAVE A HEARING IN
21-1 WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR NONCONTINUANCE OF
21-2 YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
21-3 COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
21-4 (iii) the manufacturer, distributor, or
21-5 representative has received the informed, written consent of the
21-6 affected dealer or the appropriate period for the affected dealer
21-7 to protest the proposed franchise termination or noncontinuance has
21-8 lapsed; or
21-9 (iv) if the affected dealer files a
21-10 protest with the board within the greater of (1) 60 days after
21-11 receiving its 60-day notice of proposed termination or
21-12 noncontinuance or (2) the time specified in such notice, the board
21-13 determines that the party seeking to terminate or not continue a
21-14 dealer's franchise has established by a preponderance of the
21-15 evidence, at a hearing called by the board, that there is good
21-16 cause for the proposed termination or noncontinuance.
21-17 (v) Notwithstanding Subdivisions (3)(A)(i)
21-18 and (3)(A)(iv) of this section, notice may be made not less than 15
21-19 days prior to the effective date of termination or noncontinuance
21-20 if a licensed dealer fails to conduct its customary sales and
21-21 service operations during its customary business hours for seven
21-22 consecutive business days unless such failure is caused by an act
21-23 of God, work stoppage or delays due to strikes or labor disputes,
21-24 an order of the board, or other causes beyond the control of the
21-25 dealer.
21-26 (B) Whenever a dealer files a timely protest to
21-27 a proposed franchise termination or noncontinuance, the board shall
22-1 notify the party seeking to terminate or to not continue the
22-2 protesting dealer's franchise that a timely protest has been filed,
22-3 that a hearing is required in accordance with this Act, and that
22-4 the party who gave the dealer notice of termination or
22-5 noncontinuance of the franchise may not terminate or refuse to
22-6 continue the franchise until the board issues its final decision or
22-7 order.
22-8 (C) If a franchise is terminated or not
22-9 continued, another franchise in the same line-make will be
22-10 established within a reasonable time unless it is shown to the
22-11 board by a preponderance of the evidence that the community or
22-12 trade area cannot reasonably support such a dealership. If this
22-13 showing is made, no dealer license shall be thereafter issued in
22-14 the same area unless a change in circumstances is established.
22-15 (4) Notwithstanding the terms of any franchise
22-16 agreement, modify or replace a franchise if the modification or
22-17 replacement would adversely affect, to a substantial degree, the
22-18 dealer's sales, investment, or obligations to provide service to
22-19 the public, unless the manufacturer, distributor, or representative
22-20 has first given the board and each affected dealer written notice
22-21 by registered or certified mail of any such action 60 days in
22-22 advance of the modification or replacement. The written notice
22-23 shall contain on the first page thereof a conspicuous statement
22-24 which reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO
22-25 FILE A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS,
22-26 AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED
22-27 MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE UNDER THE TERMS OF
23-1 THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."
23-2 Within the greater of (1) 60 days after receipt of such notice or
23-3 (2) the time specified in such notice, a dealer may file a protest
23-4 with the board and the modification or replacement shall not become
23-5 effective unless and until the board determines that the party
23-6 seeking to modify or replace a franchise has demonstrated by a
23-7 preponderance of the evidence that there is good cause for the
23-8 modification or replacement. The prior franchise shall continue in
23-9 effect until the protest is resolved by the board.
23-10 (5) Notwithstanding the terms of any franchise
23-11 agreement, in determining whether good cause has been established
23-12 for modifying, replacing, terminating, or refusing to continue a
23-13 franchise, or for forcing or attempting to force a dealer to
23-14 relocate or discontinue a line-make or parts or products related to
23-15 that line-make, the board shall consider all the existing
23-16 circumstances including, without limitation by the enumeration
23-17 herein, all the following:
23-18 (A) the dealer's sales in relation to the sales
23-19 in the market;
23-20 (B) the dealer's investment and obligations;
23-21 (C) injury or benefit to the public [welfare];
23-22 (D) the adequacy of the dealer's service
23-23 facilities, equipment, parts, and personnel in relation to those of
23-24 other dealers of new motor vehicles of the same line-make;
23-25 (E) whether warranties are being honored by the
23-26 dealer;
23-27 (F) the parties' compliance with their franchise
24-1 agreement except to the extent that the franchise agreement is in
24-2 conflict with this Act; and
24-3 (G) the enforceability of the franchise
24-4 agreement from a public policy standpoint, including, without
24-5 limitation, issues of the reasonableness of the franchise
24-6 agreement's terms, oppression, adhesion, and the relative
24-7 bargaining power of the parties.
24-8 Good cause shall not be shown solely by the desire of a
24-9 manufacturer, distributor, or representative for market
24-10 penetration.
24-11 (6) Use any false, deceptive or misleading
24-12 advertising.
24-13 (7) Notwithstanding the terms of any franchise
24-14 agreement, prevent any dealer from reasonably changing the capital
24-15 structure of his dealership or the means by or through which he
24-16 finances the operation thereof, provided that the dealer meets
24-17 reasonable capital requirements.
24-18 (8) Notwithstanding the terms of any franchise
24-19 agreement, fail to give effect to or attempt to prevent any sale or
24-20 transfer of a dealer, dealership or franchise or interest therein
24-21 or management thereof except as provided by Section 5.01B.
24-22 (9) Notwithstanding the terms of any franchise
24-23 agreement, require or attempt to require that a dealer assign to or
24-24 act as an agent for any manufacturer, distributor or representative
24-25 in the securing of promissory notes and security agreements given
24-26 in connection with the sale or purchase of new motor vehicles or
24-27 the securing of policies of insurance on or having to do with the
25-1 operation of vehicles sold.
25-2 (10) Notwithstanding the terms of any franchise
25-3 agreement, fail or refuse, after complaint and hearing, to perform
25-4 the obligations placed on the manufacturer in connection with the
25-5 delivery, preparation and warranty of a new motor vehicle as
25-6 provided in the manufacturer's warranty, preparation, and delivery
25-7 agreements on file with the board.
25-8 (11) Notwithstanding the terms of any franchise
25-9 agreement[, fail to compensate its dealers for the work and
25-10 services they are required to perform in connection with the
25-11 dealer's delivery and preparation obligations according to the
25-12 agreements on file with the board which must be found by the board
25-13 to be reasonable, or fail to adequately and fairly compensate its
25-14 dealers for labor, parts and other expenses incurred by such dealer
25-15 to perform under and comply with a manufacturer's or a
25-16 distributor's warranty agreement, or require, as a prerequisite to
25-17 the manufacturer's or distributor's payment of a claim for
25-18 reimbursement as required by this section, that a dealer file with
25-19 the manufacturer or distributor the actual time spent in the
25-20 performance of labor unless actual time is the basis for
25-21 reimbursement. In no event shall any manufacturer or distributor
25-22 pay its dealers an amount of money for warranty work that is less
25-23 than that charged by the dealer to the retail customers of the
25-24 dealer for nonwarranty work of like kind. All claims made by
25-25 dealers for compensation for delivery, preparation, and warranty
25-26 work shall be paid within 30 days after approval and shall be
25-27 approved or disapproved within 30 days after receipt. When any
26-1 claim is disapproved, the dealer shall be notified in writing of
26-2 the grounds for disapproval. No claim which has been approved and
26-3 paid may be charged back to the dealer unless it can be shown that
26-4 the claim was false or fraudulent, that the repairs were not
26-5 properly made or were unnecessary to correct the defective
26-6 condition, or that the dealer failed to reasonably substantiate the
26-7 claim in accordance with reasonable written requirements of the
26-8 manufacturer or distributor, if the dealer has been notified of the
26-9 requirements prior to the time the claim arose, and if the
26-10 requirements were in effect at the time the claim arose. A
26-11 manufacturer or distributor may not audit a claim after the
26-12 expiration of two years following the submission of the claim
26-13 unless the manufacturer or distributor has reasonable grounds to
26-14 suspect that a claim was fraudulent. Notwithstanding the terms of
26-15 a franchise agreement] or provision of law in conflict with this
26-16 section, the dealer's delivery, preparation, and warranty
26-17 obligations as filed with the board shall constitute the dealer's
26-18 sole responsibility for product liability as between the dealer and
26-19 manufacturer or distributor, and, except for a loss caused by the
26-20 dealer's failure to adhere to these obligations, a loss caused by
26-21 the dealer's negligence or intentional misconduct, or a loss caused
26-22 by the dealer's modification of a product without manufacturer or
26-23 distributor authorization, the manufacturer or distributor shall
26-24 reimburse the dealer for all loss incurred by the dealer, including
26-25 legal fees, court costs, and damages, as a result of the dealer
26-26 having been named a party in a product liability action.
26-27 (12) Operate as a manufacturer, distributor, or
27-1 representative without a currently valid license from the board or
27-2 otherwise violate this Act or rules promulgated by the board
27-3 hereunder.
27-4 (13) Notwithstanding the terms of any franchise
27-5 agreement, to prevent or refuse to honor the succession to a
27-6 dealership by any legal heir or devisee under the will of a dealer
27-7 or under the laws of descent and distribution of this State unless
27-8 it is shown to the board, after notice and hearing, that the result
27-9 of such succession will be detrimental to the public interest and
27-10 to the representation of the manufacturer or distributor; provided,
27-11 however, nothing herein shall prevent a dealer, during his
27-12 lifetime, from designating any person as his successor dealer, by
27-13 written instrument filed with the manufacturer or distributor.
27-14 (14) Notwithstanding the terms of any franchise
27-15 agreement, require that a dealer pay or assume, directly or
27-16 indirectly, any part of any refund, rebate, discount, or other
27-17 financial adjustment made by the manufacturer, distributor, or
27-18 representative to, or in favor of, any customer of a dealer, unless
27-19 voluntarily agreed to by such dealer.
27-20 (15) Notwithstanding the terms of any franchise
27-21 agreement, deny or withhold approval of a written application to
27-22 relocate a franchise unless (A) the applicant has received written
27-23 notice of the denial or withholding of approval within 60 days
27-24 after receipt of the application containing information reasonably
27-25 necessary to enable the manufacturer or distributor to adequately
27-26 evaluate the application, and if (B) the applicant files a protest
27-27 with the board and the manufacturer or distributor establishes by a
28-1 preponderance of the evidence at a hearing called by the board that
28-2 the grounds for the denial or withholding of approval of the
28-3 relocation are reasonable.
28-4 (16) Notwithstanding the terms of any franchise
28-5 agreement, fail to pay to a dealer or any lienholder in accordance
28-6 with their respective interest after the termination of a
28-7 franchise:
28-8 (A) the dealer cost of each new motor vehicle in
28-9 the dealer's inventory with mileage of 6,000 miles or less, reduced
28-10 by the net discount value of each, where "net discount value" is
28-11 determined according to the following formula: net cost multiplied
28-12 by total mileage divided by 100,000, and where "net cost" equals
28-13 the dealer cost plus any charges by the manufacturer, distributor,
28-14 or representative for distribution, delivery, and taxes, less all
28-15 allowances paid to the dealer by the manufacturer, distributor, or
28-16 representative for new, unsold, undamaged, and complete motor
28-17 vehicles of current model year or one year prior model year in the
28-18 dealer's inventory, except that if a vehicle cannot be reduced by
28-19 the net discount value, the manufacturer or distributor shall pay
28-20 the dealer the net cost of the vehicle;
28-21 (B) the dealer cost of each new, unused,
28-22 undamaged, and unsold part or accessory if the part or accessory is
28-23 in the current parts catalogue and is still in the original,
28-24 resalable merchandising package and in unbroken lots, except that
28-25 in the case of sheet metal, a comparable substitute for the
28-26 original package may be used, and if the part or accessory was
28-27 purchased by the dealer either directly from the manufacturer or
29-1 distributor or from an outgoing authorized dealer as a part of the
29-2 dealer's initial inventory;
29-3 (C) the fair market value of each undamaged sign
29-4 owned by the dealer which bears a trademark or tradename used or
29-5 claimed by the manufacturer, distributor, or representative if the
29-6 sign was purchased from or purchased at the request of the
29-7 manufacturer, distributor, or representative;
29-8 (D) the fair market value of all special tools,
29-9 data processing equipment, and automotive service equipment owned
29-10 by the dealer which were recommended in writing and designated as
29-11 special tools and equipment and purchased from or purchased at the
29-12 request of the manufacturer, distributor, or representative, if the
29-13 tools and equipment are in usable and good condition except for
29-14 reasonable wear and tear;
29-15 (E) the cost of transporting, handling, packing,
29-16 storing, and loading of any property subject to repurchase under
29-17 this section;
29-18 (F) except as provided by this subdivision, any
29-19 sums due as provided by Paragraph (A) of this subdivision within 60
29-20 days after termination of a franchise and any sums due as provided
29-21 by Paragraphs (B) through (E) of this subdivision within 90 days
29-22 after termination of a franchise. As a condition of payment, the
29-23 dealer is to comply with reasonable requirements with respect to
29-24 the return of inventory as are set out in the terms of the
29-25 franchise agreement. A manufacturer or distributor shall reimburse
29-26 a dealer for the dealer's cost for storing any property covered by
29-27 this subdivision beginning 90 days following termination. A
30-1 manufacturer or distributor shall reimburse a dealer for the
30-2 dealer's cost of storing any property covered by this subdivision
30-3 before the expiration of 90 days from the date of termination if
30-4 the dealer notifies the manufacturer or distributor of the
30-5 commencement of storage charges within that period. On receipt of
30-6 notice of the commencement of storage charges, a manufacturer or
30-7 distributor may immediately take possession of the property in
30-8 question by repurchasing the property as provided by this
30-9 subdivision. A manufacturer, distributor, or representative who
30-10 fails to pay those sums within the prescribed time or at such time
30-11 as the dealer and lienholder, if any, proffer good title prior to
30-12 the prescribed time for payment, is liable to the dealer for:
30-13 (i) the greatest of dealer cost, fair
30-14 market value, or current price of the inventory;
30-15 (ii) interest on the amount due calculated
30-16 at the rate applicable to a judgment of a court; and
30-17 (iii) reasonable attorney's fees and
30-18 costs.
30-19 (17) Notwithstanding the terms of any franchise
30-20 agreement, change its distributor, its method of distribution of
30-21 its products in this state, or its business structure or ownership
30-22 in a manner that results in the termination or noncontinuance of a
30-23 franchise without good cause. The manufacturer, distributor, or
30-24 representative shall issue the same notice to the dealer and to the
30-25 board as is provided in Subdivisions (3)(A) and (B) of this section
30-26 and said same procedures shall apply to the parties.
30-27 (18) Notwithstanding the terms of any franchise
31-1 agreement, require a dealer to submit to arbitration on any issue
31-2 unless the dealer and the manufacturer, distributor, or
31-3 representative and their respective counsel agree to arbitrate
31-4 after a controversy arises. The arbitrator shall apply the
31-5 provisions of this Act in resolving the pertinent controversy.
31-6 Either party may appeal to the board a decision of an arbitrator on
31-7 the ground that the arbitrator failed to apply this Act.
31-8 (19) Notwithstanding the terms of any franchise
31-9 agreement, require that a dealer join, contribute to, or affiliate
31-10 with, directly or indirectly, any advertising association.
31-11 (20) Notwithstanding the terms of a franchise
31-12 agreement:
31-13 (A) require adherence to unreasonable sales or
31-14 service standards;
31-15 (B) directly or indirectly, discriminate against
31-16 a dealer or otherwise treat dealers differently as a result of a
31-17 formula or other calculation or process intended to gauge the
31-18 performance of a dealership;
31-19 (C) unreasonably require that a dealer purchase
31-20 special tools or equipment; or
31-21 (D) fail to compensate a dealer for all costs
31-22 incurred by the dealer as required by the manufacturer in complying
31-23 with the terms of a product recall by the manufacturer or
31-24 distributor, including the costs, if any, incurred by the dealer in
31-25 notifying vehicle owners of the existence of the recall.
31-26 (21) Discriminate unreasonably between or among
31-27 franchisees in the sale of a motor vehicle owned by the
32-1 manufacturer or distributor.
32-2 (22) Directly or indirectly, or through a subsidiary
32-3 or agent, require, as a condition for obtaining financing for a
32-4 motor vehicle, the purchaser of a vehicle to purchase any product
32-5 other than the motor vehicle from the manufacturer or distributor,
32-6 or from an entity owned or controlled by the manufacturer or
32-7 distributor.
32-8 (23) Directly or indirectly, or through a subsidiary
32-9 or agent, require, as a condition of its or its subsidiary's
32-10 agreement to provide financing for a motor vehicle, that any
32-11 insurance policy or service contract purchased by the motor vehicle
32-12 purchaser be purchased from a specific source.
32-13 (24) Compel a dealer through a financing subsidiary of
32-14 the manufacturer or distributor to agree to unreasonable operating
32-15 requirements or directly or indirectly to terminate a dealer
32-16 through the actions of a financing subsidiary of the manufacturer
32-17 or distributor. This subdivision does not limit the right of a
32-18 financing entity to engage in business practices in accordance with
32-19 the usage of trade in retail and wholesale motor vehicle financing.
32-20 (25) [Operate as a dealer except on a temporary basis
32-21 and only if:]
32-22 [(A) the dealership was previously owned by a
32-23 franchised dealer and is currently for sale at a reasonable price;
32-24 or]
32-25 [(B) the manufacturer, distributor, or
32-26 representative operates the dealership in a bona fide relationship
32-27 with a franchised dealer who is required to make a significant
33-1 investment in the dealership, subject to loss, and who reasonably
33-2 expects to acquire full ownership of the dealership under
33-3 reasonable terms and conditions.]
33-4 [(26)] Notwithstanding the terms of a franchise
33-5 agreement, deny or withhold approval of a dealer's application to
33-6 add a line-make or parts or products related to that line-make
33-7 unless, within 60 days of receipt of the dealer's written
33-8 application to add the line-make, the manufacturer or distributor
33-9 gives the dealer written notice of the denial or withholding of
33-10 approval. After receipt of notice, the dealer may file a protest
33-11 with the board. If the dealer files a protest as provided by this
33-12 subdivision, the board may uphold the manufacturer's or
33-13 distributor's decision to deny or withhold approval of the addition
33-14 of the line-make only if the manufacturer or distributor proves by
33-15 a preponderance of the evidence that the denial or withholding of
33-16 approval was reasonable. In determining whether or not the
33-17 manufacturer or distributor has met its burden to show that its
33-18 denial or withholding of approval is reasonable, the board shall
33-19 consider all existing circumstances, including, without limitation,
33-20 the following:
33-21 (A) the dealer's sales in relation to the sales
33-22 in the market;
33-23 (B) the dealer's investment and obligations;
33-24 (C) injury or benefit to the public [welfare];
33-25 (D) the adequacy of the dealer's sales and
33-26 service facilities, equipment, parts, and personnel in relation to
33-27 those of other dealers of new motor vehicles of the same line-make;
34-1 (E) whether warranties are being honored by the
34-2 dealer agreement;
34-3 (F) the parties' compliance with their franchise
34-4 agreement to the extent that the franchise agreement is not in
34-5 conflict with this Act;
34-6 (G) the enforceability of the franchise
34-7 agreement from a public policy standpoint, including without
34-8 limitation, issues of the reasonableness of the franchise
34-9 agreement's terms, oppression, adhesion, and the relative
34-10 bargaining power of the parties;
34-11 (H) whether the dealer complies with reasonable
34-12 capitalization requirements or will be able to comply with
34-13 reasonable capitalization requirements within a reasonable time;
34-14 (I) the harm, if any, to the manufacturer if the
34-15 denial or withholding of approval is not upheld; and
34-16 (J) the harm, if any, to the dealer if the
34-17 denial or withholding of approval is upheld.
34-18 (26) [(27)] Fail or refuse to offer to its same
34-19 line-make franchised dealers all models manufactured for that
34-20 line-make, or require a dealer to pay any extra fee, purchase
34-21 unreasonable advertising displays or other materials, or remodel,
34-22 renovate, or recondition the dealer's existing facilities as a
34-23 prerequisite to receiving a model or series of vehicles.
34-24 (27) [(28)] Require a dealer to compensate the
34-25 manufacturer or distributor for any court costs, attorney's fees,
34-26 or other expenses incurred in an administrative or civil proceeding
34-27 arising under this Act, except that this subdivision does not
35-1 prohibit a manufacturer and dealer from entering into an agreement
35-2 to share costs in a proceeding in which the dealer and manufacturer
35-3 have the same or similar interests.
35-4 SECTION 14. The Texas Motor Vehicle Commission Code (Article
35-5 4413(36), Vernon's Texas Civil Statutes), is amended by adding
35-6 Sections 5.02A, 5.02B, and 5.02C to read as follows:
35-7 Sec. 5.02A. WARRANTY REIMBURSEMENT. (a) A manufacturer or
35-8 distributor shall file with the board a copy of the current
35-9 requirements the manufacturer or distributor places on its dealers
35-10 with respect to the dealer's:
35-11 (1) duties under the manufacturer's or distributor's
35-12 warranty; and
35-13 (2) vehicle delivery and preparation obligations.
35-14 (b) Warranty or delivery and preparation requirements placed
35-15 on a dealer by a manufacturer are not enforceable unless they are
35-16 reasonable and are disclosed and filed in compliance with
35-17 Subsection (a).
35-18 (c) A manufacturer or distributor shall fairly and
35-19 adequately compensate its dealers for warranty work.
35-20 (d) In no event may a manufacturer or distributor pay or
35-21 reimburse a dealer an amount of money for warranty work that is
35-22 less than that charged by the dealer to the dealer's retail
35-23 customers for nonwarranty work of like kind. In computing the
35-24 amount of money charged by the dealer to the dealer's retail
35-25 customers for labor of like kind, the manufacturer or distributor
35-26 shall use the greater of:
35-27 (1) the average labor rate charged by the dealer on
36-1 100 sequential nonwarranty repair orders, exclusive of routine
36-2 maintenance, during the preceding six months; or
36-3 (2) the average labor rate charged by the dealer for
36-4 nonwarranty repairs, exclusive of routine maintenance, for 90
36-5 consecutive days during the preceding six months.
36-6 (e) A dealer may request an adjustment in the dealer's
36-7 warranty labor rate. A request under this subsection shall be by
36-8 certified mail, return receipt requested. In a request for an
36-9 adjustment of a warranty labor rate under this subsection, the
36-10 requesting dealer shall set forth the requested rate and shall
36-11 include information reasonably necessary to enable the manufacturer
36-12 or distributor adequately to evaluate the request as provided by
36-13 this section. A manufacturer or distributor shall, within 60 days
36-14 after receipt of a request for a rate adjustment under this
36-15 subsection, notify the requesting dealer, in writing, of the
36-16 approval or disapproval of the request. If the manufacturer or
36-17 distributor disapproves the request, the manufacturer or
36-18 distributor shall set forth the reasons for the disapproval. If
36-19 the manufacturer or distributor disapproves the request or fails to
36-20 respond within the time provided by this subsection, the requesting
36-21 dealer is entitled to file a protest.
36-22 (f) If a dealer files a protest under Subsection (e), the
36-23 board may uphold the manufacturer's or distributor's decision only
36-24 if the manufacturer or distributor proves by a preponderance of the
36-25 evidence that the disapproval of the request or failure to respond
36-26 was reasonable. If the board finds that the disapproval of the
36-27 request or failure to respond was unreasonable, the board shall put
37-1 the requested rate into effect as of the 60th day after the receipt
37-2 of the request by the manufacturer or distributor.
37-3 (g) Except by agreement of the parties, a warranty labor
37-4 rate established as provided by this section may be adjusted no
37-5 more often than annually.
37-6 (h) A manufacturer or distributor shall pay a dealer's claim
37-7 for reimbursement for warranty work or dealer preparation and
37-8 delivery work within 30 days after approval of the claim. A claim
37-9 not disapproved within 30 days after the manufacturer or
37-10 distributor receives it is approved. If the claim is disapproved,
37-11 the manufacturer or distributor shall provide the dealer written
37-12 notice of the reasons for the disapproval.
37-13 (i) Except as provided by this section, a manufacturer or
37-14 distributor may not charge a dealer back money paid to the dealer
37-15 to satisfy a claim approved and paid as provided by this section.
37-16 A manufacturer or distributor may charge back to a dealer money
37-17 paid to the dealer to satisfy a claim approved and paid as provided
37-18 by this section if the manufacturer or distributor can show that:
37-19 (1) the claim was false or fraudulent;
37-20 (2) repair work was not properly performed or was
37-21 unnecessary to correct a defective condition; or
37-22 (3) the dealer who made the claim failed to provide
37-23 substantiation of the claim in the manner provided by the
37-24 manufacturer's or distributor's requirements if those requirements
37-25 were on file with the board at the time the claim was filed and if
37-26 those requirements are reasonable as provided by this section.
37-27 (j) A manufacturer or distributor may not:
38-1 (1) audit a claim filed under this section after the
38-2 expiration of one year from the submission of the claim unless the
38-3 manufacturer or distributor has reasonable grounds to suspect that
38-4 a claim was fraudulent; or
38-5 (2) require, as a prerequisite to the payment of a
38-6 claim for reimbursement, that a dealer file a statement of actual
38-7 time spent in performance of labor, unless actual time is the basis
38-8 for reimbursement.
38-9 Section 5.02B. MANUFACTURER OR DISTRIBUTOR INCENTIVE
38-10 PROGRAMS; PROCEDURES. (a) Except as provided by Subsection (b),
38-11 after the first anniversary of the ending date of a manufacturer or
38-12 distributor incentive program, a manufacturer or distributor may
38-13 not:
38-14 (1) charge back to a dealer money paid by the
38-15 manufacturer or distributor as a result of the incentive program;
38-16 (2) charge back to a dealer the cash value of a prize
38-17 or other thing of value awarded to the dealer as a result of the
38-18 incentive program; or
38-19 (3) audit the records of a dealer to determine
38-20 compliance with the terms of the incentive program, unless the
38-21 manufacturer or distributor has reasonable grounds to believe the
38-22 dealer committed fraud with respect to the incentive program.
38-23 (b) Notwithstanding Subsection (a), a manufacturer or
38-24 distributor may make charge-backs to a dealer if after audit the
38-25 manufacturer or distributor has reasonable grounds to conclude that
38-26 the dealer committed fraud with respect to the incentive program.
38-27 Section 5.02C. MANUFACTURER OR DISTRIBUTOR OWNERSHIP,
39-1 OPERATION, OR CONTROL OF DEALERSHIP. (a) In this section the term
39-2 "manufacturer" includes:
39-3 (1) a representative; or
39-4 (2) a person or entity who is affiliated with a
39-5 manufacturer or representative or who, directly or indirectly
39-6 through an intermediary, is controlled by, or is under common
39-7 control with, the manufacturer.
39-8 (b) For purposes of Subsection (a)(2), a person or entity is
39-9 controlled by a manufacturer if the manufacturer has the authority
39-10 directly or indirectly, by law or by agreement of the parties, to
39-11 direct or influence the management and policies of the person or
39-12 entity.
39-13 (c) Except as provided by this section, a manufacturer or
39-14 distributor may not directly or indirectly:
39-15 (1) own an interest in a dealer or dealership;
39-16 (2) operate or control a dealer or dealership; or
39-17 (3) act in the capacity of a dealer.
39-18 (d) A manufacturer or distributor may own an interest in a
39-19 franchised dealer, or otherwise control a dealership, for a period
39-20 not to exceed 12 months from the date the manufacturer or
39-21 distributor acquires the dealership if:
39-22 (1) the person from whom the manufacturer or
39-23 distributor acquired the dealership was a franchised dealer; and
39-24 (2) the dealership is for sale by the manufacturer or
39-25 distributor at a reasonable price and on reasonable terms and
39-26 conditions.
39-27 (e) For the purpose of broadening the diversity of its
40-1 dealer body and enhancing opportunities for qualified persons who
40-2 are part of a group who have historically been underrepresented in
40-3 its dealer body, or other qualified persons who lack the resources
40-4 to purchase a dealership outright, but for no other purpose, a
40-5 manufacturer or distributor may temporarily own an interest in a
40-6 dealership if the manufacturer's or distributor's participation in
40-7 the dealership is in a bona fide relationship with a franchised
40-8 dealer who:
40-9 (1) has made a significant investment in the
40-10 dealership, subject to loss;
40-11 (2) has an ownership interest in the dealership; and
40-12 (3) operates the dealership under a plan to acquire
40-13 full ownership of the dealership within a reasonable time and under
40-14 reasonable terms and conditions.
40-15 (f) On a showing by a manufacturer or distributor of good
40-16 cause, the board may extend the time limit set forth in Subsection
40-17 (d)(1). An extension under this subsection may not exceed 12
40-18 months. An application for an extension after the first extension
40-19 is granted is subject to protest by a dealer of the same line-make
40-20 whose dealership is located in the same county as, or within 15
40-21 miles of, the dealership owned or controlled by the manufacturer or
40-22 distributor.
40-23 (g) Notwithstanding any other provision of this section, a
40-24 person who, on June 7, 1995, held both a motor home dealer's
40-25 license and a motor home manufacturer's license issued under this
40-26 Act may:
40-27 (1) hold both a motor home dealer's license and a
41-1 motor home manufacturer's license; and
41-2 (2) operate as both a manufacturer and dealer of motor
41-3 homes but of no other type of vehicle.
41-4 SECTION 15. Section 6.07(a), Texas Motor Vehicle Commission
41-5 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
41-6 to read a follows:
41-7 (a) In addition to the other powers and duties provided for
41-8 in this Act, the board [Commission] shall cause manufacturers,
41-9 converters, and distributors to perform the obligations imposed by
41-10 this section. In this section "owner" means a person who:
41-11 (1) purchased a vehicle at retail from a licensee and
41-12 is entitled to enforce the terms of a manufacturer's warranty with
41-13 respect to the vehicle;
41-14 (2) is a lessor or lessee, other than a sublessee, who
41-15 purchased or leased the vehicle from a licensee; or
41-16 (3) is the transferee or assignee of any of the
41-17 persons described in Subdivision (1) or (2) of this subsection if
41-18 the transferee or assignee is a Texas resident and is entitled to
41-19 enforce the terms of a manufacturer's warranty. [For purposes of
41-20 this section, the term "owner" means a retail purchaser, lessor,
41-21 lessee other than a sublessee, or the person so designated on the
41-22 certificate of title to a motor vehicle issued by the Texas
41-23 Department of Transportation, or an equivalent document issued by
41-24 the duly authorized agency of any other state, or any person to
41-25 whom such motor vehicle is legally transferred during the duration
41-26 of a manufacturer's or distributor's express warranty applicable to
41-27 such motor vehicle, and any other person entitled by the terms of
42-1 the manufacturer's, converter's, or distributor's express warranty
42-2 to enforce the obligations thereof.]
42-3 SECTION 16. Section 7.01(f), Texas Motor Vehicle Commission
42-4 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
42-5 to read as follows:
42-6 (f) Appeal shall not affect the enforcement of a final board
42-7 [Commission] order unless its enforcement is enjoinable under
42-8 Section 65.001 et seq., Civil Practice and Remedies Code, and under
42-9 principles of primary jurisdiction. Notwithstanding the terms of
42-10 this section, the board may, in the interest of justice, suspend
42-11 the enforcement of its order pending final determination of an
42-12 appeal of that order as provided by this section.
42-13 SECTION 17. Section 1A.01, Chapter 7, Acts of the 72nd
42-14 Legislature, 1st Called Session, 1991 (Article 4413(36a), Vernon's
42-15 Texas Civil Statutes), is amended by adding Subdivision (5) to read
42-16 as follows:
42-17 (5) "Executive director" means the executive director
42-18 of the Texas Department of Transportation.
42-19 SECTION 18. Section 1A.02, Chapter 7, Acts of the 72nd
42-20 Legislature, 1st Called Session, 1991 (Article 4413(36a), Vernon's
42-21 Texas Civil Statutes), is amended to read as follows:
42-22 Sec. 1A.02. (a) The Board shall:
42-23 (1) except as provided by Subsection (b) or (c),
42-24 exercise the authority and perform the duties placed on the Board
42-25 by this article or other provision of law independent of the Texas
42-26 Transportation Commission and the executive director; and
42-27 (2) advise, by and through the director, the
43-1 department on:
43-2 (A) [matters arising under the body of law known
43-3 as the Texas Motor Vehicle Commission Code or its successor and
43-4 other matters relating to the licensing and regulation of motor
43-5 vehicle manufacturers, distributors, converters, and dealers;]
43-6 [(B) personnel needs of the Board and division;]
43-7 [(C)] budgetary needs of the Board and division;
43-8 (B) [(D)] equipment needs of the Board and
43-9 division;
43-10 (C) [(E)] data processing needs of the Board and
43-11 division;
43-12 (D) [(F)] the purchase or other acquisition of
43-13 facilities and property for the Board and division.
43-14 (b) Personnel of the division are personnel of the Texas
43-15 Department of Transportation and are subject to the human resource
43-16 rules and policies of the department and the Texas Transportation
43-17 Commission, except that, as applied to employees of the division,
43-18 any and all powers granted to the executive director by those rules
43-19 and policies shall reside with the director.
43-20 (c) The executive director shall, by and through the various
43-21 offices of the department, provide equipment, facilities, property,
43-22 and services necessary to carry out the division's purposes,
43-23 powers, and duties. The executive director shall be responsible
43-24 for allocating department resources as the executive director deems
43-25 necessary and appropriate to meet the needs of both the division
43-26 and the other offices of the department.
43-27 SECTION 19. The importance of this legislation and the
44-1 crowded condition of the calendars in both houses create an
44-2 emergency and an imperative public necessity that the
44-3 constitutional rule requiring bills to be read on three several
44-4 days in each house be suspended, and this rule is hereby suspended,
44-5 and that this Act take effect and be in force from and after its
44-6 passage, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3092 was passed by the House on April
22, 1999, by the following vote: Yeas 140, Nays 0, 2 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 3092 on May 21, 1999, by the following vote: Yeas 143, Nays 0,
1 present, not voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3092 was passed by the Senate, with
amendments, on May 19, 1999, by the following vote: Yeas 30, Nays
0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor