Texas 2011 - 82nd Regular

Texas House Bill HB1960 Compare Versions

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1	1	By: Deshotel, et al. (Senate Sponsor - Jackson) H.B. No. 1960
2	2	(In the Senate - Received from the House May 6, 2011;
3	3	May 13, 2011, read first time and referred to Committee on
4	4	Transportation and Homeland Security; May 19, 2011, reported
5	5	favorably by the following vote: Yeas 5, Nays 4; May 19, 2011,
6	6	sent to printer.)
7	7
8	8
9	9	A BILL TO BE ENTITLED
10	10	AN ACT
11	11	relating to the regulation of boat manufacturers, distributors, and
12	12	dealers; providing a civil penalty.
13	13	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	14	SECTION 1. Section 2352.001, Occupations Code, is amended
15	15	by amending Subdivisions (1), (3), (4), and (5) and adding
16	16	Subdivisions (2-a), (5-a), (8-a), and (8-b) to read as follows:
17	17	(1) "Agreement" means a written agreement between a
18	18	manufacturer or distributor and a dealer for the purchase and sale
19	19	of new boats or new boat [outboard] motors.
20	20	(2-a) "Boat motor" means a mechanical form of
21	21	propulsion for a vessel, including an inboard or outboard motor.
22	22	(3) "Dealer" means a person engaged in the business of
23	23	buying, selling, selling on consignment, displaying for sale, or
24	24	exchanging at least five vessels, motorboats, or boat motors during
25	25	a calendar year [has the meaning assigned by Section 31.003, Parks
26	26	and Wildlife Code].
27	27	(4) "Distributor" means a person who:
28	28	(A) offers for sale, sells, or distributes new
29	29	boats or new boat [outboard] motors to dealers; or
30	30	(B) controls a person described by Paragraph
31	31	[Subdivision] (A).
32	32	(5) "Manufacturer" means a person engaged in the
33	33	business of manufacturing new and unused vessels or boat motors for
34	34	the purpose of sale or trade [has the meaning assigned by Section
35	35	31.003, Parks and Wildlife Code].
36	36	(5-a) "Marketing standards" means mutually agreed
37	37	standards in a manufacturer's marketing or promotional activities.
38	38	(8-a) "Performance standards" means reasonable
39	39	standards that are mutually developed and agreed to by a
40	40	manufacturer and a dealer relating to:
41	41	(A) achievement of market share by a dealer for
42	42	manufacturer products sold in a territory;
43	43	(B) achievement of a level of performance in a
44	44	manufacturer's certified dealer program, if any; and
45	45	(C) participation in a plan that addresses
46	46	improvement, if needed, in dealer performance.
47	47	(8-b) "Territory" means:
48	48	(A) for the sale of a manufacturer's boats, a
49	49	defined geographical area within which a dealer is appointed by the
50	50	manufacturer as the sole authorized dealer; or
51	51	(B) for the sale of all other manufacturer
52	52	products, a market area within which a dealer is appointed by the
53	53	manufacturer as an authorized dealer.
54	54	SECTION 2. Section 2352.051, Occupations Code, is amended
55	55	to read as follows:
56	56	Sec. 2352.051. AGREEMENT REQUIRED. A manufacturer or
57	57	distributor contracting with a dealer may not sell or offer for
58	58	sale, and a dealer may not purchase or offer to purchase, a new boat
59	59	or a new boat [outboard] motor unless the manufacturer or
60	60	distributor and the dealer enter into an agreement that complies
61	61	with this chapter.
62	62	SECTION 3. Section 2352.052, Occupations Code, is amended
63	63	to read as follows:
64	64	Sec. 2352.052. TERMS OF AGREEMENT. (a) An agreement under
65	65	this chapter must include:
66	66	(1) the dealer's [location,] territory and dealership
67	67	locations [, or market area];
68	68	(2) the length of the agreement, which must be not less
69	69	than three years;
70	70	(3) [any] performance standards or marketing
71	71	standards, if any;
72	72	(4) [any] working capital, inventory, facility,
73	73	equipment, or tool standards, including mutually agreed minimum
74	74	product stocking requirements, if any;
75	75	(5) provisions for termination or nonrenewal of the
76	76	agreement and the designation of a successor dealer in the event of
77	77	the dealer's death or disability;
78	78	(6) the obligations of the manufacturer, distributor,
79	79	and dealer in the preparation and delivery of and warranty service
80	80	on new boats and new boat [outboard] motors;
81	81	(7) the obligations of the manufacturer, distributor,
82	82	and dealer on termination of the agreement, including inventory of
83	83	new boats and new boat [outboard] motors, parts inventory,
84	84	equipment, furnishings, special tools, and required signs; [and]
85	85	(8) mutually agreed standards for maintenance of:
86	86	(A) a dedicated or self-funded line of credit, if
87	87	any; and
88	88	(B) a trade-in line of credit or self-funded
89	89	trade-in line of credit, if any; and
90	90	(9) dispute resolution procedures.
91	91	(b) At the end of the first year of an agreement, a dealer
92	92	and manufacturer shall evaluate the dealer's progress in meeting
93	93	the agreement's performance standards, marketing standards, and
94	94	line of credit standards, to determine whether to enter into a new
95	95	three-year agreement.
96	96	(c) If the dealer and manufacturer enter into a new
97	97	agreement, the initial agreement is void. If the dealer and
98	98	manufacturer do not enter into a new agreement, the dealer and
99	99	manufacturer are bound by the terms and conditions of the initial
100	100	agreement.
101	101	(d) Notwithstanding the terms of a dealer agreement, a
102	102	dealer agreement and any transaction subject to this chapter must
103	103	comply with the requirements of this chapter [section].
104	104	(e) Notwithstanding Subsection (a)(2), an initial agreement
105	105	between a dealer and a manufacturer may have a term of less than
106	106	three years. An extension or renewal of the initial agreement or a
107	107	subsequent agreement under this chapter between the same dealer and
108	108	manufacturer must be for a term of not less than three years.
109	109	SECTION 4. Subchapter B, Chapter 2352, Occupations Code, is
110	110	amended by adding Sections 2352.0521, 2352.0522, 2352.0523, and
111	111	2352.0524 to read as follows:
112	112	Sec. 2352.0521. PERFORMANCE STANDARDS. (a) A manufacturer
113	113	shall make reasonable efforts to provide a dealer with information
114	114	regarding the dealer's compliance with performance standards.
115	115	(b) Performance standards must be evaluated on an annual
116	116	basis and, if a dealer and manufacturer agree, may be adjusted to
117	117	promote the sale of the manufacturer's products.
118	118	(c) If revised performance standards are not agreeable, the
119	119	initial performance standards remain in place until the expiration
120	120	of the agreement.
121	121	Sec. 2352.0522. DEALER TERRITORY. (a) During the term of
122	122	an agreement, a manufacturer may not appoint another authorized
123	123	dealer for the sale of the manufacturer's boats in a dealer's
124	124	territory.
125	125	(b) Except for purposes of advertising without an
126	126	advertised price or with a manufacturer's suggested retail price, a
127	127	dealer may not advertise or promote the sale of the manufacturer's
128	128	boats outside the dealer's territory, including through the
129	129	Internet.
130	130	(c) A dealer may not use a broker in another dealer's
131	131	territory to sell a manufacturer's boat.
132	132	(d) This chapter does not prohibit a dealer from selling a
133	133	boat to a customer residing outside of the dealer's territory who
134	134	independently visits the dealership and seeks to purchase a boat
135	135	from the dealer.
136	136	Sec. 2352.0523. DEFAULT. (a) A default under an agreement
137	137	under this chapter by a manufacturer, distributor, or dealer is:
138	138	(1) a material failure to meet minimum product
139	139	stocking requirements as specified by the agreement;
140	140	(2) a material failure to make timely payment of any
141	141	material obligation as specified by the agreement;
142	142	(3) a material failure to substantially comply with a
143	143	federal, state, or local law, rule, regulation, ordinance, or order
144	144	applicable to the agreement; or
145	145	(4) an act of material fraud relating to the
146	146	performance of a right or obligation under the agreement.
147	147	(b) A default by a dealer under an agreement under this
148	148	chapter is:
149	149	(1) a material failure to meet applicable performance
150	150	standards as specified by the agreement for a defined one model year
151	151	marketing cycle;
152	152	(2) a material failure to meet applicable marketing
153	153	standards as specified by the agreement;
154	154	(3) a material failure to meet applicable standards
155	155	for a dedicated or self-funded line of credit or a trade-in or
156	156	self-funded trade-in line of credit as specified by the agreement;
157	157	or
158	158	(4) the marketing of the manufacturer's boats by the
159	159	dealer outside of the dealer's territory in violation of this
160	160	chapter.
161	161	Sec. 2352.0524. CURE OF DEFAULT. (a) Except as provided by
162	162	Section 2352.053(d)(3), (8), or (9), a manufacturer or distributor
163	163	must give a dealer written notice of a default under Section
164	164	2352.0523 and allow the dealer to cure the default within a cure
165	165	period as provided by Subsection (b).
166	166	(b) A dealer must cure a default not later than the:
167	167	(1) 30th day after the date of receipt of notice of a
168	168	default under Section 2352.0523(a)(2) or (b)(4);
169	169	(2) 60th day after the date of receipt of notice of a
170	170	default under Section 2352.0523(b)(2) or (3);
171	171	(3) 90th day after the date of receipt of notice of a
172	172	default under Section 2352.0523(a)(1); or
173	173	(4) 180th day after the date of receipt of notice of a
174	174	default under Section 2352.0523(b)(1).
175	175	SECTION 5. Section 2352.053, Occupations Code, is amended
176	176	to read as follows:
177	177	Sec. 2352.053. TERMINATION OR NONRENEWAL OF AGREEMENT;
178	178	NOTICE. (a) Except as provided by Subsection (d), a [A]
179	179	manufacturer or distributor may not terminate an agreement unless
180	180	the dealer defaults under Section 2352.0523 [there is good cause
181	181	for the termination] and:
182	182	(1) the manufacturer or distributor gives the dealer
183	183	written notice of the default and possible termination in clear and
184	184	concise terms;
185	185	(2) the notice states the default [reasons for
186	186	termination]; [and]
187	187	(3) the dealer has been given the applicable cure
188	188	period [30 days] to make a good faith effort to cure the default
189	189	[reasons for termination] stated in the notice; and
190	190	(4) the dealer fails to cure the default.
191	191	(b) Good cause is not required for the nonrenewal of an
192	192	agreement [other than an agreement having an original term of less
193	193	than one year].
194	194	(c) The fact that a dealer holds an agreement involving
195	195	another line, make, or brand of new boat or new boat [outboard]
196	196	motor does not constitute a default or grounds for termination of an
197	197	agreement [good cause].
198	198	(d) A manufacturer or distributor may terminate an
199	199	agreement on written notice, without a cure period, if the dealer:
200	200	(1) financially defaults to the manufacturer, the
201	201	distributor, or a financing source;
202	202	(2) becomes subject to an order for relief, as that
203	203	term is used in Title 11, United States Code;
204	204	(3) engages in an act of material fraud relating to the
205	205	performance of a right or obligation under the agreement
206	206	[fraudulent conduct in:
207	207	[(A) conducting the dealer's business; or
208	208	[(B) performing the agreement];
209	209	(4) is a corporation that ceases to exist;
210	210	(5) becomes insolvent or takes or fails to take any
211	211	action that constitutes an admission of inability to pay debts as
212	212	the debts mature;
213	213	(6) makes a general assignment for the benefit of
214	214	creditors to an agent authorized to liquidate any substantial
215	215	amount of assets; [or]
216	216	(7) applies to a court for the appointment of a
217	217	receiver for any assets or properties;
218	218	(8) fails to substantially comply with a federal,
219	219	state, or local law, rule, regulation, ordinance, or order
220	220	applicable to the agreement; or
221	221	(9) receives three valid notices of a default under
222	222	Section 2352.0523 for the same default, whether cured or not,
223	223	within a 12-month period.
224	224	SECTION 6. Section 2352.101(a), Occupations Code, is
225	225	amended to read as follows:
226	226	(a) A manufacturer or distributor who publicly advertises a
227	227	new boat, new boat [outboard] motor, or part as available for
228	228	immediate delivery shall deliver the boat, boat [outboard] motor,
229	229	or part in reasonable quantities and within a reasonable time after
230	230	receipt of an order from a dealer who has an agreement with the
231	231	manufacturer or distributor applicable to the advertised boat, boat
232	232	[outboard] motor, or part.
233	233	SECTION 7. Section 2352.103, Occupations Code, is amended
234	234	to read as follows:
235	235	Sec. 2352.103. FINANCING. (a) A manufacturer or
236	236	distributor may not require a dealer to finance through a
237	237	particular financing source a new boat or new boat [outboard] motor
238	238	sold by the dealer.
239	239	(b) A manufacturer or distributor may not require a dealer
240	240	to act as the manufacturer's or distributor's agent in securing:
241	241	(1) a promissory note and security agreement in
242	242	connection with the sale or purchase of a new boat or new boat
243	243	[outboard] motor; or
244	244	(2) an insurance policy on the operation of a new boat
245	245	or new boat [outboard] motor.
246	246	SECTION 8. Section 2352.104, Occupations Code, is amended
247	247	to read as follows:
248	248	Sec. 2352.104. SALE OF PARTS AND ACCESSORIES AND SERVICE
249	249	AFTER TERMINATION OR NONRENEWAL OF AGREEMENT. (a) After a
250	250	manufacturer or distributor terminates or does not renew an
251	251	agreement, the former dealer may continue to purchase parts and
252	252	accessories to service the products covered by the agreement until
253	253	the first anniversary of the date of termination or nonrenewal. The
254	254	manufacturer or distributor shall sell parts and accessories under
255	255	this subsection at the same price offered to a current dealer.
256	256	(b) Until the first anniversary of the date of termination
257	257	or nonrenewal of an agreement, a dealer shall continue to perform
258	258	warranty work for the manufacturer's products, unless otherwise
259	259	specified by the manufacturer in the termination notice [Subsection
260	260	(a) does not apply if the manufacturer or distributor terminates
261	261	the agreement:
262	262	[(1) based on quality of service; or
263	263	[(2) for a reason justifying immediate termination
264	264	under Section 2352.053(d)].
265	265	SECTION 9. Section 2352.105, Occupations Code, is amended
266	266	by amending Subsection (d) and adding Subsections (e) and (f) to
267	267	read as follows:
268	268	(d) A manufacturer or distributor shall approve or
269	269	disapprove a dealer's written claim for warranty work not later
270	270	than the second business day after the date of receipt of the claim
271	271	[within a reasonable time]. If the claim is approved, the
272	272	manufacturer or distributor shall pay the claim not later than the
273	273	30th day after the date of receipt of the dealer's written invoice
274	274	or written proof of completion of the warranty work [within a
275	275	reasonable time]. If the claim is disapproved, the manufacturer or
276	276	distributor shall notify the dealer of the grounds for disapproval.
277	277	(e) A manufacturer or distributor may not audit a claim
278	278	filed for warranty work after the first anniversary of the date the
279	279	claim is submitted.
280	280	(f) A manufacturer must act as the single source of contact
281	281	for the dealer for the manufacturer's component part product
282	282	warranties, other than engine-related product warranties.
283	283	SECTION 10. Subchapter C, Chapter 2352, Occupations Code,
284	284	is amended by adding Section 2352.1051 to read as follows:
285	285	Sec. 2352.1051. DELIVERY OF PARTS. On signing an
286	286	agreement, a manufacturer shall provide the dealer with a written
287	287	statement of the approximate amount of time the manufacturer takes
288	288	to deliver a part to the dealer.
289	289	SECTION 11. Sections 2352.107(a) and (b), Occupations Code,
290	290	are amended to read as follows:
291	291	(a) A manufacturer or distributor who terminates an
292	292	agreement shall repurchase on demand from the dealer any of the
293	293	following items, purchased by the dealer from the manufacturer or
294	294	distributor, that are free and clear of a lien or encumbrance:
295	295	(1) a new, unsold, [retailable, undamaged,] and
296	296	complete boat, with accessories and packaged trailers sold with the
297	297	boat, and any boat [outboard] motor that:
298	298	(A) is in the dealer's inventory; and
299	299	(B) was purchased during the two years [within
300	300	one year] preceding the date of the termination; and
301	301	(2) any new, current, unsold, undamaged, and unused
302	302	parts or accessories for boats or boat [outboard] motors in the
303	303	original resalable merchandising package.
304	304	(b) A demand for repurchase must be made in writing not
305	305	later than the 90th [30th] day after the date the manufacturer or
306	306	distributor terminates the agreement. The dealer must provide the
307	307	manufacturer or distributor with a complete list of the items to be
308	308	repurchased. The manufacturer or distributor shall complete the
309	309	repurchase not later than the 30th day after the date the dealer
310	310	demands the repurchase [within a reasonable time].
311	311	SECTION 12. Subchapter D, Chapter 2352, Occupations Code,
312	312	is amended by adding Section 2352.204 to read as follows:
313	313	Sec. 2352.204. CIVIL PENALTY. (a) A manufacturer or
314	314	distributor who violates this chapter is liable to this state for a
315	315	civil penalty. The amount of the penalty may not exceed $500 for
316	316	each violation.
317	317	(b) Each sale of a new boat or boat motor by a manufacturer
318	318	or distributor in violation of Section 2352.051 is a separate
319	319	violation.
320	320	(c) The attorney general may sue to collect a civil penalty
321	321	under this section. The attorney general may recover, on behalf of
322	322	the state, the reasonable expenses incurred in obtaining the
323	323	penalty, including investigation and court costs, reasonable
324	324	attorney's fees, witness fees, and other expenses.
325	325	SECTION 13. The change in law made by this Act applies only
326	326	to an agreement entered into or renewed under Chapter 2352,
327	327	Occupations Code, on or after the effective date of this Act. An
328	328	agreement entered into or renewed before the effective date of this
329	329	Act is governed by the law in effect on the date the agreement was
330	330	entered into or renewed, and the former law is continued in effect
331	331	for that purpose.
332	332	SECTION 14. This Act takes effect September 1, 2011.
333	333	* * * * *