Texas 2011 - 82nd Regular

Texas House Bill HB3079 Compare Versions

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1	1	By: Darby (Senate Sponsor - Deuell) H.B. No. 3079
2	2	(In the Senate - Received from the House May 12, 2011;
3	3	May 12, 2011, read first time and referred to Committee on
4	4	Transportation and Homeland Security; May 21, 2011, reported
5	5	favorably by the following vote: Yeas 9, Nays 0; May 21, 2011, sent
6	6	to printer.)
7	7
8	8
9	9	A BILL TO BE ENTITLED
10	10	AN ACT
11	11	relating to dealer agreements regarding the purchase and sale of
12	12	certain equipment or machinery used for agricultural,
13	13	construction, industrial, mining, outdoor power, forestry, and
14	14	landscaping purposes.
15	15	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
16	16	SECTION 1. The legislature finds that the retail
17	17	distribution, sales, and rental of agricultural, construction,
18	18	industrial, mining, outdoor power, forestry, and lawn and garden
19	19	equipment through the use of independent dealers operating under
20	20	contract with the equipment suppliers vitally affect the general
21	21	economy of this state, the public interest, and the public welfare.
22	22	Therefore, the legislature determines that state regulation of the
23	23	business relationship between the independent dealers and
24	24	equipment suppliers as contemplated in the Fair Practices of
25	25	Equipment Manufacturers, Distributors, Wholesalers, and Dealers
26	26	Act is necessary and that any action taken in violation of this Act
27	27	would violate the public policy of this state.
28	28	SECTION 2. Title 4, Business & Commerce Code, is amended by
29	29	adding Chapter 57 to read as follows:
30	30	CHAPTER 57. AGRICULTURAL, CONSTRUCTION, INDUSTRIAL, MINING,
31	31	FORESTRY, LANDSCAPING, AND OUTDOOR POWER EQUIPMENT DEALER
32	32	AGREEMENTS
33	33	SUBCHAPTER A. GENERAL PROVISIONS
34	34	Sec. 57.001. SHORT TITLE. This chapter may be cited as the
35	35	Fair Practices of Equipment Manufacturers, Distributors,
36	36	Wholesalers, and Dealers Act.
37	37	Sec. 57.002. DEFINITIONS. In this chapter:
38	38	(1) "Current net parts cost" means an amount equal to
39	39	the current net parts price of a repair part, less any trade or cash
40	40	discount typically given to a dealer in the normal, ordinary course
41	41	of ordering a repair part.
42	42	(2) "Current net parts price" means:
43	43	(A) with respect to a repair part in current
44	44	stock, the price for the repair part listed in the supplier's price
45	45	list or catalog in effect:
46	46	(i) when a dealer agreement is terminated
47	47	or discontinued; or
48	48	(ii) for purposes of Subchapter F, when the
49	49	repair part is ordered; and
50	50	(B) with respect to a repair part that has been
51	51	superseded, the price for a repair part listed in the supplier's
52	52	price list or catalog in effect when a dealer agreement is
53	53	terminated or discontinued that:
54	54	(i) performs the same function and is for
55	55	the same purpose as the superseded part; and
56	56	(ii) is listed under a different part
57	57	number than the superseded part.
58	58	(3) "Dealer" means a person who is primarily engaged
59	59	in the business of:
60	60	(A) selling or leasing equipment or repair parts
61	61	for equipment to end users of the equipment; and
62	62	(B) repairing or servicing equipment.
63	63	(4) "Dealer agreement" means an oral or written
64	64	agreement or arrangement, of definite or indefinite duration,
65	65	between a dealer and a supplier that provides for the rights and
66	66	obligations of the parties with respect to the purchase or sale of
67	67	equipment or repair parts.
68	68	(5) "Dealership" means the retail sale business
69	69	engaged in by a dealer under a dealer agreement.
70	70	(6) "Demonstrator" means equipment in a dealer's
71	71	inventory that:
72	72	(A) has never been sold at retail; and
73	73	(B) is or has been made available to a potential
74	74	customer, as authorized by the supplier, without charge or under a
75	75	short-term rental agreement for purposes of demonstrating its use
76	76	and with the intent of encouraging the customer to purchase the
77	77	equipment.
78	78	(7) "Equipment":
79	79	(A) means machinery, equipment, or implements or
80	80	attachments to the machinery, equipment, or implements used for, or
81	81	in connection with, any of the following purposes:
82	82	(i) lawn, garden, golf course, landscaping,
83	83	or grounds maintenance;
84	84	(ii) planting, cultivating, irrigating,
85	85	harvesting, or producing agricultural or forestry products;
86	86	(iii) raising, feeding, or tending to
87	87	livestock or harvesting products from livestock or any other
88	88	activity in connection with those activities; or
89	89	(iv) industrial, construction,
90	90	maintenance, mining, or utility activities or applications; and
91	91	(B) does not mean:
92	92	(i) trailers or self-propelled vehicles
93	93	designed primarily for the transportation of persons or property on
94	94	a street or highway; or
95	95	(ii) all-terrain vehicles, utility task
96	96	vehicles, or recreational off-highway vehicles.
97	97	(8) "Family member" means a child or other lineal
98	98	descendant, a son-in-law, a daughter-in-law, or the spouse of an
99	99	individual.
100	100	(9) "Index" means the producer price index for
101	101	construction machinery series identification number
102	102	pcu333120333120 published by the Bureau of Labor Statistics of the
103	103	United States Department of Labor or a successor index measuring
104	104	substantially similar information.
105	105	(10) "Inventory" means equipment, repair parts, data
106	106	processing hardware or software, or specialized service or repair
107	107	tools.
108	108	(11) "Net equipment cost" means an amount equal to the
109	109	sum of the price the dealer actually paid to the supplier for
110	110	equipment, and:
111	111	(A) any freight paid by the dealer from the
112	112	supplier's location to the dealer's location, payable at the cost
113	113	stated on the invoice, or, if there is no invoice, at the truckload
114	114	rate in effect when a dealer agreement is terminated; and
115	115	(B) the set-up cost of labor incurred in
116	116	preparing the equipment for retail sale or lease, reimbursable at
117	117	the dealer's standard labor rate charged by the dealer to its
118	118	customers for non-warranty repair work, unless a supplier has
119	119	established a reasonable set-up time to prepare the equipment for
120	120	retail sale or lease, in which case the labor will be reimbursable
121	121	at an amount equal to the reasonable set-up time in effect as of the
122	122	date of delivery multiplied by the dealer's standard labor rate.
123	123	(12) "New equipment" means, for purposes of
124	124	determining whether a dealer is a single-line dealer, equipment
125	125	that can be returned to the supplier following termination of a
126	126	dealer agreement under Subchapter H.
127	127	(13) "Person" means:
128	128	(A) an individual, corporation, partnership,
129	129	limited liability company, company, trust, or any other form of
130	130	business entity, including any other entity in which a person has a
131	131	majority interest or of which a person has control; or
132	132	(B) an officer, director, or other individual who
133	133	actively controls the activities of an entity described by
134	134	Paragraph (A).
135	135	(14) "Repair parts" means all parts related to the
136	136	repair of equipment, including superseded parts.
137	137	(15) "Single-line dealer" means a dealer that:
138	138	(A) has purchased construction, industrial,
139	139	forestry, or mining equipment from a single supplier constituting
140	140	75 percent or more of the dealer's total new equipment that is
141	141	construction, industrial, forestry, or mining equipment, computed
142	142	on the basis of net equipment cost; and
143	143	(B) has a total annual average sales volume of
144	144	equipment acquired from the single-line supplier in excess of $25
145	145	million for the five calendar years immediately preceding the
146	146	applicable determination date, provided, however, that the $25
147	147	million threshold will be increased as of September 1 of each year
148	148	by an amount equal to the threshold on the date the determination is
149	149	made multiplied by the percentage increase in the index from
150	150	January of the immediately preceding year to January of the year the
151	151	determination is made.
152	152	(16) "Single-line dealer agreement" means a dealer
153	153	agreement between a single-line dealer and a single-line supplier
154	154	that only provides for the rights and obligations of the parties
155	155	with respect to the purchase and sale of construction, forestry,
156	156	industrial, or mining equipment.
157	157	(17) "Single-line supplier" means the supplier that is
158	158	selling to a single-line dealer construction, industrial,
159	159	forestry, or mining equipment constituting 75 percent of the
160	160	single-line dealer's new equipment that consists of construction,
161	161	industrial, forestry, and mining equipment.
162	162	(18) "Specialty agricultural equipment" means
163	163	equipment that is designed for and used in:
164	164	(A) planting, cultivating, irrigating,
165	165	harvesting, and producing agricultural products; or
166	166	(B) raising, feeding, or tending to livestock or
167	167	harvesting products from livestock.
168	168	(19) "Specialty agricultural equipment supplier"
169	169	means a supplier of specialty agricultural equipment whose:
170	170	(A) gross sales revenue to the dealer is less
171	171	than the threshold amount;
172	172	(B) product line does not include farm tractors
173	173	or combines;
174	174	(C) sales of outdoor power equipment to the
175	175	dealer do not exceed 10 percent of the supplier's total sales to the
176	176	dealer during the one-year period ending on the last day of the
177	177	calendar month immediately preceding the effective date of the
178	178	termination of the dealer agreement; and
179	179	(D) qualification for that status is determined
180	180	on a case-by-case basis depending on the sales of the applicable
181	181	dealer and the sales to the applicable dealer by the specialty
182	182	agricultural equipment supplier.
183	183	(20) "Supplier" means a person engaged in the business
184	184	of the manufacture, assembly, or wholesale distribution of
185	185	equipment or repair parts. The term includes any successor in
186	186	interest of a supplier, including:
187	187	(A) a receiver, trustee, liquidator, assignee,
188	188	purchaser of assets or stock, or surviving corporation resulting
189	189	from a merger, liquidation, or reorganization of an original
190	190	supplier; and
191	191	(B) a purchaser of all or substantially all of a
192	192	supplier's assets, such as a purchaser of all or substantially all
193	193	of the inventory of the supplier or any division or product line of
194	194	the supplier.
195	195	(21) "Terminate" or "termination" means to terminate,
196	196	cancel, fail to renew, or substantially change the competitive
197	197	circumstances of a dealer agreement.
198	198	(22) "Threshold amount" means the lesser of 10 percent
199	199	of the dealer's gross sales revenue or $350,000, in each case based
200	200	on net sales of the dealership during the one-year period ending on
201	201	the last day of the calendar month immediately preceding the
202	202	effective date of the termination of the dealer agreement,
203	203	provided, however, that the $350,000 amount must be increased each
204	204	year by an amount equal to the amount on the year in which the
205	205	determination is made multiplied by the percentage increase in the
206	206	index from January of the immediately preceding year to January of
207	207	the year in which the determination is made.
208	208	Sec. 57.003. WAIVER OF CHAPTER VOID. An attempted waiver of
209	209	a provision of this chapter or of the application of this chapter is
210	210	void.
211	211	[Sections 57.004-57.050 reserved for expansion]
212	212	SUBCHAPTER B. PROVISIONS REGARDING DEALER AGREEMENT OR DEALERSHIP
213	213	Sec. 57.051. CERTAIN PROVISIONS VOID. The following
214	214	provisions contained in a dealer agreement are void:
215	215	(1) any provision that purports to elect the
216	216	application of a law of another state instead of the law of this
217	217	state; and
218	218	(2) any provision that requires a dealer to pay
219	219	attorney's fees incurred by the supplier.
220	220	Sec. 57.052. CHANGE IN OWNERSHIP OR FINANCIAL STRUCTURE. A
221	221	supplier may not prevent, by contract or otherwise, a dealer from
222	222	changing its capital structure or the means by or through which the
223	223	dealer finances its operations, if:
224	224	(1) the dealer gives prior notice of the change to the
225	225	supplier; and
226	226	(2) the dealer at all times meets any reasonable
227	227	capital standards required by the supplier pursuant to a right
228	228	granted in the dealer agreement and imposed on similarly situated
229	229	dealers.
230	230	Sec. 57.053. RELEASE OF LIABILITY PROHIBITED. A supplier
231	231	may not require a dealer to assent to a release, assignment,
232	232	novation, waiver, or estoppel that would release any person from
233	233	liability imposed by this chapter.
234	234	[Sections 57.054-57.100 reserved for expansion]
235	235	SUBCHAPTER C. SALE, TRANSFER, OR OWNERSHIP OF DEALERSHIP
236	236	Sec. 57.101. TRANSFER OF INTEREST IN DEALERSHIP BY
237	237	SUCCESSION; SINGLE-LINE DEALER AGREEMENTS. (a) This section
238	238	applies only to single-line dealer agreements.
239	239	(b) If a dealer dies, a supplier has 90 days in which to
240	240	consider and make a determination on a request by a family member to
241	241	enter into a new dealer agreement to operate the dealership. If the
242	242	supplier determines that the requesting family member is not
243	243	acceptable, the supplier shall provide the family member with a
244	244	written notice of its determination with the stated reasons for
245	245	nonacceptance. This section does not entitle an heir, personal
246	246	representative, or family member of the dealer to operate a
247	247	dealership without the specific written consent of the supplier.
248	248	(c) Notwithstanding Subsection (b), if a supplier and
249	249	dealer have previously executed an agreement concerning succession
250	250	rights before the dealer's death, and if that agreement is still in
251	251	effect, the agreement shall be observed even if it designates
252	252	someone other than the surviving spouse or an heir of the decedent
253	253	as the successor.
254	254	Sec. 57.102. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT
255	255	DEALER'S REQUEST. (a) This section applies only to a dealer
256	256	agreement that is not a single-line dealer agreement.
257	257	(b) If a supplier has contractual authority to approve or
258	258	deny a request for the sale or transfer of a dealer's business or an
259	259	equity ownership interest in the dealer's business, a dealer may
260	260	request that the supplier approve or deny a request for the sale or
261	261	transfer of a dealer's business or an equity ownership interest in
262	262	the dealer's business to a proposed buyer or transferee. The
263	263	dealer's request must be in writing and must include character
264	264	references and reasonable financial, personal background, and work
265	265	history information with respect to the proposed buyer or
266	266	transferee.
267	267	(c) Not later than the 60th day after receipt of a request
268	268	under Subsection (b), the supplier shall either approve the sale or
269	269	transfer or send a written response to the dealer stating the
270	270	supplier's denial of the request and the specific reasons for the
271	271	denial. The request is considered approved if the supplier does not
272	272	approve or deny the request by the deadline.
273	273	(d) A supplier may deny a request made under this section
274	274	only if the proposed buyer or transferee fails to meet the
275	275	reasonable requirements consistently imposed by the supplier for
276	276	purposes of determining whether to approve a new dealer or a request
277	277	for approval of a sale or transfer of a dealer's business or equity
278	278	ownership in the dealer's business.
279	279	Sec. 57.103. APPROVAL OF SALE OR TRANSFER OF BUSINESS AT
280	280	REQUEST OF PERSONAL REPRESENTATIVE. (a) This section applies only
281	281	to a dealer agreement that is not a single-line dealer agreement.
282	282	(b) If a dealer dies and the supplier has contractual
283	283	authority to approve or deny a request for the sale or transfer of a
284	284	dealer's business or an equity ownership interest in the dealer's
285	285	business, the personal representative of the dealer's estate, or
286	286	any other person with authority to transfer the dealer's assets,
287	287	must submit to the supplier a written request for approval of the
288	288	sale or transfer of the business or ownership interest not later
289	289	than the 180th day after the date of the dealer's death.
290	290	(c) If a timely request for approval of a sale or transfer is
291	291	made as provided by Subsection (b), the supplier must approve or
292	292	deny the request in accordance with the procedures prescribed by
293	293	Sections 57.102(c) and (d) for a supplier's approval or denial of a
294	294	request for a sale or transfer made under Section 57.102.
295	295	(d) Notwithstanding any other provision of this chapter to
296	296	the contrary, any attempt by the supplier to terminate the dealer
297	297	agreement as a result of the death of a dealer will be delayed until
298	298	there has been compliance with the terms of this section or the
299	299	180-day period has expired, as applicable.
300	300	[Sections 57.104-57.150 reserved for expansion]
301	301	SUBCHAPTER D. TERMINATION OF AGREEMENTS OTHER THAN SINGLE-LINE
302	302	DEALER AGREEMENTS
303	303	Sec. 57.151. APPLICABILITY OF SUBCHAPTER. This subchapter
304	304	applies only to a dealer agreement that is not a single-line dealer
305	305	agreement.
306	306	Sec. 57.152. TERMINATION BY DEALER; WRITTEN NOTICE. A
307	307	dealer must give the supplier at least 30 days' prior written notice
308	308	of termination.
309	309	Sec. 57.153. TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED.
310	310	A supplier may not terminate a dealer agreement without good cause.
311	311	Sec. 57.154. GOOD CAUSE DETERMINATION. (a) Except as
312	312	specifically provided otherwise by this chapter, good cause for
313	313	termination of a dealer agreement exists for purposes of this
314	314	subchapter if:
315	315	(1) the dealer fails to substantially comply with
316	316	essential and reasonable requirements imposed on the dealer under
317	317	the terms of the dealer agreement, provided that such requirements
318	318	are not different from requirements imposed on other similarly
319	319	situated dealers either by their terms or by the manner in which
320	320	they are enforced;
321	321	(2) the dealer or dealership has transferred a
322	322	controlling ownership interest in its business without the
323	323	supplier's consent;
324	324	(3) the dealer has filed a voluntary petition in
325	325	bankruptcy or an involuntary petition in bankruptcy has been filed
326	326	against the dealer and has not been discharged earlier than the 31st
327	327	day after the date the petition was filed;
328	328	(4) there has been a sale or other closeout of a
329	329	substantial part of the dealer's assets related to the business;
330	330	(5) there has been commencement of an action or
331	331	proceeding for the dissolution or liquidation of the dealership;
332	332	(6) there has been a change in dealer or dealership
333	333	locations without the prior written approval of the supplier;
334	334	(7) the dealer has defaulted under the terms of any
335	335	chattel mortgage or other security agreement between the dealer and
336	336	the supplier;
337	337	(8) there has been a revocation of any guarantee of the
338	338	dealer's present or future obligations to the supplier, except as
339	339	provided by Subsection (b);
340	340	(9) the dealer has failed to operate in the normal
341	341	course of business for seven consecutive days or has otherwise
342	342	abandoned the dealer's business;
343	343	(10) the dealer has been convicted of or pleaded nolo
344	344	contendere to a felony affecting the relationship between the
345	345	dealer and supplier;
346	346	(11) the dealer has engaged in conduct that is
347	347	injurious or otherwise detrimental to:
348	348	(A) the dealer's customers;
349	349	(B) the public welfare; or
350	350	(C) the representation or reputation of the
351	351	supplier's product; or
352	352	(12) the dealer has consistently failed to meet and
353	353	maintain the supplier's requirements for reasonable standards and
354	354	performance objectives, so long as the supplier has provided the
355	355	dealer with reasonable standards and performance objectives based
356	356	on the supplier's experience in other comparable market areas.
357	357	(b) Good cause is not considered to exist for purposes of
358	358	Subsection (a)(8) if:
359	359	(1) a person revokes any guarantee of the dealer's
360	360	obligations to the supplier in connection with or following the
361	361	transfer of the person's entire ownership interest in the
362	362	dealership; and
363	363	(2) the supplier does not require the person to
364	364	execute a new guarantee of the dealer's present or future
365	365	obligations to the supplier in connection with the transfer of the
366	366	person's ownership interest in the dealership.
367	367	Sec. 57.155. NOTICE OF TERMINATION; CORRECTION OF
368	368	DEFICIENCY. (a) Except as otherwise provided by this section, a
369	369	supplier must provide a dealer written notice of termination of a
370	370	dealer agreement at least 180 days before the effective date of
371	371	termination. The notice must state all reasons constituting good
372	372	cause for the termination and that the dealer has 60 days in which
373	373	to cure any claimed deficiency. If the deficiency is cured within
374	374	60 days, the notice will be void.
375	375	(b) A supplier, other than a specialty agricultural
376	376	equipment supplier, may not terminate a dealer agreement for the
377	377	reason stated in Section 57.154(a)(12) unless the supplier gives
378	378	the dealer notice of the action at least two years before the
379	379	effective date of the termination. If the dealer achieves the
380	380	supplier's requirements for reasonable standards or performance
381	381	objectives before the expiration of the two-year notice period, the
382	382	notice will be void and the dealer agreement will continue in
383	383	effect.
384	384	(c) The notice and right to cure provisions in this section
385	385	do not apply if the reason for termination is for any reason stated
386	386	in Sections 57.154(a)(1)-(11).
387	387	[Sections 57.156-57.200 reserved for expansion]
388	388	SUBCHAPTER E. TERMINATION OF SINGLE-LINE DEALER AGREEMENTS
389	389	Sec. 57.201. APPLICABILITY OF SUBCHAPTER. This subchapter
390	390	applies only to a single-line dealer agreement.
391	391	Sec. 57.202. TERMINATION BY SUPPLIER; GOOD CAUSE REQUIRED.
392	392	No supplier may terminate a dealer agreement without good cause.
393	393	Sec. 57.203. GOOD CAUSE DETERMINATION. (a) For purposes of
394	394	this subchapter, "good cause" means failure by a dealer to comply
395	395	with requirements imposed on the dealer by the dealer agreement if
396	396	the requirements are not different from those requirements imposed
397	397	on other similarly situated dealers.
398	398	(b) In addition to the good cause reason for termination
399	399	stated in Subsection (a), good cause for termination of a dealer
400	400	agreement exists when:
401	401	(1) there has been a closeout or sale of a substantial
402	402	part of the dealer's assets related to the equipment business;
403	403	(2) there has been commencement of a dissolution or
404	404	liquidation of the dealer;
405	405	(3) the dealer has changed its principal place of
406	406	business or has added additional locations without the supplier's
407	407	prior approval, which shall not be unreasonably withheld;
408	408	(4) the dealer has substantially defaulted under a
409	409	chattel mortgage or other security agreement between the dealer and
410	410	the supplier or there has been a revocation or discontinuance of a
411	411	guarantee of a present or future obligation of the dealer to the
412	412	supplier;
413	413	(5) the dealer has failed to operate in the normal
414	414	course of business for seven consecutive days or has otherwise
415	415	abandoned its business;
416	416	(6) the dealer has been convicted of or pleaded guilty
417	417	to a felony affecting the relationship between the dealer and
418	418	supplier; or
419	419	(7) the dealer transfers an interest in the dealership
420	420	or a person with a substantial interest in the ownership or control
421	421	of the dealership, including an individual proprietor, partner, or
422	422	major shareholder, withdraws from the dealership or dies, or a
423	423	substantial reduction occurs in the interest of a partner or major
424	424	shareholder in the dealership, provided, however, good cause does
425	425	not exist if the supplier consents to an action described by this
426	426	subdivision.
427	427	Sec. 57.204. NOTICE OF TERMINATION; CORRECTION OF
428	428	DEFICIENCY. (a) Except as provided by Subsection (b) and Section
429	429	57.205, a supplier shall provide a dealer with at least 90 days'
430	430	written notice of termination. The notice must state all reasons
431	431	constituting good cause for the termination and state that the
432	432	dealer has 60 days in which to cure any claimed deficiency. If the
433	433	deficiency is cured within 60 days, the notice will be void.
434	434	(b) Notwithstanding Subsection (a), if the good cause
435	435	reason for termination is due to the dealer's failure to meet or
436	436	maintain the supplier's requirements for market penetration, a
437	437	reasonable period of time has existed where the supplier has worked
438	438	with the dealer to gain the desired market share.
439	439	Sec. 57.205. NOTICE OF TERMINATION NOT REQUIRED UNDER
440	440	CERTAIN CIRCUMSTANCES. The notice and right to cure provisions
441	441	under Section 57.204 do not apply if the reason for termination is
442	442	contained in Sections 57.203(b)(1)-(7).
443	443	[Sections 57.206-57.250 reserved for expansion]
444	444	SUBCHAPTER F. WARRANTY CLAIMS
445	445	Sec. 57.251. DEFINITION OF TERMINATE AND TERMINATION. For
446	446	purposes of this subchapter, "terminate" and "termination" do not
447	447	include the phrase substantially change the competitive
448	448	circumstances of a dealer agreement.
449	449	Sec. 57.252. APPLICABILITY OF SUBCHAPTER; CONFLICT WITH
450	450	SUBCHAPTER. (a) Sections 57.253, 57.254, and 57.255 apply to a
451	451	warranty claim submitted by a dealer who has complied with the
452	452	supplier's reasonable policies and procedures for reimbursement of
453	453	the warranty claim and the claim is a warranted claim under the
454	454	supplier's warranty policy.
455	455	(b) A supplier's warranty reimbursement policies and
456	456	procedures are considered unreasonable to the extent of any
457	457	conflict with this subchapter.
458	458	Sec. 57.253. WARRANTY CLAIM. (a) This section applies to a
459	459	warranty claim submitted by a dealer to the supplier:
460	460	(1) while the dealer agreement is in effect; or
461	461	(2) not later than the 60th day after the termination
462	462	or expiration date of the dealer agreement, if the claim is for work
463	463	performed before the effective date of the termination or
464	464	expiration.
465	465	(b) Not later than the 45th day after the date a supplier
466	466	receives a warranty claim from a dealer, the supplier shall accept
467	467	or reject the claim by providing written notice to the dealer. A
468	468	claim not rejected before that deadline is considered accepted.
469	469	(c) If the warranty claim is accepted, the supplier shall
470	470	pay or credit to the dealer's account all amounts owed to the dealer
471	471	with respect to the accepted claim not later than the 30th day after
472	472	the date the claim is accepted.
473	473	(d) If the supplier rejects the warranty claim, the supplier
474	474	shall give the dealer written or electronic notice of the grounds
475	475	for rejection of a rejected claim, which must be consistent with the
476	476	supplier's grounds for rejection of warranty claims of other
477	477	dealers, both in the terms and manner of enforcement.
478	478	(e) If no grounds for rejection of a rejected claim are
479	479	given to the dealer, the claim is considered accepted.
480	480	Sec. 57.254. RESUBMISSION OF WARRANTY CLAIM. If a warranty
481	481	claim was rejected on the ground that the dealer failed to properly
482	482	follow the procedural or technical requirements for submission of a
483	483	warranty claim, the dealer may resubmit the claim in proper form not
484	484	later than the 30th day after the date the dealer receives notice of
485	485	the claim's rejection.
486	486	Sec. 57.255. PAYMENT OF WARRANTY CLAIM. Warranty work
487	487	performed by the dealer shall be compensated in accordance with the
488	488	reasonable and customary amount of time required to complete the
489	489	work, expressed in hours and fractions of hours, multiplied by the
490	490	dealer's established customer hourly retail labor rate for
491	491	non-warranty repair work, which must have previously been made
492	492	known to the supplier. Parts used in warranty repair work shall be
493	493	reimbursed at the current net parts cost plus 15 percent.
494	494	Sec. 57.256. WARRANTY CLAIM FOR CERTAIN REPAIR WORK OR
495	495	INSTALLATION OF REPLACEMENT PARTS. Any repair work or installation
496	496	of replacement parts performed with respect to inventory equipment
497	497	of a dealer or with respect to equipment of a dealer's customers, at
498	498	the request of a supplier, including work performed under a product
499	499	improvement program, constitutes a warranty claim for which the
500	500	dealer must be paid under this subchapter.
501	501	Sec. 57.257. AUDIT OF WARRANTY CLAIMS. (a) Except as
502	502	provided by Subsection (b), a supplier may audit a warranty claim
503	503	submitted by a dealer until the first anniversary of the date the
504	504	claim was paid and may charge back the amount of any claim that is
505	505	shown by audit to have been misrepresented.
506	506	(b) If an audit conducted under this section shows that a
507	507	warranty claim has been misrepresented, the supplier may audit any
508	508	other warranty claims submitted by the affected dealer within the
509	509	three-year period ending on a date a claim is shown by audit to be
510	510	misrepresented.
511	511	Sec. 57.258. ALTERNATE REIMBURSEMENT TERMS ENFORCEABLE.
512	512	(a) Sections 57.253, 57.254, and 57.255 do not apply if the terms
513	513	of a written dealer agreement between the parties require the
514	514	supplier to compensate the dealer for warranty labor costs either
515	515	as:
516	516	(1) a discount in the price of the equipment to the
517	517	dealer, subject to Subsection (b); or
518	518	(2) a lump-sum payment made to the dealer not later
519	519	than the 90th day after the date the supplier's new equipment is
520	520	sold to the dealer, subject to Subsection (b).
521	521	(b) The discount or lump-sum payment under Subsection (a)
522	522	must be or result in an amount that is not less than five percent of
523	523	the suggested retail price of the equipment.
524	524	(c) The alternate reimbursement terms of a dealer agreement
525	525	that comply with Subsections (a) and (b) are enforceable.
526	526	(d) This section does not affect the supplier's obligation
527	527	to reimburse the dealer for parts in accordance with Section
528	528	57.255.
529	529	[Sections 57.259-57.300 reserved for expansion]
530	530	SUBCHAPTER G. DELIVERY, SALE, AND RETURN OF EQUIPMENT
531	531	Sec. 57.301. COERCED ORDERS, DELIVERIES, OR REFUSALS TO
532	532	PURCHASE. (a) A supplier may not coerce, compel, or require a
533	533	dealer to accept delivery of equipment or a repair part that has not
534	534	been voluntarily ordered by the dealer, unless:
535	535	(1) the equipment or repair part is a safety feature
536	536	required by the supplier or applicable law; or
537	537	(2) the dealer is otherwise required by applicable law
538	538	to accept the delivery.
539	539	(b) A supplier may not coerce a dealer to refuse purchase of
540	540	equipment manufactured by another supplier.
541	541	(c) It shall not be considered a violation of this section
542	542	if the supplier requires a dealer to have or provide separate
543	543	facilities, financial statements, or sales staff for major
544	544	competing product lines if the supplier gives the dealer at least
545	545	three years' notice of such a requirement.
546	546	Sec. 57.302. CONDITIONAL PURCHASES OF GOODS AND SERVICES.
547	547	(a) A supplier may not condition the sale of equipment, repair
548	548	parts, or goods or services to a dealer on the purchase of other
549	549	goods or services.
550	550	(b) This section does not prohibit a supplier from requiring
551	551	a dealer to purchase all repair parts, special tools, or training
552	552	reasonably necessary to maintain the safe operation or quality of
553	553	operation in the field of any equipment offered for sale by the
554	554	dealer.
555	555	Sec. 57.303. EQUIPMENT REPRESENTED AS AVAILABLE FOR
556	556	IMMEDIATE DELIVERY. A supplier may not refuse to deliver, in
557	557	reasonable quantities and within a reasonable time after receipt of
558	558	a dealer's order, to any dealer having a dealer agreement for the
559	559	retail sale of new equipment sold or distributed by the supplier,
560	560	equipment covered by the dealer agreement and specifically
561	561	advertised or represented by the supplier as available for
562	562	immediate delivery, unless the refusal is due to:
563	563	(1) the supplier's prudent and reasonable restrictions
564	564	on extensions of credit to the dealer;
565	565	(2) a business decision by the supplier to limit the
566	566	production volume of the equipment; or
567	567	(3) an act of nature, work stoppage or delay due to a
568	568	strike or labor difficulty, a bona fide shortage of materials,
569	569	freight embargo, or other cause over which the supplier has no
570	570	control.
571	571	Sec. 57.304. DISCRIMINATION IN ORDERS. A supplier may not
572	572	discriminate, directly or indirectly, in filling an order placed by
573	573	a dealer for retail sale or lease of new equipment under a dealer
574	574	agreement as between dealers of the same product line.
575	575	Sec. 57.305. DISCRIMINATION IN PRICES OF NEW EQUIPMENT.
576	576	(a) Except as provided by Subsection (b), a supplier may not
577	577	discriminate, directly or indirectly, in the price among different
578	578	dealers with respect to a purchase of equipment or a repair part of
579	579	like grade and quality and identical brand, where the effect of such
580	580	discrimination may be to:
581	581	(1) substantially lessen competition;
582	582	(2) tend to create a monopoly in any line of commerce;
583	583	or
584	584	(3) injure, destroy, or prevent competition with any
585	585	dealer who either grants or knowingly receives the benefit of such
586	586	discrimination.
587	587	(b) A supplier may charge a different price among dealers
588	588	for purchases described by Subsection (a) if:
589	589	(1) the price difference is due to differences in the
590	590	cost of manufacture, sale, or delivery of the equipment or repair
591	591	part;
592	592	(2) the supplier can show that the lower price was made
593	593	in good faith to meet an equally low price of a competitor; or
594	594	(3) the price difference is related to the volume of
595	595	equipment purchased by dealers or market share obtained by dealers.
596	596	[Sections 57.306-57.350 reserved for expansion]
597	597	SUBCHAPTER H. REPURCHASE OR OTHER OBLIGATIONS FOLLOWING
598	598	CANCELLATION OR NONRENEWAL OF AGREEMENT
599	599	Sec. 57.351. DEFINITION OF TERMINATE AND TERMINATION. For
600	600	purposes of this subchapter, "terminate" and "termination" do not
601	601	include the phrase substantially change the competitive
602	602	circumstances of a dealer agreement.
603	603	Sec. 57.352. APPLICABILITY OF SUBCHAPTER TO SEVERAL
604	604	BUSINESS LOCATIONS COVERED BY SAME AGREEMENT. If a dealer has more
605	605	than one of its business locations covered by the same dealer
606	606	agreement, this subchapter applies to the repurchase of the
607	607	dealer's inventory at the particular business location being closed
608	608	unless the closing occurs without the permission of the supplier.
609	609	Sec. 57.353. PAYMENTS OR CREDITS. (a) When a supplier or
610	610	dealer terminates or otherwise discontinues the dealer agreement
611	611	entered into between the two parties, the supplier shall pay to the
612	612	dealer, or credit to the dealer's account, if the dealer has
613	613	outstanding any sums owing the supplier:
614	614	(1) an amount equal to 100 percent of the net equipment
615	615	cost of all new, unsold, and undamaged equipment, less a downward
616	616	adjustment for new, unsold, and undamaged equipment between 24 and
617	617	36 months old to reflect a reasonable allowance for refurbishment
618	618	and the price another dealer will pay for the equipment;
619	619	(2) an amount equal to 100 percent of the net equipment
620	620	cost of all unsold, undamaged demonstrators, less a downward
621	621	adjustment to reflect a reasonable allowance for refurbishment and
622	622	the price another dealer will pay for the equipment;
623	623	(3) an amount equal to 90 percent of the current net
624	624	parts cost of new, unsold, and undamaged repair parts previously
625	625	purchased from the supplier and held by the dealer on the date that
626	626	the dealer agreement is terminated or expires;
627	627	(4) an amount equal to five percent of the current net
628	628	parts price of all repair parts returned to the supplier to
629	629	compensate the dealer for the handling, packing, and loading of
630	630	those repair parts for return to the supplier, unless the supplier
631	631	elects to perform the handling, packing, and loading of the repair
632	632	parts itself;
633	633	(5) an amount equal to the fair market value of any
634	634	specific data processing hardware or software that the supplier
635	635	required the dealer to acquire or purchase to satisfy the
636	636	requirements of the supplier, including computer equipment
637	637	required and approved by the supplier to communicate with the
638	638	supplier; and
639	639	(6) an amount equal to 75 percent of the net cost,
640	640	including shipping, handling, and set-up fees, of all specialized
641	641	service or repair tools that:
642	642	(A) were previously purchased pursuant to the
643	643	requirements of the supplier within 15 years before the date of the
644	644	applicable notification of termination of the dealer agreement; and
645	645	(B) are unique to the supplier's product line and
646	646	are complete and in good operating condition.
647	647	(b) Fair market value of property subject to repurchase
648	648	under Subsection (a)(5) is considered to be the acquisition cost of
649	649	the property, including any shipping, handling, and set-up fees,
650	650	less straight line depreciation of the acquisition cost over a
651	651	three-year period. If the dealer purchased data processing
652	652	hardware or software that exceeded the supplier's minimum
653	653	requirements, the acquisition cost of the data processing hardware
654	654	or software for purposes of this section is considered to be the
655	655	acquisition cost of hardware or software of similar quality that
656	656	did not exceed the minimum requirements of the supplier.
657	657	(c) Notwithstanding any other provision of this chapter,
658	658	with respect to machines with hour meters, demonstrators with less
659	659	than 50 hours of use will be considered new, unsold, undamaged
660	660	equipment subject to repurchase under this section.
661	661	(d) On payment of the amount due under this section or on
662	662	credit to the dealer's account of the amount required by this
663	663	section, title to all inventory repurchased under this subchapter
664	664	is transferred to the supplier, and the supplier is entitled to
665	665	possession of the inventory.
666	666	Sec. 57.354. LATE PAYMENT OR CREDIT. (a) All payments or
667	667	allowances of credit due to a dealer shall be paid or credited
668	668	within 90 days after receipt by the supplier of property required to
669	669	be repurchased under this subchapter.
670	670	(b) Any payment or allowance of credit due a dealer that is
671	671	not paid within the 90-day period will accrue interest at the
672	672	maximum rate allowed by law.
673	673	(c) The supplier may withhold payments due under this
674	674	subchapter during the period in which the dealer fails to comply
675	675	with its contractual obligation to remove any signage indicating
676	676	that the dealer is an authorized dealer of the supplier.
677	677	Sec. 57.355. LIABILITY. (a) A supplier who refuses to
678	678	repurchase any inventory covered under this chapter after
679	679	termination or discontinuation of the dealer agreement is liable to
680	680	the dealer for:
681	681	(1) 110 percent of the amount that would have been due
682	682	for the inventory had the supplier timely complied with the
683	683	requirements of this chapter;
684	684	(2) any freight charges paid by the dealer;
685	685	(3) any accrued interest; and
686	686	(4) the actual costs of any court or arbitration
687	687	proceeding incurred by the dealer, including attorney's fees or
688	688	arbitrator fees.
689	689	(b) The supplier and dealer will each pay 50 percent of the
690	690	costs of freight, at truckload rates, to ship any equipment or
691	691	repair parts returned to the supplier pursuant to this chapter.
692	692	(c) Notwithstanding any provision to the contrary in the
693	693	Uniform Commercial Code, the dealer retains title to and has a first
694	694	and prior lien against all inventory returned by the dealer to the
695	695	supplier under this chapter until the dealer is paid all amounts
696	696	owed by the supplier under this subchapter for the repurchase of the
697	697	inventory required under this chapter, and the supplier must hold
698	698	the proceeds of the inventory in trust for the dealer's benefit.
699	699	Sec. 57.356. CONSTRUCTION OF SUBCHAPTER; CREDITOR'S
700	700	CLAIMS. This subchapter may not be construed to affect any security
701	701	interest the supplier may have in the inventory of the dealer, and
702	702	any repurchase of the dealer's inventory under this subchapter may
703	703	not be subject to the claims of any secured or unsecured creditor of
704	704	the supplier or any assignee of the supplier until the dealer has
705	705	received full payment or credit, as applicable, under this
706	706	subchapter.
707	707	Sec. 57.357. AGREEMENT TERMINATED BY DEALER;
708	708	INAPPLICABILITY OF SUBCHAPTER TO CERTAIN SPECIALTY SUPPLIERS. (a)
709	709	This subchapter does not apply to a specialty agricultural
710	710	equipment supplier if the dealer terminates the dealer agreement
711	711	without good reason. A dealer has good reason to terminate the
712	712	dealer agreement for any of the following reasons:
713	713	(1) the death or disability of a majority owner of the
714	714	dealership;
715	715	(2) the dealership terminates the dealer agreement
716	716	and:
717	717	(A) substantially all of the dealership assets or
718	718	all shares of stock of the dealership are sold to a new owner; and
719	719	(B) no owner of the terminated dealership
720	720	continues to own an interest in the continuing dealership;
721	721	(3) the filing of bankruptcy by or against the
722	722	dealership that has not been discharged within 30 days after the
723	723	date of the filing, the appointment of a receiver, or an assignment
724	724	for the benefit of creditors; or
725	725	(4) the specialty agricultural equipment supplier:
726	726	(A) abandons the market or withdraws from the
727	727	market by no longer selling to the dealer a type of equipment
728	728	previously sold to the dealer that constituted a material part of
729	729	the specialty agricultural equipment sold by the supplier;
730	730	(B) consistently sells products to the dealer
731	731	that are defective or breach the implied warranty of
732	732	merchantability;
733	733	(C) consistently fails to:
734	734	(i) provide adequate product support for
735	735	the type and use of the product, including technical assistance,
736	736	operator and repair manuals, and part lists and diagrams;
737	737	(ii) provide adequate training required by
738	738	the supplier for maintenance, repair, or use of the supplier's
739	739	products; or
740	740	(iii) provide marketing and marketing
741	741	support for the supplier's product if marketing is a requirement of
742	742	the dealer agreement;
743	743	(D) consistently fails to meet the supplier's
744	744	warranty obligations to the dealer as required by contract or law,
745	745	including obligations under this chapter;
746	746	(E) has engaged in conduct that is injurious or
747	747	detrimental to the dealer's customers, the public welfare, or the
748	748	dealer's reputation;
749	749	(F) has made material misrepresentations to the
750	750	dealer or has falsified a record;
751	751	(G) has breached the dealer agreement; or
752	752	(H) has violated this chapter.
753	753	(b) This subchapter may not be construed to limit a
754	754	specialty agricultural equipment supplier's obligation to
755	755	repurchase a dealer's inventory as provided by this section if the
756	756	supplier terminates or otherwise discontinues the dealer
757	757	agreement.
758	758	Sec. 57.358. EXCEPTIONS. (a) A supplier is not required to
759	759	repurchase from a dealer:
760	760	(1) a repair part that, except as provided by
761	761	Subsection (b), is in a broken or damaged package;
762	762	(2) a repair part that because of its condition cannot
763	763	be resold as a new part without repackaging or reconditioning;
764	764	(3) any inventory for which the dealer is unable to
765	765	furnish evidence, satisfactory to the supplier, of clear title,
766	766	free and clear of all claims, liens, and encumbrances unless the
767	767	inventory will be free and clear of all claims, liens, and
768	768	encumbrances immediately on payment by the supplier of amounts due
769	769	in this subchapter to the lienholders;
770	770	(4) any inventory that the dealer wants to keep,
771	771	provided the dealer has a contractual right to keep the inventory;
772	772	(5) equipment delivered to the dealer before the
773	773	beginning of the 36-month period preceding the date of notification
774	774	of termination; and
775	775	(6) equipment or a repair part that:
776	776	(A) is ordered by the dealer on or after the date
777	777	of notification of termination;
778	778	(B) is acquired by the dealer from a source other
779	779	than the supplier, unless the equipment or repair part was ordered
780	780	from, or invoiced to the dealer by, the supplier;
781	781	(C) is not in new, unsold, undamaged, or complete
782	782	condition, subject to the provisions of this chapter relating to
783	783	demonstrators; and
784	784	(D) is not returned to the supplier before the
785	785	90th day after the later of:
786	786	(i) the effective date of termination of a
787	787	dealer agreement; or
788	788	(ii) the date the dealer receives from the
789	789	supplier all information, including documents or supporting
790	790	materials, required by the supplier to comply with the supplier's
791	791	return policy.
792	792	(b) The supplier will be required to repurchase a repair
793	793	part in a broken or damaged package for a repurchase price that is
794	794	equal to 85 percent of the current net parts cost for the repair
795	795	part if the aggregate current net parts cost for the entire package
796	796	of repair parts is $75 or more.
797	797	(c) Subsection (a)(6)(D) does not apply to a dealer if the
798	798	supplier did not give the dealer notice of the 90-day deadline at
799	799	the time the applicable notice of termination was sent to the
800	800	dealer.
801	801	[Sections 57.359-57.400 reserved for expansion]
802	802	SUBCHAPTER I. ACTIONS AND REMEDIES
803	803	Sec. 57.401. CIVIL ACTION; INJUNCTIVE RELIEF. (a) If a
804	804	supplier violates any provision of this chapter, a dealer may bring
805	805	an action against the supplier in a court of competent jurisdiction
806	806	for damages sustained by the dealer as a consequence of the
807	807	supplier's violation, including damages for lost profits, together
808	808	with the actual costs of the action, including the dealer's
809	809	attorney's fees and paralegal fees and the costs of arbitrators.
810	810	The dealer may also be granted injunctive relief for unlawful
811	811	termination.
812	812	(b) A remedy provided by this section is not exclusive and
813	813	is in addition to any other remedy permitted by law.
814	814	Sec. 57.402. CHOICE OF REMEDIES. The provisions of this
815	815	chapter are supplemental to any dealer agreement between the dealer
816	816	and the supplier that provides the dealer with greater protection.
817	817	A dealer may elect to pursue its contract remedy or the remedy
818	818	provided by state law, or both. An election by the dealer to pursue
819	819	those remedies does not bar the dealer's right to exercise any other
820	820	remedies that may be granted at law or in equity.
821	821	SECTION 3. Chapter 55, Business & Commerce Code, is
822	822	repealed.
823	823	SECTION 4. (a) Chapter 57, Business & Commerce Code, as
824	824	added by this Act, applies to:
825	825	(1) a dealer agreement entered into or renewed on or
826	826	after the effective date of this Act; and
827	827	(2) a dealer agreement that was entered into before
828	828	the effective date of this Act, has no expiration date, and is a
829	829	continuing contract.
830	830	(b) A dealer agreement entered into before the effective
831	831	date of this Act, other than a dealer agreement described by
832	832	Subsection (a)(2) of this section, is governed by the law as it
833	833	existed on the date the agreement was entered into, and the former
834	834	law is continued in effect for that purpose.
835	835	SECTION 5. This Act takes effect September 1, 2011.
836	836	* * * * *