Senate Bill No. 509
(By Senators Kessler, Tomblin, Mr. President, Harrison, Caruth,
Oliverio, Chafin, Dempsey, Foster, Helmick, Jenkins, Minard,
Love, White, Plymale, Deem, Facemyer, Weeks, Minear, Guills,
Yoder, Bowman, Bailey, Boley, Unger and Sharpe )
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[Introduced February 7, 2006; referred to the Committee
on the Judiciary.]
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A BILL to amend and reenact §17A-6A-3, §17A-6A-4, §17A-6A-8,
§17A-6A-8a, §17A-6A-10, §17A-6A-15, §17A-6A-16 and §17A-6A-
17 of the Code of West Virginia, 1931, as amended, all
relating generally to automobile franchise law; relationship
of automobile dealers, distributors and manufacturers;
providing clarification that material damages are required
for good cause for cancellation of dealer contract;
providing factors to be considered for dealer and public
interest in cancellation of dealer contract; providing for
compensation to a dealer from a manufacturer when a brand is
phased out; establishing prohibition of a surcharge for
recovery of retail rates for warranty and recall work;
clarifying prohibited coercive acts when requiring a dealer
enter into an agreement; adding requirement that manufacturers and distributors use fair and reasonable
performance standards that are statistically sound and
verifiable; requiring incentive programs be offered to all
dealers within a geographical area; prohibiting
manufacturers and distributors from requiring facility
upgrades as a condition of offering certain vehicle models;
limiting fees and penalties for exported or resold vehicles
to situations where the dealer has intent to immediately
export or resell; requiring manufacturer or distributor
responsibility for all damage to vehicles prior to dealer
taking possession; providing for continuation of business
during pending litigation; and providing for payment of
expenses for accounting and nonlegal advisors by the
manufacturer or distributor prior to the exercise of a first
right of refusal.
Be it enacted by the Legislature of West Virginia:
That §17A-6A-3, §17A-6A-4, §17A-6A-8, §17A-6A-8a, §17A-6A-
10, §17A-6A-15, §17A-6A-16 and §17A-6A-17
of the Code of West
Virginia, 1931, as amended, be amended and reenacted, all to read
as follows:
ARTICLE 6A. MOTOR VEHICLE DEALERS, DISTRIBUTORS, WHOLESALERS AND
MANUFACTURERS.
§17A-6A-3. Definitions.
For the purposes of this article, the words and phrases
defined in this section have the meanings ascribed to them,
except where the context clearly indicates a different meaning.
(1) "Dealer agreement" means the franchise, agreement or
contract in writing between a manufacturer, distributor and a new
motor vehicle dealer, which purports to establish the legal
rights and obligations of the parties to the agreement or
contract with regard to the purchase, lease or sale of new motor
vehicles, accessories, service and sale of parts for motor
vehicles.
(2) "Designated family member" means the spouse, child,
grandchild, parent, brother or sister of a deceased new motor
vehicle dealer who is entitled to inherit the deceased dealer's
ownership interest in the new motor vehicle dealership under the
terms of the dealer's will, or who has otherwise been designated
in writing by a deceased dealer to succeed the deceased dealer in
the new motor vehicle dealership, or is entitled to inherit under
the laws of intestate succession of this state. With respect to
an incapacitated new motor vehicle dealer, the term means the
person appointed by a court as the legal representative of the
new motor vehicle dealer's property. The term also includes the
appointed and qualified personal representative and the
testamentary trustee of a deceased new motor vehicle dealer.
However, the term means only that designated successor nominated
by the new motor vehicle dealer in a written document filed by
the dealer with the manufacturer or distributor, if such a
document is filed.
(3) "Distributor" means any person, resident or nonresident,
who, in whole or in part, offers for sale, sells or distributes any new motor vehicle to a new motor vehicle dealer or who
maintains a factory representative, resident or nonresident, or
who controls any person, resident or nonresident, who, in whole
or in part, offers for sale, sells or distributes any new motor
vehicle to a new motor vehicle dealer.
(4) "Established place of business" means a permanent,
enclosed commercial building located within this state easily
accessible and open to the public at all reasonable times and at
which the business of a new motor vehicle dealer, including the
display and repair of motor vehicles, may be lawfully carried on
in accordance with the terms of all applicable building codes,
zoning and other land-use regulatory ordinances and as licensed
by the Division of Motor Vehicles.
(5) "Factory branch" means an office maintained by a
manufacturer or distributor for the purpose of selling or
offering for sale vehicles to a distributor, wholesaler or new
motor vehicle dealer, or for directing or supervising, in whole
or in part, factory or distributor representatives. The term
includes any sales promotion organization maintained by a
manufacturer or distributor which is engaged in promoting the
sale of a particular make of new motor vehicles in this state to
new motor vehicle dealers.
(6) "Factory representative" means an agent or employee of a
manufacturer, distributor or factory branch retained or employed
for the purpose of making or promoting the sale of new motor
vehicles or for supervising or contracting with new motor vehicle
dealers or proposed motor vehicle dealers.
(7) "Good faith" means honesty in fact and the observation
of reasonable commercial standards of fair dealing in the trade.
(8) "Manufacturer" means any person who manufactures or
assembles new motor vehicles; or any distributor, factory branch
or factory representative.
(9) "Motor vehicle" means that term as defined in section
one, article one of this chapter, including motorcycle and
recreational vehicle as defined in subsections (c) and (nn),
respectively, of said section, but not including a tractor or
farm equipment.
(10) "New motor vehicle" means a motor vehicle which is in
the possession of the manufacturer, distributor or wholesaler, or
has been sold only to a new motor vehicle dealer and on which the
original title has not been issued from the new motor vehicle
dealer.
(11) "New motor vehicle dealer" means a person who holds a
dealer agreement granted by a manufacturer or distributor for the
sale of its motor vehicles, who is engaged in the business of
purchasing, selling, leasing, exchanging or dealing in new motor
vehicles, service of said vehicles, warranty work and sale of
parts who has an established place of business in this state and
is licensed by the Division of Motor Vehicles.
(12) "Person" means a natural person, partnership,
corporation, association, trust, estate or other legal entity.
(13) "Proposed new motor vehicle dealer" means a person who
has an application pending for a new dealer agreement with a
manufacturer or distributor. Proposed motor vehicle dealer does not include a person whose dealer agreement is being renewed or
continued.
(14) "Relevant market area" means the area located within a
fifteen air-mile radius around an existing same line-make new
motor vehicle dealership.
§17A-6A-4. Cancellation of dealer contract; notification.
(1) Notwithstanding any agreement, a manufacturer or
distributor shall not cancel, terminate, fail to renew or refuse
to continue any dealer agreement with a new motor vehicle dealer
unless the manufacturer or distributor has complied with all of
the following:
(a) Satisfied the notice requirement of section seven of
this article;
(b) Acted in good faith;
(c) Engaged in full and open communication with franchised
dealer; and
(d) Has good cause for the cancellation, termination,
nonrenewal or discontinuance.
(2) Notwithstanding any agreement, good cause exists for the
purposes of a termination, cancellation, nonrenewal or
discontinuance under subdivision (d), subsection (1) of this
section when both of any the following occur when a manufacturer
or distributor can demonstrate termination is necessary to avoid
material damages to the manufacturer or distributor when weighed
against the interest of the dealer and the public. The interest
of the dealer and the public shall include a consideration of:
(a) There is a failure by the new motor vehicle dealer to comply with a provision of the dealer agreement and the provision
is both reasonable and of material significance to the
relationship between the manufacturer or distributor and the new
motor vehicle dealer; and
(b) The manufacturer or distributor first acquired actual or
constructive knowledge of the failure not more than eighteen
months prior to the date on which notification was given pursuant
to section seven of this article.
(a) The relationship of the dealer's sales to the sales in
the relevant market;
(b) The investment and financial obligations of the dealer;
(c) Injury or benefit to the public of cancellation of the
contract;
(d) The adequacy of the dealer's sales and service
facilities, equipment, parts and personnel in relation to other
dealers in the relevant market;
(e) Whether the dealer is honoring existing warranties;
(f) Whether the dealer is complying, or can comply within a
reasonable time, with reasonable capitalization requirements;
and,
(g) The dealer's overall performance under the reasonable
terms of the franchise agreement. This shall include the overall
fairness of the agreement terms, the enforceability of the
agreement, oppression, adhesion and the relative bargaining power
of the parties and the dealer.
(3) If the failure by the new motor vehicle dealer to comply
with a provision of the dealer agreement relates to the performance of the new motor vehicle dealer in sales or service,
good cause exists for the purposes of a termination,
cancellation, nonrenewal or discontinuance under subsection (1)
of this section when the new motor vehicle dealer failed to
effectively carry out the performance provisions of the dealer
agreement if all of the following have occurred:
(a) The new motor vehicle dealer was given written notice by
the manufacturer or distributor of the failure;
(b) The notification stated that the notice of failure of
performance was provided pursuant to this article;
(c) The new motor vehicle dealer was afforded a reasonable
opportunity to exert good faith efforts to carry out the dealer
agreement; and
(d) The failure continued for more than three hundred sixty
days after the date notification was given pursuant to
subdivision (a) of this subsection.
§17A-6A-8. Reasonable compensation to dealer.
(1) Upon the termination, cancellation, nonrenewal or
discontinuance of any dealer agreement, the new motor vehicle
dealer shall be allowed fair and reasonable compensation by the
manufacturer or distributor for the following:
(a) Any new current model year and one year prior model year
motor vehicle inventory, manufactured for sale in the United
States, purchased from the manufacturer, distributor or other
dealers, which has not been materially altered, substantially
damaged or driven for more than seven hundred fifty miles, except
that for any new motorcycle inventory purchased from the manufacturer or distributor, that inventory must not have been
materially altered, substantially damaged or driven for more than
fifty miles;
(b) Supplies and parts inventory purchased from the
manufacturer or distributor and listed in the manufacturer's or
distributor's current parts catalog;
(c) Equipment, furnishings and signs purchased from the
manufacturer or distributor; and
(d) Special computer software, hardware, license fees and other
programs mandated by the manufacturer to provide training or
communication with the manufacturer.
(2) Upon the termination, cancellation, nonrenewal or
discontinuance of a dealer agreement by the manufacturer or
distributor, the manufacturer or distributor shall also pay to
the new motor vehicle dealer a sum equal to the current, fair
rental value of his or her established place of business for a
period of three years from the effective date of termination,
cancellation, nonrenewal or discontinuance, or the remainder of
the lease, whichever is less. If the dealer, directly or
indirectly, owns the dealership facility, the manufacturer shall
pay the dealer a sum equal to the reasonable rental value of the
dealership premises for three years. However, the dealer shall
have the obligation to mitigate his or her damages, including,
but not limited to, listing the facility with a commercial real
estate agent and other reasonable steps to sell or lease the
property. During this three-year period the manufacturer shall
have the right to occupy and use the facilities until such time as the dealer is able to otherwise sell or lease the property to
another party. The payment required by this subsection does not
apply to any termination, cancellation, nonrenewal or
discontinuance made pursuant to subsection (c), section five of
this article.
(3) Upon the termination, cancellation, nonrenewal or
discontinuance of a line of a manufacturer or distributor, the
manufacturer or distributor shall pay or provide unto the motor
vehicle dealer:
(a) Compensation for the goodwill value of the business
determined without regard to the effect of the discontinuance;
and
(b) Support of the franchisor's warranty obligations by
making parts available and compensating dealers in business prior
to the termination for warranty parts and labor for five years.
§17A-6A-8a. Compensation to dealers for service rendered.
(1) Every motor vehicle manufacturer, distributor or
wholesaler, factory branch or distributor branch, or officer,
agent or representative thereof, shall:
(a) Specify in writing to each of its motor vehicle dealers,
the dealer's obligation for delivery, preparation, warranty and
factory recall services on its products;
(b) Compensate the motor vehicle dealer for warranty and
factory recall service required of the dealer by the
manufacturer, distributor or wholesaler, factory branch or
distributor branch, or officer, agent or representative thereof;
and
(c) Provide the dealer the schedule of compensation to be
paid the dealer for parts, work and service in connection with
warranty and recall services and the time allowance for the
performance of the work and service.
(2) In no event may:
(a) The schedule of compensation fail to compensate the
dealers for the work and services they are required to perform in
connection with the dealer's delivery and preparation
obligations, or fail to adequately and fairly compensate the
dealers for labor, parts and other expenses incurred by the
dealer to perform under and comply with manufacturer's warranty
agreements and factory recalls;
(b) Any manufacturer, distributor or wholesaler, or
representative thereof, pay its dealers an amount of money for
warranty or recall work that is less than that charged by the
dealer to the retail customers of the dealer for nonwarranty and
nonrecall work of the like kind; and
(c) Any manufacturer, distributor or wholesaler, or
representative thereof, compensate for warranty and recall work
based on a flat-rate figure that is less than what the dealer
charges for retail work.
(3) It is a violation of this section for any manufacturer,
distributor, wholesaler or representative to coerce or attempt to
coerce any to require any dealer to pay in any manner, either
written or verbal, with threats of surcharges, limited
allocation, audits, charge backs or other retaliation, if the
dealer seeks to recover its nonwarranty retail rate for warranty and recall work.
(4) All claims made by motor vehicle dealers pursuant to
this section for compensation for delivery, preparation, warranty
and recall work, including labor, parts and other expenses, shall
be paid by the manufacturer within thirty days after approval and
shall be approved or disapproved by the manufacturer within
thirty days after receipt. When any claim is disapproved, the
dealer shall be notified in writing of the grounds for
disapproval. No claim which has been approved and paid may be
charged back to the dealer unless it can be shown that the claim
was false or fraudulent, that the repairs were not properly made
or were unnecessary to correct the defective condition or the
dealer failed to reasonably substantiate the claim in accordance
with the written requirements of the manufacturer or distributor
in effect at the time the claim arose. No charge back may be
made until the dealer has had notice and an opportunity to
support the claim in question. No otherwise valid reimbursement
claims may be denied once properly submitted within
manufacturers' submission guidelines due to a clerical error or
omission or based on a different level of technician technical
certification or the dealer's failure to subscribe to any
manufacturer's computerized training programs.
(5) Notwithstanding the terms of a franchise agreement or
provision of law in conflict with this section, the dealer's
delivery, preparation, warranty and recall obligations
constitutes the dealer's sole responsibility for product
liability as between the dealer and manufacturer, and, except for a loss caused by the dealer's failure to adhere to these
obligations, a loss caused by the dealer's negligence or
intentional misconduct, or a loss caused by the dealer's
modification of a product without manufacturer authorization, the
manufacturer shall reimburse the dealer for all loss incurred by
the dealer, including legal fees, court costs and damages, as a
result of the dealer having been named a party in a product
liability action.
§17A-6A-10. Prohibited practices.
(1) A manufacturer or distributor may not require any new
motor vehicle dealer in this state to do any of the following:
(a) Order or accept delivery of any new motor vehicle, part
or accessory of the vehicle, equipment or any other commodity not
required by law which was not voluntarily ordered by the new
motor vehicle dealer. This section does not prevent the
manufacturer or distributor from requiring that new motor vehicle
dealers carry a reasonable inventory of models offered for sale
by the manufacturer or distributor;
(b) Order or accept delivery of any new motor vehicle with
special features, accessories or equipment not included in the
list price of the new motor vehicle as publicly advertised by the
manufacturer or distributor;
(c) Unreasonably participate monetarily in any advertising
campaign or contest, or purchase any promotional materials,
display devices, display decorations, brand signs and dealer
identification, nondiagnostic computer equipment and displays, or
other materials at the expense of the new motor vehicle dealer;
(d) Enter into any agreement with the manufacturer or
distributor or do any other act prejudicial to the new motor
vehicle dealer by threatening any coercive act, including but not
limited to the threat to terminate a dealer agreement, limit
inventory, invoke sales and service warranty or other types of
audits or any contractual agreement or understanding existing
between the dealer and the manufacturer or distributor. Notice
in good faith to any dealer of the dealer's violation of any
terms or provisions of the dealer agreement is not a violation of
this article;
(e) Change the capital structure of the new motor vehicle
dealership or the means by or through which the dealer finances
the operation of the dealership if the dealership at all times
meets any reasonable capital standards determined by the
manufacturer in accordance with uniformly applied criteria;
(f) Refrain from participation in the management of,
investment in or the acquisition of any other line of new motor
vehicle or related products, provided that the dealer maintains a
reasonable line of credit for each make or line of vehicle,
remains in compliance with reasonable facilities requirements and
makes no change in the principal management of the dealer.
Notwithstanding the terms of any franchise agreement, a
manufacturer or distributor may not enforce any requirements,
including facility requirements, that a new motor vehicle dealer
establish or maintain exclusive facilities, personnel or display
space, when the requirements are unreasonable considering current
economic conditions and are not otherwise justified by reasonable business considerations. The burden of proving that current
economic conditions or reasonable business considerations justify
exclusive facilities is on the manufacturer or distributor and
must be proven by a preponderance of the evidence;
(g) Change the location of the new motor vehicle dealership
or make any substantial alterations to the dealership premises,
where to do so would be unreasonable; and
(h) Prospectively assent to a release, assignment, novation,
waiver or estoppel which would relieve any person from liability
imposed by this article or require any controversy between a new
motor vehicle dealer and a manufacturer or distributor to be
referred to a person other than the duly constituted courts of
the state or the United States, if the referral would be binding
upon the new motor vehicle dealer.
(2) A manufacturer or distributor may not do any of the
following:
(a) Fail to deliver new motor vehicles or new motor vehicle
parts or accessories within a reasonable time and in reasonable
quantities relative to the new motor vehicle dealer's market area
and facilities, unless the failure is caused by acts or
occurrences beyond the control of the manufacturer or
distributor, or unless the failure results from an order by the
new motor vehicle dealer in excess of quantities reasonably and
fairly allocated by the manufacturer or distributor. No
manufacturer or distributor may penalize a new motor vehicle
dealer for an alleged failure to meet sales quotas where the
alleged failure is due to actions of the manufacturer or distributor;
(b) Refuse to disclose to a new motor vehicle dealer the
method and manner of distribution of new motor vehicles by the
manufacturer or distributor, including any numerical calculation
or formula used, nationally or within the dealers market, to make
the allocations;
(c) Refuse to disclose to a new motor vehicle dealer the
total number of new motor vehicles of a given model, which the
manufacturer or distributor has sold during the current model
year within the dealer's marketing district, zone or region,
whichever geographical area is the smallest;
(d) Increase prices of new motor vehicles which the new
motor vehicle dealer had ordered and then eventually delivered to
the same retail consumer for whom the vehicle was ordered, if the
order was made prior to the dealer's receipt of the written
official price increase notification. A sales contract signed by
a private retail consumer and binding on the dealer is evidence
of each order. In the event of manufacturer or distributor price
reductions or cash rebates, the amount of any reduction or rebate
received by a dealer shall be passed on to the private retail
consumer by the dealer. Any price reduction in excess of five
dollars shall apply to all vehicles in the dealer's inventory
which were subject to the price reduction. A price difference
applicable to new model or series motor vehicles at the time of
the introduction of the new models or the series is not a price
increase or price decrease. This subdivision does not apply to
price changes caused by the following:
(i) The addition to a motor vehicle of required or optional
equipment pursuant to state or federal law;
(ii) In the case of foreign made vehicles or components,
revaluation of the United States dollar; or
(iii) Any increase in transportation charges due to an
increase in rates charged by a common carrier and transporters;
(e) Offer any refunds or other types of inducements to any
dealer for the purchase of new motor vehicles of a certain line
make to be sold to this state or any political subdivision of
this state without making the same offer available upon request
to all other new motor vehicle dealers of the same line make;
(f) Release to an outside party, except under subpoena or in
an administrative or judicial proceeding to which the new motor
vehicle dealer or the manufacturer or distributor are parties,
any business, financial or personal information which has been
provided by the dealer to the manufacturer or distributor, unless
the new motor vehicle dealer gives his or her written consent;
(g) Deny a new motor vehicle dealer the right to associate
with another new motor vehicle dealer for any lawful purpose;
(h) Establish a new motor vehicle dealership which would
unfairly compete with a new motor vehicle dealer of the same line
make operating under a dealer agreement with the manufacturer or
distributor in the relevant market area. A manufacturer or
distributor shall not be considered to be unfairly competing if
the manufacturer or distributor is:
(i) Operating a dealership temporarily for a reasonable
period.
(ii) Operating a dealership which is for sale at a
reasonable price.
(iii) Operating a dealership with another person who has
made a significant investment in the dealership and who will
acquire full ownership of the dealership under reasonable terms
and conditions.
(i) A manufacturer may not, except as provided by this
section, directly or indirectly:
(i) Own an interest in a dealer or dealership;
(ii) Operate a dealership; or
(iii) Act in the capacity of a new motor vehicle dealer:
Provided, That a manufacturer may own an interest, other than
stock in a publicly held company, solely for investment purposes.
(j) A manufacturer or distributor may own an interest in a
franchised dealer, or otherwise control a dealership, for a
period not to exceed twelve months from the date the manufacturer
or distributor acquires the dealership if:
(i) The person from whom the manufacturer or distributor
acquired the dealership was a franchised dealer; and
(ii) The dealership is for sale by the manufacturer or
distributor at a reasonable price and on reasonable terms and
conditions;
(k) The twelve-month period may be extended for an
additional twelve months. Notice of any such extension of the
original twelve-month period must be given to any dealer of the
same line-make whose dealership is located in the same county, or
within fifteen air miles of, the dealership owned or controlled by the manufacturer or distributor prior to the expiration of the
original twelve-month period. Any dealer receiving the notice
may protest the proposed extension within thirty days of
receiving notice by bringing a declaratory judgment action in the
circuit court for the county in which the new motor vehicle
dealer is located to determine whether good cause exists for the
extension;
(l) For the purpose of broadening the diversity of its
dealer body and enhancing opportunities for qualified persons who
are part of a group who have historically been under represented
in its dealer body, or other qualified persons who lack the
resources to purchase a dealership outright, but for no other
purpose, a manufacturer or distributor may temporarily own an
interest in a dealership if the manufacturer's or distributor's
participation in the dealership is in a bona fide relationship
with a franchised dealer who:
(i) Has made a significant investment in the dealership,
subject to loss;
(ii) Has an ownership interest in the dealership; and
(iii) Operates the dealership under a plan to acquire full
ownership of the dealership within a reasonable time and under
reasonable terms and conditions;
(m) Unreasonably withhold consent to the sale, transfer or
exchange of the dealership to a qualified buyer capable of being
licensed as a new motor vehicle dealer in this state;
(n) Fail to respond in writing to a request for consent to a
sale, transfer or exchange of a dealership within sixty days after receipt of a written application from the new motor vehicle
dealer on the forms generally utilized by the manufacturer or
distributor for such purpose and containing the information
required therein. Failure to respond to the request within the
sixty days is consent;
(o) Unfairly prevent a new motor vehicle dealer from
receiving reasonable compensation for the value of the new motor
vehicle dealership;
(p) Audit any motor vehicle dealer in this state for
warranty parts or warranty service compensation, service
compensation, service incentives, rebates or other forms of sales
incentive compensation more than twelve months after the claim
for payment or reimbursement has been made by the automobile
dealer: Provided, That the provisions of this subsection does
not apply where a claim is fraudulent. In addition, the
manufacturer or distributor is responsible for reimbursing the
audited dealer for all copying, postage and administrative costs
incurred by the dealer during the audit. Any charges to a dealer
as a result of the audit must be separately billed to the dealer;
(q) Unreasonably restrict a dealer's ownership of a
dealership through noncompetition covenants, site control,
sublease, collateral pledge of lease, right of first refusal,
option to purchase, or otherwise. A right of first refusal is
created when:
(i) A manufacturer has a contractual right of first refusal
to acquire the new motor vehicle dealer's assets where the dealer
owner receives consideration, terms, and conditions that are either the same as or better than those they have already
contracted to receive under the proposed change of more than
fifty percent of the dealers's ownership.
(ii) The proposed change of the dealership's ownership or
the transfer of the new vehicle dealer's assets does not involve
the transfer of assets or the transfer or issuance of stock by
the dealer or one of the dealer's owners to one of the following:
(A) A designated family member of one or more of the dealer
owners;
(B) A manager employed by the dealer in the dealership
during the previous five years and who is otherwise qualified as
a dealer operator;
(C) A partnership or corporation controlled by a designated
family member of one of the dealers;
(D) A trust established or to be established:
(1) For the purpose of allowing the new vehicle dealer to
continue to qualify as such under the manufacturer's or
distributor's standards; or
(2) To provide for the succession of the franchise agreement
to designated family members or qualified management in the event
of death or incapacity of the dealer or its principle owner or
owners.
(iii) Upon exercising the right of first refusal by a
manufacturer, it eliminates any requirement under its dealer
agreement or other applicable provision of this statute, that the
manufacturer evaluate, process or respond to the underlying
proposed transfer by approving or rejecting the proposal, is not subject to challenge as a rejection or denial of the proposed
transfer by any party.
(iv) Except as otherwise provided in this subsection, the
manufacturer or distributor agrees to pay the reasonable
expenses, including reasonable fees for accounting services,
nonlegal advisory fees of the prospective or proposed owner, the
dealer and his or her employees and attorney's fees that are
incurred by the proposed owner or transferee before the
manufacturer's or distributor's exercise of its right of first
refusal. Payment of the expenses and accounting fees, nonlegal
advisory fees and attorney's fees are not required if the dealer
fails to submit an accounting of those expenses and fees within
twenty days of the dealer's receipt of the manufacturer's or
distributor's written request for such an accounting. Such a
written account of fees and expenses may be requested by a
manufacturer or distributor before exercising its right of first
refusal;
(r) Except for experimental low-volume not-for-retail sale
vehicles, cause warranty and recall repair work to be performed
by any entity other than a new motor vehicle dealer;
(s) Make any material change in any franchise agreement
without giving the new motor vehicle dealer written notice by
certified mail of the change at least sixty days prior to the
effective date of the change;
(t) Fail to reimburse a new motor vehicle dealer, at the
dealers regular rate, or the full and actual cost of providing a
loaner vehicle to any customer who is having a vehicle serviced at the dealership if the provision of the loaner vehicle is
required by the manufacturer; and
(u) Compel a new motor vehicle dealer through its finance
subsidiaries to agree to unreasonable operating requirements or
to directly or indirectly terminate a franchise through the
actions of a finance subsidiary of the franchisor. This
subsection does not limit the right of a finance subsidiary to
engage in business practices in accordance with the usage of
trade in retail or wholesale vehicle financing;
(v) Charge differing prices for similarly equipped, same
year make and model vehicles to different dealers through the use
of an incentive program unless all dealers within the marketing
district, zone or region, whichever geographical area is the
smallest, are offered the same incentive program by the
manufacturer;
(w) Use or employ any performance standard that is not fair
and reasonable and, if based upon survey or calculation results,
be statistically sound with verifiable assumptions;
(x) Charge a dealer a fee or penalty of any kind for a
vehicle that is exported or resold to a broker outside the market
area: Provided, That if the manufacturer can demonstrate that
the dealer had actual knowledge at the time of the initial sale
of intent to export or resell the vehicle to a broker outside the
market area, a reasonable fee or penalty may be charged.
(3) A manufacturer or distributor, either directly or
through any subsidiary, may not terminate, cancel, fail to renew
or discontinue any lease of the new motor vehicle dealer's established place of business except for a material breach of the
lease.
(4) Except as may otherwise be provided in this article, no
manufacturer or franchisor shall sell, directly or indirectly,
any new motor vehicle to a consumer in this state, except through
a new motor vehicle dealer holding a franchise for the line-make
covering such new motor vehicle. This subsection shall not apply
to manufacturer or franchisor sales of new motor vehicles to
charitable organizations, qualified vendors or employees of the
manufacturer or franchisor.
(5) Except when prevented by an act of God, labor strike,
transportation disruption outside the control of the manufacturer
or time of war, a manufacturer or distributor may not refuse or
fail to deliver, in reasonable quantities and within a reasonable
time, to a dealer having a franchise agreement for the retail
sale of any motor vehicle sold or distributed by the
manufacturer, any new motor vehicle or parts or accessories to
new motor vehicles as are covered by the franchise if the
vehicles, parts and accessories are publicly advertised as being
available for delivery or are actually being delivered. All
models offered for sale by the manufacturer, without any
enrollment, surcharge, facility or building or any other type of
upgrade requirement or acquisition fee, shall be available to the
franchised dealer at no additional cost for that particular model
of vehicle.
§17A-6A-15. Indemnity.
Notwithstanding the terms of any dealer agreement, a manufacturer or distributor shall indemnify and hold harmless its
dealers against any judgment for damages, including court costs
and attorney's fees, arising solely out of complaints, claims, or
actions which relate to the manufacture, assembly, or design of a
new motor vehicle, or other functions by the manufacturer or
distributor beyond the control of the dealer, including, without
limitation, the selection by the manufacturer or distributor of
parts or components for the vehicle, or and any damages to the
vehicle incurred prior to acceptance of the vehicle by the dealer
including damages to merchandise occurring in transit to the
dealer if the carrier is designated by the manufacturer or
distributor, if the new motor vehicle dealer gives timely notice
to the manufacturer or distributor of the complaint, claim or
action.
§17A-6A-16. Actions at law; damages.
(1) If a manufacturer or distributor terminates, cancels,
fails to renew or discontinues a dealer agreement for other than
good cause as defined in this article, or commits any other
violation of this article, the new motor vehicle dealer adversely
affected by the actions may bring an action for damages and
equitable relief against the manufacturer or distributor. A
purchaser of a dealership with an executed purchase agreement who
is unable to close due to franchisor decisions by a manufacturer
or distributor in violation of this article, may also bring an
action for damages. If the new motor vehicle dealer or purchaser
prevails, the dealer or purchaser may recover, in addition to
actual damages, treble damages up to three times the amount of the actual damages awarded, plus reasonable attorney's fees,
regardless of the amount in controversy. For the purposes of the
award of attorney's fees and costs, whenever the new motor
vehicle dealer or purchaser is seeking injunctive or other
relief, the dealer or purchaser may be considered to have
prevailed when a judgment or other final order providing
equitable relief is entered in its favor.
(2) A manufacturer or distributor who violates this article
is liable for all damages sustained by a new motor vehicle dealer
or purchaser as a result of the violation.
(3) A manufacturer or distributor or new motor vehicle
dealer or purchaser may bring an action for declaratory judgment
for determination of any controversy arising pursuant to this
article.
(4) Any corporation or association which is primarily owned
by or composed of dealers and which primarily represents the
interests of dealers has standing to file a petition or cause of
action with the court of competent jurisdiction for itself or by,
for or on behalf of any, or a group of, new motor vehicle dealers
for any violation of this article or for the determination of any
rights created by this article.
(5) In addition to any county in which venue is proper in
accordance with the constitution and laws of this state, in any
cause of action brought by a new motor vehicle dealer or
purchaser against a manufacturer or distributor for any violation
of this article or for the determination of any rights created by
the dealer's franchise agreement, venue is proper in the county in which the dealer or purchaser is engaged in the business of
selling the products or services of the manufacturer or
distributor.
§17A-6A-17. Injunctive relief.
Upon proper application to the circuit court, a manufacturer
or distributor or new motor vehicle dealer may obtain appropriate
injunctive relief against termination, cancellation, nonrenewal
or discontinuance of a dealer agreement or any other violation of
this article. The court may grant injunctive relief or a
temporary restraining order without bond. Absent extraordinary
circumstances, a dealer shall be permitted to continue to operate
a business under the dealer agreement during the pendency of any
litigation.
NOTE: The purpose of this bill is to clarify the West
Virginia Automobile Franchise Law. The bill clarifies the
relationship between an automobile dealer and a manufacturer or
distributor and offers details about their responsibilities. The
bill additionally provides for prohibitions against the
manufacturer or distributor pertaining to termination of dealer
agreements, use of performance standards and sales to brokers in
certain instances; allows continuation of business during pending
litigation; discusses obligations of dealers and manufacturers
when there is a discontinuation of an automobile line; provides
for standing of a buyer of dealership and clarifies liability for
damage to vehicles prior to the dealer taking possession.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added. The changes to section (3) are to add
numbering to the section.
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