Liens; garage keepers; garage keeper's lien act; clarify certain

procedures.

LIENS: Garage keepers

A bill to amend 1915 PA 312, entitled

"Garage keeper's lien act,"

by amending sections 2, 3, 4, 5, and 6 (MCL 570.302, 570.303,

570.304, 570.305, and 570.306), sections 2 and 3 as amended and

sections 4, 5, and 6 as added by 1998 PA 236, and by adding sec-

tion 10.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 2. As used in this act:

2 (A) "BUREAU" MEANS THE BUREAU OF AUTOMOTIVE REGULATION.

3 (B) (a) "Department" means the department of state.

4 (C) (b) "Garage keeper" means a person or the person's

5 heirs HEIR, personal representative, successors, and

6 assignees, SUCCESSOR, ASSIGNEE, OR AUTHORIZED AGENT who for hire

7 or reward, publicly offer OFFERS to store, maintain , keep,

8 or repair a vehicle or an accessory used in the operation of a

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1 vehicle or to furnish accessories and supplies for a vehicle or

2 an accessory used in the operation of a vehicle.

3 (D) (c) "Last known address" means the address provided by

4 the owner in the most recent contract for storage, labor, materi-

5 al, or supplies entered into between the garage keeper and the

6 owner, or in a subsequent written notice of change of address to

7 the garage keeper or as shown by the records of the department.

8 (E) "LIENHOLDER" MEANS ANY PERSON OR LEGAL ENTITY THAT IS

9 NOTED ON THE MOTOR VEHICLE CERTIFICATE OF TITLE AS A LIENHOLDER,

10 OR, IF THE MOTOR VEHICLE CERTIFICATE OF TITLE CONTAINS THE TERM

11 LESSEE, THE PERSON OR LEGAL ENTITY THAT IS NOTED ON THE MOTOR

12 VEHICLE CERTIFICATE OF TITLE AS THE LESSOR OR AS SHOWN BY THE

13 RECORDS OF THE DEPARTMENT.

14 (F) (d) "Market value" means the TRADE-IN value as deter-

15 mined by the issue of the national auto dealers association offi-

16 cial used car guide in effect at the time the garage keeper per-

17 forms the first labor or first furnishes supplies for which the

18 garage keeper claims a lien under this act.

19 (G) (e) "Owner" means the person in whose name a vehicle

20 is registered or titled THAT TERM AS DEFINED IN SECTION 37 OF

21 THE MICHIGAN VEHICLE CODE, 1949 PA 300, MCL 257.37, OR AS SHOWN

22 BY THE RECORDS OF THE DEPARTMENT.

23 (H) (f) "Vehicle" means that term as defined in section 79

24 of the Michigan vehicle code, 1949 PA 300, MCL 257.79.

25 Sec. 3. (1) A EXCEPT AS OTHERWISE PROVIDED IN THIS ACT, A

26 garage keeper who, in pursuance of a contract that is expressed,

27 implied, written, or unwritten, furnishes labor, material,

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1 STORAGE, DIAGNOSIS, AN ESTIMATE OF REPAIRS, or supplies FOR A

2 VEHICLE, shall have a lien upon the vehicle stored, maintained,

3 supplied, or repaired by him or her for the charges due for the

4 storage, maintenance, keeping, DIAGNOSIS, ESTIMATE OF REPAIRS,

5 and repair of the vehicle and for gasoline, electric current, or

6 other accessories and supplies furnished, expenses bestowed, or

7 labor performed on the vehicle at the request or with the consent

8 of the owner of the vehicle. A IF A VEHICLE REMAINS IN THE

9 POSSESSION OF A GARAGE KEEPER AFTER THE COMPLETION OF REPAIRS OR

10 AFTER A DIAGNOSIS AND SUBSEQUENT STORAGE OF THE VEHICLE WHEN

11 REPAIRS ARE NOT AUTHORIZED, A garage keeper's lien attaches TO

12 THE VEHICLE in the manner and amount provided in this section.

13 (2) THE LIEN ATTACHES TO THE VEHICLE ON THE DAY THE GARAGE

14 KEEPER PERFORMS THE LAST LABOR OR FURNISHES THE LAST SUPPLIES FOR

15 WHICH A LIEN IS CLAIMED AGAINST THE VEHICLE. The garage keeper

16 may detain KEEP a vehicle for not more than 120 225 days

17 after performing the last labor or furnishing the last supplies

18 for which a lien is claimed against the vehicle.

19 (3) The portion of a lien that is for labor and material

20 furnished in making repairs upon a vehicle has priority over all

21 other liens upon the vehicle. The lien has no effect against the

22 holder of a security interest, conditional sales agreement or

23 other lien that attached before the attachment of the garage

24 keeper's lien upon the payment by a prior lienholder to the

25 garage keeper of the amount of the lien calculated under

26 subsection (4) AND SECTION 4.

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1 (4) Except as provided in section 4, the maximum amount of a

2 lien that a prior lienholder shall pay a garage keeper under this

3 section is calculated as follows:

4 (a) If a repaired vehicle has a market value of more than

5 $3,000.00 $5,000.00, then the amount of the lien shall be not

6 more than 20% of the market value of the repaired vehicle or

7 $5,000.00, whichever is less.

8 (b) If a repaired vehicle has a market value of $3,000.00

9 $5,000.00 or less, then the amount of the lien shall be $600.00

10 NOT MORE THAN $1,000.00.

11 (5) The amount of a payment made under this section shall

12 be added to the amount of the prior lienholder's lien.

13 Sec. 4. (1) A garage keeper's lien under section 3 shall

14 not include an amount for labor and materials for any of the fol-

15 lowing if the materials used were custom materials that are not

16 normally available from the manufacturer or, in the case of a

17 vehicle manufactured in a foreign country, a distributor of the

18 vehicle or that are not normally installed on the vehicle by the

19 original manufacturer:

20 (a) The repair or replacement of all or a part of the

21 interior or exterior of the repaired vehicle.

22 (b) The installation, repair, or replacement of electronic

23 and related parts.

24 (c) The installation, repair, or replacement of any other

25 materials or parts that are not essential to the normal operation

26 of the repaired vehicle.

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1 (2) A garage keeper has a lien in a reasonable amount

2 UNLESS OTHERWISE AGREED TO IN WRITING, A GARAGE KEEPER'S LIEN

3 UNDER SECTION 3 MAY INCLUDE AN AMOUNT OF NOT MORE THAN $10.00 PER

4 DAY for the storage of the vehicle, for the storage of an acces-

5 sory used in the operation of a vehicle, or for the storage of

6 accessories and supplies furnished for the vehicle or an acces-

7 sory used in the operation of the vehicle. Unless otherwise

8 agreed to in writing, the charge shall be for not more than

9 120 days' storage. HOWEVER, A LIENHOLDER WHO PAYS A GARAGE

10 KEEPER'S LIEN UNDER SECTION 5(8) IS NOT LIABLE FOR AND IS NOT

11 REQUIRED TO PAY FOR ANY STORAGE CHARGES THAT ACCRUED PRIOR TO

12 45 DAYS AFTER THE GARAGE KEEPER'S NOTIFICATION TO THE LIENHOLDER

13 UNDER SECTION 5. Charges described in this subsection may be in

14 addition to the maximum allowance under section 3(4).

15 Sec. 5. (1) A lien under section 3 shall be enforced only

16 as provided in this section.

17 (2) If charges described in section 3 are not paid, the

18 garage keeper may sell the vehicle at a public sale described in

19 this section.

20 (3) TO ENFORCE A LIEN UNDER SECTION 3, A GARAGE KEEPER OR

21 AUTHORIZED AGENT SHALL, NOT MORE THAN 105 DAYS AFTER THE DATE THE

22 LIEN ATTACHED AS PROVIDED IN SECTION 3, APPLY TO THE DEPARTMENT,

23 IN A FORMAT PRESCRIBED BY THE DEPARTMENT, FOR A CERTIFICATE OF

24 FORECLOSURE OF GARAGE KEEPER'S LIEN AND BILL OF SALE ACCOMPANIED

25 BY A FEE OF $10.00 PAID TO THE DEPARTMENT. THE DEPARTMENT SHALL,

26 NOT MORE THAN 30 DAYS AFTER THE POSTMARK DATE OF A COMPLETE

27 APPLICATION RECEIVED BY MAIL OR THE DATE A COMPLETE APPLICATION

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1 IS HAND-DELIVERED BY THE GARAGE KEEPER OR AUTHORIZED AGENT TO THE

2 DEPARTMENT, PROVIDE TO THE GARAGE KEEPER OR AUTHORIZED AGENT THE

3 NAMES AND ADDRESSES OF ALL OWNERS OF RECORD AND OF ALL LIENHOLD-

4 ERS OF THE VEHICLE AS SHOWN BY THE RECORDS OF THE DEPARTMENT.

5 (4) (3) The AFTER COMPLYING WITH THE REQUIREMENTS OF

6 SUBSECTION (3), THE garage keeper shall notify the owner OR

7 OWNERS, ALL LIENHOLDERS, AND THE DEPARTMENT OF STATE, BUREAU OF

8 AUTOMOTIVE REGULATION, LANSING, MICHIGAN, of the proposed sale of

9 the vehicle in order to satisfy the lien of the garage keeper by

10 a notice sent by certified mail RETURN RECEIPT REQUESTED to the

11 last known address of the owner OR OWNERS, THE LIENHOLDERS AND

12 THE BUREAU. THE GARAGE KEEPER SHALL SEND ALL THE NOTICES

13 REQUIRED BY THIS SUBSECTION NOT MORE THAN 30 DAYS AFTER THE DATE

14 PLACED ON THE CERTIFICATE OF FORECLOSURE OF GARAGE KEEPER'S LIEN

15 AND BILL OF SALE BY THE DEPARTMENT. The notice shall include

16 both ALL of the following:

17 (a) An itemized statement of the garage keeper's lien show-

18 ing the amount due at the time of the notice and the date on

19 which the amount became due.

20 (b) A demand for payment not more than 45 days after deliv-

21 ery of the notice IN THE AMOUNT NECESSARY TO SATISFY THE LIEN

22 AUTHORIZED UNDER SECTION 3(1). THE DEMAND FOR PAYMENT MUST GIVE

23 THE OWNER OR OWNERS NOT LESS THAN 30 CALENDAR DAYS AFTER THE

24 POSTMARK DATE OF THE NOTICE TO SATISFY THE GARAGE KEEPER'S LIEN.

25 (C) A STATEMENT THAT ALL LIENHOLDERS ARE BEING NOTIFIED OF

26 THE DELINQUENCY, THAT A LIENHOLDER HAS THE RIGHT TO SATISFY THE

27 GARAGE KEEPER'S LIEN PLUS ANY STORAGE CHARGES PROVIDED FOR UNDER

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1 SECTION 4 AND OBTAIN POSSESSION OF THE VEHICLE AS PROVIDED IN

2 SECTION 5(8), AND THAT A LIENHOLDER IS REQUIRED TO NOTIFY THE

3 GARAGE KEEPER BEFORE THE PROCEEDS ARE DISTRIBUTED UNDER SECTION 6

4 IF THE LIENHOLDER DESIRES TO CLAIM ANY OF THE PROCEEDS FROM THE

5 SALE OF THE VEHICLE UNDER SECTION 6(1)(A).

6 (D) A STATEMENT OF DAILY STORAGE FEES, IF ANY.

7 (E) A STATEMENT OF THE DATE, TIME, MANNER, AND PLACE THAT

8 THE VEHICLE WILL BE SOLD.

9 (4) On the same day that the notice described in

10 subsection (3) is sent to the owner, the garage keeper shall send

11 an exact duplicate of that notice by first-class mail, addressed

12 to both of the following:

13 (a) The department of state, bureau of automotive regula-

14 tion, Lansing, Michigan.

15 (b) Each prior lienholder listed on the title of the vehicle

16 at the address indicated on the title for that prior lienholder,

17 if any.

18 (5) The EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION,

19 THE sale shall be held not less than 20 75 CALENDAR days and

20 not more than 60 days after the expiration of the 45-day period

21 described in subsection (3) AFTER THE DATE PLACED ON THE CERTIF-

22 ICATE OF FORECLOSURE OF THE GARAGE KEEPER'S LIEN AND BILL OF SALE

23 BY THE DEPARTMENT. THE BUREAU MAY OBJECT TO A SALE ONLY IF IT

24 HAS REASON TO BELIEVE THAT THE GARAGE KEEPER HAS FAILED TO SUB-

25 STANTIALLY COMPLY WITH THIS ACT, THE RULES PROMULGATED UNDER THIS

26 ACT, THE MOTOR VEHICLE SERVICE AND REPAIR ACT, 1974 PA 300, MCL

27 257.1301 TO 257.1340, OR THE RULES PROMULGATED UNDER THE MOTOR

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1 VEHICLE SERVICE AND REPAIR ACT, 1974 PA 300, MCL 257.1301 TO

2 257.1340, IN THE REPAIR TRANSACTION INVOLVING THE VEHICLE THAT IS

3 THE SUBJECT OF THE LIEN. IF THE BUREAU OBJECTS TO THE SALE

4 WITHIN THE 75-DAY PERIOD, ALL OF THE FOLLOWING CONDITIONS SHALL

5 APPLY:

6 (A) THE BUREAU SHALL COMPLETE AN INVESTIGATION OF ITS OBJEC-

7 TION WITHIN 150 CALENDAR DAYS AFTER THE DATE PLACED ON THE CER-

8 TIFICATE OF FORECLOSURE OF THE GARAGE KEEPER'S LIEN AND BILL OF

9 SALE BY THE DEPARTMENT.

10 (B) UPON COMPLETION OF THE INVESTIGATION OR THE EXPIRATION

11 OF THE 150-CALENDAR-DAY PERIOD, WHICHEVER OCCCURS FIRST, THE

12 BUREAU SHALL DO 1 OF THE FOLLOWING:

13 (i) REMOVE THE OBJECTION TO THE SALE.

14 (ii) COMPLETE SERVICE UPON THE GARAGE KEEPER OF A WRITTEN

15 NOTICE OF ALLEGED VIOLATION THAT ALLEGES A SPECIFIC VIOLATION OF

16 THE MOTOR VEHICLE SERVICE AND REPAIR ACT, 1974 PA 300, MCL

17 257.1301 TO 257.1340, OR THE RULES PROMULGATED UNDER THAT ACT,

18 AND EXTENDS THE BUREAU'S OBJECTION TO THE SALE INDEFINITELY UNTIL

19 RESOLUTION UNDER THIS SECTION.

20 (C) THE GARAGE KEEPER MAY, WITHIN 10 DAYS AFTER THE PERSONAL

21 SERVICE OR POSTMARKED DATE OF THE NOTICE OF ALLEGED VIOLATION,

22 NOTIFY THE BUREAU, IN WRITING, THAT THE GARAGE KEEPER WANTS TO

23 CONTEST THE NOTICE OF ALLEGED VIOLATION. IF THE GARAGE KEEPER

24 CONTESTS THE NOTICE, THE BUREAU SHALL CONDUCT AN IMMEDIATE REVIEW

25 OF ITS REASONS FOR THE OBJECTION. AFTER THIS REVIEW, THE BUREAU

26 SHALL DO 1 OF THE FOLLOWING:

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1 (i) REMOVE THE OBJECTION TO THE SALE.

2 (ii) IF THE OBJECTION IS SUSTAINED, THE BUREAU SHALL, IN

3 WRITING, OFFER THE GARAGE KEEPER AN OPPORTUNITY TO HAVE THE

4 BUREAU'S OBJECTION RESOLVED UNDER THE ADMINISTRATIVE PROCEDURES

5 ACT OF 1969, 1969 PA 306, MCL 24.201 TO 24.328, AS A CONTESTED

6 CASE PROCEEDING UNDER THE MOTOR VEHICLE SERVICE AND REPAIR ACT,

7 1974 PA 300, MCL 257.1301 TO 257.1340. IF A CONTESTED CASE PRO-

8 CEEDING IS PURSUED UNDER THIS SECTION, THE BUREAU MAY INCLUDE IN

9 THAT PROCEEDING'S COMPLAINT ANY OTHER OUTSTANDING ALLEGED REPAIR

10 ACT OR RULE VIOLATION AGAINST THE GARAGE KEEPER THAT MAY BE PUR-

11 SUED THROUGH A CONTESTED CASE PROCEEDING. IF THE GARAGE KEEPER

12 FAILS TO RESPOND TO THE OFFER FOR A CONTESTED CASE PROCEEDING

13 WITHIN 10 DAYS OF RECEIVING THE OFFER FROM THE BUREAU, THE

14 BUREAU'S OBJECTION TO THE LIEN SHALL BE DEEMED PERMANENT.

15 (D) STORAGE CHARGES PROVIDED FOR UNDER THIS ACT SHALL NOT

16 ACCRUE DURING THE PERIOD THAT THE BUREAU OBJECTS TO THE SALE.

17 (E) THE 225-DAY PERIOD PROVIDED FOR IN SECTION 3(2) SHALL BE

18 EXTENDED BY THE NUMBER OF DAYS THAT THE BUREAU OBJECTS TO THE

19 SALE.

20 (6) A sale of the vehicle shall be held at the facility of

21 the garage keeper or at the nearest suitable place.

22 (7) Before a sale of a vehicle pursuant to this section, the

23 owner OR OWNERS may pay the amount necessary to satisfy the lien,

24 in addition to the reasonable expenses or fees incurred by the

25 garage keeper under this act, and redeem the vehicle. Upon

26 receipt of this payment, the garage keeper shall return the

27 vehicle to the owner OR OWNERS in the same condition, or

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1 substantially the same condition, as it THE VEHICLE was in when

2 stored by the garage keeper THE LIEN ATTACHED UNDER SECTION

3 3(1).

4 (8) Not less than 30 CALENDAR days before a sale is held

5 under this section, the garage keeper shall give written notice

6 of the manner, time, and place of the sale to each lienholder as

7 shown by the records of the department, and to the owner of the

8 vehicle. Notice to the lienholders shall be given by certified

9 mail, addressed to the lienholders, as shown by the records of

10 the department. Notice to the owner of the vehicle shall be

11 given by certified mail, directly to the last known address of

12 the owner. AFTER THE GARAGE KEEPER'S NOTICE IS MAILED TO THE

13 OWNER OR OWNERS, AND PRIOR TO THE SALE, A LIENHOLDER MAY PAY THE

14 GARAGE KEEPER THE AMOUNT OF THE GARAGE KEEPER'S LIEN AS CALCU-

15 LATED UNDER SECTIONS 3(4) AND 4, OR ANOTHER AMOUNT TO WHICH THE

16 LIENHOLDER AND GARAGE KEEPER AGREE. UPON RECEIPT OF THIS PAY-

17 MENT, THE GARAGE KEEPER SHALL RETURN THE VEHICLE TO THE LIEN-

18 HOLDER IN THE SAME CONDITION, OR SUBSTANTIALLY THE SAME CONDI-

19 TION, AS THE VEHICLE WAS IN WHEN REPAIRS WERE COMPLETED AND IT

20 WAS STORED BY THE GARAGE KEEPER OR, IF NO REPAIRS WERE AUTHORIZED

21 BY THE OWNER, IN THE SAME CONDITION OR SUBSTANTIALLY THE SAME

22 CONDITION, AS THE VEHICLE WAS IN WHEN IT WAS RECEIVED BY THE

23 GARAGE KEEPER. IF THE GARAGE KEEPER PERFORMED DIAGNOSTIC TESTS

24 ON THE VEHICLE FOR WHICH A LIEN IS CLAIMED, THE GARAGE KEEPER

25 SHALL INCLUDE A WRITTEN EXPLANATION OF THE RESULTS OF THE DIAG-

26 NOSTIC TESTS PERFORMED WHEN THE GARAGE KEEPER RETURNS THE VEHICLE

27 TO THE LIENHOLDER. THE AMOUNT OF A PAYMENT MADE UNDER THIS

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1 SECTION SHALL BE ADDED TO THE AMOUNT OF THE PRIOR LIENHOLDER'S

2 LIEN.

3 (9) Before a sale of a vehicle under this act, a lienholder

4 of a vehicle to be sold may pay the garage keeper the amount of

5 the garage keeper's lien, in addition to the reasonable expenses

6 or fees incurred by the garage keeper under this act, or another

7 amount to which the lienholder and garage keeper agree. However,

8 the amount payable to the garage keeper shall not exceed the

9 market value of the vehicle. A payment made to the garage keeper

10 shall be added to the amount of the lien of the lienholder who

11 made the payment, and shall be subtracted from the amount of the

12 garage keeper's lien. Upon receipt of this payment, the garage

13 keeper shall return the vehicle to the lienholder in the same

14 condition, or substantially the same condition, as it was in when

15 repairs were completed and as stored by the garage keeper. THE

16 AMOUNT PAYABLE TO THE GARAGE KEEPER SHALL NOT EXCEED THE MARKET

17 VALUE OF THE VEHICLE.

18 (10) After the expiration of the 45-day period described in

19 subsection (3), the garage keeper may apply to the department for

20 a certificate, in a form as prescribed by the secretary of state,

21 for a fee of $10.00 paid to the secretary of state. Upon the

22 PUBLIC sale of a vehicle under this act, the garage keeper shall

23 complete the certificate DESCRIBED IN SUBSECTION (3) as indicated

24 on its face and give the completed certificate to the purchaser

25 of the vehicle. In addition to other information that may be

26 required by the secretary of state, the purchaser shall submit

27 this certificate to the department when making an original

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1 application for a certificate of title or a vehicle registration

2 for the vehicle in the name of the purchaser.

3 (11) The garage keeper may bid for and purchase the vehicle

4 at the sale. If the garage keeper directly or indirectly pur-

5 chases the vehicle at the sale, the proceeds of the sale shall

6 be considered to be the greater of the following:

7 (a) The amount paid by the garage keeper.

8 (b) The market value of the vehicle at the time of sale.

9 LIEN GRANTED UNDER THIS ACT IS EXTINGUISHED IN FULL.

10 (12) A person who in good faith buys a vehicle at a sale

11 conducted pursuant to this act takes the vehicle free of a secur-

12 ity interest created by the seller even though the security

13 interest is perfected and even though the buyer knows of its

14 existence.

15 Sec. 6. (1) After the amount of the lien under section 3 is

16 paid to the garage keeper and the costs of the sale are deducted,

17 any remaining money shall be paid to the following persons in

18 this descending order of priority:

19 (a) A prior lienholder who gives notice to the garage keeper

20 of his or her claim of lien before the distribution of the money

21 realized from a sale under this act is complete.

22 (b) The reasonable charges of the garage keeper.

23 (c) The owner OR OWNERS of the vehicle as described in

24 subsection (2).

25 (2) Proceeds of the sale remaining after the distribution is

26 made under subsection (1) shall be returned to the owner of the

27 vehicle by mailing the proceeds to the owner's last known address

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1 by certified mail. If the garage keeper cannot locate the owner

2 within 14 CALENDAR days after the date of the sale, the remaining

3 money shall be transmitted to the department. If the owner does

4 not claim the remaining money within 2 years after the date of

5 the sale, it shall escheat to the state.

6 SEC. 10. A PERSON, AGENT, OR EMPLOYEE OF A GARAGE KEEPER

7 WHO KNOWINGLY MAKES A FALSE STATEMENT ON AN APPLICATION FOR A

8 GARAGE KEEPER'S LIEN, THE DOCUMENTS FILED BY THE APPLICANT WITH

9 THE DEPARTMENT IN SUPPORT OF THE APPLICATION FOR A GARAGE

10 KEEPER'S LIEN, OR A CERTIFICATION REQUIRED UNDER THIS ACT IS

11 GUILTY OF A MISDEMEANOR PUNISHABLE BY A FINE OF NOT MORE THAN

12 $1,000.00 OR IMPRISONMENT FOR NOT MORE THAN 90 DAYS, OR BOTH, FOR

13 THE FIRST CONVICTION UNDER THIS SECTION, AND A FINE OF NOT MORE

14 THAN $5,000.00 OR IMPRISONMENT FOR NOT MORE THAN 1 YEAR, OR BOTH,

15 FOR ANY SUBSEQUENT CONVICTION UNDER THIS SECTION.

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