SB-1308, As Passed House, July 21, 2010

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 1308

     A bill to amend 1981 PA 118, entitled

"An act to regulate motor vehicle manufacturers, distributors,

wholesalers, dealers, and their representatives; to regulate

dealings between manufacturers and distributors or wholesalers and

their dealers; to regulate dealings between manufacturers,

distributors, wholesalers, dealers, and consumers; to prohibit

unfair practices; to provide remedies and penalties; and to repeal

certain acts and parts of acts,"

by amending sections 15, 17, and 20 (MCL 445.1575, 445.1577, and

445.1580), section 17 as amended by 1983 PA 188, and by adding

section 14a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 14a. (1) A manufacturer shall not require that a new

motor vehicle dealer, a proposed new motor vehicle dealer, or any

owner of an interest in a dealership facility enter into or agree

to a property use agreement as a condition to any of the following:

     (a) Awarding a dealer agreement to a prospective new motor

vehicle dealer.

     (b) Adding a line make or dealer agreement to an existing new

motor vehicle dealer.

     (c) Renewing a dealer agreement with an existing new motor

vehicle dealer.

     (d) Approving a relocation of a new motor vehicle dealer's

place of business.

     (e) Approving a sale or transfer of the ownership of a

dealership or a transfer of a dealer agreement to another person.

     (2) Subsection (1) does not apply to a property use agreement

if any of the following are offered and accepted for that

agreement:

     (a) Monetary consideration.

     (b) Separate and valuable consideration that can be calculated

to a sum certain.

     (3) If a manufacturer and a new motor vehicle dealer are

parties to a property use agreement, the dealer agreement between

the manufacturer and new motor vehicle dealer is terminated by a

manufacturer, by a successor manufacturer, or by operation of law,

and the reason for the termination is not a reason described in

section 10(c), the property use agreement terminates and ceases to

be effective at the time the dealer agreement is terminated.

     (4) If any provision contained in a property use agreement

entered into on or after the effective date of the amendatory act

that added this subsection is inconsistent with this section, the

provision is voidable at the election of the affected new motor

vehicle dealer, proposed new motor vehicle dealer, or owner of an

interest in the dealership facility.

     (5) As used in this section, "property use agreement" means

any of the following:

     (a) An agreement that requires that a new motor vehicle dealer

establish or maintain exclusive dealership facilities.

     (b) An agreement that restricts the ability of a new motor

vehicle dealer, or the ability of the dealer's lessor if the dealer

is leasing the dealership facility, to transfer, sell, lease, or

change the use of the place of business of the dealership, whether

by sublease, lease, collateral pledge of lease, right of first

refusal to purchase or lease, option to purchase, option to lease,

or other similar agreement, regardless of who the parties to that

agreement are.

     (c) Any similar agreement between a manufacturer and a new

motor vehicle dealer and commonly known as a site control agreement

or exclusive use agreement.

     Sec. 15. (1) Any designated family member of a deceased or

incapacitated new motor vehicle dealer or an executive manager of

the dealership may succeed the dealer in the ownership or operation

of the dealership under the existing dealer agreement if the

designated family member or executive manager gives the

manufacturer or distributor written notice of his or her intention

to succeed to the dealership within 120 days after the dealer's

death or incapacity, agrees to be bound by all of the terms and

conditions of the dealer agreement, and the designated family

member meets the current criteria generally applied by the

manufacturer or distributor in qualifying new motor vehicle

dealers. A manufacturer or distributor may refuse to honor continue

the existing dealer agreement with the designated family member

only for good cause.

     (2) The A manufacturer or distributor may request from a

designated family member such or executive manager described in

subsection (1) a completed application form and any personal and

financial data as is information that is reasonably necessary to

determine whether the existing dealer agreement should be honored

continue. The designated family member or executive manager shall

supply the completed application form and personal and financial

data information promptly upon the on request. As used in this

subsection and subsection (3), "application form" means the

application form generally used by the manufacturer in connection

with a proposal to continue a dealer agreement under this section.

     (3) If a manufacturer or distributor believes that good cause

exists for refusing to honor the succession continue a dealer

agreement under this section with a designated family member or

executive manager described in subsection (1), the manufacturer or

distributor may, within 60 days after receipt of the receiving

notice of the designated family member's or executive manager's

intent to suceed succeed the dealer in the ownership and operation

of the dealership, or within 60 days after the receipt of receiving

the requested personal and financial data information and completed

application form, serve upon on the designated family member or

executive manager notice of its refusal to approve the succession.

     (4) The A notice of the refusal served by a manufacturer or

distributor provided in under subsection (3) shall state the

specific grounds for the refusal to approve the succession and that

discontinuance of the agreement shall take effect not less fewer

than 90 days after the date the notice is served.

     (5) If a notice of refusal described in subsection (3) is not

served within the 60 days provided for 60-day period described in

subsection (3), the dealer agreement shall continue in effect and

shall be is subject to termination only as otherwise permitted by

under this act.

     (6) This section does not preclude a new motor vehicle dealer

from designating any person as his or her successor by written

instrument filed with the manufacturer. or distributor, and if such

If the dealer files an instrument is filed described in this

subsection, it alone shall determine the succession rights to the

management and operation of the dealership.

     Sec. 17. (1) Each new motor vehicle manufacturer or

distributor shall specify in writing to each of its new motor

vehicle dealers licensed in this state the dealer's obligations for

preparation, delivery, and warranty service on its products. The A

manufacturer or distributor shall compensate the a new motor

vehicle dealer for warranty service required of the dealer by the

manufacturer. or distributor. The A manufacturer or distributor

shall provide the a new motor vehicle dealer with the schedule of

compensation to be paid to the dealer for parts, work, and service,

and the time allowance for the performance of the work and service.

     (2) The A schedule of compensation described in subsection (1)

shall include reasonable compensation for diagnostic work , as well

as and repair service and labor. Time allowances for the diagnosis

and performance of warranty work and service shall be reasonable

and adequate for the work to be performed. In the determination of

determining what constitutes reasonable compensation under this

section, the principal factor to be given consideration shall be is

the prevailing wage rates being paid by dealers in the community in

which the dealer is doing business, and in no event shall the

compensation of a dealer for warranty labor shall not be less than

the rates charged by the dealer for like service to retail

customers for nonwarranty service and repairs, provided that such

if those rates are reasonable.

     (3) A manufacturer or distributor shall not do any of the

following:

     (a) Fail to perform any warranty obligation.

     (b) Fail to include in written notices of factory recalls to

new motor vehicle owners and dealers the expected date by which

necessary parts and equipment will be available to dealers for the

correction of the defects.

     (c) Fail to compensate any of the a new motor vehicle dealers

dealer licensed in this state for repairs effected by made in

connection with the recall.

     (4) All claims A manufacturer shall pay a claim made by a new

motor vehicle dealer pursuant to under this section for labor and

parts shall be paid within 30 days after their its approval. All

claims shall be either approved or disapproved by the manufacturer

or distributor within 30 days after their receipt on a proper A

manufacturer shall either approve or disapprove a claim within 30

days after receiving the claim, submitted on the form generally

used by the manufacturer or distributor and containing the usually

required information therein usually required in the form. Any

claim not specifically disapproved in writing within 30 days after

the receipt of the form shall be manufacturer receives the claim

form is considered to be approved, and payment shall be made the

manufacturer shall pay the claim within 30 days. A claim which has

been

     (5) Subject to subsection (10), if a manufacturer has approved

and paid may not be charged back to the dealer unless the

manufacturer can show that the claim was fraudulent, false, or

unsubstantiated, except that a charge back for false or fraudulent

claims shall not be made more than 2 years after payment, and a

charge back for unsubstantiated claims shall not be made more than

15 months after payment. a new motor vehicle dealer for a claim,

the manufacturer may only charge the claim back to the dealer if 1

of the following is met:

     (a) The manufacturer shows that the claim is fraudulent or

false. However, the manufacturer may not charge back the amount

paid if the claim is found to be false or fraudulent more than 2

years after payment.

     (b) The manufacturer shows that the claim is unsubstantiated,

lacks proper documentation, or shows an improper diagnosis process

or improper repair procedures. However, the manufacturer may not

charge back the amount paid if the claim is found to be

unsubstantiated, to lack proper documentation, or show an improper

diagnosis process or repair procedures more than 12 months after

payment.

     (6) A manufacturer may not deny a claim made under this

section because of a new motor vehicle dealer's incidental failure

to comply with a specific claim processing requirement, such as a

clerical error, that does not call into question the legitimacy of

the claim.

     (7) A new motor vehicle dealer shall maintain all records of

warranty repairs, including the related time records of its

employees, for at least 2 years following payment of any warranty

claim.

(8) (5) A manufacturer or distributor shall compensate the a

new motor vehicle dealer for manufacturer or distributor sponsored

any sales or service promotion events, programs, or activities

sponsored by the manufacturer, in accordance with established

guidelines for such those events, programs, or activities.

(9) (6) All claims made by A manufacturer shall pay a claim

for compensation owed to a new motor vehicle dealer pursuant to

under subsection (5) (8) for a promotion events, programs, or

activities shall be paid event, program, or activity within 10 days

after their its approval. All claims shall be either approved or

disapproved by the A manufacturer or distributor shall either

approve or disapprove a claim for compensation described in this

subsection within 30 days after their receipt on a proper receiving

the claim, submitted on the form generally used by the manufacturer

or distributor and containing the information usually required

information therein in the form. Any claim not specifically

disapproved for compensation the manufacturer does not specifically

disapprove in writing within 30 days after the receipt of the

receiving the claim form shall be is considered to be approved, and

payment shall be made the manufacturer shall pay the amount of the

claim within 30 days. The A manufacturer has the right to may only

charge back any a claim for 6 months after the later of either the

close of the promotion event, program, or activity, or the date of

the payment compensation within 12 months after the date of

payment, or within 12 months after the end of a program if the

duration of the program is 1 year or less.

     (10) A manufacturer may not charge a claim back to a new motor

vehicle dealer after the claim is paid unless a representative of

the manufacturer first meets in person or by video teleconference

or telephone with an officer or employee of the dealer designated

by the new motor vehicle dealer, or responds in writing to any

dealer written request for information. All of the following apply

if a meeting is held under this subsection:

     (a) At the meeting, the manufacturer shall provide a detailed

explanation, with supporting documentation, of the basis for each

proposed chargeback of a claim to the dealer and a written

statement containing the basis on which the claim or claims of the

dealer were selected for audit or review by the manufacturer.

     (b) After the meeting, the manufacturer shall provide the

motor vehicle dealer's representative a reasonable period of time

of at least 45 days to respond to the proposed chargebacks. The

manufacturer shall provide a longer period of time for the dealer

to respond if warranted by the volume of proposed chargebacks.

     (c) An unexcused failure or refusal of the dealer or

designated officer or employee of the dealer to schedule, attend,

or participate in the meeting with the manufacturer relieves the

manufacturer from any further obligation under this subsection.

     (11) A manufacturer may conduct an audit of the records of a

new motor vehicle dealer relating to a warranty or promotion claim

submitted by a new motor vehicle dealer under this section, but the

manufacturer may only conduct that audit in the time periods

allowed for warranty or promotional claim chargebacks under this

section.

     Sec. 20. (1) If a manufacturer or distributor terminates,

cancels, fails to renew, or discontinues a dealer agreement, for

other than without good cause as defined described in this act, the

new motor vehicle dealer may bring an action against the

manufacturer or distributor to recover actual damages reasonably

incurred by the dealer as a result of the termination,

cancellation, failure, or discontinuance.

     (2) A manufacturer or distributor who that violates this act

is liable for all damages sustained by a new motor vehicle dealer

as a result of the violation.

     (3) A manufacturer or distributor or new motor vehicle dealer

may bring an action for declaratory judgment for determination of

any controversy arising pursuant to under this act.

     (4) A manufacturer or distributor who that violates this act

shall be liable for all court costs and reasonable attorney's

attorney fees incurred by the a dealer in an action under this

section.

     Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 95th Legislature are

enacted into law:

     (a) Senate Bill No. 1309.

     (b) House Bill No. 6099.

     (c) House Bill No. 6100.

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