April 29, 2010, Introduced by Senators THOMAS, GILBERT, SANBORN, WHITMER, KUIPERS, NOFS, JANSEN, HUNTER, ALLEN, McMANUS, OLSHOVE, BROWN, PAPPAGEORGE, CROPSEY, BARCIA, CLARKE, CHERRY, PATTERSON, SCOTT, RICHARDVILLE, STAMAS, BISHOP, GLEASON, BIRKHOLZ, ANDERSON, KAHN and VAN WOERKOM and referred to the Committee on Economic Development and Regulatory Reform.
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 2, 3, 4, 5, 6, 11, 12, and 13 (MCL 445.1562,
445.1563, 445.1564, 445.1565, 445.1566, 445.1571, 445.1572, and
445.1573), sections 2, 3, 5, and 13 as amended by 1998 PA 456,
section 4 as amended by 2000 PA 240, and sections 6, 11, and 12 as
amended by 1983 PA 188.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. (1) "Closed dealership" means a new motor vehicle
dealer whose dealer agreement has been terminated, canceled,
discontinued, or not renewed.
(2) "Coerce" means to compel or attempt to compel a person to
act in a given manner or to refrain from acting in a given manner
by pressure, intimidation, or threat of harm, damage, breach of
contract, or other adverse consequences, including, but not limited
to, the loss of any benefit available to other new motor vehicle
dealers of the same line make in this state. The term does not
include any of the following actions by a manufacturer:
(a) Without conditions, making a good faith recommendation,
exposition, or argument or persuading or attempting to persuade a
person.
(b) Giving notice in good faith to a new motor vehicle dealer
of that dealer's violation of the terms or provisions of a dealer
agreement.
(c) Engaging in any conduct the manufacturer is permitted to
engage in under this act.
(3) "Current model year" means the calendar year in which a
termination, cancellation, nonrenewal, or discontinuance of a
dealer agreement described in section 11 occurs and the immediately
preceding calendar year.
(4) (2)
"Dealer agreement" means the
an agreement or contract
in writing between a distributor and a new motor vehicle dealer,
between a manufacturer and a distributor or a new motor vehicle
dealer, or between an importer and a distributor or a new motor
vehicle
dealer, which that purports to establish the legal rights
and
obligations of the parties to the agreement or contract. with
regard
to the purchase and sale or resale of new and unaltered
motor
vehicles and accessories for motor vehicles.
(5) (3)
"Designated family
member" means any of the
following:
(a) If a new motor vehicle dealer who dies or becomes
incapacitated has designated a successor under section 15(6), that
designated successor.
(b) If a new motor vehicle owner dies and has not designated a
successor
under section 15(6), the spouse , or a 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 who 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 or the appointed
and
qualified personal representative and the or testamentary
trustee
of a the deceased new motor vehicle dealer. However, the
term
shall mean 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.
(c) If a new motor vehicle dealer becomes incapacitated and
has not designated a successor under section 15(6), the person
appointed by the court as the legal representative of the dealer.
Sec.
3. (1) "Distributor" means any person, including an
importer,
resident or nonresident, who that
is located in or
outside
of this state and is
engaged in the business pursuant to a
dealer
agreement, in whole or in part, of
offering for sale,
selling, or distributing new and unaltered motor vehicles to a new
motor
vehicle dealer , who under
a dealer agreement, that maintains
a
factory representative for such purposes, resident or
nonresident,
that is located in or outside
of this state for
purposes
of conducting that business, or who that controls
any a
person ,
resident or nonresident, who in whole or in part that is
located in or outside of this state and offers for sale, sells, or
distributes new and unaltered motor vehicles to a new motor vehicle
dealer.
Distributor does not include a person who that alters or
converts motor vehicles for sale to a new motor vehicle dealer.
(2) "Established place of business" means a permanent,
enclosed
commercial building located within in this state that is
easily accessible and open to the public at all reasonable times
and
at which the business of a new motor vehicle dealer may legally
conduct business, including the display and repair of motor
vehicles,
may be lawfully carried on in accordance compliance with
the terms of all applicable buildings codes, zoning, and other
land-use regulatory ordinances.
(3) "Executive manager" means an individual employed by a new
motor vehicle dealer in an executive capacity and who has a written
employment agreement with the dealer that includes a right for the
executive manager to purchase a controlling interest in the
dealership at a future time or on the death or incapacity of the
dealer.
(4) (3)
"Factory branch" means an
office maintained by a
manufacturer or distributor for the purpose of selling or offering
for
sale to sell vehicles to a distributor, wholesaler, or new
motor
vehicle dealer , or for
directing or supervising in whole or
in
part any factory or distributor representatives. The term
includes any sales promotion organization maintained by a
manufacturer
or distributor which that is engaged in promoting the
sale of a particular make of new motor vehicles in this state to
new motor vehicle dealers.
(5) (4)
"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.
(6) "Fair rental value" of a new motor vehicle dealer's place
of business means 1 of the following, calculated on an annual
basis:
(a) If the new motor vehicle dealer leases the place of
business, the actual rental amount owed by the dealer under the
lease agreement.
(b) If the new motor vehicle dealer owns the place of
business, an amount equal to 20% of the state equalized valuation
of that property as determined under the general property tax act,
1893 PA 206, MCL 211.1 to 211.155.
(7) "Former dealer" means a new motor vehicle dealer that
entered into a dealer agreement with a predecessor manufacturer and
1 of the following occurred:
(a) The dealer entered into a termination agreement or
deferred termination agreement with the predecessor manufacturer or
a successor manufacturer related to that dealer agreement.
(b) The dealer agreement was terminated, canceled, not
renewed, discontinued, rejected, not assumed, or otherwise ended.
Sec.
4. (1) "Good faith" means honesty in fact and the
observation
of reasonable commercial standards of fair dealing in
the
trade, as defined and interpreted under that term as defined in
section 2103 of the uniform commercial code, 1962 PA 174, MCL
440.2103.
(2)
"Manufacturer" means any a person who that manufactures
or
assembles
new motor vehicles ; or any
a distributor, factory
branch, or factory representative.
(3) "Motor vehicle" means that term as defined in section 33
of the Michigan vehicle code, 1949 PA 300, MCL 257.33, but does not
include a bus, a tractor, or farm equipment.
(4) "Motor vehicle service and repair facility" means a motor
vehicle repair facility, as defined in section 2 of the motor
vehicle service and repair act, 1974 PA 300, MCL 257.1302. The term
does not include a motor vehicle service and repair facility owned
or operated by a new motor vehicle dealer.
Sec.
5. (1) "New motor vehicle" means a motor vehicle which
that is in the possession of the manufacturer, distributor, or
wholesaler, or has been sold only to a new motor vehicle dealer and
on
for which the new motor vehicle dealer has
not issued an
original
title. has not been issued from the new motor vehicle
dealer.
(2) "New motor vehicle dealer" means a person, including a
distributor,
who that holds a dealer agreement granted by a
manufacturer, distributor, or importer for the sale or distribution
of
its motor vehicles; , who is
engaged in the business of
purchasing, selling, exchanging, or dealing in new motor vehicles;
and
who has an established place of business in this state.
(3) "Person" means a natural person, partnership, corporation,
limited liability company, association, trust, estate, or other
legal entity.
(4) "Predecessor manufacturer" means a manufacturer that
sells, conveys, or otherwise transfers all or part of its business
to a successor manufacturer.
(5) (4)
"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.
Sec. 6. (1) "Relevant market area" means 1 of the following:
(a)
For a proposed new motor vehicle dealer or a new motor
vehicle
dealer who plans to relocate his or her place of business
in
a county having a population which is greater than 25,000, the
area
within a radius of 6 miles of the intended site of the
proposed
or relocated dealer. The 6-mile distance shall be In a
county that has a population of more than 250,000, the area within
a radius of 10 miles of the site of the intended place of business
of a proposed new vehicle dealer or the intended place of business
of a new vehicle dealer that plans to relocate its place of
business. For purposes of this section, the 10-mile distance is
determined by measuring the distance between the nearest surveyed
boundary
of the an existing new motor vehicle dealer's principal
place of business and the nearest surveyed boundary line of the
proposed or relocated new motor vehicle dealer's principal place of
business.
(b)
For a proposed new motor vehicle dealer or a new motor
vehicle
dealer who plans to relocate his or her place of business
in
a county having a population which is not greater than 25,000,
the
area within a radius of 10 miles of the intended site of the
proposed
or relocated dealer, or the county line, whichever is
closer
to the intended site. The 10-mile distance shall be In a
county that has a population of 250,000 or fewer, the area within a
radius of 20 miles of the site of the intended place of business of
a proposed new vehicle dealer or the intended place of business of
a new vehicle dealer that plans to relocate its place of business.
For purposes of this section, the 20-mile distance is determined by
measuring the distance between the nearest surveyed boundary line
of
the an existing new motor vehicle dealer's principal place
of
business and the nearest surveyed boundary line of the proposed or
relocated new motor vehicle dealer's principal place of business.
(2) "Successor manufacturer" means a manufacturer that
acquires, succeeds to, or assumes any part of the business of
another manufacturer on or after January 1, 2009, as the result of
any of the following:
(a) A change in ownership, operation, or control of a
predecessor manufacturer by sale or transfer of assets, corporate
stock, or other equity interest, assignment, merger, consolidation,
combination, joint venture, redemption, court-approved sale,
operation of law, or any other means.
(b) Termination, suspension, or cessation of a part or all of
the business operations of a predecessor manufacturer.
(c) Discontinuance of the sale of a product line.
(d) A change in distribution system by a predecessor
manufacturer, whether through a change in distributor or the
predecessor manufacturer's decision to cease conducting any
business through a particular distributor.
(3) "Used motor vehicle" means a motor vehicle that is not a
new motor vehicle.
(4) "Used motor vehicle dealer" means a person that is engaged
in the business of purchasing, selling, exchanging, or dealing in
used motor vehicles and that has an established place of business
in this state. The term does not include a new motor vehicle dealer
purchasing, selling, exchanging, or dealing in used motor vehicles
as part of its business of purchasing, selling, exchanging, or
dealing in new motor vehicles.
Sec.
11. (1) Upon the termination, cancellation, nonrenewal,
or
discontinuance of any dealer agreement, Subject to section 12,
if a dealer agreement is terminated, canceled, not renewed, or
discontinued, the manufacturer shall pay the new motor vehicle
dealer
shall be allowed fair and reasonable compensation by the
manufacturer
or distributor for all of
the following:
(a)
All new current model year motor vehicle inventory
purchased
from the manufacturer or distributor, which that has not
been materially altered, substantially damaged, or driven for more
than
300 1,000 miles. and all new motor vehicle inventory not of
the
current model year which has not been materially altered,
substantially
damaged, or driven for more than 300 miles, provided
the
noncurrent model vehicles were purchased from the manufacturer
or
distributor and drafted on the dealer's financing source or paid
for
within 120 days of the effective date of the termination,
cancellation,
or nonrenewal.
(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.
(d)
Special tools purchased from the manufacturer or
distributor
within 3 years of the date of
termination,
cancellation, nonrenewal, or discontinuance.
(e) Computers, software, and software agreements that the
manufacturer required that the dealer obtain for communication of
sales, service, warranty, or other information between the dealer
and the manufacturer.
(f) The goodwill of the dealer.
(2)
Upon the termination, cancellation, nonrenewal, or
discontinuance
of a dealer agreement, In
addition to the payment of
compensation under subsection (1), if a dealer agreement is
terminated, canceled, not renewed, or discontinued, the
manufacturer
or distributor shall also pay to the new motor vehicle
dealer
a sum in equal monthly
installments an amount equal to the
current,
fair rental value of his or her its established
place of
business for a period of 1 year from the effective date of
termination, cancellation, nonrenewal, or discontinuance, or the
remainder of any lease, whichever is less. However, the payment
required
by this subsection shall does
not apply to any
termination,
cancellation, nonrenewal, or discontinuance made
pursuant
to under section 10(c).
(3)
The requirement of paying an annual obligation to pay a
new motor vehicle dealer fair rental value pursuant to under
subsection
(2) shall apply applies only to the extent that the new
motor vehicle dealer's established place of business is used for
performance of sales and service obligations under the
manufacturer's
or distributor's dealer agreement.
(4)
In the event that termination is by the dealer, If a new
motor vehicle dealer terminates a dealer agreement, the
manufacturer
is only required to make the payment
required by under
subsection
(2) is required only if the new motor vehicle dealer
makes
available to the manufacturer or distributor use and
possession of the premises free of any claims of others for the 1-
year period, except for use by the dealer for closing his or her
business.
(5)
In the event that termination is by the dealer If a new
motor vehicle dealer terminates a dealer agreement, the payment
required
by under subsection (2) shall not exceed $20,000.00 unless
provided
otherwise by contract entered into between the parties
agree in writing to a different amount.
(6)
This section shall does not relieve a new motor vehicle
dealer, lessor, or other owner of an established place of business
from the obligation of mitigating damages.
Sec.
12. (1) Compensation A
manufacturer shall pay the
compensation
for new motor vehicle inventory under
section 11(1)(a)
shall
be paid, if possible, within 30 days after the effective date
of
the termination, cancellation, nonrenewal, or discontinuance,
provided
that the new motor vehicle dealer has met all reasonable
requirements
of the dealer agreement with respect to the return of
the
new motor vehicle inventory. Compensation for and
items of
personal
property required by under
section 11(1)(b), 11(1)(c), and
11(1)(d)
shall be paid 11(1) within 90 75 days after the effective
date of the termination, cancellation, nonrenewal, or
discontinuance, provided that the new motor vehicle dealer has met
all reasonable requirements of the dealer agreement with respect to
the return of the new motor vehicle inventory and repurchased
personal property, including providing clear title to the
repurchased personal property.
(2) All of the following apply in determining the amount of
fair and reasonable compensation under section 11(1):
(a)
Fair and reasonable compensation pursuant
to under section
11(1)(a)
shall be not less than equal
or exceed the new motor
vehicle dealer's net acquisition cost.
(b) Fair and reasonable compensation pursuant to for supplies
and parts inventory for purposes of section 11(1)(b) shall be is
the
amount stated in the manufacturer's or distributor's current
parts price list.
(c) Fair and reasonable compensation pursuant to for purposes
of
section 11(1)(c), and
11(1)(d) shall be (d), and
(e) is the fair
market value of the personal property described in those
subdivisions.
(d) Fair and reasonable compensation for a new motor vehicle
dealer's goodwill for purposes of section 11(1)(f) is the fair
market value of that goodwill. All of the following apply to the
determination of the fair market value of a new motor vehicle
dealer's goodwill under this subdivision:
(i) The fair market value for purposes of section 11(1)(f) is
the highest of the fair market values on the following dates:
(A) The date the action that resulted in the cancellation,
termination, discontinuance, or nonrenewal of the dealer agreement
became final.
(B) If the manufacturer is a predecessor manufacturer, the
date the predecessor manufacturer announced the action that
resulted in the cancellation, termination, discontinuance, or
nonrenewal of the dealer agreement.
(C) If the manufacturer is a predecessor manufacturer, the
date that is 12 months before the date that the predecessor
manufacturer announced the action that resulted in the
cancellation, termination, discontinuance, or nonrenewal of the
dealer agreement.
(ii) If the manufacturer and the new motor vehicle dealer agree
on the fair market value within 30 days after the effective date of
the termination, cancellation, nonrenewal, or discontinuance of the
dealer agreement, that valuation is conclusive and binding on the
manufacturer and the new motor vehicle dealer.
(iii) If the manufacturer and the new motor vehicle dealer are
unable to agree on the fair market value within 30 days after the
effective date of the termination, cancellation, nonrenewal, or
discontinuance of the dealer agreement, a valuation expert mutually
selected by the manufacturer and new motor vehicle dealer shall
conduct a full evaluation of the dealership and determine the fair
market value of the goodwill. The opinion of a valuation expert
selected under this subparagraph is conclusive and binding on the
manufacturer and the new motor vehicle dealer.
(iv) If the manufacturer and new motor vehicle dealer cannot
agree on a valuation expert for purposes of subparagraph (iii) within
45 days after the effective date of the termination, cancellation,
nonrenewal, or discontinuance of the dealer agreement, the
manufacturer and new motor vehicle dealer shall within 60 days of
that effective date each appoint, at its own cost, a valuation
accountant to determine the fair market value of the goodwill. If
the manufacturer or the dealer, but not both, appoints a valuation
accountant within that 60-day period, that accountant's written
opinion on the fair market value of the goodwill is conclusive and
binding on the manufacturer and new motor vehicle dealer. If the
manufacturer and the dealer each appoint a valuation accountant
within that 60-day period, and those accountants agree on the fair
market value of the goodwill, the written opinion of those
accountants is conclusive and binding on the manufacturer and the
new motor vehicle dealer.
(v) If the manufacturer and the dealer each appoint a
valuation accountant under subparagraph (iv) within the 60-day
period described in that subparagraph, and those accountants
disagree on the fair market value of the goodwill, those
accountants shall appoint a third valuation accountant who is
mutually acceptable to them. All of the following apply if a third
valuation accountant is appointed under this subparagraph:
(A) The manufacturer and the dealer are each responsible for
50% of the fees and expenses of the third valuation accountant.
(B) The third valuation accountant shall provide a written
opinion of the fair market value of the goodwill. Subject to sub-
subparagraphs (C) and (D), the third valuation accountant's written
opinion of the fair market value of the goodwill is conclusive and
binding on the manufacturer and new motor vehicle dealer.
(C) If the fair market value stated in the written opinion of
the third valuation accountant is higher than the fair market value
determined by the valuation accountant of the manufacturer and the
fair market value determined by the valuation accountant of the
dealer, then the fair market value of the manufacturer's valuation
accountant, or the fair market value determined by the dealer's
valuation accountant, whichever is higher, and not the fair market
value of the third valuation accountant, constitutes the fair
market value of the goodwill and is conclusive and binding on the
manufacturer and new motor vehicle dealer.
(D) If the fair market value stated in the written opinion of
the third valuation accountant is less than the fair market value
determined by the valuation accountant of the manufacturer and the
fair market value determined by the valuation accountant of the
dealer, then the fair market value of the manufacturer's valuation
accountant, or the fair market value determined by the dealer's
valuation accountant, whichever is less, and not the fair market
value of the third valuation accountant, constitutes the fair
market value of the goodwill and is conclusive and binding on the
manufacturer and new motor vehicle dealer.
(3)
In the event If payment required
under subsection (1) is
not
made within 90 days as provided in the 90-day period described
in that subsection, then beginning on the day after the expiration
of that 90-day period under subsection (1), interest shall accrue
thereafter
on all amounts due the new motor
vehicle dealer at a
rate of 12% per annum.
(4) As used in this section:
(a) "Valuation accountant" means a certified public accountant
who is qualified by experience and ability to value the goodwill of
a new motor vehicle dealer.
(b) "Valuation expert" means any independent individual who is
qualified by experience and ability to value the goodwill of a new
motor vehicle dealer. The term includes, but is not limited to, a
valuation accountant.
Sec.
13. A manufacturer , importer, or distributor shall 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, or a
part or accessory of a new motor vehicle, equipment, or any other
commodity
not required by law which was that
is 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) Participate monetarily in any advertising campaign or
contest,
or purchase any promotional materials, display devices, or
display decorations or materials, or pay or assume directly in
connection with the sale of a new motor vehicle any part of the
cost of a refund, rebate, or discount made by or lawfully imposed
by
the manufacturer or distributor to or in favor of a consumer,
unless voluntarily agreed to by the 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 to terminate a dealer agreement 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 shall does
not constitute a violation of
this act.
(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 acquiring a
dealership for, or participating in the management of or investing
in, a dealer that has a dealer agreement for another line of new
motor
vehicle vehicles 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.
(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 if changing
the location or making the
alterations is unreasonable.
(h) Prospectively assent to a release, assignment, novation,
waiver,
or estoppel which that would relieve any person from
liability imposed by this act; require that any dealer agreement be
governed by the laws of a state other than this state; or require
referral of any controversy between a new motor vehicle dealer and
a
manufacturer , importer, or distributor to be referred to a
person other than the duly constituted courts of this state, or of
the United States located in this state, if the referral would be
binding
upon on the new motor vehicle dealer. unless
the parties
agree
This subdivision does not
apply to an agreement between the
parties,
made at the time of a controversy, to
refer a the
controversy to a court of the United States located outside this
state
or agree at the time of the an
arbitration to conduct the
arbitration
either within in or outside of
this state. Such a A
provision in a dealer agreement that violates this subdivision is
void and unenforceable.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 1308
of the 95th Legislature is enacted into law.