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S.B. 157

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Fri, Mar 5, 2010 at 5:26 PM by rday. -->              1     

MOTOR VEHICLE DEALER FRANCHISE AMENDMENTS

             2     
2010 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Curtis S. Bramble

             5     
House Sponsor: Kevin S. Garn


             6      Cosponsor: John L. Valentine

             7     

             8      LONG TITLE
             9      General Description:
             10          This bill modifies and enacts provisions under the New Automobile Franchise Act.
             11      Highlighted Provisions:
             12          This bill:
             13          .    enacts a provision authorizing a reinstated franchisee to resume operating as a
             14      franchisee under certain circumstances; and
             15          .    provides a private cause of action for a reinstated franchisee for an act of a specified
             16      franchisor that causes a substantial diminution in value of the reinstated franchisee's
             17      reinstated franchise.
             18      Monies Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          This bill provides an immediate effective date.
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          13-14-308, as enacted by Laws of Utah 2008, Chapter 362
             25      ENACTS:
             26          13-14-302.5, Utah Code Annotated 1953
             27     



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             28
     Be it enacted by the Legislature of the state of Utah:
             29          Section 1. Section 13-14-302.5 is enacted to read:
             30          13-14-302.5. Reinstatement of certain terminated franchises.
             31          (1) As used in this section:
             32          (a) "Covered franchisee":
             33          (i) means a person who was a franchisee under a pre-bankruptcy franchise; and
             34          (ii) is a "covered dealership," as that term is defined in the federal franchise arbitration
             35      law.
             36          (b) "Covered franchisor":
             37          (i) means a person who was a franchisor under a pre-bankruptcy franchise; and
             38          (ii) is a "covered manufacturer," as that term is defined in the federal franchise
             39      arbitration law.
             40          (c) "Federal franchise arbitration law" means Section 747 of the Consolidated
             41      Appropriations Act of 2010, Pub. L. No. 111-117.
             42          (d) "New franchisor":
             43          (i) means a person who is a franchisor of the same line-make as the franchisor under a
             44      pre-bankruptcy franchise that has become a terminated franchise; and
             45          (ii) is a "covered manufacturer," as that term is defined in the federal franchise
             46      arbitration law.
             47          (e) "Pre-bankruptcy franchise" means a franchise in effect as of October 3, 2008.
             48          (f) "Reinstated franchise" means:
             49          (i) a terminated franchise that a reinstatement order determines should be reinstated,
             50      renewed, continued, assigned, or assumed; or
             51          (ii) a franchise that a reinstatement order otherwise determines should be reestablished
             52      in or added to the dealer network of a new franchisor in the geographic area where the covered
             53      franchisee was located before October 3, 2008.
             54          (g) "Reinstated franchisee" means a covered franchisee S. :
             54a          (i) whose franchise became a terminated franchise with less than 90 days notice prior to
             54b      termination; and
             54c          (ii) .S that becomes entitled to a
             55      reinstated franchise under a reinstatement order.
             56          (h) "Reinstatement order" means an arbitrator's written determination:
             57          (i) in an arbitration proceeding held under the federal franchise arbitration law; and


             58          (ii) (A) that a terminated franchise should be reinstated, renewed, continued, assigned,



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             59
     or assumed; or
             60          (B) that a covered franchisee should otherwise be reestablished as a franchisee in or
             61      added to the dealer network of a new franchisor in the geographic area where the covered
             62      franchisee was located before October 3, 2008.
             63          (i) "Terminated franchise" means a covered franchisee's pre-bankruptcy franchise that
             64      was terminated or not continued or renewed as a result of a bankruptcy proceeding involving a
             65      covered franchisor as the bankruptcy debtor.
             66          (2) The process under Sections 13-14-302 , 13-14-304 , and 13-14-306 for the issuance
             67      of a franchise, including Subsections 13-14-302 (4) and (5) and Section 13-14-304 relating to a
             68      protest by another franchisee in the line-make in the relevant market area against the
             69      establishment or relocation of a franchise, does not apply to a reinstated franchise or reinstated
             70      franchisee.
             71           S. [ (3) A reinstated franchisee may resume operating as a franchisee under a reinstated
             72      franchise upon the issuance of a reinstatement order.
] .S

             73          Section 2. Section 13-14-308 is amended to read:
             74           13-14-308. Private right of action.
             75          (1) A franchisee has a private right of action for actual damages and S. [ an ] reasonable .S
             75a      attorney S. [ fee ] fees .S
             76      against a franchisor for a violation of this chapter that results in damage to the franchisee.
             77          (2) (a) As used in this Subsection (2):
             78          (i) "New franchisor" has the same meaning as defined in Section 13-14-302.5 .
             79          (ii) "Reinstated franchise" has the same meaning as defined in Section 13-14-302.5 .
             80          (iii) "Reinstated franchisee" has the same meaning as defined in Section 13-14-302.5 .
             81          (b) A reinstated franchisee has a private right of action for actual damages and S. [ an ]
             81a      reasonable .S
             82      attorney S. [ fee ] fees .S against a new franchisor S. [ for any action of the new franchisor that ]
             82a      if:
             82b          (i) the new franchisor:
             82c          (A) establishes a new franchisee of the same line-make as a line-make of the reinstated
             82d      franchisee within the relevant market area of the reinstated franchisee; or
             82e          (B) adds a line-make to another franchisor's existing franchisee within the relevant
             82f      market area of the reinstated franchisee that is the same line-make as a line-make of the
             82g      reinstated franchisee; and
             82h          (ii) the franchisor's action under Subsection (2)(b)(i) .S causes a


            
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83
     substantial diminution in value of the reinstated franchisee's reinstated franchise.
             83a      S. (c) A new franchisor may not be held liable under Subsection (2)(b) based on a franchisee's
             83b      purchase of another existing franchise, both of which are within the relevant market area of a
             83c      reinstated franchisee, for the purpose of combining the purchased franchise with the franchise
             83d      of the purchasing franchisee. .S
             84          Section 3. Effective date.
             85          If approved by two-thirds of all the members elected to each house, this bill takes effect
             86      upon approval by the governor, or the day following the constitutional time limit of Utah
             87      Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
             88      the date of veto override.



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