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S.B. 157 Enrolled

             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 relating to a reinstated franchisee resuming operations as a
             14      franchisee under certain circumstances; and
             15          .    provides a private cause of action for a reinstated franchisee for an act of a
             16      specified franchisor that causes a substantial diminution in value of the reinstated
             17      franchisee's 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     
             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. Application of new franchise process with respect to certain
             31      terminated franchises.
             32          (1) As used in this section:
             33          (a) "Covered franchisee":
             34          (i) means a person who was a franchisee under a pre-bankruptcy franchise; and
             35          (ii) is a "covered dealership," as that term is defined in the federal franchise arbitration
             36      law.
             37          (b) "Covered franchisor":
             38          (i) means a person who was a franchisor under a pre-bankruptcy franchise; and
             39          (ii) is a "covered manufacturer," as that term is defined in the federal franchise
             40      arbitration law.
             41          (c) "Federal franchise arbitration law" means Section 747 of the Consolidated
             42      Appropriations Act of 2010, Pub. L. No. 111-117.
             43          (d) "New franchisor":
             44          (i) means a person who is a franchisor of the same line-make as the franchisor under a
             45      pre-bankruptcy franchise that has become a terminated franchise; and
             46          (ii) is a "covered manufacturer," as that term is defined in the federal franchise
             47      arbitration law.
             48          (e) "Pre-bankruptcy franchise" means a franchise in effect as of October 3, 2008.
             49          (f) "Reinstated franchise" means:
             50          (i) a terminated franchise that a reinstatement order determines should be reinstated,
             51      renewed, continued, assigned, or assumed; or
             52          (ii) a franchise that a reinstatement order otherwise determines should be reestablished
             53      in or added to the dealer network of a new franchisor in the geographic area where the covered
             54      franchisee was located before October 3, 2008.
             55          (g) "Reinstated franchisee" means a covered franchisee:
             56          (i) whose franchise became a terminated franchise with less than 90 days' notice prior
             57      to termination; and


             58          (ii) that becomes entitled to a reinstated franchise under a reinstatement order.
             59          (h) "Reinstatement order" means an arbitrator's written determination:
             60          (i) in an arbitration proceeding held under the federal franchise arbitration law; and
             61          (ii) (A) that a terminated franchise should be reinstated, renewed, continued, assigned,
             62      or assumed; or
             63          (B) that a covered franchisee should otherwise be reestablished as a franchisee in or
             64      added to the dealer network of a new franchisor in the geographic area where the covered
             65      franchisee was located before October 3, 2008.
             66          (i) "Terminated franchise" means a covered franchisee's pre-bankruptcy franchise that
             67      was terminated or not continued or renewed as a result of a bankruptcy proceeding involving a
             68      covered franchisor as the bankruptcy debtor.
             69          (2) The process under Sections 13-14-302 , 13-14-304 , and 13-14-306 for the issuance
             70      of a franchise, including Subsections 13-14-302 (4) and (5) and Section 13-14-304 relating to a
             71      protest by another franchisee in the line-make in the relevant market area against the
             72      establishment or relocation of a franchise, does not apply to a reinstated franchise or reinstated
             73      franchisee.
             74          Section 2. Section 13-14-308 is amended to read:
             75           13-14-308. Private right of action.
             76          (1) A franchisee has a private right of action for actual damages and reasonable
             77      attorney fees against a franchisor for a violation of this chapter that results in damage to the
             78      franchisee.
             79          (2) (a) As used in this Subsection (2):
             80          (i) "New franchisor" has the same meaning as defined in Section 13-14-302.5 .
             81          (ii) "Reinstated franchise" has the same meaning as defined in Section 13-14-302.5 .
             82          (iii) "Reinstated franchisee" has the same meaning as defined in Section 13-14-302.5 .
             83          (b) A reinstated franchisee has a private right of action for actual damages and
             84      reasonable attorney fees against a new franchisor if:
             85          (i) the new franchisor:


             86          (A) establishes a new franchisee of the same line-make as a line-make of the reinstated
             87      franchisee within the relevant market area of the reinstated franchisee; or
             88          (B) adds a line-make to another franchisor's existing franchisee within the relevant
             89      market area of the reinstated franchisee that is the same line-make as a line-make of the
             90      reinstated franchisee; and
             91          (ii) the franchisor's action under Subsection (2)(b)(i) causes a substantial diminution
             92      in value of the reinstated franchisee's reinstated franchise.
             93          (c) A new franchisor may not be held liable under Subsection (2)(b) based on a
             94      franchisee's purchase of another existing franchise, both of which are within the relevant
             95      market area of a reinstated franchisee, for the purpose of combining the purchased franchise
             96      with the franchise of the purchasing franchisee.
             97          Section 3. Effective date.
             98          If approved by two-thirds of all the members elected to each house, this bill takes effect
             99      upon approval by the governor, or the day following the constitutional time limit of Utah
             100      Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
             101      the date of veto override.


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