ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 2961
(By Delegates Warner and Shelton)
[Passed April 14, 2001; in effect ninety days from passage.]
AN ACT to amend and reenact sections two, four, six, eight and
eighteen, article six, chapter seventeen-a of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
and to further amend said article by adding thereto a new
section, designated two-a, all relating to the establishment
of a dealer recovery fund; setting forth legislative findings;
creating a dealer recovery fund control board; promulgation of
rules; providing for an annual dealer recovery fund fee;
providing exemptions; requiring surety bonds; and providing
for payment of claims.
Be it enacted by the Legislature of West Virginia:
That sections two, four, six, eight and eighteen, article six,
chapter seventeen-a of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted; and that said article be further amended by adding a new section, designated
two-a
, all to read as follows:
ARTICLE 6. LICENSING OF DEALERS, WRECKERS OR DISMANTLERS; SPECIAL
PLATES; TEMPORARY PLATES OR MARKERS
§17A-6-2. Legislative findings, declaration of public policy and
dealer recovery fund.
(a) The Legislature hereby determines and finds that in the
past some persons engaged in the business of selling new or used
motor vehicles, house trailers, trailers, recreational vehicles,
motorcycles, or used motor vehicle parts, and in the business of
wrecking or dismantling motor vehicles, have not had the necessary
qualifications, staff, equipment or facilities to adequately serve
the public; that some persons engaged in the businesses have made
false and deceptive claims and advertisements to the public and
have engaged in fraud and other illegal conduct; that certain
citizens of this state have sustained financial losses as a result
thereof; and that in some of the
cases there has been no adequate
means to prevent the
conduct or protect the interests of the
citizens of West Virginia. It is, therefore, declared to be the
public policy of this state that the business of new motor vehicle
dealer, used motor vehicle dealer, house trailer dealer, trailer
dealer, recreational vehicle dealer, motorcycle dealer, used parts
dealer, or wrecker or dismantler, affects the general welfare of this state and its citizens; that persons without the necessary
qualifications, staff, equipment or facilities to adequately serve
the public, and persons not of good character or who have or are
likely to attempt to misrepresent their product or engage in
fraudulent or other illegal conduct should not engage in these
businesses; and that the evils may best be prevented and the
interests of the public best served by requiring persons in the
businesses to meet the qualifications set forth in this article and
to be licensed by the commissioner of motor vehicles as provided in
this article.
(b) The Legislature further determines and finds that there
exists a significant problem when a motor vehicle dealer goes out
of business or engages in business practices that cause citizens or
businesses of the affected community, as well as this state
substantial financial loss. It is, therefore determined, that the
creation of a dealer recovery fund is necessary as a remedial
measure to allow both the state and the citizens of this state to
recover any taxes which have not been properly remitted to the
state and to provide financial relief to citizens, businesses and
other motor vehicle dealers who have suffered financial harm
through the failure of a motor vehicle dealer to properly fulfill
its responsibilities such as failure to properly release liens and
deliver clear title in motor vehicle transactions.
§17A-6-2a. Dealer recovery fund created.
(a) There is hereby created a special fund in the state
treasury which is to be designated the "dealer recovery fund." The
fund shall consist of certain moneys received from persons engaged
in the business of selling new or used motor vehicles, new or used
motorcycles, trailers, semi-trailers or recreational vehicles or
from grants, gifts, bequests or awards arising out of the
settlement or adjudication of a claim. The fund is not to be
treated by the auditor and treasurer as part of the general revenue
of the state. The fund is to be a special revolving fund paid out
upon order of the commissioner of motor vehicles based on the
recommendation of the dealer recovery fund control board created in
this section, solely for the purposes specified in this section.
The commissioner may use up to one percent of funds from the dealer
recovery fund for the administrative expenses of operating the
dealer recovery fund program.
(b) The dealer recovery fund control board shall consist of
the commissioner of motor vehicles or his or her designee, the
attorney general's designee representing the office of consumer
protection and one representative selected by the motor vehicle
dealer's advisory board. The commissioner of motor vehicles or his
or her designee shall serve as chair and the board shall meet at
least once a year during the month of July, and as required by the commissioner. The commissioner may propose rules for promulgation
in accordance with article three, chapter twenty-nine-a of this
code that are necessary to effectuate the provisions of this
section. The commissioner may employ the necessary staff needed to
operate the program. The board may prorate the amount paid on
claims when the amount of valid claims submitted would exceed
thirty-three percent of the fund. However, claims presented by the
division of motor vehicles for taxes and fees shall be paid in
full. The board may purchase insurance at a cost not to exceed one
percent of the fund
to cover extraordinary or excess claims from
the fund.
(c) Every applicant for either an original dealer license or
renewal of an existing dealer license of the type enumerated in
subsection (a) of this section shall pay, in addition to any other
license fee, an annual dealer recovery fund fee of one hundred and
fifty dollars. All dealers shall continue to maintain a surety
bond as required by this article and the dealer recovery fund
payment unless exempt by one of the following requirements:
(1) Any dealer who, for the three years immediately preceding
assessment of the fees, has not had a claim paid against their bond
or against the dealer recovery fund, whose license has not been
suspended or revoked and who has not been assessed any civil
penalties is not required to continue to keep the bond required by this article. However, no dealer can submit a claim against the
fund unless it has contributed to the fund for at least three
years.
(2) If the dealer recovery fund reaches or exceeds the amount
of three million dollars as of the first day of July of any year,
a dealer who meets the requirements of subdivision (1) of this
subsection, is exempt from payment of the annual dealer recovery
fund fee. However, if the fund should, as of the first day of
April of any year, drop below three million dollars, all dealers,
regardless of any previous exemption shall pay the annual dealer
recovery fee of one hundred fifty dollars. The exemption prescribed
in subdivision (1) of this subsection remains in effect regardless
of the status of the fund.
(d) The dealer recovery fund control board may consider
payment only after any dealer surety bond required pursuant to the
provisions of section four of this article has been exhausted.
(e) When the fund reaches two hundred fifty thousand dollars,
the board shall consider claims for payment.
(f) Claims against the fund are not to be made for any act or
omission which occurred prior to the first day of July, two-
thousand and two.
(g) Claims for payment shall be submitted within six months of
the date of sale or the date the division is made aware of the claim.
(h) The board shall pay claims in the following order:
(1) Claims submitted by the division of motor vehicles for
unpaid taxes and fees;
(2) Claims submitted by a retail purchaser of a vehicle from
a dealer covered by the fund with an undisclosed lien or a retail
purchaser of a vehicle from a dealer covered by the fund who finds
that the lien on the vehicle traded in has not been satisfied by
the selling dealer if the lien satisfaction was a condition of the
purchase agreement;
(3) Claims submitted by a motor vehicle dealer contributing to
the fund, which has purchased a vehicle or vehicles from another
dealer covered by the fund with an undisclosed lien; or
(4) Claims submitted by a retail purchaser of third party
goods or services from a dealer covered by the fund for the unpaid
charges when the dealer fails to pay the third party for the goods
or services.
(i) The maximum claim against the fund for any unpaid lien of
a used vehicle is the unpaid balance of the lien up to the loan
value of the vehicle as of the date of the sale or other
transaction as shown by a generally accepted motor vehicle value
guide. The maximum claim against the fund for any new or unused
vehicle is the amount of the invoice less any amounts rebated or to be rebated to the dealer from the manufacturer. Payment is only to
be made to a secured party who agrees to accept payment from the
dealer recovery fund and who accepts the payment in full settlement
of any claims, and who releases the lien and the title, if
applicable, prior to receiving payment. Any dealer who agrees to
accept payment from the dealer recovery fund shall release the
title prior to receiving payment.
(j) On payment by the board to a claimant from the fund, the
board shall immediately notify the licensee against whom a claim
was paid and request full reimbursement within thirty days of
notification. If a dealer fails to fully reimburse the board within
the specified period of time, the commissioner shall immediately
and without prior hearing revoke the dealer license of dealer
against whom the claim was paid. No applicant with an unpaid claim
is eligible for renewal or relicensure until the full amount of the
reimbursement plus interest as determined by the board is paid to
the fund. Nothing in this section shall limit the authority of the
commissioner to suspend, revoke or levy civil penalties against a
dealer, nor shall full repayment of the amount owed to the fund
necessarily nullify or modify the effect of any action by the
commissioner.
(k) Nothing in this section shall limit the right for any
person to seek relief though civil action against any other person.
(l) The provisions of this section do not apply to those class
DTR dealers in the business of selling manufactured housing and
covered by the state manufactured housing recovery fund established
by the division of labor pursuant to a legislative rule.
§17A-6-4. Application for license certificate; insurance; bonds;
investigation; information confidential
.
(a) Application for any license certificate required by
section three of this article shall be made on a form prescribed by
the commissioner. There shall be attached to the application a
certificate of insurance certifying that the applicant has in force
an insurance policy issued by an insurance company authorized to do
business in this state insuring the applicant and any other person,
as insured, using any vehicle or vehicles owned by the applicant
with the express or implied permission of the named insured,
against loss from the liability imposed by law for damages arising
out of the ownership, operation, maintenance or use of the vehicle
or vehicles, subject to minimum limits, exclusive of interest and
costs, with respect to each vehicle, as follows: Twenty thousand
dollars because of bodily injury to or death of one person in any
one accident and, subject to the limit for one person, forty
thousand dollars because of bodily injury to or death of two or
more persons in any one accident, and ten thousand dollars because
of injury to or destruction of property of others in any one accident.
(b) In the case of an application for a license certificate
to engage in the business of new motor vehicle dealer, used motor
vehicle dealer or house trailer dealer, the application shall
disclose, but not be limited to, the following:
(1) The type of business for which a license certificate is
sought;
(2) If the applicant is an individual, the full name and
address of the applicant and any trade name under which he or she
will engage in the business;
(3) If the applicant is a copartnership, the full name and
address of each partner in the copartnership, the name of the
copartnership, its post-office address and any trade name under
which it will engage in the business;
(4) If the applicant is a corporation, its name, the state of
its incorporation, its post-office address and the full name and
address of each officer and director of the corporation;
(5) The location of each place in this state at which the
applicant will engage in the business and whether the business is
owned or leased by the applicant;
(6) Whether the applicant, any partner, officer or director
of the business has previously engaged in the business or any other
business required to be licensed under the provisions of this article and if so, with or for whom, at what location and for what
periods of time;
(7) Whether the applicant, any partner, officer, director or
employer of the business has previously applied for a license
certificate under the provisions of this article or a similar
license certificate in this or any other state, and if so, whether
the license certificate was issued or refused, and, if issued,
whether it was ever suspended or revoked;
(8) A statement of previous general business experience and
the past history of the applicant; and
(9) Any other information that the commissioner may reasonably
require which may include information relating to any contracts,
agreements or understandings between the applicant and other
persons respecting the transaction of the business, and any
criminal record of the applicant if an individual, or of each
partner if a copartnership, or of each officer and director, if a
corporation.
(c) In the case of an application for a license certificate
to engage in the business of new motor vehicle dealer, the
application shall, in addition to the matters outlined in
subsection (b) of this section disclose:
(1) The make or makes of new motor vehicles which the
applicant will offer for sale in this state during the ensuing
fiscal year; and
(2) The exact number of new and used motor vehicles, if any,
sold at retail and wholesale by the applicant or his or her
predecessor, if any, during the preceding fiscal year, and if no
new and used motor vehicles were sold at retail and wholesale by
the applicant or his or her predecessor, if any, during the
preceding fiscal year, the number of new and used motor vehicles
the applicant reasonably expects to sell at retail and wholesale
during the ensuing fiscal year.
(d) In the case of an application for a license certificate
to engage in the business of used motor vehicle dealer, the
application shall in addition to the matters outlined in subsection
(b) of this section, disclose the exact number of used motor
vehicles, if any, sold at retail and wholesale by the applicant or
his or her predecessor, if any, during the preceding fiscal year,
and if no used motor vehicles were sold at retail and wholesale by
the applicant or his or her predecessor, if any, during the
preceding fiscal year, the number of used motor vehicles the
applicant reasonably expects to sell at retail and wholesale during
the ensuing fiscal year.
(e) In the case of an application for a license certificate
to engage in the business of trailer dealer, recreational vehicle
dealer, motorcycle dealer, used parts dealer or wrecker/
dismantler/rebuilder, the application shall disclose any
information that the commissioner may reasonably require.
(f) The application shall be verified by the oath or
affirmation of the applicant, if an individual, or if the applicant
is a copartnership or corporation, by a partner or officer thereof,
as the case may be. Except as provided in section two-a of this
article, the application shall be accompanied by a bond of the
applicant in the penal sum of ten thousand dollars, in the form
prescribed by the commissioner, conditioned that the applicant will
not in the conduct of his or her business practice any fraud which,
or make any fraudulent representation which, shall cause a
financial loss to any purchaser, seller or financial institution or
agency, or the state of West Virginia, with a corporate surety
thereon authorized to do business in this state. The bond shall be
effective as of the date on which the license certificate sought is
issued.
(g) Upon receipt of any fully completed application, together
with any bond required under subsection (f) of this section, the
certificate of insurance as required in subsection (a) of this
section and the appropriate fee provided for in section ten of this article, the commissioner may conduct any investigation he or she
considers necessary to determine the accuracy of any statements
contained in the application and the existence of any other facts
which he or she considers relevant in considering the application.
To facilitate the investigation, the commissioner may withhold
issuance or refusal of the license certificate for a period not to
exceed twenty days.
(h) Any application for a license certificate under the
provisions of this article and any information submitted with the
application is confidential for the use of the division. No person
shall divulge any information contained in any application or any
information submitted with the application except in response to a
valid subpoena or subpoena duces tecum issued pursuant to law.
§17A-6-6. Refusal or issuance of license certificate; license
certificate not transferable.
(a) Upon the basis of the application and all other
information before him or her, the commissioner shall make and
enter an order denying the application for a license certificate
and refusing the license certificate sought. The denial and
refusal are final and conclusive unless an appeal is taken in
accordance with the provisions of section twenty-one of this
article, if the commissioner finds that the applicant
(individually, if an individual, or the partners, if a copartnership, or the officers and directors, if a corporation):
(1) Has failed to furnish the required bond unless otherwise
exempt under the provisions of section two-a of this article;
(2) Has failed to furnish the required certificate of
insurance;
(3) Has knowingly made false statement of a material fact in
his or her application;
(4) Has habitually defaulted on financial obligations in this
state or any other state or jurisdiction;
(5) Has been convicted of a felony: Provided, That upon
appeal, the motor vehicle dealers advisory board established
pursuant to the provisions of section eighteen-a of this article
may grant as exemption of this restriction if the felony did not
involve financial matters, the motor vehicle industry or matters of
moral turpitude.
(6) So far as can be ascertained, has not complied with and
will not comply with the registration and title laws of this state
or any other state or jurisdiction;
(7) Does not or will not have or maintain at each place of
business (subject to the qualification contained in subdivision
(17), subsection (a), section one of this article with respect to
a new motor vehicle dealer) an established place of business as
defined for the business in question in that section;
(8) Has been convicted of any fraudulent act in connection
with the business of new motor vehicle dealer, used motor vehicle
dealer, house trailer dealer, trailer dealer, recreational vehicle
dealer, motorcycle dealer, used parts dealer, or wrecker or
dismantler in this state or any other state or jurisdiction;
(9) Has done any act or has failed or refused to perform any
duty for which the license certificate sought could be suspended or
revoked were it then issued and outstanding;
(10) Is not age eighteen years or older;
`(11) Is delinquent in the payment of any taxes owed to the
United States, the state of West Virginia or any political
subdivision thereof;
(12) Has been denied a license in another state or has been
the subject of license revocation or suspension in another state;
(13) Has committed any action in another state which, if it
had been committed in this state, would be grounds for denial and
refusal of the application for a license certificate;
(14) Has failed to pay any civil penalty assessed by this
state or any other state; or
(15) Has failed to reimburse when ordered, any claim against
the dealer recovery fund as prescribed in section two-a of this
article.
Otherwise, the commissioner shall issue to the applicant the appropriate license certificate which entitles the licensee to
engage in the business of new motor vehicle dealer, used motor
vehicle dealer, house trailer dealer, trailer dealer, recreational
vehicle dealer, motorcycle dealer, used parts dealer, or wrecker or
dismantler, as the case may be, during the period, unless sooner
suspended or revoked, for which the license certificate is issued.
(b) A license certificate issued in accordance with the
provisions of this article is not transferable.
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