ENGROSSED
Senate Bill No. 735
(By Senators Oliverio, White, Edgell, Foster, Harrison, Hunter,
Lanham, Love and Prezioso)
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[Originating in the Committee on Labor;
reported March 23, 2005.]
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A BILL to amend and reenact §17A-6A-7 of the Code of West Virginia,
1931, as amended, all relating to cancellation of a motor
vehicle agreement; notice of cancellation of motor vehicle
agreement; right of motor vehicle dealer to contest
cancellation; grounds for contest of cancellation; effect of
agreement pending judicial contest; stay of termination
proceedings; conditions permitting cancellation; and effect on
motor vehicle agreement of transfer of ownership.
Be it enacted by the Legislature of West Virginia:
That §17A-6A-7 of the code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
§17A-6A-7. Notice provisions.
Notwithstanding any agreement, prior to the termination,
cancellation, nonrenewal or discontinuance of any dealer agreement,
the manufacturer or distributor shall furnish notice of the termination, cancellation, nonrenewal or discontinuance to the new
motor vehicle dealer as follows:
(a) Except as
otherwise provided in
subdivision (c) or (d)
this
subsection section, notice shall be made not less than one
hundred twenty days prior to the effective date of the termination,
cancellation, nonrenewal or discontinuance.
(b) Notice shall be by certified mail with restrictive
delivery to the new motor vehicle dealer principal and shall
contain the following:
(i) (1) A statement of intention to terminate, cancel, not
renew or discontinue the dealer agreement;
(ii) (2) A detailed written statement of all reasons for the
termination, cancellation, nonrenewal or discontinuance. The
statement shall include, at a minimum, a complete explanation of
each reason upon which the manufacturer or distributor relies to
support its proposed action, along with all supporting
documentation which is material to the proposed action and
available to the manufacturer or distributor at the time of
termination, cancellation, nonrenewal or discontinuance; and
(iii) (3) The date on which the termination, cancellation,
nonrenewal or discontinuance takes effect.
(c) Notwithstanding subdivision (a) of this subsection, notice
shall be made not less than thirty days prior to the effective date
of the termination, cancellation, nonrenewal or discontinuance for any of the following reasons:
(i) (1) Insolvency of the new motor vehicle dealer or the
filing of any petition by or against the new motor vehicle dealer
under any bankruptcy or receivership law;
(ii) (2) Failure of the new motor vehicle dealer to conduct
his or her customary sales and service operations during his or her
customary business hours for seven consecutive business days;
(iii) (3) Conviction of the new motor vehicle dealer or its
principal owners of a crime, but only if the crime is punishable by
imprisonment in excess of one year under the law under which the
dealer was convicted or the crime involved theft, dishonesty or
false statement regardless of the punishment;
(iv) (4) Revocation of a motor vehicle dealership license in
accordance with section eighteen, article six of this chapter; or
(v) (5) A fraudulent misrepresentation by the new motor
vehicle dealer to the manufacturer or distributor, which is
material to the dealer agreement.
(d) Notwithstanding subdivision (a) of this subsection, notice
shall be made not less than twelve months prior to the effective
date of a termination, cancellation, nonrenewal or discontinuance
if a manufacturer or distributor discontinues production of the new
motor vehicle dealer's product line or discontinues distribution of
the product line in this state.
(e) Any motor vehicle dealer who receives a notice of intent
to discontinue, cancel or not renew a dealer agreement may, within
a 120-day notice period, file a petition or complaint for a determination of whether such action is an unfair or prohibited
discontinuation, cancellation or nonrenewal. Dealer agreements and
certificates of appointment shall continue in effect until a final
determination of the issues raised in such petition or complaint by
the motor vehicle dealer. A discontinuance, cancellation or
nonrenewal is unfair if it is:
(1) Not clearly permitted by the dealer agreement;
(2) Not undertaken in good faith;
(3) Not undertaken for good cause;
(4) Is based on an alleged breach of the franchise agreement
which is not in fact a material and substantial breach; or
(5) If the grounds relied upon for the discontinuation,
cancellation or nonrenewal have not been applied in a uniform and
consistent manner by the manufacturer or distributor.
(f) No replacement dealer shall be named for this point or
location to engage in business and the dealer's agreement shall
remain in effect until a final judgement is entered after all
appeals are exhausted: Provided, That when a motor vehicle dealer
appeals a decision upholding a discontinuation, cancellation or
nonrenewal under subdivisions (f) and (g) of this section, the
dealer agreement shall remain in effect pending exhaustion of all
appeals only if the motor vehicle dealer establishes a likelihood
of success on appeal and that the public interest will not be
harmed by keeping the dealer agreement in effect pending entry of
final judgement after such appeal.
(g) If a transfer of ownership is proposed after a notice to discontinue, cancel or not renew a dealer agreement is received
but, prior to the final determination, including exhaustion of all
appellate remedies of a motor vehicle dealer's complaint or
petition contesting such action, the termination proceedings shall
be stayed, without bond, during the period the transfer is being
reviewed by the manufacturer or distributor. During the period
that the transfer is being reviewed by the manufacturer or
distributor, the dealer agreement shall remain in full force and
effect, and the motor vehicle dealer shall retain all rights and
remedies pursuant to the terms and conditions of the dealer
agreement and applicable law. This shall include, but is not
limited to, all rights of transfer under subdivision (2), section
ten, article six-a, chapter seventeen of this code until such time
as the manufacturer or distributor has accepted or rejected the
proposed transfer. If the proposed transfer is rejected, the motor
vehicle dealer shall retain all of its rights pursuant to section
sixteen of said article to a judicial determination as to whether
the manufacturer or distributor's rejection is in compliance with
the provisions of subdivision (2), section ten of said article and
during the pendency of such judicial proceeding, and any related
appellate proceedings, the termination proceedings shall remain
stayed without bond, the dealer agreement shall remain in full
force and effect and the motor vehicle dealer shall retain all
rights and remedies pursuant to the terms and conditions of the
dealer agreement and applicable law including all rights of
transfer. If a transfer is approved by the manufacturer or distributor or mandated by law, the termination proceedings shall
be dismissed with prejudice as moot.
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