Texas Register
(24 TexReg 8029). Amendments to §§107.1
- 107.8 and 107.10 - 107.11 are adopted without changes and will not be republished.
General changes to rule language.
The Motor Vehicle Commission was renamed the Motor Vehicle Board in 1992.
The title of "executive director" was also changed to "director". The amendments
change all references from "Commission" to "Board" and "executive director"
to "director" throughout the chapter. Changes also make it clear that the
procedures in the chapter apply to complaints filed under the lemon law for
repurchase or replacement of a vehicle (§6.07 of the Motor Vehicle Commission
Code) (Code) and to complaints filed for repair of a vehicle under general
warranty agreements (§3.08(i) of the Code). Sections pertinent only to §6.07
or §3.08(i) are now clearly identified. Other amendments correct grammar,
add acronyms to avoid repetition, and remove surplusage and gender-specific
references.
Other changes specific to each section:
The>
filed under §3.08(i) because general warranty complaints may be filed
regarding used vehicles if they are still under warranty. Changes to §107.2
conform the section to the current practice of accepting complaints even if
they do not initially include necessary information. The amendment adds converters
and distributors as potential parties to a complaint, as permitted by the
Code. Other amendments delete an obsolete filing fee amount, add provisions
clarifying no filing fee is due for complaints filed under §3.08(i) and
indicate failure to remit a fee under §6.07 may result in dismissal of
the complaint.
Amendments to §107.3 clarify procedure references and Code provisions.
Changes to §§107.4 and 107.5 add converters as entities who will
be given notice and an opportunity to settle if a complaint is filed and give
the Board the option of requiring a response from dealers.
Section 107.6, Hearings, is amended to delete the specific requirement
that dealers be given notice of hearing, since all parties receive notice
of hearing. Other changes make the section apply to warranty performance complaints
as well as lemon law complaints, increase the amount of time to notify the
Board of attorney appearances and clarify that evidence presented is subject
to admission by the hearing examiner so consumers will understand that the
right is not absolute. Additional changes delete the requirement that an expert
be independent, to conform to current practice, and no longer require the
presence of the expert at the hearing.
Changes to §§107.7(4) and 107.7(6) conform the sections to Government
Code amendments concerning notification of a final order, effective September
1, 1999. Other changes to §107.7 allow hearings under both the lemon
law and general warranty complaints and add language conforming the section
to statutory time limit and appeal provisions contained in the Government
Code and the Motor Vehicle Commission Code.
Amendments to §107.8 state that the section only applies to lemon
law (§6.07) complaints unless otherwise indicated, and conforms the overall
application of the section relating to serious safety hazards to the language
in the statute. Additional amendments no longer set out the items included
in the purchase price of a vehicle, but continue to exclude interest, finance
charges and insurance premiums from the purchase price. Converters and distributors
are included as entities who may have obligations under the section, as set
out in the statute. The amendment to §107.8(9) conforms the section to
the current practice of allowing reconsideration of the repurchase price for
damage to the vehicle after the date of the hearing, instead of the date of
delivery to the owner, since damage between the date of delivery and the date
of hearing is considered at the hearing. Changes to §107.8(10) make it
clear that the Board will issue a written order in both lemon law and warranty
performance complaints when a hearing is held.
Amendments to §107.9 are adopted with changes to the proposed text.
Concerning §107.9(a)(6), the Board agreed with comments that service
contracts should not be subject to reimbursement as an incidental expense
because the purchaser can cancel a service contract and obtain a refund for
the unexpended time. The Board viewed service contracts as a type of insurance
voluntarily purchased by a consumer, and did not approve §107.9(a)(6).
As a result, §§107.9(a)(7) and (8), adopted without substantive
change, are renumbered and adopted as §§107.9(a)(6) and (7).
Adopted without changes were proposals requiring that incidental expenses
be reasonable and verified, and clarifying that incidental expenses are not
limited to the categories listed within §107.9. Also adopted without
change was §107.9(a)(5), allowing reimbursement for loss or damage to
personal property; §107.9(a)(7) {renumbered and adopted as §107.9(a)(6)},
allowing reimbursement for attorney fees if the complainant retains counsel
after notification that respondent is represented by counsel and §107.9(a)(8)
{renumbered and adopted as §107.9(a)(7)}, allowing reimbursement for
after-market items. Section 107.9(c), which provides guidance to hearing examiners
in considering whether items or accessories should be reimbursed, was also
adopted, only changing the reference contained therein from 107.9(a)(8) to
107.9(a)(7).
Amendments to §107.10 extend the disclosure requirement to all vehicles
reacquired by a manufacturer, converter or distributor. The disclosure statement
at Attachment 1 is deleted and the Board or director is now allowed to prescribe
the manner and form for disclosing that a vehicle has been reacquired. Additional
changes clarify that manufacturers must provide information on vehicles transferred
from out-of-state and require dealers to complete and return the disclosure
statement within 60 days of the sale of a reacquired vehicle. Other changes
remove non-original equipment manufacturer items or accessories from manufacturer
warranty requirements and clarify that the Board, through its director, may
provide or approve the warranty form.
The amendment to §107.11 clarifies that the director shall provide
the Board with information about complaints resolved before and after hearings
are set, rather than formal and informal resolutions of complaints.
The amendments provide a clearer understanding of the hearings process
for lemon law and warranty performance complaints and conserve the time and
resources of the agency and entities appearing before it. The amendments also
create better notification to consumers concerning reacquired vehicles.
Proposed amendments were originally published in the July 23, 1999 issue
of the
Texas Register
(24 TexReg 5638). The
Board held a public hearing on the proposals at its September 9, 1999 meeting
and tabled the matter after receiving oral comment. As a result of comments
received, the July 23, 1999 publication was withdrawn and simultaneously republished
with some revisions in the September 24, 1999 issue of the
Texas Register
(24 TexReg 8029). Additional comments were received
after the republication and at the second public hearing held November 4,
1999.
Written comments were received from Specialty Equipment Market Association,
Texas Automobile Dealers Association (TADA), DaimlerChrysler Motors Corporation,
Recreational Vehicle Industry Association and Brett Bray, Motor Vehicle Division
Director. The Board heard oral comment at its September 9, 1999 hearing from
DaimlerChrysler Motors Corporation, Consumer's Union, Public Citizen and Texas
Automobile Dealers Association. At the November 4, 1999 hearing, oral comment
was received from Public Citizen, Texas Automobile Dealers Association, Consumer's
Union, Watson Law Firm and Sherrod Vans of Jacksonville.
The original version of §107.8(3), concerning determination of the
purchase price of a vehicle, was revised and republished in response to suggestions
from TADA that the language be revised to simply indicate what is excluded
from the purchase price of a vehicle instead of naming items included and
excluded from the purchase price. No comments were received on the revised
version of §107.8(3).
Comments against §107.9(a)(5), reimbursement for loss or damage to
personal property, suggested that the language is too broad for recreational
vehicles and suggestions were made to establish a method of determining the
value of personal property and to set an upper limit for reimbursement. Another
commenter urged that the provision constitutes a penalty to the manufacturer
and goes beyond the authority of the statute. Comments were received from
the Recreational Vehicle Industry Association, the Watson Law Firm and Sherrod
Vans of Jacksonville.
Original amendments to §107.9(a)(6) added service contracts to the
category of reimbursable incidental expenses. Comments in support of §107.9(a)(6)
urged adoption to ensure that consumers are fully compensated for a cancelled
service contract, including cancellation penalties. Public Citizen commented
in support of §107.9(a)(6). Comments against the proposal asserted that
service contracts should not be subject to reimbursement as an incidental
expense because the purchaser can cancel a service contract and obtain a refund
for the unexpended time. It was suggested that a pro rata refund for the time
remaining on the contract be authorized because requiring a full refund for
a service contract would result in unjust enrichment of the consumer. The
Texas Automobile Dealers Association commented against 107.9(a)(6). As a result
of these comments, the Board withdrew and republished §107.9(a)(6). The
republished proposal included a provision that service contracts less cancellation
refunds would be a reimbursable incidental expense. Comments in support of
the proposal stated that consumers purchase service contracts for the years
beyond the warranty period and should be reimbursed for an investment that
is never realized because of the condition of the vehicle. Supporting comments
were offered by Consumer's Union and Public Citizen. Comments against the
proposal suggested that a service contract should be considered similar to
insurance and that consumers are not entitled to reimbursement for insurance.
Mr. Bray concurred with the latter view.
The original version of §107.(9)(a)(7) {renumbered and adopted as §107.9(a)(6)},
reimbursement for attorney fees as an incidental expense, was revised in response
to comments against the proposal. The revision added the provision that consumer
complainants prevailing in a lemon law proceeding could recover attorney fees
only if they hired an attorney after notification that the respondent was
represented by counsel. Comments against the original publication suggested
that the lemon law procedure was designed so consumers would not need attorneys
and allowing attorney fees would increase the use of counsel. Another commenter
asserted that attorney fees are not incidental to the loss of the use of the
vehicle and the legislature never intended reimbursement of attorney fees.
It was also pointed out that out-of-state manufacturers and converters would
face additional penalty if they retained local counsel. Another commenter
suggested that if a complainant wants attorney fees, the appropriate remedy
is to file a lawsuit under the Deceptive Trade Practices Act. Comments in
favor of the proposal were that the provision would level the playing field
and that attorney fees were a consequence of a nonconformity in a vehicle.
Commenters stated that the Board clearly had the authority to adopt the provision.
Comments against the original versions were received from TADA and DaimlerChrysler
Motors Corporation. Commenting in favor of the original version were Consumers
Union and Public Citizen. Comments against the revised version of §107.9(a)(7)
{renumbered and adopted as §107.9(a)(6)} were that the consumers do not
need attorneys because the administrative law judge protects the record and
the process, and the process itself helps level the playing field. Other commenters
stated that the legislature never intended for the Lemon Law to include attorney
fees. Commenters asserted that the provision will encourage the involvement
of attorneys, delaying the process and adding cost to the agency. Commenters
also maintained that it is more economical for an out-of-state manufacturer
to hire local counsel than send a representative to a hearing and suggested
that manufacturers be awarded attorney fees when the complaint is frivolous
or harassing. Commenters in favor of the proposal stated that the legislature
gave the Board the discretion to determine what qualifies as an incidental
expense and declined to set an upper limit on incidental expenses for this
reason. Another commenter noted that attorneys are already in the process
and this provision has self-limitations that will merely level the playing
field. Comments against the revised proposal were received from TADA, the
Watson Law Firm and Sherrod Vans of Jacksonville. Comments in favor the proposal
were received from Public Citizen and Consumers Union.
Sections 107.9(a)(8) {renumbered and adopted as 107.9(a)(7)} and 107.9(c)
concern reimbursement for accessories added to a vehicle at or after purchase.
The sections were withdrawn and republished with revisions in response to
comments. Commenting in favor of the original publication were TADA, Consumers
Union, Public Citizen and the Specialty Equipment Market Association. Commenting
against the original publication was DaimlerChrysler Motors Corporation. The
revisions added provisions for deducting a reasonable allowance for use and
requiring hearing examiners to consider the functionality of the accessories
and whether they are original equipment manufacturer parts (OEM) or non-OEM
parts. Commenting in favor of the revised publication was TADA, Public Citizen
and Consumers Union. Commenting against were the Recreational Vehicle Industry
Association, the Watson Law Firm and Sherrod Vans of Jacksonsville. Commenters
in favor of the proposal stated that the rule is structured to allow an administrative
law judge (ALJ) to make a reasoned decision about the nature and value of
aftermarket accessories and gives the ALJ the authority to compromise when
appropriate. Commenters opposing the proposal stated that it is too broad
for recreational vehicles because there are many additional components in
an RV. Commenters also opposed consideration of non-OEM parts. Another commenter
suggested that there should be no distinction between OEM and non-OEM parts.
Another asserted that the proposal conflicts with the requirement that a manufacturer
restore a vehicle to factory specifications and offer a warranty after repurchase,
and that a manufacturer may not be able to offer a warranty on aftermarket
items.
Section 107.10(4) requires manufacturers to disclose to subsequent retail
purchasers when a vehicle was reacquired pursuant to a warranty claim. The
section was expanded after its original publication to include all vehicles
reacquired as the result of a warranty claim, rather than just those reacquired
pursuant to a lemon law claim and brought into the state of Texas, because
lemon law and warranty claim relief vary from state to state. One commenter
urged that no punitive action be taken against a dealer who does not return
the disclosure form to the Board if the dealer does not receive it from the
manufacturer. Another commenter stated that the language was too broad for
the RV industry because recreational vehicles have so many additional components
not covered by the manufacturer warranty. It was suggested that the section
only apply to the chassis of recreational vehicles. Other commenters asserted
that the requirement will discourage goodwill settlements and could be considered
an unconstitutional taking to label a vehicle as a lemon when it has not been
adjudicated as such. Comments against the proposal were received from TADA,
the Recreational Vehicle Dealers Association, the Watson Law Firm and Sherrod
Vans of Jacksonville.
The amendments are adopted under the Texas Motor Vehicle Commission
Code, §3.06, which provides the Board with authority to adopt rules as
necessary and convenient to effectuate the provisions of the Code and to govern
practice and procedure before the Board.
Texas Motor Vehicle Commission §§3.08(i) and 6.07 are affected
by the amendments and repeal.
§107.9.Incidental Expenses.
(a)
When a refund of the purchase price of a vehicle is ordered,
the complainant shall be reimbursed for certain incidental expenses incurred
by the complainant from loss of use of the motor vehicle because of the defect
or nonconformity which is the basis of the complaint. The expenses must be
reasonable and verified through receipts or similar written documents. Reimbursable
incidental expenses include but are not limited to the following costs:
(1)
alternate transportation;
(2)
towing;
(3)
telephone calls or mail charges directly attributable
to contacting the manufacturer, distributor, converter, or dealer regarding
the vehicle;
(4)
meals and lodging necessitated by the vehicle's failure
during out - of - town trips;
(5)
loss or damage to personal property;
(6)
attorney fees if the complainant retains counsel after
notification that the respondent is represented by counsel; and
(7)
items or accessories added to the vehicle at or after
purchase, less a reasonable allowance for use.
(b)
Incidental expenses shall be included in the final repurchase
price required to be paid by a manufacturer, converter, or distributor to
a prevailing complainant or in the case of a vehicle replacement, shall be
tendered to the complainant at the time of replacement.
(c)
In regards to the cost of items or accessories presented
under subsection (a)(7) of this section, the hearing officer shall consider
the permanent nature, functionality and value added by the items or accessories
and whether the items or accessories are original equipment manufacturer parts
(OEM) or non-OEM parts.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 6, 2000.
TRD-200001697
Brett Bray
Director
Texas Motor Vehicle Board
Effective date: March 26, 2000
Proposal publication date: September 24, 1999
For further information, please call: (512) 416-4899
16 TAC §107.12
The Motor Vehicle Board of the Texas Department of Transportation
adopts the repeal of §107.12, Contested Cases under General Warranty
Provisions: Decisions and Final Orders, as published in the September 24,
1999 issue of the
Texas Register
.
The Appropriations Act of 1997, House Bill 1, Article IX, §167 requires
that each state agency review and consider readoption of each rule adopted
by that agency pursuant to the Government Code, Chapter 2001 (Administrative
Procedure Act). Such reviews shall include an assessment by the agency as
to whether the reason for adopting or readopting the rule continues to exist.
The Board conducted a review of Title 16, Chapter 107, relating to Warranty
Performance Obligations, at its June 10, 1999 meeting.
As a result of its review, the Board determined that §107.12, Contested
Cases under General Warranty Provisions: Decisions and Final Orders, is unnecessary,
since proposed amendments to §107.7 incorporate the authority contained
in §107.12. Section 107.12 states that the director has authority to
conduct hearings and issue final orders in warranty performance complaints
filed under Section 3.08(i) of the Texas Motor Vehicle Commission Code (Code).
Amendments to §107.7 now authorize the director to conduct hearings and
issue final orders in complaints filed under both §6.07 and §3.08(i)
of the Code, relating to lemon law and warranty performance complaints respectively,
making §107.12 redundant.
No comments were received concerning the repeal.
The repeal is adopted under the Texas Motor Vehicle Commission
Code, §3.06, which provides the Board with authority to adopt rules as
necessary and convenient to effectuate the provisions of the Act and to govern
practice and procedure before the agency.
Motor Vehicle Commission Code §§3.08(i) and 6.07 are affected
by the proposed repeal.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 6, 2000.
TRD-200001696
Brett Bray
Director
Texas Motor Vehicle Board
Effective date: March 26, 2000
Proposal publication date: September 24, 1999
For further information, please call: (512) 416-4899