71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 700
House Bill 2209
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Attorney General Hardy
Myers for Department of Justice)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Establishes Recovery Fund to pay certain consumer claims that
arise from vehicle dealer fraud and other violations. Establishes
Recovery Fund Governing Board. Imposes fees on certain dealers
for issuance and renewal of vehicle dealer certificates.
Appropriates fees to fund. Appropriates moneys from General Fund
to Recovery Fund Governing Board for start-up costs.
Sunsets January 2, 2006.
A BILL FOR AN ACT
Relating to vehicle dealers; creating new provisions; amending
ORS 822.020; and appropriating money.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + As used in sections 1 to 9 of this 2001 Act:
(1) 'Applicant' means a dealer applying for a vehicle dealer
certificate under ORS 822.020 or for renewal of a vehicle dealer
certificate under ORS 822.040.
(2) 'Consumer' means a person that leases or purchases a
vehicle from a dealer for personal, family or household purposes
or for business use personally by the lessee or purchaser. '
Consumer' includes an assignee of the lessee or purchaser, to the
extent of the value actually transferred from the lessee or
purchaser to the assignee.
(3) 'Dealer' means a person required to qualify for a vehicle
dealer certificate under ORS 822.020 or to qualify for renewal of
a vehicle dealer certificate under ORS 822.040.
(4) 'Fund' means the Recovery Fund established by section 3 of
this 2001 Act.
(5) 'Governing board' or 'board' means the Recovery Fund
Governing Board established by section 9 of this 2001 Act.
(6) 'Person' means a natural person, corporation, limited
liability company, partnership or other business entity.
(7) 'Principal of a dealer' or 'principal' means a person that
owns any part of the equity of the dealer or exercises any
managerial control over the dealer, or other person that controls
or manages the business organization or the employees or agents
of the dealer. + }
SECTION 2. { + The provisions of sections 1 to 9 of this 2001
Act do not apply to:
(1) A dealer that voluntarily purchases a bond or letter of
credit in the amount of $250,000;
(2) A dealer engaged primarily in the sale or lease of vehicles
for farm use;
(3) A dealer engaged primarily in the sale or lease of
vehicles, the operation of which requires the operator to pay
taxes under ORS chapter 825;
(4) A dealer engaged primarily in the sale of motorcycles; or
(5) A person unlawfully doing business without a required
vehicle dealer certificate. + }
SECTION 3. { + (1) The Recovery Fund is established separate
and distinct from the General Fund. Fees and special assessments
paid pursuant to section 4 of this 2001 Act shall be paid over to
the State Treasurer and deposited in the fund. Attorney fees and
costs recovered by the Recovery Fund Governing Board pursuant to
section 8 of this 2001 Act shall be paid over to the State
Treasurer and deposited in the Recovery Fund. Proceeds of actions
brought pursuant to section 8 of this 2001 Act to indemnify the
fund shall be paid over to the State Treasurer and deposited in
the fund.
(2) Moneys deposited to the credit of the fund are continuously
appropriated to the board for the purpose of paying claims and
carrying out the functions and duties of the governing board.
(3) The board shall reimburse the Department of Transportation
monthly for documented costs incurred by the department in
carrying out the department's responsibilities under sections 4,
7 and 8 of this 2001 Act.
(4) Interest earned on the fund shall be credited to the fund.
When the balance in the fund exceeds $700,000, interest shall be
distributed annually by the board to dealers that apply for
reimbursement of fees that dealers previously paid to the fund
pursuant to section 4 of this 2001 Act. A dealer may not receive
any reimbursement in excess of the amount the dealer paid
pursuant to section 4 of this 2001 Act. The board shall first
reimburse the first dealer that paid a fee and then the remaining
dealers in succession in the order in which they paid until the
board has exhausted the interest available for distribution for
that year. Any interest not distributed as reimbursement of fees
shall remain in the fund. + }
SECTION 4. { + (1) Except as provided in subsections (5) and
(6) of this section, every applicant for issuance or renewal of a
vehicle dealer certificate, in addition to securing a bond or
letter of credit as required by ORS 822.030 and to paying the
issuance or renewal fee otherwise required by law, prior to and
as a condition of application or renewal, shall pay a fee or
special assessment to the Department of Transportation as
provided in this section. A dealer seeking issuance or renewal of
a supplemental certificate as described in ORS 822.040 is not
required to comply with this section with respect to the
supplemental certificate. The department shall pay all such fees
and special assessments to the State Treasurer for deposit to the
Recovery Fund.
(2) A dealer shall pay fees in the following amounts at the
time the dealer makes application for issuance or renewal of the
dealer's vehicle dealer certificate:
(a) $650 for an application to qualify for the dealer's first
vehicle dealer certificate under ORS 822.020;
(b) $300 for the first application for renewal under ORS
822.040 of the dealer's vehicle dealer certificate;
(c) $150 for the second consecutive application for renewal
under ORS 822.040 of the dealer's vehicle dealer certificate; and
(d) The amount of any special assessment established by the
Recovery Fund Governing Board.
(3) In accordance with the applicable provisions of ORS 183.310
to 183.550, the governing board may adopt rules to raise or lower
fees as it deems necessary to maintain the target balance in the
fund. For the purpose of maintaining the target balance in the
fund, the governing board may by rule levy a special assessment
uniformly on all dealers subject to the provisions of sections 1
to 9 of this 2001 Act, regardless of the length of time dealers
have held their certificates. The target balance shall be
$700,000.
(4) Unless the governing board has levied a special assessment,
a fee levied on a dealer in the first three years in which the
dealer holds the same vehicle dealer certificate may not exceed
the amounts established in subsection (2) of this section. A
special assessment may not exceed $300.
(5) Except for special assessments, a dealer that has held the
same vehicle dealer certificate for four or more consecutive
years on the effective date of this 2001 Act may not be required
to pay any moneys to the fund.
(6) An applicant that is a successor in interest to a
continuing enterprise shall pay special assessments but need not
pay any fee, provided the applicant:
(a) Has held a different vehicle dealer certificate in Oregon
for four or more consecutive years at the time of acquisition of
the applicant's predecessor dealer; or
(b) Is:
(A) Any one of the following family members of any owner of the
dealer:
(i) The spouse;
(ii) A child or stepchild;
(iii) A grandchild or stepgrandchild;
(iv) The spouse of a child, stepchild, grandchild or
stepgrandchild;
(v) A sibling or stepsibling; or
(vi) A parent or stepparent.
(B) A manager employed by the dealer who is otherwise qualified
as a dealer.
(C) A partnership or corporation controlled by any of the
family members listed in this subsection.
(D) A trust arrangement established or to be established:
(i) For the purposes of allowing the applicant to continue to
qualify as a dealer; or
(ii) To provide for the succession of the franchise to
qualified designated family members or a qualified manager in the
event of the death or incapacity of the dealer. + }
SECTION 5. { + (1) Subject to the limits provided in this
section, the Recovery Fund Governing Board shall pay from the
Recovery Fund only the following:
(a) Unpaid sums, including attorney fees as provided in this
section, due a consumer under any final judgment against a dealer
arising from the dealer's fraud, fraudulent representations or
violations of the provisions of the Oregon Vehicle Code relating
to:
(A) Vehicle registration;
(B) Vehicle permits;
(C) The transfer or alteration of vehicles; or
(D) The regulation of vehicle dealers.
(b) Unpaid sums, including attorney fees as provided in this
section, owed by a dealer to a consumer under the terms of a
written settlement agreement between the dealer and the consumer
arising from the dealer's fraud, fraudulent representations or
violations of the provisions of the Oregon Vehicle Code relating
to:
(A) Vehicle registration;
(B) Vehicle permits;
(C) The transfer or alteration of vehicles; or
(D) The regulation of vehicle dealers.
(c) Unpaid sums owed by a dealer to a consumer pursuant to an
assurance of voluntary compliance executed and filed pursuant to
ORS 646.632 (2), to the extent such unpaid sums arise from the
dealer's fraud, fraudulent representations or violations of the
provisions of the Oregon Vehicle Code relating to:
(A) Vehicle registration;
(B) Vehicle permits;
(C) The transfer or alteration of vehicles; or
(D) The regulation of vehicle dealers.
(d) Not more than $500 for attorney fees that a court has
determined are due a consumer. Upon the affirmative vote of at
least six members of the board, the board shall pay from the
Recovery Fund reasonable attorney fees exceeding $500 that a
court has determined are due a consumer under any final judgment
against a dealer arising from contested litigation arising from
the dealer's fraud, fraudulent representations or violations of
the provisions of the Oregon Vehicle Code relating to:
(A) Vehicle registration;
(B) Vehicle permits;
(C) The transfer or alteration of vehicles; or
(D) The regulation of vehicle dealers.
(2) Nothing in subsection (1) of this section establishes a
right independent of any other provision of law to a judgment for
attorney fees payable to a consumer. Except as provided in
subsection (4) of this section, the board shall pay either all of
the attorney fees awarded by the court in the amount determined
by the court and set forth in the judgment, or none of them.
(3) The governing board shall not pay any claim:
(a) Arising from conduct occurring prior to the operative date
of this section.
(b) Awarded by judgment as punitive, emotional, multiplied,
consequential or exemplary damages.
(c) Determined by the governing board in the governing board's
sole discretion to have resulted from deceitful collusion between
a dealer and a consumer.
(d) Exceeding the limitations set forth in subsection (4) of
this section.
(e) Awarded pursuant to a foreign judgment filed in the State
of Oregon.
(f) Not supported by:
(A) An agreement bearing the signature of each party to the
agreement or of each party's representative;
(B) An assurance of voluntary compliance executed and filed
pursuant to ORS 646.632 (2); or
(C) A final money judgment entered by a court of the State of
Oregon.
(g) Against any person other than a dealer.
(h) By any person that is not a consumer.
(i) By a dealer or by a surety that provided a bond or letter
of credit pursuant to ORS 822.030 to the dealer whose conduct
gave rise to the claim.
(j) Except as provided in subsection (1)(d) of this section,
for attorney fees awarded to any person in excess of $500.
(k) By any person required to qualify for a vehicle dealer
certificate under ORS 822.020 or to qualify for renewal of a
vehicle dealer certificate under ORS 822.040 that is exempted
from application of sections 1 to 9 of this 2001 Act by section 2
of this 2001 Act.
(4) The maximum amounts the governing board may pay from the
fund are:
(a) $30,000 to any consumer, or a consumer claiming jointly
with any other consumer or consumers, in any five-year period
regardless of the number of claims or transactions and regardless
of the amount by which the consumer's claim or claims exceed
$30,000; and
(b) $250,000 for any combination of claims by more than one
consumer against the same dealer involving one or more
transactions occurring within a five-year period regardless of
the amount by which the claims exceed $250,000.
(5) Nothing in sections 1 to 9 of this 2001 Act shall be
construed to eliminate or limit any claimant's right to pursue
claims arising under any other law against the dealer, or against
any other person, or to eliminate or limit the claimant's right
to collect amounts due the claimant from any source other than
the fund. + }
SECTION 6. { + (1) If a claim or combination of claims exceeds
the maximum amounts set out in section 5 (4) of this 2001 Act,
the Recovery Fund Governing Board shall make partial payment of
the claim or claims as provided in this section. The governing
board shall pay such claims in the following order:
(a) First, unpaid sums described in section 5 (1)(a) of this
2001 Act shall be paid. If the total of such sums exceeds the
maximum amounts allowed by section 5 (4) of this 2001 Act, the
governing board shall divide the available sum among the
claimants in proportion to the amount of their eligible claims;
(b) The remainder, if any, shall be applied to the unpaid sums
described in section 5 (1)(b) of this 2001 Act. If the total of
such sums exceeds the maximum amounts allowed by section 5 (4) of
this 2001 Act, the governing board shall divide the available sum
among the claimants in proportion to the amount of their eligible
claims; and
(c) The remainder, if any, shall be paid to the Department of
Justice for distribution to consumers.
(2) With the agreement of the claimant or claimants involved,
the governing board may settle or compromise any claim.
(3) If the governing board has reason to believe that
additional claims arising from the same transaction or from other
transactions involving the same vehicle dealer may be made
against the Recovery Fund, the governing board may:
(a) Withhold any payment to any claimant for up to two years
from the date the claim is received by the governing board; and
(b) Establish a deadline beyond which no additional claims will
be accepted. + }
SECTION 7. { + The Department of Transportation may not issue
or renew the vehicle dealer certificate of a dealer:
(1) Against which there exists any unsatisfied final judgment
described in section 5 (1)(a) of this 2001 Act;
(2) That has failed to pay any sum due under a written
settlement agreement with a consumer described in section 5
(1)(b) of this 2001 Act; or
(3) That has failed to pay any sum due under an assurance of
voluntary compliance as described in section 5 (1)(c) of this
2001 Act. + }
SECTION 8. { + (1) If the Recovery Fund Governing Board makes
payment from the Recovery Fund and the dealer or the principals
of the dealer fail within 30 days to indemnify the fund in full,
the Department of Transportation shall immediately suspend the
dealer's certificate and the governing board may bring an action
against the dealer or the principals of the dealer to indemnify
the fund for any payments from the fund. The court may award
reasonable attorney fees and costs to the prevailing party in any
action for indemnification of the fund brought pursuant to this
subsection.
(2) In an action for indemnification of the fund, the dealer
may not assert any defense, affirmative defense or claim that the
dealer could have asserted in any action that could have been
brought by the claimant or claimants against the dealer or
surety.
(3) If the governing board makes payment from the fund and the
dealer or the principals of the dealer fail within 30 days to
indemnify the fund in full, then the Department of Transportation
shall not issue any vehicle dealer certificate to the defaulting
dealer, principal of the defaulting dealer or applicant in which
any principal was a principal of the defaulting dealer, until the
applicant fully indemnifies the fund for all claims paid and for
all attorney fees and costs incurred by the fund with respect to
the defaulting dealer. + }
SECTION 9. { + (1) The Recovery Fund Governing Board is
established and shall be composed of 11 voting members.
(2) After consultation with consumers and with dealers, the
Attorney General and the Director of Transportation shall each
appoint three members to the board. The Attorney General and the
Director of Transportation shall jointly appoint a seventh
member. The seven members thus appointed shall by majority vote
appoint the remaining four members. Members appointed by the
Attorney General shall serve for one year, those appointed by the
Director of Transportation for 18 months, and the member jointly
appointed by the Attorney General and the director for two years.
All other members, including those selected by the governing
board to fill vacancies as they occur, shall serve for two years.
(3) The governing board shall be composed of:
(a) Two dealers, or principals of dealers, that are franchisees
of a motor vehicle manufacturer;
(b) Two dealers, or principals of dealers, that are not
franchisees of a motor vehicle manufacturer;
(c) Five consumers that are not engaged in the sale or lease of
motor vehicles for profit in the regular course of business;
(d) One individual engaged in the business of issuing bonds or
letters of credit to dealers pursuant to ORS 822.030; and
(e) One individual employed by a financial institution that
lends money to consumers for the purchase or lease of vehicles
for personal, family or household purposes.
(4) The Attorney General and the Director of Transportation, or
their respective designees, shall be perpetual nonvoting members
of the governing board. In the event of a tie vote, the Attorney
General or the Attorney General's designee shall cast the
deciding vote. The Attorney General and the Director of
Transportation shall, in all respects except for voting, be full
members of the governing board.
(5) The governing board shall:
(a) Be subject to the provisions of ORS 192.410 to 192.505 and
192.610 to 192.690; and
(b) Be considered a public body for purposes of ORS 30.260 to
30.300.
(6) On the authorization of six or more members, and subject to
the availability of funds, the governing board may pay the
following expenses from the Recovery Fund:
(a) Salary, wages or payments to any persons the board deems
necessary to employ or retain for any purpose relating to the
payment of claims and the duties of the governing board, except
that members of the board shall serve without compensation;
(b) The reasonable travel and lodging expenses of board members
as required by their official duties; and
(c) Fees charged by any professional, including but not limited
to an attorney, hired by the governing board for purposes
relating to the fund. Pursuant to ORS 180.060, the Attorney
General shall provide all legal services required by the
governing board. + }
SECTION 10. ORS 822.020 is amended to read:
822.020. { + Except as otherwise provided in section 7 of this
2001 Act, + } the Department of Transportation shall issue a
vehicle dealer certificate to any person if the person meets all
of the following requirements:
(1) The person must complete the application for a dealer
certificate described under ORS 822.025.
(2) The person must deliver to the department a bond or letter
of credit that meets the requirements under ORS 822.030.
(3) The person must deliver to the department a certificate of
insurance that meets the requirements established by ORS 822.033.
(4) The person must pay the fee required under ORS 822.700 for
issuance of a vehicle dealer certificate.
(5) The person must certify completion of the education and
test requirements of ORS 822.027 (1) if the person is a dealer
subject to the education and test requirements.
SECTION 11. { + Sections 5 to 8 of this 2001 Act become
operative on the date that is 30 days after the date the Recovery
Fund Governing Board first determines that the balance in the
Recovery Fund first exceeds $700,000. + }
SECTION 12. { + Sections 1 to 9 of this 2001 Act are repealed
on January 2, 2006. + }
SECTION 13. ORS 822.020, as amended by section 10 of this 2001
Act, is amended to read:
822.020. { - Except as otherwise provided in section 7 of
this 2001 Act, - } The Department of Transportation shall issue
a vehicle dealer certificate to any person if the person meets
all of the following requirements:
(1) The person must complete the application for a dealer
certificate described under ORS 822.025.
(2) The person must deliver to the department a bond or letter
of credit that meets the requirements under ORS 822.030.
(3) The person must deliver to the department a certificate of
insurance that meets the requirements established by ORS 822.033.
(4) The person must pay the fee required under ORS 822.700 for
issuance of a vehicle dealer certificate.
(5) The person must certify completion of the education and
test requirements of ORS 822.027 (1) if the person is a dealer
subject to the education and test requirements.
SECTION 14. { + The amendments to ORS 822.020 by section 13 of
this 2001 Act become operative January 2, 2006. + }
SECTION 15. { + Any moneys remaining in the Recovery Fund on
January 2, 2006, shall be transferred to the State Highway
Fund. + }
SECTION 16. { + (1) A dealer that on the effective date of
this 2001 Act was in the dealer's second year of operation under
the same vehicle dealer certificate shall pay $300 for the first
application for renewal under ORS 822.040; and
(2) A dealer that on the effective date of this 2001 Act is in
the dealer's third year of operation under the same vehicle
dealer certificate shall pay $150 for the dealer's second
consecutive application for renewal under ORS 822.040. + }
SECTION 17. { + (1) There is appropriated to the Recovery Fund
Governing Board for the biennium beginning July 1, 2001, out of
the General Fund, the amount of $___, for the purpose of carrying
out the provisions of this 2001 Act.
(2) When the board determines that moneys in sufficient amounts
are available in the Recovery Fund established by section 3 of
this 2001 Act, but in no event later than June 30, 2003, the
board shall reimburse the General Fund without interest, in an
amount equal to the amount from the General Fund appropriated and
expended as provided in subsection (1) of this section. The
moneys used to reimburse the General Fund under this subsection
shall not be considered as a budget item on which a limitation is
otherwise fixed by law, but shall be in addition to any specific
biennial appropriations or amounts authorized to be expended from
continually appropriated moneys for any biennial period. + }
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