0001|                           SENATE BILL 175
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0002|     43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003|                            INTRODUCED BY
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0004|                          ROMAN M. MAES III
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0005|     
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0006|                                   
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0007|     
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0008|                                   
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0009|     
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0010|                                AN ACT
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0011|     RELATING TO AGREEMENTS; ENACTING THE HEAVY EQUIPMENT DEALER
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0012|     ACT; PROVIDING STANDARDS FOR PROPOSED CHANGES TO AGREEMENTS
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0013|     BETWEEN HEAVY EQUIPMENT DEALERS AND SUPPLIERS; PROVIDING
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0014|     REMEDIES.
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0015|     
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0016|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0017|          Section 1.  SHORT TITLE.--This act may be cited as the
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0018|     "Heavy Equipment Dealer Act".
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0019|          Section 2.  FINDINGS--PURPOSE.--
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0020|               A.  The legislature finds that the distribution,
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0021|     sale and lease of heavy equipment products in New Mexico
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0022|     affect the general economy of the state and the public
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0023|     interest and welfare of its citizens.
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0024|               B.  It is the purpose of the Heavy Equipment Dealer
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0025|     Act to exercise the state's police power to:
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0001|                    (1)  ensure a sound system of distributing,
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0002|     selling and leasing heavy equipment products; and
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0003|                    (2)  regulate suppliers and dealers of heavy
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0004|     equipment products and prevent the occurrence of frauds and
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0005|     unfair practices.
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0006|          Section 3.  DEFINITIONS.--As used in the Heavy Equipment
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0007|     Dealer Act:
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0008|               A.  "agreement" means a contract, written or oral,
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0009|     between a supplier and a dealer in which the dealer is
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0010|     authorized to distribute the supplier's heavy equipment
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0011|     products and attachments and repair parts for those products
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0012|     and the dealer is authorized to use the supplier's trade name,
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0013|     trademark, logo or advertising.  "Agreement" includes sales
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0014|     contracts, service contracts, advertising contracts, leases or
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0015|     mortgages of real or personal property, promises to pay,
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0016|     security interests, pledges, insurance contracts, construction
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0017|     or installation contracts and all other contracts in which the
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0018|     supplier and dealer have a direct or indirect interest;
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0019|               B.  "dealer" means a person engaged in the retail
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0020|     business of selling or leasing heavy equipment products who:
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0021|                    (1)  maintains a total inventory, valued at
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0022|     more than seven hundred fifty thousand dollars ($750,000), of
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0023|     new heavy equipment products and attachments and repair parts
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0024|     for those products; and
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0025|                    (2)  performs repair services for the heavy 
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0001|     equipment products he sells;
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0002|               C.  "heavy equipment products" means self-
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0003|     propelled, self-powered or pull-type equipment or machinery,
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0004|     including engines, that weighs five thousand pounds or more
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0005|     and that is commonly used for agricultural, construction,
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0006|     industrial, maritime, mining and forestry operations; and
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0007|               D.  "supplier" means a person, or that person's
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0008|     agent or authorized broker, who enters into an agreement with
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0009|     a dealer.
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0010|          Section 4.  AMENDMENT OR TERMINATION OF AN AGREEMENT.--
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0011|               A.  A supplier shall not unilaterally amend or
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0012|     terminate or cause a dealer to resign from an agreement unless
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0013|     the supplier complies with the provisions of the Heavy
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0014|     Equipment Dealer Act and due cause exists for amendment or
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0015|     termination of an agreement or for causing a dealer to resign
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0016|     from an agreement.  
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0017|               B.  As used in this section, "due cause" does not
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0018|     include the sale or purchase of a supplier.  "Due cause" is
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0019|     limited to:
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0020|                    (1)  withdrawal by the supplier, its
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0021|     successors and assigns of the sale or lease of its heavy
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0022|     equipment products in New Mexico; or 
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0023|                    (2)  dealer performance deficiencies,
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0024|     including the following:
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0025|                         (a)  the dealer initiates bankruptcy
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0001|     proceedings or a receiver is appointed to manage the dealer's
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0002|     business;
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0003|                         (b)  the dealer assigns assets for the
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0004|     benefit of the dealer's creditors, other than the creation of
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0005|     a security interest in the assets for the purpose of securing
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0006|     financing in the ordinary course of business; or
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0007|                         (c)  the dealer fails to substantially
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0008|     comply, without reasonable cause or justification, with a
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0009|     reasonable and material requirement imposed in writing upon
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0010|     the dealer by the supplier, including a substantial failure by
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0011|     the dealer to:  1) maintain a sales volume or trend of his
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0012|     supplier's heavy equipment products comparable to that of
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0013|     other similarly situated dealers; or 2) render heavy equipment
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0014|     product services comparable in quality, quantity or volume to
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0015|     the provision of services by other similarly situated dealers.
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0016|               C.  In a determination as to whether a dealer has
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0017|     failed to substantially comply, without reasonable cause or
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0018|     justification, with a reasonable and material requirement
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0019|     imposed upon the dealer by the supplier, consideration shall
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0020|     be given to the relative size, population, geographic
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0021|     location, number of retail outlets and demand for the heavy
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0022|     equipment products applicable to the market area of the dealer
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0023|     in question and to comparable market areas.
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0024|               D.  A supplier is not required to show due cause as
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0025|     a prerequisite to unilaterally amending or terminating an
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0001|     agreement if the amendment or termination is necessary to:
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0002|                    (1)  comply with federal or state law; or
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0003|                    (2)  uniformly amend the supplier's agreements
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0004|     with all of the supplier's dealers in all states in which the
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0005|     supplier markets its heavy equipment products.
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0006|               E.  In a dispute as to whether due cause exists to
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0007|     amend or terminate an agreement or cause a dealer to resign
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0008|     from an agreement, the supplier has the burden of proof to
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0009|     establish that due cause existed.
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0010|          Section 5.  PROPOSED AMENDMENTS TO OR TERMINATION OF AN
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0011|     AGREEMENT--PROCEDURAL REQUIREMENTS--EXCEPTIONS.--
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0012|               A.  Except as provided in Subsection C of this
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0013|     section, a supplier shall give a dealer at least one hundred
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0014|     twenty days' written notice of the supplier's intention to
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0015|     amend or terminate an agreement.  The written notice shall
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0016|     state the supplier's reasons for amending or terminating the
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0017|     agreement.    
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0018|               B.  When the supplier's reasons for amending
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0019|     or terminating the agreement relate to a condition that may be
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0020|     remedied by the dealer, the dealer shall have seventy-five
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0021|     days to remedy the condition.  If the dealer elects to remedy
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0022|     the condition within that time period, he shall provide the
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0023|     supplier with written notice of the remedy.  If the supplier
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0024|     accepts the dealer's remedy, the supplier's proposed
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0025|     amendments to or termination of the agreement shall be void. 
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0001|     If the supplier does not accept the dealer's remedy, the
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0002|     supplier shall provide the dealer with written notice of the
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0003|     supplier's refusal no later than fifteen days after the
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0004|     supplier receives the dealer's proposed remedy.  
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0005|               C.  A supplier is not required to provide written
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0006|     notice to a dealer and may immediately amend or terminate an
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0007|     agreement when:
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0008|                    (1)  the dealer initiates bankruptcy
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0009|     proceedings or a receiver is appointed to manage the dealer's
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0010|     business;
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0011|                    (2)  the dealer makes intentional 
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0012|     misrepresentations for the purpose of defrauding the supplier;
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0013|                    (3)  the dealer fails to pay an undisputed
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0014|     amount of money due to the supplier and more than thirty days
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0015|     have passed since the supplier provided the dealer with
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0016|     written notice of the amount due; 
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0017|                    (4)  the dealer fails to conduct his customary
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0018|     sales and service operations during his customary business
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0019|     hours for seven consecutive business days, unless the failure
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0020|     to conduct business is the result of an act of God, a strike
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0021|     or other circumstances beyond the dealer's control; or
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0022|                    (5)  the dealer is convicted of a felony
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0023|     offense and exhausts his right to appeal.
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0024|               D.  During the one hundred twenty-day notice period
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0025|     provided for in Subsection A of this section, a dealer has the
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0001|     right to transfer his business to another person who meets the
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0002|     reasonable and material requirements imposed upon other
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0003|     dealers by the supplier.  A dealer shall give notice to the
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0004|     supplier of the transfer of the dealer's business at least
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0005|     forty-five days prior to the expiration of the one hundred
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0006|     twenty-day notice period.
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0007|          Section 6.  TRANSFER OF A DEALER'S BUSINESS.--
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0008|               A.  A supplier shall not unreasonably withhold or
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0009|     delay consent to a transfer of a dealer's business or a
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0010|     transfer of stock in a dealer's business if the transferee
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0011|     meets reasonable standards and qualifications required by the
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0012|     supplier of all its dealers.  If a supplier determines that a
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0013|     proposed transferee does not meet the supplier's standards and
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0014|     qualifications, the supplier shall provide the dealer with
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0015|     written notice of its reasons for withholding consent to the
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0016|     transfer.  A supplier shall have forty-five days to respond to
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0017|     a dealer's request to make a transfer.
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0018|               B.  Notwithstanding the provisions of Subsection A
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0019|     of this section, a supplier shall not withhold consent when a
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0020|     dealer proposes to transfer his business to a member of the
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0021|     dealer's family.  As used in this subsection, "family" means a
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0022|     spouse, parent, sibling, child, adopted child, stepchild or 
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0023|     lineal descendant.
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0024|               C.  When a transfer of a dealer's business occurs,
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0025|     the transferee shall assume all obligations and succeed to all
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0001|     rights held by the selling dealer, as set forth in the
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0002|     agreement between the selling dealer and his supplier.
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0003|               D.  In a dispute as to whether a supplier has
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0004|     unreasonably withheld or delayed consent regarding the
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0005|     transfer of a dealer's business, the supplier has the burden
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0006|     of proving a reasonable and substantial justification for
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0007|     withholding or delaying consent to the transfer.
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0008|               Section 7.  CAPITAL STRUCTURE.--A supplier shall
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0009|     not coerce or attempt to coerce, by agreement or otherwise, a
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0010|     dealer to change the capital structure of his business or the
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0011|     means by which the dealer finances his business, so long as
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0012|     the dealer meets reasonable capital standards that are
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0013|     mutually agreed to by the dealer and the supplier.
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0014|          Section 8.  MANAGEMENT.--
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0015|               A.  A supplier shall not require a dealer to change
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0016|     the dealer's management or other personnel, unless the
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0017|     dealer's current management or personnel fails to meet
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0018|     reasonable qualifications and standards required by the
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0019|     supplier of all his dealers.
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0020|               B.  A supplier shall not prohibit a dealer from
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0021|     changing the dealer's management or other personnel, unless
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0022|     the dealer's prospective management or personnel fail to meet
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0023|     reasonable qualifications and standards required by the
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0024|     supplier of all his dealers.
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0025|          Section 9.  REMEDIES.--
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0001|               A.  When a dispute arises concerning the terms of 
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0002|     an agreement or compliance with the provisions of the Heavy
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0003|     Equipment Dealer Act, the district court in which the dealer
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0004|     has its principal place of business shall have jurisdiction to
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0005|     hear the case.  The district court may grant relief that is
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0006|     necessary to remedy the dispute, including injunctive relief.
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0007|               B.  In addition to other remedies available at law
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0008|     or equity, if a supplier violates the provisions of the Heavy
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0009|     Equipment Dealer Act by amending or terminating an agreement,
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0010|     causing a dealer to resign from an agreement, or delaying or
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0011|     withholding consent to a dealer's transfer, then if the dealer
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0012|     is the prevailing party in resulting litigation, the dealer is
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0013|     entitled to recover general and special damages, court costs
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0014|     and reasonable attorney fees.
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0015|               C.  The parties to an agreement may include a
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0016|     provision in the agreement that authorizes binding arbitration
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0017|     of disputes.  When arbitration is used, it shall be held in
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0018|     the county in which the dealer has its principal place of
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0019|     business.
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0020|          Section 10.  NOTICE.--Written notice required pursuant to
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0021|     the provisions of the Heavy Equipment Dealer Act shall be sent
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0022|     by certified mail.
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0023|          Section 11.  WAIVER DISALLOWED.--A supplier shall not
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0024|     require a dealer to waive compliance with the provisions of
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0025|     the Heavy Equipment Dealer Act.  An agreement that purports to
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0001|     waive the provisions of that act is void and unenforceable to
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0002|     the extent of the waiver.     
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0003|          Section 12.  EFFECTIVE DATE.--The effective date of the
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0004|     provisions of this act is July 1, 1998.
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0005|                              
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