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