Minnesota Session Laws - 1988, Regular Session

  

                         Laws of Minnesota 1988 

                        CHAPTER 611-H.F.No. 2049 
           An act relating to commerce; motor vehicles; 
          clarifying the intent of the legislature regarding 
          certain motor vehicle coverages; regulating motor 
          vehicle franchises; clarifying the intent of the 
          legislature regarding cancellations, terminations, or 
          nonrenewals; specifying unfair practices; prohibiting 
          agreements designed to waive, nullify, or modify 
          statutory regulation; requiring lessors to title and 
          register vehicles; amending Minnesota Statutes 1986, 
          sections 60A.08, by adding a subdivision; 80E.06; 
          80E.07; 80E.08; 80E.09; 80E.13; Minnesota Statutes 
          1987 Supplement, sections 65B.49, subdivision 5a; and 
          72A.125, by adding a subdivision; proposing coding for 
          new law in Minnesota Statutes, chapter 80E.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 60A.08, is 
amended by adding a subdivision to read: 
    Subd. 12.  [EXCLUSIONS.] All liability policies must 
provide coverage for rented vehicles as required in chapter 65B. 
    This subdivision does not apply to liability policies that 
the commissioner has exempted by order. 
    This coverage can be excess over any and all specific motor 
vehicle coverage that is applicable. 
    Sec. 2.  Minnesota Statutes 1987 Supplement, section 
65B.49, subdivision 5a, is amended to read: 
    Subd. 5a.  [RENTAL VEHICLES.] (a) No Every plan of 
reparation security may be issued or renewed after August 1, 
1987, unless the plan provides that all coverages under the plan 
are extended to any motor vehicle while being rented by the 
named insured.  The plan insuring a natural person as named 
insured, covering private passenger vehicles as defined under 
section 65B.001, subdivision 3, must also provide that all or 
any part of the obligation of the named insured for property 
damage and loss of use to a rented vehicle would be covered by 
the collision or comprehensive portion of the plan.  The plan 
must provide that any deductible will not apply to claims that 
arise while a motor vehicle is being rented by a named 
insured property damage liability portion of the plan.  The 
obligation of the plan must not be contingent on fault or 
negligence.  In all cases where the plan's property damage 
liability coverage is less than $25,000, the coverage available 
under the subdivision must be $25,000.  Other than as described 
in this paragraph, nothing in this section amends or alters the 
provisions of the plan of reparation security as to primacy of 
the coverages in section 65B.49. 
    (b) A vehicle is rented for purposes of this subdivision if 
the rate for the use of the vehicle is determined on a weekly or 
daily basis.  A vehicle is not rented for purposes of this 
subdivision if the rate for the vehicle's use is determined on a 
monthly or longer period or the vehicle is rented principally 
for business purposes. 
    (c) The policy or certificate issued by the plan must 
inform the insured of the application of the plan to rental 
vehicles and that the insured may not need to purchase 
additional coverage from the rental company. 
    (d) Where an insured has two or more vehicles covered by a 
plan or plans of reparation security containing the rented motor 
vehicle coverage required under paragraph (a), claims must be 
made against the plan covering the motor vehicle most often 
driven by the insured may select the plan the insured wishes to 
collect from and that plan is entitled to a pro rata 
contribution from the other plan or plans based upon the 
property damage limits of liability.  If the person renting the 
motor vehicle is also covered by the person's employer's 
insurance policy or the employer's automobile self-insurance 
plan, the reparation obligor under the employer's policy or 
self-insurance plan has primary responsibility to pay claims 
arising from use of the rented vehicle. 
    (e) A notice advising the insured of rental vehicle 
coverage must be given by the reparation obligor to each current 
insured with the first renewal notice after January 1, 1988 
1989.  The notice must be approved by the commissioner of 
commerce.  The commissioner may specify the form of the notice.  
A form approved by the commissioner must be reasonably 
calculated to put the insured on notice of the coverage. 
    (f) When a motor vehicle is rented or leased in this 
state on a weekly or daily basis, there must be attached to the 
rental contract must contain a separate form containing a 
written notice in at least 10-point bold type, if printed, or in 
capital letters, if typewritten, which states: 
 Under Minnesota law, a personal automobile insurance policy 
issued in Minnesota must cover the rental of a this motor 
vehicle unless the rental is principally for business use 
or rented on a monthly or longer basis against damage to 
the vehicle and against loss of use of the vehicle.  
Therefore, purchase of any collision damage waiver or other 
similar insurance affected in this rental contract may is 
not be necessary if your policy was issued in Minnesota. 
No collision damage waiver or other insurance offered as part of 
or in conjunction with a rental of a motor vehicle may be sold 
unless the person renting the vehicle provides a written 
acknowledgment that the above consumer protection notice has 
been read and understood. 
    (g) When damage to a rented vehicle is covered by a plan of 
reparation security as provided under paragraph (a), the rental 
contract must state that payment by the reparation obligor 
within the time limits of section 72A.201 is acceptable, and 
prior payment by the renter is not required. 
     (h) To be compensated for the loss of use of a damaged 
rented motor vehicle, the car rental company must prove: 
    (1) that had the vehicle been available, it would have been 
rented; and 
    (2) that no other vehicle was available for rental in place 
of the damaged vehicle. 
    The standard of proof set forth in this paragraph does not 
limit the responsibility of a reparation obligor to provide an 
insured with coverage for any loss of use for which the 
reparation obligor is otherwise responsible.  A car rental 
company may be compensated for loss of use of a damaged rental 
motor vehicle only for the period when the damaged car actually 
would have been rented. 
    Sec. 3.  Minnesota Statutes 1987 Supplement, section 
72A.125, is amended by adding a subdivision to read: 
    Subd. 3.  [COLLISION DAMAGE WAIVER.] A "collision damage 
waiver" is a discharge of the responsibility of the renter or 
leasee to return the motor vehicle in the same condition as when 
it was first rented.  The waiver is a full and complete 
discharge of the responsibility to return the vehicle in the 
same condition as when it was first rented.  The waiver may not 
contain any exclusions except those approved by the commissioner 
pursuant to the requirements contained in section 61A.02, 
subdivisions 2 to 5. 
    Sec. 4.  Minnesota Statutes 1986, section 80E.06, is 
amended to read:  
    80E.06 [CANCELLATIONS;, TERMINATIONS, OR NONRENEWALS.] 
    Subdivision 1.  [REQUIREMENTS.] Notwithstanding the terms 
of any franchise agreement or waiver to the contrary, no 
manufacturer shall cancel or, terminate, or fail ro renew any 
franchise relationship with a licensed new motor vehicle dealer 
unless the manufacturer has:  
    (a) satisfied the notice requirement of section 80E.08;  
    (b) acted in good faith as defined in section 80E.03, 
subdivision 9; and 
    (c) good cause for the cancellation or, termination, or 
nonrenewal.  
    For the purposes of sections 80E.06 to 80E.09, a 
manufacturer includes a distributor.  Any action by a 
manufacturer terminating a contractual relationship with a 
distributor is not effective to terminate existing valid 
franchises running from the distributor to new motor vehicle 
dealers unless the manufacturer follows the provisions of 
sections 80E.06 to 80E.09. 
    Subd. 2.  [CIRCUMSTANCES CONSTITUTING GOOD CAUSE.] 
Notwithstanding the terms of any franchise agreement or waiver 
to the contrary, good cause exists for the purposes of a 
termination or, cancellation, or nonrenewal, when the new motor 
vehicle dealer fails to comply with a provision of the franchise 
which is both reasonable and of material significance to the 
franchise relationship; provided, that the dealer has been 
notified in writing of the failure within 180 days after the 
manufacturer first acquired knowledge of the failure; and. 
    If failure by the new motor vehicle dealer relates to the 
performance of the new motor vehicle dealer in sales or service, 
then good cause shall be defined as the failure of the new motor 
vehicle dealer to comply with reasonable performance criteria 
established by the manufacturer; provided, that the new motor 
vehicle dealer was apprised by the manufacturer in writing of 
the failure; the notification stated that notice was provided 
for failure of performance pursuant to sections 80E.01 to 
80E.17; the new motor vehicle dealer was afforded a reasonable 
opportunity in no event less than six months to comply with the 
criteria; and the dealer did not demonstrate substantial 
progress toward compliance with the manufacturer's performance 
criteria during the period.  
    Sec. 5.  Minnesota Statutes 1986, section 80E.07, is 
amended to read:  
    80E.07 [CANCELLATION, TERMINATION, OR NONRENEWAL; 
LIMITATIONS.] 
    Subdivision 1.  [CIRCUMSTANCES NOT CONSTITUTING GOOD 
CAUSE.] Notwithstanding the terms of any franchise agreement or 
waiver to the contrary, the following examples represent 
circumstances which do not by themselves constitute good cause 
for the termination or, cancellation, or nonrenewal of a 
franchise: 
    (a) A change of ownership of the new motor vehicle dealer's 
dealership. This paragraph does not authorize any change in 
ownership which would have the effect of the sale of the 
franchise without the manufacturer's or distributor's consent, 
but consent shall not in any case be unreasonably withheld.  The 
burden of establishing the reasonableness is on the franchisor; 
    (b) The fact that the new motor vehicle dealer refused to 
purchase or accept delivery of any new motor vehicle parts, 
accessories, or any other commodity or services not ordered by 
the new motor vehicle dealer, other than parts necessary to 
conduct recall campaigns or perform warranty service;  
    (c) The fact that the new motor vehicle dealer owns, 
invests in, participates in the management of, holds a license 
for the sale of another make or line of new motor vehicle, or 
has established another make or line of new motor vehicle in the 
same dealership facilities as those of the manufacturer; 
provided, that the new motor vehicle dealer maintains a 
reasonable line of credit for each make or line of new motor 
vehicle, and that the new motor vehicle dealer remains in 
substantial compliance with the terms and conditions of the 
franchise and with any reasonable capital, credit, or 
facilities' requirements of the manufacturer; or 
    (d) A change in the location of the new motor vehicle 
dealership.  This paragraph does not authorize a change in 
location without the manufacturer's or distributor's consent, 
but consent shall not in any case be unreasonably withheld.  The 
burden of establishing reasonableness is on the franchisor. 
    Subd. 2.  [BURDEN OF PROOF.] The manufacturer has the 
burden of proving that it acted in good faith; that the notice 
requirements have been complied with; and that there was good 
cause for the franchise termination or, cancellation, or 
nonrenewal.  
    Sec. 6.  Minnesota Statutes 1986, section 80E.08, is 
amended to read:  
    80E.08 [NOTICE OF TERMINATION OR, CANCELLATION, OR 
NONRENEWAL.] 
    Subdivision 1.  [REQUIREMENTS.] Notwithstanding the terms 
of any franchise agreement or waiver to the contrary, prior to 
the termination or, cancellation, or nonrenewal of any 
franchise, the manufacturer shall furnish notice of the 
termination, cancellation, or nonrenewal to the new motor 
vehicle dealer as provided in subdivision 2.  
    Subd. 2.  [GENERALLY.] Notice shall be in writing and 
except as provided in subdivision 3 shall be given not less than 
90 days prior to the effective date of the termination or, 
cancellation, or nonrenewal.  
    Subd. 3.  [SPECIFIC EXCEPTIONS.] (a) At least 15 days 
notice must be provided with respect to terminations or, 
cancellations, or nonrenewals involving the following 
circumstances:  
    (1) Conviction of or plea of nolo contendere of a 
franchised motor vehicle dealer, or one of its principal owners, 
of a crime which constitutes a felony as defined in section 
609.02, subdivision 2;  
    (2) The business operations of the franchised motor vehicle 
dealer have been abandoned or closed for seven consecutive 
business days unless the closing is due to an act of God, strike 
or labor difficulty, or other cause over which the dealer has no 
control;  
    (3) A significant misrepresentation by the new motor 
vehicle dealer; or 
    (4) The suspension, revocation, or refusal to renew the 
franchised motor vehicle dealer's license pursuant to section 
168.27.  
    (b) Not less than 180 days notice must be provided prior to 
the effective date of cancellation or, termination, or 
nonrenewal where the manufacturer or distributor is 
discontinuing the sale of the product line.  
    Subd. 4.  [CONTENTS AND DELIVERY.] The notice shall be sent 
by certified mail or personally delivered to the new motor 
vehicle dealer.  The notice shall contain the following 
information:  
    (a) A statement of intention to terminate or, cancel, or 
nonrenew the franchise; 
    (b) A statement of the reasons for the termination or, 
cancellation, or nonrenewal; and 
    (c) The date on which the termination or, cancellation, or 
nonrenewal takes effect.  
    Sec. 7.  Minnesota Statutes 1986, section 80E.09, is 
amended to read:  
    80E.09 [PAYMENTS REQUIRED UPON TERMINATION, CANCELLATION, 
OR NONRENEWAL.] 
    Subdivision 1.  [REQUIREMENTS.] Upon the termination or, 
cancellation, or nonrenewal of any franchise, the new motor 
vehicle dealer shall, in the time prescribed, be allowed fair 
and reasonable compensation by the manufacturer for the 
following items: 
    (a) New motor vehicle inventory which was originally 
acquired from the manufacturer, as limited in clause (f); 
    (b) Equipment and furnishings if the new motor vehicle 
dealer purchased them from the manufacturer; 
    (c) Special tools; 
    (d) Supplies, including accessories and parts, purchased 
from the manufacturer; 
    (e) A sum equal to the current fair rental value of the 
dealership facilities for a period of one year from the 
effective date of the termination or, cancellation, or 
nonrenewal, or the remainder of the term of the lease, whichever 
is less.  Payment under this clause shall not be required if the 
termination or, cancellation, or nonrenewal was for good cause 
based on a conviction or plea of nolo contendere of the dealer 
or one of its principal owners for a crime which constitutes a 
felony as described in section 609.02, subdivision 2, or if it 
has been demonstrated that the dealer has exhibited a course of 
conduct constituting fraud with respect to the manufacturer or 
the general public; 
    (f) Fair and reasonable compensation as applied to 
paragraphs (a) and (d) means the manufacturer shall reimburse 
the dealer for 100 percent of the net cost to the dealer, 
including transportation, of all new current model year motor 
vehicle inventory acquired from the manufacturer which has not 
been materially altered or substantially damaged, and all new 
motor vehicle inventory not of the current model year which has 
not been materially altered or substantially damaged; provided 
the noncurrent model year vehicles were acquired from the 
manufacturer and drafted on the dealer's financing source or 
paid for within 120 days prior to the effective date of the 
termination or, cancellation, or nonrenewal.  The manufacturer 
shall reimburse the dealer for 100 percent of the current net 
prices on motor vehicle accessories and parts, including 
superseded parts listed in current price lists or catalogues 
plus five percent of the current net price of all accessories 
and parts returned to compensate the dealer for handling, 
packing, and loading the parts. 
    Subd. 2.  [TIME IN WHICH PAYMENTS MUST BE MADE.] Fair and 
reasonable compensation shall be paid by the manufacturer when 
possible within 90 days of the effective date of termination or, 
cancellation, or nonrenewal, provided the dealer has clear title 
to the inventory and other items, is in a position to convey 
that title to the manufacturer and as long as this period will 
allow compliance with the notification requirements of sections 
336.6-101 to 336.6-111 or any other state or federal laws 
relating to creditor notification. 
    Subd. 3.  [VOLUNTARY TERMINATIONS OR, CANCELLATIONS, OR 
NONRENEWALS.] For the purposes of reimbursement under this 
section, termination or, cancellation, or nonrenewal includes a 
voluntary termination or, cancellation, or nonrenewal by the 
dealer, and the compensation provided for in subdivision 1, 
except clause (e) thereof, shall be paid to the dealer. 
    Sec. 8.  Minnesota Statutes 1986, section 80E.13, is 
amended to read:  
    80E.13 [UNFAIR PRACTICES BY MANUFACTURERS, DISTRIBUTORS, 
FACTORY BRANCHES.] 
    It is unlawful and an unfair practice for a manufacturer, 
distributor, or factory branch to engage in any of the following 
practices:  
    (a) To delay, refuse, or fail to deliver new motor vehicles 
or new motor vehicle parts or accessories in reasonable time and 
in reasonable quantity relative to the new motor vehicle 
dealer's facilities and sales potential in the dealer's relevant 
market area, after having accepted an order from a new motor 
vehicle dealer having a franchise for the retail sale of any new 
motor vehicle sold or distributed by the manufacturer or 
distributor, if the new motor vehicle or new motor vehicle parts 
or accessories are publicly advertised as being available for 
delivery or actually being delivered.  This clause is not 
violated, however, if the failure is caused by acts or causes 
beyond the control of the manufacturer;  
    (b) To refuse to disclose to any new motor vehicle dealer 
handling the same line make, the manner and mode of distribution 
of that line make within the relevant market area;  
    (c) To obtain money, goods, service, or any other benefit 
from any other person with whom the dealer does business, on 
account of, or in relation to, the transaction between the 
dealer and the other person, other than for compensation for 
services rendered, unless the benefit is promptly accounted for, 
and transmitted to, the new motor vehicle dealer;  
    (d) To increase prices of new motor vehicles which the new 
motor vehicle dealer had ordered for private retail consumers 
prior to the dealer's receiving the written official price 
increase notification.  A sales contract signed by a private 
retail consumer shall constitute evidence of each order if the 
vehicle is in fact delivered to that customer.  In the event of 
manufacturer price reductions, the amount of any reduction 
received by a dealer shall be passed on to the private retail 
consumer by the dealer if the retail price was negotiated on the 
basis of the previous higher price to the dealer;  
    (e) To offer any refunds or other types of inducements to 
any new motor vehicle dealer for the purchase of new motor 
vehicles of a certain line make to be sold to the state or any 
political subdivision thereof without making the same offer to 
all other new motor vehicle dealers in the same line make within 
the relevant market area;  
    (f) To release to any outside party, except under subpoena 
or in an administrative or judicial proceeding involving the 
manufacturer or dealer, any business, financial, or personal 
information which may be provided by the dealer to the 
manufacturer, without the express written consent of the dealer 
or unless pertinent to judicial or governmental administrative 
proceedings or to arbitration proceedings of any kind;  
    (g) To deny any new motor vehicle dealer the right of free 
association with any other new motor vehicle dealer for any 
lawful purpose;  
    (h) To unfairly discriminate among its new motor vehicle 
dealers with respect to warranty reimbursement or authority 
granted its new vehicle dealers to make warranty adjustments 
with retail customers;  
    (i) To compete with a new motor vehicle dealer in the same 
line make operating under an agreement or franchise from the 
same manufacturer in the relevant market area.  A manufacturer 
shall not, however, be deemed to be competing when operating a 
dealership either temporarily for a reasonable period, or in a 
bona fide retail operation which is for sale to any qualified 
independent person at a fair and reasonable price, or in a bona 
fide relationship in which an independent person has made a 
significant investment subject to loss in the dealership and can 
reasonably expect to acquire full ownership of the dealership on 
reasonable terms and conditions; or 
    (j) To prevent a new motor vehicle dealer from receiving 
fair and reasonable compensation for the value of the new motor 
vehicle dealership.  There shall be no transfer, assignment of 
the franchise, or major change in the executive management of 
the dealership, except as is otherwise provided in sections 
80E.01 to 80E.17, without consent of the manufacturer, which 
shall not be unreasonably withheld.  Denial of the request must 
be in writing and delivered to the new motor vehicle dealer 
within 60 days after the manufacturer receives the information 
necessary to evaluate the proposed transfer.  If a denial is not 
sent within this period, the manufacturer shall be deemed to 
have given its consent to the proposed transfer or change; or 
    (k) To threaten to modify or replace or modify or replace a 
franchise with a succeeding franchise that would adversely alter 
the rights or obligations of a new motor vehicle dealer under an 
existing franchise or that substantially impairs the sales or 
service obligations or investments of the motor vehicle dealer.  
    Sec. 9.  [80E.135] [WAIVERS AND MODIFICATIONS PROHIBITED.] 
    No manufacturer, distributor, or factory branch shall, 
before entering into a franchise with a new motor vehicle dealer 
or during the franchise term, use any written instrument, 
agreement, or waiver, to attempt to nullify or modify any 
provision of this chapter, or prevent a new motor vehicle dealer 
from bringing an action in a particular forum otherwise 
available under law.  These instruments, agreements, and waivers 
are null and void.  
    Sec. 10.  [LEGISLATIVE INTENT.] 
    Sections 4 to 7 are a restatement and clarification of the 
legislative intent of Laws 1987, chapter 150, section 3, and 
shall not be construed as a modification of existing law. 
    Approved April 24, 1988