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     §437-28  Suspension; revocation; fine; denial of issuance or renewal of a license. 


Published: 2015

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     §437-28  Suspension; revocation; fine;

denial of issuance or renewal of a license.  (a)  In addition to any other

actions authorized by law, the board, after notice and hearing as provided in

chapter 91, and subject to appeal to the circuit court of the circuit in which

the board has jurisdiction under the procedure and rules prescribed by the laws

of the State or the applicable rules of the courts pertaining to appeals to

circuit courts, may suspend, revoke, fine, or deny the renewal of any license,

or prior to notice and hearing deny the issuance of any license for any cause

authorized by law, including but not limited to circumstances where the board

finds that the applicant or holder, or any officer, director, general manager,

trustee, partner, or stockholder owning more than ten per cent interest of the

applicant or holder:

     (1)  Has intentionally made a false statement of a

material fact in the application for a license or in any other statement

required by this chapter or has obtained or attempted to obtain a license by

fraud or misrepresentation;

     (2)  Has failed to comply with, observe, or adhere to

any provision of this chapter or any other law relating to the sale, taxing, or

licensing of motor vehicles or any rule or order made pursuant to this chapter;

     (3)  Has committed a fraudulent act in selling,

purchasing, or otherwise dealing in motor vehicles or has misrepresented the

terms and conditions of a sale, purchase, or contract for sale or purchase of a

motor vehicle or any interest therein including an option to purchase motor

vehicles;

     (4)  Has engaged in business under a past or present

license issued pursuant to this chapter, in a manner as to cause injury to the

public or to those with whom one is dealing;

     (5)  Has failed to comply with, observe, or adhere to

any law in any other respect so that the board deems the applicant or holder to

be an unfit or improper person to hold a license;

     (6)  Has failed to meet or maintain the conditions and

requirements necessary to qualify for the issuance of a license;

     (7)  Is insolvent, has filed or is the subject of a

petition for bankruptcy, wage earner's plan, or financial reorganization plan,

or has made or proposes to make an assignment for benefit of creditors;

     (8)  Is not at least eighteen years of age, or in the

case of a partnership applicant or holder of a license, if any general or

limited partner is not at least eighteen years of age;

     (9)  Has charged more than the legal rate of interest

on the sale, purchase, or attempted sale or purchase, or in arranging the sale

or purchase of a motor vehicle or any interest therein including an option to

purchase;

    (10)  Has violated any law pertaining to false

advertising or to credit sales in the offering, soliciting, selling,

purchasing, or arranging to sell or purchase a motor vehicle or any interest

therein;

    (11)  Has wilfully failed or refused to perform any

unequivocal and indisputable obligation under any written agreement involving

the sale or purchase of a motor vehicle or any interest therein, including an

option to purchase;

    (12)  Has been denied the issuance of a license under

this chapter for substantial culpable cause or has had a license issued under

this chapter suspended, revoked, or the renewal thereof denied for substantial

culpable cause;

    (13)  Has entered, has attempted to enter, or proposes

to enter into any contract or agreement contrary to this chapter or any rule

adopted thereunder;

    (14)  Has been, is engaged, or proposes to engage in

the business of selling new motor vehicles as a dealer or auction without a

proper franchise therefor;

    (15)  Has at any time employed, utilized, or attempted

or proposed to employ or utilize any person not licensed under this chapter who

is required to be so licensed;

    (16)  Has entered or attempted to enter any one-payment

contract where the contract is required to be signed by the purchaser prior to

removal of the motor vehicle for test driving from the seller's premises;

    (17)  Is a salesperson or dealer and:

         (A)  Has required a purchaser of a motor

vehicle as a condition of sale and delivery, to purchase special features,

appliances, accessories, or equipment not desired or requested by the

purchaser; provided that this prohibition shall not apply as to special

features, appliances, accessories, or equipment which are ordinarily installed

on the vehicle when received or acquired by the dealer;

         (B)  Has represented and sold as an unused

motor vehicle any motor vehicle which has been leased or operated as a

demonstrator or U-drive motor vehicle;

         (C)  Has sold a new motor vehicle without

providing or securing for the purchaser the standard factory new car warranty

for the vehicle unless the dealer or salesperson clearly notes in writing on

the sales contract that the new motor vehicle is sold without the standard factory

warranty;

         (D)  Has sold a new motor vehicle covered by a

standard factory warranty without informing the purchaser in writing that any

repairs or other work necessary on any accessories which were not installed by

the manufacturer of the vehicle may not be obtainable in a geographic location

other than where the purchase occurred; provided that the notice required by

this section shall conform to the plain language requirements of section

487A-1, regardless of the dollar amount of the transaction;

          (E)  Has engaged in any improper business

conduct, including but not limited to employing, contracting with, or

compensating consumer consultants; or

         (F)  Has sold or leased a new or used motor

vehicle, other than at auction, without written documentation upon which the

salesperson or dealer shall appropriately indicate the type of sale, which both

the customer and salesperson or dealer shall place their initials in the

designated spaces prior to the signing of the contract of sale or lease and

that contains the following provision printed legibly in at least fourteen

point bold typeface:

 

"This (IS) (IS NOT)

a door-to-door sale.  There (IS A) (IS NO) 3-DAY RIGHT TO CANCEL on this purchase.

____ Customer's

Initials      ____ Salesperson's

                                        or Dealer's

Initials";

 

    (18)  Is an applicant or holder of a dealer's license

and:

         (A)  Has sold or proposed to sell new motor

vehicles without providing for the maintenance of a reasonable inventory of

parts for new vehicles or without providing and maintaining adequate repair

facilities and personnel for new vehicles at either the main licensed premises

or at any branch location;

         (B)  Has employed or proposed to employ any

salesperson who is not duly licensed under this chapter; or

         (C)  Has sold or proposed to sell new motor

vehicles without being franchised therefor;

    (19)  Is an applicant or holder of an auction's license

and has sold or proposed to sell new motor vehicles without being franchised

therefor; or

    (20)  Is an applicant for a salesperson's license and:

         (A)  Does not intend to be employed as a

salesperson for a licensed motor vehicle dealer; or

         (B)  Intends to be employed as a salesperson

for more than one dealer;

    (21)  Being a manufacturer or distributor:

         (A)  Has required any dealer in the State to

enter into any agreement with the manufacturer or distributor or any other

party, to perform any act not required by or to refrain from performing any act

not contrary to the reasonable requirements of the franchise agreement with the

dealer, by threatening to cancel the franchise agreement or by threatening to

refuse, at the expiration of the current franchise agreement, to enter into a

new franchise agreement with the dealer;

         (B)  Has required any dealer in the State to

enter into any agreement with the manufacturer or distributor or any other

party, to perform any act not required by or to refrain from performing any act

not contrary to the reasonable requirements of the franchise agreement with the

dealer, by awarding or threatening to award a franchise to another person for

the sale of the same make of any motor vehicle in the relevant market area of a

dealer;

         (C)  Has canceled or failed to renew the

franchise agreement of any dealer in the State without good faith, as defined

herein.  As used in this subparagraph, "good faith" means the duty of

each party to any franchise agreement to fully comply with that agreement, or

to act in a fair and equitable manner towards each other;

         (D)  Has delayed delivery of or refused to

deliver without cause, any new motor vehicle to a dealer, franchised to sell

the new motor vehicle, within a reasonable time after receipt of a written

order for the vehicle from the dealer.  The delivery to another dealer of a

motor vehicle of the same model and similarly equipped as the vehicle ordered

by a dealer who has not received delivery thereof, but who had placed the

written order for the vehicle prior to the order of the dealer receiving the

vehicle, shall be prima facie evidence of a delayed delivery of, or refusal to

deliver, a new motor vehicle without cause.  The nondelivery of a new motor

vehicle to a dealer within sixty days after receipt of a written order for the

vehicle from a dealer shall also be prima facie evidence of delayed delivery

of, or refusal to deliver, a new motor vehicle without cause; provided that the

delayed delivery of, or refusal to deliver, a motor vehicle shall be deemed

with cause if the manufacturer establishes that the delay or refusal to deliver

is due to a shortage or curtailment of material, labor, transportation, utility

service, labor or production difficulty, or other similar cause beyond the

reasonable control of the manufacturer;

         (E)  Has discriminated against any of their

franchised dealers in the State by directly or indirectly charging the dealer

more for a new motor vehicle or services, parts, or accessories or a higher

rate of transportation for transporting the vehicle from the manufacturing or

assembly plant to the dealer or any portion of the distance, than is charged to

any other of their franchised dealers in the State for the same make, model,

and year of a new motor vehicle or for the same devices, parts, or accessories

for the similar transportation for the vehicle during the same period.  A

manufacturer or distributor who provides or causes to be provided greater

transportation benefits for a new motor vehicle as aforesaid to any of their

franchised dealers in the State than is provided to any of their competing

franchised dealers in the State for the same or lesser price or charge than

that imposed upon the franchised dealer in the State during the same period is

deemed to have so discriminated against the competing franchised dealer in the

State.  Evidence of similar discriminatory practice against franchised dealers

in other states shall not constitute a defense to or justification of the

commission of the discriminatory act against the franchised dealer in the

State.  The intent and purpose of this subparagraph is to eliminate inequitable

pricing policies set by manufacturers or distributors which result in higher

prices of new motor vehicles to the consumer in the State.  This subparagraph

shall be liberally interpreted to effect its intent and purpose and in the

application thereof, the substance and effect and not the form of the acts and

transactions shall be primarily considered in determining whether a

discriminatory act has been committed.  Nothing contained in this subparagraph

shall prohibit establishing delivered prices or destination charges to dealers

in the State which reasonably reflect the seller's total transportation costs

incurred in the manufacture or delivery of products to the dealers, including

costs that are related to the geographical distances and modes of

transportation involved in shipments to this State, or which meet those lower

prices established by competitors;

         (F)  Has required a dealer of new motor

vehicles in the State as a condition of sale and delivery of new motor vehicles

to purchase special features, appliances, accessories, or equipment not desired

or requested by the dealer; provided that this prohibition shall not apply to

special features, appliances, accessories, or equipment, except heaters, that

are regularly installed on that particular model or new motor vehicles as

"standard" equipment or to special features, appliances, accessories,

or equipment that are an integral part of the new motor vehicles and cannot be

removed therefrom without substantial expense.  Nothing in this subparagraph

shall make it unlawful for a dealer to sell a vehicle that includes a heater

that has been installed as standard equipment;

         (G)  Has failed to adequately and fairly

compensate its dealers for labor incurred by the dealer to perform under and

comply with manufacturer's warranty agreements. In no event shall any

manufacturer or distributor pay its dealers a labor rate per hour for warranty

work that is less than that charged by the dealer to the retail customers of

the dealer nor shall the rates be more than the retail rates.  All claims made

by the dealers for compensation for delivery, preparation, and warranty work

shall be paid within thirty days after approval and shall be approved or

disapproved within thirty days after receipt.  When any claim is disapproved,

the dealer shall be notified in writing of the grounds for disapproval;

         (H)  Has wilfully failed to affix the vehicle

bumper impact notice pursuant to section 437-4.5(a), or wilfully misstated any

information in the notice.  Each failure or misstatement is a separate offense;

         (I)  Has wilfully defaced, or removed the

vehicle bumper impact notice required by section 437-4.5(a) prior to delivery

of the vehicle to which the notice is required to be affixed to the registered

owner or lessee.  Each wilful defacement, alteration, or removal is a separate

offense; or

         (J)  Has required a dealer to refrain from

participation in the management of, investment in, or the acquisition of, any

other line of new motor vehicle or related products; provided that the new

motor vehicle dealer maintains a reasonable line of credit consistent with the

requirements of section 437-7(d)(1) for each make or line of new motor vehicle,

remains in compliance with reasonable facilities and other franchise

requirements of the manufacturer or distributor, and makes no unauthorized

change in the principal management of the dealer.

     (b)  For disregard of an order suspending a

license pursuant to section 436B-23, the board may summarily take possession of

and impound all motor vehicles belonging to or in the possession of the licensee

whether or not the vehicles are situated upon the licensed premises, pending

final action in this case or, without taking possession of the motor vehicles,

may render them unusable; provided that the right of the board to take any

action and any liens for towing or storage or otherwise arising from the action

are subject to and subordinate to any security interest that has attached to

the motor vehicles prior thereto, and the board, prior to taking any action,

shall give notice thereof to any secured party whose security interest in the

motor vehicles is known to the board or who, prior to any action by the board,

had filed a financing statement covering the motor vehicles or had noted the

lien on the legal ownership certificates thereof.

     (c)  Any fine imposed by the board after a

hearing in accordance with chapter 91 shall be no less than $100 nor no more

than $1,000 for each violation.

     (d)  In lieu of or in addition to the fine

imposed under this section, the board may require the motor vehicle dealer to

make restitution to the customer.  Restitution may be imposed in lieu of a fine

even though the amount may exceed the fine set forth in subsection (c). [L

1939, c 258, §11; RL 1945, §7373; am L 1951, c 90, pt of §1; RL 1955, §160-173;

am L 1957, c 302, §1(20); am L 1961, c 59, §1(15); am L 1963, c 199, §1n; HRS

§437-28; am L 1969, c 252, §4 and c 263, §1(16); am L 1970, c 87, §1; am L

1972, c 195, §1; am L 1973, c 129, §1(a) to (h); am L 1974, c 21, §1, c 89, §1,

and c 205, §2(4); am L 1978, c 92, §3; am L 1980, c 62, §1; am L 1982, c 204,

§8; am L 1983, c 124, §17; am L 1986, c 154, §2; am L 1987, c 283, §27; am L

1988, c 319, §1; am L 1992, c 109, §4 and c 202, §29; am L 1996, c 264, §10; am

L 1997, c 44, §1 and c 85, §2; am L 1999, c 216, §2; am L 2003, c 126, §8; am L

2010, c 164, §6]

 

Rules of Court

 

  Appeal to circuit court, see HRCP rule 72.

 

Case Notes

 

  In passing on necessity of convening three judge court, held

that section raised substantial constitutional questions.  316 F. Supp. 803

(1970).

  Cited:  44 H. 484, 487, 354 P.2d 956 (1960).