California Legislature—2013–14 Regular Session

Assembly Bill No. 988

Introduced by Assembly Member Jones

February 22, 2013

An act to amend Sections 285, 286, 296, 331.1, 331.2, 426, 672, 3051, 11701, 11704.5, 11710, and 11723 of the Vehicle Code, relating to recreational off-highway vehicles.

LEGISLATIVE COUNSEL’S DIGEST

AB 988, as introduced, Jones. New Motor Vehicle Board: recreational off-highway vehicles.

Existing law establishes the New Motor Vehicle Board that regulates the activities or practices of a new motor vehicle dealer, manufacturer, manufacturer branch, distributor, distributor branch, or representative, as those terms are defined by the Vehicle Code. Existing law requires licensing by the Department of Motor Vehicles to do these activities for specified types of vehicles.

Existing law defines a recreational off-highway vehicle as a motor vehicle designed by the manufacturer for operation primarily off of the highway that has a steering wheel, nonstraddle seating, a maximum speed capability of greater than 30 miles an hour, and an engine displacement equal to or less than 1,000cc.

This bill would include the activities and practices of recreational off-highway vehicle dealers, manufacturers, manufacturer branches, distributors, distributor branches, or representatives within the scope of regulation by the board.

This bill would require these entities to make application to the Department of Motor Vehicles for a license, but would exempt them from the written examination and education program requirements. The bill would require an applicant for a dealer’s license for a dealer who deals exclusively in recreational off-highway vehicles to procure and file a bond with the department in the amount of $10,000 before a license is issued or renewed. The bill would also require the holders of these licenses and the dealers, manufacturers, manufacturer branches, distributors, distributor branches, and representatives to pay fees for the issuance and renewal of a license.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 285 of the Vehicle Code is amended to
read:

285.  

“Dealer” is a person not otherwise expressly excluded by
Section 286 who:

(a) For commission, money, or other thing of value, sells,
exchanges, buys, or offers for sale, negotiates or attempts to
negotiate, a sale or exchange of an interest in, a vehicle subject to
registration, a motorcycle, snowmobile, begin delete or end delete all-terrain vehicle begin insert , or
recreational off-highway vehicle end insert subject to identification under
this code, or a trailer subject to identification pursuant to Section
5014.1, or induces or attempts to induce any person to buy or
exchange an interest in a vehicle and, who receives or expects to
receive a commission, money, brokerage fees, profit, or any other
thing of value, from either the seller or purchaser of the vehicle.

(b) Is engaged wholly or in part in the business of selling
vehicles or buying or taking in trade, vehicles for the purpose of
resale, selling, or offering for sale, or consigned to be sold, or
otherwise dealing in vehicles, whether or not the vehicles are
owned by the person.

SEC. 2.  

Section 286 of the Vehicle Code is amended to read:

286.  

The term “dealer” does not include any of the following:

(a) Insurance companies, banks, finance companies, public
officials, or any other person coming into possession of vehicles
in the regular course of business, who sells vehicles under a
contractual right or obligation, in performance of an official duty,
or in authority of any court of law, if the sale is for the purpose of
saving the seller from loss or pursuant to the authority of a court.

(b) Persons who sell or distribute vehicles of a type subject to
registration or trailers subject to identification pursuant to Section
5014.1 for a manufacturer to vehicle dealers licensed under this
code, or who are employed by manufacturers or distributors to
promote the sale of vehicles dealt in by those manufacturers or
distributors. However, any of those persons who also sell vehicles
at retail are vehicle dealers and are subject to this code.

(c) Persons regularly employed as salespersons by vehicle
dealers licensed under this code while acting within the scope of
that employment.

(d) Persons engaged exclusively in the bona fide business of
exporting vehicles or of soliciting orders for the sale and delivery
of vehicles outside the territorial limits of the United States, if no
federal excise tax is legally payable or refundable on any of the
transactions. Persons not engaged exclusively in the bona fide
business of exporting vehicles, but who are engaged in the business
of soliciting orders for the sale and delivery of vehicles, outside
the territorial limits of the United States are exempt from licensure
as dealers only if their sales of vehicles produce less than 10
percent of their total gross revenue from all business transacted.

(e) Persons not engaged in the purchase or sale of vehicles as
a business, who dispose of any vehicle acquired and used in good
faith, for their own personal use, or for use in their business, and
not for the purpose of avoiding the provisions of this code.

(f) Persons who are engaged in the purchase, sale, or exchange
of vehicles, other than motorcycles, all-terrain vehicles,
begin insert recreational off-highway vehicles, end insert or trailers subject to
identification under this code, that are not intended for use on the
highways.

(g) Persons temporarily retained as auctioneers solely for the
purpose of disposing of vehicle stock inventories by means of
public auction on behalf of the owners at the owners’ place of
business, or as otherwise approved by the department, if
intermediate physical possession or control of, or an ownership
interest in, the inventory is not conveyed to the persons so retained.

(h) Persons who are engaged exclusively in the business of
purchasing, selling, servicing, or exchanging racing vehicles, parts
for racing vehicles, and trailers designed and intended by the
manufacturer to be used exclusively for carrying racing vehicles.
For purposes of this subdivision, “racing vehicle” means a motor
vehicle of a type used exclusively in a contest of speed or in a
competitive trial of speed which is not intended for use on the
highways.

(i) A person who is a lessor.

(j) A person who is a renter.

(k) A salvage pool.

(l) A yacht broker who is subject to the Yacht and Ship Brokers
Act (Article 2 (commencing with Section 700) of Chapter 5 of
Division 3 of the Harbors and Navigation Code) and who sells
used boat trailers in conjunction with the sale of a vessel.

(m) A licensed automobile dismantler who sells vehicles that
have been reported for dismantling as provided in Section 11520.

(n) The Director of Corrections when selling vehicles pursuant
to Section 2813.5 of the Penal Code.

(o) (1) Any public or private nonprofit charitable, religious, or
educational institution or organization that sells vehicles if all of
the following conditions are met:

(A) The institution or organization qualifies for state tax-exempt
status under Section 23701d of the Revenue and Taxation Code,
and tax-exempt status under Section 501(c)(3) of the federal
Internal Revenue Code.

(B) The vehicles sold were donated to the nonprofit charitable,
religious, or educational institution or organization.

(C) The vehicles subject to retail sale meet all of the applicable
equipment requirements of Division 12 (commencing with Section
24000) and are in compliance with emission control requirements
as evidenced by the issuance of a certificate pursuant to subdivision
(b) of Section 44015 of the Health and Safety Code. Under no
circumstances may any institution or organization transfer the
responsibility of obtaining a smog inspection certificate to the
buyer of the vehicle.

(D) The proceeds of the sale of the vehicles are retained by that
institution or organization for its charitable, religious, or
educational purposes.

(2) An institution or organization described in paragraph (1)
may sell vehicles on behalf of another institution or organization
under the following conditions:

(A) The nonselling institution or organization meets the
requirements of paragraph (1).

(B) The selling and nonselling institutions or organizations enter
into a signed, written agreement pursuant to subparagraph (A) of
paragraph (3) of subdivision (a) of Section 1660.

(C) The selling institution or organization transfers the proceeds
from the sale of each vehicle to the nonselling institution or
organization within 45 days of the sale. All net proceeds transferred
to the nonselling institution or organization shall clearly be
identifiable to the sale of a specific vehicle. The selling institution
or organization may retain a percentage of the proceeds from the
sale of a particular vehicle. However, any retained proceeds shall
be used by the selling institution or organization for its charitable,
religious, or educational purposes.

(D) At the time of transferring the proceeds, the selling
institution or organization shall provide to the nonselling institution
or organization, an itemized listing of the vehicles sold and the
amount for which each vehicle was sold.

(E) In the event the selling institution or organization cannot
complete a retail sale of a particular vehicle, or if the vehicle cannot
be transferred as a wholesale transaction to a dealer licensed under
this code, the vehicle shall be returned to the nonselling institution
or organization and the written agreement revised to reflect that
return. Under no circumstances may a selling institution or
organization transfer or donate the vehicle to a third party that is
excluded from the definition of a dealer under this section.

(3) An institution or organization described in this subdivision
shall retain all records required to be retained pursuant to Section
1660.

(p) A motor club, as defined in Section 12142 of the Insurance
Code, that does not arrange or negotiate individual motor vehicle
purchase transactions on behalf of its members but refers members
to a new motor vehicle dealer for the purchase of a new motor
vehicle and does not receive a fee from the dealer contingent upon
the sale of the vehicle.

SEC. 3.  

Section 296 of the Vehicle Code is amended to read:

296.  

A “distributor” is any person other than a manufacturer
who sells or distributes new vehicles subject to registration under
this code, new trailers subject to identification pursuant to Section
5014.1, or new off-highway motorcycles begin delete or end delete begin insert , end insert all-terrain vehicles begin insert ,
or recreational off-highway vehicles end insert subject to identification under
this code, to dealers in this state and maintains representatives for
the purpose of contacting dealers or prospective dealers in this
state.

SEC. 4.  

Section 331.1 of the Vehicle Code is amended to read:

331.1.  

A “franchisee” is any person who, pursuant to a
franchise, receives new motor vehicles subject to registration under
this code, new off-highway motorcycles, as defined in Section
436, new all-terrain vehicles, as defined in Section 111, begin insert new
recreational off-highway vehicles, as defined in Section 500, end insert or
new trailers subject to identification pursuant to Section 5014.1
from the franchisor and who offers for sale or lease, or sells or
leases the vehicles at retail or is granted the right to perform
authorized warranty repairs and service, or the right to perform
any combination of these activities.

SEC. 5.  

Section 331.2 of the Vehicle Code is amended to read:

331.2.  

A “franchisor” is any person who manufactures,
assembles, or distributes new motor vehicles subject to registration
under this code, new off-highway motorcycles, as defined in
Section 436, new all-terrain vehicles, as defined in Section 111,
begin insert new recreational off-highway vehicles, as defined in Section 500, end insert
or new trailers subject to identification pursuant to Section 5014.1
and who grants a franchise.

SEC. 6.  

Section 426 of the Vehicle Code is amended to read:

426.  

“New motor vehicle dealer” is a dealer, as defined in
Section 285, who, in addition to the requirements of that section,
either acquires for resale new and unregistered motor vehicles
from manufacturers or distributors of those motor vehicles or
acquires for resale new off-highway motorcycles, begin delete or end delete begin insert new end insert all-terrain
vehicles begin insert , or new recreational off-highway vehicles end insert from
manufacturers or distributors of the vehicles. A distinction shall
not be made, nor any different construction be given to the
definition of “new motor vehicle dealer” and “dealer” except for
the application of the provisions of Chapter 6 (commencing with
Section 3000) of Division 2 and Section 11704.5. Sections 3001
and 3003 do not, however, apply to a dealer who deals exclusively
in motorcycles, all-terrain vehicles, begin insert recreational off-highway
vehicles, end insert or recreational vehicles, as defined in subdivision (a) of
Section 18010 of the Health and Safety Code.

SEC. 7.  

Section 672 of the Vehicle Code is amended to read:

672.  

(a) “Vehicle manufacturer” is any person who produces
from raw materials or new basic components a vehicle of a type
subject to registration under this code, off-highway motorcycles
begin delete or end delete begin insert , end insert all-terrain vehicles begin insert , or recreational off-highway vehicles, end insert subject
to identification under this code, or trailers subject to identification
pursuant to Section 5014.1, or who permanently alters, for purposes
of retail sales, new commercial vehicles by converting the vehicles
into house cars that display the insignia of approval required by
Section 18056 of the Health and Safety Code and any regulations
issued pursuant thereto by the Department of Housing and
Community Development. As used in this section, “permanently
alters” does not include the permanent attachment of a camper to
a vehicle.

(b) A vehicle manufacturer that produces a vehicle of a type
subject to registration that consists of used or reconditioned parts,
for the purposes of the code, is a remanufacturer, as defined in
Section 507.8.

(c) Unless a vehicle manufacturer either grants franchises to
franchisees in this state, or issues vehicle warranties directly to
franchisees in this state or consumers in this state, the manufacturer
shall have an established place of business or a representative in
this state.

(d) The scope and application of this section are limited to
Division 2 (commencing with Section 1500) and Division 5
(commencing with Section 11100).

SEC. 8.  

Section 3051 of the Vehicle Code is amended to read:

3051.  

This chapter does not apply to any person licensed as a
transporter under Article 1 (commencing with Section 11700) or
as a salesperson under Article 2 (commencing with Section 11800)
of Chapter 4 of Division 5, or to any licensee who is not a new
motor vehicle dealer, motor vehicle manufacturer, manufacturer
branch, new motor vehicle distributor, distributor branch, or
representative. This chapter does not apply to transactions
involving “mobilehomes,” as defined in Section 18008 of the
Health and Safety Code, “recreational vehicles,” as defined in
subdivision (b) of Section 18010 of the Health and Safety Code,
truck campers, “commercial coaches,” as defined in Section
18001.8 of the Health and Safety Code, or off-highway motor
vehicles subject to identification, as defined in Section 38012,
except off-highway motorcycles, as defined in Section 436, begin delete and end delete
all-terrain vehicles, as defined in Section 111 begin insert , and recreational
off-highway vehicles, as defined in Section 500 end insert . Except as
otherwise provided in this chapter, this chapter applies to a new
motor vehicle dealer, a dealer of new recreational vehicles, as
defined in subdivision (a) of Section 18010 of the Health and
Safety Code, except a dealer who deals exclusively in truck
campers, a vehicle manufacturer as defined in Section 672, a
manufacturer branch as defined in Section 389, a distributor as
defined in Section 296, a distributor branch as defined in Section
297, a representative as defined in Section 512, or an applicant
therefor.

SEC. 9.  

Section 11701 of the Vehicle Code is amended to read:

11701.  

Every manufacturer, manufacturer branch,
remanufacturer, remanufacturer branch, distributor, distributor
branch, transporter, or dealer of vehicles of a type subject to
registration, or snowmobiles, motorcycles, all-terrain vehicles,
begin insert recreational off-highway vehicles, end insert or trailers of a type subject to
identification, shall make application to the department for a license
containing a general distinguishing number. The applicant shall
submit proof of his or her status as a bona fide manufacturer,
manufacturer branch, remanufacturer, remanufacturer branch,
distributor, distributor branch, transporter, or dealer as may
reasonably be required by the department.

SEC. 10.  

Section 11704.5 of the Vehicle Code is amended to
read:

11704.5.  

(a) Except as provided in subdivision (e), every
person who applies for a dealer’s license pursuant to Section 11701
for the purpose of transacting sales of used vehicles on a retail or
wholesale basis only shall be required to take and successfully
complete a written examination prepared and administered by the
department before a license may be issued. The examination shall
include, but need not be limited to, all of the following laws and
subjects:

(1) Division 12 (commencing with Section 24000), relating to
equipment of vehicles.

(2) Advertising.

(3) Odometers.

(4) Vehicle licensing and registration.

(5) Branch locations.

(6) Offsite sales.

(7) Unlawful dealer activities.

(8) Handling, completion, and disposition of departmental forms.

(b) Prior to the first taking of an examination under subdivision
(a), every applicant shall successfully complete a preliminary
educational program of not less than four hours. The program shall
address, but not be limited to, all of the following topics:

(1) Chapter 2B (commencing with Section 2981) of Title 14 of
Part 4 of Division 3 of the Civil Code, relating to motor vehicle
sales finance.

(2) Motor vehicle financing.

(3) Truth in lending.

(4) Sales and use taxes.

(5) Division 12 (commencing with Section 24000), relating to
equipment of vehicles.

(6) Advertising.

(7) Odometers.

(8) Vehicle licensing and registration.

(9) Branch locations.

(10) Offsite sales.

(11) Unlawful dealer activities.

(12) Air pollution control requirements.

(13) Regulations of the Bureau of Automotive Repair.

(14) Handling, completion, and disposition of departmental
forms.

(c) (1) Except as provided in paragraph (2) or (3), every dealer
who is required to complete a written examination and an
educational program pursuant to subdivisions (a) and (b) and who
is thereafter issued a dealer’s license shall successfully complete,
every two years after issuance of that license, an educational
program of not less than four hours that offers instruction in the
subjects listed under subdivision (a) and the topics listed under
subdivision (b), in order to maintain or renew that license.

(2) A dealer is not required to complete the educational program
set forth in paragraph (1) if the educational program is completed
by a managerial employee employed by the dealer.

(3) Paragraph (1) does not apply to dealers who sell vehicles
on a wholesale basis only and who, in a one-year period, deal with
less than 50 vehicles that are subject to registration.

(d) Instruction described in subdivisions (b) and (c) may be
provided by generally accredited educational institutions, private
vocational schools, and educational programs and seminars offered
by professional societies, organizations, trade associations, and
other educational and technical programs that meet the
requirements of this section or by the department.

(e) This section does not apply to any of the following:

(1) An applicant for a new vehicle dealer’s license or any
employee of that dealer.

(2) A person who holds a valid license as an automobile
dismantler, an employee of that dismantler, or an applicant for an
automobile dismantler’s license.

(3) An applicant for a motorcycle only dealer’s license or any
employee of that dealer.

(4) An applicant for a trailer only dealer’s license or any
employee of that dealer.

(5) An applicant for an all-terrain only dealer’s license or any
employee of that dealer.

begin insert

(6) An applicant for a recreational off-highway vehicle only
dealer’s license or any employee of that dealer.

end insert

SEC. 11.  

Section 11710 of the Vehicle Code is amended to
read:

11710.  

(a) Before any dealer’s or remanufacturer’s license is
issued or renewed by the department to any applicant therefor, the
applicant shall procure and file with the department a bond
executed by an admitted surety insurer, approved as to form by
the Attorney General, and conditioned that the applicant shall not
practice any fraud or make any fraudulent representation which
will cause a monetary loss to a purchaser, seller, financing agency,
or governmental agency.

(b) A dealer’s bond shall be in the amount of fifty thousand
dollars ($50,000), except the bond of a dealer who deals exclusively
in motorcycles or all-terrain vehicles shall be in the amount of ten
thousand dollars ($10,000). Before the license is renewed by the
department, the dealer, other than a dealer who deals exclusively
in motorcycles begin delete or end delete begin insert , end insert all-terrain vehicles, begin insert or recreational off-highway
vehicles, end insert shall procure and file a bond in the amount of fifty
thousand dollars ($50,000). A remanufacturer bond shall be in the
amount of fifty thousand dollars ($50,000).

(c) Liability under the bond is to remain at full value. If the
amount of liability under the bond is decreased or there is
outstanding a final court judgment for which the dealer or
remanufacturer and sureties are liable, the dealer’s or
remanufacturer’s license shall be automatically suspended. In order
to reinstate the license and special plates, the licensee shall either
file an additional bond or restore the bond on file to the original
amount, or shall terminate the outstanding judgment for which the
dealer or remanufacturer and sureties are liable.

(d) A dealer’s or remanufacturer’s license, or renewal of the
license, shall not be issued to any applicant therefor, unless and
until the applicant files with the department a good and sufficient
instrument, in writing, in which the applicant appoints the director
as the true and lawful agent of the applicant upon whom all process
may be served in any action, or actions, which may thereafter be
commenced against the applicant, arising out of any claim for
damages suffered by any firm, person, association, or corporation,
by reason of the violation of the applicant of any of the terms and
provisions of this code or any condition of the dealer’s or
remanufacturer’s bond. The applicant shall stipulate and agree in
the appointment that any process directed to the applicant, when
personal service of process upon the applicant cannot be made in
this state after due diligence and, in that case, is served upon the
director or, in the event of the director’s absence from the office,
upon any employee in charge of the office of the director, shall be
of the same legal force and effect as if served upon the applicant
personally. The applicant shall further stipulate and agree, in
writing, that the agency created by the appointment shall continue
for and during the period covered by any license that may be issued
and so long thereafter as the applicant may be made to answer in
damages for a violation of this code or any condition of the bond.
The instrument appointing the director as the agent for the applicant
for service of process shall be acknowledged by the applicant
before a notary public. In any case where the licensee is served
with process by service upon the director, one copy of the summons
and complaint shall be left with the director or in the director’s
office in Sacramento or mailed to the office of the director in
Sacramento. A fee of five dollars ($5) shall also be paid to the
director at the time of service of the copy of the summons and
complaint. Service on the director shall be a sufficient service on
the licensee if a notice of service and a copy of the summons and
complaint are immediately sent by registered mail by the plaintiff
or the plaintiff’s attorney to the licensee. A copy of the summons
and complaint shall also be mailed by the plaintiff or the plaintiff’s
attorney to the surety on the applicant’s bond at the address of the
surety given in the bond, postpaid and registered with request for
return receipt. The director shall keep a record of all process so
served upon the director, which record shall show the day and hour
of service and shall retain the summons and complaint so served
on file. Where the licensee is served with process by service upon
the director, the licensee shall have and be allowed 30 days from
and after the service within which to answer any complaint or other
pleading which may be filed in the cause. However, for purposes
of venue, where the licensee is served with process by service upon
the director, the service is deemed to have been made upon the
licensee in the county in which the licensee has or last had an
established place of business.

SEC. 12.  

Section 11723 of the Vehicle Code is amended to
read:

11723.  

The board may require that fees shall be paid to the
department for the issuance or renewal of a license to do business
as a new motor vehicle dealer, dealer branch, manufacturer,
manufacturer branch, distributor, distributor branch, or
representative. The fees shall be to reimburse the department for
costs incurred in licensing those dealers, manufacturers,
distributors, branches, and representatives and for related
administrative costs incurred on behalf of the board. The board
may also require that an additional fee be paid to the department
when the licensee has failed to pay the fee authorized by Section
3016 prior to the expiration of its occupational license and special
plates and the licensee utilizes the 30-day late renewal period
authorized by subdivision (c) of Section 11717.

This section shall not apply to dealers, manufacturers,
distributors, or representatives of vehicles not subject to registration
under this code, except dealers, manufacturers, manufacturer
branches, distributors, distributor branches, or representatives of,
off-highway motorcycles, as defined in Section 436, all-terrain
vehicles, as defined in Section 111, begin insert recreational off-highway
vehicles, as defined in Section 500, end insert and trailers subject to
identification pursuant to Section 5014.1.