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

§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 on account whereof the board may deem 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 or has filed or is the subject of
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) In the case of an individual applicant or holder
of a license, if the applicant or holder is not at least eighteen years of age;
in the case of a partnership applicant or holder of a license, if any general
or limited partner thereof is not at least eighteen years of age;

(9) Has charged more than the legal rate of interest
on the sale or 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 of the laws pertaining to false
advertising or to credit sales in the offering, soliciting, selling, or
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 for having had a license issued
under this chapter suspended, revoked, or the renewal thereof denied for
substantial culpable cause;

(13) Has entered or 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 or 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 or 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) Being a salesperson or dealer:

(A) Has required a purchaser of motor vehicles
as a condition of sale and delivery thereof 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 operated as a demonstrator,
leased, 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 that contains the
following provision printed legibly in at least fourteen-point bold typeface
print, upon which the salesperson or dealer shall appropriately indicate the
type of sale, and upon 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:

"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) Being an applicant or holder of a dealer's
license:

(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

(19) Being an applicant or holder of an auction's
license has sold or proposed to sell new motor vehicles without being
franchised therefor;

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

(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; or

(21) Being a manufacturer or distributor:

(A) Has attempted to coerce or has coerced 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 attempted to coerce or has coerced 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 same sales area of responsibility covered by the existing franchise
agreement of the dealer;

(C) Has attempted to or has canceled or failed
to renew the franchise agreement of any dealer in the State without good faith, as defined herein. Upon such a
cancellation or failure to renew the franchise agreement, the party canceling
or failing to renew the franchise agreement, at the dealer's option, shall
either:

(i) Compensate
the dealer at the fair market going business value for the dealer's capital
investment, which shall include but not be limited to the going business value
of the business, goodwill, property, and improvement owned or leased by the
dealer for the purpose of the franchise, inventory of parts, and motor vehicles
possessed by the dealer in connection with the franchise, plus reasonable
attorney's fees incurred in collecting compensation; provided that the
investment shall have been made with reasonable and prudent judgment for the
purpose of the franchise agreement; or

(ii) Compensate
the dealer for damages including attorney's fees as aforesaid, resulting from
the cancellation or failure to renew the franchise agreement.

As used in this paragraph,
"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, parts, and other expenses 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 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]

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.

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