2015-2016 Bill 911: Closing Fees on Motor Vehicle Sales Contracts - South Carolina Legislature

1 South Carolina General Assembly 2 121st Session, 2015-2016 3 4 S. 911 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Senators L. Martin, Campsen, Massey, Hayes, Alexander, Bennett, Bright, Bryant, Campbell, 10 Corbin, Gregory, Hembree, S. Martin, O'Dell, Peeler, Shealy, Turner, Johnson, Grooms, Williams, Davis, 11 Verdin, Fair, Reese, Nicholson, Cleary and Lourie 12 Document Path: l:\s-jud\bills\l. martin\jud0078.jh.docx 13 14 Introduced in the Senate on January 13, 2016 15 Currently residing in the Senate Committee on Judiciary 16 17 Summary: Closing fees on motor vehicle sales contracts 18 19 20 HISTORY OF LEGISLATIVE ACTIONS 21 22 Date Body Action Description with journal page number 23 12/2/2015 Senate Prefiled 24 12/2/2015 Senate Referred to Committee on Judiciary 25 12/3/2015 Senate Referred to Subcommittee: L.Martin (ch), Hutto, Massey 26 1/13/2016 Senate Introduced and read first time ( Senate Journalpage 28) 27 1/13/2016 Senate Referred to Committee on Judiciary ( Senate Journalpage 28) 28 1/20/2016 Senate Committee report: Majority favorable, minority unfavorable Judiciary (Senate 29 Journalpage 10) 30 1/21/2016 Scrivener's error corrected 31 5/31/2016 Senate Recommitted to Committee on Judiciary 32 33 View the latest legislative information at the website 34 35 36 VERSIONS OF THIS BILL 37 38 12/2/2015 39 1/20/2016 40 1/21/2016 41 1 Indicates Matter Stricken 2 Indicates New Matter 3 4 COMMITTEE REPORT 5 January 20, 2016 6 7 S. 911 8 9 Introduced by Senators L. Martin, Campsen, Massey, Hayes, 10 Alexander, Bennett, Bright, Bryant, Campbell, Corbin, Gregory, 11 Hembree, S. Martin, O’Dell, Peeler, Shealy, Turner, Johnson, 12 Grooms, Williams, Davis, Verdin, Fair, Reese, Nicholson, Cleary 13 and Lourie 14 15 S. Printed 1/20/16--S. [SEC 1/21/16 12:57 PM] 16 Read the first time January 13, 2016. 17 18 19 THE COMMITTEE ON JUDICIARY 20 To whom was referred a Bill (S. 911) to amend the Code of 21 Laws of South Carolina, 1976, relating to closing fees on motor 22 vehicle sales contracts, so as to establish a definition of a closing 23 fee that, etc., respectfully 24 REPORT: 25 That they have duly and carefully considered the same and 26 recommend that the same do pass: 27 28 Majority favorable. Minority unfavorable. 29 LARRY A. MARTIN BRAD HUTTO 30 For Majority. For Minority. 31 32

[911-2] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, RELATING TO CLOSING FEES ON MOTOR VEHICLE 13 SALES CONTRACTS, SO AS TO ESTABLISH A DEFINITION 14 OF A CLOSING FEE THAT A MOTOR VEHICLE DEALER 15 MAY CHARGE BY AMENDING SECTION 372307 OF THE 16 CODE AND TO PROVIDE AN AFFIRMATIVE DEFENSE FOR 17 A MOTOR VEHICLE DEALER WHO COMPLIES WITH THE 18 REQUIREMENTS OF THE CODE IS IN COMPLIANCE WITH 19 STATE LAW; RELATING TO THE DEALERS’ ACT TO 20 CLARIFY THE PROCEDURAL PROCESS FOR BRINGING A 21 CLAIM SO AS TO REPEAL SECTION 5615110(2) AND TO 22 AMEND THE PROCEDURAL PROCESS FOR A PERSON TO 23 BRING A CLAIM IN AN INDIVIDUAL CAPACITY UNDER 24 THE DEALER’S ACT IN SECTION 5615110(1); AND TO 25 CLARIFY THE CURRENT PROCEDURAL PROCESS IN 26 STATE LAW FOR A MOTOR VEHICLE TO BRING ACTION 27 OR CLAIM FOR DAMAGE AND HARM TO ITS BUSINESS 28 OR PROPERTY BY THE MANUFACTURER, DISTRIBUTOR, 29 OR OTHER PERSON BY AMENDING SECTION 561530. 30 31 Whereas, the South Carolina Supreme Court held in the matter of 32 Freeman v. J.L.H. Investments, L.P., a/k/a Hendrick Honda of 33 Easley issued on November 4, 2015, that a closing fee charged by 34 a motor vehicle dealer pursuant to Section 372307 of the South 35 Carolina Code must bear some relation to the actual expenses 36 incurred for the closing and the majority; and 37 38 Whereas, the General Assembly enacted Section 372307 of the 39 South Carolina Code in 2000 and placed the closing fee statute in 40 the disclosure chapter of the South Carolina Consumer Protection 41 Code as a disclosure provision if a motor vehicle dealer intends to 42 collect or charge a closing fee; and 43

[911] 3 1 Whereas, the South Carolina Supreme Court’s Opinion, directly 2 and adversely threatens the economic stability and ongoing 3 viability of owners and operators of motor vehicle dealerships, 4 their employees, vendors, customers, and communities; and 5 6 Whereas, there are approximately 282 franchised automotive 7 dealerships employing 22,568 citizens in jobs throughout the State 8 of South Carolina and their economic interests are important to 9 their communities and to the State; and 10 11 Whereas, the majority expressly invited the General Assembly to 12 address and correct this interpretation if it disagreed with the 13 aforementioned Opinion; and 14 15 Whereas, the General Assembly enacted Section 5615110(2) of the 16 Dealer’s Act (Chapter 15 of Title 56) to allow motor vehicle 17 dealers who are aggrieved and damaged as a result of the 18 manufacturer and/or distributor to have the ability to join together 19 in seeking remedy and action against the manufacturer and/or 20 distributor; and 21 22 Whereas, the General Assembly finds that the court’s dissenting 23 opinion accurately reflects the intent of the General Assembly 24 when it enacted the Closing Fee Statute as part of the Consumer 25 Protection Code and placed the enforcement authority with the 26 Department of Consumer Affairs to ensure compliance with the 27 statute and to encourage reliance on the construction of the code by 28 the department thereby protecting consumers and providing due 29 regard for the interests of legitimate businesses seeking to comply 30 with applicable requirements established by the department. Now, 31 therefore, 32 33 Be it enacted by the General Assembly of the State of South 34 Carolina: 35 36 SECTION 1. Section 372307 of the 1976 Code is amended to 37 read: 38 39 “Section 372307. (a) Every motor vehicle dealer charging 40 closing fees on a motor vehicle sales contract shall pay a onetime 41 registration fee of ten dollars during each state fiscal year to the 42 Department of Consumer Affairs. The closing fee must be 43 included in the advertised price of the motor vehicle, disclosed on

[911] 4 1 the sales contract, and displayed in a conspicuous location in the 2 motor vehicle dealership. 3 4 (b) A motor vehicle dealer who complies with subsection (a) 5 above is deemed to be in compliance with the provisions of this 6 section and may lawfully charge a closing fee. A motor vehicle 7 dealer may assert any defenses provided to a creditor under the 8 provision of Title 37 of the South Carolina Code of Laws whether 9 the vehicle transaction is a credit sale or cash transaction. 10 11 (c) The Department of Consumer Affairs shall administer this 12 section and shall exclusively enforce the subject of motor vehicle 13 dealer closing fees, including, but not limited to, this section . 14 15 SECTION 2. Section 5615110(1) of Article 1, Chapter 15, Title 16 56 of the 1976 Code is amended to read: 17 18 “Section 56-15-110. (1) In addition to temporary or 19 permanent injunctive relief as provided in Section 561540(3)(c), 20 any person who shall be injured in his business or property by 21 reason of anything forbidden in this chapter may sue therefor in 22 the court of common pleas individually, but not in a representative 23 or group capacity, nor acting as a private attorneys general, and 24 shall recover double the actual damages by him sustained, and the 25 cost of suit, including a reasonable attorney’s fee and costs.” 26 27 SECTION 3. Section 5615110(2) of the 1976 Code is repealed. 28 29 SECTION 4. If any section, subsection, paragraph, subparagraph, 30 sentence, clause, phrase, or word of this act is for any reason held 31 to be unconstitutional or invalid, such holding shall not affect the 32 constitutionality or validity of the remaining portions of this act, 33 the General Assembly hereby declaring that it would have passed 34 this Act, and each and every section, subsection, paragraph, 35 subparagraph, sentence, clause, phrase, and word thereof, 36 irrespective of the fact that any one or more other sections, 37 subsections, paragraphs, subparagraphs, sentences, clauses, 38 phrases, or words hereof may be declared to be unconstitutional, 39 invalid, or otherwise ineffective. 40 41 SECTION 5. This act takes effect upon approval by the 42 Governor, and shall apply to any and all causes of action, 43 including appeals, pending on January 12, 2016, which have not

[911] 5 1 been reduced to final judgment, and this act shall apply to any 2 matter pending and unresolved on the effective date of this act. 3 XX 4

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