2023 Hawaii Revised Statutes › Title 25. Professions and Occupations › 437. Motor Vehicle Industry Licensing Act › 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 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).
Plaintiff alleged sufficient facts to state a claim for violation of the Hawaii Motor Vehicle Industry Licensing Act, in particular, subsection (a)(21)(A) and (C), based on nonrenewal of the distributorship agreement. 81 F. Supp. 3d 993 (2014).
Cited: 44 H. 484, 487, 354 P.2d 956 (1960).