41-3-205 - Licenses -- Bonds required -- Maximum liability -- Action against surety -- Loss of bond.
41-3-205. Licenses -- Bonds required -- Maximum liability -- Action against surety-- Loss of bond.
(1) (a) Before a dealer's, special equipment dealer's, crusher's, or body shop's license isissued, the applicant shall file with the administrator a corporate surety bond in the amount of:
(i) $50,000 until June 30, 2006, and $75,000 on or after July 1, 2006, for a motor vehicledealer's license;
(ii) $20,000 until June 30, 2006, and $75,000 on or after July 1, 2006, for a specialequipment dealer's license;
(iii) $10,000 for a motorcycle, off-highway vehicle, or small trailer dealer's or crusher'slicense; or
(iv) $20,000 for a body shop's license.
(b) The corporate surety shall be licensed to do business within the state and have arating of at least B+ by the A.M. Best Company.
(c) The form of the bond:
(i) shall be approved by the attorney general;
(ii) shall be conditioned upon the applicant's conducting business as a dealer without:
(A) fraud;
(B) fraudulent representation;
(C) violating Subsection 41-3-301(1) which requires a dealer to submit or deliver acertificate of title or manufacturer's certificate of origin; or
(D) violating Subsection 41-3-402(1) which requires payoff of liens on motor vehiclestraded in; and
(iii) may be continuous in form.
(d) The total aggregate liability on the bond to all persons making claims, regardless ofthe number of claimants or the number of years a bond remains in force, may not exceed theamount of the bond.
(2) (a) A cause of action under Subsection (1) may not be maintained against a suretyunless:
(i) a claim is filed in writing with the administrator within one year after the cause ofaction arose; and
(ii) the action is commenced within two years after the claim was filed with theadministrator.
(b) The surety or principal shall notify the administrator if a claim on the bond issuccessfully prosecuted or settled against the surety or principal.
(3) (a) A surety or principal may not make a payment on a surety bond to any claimantuntil six months have expired from the date when the first claim on the bond was filed with thesurety or principal in writing.
(b) After six months have expired following the filing of the first bond claim, the suretyor principal shall:
(i) assess the validity of all claims on the bond; and
(ii) submit a distribution assessment determined in accordance with Subsection (3)(c)regarding the bond proceeds to the claimants of valid claims for approval.
(c) (i) If the total verifiable claims on the bond are less than the bond amount, then eachbond claimant shall be entitled to the full amount of a valid claim.
(ii) If the total verifiable claims exceed the bond amount, then the proceeds shall be
distributed pro rata to the bond claimants of valid claims.
(d) If the distribution assessment under Subsection (3)(b) is not unanimously approvedby the claimants of all valid claims on the bond, the principal or surety shall file an interpleaderaction in the state district court where the defaulting dealer was licensed.
(4) (a) A person making a claim on the bond shall be awarded attorney fees in casessuccessfully prosecuted or settled against the surety or principal if the bond has not beendepleted.
(b) A surety or principal may not be awarded attorney fees that exceed $2,500 for aninterpleader action filed under Subsection (3)(d).
(5) (a) (i) If a dealer, body shop, or crusher loses possession of the bond required by thischapter, the dealer, body shop, or crusher license is automatically suspended.
(ii) All licenses, pocket cards, temporary permits, and special plates issued to the licenseeshall be immediately returned to the administrator.
(b) A dealer, body shop, or crusher may not continue to use or permit to be usedlicenses, pocket cards, temporary permits, or special plates until the required bond is on file withthe administrator and the license has been reinstated.
(6) A representative or consignee of a dealer is not required to file a bond if the dealer forwhom the representative or consignee acts fully complies with the provisions of this chapter.
Amended by Chapter 342, 2010 General Session