Opinion No. (2006)

BILL LOCKYER Attorney General GREGORY L. GONOT Deputy Attorney General THE HONORABLE NELL SOTO, MEMBER OF THE STATE SENATE, has requested an opinion on the following question: Does a finance company have a statutory right of action against a surety upon an automobile dealer's bond when the dealer defaults on his or her loan from the finance company for the purchase of a vehicle at an auction? CONCLUSION A finance company does not have a statutory right of action against a surety upon an automobile dealer's bond when the dealer defaults on his or her loan from the finance company for the purchase of a vehicle at an auction. ANALYSIS The Department of Motor Vehicles ("Department") administers the issuance and renewal of motor vehicle dealer licenses (Veh. Code, §§ 11700-11909). 1 Subdivision (a) of section 11710 requires a dealer to submit a surety bond before obtaining a dealer license from the Department: "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…