Liabilities of the A/HB builders

docmirror said:
Please forward the agent, company or contact info. You may PM if you wish. Thx.
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Call your insurance agent and ask about a rider on your home owners policy.

I charge $250 hour for consultation, $1,000 up front retainer for any financial advice. ;)
 
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I can't see how anybody could think that they could build an airplane and have their name on record as the builder and think there would be no liability. Of course there is liability. No amount of boiler plate forms from the EAA is going to protect you from potential suits.

Having said that, the builder of the airplane has two choices when it is decided to dispose of the aircraft, either break up the plane and sell the parts as salvage, or sell the plane whole and take your chances. Clearly the vast majority due to emotional attachment and desire to get the highest dollar, choose the later. As long as you have little assets, I'm sure you're fine. The gamble has paid off for many... so far.

I'm sure there are lawsuits still coming.
 
Dav8or said:
I can't see how anybody could think that they could build an airplane and have their name on record as the builder and think there would be no liability. Of course there is liability. No amount of boiler plate forms from the EAA is going to protect you from potential suits.

Having said that, the builder of the airplane has two choices when it is decided to dispose of the aircraft, either break up the plane and sell the parts as salvage, or sell the plane whole and take your chances. Clearly the vast majority due to emotional attachment and desire to get the highest dollar, choose the later. As long as you have little assets, I'm sure you're fine. The gamble has paid off for many... so far.

I'm sure there are lawsuits still coming.
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You don't understand EAB or E-LSA.
 
N801BH said:
Yup.... You are listed in the database FORE EVER as the builder...:redface:
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But in your case, your corp is listed forever, not you, right?

Sounds like a good reason to use a corp to register itself as the builder.
 
This board has several lawyers that post frequently, but notice not one has chimed in on this at all?

Their silence is very telling.
 
Geico266 said:
You don't understand EAB or E-LSA.
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Really? What part don't I understand? You build a product and you sell it to someone. The FAA has you as the builder or record. That means they hold you responsible for how it was built. Somebody crashes it and dies. They can always argue that it was due to how you built it. They do it all the time with Cessna and Piper. You may not be at fault, but they'll sue you anyhow.

With the right lawyers and a sympathetic jury, the words "Experimental" on the plane and the paperwork won't mean jack, or squat. Sucks, but that's the way it is. Like I said, if you don't have a lot of assets, they probably won't bother you. I suspect it is this that has protected most builders of ill fated EAB planes to date.
 
Geico266 said:
Call your insurance agent and ask about a rider on your home owners policy.

I charge $250 hour for consultation, $1,000 up front retainer for any financial advice. ;)
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Which means, you don't have it, can't get it and no nothing about it. I've already talked to my insurance guy about a rider on my HO policy. The amounts for $1mil coverage were significantly higher than your - um, estimate.
 
SoloEqs said:
Well, unless you can show me a case in which this was proven not to work, I'd have to say that the objections are vapor.

This has been done by countless property owners, contracting companies, shipowners, charter-tour operations, rural mail carriers, broadcast site owners and long-haul truck owner operators. It works for them, why wouldn't it work for EABs?
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It doesn't matter if a phantom LLC is the owner. If you are OPERATING the aircraft when it crashes into the school bus, you're personally on the hook. This is discussed ad nauseam on AOPA and aviation law blogs. The only level of protection you have as an OPERATOR is aviation insurance. The one value to de-coupling yourself from your ownership interest in the aircraft via incorporation is if you allow other people to fly the airplane or the airplane is co-owned. At that point having an LLC limits your personal exposure to the misfortunes or boneheadedness of other people flying your airplane around. But when you're at the controls, tag you're it.

Furthermore and I'm no lawyer, but I fully expect to get sacked out of my livelihood by my socks if I ever try to come into a courtroom to defend myself under the guise of having my dopy LLC, of which I own 100% of the interests on, own the aircraft I just planted on the mall parking lot while arguing that I am, as a commercial pilot, but a mere contracted party operating the flight on my dopy LLC's behalf. That paper trail is so facetious and easy to uncover any judge would laugh you out the building. As an aircraft owner-operator, I just pay the damn insurance and go fly. This incorporation business is for the birds as an operator. I sure hope you have insurance.

This is different than a builder incorporating. There the LLC distances you a bit from the chain, since you're not the operator or owner. I do still think people are woefully exposed once they resale something the FAA has a record of them building. But if they think a phantom LLC will stop them losing their personal financial lives, that's on them. I don't think the John Denver case is a good precedent at all. The builder settled out of courtroom did he not? If so, that's the same as losing. He lost money. Could have been any builder. Where the liability exposure protection there? If you gotta lose your shirt defending yourself because the formation of an LLC doesn't offer you ip so facto protection against lawsuits, then you didn't win.

Again I'm no lawyer, but that's my logic if I were one.
 
bbchien said:
Man hears what he wants to hear, and disregards the rest.....
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Simon and Garfunkel... Really?

But the reality is that all you can do if you choose to sell your EAB is sell it in good condition, document all of the likely problem areas (FWF, etc.), and have the buyer's IA do the first condition inspection. The truth (that you built a good airplane sold it in good condition) is a defense.

You still have liability, but the inexpensive umbrella policy is another firewall in front of your personal wealth. I think our umbrella policy is $268/yr and we have a pool and two dogs.
 
Some years ago I was putting together the outline of a Velocity build, and I could NOT get a quote for such.

State Farm said they would line out the aircraft from my 3M umbrella, so did Allsate.
So please say who the insuror is.....
 
bbchien said:
He did. that was Adrian Davis. He lost, also.
The idea that you don't have liability is full of cr_p.
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Contributing to the liability in the Denver(estate) case against Davis was the builders deviation from the plans provided by one of the most revered homebuilders/designers ever. Davis changed the fuel system in an effort to keep fuel hoses and fittings out of the cockpit. While he succeeded in this, his methods and workmanship were found by several A&Ps to be substandard, and lacking in basic design philosophy.

The fuel valve was behind the aft bulkhead with a long shaft leading forward to the front cockpit sidewall. The selector was hard to turn, unlabeled, and the handle had previously broken. In fact, the handle was removed before Denver's last flight and a pair of vise grips were substituted.

Of course, the pliers would not have been necessary had the fuel valve and shaft had been designed and installed either the way Rutan said to do it, or in a manner consistent with good engineering. By putting it out of sight, and reach of a normal person the builder kind of extended his liability due to the fact that the tank switching was the proximate cause of the accident(so says the NTSB).
 
In addition to the truth, the purchase agreement (or addendum) should include full disclosure and representations made by seller.

kyleb said:
Simon and Garfunkel... Really?

But the reality is that all you can do if you choose to sell your EAB is sell it in good condition, document all of the likely problem areas (FWF, etc.), and have the buyer's IA do the first condition inspection. The truth (that you built a good airplane sold it in good condition) is a defense.

You still have liability, but the inexpensive umbrella policy is another firewall in front of your personal wealth. I think our umbrella policy is $268/yr and we have a pool and two dogs.
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bbchien said:
Some years ago I was putting together the outline of a Velocity build, and I could NOT get a quote for such.

State Farm said they would line out the aircraft from my 3M umbrella, so did Allsate.
So please say who the insuror is.....
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State Farm. Of course, the airplane was not top of mind when we got the umbrella. The pool and the dogs were the main topics of discussion along with the obvious issue of auto liability.
 
The major question still remains unanswered, When Mike builds 75% of any AHB/EXP aircraft, then sells it to John, who then completes the project, applies for the AWC and N number, plus all other registration requirements in his name, how can any one see Mikes name as the builder?

How could anyone sue Mike when his name is no where in the records for the aircraft/

that would be the case in the CoZY I'm chasing.

.
 
Tom-D said:
The major question still remains unanswered, When Mike builds 75% of any AHB/EXP aircraft, then sells it to John, who then completes the project, applies for the AWC and N number, plus all other registration requirements in his name, how can any one see Mikes name as the builder?

How could anyone sue Mike when his name is no where in the records for the aircraft/

that would be the case in the CoZY I'm chasing.

.
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Because John's estate or insurance company rolls over on Mike and says "Oh, that bad layup? Mike did it. John bought all that stuff already built."

Lawyers, discovery, deep pockets, etc. Ultimately, if someone wants to sue, they can, and they will do their darndest to find someone with deep pockets to link to the suit.
 
kyleb said:
Because John's estate or insurance company rolls over on Mike and says "Oh, that bad layup? Mike did it. John bought all that stuff already built."

Lawyers, discovery, deep pockets, etc. Ultimately, if someone wants to sue, they can, and they will do their darndest to find someone with deep pockets to link to the suit.
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the problem with that is simply they can't prove who built what. speciality when mike's name can't be seen anywhere in the build or the records.

Plus John contaminated the liability loop when he finished the project.
 
Tom-D said:
the problem with that is simply they can't prove who built what. speciality when mike's name can't be seen anywhere in the build or the records.

Plus John contaminated the liability loop when he finished the project.
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Can he prove what he didn't build? If he can prove he didn't build a certain part can he prove what he did build didn't contribute to the failure/accident?
 
RotorAndWing said:
Can he prove what he didn't build? If he can prove he didn't build a certain part can he prove what he did build didn't contribute to the failure/accident?
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how would you know who to ask that question?

"I never saw that aircraft before, get lost".
 
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Tom-D said:
the problem with that is simply they can't prove who built what. speciality when mike's name can't be seen anywhere in the build or the records.
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You don't have to prove who built what to file a suit (or even win the suit, depending on the intellectual capacity of the jury).

There is a paper trail showing that John bought the project from Mike or his estate. It is called a cancelled check. If John has half a brain, he's gonna wave that cancelled check (and any pictures from the purchase) around like nobody's business if he thinks it can reduce, shift, or eliminate his liability.
 
kyleb said:
You don't have to prove who built what to file a suit (or even win the suit, depending on the intellectual capacity of the jury)..
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long before it gets to a jury the judge will throw it out as frivolous.
 
I'm not a lawyer, but I have been involved with my share of litigation. Most of the time I see lawyers list every possible party on the suit. Flush out any insurance. Make the best settlement deals possible. Then if there is something else worth going after you have a nice little war chest to do so. The cost of the filing doesn't change and for the most part the lawyers time is going to be about the same.

I agree with R&W, I just can't see anyway a lawyer would not put the named builder on the suit (along with everyone else).

In my case if I ever built an experimental I would commit up front that it would just be scrapped when I was done with it. Letting an aircraft with your name as the builder float around from hand to hand forever seems straight nuts to me.

Another thought: Assuming you have some assets, how about subrogation? Your pocket book vs. say AIG's.... no thank you.
 
On the EAA web site you can find a webinar on the subject of liability when selling an AB experimental. The webinar is conducted by a lawyer. Nothing screams caveat emptor louder than an AB experimental.
 
Alexb2000 said:
In my case if I ever built an experimental I would commit up front that it would just be scrapped when I was done with it. Letting an aircraft with your name as the builder float around from hand to hand forever seems straight nuts to me.
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Let's say 20,000 homebuilts have been sold over the years. We've had one situation that anyone can name where a builder or parts supplier has taken it in the shorts. One in 20,000 odds ain't bad when you're looking at selling a $50k or more airplane.
 
Will the claim for damages be limited to the sales price so the worst case is a break-even?

kyleb said:
Let's say 20,000 homebuilts have been sold over the years. We've had one situation that anyone can name where a builder or parts supplier has taken it in the shorts. One in 20,000 odds ain't bad when you're looking at selling a $50k or more airplane.
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kyleb said:
Let's say 20,000 homebuilts have been sold over the years. We've had one situation that anyone can name where a builder or parts supplier has taken it in the shorts. One in 20,000 odds ain't bad when you're looking at selling a $50k or more airplane.
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Well the experimental market is evolving. They go faster and carry more people. Passengers (or their estates) I'm sure are the genesis of many lawsuits. Also, we don't know what terms have been reached in settlements so far either.

My attorney is also a good friend of mine told me not to carry passengers (other than the wife, kids, dogs, etc) ever. He also said NEVER build an experimental. Of course I do carry other passengers, but his point was that someone building an airplane, piloting it, and then killing an innocent person in the plane or on the ground is a litigators dream case. Maxing out the insurance is a nice appetizer then he'd see if there was steak for dinner.
 
wabower said:
Will the claim for damages be limited to the sales price so the worst case is a break-even?
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Nope, but 20k:1 is a reasonable risk, IMO. You could get sued and lose, but the numbers are way in your favor.
 
Alexb2000 said:
Well the experimental market is evolving. They go faster and carry more people. Passengers (or their estates) I'm sure are the genesis of many lawsuits. Also, we don't know what terms have been reached in settlements so far either.

My attorney is also a good friend of mine told me not to carry passengers (other than the wife, kids, dogs, etc) ever. He also said NEVER build an experimental. Of course I do carry other passengers, but his point was that someone building an airplane, piloting it, and then killing an innocent person in the plane or on the ground is a litigators dream case. Maxing out the insurance is a nice appetizer then he'd see if there was steak for dinner.
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attorneys are always going to advise you to sit quietly in your home and concentrate on doing nothing but breathing until it's time to die.
 
No they're not, at least those who specialize in aviation. They're going to advise you to acquire adequate insurance for the risks you assume. The NBAA tax conference is in Las Vegas next month and they will address the subject again this year, if you're interested.

JHW said:
attorneys are always going to advise you to sit quietly in your home and concentrate on doing nothing but breathing until it's time to die.
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kyleb said:
You don't have to prove who built what to file a suit (or even win the suit, depending on the intellectual capacity of the jury).

There is a paper trail showing that John bought the project from Mike or his estate. It is called a cancelled check. If John has half a brain, he's gonna wave that cancelled check (and any pictures from the purchase) around like nobody's business if he thinks it can reduce, shift, or eliminate his liability.
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Well if Mike was dumb enough to allow that info out of his control he's dumb enough to get what ever comes along.

Builders logs are nice, but not really required. pictures?
 
JHW said:
attorneys are always going to advise you to sit quietly in your home and concentrate on doing nothing but breathing until it's time to die.
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He isn't that kind of person at all. As pilots we are so use to the risks of flying that it's easy to forget what a jury of our "peers" might think about our activities and decisions. He knows this and his point is that if he were representing a victims estate he would have a high degree of confidence to take it to trial if there was something to be gained.

To Wayne's point: I doubled my insurance after discussing it and I sure don't sit around on the couch waiting to die.
 
wabower said:
No they're not, at least those who specialize in aviation. They're going to advise you to acquire adequate insurance for the risks you assume. The NBAA tax conference is in Las Vegas next month and they will address the subject again this year, if you're interested.
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I'm speaking more generally. Our legal dept at work functions as the sales prevention dept.
 
Understood, but it emphasizes the reason to seek advice (and counsel) from people who understand the subject at hand. Aviation is a small industry as is the number of practitioners who are truly qualified and informed.
JHW said:
I'm speaking more generally. Our legal dept at work functions as the sales prevention dept.
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Tom-D said:
long before it gets to a jury the judge will throw it out as frivolous.
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There are several lawyers on this board. Please have one of them respond to that and also have them explain how a lawsuit works, the filings, motions, discover, etc before it ever gets to the point of possibly being dismissed by a judge. Please have a lawyer explain the possible cost of this (retainers, hourly rates, filing fees, etc). :rolleyes:
 
bbchien said:
Some years ago I was putting together the outline of a Velocity build, and I could NOT get a quote for such.

State Farm said they would line out the aircraft from my 3M umbrella, so did Allstate.
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I currently have an umbrella policy with Liberty Mutual. It says the following...
EXCLUSIONS - This policy does not apply to personal injury or property damage arising out of the ownership, maintenance, use, loading or unloading of any aircraft.
​
 
kyleb said:
You still have liability, but the inexpensive umbrella policy is another firewall in front of your personal wealth. I think our umbrella policy is $268/yr and we have a pool and two dogs.
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As noted below, most general umbrella policies exclude general aviation among other things.

bbchien said:
State Farm said they would line out the aircraft from my 3M umbrella, so did Allsate.
So please say who the insuror is.....
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mvferrer said:
I currently have an umbrella policy with Liberty Mutual. It says the following...
EXCLUSIONS - This policy does not apply to personal injury or property damage arising out of the ownership, maintenance, use, loading or unloading of any aircraft.
​
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Both of which have been my experience in dealing with several companies.

That said, one can ask for a specialty policy to cover GA - but it is considerably more money. Ask your broker.
 
mvferrer said:
I currently have an umbrella policy with Liberty Mutual. It says the following...
EXCLUSIONS - This policy does not apply to personal injury or property damage arising out of the ownership, maintenance, use, loading or unloading of any aircraft.
​
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Ding-ding-ding; Me too. I asked about adding it, and was told 'there is no such animal in the ins world'.
 
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