Was I being unreasonable?

[mryan75]

But you got into the club after it was already established so I imagine these rules were already in place and by agreeing to join you agreed to the ways things are handled. I wouldn't expect them to hold a vote on their operating practices every time a new member joins, although I would expect you would need to agree to their current Ts & Cs, right? Sorta like by using my website you agree to allow me to snatch your info using cookies...

That's what I'm saying - as currently construed, there are no rules. We have a copy of an Operating Agreement of another club, with all of their information. It's like if you had an employment contract with your name, employer, all rules and regs, etc., and I took it and said "This is now my employment contract". Except it doesn't have my name, my employer, on and on.

We could have taken the other club's form as a template, updated it with our information, and it would be golden. But that was never done. Not only that, we enforce absolutely none of the rules or regulations in that agreement. Like, none.

So basically, we have a template, it has none of our information in it, and we don't enforce it at all. Sounds good, no?

 

[deyoung]

I in no way think they are purposely trying to screw me, but I would like to know if my name is indeed on the corporate agreement.

If it's not, and if you're sure they're not actually trying to do anything untoward, I guess I would first---tactfully and politely---ask for the ownership documents to be updated to accurately reflect your share. If you can get that done, that'll be a huge step forward. (Of course if you're lucky the paperwork will turn out to be up to date already.)

Not only that, our insurance policy specifically says you have to have a "medical certificate". No mention of Basic Med.

I could see a reading that Basic Med counts as a certificate, since it is a document that allows you to fly legally, though it would probably be prudent to ask the insurance company for clarification just so you know what your real coverage is. Of course it's moot anyway in light of the heart attack, unless he got the appropriate special issuance.

It does sound possible that they are clueless rather than willfully disregarding the issues around the medicals.

 

[deyoung]

I thought this was interesting. It looks like an LLC doesn't actually have to have an operating agreement (and it sounds like you don't), though it's wise to have one.

This short article is specific to New York law, and I assume different states treat this in different ways, so it might be worthwhile to look up what your state's rules are.

https://www.newyorksmallbusinesslaw...or-an-llc-without-an-operating-agreement.html

 

[PaulS]

So a few updates: I get a look at the corporate book tomorrow. I in no way think they are purposely trying to screw me, but I would like to know if my name is indeed on the corporate agreement.

Beyond that there are just a lot of open questions. We don't have any bylaws or an operating agreement of any kind. Which is just nonsense. The one we are using as a "template" says we need to vote on a maintenance manager and a business manager, neither of which we have done; and that each would be compensated $100 per month or 1 flight hour per month for their work. Now, the guy who does the management of things does a great job - he keeps the monthly accounting, pays all the bills (I have no reason to believe they aren't paid), and I have no problem with him being compensated. But we were never asked, there was never a vote. And I'm pretty sure (based on his negative balance on the monthly accounting sheet) that he is indeed being compensated. And another thing: equipment upgrades require the consent of the majority of the members in the form of a vote. We've done new radios, the 650, and ADS-B, and never had a single vote about anything (partly because we've never had a meeting I'd imagine). We just get a bill.

So we're using this other club's operating agreement as a template, and we are following exactly none of it.

Lastly, I wrote the member who flipped out and apologized. I just like to smooth the feathers, as it were. I got a response back which was mostly positive, but was explaining how the other pilot could be PIC. Now, the other owner is on Basic Med and had a heart attack a few months ago. So he can't fly under basic med. Not only that, he's over 80 years old, and our insurance policy (which I just read) says pilots over 80 need to be accompanied by a CFI. So strike 2. Not only that, our insurance policy specifically says you have to have a "medical certificate". No mention of Basic Med. But I'm not going to argue. (This could explain another mystery - a few weeks ago, when the one pilot told me they didn't have a medical - the two of them went flying in our airplane. Now, I know that neither of them were legal - one had no medical, the other had Basic Med, but had just had a heart attack, so no joy. They likely THOUGHT he could be PIC because he was on Basic Med, but that's not the case).

Anyway, I look at the corporate book tomorrow, and if my name is in it I'm going to feel a whole lot better. If not, I'm not going to be happy.

Nice work, you are getting to the bottom of this. The guy you wrote may not understand the other guy isn't legal to fly either. In fact they both may not know. I have a feeling they filed the original LLC, then never bothered with it again except for the annual reports (fees) and hopefully tax returns, if needed. It would be a good time to get that stuff all straightened out. They should be having a share holders meeting once a year at least and keep minutes, even if the meeting is only five minutes long. If the LLC doesn't act like an LLC, then the corporate shield is easier to pierce and they look for the deepest pockets. I have a feeling they don't want to lose you as you are probably flying the most. I would tell them you don't want to get sued for someone flying when they shouldn't and take someone out. I bet you can smooth this all over, but you really should decide if you want to.

 

[iflyvfr]

Nice work, you are getting to the bottom of this. The guy you wrote may not understand the other guy isn't legal to fly either. In fact they both may not know. I have a feeling they filed the original LLC, then never bothered with it again except for the annual reports (fees) and hopefully tax returns, if needed. It would be a good time to get that stuff all straightened out. They should be having a shareholders' meeting once a year at least and keep minutes, even if the meeting is only five minutes long. If the LLC doesn't act like an LLC, then the corporate shield is easier to pierce and they look for the deepest pockets. I have a feeling they don't want to lose you as you are probably flying the most. I would tell them you don't want to get sued for someone flying when they shouldn't and take someone out. I bet you can smooth this all over, but you really should decide if you want to.

Well put. I guess if our guy finds his name isn't anywhere on the documents, he needs to decide if, given some of the apparent shenanigans going on, he *wants* to have his name associated with this group. I totally get the group dynamic here, it's 'everyone STFU and MYOB and we can keep a good thing going.' It's up to the OP to decide if good thing means the same to him as it does to them. I am not judging, just watching with interest how this pans out. One last thing, I don't believe that an LLC provides much, if any, corporate shield; the veil is exceedingly thin IIRC from grad school.

 

[tspear]

Depending on the cash involved, you could always work with them to get everything up to date and sorted.
Then wait a few months and sell, the reason for doing it this way is it will make it easier to sell and also provide some protection of the capital.
Otherwise, without the paperwork you might be looking at losing all your capital if they want to be a**holes.

Tim

Sent from my SM-J737T using Tapatalk

 

[jimhorner]

So, we don't have any bylaws. We are using another club's operating agreement "as a template". Also, on the insurance policy, our aircraft is listed as being principally located at another airport. Meanwhile we have a hangar with a lease agreement at a different airport than that listed in the insurance policy. I'm not sure if a detail such as where it is "principally based" would invalidate the policy. If so, we. Are. Screwed.

The other thing: I asked for a copy of the LLC agreement and got a copy of another club's operating agreement. But there is an LLC agreement for our LLC, regardless of the operating agreement, no? In other words, an LLC document and an operating agreement are two different things, no? The operating agreement "template" from the other club is a legal document listing rights and responsibilities, uses of the plane, rules about payment, etc., and at the end lists the named owners. But even that is separate and apart from any LLC document, correct?

So either we have no document with owners listed on it, or we do (the LLC agreement) and I haven't been given a copy of it. Which would beg the question, why? Because if my name isn't on that LLC agreement, I'm not legally an owner.

What a mess. I will freely admit, this is why I didn't ask any questions. I obviously didn't want to know the answers.

I’m not a lawyer, but I would strongly suggest you go see one NOW! Even if it turns out that you aren’t officially on any documents, I would suspect that all of your years of paying dues, having access to the plane, etc. will give you some rights, maybe like a common law marriage (is there such a thing as a common law LLC?). But, as I said, I’m not a lawyer. If I were in your situation, I would be looking at how to quickly get out of this situation as cleanly as possible.

Then, draw up some partnership contracts of your own (with a lawyer’s help) , get some people you trust together, and form your own club. Run it properly. Sleep well at night..


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[dmspilot]

In Virginia at least, an Operating Agreement is not required to form an LLC. However, neither the Articles of Organization nor Certificate of Organization list the members (i.e. owners) of the LLC. Therefore, it would be a very poor idea for a multi-member LLC to not have an operating agreement, which is where the members of the corporation would be listed.

 

[deyoung]

I am interested to see what you learn when you see the official documents....

 

[mryan75]

In Virginia at least, an Operating Agreement is not required to form an LLC. However, neither the Articles of Organization nor Certificate of Organization list the members (i.e. owners) of the LLC. Therefore, it would be a very poor idea for a multi-member LLC to not have an operating agreement, which is where the members of the corporation would be listed.

Ah, that makes sense. The "template" we have lists the members of the club for which the document was created.

 

[mryan75]

Okay, feeling 3,000% better about this. Went and talked to the maintenance/business manager, looked over the books, had a good conversation. When this whole thing started, it was him who I texted asking about the legality of the one flight. Apparently he was with the one pilot as I suspected, who promptly freaked out when told what I asked about. The club manager told the pilot, "What are you freaking out about? He (meaning me) has an interest In the airplane, he has every right to ask," etc. etc. So rather than throwing me under the bus, the manager actually stuck up for me. (I repent for thinking otherwise).

So we talked about everything we need to do to get the club current and compliant with the LLC requirements. I offered to take the template for the operating agreement from the other club and update it for our purposes, then we'll take it to my attorney for review. He was grateful for that help. Then we will schedule a group meeting, lay everything out for everyone, get everything signed, etc. (The club manager runs three businesses, which he said is the reason he has not gotten around to taking care of all of this, which I can understand).

The other thing, from what I could see, nobody's names were mentioned in the documents. But after the conversation I have no doubt that everyone's intentions are in the right place, and we will get this squared away quickly. That I can be directly involved makes it even better.

The bottom line is, in this world of electronic communication, there is still no substitute for sitting down with someone and talking things over. I feel much, much better having done so.

(Lastly, the club manager is totally in agreement that we have to be very, very careful with the insurance, making sure we're in compliance with the policy, etc. It was clear in talking to him he shares my concerns in those matters).

 

[Zeldman]

Sounds like a productive meeting with effective communications taking place....keep up the good work.!!

 

[BillyBH]

I guess that I would have assumed that the "pilot-rated mechanic" was legal and left it alone. This may go against your by-laws, but there are two club members in the aircraft. Regardless and not to sound mean, I do not make it a habit to police other pilots unless there was a life-or-limb situation...

Just my $0.02...

If you are vested in the club, have a financial stake in it, you are absolutely wise to question this. Imagine the worst case scenario. YOU, as an "owner" could be the target of a lawsuit because YOU have the deepest pockets.

 

[Rooney Freimund]

If you are vested in the club, have a financial stake in it, you are absolutely wise to question this. Imagine the worst case scenario. YOU, as an "owner" could be the target of a lawsuit because YOU have the deepest pockets.

Clearly, I am in the minority here on this topic. However, all of these days later, we still have not answered the question on the open pilot clause and/or current medical(s) to determine if the flight was covered. The lack of a definitive answer on this issue leads me to believe that it was.

Although what I do know for sure is that @mryan75 's partners have been called a lot of names by POAers on this thread who know exactly one side/perception of the "club's" issues and yet the OP still remains with them! My point is that we may not be getting a complete picture as actions usually speak louder than words.

Heck, in his OP he states that he should have gone straight to the other pilot...

To your point, surely I can get sued as you point out. However, I can also sue. At the end of the day, the flight was had and relationships were damaged. IMHO, the risk/reward was not there enough for me to ethically challenge my partners' credibility to do the right thing.

What I have relearned from this post is that I can only control MY actions and a partnership is NOT for me!

YMMV...

 

[mryan75]

So update here: after a lot of thinking, I am going to sell my share and get out of this situation. There is another club on the field that actually has a newer 180, with better avionics than our 160, and the cost is give or take a few bucks the same to fly. It's also cheaper to buy into, though at this point I'm willing to take a loss to get out of the plane I'm in, so if that part of it is a wash in the end it's fine with me.

The bottom line is that cheap flying isn't worth the tradeoff for me anymore, especially when there are other options. There are some ongoing maintenance issues that (in my opinion) have never been adequately addressed, and I think it's time to just accept that they operate things differently than I would and move on.

The reality is that I've always felt like the redheaded stepchild of the group. Two of the 10 owners (we all in theory have the same ownership stake) are the original two co-owners of the plane, and in my opinion they still treat it as if the airplane is theirs, and I get to fly it because they say it's okay, not because I'm an owner on the same level with them. I've tried many times to get an owners' meeting together to hash out certain things, and despite 5 years of asking, it has never happened (despite an annual meeting being a requirement of our club agreement, no less). Time to accept that it isn't going to happen and make my decision based on the premise that the situation isn't changing anytime soon.

I'm meeting with the president of the other club tomorrow to see their plane. They have an open share and if all goes well, that will be where I wind up.

 

[idahoflier]

Did you ever get the operating agreement and membership figured out? Are the remaining 9 going to buy you out?

 

[chemgeek]

Good luck. Leadership and organization matters. Hopefully your new club will be more transparent and organized, with maintenance and operating standards you are comfortable with.

 

[CharlieD3]

Well, that was eye opening...

I'm sorry that, in the end, it didn't work out for you... Just as it sounded like you were turning the oceanliner around...

I hope, that aside from your participation payments, you recoup your initial investment.

Sounds like you had an inexpensive run... With some interesting additional payments.

Speaks well for sole ownership. And yet, I know proportional ownership/clubs CAN be done right for all members.

Good luck!

 

[steingar]

I would just wrack up a whole bunch of costs for time, fuel, and everything. Then, when someone comes around asking for money, I'd say I had no ownership in the club at all. If someone tried to collect, I'd just say "prove it". With luck I'd recoup my original cost so I could wash m y hands of the thing.

 

[mryan75]

Did you ever get the operating agreement and membership figured out? Are the remaining 9 going to buy you out?

Not really. I sat down with the club manager and once I got the feeling that all the intentions were in the right place (and I truly believe they are), I just left it at that. And it's on me to sell my share. If they get a nibble from a new student or something like that they may send the person my way. They may be just as happy to see the back pf me as I am to leave, who knows.

 

[mryan75]

Well, that was eye opening...

I'm sorry that, in the end, it didn't work out for you... Just as it sounded like you were turning the oceanliner around...

I hope, that aside from your participation payments, you recoup your initial investment.

Sounds like you had an inexpensive run... With some interesting additional payments.

Speaks well for sole ownership. And yet, I know proportional ownership/clubs CAN be done right for all members.

Good luck!

Yeah, there are great clubs out there, and this one worked out well for me for a long time. Honestly the bale of hay that broke the camel's back was maintenance. We've had some ongoing issues and I keep hearing they're resolved, then they crop up again, and it's been going on for quite a while now. I just came to the conclusion that there's no good reason to believe that's going to change, and since it's something that would make me uncomfortable flying the plane in IMC and that's what I want to do with it, it just doesn't make a whole lot of sense anymore.

 

[mryan75]

Went and saw the other plane today. It's a 1973 Cherokee, so bigger than our '66 140. Quite a bit bigger in fact. Much more comfortable for me (I'm 6'3). But the real selling point is the avionics: a GTN750, GTX345, dual G5s. Might've had another doohicky or two as well, but those were the highlights. Really nice setup. And they're putting in a new engine over the winter, for which they already have the money in the bank. Makes the decision a snap.