De-Plane

[leok]

I am not a lawyer, but provide technical support in defense of lawsuits at a major car company. Just a few observations:

Plaintiffs can file a law suit for any reason at all against anybody they wish to target. It is up to the court to judge if the lawsuit goes forward with merit. You will however pay your lawyer even if only to get the case dismissed. My guess is that even parting out will not insulate you entirely from an enterprising plaintiff attorney if he is able to trace the source of the parts. (Particularly if the part was somehow involved in the event.)

The first thing "contingency plaintiff attorneys" look for is an economic loss or egregious negligence. No loss, no money to recover (Loss of life is an economic loss in the eyes of the law. Doctors are worth more than construction workers etc..)
For egregious negligence on the sale of a homebuilt, you would likely have to represent an un-airworthy aircraft as airworthy, likely in writing for that to stick. Successful years of flying and a high level of documented maintenance (i.e. good thorough logs) would be a good defense against an allegation of poor workmanship.


Second is a "sad story". Most lawsuits against my employer involve no more than a sad outcome riding in a vehicle we built. Sorry to say, but most people will not walk away from a vehicle crash uninjured in spite of the airbags, well designed structure or Hollywood movies. Sad stories bring sympathy from juries with potential "sympathy" awards.

Third, contingency lawyers want deep pockets to go after. They prefer targets that would typically rather settle than fight (like insurance companies) since long drawn out fights cost money and time. Since they have to invest their own time and money in the hope of a settlement, I always like to see how much I can help them to run up a big cost.


Contingency lawyers are good at throwing every conceivable allegation against every conceivable wall in the hope that something sticks. And yes, they do favor walls with money behind them since they have to invest time and money to file and support the lawsuit. Insurance coverage is one of their favorite targets.

My own philosophy after years of work in this field is to just live my life. Do things right (i.e. fix the cracks in my front walk, document my build and maintenance, etc) and not spend my time, or make my decisions based on lawsuit concerns. And yes, at some point in the future I will sell my project as an airworthy aircraft.

[OkieDave]

Originally Posted by 9GT

I am not a lawyer but I know there are some here on the forum that could give a good opinion. What is the value, liability wise, if you register the plane in an LLC? I see this on a few builders sites.

Corporate registration cannot shield you from your own tortious actions. Registering the airplane in an LLC may provide some shielding where somebody else is flying, or where the accident isn't your fault (though failure to perform maintenance, etc. will be held as your fault), but if the crash is in any way traceable to your actions--whether as pilot, builder, or maintainer--you are still personally liable for your actions (subject to applicable statutes of limitations and the usual defenses).

Prior registration in an LLC won't help you at all down the road, after it's sold, if somebody claims you were at fault as the builder. Cessna, Piper, etc. get sued because A) it would be hard to trace a problem to a single person on the assembly line, and B) they have much deeper pockets than the guy on the line (this being the important reason). If the problem could be traced to a guy on the line who took a hacksaw to the wing spar before it left the factory, he could absolutely named as a defendant--but he may still be "judgment proof," i.e. too broke to get anything from. I previously worked for a bankruptcy attorney, and we had a canned letter we'd send to creditors in cases of an insolvent debtor--we called it the "Turnip Letter, as in "you can't get blood from a turnip.

Even in cases where the LLC can provide you some shielding, you can still make mistakes that will destroy the shield. Any corporate form requires certain formalities to be followed, including an annual meeting, named officers, certain bookkeeping and reports, etc. Money also has to be kept separated between you, the individual and you, the LLC member/officer. Miss the formalities, or commingle funds, and it will be easy for opposing counsel to "pierce the corporate veil," allowing him to go after you personally instead of being limited to corporate assets.

Airplanes are often registered in an LLC for tax reasons, particularly when used for business purposes. That's another matter entirely, and one you should discuss with an accountant or tax lawyer if you think it might apply to you.

So...no, you likely won't be doing yourself any favors with regard to liability by registering it in an LLC.

[VA Maule]

Jest watched the video. Saddest thing I've seen in quite a while, a real pity!!!

[Kyle Boatright]

Where does an umbrella policy fit into this? Couldn't you buy a personal umbrella policy, which would take care of a low 7 figure settlement?

[OkieDave]

Originally Posted by Kyle Boatright

Where does an umbrella policy fit into this? Couldn't you buy a personal umbrella policy, which would take care of a low 7 figure settlement?

In principle, absolutely. In practice, be very careful to check the fine print on the policy; a lot of insurance companies run like **** from anything involving GA, leaving you completely on the hook.

(Use of defensive force is another matter that often gets excluded in the fine print, BTW. Just a point of interest.)

[wilddog]

I?m wondering if carrying a big insurance policy only makes you a bigger target? If you do have a $2m umbrella policy plus say a half mil liability policy and get sued for $10m, you?re still on the hook, right? Maybe carrying only a small policy so the insurance co would pay the defense would be a way to go for some. You would be a small target and the defense would be paid and that can be a very major cost even if the case is dismissed.

[Kyle Boatright]

Originally Posted by wilddog

I?m wondering if carrying a big insurance policy only makes you a bigger target? If you do have a $2m umbrella policy plus say a half mil liability policy and get sued for $10m, you?re still on the hook, right? Maybe carrying only a small policy so the insurance co would pay the defense would be a way to go for some. You would be a small target and the defense would be paid and that can be a very major cost even if the case is dismissed.

Whoever is suing you has no idea what insurance you carry when they file the suit.

[airguy]

Originally Posted by Kyle Boatright

Whoever is suing you has no idea what insurance you carry when they file the suit.

Which is the whole point of filing the suit. They are looking to see how deep your pockets are, and whether or not it's worth proceeding on their end.

[tspear]

Unless the laws in Texas are different then the other states I have had the please of dealing with attorneys and company liability coverage, the plaintiff has no idea of your limits unless you expose it or somehow give it away in the negotiations for an out of court settlement.

AIG, Loyds and a few others had briefing documents I head to read and acknowledge which explained a fair amount of it. They had plenty of points on what to do, or more specifically what not to do when faced with a liability claim...

Tim

[leok]

One if the first filings from a plaintiff attorney after a lawsuit is filed are interrogatories which in my experience always include a question directed at financial responsibility to satisfy any judgment. You don't give the amount of coverage, but are required to disclose "financial responsibility" for any judgment such as insurance. The plaintiff doesn't know going in, but uses the court force the disclosure of liability insurance.