RV Build under LLC?

[lr172]

Originally Posted by JDeanda

Depends on your definition of successful. Both the builder of John Denver’s airplane and the manufacturer of the fuel selector valve paid undisclosed out-of court-settlementa. Vans and FlowScan (the manufacturer of the fuel flow transmitter) paid undisclosed out-of-court settlements for the Oregon accident. Sorrell Aviation (Hiperbipe) was driven out of business by a lawsuit. But they were not “successfully sued.”
I dismantled an RV-9A for a couple when their attorney had a mild heart attack at the thought of them selling it. We sold the seats to another attorney who insisted they’d gotten good advice. Suits happen all the time, he told me, then left before I could ask him to point me to some case law.
Nearest I can tell, there are plenty of suits, but they settle out of court before getting in front of a jury or judge and lots of $ changes hands.
We’re vulnerable.

I think the quote is related to builders and not kit or parts suppliers. The John Denver builder is the only one that I have heard of getting heavily tangeled up in litigation. I do believe firmly that the lack of activity with builders is the fact that most builders do not have enough assets to warrant an attorney's time (most work of this type is done on contingency and they get paid out of the settlement). The first successfull case will likely be against a builder with decent assets. This is America; Its a when not if situation.

Larry

[Nihon_Ni]

Another vote for "talk to your attorney." Here's two things I suggest you discuss with your attorney:

As I understand the LLC, it won't protect you from any personal negligence you do as an employee/officer/operator under the LLC. I looked into this when I started working as a CFI, but found out that since everything my company would do was to be done by me personally, the LLC wouldn't provide me any protection from litigation.

You'll also have to be 100% sure you don't pierce the corporate veil, or all that effort will be for not. Don't buy anything for the plane in your own name, don't sign for anything in your own name, etc., but only as a representative of your LLC. This will take new bank accounts in the name of the LLC to buy everything (including cash transactions at the OSH Fly Market) and strict discipline on your part to keep your business separate from your personal life.

[Ted RV8]

?The builder (manufacturer) of the airplane has liability exposure until after the statute of repose, which I think is 17 years, but not sure about that. The manufacturers name is on the registration and aircraft data plate.?

I?ve read about this protection for airplane manufacturers like Cessna, etc.
Is this applicable for experimental amateur built?

[KatanaPilot]

Originally Posted by McStevens

Then you're too easily scared and should probably scrap your plane instead of selling it

Or maybe just prudent about managing risks. Suspect it's a personality defect of mine for 35 years in a career where one is expected to be risk averse.

As I said in a previous post, I'll give both planes to my son. No need to scrap them, although that is an option. He can sell them after I'm dead.

[lr172]

Originally Posted by Ted RV8

“The builder (manufacturer) of the airplane has liability exposure until after the statute of repose, which I think is 17 years, but not sure about that. The manufacturers name is on the registration and aircraft data plate.”

I’ve read about this protection for airplane manufacturers like Cessna, etc.
Is this applicable for experimental amateur built?

The writing of GARA makes it ambiguious whether or not it applies to AB aircraft builders. Clearly the intent of the law was to protect airframe and parts manufacturers (commercial entities) from reaching insolvency and ultimately destroying the GA industry. Judges often consider a laws intent when applicability of that law to the case at hand is unclear and no precedence exists. To my knowledge, no builder has attempted to defend themselves by using these provisions in court, so it is very unclear how a judge would rule on their applicability to an amatuer builder.

Larry

[Ted RV8]

Interesting reading about GARA on Wikipedia, the 18 year timeline and it also being applicable to parts manufacturers.

Precision Airmotive was successfully sued over a Marvel-Schebler carburetor in a Cessna 150 around 2009. They manufactured new Marvel-Schebler carburetors at the time. They didn’t even manufacture the carburetor in the named Cessna that was a 1960’s model, well past the 18 year mark.

Multimillion dollar successful lawsuit!

[lr172]

Originally Posted by Ted RV8

Interesting reading about GARA on Wikipedia, the 18 year timeline and it also being applicable to parts manufacturers.

Precision Airmotive was successfully sued over a Marvel-Schebler carburetor in a Cessna 150 around 2009. They manufactured new Marvel-Schebler carburetors at the time. They didn’t even manufacture the carburetor in the named Cessna that was a 1960’s model, well past the 18 year mark.

Multimillion dollar successful lawsuit!

It is important to note that the 18 year clock resets each time the part design is modifed. For example, if Marvel modified the carb model used in the 150 to utilize composite floats instead of the original brass floats in 1993 and that 150 had followed an SB requiring installation of the composite floats, I believe that would make the GARA law irrelevant in the referenced case. A high level explanation missing a lot of detail including proper legal interpretation on my behalf, but gives you some idea why GARA may not have applied in that case. It is not a simple and straight forward law.

If precision bought marvel, as opposed to buying their assets in bankruptcy which is unlikely given they still use the name, they picked up all of Marvel's future liability in the transaction. One of the reasons that quality due diligence is so important in corporate acquisitions. Someone must assess that liability risk and factor it into the value of the company.

[Ted RV8]

Very good points.

I don’t know the details to know if what you’re saying applies, but those specifics you point out could be related to it.

The part I do know that I was told, they had the deepest pockets!