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04-02-2008, 05:57 AM
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Join Date: Apr 2005
Location: Twin Cities
Posts: 438
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The corporate entity will not, in general wipe away your personal liability. In general, people are always liable for their own actions and omissions.
YOU built the plane.
YOU were the pilot.
It will be nearly impossible to change those two facts and still have an AMATEUR built part 91 flight. I cannot think of any way to do it without falsifying a handful of federal documents and at least one sworn affidavit.
By the way, you are not a "partner" in an LLC, you are a "member". Telling the world that you are a "partner" will get you and the other members of the LLC treated like partners by third parties...you do not want that. This assumes that TX follows the conventions of UPA/RUPA and general LLC law. YMMV.
Shallow pockets are a great lawsuit avoidance. In the end no one can promise you that you will not be sued, or that you will win any lawsuit with preemptive structuring. If you meet a lawyer who promises such, be careful. You can improve your chances to have protection from very specific exposures, with careful planning.
In the end the best protection is to conduct yourself with prudence. You do not have to build a perfect airplane, but if you fail to use due care, and that failure kills someone down the road...you will be and probably should be liable.
You do not have to be a perfect pilot. But if you are wantonly careless, and it kills someone or destroys their house, you will be and probably should be held accountable to those people.
We can all think of horribkle cases where we believe the system got it wrong. But, I deal with juries all the time, and I can tell you that a collection of 6 or 12 ordinary people, properly instructed by the judge, is an intelligent and effective fact finding body. I think that juries get it right far more often (By a HUGE margin) than they get it wrong.
__________________
John C Conard
J.D.
Citabria 7KCAB (Former)
RV-7 Flying
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04-02-2008, 11:04 AM
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Join Date: Dec 2006
Location: Leesburg, FL
Posts: 89
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How the LLC worked for me
Within 4 hours of the accident, a very respected aviation attorney, freind, and hangar neighbor heard about the accident and arrived at our home. Once we collected our shock and sorrow, his first request was to see all corporate books and the insurance policy. I have spoken about the insurance part sevral times. I agree with all of the replys thus far. No corporate shield can protect you from personal liability and I stood fully liable for signing Bob's log book, as did all of his flight instructors. My Dad stood liable as the builder. An LLC cannot shield the individual acting as an instructor or a builder. However, the point I am trying to make is that any and every legal shield to liability should be used. An LLC and the requirements to create and manage costs about the same as cheap handheld GPS. It is way too easy to create and manage an LLC to add one layer of protection. Those layers become cost items as viewed by a plaintiff attorney. Difficulty to prosecute can increase the cost, thus decrease some of chances of litigation. It worked in our case as my Dad's reputation as a mechanic-builder was a 10 out of a 10 and my credentials were also 10 out of 10 to judge the PIC's ability. With my thousands of hours in 1, 2, 3, and 4 engine tailwheel airplanes, I was very comfortable with Bob's ability in the RV4 along with some of his limited experience in a Champ he built with his Mom and Mustang time with Lee Lauderback. The airplane was a grand champion and Bob was a very good stick, but had limited total time. Our personal exposure would have been tough (not impossible) for a plaintiff to go after. If the aircraft were in our personal name(s), that becomes the easy target that places all personal assets on the table and a free pass for the plaintiff to secure far more than the insurance policy value. In our case, enough road blocks sent the plantiff attorneys after the employer of the second fatality as he was visiting on business. That raises another topic if you own a business with traveling employees. This real life experience convinced me to place everything I own in an LLC. I own nothing.
Another example of an LLC that may have prevented litigation involved my son driving his race car. A pedestrian stepped in front of his car entering the race track and was severily injured. I run an in-car camera and the entire event was caught on tape except for the last 1/2 second when the track lights blinded the camera (and the driver). The driver was not negligent nor was he operating in a wreckless manner. Possibly I was negligent for allowing a 14 year-old drive race cars (since he was 5). However, when the plaintiff attorneys began hovering, they discovered that my entire race operation was in an arms length LLC, I never heard from them again. If the car was in my name, I can only imagine what that could cost as typically, one does not carry insurance on a racing operation.
An LLC or a SubS is a tool that works. It is separate from the conduct of the individual as it has been pointed out. As most of us operate on the good side of responsibility, our liability for our actions is acceptable. The LLC manages your net worth and your sanity if the unthinkable were to happen.
Ned Bowers
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04-05-2008, 09:57 PM
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Join Date: Mar 2008
Location: Spokane, Wa
Posts: 9
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I've practiced law for almost 30 years and done insurance defense for more than 20 years includiing aviation defense. I've also done plaintiff's cases. I can assure you that mere corporate ownership of an aircraft does nothing to protect a builder, operator, pilot or mechanic from liability for their own personal lack of reasonable care. Moreover, even if the builder, operator, pilot or mechanic uses reasonable care, he or she may be sued anyway. The plaintiff can always claim negligence and the costs of defense can be horrendus. The best protection is insurance. Even if the policy limits are low, the insurance company will provide a defense and save the insured from the costs of proving lack of negligence.
In some circumstances, in some states, having passengers or aircraft purchasers sign waiver of damage, assumption of risk, release or indemnification documents may provide some protection. However, the courts in most states are reluctant to enforce such documents even if they are carefully drafted. For example, Washington State courts do not honor releases signed by parents for their minor children to engage in sports (and probably to fly around in small airplanes). Thousands of schools routinely seek such releases but a few years ago the state Supreme Court held a parental release was not valid to protect a ski racing organization from liability for an accident involving a young ski racer. In some circumstances, with an adult who is knowlegable about the risk and voluntarily expressly assumes the risk, an assumption of risk document would work.
In short, a corporate entity does not protect individuals from liability for their personal actions or ommissions, insurance is the best protection and written waivers of liability may give some protection sometimes.
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04-06-2008, 06:21 AM
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Join Date: Jan 2005
Location: Louisville, Ga
Posts: 7,840
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Thanks..
...to the lawyers here giving this information...oh, and welcome Steve,
Regards,
__________________
Pierre Smith
RV-10, 510 TT
RV6A (Sojourner) 180 HP, Catto 3 Bl (502Hrs), gone...and already missed
Air Tractor AT 502B PT 6-15 Sold
Air Tractor 402 PT-6-20 Sold
EAA Flight Advisor/CFI/Tech Counselor
Louisville, Ga
It's never skill or craftsmanship that completes airplanes, it's the will to do so,
Patrick Kenny, EAA 275132
Dues gladly paid!
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04-08-2008, 01:17 PM
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Join Date: Apr 2008
Location: Tennessee
Posts: 440
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I've been around airplanes and healthcare most of my life. I've been advised many times to keep up as much insurance as i can afford. You might never do anything "wrong" but that doesn't shield you from getting sued in this day and age where everybody wants to hit the legal version of a lottery. You can get a million dollar rider policy really inexpensively from your car/home insurer. Mine costs about $250 per year. Cheap for the peace of mind. This is a very timely thread as I've been reading about the RV-10 that went down yesterday in south Alabama. They were based several counties away from me and were on the way to SnF.
Steve, you are correct in my book. My attorney friends in aviation go that route also.
Quote:
Originally Posted by stearmansteve
I've practiced law for almost 30 years and done insurance defense for more than 20 years includiing aviation defense. I've also done plaintiff's cases. I can assure you that mere corporate ownership of an aircraft does nothing to protect a builder, operator, pilot or mechanic from liability for their own personal lack of reasonable care. Moreover, even if the builder, operator, pilot or mechanic uses reasonable care, he or she may be sued anyway. The plaintiff can always claim negligence and the costs of defense can be horrendus. The best protection is insurance. Even if the policy limits are low, the insurance company will provide a defense and save the insured from the costs of proving lack of negligence.
In some circumstances, in some states, having passengers or aircraft purchasers sign waiver of damage, assumption of risk, release or indemnification documents may provide some protection. However, the courts in most states are reluctant to enforce such documents even if they are carefully drafted. For example, Washington State courts do not honor releases signed by parents for their minor children to engage in sports (and probably to fly around in small airplanes). Thousands of schools routinely seek such releases but a few years ago the state Supreme Court held a parental release was not valid to protect a ski racing organization from liability for an accident involving a young ski racer. In some circumstances, with an adult who is knowlegable about the risk and voluntarily expressly assumes the risk, an assumption of risk document would work.
In short, a corporate entity does not protect individuals from liability for their personal actions or ommissions, insurance is the best protection and written waivers of liability may give some protection sometimes.
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04-08-2008, 04:41 PM
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Join Date: Aug 2007
Location: Portland, OR
Posts: 270
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Libility insurance rider
Unfortunately most liability riders will not cover aviation related accidents. At least mine does not and I tried to find one that would... without success..
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