EAA AIR VENTURE OSHKOSH JOSEPH S. LAWDER, ESQ. STEVEN KLUZ, JR., ESQ. Rid er, Ben n ett, Egan & Aru n d el, LLP

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1 Aircraft Accident/ Incident Liability and Ins urance Is s ues With an Em phas is On Hom e- Built Aircraft EAA AIR VENTURE OSHKOSH JOSEPH S. LAWDER, ESQ. STEVEN KLUZ, JR., ESQ. Rid er, Ben n ett, Egan & Aru n d el, LLP

2 Intro ductio n Two d ead ly crashes before yesterd ay s op ening of a p op ular fly- in of exp erim ental aircraft und erscore just how d ead ly this hobby can be.... In ad d ition to this week s d eaths, the National Transp ortation Safety Board s d atabase shows 69 exp erim ental aircraft have crashed in the last 12 m onths. Those crashes claim ed 16 lives and seriously injured 12 others. - The Seattle Post- Intelligencer, Thursd ay, July 8, 1999 (referring to the 1999 Northwest Exp erim ental Aircraft Fly- In).

3 The Federal Aviation Adm inistration said 22,000 experim ental- class airplanes are registered in the United States and about 1,000 are added each year. Records show that the accident rate for them is only one percent higher than those for certified airplanes. - The Portland Oregonian, Sunday, April 5, 1998.

4 Home- Built Statistics... Cras hes In 1999, FAA record s sh owed th at th ere were 19,643 registrations on file for am ateu r bu ilt airp lan es. NTSB record s sh ow th at between Jan u ary 1, 1991 an d Ju ly 23, 2001, th ere h ave been 2,169 reported accidents in volvin g am ateu r bu ilt aircraft. Of th ose accid en ts, 625 w ere fatal.

5 Issues In the Hy pothetical: 1. Sales Contract Exculpatory Agreem ent 2. Insurance Policy Exclusion 3. Fuel Tank Modification 4. Faulty Fuel Pum p Included in Kit 5. Friend s Possible Negligence 6. Owner s Possible Liability

6 Background of General Av iation Liability A. Pilot Liability B. Aircraft Own er/ Op erator Liability C. Man u factu rer Liability negligence strict liability breach of exp ress or im p lied warranties

7 Background of General Av iation Liability D. Govern m en t Liability FAA, the National Weather Service, and the m ilitary. Fed eral Tort Claim s Act. B. NTSB In vestigation s of Air Crash es C. In su ran ce Coverage Issu es

8 FAA Certification for Home- built Aircraft: The 51% Rule. Som eone can qualify for a hom e- built airworthiness certificate if they have d one m ore than 50% of the fabrication or assem bly of the aircraft and und ertook the construction p roject solely for their own education or recreation. FAR (g). 51% Rule does not m ean that the m anufacturer of the kit has no liability once an am ateur has done m ore than 50% of the work. FAA Inspection.

9 Manufacture r Pro duct Liability Kit Man u factu rer: sells p lan s an d p arts; m ay sell p lan s on ly. Th e Hom ebu ild er: u su ally d oes n ot sell m ass- p rod u ced p rod u ct to th e p u blic. Resp on sibility as a d esign er/ m an u factu rer m ay be in cu rred by th e h om ebu ild er by d eviatin g from th e p arts an d p lan s of th e kit m an u factu rer.

10 Manufacturer Product Liability *Non- Com m ercial Manufacturer Liability Prod uct Liability if the hom ebuild er was negligent in build ing the aircraft (negligence rather than strict p rod uct liability). Liability will p robably increase with the m ore m od ifications in p arts and d esigns that the hom ebuild er m akes. Hunter v. United States, 961 F. Supp. 266 (M.D. Fla. 1997).

11 Home- Built Aircraft Insurance Hu ll an d Liability In su ran ce; Factors for Determ in in g In su rability: Pilot s license with current m ed ical and biennial flight review Pilot s flight exp erience (p ilot logbooks) Pilot s age Requirem ents for high- p erform ance aircraft m uch stricter

12 Effect of GARA (General Av iation Rev italiz ation Act) on Home- built Aircraft GARA lim its claim s again st gen eral aviation m an u factu rers for an y claim s th at arise m ore th an 18 y ears after m an u factu re. Ap p lication to Hom ebu ilt Aircraft.

13 Exculpatory Agreements Shield a seller of a hom e- built aircraft from liability once the aircraft has been sold. Courts typically look unfavorably at exculpatory agreem ents. Should be unam biguous as to its scop e and effect. Courts often do not allow com m ercial sellers to avoid liability through exculpatory agreem ents. Mullan v. Quickie Aircraft Corp., 797 F.2d 845 (10th Cir. 1986).

14 Practical Tips Modifications can increase the hom e- builder s liability. Modification after FAA certification could affect insurance coverage. Consider having a purchaser sign an exculpatory agreem ent: the m ore specific and unam biguous the agreem ent, the better. Thoroughly read any exculpatory agreem ent that you are considering signing.

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