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LPBA Summer 1996 Meeting

Durango, CO

Bruce A. Lampert, Esq., discussed The Ten Questions Most Asked Lawyer-Pilots. .

    LPBA member Bruce A. Lampert, Esq. maintains an office in Broomfield, Colorado, from which he carries on his practice involving aviation and product liability litigation. Mr. Lampert is an active pilot, and frequent speaker and author. His presentation to the Lawyer Pilots Bar Association membership is equally valuable to the non-lawyer aviators as it raises many issues commonly faced by general aviation aircraft owners and pilots.

    THE TEN QUESTIONS MOST ASKED LAWYER-PILOTS

    1. THE AIRCRAFT PURCHASE AGREEMENT:

      "I've just bought a new airplane, would you just take a quick look at my purchase agreement for me?"

    2. THE AIRCRAFT INSURANCE POLICY:

      "How much insurance do you think I'll need, the airplane only cost me $80,000?"

    3. THE AIRCRAFT PARTNERSHIP:

      "Fast Eddie and Crash Cargo want me to go into partnership with them on their 1944 YAK 18. It sounds like a great deal -- a real warbird!"

    4. THE RENTER EXCLUSION:

      "When I rent an airplane, I'm covered under the FBO's insurance policy, aren't I?"

    5. WHO's THE PIC:

      "I've got it." "No, you've got it." "Oh what the ____!"

    6. THE OPEN PILOT CLAUSE:

      "Is it okay for my good buddy, Hoot Hurricane to ferry my Cosair 150 over to outlying field for maintenance?"

    7. AIRCRAFT ACCIDENTS OR INCIDENTS -- WHEN TO REPORT:

      "My partner ran our airplane off the runway out in Iowa this weekend -- do I have to tell the FAA? He'll be out of the hospital next month."

    8. OWNER PERFORMED MAINTENANCE:

      "Counsel, I've just got a great deal on a set of vortex generators for my Bluebird 190. Is it okay for me to epoxy those hummers on? I've even got a template showing where they should go!"

    9. THE GENERAL AVIATION REVITALIZATION ACT (GARA):

      "Now that AOPA finally got that new law passed we should be ably to buy G.A. aircraft at a reasonable price again -- right?

    10. "Why are there so many lawyers in this country?"  (A commentary).

    1. "I've just bought a new airplane, would you just take a quick look at my purchase agreement for me?"

      THE AIRCRAFT PURCHASE AGREEMENT

      In reality, you hope this question is asked before the purchase agreement is signed. There are 288,000 registered private pilots in the United States. Last year only 551 new piston-powered aircraft were sold. In all likelihood, if someone you know is buying an aircraft in the near future, it will probably not be from a manufacturer.

      Today, most aircraft brokers and sales agents use aircraft purchase agreements. Private parties often obtain form copies or type over a document they used before. This document, the aircraft purchase agreement, should set forth all terms that are material to the sale. That is, if it's important, it should be there. Most agreements have merger or integration clauses in them that state that any representations made or relied upon will be in the agreement. If the seller or broker says he will fix the DME, and this fact is not in the agreement, the seller may not be legally bound to perform.

      If the broker has prepared a spec sheet on the aircraft, stating the year, model, total time, engine time, damage history and avionics, this document should be referenced in the purchase agreement and incorporated into the document. Obviously, the buyer will be relying on those facts. If the props haven't been overhauled in 10,000 hours, the time to learn about it is before you buy.

      All essential terms of the transaction should be set forth in the purchase agreement - price, terms, if any, delivery date, mode of delivery, accessories included and warranties. The document will normally state who will be responsible for payment of any applicable sales tax or use tax. This is normally the purchaser.

      Most form documents are prepared for the seller, most documents favor the seller. Any clause, term or provision can be subject to negotiation. If the form does not properly state what you think is the understanding of the parties, ask that it be stricken (crossed out) and have both parties initial it. Form language can be modified by handwritten language. The handwritten language will prevail over the form language if they disagree.

      Special Problems

      1. Disclaimer of Warranties

        In all probability, you will be buying a used aircraft. Normally the seller and broker will disclaim all warranties, express or implied. What this means is that you are buying this airplane "as is, where is." If, the hour after you sign the purchase agreement, No More Pistons Aircraft Company comes out with a mandatory service bulletin that requires all No More Piston owners to ground their aircraft until every bolt and nut is magna fluxed - you're stuck with the aircraft. If you find out after the sale the main wing spar was bent in an inverted landing - you're stuck with the aircraft. Unless there has been a material misrepresentation by the seller, which is in the purchase agreement, chances of rescinding the sale or collecting damages from the seller are small.

      2. Acknowledge Inspection

        Many purchase agreements have clauses stating that the purchaser has inspected the aircraft, the maintenance records and the logbooks to his/her satisfaction and accepts the aircraft. If you sign this form, it will be presumed that you did conduct these inspections whether you did or not. You cannot say after the fact, "I really didn't. I relied upon the seller's representations that all was OK."

      3. Sale Tax Affidavit

        This is a clause that states that the seller will be responsible for paying any and all applicable sales taxes or use taxes. The reason for this clause is that in some states, if the sales tax is not paid, it can be collected from the broker or even the seller. This cause puts the burden exclusively and clearly on the purchaser. Use tax is a state tax imposed upon purchases made in another state but utilized in the taxing state. If you buy your aircraft in North Carolina, register it in Oregon, but hanger and fly out of Jeffco (Broomfield, Colorado), you may be subject to a Colorado use tax.

      4. Risk of Loss

        Most purchase agreements specify a time and place after which a risk of loss of the aircraft passes to the purchaser. If the seller delivers the aircraft at the appointed place at the appointed time, the seller assumes the risk of loss. If a wind storm or fire occurs after that time, the purchaser should have proper insurance in place. It is best to make sure the aircraft is bound with your insurance company prior to the date and place of delivery. Any gap in coverage can cause significant problems in the event of loss.

      5. Risk of Delay

        Some purchase agreements specifically absolve sellers of liability for delays in deliveries. If time is important to you as the buyer, cross out this clause. A specific dollar amount can be agreed upon if the aircraft is not delivered on time. For example, the parties can agree on a $50 per day penalty, up to a set number of days. After the set number of days is exhausted, the purchaser can either cancel the contract or enforce its specific terms and seek damages. These claims deal with delays that could have been avoided by better planning. Delays caused by weather, "acts of God," or causes outside the seller's control are normally excepted.

      6. Choice of Law

        Occasionally, a seller or broker will insert a clause imposing a certain state's law in the case of a disagreement. It may be that Delaware law is more favorable to a seller than Colorado's or Wyoming's. You, the buyer, not knowing what a state's law imposes may not want to agree to the choice of law clause. As the seller what specifically he wants included. If a point is in dispute, it is better to put it in the contract terms than to rely upon a choice of law provision. Normally, the law of the state where the contract is entered into should apply.

      7. Dispute Resolution

        Litigation in American courts is expensive ... for both sides. Many purchase agreements ask the parties to agree upon the arbitration of any disputes. Arbitration can be made binding and the ruling of an arbitration can have the same effect and enforceability as a jury ruling or an order of court. Often arbitration is conducted under the procedural rules of the American Arbitration Association. If the arbitration system is not specified, it may be governed by a state law. Arbitration is not good or bad. It depends mainly on the amount in dispute, the nature of the dispute, and how the arbitrator(s) will be chosen. It is vital that the arbitrator(s) chosen be chosen fairly.

        You could be at a decided disadvantage if you were required to arbitrate in a foreign jurisdiction. Local arbitrators may favor the local party. Be aware of the application of these clauses in dispute resolution.

         

      Conclusion

      The sales contract or the purchase agreement is a memorialization of the intent of the parties. If you and the seller cannot agree on the terms of the sale in writing, it may be because you have different ideas of what is being sold. No form is sacred. If the form does not say what you think it should say, ask to have it changed. If the seller won't change the form, perhaps you can negotiate another term to protect your interests.

      Everybody is happy and cordial before the sale. What you don't want to have to do is to go to Alabama to defend a lawsuit if the airplane ignites on the ramp 20 minutes after you sign the purchase agreement. Read the purchase agreement in its totality. Understand all of its terms. If there is a clause or phrase you don't understand, ask to have it explained. If you don't like what it says or did not agree to that provision, ask that it be deleted. In aircraft purchase, an ounce of forethought is worth a pound of afterthought.

    2. "How much insurance do you think I'll need, the airplane only cost me $80,000?"

      INSURANCE LIMITS

      "I've got a million dollar insurance policy." Many pilots boast such a claim to their comrades and passengers. However, many of these policies have limiting clauses which restrict liability payouts of a maximum per seat of much lower limits -- most often $100,000. A maximum limit of $1 million is hardly relevant to an owner of a Cessna 150 with a $100,000 per seat limitation and not much better to a pilot of a Cherokee 180 with four seats. Practically, the pilot is carrying only $100,000 coverage per passenger with the pilot not being covered - thus a maximum payout to occupants of $300,000. This is a far cry from a million dollars worth of coverage.

      Proper insurance coverage depends on what is being insured and whom is sought to be protected. Generally, the problem will be analyzed in two stages, (a) hull coverage and (b) general liability. The more valuable the aircraft, the higher should be the hull coverage. With some used aircraft appreciating 8-10% per quarter, at least an annual review of coverage limits is mandatory. Also, if you install a $10,000 GPS receiver, you might want to up your coverage to cover the new avionics. The higher value can usually be obtained with a phone call to your agent.

      As to general liability limits, the proper amount of coverage depends upon the entities being insured and the likelihood that an injured party would seek to pursue personal assets. If the pilot is a person of means or is also using the aircraft in his/her business which has substantial assets, full protection is mandatory. The more assets, the greater the need for higher limits.

      Some Part 135 operators carry 50-100 million dollars in coverage. For a general aviation operator, one million dollars is the basic minimum. Policies with $100,000 seat limitations are inadequate. In most cases, $100,000 will not even cover the medical expenses of a serious accident today, and will be insufficient in all death cases.

      If you are a new pilot or transitioning into a new category of aircraft, say from a complex single to a piston twin, you may not be able to get $1,000,000 coverage immediately. Most companies require some level of experience in the aircraft and/or approved school such as Simcom or FlightSafety prior to writing higher limits. A temporary solution in part would be not to carry passengers until you obtained the requisites needed for the higher limits. An inconvenience, of course, but superior to being a defendant in a serious lawsuit with inadequate coverage.

      A second solution might be to agree to fly with an instructor for the first 25-50 hours. Such an agreement may assuage the concerns of your insurance company and allow you to obtain higher limits.

      A note should be made about policies with a combined single limits. This provision is similar to the seat limitation except that instead of limiting the coverage to a single person or passenger, it limits the insurance company's exposure to a maximum amount for a single accident. Sometimes the policy will even include the hull loss.

      If, for example, its limits were one million per accident, you would have that much available to settle the claim of one passenger if only one person was on board. If you have two passengers, they would both claim against the one million and so on. If you always fly the aircraft solo or with one passenger, such a limitation may be acceptable. However, if you ever fly it with 3 or 4 people on board, you are essentially back to a per seat limitation of $250,000.

      Finally, after you receive your insurance policy from your agent - READ IT. If you have an attorney, have her/him read it too. Often, clauses show up in a policy you did not agree to or bargain for. Especially important are the exclusions sections. Every exclusion in the policy should be read and understood completely. It does no good to pay a premium for a policy that will not cover you in the event of a loss.

    3. "Fast Eddie and Crash Cargo want me to go into partnership with them on their 1944 YAK 18. It sounds like a great deal -- a real warbird!"

      THE AIRCRAFT PARTNERSHIP

      As a result of the continued high cost of owing, operating and maintaining general aviation aircraft, more and more aircraft are turning up with more than one owner. The idea of flying a turbocharged twin for the cost of operating your Cessna 182 has intuitive appeal. However, like so many other things in life, entering into a relationship with another aircraft owner has its benefits and potential problems - practical and legal.

      Practical Issues

      On the practical side, many aircraft joint-ownership agreements do not work out in the long run. Co-owners must be compatible. The more people involved, the more difficult is the compatibility issue. Co-owners must be able to agree on at least three issues: (1) scheduling flight time; (2) maintenance; and (3) flying philosophy. It does no good to have an ownership interest in an improved airplane, if you never get to fly it, or it's always "out" when you need it. Secondly, if you are a very conservative pilot, when confronted with safety-of-flight maintenance items and your partner is a "bare bones fix-it-only-when-it's-broken type," you are not going to be happy owning and maintaining an aircraft together. After putting your tender loving care into the airplane, you are not going to be content with a partner who risks that investment in taking needless chances.

      Legal Issues

      Most legal issues involved in co-ownership of an airplane can be handled by careful thorough pre-planning. Many potential problems can be anticipated and addressed in a partnership agreement. A good insurance policy with adequate coverage can also prevent major problems in the event of an accident. Don't ever let the excitement of a new airplane purchase rush you into joint ownership without this necessary pre-planning. Remember, the accident leading to your problems can happen on the first flight home. Have your written understandings as to who is going to be responsible for what prior to taking delivery of the aircraft.

      Type of Ownership

      "Ownership" can be as simple a procedure as having both names on the registration certificate, to the establishment of a formal corporation registered with the secretary of state's office. Further, complexity depends upon the amount invested, the perceived risk, type of use of the aircraft and the degree of personal assets to be protected.

      The basic legal distinction between a partnership and a corporation is the concept of limited liability. Generally, an officer or shareholder of a corporation has liability limited to the assets of the corporation. An unincorporated association or a partnership potentially exposes each partner to unlimited liability of his or her personal assets. While there exists exceptions to these basic rules, it is this concept that drives most individuals to form a corporation.

      In most states, forming a corporate entity is not difficult. Generally, a corporate entity can be established for several hundred dollars. However, it does no good to create the corporate entity if it is not going to be kept legally current. If certain obligations are not performed by the corporation, the parties can lose the legal protection it provides. Filing of yearly reports with the secretary of state, annual meetings, adequate minutes of major decisions, separation of corporate and personal assets, and the filing of corporate tax returns are all necessary to keep the protection a corporation offers owners.

      A partnership is formed around a document called a partnership agreement. This is simply a written understanding of the obligations and rights of each partner as related to the partnership assets (generally the airplane). It is in the partnership agreement that potential legal problems must be addressed. What is to be done in the eventual dissolution of the partnership? Who is to pay the deductible in an insurance claim? Who bears the risk of loss for diminished value of the aircraft after an accident (a claim not covered by insurance)? The requirement to maintain currency and competency should be addressed. How will expenses be shared? What about a partner that shock cools an engine and blows a cylinder? Is that expense borne by the partners equally or is "fault" attributed to one partner, who then pays for the repair? What do the partners do if there is a significant dispute on an issue? Do you litigate or arbitrate?

      These are all important issues that if left unaddressed, could cause serious problems in case of an accident or loss. For example, if you partner is VFR-rated only and operates you aircraft in IFR conditions, he could void the insurance policy and leave the remaining partners with the complete loss of the hull, as well as even greater liability exposure.

      Fortunately, these problems can all be addressed with adequate planning. A good insurance policy, kept in effect, and adhered to, can go a long way toward protecting partners from loss.

      A basic rule is: Uncertainty breeds conflict. If all involved know beforehand what their obligations are, are willing to accept them and have the financial resources to meet the responsibilities accepted, problems are unlikely. If the relationship is framed in haste, the participants are not sure of what their obligations are and a significant loss is involved, difficulties will arise.

      Know your partners. Spend the required time to pre-plan for the most common foreseeable eventualities, and you will enjoy the increased advantages of airplane co-ownership.

    4. "When I rent an airplane, I'm covered under the FBO's insurance policy, aren't I?"

      PROBLEM: THE RENTER EXCLUSION

      SOLUTION: RENTER'S INSURANCE

      The above wide-spread misapprehension derives form the fact that just because an FBO has insurance on the hull, or general liability for itself, it also has in effect a liability policy that covers the rental pilot. A typical renter exclusion is set forth in a liability policy under paragraph 4, Who's Not Protected, subparagraph c. states: "any renter pilot."

      What this means is that the renter pilot has unlimited liability, no coverage and may even be sued by the FBO's for the deductible and the FBO's insurer for the subrogation of the hull loss. Far fetched you say? This office recently had an insurance company sue a renter pilot, who met the open pilot clause and thus should have been covered by the policy for its payout to the passenger and the hull loss, saying the renter was not covered under the policy because he flew into IFR conditions on a VFR flight, thus voiding the policy. (When the litigation was finally resolved, the insurance company paid the deceased pilot's family a $50,000 bad faith award.)

      A partial solution to the above problem is for pilots who rent various aircraft to purchase and maintain in effect renter's or non-owners' insurance policies. These policies generally provide very minimal coverage for pilots as to passengers, adequate coverage for third party ground victims and coverage for hull claims. Their problems are in providing very limited coverage or per seat limitations for liability to passengers. A $100,00 per seat liability limit is woefully inadequate in today's aviation society.

      The renter pilot should also purchase as part of their non-owner policy an endorsement which covers damage to the aircraft itself. This protects the renter pilot for physical damage to the aircraft in an incident where there is no personal injury. Many FBO's who rent aircraft have very high risk deductibles or in some cases no hull insurance at all. The physical damage coverage will protect the renter from exposure for damage to the aircraft itself.

    5. "I've got it." "No, you've got it." "Oh what the ____!"

      WHO'S THE PILOT IN COMMAND

      Case No. 1. You are a private pilot with 100 hours total time. You take your girlfriend who is a United Airlines First Officer up for a sight seeing hop. She has an ATP, 4,000 hours of instructor's time and 6,000 hours flight time. A problem develops and an accident occurs. Who's the PIC? What if she took over seconds before the impact and flared the airplane for touchdown?

      Case No. 2. You are the check airman for a 135 operator, but not a CFI. On the way back from Mexico with no passengers on board, the boss asks you to let the "new kid" get some C-421 time. He is an instrument rated, multi-engine CFI with zero time in a 421. On take-off the airplane crashes. Who's the PIC?

      Case No. 3. A well known national training school is giving you, an instrument rated, twin engine pilot, a three day "refresher course" in instrument approach procedures in your airplane. While on an actual instrument approach you are "cleared for the visual." A mid-air collision occurs. Who is the PIC? What if you had been under the hood?

      Normally, the determination of pilot in command (PIC) in non-crewed aircraft is a simple matter. It is the person in the left seat of the aircraft manipulating the controls. However, the fact situation becomes more complicated in aircraft with dual controls, more than one pilot on board, perhaps in training situations with a safety pilot on board r with one pilot being a flight instructor, ow where due to an emergency or unusual flight condition control may pass from one pilot to the other.

      If both pilots are properly rated and current in an aircraft, either one may assume PIC duties. The other pilot becomes "a pilot not flying." There is no co-pilot in a Part 91 aircraft that does not require a crew. Thus, at any given time there can only be one PIC. Normally, the two pilots should have discussed the issue in pre-flight briefing and determine who will be the PIC. Often this "discussion" gets factually clouded after an accident occurs.

      The NTSB and the FAA have tried to give some limited guidance to this otherwise grey area.

      1. Pilot applicants are the PIC on FAA required check rides (FAR 61.47) unless "the inspector or examiner ... acts in that capacity ... by prior agreement."
      2. The NTSB has said that CFI's are always the pilot in command - "during instructional flight." Yet in one appeal to the Board, the opinion stated that "We will not impose strict liability on the [CFI] for all student mistakes." The question then becomes, "what is instructional flight?"

      Thus, it appears one can be a PIC, yet not liable for the final outcome of the flight. Likewise it appears one could not be the PIC and still be negligent in some way which contributed to an accident or incident. This contrasts with the language of FAR 91.3(a):

      "The pilot in command of an aircraft is directly responsible for, and is the final authority as to, the operation of the aircraft."

      Who is the pilot in command is a question of fact, not a question of law, which must be determined in the light of all the circumstances of the particular situation, not just the ratings of the pilots involved.

    6. "Is it okay for my good buddy, Hoot Hurricane to ferry my Cosair 150 over to outlying field for maintenance?" Or, "My mechanic always test flies my bird after they work on it - isn't that great?"

      Letting a ferry pilot take the controls of your beloved airplane or even a maintenance shop by your mechanic triggers operation of the "Open Pilot Clause" of your insurance policy. Most insurance policies have several pages of insured-specific information typed into a form prior to the pages of stock language. These typed-in pages are called the declarations sheet or the "dec sheet." It is here, in the pilot endorsement section, where the named insureds are normally listed. These are usually the owner(s) of the aircraft. There may be a note in this section adding "additional insured," such as your corporation, partnership or perhaps regular flight instructor. Finally, there is normally a legalistic-sounding paragraph that amends the declaration page to include something similar to the following:

      "Any pilot, aged between 25 and 65, having a private (or better) pilot certificate, with a single/multi-engine land, instrument rating, who has flown a minimum of 1,000 total flying hours, including 25 hours in the make and model insured hereunder, and who has had no accidents, incidents, or violations, within the past five years, and who has the insured's full approval and consent."

      An actual case handled by this office involved the clause set forth above. The pilot in question was between the ages of 25 and 65, had a private (or better) pilot certificate, with a multi-engine land, instrument rating, who had flown a minimum of 1,000 as PIC, 250 of which were multi-engine hours with 25 in make and model,yet he had a gear failure accident fours and 10 months prior to his flight in the aircraft in question. He did not meet the open pilot qualifications requiring no accidents or incidents within five years!

      The insurance company can void the entire policy for the slightest violation of the open pilot clause. This means you have no insurance coverage on the aircraft. No liability coverage. No hull coverage. If the ferry pilot has an accident, you're out of luck and liable for the repair of your aircraft, and any damage he or she may have done.

      An even more demanding open pilot clause from a commercial policy is below:

      Any commercial pilot with a multi-engine, instrument, and the appropriate type ratings properly certificated by the FAA having a minimum of 4,000 logged pilot-in-command in multi-engine aircraft, 500 hours of which are as pilot-in-command in jet aircraft, 100 hours of which are as pilot-in-command in Citation I model aircraft, and is accompanied at all times by a co-pilot who meets the co-pilot warranty as stated herein."

      The co-pilot clause was as thorough and as burdensome. If a pilot had attended the ground school at FlightSafety - but not the flight portion - the policy could be invalid. Any slip is potentially fatal.

      Now that I've given you the problem, let me give you the best-recommended solution. Any time you let someone other than a named insured or listed-additional insured fly your aircraft, do the following:

      1. Have the proposed pilot fill out a pilot qualifications questionnaire;
      2. Review the questionnaire for basic accuracy;
      3. Send it to your insurance agent;
      4. Get specific approval from your company for the pilot involved and for the flight involved.

      A lot of trouble, you say? Too much work, you say? In today's world of fax machines, $820,000 Barons and $476,000 Senecas, it's not too much to ask. Unless you want to self-insure yourself and your airplane for that short hop, have the pilot fill out a qualification questionnaire obtained from your insurance agent. Then fax the questionnaire to your insurance agent. He or she can usually get specific approval of the pilot the same day.

      The above problem exists for any flight, however short or seemingly simple - even maintenance test flights. Although the maintenance facility may have a policy that insures them when they fly your aircraft, you may end up claiming under their policy, not yours, should something happen.

      Be aware of specific language in your own open pilot clause. Then, work with your agent and carrier to ensure it is never violated. Don't give your insurance company an excuse to void that policy for which you have been paying so faithfully all these years.

    7. "My partner ran our airplane off the runway out in Iowa this weekend -- do I have to tell the FAA? He'll be out of the hospital next month."

      AIRCRAFT ACCIDENTS OR INCIDENTS - WHEN TO REPORT

      As a roughhousing youngster you may have inadvertently broken something of your parents. Clearing up the mess meant out of sight, out of mind. Inevitably, your parents discovered your miscue and perhaps a bit of extra punishment was added for your feeble attempt to hide the deed.

      As an aviator, you administrative "mother" and "father" are the FAA and its overseer, the Department of Transportation and the National Transportation Safety Board (NTSB). The house rules in statutory enactments are every bit as hard to avoid as the rules imposed by your parents. The punishment can be the loss of your flying privileges if you fail to comply with these regulations.

      Title 49 of the United States Code, Section 830, sets forth the reporting requirements for aircraft accidents or incidents, and outlines the requirements relating to the preservation of aircraft wreckage, cargo and records. The enactment defines and distinguishes between an "aircraft accident" and an "incident."

      Aircraft Accident

      An aircraft accident is first defined in relation to time and then in relation to seriousness of the mishap. It is any occurrence associated with the operation of an aircraft, that takes place between the time any person boards the aircraft with the intention of flight and the time all such persons have disembarked. In addition, the mishap must involve death, serious injury or substantial damage to the aircraft to trigger the reporting requirements. Taken literally then, the statute would not require the reporting of a gear collapse while maintenance personnel were aboard for servicing (no intention of flight). Likewise, a runaway aircraft, after all passengers and crew had left the aircraft, arguably would not require reporting (after disembarkment). Finally, no reporting is required if the incident did not result in death, serious injury or substantial damage to the aircraft.

      Incident

      An incident is defined as an occurrence other than an accident associated with the operation of an aircraft, that affects or could affect, the safety of operations. A report of an incident is required only if requested by an authorized member of the safety board.

      Our attention must then turn to the definitions of "serious injury" and "substantial damage." If you have either, you must report. If you do not, you need not file a formal report.

      Serious Injury

      Serious injury is defined as an injury that (1) requires hospitalization for more than 48 hours within seven days from the date the injury was received; (2) results in a fracture of any bone (except simple fractures of fingers, toes or noses); (3) causes severe hemorrhages, nerve, muscle or tendon damage; (4) involves any internal organ; or (5) involves second or third degree burns, or any burns affecting more than five percent of the body surface.

      It appears the regulation requires the operator to make a diagnosis of his passenger' injuries. In that not all pilots or operators are doctors (at least, not yet), prudence would suggest that you report if you have any doubt as to the nature or seriousness of your passengers' or crew's injuries.

      Substantial Damage

      Substantial damage is defined as damage that adversely affects the structural strength, performance or flight characteristics of the aircraft, and that normally require major repair or replacement of the affected component. (I guess if you have damage that improves the structural strength of your aircraft or its flight characteristics you do not have to report it.)

      The regulation goes on to list items not considered substantial damage: "Engine failure or damaged limited to an engine, if only one engine fails or is damaged, bent fairings or cowling, dented skin, small punctured holes in the skin or fabric, ground damage to rotor or propeller blades, and damage to landing gear, wheels, tires, flaps, engine accessories, brakes or wingtips are not considered substantial damage." What about that wingtip damage that affects the flight characteristics of the airplane? One sentence seems to say yes, report. Sentence two seems to say no reporting is required. I guess there has to be something for the lawyers to argue about.

      Additional Reporting

      All operators are additionally required to report any of the following incidents: (1) flight control failure or malfunction; (2) the inability of any required flight crew member to perform normal flight duties as a result of injury or illness; (3) failure of any structural components of a turbine engine; (4) an in-flight fire; (5) aircraft collision in-flight; and (6) damage to property, excluding the aircraft, exceeding $25,000. Operators of multi-engine aircraft exceeding 12,500 pounds maximum certified take off weight must additionally report: (1) in-flight failure of electrical system; (2) in-flight failure of hydraulic system; (3) sustained loss of power or thrust by two or more engines; (4) evacuation by emergency egress; and (5) all overdue aircraft.

      By Whom to Whom

      The regulation requires "the operator", defined as an owner, lessee or bailee of an aircraft, to immediately report the accident or missing aircraft to the nearest NTSB field office. Formal reports on NTSB standardized forms are required to be filed within 10 days for an accident and seven days for an overdue aircraft. (NTSB form 6120.1 or 7120.2.) Each crew member, if physically able, must attach to the report a statement setting forth the facts, conditions and circumstances relating to the accident or incident as they appear to him/her.

      Wreckage Preservation

      The operator is also responsible for preserving, to the extent possible, any aircraft, including recording mediums of flight, maintenance, and voice recordings pertaining to the operation and maintenance of the aircraft and to the airmen, until the Board takes custody of the material.

      There is no penalty for reporting a non-required incident. If in doubt, err on the side of caution. However, if you clearly are not required to report, don't invite the FAA to go over your aircraft and engine logbooks. They may find something other than a reporting violation. Finally, do not forget to report the event to your insurance company, the owner, your boss - and a call to mom and dad probably would not hurt either.

    8. "Counsel, I've just got a great deal on a set of vortex generators for my Bluebird 190. Is it okay for me to epoxy those hummers on? I've even got a template showing where they should go!"

      OWNER PERFORMED MAINTENANCE

      The FAA specifically and in great detail outlines that preventative maintenance which can be performed by an owner on his own aircraft. FAR 43, Maintenance, Preventative Maintenance, Rebuilding and Alteration states at section 43.3(a):

      The holder of a pilot certificate issued under Part 91 may perform preventative maintenance on any aircraft owned or operated by that pilot which is not used under Part 121, 127, 129 or 135. [Airline, charter or air taxi aircraft.]

      Appendix A to FAR 43, subpart (c) defines by delineation what is preventative maintenance. Remember, that maintenance not allowed in subpart (c) may not only be a violation of the FAR's, but may also void your insurance policy as a breach of the contract.

      Our example above would not only be a violation of FAR 43, but would probably require a Form 337 as a major airframe modification.

    9. "Now that AOPA finally got that new law passed we should be ably to buy G.A. aircraft at a reasonable price again -- right?"

      THE GENERAL AVIATION REVITALIZATION ACT (GARA)

      The General Aviation Revitalization Act will be discussed in detail by another speaker. Suffice to say that enactment of GARA will have little effect on new airplane sales prices. Cessna has estimated the cost of a VFR 172 at $124,500 and a VFR 182 at $190,600. A new A-36 Bonanza can run between $322,000 and half a million dollars.

      The Act has no effect on product liability exposure for new airplanes. It only imposes a statute of repose for airplanes over 18 years old. The idea was to cut off the liability "tail" on aircraft that are up to 40 years old and still flying. In a rather unusual series of events AOPA lobbied long and hard for a piece of legislation which took away legal rights from its members and their survivors.

      The reason articulated was that product liability was "stifling the G.A. industry." The real reasons for atrophy in the small airplane business are too extensive for discussion here. However, the new airplanes could not compete with the ones already produced and in the field. Also, the majors have gone to where the profits are - in turboprop and jet business aircraft. Total sales volume and profits have not changed all that much since the hay days of the '70's. It is just that the profits are in fewer number and higher priced aircraft.

      As an attorney you should be aware that there are a number of clearly specified exceptions to the GARA statute of repose. In the right case involving the right airplane, GARA as a defense can and is being defeated.

      GARA allows cases to proceed if the plaintiff alleges and can prove misrepresentations, concealments or withholding by the manufacturer of required information from the FAA. Many G.A. aircraft have very bad characteristics which manufacturers have concealed or covered up for years. With proper research and analysis these cases should still be brought. A manufacturer who misleads the FAA or outright conceals information from the FAA loses the protections of the GARA statute. Unfortunately, G.A. manufacturers have a long history of doing both.

    10. "Why are there so many lawyers in this country?"

      (A COMMENTARY)

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