Limited Liability Companies May Protect Aircraft Owners

Posted on November 30, 2010 by Mike Danko

It’s not uncommon for three or four pilots to share ownership of an aircraft. For years, owning an aircraft as “partners” was the norm. That form of ownership, however, carries with it some liability considerations.

  • “Partners” can generally be held individually liable for one another’s debts, including debts arising from one another’s negligence. In other words, if one partner ’s piloting mistake kills or injures a passenger, the other partners may in some cases be held accountable to the victim or the victim’s family.
  • Aircraft owners are responsible for maintaining their aircraft properly. If one of the partnership’s maintenance decisions – such as an ill-considered decision to run past TBO – leads to an accident, each partner could be held responsible for that as well.
  • Even assuming the partnership made all the right maintenance decisions, the partnership may still be held responsible for the negligence of the mechanic. More on that here. If the partnership is liable, each of the individual partners may be liable as well.

Many pilots seeking to share an airplane now form a limited liability corporation. They arrange it so that the corporation, and not the individual pilots, own the aircraft. The pilots own shares in the corporation only. Because the pilots do not themselves own the aircraft, they avoid some of the liability that comes with aircraft ownership generally and with the partnership relationship in particular.

But here’s where people often get confused: no form of ownership allows the pilot who is flying the aircraft to avoid responsibility for his own negligence. If a pilot error kills or injures someone, that pilot may be held accountable to the victim or his family regardless of whether the aircraft is owned by his partnership or by his limited liability corporation.

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Holding the Aircraft Owner Responsible for the Mechanic's Negligence

Posted on November 11, 2010 by Mike Danko

An aircraft owner loans his plane to a friend. The plane crashes and a passenger is injured. It turns out the crash was caused by the negligence of the aircraft's mechanic. Can the crash victim hold the aircraft owner liable for the mechanic’s faulty work?

This question comes up a lot. In fact, it comes up in almost every case where the mechanic doesn't have adequate insurance to cover the passenger's medical expenses. 

Ask the owner’s insurance company whether the owner can be held liable, and they will always say “no.” Their argument is that the owner didn’t perform the work and, in fact, without a mechanic's license was legally prohibited from doing so. The owner trusted the mechanic, as the regulations required him to, and so did nothing wrong. According to the owner’s insurance company, the passenger must look to the mechanic for compensation, and not to the owner. 

There are a couple of court opinions that seem to go along with the insurance company's reasoning.  But none of those opinions applies in California.  

In California, unlike in some other states, an owner of a machine that can seriously injure someone if not properly maintained is responsible to those injured as a result of faulty maintenance. It doesn’t matter that the owner didn't actually perform the faulty maintenance. 

Why does this make sense? Because, according to the Supreme Court's opinion in Maloney v. Rath, it is the owner who decides who the mechanic will be.

the owner selects the [mechanic] and is free to insist upon one who is financially responsible and to demand indemnity of him.

In other words, the injured party had no say in what mechanic did the work, or whether the mechanic carried insurance. But the owner who selected him did. So the accident victim can hold the owner financially responsible, and leave it to the owner to try to obtain reimbursement from his mechanic.

The Maloney case didn’t involve airplanes. It involved a car crash caused by improperly maintained brakes. But the reasoning applies to airplanes too. After all, improper aircraft maintenance is just as dangerous as improper car maintenance. Maybe even more so.

The federal aviation regulations make the owner responsible for maintaining the aircraft in airworthy condition. The owner can’t necessarily avoid that responsibility by hiring a good mechanic. Despite what the insurance company says, the owner may still be on the hook.  At least in California.

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