Reply-To: <IIP@hawaii.rr.com>
Reply-To: lancair.list@olsusa.com
From: "IIP" <IIP@hawaii.rr.com>
To: "Lancair Mail List" <lancair.list@olsusa.com>
Subject: Future liability on sale
Date: Wed, 30 Jan 2002 23:26:12 -1000
Organization: Inter Island Petroleum
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Response to Bob Smiley's comments on rudder pedals and selling your
experimental:

We got some advice on the liability issue from an FAA rep and an
attorney, which helped resolve the issue of resale liability for us. A
corporation (funded by another corporation) owns the airplane, and we
work on it as employees. Others (builder assist, interior, paint, etc.)
also work on it for the corporation. We will clearly satisfy the FAA as
to who built 51% of the airplane. It will always be an asset of the
corporation and will never be "sold". The shares of the corporation (no
other assets) which built it (and will continue to own it) can be sold
instead. If the new owner of this corporation "drills a hole in the
ground" with its primary asset, people can sue his heirs and the
corporation all they want and it won't bother us personally. We will
have never owned the airplane, and will have built it as former
employees of the airplane corporation. To sue us individually would be
like someone suing the employees or shareholders of Boeing. It would
also be like suing the employees or shareholders of Lancair, since they
also "built" parts of the airplane. I don't think there's much chance of
any of that. If there was, it would kill the kit plane industry and no
supplier would even sell parts to go in an experimental.

This might not be a "perfect" defense, but nothing in U.S. law really
ever is. If nothing else, it presents a very difficult path for someone
trying to claim individuals built it wrong many years earlier. If it
were ultimately found that some liability goes past the corporation,
then who is liable, and for how much? Us? The interior shop? Lancair?
The engine manufacturer? The carbon fiber manufacturer? The Lancair shop
helper who helped us close our wings? Etc., etc. We would have lots of
company in such a suit, even if the corporate protection was pierced.
Assuming it was "pilot error", getting any sort of judgment would be
very tough. If we keep the plane 10 years, our corporate barrier only
has to work for the remaining 5, after which we would no longer be
liable anyway. Taking a step like this on Day One is cheap, easy, and
should be 95% effective so you can sleep after selling.

Another avenue is, when selling the shares of the airplane corporation,
simply require the new owner to indemnify named individuals from any
liability arising from his use of the corporation's assets.

If you are still nervous, you can easily clean up your personal affairs
(before or right after selling the airplane) so that all your assets are
owned by trusts, LLC's, your wife (or husband), your kids, charities,
etc., leaving anyone who might possibly navigate the corporate barrier
nothing to get from you (or anyone else) anyway. Many people do this
routinely for estate planning purposes.

I don't think we should be condemned to keep our airplanes forever
because of our litigious society. Any attorneys out there see it
differently?

LIVPT, Inc.
Lancair IV-P Turbine
40%


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