Disciplined in Sophisticated Defense and Insurance Litigation

August 23, 2017 | Blog Post| "It's Not Old, It's A Classic!": Risk in Aging Aircraft with GARA Protecting Manufacturers

The General Aviation Revitalization Act of 1994 (“GARA”) was a byproduct of aging aircraft, rising costs, and tort liability in the United States.  Congress was concerned that aircraft manufacturers were being devastated by liability costs for accidents occurring long after the planes left the manufacturer.  These liability costs drove up the price for aircraft beyond what the market would bear, and general aviation experienced a sharp decline.  The General Aviation Manufacturers Association reports the total U.S.-manufactured general aviation airplane shipments went from a high of 17,811 in 1978 to a low of 929 in 1994.  As a result many manufacturers stopped making certain model aircraft, including Cessna which ceased production of all piston aircraft in 1986. 

GARA sets a federal statute of repose, with limited exceptions, of 18 years for claims for personal injury, death, or property damage against manufacturers of general aviation aircraft.  “General aviation aircraft” means:

[A]ny aircraft for which a type certificate or an airworthiness certificate has been issued by the…Federal Aviation Administration, which, at the time such certificate was originally issued, had a maximum seating capacity of fewer than 20 passengers, and which was not, at the time of the accident, engaged in scheduled passenger-carrying operations as defined under regulations in effect under the Federal Aviation Act of 1958 (49 U.S.C.App. 1301 et seq.) at the time of the accident.  

GARA, PL 103-298, August 17, 1994, 108 Stat 1552. The statute preempts any state law to the contrary.

The 18-year period essentially runs from the date the plane leaves the manufacturer, whether sold to a consumer or to a distributor.  The statute has a rolling date for any new component, system, subassembly, or other part which replaces or is added to the aircraft and which causes the accident.  In these circumstances, the statute runs from the date the new component is added or replaced. 

The statute does have exceptions, including when a plaintiff can show that the manufacturer knowingly misrepresented material information to the FAA that is the cause of the accident; if the claim is brought by or on behalf of a person who was being transported for medical or other emergency purposes; if the injured person was not aboard the aircraft; or when the action is brought pursuant to a written warranty that is otherwise enforceable. 

In a recent subrogation case from the Southern District of Florida, Intact Insurance Company, formerly AXA Pacific Insurance Company and R&Q Insurance Ltd. As Subrogee of Keystone Air Service Ltd. & Kevin Hepp v. Piper Aircraft Corp. Irrevocable Trust, the Court granted a judgment on the pleadings against Plaintiffs, barring their suit under GARA. 

In Intact, the insurance companies had paid out money to claimants after a Piper PA-31-350 Chieftain crashed while on approach at Winnipeg International Airport in Manitoba, Canada, on November 6, 2000.  The Chieftain had been built and sold in 1978.  When it crashed, the aircraft carried seven passengers and one pilot, all Canadians.  At the time of the accident, the plane was owned and operated by Keystone Air Service, Ltd., a Canadian Company with its principal place of business in Manitoba.  In the years following the accident the passengers brought suit against Keystone, and all together the insurance companies paid $595,753.23 Canadian dollars to settle those claims and reimburse Keystone for the value of the aircraft. 

The insurance companies brought suit in the Southern District of Florida in 2015 against Piper Aircraft to recover these payments.  A singularity about Piper Aircraft cases involves how the company came out of bankruptcy proceedings in 1995.  As a part of Piper’s bankruptcy, claims involving aircraft manufactured by Piper prior to the bankruptcy are subject to a channeling injunction, meaning that claimants are required to, among other things, file suit against a trust that was established.  They must also file suit in the Southern District of Florida.  Here, the insurance companies followed all prerequisites to filing suit under the trust agreement.

Piper brought a motion for judgment on the pleadings alleging that GARA barred the insurance companies’ suit, and it should be dismissed.  In its Report and Recommendation (“R & R”), the magistrate recommended granting the motion, which the Court did, approving the R & R and its analysis.

In what should have been a straightforward application of GARA, as there was no dispute over the manufacture or the accident dates, Plaintiffs argued instead that, but for the Piper trust agreement, the suit would have been brought in Canada, where GARA would not have applied.  Plaintiffs also argued that GARA violates Plaintiffs’ constitutional rights. 

The Court rejected Plaintiffs’ contention that the trust agreement’s provisions were unfair because it required suit to be brought in the United States where GARA applied.  The Court noted that the agreement served as a de facto forum selection clause, and Plaintiff failed to show that its enforcement was unreasonable.  The Court noted that Plaintiffs would have no suit against Old Piper without the trust agreement and that GARA would still bar the suit even if Canadian law were to apply, citing many instances where courts have applied GARA to accidents on foreign soil. 

The Court similarly rejected the notion that GARA implicated extraterritoriality.  There is a presumption against extraterritoriality, meaning that legislation is meant to apply only within the territorial jurisdiction of the United States.  Or, in short, U.S. laws will generally not regulate activities outside the country.  Relying on a Ninth Circuit case, which dismissed similar arguments, the Court noted that GARA does not govern any substantive standards in tort law; it merely regulates the ability of plaintiffs to bring suit in United States’ courts.  As such, GARA only regulates entirely domestic conduct, regardless of whether the underlying facts of the case involve activities inside or outside of the United States.  Thus, even if Canadian law applied to the case, GARA would bar the suit. 

The Court went on to summarily reject Plaintiffs’ constitutional arguments that their rights of access to the courts and due process were violated by the application of GARA.  The Court noted that statutes of repose are generally upheld, and that a court dismissing a case before trial is not the equivalent of a denial of access to courts.

With this case, GARA continues to block claims against manufacturers of aging general aviation equipment regardless of whether the accident occurs on or off U.S. soil.  Intact joins a line of cases upholding the Act and protecting manufacturers.   

Laura Heft

An Associate at Butler Weihmuller Katz Craig LLP in Chicago, IL. Laura practices in our First-Party Coverage, Casualty Defense Litigation, Product Recall, and Aviation departments.

January 18, 2018 Blog PostEighty Years After Earhart: Congress Moves to Motivate and Facilitate Women In Aviation

The aviation industry is in dire need of a future workforce. This industry is already suffering from a shortage of qualified individuals to work in all sectors of aviation. For instance, the Forbes article here states that the gap between supply and demand for aviation mechanics is projected to be at 9 percent by 2027.   

Read More »
November 09, 2017 Blog PostDon't Wreck Your Carmack Claim: Requirements for the Written Notice of Claim

Carmack claims are unique animals.  Carmack provides a shipper—or its subrogating insurance company—with the sole remedy for damages sustained when goods are shipped between states.  As the sole remedy, it’s imperative that a claimant strictly comply with Carmack’s notice of claim requirements and any additional notice requirements outlined in the bill of lading.  As subrogation professionals, when a cargo claim comes in, the bill of lading should be the first document reviewed to determine what needs to be done—in addition to the five items listed below—to provide proper notice of the claim to the carrier.  Failure to file proper written notice will bar the claim. 

Read More »
September 21, 2017 Blog PostThe Rule of Sevens: Evaluating Claims Involving a Child

As subrogation professionals, we may be tasked with evaluating property loss claims where a child caused or contributed to the property damage.  For example, is a child playing with matches or a lighter liable for a fire loss?  Or, is a child liable for driving a vehicle into the neighbor’s home? In some instances, a parent may be held liable for the child’s acts.   As more fully set forth below, when evaluating a claim involving a child, it is important to evaluate the age and capacity of the at-fault party, and to be familiar with state specific statutes regarding parental liability. 

Read More »
September 01, 2017 Blog PostHurricane Hindsight is 20/20

It took years of depositions and other discovery to realize that that most of my 2004-2005 hurricane condominium association claims were much simpler to defend than I thought.   The center of gravity of these claims was the proper calculation of Actual Cash Value (ACV).

Read More »
August 29, 2017 Blog PostThe Common Interest Doctrine: Maintaining Confidentiality

While confidentiality is usually destroyed when communications between an attorney and client take place in the presence of a third party or when work product is shared with others, those communications can remain protected if the common interest doctrine applies.

Read More »
August 15, 2017 Blog PostThe ABC's of ACV in Subrogation Claims

Oftentimes, during the course of a subrogation claim, third-party liability adjusters will refuse to pay the full amount of the “Repair Cost Value” (“RCV”) of the damages demanded, and contend that they only owe “Actual Cash Value” (“ACV”), regardless of the amount paid in the underlying first party property claim adjustment.   Oftentimes, this position is not necessarily predicated on a specific legal doctrine or theory, but rather a general “understanding” that is commonly used in the insurance context.   The true measure of damages, in the legal context, is always dictated by state law. 

Read More »
July 18, 2017 Blog PostSubrogation Following a Hurricane is All Hands on Deck

Hurricane season began June 1 st, and runs through November 30th.   However, we are about 30 days from approaching the peak of hurricane season, when the season becomes its most active.  Weather predictors are predicting an above-average number of storms this year, with 14 expected named storms.  As anyone who has worked “CAT” claims knows, when a hurricane hits, it’s “all hands on deck.”  This is true for subrogation professionals, as well.  There is a significant increase in the number of claims that must be triaged, with a goal of finding any claims that might have subrogation potential. 

Read More »
July 14, 2017 Blog PostNew Laws passed in Florida and Oregon add to Varying State Drone Regulations

More and more states are adopting individual rules for UAS operations within their borders. These rules vary from state to state.  Congress wanted to take up the issue and regulate UAS federally, but stakeholders including the Aircraft Owners and Pilots Association, Drone Manufacturers Alliance, the National Business Aviation Association, and the Commercial Drone Alliance, among others, are encouraging Congress to defer regulation of UAS pending the report and recommendations of the Drone Advisory Committee, the “DAC”.

Read More »
May 24, 2017 Blog PostThe D.C. Court of Appeals Just Scrapped the Drone Registry and May Have Also Turned Homeowners Insurers into Aviation Insurers

Model-aircraft hobbyist John Taylor didn’t want to register his model aircraft with the FAA pursuant to the newly created drone registry. So he took on the FAA, challenging new regulations aimed at unmanned aircraft registration and flight restrictions.

Read More »
April 13, 2017 Blog PostThe Answers to Some of Your Questions About What Airlines Can Do When a Flight is Overbooked and Someone Is Going to Have to Get Off of the Plane

Suddenly, the entire world is interested in learning about the laws governing airlines’ actions when a flight is overbooked. It isn’t every day that the entire world suddenly wants to learn all about something that you’ve spent years studying, so this post is for our clients who insure aviation risks, our clients who are frequent air travelers, and perhaps a few curious strangers who have no business with our law firm but have nonetheless been led here by their quest for answers. 

Read More »
April 05, 2017 Blog PostA Federal Court in Kentucky Shoots Down Drone Airspace Case

The Western District of Kentucky recently granted a motion to dismiss for lack of subject matter jurisdiction, determining that there is no federal question jurisdiction when a claim is brought for trespass to chattels and declaratory judgment where a drone is flown above an individual’s property. 

Read More »
November 16, 2015 Blog PostWest Virginia Supreme Court Allows Landlord's Subrogation against Tenant

The West Virginia Supreme Court of Appeals recently opened the door further for a landlord’s insurer subrogating against a tenant for damages to the landlord’s property.

Read More »
October 13, 2014 Blog PostIs Texas Following Florida's Lead On Changing The Economic Loss Rule?

Practicing in both Florida and Texas I have seen the Economic Loss Rule evolve over the years, and its direct impact on the recovery potential for our subrogation claims appears to be moving in a positive direction. Recently, the Texas Supreme Court held in a per curium opinion in Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 2014 WL 4116839 (Tex. Aug. 22, 2014), that a claimant can now bring a tort claim (negligence, in this case) against a party, as well as a breach of contract claim. In doing so, the Court applied ...

Read More »
Key Points