Lessor Liability Ruling Stands as Top Court Declines Case

 - June 2, 2012, 2:40 AM

A legal case that could hold serious ramifications for the aircraft financing and leasing industry met its end with a blow against the lenders when the U.S. Supreme Court refused to hear an appeal.

Central to the case was the question of whether lessors are liable for damages in cases where they do not have operational control of an aircraft. While a federal statute (49 U.S.C. 44112) states that a “lessor, owner or secured party is liable for personal injury, death or property loss or damage on land or water only when a civil aircraft, aircraft engine or propeller is in the actual possession or control of the lessor, owner or secured party,” the top courts of several states in the past have interpreted this statute to rule against the lessors.

The Florida Supreme Court recently reversed a verdict in the most recent case involving this matter in favor of the plaintiff. In Vreeland v. Ferrer, the state’s highest appellate court ruled that 49 U.S.C. 44112 does not protect aircraft lessors from liability from property damage and/or personal injury or wrongful death of aircraft passengers and crew.

Florida Case Poses Questions

On Jan. 14, 2005, a Cessna 337 Super Skymaster registered to Aerolease of America, but leased to and operated by a private individual, crashed shortly after takeoff at Lakeland Linder Regional Airport in Florida, killing the pilot and passenger. The passenger’s estate sued Aerolease, contending that as the registered owner of the aircraft, the company was liable and responsible for the pilot’s negligence in the operation and inspection of the aircraft. The lawsuit also asserted that before the transfer of the aircraft to the lessee Aerolease was negligent in performing inspections and maintenance of the aircraft.

In a 2007 verdict, the trial court ruled in favor of Aerolease. While Florida has a “dangerous instrumentality” doctrine that states that the owner or lessor of a vehicle is vicariously liable for the negligent conduct of an operator, the court concluded that the federal statute preempted state law and since Aerolease was not in actual possession or control of the aircraft at the time of the crash, it was not responsible. The passenger’s estate appealed the verdict twice more before the Florida Supreme Court reversed the decision last July.

In response, Aerolease appealed the ruling to the U.S. Supreme Court. “The main issue is federal preemption,” said Scott Burgess, a member of the National Aircraft Finance Association’s (NAFA) board of directors and a shareholder in the Aviation Legal Group. “There is a federal statute that basically says that an aircraft lessor is not liable for injuries, and I think a correct view says it’s not liable for personal injuries or property damage to people aboard the aircraft and or people on the ground in the event that the lessor has no operational control over the aircraft.”

NAFA, along with industry lobbying organization Aviation Working Group, had filed a friend of the court brief with the U.S. Supreme Court urging it to accept the case and thereby settle the matter once and for all and prevent a patchwork of individual state rules on the subject, but on February 21, the Supreme Court denied, without comment, Aerolease’s petition for certiorari in Aerolease of America, Inc. v. Vreeland.

Burgess told AIN that he believes the Florida Supreme Court took a narrow view in its interpretation of the federal statute, construing it to read that its protection to lessors applies only to injuries or property damage sustained by people on the ground rather than those in the aircraft as well. But as a result of the Supreme Court’s refusal to hear the case, the ruling in Florida stands. “Right now the Florida Supreme Court’s opinion that lessors are liable for personal injury sustained by people aboard aircraft when they crash is the law of Florida,” said Burgess.

The aviation finance industry will certainly be watching closely for any similar cases in other states. “The liability that this could put on the lenders would have a chilling effect in the industry,” said Robert Howe, president of Dorr Aviation and the current president of NAFA. “It’s going to be even more difficult for banks to get into that type of business or stay in that type of business if this sort of liability is thrust upon them.”



Saw this article, wow, scary stuff....how do you protect yourself?


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