Regular Features of the LPBA Journal

Lawyer Pilot's Bar Association

Regular Features of the LPBA Journal

Each quarterly issue of the Lawyer Pilots Bar Association Journal contains features called The President's Letter, Recent Developments in Aviation Law, Trials and Settlements, The Enforcement Docket, and The View From Justice.

Sample issue of the LPBA JOURNAL

Journal Editor Gary W. Allen, Esq.

Read about our Editor

(The hardest working man in the LPBA)

Excerpts from:

RECENT DEVELOPMENTS IN AVIATION LAW

By: Cecile Hatfield, Esq.

I. AIR CARRIER CASES:

A. Judge Allows Passenger's False Imprisonment Claim

Wade v. American Airlines Inc. et al.,
No. 01 C 3521, 2003 WL 22053601 (N.D. Ill., E. Div. Sept. 2, 2003)

A federal court judge in Illinois has refused to dismiss the false-imprisonment claims of a passenger arrested after a boarding disturbance on an American Airlines jet. At the same time, the judge dismissed the plaintiff's claims for emotional distress and abuse of process.
Stacy Wade was a passenger on American Airlines Flight 1199 on May 14, 2000. Wade contends that flight attendant Gail Paulson took an instant dislike to her when she boarded. Wade, who is black, claims that Paulson did not believe Wade was a first-class passenger because of her race. In addition, according to the plaintiff, Paulson unfairly accused her of breaking an overhead bin and told the captain that Wade was causing a disturbance.
Wade also said a member of the flight crew called the police, causing her to be arrested and wrongly charged with disorderly conduct. Although the charges were eventually dropped, Wade says the incident resulted in her losing her job. She alleges that customer service representative Dan McNamara, or other American employees, sent faxes to Wade's superiors claiming that she had assaulted a police officer.
American, Paulson and McNamara told a different story. Paulson had four passengers testify that Wade was extremely aggressive towards Paulson, used abusive language and left the flight crew no choice but to call the police. Paulson testified that she never actually saw the complaint or signed it, and the defendants say no American employees sent faxes containing incorrect information to Wade's employers.
The defendants moved to dismiss Wade's state law claims for false imprisonment, malicious prosecution, abuse of process, tortious interference with economic advantage, and intentional and negligent infliction of emotional distress. The Court first ruled that to prevail on a claim for false imprisonment, a plaintiff must show that the defendants caused or procured the restraint of her personal liberty without reasonable grounds.
In order to prove malicious prosecution, a plaintiff must show that the defendants brought a lawsuit maliciously and without probable cause. The plaintiff must additionally show that the action terminated in her favor and that she suffered some special injury beyond the usual expense of defending a lawsuit.
There is an issue of material fact as to whether defendants actually filed the charges against Wade, the Court noted. While Paulson testified that she never actually saw the complaint or signed it, there is a signature that reads "Gale Paulson," an incorrect spelling of her name. The Court found this is consistent with the testimony of a police officer, who stated that he talked to Paulson and others over the phone, collected information about the events on the plane and signed her name to the complaint with her permission.
Abuse of process requires both that the defendants had an ulterior purpose for filing suit and that they acted in a way that was not proper in the regular prosecution of the suit. The mere institution of a legal proceeding, even without foundation and merely intended to harass the defendant, does not constitute abuse of process. In this case, the Court noted, Wade admitted that the defendants never followed up on the legal claims against her; therefore, there is no claim for abuse of process. If the defendants disseminated false information about the events on the plane and eventually cost Wade her job, this would constitute purposeful interference into her business relationship with her employer.
The Court determined that while Wade did not actually lose her job until nine months after the incident on the plane, she does produce evidence that, following faxes from American employees to her employer, she no longer received quality assignments and was passed over for better positions. Again, if she can prove this, plaintiff may be able to prevail on her claim for tortious interference with economic advantage.
Taking Wade's testimony as true, the Court held the defendants wrongly accused her of causing a disturbance on a plane, filed suit and told her employer about the events.
While this may have injured plaintiff economically, the Court ruled, it does not rise to the level necessary to prevail on a claim for intentional infliction of emotional distress. The defendants' behavior was not so objectively unreasonable that severe emotional distress would be a natural result.
The Court also observed that while American and its employees clearly owe a duty of care to passengers, Wade claimed her injuries were caused by the intentional acts of individual personnel, and did not allege breach of this duty of care.

B. Forum Non Conveniens
Jones et al. v. Raytheon Aircraft Services Inc.
No. 04-02-00279-CV, 2003 WL 21919598
(Tex. App., San Antonio Aug. 13, 2003).

A state appellate court in Texas has ruled that litigation involving a fatal air crash in New Zealand belongs in the courts of that country. The defendants, Raytheon Aircraft Services Inc. and Beech Aircraft Corp., pointed out that none of the plaintiffs were residents of the United States.
Minutes after takeoff March 29, 1995, the crew of a Beech Queen Air/Excalibur Conversion aircraft crew reported it had lost an engine and was returning to the airport. On the way back the other engine failed, and the plane crashed in a pasture near Ngahinapouri, New Zealand. The pilot, copilot and four passengers were killed. The New Zealand Transport Accident Investigation Commission concluded that the engines failed because of fuel starvation, even though the outboard tanks contained enough fuel for the entire flight. That fuel may never have reached the engine because the selectors were set for the inboard tanks, which were nearly empty.
The inboard tanks may have been selected because Kiwi West, the owner of the plane, applied the same checklist to two outwardly similar aircraft with significantly different fuel systems. The investigators also criticized Beech's flight manual for using allegedly ambiguous terminology to describe the two sets of fuel tanks.
The aircraft was assembled by Beech in Kansas in 1965. In 1977, the aircraft underwent modifications, Excalibur Conversion, to substitute larger engines, modify the fuel system and change other features. These modifications were performed by Excalibur Aviation Co. in Texas. In 1989 the plane was shipped to Australia.
In 1994 the plane was shipped to New Zealand, where it was refurbished and put into service by Kiwi West. The plane was operated in New Zealand until the 1995 crash.
A large group of plaintiffs brought suit in the Fifty Seventh Judicial District Court, Bexar County, Texas. The defendants were Excalibur, Raytheon, Beech and Swearingen Aircraft Inc. The plaintiffs claimed that the aircraft, as manufactured and modified, was defective. They also asserted other theories of liability including negligence, breach of the duty to warn of defects, and breach of warranties. The plaintiffs sought recovery for wrongful death, pecuniary loss, loss of inheritance, medical and funeral expenses, mental anguish, and loss of companionship and society.
Beech filed a special appearance to challenge the trial court's exercise of personal jurisdiction over it in Texas and filed a conditional motion to dismiss for forum non conveniens. Raytheon also filed a motion to dismiss for forum non conveniens. Swearingen moved to join Beech and Raytheon's motion.
The trial court sustained Beech's special appearance, but the Texas Court of Appeals, San Antonio, reversed and remanded in 1999. The appellate court noted that Beech's contacts with Texas, including the presence in the suit of its subsidiary Raytheon Aircraft Services, made Beech subject to the general jurisdiction in the state.
After the case was remanded to the trial court, the parties conducted additional discovery. In response to Beech and Raytheon's requests for admission, the plaintiffs admitted that they are not legal residents of the United States. The parties also produced affidavits from several New Zealand legal experts on its no-fault accident insurance system.
The New Zealand workers' compensation insurance system includes all accidental injuries and deaths sustained by any individual in New Zealand. The Accident Compensation Commission handles all claims without any involvement by the alleged wrongdoer. Dependents of deceased victims receive weekly payments based on the deceased's earnings. As a corollary, victims may not bring law suits in New Zealand courts for injuries that are covered by the system.
The trial court granted Beech and Raytheon's motion to dismiss for forum non conveniens. The plaintiffs appealed. The Texas forum non conveniens statute makes it easier for a defendant to win dismissal of a case filed by foreign residents than one filed by U.S. residents.
The plaintiffs argued that because New Zealand does not have a traditional court system where claimants can sue defendants, it is not a "forum" as contemplated by the statute. The appellate court majority held that unlike the statutory provision for United States residents, the statutory provision for non-residents places no apparent constraints on what may constitute a forum, nor does the legislative history indicate an intent to do so. After reviewing the legislative history, we cannot conclude that the Legislature intended that … the alternative forum must provide, as plaintiffs argued, a court system that allows litigation between the parties.
In addition, the courts in other jurisdictions that apply the doctrine of forum non conveniens have generally accepted New Zealand as an alternative forum because victims do receive some compensation for their losses, according to the court.
C. Terrorist Attacks
In re: Sept. 11, 2001, Litigation,
No. 21 MC 97 (AKH), 2003 WL 22077747 (S.D. N.Y. Sept. 9 2003)

A federal court judge in New York has rejected the dismissal motions of United Air Lines, American Airlines, airport operators, non-carrier airlines and Boeing Co., ruling that the defendants "owed duties to the plaintiffs who sued them" for wrongful death and property damage stemming from the terrorist attacks of September 11, 2001.
United Flight 175 and American Flight 11 were hijacked after departing Boston and crashed into the World Trade Center in New York. The flights originated in Portland, Maine. American Flight 77 took off from Dulles International Airport in Washington, D.C., was circled back by the hijackers and crashed into the Pentagon. United Flight 93 took off from Newark International Airport and crashed near Shanksville, PA.
The Plaintiffs' Executive Committee, on behalf of all plaintiffs who asserted wrongful-death, personal injury and property damage claims in the consolidated actions, argued against the defendants' motions to dismiss. The motions were confined to a single issue, whether the companies owed a legal duty to any or all of the victims to exercise reasonable care to prevent their deaths and injuries, and whether those who suffered property loss were entitled to recover damages, assuming the defendants' negligence is established.
The aviation defendants, American Airlines, AMR Corp., Continental Airlines Inc., Air Tran Airlines, Burns International Services Corp., Burns International Security Services Corp., Globe Airport Security Services, Globe Aviation Services Corp., Huntleigh USA Corp., Pinkerton's Inc., United Airlines and UAL Corp., conceded a duty to their passengers and limited their motion to the "ground victims," those who were in the buildings or vicinity of the World Trade Center and were injured or killed in the attacks.
The plaintiffs argued that the aviation defendants "knew long before September 11, 2001, that the aviation industry was the most favored instrument and target of terrorists bent upon attacking the United States, its citizens and institutions."
The aviation defendants were "certainly aware," the plaintiffs claimed, that the federal government considered passenger screening to be the key defense against large-scale incidents designed for maximum destruction, terror and media impact , "exactly the effects of attacks on aviation."
A. U.S. District Judge of the Southern District of New York held that Plaintiffs and society generally could have reasonably expected that the screening performed at airports by the aviation defendants would be for the protection of people on the ground as well as for those in airplanes.
Ours is a complicated and specialized society, the Court noted. We live in the vicinity of busy airports and we work in tall office towers, depending on others to protect us from the willful desire of terrorists to do us harm. Society in general and airline passengers in particular, expect that security screening is performed for the benefit of all, including those present in the Twin Towers on the morning of September 11, 2001.
Boeing argued that its design of the cockpit was not unreasonably dangerous in relation to foreseeable risks, and that the risk of death to passengers and ground victims caused by a terrorist hijacking was not reasonably foreseeable. The record at this point does not support Boeing's argument, the court ruled. There have been many efforts by terrorists to hijack airplanes, and too many have been successful, the court observed. The practice of terrorists to blow themselves up in order to kill as many people as possible has also been prevalent. Although there have been no incidents before the ones of September 11, 2001, where terrorists combined both an airplane hijacking and a suicidal explosion, the Court was not able to say that the risk of crashes was not reasonably foreseeable to an airplane manufacturer.
In response to the dismissal motion of the New York - New Jersey Port Authority and the World Trade Center Properties, LLC, the plaintiffs said the people who designed, build, owned, operated and maintained the World Trade Center towers intended that they would be more than simply office buildings but monuments to national pride and success, making them perfect terrorist targets for those reasons.
Deficiencies in the World Trade Center, design materials and structure facilitated the towers' collapse, the plaintiffs contended. The Court stated the plaintiffs pleaded sufficient facts to allege legal proximate cause.
While the specific acts of the terrorists were certainly horrific, the court held it could not find that the WTC defendants should be excused of all liability as a matter of policy and law on the record, especially given the plaintiffs' allegations regarding the defendants' knowledge of the possibility of terrorist acts, large-scale fires and even airplane crashes at the World Trade Center. The Court also rejected the defendants' governmental immunity arguments.

D. In Flight Injury
Wagner v. Southwest Airlines Inc.,
No. 2000-11-4711-C (Tex. Dist. Ct.,
197th Dist., Cameron County Aug. 19, 2003)

A Texas state court judge has dismissed personal-injury claims against Southwest Airlines Inc. filed by a passenger who claimed a loud noise on a Southwest flight caused his hearing loss. The court noted that the plaintiff's physician found he had not suffered any hearing loss. Gervail Wagner, a physician himself, had his doctor run tests to determine the validity of his claim. The doctor was unable to confirm Wagner's complaint.
Southwest also presented testimony from the captain of the flight that the trip was uneventful and that all aircraft systems appeared normal. In closing arguments, concluding a two-day bench trial, the plaintiff asked for $500,000 in damages for lost earning capacity, claiming he was unable to effectively practice medicine because of a hearing loss. The Cameron County District Court found no negligence on Southwest's part.

E. Warsaw Convention
1. Caman v. Continental Airlines Inc.
No. CV 02-8958-JFW (C.D. Cal. Sept. 8, 2003)

A federal judge in Los Angeles has dismissed a personal injury suit against Continental Airlines Inc. involving a passenger's claim of deep-vein thrombosis. The court ruled that the plaintiff's alleged condition did not stem from a Warsaw Convention "accident."
Guy Caman was a passenger on an international flight. He said the trip was uneventful. Caman later filed suit in the U.S. District Court for the Central District of California claiming that without any external or physical trauma, he had developed DVT. He had not asked for medical assistance from airline personnel during the flight.
Caman said Continental should have warned him about the risks of developing DVT and that the airline's failure to do so constituted an "accident" for purposes of Article 17 of the Warsaw Convention international aviation. Article 17 states, "The carrier shall be liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking."
In Air France v. Saks, 470 U.S. 392, 396 (1985), the U.S. Supreme Court defined "accident" as "an unexpected or unusual event or happening that is external to the passenger."
The court held that when the injury results from the passenger's own internal reaction to the usual, normal and expected operation of the aircraft, it has not been caused by an accident and Article 17 of the Warsaw Convention cannot apply. The court, granting summary judgment to Continental, found no evidence that Caman developed DVT from an unexpected or unusual event during the flights. As a result, the opinion states, plaintiff has failed to demonstrate that an ''accident" was the cause of his injury as that term is used in the Warsaw Convention and defined by the Supreme Court in Saks.
2. Girard v. American Airlines Inc. et al.,
No. 00-CV-4559-ERK, 2003 WL 21989978
(E.D.N.Y. Aug. 21, 2003)

A federal court judge in New York, denying summary judgment to American Airlines Inc., has ruled that a plaintiff injured while exiting an airport bus has a viable claim under the Warsaw Convention on international aviation.
Clemencia Girard flew on American Airlines Flight 647 from John F. Kennedy International Airport to San Juan, Puerto Rico. She was scheduled to board American Eagle Flight 5624 to St. Lucia and needed to take a bus from the airport terminal to the plane. The bus was owned, maintained, repaired and inspected by Executive Airlines, and was operated by Carlos Fuentes, an Executive employee.
As Girard was exiting the bus she suddenly flipped forward on the stairs, landed on the ground on her right knee and then rolled to her right side. She testified at her deposition that she did not know exactly what caused her to fall, but said she felt something move under her feet just before she flipped over. Girard's daughter, Ursula St. Prix, stated that she was following behind her mother as she descended the stairs and clearly observed a defective step.
Girard filed suit in the U.S. District Court for the Eastern District of New York against American Airlines, American Eagle, AMR Corp. and Executive. The defendants moved to dismiss. The court noted that resolution of the motion turned exclusively on the applicability of the Warsaw Convention.
The court said the defendants had neither actual nor constructive notice of any defect in the condition of the terminal bus, and that the plaintiff failed to submit evidence that defendants knew of the alleged defect or should have discovered the defect through reasonable inspection. Accordingly, under ordinary negligence principles, the defendants would prevail.
However, the court observed, the Warsaw Convention contemplates a form of strict liability for injuries sustained during international air travel and makes no provision for actual or constructive notice as a prerequisite for liability. Thus, if this action falls under the ambit of the convention, lack of notice does not absolve defendants.
Article 17 of the Warsaw Convention provides for strict liability of an air carrier for personal injuries sustained by a passenger in international travel if the injury occurs "on board the aircraft or in the course of any of the operations of embarking or disembarking."
Since Girard had completed preliminary ticketing procedures, was in a part of the terminal restricted to travelers (the bus conveying passengers from their arrival terminal to connecting flights) and was acting under the direction of airline personnel when she boarded and exited the bus, her injury occurred in the course of "embarkment" as that term has been defined with respect to the Warsaw Convention, the court held.
The more difficult question was whether Girard's fall and injury qualified as an "accident" under the Warsaw Convention. In Air France v. Saks, 470 U.S. 392 (1985), the U.S. Supreme Court concluded that Article 17 liability arises only if a passenger's injury is caused by "an unexpected or unusual event or happening that is external to the passenger." This definition of "accident" should be flexibly applied, the Supreme Court held.
Following Saks, the Second Circuit has applied the definition of "accident" broadly, the court noted. However, Saks did not make clear whether an event's relationship to the operation of an aircraft is relevant to whether the event is an accident.
The Court then held, "To constrain the definition of 'accident' in the manner advocated by proponents of a 'risk inherent to air travel' requirement would eviscerate the careful balance achieved by the original convention."
An airline has the duty to furnish its passengers with a safe passage from the terminal to the aircraft and is not relieved of liability for any injuries to its passengers incurred along this passage merely because the carrier does not operate the terminal, the court ruled.
In any event, the opinion states, American and American Eagle undeniably assumed constructive control over the vehicle by using it to transport passengers to their respective aircraft. To this extent, Ms. Girard's injuries may be causally traced to the operations of all the defendant airlines. Causation is also satisfied with respect to AMR Corp., which Girard asserted to be the actual owner or operator of the bus.
Finally, the court ruled, Girard's injury was not a result of her own internal reaction to the usual, normal and expected operation of the aircraft. It is not usual or expected that the stairs of a terminal bus would abruptly give way, nor would an injury incurred by such a defect be within the normal operation of an aircraft or airline. Thus, plaintiff's injury can be attributed to an event both external and unexpected, placing it within the purview of the Warsaw Convention, according to the Court.

II. PRODUCT LIABILITY

A. General Aviation Revitalization Act (GARA)
1. Hiser v. Bell Helicopter Textron Inc.,
No. G029637, 2003 WL 21995286
(Cal. Ct. App., 4th Dist., Div. 3 Aug. 22, 2003)
Affirming a jury verdict for the plaintiff in a crash case, a California state appellate court has ruled that the applicable statute of repose started to run on the date an allegedly defective component part was replaced. The court also said the evidence supported the conclusions of the jury.
Sharon Hiser, the widow of the pilot, was awarded $8.67 million. The Bell 206L-1 Long Ranger helicopter flown by Floyd Hiser crashed during a fire-suppression mission in 1997. Shortly before the accident, Hiser reported by radio that he had suffered a flameout. Sharon Hiser argued that the flameout was caused by a defective fuel transfer system disrupting fuel flow to the engine. Bell countered that the helicopter simply ran out of fuel.
On appeal, Bell argued that the General Aviation Revitalization Act bars actions involving aircraft or components older than 18 years. Bell said Hiser focused her lawsuit on aspects of the overall fuel system, which were not new, and which were part of the original design shielded from liability by GARA.
Bell first delivered the helicopter to Rogers Helicopters June 29, 1979, 18 years and 7 days before the crash. Before 1981, Bell had received reports of engine flameouts occurring both in flight and on the ground with up to 150 pounds of fuel indicated on the fuel gauge.
In 1982, Bell introduced new fuel flow switches with a larger internal capacity and more resistance to contamination. The fuel system changes were completed by Rogers Helicopters. Bell issued a "service alert bulletin" in June 1988, advising operators that, from Bell's perspective, the 1982 retrofit of the fuel system was no longer optional but mandatory. Also, at the defendant's request, the Federal Aviation Administration issued an Airworthiness directive mandating these changes to the fuel system, effective in 1989.
Before the California Court of Appeal, Fourth District, Bell argued that the trial court's interpretation of GARA permitted Sharon Hiser to criticize the fuel transfer system generally, and to focus her proof on elements that were aspects of the original design and not modified by the 1982 retrofit.
We agree with defendant's interpretation, the appellate court stated, but we disagree our interpretation compels reversal of the judgment. Under GARA, the appellate court observed, a new 18-year limitation period begins upon completion of a "replacement," i.e., the substitution of one item for another. "Replacement," requires two acts, the court said, removal of the old and substitution of the new.
The court observed that it was plain from the language of GARA that the statute of repose applies only with respect to a new item that replaces an original item, or which is added to the aircraft, provided the new item is also a cause of the damage.
Because the item causing the damage must be a replacement item, the court concluded there is no room to argue that replacement of a few parts of a larger system starts the rolling limitation period anew for all parts in the larger system.
2. Butler et al. v. Bell Helicopter Textron, Inc. et al,
No. S117739, review denied (Cal. Sept. 10, 2003)

The California Supreme Court will not review an appellate court reversal of summary judgment for Bell Helicopter Textron Inc. in a crash case. The appellate court ruled that the 18-year federal statute of repose does not apply when a manufacturer withholds required material information from the Federal Aviation Administration.
Three paramedics were killed March 23, 1998, when the Bell 2-5-A-1 crashed in Griffith Park, Los Angeles. The helicopter was airlifting an injured child when the tail rotor yoke failed. The families of the crash victims filed suit in Los Angeles County Superior Court. The action was dismissed under the General Aviation Revitalization Act of 1994, which bars legal action against manufacturers of general aviation aircraft if the part that allegedly caused the accident is more than 18 years old.
The California Court of Appeal, Second District, ruled that the law does not apply to Bell in this case. The court noted that Bell, within the 18-year period, withheld information from the FAA about five prior military aircraft accidents the company knew were caused by the failure of identical tail rotor yokes.
The appellate court held that the facts proffered by the plaintiffs support the applicability of the fraud exception to the statute of repose, and therefore reversed the judgment of the trial court. Specifically, the Court held that under Part 21.3(a) of the FAA's regulations, Bell had an affirmative duty to report the failures that occurred in identical tail rotor yokes installed on military aircraft, referred to by the parties as 'dual use' parts.
The withholding of that information brings these lawsuits within the statutory exception applicable when a manufacturer has "knowingly misrepresented to the FAA, or concealed or withheld from the FAA, required information material to the maintenance or operation of the aircraft or part that is causally related to the harm," the court noted.
The court also said that interpreting Part 21.3 in accordance with its plain meaning in no way expands the scope of the FAA's jurisdiction. The Court discerned no reason in law or public policy to exclude from this reporting requirement a failure in a critical part used on a manufacturer's type-certificated aircraft simply because the failure occurred on a military aircraft.
The appellate court rejected Bell's contention that summary judgment was proper based on the absence of a causal relationship between its failure to report the military accidents and the Griffith Park accident.
Bell argued that the appellate court decision improperly expanded the duty of manufacturers to include information on the maintenance and operation of military aircraft in their FAA reports on civil aircraft. The ruling, according to Bell, conflicted with the language of the regulation and with the probative evidence in the trial court as to how the FAA would interpret the rule.
The plaintiffs countered that in terms of decisional law, the opinion establishes uniformity by ruling, for the first time, that FAR 21.3 applies to "type certificate" holders whose dual-use parts fail in military use, under conditions equally applicable to civilian use.
3. Carson et al. v. Heli-Tech Inc. et al.
No. 2:01-cv-643-FtM-29SPC
(M.D. Fla., Fort Myers Div. Sept. 25, 2003)

A federal court judge in Florida has ruled that the 18-year statute of repose in the General Aviation Revitalization Act does not apply when a new part installed within that period is alleged to be the cause of a crash. The court also found that the government-contractor defense does not apply in the case, denying the dismissal motion of McDonnell Douglas Helicopter Co.
Lonnie Carson was seriously injured when the Hughes OH-6A helicopter he was piloting crashed into the roof of a building December 20, 1999. The aircraft was manufactured in 1969 by MDHC's predecessor, Hughes Aircraft Co. After years of military service, it was bought in 1996 by a Florida sheriff's department and maintained by Heli-Tech, Inc., which settled with Carson.
The crash was caused by the in-flight separation of the lateral control rod from its rod end fitting. MDHC moved to dismiss the case from the U.S. District Court for the Middle District of Florida, based on the GARA statute of repose. The court noted that in 1996 Heli-Tech installed a new aluminum reinforcement sleeve around the lateral control rod and rod end bearing. When this modification was made, the resulting lateral control rod assembly was given a different part number. The court said the "new" part added to the helicopter was the sleeve, not the lateral control rod and rod end bearing. The court then noted the testimony of the plaintiff's expert, who said the aluminum-reinforcing sleeve was responsible for the crash.
The evidence is sufficient on the matter of causation to create a jury issue, the court held, denying the defendant's summary judgment motion based on GARA.
A government contractor is shielded from liability for injuries caused by design defects where the United States approved reasonably precise specifications, the equipment conformed to those specifications, and the supplier warned the United States about the dangers in the use of the equipment known to the supplier but not to the government.
The court stated the only design at issue was the 1989 decision to add aluminum reinforcing sleeves added in 1996. Carson was correct in arguing that MDHC offered no proof of governmental review or approval of the materials composition of the lateral control rod assemblies, the court held, concluding that MDHC did not establish that the government contractor defense applies in this case.

III. INSURANCE

A. Airport Liability
Associated Aviation Underwriters Inc. et al v. Aon Corp. et al.,
Nos. 1-01-4518, 1-02-2797 and 1-02-2831, 2003 WL 21782185
(Ill. App. Ct., 1st Dist., 4th Div. July 31, 2003)

An Illinois appellate court has ruled that a settlement involving two aviation defendants and their insurers was not reached in good faith. The municipalities that own the airport where the crash at issue occurred had argued that the agreement deprived them of seeking meaningful contribution from the more culpable defendant.
The 1996 crash of a Gulfstream G-IV corporate jet at Palwaukee Municipal Airport in Illinois killed four people. The aircraft was owned and operated by Alberto-Culver USA, Inc., the personal-care-products company based in Chicago.
One pilot was provided by Aon Risk Services Co. and one by Alberto. The Aon pilot, Martin Koppie, was in the left seat at takeoff and the Alberto pilot, Robert Whitener, was in the right seat. Shortly after the takeoff roll began, the plane veered left and departed the runway. Tire marks indicated that no braking action was applied. The jet traversed a shallow ditch and became airborne after hitting a small berm. The left wing fuel tank exploded and the aircraft caught fire. The main wreckage was located more than a mile from the start of the takeoff roll, lying in a creek adjacent to the airport.
Koppie and Whitener were killed along with Arthur Quern, CEO of Aon and chairman of the Illinois Board of Higher Education, and flight attendant Catherine Mio-Anderson. The families of Koppie and Whitener filed suit. In two separate trials, the Koppie family was awarded $10.45 million and the Whitener family $18.9 million. The companies had reached earlier settlements with the families of Quern, for $11 million, and the husband of Mio-Anderson, for $5.25 million.
The appeals before the Illinois Appellate Court, First District, involved the propriety of a good-faith settlement finding in a subrogation setting. In the first appeal, the airport owners/municipalities, the Palwaukee Municipal Airport Commission, the village of Wheeling and the city of Prospect Heights challenged a November 2001, Circuit Court order making the good-faith finding in a $6 million settlement between Aon Aviation Inc., Aon Corp. and their insurers, United States Aviation Underwriters and the United States Aircraft Insurance Group, and Alberto-Culver, Alberto's primary insurer, Associated Aviation Underwriters Inc., USAU and USAIG (the Alberto insurers).
This was termed the "good-faith appeal" by the court.
The municipalities said:
· The Circuit Court ignored the only evidence presented at the evidentiary hearing;

· The municipality had met the governing "preponderance-of-the-evidence" standard; and

· The settlement violated the Joint Tortfeasor Contribution Act and did not satisfy the four prerequisites necessary to establish good faith.

The municipalities said the settlement did not represent a reasonable
share of the Aon defendants' tort liability, because the Aon defendants were found 90 percent liable and Alberto was found 10 percent liable for the accident. This finding was made in one of the wrongful-death actions not involved in the appeal. The municipalities also claimed the settling parties concealed all information regarding the terms of the agreement.
In the second appeal, the municipalities contested the denial of their motion for relief of judgment under Code of Civil Procedure, Section 2-1401, which disputed the good-faith finding, contending that their motion presented new information. They cited a January 2001, letter in which Associated Aviation Underwriters admitted the true value of the hull coverage claim was $12 million instead of $28 million.
The municipalities argued that the Aon defendants could not obtain a good-faith finding on the settlement because Alberto was the principal insured on AAU's policy, and AAU became the Aon defendants' primary insurer by virtue of an August 2002 Circuit Court ruling. Allowing the good-faith finding to stand, they maintained, would have a devastating effect on public policy on insurance coverage matters.
The third appeal involved the municipalities' contention that the Circuit Court erred by denying their motion to stay the outstanding subrogation proceedings until the determination of the good-faith appeal because the court's August 2002, finding that AAU was the Aon defendants' primary insurer established that the Alberto insurers, having settled with Alberto, stand in Alberto's shoes and should not be allowed to apportion competing interests of both Alberto and Aon to the detriment of third parties.
As a result, the municipalities said, they could not secure a fair contribution allocation via a third-party complaint against the Aon defendants, which had insulated themselves from paying their fair share of liability by the alleged good-faith settlement.
As a result of the good-faith finding, the appellate court held, the municipalities, who had no notice of AAU's declaratory judgment action against Aon defendants, are liable potentially for the entire $28 million representing the cost of the aircraft because Aon defendants were released from liability for the loss of the aircraft.
The Court stated that AAU's failure to give notice of the declaratory judgment action or the settlement to the municipalities and its fortuitous concealment of the existence of its subrogation claim against the municipalities from Aon defendants has allowed it to fashion separate litigation strategies on an identical claim in two separate courtrooms without the fear of adverse admissions affecting the other case. The settlement has allowed AAU to manipulate the settlement process by minimizing its exposure as a prospective indemnitor of Aon defendants, the court held.
These circumstances illustrated a "concert of action" by the settling parties that deprived the municipalities of their rights under the Contribution Act, the court ruled, by causing them to pay a potentially higher amount than their pro rata share, while minimizing the Alberto insurers' exposure for indemnification of the aircraft's value.
In addition, the appellate court observed, the Aon defendants' settlement payment was grossly disproportionate to their relative liability, in conflict with the policy of the Contribution Act. Accordingly, the court concluded, the Circuit Court abused its discretion by granting Aon defendants' motion for good-faith finding and dismissal. The appellate court's findings also applied to the second and third appeals, the opinion notes, effectively granting the municipalities the relief requested in both their Section 2-1401 motion and the motion to stay.

B. Insurance Coverage
Godbout v. Lloyd's Insurance Syndicates,
No. 2003-077, 2003 WL 22250514 (N.H. Oct. 2, 2003)

The New Hampshire Supreme Court has ruled that a policy exclusion barred coverage in a crash case in which the pilot of a kit helicopter was flying higher than his operations certificate allowed. The Supreme Court reversed a lower court ruling and found for the insurer, Lloyd's Insurance Syndicates. The state Supreme court said the exclusion applied even though the pilot had never received a copy of the full insurance policy text.
Roger Godbout assembled a Rotorway kit helicopter and was eventually certified for "translational flight" at a maximum of 35 feet altitude. He paid $5,250 for the personal accident flying insurance from Lloyd's. The defendant's agent issued a confirmation that detailed the type of coverage, helicopter, coverage limits and deductibles. Godbout did not receive the policy itself.
Godbout crashed in the mountains October 30, 1999, and was killed. He had been flying higher than 35 feet when the crash occurred. Lloyd's denied liability coverage based on an exclusion for "loss or damage occurring when the pilot flying the helicopter is flying outside the parameters of … the certificate issued to the pilot by Rotorway."
The trial court found that although the policy language was clear and unambiguous, the denial of coverage was improper since a reasonable person in Godbout's position would not have been on notice that the exclusion was part of his coverage that had been confirmed. The court concluded that because Godbout did not have notice of the exclusion, there was no "meeting of the minds" between him and Lloyd's; therefore, the provision was not a valid part of the insurance contract.
On appeal, the New Hampshire Supreme Court agreed with Lloyd's that it had no duty to accept the risk of Godbout's decision to fly beyond the parameters of his certificate. The exclusion was applicable because the policy language was clear and unambiguous, and the insured's subjective expectation of coverage was irrelevant to the policy interpretation.
There was no evidence, the New Hampshire Supreme Court said, that Godbout requested, or the insurance agent promised, unlimited insurance coverage that exceeded the scope of his flying certificate.
The activity for which the estate seeks coverage, flying a helicopter outside the scope of a flying certificate is neither obvious to an insurance agent nor, based upon the evidence that the decedent was flying 100 feet above the ground, within the reasonable parameters of safe flying, the opinion states.
The Supreme Court also ruled that delivery of a copy of the full policy text is not a condition precedent to a valid insurance contract. All that is required is that the insurer, in some manner, inform the insured that the policy contains restrictive language, the justices held.