Out of your control
Federal liability protection for aircraft owners
Owners may be very interested to know, then, that a federal law exists to preempt these state laws and protect owners, lessors, and financers, as long as certain conditions are met. Yet owners must remain cautious, as some courts may still disagree about the law’s intent and the protection it provides.
49 U.S. Code Section 44112 Limitation of Liability states, in part, that a “lessor, owner, or secured party is liable for personal injury, death, or property loss or damage only when a civil aircraft, aircraft engine, or propeller is in the actual possession or operational control of the lessor, owner, or secured party.” Most cases about this law involve arguments about what Congress intended the law to do, inevitably turning into painstakingly detailed discussions of the legislative history of the 1948 federal law that would eventually become present-day Section 44112.
The predecessor of Section 44112 was enacted in 1948 in response to some states adopting the Uniform Aeronautics Act, which declared that the owner of every aircraft was “absolutely liable” for injuries caused by the aircraft’s flight regardless of the owner’s degree of control of the aircraft. Concerned this would stifle the aviation industry, Congress passed the 1948 statute to limit this liability. Recodifications and modifications were made in 1958 and 1994, which among other changes, added definitions for “lessor” (leasing at least 30 days), “owner,” and “secured party.”
Many state and federal courts that have considered the law ultimately concluded that it preempts conflicting state statutes and common law claims, but such cases often involve a fact-specific analysis to determine that the owner, lessor, or secured party did not have actual possession or operational control of the aircraft at the time of the accident. Although not defined by statute, “operational control” is defined by FAR 1.1 as “the exercise of authority over initiating, conducting or terminating a flight.” (See “For the Record: Who’s In Control Here?” March 2020 AOPA Pilot.)
Unfortunately, some courts have adopted nuanced interpretations of Section 44112 that limit its preemptive effect, with some notable examples leading Congress to amend the statute once more to preserve its original objective. One such case involved a prior, but substantially similar, version of the law that provided an aircraft owner or lessor was liable “for personal injury, death, or property loss or damage on land or water.”
In that 2011 case, the Florida Supreme Court limited the preemptive effect of the law depending on whether the injured party was on the ground or a passenger on the aircraft. The case involved the crash of a leased airplane that killed the pilot and the only passenger. The estate of the passenger sought to hold the aircraft’s owner liable by relying on Florida’s “dangerous instrumentality” doctrine, which imposed strict liability on the owner of a motor vehicle (including aircraft) who gave express or implied consent to the operation. The court, focusing on the “death…on land or water” language in statute at the time, concluded that Section 44112’s “limitation on liability would apply only to individuals and property that are underneath the aircraft during its flight, ascent, or descent,” and the claim against the owner was not preempted because the passenger died inside the aircraft that crashed, rather than while standing on the ground. A dissenting judge stated the interpretation “defies reality” as the passenger was in the aircraft and died when it hit the ground.
In 2018, Congress passed an FAA reauthorization that eliminated “on land or water” from Section 44112—but there remains the possibility that future courts may adopt other unexpected interpretations that may again limit the law’s preemptive effect. Such decisions would likely have significant implications relating to insurance and ownership entity choice for aircraft owners.
Aircraft owners should remember that while Section 44112 may limit liability, it probably won’t prevent a lawsuit from being filed. When an owner raises Section 44112 as a defense, it will likely result in the court closely scrutinizing the facts as to who had actual possession or operational control at the time of the accident.
For now, owners who lease their aircraft should include lease terms transferring operational control to the lessee (and make certain that lessees truly exercise operational control), ensure their insurance policy has appropriate liability coverage, and remain vigilant when negotiating indemnity clauses and insurance provisions with a prospective lessee of an aircraft.
