What liability concerns would drive an airplane homebuilder to scrap their plane?

Question

Via this post by Ron Rapp, I found this video of a plane owner and builder dismantling a GA plane and then scrapping the airframe. The video claims this is because

after consulting with aviation attorneys and other experts regarding builder's liability, the owner concluded there was only one way out.

However, I'm completely in the dark about - and rather baffled by - what this liability risk would be, and how it relates to the Van's Aircraft lawsuit. What liability would a builder pilot be under in the event of a crash that they would be able to avoid if the plane were factory-produced?

Answer 1

I understand that the aircraft owner had sought for some time to donate the aircraft. I would presume that he had come to a time in life where he was, or felt he was, no longer able to fly the aircraft, and so was seeking to rid himself of what may have become a burden (hangar fees, etc.).

To quote liberally from the builder/destroyer's daughter who created and uploaded the YouTube video (this is quoted from what she wrote in the video description):

It took him two years to make this decision about his plane. He did actually try to donate it to a couple of aviation schools in the area and the schools politely refused the offer. He also tried to donate to a local museum and was also refused.

He knew when he built the plane he might face this decision one day, but he hoped some of the laws would have changed by that time.

[...]

Mr. Ron Rapp, author of the article “A Tragic Pile of Twisted Metal” and noted blogger on his website The House of Rapp., highlights many reasons my Dad made this decision among others.

A couple months before my dad made his final decision, a local fellow pilot was named in a lawsuit because he sold the plane he built to a man that later crashed and killed himself in the plane. The spouse of the buyer filed the suit and also named other companies who made parts used to build the plane.

Many have commented that he should have used a limited liability entity, such as a LLC or a corporation to sell the plane. However, because the plane was not, at the time of manufacturing, owned in a properly capitalized limited liability entity with a legitimate business purpose and was, in fact, used purely for personal reason, courts would in almost all cases “pierce the corporate veil.” Therefore, this does not offer adequate (or any) protection.

I don't think I can add a whole lot to that. Apparently, he had decided that he was unwilling to take on the liability of letting someone else fly what he had built. In the absence of a party interested in the aircraft for anything other than flight, he chose to destroy it.

Answer 2

The USA has a culture of lawsuits, often frivolous. When airplanes crash, people die and the estates of those people want someone to blame. In the past they've tried to blame aircraft manufacturers and the resulting lawsuits were detrimental to general aviation. It got to the point that congress had to step in and shield the industry from lawsuits (see: General Aviation Revitalization Act of 1994).

However, these protections don't apply to individuals. Van's aircraft may get sued and if a judgement comes down the company will probably fold and cease to exist. If you as an individual get slapped with a wrongful death lawsuit and a judgement is found against you, it will ruin you financially. If you are getting to be old and retired, you may never recover from it.

The liability the builder shoulders is the accountability if anything ever goes wrong with the airplane, in perpetuity. If that plane crashes some day and especially if it is fatal, someone is going see it is a homebuilt experimental and sue the guy who put it together, alleging they did something wrong. It'll be expensive to lose and nearly as expensive to win (lawyers are not cheap).

Answer 3

My father has built a small plane and talks about this problem (incidentally it is an RV through Van's too).

This is a very common understanding amongst the community involved in building RV's. When you sell a plane, you are incurring significant liability.

A point not really mentioned in the other answers is that it takes a certain type of person to build a plane. Many of those people are... let's say less than interested in someone else taking their money, especially through a lawsuit resulting from pilot error, which is probably immensely more likely than build defects.

Many homebuilders also are pretty financially well off, so they have a big target on their back in a litigious society.

Anecdotally I know of at least one RV that has an interesting post-flying life. It currently is hanging over an office space for a startup company as a very interesting and expensive decoration. The reason it is there, and not sold, is the same reason as the above.