Lycoming Crankshaft Manufacturer Dodges Bullet in Failure Cases

The Supreme Court of Texas upheld a jury verdict in favor of Interstate Southwest and against Lycoming involving the manufacture of faulty crankshafts that were installed in Lycoming engines. In 2005, a Texas jury only found Interstate blameless and determined that Lycoming was liable for fraud. Lycoming appealed and the Supreme Court rejected the appeal.

The case began in 2003 when crankshafts began failing in many Lycoming engines and Lycoming launched a massive recall. Two class action cases filed on behalf of damaged aircraft owners are ongoing.  Lycoming sued Interstate to recover its losses because Interstate made the crankshafts.  The Texas jury found Lycoming had a faulty design and Interstate was not to blame for the failures.  Appellate courts had already reduced a $96 million judgment in favor of Interstate to allow Interstate to recover only attorneys fees, and eliminated a $186 million counterclaim by Lycoming.

Source: AvWeb

Eclipse VLJ Buyer Sues for Refund

AvWeb reported this week that the British buyer of an Eclipse 500 very light jet is reportedly suing the manufacturer to recover its $180,000 deposit.  According to the report, the order has been cancelled and a refund of the deposit is past due.  The buyer, London-based Ice Blue Air, signed a purchase agreement in July of 2006 to purchase a $1.5 million Eclipse 500, and Eclipse claims that the buyer is not entitled to a refund of the deposit per the purchase agreement. Eclipse has also said that refunds will be delayed until its next round of financing is in place, possibly as late as the end of the year.

The lawsuit alleges that Eclipse has raised the price of the aircraft to $2.15 million since Ice Blue placed its order, and the purchase agreement allows for cancellation and a full refund in the event that the jet's final price is raised. Ice Blue says the refund was due on Aug. 1, and filed the lawsuit on Aug. 5. Based on previous AvWeb reports, this may be the first of many such lawsuits as the manufacturer faces substantial financial problems associated with the production of its aircraft. 

Depending on the language of the purchase agreement, buyers may be entitled to a full or partial refund, which might result in what amounts to a "run on the bank."  In the event that Eclipse later declares bankruptcy, those to file their claims first may be entitled to greater rights over other creditors, leading to an an even more rapid deterioration in Eclipse's financial health as buyers seek to get in line ahead of other buyers. 

If you are an Eclipse buyer that has questions about your deposit, please give us a call, we will be glad to discuss your options.

Helicopters Rescue Stranded Grand Canyon Tourists

The Associated Press reports that helicopters have rescued over 250 people stranded in Grand Canyon after severe flooding struck the area. The Arizona Republic reports that the village of Supai, home of the Havasupai Tribe, was devastated by the flood and major repairs will be required. The Arizona Republic article says: "getting workers and supplies to the rim of the Grand Canyon will be difficult; getting them to the bottom even more so. The only way to the village, one of the only places in the country where mail is still delivered by mule, is a 9-mile hike or a 10-minute helicopter ride."

People often forget why helicopters were there to rescue people in the first place, and why they will be there to rebuild Supai village when the Havasupai Tribe needs their help. It is not like there are fleets of helicopters sitting on the ground at the Grand Canyon waiting for the opportunity to rescue flood victims and transport materials down into the Canyon. No, the helicopters are able to exist at Grand Canyon by flying tourists over the Canyon on air tours. Were it not for that fact, 250 lives would have been in jeopardy, and the Havasupai Tribe would face the complexity and expense of bringing in helicopters from elsewhere in order to rebuild their village.

This is an example of a time when the helicopter industry needs to be on the public relations offensive. Helicopter Association International (HAI) is a wonderful organization that does many great things to promote and protect the industry. But one must question why HAI has not issued a single press release concerning this event? The time to tell this story is not at the next Congressional hearing concerning proposed regulations governing helicopter operations. The time to tell the story is now when it is fresh, and most importantly, when it is newsworthy.

Helicopters save lives and rebuild communities after disasters. That is a message that the industry needs to convey over and over and over again on a real time basis. It will then be against that backdrop that "the court of public opinion" will judge the value of helicopters to society when addressing noise and safety concerns. The industry cannot afford to miss out on public relations building opportunities like the one presented at the Grand Canyon, but it appears that it did.

Taxpayers Rejoice!: Florida Taxing Authorities Dealt Serious Blows in Tax Cases

The Florida Department of Revenue and local taxing authorities suffered two significant losses within the past week. In one case, Crossings at Fleming Island Cmty. Dev. Dist. v. Echeverri, No. SC07-1556, the Supreme Court of Florida ruled that "a property appraiser does not have standing in his or her official capacity to raise the constitutionality of a statute as a defense in a tax suit filed by a taxpayer." In another case, the First District Court of Appeal ruled in Marcus and Patricia Ogborn, etc. v. Jim Zingale, Dept. of Revenue, 1st DCA Case No. 07-1831, that the trial court erred when it characterized a taxpayer's facial constitutional challenge as an as-applied constitutional challenge and consequently dismissed the taxpayer's case as untimely pursuant to Florida Statute Section 202.23.

These cases are significant to Florida taxpayers in that they establish that a taxpayer may attack a taxing statute as facially unconstitutional and, in that instance, will not be subject to the limitations of the tax refund procedure established in Fla. Stat. Sec. 202.23. Additionally, a property appraiser may not raise the constitutionality of a statute granting a tax exemption as a defense in a lawsuit brought by a taxpayer for failing to provide the taxpayer with the exemption granted by the statute.

These issues are closely related to the tax issues the parties faced in the Sun Aviation and Paris Air cases, in which the property appraiser for Indian River County sought to deny a tax exemption to two airport FBOs (Fixed Base Operators). The FBOs sued the property appraiser and he raised the defense that the tax exemption was unconstitutional. The Fourth District Court of Appeal held that the property appraiser had failed to preserve that issue and therefore did not address it. However, the Court ruled in favor of the FBOs on the basis that the FBOs were exempted from paying certain property taxes under the statute.

Taxpayers should rejoice because these cases send a clear message to taxing authorities that they cannot exceed the scope of their authority merely because tax revenues have declined with a troubled economy. Perhaps now our state and local tax officials will get back to the business of serving the citizens and businesses of Florida rather than seeking new and "innovative" ways of squeezing yet another drop of tax revenue out of them.

Medevac Operations Under Scrutiny in Wake of Flagstaff Crash

The NTSB is stepping up its investigation of medevac services in the wake of a crash last Sunday in Flagstaff, Arizona, that killed 6 people and seriously injured one. According to the The New York Times, NTSB chairman, Mark Rosenker, says he's "very concerned" that this was the tenth accident involving medical airlift aircraft this year. "We are going to try very hard to make sure we understand exactly what happened here, determine the probable cause and make recommendations to prevent it from happening again," Rosenker said.

According to the New York Times report, Rosenker said that the NTSB is worried about the safety record of medevac services and will take appropriate action to improve safety. "We are very concerned about that . . . we are going to try very hard to make sure we understand exactly what happened here, determine the probable cause and make recommendations to prevent it from happening again," Mr. Rosenker said at a news conference.

Anyone familiar with the fallout from increased accident rates experienced by parachute jumping operations, air charter companies, air ambulance companies, commercial airlines, and air tour operators, knows that it is only a matter of time before the FAA steps in to propose new rules based on the NTSB recommendations. If experience is any indication, it is likely that we will see an NPRM on medevac operations within the next 12 months. Now would be a good time for the medevac industry to step forward and propose its own rules if it is to stem the tide of new regulations. Unfortunately, it may be too little too late.

Florida Aviation Trades Association Selects The Anderson Law Firm as General Counsel

The Anderson Law Firm announced today that it has been selected by the Florida Aviation Trades Association (FATA) to act as FATA General Counsel. The FATA is an aviation trade group that has been actively promoting and protecting the rights, interests and development of Florida’s aviation industry since 1946. Attorney Daniel Anderson said that the firm is honored to be selected by such a prestigious aviation organization that is known throughout the state of Florida for its consistent and effective advocacy on general aviation issues.

"We're delighted to be able to support the important work of the FATA and its members and look forward to being involved in future FATA activities," Anderson said. Anderson noted that he had been working with the FATA during his tenure as a partner at his former law firm, Forizs & Dogali, P.L.. Anderson said the previous representation involved two legal cases potentially affecting FATA members in which he filed briefs on behalf of the FATA as amicus curiae, or "friend of the Court." According to Anderson, the two cases, Nolte v. Paris Air and Nolte v. Sun Aviation, were resolved in favor of FATA's members and against the property appraiser for Indian River County, Florida.

"The assistance we provided to FATA in the Sun Aviation and Paris Air cases is a great example of the cost-effective legal services we provide to non-profit trade groups that do not have the multi-million dollar budgets of the national associations," Anderson said. Anderson is a former Washington lobbyist and executive director of a national aviation trade group representing helicopter and airplane tour operators at Grand Canyon, Alaska, Hawaii, and New York.

"I hope to provide nonprofit trade groups and their members with the kind of legal support that we desperately needed when I was in Washington," Anderson said. "We did our best to serve our members, but we simply could not afford the rates charged by law firms inside the beltway," Anderson added. Anderson said that he plans to represent nonprofits through AmicusAppeal, a subdivision of his firm created for the sole purpose of providing representation at the appellate level on issues important to trade groups and their members.

"My guess is that there are other executive directors who are, like I was, faced with the difficult challenge of serving the needs of their members while working within a limited budget," Anderson said. "I know how that feels, and I hope to be able to help them meet those demands," Anderson added.

Burbank Airport Curfew Meets Resistance

According to Aviation Week, the FAA and Los Angeles Mayor Antonio Villaraigosa have voiced opposition to a proposed curfew at Burbank Airport in California.  The curfew was proposed as a result of a Part 161 study conducted by the Burbank-Glendale-Pasadena Airport Authority.  Interestingly, Airports Council International-North America and the Burbank Chamber of Commerce submitted comments in support of the curfew.  However, the FAA has concerns that the curfew will divert air traffic from Burbank to nearby airports and adversely impact the local and national ATC system.  LA's Mayor said that the problems at Burbank should be addressed regionally, citing Part 161 studies currently underway at Van Nuys (VNY) and and LAX.

Lawsuit Filed to Stop General Aviation Activities at March AFB

A Riverside County, California newspaper reports that an area environmental group has launched a lawsuit to stop general aviation activities at March Air Reserve Base's military-civilian airport.  According to the report, the Community Alliance for Riverside's Economy and Environment (CAREE) has previously sought to curtail aviation activities at March AFB.  In 2003, CAREE  halted construction of the 1,290-acre March Business Center for five months before a settlement was reached, which brought about a number of environmentally improved practices.  In 2004, CAREE tried unsuccessfully to block the DHL distribution center at March, saying the airport developer had misled the public about the airport flight path and noise. An independent investigation ordered by the March commission later determined the group was correct.