The Maintenance Facility and the Aircraft Bailment Relationship

A maintenance facility representative recently asked me to explain what duties the facility might owe to an aircraft owner when the owner leaves his or her aircraft with the facility for service, other than the responsibility for performing repair or maintenance services on the aircraft as requested by the aircraft owner. This situation creates what many states refer to as a “bailment” and imposes certain additional duties upon the maintenance facility.

The bailment relationship is created when:

1. the aircraft owner (the “bailor”) delivers the aircraft to the maintenance facility (the “bailee”);

2. the aircraft owner/bailor does not transfer ownership of the aircraft to the maintenance facility/bailee;

3. the maintenance facility/bailee accepts the aircraft based upon an agreement with the aircraft owner/bailor that the aircraft will be returned to the aircraft owner/bailor; and

4. upon return of the aircraft to the aircraft owner/bailor, the aircraft must be in at least the same condition it was in when delivered to the maintenance facility/bailee.

Once the bailment relationship is created, the maintenance facility (as a bailee of the aircraft) has a duty to exercise reasonable care with respect to the aircraft based upon the maintenance facilities acceptance of possession of the aircraft and its subsequent exclusive custody and control over the aircraft. The maintenance facility/bailee must ensure that the aircraft is in at least the same condition as it was when it was delivered to the maintenance facility/bailee.

If the aircraft is damaged while it is in the exclusive custody and control of the maintenance facility/bailee and it is damaged (e.g., the aircraft is lost, stolen, damaged or destroyed), the maintenance facility/bailee will be responsible for the damage unless the damage occurred in spite of the maintenance facility’s/bailee’s exercise of reasonable care. The maintenance facility/bailee will have the burden of proving that it was not at fault and the damage occurred despite its use of reasonable care.

To be clear, the maintenance facility/bailee doesn’t become an insurer of the aircraft under the bailment relationship. However, the maintenance facility/bailee must use reasonable care — the type of care a reasonably prudent maintenance facility would exercise with respect to its own aircraft under similar circumstances. This,  of course, could vary depending upon the time and place or the custom and usage of maintenance facility.

Additionally, if the maintenance facility/bailee fails or refuses to deliver the aircraft to the aircraft owner upon demand, or if it uses or permits others to use the aircraft contrary to the aircraft owner’s/bailor’s instructions, then the maintenance facility/bailee could also be liable for conversion. In that situation, the maintenance facility/bailee could be responsible for the value of the aircraft at the time of the conversion plus interest from that time.

However, the duty to return the aircraft is qualified: a maintenance facility/bailee may condition return of the aircraft upon the aircraft owner proving that the owner has title or right to possession of the aircraft, so long as the maintenance facility/bailee then provides an opportunity for the aircraft owner/bailor to present proof of title or right to possession. This rule is intended to protect the maintenance facility/bailee from being placed in the difficult position of risking a suit by the rightful owner of the aircraft for converting the aircraft when the maintenance facility/bailee gives the aircraft to another person who claims to be the owner of the aircraft. If the maintenance facility/bailee does not receive such proof, the maintenance facility/bailee will likely not be liable for conversion.

Unfortunately, this can potentially leave a maintenance facility/bailee in the unenviable position of having to decide to whom it should release the aircraft and to suffer the consequences if its decision turns out to be incorrect. In situations where the maintenance facility/bailee might be presented with multiple bills of sale or documents indicating security interests held by creditors, it might be difficult to figure out which party has the right to delivery and possession of the aircraft.

Another situation that might impact the decision to deliver the aircraft could arise if the maintenance facility/bailee has not been paid for its services. Depending upon the state in which the maintenance facility/bailee is located, it might be necessary for the maintenance facility/bailee to retain possession of the aircraft if it wants to assert a mechanic’s or artisan’s lien against the aircraft to secure payment of the amount owed for the work it performed. Retaining possession of the aircraft to perfect the lien would excuse the maintenance facility/bailee from complying with the aircraft owner’s request for return of the aircraft. As long as the lien claim was valid, the maintenance facility/bailee would likely not be liable for conversion of the aircraft.

What can a maintenance facility do to protect itself from potential liability under a bailment relationship? The maintenance facility should ensure that it exercises reasonable care with respect to the aircraft in its custody. Maintaining custody and control of the aircraft and taking reasonable precautions to minimize the opportunities for damage to aircraft will go a long way to avoiding claims.

Another option is to include language in the work order or service request signed by the aircraft owner that limits the maintenance facilities liability for negligent damage to an aircraft. This could include exclusion of damages for loss of use or diminution of value and it could cap or limit the total amount of damages for which the maintenance facility could be liable. Other language could be included to require that the aircraft owner carry certain minimum insurance and that the maintenance facility be protected by the owner’s insurance.

A bailment relationship will often result when a maintenance facility accepts an aircraft owner’s aircraft for service. Maintenance facility staff should understand the duties and liability to which they might be exposed as a bailee in that relationship. With proper procedures and contractual planning, maintenance facilities can comply with their duties and limit their liability exposure in the bailment relationship.

Greg Reigel is an aviation attorney, author and pilot. He holds a commercial pilot certificate with an instrument rating and can fly single-engine land and sea, as well as multi-engine land aircraft. His practice concentrates on aviation litigation, including insurance matters and creditor’s rights, FAA certificate actions and transactional matters. He represents clients throughout the country on aviation law matters. His also an adjunct professor at Minnesota State University-Mankato where he teaches aviation law and at William Mitchell College of Law where he is an instructor in the advocacy course. He can be reached via e-mail at greigel@aerolegalservices.com.

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