Date Insured Had Possession and Title to Aircraft, Not Conditional Sales Agreement, Determined When Insured ‘Acquired Ownership’ Triggering Deadline to Report Aircraft to Insurer

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In National Union Fire Insurance Company of Pittsburgh, PA v. Eagle Aviation Academy, LLC, No. 1:10-CV-108 WKW, 2010 WL 4867644 (M.D. Ala. Nov. 23, 2010), the U.S. District Court for the Middle District of Alabama determined that the insured, Eagle Aviation, was not entitled to coverage for physical damage to its Bell UH-1 Huey helicopter because it had failed to report the aircraft within 30 days after it “acquired ownership” under a conditional sales agreement. Holding that the insured acquired ownership when it had taken possession of the aircraft and executed a bill of sale, the court rejected the insured’s argument that it did not acquire ownership until months later when it had agreed with the seller that all conditions of the sale had been met.

Eagle Aviation had entered into a conditional sales agreement in April 2009 to exchange its Hughes OH-6 helicopter for the seller’s Huey and took possession of the Huey that month. In August 2010 the parties executed an FAA aircraft bill of sale and Eagle Aviation applied for registration of the Huey. Nevertheless, it was not until December 2009 that the parties agreed that the conditions of the sale had been met and that they would transfer title after Christmas. According to Eagle Aviation, the bill of sale executed in August was only for the purpose of obtaining an airworthiness certificate. On December 23, 2009 the Huey’s engine failed during a hover check, resulting in a hard landing and physical damage. On the same day, Eagle notified National Union of the damages and that it had acquired the Huey.

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