It's a long story
I appreciate the time responders have taken to provide backround and advice-- this is an excellent forum. Looks as though I am the one being enlightened as to the lack of any written observer standard I hoped existed. Here are the events that unfolded which ultimately brought me to this forum for help:
1)The airplane is a Grumman Tiger(AA5B) with about 1000hrs SMOH.
2)The repair shop has seemed reputable as it has performed annuals on this aircraft for about 6 years. They provide a lot of flight instruction, run a fuel truck, are insured by Phoenix ($2,500 deductible), and have several mechanics beside their lead A&P Bill.
3)In December Bill called to say they finished the inspection the previous day, towed the plane out onto the ramp, and did the run-up the next morning-- Bill was not forthcoming with details of the run-up stating he had not yet arrived at the shop that morning. When pressed he did report there to be only 1 1/2 quarts of oil left in the engine after shut down subsequent to oil cooler failure. I still do not know who was in the cockpit or their qualifications. He insisted there needed to be an engine teardown inspection to check for internal damage. He also suggested I file a claim with my insurance.
4)My insurance company,ACE, denied the claim, but during the claim process they sent an investigator. After the denial they refused to release the investigators report to me. During the process they agreed by phone to at least pay for the inspection. I had Bill send the engine to Penn Yan. The estimate for repairs and inspection was $13,618. Later ACE informed me their agent made a mistake and they would not cover the cost of the teardown inspection, about $4,500.
5)I called AOPA legal services for guidance. They indicated since the plane was in the shop's "care, control, and custody", and since there appears to be negligence in the cockpit, that I was getting a raw deal. But they only handle pilot certificate issues so could offer no formal legal assistance.
6)When I informed Bill of ACE's denial, I suggested he contact his insurance company. At some point he said for an additional $5000 that Penn Yan could zero out the engine. I told him I was undecided which route to take since I first wanted to determine how the expenses were going to be paid.
7)I hired an independent A&P to check the oil cooler. He could not determine the size of the oil leak from looking at the failed oil cooler. The oil cooler was sent to SouthWest cooler service who reported the cooler leak was not repairable. This A&P gave me the name of an attorney with aviation litigation experience.
8)Bill told me Phoenix was willing to pay half the engine repair bill. I consulted the aforementioned attorney who felt the shop ought to be fully liable since, during a carefully executed run-up, the person in the cockpit should have been regularly monitoring the most critical engine indicator, oil pressure, recognized a problem, and shut down well before any engine damage was sustained. He sent a letter on my behalf to Phoenix charging due care was not exercised and claimed only the amount $13,618, with no claims of diminution of value or loss of use.
9)A private consultant hired by Pheonix replied as follows:
"You have alleged that the repair shop failed to monitor oil pressure during a run-up of your client's aircraft. Oil pressure was indeed monitored during startup and was confirmed to be adequate. Through no negligence of our insured, there was a major malfunction to the oil cooler which resulted in the fairly quick loss of engine oil. The engine ended up with one quart of oil remaining, however, it can still be operated with as little as 1 1/2 quarts of oil remaining. The window of opportunity to react during the loss of the last 1/2 quart of oil would be very slim. Also, while the mechanic was operating the aircraft, he was performing numerous required checks and, of course, would not have his eyes permanently riveted on the oil pressure gauge."
10)You may have noticed the discrepancy between the 1 1/2 quarts Bill reported were left in the engine compared to the 1 quart claimed in the above response. I told my attorney I wanted to do some more research before pursuing the matter any further with Phoenix consultants.
11)I called Penn Yan to try to get specific numbers on the repair versus rebuild options. Unexpectedly I discovered the engine had already been repaired and was ready to ship as soon as paid for!
12)So now that my hopes of an outside observer standard have been dashed, I was wondering if the oil pressure gauge would have indicated a problem sooner than "the loss of the last 1/2 quart", as explained by Phoenix consultants.
13)As my resources are limited, to this point I have been careful to keep my legal expenses minimal. I have not contacted the BBB because I hoped the facts would compell Phoenix to "insure" their clients mistake and pay the bill, and that the repair shop has engaged in carefully conducted run--ups since this incident. So before deciding how aggressively to pursue this issue, I am seeking comments, expertise, and advice from this forum. Thanks again.