Executive Jet Aviation, Inc. v. United States

507 F.2d 508 (6th Cir. 1974)

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Nature of the Case

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Facts

On July 28, 1968, P's aircraft crashed on takeoff after its engines had ingested a large number of seagulls that had been roosting on the runway. The plane was covered by a $1,300,000 policy of aircraft hull insurance issued by a group of British insurance companies. P received $1,300,000 from the insurers pursuant to a typical loan receipt agreement, under which P was obligated to make repayment only out of any net recovery it might obtain from those liable for the crash. The agreement required that P stand ready to institute a suit in its own name for the purpose of effecting such a recovery. The insurers were to bear the expense and to assume direction and control of any such litigation. P submitted to the Federal Aviation Administration (FAA) a written claim in the amount of $1,763,643.64 making no reference to the insurers. On May 12, 1969, P filed a complaint against D alleging negligence on the part of the FAA air traffic controllers in not warning of the presence of seagulls on the runway and praying for $1,763,643.64 in damages. In part, D raised the defense that P was not the real party in interest. The District Court concluded that the loan receipt arrangement was a mere fiction that would not avoid subrogation. It held that the insurers, rather than P were the real parties in interest. Because the insurers had not filed an administrative claim within two years of the accident as required by 28 U.S.C. § 2401(b), the insurers could not be joined as plaintiffs. The court dismissed the complaint with prejudice. P appealed.