## Facts

- Executive Jet Aviation, Inc.’s aircraft crashed during takeoff from Cleveland, Ohio, after both engines ingested seagulls roosting on the runway.
- Executive Jet carried hull insurance with policy limits of $1,300,000 issued by British insurers.
- The insurers paid Executive Jet $1,300,000 under a “loan receipt” agreement requiring repayment only from any net recovery against responsible third parties and providing that Executive Jet would sue in its own name while insurers controlled and funded the litigation.
- Executive Jet submitted a timely written administrative claim to the Federal Aviation Administration seeking $1,763,643.64 for alleged negligence; the claim did not mention the insurers or the loan receipt arrangement.
- Executive Jet then sued the United States under the Federal Tort Claims Act (FTCA), alleging negligent failure by FAA personnel to warn of seagulls on the runway.
- The United States asserted, among other defenses, that Executive Jet was not the real party in interest under Federal Rule of Civil Procedure 17(a) because insurers had paid the hull loss and were subrogated.
- The district court dismissed for lack of jurisdiction, reasoning that the insurers were the real parties in interest and had not filed a timely FTCA administrative claim.

## Issues

1. Whether, after payment under a loan receipt agreement, the insured may prosecute the action in its own name as the real party in interest under Federal Rule of Civil Procedure 17(a).
2. Whether the FTCA administrative claim requirement is satisfied when the insured timely presents a claim covering the entire loss, even though subrogated insurers did not separately file an administrative claim.
3. Whether characterizing the insurers’ payment as a “loan” prevents recognition of subrogation for real-party-in-interest analysis.

## Decision

- The Sixth Circuit reversed the dismissal and remanded for further proceedings on the negligence claim.
- The court held that the payment arrangement did not eliminate subrogation in substance; the insurers were real parties in interest to the extent of their payment.
- The court nonetheless held that the suit could proceed in the name of the insured under Rule 17(a), with insurer joinder treated as a pragmatic case-management question rather than a jurisdictional prerequisite.
- The court held the FTCA administrative claim requirement was satisfied by Executive Jet’s timely claim encompassing the entire damage; separate insurer claims were not required.

## Legal Principles

- A loan receipt arrangement does not, by its label alone, negate subrogation; courts look to the substance of the transaction.
- Under the federal approach to Rule 17(a) in subrogation contexts, an insured may maintain an action in its own name even when an insurer has paid all or part of the loss and is subrogated.
- In FTCA cases, a timely administrative claim by the insured that presents the entire loss can satisfy 28 U.S.C. § 2675 even if subrogated insurers did not file separate administrative claims, so long as the claim gives the agency notice and avoids multiple liability exposure.

## Conclusion

The Sixth Circuit held that although the insurers’ payment created subrogation interests, Executive Jet could sue the United States in its own name under Rule 17(a), and Executive Jet’s timely FTCA administrative claim for the full loss satisfied § 2675 without separate insurer claims, requiring reversal of the jurisdictional dismissal and remand.


Executive Jet Aviation, Inc. v. United States, 507 F.2d 508 (6th Cir. 1974)