Fourth Circuit resolves nuts-and-bolts questions of removal jurisdiction

By Steve Klepper (Twitter: @MDAppeal)

Practice in the Fourth Circuit means that you often rely on persuasive authority on questions where, in other Circuits, you might expect to find on-point precedent. By local rule, the Fourth Circuit only issues reported opinions in cases where it hears oral argument. It hears oral argument at one of the lowest rates in the country. And, even when it does hear argument, it might still issue unreported opinions in cases that outsiders might think worthy of publication.

I was pleasantly surprised, therefore, to see the Fourth Circuit issue the first precedential appellate opinion in the country on an issue that I frequently encounter.[*] Many states, including Maryland, require insurers to designate the state’s insurance commissioner as the insurer’s agent for service of process. In Elliott v. Am. States Ins. Co., __F.3d __, 2018 WL 943138 (4th Cir. Feb. 20, 2018), the Court held that the 30-day removal clock does not begin to run when the statutory agent is served. Rather, the clock begins to run when the insurer’s “true agent” actually receives the summons and complaint forwarded by the commissioner as statutory agent.

Before Elliott, the only guidance on this question appeared in treatises, non-binding district court opinions, and one non-precedential unreported federal appellate opinion, Gordon v. Hartford Fire Ins. Co., 105 F. App’x 476, 480 (4th Cir. 2004). But citation to pre-2007 reported opinions is disfavored under Local Rule 32.1. Elliott is now binding precedent in the Fourth Circuit, and its comprehensive treatment of the question can serve as strong persuasive authority everywhere else.

Also in Elliott, the Fourth Circuit became one of the last Circuits to address the “direct action” clause of the diversity jurisdiction statute, 28 U.S.C. § 1332(c)(1). Joining the nine other Circuits to address this question, the Fourth Circuit held that a “‘direct action’ in § 1332(c)(1) does not include an insured’s suit against his or her own insurer for breach of the terms of the insurance policy or the insurer’s own alleged tortious conduct.” The Fourth Circuit does not always see fit to report opinions on issues where all other Circuits have done so, and I’m happy to see it do so here.

Removal jurisdiction, although exciting only to a small handful of lawyers, presents the kinds of nuts-and-bolts questions where precedent can be the most helpful. Many remand orders are non-appealable, making it all the more important for appellate courts to make precedent when opportunities arises. For example, former Judge Andre Davis, before his elevation from the U.S. District Court to the Fourth Circuit, once took the unusual step of denying a motion to remand, precisely so that he could certify a removal question to the Fourth Circuit, which found the issue important enough to warrant en banc consideration.[†]

Judge Floyd, joined by Judges Motz and Agee, made the right call in issuing a reported opinion in Elliott.

[*] Hat-tip to Tillman Breckenridge, who tweeted a quick summary for @DRIAppellate.

[†] Congress did, however, almost immediately abrogate the Fourth Circuit’s decision as part of the Federal Courts Jurisdiction and Venue Clarification Act of 2011.