                                                  Filed:   June 4, 2002

                    UNITED STATES COURT OF APPEALS

                        FOR THE FOURTH CIRCUIT


                            Nos. 01-1214(L)
                           (CA-99-141-7-BR)



Joseph Battle,

                                                Plaintiff - Appellant,

           versus


Seibels Bruce Insurance Company, et al.,

                                               Defendants - Appellees.



                              O R D E R



     The court amends its opinion filed April 29, 2002, as follows:

     On page 2, section 4, line 3 -- the name “Dana T. Blackmore,

Fayetteville, North Carolina” is removed from the “ON BRIEF”

section.

                                          For the Court - By Direction




                                          /s/ Patricia S. Connor
                                                   Clerk
                                            PUBLISHED

                                UNITED STATES COURT OF APPEALS

                                     FOR THE FOURTH CIRCUIT


JOSEPH BATTLE,
     Plaintiff-Appellant,

     v.

SEIBELS BRUCE INSURANCE COMPANY;
SOUTH CAROLINA INSURANCE
COMPANY,                                             No. 01-1214
     Defendants-Appellees,

     and

GLASGOW HICKS COMPANY; NORTH
CAROLINA JOINT UNDERWRITING
ASSOCIATION,
     Defendants.


JOSEPH BATTLE,
     Plaintiff-Appellee,

     v.

SEIBELS BRUCE INSURANCE COMPANY;
SOUTH CAROLINA INSURANCE
COMPANY,                                             No. 01-1256
     Defendants-Appellants,

     and

GLASGOW HICKS COMPANY; NORTH
CAROLINA JOINT UNDERWRITING
ASSOCIATION,
     Defendants.


                           Appeals from the United States District Court
                     for the Eastern District of North Carolina, at Wilmington.
                                W. Earl Britt, Senior District Judge.
                                          (CA-99-141-7-BR)
                                      Argued: December 5, 2001

                                        Decided: April 29, 2002

                          Before WIDENER and WILLIAMS, Circuit Judges, and
                                  HAMILTON, Senior Circuit Judge.

____________________________________________________________

Affirmed in part, vacated in part, and remanded by published opinion.
Senior Judge Hamilton wrote the opinion, in which Judge Williams
joined. Judge Widener wrote a concurring and dissenting opinion.

____________________________________________________________

                                               COUNSEL

ARGUED: Carmen J. Battle, Fayetteville, North Carolina, for Appel-
lant. Gerald Joseph Nielsen, NIELSEN LAW FIRM, Metairie, Louisi-
ana, for Appellees. ON BRIEF: Walter T. Johnson, Jr., Greensboro,
North Carolina, for Appellant. Eric Stevens, POYNER &
SPRUILL, L.L.P., Raleigh, North Carolina, for Appellees.

____________________________________________________________

                                               OPINION

HAMILTON, Senior Circuit Judge:

   This appeal primarily presents a subject matter jurisdiction ques-
tion with respect to certain claims emanating from a coverage dispute
between a homeowner and the South Carolina Insurance Company
(SCIC) which involves a flood insurance policy issued under the
National Flood Insurance Program (NFIP), see 42 U.S.C. §§ 4001-
4129. The claims allege breach of the implied covenant of good faith
and fair dealing and the temporary conversion of money. We hold the
district court possessed subject matter jurisdiction over these claims
under the federal question statute, 28 U.S.C. § 1331, and, therefore,
we vacate the district court's remand of those claims to state court.

                                                   2
We remand this case to the district court for further proceedings on
those claims consistent with this opinion.

   We also affirm the district court's grant of summary judgment in
favor of SCIC with respect to the homeowner's breach of contract
claim against it. We also affirm the district court's grant of summary
judgment in favor of codefendant Seibels Bruce Insurance Company
(Seibels Bruce)1 with respect to all claims against it.

                                                     I.

   On October 23, 1995, SCIC issued Joseph Battle (Battle) a flood
insurance policy under the NFIP for his beach-front home (the Prop-
erty) located at 911 Canal Drive, Carolina Beach, North Carolina.
Before we continue setting forth the facts and procedural history rele-
vant to the issues on appeal, we deem the immediately following
explanation of the NFIP necessary to put such information in proper
context.

                                                     A.

   Congress established the NFIP under the National Flood Insurance
Act of 1968, 42 U.S.C. §§ 4001-4129, in order to make flood insur-
ance available on reasonable terms and conditions to those in need of
such protection, id. at § 4001. Furthermore, as the Seventh Circuit
recently explained:

        When Congress created the NFIP it gave the program's
        administrator two ways to execute the program and discre-
        tion to choose between them. The first method, the "Industry
        Program," allows a pool of private insurers to underwrite
        flood insurance with financial backing from the government.
        The "Government Program," the second option, allows the
        government to run the NFIP itself—offering federally
        underwritten policies—with the potential for administrative
        assistance from private insurers. In 1977[,] the Secretary of
        Housing and Urban Development, who ran the NFIP at the
____________________________________________________________
  1
      Seibels Bruce is the parent company of SCIC.

                                                     3
        time (it has since been taken over by the Federal Emergency
        Management Agency), decided that the Industry Program
        was unworkable and ended it. He then implemented the
        Government Program, which has continued to the present.

Downey v. State Farm Fire & Cas. Co., 266 F.3d 675, 678-79 (7th
Cir. 2001) (internal citations omitted).

   For more than twenty years, the Director of the Federal Emergency
Management Agency (FEMA) has been charged as the sole adminis-
trator of the NFIP. Exec. Order No. 12127, 44 Fed. Reg. 19367 (Mar.
31, 1979), reprinted in 15 U.S.C. § 2201 (making effective Reorgani-
zation Plan No. 3 of 1978, 43 Fed. Reg. 41943 (June 19, 1978),
reprinted in 15 U.S.C. § 2201). Moreover, the Director of FEMA is
statutorily authorized to provide, by regulation, not only "for the gen-
eral terms and conditions of insurability which shall be applicable to
properties eligible for flood insurance coverage" under the NFIP, but
also for the general method or methods by which proved and
approved claims for losses under such policies may be adjusted and
paid. 42 U.S.C. §§ 4013, 4019. Significantly, by FEMA regulation, all
policies issued under the NFIP must be issued using the terms and
conditions of the Standard Flood Insurance Policy (SFIP) found in 44
C.F.R. Part 61, Appendix A. 44 C.F.R. §§ 61.4(b), 61.13(d), (e),
62.23(c).

   The Director of FEMA operates the Government Program of the
NFIP "through the facilities of the Federal Government . . . ." 42
U.S.C. § 4071(a). In so doing, the Director of FEMA is authorized to
use private insurance companies "as fiscal agents of the United
States," id. at § 4071(a)(1), and to enter into with insurance compa-
nies any necessary "contracts, agreements, or other appropriate
arrangements," id. at § 4081(a).

    In 1983, the Director of FEMA used this authorization to create the
"Write-Your-Own Program" (WYO Program). The WYO Program is
a program whereby private insurance companies are allowed to issue,
under their own names as insurers, flood insurance policies under the
Government Program. 44 C.F.R. § 62.23. Insurance companies which
participate in the WYO Program are known as "WYO Companies."
Id. Notably, all flood insurance policies issued by WYO Companies

                                                     4
under the WYO Program must mirror the terms and conditions of the
SFIP, which terms and conditions cannot be varied or waived other
than by the express written consent of the Federal Insurance Adminis-
trator. 44 C.F.R. §§ 61.4(b), 61.13(d), (e), 62.23(c), (d). Additionally,
"[a] WYO Company issuing flood insurance coverage shall arrange
for the adjustment, settlement, payment and defense of all claims aris-
ing from policies of flood insurance it issues under the [NFIP], based
upon the terms and conditions of the [SFIP]." 44 C.F.R. § 62.23(d).

   Premiums collected by WYO Companies, after deducting fees and
costs, must be deposited in the National Flood Insurance Fund in the
United States Treasury. 42 U.S.C. § 4017(d); 44 C.F.R. Pt. 62, App.
A, Arts. II(E) & VII(B). When the funds retained by WYO Compa-
nies are insufficient to satisfy outstanding claims and refunds, the
WYO Companies must draw upon letters of credit from FEMA. 44
C.F.R. Pt. 62, App. A, Art. IV (A). In short, premiums collected on
policies written by WYO Companies do not belong to those compa-
nies. Newton v. Capital Assurance Co., 245 F.3d 1306, 1311 (11th
Cir. 2001). Thus, claim payments on such policies are a direct charge
on the United States Treasury. Id.; see also 44 C.F.R. § 62.23(f)
(characterizing the relationship between the federal government and
WYO Companies as "one of a fiduciary nature" and intended to "as-
sure that any taxpayer funds are accounted for and appropriately
expended").

                                                   B.

   SCIC is a WYO Company. As a WYO Company, SCIC issued
Battle a SFIP for the Property (Battle's SFIP or his SFIP) for a one-
year period beginning October 23, 1995. Significantly, Article 9(R)
of Battle's SFIP provides as follows:

        Conditions for Filing a Lawsuit:
                                Lawsuit You may not sue us to
        recover money under this policy unless you have complied
        with all of the requirements of the policy.
                                              policy If you do sue, you
        must start the suit within 12 months from the date we mailed
        you notice that we have denied your claim, or part of your
        claim, and you must file the suit in the United States District
        Court of the district in which the insured property was
        located at the time of the loss.

                                                   5
(J.A. 484).2

   On July 18, 1996, a property loss notice was forwarded on behalf
of Battle to SCIC indicating that portions of the Property had sus-
tained flood damage on July 12, 1996 as a result of Hurricane Bertha
(the Bertha Claim). Specifically, Battle claimed flood damage to two
structures built over the water and their miscellaneous contents, an
enclosure on ground level under an elevated building, an air condi-
tioning unit on a support stand, and the ceiling under an elevated
building.

    On September 13, 1996, another property loss notice was for-
warded on behalf of Battle to SCIC. This time SCIC was notified that
the Property had sustained additional flood damage on September 5,
1996 as a result of Hurricane Fran (the Fran Claim). This second
property loss notice reported the damage to the Property as follows:
"[R]oof, railing off deck, glass window seal broke, water damage
inside, side of out building gone, fence damaged, contents damaged."
(J.A. 388).

   Following a physical inspection of the Property by an insurance
claim adjuster from Insurance Network Services sent by SCIC, Battle
was sent a letter dated September 24, 1996, stating that his SFIP pro-
vided no coverage for his Bertha Claim.3 Although the letter was on
the letterhead of "The Seibels Bruce Insurance Companies," the "RE:"
section of the letter correctly referenced the policy number of Battle's
SFIP and the date he claimed to have sustained flood damage to the
Property as the result of Hurricane Bertha. The letter specifically
____________________________________________________________
   2
     The cover page of Battle's SFIP stated that "COVERAGE IS PRO-
VIDED BY THE COMPANY INDICATED ON THE DECLARA-
TIONS PAGE." (J.A. 474). The declarations page lists SCIC as the
company providing coverage, i.e., the insurer. Thus, the references to
"us" and "we" in Article 9(R) of Battle's SFIP refer to SCIC. 44 C.F.R.
§ 61.13(f) ("In the case of any [SFIP], and its related forms, issued by a
WYO Company, wherever the names `Federal Emergency Management
Agency' and `[FEMA]' appear, the WYO Company is authorized to sub-
stitute its own name therefor.").
   3
     Battle specifically acknowledges his receipt of this letter on page
nineteen of his opening appellate brief.

                                                      6
advised Battle that his SFIP "does not provide coverage for outbuild-
ings, walkways or contents located in the enclosure of an elevated
building." (J.A. 386). The letter further advised him that his SFIP
"does provide coverage for appurtenant structures, but only detached
garages and carports," and quoted the coordinate portions of Battle's
SFIP. Id. The closing paragraph of the letter states as follows:

        Since you did not sustain a loss that would be covered by
        your flood policy, I regret to inform you Catawba Insurance
        Company will be unable to assist you in this matter. If you
        have any information which you feel may cause us to
        reevaluate our position, please do not hesitate to contact us
        by return mail.

(J.A. 387).4 The letter was signed by Linda Taylor, Senior Claims
Representative.

   Following another physical inspection of the Property by an insur-
ance claim adjuster from Insurance Network Services sent by SCIC,
Battle was sent a second letter dated January 21, 1997, stating that his
SFIP provided only partial coverage for his Fran Claim.5 Although the
letter was on the letterhead of "The Seibels Bruce Group, Inc.," the
"RE:" section of the letter correctly referenced the policy number of
Battle's SFIP and the date he claimed to have sustained flood damage
to the Property as the result of Hurricane Fran. The entire body of the
letter states as follows:

        Reference is made to the flood damage your above refer-
        enced property sustained on 9/5/96. Enclosed is a check for
____________________________________________________________
   4
     Even viewing the record, as we must, in the light most favorable to
Battle, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587-88 (1986), leads to the inescapable conclusion that the reference to
the Catawba Insurance Company, another subsidiary company of Seibels
Bruce, was an inadvertent mistake, with SCIC being the insurance com-
pany intended to be named. Indeed, the "RE:" line at the beginning of the
letter correctly refers to the policy number of Battle's SFIP, which SCIC
issued.
   5
     Battle specifically acknowledges his receipt of this letter on page
nineteen of his opening appellate brief.

                                                    7
        the undisputed amount of loss for which your flood policy
        provides coverage.

        Also enclosed is a Proof of Loss in the amount of $6,195.15
        (check amount). Please sign the Proof of Loss and return it
        in the self-addressed stamped envelope provided.

        If you have any additional information you feel might cause
        us to reevaluate our position, please let us know by return
        mail.

(J.A. 390). The letter is signed by Michael Shaw, Claim Representa-
tive.

   For reasons unexplained in the record, the check referenced as
enclosed with the letter was not so enclosed. Nevertheless, Battle
received a check for the same amount referenced in the January 21,
1997 letter in either late April or early May 1999 following a letter
of inquiry by his attorney.

   Nearly three years after Battle received the letter denying his Ber-
tha Claim and two and one-half years after he received the letter
denying his Fran Claim, in July 1999, Battle filed suit in North Caro-
lina state court against SCIC, Seibels Bruce, the North Carolina Insur-
ance Underwriting Association (NCIUA),6 as well as the Glasgow
Hicks Company (Glasgow Hicks), the independent insurance agency
through which Battle purchased his SFIP. Glasgow Hicks is located
in Wilmington, North Carolina.

   Battle's complaint alleged multiple claims, but the only claims at
issue in the present appeal are his claims against SCIC and Seibels
Bruce: (1) breach of contract; (2) breach of the implied covenant of
good faith and fair dealing; and (3) conversion.7
____________________________________________________________
  6
     By mistake, Battle originally named the North Carolina Joint Under-
writing Association rather than the NCIUA as a defendant. Battle's
claims against the NCIUA concerned separate dwelling and crime poli-
cies allegedly issued by NCIUA with respect to the Property.
   7
     Battle's claims for conversion against SCIC and Seibels Bruce sought
damages for the alleged temporary conversion of the money SCIC admit-
ted in its January 21, 1997 letter that it owed Battle with respect to the
Fran Claim.

                                                   8
   SCIC and Seibels Bruce removed Battle's suit to the United States
District Court for the Eastern District of North Carolina. The removal
was based upon federal question jurisdiction, 28 U.S.C. § 1331, and
upon 42 U.S.C. § 4072.8 Battle did not object to the removal.

   Following discovery, all defendants filed motions for summary
judgment. Among other grounds, Seibels Bruce sought the grant of
summary judgment with respect to all claims against it on the ground
that it lacked privity of contract with Battle. Battle responded that lia-
bility on his SFIP should extend to Seibels Bruce because Seibels
Bruce's logo appeared on the letterhead of the claim denial letters and
on the declarations page of his SFIP. Agreeing fully with Seibels
Bruce's lack of privity of contract argument, the district court granted
Seibels Bruce's motion for summary judgment in toto.

   Among other grounds, SCIC sought the grant of summary judg-
ment in its favor with respect to all claims on the ground that Battle
filed his lawsuit outside the twelve-month limitation period set out in
Article 9(R) of Battle's SFIP and 42 U.S.C. § 4072. The district court
partially agreed with SCIC, concluding that the twelve-month limita-
tion period set forth in Article 9(R) of Battle's SFIP and 42 U.S.C.
§ 4072 only applied to Battle's claim against SCIC for breach of con-
tract. Specifically, the district court ruled that the language of Article
9(R) of Battle's SFIP and § 4072 describing the nature of the claims
subject to the twelve-month limitation period was not broad enough
____________________________________________________________
      8
          42 U.S.C. § 4072 provides:

             [T]he Director [of FEMA] shall be authorized to adjust and make
             payment of any claims for proved and approved losses covered
             by flood insurance, and upon the disallowance by the Director of
             any such claim, or upon the refusal of the claimant to accept the
             amount allowed upon any such claim, the claimant, within one
             year after the date of mailing of notice of disallowance or partial
             disallowance by the Director, may institute an action against the
             Director on such claim in the United States district court for the
             district in which the insured property or the major part thereof
             shall have been situated, and original exclusive jurisdiction is
             hereby conferred upon such court to hear and determine such
             action without regard to the amount in controversy.

Id.

                                                       9
to cover Battle's claims against SCIC alleging breach of the implied
covenant of good faith and fair dealing and conversion. Accordingly,
the district court granted SCIC's motion for summary judgment with
respect to the breach of contract claim and remanded all claims
remaining in the case, including the claims against NCIUA and Glas-
gow Hicks, to state court pursuant to 28 U.S.C. § 1367(c)(3).9

   Battle noted a timely appeal. On appeal, Battle does not appeal the
district court's remand of any of his claims against NCIUA or Glas-
gow Hicks. Neither do either of these companies cross-appeal on any
ground. Rather, Battle only appeals: (1) the district court's grant of
summary judgment in favor of Seibels Bruce with respect to all of his
claims against Seibels Bruce; and (2) the district court's grant of sum-
mary judgment in favor of SCIC with respect to his breach of contract
claim against SCIC.

   Seibels Bruce and SCIC noted timely cross-appeals. SCIC cross-
appeals the district court's remand of Battle's claims against it alleg-
ing breach of the implied covenant of good faith and fair dealing and
conversion. Seibels Bruce joins in SCIC's cross-appeal in the event
we reject its lack of privity of contract argument. We will address
Battle's appeal first and SCIC's cross-appeal second.

                                                   II.

   Battle first contends the district court erred by granting summary
judgment in favor of Seibels Bruce for lack of privity of contract.
According to Battle, he has privity of contract with Seibels Bruce
based upon the equitable theories of apparent agency (also known as
apparent authority) and agency by estoppel. Battle theorizes that Sei-
bels Bruce is a proper party because its logo appeared on the claim
denial letters and on the declarations page of his SFIP.

   Summary judgment is appropriate when "the pleadings, deposi-
tions, answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any
____________________________________________________________
  9
    The district court also stated that the twelve-month limitation period
"would serve as an alternative basis for dismissing the breach of contract
claim against Seibels [Bruce]." (J.A. 582 n.3).

                                                   10
material fact and that the moving party is entitled to judgment as a
matter of law." Fed. R. Civ. P. 56(c). "We review a grant of summary
judgment de novo, applying the same standard as the district court."
Baber v. Hospital Corp. of Am., 977 F.2d 872, 874 (4th Cir. 1992).
In so doing, we view all facts and reasonable inferences therefrom in
the light most favorable to the nonmoving party. Matsushita Elec.
Indus. Co., 475 U.S. at 587-88.

   Battle's challenge to the district court's grant of Seibels Bruce's
motion for summary judgment is without merit. Every formulation of
the equitable theories relied upon by Battle requires as an element
reliance by the plaintiff upon the apparent agency relationship with
the principal involved in order to establish liability. E.g., Crinkley v.
Holiday Inns, Inc., 844 F.2d 156, 166 (4th Cir. 1988) (under both
equitable theories of apparent agency or agency by estoppel, though
no actual agency exists, a party may be held to be the agent of another
on the basis that he has been held out by the other to be so in a way
that reasonably induces reliance on the appearances) (applying North
Carolina law); Johns Hopkins Univ. v. Ritter, 689 A.2d 91, 100 (Md.
Ct. Spec. App. 1996) ("Like apparent authority, an agency by estop-
pel can arise only where the principal, through words or conduct, rep-
resents that the agent has authority to act and the third party
reasonably relies on those representations.").

   The record in this case is bereft of evidence suggesting that Battle
relied upon any apparent agency relationship between Seibels Bruce
and SCIC in connection with his decision to purchase flood insurance
from SCIC or in his actions following such purchase. Accordingly,
we affirm the district court's grant of summary judgment in favor of
Seibels Bruce with respect to all of Battle's claims against it based
upon the lack of privity of contract between Battle and Seibels Bruce.

                                                   III.

   Battle next challenges the district court's grant of summary judg-
ment in favor of SCIC with respect to his breach of contract claim
against SCIC, which claim the district court determined was time-
barred pursuant to Article 9(R) of Battle's SFIP and 42 U.S.C.
§ 4072. We affirm the district court's grant of summary judgment in

                                                   11
favor of SCIC on the basis that the claim is time-barred pursuant to
Article 9(R) of Battle's SFIP.

   Article 9(R) of Battle's SFIP provides:

        Conditions for Filing a Lawsuit:
                                Lawsuit You may not sue us to
        recover money under this policy unless you have complied
                                           policy If you do sue, you
        with all the requirements of the policy.
        must start the suit within 12 months from the date we mailed
        you notice that we have denied your claim, or part of your
        claim, and you must file the suit in the United States District
        Court of the district in which the insured property was
        located at the time of loss.

(J.A. 484) (italics added).

    We hold the mailing of the September 24, 1996 letter denying the
Bertha Claim triggered the beginning of this twelve-month limitation
period with respect to the Bertha Claim. In his appellate brief, Battle
candidly acknowledges that he received the September 24, 1996 let-
ter, which plainly states that it was sent "in reference to the claim
which was presented under the above referenced policy number."10
(J.A. 386). The "RE:" portion of the letter correctly states the policy
number of Battle's SFIP and the date Battle claimed Hurricane Bertha
damaged the Property, July 12, 1996. The letter specifically refer-
ences the claim inspection performed by Mr. Gattiker of Insurance
Network Services and the fact that Mr. Gattiker "advised that you sus-
tained flood damage to two outbuildings, contents which were located
in the enclosure, and a walkway." (J.A. 386). The letter goes on to
specifically state and explain why none of the claimed damage is cov-
ered by the referenced policy. Finally, the letter closes with the name
and telephone number of a senior claims representative and a "cc:" to
Glasgow Hicks. (J.A. 387).
____________________________________________________________
   10
     Although Battle does not actually specify when he received the Sep-
tember 24, 1996 letter, his filings and oral argument before this court
imply nothing other than the fact that he received it shortly after its stated
mailing date of September 24, 1996.

                                                   12
   Despite all of this information, Battle argues that the September 24,
1996 letter was ineffective to put him on notice that SCIC had denied
the Bertha Claim because the letter appeared on the letterhead of
"THE SEIBELS BRUCE INSURANCE COMPANIES," rather than
on the letterhead of SCIC. Battle contends that his argument is even
stronger if we ultimately hold, as we did in Part II. of this opinion,
that Battle lacks privity of contract with Seibels Bruce.

    Battle's argument is without merit. Under federal law, a cause of
action accrues when the plaintiff possesses sufficient facts about the
harm done to him that reasonable inquiry will reveal his cause of
action. See United States v. Kubrick, 444 U.S. 111, 122-24 (1979). All
of the information in the September 24, 1996 letter and the fact that
the cover page of Battle's SFIP listed SCIC as a subsidiary company
of "THE SEIBELS BRUCE INSURANCE COMPANIES," at a mini-
mum, gave Battle sufficient facts about the alleged harm done to him
(i.e., denial of the Bertha Claim) that reasonable inquiry would have
revealed his cause of action. In short, Battle was on inquiry notice that
SCIC had denied his Bertha Claim at the time he received the Sep-
tember 24, 1996 letter. Thus, his breach of contract claim, filed
almost three years after his receipt of the September 24, 1996 letter,
is untimely under the twelve-month limitation period set forth in Arti-
cle 9(R) of Battle's SFIP.

   Similarly, we hold the mailing of the January 21, 1997 letter deny-
ing the Fran Claim triggered the beginning of the twelve-month limi-
tation period set forth in Article 9(R) of Battle's SFIP with respect to
that claim. Again, Battle candidly admits that he received the January
21, 1997 letter.11 The letter correctly references the policy number of
his SFIP, correctly states the date of his claimed loss due to Hurricane
Fran, and plainly indicates that only a portion of the Fran Claim is
covered while the remainder of the claim is denied.

   In response to these facts, Battle reiterates his argument about the
incorrect letterhead. We reject his argument for the same reason we
____________________________________________________________
   11
      Again, although Battle does not actually specify when he received
the January 21, 1997 letter, his filings and oral argument before this court
imply nothing other than the fact that he received it shortly after its stated
mailing date of January 21, 1997.

                                                   13
rejected it with respect to the September 24, 1996 letter. Battle's
receipt of the January 21, 1997 letter and the fact that the cover page
of Battle's SFIP listed SCIC as a subsidiary company of "THE SEI-
BELS BRUCE INSURANCE COMPANIES," at a minimum, gave
Battle sufficient facts about the alleged harm done to him (i.e., partial
denial of the Fran Claim) that reasonable inquiry would have revealed
his cause of action. See Kubrick, 444 U.S. at 122-24. Thus, Battle's
breach of contract claim against SCIC in connection with the partial
denial of the Fran Claim, filed almost two and one-half years after his
receipt of the January 21, 1997 letter, is untimely under the twelve-
month limitation period set forth in Article 9(R) of Battle's SFIP.

    In sum, we affirm the district court's grant of summary judgment
in favor of SCIC with respect to Battle's breach of contract claim
against SCIC on the basis that the claim is time-barred pursuant to
Article 9(R) of Battle's SFIP.12

                                                   IV.

   We now turn to address SCIC's cross-appeal. The district court
believed that Battle's claims alleging breach of the implied covenant
of good faith and fair dealing and temporary conversion of money
that SCIC acknowledged in its January 21, 1997 letter that it owed
Battle with respect to the Fran Claim (collectively "the Remaining
Claims") did not "arise[ ] under the Constitution, laws, or treaties of
the United States," as provided in 28 U.S.C. § 1331, the federal ques-
tion statute. The district court also believed that the Remaining
Claims did not come within the ambit of 42 U.S.C. § 4072, the federal
statute providing "original exclusive jurisdiction" in federal court over
claims "against the Director [of FEMA]" alleging wrongful full or
partial disallowance of claims for SFIP coverage of losses due to
flood damage.13 Id. Accordingly, the district court believed that it
____________________________________________________________
  12
     Given our affirmance on this basis, we need not and do not address
whether the limitation period set forth in § 4072 operates to bar Battle's
breach of contract claim against SCIC.
  13
     Specifically, the district court opined that § 4072 applies to no claims
beyond contract claims for coverage under an SFIP. The district court
expressed no opinion regarding the applicability of § 4072 given the fact
that Battle did not sue "the Director [of FEMA]" in the present action.
Id.

                                                   14
could only possess subject matter jurisdiction over the Remaining
Claims under 28 U.S.C. § 1367(a), the supplemental jurisdiction stat-
ute.14 Having disposed of all claims in the case over which the district
court believed that it possessed "original jurisdiction" (i.e., the breach
of contract claims against Seibels Bruce and SCIC), id., the district
court, pursuant to 28 U.S.C. § 1367(c)(3), declined to exercise supple-
mental jurisdiction over the Remaining Claims pursuant to § 1367(a)
and, thus, ordered such claims remanded to state court.15 See Hinson
v. Norwest Fin. S.C., Inc., 239 F.3d 611, 617 (4th Cir. 2001) (holding
a district court's power to remand pendent state claims to state court
is inherent in statutory authorization to decline supplemental jurisdic-
tion under § 1367(c)).

   In its cross-appeal, SCIC argues the district court lacked the discre-
tion to remand the Remaining Claims to state court pursuant to
§ 1367(c)(3), because 42 U.S.C. § 4072 applies to the Remaining
Claims despite the fact that the literal text of § 4072 only speaks of
actions "against the Director [of FEMA]." Id. We agree with SCIC
that the district court lacked discretion to remand the Remaining
Claims to state court pursuant to § 1367(c)(3), but not for the reason
advanced by SCIC. We need not tackle the difficult statutory con-
struction question raised by SCIC's argument because the district
court clearly possessed subject matter jurisdiction over the Remaining
Claims pursuant to 28 U.S.C. § 1331.16 Newton, 245 F.3d at 1309
____________________________________________________________
      14
           Title 28 U.S.C. § 1367(a) provides, in relevant part:

               Except as provided in subsections (b) and (c) or as expressly
              provided otherwise by Federal statute, in any civil action of
              which the district courts have original jurisdiction, the district
              courts shall have supplemental jurisdiction over all other claims
              that are so related to claims in the action within such original
              jurisdiction that they form part of the same case or controversy
              under Article III of the United States Constitution.

Id.
      15
     Title 28 U.S.C. § 1367(c)(3) provides that "district courts may
decline to exercise supplemental jurisdiction over a claim under subsec-
tion (a) if— . . . the district court has dismissed all claims over which it
has original jurisdiction . . . ." Id.
      16
     Here, we acknowledge that Battle challenges our appellate jurisdic-
tion to review the portion of the district court's order that remands the

                                                          15
(declining to address whether § 4072 provided additional basis for
federal subject matter jurisdiction over insured's breach of contract
claim against WYO Company after easily concluding that district
court possessed subject matter jurisdiction over the claim pursuant to
§ 1331).

   Title 28 U.S.C. § 1331 provides that district courts have subject
matter jurisdiction of every civil action that "arises under the Consti-
tution, laws, or treaties of the United States." Id. This means that
"Congress has given the lower federal courts jurisdiction to hear `only
those cases in which a well-pleaded complaint establishes either that
federal law creates the cause of action or that the plaintiff's right to
relief necessarily depends on resolution of a substantial question of
federal law.'" Interstate Petroleum Corp. v. Morgan, 249 F.3d 215,
219 (4th Cir. 2001) (en banc) (quoting Franchise Tax Bd. v. Const.
Laborers Vacation Trust, 463 U.S. 1, 27 (1983)).

   Therefore, in order to determine whether the district court had sub-
ject matter jurisdiction pursuant to 28 U.S.C. § 1331 over the Remain-
ing Claims, we turn to examine the allegations of Battle's complaint
as they pertain to those two claims. Count Seven of Battle's complaint
alleged that, by virtue of his SFIP, SCIC impliedly covenanted to act
in good faith and to deal fairly with him in connection with any claim
that he made under his SFIP; and that SCIC breached this covenant
by refusing to settle the Bertha Claim and the Fran Claim in good
____________________________________________________________
Remaining Claims to state court. We reject this challenge based upon
well-settled precedent. See, e.g. Hinson, 239 F.3d at 614-15 (holding
remand orders not subsumed under statute barring review of remand
orders based on defect in removal or on lack of subject matter jurisdic-
tion may be appealed pursuant to 28 U.S.C. § 1291) (reviewing, as an
appealable final order, discretionary remand order entered pursuant to 28
U.S.C. § 1367(c), which ordered pendent claims remanded to state court
following settlement of federal claim). See also Quackenbush v. Allstate
Ins. Co., 517 U.S. 706, 715 (1996) (permitting appeal of an abstention-
based remand order under § 1291 and disavowing a previous decision's
broad statement that "`an order remanding a removed action does not
represent a final judgment reviewable on appeal'") (quoting Thermtron
Products, Inc. v. Hermansdorfer, 423 U.S. 336, 352-53 (1976)); 14C
Charles Allen Wright, Arthur R. Miller, and Edward H. Cooper, Fed.
Prac. & Proc. § 3740 (3d ed. 1998).

                                                  16
faith, by refusing to acknowledge his damage estimates with respect
to those claims, and by refusing to assign qualified agents to identify
and estimate the amount of damages to the Property. Count Ten of
Battle's complaint alleged (in a claim entitled "CONVERSION") that,
until May 4, 1999, SCIC wrongfully asserted dominion and control
of $6,195.15 due him under his SFIP and in the form of a check made
payable to him and Glasgow Hicks.

   Battle's complaint does not specify upon what law, state or federal,
he premises either of these claims. Accordingly, we cannot conclude
that Battle's complaint establishes that federal law creates either
claim. However, we do conclude that Battle's complaint establishes
that Battle's right to relief under either claim"`necessarily depends on
resolution of a substantial question of federal law.'" Interstate Petro-
leum Corp., 249 F.3d at 219 (quoting Franchise Tax Bd., 463 U.S. at
27). First, the law is well settled that federal common law alone gov-
erns the interpretation of insurance policies issued pursuant to the
NFIP.17 Leland, 934 F.2d at 529. See also Newton, 245 F.3d at 1309;
Flick v. Liberty Mut. Fire Ins. Co., 205 F.3d 386, 390 (9th Cir.), cert.
denied, 531 U.S. 927 (2000); Sodowski v. National Flood Ins.
Program, 834 F.2d 653, 655 (7th Cir. 1987); Hanover Bldg. Materi-
als, Inc., 748 F.2d at 1013; Atlas Pallet, Inc. v. Gallagher, 725 F.2d
131, 135 (1st Cir. 1984); West, 573 F.2d at 881-82. Second, by force
____________________________________________________________
   17
      Here, we are careful to note that the exclusive governance of federal
common law in resolving interpretative questions concerning insurance
policies issued pursuant to the NFIP does not preclude federal courts
from drawing upon the body of standard insurance law principles in
resolving such questions. Leland v. Federal Ins. Adm'r, 934 F.2d 524,
529-30 (4th Cir. 1991) ("In considering coverage questions arising under
the NFIP, federal courts have recognized that, because potential exposure
to claims and premium rates are estimated by FEMA in accordance with
standard insurance practices, `Congress did not intend to abrogate stan-
dard insurance law principles which affect such estimates and risks.'")
(quoting Drewett v. Aetna Cas. & Sur. Co., 539 F.2d 496, 498 (5th Cir.
1976)). Indeed, in such circumstances, standard insurance law principles
offer federal courts a valuable repository of settled law upon which to
draw. Hanover Bldg. Materials, Inc. v. Guiffrida, 748 F.2d 1011, 1013
(5th Cir. 1984) ("When such disputes arise, they are resolved under fed-
eral law `by drawing upon standard insurance law principles.'") (quoting
West v. Harris, 573 F.2d 873, 881 (5th Cir. 1978)).

                                                   17
of the regulatory authority granted the Director of FEMA by Con-
gress, Battle's SFIP "is governed by the flood insurance regulations
issued by FEMA, the National Flood Insurance Act of 1968, as
amended (42 U.S.C. 4001, et seq.), and Federal common law." 44
C.F.R. Pt. 61, App. A(1), Art. 11.18 Indeed, Article 11 of Battle's
SFIP contains this exact language. Therefore, at a minimum, Battle's
claim alleging breach of the implied covenant of good faith and fair
dealing raises the federal question of whether federal common law
implies, as part of a SFIP, a covenant of good faith and fair dealing
on the part of a WYO Company towards its insured. Cf. Downey, 266
F.3d at 681-82 (breach of contract claim against WYO Company
brought by insured with respect to SFIP issued by the WYO Com-
pany, was one in which duties or rights of United States under a fed-
eral program were at stake, so that application, and if necessary
creation, of federal common law was required, and breach of contract
claim thus came within district court's federal question jurisdiction
under § 1331); Newton, 245 F.3d at 1309 ("a complaint alleging
breach of an SFIP satisfies § 1331 by raising a substantial federal
question").

   We also hold that Battle's complaint establishes that his right to
____________________________________________________________
   18
      Here we note that effective December 31, 2000, FEMA revised 44
C.F.R. Pt. 61, App. A(1), Art. 9(R) to "clarif[y] the policy language per-
taining to jurisdiction, venue and the applicable law to emphasize that
matters pertaining to the [SFIP], including issues relating to and arising
out of claims handling, must be heard in Federal court and are governed
exclusively by Federal law." 65 Fed. Reg. 60758, 60767 (2000) (empha-
sis added). Thus, as of December 31, 2000, Article 9(R) of the SFIP pro-
vides:

        You may not sue us to recover money under this policy unless
        you have complied with all the requirements of the policy. If you
        do sue, you must start the suit within one year after the date of
        the written denial of all or part of the claim, and you must file
        the suit in the United States District Court of the district in which
        the covered property was located at the time of loss. This
        requirement applies to any claim that you may have under this
        policy and to any dispute that you may have arising out of the
        handling of any claim under the policy.

65 Fed. Reg. 60758, 60776 (2000) (emphasis added).

                                                     18
relief upon his so-called "CONVERSION" claim"`necessarily
depends on resolution of a substantial question of federal law.'" Inter-
state Petroleum Corp., 249 F.3d at 219 (quoting Franchise Tax Bd.,
463 U.S. at 27). This is because Battle's so-called "CONVERSION"
claim is essentially a breach of contract claim with respect to Battle's
SFIP, which claim, as explained previously, is governed solely by
federal law. The essence of the claim is that SCIC owed Battle money
under the terms of his SFIP, which SCIC allegedly paid him in an
untimely manner under the terms of his SFIP.

   We recognize that on remand, the district court may be faced with
other federal questions. For example, the district court may be faced
with resolving whether, under the undisputed material facts, the
twelve-month limitation period set forth in Article 9(R) of Battle's
SFIP bars Battle's claim against SCIC for breach of the implied cove-
nant of good faith and fair dealing. In this regard, we hold, in direct
contrast to the district court's ruling below, that such a claim would
be a "su[it] to recover money under" Battle's SFIP as stated in Article
9(R) of Battle's SFIP. (J.A. 484). Logic dictates that any possible
implied covenant of good faith and fair dealing on the part of SCIC
that may be recognized by the district court on remand would be a
contractual covenant implied by federal common law, and thus, a cov-
enant "under" Battle's SFIP. Id. Indeed, in the portion of Battle's
complaint setting forth his claim against SCIC for breach of the
implied covenant of good faith and fair dealing, Battle's complaint
alleges that such a covenant on the part of SCIC exists "[b]y virtue
of" his SFIP. (J.A. 27).

   Like Battle's claim alleging breach of the implied covenant of good
faith and fair dealing, Battle's so-called "CONVERSION" claim also
constitutes a "su[it] to recover money under" his SFIP, as stated in
Article 9(R) of his SFIP. (J.A. 484). Thus, such claim is also subject
to the accompanying twelve-month limitation period for bringing suit.
Accordingly, as with Battle's claim alleging breach of the implied
covenant of good faith and fair dealing, the district court may be
faced with resolving whether, under the undisputed material facts,
Battle's so-called "CONVERSION" claim is barred by the twelve-
month limitation period set forth in Article 9(R) of Battle's SFIP.

                                                  19
    Finally, we recognize that because the Remaining Claims are "su-
[its] to recover money under" Battle's SFIP, as stated in Article 9(R)
of Battle's SFIP, they are also subject to Article 9(R)'s contractual
obligation that Battle litigate these claims, if at all, in "the United
States District Court of the district in which the insured property was
located at the time of the loss." (J.A. 484). Accordingly, rendered
nugatory is any need to address SCIC's statutory construction argu-
ment that the exclusive federal court jurisdiction provision in 42
U.S.C. § 4072 applies to the Remaining Claims.19

   For the reasons we have just explained, we hold the district court
possessed subject matter jurisdiction over the Remaining Claims pur-
suant to § 1331. Accordingly, the district court erred when it
remanded the Remaining Claims to state court pursuant to 28 U.S.C.
§ 1367(c)(3) based upon its mistaken belief that it had otherwise dis-
missed all claims over which it had "original jurisdiction." Id. There-
fore, we vacate the portion of the district court's order remanding the
Remaining Claims to state court and remand this case to the district
court for further proceedings with respect to those claims consistent
with this opinion.20

                                                  V.

    In summary, we: (1) affirm the district court's grant of summary
judgment in favor of Seibels Bruce with respect to all claims against
it; (2) affirm the district court's grant of summary judgment in favor
of SCIC with respect to the breach of contract claim against it; and
(3) vacate the district court's order remanding to state court the
____________________________________________________________
  19
     To be clear, by recognizing the applicability of the exclusive federal
court jurisdiction requirement in Article 9(R) to the Remaining Claims,
we are in no way suggesting that parties to a contract may contractually
create federal court subject matter jurisdiction.
  20
     We acknowledge that, in addition to holding that the district court
lacked the discretion to remand the Remaining Claims to state court,
SCIC argues that we should dismiss the Remaining Claims as preempted
by federal law, under various theories of preemption. Given our disposi-
tion of the Remaining Claims, resolution of the various preemption
issues raised by SCIC in this appeal would be premature. Accordingly,
we do not address them.

                                                  20
Remaining Claims and remand this case to the district court for fur-
ther proceedings consistent with this opinion.21

                                                                     AFFIRMED IN PART, VACATED IN PART,
                                                                                         AND REMANDED

WIDENER, Circuit Judge, concurring and dissenting:

  I concur in Parts I, II, and III of the majority opinion.

  I concur in Parts V(1) and V(2) of the majority opinion.

   The remaining parts of the opinion are Part IV and V(3); with
respect to these, I respectfully dissent. They concern only the claims
of an "implied covenant of good faith and fair dealing" and the "tem-
porary conversion of money that SCIC acknowledged in its January
21, 1997 letter."

  In my opinion, there is no cause of action arising under federal
common law for either of those two items.

   Among other reasons, acknowledging their existence under federal
common law is very nearly in the teeth of Erie Railroad v. Thomp-
kins, 304 U.S. 64 (1938): "There is no federal general common law."
304 U.S. at 78.

   Second, an equally strong reason is that I would not leave open on
remand any option for the district court to find that such causes of
action exist in this case under federal common law, thus inviting an
arguable opportunity for a plaintiff to recover from the Treasury of
the United States on those causes of action, a result never intended
under the National Flood Insurance Program. On remand, I would
require the district court to dismiss those claims as not stating a fed-
eral question cause of action.
____________________________________________________________
   21
      We deny SCIC and Seibels Bruce's motions to file a pre-oral argu-
ment supplemental memorandum and supplement the record with the
amicus curiae brief which FEMA filed with the Seventh Circuit in Dow-
ney, 266 F.3d at 675.

                                                     21
