SUMMIT HOSPITALITY GROUP, LTD v. THE CINCINNATI INSURANCE COMPANY

Holding: The court affirmed the district court's denial of the motion for relief from judgment because the change in state law did not constitute extraordinary circumstances under Federal Rule of Civil Procedure sixty point B six.
Standard: Rule sixty point B six extraordinary circumstances
Vote: Unpublished per curiam opinion affirming the district court.
Practical effect: Businesses seeking to reopen insurance claims dismissed years prior based on a subsequent change in state law face a high bar, as the Fourth Circuit requires more than a mere change in law to grant relief from a final judgment.

The United States Court of Appeals for the Fourth Circuit affirmed a district court's denial of a motion for relief from a prior dismissal. The court held that a change in state law regarding insurance coverage for pandemic losses did not constitute extraordinary circumstances under Federal Rule of Civil Procedure sixty point B six.

Background

Summit Hospitality Group sought coverage for financial losses caused by government-mandated closures during the COVID nineteen twenty pandemic. After the insurer denied coverage, Summit filed suit in state court, which was removed to federal court. The district court dismissed the case for failure to state a claim under Rule twelve point B six. Three years later, the North Carolina Supreme Court issued a ruling in North State Deli holding that similar policies covered such losses. Summit then moved for relief from the prior dismissal under Rule sixty point B six, which the district court denied.

The court’s reasoning

The appellate court concluded that the district court acted within its discretion in denying the motion. The court noted that unlike a related case, Golden Corral, the appellant’s case did not arise from the same transaction or occurrence as the North State Deli case. Furthermore, the losses were not the same, and the claims arose under different insurance policies. The court reaffirmed that a mere change in decisional law without more does not justify relief under Rule sixty point B six.

What it means going forward

Businesses seeking to reopen insurance claims dismissed years prior based on a subsequent change in state law face a high bar, as the Fourth Circuit requires more than a mere change in law to grant relief from a final judgment.