Background
Golden Corral Corporation and its franchising system sued Illinois Union Insurance Company after the insurer denied coverage for pandemic-related business losses. The district court dismissed the case with prejudice in two thousand and twenty-one, ruling that the policy did not cover losses from government closure mandates. Over three years later, the North Carolina Supreme Court issued a ruling in a different case finding similar losses covered. Golden Corral then moved to reopen its dismissed case under Rule sixty point B six, arguing the new state ruling created extraordinary circumstances.
The court’s reasoning
The court explained that Federal Rule of Civil Procedure sixty point B six is a catch-all provision requiring extraordinary circumstances to relieve a party from a final judgment. The court noted that federal courts sitting in diversity must apply state law, but a mere change in decisional law without more does not provide a basis for reopening a closed case. The court distinguished prior cases where relief was granted, noting those involved the same transaction or occurrence, whereas this case involved different plaintiffs and policies. The court also rejected the argument that Golden Corral’s failure to seek a stay warranted relief, stating that free and calculated litigation choices are not to be relieved from.
Our common law system rests upon this principle to allow parties to carry on after the adjudication of a legal dispute.
Klapprott v. United States, 335 U.S. 601, 614–15 (1949)
What it means going forward
The decision reinforces the finality of judgments in diversity cases, preventing parties from reopening closed cases solely because a state supreme court later rules differently on similar legal issues.