Court won’t revive COVID loss lawsuits from Golden Corral, Summit hotels

The 4th US Circuit Court of Appeals refused Wednesday to revive lawsuits from Golden Corral and the Summit Hospitality Group over losses suffered during government-mandated COVID shutdowns.

In both cases, federal trial judges ruled against the North Carolina-based companies in 2021. The judges rejected the businesses’ attempts to force their insurance companies to cover COVID-related losses.

Three years later, the North Carolina Supreme Court ruled in December 2024 that a restaurant’s COVID-related losses were covered under commercial liability insurance policies.

Both Golden Corral and Summit then asked federal trial judges to reopen their cases in light of the state Supreme Court ruling. Both trial courts refused.

In a pair of unanimous rulings Wednesday, the 4th Circuit affirmed the trial court decisions.

“Federal Rule of Civil Procedure 60(b)(6) is often described as a ‘catch-all provision’ that authorizes courts to relieve a party from a final judgment, order, or proceeding when the party demonstrates extraordinary circumstances,” Judge Nicole Berner wrote in the Golden Corral case. “Unless the circumstances are truly extraordinary, however, they cannot outweigh the fundamental principle of finality of judgments.”

“Our common law system rests upon this principle to allow parties to carry on after the adjudication of a legal dispute,” Berner continued. “Finality of judgments also permits our case law to develop without unwarranted disruption. Thus, though Rule 60(b)(6) permits courts to make exceptions to finality, this unusual relief may be granted only when ‘appropriate to accomplish justice.’”

The 4th Circuit did not agree with the buffet restaurant chain’s assessment of the impact of 2024’s North Carolina Supreme Court decision in North State Deli v. Cincinnati Insurance Company. Golden Corral argued that the state Supreme Court decision should revive its case against the Illinois Union Insurance Company.

“Golden Corral argues that this subsequent state court ruling is so at odds with the district court’s prior ruling in this case that it was an abuse of discretion for the district court to deny Rule 60(b)(6) relief,” Berner wrote. “We disagree and affirm the ruling of the district court.”

“Golden Corral argues on appeal, as it did before the district court, that the ruling of the North Carolina Supreme Court in North State Deli is so ‘closely related’ to this case that it was an abuse of discretion for the district court to deny its Rule 60(b)(6) motion,” Berner explained.

“Golden Corral can prevail on appeal only if the ruling by the North Carolina Supreme Court in North State Deli created a circumstance so extraordinary that it was an abuse of discretion for the district court to deny its Rule 60(b)(6) motion. Golden Corral cannot meet this heavy burden,” she wrote.

A federal trial judge addressing a claim under a state law “must apply the substantive law of the forum state in cases such as this that arise out of state law,” Berner explained. “Where no applicable state law exists, the federal court must predict, to the best of its ability, how the state’s highest court would rule.”

“Here, the district court did exactly that,” she added. “It properly looked to then-existing North Carolina precedent and made its best effort to predict how the North Carolina Supreme Court would rule.”

“Had the North Carolina Supreme Court handed down its ruling in North State Deli before the district court ruled on Illinois Union’s motion for judgment on the pleadings, the district court may well have reached a different conclusion,” Berner wrote. “Unfortunately for Golden Corral, the timing was not in its favor.”

“It is well established in our circuit that a mere change in decisional law — without more — does not provide a basis for Rule 60(b)(6) relief,” she continued.

“While this case and North State Deli both concern claims under commercial property insurance policies for losses resulting from business interruptions during the COVID-19 pandemic, the similarities end there,” Berner wrote. “[T]his case and North State Deli involve different injuries, different insured plaintiffs, a different insurance provider, and a different insurance policy.”

“Simply put, even if we were to agree that an exception to the general rule of finality may be appropriate in cases arising out of the same transaction or occurrence, that is not the situation here,” she added.

“In denying Golden Corral’s Rule 60(b)(6) motion, the district did not act in an arbitrary manner, nor did it fail to consider any judicially-recognized factors or rely on erroneous factual or legal premises,” Berner concluded.

Judges Allison Jones Rushing and Toby Heytens joined Berner’s decision.

Raleigh-based Summit Hospitality owns and operates 18 hotels in the Triangle, Triad, Charlotte, Wilmington, and Pinehurst, according to its website.

“Summit Hospitality argues that the district court abused its discretion in denying its Rule 60(b)(6) motion. We disagree,” appellate judges wrote in an unsigned unpublished opinion Wednesday. Berner, Rushing, and Heytens made up the panel that decided Summit’s case.

“Having reviewed the parties’ arguments and the record and in light of this court’s decision in Golden Corral v. Ill. Union Ins. Co., we conclude that the district court acted well within its discretion,” the panel agreed.

“Though, unlike in Golden Corral, the insurer in this case and the insurer in North State Deli are one and the same, the remaining relevant facts and circumstances differ,” the 4th Circuit opinion explained. “Like in Golden Corral, Summit’s case does not arise out of the same transaction or occurrence as that in North State Deli, nor can it be said that the two cases are closely related.”

“The losses suffered by Summit are not the same losses as those suffered by the plaintiffs in North State Deli,” the opinion continued. “Moreover, while Summit contends that the policies at issue are ‘materially similar,’ the cases concern claims arising under different insurance policies.”

“We see no reason to depart from our circuit precedent that ‘a mere change in decisional law — without more — does not provide a basis for Rule 60(b)(6) relief,’” appellate judges concluded.

“Court won’t revive COVID loss lawsuits from Golden Corral, Summit hotels” was originally published on www.carolinajournal.com.