Summary:

In Golden Corral Corp. v. Illinois Union Insurance Co., the Fourth Circuit held that a subsequent change in state law—even one directly undermining a federal court's earlier prediction of that law—does not ordinarily constitute the "extraordinary circumstances" required to reopen a final judgment under Federal Rule of Civil Procedure 60(b)(6).

Golden Corral sought insurance coverage for the massive business interruption losses it suffered when COVID-19 executive orders forced the closure of indoor dining. Its commercial property insurer denied coverage, arguing that the policy required "direct physical loss or damage" to property.

In 2021, the Eastern District of North Carolina agreed with the insurer, concluding that North Carolina law did not recognize coverage for pandemic-related business interruption losses under the policy language at issue. The Fourth Circuit affirmed that decision in an unpublished opinion in 2022.

Then everything changed.

In 2024, the North Carolina Supreme Court decided North State Deli v. Cincinnati Insurance Co., holding that similar COVID-19 shutdown losses were covered under another commercial property policy. Believing that this new decision demonstrated the federal courts had incorrectly predicted North Carolina law, Golden Corral returned to federal court seeking relief under Rule 60(b)(6), asking that the final judgment be reopened.

The district court refused, and the Fourth Circuit affirmed.

Rule 60(b)(6) Remains an Extraordinary Remedy

The Fourth Circuit began with the familiar principle that Rule 60(b)(6) serves as a narrow "catch-all" provision available only in extraordinary circumstances. The rule exists to accomplish justice in truly exceptional cases, but it does not override the equally important principle that judgments must eventually become final.

The court emphasized that federal courts sitting in diversity must predict how a state's highest court would rule when state law is unsettled. That prediction may later prove incorrect, but an incorrect prediction is not judicial error—it is simply the unavoidable consequence of deciding cases before the state supreme court has spoken.

Accordingly, the court reiterated longstanding Fourth Circuit precedent:

A subsequent change in decisional law, standing alone, is not an extraordinary circumstance justifying Rule 60(b)(6) relief.

Erie Does Not Guarantee a Second Chance

Golden Corral argued that because federal courts are required under Erie to apply state substantive law, fairness required reopening the judgment once the North Carolina Supreme Court clarified what that law actually was.

The Fourth Circuit rejected that argument.

The district court had faithfully applied the law as it existed in 2021 and made its best prediction of how the North Carolina Supreme Court would rule. That prediction later proved inconsistent with North State Deli, but Rule 60(b)(6) is not designed to revisit every judgment whenever appellate or state law evolves.

Otherwise, every significant state supreme court decision could reopen years of completed federal litigation.

The Narrow Exception Did Not Apply

Golden Corral relied heavily on cases such as Pierce v. Cook & Co., where courts reopened judgments after later state-court decisions.

The Fourth Circuit carefully distinguished those authorities.

Those rare cases involved multiple lawsuits arising from the same accident or transaction, where different plaintiffs received inconsistent recoveries solely because one action proceeded in state court and another in federal court.

Here, although both cases involved COVID business interruption insurance, they involved:

• different insureds,

• different insurance companies,

• different insurance policies, and

• different losses.

That similarity was simply too attenuated to justify disturbing a final judgment.

Litigation Strategy Matters

The court also rejected Golden Corral's suggestion that it should receive relief because the law later changed while related litigation was pending.

Although the district court noted that Golden Corral never sought to stay its case while North State Deli worked its way through the North Carolina courts, the Fourth Circuit emphasized that this observation merely illustrated a broader principle:

Rule 60(b)(6) is not intended to rescue parties from strategic litigation decisions that later prove unsuccessful. Parties must ordinarily live with the consequences of deliberate litigation choices, including decisions about whether to seek stays, appeals, or other procedural protections.

Commentary:

This opinion is not really about COVID insurance litigation anymore.

It is about something far more fundamental: when litigation truly ends.

Rule 60(b)(6) occupies one of the most fascinating corners of civil procedure because it forces courts to balance two competing values.

One is accuracy. We naturally want courts to reach the legally correct result.

The other is finality. Eventually, litigation has to stop.

The Fourth Circuit makes clear that finality generally wins.

That principle matters well beyond insurance coverage disputes.

Bankruptcy practitioners encounter Rule 60(b) regularly. Debtors seek relief from dismissal orders. Creditors seek relief from discharge orders. Trustees seek to reopen judgments approving settlements or sales. In each setting, parties often point to some later development—a new appellate decision, newly favorable precedent, or a shift in the legal landscape—and argue that justice requires reopening the case.

Golden Corral reminds us that later changes in the law almost never suffice by themselves.

Instead, courts continue to reserve Rule 60(b)(6) for situations involving something truly extraordinary beyond ordinary changes in precedent.

The opinion also contains a useful reminder about federal diversity jurisdiction.

Federal judges predicting unsettled state law occasionally get those predictions wrong. That is not a failure of the judicial process; it is an unavoidable feature of the Erie doctrine. Until the state's highest court speaks, someone must make the prediction. Once the judgment becomes final, however, later clarification of state law ordinarily benefits future litigants—not those whose cases have already ended.

For bankruptcy attorneys, the broader lesson is practical as well as doctrinal.

When there is a significant unsettled legal issue pending before an appellate court—whether involving exemptions, dischargeability, plan confirmation, lien avoidance, or any other recurring issue—it may be worth considering procedural tools such as stays or preserving appellate rights. Once the judgment becomes final, even a later decision demonstrating that the law has changed may not be enough to reopen the case.

The law evolves.

Final judgments generally do not.