FOLLOW US

USA Herald – This is the case of Kinsale Insurance Company v. JDBC Holdings Inc., in the U.S. Court of Appeals for the Fourth Circuit.

A CBD company located in Kernersville, West Virginia. is urging the Fourth Circuit to sanction its insurance company over what it refers to as a "frivolous" and "vexatious" appeal of a $6.45 million verdict against the insurer in a coverage dispute.

Fun Fact: Cannabidiol (CBD) is an active ingredient in cannabis that is derived from the hemp plant, but it does not cause a high.

JDBC Holdings Inc. is represented by J. Tyler Mayhew, Stuart A. McMillan, and Patrick C. Timony of Bowles Rice LLP.

In a motion filed this week, JDBC’s attorneys pointed out that the Fourth Circuit previously dismissed Kinsale’s first appeal, which JDBC says should have made it abundantly clear that the second attempt would also be unsuccessful.

The JDBC attorneys argued that Kinsale's appeal was filed in bad faith in an effort to delay or avoid paying on its judgment award.

JDBC attorneys told the court that "Kinsale's misconduct serves no purpose other than to waste the time and resources of JDBC's counsel, delay final resolution of this case, and clog this court's docket," Counsel for JDBC further stated that it is for this reason that "Sanctions are therefore warranted."

According to the motion, Kinsale's appeal arguably agrees that there is no good faith argument for an appeal, but in spite of this, it has chosen to forge forward at its own peril.

JDBC contends that the insurer disregarded the court's previous findings because as JDBC claims, this was the insurer’s master plan to file the appeal with the intent to cause disrupt the proceedings, force JDBC to incur unnecessary attorneys fees, and costs in responding to its frivolous filings, and to intentionally delay payment of the court’s judgment

In November 2022, U.S. District Judge John Preston Bailey ruled in favor of the CBD manufacturer, finding that the insurer owed coverage for a 2019 fire that destroyed its West Virginia facility.

JDBC filed a claim just one day after the incident, and Kinsale countered by filing a lawsuit against JDBC asking the court for a declaration that it had no coverage obligations, but that complaint was dismissed. Additionally, the court found that the fire was covered by its insurance policy.

Kinsale Insurance Co., who is represented by Ancil G. Ramey of Steptoe & Johnson PLLC, also has exposure here, because the court has the discretion to issue sanctions against the parties engaged in the litigation, and/or to sanction the attorneys personally, if the court finds that sanctions are warranted in this case.

JDBC attorneys argued that "If there were ever a time that sanctions are appropriate, this is it."