CBD Producer Denied New Trial in Kinsale Insurance Co. Fire Coverage Lawsuit


(USA Herald) – In a courtroom battle between a West Virginia CBD producer and Kinsale Insurance Co., the judge has made a controversial decision. Federal judge, John Preston Bailey, denied JDBC Holdings Inc.’s motion for a new trial in its fire coverage lawsuit with Kinsale Insurance Co. on Wednesday.

The company, which operates as “The CBD Factories,” had hoped to obtain around $1.5 million in additional damages for net economic loss and annoyance and inconvenience to the $10.2 million that Kinsale is already liable for after an October jury trial on the insurer’s liability for a Halloween 2019 warehouse fire.

JDBC Holdings argued that the jury failed to award those damages improperly, but Judge Bailey found the decision appropriate. The insurer, Kinsale, contended that the company did not prove a causal relationship between its expenses and Kinsale’s actions, according to the order. The jury was instructed that it was JDBC’s responsibility to prove the relationship, and Judge Bailey found that the jury did not err in their decision.

Judge Bailey stated that “The jury considered these claims for damages and rejected them. This court finds nothing in the record or in applicable law to provide defendant with a piecemeal redo as to these damages that the jury declined to award.”

Each of JDBC’s “itemized and uncontested” economic losses was based on testimony the jury was allowed to discredit, according to Judge Bailey. For example, the jury rejected a company representative’s claims that it took out promissory notes to keep the business running while the claim went unpaid, finding that the business was never operational. Therefore, the notes were not used to keep it functioning, nor were they used for other purposes.

In addition, the jury did not have to take the company at its word that its expenses were caused by any delay by the insurer in resolving the claim, according to the order. Although JDBC Holdings argued that the jury made a mistake in their decision, the judge found that their verdict was justified.

The dispute began on Halloween in 2019 when an employee using a heat gun caused a fire at the company’s new warehouse. It occurred less than two months after Kinsale’s policy went into effect, and the insurer was aware that the company had not yet installed a sprinkler system in the warehouse, according to court filings.

In 2020, Kinsale sued seeking rescission of its $7.25 million policy and a declaration that it did not owe coverage to JDBC. The insurer argued before trial that it was not subject to West Virginia’s Unfair Trade Practices Act as a nonstate carrier and asked the court to toss the company’s bad-faith and breach-of-contract counterclaims.

A jury awarded JDBC $6.45 million in October, and Judge Bailey granted the company the right to petition the insurer for attorney fees. The insurer’s total bill, including those fees and prejudgment interest, was more than $10.2 million, according to a final judgment entered in January.

In summary, the West Virginia CBD producer, JDBC Holdings Inc., has been denied a new trial in its fire coverage lawsuit with Kinsale Insurance Co., after the federal judge found that the jury did not make any errors in their decision not to grant additional damages to the company. The court case, which involved a Halloween 2019 warehouse fire and a $10.2 million liability policy, has been closely watched by many, and the verdict is seen as a significant setback for JDBC Holdings Inc. in their battle with the insurer.