Insurer Jumped Gun with Appeal on CBD Plant Fire Claim, Appeals Court Finds
Insurance company officials and attorneys have been known to complain when policyholders file suit before the parties have had a chance to settle a claim.
In West Virginia, it was the insurer, Kinsale Insurance Co., that filed suit in federal court before it even notified the policyholder, a CBD oil extraction factory, that it would deny a fire claim. A federal appeals court said this week that Kinsale’s appeal was premature and that the lower court must first determine the extent of the claim.
“Though the district court resolved the key question of whether Kinsale was liable for providing insurance coverage for the damage caused by the fire at the JDBC facility,” the court had not found all of the facts necessary to compute the amount of damages due, the U.S. 4th Circuit Court of Appeal said in a published opinion handed down April 20.
The JDBC cannabidiol plant in Charles Town, West Virginia, erupted in flames on Halloween in 2019. The owners filed a claim the next day. Two months later, Kinsale, “without notifying JDBC about whether its claim was accepted or denied,” filed suit in the U.S. District Court for the Northern District of West Virginia, the appeals court explained.
The Virginia-based insurer argued that it was not bound to provide coverage, based on the conditions and exclusions under the policy. The policy’s pollution exclusion bars coverage for “increased” losses and damages from hazardous chemicals, which Kinsale said the company was using to manufacture the oil.
Nonetheless, the district court denied Kinsale’s motion for summary judgment and declared that the insurer was obligated to cover the damages. But differences remained over the amount of losses. JDBC said had asked for $7.25 million plus attorneys’ fees.
Because of the remaining questions, the appeals court held that long-standing precedent and rules of procedure bar the appeal at this point.
“Because we find that the district court’s partial summary judgment order is not a final decision under Rule 54(b) and because we find that certification exceeded the scope of the district court’s discretion, we dismiss the appeal and remand for further proceedings,” the appeals court panel of judges wrote. “Without a final decision to review, we must dismiss the appeal before us and remand it for further proceedings so that all remaining claims and issues can be resolved.”