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Posted February 28, 2012 | comments Leave a comment

Court sides with Woodmark insurers in lawsuit

Kentucky companies owned by family of former plant manager ordered to pay

By Sally Voth -- svoth@nvdaily.com

HARRISONBURG -- The insurers for Winchester-based American Woodmark have succeeded in their lawsuit against two Kentucky lumber companies, with a U.S. District Court judge ordering the firms to pay more than $1 million.

St. Paul Fire and Marine Insurance Co. filed the $4.1 million suit in September 2010 against Herbert H., Melanie Ann, and James Robert "J.R." Wesley Hoskins, all of London, Ky., Kentucky Lumber Sales LLC and Bluegrass Wood Products LLC.

According to St. Paul's suit, Herbert Hoskins worked for American Woodmark as a plant manager in Kentucky from 2002-2008.

Three years after he started working there, he began buying wood from Kentucky Lumber for more than the market price -- about $3 million for $2.7 million worth of lumber -- according to the suit.

"Unbeknownst to American Woodmark, Kentucky Lumber was owned and operated by Herbert Hoskins' wife and son," it says.

Another company owned by the mother and son, Bluegrass Wood Products, began getting Woodmark scraps for low prices or at no cost, and then selling them on to another company for a profit of about $1 million in the course of five years, according to the suit.

A whistleblower tipped American Woodmark off two years ago that Melanie Hoskins was using an alias to sign contracts on behalf of Bluegrass, the suit says.

On Friday, Judge Michael F. Urbanski granted St. Paul's motions for default judgments against Bluegrass and Kentucky Lumber, according to online court records.

Both had been ordered to respond or defend themselves against the lawsuit by Jan. 30, and had failed to do so, Urbanski's orders say.

Kentucky Lumber was ordered to pay St. Paul $243,381 plus interest, and Bluegrass was ordered to pay the insurers about $1.1 million.

Herbert Hoskins and his wife have both filed for Chapter 7 bankruptcy within the past two months, according to court records.

J.R. Hoskins has claimed in court records that he thought his father had disclosed to American Woodmark his relationship with the lumber companies.

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