Insurer Says It’s Not Liable In Liquid-Nitrogen Drink Claim

Mark Willingham Uncategorized

Insurer Says It’s Not Liable In Liquid-Nitrogen Drink Claim


Source: Law360

By Shayna Posses

August 17, 2016


Scottsdale Insurance Co. filed suit in Florida federal court Tuesday seeking a determination that it doesn’t have to cover claims against a company that provides liquid nitrogen to nightclubs and other venues alleging that a woman was seriously injured after she consumed a drink made with the product.


The insurer contends that it doesn’t have to defend or indemnify Kryogenifex Inc. in litigation claiming that an alcoholic drink containing the company’s liquid nitrogen caused Barbara Kaufman to suffer serious and permanent injuries. Scottsdale said a pollution exclusion in its policy bars coverage for the underlying suit, as well as a cross-claim filed by the Miami Beach Botanical Garden, which ordered the product for an annual culinary event.


Kryogenifex’s policy – which spanned one year, from September 2013 to 2014 – provided coverage for bodily injury or property damage, with an exclusion for damages that would not have occurred if not for the actual, alleged or threatened discharge, release or escape of pollutants, according to Scottsdale.


“The policy defines ‘pollutants’ as ‘any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed,'” the complaint says.


The underlying suit alleges that the botanical garden ordered Kryogenifex’s liquid nitrogen, which creates a smoke effect on beverages, for the Ninth Annual Taste of the Garden Event. During the January 2014 program, Barbara Kaufman consumed an alcoholic beverage that contained the liquid nitrogen, but it was made or served improperly, causing her to suffer serious and permanent injuries, the underlying suit contends.


The Kaufmans filed suit in state court in November 2014 and amended their complaint in June. The litigation, which also names the botanical garden, brings strict liability in tort and negligence claims against Kryogenifex.


The botanical garden then filed cross-claims in July, alleging that Barbara Kaufman’s supposed injuries occurred because of a cocktail that was prepared by a food and beverage vendor called Haven South Beach LLC and supervised by Kryogenifex, according to Tuesday’s complaint.


Scottsdale’s complaint explains that it had agreed to defend Kryogenifex with regard to the underlying lawsuit, pointing to a letter the insurer sent the company in June. In that letter, the insurer reserved its right to yank coverage based on a Florida federal court’s decision in a declaratory judgment action filed by Evanston Insurance Co. over the same underlying incident.


In December, the judge in the Evanston lawsuit concluded that the insurer didn’t owe coverage to Haven because of a pollution exclusion in its policy, holding that the nitrogen was an “irritant” that fell within the policy’s definition of “pollutant,” according to the letter.


Scottsdale now also seeks a declaratory judgment that it has no duty to defend or indemnify Kryogenifex in the underlying litigation.


Marc L. Brumer of Brumer & Brumer PA, who represents the Kaufmans in the underlying suit, told Law360 on Wednesday that he feels like the situation is a “miscarriage of justice,” saying it’s a valid policy and the insurer should cover their insured.


Representatives for the other parties didn’t immediately return request for comment Wednesday.


Scottsdale is represented by Stella J. Lane of Phelps Dunbar LLP.


Counsel information for the other parties wasn’t immediately available.


The suit is Scottsdale Insurance Co. v. Kryogenifex Inc. et al., suit number 1:16-cv-23531, in the U.S. District Court for the Southern District of Florida.