In a dramatic turn of events, Vale Fox Distillery, a New York-based producer of single malt whiskey, has taken its insurance company, Central Mutual Insurance Co., to court after a significant loss of product. The incident, which occurred in December, saw a rack loaded with barrels of whiskey collapse, resulting in a spill worth $2.5 million. The distillery's efforts to claim this loss from their insurance provider have been met with denial, prompting the lawsuit.
The Incident
On December 19, Vale Fox Distillery's manager discovered a devastating scene: a storage rack had failed, causing 60 barrels of their prized single malt whiskey to crash to the ground. Of these, 52 barrels broke open, spilling their valuable contents. The whiskey in question included barrels of Curium, a $150-per-bottle expression named after the renowned scientist Marie Curie. This particular whiskey had been aging for an additional three to four years, making the loss even more significant. The distillery estimated the total value of the spilled whiskey at over $2.5 million.
Insurance Claim Denial
Vale Fox Distillery had a $5.7 million insurance policy with Central Mutual Insurance Co., which they believed covered such abrupt collapses. However, Central Mutual denied the claim, stating that the policy did not cover this type of collapse. The distillery argues that the insurance company's own engineer's report supports their claim for coverage.
Central Mutual hired J.S. Held Engineering Services to investigate the cause of the collapse. Initially, J.S. Held reported that the collapse was due to age-related degradation of the racks. However, a subsequent report indicated that welding defects also played a role in the failure. Despite this, Central Mutual denied the claim, citing "wear and tear" and "rust and corrosion" as the causes, which they argued were not covered under the policy.
Legal Battle
Vale Fox Distillery filed a lawsuit in the U.S. District Court in White Plains on June 3, accusing Central Mutual of breach of contract and breach of the implied covenant of good faith and fair dealing. The distillery alleges that Central Mutual's investigation was biased and aimed at denying the claim without proper justification. The lawsuit seeks to compel Central Mutual to pay for the losses incurred.
Background of Vale Fox Distillery
Vale Fox Distillery, located on Noxon Road in LaGrange, Dutchess County, was founded in 2017 by Eral Gokgol-Kline of Greenwich, Connecticut, with Livens Aquam LLC as the majority owner. The distillery began operations in 2018 and released its first product, Tod & Vixen’s Dry Gin 1651, in 2019. Since then, the focus has shifted to producing single malt whiskey. The first batch of Curium was released last year, and due to high demand, most of it was sold directly through the distillery's tasting room.
The Future
As the lawsuit proceeds, Vale Fox Distillery hopes to recover the significant financial loss from the incident. The case highlights the complexities and challenges distilleries face when dealing with insurance claims for high-value products. Central Mutual has yet to respond to requests for comment on the lawsuit.
The outcome of this legal battle could set a precedent for how insurance companies handle claims related to product losses in the distilling industry. For now, Vale Fox Distillery remains determined to hold their insurer accountable and recoup their losses, ensuring their business can continue to thrive in the competitive whiskey market.
