The parents of a Massachusetts man who died after drinking a product called “Ethanol Extraction” have won a round in their fight to access insurance coverage, after Indiana’s Court of Appeals ruled the insurer wrongly classified their son’s death as a pollution claim to limit its payout.
In 2018, Timothy Parsons died after drinking a product labeled as 190-proof grain alcohol but actually contained high levels of toxic methanol. The product was made by Glycerin Traders and marketed by its affiliate, Lake Michigan Distilling Company, both based in LaPorte, Indiana. The case is Parsons v. Crum & Forster Specialty Insurance Company.
The methanol contamination traced back to a 2016 shipment of roughly 6,500 gallons of denatured alcohol that Glycerin Traders’ owner, Dennis Zeedyk, purchased from a middleman, according to the ruling. That supplier had sourced the alcohol from a cargo barge cleaning company, which had combined leftover industrial alcohol from multiple shipments into large holding containers. The resulting mixture had a pungent odor and a slight yellow tint. Without testing the mixture, Mr. Zeedyk distilled it multiple times to remove the smell and color, then bottled and sold it as safe for human consumption, the ruling said.
“A subsequent investigation determined several purchasers of Ethanol Extraction had died or been seriously injured after ingesting it,” according to the ruling by Judge Elizabeth DeBoer. Insurer Crum & Forster had paid out claims from those three earlier deaths and injuries under a third-party pollution liability policy rather than the broader commercial general liability policy.
By the time the Parsons family sued, the pollution-coverage limits were exhausted, and Crum & Forster argued a policy provision barred any general liability payout once pollution liability coverage applied to the same “pollution condition.”
A LaPorte Superior Court judge sided with the insurer, but the court of appeals on June 22 reversed that decision.
Judge DeBoer noted that because the policy’s definition of pollutant doesn’t clearly include methanol, the term remained ambiguous, and under longstanding Indiana Supreme Court precedent, ambiguous exclusions must be read in the policyholder’s favor.
The judge also found that methanol could not be considered a pollutant for pollution liability coverage because it never escaped a contained state during manufacturing.
“In sum, no part of the manufacture or sale of Ethanol Extraction involved the discharge, release, etc. of methanol,” the judge wrote. “Methanol was present in the finished product not because an otherwise pure batch of ethanol was contaminated, but because Zeedyk mislabeled industrial alcohol as safe for human consumption.”
The court determined Indiana law, not Massachusetts law, governs the policy’s interpretation, since the companies were based and operated in LaPorte.
The ruling sends the case back to the trial court with instructions to grant the Parsons family’s request for a declaration that general liability coverage applies, potentially reopening insurance proceeds for their wrongful death claim.
In 2024, Mr. Zeedyk was sentenced to 48 months in prison after pleading guilty to mail fraud and tax fraud in connection with Ethanol Extraction. More than 1,200 customers had brought the product, according to the U.S. Attorney’s Office.