Photos of the failed location are key. Most failures of axle becoming detached from the trailer have been documented as weld failures on the frame side, which is aluminum. This is a documented issue for these aluminum trailers unfortunately. Whoever was tasked to weld that day seemed to either have good experience with aluminum, or a less than adequate welder buggered up welds badly.
The way you have it worded makes it sound like the mounting bracket on the axle is what failed? So there is some confusion on what actually failed.
As far as having it covered. I know there was a recall to have weld areas reinforced if the welds were cracking. With Livin Lite defunct, I don't know where you would get with having KZ cover any costs. Maybe I am wrong though, I am not a lawyer, which may be best to consult.
EDIT: Just realized you posted the failure pictures in another thread. It does appear the aluminum frame weld failed.