Toys ‘R’ Us recently agreed to settle its breach-of-contract lawsuit against insurance provider Colony National Insurance after alleging the company failed to provide assistance, both financially and legally, following the retailer’s loss of a $25 million wrongful death suit in 2013. U.S. District Judge Madeline C. Aeleo filed a one-page order in New Jersey federal court stating that the two companies have 60 days each to reopen the matter if the settlement is not agreed upon. The settlement itself was not open to the public and both sides have refused to comment.
Toys ‘R’ Us was found guilty of negligence in a case involving a 28-year-old woman who died after using an allegedly defective Benzai Falls In-Ground Pool Slide sold at one of the retailer’s locations. Upon appealing the case in September 2013, the Massachusetts Supreme Judicial Court found the retailer demonstrated a “substantial degree of reprehensibility” when it sold the unsafe pool slides that did not meet federal consumer safety laws.
When Toys ‘R’ Us turned to Colony to cover them, the provider said the contract had only agreed to cover the slide manufacturer’s, Manley Toys Ltd., U.S. subsidiary, but the retailer itself did not qualify as an insured party. The Toys ‘R’ Us complaint stated:
In breach of its duty to exercise good faith in attempting to settle the [wrongful death suit] on behalf of TRU … Colony never offered or made available its policy limit.
The complaint does recognize Colony paid out $800,000 from Manley’s $4 million policy, which allowed them to settle out of the case. Toys ‘R’ Us, operating under the belief it was a “certificate holder” to Colony’s general liability policy, believed it been under an additional umbrella policy with Colony. The retailer accused Colony of lying when it agreed to indemnify Toys ‘R’ Us and defend it from all liability, but instead waited three years before claiming the retailer was not covered under an umbrella policy.