C4 Waterman/RedStone Settles Lawsuit with King Food, Not Travelers

Business Wire

HONOLULU--(BUSINESS WIRE)-- Oahu-based company RedStone Hawaii, Inc., formerly C4 Waterman, Inc., a water sports equipment and lifestyle brand founded by legendary watermen, Brian Keaulana and Todd Bradley, reached a partial settlement with King Food Service over a lawsuit resulting from an accident which occurred in May 2013. King Food agreed to pay RedStone Hawaii $750,000 in damages to settle its own liability for the case. RedStone’s claims against King Food’s insurance company, Travelers Indemnity Company, for the loss of the value of its business, will be decided in a jury trial in Honolulu in July 2016.

In May 2013, while making a delivery in the Kakaako district of Honolulu, a King Food delivery truck was attempting to park illegally next to a fire hydrant and sheered the hydrant from its foundation. Tens of thousands of gallons of water erupted and flooded the adjacent headquarters, warehouse and showroom of C4 Waterman. The accident resulted in substantial damage to the building, inventory and business operations of C4 Waterman.

“Prior to the accident, C4 Waterman had unlimited potential,” said Todd Bradley, co-founder and President of the Hawaii company. “Like all entrepreneurs, we faced a number of hurdles while starting and growing our business, but we made it beyond every one, until the accident. Our company’s revenue grew 45% year-over-year for the period just prior to the flood. Unfortunately, this accident came at a time when we needed cash for production to keep up with our rapid growth. Travelers’ failure to immediately provide the funds we needed left us with insufficient resources to recover. The payment of $750,000, which is finally being made now, would have been a godsend at the time of the accident. Instead of doing the right thing early on, Travelers sat on its money, which ultimately caused us to fail.”

Following the accident, C4 worked with its own insurance company, Scottsdale, to cover the losses it had incurred. While Scottsdale promptly paid out its policy limits of $420,000, the losses from the accident far exceeded the company’s policy limits. C4 promptly sought the balance of what was needed for recovery from Travelers, King Food’s insurance company. Though Travelers initially promised to make C4 whole, it failed to provide funds to the devastated company. Travelers’ records show that it had an early reserve of $500,000 for the claim, but only offered $50,000 to settle, hoping to get by cheaply.

RedStone believes the accident and the failure by Travelers to honor its obligations and representations ultimately caused the company to lose a prospective investor and left C4 without the necessary funds to carry on. As a result, the owners of C4 were eventually forced to sell the assets and brand to a Minnesota-based paddle sports company, Wenonah Canoe.

“Creating C4 Waterman was my pride and joy. It represents my life’s work in water sports and water safety. My partners and I are proud of the Hawaiian brand we built and the products we developed, which Wenonah is still marketing today. We are also proud of our Hawaiian heritage and the local people we have employed,” said Brian Keaulana, co-founder of C4 Waterman.

While RedStone was able to reach a settlement with King Food related to the case, claims against Travelers remain outstanding. The company believes Travelers is the more culpable defendant and asserts that if Travelers had responded in a timely manner, as Scottsdale did, the company would not have failed and there would be no litigation.

“The callous and dismissive claims handling by Travelers was dishonest, disappointing and irresponsible,” said Jason Stanson, CEO of C4 at the time of the accident and current CEO of RedStone. “In a business sense we were like a hit and run victim, left to bleed out on the side of the road by an insurer that made every excuse not to responsibly adjust this claim.”

Counsel for Redstone are Bill Meheula and Jerry Hiatt. Mr. Hiatt commented, “Traveler’s behavior here contradicts its representations and promises to C4 immediately after the accident and its written duty to fairly resolve the claims of third parties such as Redstone -- a duty which is found in its own claim’s manual and one which was affirmed by its senior executives in their testimony for this case. Travelers has spent massive amounts of money in attorneys and expert fees in this case to avoid a local jury’s review of their conduct, but hopefully that day is coming soon.”

RedStone Hawaii, Inc. (formerly C4 Waterman, Inc.) was established in 2007, by Brian Keaulana and Todd Bradley on Oahu, Hawaii. The company made its worldwide mark by exporting the waterman’s lifestyle through innovative water sports, water safety and lifestyle equipment, apparel, and accessories.