P.O. Box ZZ
Jamaica, NY 11430
Email Address:debra.bertone@zurichna.com
ZURICH NORTH AMERICA

May 24, 2002

 

 

CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Wolfe's Borough Coffee d/b/a

Black Bear Micro Roastery

P.O. Box 31 Ctr Tuftonboro, NH 03819

Att. Mr. Jim Clark

Re:

Starbucks Corp., u Washington Corp. and Starbucks U.S. Brands, Inc., a

California Corp. v Wolfe's Borough Coffee

Insured : Wolfe's Borough Coffee
Claimant : Starbucks US Br Starbucks Corporation
Claim No. : 56400666470-001
Policy No. : PAS 30929054
Eff. Dates : 3/10/2001 to 3/10/2002
DOL : 07/03/01

Dear Mr. Clark:

We have reviewed the motion of Starbucks for leave to serve an Amended Complaint  together with the Amended Complaint, the policy of insurance maintained with this Company, and relevant law. By this letter we must reiterate our advice to you that no coverage exists under the policy for the Amended Complaint and we must withdraw from the defense of this matter when and if the motion for leave to serve the Amended Complaint is granted and the Amended Complaint becomes the operative pleading against you.

The Amended Complaint contains the same allegations as the original Complaint with respect to trademark dilution, trademark infringement, and violation of federal and New York State laws relating to your use of the name "Charbucks," which plaintiff Starbucks alleges is confusingly similar to its trademarked name. The Amended Complaint, however, seeks only injunctive relief and attorneys' fees and does not set forth a demand for money damages. The Starbucks' motion papers expressly state that Starbucks seeks in the Amended Complaint to withdraw its demand for money damages.

The basic insuring clause of the "Personal Injury and Advertising Injury" coverage of the policy provides that this Company:

will pay those sums of the insured becomes equally obligated to pay as damages because of  "personal injury" or "advertising injury" to which this insurance applies. We have the right and duty to defend any suit seeking those damages, (emphasis applied)

As you know, we agreed to provide you with a defense with respect to the original Complaint on the basis that it sought damages, in part, based on allegations of
trademark infringement which potentially fell within the "personal injury" and "advertising injury" coverage of the policy.

Pursuant to the insuring clause, quoted above, however, our obligations with respect to indemnification and defense are triggered by allegations of your legal liability for "damages" arising from covered claims. As the Amended Complaint no longer seeks "damages," the Amended Complaint does not fall within the insuring clauses of the policy, either with respect to our obligation to indemnify or our obligation to defend.

The remaining claims seeking injunctive relief and attorneys' fees do not constitute "damages" as that term is used in the policy of insurance.

Accordingly, we must adhere to our determination to withdraw from your defense if and when the Amended Complaint becomes the operative pleading in this matter.

In that regard, at the time the Amended Complaint becomes the operative pleading, it will be necessary for you to either assume responsibility for payment of the fees of defense counsel, or make arrangements to substitute other counsel.

Should you have questions concerning any of the foregoing, please do not hesitate to contact the undersigned.

Very truly yours,

NORTHERN INSURANCE COMPANY

OF NEW YORK

Debra Bertone

Litigation  Specialist

973-394-5204

Fax: 973-394-5262