Borough Coffee Inc. – dba - The Black Bear Micro Roastery
Burleigh Road, POB 31, Center Tuftonboro, NH 03816
the WEB at www.BlackBearCoffee.com
June 5, 2002
American Insurance Company
Re: Claim #: 564-0066470-001 CF
Policy #: PAS 30929054
Date of Loss: 7/3/01
Re: Zurich May 24, 2002 Certified Letter regarding
Starbucks motion for leave to serve an Amended Complaint
I would like to respond to the
above referenced letter, and make you clearly aware of our situation,
and the potential impact on our business that your actions may have.
After months of evasive
behavior on the part of Zurich, it now appears that there is no
defensible reason for Zurich to cease coverage on the above referenced
claim. I’ll outline your actions, which began on 3/12/02, as
When you first notified us as to Zurich’s intent to withdraw
coverage, you made reference to a definition of “damages” in our
it became apparent that no such definition exists, you then stated that
you had e-mailed your superiors at Zurich, and that they were going to
provide “in print” justification for Zurich’s position.
When said “in print” justification failed to materialize, you
then stated that Zurich’s coverage counsel would research the matter,
and provide precise references to court decisions that backup Zurich’s
Again, nothing materialized.
Now you have returned to your original position of threatening to
pull coverage without any additional justification to do so.
I will reiterate our position:
have paid premiums to Zurich in good faith.
The coverage Zurich provides in this matter protects us against
“… sums of the insured becomes legally obligated to pay as damages
The word “damages” does not appear in quotes in the policy,
and is not defined in the policy, or anywhere else.
The only damages covered by the “Personal Injury and
Advertising Injury” clause in our policy, are monetary losses, as
opposed to physical losses.
Should the court grant Starbucks’ motion to amend, Starbucks
will still be seeking extensive monetary compensation (damages) in the
form of “costs” and “reasonable attorneys’ fees”.
Without insurance coverage, a judgment against us could prove
catastrophic to our business.
Starbucks would have to drop all claims for monetary
compensation, and seek only injunctive relief for Zurich to have any
possible justification to pull coverage, however:
Should Starbucks only seek injunctive relief, the result of our
losing the ability to use the trademark in question would result in
monetary damage to our business.
Therefore, until Starbucks abandons all claims against us seeking
monetary compensation, it would appear Zurich is bound to provide
coverage by both the terms contained in our policy, and by the generally
accepted insurance industry interpretation of the word
Not only has your behavior been
evasive, but also Zurich has the appearance of working in concert with
Starbucks. The concerted actions of Zurich and Starbucks are
mutually beneficial, while being extremely detrimental to us. It
is possible that such actions could be viewed as a conspiracy, a
conspiracy that could result in the elimination of our business.
While you may, or may not, be in direct communication with Starbucks,
you are perfectly aware of Starbucks’ actions, and you are perfectly
aware of why they are taking such actions. Starbucks is well aware
of our limited financial resources, and Starbucks is well aware that,
should its actions prove successful, we will most likely be eliminated
as a competitor. I want to make sure, that from this point
forward, that Zurich is clearly aware that your actions are posing a
fatal threat to the existence of our business. While neither
Starbucks nor Zurich may have set out with the initial intent of our
elimination, continuing to pursue an unjustifiable course of action,
with the full knowledge of the catastrophic effects that action could
have on our business, can be synonymous with intent.
I want to make Zurich
specifically aware that our attorneys are being prevented from
prosecuting an aggressive defense, because of your threat to pull
coverage. Beyond said threat, you have specifically restricted
their ability to defend us by directly instructing them not to pursue
certain essential avenues of a proper defense. In so doing, you
are enhancing Starbucks’ chances of success by actively hindering our
I want to make you aware of a
specific event that occurred in the past. On 11/2/01 Starbucks’
attorney John Rawls directly threatened our attorney, Michael Terry,
with the possibility that Starbucks might amend its complaint in an
attempt to cause Zurich to pull coverage on our defense, if we refused
to agree to an out-of-court with Starbucks. Another attorney who
was present, Mark Kaufman, witnessed this threat. Attempting to
force a party into an agreement with the threat of considerable monetary
harm could be construed as an act of “extortion”. It is
important to take note of the fact that the act of Starbucks trying to
drop its claim for “damages” is particularly transparent due to the
fact that there were no measurable damages to start with. The sole
reason for Starbucks action appears to be an attempt to force us to
agree to Starbucks’ terms. It is possible that Zurich could be
viewed as actively participating in said extortion by appearing to be
favoring Starbucks’ interests over our interests.
I also want you to be clear
that for us to incur the expense of seeking a declarative judgment to
compel Zurich to continue providing coverage, could, in itself, put our
business at risk of becoming insolvent.
From this point forward, the
actions of Zurich will speak more clearly than any possible statements
Zurich may make. From this
point forward, you are clearly aware of our very limited financial
resources, and of the jeopardy you are putting our business in.
I will close with the following
points for your consideration:
Our business provides a product that the consuming public deems
The elimination of our business would be detrimental to the
We are a competitor of Starbucks.
Should it be found that Starbucks has knowingly pursued a course
of action that would likely result in our elimination, and that said
course of action cannot be justified, then Starbucks’ actions could be
considered “restraint of trade”.
Zurich’s actions could be view as knowingly aiding and abetting
Given the foregoing, Zurich could be viewed as conspiring with
Starbucks in “restraint of trade”.
cc: Honorable Laura Taylor Swain (S.D.N.Y.)