The opinion of the court was delivered by: CAROL E. HECKMAN
The parties have consented to final disposition of this case before the Magistrate Judge, pursuant to 28 U.S.C. § 636(c). Pending for decision are Defendant's motion and Plaintiffs' cross-motion for summary judgment.
For the following reasons, Defendant's motion is denied, and Plaintiffs' cross-motion is granted.
The relevant facts are not in dispute. On July 23, 1990, John A. Brundage and his companies J.A. Brundage Plumbing & Roto-Rooter, Inc. and the Drain Doctor, Inc., were sued in this Court in an action entitled Roto-Rooter Corp. v. J.A. Brundage Plumbing & Roto-Rooter, Inc., John A. Brundage, the Drain Doctor, Inc., and John A. Brundage, Jr., 92-CV-402A. This lawsuit asserted six causes of action based on the following facts.
Roto-Rooter owns both New York State servicemarks and United States trademarks for its name and services. It permits others to use these marks by granting licenses and franchises. On April 1, 1990, Roto-Rooter granted Brundage a written license and franchise to perform and sell sewer, drain and pipe cleaning services.
In P 16 of the franchise agreement, Brundage promised not to compete with the Roto-Rooter trademarks or servicemarks by entering into any other sewer, drain or pipe cleaning business in the geographic territory in which the franchise agreement operated. Brundage also agreed to use the trademarks and servicemarks only as authorized in P 8.
Roto-Rooter alleges that Brundage violated this franchise agreement by:
1. Failing to maintain service personnel in Roto-Rooter uniforms.
2. Inappropriately and improperly using the Roto-Rooter trademarks in connection with sales and service performed by unauthorized entities.
4. Entering into a competing business called "The Drain Doctor."
When Brundage failed to cure these alleged violations, Roto-Rooter terminated Brundage's franchise agreement. Roto-Rooter then instituted the underlying lawsuit alleging that Brundage's acts constituted:
1. Federal trademark and servicemark infringement.
2. False designation of origin.
3. State servicemark infringement.
4. Dilution and injury to business reputation.
Roto-Rooter demanded that the Court declare that Brundage breached the franchise agreement, infringed Roto-Rooter's registered marks, falsely designated the source of the services in violation of federal law, diluted the quality of Roto-Rooter's marks and unfairly competed with Roto-Rooter. Roto-Rooter also demanded that Brundage be preliminary and permanently enjoined from using the designation "ROTO-ROOTER" or any like mark, together with damages in excess of $ 50,000.
Brundage notified its primary insurance carrier, Massachusetts Bay Insurance Company, of the underlying suit and requested defense of the action. Massachusetts Bay denied coverage, asserting that the complaint did not fall within either the personal injury coverage or the advertising injury coverage in the policy.
On August 10, 1992, Brundage instituted the instant action seeking a declaration that coverage was provided under the policy.
In September of 1992, the underlying action was settled at no cost to the parties. At issue are Plaintiff's attorneys fees in the underlying action.
Defendant Massachusetts Bay now moves for summary judgment. Plaintiffs have cross-moved for summary judgment.
The relevant portions of the insurance policy provide as follows:
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal injury" or "advertising injury" to which this insurance applies. . . . We will have the right ...