Taco Bell Targets TBWA\Chiat\Day

Taco Bell last week was ordered to pay even more to the two men who claim to have hatched the idea of using a chihuahua to sell Mexican food. But it wants its former shop to cough up the cash.

Seeking damages for “breach of contract and indemnity,” the $200 million advertiser has filed suit against former agency TBWA\Chiat\ Day, Playa del Rey, Calif., in U.S. District Court in Santa Ana, Calif. Court papers cite a contract the Omnicom Group shop signed in 1998, which Taco Bell claims was retroactive to 1997, when the “Yo quiero Taco Bell” ads broke. The contract stipulated Taco Bell was not liable for “loss, damage, liability, claim, demand, suit or expense, including reasonable attorneys fees and costs” if a lawsuit were to result from any advertising.

TBWA filed two counterclaims, arguing it has no obligation in the original suit and that Taco Bell must indemnify TBWA for expenses arising out of “Taco Bell’s fault or negligence.” (The two split in 2000, and the account is now at Interpublic’s Foote, Cone & Belding.)

“We feel there is no basis for this claim,” a TBWA\C\D rep said of the suit. Taco Bell, which filed the suit in July, was unavailable for comment.

Joseph Shields and Thomas Rinks, execs in an agency called Wrench, sued Taco Bell in U.S. District Court in Grand Rapids, Mich., on a breach-of-contract claim in 1998. They won a $30.1 million settlement in June, which ballooned to $42 million last week after a judge awarded them an additional $11.8 million in interest [Adweek Online, Sept. 11]. Taco Bell is appealing the verdict.