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Former Tyco lawyer Belnick sues Hartford unit for defence bills

(Bloomberg) ? Former Tyco International Ltd. General Counsel Mark Belnick, who was acquitted of criminal charges in July, sued a unit of Hartford Financial Services Group Inc. to force the insurer to pay part of his legal bills.

Belnick, who was cleared of charges he took a $17 million bonus without authorisation, said in the suit that Hartford?s Twin City Fire Insurance unit won?t pay his legal bills or those of ex-Tyco Chief Executive L. Dennis Kozlowski, former Chief Financial Officer Mark Swartz and former director Frank Walsh.

Belnick is seeking part of a $25 million policy that was taken out to cover the legal expenses of Tyco officers and directors. ?To date, Twin City has made no payments to Mr. Belnick for his defence costs,? the suit says.

Belnick?s criminal case is one of many stemming from civil and criminal probes of Tyco executives. Kozlowski and Swartz are scheduled to be re-tried in January on charges that they looted $600 million from the company through theft and stock fraud. Their first trial ended in a mistrial in April. Walsh pleaded guilty in December 2002 to accepting a secret payment for brokering Tyco?s acquisition of CIT Group Inc.

The Hartford policy is one of two the former Tyco executives are seeking to use to pay their defence bills. A separate policy issued by a Chubb Corp. unit is to pay the first $25 million of their defence costs. The Hartford policy, described in the suit as an ?excess policy,? would pay legal costs once the Chubb policy is exhausted.

Hartford spokeswoman Cynthia Michener declined to comment on the suit, saying the company doesn?t discuss pending litigation.

Belnick?s says defence costs incurred by the four men and other Tyco directors who have been sued ?are sufficient to exhaust the limits? of the $25 million Chubb policy and that the Twin City excess policy will have to be tapped.

Belnick said Twin City requested copies of his legal bills after his acquittal ?based upon Twin City?s representation that it needed those bills in order to reimburse Mr. Belnick for his defence costs.?

Rather than pay those costs, Twin City filed suit against Belnick, Kozlowski, Swartz, Walsh and Tyco last month, seeking a ruling that they aren?t entitled to coverage, the suit says.

Chubb, which is contesting its obligation to pay the legal bills for Kozlowski, Swartz and Walsh, has agreed to pay some of Belnick?s legal bills, the suit says. Chubb hasn?t yet made a payment to Belnick, the suit says.

In March, a New York judge told Chubb?s Federal Insurance unit to pay Kozlowski?s defence bills until a lawsuit over the coverage is resolved.