Ex-Tyco Executives Sue For Legal fees
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NEW YORK – The two former top executives of Tyco International who face a retrial in January on charges of looting the conglomerate of $600 million have sued to force an insurance company to pay their legal bills.
Former Tyco CEO Dennis Kozlowski and Mark Swartz, the company’s onetime chief financial officer, asked a court to direct Twin City Fire Insurance to pay legal bills that they say have surpassed $25 million.
The first trial of Messrs. Kozlowski and Swartz on charges of stealing $170 million in unauthorized pay and $430 million in profits from manipulated stock ended in a mistrial in April. Their second trial is scheduled for January 18.
Court papers say Twin City, a unit of Hartford Financial Services Group, had an “excess” coverage policy that provided $25 million in coverage after Tyco exhausted the first $25 million of coverage, provided by Federal Insurance Co.
The Twin City contract requires that it follow the same terms, conditions, definitions and other provisions as the Federal policy, say court papers filed Tuesday in Manhattan’s state Supreme Court.
The Federal policy provides that it will pay for each insured person “all loss for which the insured person is not indemnified by the insured organization.”
The papers say “loss” under the Federal policy includes “defense costs” – and that because defense costs have already exhausted the Federal policy, Twin City is obligated to pay the rest.
The lawsuit says neither Federal, a unit of Chubb Corp., nor Twin City has acknowledged its obligation to pay the executives’ defense costs. The suit asks the court to direct the insurance companies to pay.
A similar suit was filed last week against Twin City by Mark A. Belnick, Tyco’s former general counsel, acquitted in July of charges he abused company loan programs and accepted an improper bonus of $17 million from Mr. Kozlowski.