Westports Martha Stewart, on trial for stock fraud, is now the target of a suit from Kmart Corp. which says her company is overcharging for the exclusive rights to sell housewares and other product bearing StewartҒs name.

Martha Stewart Living Omnimedia Inc. said today that Kmart’s interpretation of their contract would cut what it gets from Kmart by millions of dollars and said it would contest Kmart’s court filing.

Stewart stepped down last June as chairman and CEO of Martha Stewart Living but remains its biggest stockholder.

Kmart, which emerged from bankruptcy in May, has stood by its Martha Stewart Everyday line, touting the brand as one of its main assets despite Stewart’s legal troubles.

It’s been tough going for the defense attorneys in the stock fraud trial of Westport’s Martha Stewart, but today the judge gave them a win.

The ruling by U.S. District Judge Miriam Goldman Cedaraum dealt a blow to the government’s effort to prove Stewart committed securities fraud, the most serious count against her.

Cedarbaum blocked any expert testimony on whether investors would have considered Stewart’s public statements about her ImClone Systems sale important.

The securities fraud count accuses Stewart of propping up the stock price of her own company, Martha Stewart Living Omnimedia, by claiming in 2002 that her ImClone sale was proper and that she was cooperating with authorities.

The old Eddie Bauer store at the intersection of Post Road East and Main Street has taken on a new identity an Orvis Sale Room. The mail order company, which also has a number of retail and warehouse outlets, specializes in outdoor sporting goods, men֒s and womens clothing, and specialty items. Since the Eddie Bauer store closed last summer, the building has also housed a store that sold Halloween costumes and masks and then Christmas holiday items. WestportNow.com photo

This is the ninth day of the stock fraud trial of Westport’s Martha Stewart and it began today with her lawyer trying to end the proceeding by asking for a mistrial. The federal judge overseeing the case promptly denied the motion.

The attorney, Robert Morvillo, said the government’s charges, which include reference to a “secret tip,” were really about insider trading, meaning he should be allowed to try to exonerate Stewart by showing such trading never occurred.

“I have the right to prove a lack of motive by proving there was no insider trading,” Morvillo told the court shortly after the day’s proceedings began.

“You’re saying this trial is being transferred to an insider trading trial?” Judge Miriam Goldman Cedarbaum said.

No progress is reported in talks involving members of Westport-based Local 371 of the United Food and Commercial Workers Union and Stop & Shop.

The current contract is set to expire at midnight Saturday, along with contracts covering 37,000 other workers at Stop & Shops in Massachusetts and Rhode Island.

“There has been no progress in the talks on anything,” union President Brian A. Petronella told the New Haven Register.

Negotiations will resume at 10 a.m. Friday at the citys Omni New Haven Hotel at Yale University.

There are 79 Stop & Shop supermarkets in Connecticut, including 21 in greater New Haven.

The assistant to Westport’s Martha Stewart testified today her boss sat down at her computer and altered a record concerning a message left by Stewart’s stockbroker about ImClone Systems stock.

Stewart immediately stood up and and then ordered the message restored to its original wording, Ann Armstrong said.

The original message read: “Peter Bacanovic thinks ImClone is going to start trading downward.”

It reflected a call by Bacanovic on Dec. 27, 2001, the day Stewart sold her 3,928 shares in the company - and the day before the company announced a negative decision from government regulators about an ImClone cancer drug.

Armstrong testified that Stewart saw the message on Jan. 31, 2002, and replaced it with the words: “Peter Bacanovic re imclone.”

Bank of Westport and Fairfield County Bank Corp. today announced agreement for Fairfield to acquire Westport.

The announcement said Bank of Westport shareholders would receive $12 per share, valuing the deal at $11.2 million.

Bank of Westport shares closed up $3.30 at $11.80, a gain of almost 39 percent over Monday’s close. The stock traded as low as $5 in 2002.

The acquisition followed last year’s merger of Westport National Bank with The Greenwich Bank & Trust Company. It now operates as a division of Connecticut Community Bank.

“We are extremely pleased to partner with Fairfield County Bank Corp.,” said Keith Lyon, president and chief executive officer of the Westport bank.

The secretary to Westport’s Martha Stewart broke down in tears on the witness stand today as she began to describe a phone conversation with Stewart on the day she sold her ImClone Systems stock.

The judge overseeing the trial ended the day’s proceedings 15 minutes early when secretary Ann Armstrong could not continue her testimony.

Armstrong was answering questions from a prosecutor about relaying a message to Stewart from her stockbroker on Dec. 27, 2001, that “ImClone is going to start trading downward.”

Armstrong said she first talked with Stewart who was checking in during a plane refueling on the way to a Mexican vacation ֖ about how each had spent the holiday season.

“I thanked her for the plum pudding she sent home,” Armstrong said through sobs. U.S. District Judge Miriam Goldman Cedarbaum called a five-minute recess, then adjourned the trial for the day.

Lawyers for Westport’s Martha Stewart get their first chance today to cross-examine the government’s star witness against her in her Manhattan stock fraud trial.

Douglas Faneuil, the Merrill Lynch & Co. assistant who handled Stewart’s well-timed sale of ImClone Systems Inc. stock in December 2001, is expected to return to the witness stand for his fourth day of testimony.

Faneuil, 28, testified last week that he was ordered by Stewart’s broker, Peter Bacanovic, to tip her that ImClone founder Sam Waksal was selling his shares.

He also claimed Bacanovic, desperately trying to protect a lucrative career at Merrill, pressured him into initially lying to investigators. He changed his story in June 2002 and struck a plea deal with the government.

Stewart and Bacanovic are accused of repeatedly lying to the government about the circumstances of the sale. They claim they had a pre-existing deal to sell ImClone when it fell to $60.

Defense lawyers in the stock fraud trial of Westport’s Martha Stewart grilled star prosecution witness Douglas Faneuil today.

The maneuvering in the Manhattan federal courtroom was aimed at showing that Faneuil routinely joked with Stewart’s stockbroker even as he claims the broker intimidated him into covering up the facts of Stewart’s stock sale.

But the judge blocked the lawyers from putting e-mails into evidence showing that Faneuil, then a Merrill Lynch & Co. assistant, had an easygoing relationship with broker Peter Bacanovic, Stewart’s co-defendant.

Bacanovic attorney David Apfel said one of the joking e-mails from Faneuil to Bacanovic describes “a man having sex with a goat.” But U.S. District Judge Miriam Goldman Cedarbaum ordered the remark stricken from the record.