By Daniel Wiessner
NEW YORK, Dec 27 (Reuters) - A New York appeals court has
revived IDT Corp's breach of contract claims against Tyco
International Ltd over the use of a globe-spanning fiber optic
In a unanimous decision, the Appellate Division, First
Department, on Thursday rejected Tyco's argument that a 2000
settlement between the companies was "extinguished" by a 2009
Court of Appeals decision.
That decision, which dismissed separate breach of contract
claims by IDT, required Tyco to continue good-faith negotiations
over IDT's use of the network, the court said.
Tyco's "obligations in this case did not have an expiration
date, nor, as (Tyco urges), did one arise through the mere
passage of time," Justice James Catterson wrote for the court.
The ruling is the latest twist in a 12-year battle between
the two companies.
In 1999, IDT and Tyco agreed to form a joint venture to
build a multibillion-dollar undersea fiber optic cable. It would
have spanned more than 70,000 kilometers and connected more than
25 cities in Europe, North America and Asia, the court said.
The venture failed and the companies in 2000 entered into a
settlement. IDT agreed to abandon a number of lawsuits against
Tyco in exchange for the right to use a different fiber optic
network for 15 years, the court said.
Tyco also agreed to provide administration and maintenance
of the fiber optic "wavelengths" that IDT would use, according
to the court. The settlement required the companies to
eventually craft a set of specific agreements but did not
provide a deadline.
After years of unsuccessful negotiations, the court said,
IDT in 2004 sued Tyco for breach of contract, arguing that Tyco
had not upheld its end of the agreement. A state Supreme Court
justice granted IDT's motion for partial summary judgment,
allowing the case to move forward.
Tyco appealed, and the First Department in 2008 reversed and
dismissed the case, finding that while Tyco was obligated under
the settlement to negotiate in good faith, the impasse did not
constitute a breach of contract.
IDT appealed, and the Court of Appeals in 2009 affirmed.
The following year, IDT again sued for breach of contract,
claiming that Tyco had failed to continue negotiating in good
faith, as the courts had directed.
Tyco moved to dismiss the case, arguing that the Court of
Appeals decision "extinguished" its obligation to IDT.
Specifically, Tyco seized on a single line in the ruling that
said its "obligation to furnish (network) capacity never became
enforceable because agreed-upon conditions were not met."
Manhattan Supreme Court Justice Melvin Schweitzer in 2011
agreed with Tyco and dismissed the case.
The First Department on Thursday reversed, finding that
Schweitzer had "misconstrued" the 2009 decision to mean that
Tyco "had no further obligations under the settlement
Instead, Catterson wrote, the Court of Appeals said only
that IDT could not sue for breach of contract until the parties
entered into a final agreement.
Catterson was joined by Justices Rolando Acosta and Peter
Tom. Justices David Friedman and Helen Freedman concurred in a
Hillel Parness, who argued the appeal for IDT, said on
Thursday that the company "is very pleased with the decision of
the appellate court."
Tyco's attorney, Thomas Dewey, and a spokesman for Tyco did
not return requests for comment.
The case is IDT Corp v. Tyco Group, New York State Supreme
Court, Appellate Division, First Department, No. 7481.
For IDT: Hillel Parness, Richard Mescon and Oren Langer of
Robins, Kaplan, Miller & Ciresi.
For Tyco: Thomas Dewey of Dewey, Pegno & Kramarsky.
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