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Idt Corp., et al., Plaintiffs-Appellants v. Tyco Group

December 27, 2012

IDT CORP., ET AL., PLAINTIFFS-APPELLANTS,
v.
TYCO GROUP, S.A.R.L., ET AL., DEFENDANTS-RESPONDENTS.



The opinion of the court was delivered by: Catterson, J., J.

IDT Corp. v Tyco Group, S.A.R.L.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on December 27, 2012

SUPREME COURT, APPELLATE DIVISIONFirst Judicial Department

Peter Tom,J.P. David Friedman James M. Catterson Rolando T. Acosta Helen E. Freedman, JJ.

Index

Plaintiffs appeal from the order of the Supreme Court, New York County (Melvin L. Schweitzer, J.), entered June 20, 2011, which granted defendants' motion to dismiss the complaint pursuant to CPLR 3211(a)(7).

CATTERSON, J.

The parties in this breach of contract action have been engaged in a highly contentious business relationship since they agreed to form a joint venture to build a multi-billion dollar undersea fiber optic telecommunications network almost 15 years ago. Between periods of litigation, the parties have spent the last 12 years unhappily and unsuccessfully negotiating the details of the plaintiffs' usage of such a network. We now find that the prior decisions of this Court and the Court of Appeals in favor of the defendants did not extinguish the defendants' obligation to continue negotiations with the plaintiffs in good faith.

The record reflects the following: In November 1999, IDT Corp. and IDT Europe, B.V.B.A.'s (collectively "plaintiffs") and Tyco Group, S.A.R.L., Tycom (US), Inc., Tyco International, Ltd., Tyco International (US) Inc., and Tycom Ltd. (collectively "defendants") agreed to form a joint venture to construct a global fiber optic telecommunications network spanning more than 70,000 undersea kilometers and connecting more than 25 cities in Europe, North America, and Asia. The efforts to form the joint venture failed, and the parties spent the next year bringing various federal and state actions against one another. In October 2000, the parties entered into a settlement agreement in which the plaintiffs agreed to release the defendants from all of their pending claims in exchange for the right to use a different undersea fiberoptic network for 15 years.

The defendants agreed to provide the plaintiffs, for their exclusive use, an "indefeasible right to use" (hereinafter referred to as an "IRU") two wavelengths, free of charge, for 15 years, beginning in 2002 for one wavelength and 2003 for the second. The defendants also agreed to provide operations, administration and management (hereinafter referred to as "OAM") for the wavelengths used by the plaintiffs for the same periods.

The settlement agreement further stated that the plaintiffs' IRU "shall be documented pursuant to definitive agreements to be mutually agreed upon and, in any event, contain [] terms and conditions consistent with those described" in the settlement agreement (emphasis added). The future agreements were to include terms governing, among other things, resale of capacity; provisioning, installation and commissioning of wavelengths; portability of capacity; and collocation services. Those agreements, including the IRU, were to be in writing and consistent with the defendants' standard agreements (which did not yet exist) with similarly situated customers or market rates, subject to any future negotiations between the parties.

After several years of unsuccessful negotiations, on May 4, 2004, the plaintiffs commenced a breach of contract action in Supreme Court. The plaintiffs alleged that the settlement agreement was a valid contract that obligated the defendants to provide IRU and OAM, and that the defendants had failed to supply the IRU and OAM in accordance with the terms of the agreement. The plaintiffs moved for partial summary ...


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