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Cellu-Beep, Inc. v. Telecorp Communications, Inc.

United States District Court, S.D. New York

July 18, 2014

CELLU-BEEP, INC., Petitioner,



Petitioner Cellu-Beep, Inc. ("petitioner" or "Cellu-Beep") brings this action to vacate an arbitration award granted in favor of respondent TeleCorp Communications, Inc. ("respondent" or "TeleCorp"). In opposition, respondent seeks an order confirming the arbitration award. For the reasons set forth below, petitioner's motion is denied, and respondent's crosspetition to confirm the award is granted.


Cellu-Beep is a corporation headquartered in San Juan, Puerto Rico and organized under Puerto Rico law. Pet. to Vacate Arb. Award ("Pet.") ¶ 3. Cellu-Beep resells and distributes wireless telephones, as well as equipment and services for those devices. Id . TeleCorp was a Delaware corporation whose principal place of business was in Arlington, Virginia. Id . ¶

4. TeleCorp was the predecessor in interest to New Cingular Wireless PCS, LLC, which currently does business as AT&T Mobility. Id.

On or around September 10, 2002, the parties entered into an agreement (the "Agreement") which authorized Cellu-Beep to sell AT&T Wireless products and services. Id . ¶ 6. Based on respondent's alleged breach of the Agreement, petitioner joined other AT&T Wireless retailers in filing a lawsuit against TeleCorp in the U.S. District Court for the District of Puerto Rico on May 22, 2003. Id . ¶ 8. Respondent moved to dismiss the suit on the grounds that petitioner failed to follow the dispute resolution procedures outlined in the Agreement. Id . ¶ 9. The Agreement reads, in relevant part:

Any claim or controversy arising out of this Agreement... will first be attempted to be resolved amicably by the parties hereto in good faith negotiations. Any dispute, which the parties have been unable to resolve amicably, will be referred to non-binding mediation before a mutually agreed certified mediator.... Any dispute which the parties have been unable to resolve in mediation, will then be settled by arbitration pursuant to the Federal Arbitration Act.

Id. ¶ 10 (quoting Section 9.2 of the Agreement). TeleCorp's motion to dismiss the complaint was granted on January 27, 2004. Id . ¶ 13; see also Cellu-Beep, Inc. v. Telecorp, Inc. , 322 F.Supp.2d 122, 125 (D.P.R. 2004).

From 2005 to 2008, petitioner and respondent engaged in "good faith negotiations, " as mandated by the Agreement, but were unable to resolve their dispute. Id . ¶¶ 13-14. The parties then held a mediation session on November 11, 2008, but it, too, was unsuccessful. Id . ¶ 14. Cellu-Beep next commenced an arbitration against TeleCorp on July 15, 2012. Id . ¶ 15. After respondent had filed an answering statement in the arbitration proceeding, Cellu-Beep submitted a revised arbitration demand. Id . ¶ 16. Rather than answer the revised demand, TeleCorp filed a motion to dismiss on April 12, 2013. Id . Although respondent's initial answering statement included a statute of limitations defense, the motion to dismiss did not. Id . ¶ 17.

During a conference call on March 22, 2013, the arbitrator, "unprompted by anything the parties said, " asked if respondent would also request dismissal of the matter on statute of limitations grounds. Id . ¶ 18. This call occurred after TeleCorp had filed its motion but before Cellu-Beep had submitted its opposition papers. Id . ¶ 16. Later, in its reply brief, respondent included a statute of limitations defense, and petitioner was given an opportunity to counter this argument in a supplemental submission. Id . ¶ 19; see also Cellu-Beep, Inc. v. New Cingular Wireless PCS, LLC, 2013 WL 6919026 (S.D.N.Y. 2013) (Arbitration Award) (Gluck, Arb.) ("Arb. Award") at 6.

On June 19, 2013, the arbitrator determined that Cellu-Beep's claim was time-barred under New York law. Arb. Award at 11. More specifically, the arbitrator found that "the running of the limitations period [was] not affected by either the negotiation or the mediation phase provided in [the Agreement]." Id. at 9. In reaching this conclusion, the arbitrator cited case law from this District (later affirmed by the Second Circuit) and the New York Court of Appeals. See id. at 9-10 (citing Johnson v. Nyack Hosp. , 891 F.Supp. 155 (S.D.N.Y. 1995), aff'd, 86 F.3d 8 (2d Cir. 1996); Ely-Cruikshank Co. v. Bank of Montreal , 615 N.E.2d 985 (N.Y. 1993)). Accordingly, the arbitrator dismissed Cellu-Beep's claim with prejudice. Id. at 14.

On September 24, 2013, Cellu-Beep filed a petition to vacate the arbitration award in the Supreme Court of the State of New York, County of New York. Respondent removed the case to this Court, pursuant to 28 U.S.C. §§ 1332(a), 1441, and 1446 on October 15, 2013. TeleCorp then filed an answer and crosspetition to confirm the arbitration award on November 5, 2013, and both motions were fully briefed by December 17, 2013.


I. Legal ...

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