Mishcon de Reya New York LLP wins telecom dispute against Verizon

Posted on 07 September 2012

On September 4, 2012, Mishcon de Reya New York LLP won an affirmance from the New York State Court of Appeals, Appellate Division, First Department of a lower court Judgment in favor of client and U.S. telecommunications company, IDT Domestic Telecom, Inc., and against a $1 million claim brought by Verizon New England Inc.

The dispute centered around a $57 million Judgment entered in Verizon's favor against a telecommunications vendor, Global NAPS, Inc. Verizon sought to enforce that Judgment by serving restraining notices on Global and its business partners, including IDT, which had pre-paid Global in advance for telecommunications services on a monthly basis.

Verizon alleged that IDT had improperly paid almost $1 million to Global, because these pre-paid sums were purportedly subject to the restraining notice. Verizon further claimed that although no contract existed between IDT and Global, their ongoing business relationship meant that IDT had in its possession Global's property (i.e. the as yet unpaid monthly pre-payments) at the time Verizon received the restraining notice.

The Appellate Division, First Department agreed with the arguments advanced by IDT's legal advisors - that the wholly contingent, pre-payment arrangements between IDT and Global could not constitute restrainable property or debt within the meaning of CPLR 5201.