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With the complete description, this becomes very clear. There was an encroachment foul during the dead ball interval. There was the appearance of a snap and scrimmage down, but that snap never officially occurred. The encroachment was penalized. However, team A was misled into believing that the ball had been live with a foul during that down that was penalized with the down to be repeated, and their coach therefore believed they had the right to an untimed down.
Still, there was something else that should have been done, unless the rules I'm referencing have been changed, which I doubt. (I have no hope of getting the article & section numbering right with so many intervening editions, but my bet is that their substance has not changed.) With team A preparing to spike the ball and seconds left in the game, team B's action delayed the game. It may not have been an intentional encroachment, but there would appear to be benefit to team B by discombobulating team A (making them come off the ball and await a new RFP) so as to let time run out, so I would rule delay of game by B, and with the penalty accepted for delay of game (superseding the encroachment penalty), time would resume on the succeeding snap rather than the RFP.
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