Lawsuit-Cruise Ship $5 Million Diamond Deal Too Good To Be True

Lawsuit-Cruise Ship $5 Million Diamond Deal Too Good To Be True
Lawsuit-Cruise Ship $5 Million Diamond Deal Too Good To Be True
Cruise Ship $5 Million Diamond Deal Too Good To Be True
Cruise Ship $5 Million Diamond Deal Too Good To Be True

Thomas DePRINCE v. STARBOARD CRUISE SERVICES, INC., 

Thomas DePrince embarked on a cruise from Miami in February 2013. During that cruise, DePrince visited an onboard jewelry shop that is wholly owned and operated by Starboard Cruise Services. When DePrince expressed some interest in a large loose diamond and specified to the sales manager of the store, Mihai Rusan(Rusan)that the stone should be between 15 and 20 carats, Rusan, who had never dealt with a diamond of such magnitude, sent an email inquiry to Starboard’s corporate office in Miami (“the Miami Office”).

Starboard maintains a consignment agreement with a supplier, Sophia Fiori (“Fiori”), that allows Starboard to obtain gemstones and jewelry for sale in its onboard stores. The consignment agreement between Starboard and Fiori specifies, in relevant part:

3. Title to the Consigned Merchandise shall at all times remain with Consignor until the time of its sale to customers of Consignee, whereupon the Consigned Merchandise shall be deemed to have been purchased from Consignor by Consignee.

Upon receiving the email inquiry from Rusan, the Miami Office relayed the information to Fiori to determine whether Fiori could fill such an order should DePrince decide to purchase a diamond. Fiori responded to the Miami Office via email, informing Starboard that there were two diamonds of that size available. Fiori’s email described the diamonds precisely as follows:

1. EMERALD CUT 20.64 carats D VVS2 GIA VG Price $235,000

2. EMERALD CUT 20.73 carats E VVS2 GIA EX EX FNT Price $245,000

The Miami Office relayed this information to Rusan via email exactly as Fiori had typed it. Rusan notified DePrince of the availability of the size of the diamond he was interested in purchasing and the pricing information contained in the email, telling him that the purchase prices for the diamonds were $235,000 and $245,000 respectively.

DePrince told Rusan that he was interested, but that he would like to take some time to think about the purchase. That night, DePrince spoke with his life partner, Vernon Crawford, a certified gemologist who was on the cruise with DePrince, and also DePrince’s sister, Carolyn DePrince, who holds the highest available degree in gemology. Both advised DePrince against making the purchase, telling him that the sale price was too good to be true and that the price for a diamond that large should be at least $2 million.

DePrince, however, ignored their advice and opted to complete the transaction. DePrince returned to Starboard’s onboard jewelry store and placed a special mail purchase order for the 20.64 carat diamond the next day. Rusan prepared and signed a one-page sales agreement that listed the total price for the diamond at $235,000 plus a $25 shipping charge. DePrince made an initial down payment of $125,000 on the spot and paid the balance ($110,025) the next day. The parties agreed to have the diamond shipped to the Gemological Institute of America laboratory in New York so that a neutral gemologist could verify that the diamond that was shipped was the same one specified in the sales agreement.

Soon after the sale was completed, Starboard learned that Fiori’s $235,000 price quote in the email was the per carat price for the diamond rather than the total price for the diamond ($4,850,400), and thus, Starboard had inadvertently contracted to sell the diamond to DePrince for less than 1/20th of the diamond’s actual value. Five days after the sales agreement was executed, Starboard contacted DePrince via telephone to explain the situation, stating that the price on the sales agreement was “seriously in error” due to the mix-up in the email. Starboard offered discounted future cruise rates to DePrince to compensate him for the inconvenience, but DePrince demanded that the sale be completed as specified in the sales agreement. Starboard unilaterally reversed the charges on DePrince’s credit card to refund him all the money he had paid and then repudiated the sales agreement, informing DePrince that it would not be shipping the diamond as they had originally agreed. These communications were memorialized in an email Starboard sent to DePrince after the phone call. The record does not disclose how Starboard dealt with the cancellation of the sale with regard to Fiori.

Thereafter, DePrince filed a complaint against Starboard alleging counts for specific performance, breach of contract, and conversion. Starboard answered and pleaded the affirmative defense of unilateral mistake, among others, claiming that Rusan had misquoted DePrince the total price of the diamond rather than the per carat price and that DePrince had known about the error the whole time due to his extensive experience with jewelry. Starboard also counterclaimed for a declaratory judgment that the sales agreement was unenforceable and for rescission of the contract.

Starboard moved for summary judgment on the ground that there had clearly been a unilateral mistake in the pricing, and, after hearing argument on that issue, the trial court granted summary judgment against DePrince on all his claims. Specifically, the trial court ruled at the summary judgment hearing:

I don’t find that the plaintiff has established that there were any actionable damages and I don’t find that there was a valid and enforceable contract for either the breach of contract or the conversion count. Particularly as to conversion, I don’t find that the plaintiff or the defendant ever—there’s no record evidence that the plaintiff possessed the diamond, as opposed to remaining in the possession of the vendor. I find, quite frankly, that it may be unconscionable to enforce this particular contract.

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