Vivid Collection, GIA Sued Over Grade Dispute

By Rob Bates -- JCK Online, 10/1/2005 2:00:00 AM

A former Harry Winston employee has sued Vivid Collection and the Gemological Institute of America over two diamonds that he charges were misrepresented in their grades. In perhaps its most eyebrow-raising allegation, the suit claims that “payments were made” to GIA to have the two stones “upgraded.”

GIA told JCK it “vigorously denies the allegations.” It has filed a motion to dismiss the suit, which argues that statements regarding the color and clarity grades are “statements of opinion.”

The suit, filed in the Supreme Court of the State of New York this April, charges that in 2001, dealer Max Pincione purchased two pieces of jewelry from Vivid: a platinum diamond ring with a 37.01 ct. stone and a 103.78 ct. pear-shape pendant. According to the lawsuit, the pieces had reports labeling them as H/VS2 and D Flawless, respectively.

The plaintiff then sold the diamond ring to the Saudi royal family. “After the sale was made, and the stone was examined by independent experts of the Royal Family of Saudi Arabia, the diamond ring was returned to the plaintiff without explanation, and with a demand for the return of the monies paid for the stones,” the suit said.

Pincione then sold the pendant to a Saudi entrepreneur. Again, the diamond was returned to the plaintiff. “The plaintiff later was advised that the stones were not of quality stated in the GIA grading reports … and thus the plaintiff lost both the Saudi Royal Family and Saudi entrepreneur as clients,” the suit says. This caused the defendants to risk “incarceration and punishment in Saudi Arabia,” the suit says. For harm to his business reputation, Pincione seeks $50 million.

The suit includes an “Exhibit F” that it says “indicates that payments were made by the defendant Vivid to defendant GIA to 'upgrade’ the quality of the diamonds sold to the plaintiff.” The document shown, however, is a page of handwritten numbers and letters. Pincione’s attorney said the page shows several payoffs—not just the two alleged in the suit—and will be backed up in court by oral testimony.

In its motion to dismiss, GIA’s lawyers noted the “important limitations” listed on the back of its reports, which says that GIA “has made no representation or warranty regarding the Report … the results of any other examination performed on the diamond may differ … this report may not be referred to as a guarantee, valuation, or an appraisal.” It also noted that GIA never dealt directly with Pincione, thereby undermining the suit’s legal standing.

Vivid Collection declined comment, but noted that it has also filed a motion to dismiss. Pincione declined comment. He has replaced his first legal team. His new lawyer, Stephen Hans, says that he is filing an “amended complaint” to the court.