According to the old saying, if a deal is too good is true, it probably is. But it still may be legally enforceable.
On April 8, a Florida appeals court ruled that a cruise line that mistakenly sold a $4.9 million 20 ct. diamond for a fraction of its cost may still have to honor the deal.
The saga started in February 2013, when former antiques and jewelry dealer Thomas DePrince embarked on a Starboard Cruise Services trip from Miami and spotted a 20.73 ct. emerald-cut diamond (GIA grade: E VVS2, excellent cut) in a Starboard-owned jewelry store. When he inquired about the gem’s price, the store manager, who had never sold a diamond of that size before, sent an email to the company’s corporate office. The office, in turn, contacted supplier Sophia Fiori, which provides Starboard with jewelry on consignment.
The supplier answered that the price was $235,000. As it happens, that was the stone’s per-carat price, and the stone was intended to sell for $4.85 million. But the manager did not know that and relayed that price to DePrince. That night, DePrince’s life partner, a gemologist, told him the stone should fetch at least $2 million, and the price was too good to be true. Regardless, DePrince bought the gem for $235,000, plus $25 shipping—about one-twentieth what it was intended to sell for. The two parties agreed to have the diamond checked at GIA’s New York City lab.
Five days later, the company discovered the mistake, unilaterally reversed the charge and canceled the sale, offering DePrince discounts on further cruises as a makeup. But the irked consumer filed suit in Miami-Dade County court, claiming breach of contract. Starboard moved to have the deal voided.
Starboard won the first round, as a Miami-Dade County circuit judge granted the cruise line’s motion for summary judgment, arguing that the company had made a unilateral mistake, DePrince would not suffer any damages if the deal was canceled, and that Starboard did not show any negligence, since it simply relayed the supplier’s price. “I find, quite frankly, that it may be unconscionable to enforce this particular contract,” the judge said.
But three judges from Florida’s Third District Court of Appeal unanimously reversed that ruling. Writing for the court, Judge Leslie Rothenberg said that a “unilateral mistake” finding requires proof that the erring party did not show negligence and that it was induced into making the mistake. But the court considered it an open question whether Starboard acted negligently, as there remain issues of fact to be resolved at trial—particularly the actions of supplier Fiori, which “for some inexplicable reason, has not been made a party to this suit.”
“It is difficult to imagine how DePrince’s and Starboard’s rights and obligations can be completely established and redressed without Fiori’s involvement,” she wrote. “Fiori can undoubtedly shed light on who, if anyone, should shoulder the blame of the price mistake, as well as explain industry standards and its pattern of dealings with Starboard.”
She added that even though DePrince may have known he was getting a deal, he did not seem to have induced Starboard into making the mistake.
Starboard’s attorney Eric Isicoff tells JCK his client was disappointed in the ruling but confident it would prevail at trial. “It will do exactly what the court has ruled, take this case to trial, and present its defenses in that forum,” he says.
DePrince’s attorney, Mario Ruiz, did not return a request for comment, but told The Daily Business Review that if the lower court’s judgment stood, “Any vendor can set a price, enter into a contract and then five days later decide, ‘That’s not a good price. We’re going to change it.’ ”