DePrince v. Starboard Cruise Servs., Inc.

• Decision Date: 17 January 2018
• Docket Number: 3D16–1149
• Parties: Thomas DEPRINCE, Appellant, v. STARBOARD CRUISE SERVICES, INC., Appellee.
• Court: Florida District Court of Appeals

347 So.3d 31

Thomas DEPRINCE, Appellant,

v.STARBOARD CRUISE SERVICES, INC., Appellee.

No. 3D16–1149

District Court of Appeal of Florida, Third District.

Opinion filed January 17, 2018.

McDonald Hopkins, and Robert A. Cohen, Mario M. Ruiz and Joelle H. Dvir, for appellant.

Isicoff, Ragatz & Koenigsberg, and Eric D. Isicoff and Carolina A. Latour, for appellee.

Before LAGOA, SCALES and LUCK, JJ.

LUCK, J.

In the 1932 movie Night After Night, a cloakroom attendant comments to Mae West on her ring, "Goodness, what a lovely diamond!" Mae West, in her first movie role, responds: "Goodness had nothing to do with it." Night After Night (Paramount Pictures, 1932). Goodness, too, had nothing to do with how Thomas DePrince bought his twenty-carat diamond. Through a comedy of errors, and an e-mail miscommunication, a cruise line jewelry shop sold the twenty-carat diamond to DePrince for one-twentieth of its retail value. DePrince knew the jewelry shop was selling the diamond for millions less than it should but said nothing. This breach of contract claim arose out of the jewelry shop reversing the charges and canceling the sale once it learned about the price. The jury, after a five day trial, found the jewelry shop made a unilateral mistake and rescinded the contract for the purchase of the diamond. Because the trial court did not follow the holdings from the first appeal, DePrince v. Starboard Cruise Servs., Inc., 163 So.3d 586 (Fla. 3d DCA 2015) ( DePrince I ), in instructing the jury on the elements of unilateral mistake, we reverse and remand for a new trial.

FACTUAL AND PROCEDURAL BACKGROUND

1. The cruise. On February 11, 2013, DePrince, a passenger aboard a cruise ship, visited the ship's jewelry boutique, operated by Starboard Cruise Services, Inc., where he indicated his interest in purchasing a fifteen to twenty carat loose diamond.¹ DePrince specified he wanted an emerald cut, high quality, color D, E, or F diamond with a G.I.A. certificate.² Because the shipboard jewelry store did not have such a diamond, the store's manager, Mr. Rusan, electronically mailed Starboard's corporate office.

Ms. Jimenez, at the corporate office, reached out to Starboard's diamond vendor in California, Sophia Fiori. Mr. Bachoura from Sophia Fiori, with some reservations because he did not believe a sale of this magnitude should take place aboard a ship, called a diamond broker in New York, Julius Klein, for its available inventory. Julius Klein sent Mr. Bachoura a list of diamonds available with the desired specifications. The list provided a per-carat price and a net price for each diamond. Mr. Bachoura selected two diamonds from the inventory listing, and electronically mailed the following information to Ms. Jimenez:

These prices are ship sailing prices based on the lowest tier diamond margin we have. Let me know if you have any questions.

EC 20.64 D VVS2 GIA VG G NON selling price $235,000

EC 20.73 E VVS2 GIA EX EX FNT selling price $245,000

Ms. Jimenez forwarded this information to Mr. Rusan on the ship. Mr. Rusan, in turn, presented the information to DePrince and his partner, Mr. Crawford.

Neither Ms. Jimenez nor Mr. Rusan had ever sold a large loose diamond before, and did not realize the quoted price was per carat. Mr. Crawford, who was a certified gemologist, asked the opinion of DePrince's sister, a graduate gemologist. Ms. DePrince warned that something was not right because the price for a diamond of that size should be in the millions and recommended not buying the diamond.

Disregarding his sister's advice, DePrince contracted with Starboard to purchase the 20.64 carat diamond for the quoted $235,000 price, paying with his American Express credit card. Shortly after the sale, Starboard discovered that the $235,000 price was per carat. Starboard immediately notified DePrince of the error and reversed the charges to his credit card. DePrince then filed the instant action seeking to enforce the parties' contract.³

2. DePrince I. The trial court initially granted summary judgment in favor of Starboard on June 20, 2014, based on Starboard's defense of unilateral mistake. This court reversed that judgment in DePrince I. There, the court reviewed the various tests for determining whether a party's agreement could be rescinded based on a unilateral mistake. Concluding that the panel and trial court were bound by the "four-prong test to establish unilateral mistake," the court

held that in order to rescind an otherwise-valid contract based on a unilateral mistake, the party seeking to avoid the contract must show:

(1) [T]he mistake was induced by the party seeking to benefit from the mistake, (2) there is no negligence or want of due care on the part of the party seeking a return to the status quo, (3) denial of release from the agreement would be inequitable, and (4) the position of the opposing party has not so changed that granting the relief would be unjust.

Id. at 592 (quotation omitted; footnote omitted). The court explained that "this panel—along with the trial court—is of course bound by" the four-prong test. Id. at 591. Later in the opinion, the court "reiterate[d] our position" that we "currently adhere[ ] to the four-prong test." Id. at 594. The court then went on to apply the four-prong test to the facts in the record at the summary judgment hearing.

The court concluded that there was a genuine issue of material fact on the inducement prong because "knowledge of an error is markedly different than inducement of that error." Id. As an example of inducement, the court quoted the test for fraudulent inducement, and explained in a footnote:

We do not hold that the burden to establish inducement for purposes of the first prong of a unilateral mistake defense is the same as proving the elements for a fraudulent inducement defense, but merely use fraudulent inducement by way of example to demonstrate that inducement requires some type of action, not mere knowledge. In fact, the burden of proof cannot be the same because such a requirement would render the unilateral mistake of fact defense completely obsolete by requiring a party seeking to avoid a contract on that basis to prove fraudulent inducement, which is itself sufficient to render a contract voidable by the aggrieved party.

Id. at 592 n.6 (emphasis added).

The court also concluded that there was a genuine issue of material fact on the negligence prong. "[W]hether Starboard made a reasonable and understandable mistake or acted negligently in its handling of the sale is a disputed issue of fact," the court explained. Id. at 593. Based on this, the court reversed the summary judgment for Starboard and remanded for further proceedings because "[t]here remain genuine issues of material fact to be resolved." Id. at 598.

3. The trial. The case went to trial on April 4, 2016 on DePrince's claim of breach of contract, and Starboard's defenses of unilateral mistake and fraudulent inducement. By the end of the case the issues had been whittled down. The parties did not dispute that they entered into an agreement; the only issues were whether Starboard was excused from that agreement because it made a unilateral mistake or had been fraudulently induced into entering into it. Here are the instructions the trial court gave on the affirmative defenses:

Now, Starboard's first affirmative defense is that it made a unilateral mistake of fact and it should be able to set aside the contract because of its mistake in quoting the price of the diamond to Mr. DePrince based upon the price quote it obtained from its vendor.

To establish this defense Starboard must prove the following: One, that the mistake was induced by the party, here Mr. DePrince, seeking to benefit from the mistake. Inducement may occur through misrepresentations, statements, or omissions which cause the contracting party to enter into a transaction. While there may be some degree of negligence on the part of Starboard, Starboard m[u]st show that there was no inexcusable lack of due care under the circumstance on its part, the party seeking return to the status quo.

Starboard must also show that denial of release from the agreement would be inequitable. In other words, it would be inequitable to hold it to the contract. And it must show that Mr. DePrince did not change his position in any way and that granting relief would not be unjust.

Starboard has also asserted the affirmative defense of fraud in the inducement through nondisclosure. The Court instructs you that [in the] absence of fiduciary relationship between parties, which the Court has found as a matter of law does not exist in this case[,] [t]here is generally no duty to disclosure any facts when parties are dealing at arm's length.

However, where a party undertakes to disclose certain facts and information, that party must then disclose the entire truth then known to him regarding the disclosures he made.

In other words, I am going to try to simplify this by telling you that the law does not allow people to speak half truths. So if you decide to speak on a matter you have an obligation to disclose the whole truth regarding that particular matter.

The jury found that Starboard should be excused from performing under the contract because it committed a unilateral mistake and was fraudulently induced by DePrince. The trial court denied DePrince's motion for directed verdict on the affirmative defenses, leading to this appeal.

STANDARD OF REVIEW

Because DePrince appeals the trial court's rulings regarding directed verdict, jury instructions, and the admission of evidence, we have multiple standards of review. "The standard of review of a trial court's ruling on a motion for directed verdict is de novo. In considering a motion for directed verdict, the trial court is required to give the benefit of all reasonable inferences to the nonmoving party and in favor of submitting the question to the jury." Diaz v. Impex of Doral, Inc., 7 So.3d 591, 593 (Fla. 3d DCA 2009) (citation omitted)....