Ideal Diamond Corp. v. Jewelers Mut. Ins. Co.

409 F.Supp.3d 1332

IDEAL DIAMOND CORPORATION, Plaintiff,

v.JEWELERS MUTUAL INSURANCE COMPANY, Defendant.

CIVIL ACTION NO. 1:18-CV-3555-LMM

United States District Court, N.D. Georgia, Atlanta Division.

Signed July 1, 2019

Jeffrey D. Diamond, Law Offices of Jeffrey D. Diamond, Atlanta, GA, for Plaintiff.

Michelle Alameda Sherman, Wayne David Taylor, Mozley, Finlayson & Loggins LLP, Atlanta, GA, for Defendant.

ORDER

Leigh Martin May, United States District Judge

This case comes before the Court on Plaintiffs Motion for Summary Judgment [30] and Motion for Oral Argument [36], and Defendant's Motion for Summary Judgment [32]. After due consideration, the Court enters the following Order:

I. BACKGROUND

Plaintiff Ideal Diamond Corporation ("Ideal Diamond") sells high-end jewelry. Dkt. No. [39] ¶ 1. Sam Ofer is Plaintiffs President and his wife, Carmela Ofer, serves as Vice-President. Id. ¶ 2. Plaintiff purchases insurance from Defendant, Jewelers Mutual Insurance Company ("Jewelers Mutual"). Dkt. No. [39] at 5. Effective May 1, 2017 to May 1, 2018, Defendant issued Plaintiff a renewal policy of insurance ("the Policy") that provided jewelers block coverage for Plaintiffs stock. Dkt. No. [43-1] ¶ 1. The Policy excludes from coverage any "unexplained loss." Id. ¶ 2. The section of the Policy entitled "PERILS NOT COVERED, EXCLUSIONS, AND LIMITATIONS" reads, in pertinent part,

6. "We" do not cover unexplained loss, shortage discovered on taking inventory, or shortage from a package received in good condition with unbroken seals.

Dkt. No. [32-3] at 31.

The Ofers frequently take luxury cruises. See Dkt. No. [39] ¶ 3. Mr. Ofer often takes one or more pieces of jewelry from Plaintiffs inventory with him on such cruises, in the event that another cruise passenger expresses interest in purchasing fine jewelry. See id. The Ofers booked a Norwegian Fjord cruise on the Oceania Marina ship from July 21, 2017 - August 1, 2017, departing from and returning to the Southampton Port in the United Kingdom. Id. ¶ 4. On a prior Oceania Marina cruise, Mr. Ofer had met with the onboard jeweler and the two had agreed that on his next trip, he would bring some of Plaintiffs inventory with him to display in ship's jewelry store for sale to passengers. Id. ¶ 6.

In anticipation of the Ofers' July 21, 2017 cruise, Plaintiff requested extended off premises travel coverage under the Policy. Dkt. No. [43-1] ¶ 3. On June 9, 2017, in response to Plaintiffs inquiry about purchasing extended travel coverage, Defendant's underwriter explained that coverage for loss would only be provided if the covered merchandise was kept on Mr. Ofer's person, stored in a two-keyed safe, or with a jeweler. Id. ¶ 5. Specifically, Defendant's underwriter advised Plaintiffs insurance agent via email that

Loose stones are to be worn on the body and may not be left unattended unless secured in a two-keyed safe or stored with a jewelry dealer.

Dkt. No. [32-5] at 9. Plaintiffs insurance agent subsequently requested that Plaintiff be bound pursuant to the terms outlined in the email. Id. at 8; Dkt. No. [43-1] ¶ 7. Plaintiffs insurance agent forwarded the confirmation of the extended travel coverage-along with the June 9th email outlining the coverage requirements-to Mr. Ofer on July 6, 2017. Dkt. No. [43-1] ¶ 8.

Accordingly, in exchange for an additional premium payment of $3,000, Defendant issued Plaintiff a formal Jewelers Block Change Endorsement (the "Change Endorsement") for the period between July 19, 2017 to August 2, 2017. Id. ¶¶ 10-11. The Change Endorsement provided Plaintiff with coverage during the Ofers' trip up to $200,000, subject to a $10,000 deductible. Id. ¶ 11. The Change Endorsement was also subject to several conditions, including: (1) "[i]f available, a private security screening at the airport"; (2) "[j]ewelry property may not be checked as baggage"; and, (3) "[j]ewelry property must be carried concealed [on] the body and may not be left unattended unless secured in a two-keyed safe or stored with a jewelry dealer." Dkt. No. [32-8] at 6. The Change Endorsement was not formally issued until August 28, 2017. Dkt. No. [39] ¶ 13.

The Ofers traveled from Atlanta, Georgia to London, England on July 19, 2017. Dkt. No. [43-1] ¶ 12. Mr. Ofer carried five of Plaintiffs rings with him, including a 7.07 carat radiant cut fancy yellow diamond ring valued at $107,697.00 ("the Ring"). Id. ¶ 13. While traveling from Atlanta to London, Mr. Ofer stored all the jewelry, including the Ring, in a cloth pouch concealed around his waist. Id. Upon boarding the cruise ship on July 21, 2017, Mr. Ofer met with the manager of the cruise ship's jewelry store, who informed him that a new company had been brought in to operate the store and it was against that company's policy to accept inventory from cruise passengers. Id. ¶ 15; Dkt. No. [39] ¶¶ 19-20. The onboard jeweler also refused to store Mr. Ofer's inventory during the cruise. Dkt. No. [39] ¶ 20.

Mr. Ofer then placed the pouch containing Plaintiffs inventory, including the Ring, in the safe of his cruise cabin. Dkt. No. [43-1] ¶ 18. The Ofers also stored their money, Mrs. Ofer's personal jewelry pouch, and their passports in the safe. Dkt. No. [39] ¶ 17. The safe in the Ofers' cruise cabin was not a two-keyed safe, but rather a combination safe that locked with a four-digit numeric code. Dkt. No. [43-1] ¶ 20. Mr. Ofer did not remove his pouch or the Ring from the safe for the remainder of the cruise. Id. ¶ 22. On the day the Ofers' disembarked, Mr. Ofer removed the pouch containing Plaintiffs inventory from the safe-without checking its contents-and placed it around his waist. Id. ¶ 25. Mr. Ofer wore the pouch at all times during his trip back to Atlanta. Dkt. No. [39] ¶ 23.

On August 2, 2017, the day after the Ofers returned to Atlanta, Mr. Ofer went to work. Id. ¶ 25. While at work, his wife called to inform him that she had discovered that a valuable piece of her personal jewelry was missing from her pouch. Id. Prompted by his wife's call, Mr. Ofer opened his own jewelry pouch and realized that the Ring was missing. Id. Because there had been no physical damage to the cabin safe, Mr. Ofer concluded that both items had been stolen by someone with access to the cabin safe. Id. ¶ 28.

Plaintiff submitted a claim to Defendant for the loss of the Ring on August 4, 2017, and Defendant promptly commenced its investigation into the claim. Dkt. No. [43-1] ¶ 27. After completing its investigation, Defendant denied Plaintiffs claim for coverage, citing Plaintiffs failure to comply with the Change Endorsement's coverage requirements and the Policy's exclusion for unexplained losses. Id. ¶ 33. The Ofers had also filed a claim for Mrs. Ofer's missing jewelry with their homeowners' insurance carrier, which was likewise denied. Id. ¶ 31. Mr. Ofer further attempted, without success, to recover the Ring by contacting Oceania Cruise lines. Dkt. No. [39] ¶ 35.

Plaintiff filed suit on July 24, 2018, asserting a single claim for breach of contract. Dkt. No. [1]. Both parties now move for summary judgment.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 56 provides "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a).

A factual dispute is genuine if the evidence would allow a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it is "a legal element of the claim under the applicable substantive law which might affect the outcome of the case." Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).

The moving party bears the initial burden of showing the Court, by reference to materials in the record, that there is no genuine dispute as to any material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). The moving party's burden is discharged merely by " ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support [an essential element of] the nonmoving party's case." Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548. In determining whether the moving party has met this burden, the district court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. Johnson v. Clifton, 74 F.3d 1087, 1090 (11th Cir. 1996).

Once the moving party has adequately supported its motion, the non-movant then has the burden of showing that summary judgment is improper by coming forward with specific facts showing a genuine dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). There is no "genuine [dispute] for trial" when the record as a whole could not lead a rational trier of fact to find for the nonmoving party. Id. (citations omitted). All reasonable doubts, however, are resolved in the favor of the non-movant. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).

The same standard of review applies to cross-motions for summary judgment, but the Court must determine whether either of the parties deserves judgment as a matter of law on the undisputed facts. S. Pilot Ins. Co. v. CECS, Inc., 52 F. Supp. 3d 1240, 1242-43 (N.D. Ga. 2014) (citing Am. Bankers Ins. Grp. v. United States, 408 F.3d 1328, 1331 (11th Cir. 2005) ). Each motion must be considered "on its own merits, [with] all reasonable inferences [resolved] against the party whose motion is under consideration." Id. at 1243.

III. DISCUSSION¹

As set forth above, both parties have moved for summary judgment on the single breach of contract claim at issue in this case. Plaintiff contends that Defendant's failure to indemnify Plaintiff for the loss of...