Facts
- Thomas DePrince, a cruise passenger, sought to buy a large loose diamond at an onboard jewelry shop owned and operated by Starboard Cruise Services, Inc.
- Starboard obtained a supplier quote through internal communications and relayed an offer to sell DePrince a 20.64-carat diamond for $235,000, which DePrince accepted and paid by credit card (plus shipping and insurance).
- Two onboard gemologists warned DePrince the quoted price seemed suspiciously low and might have been a per-carat figure rather than a total price.
- Starboard later learned the supplier intended $235,000 as a per-carat price, making the total price approximately $4.85 million.
- Starboard reversed the credit-card charges and refused to deliver the diamond.
- DePrince sued for breach of contract (market-value-minus-contract-price damages), specific performance, and conversion.
- Starboard asserted unilateral mistake and argued DePrince had no actionable damages, the diamond was not unique, and Starboard lacked sufficient possession or control for conversion due to a consignment arrangement under which title remained with the supplier until sale.
Issues
- Whether summary judgment was proper on Starboard’s unilateral mistake defense, including whether DePrince knew or should have known of the pricing error and whether the mistake resulted from inexcusable lack of due care.
- Whether DePrince presented a legally cognizable measure of breach-of-contract damages despite non-delivery.
- Whether factual disputes about the diamond’s uniqueness precluded summary judgment against specific performance.
- Whether Starboard’s rights and role under the consignment arrangement created sufficient possession or control to support a conversion claim, making summary judgment improper.
Decision
- The appellate court reversed the summary judgment for Starboard on all counts and remanded for further proceedings.
- The court held genuine disputes of material fact existed as to unilateral mistake, damages, the diamond’s uniqueness, and Starboard’s possession or control for conversion.
- The court did not order judgment for DePrince; it held only that Starboard was not entitled to summary judgment on the record.
Legal Principles
- Rescission for unilateral mistake requires proof that the mistake was induced by the other party or that the other party knew or should have known of the mistake, and that the mistake did not result from an inexcusable lack of due care; these elements are typically fact-intensive.
- In a sales contract, a buyer may seek expectation damages measured by the difference between the contract price and the item’s market value, even if the seller repudiates before delivery.
- Specific performance may be available for goods shown to be unique; uniqueness may be established by characteristics such as size, quality attributes, and rarity, and is often a fact question.
- A conversion claim may be supported by evidence of wrongful dominion or control; formal title in a third party does not necessarily defeat conversion where the defendant’s contractual rights and conduct show sufficient possession or control.
Conclusion
The appellate court set aside summary judgment because material factual disputes remained regarding unilateral mistake, the availability and measure of contract damages, whether the diamond was unique for specific performance, and whether Starboard’s consignment-based rights and conduct could satisfy the possession or control element of conversion.