November 26, 2018
A recent Law 360 story by Carolina Bolado, “No Fees for Starboard Despite Win in $5M Diamond Sale Row,” reports that a Florida appeals court affirmed the denial of an attorneys’ fee award for Starboard Cruise Services Inc., ruling that the company’s offer to settle a dispute over the onboard sale of a $5 million diamond was not valid and therefore Starboard is ineligible for fees under Florida’s offer-of-judgment statute. Florida’s Third District Court of Appeal said that because the settlement offer from Starboard, which operates retail concessions on cruise ships, was conditioned on plaintiff Thomas DePrince releasing all claims, including those for monetary damage and equitable relief, the offer was not valid under Florida Supreme Court precedent.
“The proposal for settlement was meant to resolve all claims, no matter their nature, arising from the parties’ transaction,” the appeals court said. “Although the structure of the proposal directed payment to only counts II and III (breach of contract and conversion), the proposal was conditioned upon a release and dismissal of DePrince’s equitable claim seeking specific performance as well as his damages claims.” Starboard therefore cannot collect fees under Florida’s offer-of-judgment law, which allows a defendant that offered to settle earlier in the litigation an opportunity to collect attorneys’ fees and costs if there is a defense verdict or if a judgment for the plaintiff is at least 25 percent less than the settlement offer.
DePrince sued after Starboard unilaterally reversed the credit card charges for his 2013 purchase of a 20.64-carat diamond for the listed price of $235,000. That price was actually the price per carat, not for the rock as a whole, which is valued at $4.85 million. The incident arose during a 2013 cruise out of Miami. DePrince visited an onboard jewelry store wholly owned by Starboard and expressed his interest in buying a loose diamond of 15 to 20 carats, according to the opinion. Starboard salesperson contacted the company’s supplier, which said two diamonds were available that met those specifications and emailed descriptions that listed prices of $235,000 and $245,000.
After he was quoted the prices, DePrince consulted with his partner and his sister, both of whom are gemologists and said the price was too good to be true. But he decided to move forward with the purchase and arranged to have the stone shipped to the Gemological Institute of America laboratory in New York for verification. But that shipment would never be made. Starboard soon discovered that the price quoted by the supplier was per carat and contacted DePrince. The company offered him discounted cruise fares as compensation for the inconvenience, but DePrince insisted the deal stay in place.
Starboard then unilaterally reversed the charges and rejected the sales agreement, prompting DePrince’s lawsuit. In October 2015, Starboard offered to settle the breach of contract and conversion claims for $75,000, according to the opinion. The proposal required a release and dismissal with prejudice of all of DePrince’s claims. He never responded to the offer, according to the opinion.
Just before trial, DePrince voluntarily dismissed his claims for specific performance and conversion, leaving only the breach of contract claim for trial. The jury returned a verdict in favor of Starboard. After the defense verdict, Starboard moved for fees based on the offer-of-judgment statute, but the trial judge said the settlement proposal was invalid under the Florida Supreme Court’s 2013 decision in Diamond Aircraft Industries Inc. v. Horowitch.
In that case, over a disputed contract to buy an airplane, the Supreme Court found that the statute does not apply to cases that seek both equitable relief and money damages and that there is no exception to this rule for equitable claims that lack merit, according to the opinion. Starboard argued that the Diamond Aircraft case did not apply because the offer was not a general one and was directed only at DePrince’s monetary claims, but the Third District disagreed because the offer clearly was a proposal to settle all claims with prejudice.
Eric Isicoff of Isicoff Ragatz, who represents Starboard, said he was disappointed that fees were not awarded after all of the expenses the company had to incur to fight this lawsuit, but said they plan to pursue a cost award “which will not be insignificant.” DePrince’s attorney Mario Ruiz of McDonald Hopkins LLC said that the Third District’s ruling confirms that though offers of judgment are important tools in promoting settlement, they have to be used correctly.
The case is Starboard Cruise Services Inc. v. DePrince, case number 3D16-2009, in the Third District Court of Appeal of Florida.