Opinion
CIVIL ACTION NO. 1:18-CV-3555-LMM
2019-07-01
IDEAL DIAMOND CORPORATION, Plaintiff, v. JEWELERS MUTUAL INSURANCE COMPANY, Defendant.
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.
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.
As the pending motions for summary judgment provide sufficient briefing on the issues presented in this action, the Court does not believe oral argument is necessary. See St. James Entm't LLC v. Crofts, 837 F. Supp. 2d 1283, 1287 (N.D. Ga. 2011) (holding oral argument on summary judgment motions was unwarranted because said motions were sufficiently briefed). Accordingly, for the sake of clarity in the record, Plaintiffs Motion for Oral Argument [36] is DENIED.
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 the Ring constitutes breach of contract because (1) Plaintiff sustained a loss of property insured by the Policy; and, (2) Plaintiff-through Mr. Ofer-complied with the terms of the Change Endorsement to the extent compliance was physically possible. See Dkt. No. [30-2] at 5. Defendant, in turn, asserts that it is not in breach and therefore entitled to summary judgment because (1) Plaintiff failed to comply with the express requirements of the Change Endorsement; and, (2) Plaintiffs loss is precluded by the Policy's exclusion for "unexplained loss." See Dkt. No. [32-1] at 12. The Court will first determine whether Plaintiff complied with the terms of the Change Endorsement.
A. Did Plaintiff Comply with the Terms of the Change Endorsement?
The main contention between the parties is whether Plaintiff is precluded from recovering under the Policy for failure to comply with the terms of the Change Endorsement. See Dkt. Nos. [32-1] at 14; [30-2] at 21. Under Georgia law, insurance "is a matter of contract and the parties to the contract of insurance are bound by its plain and unambiguous terms." Hurst v. Grange Mut. Cas. Co., 266 Ga. 712, 470 S.E.2d 659, 663 (1996). The terms in an insurance policy are given their "usual and common meaning" and "read as a layman would read [them] not as [they] might be analyzed by an insurance expert or an attorney." Ga. Farm Bureau Mut. Ins. Co. v. Smith, 298 Ga. 716, 784 S.E.2d 422, 424 (2016) (quotations omitted). Where an insurance policy's terms are unambiguous, the Court must apply them regardless of whether the carrier or the insured benefits. Id.
As set forth above, the Change Endorsement required that: (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 parties do not dispute that Mr. Ofer submitted to a private screening at all airports and did not check the jewelry as baggage. See Dkt. No. [43] at 22-23. Rather, Defendant argues that Mr. Ofer failed to comply with the plain terms of the Change Endorsement because he stored the Ring in the combination safe in his cabin, instead of a two-keyed safe as specified in the Change Endorsement. See Dkt. No. [32-1] at 16.
Plaintiff offers three arguments in response. First, Plaintiff asserts that it was impossible for Mr. Ofer to strictly comply with the Change Endorsement because the cruise ship cabin did not have a two-keyed safe and the cruise ship jeweler refused to store Mr. Ofer's inventory. See Dkt. No. [43] at 23. Under Georgia law, "impossibility of performance of a contract covenant personal to the promisor does not excuse nonperformance." Calabro v. State Med. Educ. Bd., 283 Ga.App. 113, 640 S.E.2d 581, 584 (2006) (quotation omitted). In other words, "subjective impossibility, that is, impossibility which is personal to the promisor and does not inhere to the nature of the act performed, does not excuse nonperformance of a contractual obligation." Hampton Island, LLC, v. HAOP, LLC, 306 Ga.App. 542, 702 S.E.2d 770, 775 (2010) (citing Bright v. Stubbs Props., 133 Ga.App. 166, 210 S.E.2d 379, 380 (1974) ).
Mr. Ofer conceded during his deposition that, upon realizing his cabin did not have a two-keyed safe, he could have complied with the terms of the Change Endorsement by wearing the inventory on his person during the cruise but felt that doing so "just didn't make sense." Dkt. No. [38-4] at 30. Mr. Ofer explained that he believed it was riskier to store the jewelry on his person while, for example, he was swimming, than it was to keep the inventory in his cruise cabin safe. See id. at 29-30. But subjective inconvenience is not commensurate with objective impossibility; indeed, it is axiomatic that "[m]ere unexpected difficulty ... does not excuse nonperformance." EZ Green Assocs., LLC v. Georgia-Pacific Corp., 318 Ga.App. 655, 734 S.E.2d 485, 490 (2012) (citation omitted); see also Bright, 210 S.E.2d at 380 ("That it may be unwise or disadvantageous or place hardship on one party furnishes no reason for not enforcing the contract as made."). It is undisputed that Mr. Ofer could have worn the jewelry on his person but chose not to do so. Accordingly, any alleged impossibility was personal to Mr. Ofer and is unavailing as a defense to Plaintiffs contractual obligations under the Change Endorsement.
In a footnote, Plaintiff argues that "no matter what kind of safe was in the cabin, the cruise ship crew would necessarily have access to the cabin safe ..." Dkt. No. [43] at 23 n.5. This argument entirely misses the mark, as "an insurance company is free to fix the terms of its policies as it sees fit, so long as such terms are not contrary to law." Henning v. Cont'l Cas. Co., 254 F.3d 1291, 1295 (11th Cir. 2001) (citation omitted). In other words, the Court will not question the wisdom of specifying a two-keyed safe because it is not contrary to law for Defendant to include such a term in its policy.
Nor does the fact that the cruise ship jeweler refused to store Mr. Ofer's inventory alter the Court's analysis of Plaintiffs impossibility defense. See Dkt. No. [43] at 23. "The inability to control the actions of a third person whose consent or cooperation is needed for the performance of an undertaking is ordinarily not to be regarded as an impossibility avoiding the obligation." Bright, 210 S.E.2d at 380 ; see also In re Rohrig Invs., L.P., 584 B.R. 382, 409 n.17 (Bankr. N.D. Ga. 2018) ("[U]nder Georgia law, a lack of cooperation by a third party generally is not a basis to relieve a contracting party of its obligations under the contract."). That Mr. Ofer was unable to store his inventory with the cruise ship jeweler does not excuse his failure to comply with the terms of the Change Endorsement.
Second, Plaintiff argues that the two-keyed requirement is unenforceable because Defendant did not check with the cruise line to determine whether the ship cabin would have a two-keyed safe. See Dkt. No. [30-2] at 22. According to Plaintiff, by "haphazardly" issuing the Change Endorsement without verifying that the cruise ship had compliant safes, Defendant placed Plaintiff in the "untenable position of having to exercise his own best judgment as to how to secure the jewelry inventory" while on the cruise. Id. But "an insurance company is free to fix the terms of its policies as it sees fit, so long as such terms are not contrary to law." Henning, 254 F.3d at 1295 (citation omitted). Here, the Change Endorsement offered three options for storing the inventory. Plaintiff offers no authority for its proposition that Defendant was under any obligation to verify that all three options would be available to Plaintiff.
Moreover, under Georgia law, "[i]nsurance is a matter of contract and the parties are bound by the terms of the policy.... It also the general rule that the insured is charged with knowledge of all the conditions imposed upon him by the terms of his policy." Richmond v. Ga. Farm Bureau Mut. Ins. Co., 140 Ga.App. 215, 231 S.E.2d 245, 249-50 (1976). Plaintiff, through Mr. Ofer, was fully aware of the conditions of the Change Endorsement and agreed to the terms. See Dkt. No. [43-1] ¶¶ 7-8. Having agreed to be bound, Plaintiff was not then permitted to substitute its own judgment for the Change Endorsement's clear and unambiguous terms. See Durden v. State Farm Fire and Casualty Co., 238 F. Supp. 3d 1370, 1378 (N.D. Ga. 2017) ("Where the terms and conditions of an insurance contract are clear and unambiguous, they must be given their literal meaning."). As such, Plaintiffs argument as to Defendant's purportedly haphazard drafting of the Change Endorsement is without merit.
That the Change Endorsement was not formally issued until August 28, 2017 is irrelevant because an insurer may rely on conditions and exclusions in a policy, even if a policy is not delivered until after the loss, so long as "the insured otherwise had notice" of the terms. Williams v. Fallaize Ins. Agency, Inc., 220 Ga.App. 411, 469 S.E.2d 752, 756 (1996) (quotation omitted). As set forth above, the parties do not dispute that Plaintiff had notice of the terms of the Change Endorsement.
Finally, Plaintiff contends that enforcing the strict terms of the Change Endorsement would run counter to Georgia public policy, which disfavors insurance provisions that permit an insurer-at the expense of the insured-to avoid the risk for which the insurer has paid and reasonably expects is covered. See Dkt. No. [45] at 10 (citing Barrett v. Nat'l Union Fire Ins. Co. of Pittsburgh, 304 Ga.App. 314, 696 S.E.2d 326, 330 (2010) ). While it is true that it would violate the public policy of Georgia to allow Defendant to sell Plaintiff a policy that excluded all possibility of recovery for loss of the Ring, that is not what occurred in this case. The Change Endorsement required Plaintiff to carry the jewelry concealed on the body "unless secured in a two-keyed sage or stored with a jewelry dealer." Dkt. No. [32-8] at 6. Mr. Ofer conceded that he could have carried the jewelry on his person but decided not to do so. See Dkt. No. [38-4] at 30. Given that Plaintiff admittedly did not comply with the explicit terms of the Change Endorsement, the Court sees no basis upon which to find that the Change Endorsement allowed Defendant to avoid all risk, in contravention of Georgia public policy.
Further, the Court finds that the Change Endorsement does not run afoul of Georgia public policy because both the Eleventh Circuit and the Georgia Court of Appeals have upheld denial of coverage where the insureds were required to keep the jewelry in their physical custody during travel and failed to so. For example, in Aydin and Co. v. Jewelers Mut. Ins. Co., the Eleventh Circuit determined that an insurer did not breach its contract with an insured jewelry retailer when it denied coverage for jewelry that the owner allegedly lost after he checked his carry-on bag during a flight. 426 F. App'x 760, 761-63 (11th Cir. 2011). The court reasoned that no breach occurred because the owner did not comply with the policy's explicit requirement that he maintain physical custody over the jewelry during the flight. See id. In a similar vein, in Williams, the Georgia Court of Appeals affirmed denial of coverage for theft of jewelry, based on the policy's unattended vehicle exclusion, where an unknown person stole jewelry out of the insured's car while she was inside a store. 469 S.E.2d at 754-55. As multiple courts have upheld policies requiring that jewelry be kept in the physical custody of the insured while off premises, the Court is not convinced that the Change Endorsement violates Georgia public policy.
In light of the foregoing, the Court finds that Plaintiff failed to comply with the terms of the Change Endorsement and is therefore not entitled to recover for the loss of the Ring. Having arrived at this conclusion, the Court need not determine whether Plaintiffs loss is also precluded by the Policy's exclusion for "unexplained loss." Plaintiffs Motion for Summary Judgment [30] is DENIED and Defendant's Motion for Summary Judgment [32] is GRANTED.
IV. CONCLUSION
Plaintiffs Motion for Summary Judgment [30] is DENIED. Plaintiffs Motion for Oral Argument [36] is DENIED. Defendant's Motion for Summary Judgment [32] is GRANTED. The Clerk is DIRECTED to CLOSE this case.
IT IS SO ORDERED this 1st day of July, 2019.