Ellig v. Molina

996 F.Supp.2d 236 (2014)

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Nature of the Case

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Facts

Ps and D met on an around-the-world trip in 2007. D operates two jewelry stores under the name Molina Fine Jewelers (MFJ). D was a regular guest in P's home when he came to New York for business. They also traveled together to Eastern Europe, Sicily, and the Caribbean. D always spoke about diamonds as an investment. P was fiscally conservative and invested primarily in municipal bonds. Mrs. Ellig's 65th birthday was in 2011. D suggested that P buy her a large diamond ring. P was contemplating a gift in the range of a couple of hundred thousand dollars, and D told him that a large diamond befitting his wife would cost three times that amount. P told D that if he were even to consider spending that kind of money, the purchase would have to be not only a gift but also an investment. P indicated that the appropriateness of the investment depended on his ability to get his money back. D stated that, if P purchased the ring and was unhappy with it for any reason at all, he would buy it back within a year for the full purchase price plus a guaranteed 10%. The agreement was not: reduced to writing. D repeated the benefits of investing in diamonds and the guarantee he was providing every time the topic was discussed on many occasions. The terms of the guarantee remained the same. Ps never discussed purchasing a loose diamond; their discussions always related to a wearable diamond ring. Mrs. Ellig expressed to D her concern that, given the price of the ring, she had to be certain it was a good investment. D told her in substance not to worry, that diamonds were an investment that did not lose value and that he would repurchase the ring and guarantee another 10% if Ps were not happy with it. Ps agreed to buy a ring for over $700,000. They did so in reliance on the specific and repeated representations by D regarding the buy-back promise. Not once did D tell Ps that the repurchase agreement was based on a consignment resale. D showed up with a 10-carat ring. Mrs. Ellig had some concerns about clarity and D stated that the ring was a good deal and that what she was noticing was its blue fluorescence, which made it even more valuable. P paid $651,188. The purchase of the ring and the terms of return were solely with D, but the invoices for the ring were in the name of MFJ, and payments were made to Molina Inc. D also provided an appraisal for insurance purposes, which valued the ring for $925,000. Ps' dissatisfaction was almost immediate. Independent valuations came in at a number far lower than what Ps had paid. Ps decided to return the ring. Ps called D at the end of May or beginning of June 2012. On July 11, 2012. D sent Ps a letter, which confirmed that the parties had an agreement with respect to the return of the ring. The letter stated that D had to resell the stone prior to returning the monies. P refused to turn over the ring without payment as he knew D had debts and the proceeds may be used to satisfy a creditor and not returned to P. P sued D for breach of contract.