Jim Dey: When it involves matrimony, diamonds really are forever
May 8—George Dana suffered from a double case of buyer's remorse.
First, there was his marriage to wife Chrysoula. Then there was that engagement ring — a "white-gold ring with one 3.57-carat pear-shaped diamond."
The stone was valued at $139,906.
He took her ring after one of their fights. Later, during divorce proceedings, he was ordered to return it.
George gave the ring back. But, according to his wife's claims, he replaced "the natural diamond in her ring ... with a synthetic diamond."
George denied switching the stone. He told an insurance investigator that his wife — now his ex-wife — may have pawned the diamond "to support her gambling habit."
One thing led to another, as these things do, eventually ending up in court.
Chrysoula sued. But she didn't target George. Instead, she went after the Great Northern Insurance Co. for denying her compensation for the missing diamond.
Great Northern's insurance policy identified both George and Chrysoula as "insureds." The insurance company denied the claim because, not unreasonably, it contends the policy excluded coverage "where one of the insureds took the ring and replaced the real diamond" with a phony one.
The insurance company did not care whether George or Dana was responsible for the missing diamond because "neither of them was entitled to recover because they were both insured under the policy."
A state appeals court last week affirmed a lower court's ruling for Chrysoula and against the insurance company. It cited the "innocent insured doctrine" for its ruling.
Circuit Judge Eve Reilly and a unanimous three-judge appellate panel both found that the "innocent insured doctrine" is applicable because "the policy did not contain a clear statement that the policy is void as to all insured, in the event of wrongdoing by one of the insureds."
The appellate court affirmed the trial judge's decision to award Chrysoula $176,356.
What is the innocent insured doctrine? It is a provision in law that, unless specifically excluded by an insurance policy, "allows an insured who is innocent of wrongdoing to recover despite the wrongdoing of other insureds."
The case of the missing diamond is a rare one when it comes to innocent insureds.
Appellate Justice Mary Ellen Coghlan said it usually is invoked in cases "involving arson or vandalism."
By way of precedent, the court cited a 2004 case in which "a plaintiff was entitled to recover losses after his stepson intentionally set fire to plaintiff's garage."
In another case involving intra-family vandalism, the appellate court held "that the policy language did not preclude a husband and wife recovering after their son vandalized property in the family's home."
Why?
"It was reasonable for the husband and wife to have assumed that their rights and obligations were not dependent upon those of their children," the court explained.
"Like the property owners (in those cases), Chrysoula was deprived of the use of her property through no fault of her own," Coghlan explained.
It's quite the mess, one that could have been avoided if George had used his head instead of his heart.
Instead of a real 3.57-carat diamond, George could have used a less-expensive industrial diamond or a zircon, the colorful gem that can mimic diamond.
