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The Case of the Missing Pink Diamond

Businessowners special insurance policy found not to cover defense of fraud counterclaim for missing 5.56-carat pink diamond

By Steven A. Meyerowitz, Esq., Director, FC&S Legal | Updated on March 28, 2014
(c) United Artists

The U.S. Court of Appeals for the Sixth Circuit, affirming a district court decision, has found that a businessowners special insurance policy did not provide coverage for the defense of a fraud counterclaim asserted against the shipper of a missing 5.56-carat pink diamond.

The CaseJohn Stafford and U.S. Diamond & Gold, doing business as Stafford’s Jewelers (together, “Stafford”), shipped a 5.56-carat pink diamond to Julius Klein Diamonds (“JKD”). Stafford packaged the diamond and arranged for The Brinks Company to provide secured transportation from Dayton, Ohio, to New York City. JKD received the package the same day Stafford shipped it. JKD claimed that upon opening the package, however, the diamond was missing.

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