RAPAPORT... Jewelry Television sued Lloyd’s of London (defendants include syndicate underwriters for the block of policies) as a result of a criminal scheme the company suffered from thefts of jewelry during a 13-month period in 2006 and early 2007.
Jewelry Television, based in Knoxville, filed the case in U.S. District Court in Tennessee. The company seeks $1.6 million plus costs, prejudgment interest, and legal fees.
According to the court documents: "Tracey Ball placed orders for approximately $3.5 million" in jewelry and made the purchases with electronic checks from an account at JP Morgan Chase.
"Unbeknownst to Jewelry Television, [Ball's] account was owned by the Office of the Comptroller of the City of New York," the court papers read.
The network grew suspicious of the transactions early in 2007 and suspended shipments to Ball in March that year. On March 29, the network and JP Morgan were told the account was owned by The City of New York, and the comptroller affirmed the transactions had not been approved.
Paymentech, for JP Morgan, then processed returns of about $1.41 million, but the purchased jewelry were never returned to the company. In April, Paymentech seized another $1.48 million from Jewelry Television's account.
Jewelry Television claims it lost nearly $3 million in pearls, diamonds, gemstones, gold and silver, with a replacement cost running more than $1.6 million. The network wrote that insurers initially cooperated with the plaintiff, but on August 24, 2007, defendants denied coverage saying each shipment to Ball triggered the $10,000 deductible.
"Defendants knew or should have known during its underwriting and marketing of the policies that less than 1/2 of 1 percent of the orders shipped by Jewelry Television have a cost or replacement value in excess of $10,000 and thus, according to defendants, virtually none of Jewelry Television’s sales would be covered."
The network claims defendants breached the insurance contracts, and acted in bad faith since failure to payout the claim inflicts expenses, loss and injury to Jewelry Television.
Jewelry Television also seeks expenses of attorney fees necessary to "prosecute this action and to file suit against Paymentech and JP Morgan."