Case Name: RANGER INSURANCE COMPANY, a foreign corporation, Appellant, v. BAL HARBOUR CLUB, INC., Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1987-06-09
Citations: 509 So. 2d 945
Docket Number: No. 84-918
Parties: RANGER INSURANCE COMPANY, a foreign corporation, Appellant, v. BAL HARBOUR CLUB, INC., Appellee.
Judges: Before SCHWARTZ, C.J., and BARKDULL, HENDRY, HUBBART, NESBITT, BASKIN, DANIEL S. PEARSON, FERGUSON and JORGENSON, JJ.
Reporter: Southern Reporter, Second Series
Volume: 509
Pages: 945–952

Head Matter:
RANGER INSURANCE COMPANY, a foreign corporation, Appellant, v. BAL HARBOUR CLUB, INC., Appellee.
No. 84-918.
District Court of Appeal of Florida, Third District.
June 9, 1987.
Joe N. Unger, Corlett, Killian, Harde-man, McIntosh & Levi, Miami, for appellant.
Mershon, Sawyer, Johnston, Dunwody & Cole and James M. McCann, Jr., Miami, for appellee.
Before SCHWARTZ, C.J., and BARKDULL, HENDRY, HUBBART, NESBITT, BASKIN, DANIEL S. PEARSON, FERGUSON and JORGENSON, JJ.

Opinion:
ON REHEARING EN BANC
NESBITT, Judge.
While Ranger Insurance Company's (Ranger) motion for rehearing was pending, we requested supplemental briefs from the parties on whether public policy considerations prevents recovery by Bal Harbour Club, Inc. (Bal Harbour) on the insurance contract at issue in this case. We subsequently granted Ranger's motion for rehearing en banc. After reviewing the authorities and arguments of counsel, we conclude recovery should not be precluded by public policy, and Ranger, after accepting premiums, must provide coverage for a claim falling within the personal injury liability provision of the policy.
No Florida case has decided the precise issue considered in this case, namely, whether public policy prohibits recovery under an insurance contract for losses paid by an insured as a result of acts that amount to intentional discrimination. There are some cases, however, which have allowed coverage for intentional acts and appear to support the result we reach here. For example, this court, in Hartford Fire Ins. Co. v. Spreen, 343 So.2d 649 (Fla. 3d DCA 1977), affirmed a judgment for an insured, finding coverage for damages which the insured had incurred as the result of an intentional assault and battery.
The Florida supreme court, in Everglades Marina, Inc. v. American E. Dev. Corp., 374 So.2d 517 (Fla.1979), held that it is not contrary to public policy to allow third-party beneficiaries of an insurance policy to recover benefits for losses caused by an intentional, criminal act of the insured. We recognize that the holding was specifically limited to recovery by innocent third-party beneficiaries. The supreme court's concern for compensation to innocent third parties is, however, also a justification for the result we reach here. While the public policy of this state condemns intentional acts of discrimination, just as it does criminal acts, prohibiting insurance coverage for such discriminatory acts will have an adverse impact upon a competing public policy by frustrating recovery for damages suffered by the victims of such discrimination. Since the insured benefits no more when payment is made directly from the insurer to the victim than when he is indemnified for a payment he makes to the victim himself, it makes little sense to prohibit such coverage and thereby frustrate the recovery of damages by innocent third parties.
Other jurisdictions, when faced with the issue presented here, have generally avoided it. See Solo Cup Co., 619 F.2d at 1187 (since intentional discrimination was not covered by the contract of insurance, as coverage was limited to "occurrences" which did not include intentional acts, the court did not consider whether public policy would have prevented coverage for the alleged acts of intentional discrimination); City of Greensboro v. Reserve Ins. Co., 70 N.C.App. 651, 321 S.E.2d 232, 236 (1984) (the court did not reach the merits of the insurer's argument that insurance against intentional acts of discrimination was against public policy because it could not determine from the record whether the alleged acts were of a discriminatory nature); School District No. 1, 650 P.2d at 936 n. 4, 946 (because the court concluded that intentional discrimination was excluded from coverage by the various insurance policies involved, it declined to decide whether intentional discrimination would be uninsura-ble as a matter of public policy). Dicta in City of Greensboro, however, does support our conclusion in the present case.
The [insurer] maintains that the . claims are uninsurable, asserting that insurance against intentional acts of a discriminatory or unconstitutional nature is against public policy, and such insurance is therefore void. Although any contract of insurance contrary to public policy is invalid and unenforceable, . we do not reach the merits of this issue. Although we do not believe these claims are unin-surable, it is impossible to determine from the record whether the [claims] are founded on acts of a discriminatory or unconstitutional nature.
321 S.E.2d at 236 (emphasis added) (citation omitted). In Union Camp Corp., 452 F.Supp. at 565, the district court was faced with the issue of whether "an insurance policy that insures an employer against losses resulting from racially discriminatory practices under Title VII and 42 U.S.C. § 1981 [is] violative of public policy[.]" 452 F.Supp. at 566. After reviewing the arguments presented on both sides of the issue, the court held against the insurance company, finding:
The proposition that insurance taken out by an employer to protect against liability under Title VII will encourage violations of the Act is based on an assumption that is speculative and erroneous. Defendant's [insurer's] conclusion is but an a priori response to the relation between violations of statutes forbidding discriminatory practices and the existence of insurance protecting against same. The argument assumes that employers would deliberately violate the law because their actions are protected by insurance.
Continental and other insurers which have issued policies containing such clauses have not up to now conceived that they were violating public policy by writing insurance policies insuring against losses resulting from discriminatory employment practices. Neither Congress no EEOC has interdicted such contracts. Only the insurer of the policy sued on makes such a claim. Exercise of the freedom of contract is not lightly to be interfered with. It is only in clear cases that contracts will be held void as against public policy.... This is not one.
452 F.Supp. at 567-68 (citations omitted).
In Harris v. County of Racine, 512 F.Supp. 1273 (E.D.Wis.1981), however, the court held, in a 42 U.S.C. § 1983 action, that it is not against public policy for an insurer to provide a government entity with coverage for punitive damages awarded for an intentional act of racial discrimination. By necessary implication the case stands for the proposition that those same entities may, without offending public policy, insure against compensatory damages awarded as a result of an intentional discriminatory act. The court emphasized the public policies favoring freedom of contract and enforcement of contracts according to their terms and noted the ease with which an insurer can exclude coverage for intentional acts of discrimination.
More than 70,000 claims of discrimination in employment were filed with the Equal Employment Opportunity Commission in 1983. See Complaints Statistical Reportings System, Fiscal Year 1984, Summary. In addition, unknown numbers of suits are filed each year alleging discrimination in housing, health services, access to public facilities and other areas. Some of these claims are founded and some are unfounded. The payment of a large award and imposition of attorney's fees in a discrimination case conceivably could cripple an employer financially or even put the offending company out of business. See Union Camp, 452 F.Supp. at 568. Employers and businesses must be permitted to take steps to protect themselves from these suits.
Allowing recovery on the contract of insurance in the present case does not limit or infringe upon the constitutional rights of either party or the victims of the discrimination. Contrary to Ranger's contentions, allowing insurance coverage for acts that amount to discrimination does not validate or encourage such actions any more than allowing coverage for other wrongful acts encourages those actions. See Hartford Fire Insurance Co. (upholding summary judgment against insurance company on defendant-insured's third-party claim for coverage under policy for damages arising from his assault and battery on plaintiff-victim). Further, as Bal Harbour points out, the marketplace itself will discourage wrongful acts of discrimination. Since insurance companies have a strong interest in avoiding claims, an entity with a history of discrimination will be unable to procure coverage. In addition, insurers can contractually exclude coverage for damages arising from acts that amount to intentional discrimination. See Solo Cup; Union Camp; School District No. 1. Cf. City Council of Elizabeth v. Fumero, 14 N.J. Super. 275, 362 A.2d 1279, 1285 (1976) (insurer may contractually eliminate certain legal theories of recovery, such as civil rights actions under the federal statutes, from the protection provided by the policy). Finally, wrongdoers can be adequately punished under present law by the imposition of punitive damages, where appropriate, since it is against the public policy of this state to insure against such damages. See U.S. Concrete Pipe Co. v. Bould, 437 So.2d 1061, 1064 (Fla.1983). Thus, the public policy of this state is adequately served by the marketplace and the present state of the law, which provide disincentives sufficient to discourage intentional discrimination. Consequently, prohibiting insurance coverage in discrimination actions is not necessary; likewise, enforcing such a prohibition would not be desirable from the standpoint of the victims of discrimination. Accordingly, the motion for rehearing en banc is denied.
Given the importance of the interests involved, we certify, pursuant to Article 5, section 3(b)(4), of the Florida Constitution, the following question as one of great public importance:
Does the public policy of Florida prohibit an insured from being indemnified for a loss resulting from an intentional act of religious discrimination?
SCHWARTZ, C.J., and HENDRY, HUBBART, BASKIN and JORGENSON, JJ., concur.
. The precise issue we requested briefs on was, "whether the 'public policy of this state should prohibit the enforcement of an insurance contract covering damages arising from a tortious interference with a contract when the tortious interference involved amounts to intentional religious discrimination." Although this issue was never raised by the parties in the trial court or on appeal, we have discretion to review the matters because of the implications of constitutional ramifications raised by Judge Ferguson's dissent to the majority opinion. See Marinelli v. Weaver, 187 So.2d 690, 693-94 (Fla. 2d DCA 1966).
. Rehearing en banc was granted because the case is considered of exceptional importance. See Fla.R.App.P. 9.331(a).
. Courts addressing the issue have consistently held that it is not contrary to public policy to insure against damages resulting from an unintentional discrimination. See Solo Cup Co. v. Federal Ins. Co., 619 F.2d 1178 (7th Cir.), cert. denied, 449 U.S. 1033, 101 S.Ct. 608, 66 L.Ed.2d 495 (1980); School Dist. No. 1, Multnomah County v. Mission Ins. Co., 58 Or.App. 692, 650 P.2d 929 (1982), review denied, 294 Or. 682, 662 P.2d 725 (1983). Our decision in the present case, by logical consistency, necessarily aligns us with this position.
. Obviously, all perpetrators of discrimination will not be sufficiently solvent to cover damages sustained by the victims of the discrimination. See Union Camp Corp. v. Continental Casualty Co., 452 F.Supp. 565, 568 (S.D.Ga.1978) (recognizing this possibility and finding that insurance coverage for racially discriminatory employment practices is not against public policy).
. It has been argued that while innocent third parties should be able to enforce such provisions, insureds should not. Such a rule will simply discourage the insured from settling or satisfying the third party's claim, forcing the victim to recover from the insurer.
. We acknowledge that the claims involved in Union Camp were not limited to acts of intentional discrimination. Racially discriminatory employment practices are actionable in some instances even where there is no intention to discriminate (where the claim is based upon the disparate impact of an employment practice). See Solo Cup Co.; School Dist. No. 1. In Union Camp, the court indicated that the policy involved would not cover intentional or consensual acts of discrimination since such acts were excluded by the terms of the policy. 452 F.Supp. at 566, 568. Nevertheless, the court's findings and conclusions closely parallel this court's conclusions in the present case where the terms of the policy involved do not exclude coverage for intentional acts of discrimination.
. Additionally, absent insurance coverage, the victims of discrimination may be left with an uncollectible judgment and, thus, not fully compensated for the damages they sustained. See supra note 3 and accompanying text.