RANGER INSURANCE COMPANY, Petitioner, v. BAL HARBOUR CLUB, INC., Respondent, 549 So. 2d 1005

SHAW, Justice. We have for review Ranger Insurance Co. v. Bal Harbour Club, Inc., 509 So.2d 945 (Fla. 3d DCA 1987), in which the district court certified the following question: Does the public policy of Florida prohibit an insured from being indemnified for a loss resulting from an intentional act of religious discrimination? 509 So.2d at 948. We have jurisdiction. Art. V, § 3(b)(4), Fla. Const. We answer the question in the affirmative and quash the decision of the district court. Phil and Roña Skolnick contracted to purchase real property in the residential

section of Bal Harbour in Dade County. The property at one time was subject to a deed restriction that prohibited occupation by anyone not a member of the Caucasian race or having more than one-fourth Hebrew or Syrian blood. Although the restriction expired by its own terms in 1968, the deed additionally provided that the seller could not convey the property to any person who was not a member of the Bal Harbour Club (the Club).

The Skolnicks applied for membership in the Club and after their application was returned as “incomplete,” they filed a complaint against the Club, alleging that the membership requirement was a sham to prevent Jewish persons from occupying the property. The Skolnicks alleged that the Club’s failure to approve their application constituted a willful disregard of their rights and precluded them from obtaining good and marketable title. The Club called upon Ranger Insurance Company (Ranger) for coverage and defense of the suit pursuant to the Club’s liability insurance policy.

Ranger defended the action under a reservation of rights, questioning its obligation to provide coverage. The lawsuit was settled, with the advice and consent of Ranger, by the Club paying $25,000 to the Skolnicks. Ranger refused to indemnify the Club for the amount of the settlement and sought a declaratory decree that no coverage existed under the policy. The Club filed a counterclaim for a determination of coverage and attorney’s fees. After the parties stipulated that the trial court “could decide the coverage issue based solely upon the allegations of the complaint,” the trial court entered final

summary judgment in favor of the Club, ordered Ranger to pay the Club $25,000, and reserved jurisdiction to tax costs and attorney’s fees. The judgment was affirmed on appeal. While Ranger’s motion for rehearing was pending before the district court, the court directed the parties to file supplemental briefs on the issue of whether the public policy of the state should prohibit the enforcement of an insurance contract covering damages arising from intentional religious discrimination.

On rehearing en banc, the district court concluded that the public policy did not preclude recovery and certified the above question. The Club asserts that the question should be answered in the negative for a number of reasons, including the following: private parties should be allowed to freely contract for coverage; such coverage should be encouraged so that the victims of discrimination can receive compensation for their injuries; indemnification for intentional wrongs is permitted under current case law; and the threat of punitive damages adequately deters discrimination.

The Club, as did the district court, asserts that such coverage will not encourage intentional religious discrimination. Unintentional discrimination is clearly a legitimate business risk and as such is insurable. The bulk of cases allowing coverage for discriminatory acts are concerned with accidental or unintentional discrimination and do not address the issue of intentional discrimination. These cases provide no guidance for us here. We note that the insurance departments of at least two states have prohibited insurance coverage for acts of intentional discrimination.

See Willborn, Insurance, Public Policy, and Employment Discrimination, 66 Minn.L. Rev. 1003, 1005 n. 10 (1982). In determining whether a particular policy of civil liability insurance is opposed to public policy, we look to two factors: the conduct of the insured (is it a type that will be encouraged by insurance?), and the purpose served by the imposition of liability for that conduct (is it to deter wrongdoers or compensate victims?). See Comment, Insurance Against Civil Liability for Employment Discrimination, 80 Colum.L. Rev. 192, 195-97 (1980).

An examination of the first factor leads to the determination of whether the existence of insurance will directly stimulate commission of a wrongful act, and an examination of the second factor leads to the determination of whether deterrence or compensation should be given priority. THE NATURE OF THE CONDUCT It is axiomatic in the insurance industry that one should not be able to insure against one’s own intentional misconduct. See, e.g., 12 J. Appleman & J. Appleman, Insurance Law and Practice § 7031 (1981); 9 G. Couch, Couch Cyclopedia of Insurance Law § 39.15 (1985).

The rationale underlying this rule is that the availability of insurance will directly stimulate the intentional wrongdoer to violate the law. Florida courts recognize this general rule and they have allowed exceptions only in individualized cases where innocent third parties were involved or it appeared unlikely that the wrongful act could have been produced by the prospect of coverage. See, e.g., Everglades Marina, Inc. v. American Eastern Dev. Corp., 374 So.2d 517 (Fla.1979) (unplanned consequence of arson held insurable); Hartford Fire Ins. Co. v.

Spreen, 343 So.2d 649 (Fla. 3d DCA 1977) (spontaneous assault and battery provoked by sexual comment concerning wife). See also Hussar v. Girard Life Ins. Co., 252 So.2d 374 (Fla. 2d DCA 1971) (no coverage for intentionally inflicted wounds). A blanket exception for intentional religious discrimination, as the Club and district court propose, clearly violates the rule.

In its opinion, the district court concluded that: 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. Ranger, 509 So.2d at 948. The district court’s conclusion sweeps too broadly when it compares acts of intentional religious discrimination to other wrongful acts and finds them undistinguishable for purposes of liability coverage.

Assault and battery, arson, and reckless and drunken driving are crimes and as such involve substantial deterrents independent of potential civil liability. Risk of personal injury is a further disincentive to the negligent, reckless, or drunken driver. Intentional religious discrimination, on the other hand, is not a crime, and no risk of injury exists to discourage the prejudiced from intentionally harming others by the exercise of their religious biases.

Both the Club and the district court indulge the supposition that making intentional religious discrimination insurable wijl not encourage such discrimination. This supposition is lacking in empirical support and defies human experience. The United States Court of Appeals, Seventh Circuit, had no difficulty in making the common sense connection between insurance and discrimination: Once a person has insurance, he will take more risks than before because he bears less of the cost of his conduct. A person with insurance on his driving may take less care on the road.

Insurance therefore tends to increase the likelihood that the insured risks will come to pass. Sometimes the increase is likely to be small — the driver is probably more interested in his own neck than in small increases in his financial liability. Other risks, however, could be affected more substantially. - If an insurance policy were to cover a city’s wilful racial discrimination, the people making policy for the city could indulge their own preference for discrimination at little risk to themselves. The city would pay in higher rates, but given the insurance each employee would be more likely to discriminate.

Western Casualty and Surety Co. v. Western World Ins. Co., 769 F.2d 381, 385 (7th Cir.1985). DETERRENT vs. COMPENSATION The second step in determining whether a particular type of liability insurance violates public policy is to examine the purpose that is served by the imposition of liability. If the primary purpose is to compensate victims, indemnification may be suitable. If, on the other hand, the primary purpose is to deter wrongdoers, then indemnification should not be the paramount consideration.

We conclude that the primary purpose served by the imposition of liability for intentional acts of wrongful discrimination is to deter wrongful discrimination. Because of the unique nature of intentional discrimination, however,, the two policies (compensation and deterrence) are not incompatible. Florida has a long-standing policy of opposing religious discrimination.

Article I,

section 2 of the Florida Constitution provides: Basic rights. — All natural persons are equal before the law and have inalienable rights, among which are the right to enjoy and defend life and liberty, to pursue happiness, to be rewarded for industry, and to acquire, possess and protect property; except that the ownership, inheritance, disposition and possession of real property by aliens ineligible for citizenship may be regulated or prohibited by law.

No person shall be deprived of any right because of race, religion or physical handicap. (Emphasis added.) Pursuant to this provision, the legislature has passed numerous laws banning religious discrimination in various practices. Intentional discrimination claims tried in Florida generally arise under the state’s numerous antidiscrimination statutes, particularly under the Human Rights Act of 1977, sections 760.01-760.10, Florida Statutes (1987) (employment discrimination), and the Fair Housing Act, sections 760.20-760.37, Florida Statutes (1987).

The primary purpose for imposing liability under these acts is undeniably to deter discrimination. The Human Rights Act clearly states: 760.01 Purposes; construction; title.—

(2) The general purposes of ss. 760.-01-760.10 are to secure for all individuals within the state freedom from discrimination because of race, color, religion, sex, national origin, age, handicap, or marital status and thereby to protect their interest in personal dignity, to make available to the state their full productive capacities, to secure the state against domestic strife and unrest, to preserve the public safety, health, and general welfare, and to promote the interests, rights, and privileges of individuals within the state. (Emphasis added.) And the Fair Housing Act provides: 760.21 State policy on fair housing. —It is the policy of this state to provide, within constitutional limitations, for fair housing throughout the state.

Whatever victim compensation takes place under these acts is secondary to deterring discrimination. Florida’s Human Rights Act appears to be patterned after Title VII of the federal Civil Rights Act of 1964, and no doubt has ever existed as to the main purpose of the federal act: This record, and its subsequent

interpretation by the courts, leaves no doubt that the primary purpose of Title VII is to eliminate discrimination in employment and that its secondary purpose is to compensate victims of discrimination. Comment, supra, at 197 (footnotes omitted). The Club implies that if intentional discrimination were not to be held insurable many victims of discrimination would be unable to collect on their damage awards. We disagree. The bulk of discrimination cases are brought against commercial enterprises that have discriminated in the marketplace or workplace.

These businesses generally have far greater resources than do individuals and to hold the acts of such parties uninsurable would result in relatively few instances where the injury would go uncompensated. Such was the case in the present claim. As to the Club’s claim that intentional discrimination is adequately deterred by the threat of punitive damages, we point out that to deter effectively, punishment must be reasonably certain. Punitive damages would appear to be awarded with insufficient frequency in statutory discrimination cases to make punishment certain by any means.

In fact, punitive damages are not even mentioned under the state’s premier antidiscrimination statute, the Human Rights Act. See §§ 760.01-760.10, Fla.Stat. (1987). Cf. Comment, supra, at 199 n. 46 (punitive damages are generally unavailable under Title VII). In private actions arising under, Florida’s Fair Housing Act, punitive damages are statutorily limited to no more than $1,000, a token wrist slap to a large corporate offender. § 760.35, Fla.Stat. (1987). Based on the foregoing, we answer the certified question in the affirmative and quash the decision of the district court.

In so doing, we hold that the public policy of Florida prohibits an insured from being indemnified for a loss resulting from an intentional act of religious discrimination. We remand for further proceedings consistent with this opinion. It is so ordered. OVERTON, BARKETT, GRIMES and KOGAN, JJ., concur. EHRLICH, C.J., dissents with an opinion. McDONALD, J., dissents. . The public policy issue in the certified question was neither raised in nor decided by the trial court and was not an issue urged by Ranger before the original panel of the district court.

A panel of,the district court originally affirmed the trial court's order granting

summary judgment in favor of the Bal Harbour Club on the basis that the claim fell within the personal injury liability coverage of the policy and no exclusions applied. Ranger Ins. Co. v. Bal Har-bour Club, Inc., 509 So.2d 940, 944 (Fla. 3d DCA 1985). . Courts generally have characterized the terms "disparate impact” and "disparate treatment," which arise primarily in employment discrimination claims, as referring to unintentional and intentional discrimination respectively. See, e.g., E-Z Loader Boat Trailers, Inc. v.

Travelers Indemnity Co., 106 Wash.2d 901, 726 P.2d 439 (1986). .No reported case has been brought to our attention that has directly addressed the issue of whether insurance coverage for intentional discrimination by a private or corporate entity violates public policy. Several have expressly avoided the issue. See, e.g., 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); City of Greensboro v. Reserve Ins. Co., 70 N.C.App. 651, 321 S.E.2d 232 (Ct.App. 1984); School Dist. Number 1 v. Mission Ins.

Co., 58 Or.App. 692, 650 P.2d 929 (Ct.App.1982), review denied, 294 Or. 682, 662 P.2d 725 (1983). One has indicated disapproval of the practice in dicta. E-Z Loader Boat Trailers, 726 P.2d at 445 ("We decline to expand contracts to cover discrimination committed intentionally.”). Another has approved the practice for public officials in dicta. Harris v.

County of Racine, 512 F.Supp. 1273, 1280 (E.D.Wis.1981) ("it is not an unreasonable construction of the policy to hold that it insures against intentional acts of discrimination by an employee acting under color of state law rather than in a purely private capacity”). Others are ambiguous. See, e.g., Western Casualty & Surety Co. v. Western World Ins. Co., 769 F.2d 381 (7th Cir.1985); Gardner v. Romano, 688 F.Supp. 489 (E.D.Wis.1988). . The idea is that only those wrongful acts are excluded from insurance coverage that may be consciously produced by the availability of insurance.

For instance, an employer or club may determine that without insurance its discriminatory purpose does not outweigh its possible liability, but with the protection offered by insurance the employer or club may decide that the purpose outweighs the liability. Insurance in such a case directly stimulates commission of the wrongful act. Alternatively, an employer may decide to discriminate without even considering the availability of insurance. Such an intentional act cannot be said to be encouraged by insurability.

The group of deliberate wrongful acts that may be encouraged by insurability is thus a subset of the broader group of intentional acts. Yet, because in most cases it is impossible to determine whether the perpetrator consciously considered insurability as a factor in making its decision to act wrongfully, the proscription is necessarily applied to all intentional wrongful acts that are not impulsive or that do not produce unintended results.

See generally Willborn, Insurance, Public Policy, and Employment Discrimination, 66 Minn.L.Rev. 1003 (1982) (no coverage where "calculating intent” to discriminate shown); Comment, Insurance Against Civil Liability for Employment Discrimination, 80 Colum.L.Rev. 192 (1980) (no coverage except where “good faith” effort to avoid discrimination shown). .

See, e.g., §§ 110.105, 110.233 (in state employment): § 112.042 (in county and municipal employment): § 229.8021 (in Dept, of Educ.); § 237.40 (in district school boards); § 240.364 (in community colleges); §§ 258.015, 267.17 (in citizen support organizations); § 286.011 (in public meetings); §§ 395.031-395.032 (in trauma centers); §§ 509.092, 509.141, and 509.142 (in public lodging and restaurants); § 513.118 (in RV parks); § 562.51 (in bars); § 641.3102 (in HMOs);

chapter 760 (in housing); § 760.10 (in employment); § 849.093 (in public games); § 871.04 (in advertising). . Cf. Ranger Ins. Co. v. Bal Harbour Club, Inc., 509 So.2d 945, 948 (Fla. 3d DCA 1987) (More than 70,000 claims of employment discrimination were filed with the federal Equal Employment Opportunity Commission in 1983. This does not include claims alleging discrimination in housing, health services, and access to public facilities.).