Lime Tree Village Community Club Ass'n, Inc. v. State Farm General Ins. Co.
| Decision Date | 08 January 1993 |
| Docket Number | No. 91-4133,91-4133 |
| Citation | 980 F.2d 1402 |
| Parties | LIME TREE VILLAGE COMMUNITY CLUB ASSOCIATION, INC., et al. Plaintiffs-Appellants, v. STATE FARM GENERAL INSURANCE COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Dennis J. Wall, Orlando, Fla., for plaintiffs-appellants.
Boehm, Brown, Rigdon, Seacrest & Fischer, P.A., Janet L. Brown, Janice A. Kelly, Orlando, Fla., for defendant-appellee.
Appeal from the United States District Court for the Middle District of Florida.
Before FAY and EDMONDSON, Circuit Judges, and HILL, Senior Circuit Judge.
Lime Tree Village Community Club Association, appellants/plaintiffs, appeal an order of the United States District Court for the Middle District of Florida granting summary judgment for State Farm General Insurance Co., 785 F.Supp. 962. Lime Tree sued State Farm for declaratory relief and damages due to breach of contract and insurer bad faith, alleging State Farm failed to indemnify and defend Lime Tree in two underlying suits. The district court found Lime Tree's losses in the suits resulted from their own intentional acts of discrimination, and that those losses were excluded under the policy. The court, therefore, held Lime Tree was not entitled to indemnification or defense by State Farm. For the reasons that follow, we hold State Farm has a duty to defend under the insurance policy. 1 We VACATE and REMAND for new proceedings consistent with this opinion.
Lime Tree Village is a residential development with a homeowner's association. The appellants/plaintiffs, defendants in the underlying suits, are the Lime Tree Village Club Association and individuals who held positions at various times as officers and directors of the Association (hereinafter "Lime Tree"). The original Declaration of Covenants and Restrictions of the development limited occupancy in Lime Tree Village to adults and children age 16 or over. After Congress passed the Fair Housing Amendments Act of 1988, Lime Tree proposed and drafted an amendment to the Covenants and Restrictions that limited the community to adults age 55 or over. The amendment passed by referendum and Lime Tree recorded it in the records of Orange County, Florida. Shortly thereafter, several homeowners filed suit to object to the change in the age restriction. State Farm initially defended Lime Tree, but later withdrew the defense and denied all coverage. The present suit ensued.
Lime Tree brought suit in Florida's circuit court seeking a determination of whether State Farm was obligated to indemnify or defend Lime Tree in the underlying cases of Bradley v. Lime Tree Village Community Club Association, Case Number 91-93-CIV-ORL-18 (the "Bradley " case) and Williamsburg Realty v. Williamsburg Homeowners' Association, Case Number 90-745-CIV-ORL-18 (the "Williamsburg " case). State Farm subsequently removed the case to federal court and moved for summary judgment arguing that the insurance contract upon which Lime Tree bases its claims excludes coverage for the intentional acts of the insured.
1. The Insurance Policy
The State Farm policy affords Lime Tree two separate forms of coverage: (1) Comprehensive Business Liability insurance and (2) Directors and Officers Liability insurance. The Comprehensive Business Liability coverage reads, in pertinent part, as follows:
COVERAGE L--BUSINESS LIABILITY
The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, property damage or personal injury caused by an occurrence to which this insurance applies....
[O]ccurrence means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured and with respect to personal injury, the commission of an offense or a series of similar or related offenses....
[P]ersonal injury means an injury which arises out of one or more of the following offenses committed in the conduct of the named insured's business ...
2. the publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual's right of privacy ...
3. wrongful entry or eviction, or other invasion of the right of private occupancy.
Under Coverage L, this policy does not apply ...
16. to personal injury arising out of the willful violation of a penal statute or ordinance....
Lime Tree paid an additional premium for Directors and Officers Liability insurance, which provides the following coverage:
OPTION DO--DIRECTORS AND OFFICERS LIABILITY
The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of wrongful acts committed by the insured solely in the conduct of its management responsibilities for the condominium/association....
"[W]rongful acts" means any negligent acts, any errors, any omissions, or breach of duty directly related to the operations of the condominium property of the named insured.
This insuring agreement does not apply:
1. to any dishonest, fraudulent, criminal or malicious act ... [or]
7. to violation of any civil rights law ... including ... discrimination on account of race, religion, sex or age...."
Under both types of coverage, State Farm expressly assumed the duty to defend any claim or suit seeking damages payable under the policy, "even though the allegations of the suit may be groundless, false, or fraudulent."
2. The Underlying Suits
The complaints filed in the Bradley and the Williamsburg cases each contain multiple claims and several similar allegations. The plaintiffs in Bradley set forth six claims. Counts I and II allege discrimination by Lime Tree in violation of 42 U.S.C. §§ 3604 and 3617. Count III alleges Lime Tree breached the Covenants and Restrictions because the original declaration provided that the age restriction could never be amended. 2 Counts IV and V request a declaratory determination that the restrictions of Lime Tree Village are null, void, and unenforceable under federal and state law. In Count VI the plaintiffs allege Lime Tree falsely and maliciously slandered or disparaged title to their properties and rights.
The Williamsburg complaint sets forth five claims. Counts I, II, and III allege discrimination and request declaratory relief upon substantially the same basis as the Bradley complaint. Counts IV and V allege restraint of trade in the market of private occupancy, purchase, and ownership of residential real property in violation of federal and state law.
The general allegation section of the Bradley and the Williamsburg complaints alleges that Lime Tree committed these acts knowingly and intended the results of their actions. These general allegations are realleged and incorporated by reference throughout the individual counts of both underlying complaints.
3. The District Court Ruling
The district court found the underlying complaints alleged damages caused by a series of knowing and intentional acts, designed by Lime Tree to result in discrimination based on familial status and race. The district court reasoned that Lime Tree's losses in the underlying suits flowed from those intentional acts and were excluded under the Business Liability coverage. Reading the Bradley and Williamsburg complaints in light of the insurance contract, the court thus held State Farm had no duty to indemnify or defend Lime Tree.
We review the district court's determination and application of Florida law in a summary judgment ruling de novo. Salve Regina College v. Russell, --- U.S. ----, ----, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190, 198 (1991).
The principles governing this case are well-established in Florida and this circuit. An insurer's "duty to defend is distinct from and broader than the duty to indemnify ... and if the [underlying] complaint alleges facts showing two or more grounds for liability, one being within the insurance coverage and the other not, the insurer is obligated to defend the entire suit." Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So.2d 810, 813-14 (Fla.Dist.Ct.App.1985) (citations omitted) (emphasis added). The duty to defend is determined by examining the allegations in the complaint filed against the insured. National Union Fire Insurance Co. v. Lenox Liquors Inc., 358 So.2d 533, 536 (Fla.1978). The insurer must defend when the complaint alleges facts which fairly and potentially bring the suit within policy coverage. Trizec Properties Inc. v. Biltmore Const. Co., 767 F.2d 810, 811-12 (11th Cir.1985); Baron Oil, 470 So.2d at 815. If the allegations of the complaint leave any doubt as to the duty to defend, the question must be resolved in favor of the insured. Trizec Properties, 767 F.2d at 812; Baron Oil, 470 So.2d at 814.
State Farm argues there is no duty to defend here because the underlying complaints allege only intentional acts and the Business Liability provision excludes intentional acts of the insured. To support the argument, State Farm points 1) to allegations made throughout the underlying complaints that Lime Tree committed a series of knowing and intentional acts designed to result in discrimination and 2) to the fact that every count incorporates by reference the allegedly intentional, unlawful and discriminatory acts of Lime Tree. State Farm further argues that the predicates for those counts not expressly alleging discrimination are "merely creative ways" to essentially allege violations of state and federal anti-discrimination laws. This argument presumably rests upon the exclusions contained in the Directors and Officers coverage.
The arguments are unavailing for two reasons. First, the duty to defend turns on the "grounds for liability" expressed by "allegations of...
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