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Click here for the full text of this decision FACTS:Mid-Continent Casualty Insurance Co. agreed to insure the Richland Parish School Board against various risks, including loss resulting from claims based on actual or alleged racial discrimination, racial harassment and breach of contract. Following execution of this agreement, a suit was filed against the school board by Katie Coleman, an African-American woman who had been terminated by the board from her position of associate principal at an elementary school. Her suit alleged federal claims for intentional racial discrimination, and state claims for breach of contract and abuse of rights. Mid-Continent refused to defend the suit. Mid-Continent then filed a motion for summary judgment, arguing that it had no duty to defend or indemnify the board on grounds that coverage for Coleman’s claims was precluded by the exclusion for acts committed with actual knowledge of their wrongful nature or intent to cause damage. The school board filed a cross-motion for summary judgment, arguing that it was entitled to a defense and indemnity on grounds that the policy explicitly provided coverage for actual or alleged racial discrimination and racial harassment. While these motions were pending, the school board defended against Coleman’s suit at its own cost and ultimately reached a settlement. Following this settlement, the district court entered summary judgment in favor of Mid-Continent on the school board’s third-party claim, and denied the board’s motion for summary judgment. The court found that coverage for all of Coleman’s claims was precluded by the policy’s intentional acts exclusion. The board timely appealed. HOLDING:Affirmed in part, reversed in part, and remanded. On appeal, the school board contends that the district court erred in holding that Mid-Continent was not obligated to defend and indemnify the board against claims alleging intentional racial discrimination. In addition, the school board argues that even if coverage for intentional discrimination were excluded, Mid-Continent would still be obligated to defend against Coleman’s suit because her complaint alleged non-excluded claims for breach of contract and abuse of rights. The board acknowledges, as it must, the presence of the exclusion for intentional acts, but urges that the exclusion cannot be squared with the policy’s explicit coverage of racial discrimination and racial harassment as both are inherently intentional in nature. The board argues that any attempt to reconcile the policy’s exclusion with its coverage for discrimination and harassment leads to the absurd result that coverage is available only for “unintentional” “intentional” acts. Construing the insurance contract under Louisiana law, the court holds that the clear and explicit language of the policy indicates that coverage is available for acts of racial discrimination or harassment only if they are committed by an insured without actual knowledge of their wrongful nature or intent to cause damage. The court concludes that the exclusion for intentional acts in the board’s policy does not conflict with the policy’s coverage for racial discrimination and racial harassment. It is well settled that claims for racial discrimination may allege either “intentional” or “unintentional” acts. Specifically, “[i]n the context of Title VII litigation, we recognize two types of discrimination claims: disparate treatment and disparate impact.” In short, while the policy’s exclusion for intentional acts cabins the scope of the policy’s coverage, it does not render the policy’s discrimination and harassment provisions wholly ineffective. Therefore, the court finds no basis for interpreting the policy to extend coverage for loss caused by acts of racial discrimination and harassment committed with knowledge of their wrongful nature or intent to cause damage. Accordingly, Mid-Continent has no duty to defend or indemnify the board against Coleman’s claims for intentional racial discrimination under 42 U.S.C. 1981 and 1983. In addition, because Coleman has not alleged facts supporting a claim for disparate impact discrimination or any other discrimination claim not required proof of intent, Mid-Continent has no duty to defend or indemnify the school board against Coleman’s Title VII claim. The court concludes that district court did not err in so holding. Coleman’s suit also asserted, under Louisiana law, a claim for abuse of rights alleging that the “Board acted in the absence of a serious and legitimate interest that is worthy of judicial protection; alternatively, acted in violation of moral rules, good faith, or elementary fairness; in the further alternative, exercised a right for a purpose other than that for which it was granted.” Louisiana courts will apply the abuse of rights doctrine only when one of four conditions is met: 1. the exercise of rights exclusively for the purpose of harming another or with the predominant motive to cause harm; 2. the non-existence of a serious and legitimate interest that is worthy of judicial protection; 3. the use of the right in violation of moral rules, good faith or elementary fairness; or 4. the exercise of the right for a purpose other than that for which it was granted. The court holds that the board’s policy is sufficient to provide coverage for Coleman’s claim that the board abused her rights when it voted to terminate her employment. Accordingly, the court holds that Mid-Continent had a duty to defend the board against that aspect of Coleman’s suit. Under Louisiana law, an insurer that breaches its duty to defend its insured is “liable in damages for attorney fees and costs the insured incurs in defending the suit.” The court therefore remands for a determination of these amounts. With respect to its holding that the policy of insurance issued by Mid-Continent to the school board does not cover acts of racial discrimination committed with actual knowledge of their wrongful nature or with intent to cause harm, the judgment of the district court is affirmed. However, with respect to its holding that Mid-Continent had no duty to defend the school board, the judgment of the district court is reversed, and this case is remanded for further proceedings consistent with this opinion. OPINION:Higginbotham, J., Higginbotham, Benavides and Smith, JJ.

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