and County of Denver District Court No. 15CV33216 Honorable
Morris B. Hoffman, Judge
Campbell Latiolais Averbach, LLC, Robyn B. Averbach, Colin C.
Campbell, Denver, Colorado, for Plaintiff-Appellee
Blanton Law Firm, Michael W. Blanton, Evergreen, Colorado;
Gerash Steiner, P.C., Daniel P. Gerash, Eric L. Steiner,
Denver, Colorado, for Defendant-Appellant
1 In this insurance coverage action for declaratory judgment,
defendant, Omar Ashour, appeals the district court's
denial of his motion for summary judgment and its entry of
summary judgment in favor of plaintiff, American Family
Mutual Insurance Company (AFI). Ashour contends that the
district court erred by ruling, as a matter of law, that his
claim for underinsured motorist (UIM) coverage under his
automobile insurance policy with AFI was precluded because he
was not legally entitled to sue his employer or co-employee
in tort for his injuries based on their immunity under the
Workers' Compensation Act of Colorado (the Act). We agree
with Ashour, reverse the judgment of the district court in
favor of AFI, and remand with directions for entry of summary
judgment in favor of Ashour.
Background and Procedural History
2 Ashour is an employee and co-owner of Nubilt Restoration
& Construction (Nubilt). While employed with Nubilt,
Ashour was severely injured when he was pinned by a
thirty-foot truck to a nearby tractor-trailer. The accident
was caused by the negligence of his co-employee, Rebecca
Peake, who failed to set the airbrake on the truck that
rolled backward and pinned Ashour to the other
3 After the accident, Ashour submitted a claim to
Nubilt's workers' compensation carrier and
subsequently received benefits. He also submitted a claim to
Nubilt's corporate liability insurance provider and
received a settlement for that claim based on a policy rider
that allowed for coverage of workplace injuries. Ashour then
made a claim under his personal automobile insurance policy
with AFI for UIM benefits to recover the remainder of his
4 After receiving Ashour's claim, AFI filed this action
in district court seeking a declaratory judgment as to
whether Ashour was owed UIM coverage when the plain language
in the policy limited UIM benefits to those situations in
which the insured was "legally entitled to recover"
from the owner or operator of an uninsured or underinsured
motor vehicle. AFI alleged that the Act provided Ashour with
his exclusive remedy for damages and that, because the Act
immunized Nubilt and Peake from tort suits brought by Ashour
for work-related injuries, Ashour was not "legally
entitled to recover" under the AFI UIM policy.
5 In his answer, Ashour alleged that the phrase "legally
entitled to recover" had been interpreted by Colorado
courts to mean that an insured must only establish fault of
the party causing the injury (the tortfeasor) and the extent
of the insured's damages, and that, accordingly, he was
not required to show that he could proceed with a lawsuit
against the tortfeasor(s). Ashour asserted as an affirmative
defense that AFI was, therefore, estopped from denying
coverage on the basis of the policy's "legally
entitled to recover" language.
6 Subsequently, Ashour filed a motion for summary judgment,
relying on Borjas v. State Farm Mutual Automobile
Insurance Co., 33 P.3d 1265 (Colo.App. 2001), in which a
division of this court defined the phrase "legally
entitled to recover" and ultimately concluded that an
insured was "legally entitled to recover" even when
the tortfeasor was immune from suit under the Colorado
Governmental Immunity Act (CGIA). In its response to
Ashour's motion for summary judgment, AFI distinguished
Borjas and instead relied on Continental Divide
Insurance Co. v. Dickinson, 179 P.3d 202 (Colo.App.
2007), in which another division of this court concluded that
an independent contractor subject to a limited recovery
provision in the Act was not entitled to claim benefits under
his employer's UIM policy.
7 The district court agreed with AFI's interpretation of
Colorado law and, in a written order, concluded that
Dickinson was dispositive of Ashour's claim if
Peake had acted within the scope and course of her
employment. At the conclusion of its order, the district
court denied Ashour's motion for summary judgment and
allowed the case to proceed for a determination of whether
Peake had been acting within the course and scope of her
employment at the time of the accident.
8 Several weeks later, AFI filed its own motion for summary
judgment asserting that, as a matter of law, Peake had been
acting within the course and scope of her employment. After
full briefing by both parties, the court entered a second
written order, reaffirming its prior order on the coverage
issue and concluding on undisputed facts that Peake was
acting within the course and scope of her employment at the
time of Ashour's accident. Accordingly, the court granted
AFI's motion for summary judgment and declared that AFI
was not obligated under Ashour's policy to pay Ashour UIM
9 Ashour now appeals. Specifically, he challenges the
district court's conclusion that he was not entitled to
UIM benefits under his own insurance policy with AFI based on
the immunity provided to Peake and Nubilt under the Act. He
does not appeal the court's ruling that Peake was acting
within the course and scope of her employment.
Standard of Review
10 We review the grant of a summary judgment motion de novo.
W. Elk Ranch, L.L.C. v. United States, 65 P.3d 479,
481 (Colo. 2002). In reviewing a motion for summary judgment,
the nonmoving party is afforded all favorable inferences that
may be drawn from the allegedly undisputed facts. City of
Longmont v. Colo. Oil & Gas Ass'n, 2016 CO 29,
¶ 8 (citing Bebo Constr. Co. v. Mattox &
O'Brien, P.C., 990 P.2d 78, 83 (Colo. 1999)).
11 For our review, we apply the same standard as the district
court. Id. at ¶ 9. "Thus, our task on
review is to determine whether . . . the district court
correctly applied the law" when it ruled that Ashour was
barred from receiving UIM benefits from AFI because he was
not legally entitled to recover against his employer or
co-employee under the Act. Id. In doing so, we
review the district court's legal conclusions de novo.
12 This case involves the application and interaction of two
bodies of Colorado law: workers' compensation and
uninsured or underinsured motorist (UM/UIM) coverage.
Workers' Compensation Law
13 The purposes of the Act are to protect employees who
suffer injuries arising from their employment and to give
injured workers a reliable source of compensation for their
injuries. Engelbrecht v. Hartford Accident & Indem.
Co., 680 P.2d 231, 233 (Colo. 1984). Employers subject
to the Act, including Nubilt, are required to secure
insurance to cover their employees' claims for
work-related injury. § 8-44-101(1), C.R.S. 2016.
14 An employer who has complied with the Act
shall not be subject to the provisions of section 8-41-101;
nor shall such employer or the insurance carrier, if any,
insuring the employer's liability under said articles be
subject to any other liability for the death of or personal
injury to any employee . . .; and all causes of action,
actions at law, suits in equity, proceedings, and statutory
and common law rights and remedies for and on account of such
. . . personal injury to any such employee and accruing to
any person are abolished except as provided in said articles.
§ 8-41-102, C.R.S. 2016. There is no dispute that Nubilt
was in compliance with the Act at the time of Ashour's
accident and that Ashour has received workers'
compensation benefits as a result of the accident.
15 Similarly, when an employer complies with the Act, such
compliance is construed as
a surrender by the employer, such employer's insurance
carrier, and the employee of their rights to any method,
form, or amount of compensation or determination thereof or
to any cause of action, action at law, suit in equity, or
statutory or common-law right, remedy, or proceeding for or
on account of such personal injuries . . . of such employee
other than as provided in said articles, and shall be an
acceptance of all the provisions of said articles, and shall
bind the employee personally.
§ 8-41-104, C.R.S. 2016. Thus, Nubilt and its
workers' compensation insurance carrier are immune from
suit by Ashour for his injuries sustained in the course and
scope of his employment.
16 By extension, co-employees are also immune from suit for
injuries to a fellow employee arising out of the scope of
employment. Kandt v. Evans, 645 P.2d 1300, 1304-05
(Colo. 1982). Thus, here, Peake is also immune from suit.
17 The immunity from suit provided by the Act is often
referred to as the exclusivity provisions because the Act has
been interpreted to provide the exclusive remedy to
a covered employee for injuries sustained while the employee
is performing services arising in the course of his or her
employment. Horodyskyj v. Karanian, 32 P.3d 470, 474
(Colo. 2001) ("The exclusive-remedy provisions of the
Act bar civil actions in tort against an employer for
injuries that are compensable under the Act." (citing
§§ 8-41-102, -104)). However, this exclusive remedy
is limited to suits by an injured employee against his or her
employer or co-employee; an injured employee may receive
workers' compensation benefits and bring suit
against a third-party tortfeasor. See §
8-41-203(1)(a), C.R.S. 2016; Frohlick Crane Serv., Inc.
v. Mack, 182 Colo. 34, 38, 510 P.2d 891, 893 (1973) (The
"Act is not to shield third-party tort-feasors [sic]
from liability for damages resulting from their
negligence."); see also Aetna Cas. & Sur. Co. v.
McMichael, 906 P.2d 92, 100 (Colo. 1995).
18 Thus, the Act's exclusivity provisions can be
summarized this way: the workers' compensation system is
an agreement by employers to provide benefits to employees,
regardless of fault, and in exchange for assuming that
burden, the employer is immunized from tort claims for
injuries to its employees. § 8-40-102(1), C.R.S. 2016
("[T]he workers' compensation system in Colorado is
based on a mutual renunciation of common law rights and
defenses by employers and employees alike."); People
v. Oliver, 2016 COA 180M, ¶ 22.
19 Colorado law requires that all automobile insurance
policies insuring against loss resulting from bodily injury
or death must provide UM/UIM coverage. § 10-4-609(1)(a),
C.R.S. 2016. The statute sets out specific requirements for
UM/UIM insurance policies, and if a policy violates those
mandatory coverage requirements, courts will read those
requirements into the policy. McMichael, 906 P.2d at
20 Specifically, UIM coverage is intended to cover the
difference, if any, between the amount of the limits of a
tortfeasor's legal liability coverage and the amount of
the damages sustained by the injured party, up to the policy
limits. § 10-4-609(1)(c). A division of this court has
interpreted this subsection to mean that an insurer's
obligation to pay UIM benefits is "triggered by
exhaustion of the tortfeasor's 'limits of . . . legal
liability coverage, ' not necessarily any payment from or
judgment against the tortfeasor." Jordan v.
Safeco Ins. Co. of Am., Inc., 2013 COA 47,
¶ 29 (alteration in original) (citation omitted).
21 As relevant here, Colorado law limits UM/UIM coverage to
"protection of persons insured thereunder who are
legally entitled to recover damages from
owners or operators of uninsured motor vehicles because of
bodily injury, sickness, or disease, including death,
resulting therefrom." § 10-4-609(1)(a) (emphasis
added). The statute also provides for payment of benefits
when the party at fault is underinsured:
Uninsured motorist coverage shall include coverage for damage
for bodily injury or death that an insured is legally
entitled to collect from the owner or driver of an
underinsured motor vehicle. An underinsured motor
vehicle is a land motor vehicle, the ownership, maintenance,
or use of which is insured or bonded for bodily injury or
death at the time of the accident.
§ 10-4-609(4) (emphasis added). AFI's policy tracks the
"legally entitled to recover" language of the
statute and explicitly provides coverage for underinsured
vehicles: "We will pay compensatory damages for bodily
injury which an insured person is legally entitled to
recover from the owner or operator of an uninsured motor
vehicle or an underinsured motor vehicle."
22 At issue in this case is the phrase "legally entitled
to recover." Colorado courts have considered the meaning
of "legally entitled" language in the past, albeit
not under the precise circumstances at issue in this case.
For example, in Newton v. Nationwide Mutual Fire
Insurance Co., in the context of deciding whether the
insurer was entitled to reduce the UIM benefits paid to the
insured by the amount of personal injury protection benefits
paid out under the same policy, the supreme court stated that
"[u]ninsured motorist recovery is available only to
persons 'legally entitled to recover damages from owners
or operators of uninsured motor vehicles.'" 197
Colo. 462, 465, 594 P.2d 1042, 1043 (1979) (citation
omitted). "Thus a claimant may not obtain payment under
uninsured motorist coverage without first establishing
that the uninsured motorist's fault, normally negligence,
caused the collision." Id. (emphasis
added). This fault-based concept was again articulated in
DeHerrera v. Sentry Insurance Co., 30 P.3d 167,
173-74 (Colo. 2001), in which the supreme court, in analyzing
section 10-4-609(1)(a), interpreted subsection (1)(a) to mean
that "an insured is entitled to recover UM/UIM benefits
when a person who is at fault in an accident does not have
any liability insurance" or is underinsured.
Interaction Between the Act and UIM Coverage
23 The "legally entitled to recover" requirement is
central to this case because of the immunity provided to
employers and co-employees under the exclusivity provisions
of the Act. The precise question before us is whether Ashour
is "legally entitled to recover" under the meaning
of the UM/UIM statute when he cannot ...