American Family Mutual Insurance Co. v. Ashour
2017 COA 67
Colo. Ct. App.2017Background
- Omar Ashour, an employee and co-owner of Nubilt, was severely injured at work when a co-employee (Rebecca Peake) negligently failed to set a truck brake; Peake and Nubilt were immune from tort suit under Colorado’s Workers’ Compensation Act and Ashour received workers’ compensation benefits and a corporate-liability settlement.
- Ashour sought underinsured motorist (UIM) benefits under his personal auto policy with American Family Insurance (AFI), which covers damages an insured is “legally entitled to recover” from an underinsured motorist.
- AFI sued for a declaratory judgment, arguing Ashour was not “legally entitled to recover” from the tortfeasors because the Act’s exclusivity/immunity bars tort suits against employer and co-employee.
- Ashour relied on Borjas v. State Farm (Colo. App.) to argue the phrase “legally entitled to recover” requires only proof of the tortfeasor’s fault and the insured’s damages, not the ability to sue; AFI relied on Continental Divide Ins. Co. v. Dickinson to argue immunity/caps can bar UIM recovery.
- The district court found Dickinson controlling, concluded Peake acted within the scope of employment, denied Ashour summary judgment and granted AFI summary judgment; Ashour appealed only the coverage ruling.
- The court of appeals reversed: it held Dickinson inapplicable, extended Borjas’s fault-based meaning of “legally entitled to recover” to bar neither workers’ compensation exclusivity nor co-employee immunity from an insured’s claim for UIM benefits under his personal policy.
Issues
| Issue | Plaintiff's Argument (AFI) | Defendant's Argument (Ashour) | Held |
|---|---|---|---|
| Whether Ashour is entitled to UIM benefits under his personal policy despite his employer/co-employee immunity under the Workers’ Compensation Act | The Act’s exclusivity/immunity means Ashour is not "legally entitled to recover" from the tortfeasors, so UIM coverage is precluded | "Legally entitled to recover" means only proving the tortfeasor’s fault and the extent of damages (Borjas); inability to sue due to immunity does not defeat UIM coverage | Reversed: Insurer must pay UIM benefits if insured proves fault and damages; Act immunity does not bar recovery from the insured’s personal UIM carrier |
| Whether Dickinson controls and bars recovery because tortfeasor was a co-employee | Dickinson should control because the tort occurred in the course/scope of employment and addressed exclusivity vs UIM | Dickinson is distinguishable: it involved an independent contractor, a $15,000 statutory cap, and recovery from the employer’s UIM policy—not the insured’s personal policy | Dickinson is inapplicable here; its narrow holding does not extend to an employee seeking benefits under his own UIM policy |
| Proper interpretation of "legally entitled to recover" in §10-4-609 and UIM policies | The plain language requires the insured be able to pursue legal recovery against the tortfeasor (i.e., immunity/caps can defeat entitlement) | The phrase is fault-based: entitlement requires proof of tortfeasor fault and damage extent, not the ability to maintain a tort action (Borjas) | Adopted Borjas’s fault-based interpretation: insureds need only establish fault and damages to trigger UIM coverage |
| Whether giving effect to UIM coverage undermines the Act or its policy goals | Allowing UIM recovery would undercut workers’ compensation exclusivity and employer protections | UM/UIM and the Act serve complementary goals; allowing UIM from the insured’s own carrier does not expose the employer/co-employee to additional tort liability and aligns with UIM’s protective purpose | Policies are not in conflict here; UIM recovery from the insured’s carrier does not impair statutory immunity and is consistent with public policy |
Key Cases Cited
- Borjas v. State Farm Mut. Auto. Ins. Co., 33 P.3d 1265 (Colo. App. 2001) (interprets “legally entitled to recover” as requiring proof of tortfeasor fault and damages; immunity under governmental-immunity statute does not bar UIM recovery)
- Continental Divide Ins. Co. v. Dickinson, 179 P.3d 202 (Colo. App. 2007) (holds independent contractor subject to § 8-41-401(3) cap could not recover employer’s UM/UIM benefits above statutory limit; narrow, fact-specific holding)
- Aetna Cas. & Sur. Co. v. McMichael, 906 P.2d 92 (Colo. 1995) (worker injured by third party can recover both workers’ compensation and employer’s UIM benefits; UIM is separate from workers’ compensation)
- Newton v. Nationwide Mut. Fire Ins. Co., 594 P.2d 1042 (Colo. 1979) (UM recovery requires establishment that the uninsured motorist’s fault caused the collision)