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Colorado Court of Appeals

American Family Mutual Insurance Company v. Omar Ashour

Announced May 18, 2017

Ashour is an employee and co-owner of Nubilt Restoration & Construction (Nubilt). While employed with Nubilt, Ashour was severely injured and the accident was caused by the negligence of his co-employee ("Peake").  After the accident, Ashour submitted a claim arising out of Workers' Compensation Act of Colorado (the Act) to Nubilt's workers' compensation carrier and subsequently received benefits.  Ashour then made a claim under his personal automobile insurance policy with American Family Mutual Insurance ("AFI") for UIM benefits to recover the remainder of his alleged damages. After receiving Ashour's claim, AFI filed this action in district court seeking a declaratory judgment as to whether Ashour was owed UIM coverage considering the Act provided Ashour with his exclusive remedy for damages and that the Act immunized the tortfeasors from tort suits.  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 the Colorado Court of Appeals 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). 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.  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 the tortfeasor 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 benefits.  On appeal, the Colorado Court of Appeals held 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.

When a general contractor for any kind of work hires a subcontractor, who in turn hires employees or other subcontractors to perform the work, both the general contractor and the subcontractors are required to provide workers' compensation insurance to their employees.   If an employee of a subcontractor is injured on the job, the employee will be covered by the subcontractor's workers' compensation insurance policy.  However, if the subcontractor fails to be insured, the employee may obtain workers' compensation benefits under the policy held by the general contractor.  In this instance, the general contractor is considered the "statutory employer."