No. 95-104 INTHESUPREMECOURTOFTHESTATEOFMONTANA 1996

AUSTIN A. MALEK,

Plaintiff andAppellant, 

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v. JOEHANKINS,

Defendant and Respondent.

APPEAL FROM: District Court of the Twelfth Judicial District,

In and for the County of Chouteau, TheHonorable John Warner, Judge presiding.

COUNSELOFRECORD:

For Appellant: John E. Seidlitz, Jr., Great Falls, Montana For Respondent:

Filed: Charles R. Cashmore! Crowley, Haughey, Hanson,

Toole &Dietrich, Billings, Montana
Heard: December 14, 1995 Submitted: December 19, 1995 Decided: January 30, 1996Chief Justice J. A. Turnage delivered the Opinion of the Court.

Austin A. Malek appeals ajudgment of the Twelfth Judicial District Court, Chouteau County, which granted Joe Hankins' motion for summary judgment onthis claim of negligence in the workplace. Weaffirm. The issue is whether the District Court erred in ruling that Hankins, anemployee of Malek, Inc., cannot bedeprived of his coemployee immunity from suit by the corporation's election not to provide workers' compensation coverage for its officer and employee, Malek. Austin Malek was acompensated director and officer (president) of Malek, Inc. Joe Hankins wasanemployee of the corporation. In March of 1990, Hankins, while acting within the course and scope of his employment, unintentionally caused injury to Malek. Hankins was covered by workers' compensation insurance through his employment with Malek, Inc. The corporation had properly and effectively elected not to cover corporate officer Malek under the Workers' Compensation Act, pursuant to §39-71- 401(4) (a), MCA(1989). InMarch of 1993, Malek brought this negligence action against Hankins. Hankins moved for summary judgment, relying on the principle of exclusivity under the Workers' Compensation Act asa bar to Malek's claim. After briefing and ahearing, the District Court entered judgment for Hankins. Malek appeals.

2Did the District Court err in ruling that Hankins, anemployee

of Malek, Inc., cannot bedeprived ofhis co-employee immunity from suit by the corporation's election not to provide workers' compensation coverage for its officer andemployee Malek? This Court's standard of review of asummary judgment is the
sameasthat used bythe trial court in ruling upon the motion for summary judgment--that is, summary judgment is proper only when there is nogenuine issue of material fact andthe moving party is entitled to judgment asamatter of law. Rule 56(c), M.R.Civ.P.; Motarie v. Northern Montana Joint Refuse Disposal Dist. (Mont. 1995), 907 P.Zd 154, 52St.Rep. 1209. Section 39-71-118(l) (a), MCA (19891, defines the term "employee" for purposes of the Workers' Compensation Act as each person who is in the service of anemployer

The term includes all of the elected and appointed officers and members of boards of directors of

. private corporations

. while rendering actual service for such corporations for pay. Hankins wasclearly anemployee under the statute. Malek, too, was a statutory "employee," as an officer of aprivate corporation rendering services to the corporation for pay. Hankins andMalek, asemployees of the sameemployer, were coemployees. This Court hasrecognized that co-employees are immune from suit in cases in which the Workers' Compensation Act applies. See, Forrester v. Kuck (1978), 177Mont. 44, 579P.2d 756; State ex rel. Fergusen v. District Court (19741, 164Mont. 84, 519P.2d 151; Madison v. Pierce (19701, 156 Mont. 209, 478 P.2d 860. Malek infers that whenanelection hasbeen madenot to cover anofficer
3and employee under workers' compensation, a co-employee is not

immune from suit for injury to the officer and employee. Malek also relies upon this Court's opinion in Sheav. NorthButte Mining Co. (1919), 55Mont. 522, 179P. 499. In Shea both -I the employer and the employee had elected workers' compensation coverage under the statutes then in effect. The issue before the Court was the constitutionality of closing the courts to injured workers whohadchosen to become subject to the workers' compensation statutes. This Court stated: [Wlhen anemployee has elected to become subject to the provision of the act, hemaynot thereafter prosecute an action for damages against the employer for an injury suffered byhim during the course of his employment[.l Shea, 179 P. at 502. Malek infers from this language that if an election has been made under the Act to reject coverage for an officer and employee, then that officer and employee retains the right to sue anegligent co-employee for damages. Malekls inferences are overbroad. His view would allow the voluntary choice by Malek, Inc., to forego workers' compensation coverage of its employee Malek to adversely affect the rights and obligations of its non-officer employee Hankins, whomust remain bound under the Act to his exclusive remedy. Thelaw gave Hankins
novoice inthe choice to forego workers' compensation coverage for Malek.Wecannot accept Malek's view. Asthe District Court cogently stated: It is undisputed that as part of his Workers' Compensation coverage Hankins gave uphis right to sue his employer. In exchange for this waiver of the right 4to sue his employer, Hankins is entitled to receive the

benefits of the Workers' Compensation Act. Oneof those benefits is immunity from lawsuits by co-employees injured in the course of employment.

. . [Malek'sl argument fails torecognize that [Hankins] is covered bythe Act, doesbear the burden [of waiver of the right to suehis employer], andis therefore entitled to the Act's benefits, one of which is immunity from lawsuits byco-employees for work-related injuries. Weagree with the District Court. Weconclude that the Workers' Compensation Act provides immunity to acovered employee for workrelated injuries to aco-employee, regardless of the employer's election not to cover the injured co-employee under workers' compensation. TheSupreme Court of Colorado considered anidentical issue in Kelly v. Mile Hi Single Ply, Inc. (Cola. 1995)) 890 P.Zd 1161. Mile Hi hadopted out of workers' compensation coverage for Kelly,
a corporate officer, as allowed under Colorado law. Kelly was injured in anautomobile accident in which James, anemployee of Mile Hi, wasthe driver. Kelly sued James andMile Hi to recover damages for his injury. As to James' liability, the Supreme Court of Colorado reasoned: [I]t would be unjust to burden a co-employee with liability based on an officer's election to reject coverage under the Act whenthe co-employee is covered by the Act, and his or her exclusive remedy for any workrelated injuries is dictated bythe Act. Wehold, therefore, that co-employees are immune from common law actions brought by an officer who has rejected coverage under the Act. Our decision to insulate co-employees from commonlaw actions is based on the status of the defendant co-employee, andnot onthat 5of the rejecting officer. It makesnodifference whether

the employee bringing the action is covered bythe Act or has rejected coverage, provided the co-employee's exclusive remedies are found in the Act. To decide otherwise would require us to elevate the interests of the rejecting officer over those of aco-employee whohas no knowledge or control over the rejecting officer's decision, and moreover, receives no benefit from the rejection of coverage. Kelly, 890P.2d at 1165. Weagree with the rationale set forth by the Supreme Court of Colorado. Based uponthe above considerations, wehold that the election by Malek, Inc., to opt out of workers' compensation coverage for its corporate officer Malek did not affect Hankins' co-employee immunity under the Workers' Compensation Act. Wetherefore affirm the summary judgment entered bythe District Court.

Chief Justice
Weconcur:

Justices

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