                                                 No.   95-104
                   IN THE SUPREME COURT OF THE STATE OF MONTANA
                                                       1996


AUSTIN        A.   MALEK,
                   Plaintiff          and Appellant,                             sJAiv (j
                                                                                     ;3      ~,y,tj
         v.
JOE HANKINS,
                   Defendant          and Respondent.




APPEAL        FROM:            District  Court of the Twelfth     Judicial   District,
                               In and for the County of Chouteau,
                               The Honorable   John Warner,   Judge presiding.


COUNSEL OF RECORD:
                   For    Appellant:
                               John   E.   Seidlitz,      Jr.,     Great      Falls,       Montana
                   For    Respondent:
                               Charles R. Cashmore!      Crowley,   Haughey,                     Hanson,
                               Toole & Dietrich,   Billings,      Montana

                                                                      Heard:           December        14,    1995
                                                                 Submitted:            December        19,    1995

                                                                   Decided:            January        30,    1996
Filed:
Chief        Justice                J.        A.     Turnage           delivered                    the      Opinion               of     the            Court.

           Austin             A.         Malek            appeals           a judgment                      of     the         Twelfth                   Judicial

District               Court,             Chouteau             County,             which            granted             Joe Hankins'                        motion
for     summary               judgment                on this             claim         of     negligence                     in        the        workplace.

We affirm.

           The          issue            is        whether          the        District              Court             erred         in       ruling              that

Hankins,               an employee                    of Malek,                 Inc.,         cannot             be deprived                       of      his      co-

employee                immunity                   from      suit         by     the         corporation's                         election                 not      to

provide                workers'                     compensation                      coverage                   for         its          officer                   and
employee,                Malek.

           Austin             Malek                was a compensated                          director                  and        officer                 (presi-

dent)        of        Malek,             Inc.            Joe Hankins                   was an employee                            of     the            corpora-

tion.             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).

           In March                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      as a

bar     to    Malek's                    claim.            After          briefing                  and a hearing,                        the            District

Court        entered                judgment                for      Hankins.                  Malek             appeals.




                                                                                  2
           Did     the         District              Court            err      in ruling              that        Hankins,             an employee

of Malek,              Inc.,           cannot         be deprived                     of his         co-employee                 immunity              from

suit        by         the          corporation's                           election             not          to        provide              workers'

compensation                      coverage            for         its         officer          and employee                     Malek?

           This        Court's             standard                   of      review       of        a summary              judgment              is    the

same as that                   used        by the            trial            court       in     ruling            upon         the     motion          for

summary           judgment--that                          is,           summary           judgment                is     proper           only         when

there       is     no genuine                     issue          of        material         fact           and the          moving           party       is

entitled           to        judgment                as a matter                     of   law.             Rule        56(c),         M.R.Civ.P.;

Motarie           v.         Northern                Montana                Joint         Refuse             Disposal             Dist.           (Mont.

1995),           907 P.Zd                154,        52 St.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 an employer
                        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           was clearly                   an employee                    under       the        statute.              Malek,            too,      was
a statutory                    "employee,"                      as         an officer                of      a private                 corporation

rendering              services                 to    the         corporation                  for         pay.

           Hankins             and Malek,                 as employees                    of the            same employer,                   were       co-

employees.                   This        Court        has recognized                       that            co-employees                 are       immune

from       suit        in      cases         in      which            the      Workers'              Compensation                 Act        applies.

See,       Forrester                v.    Kuck         (1978),                177 Mont.              44,     579 P.2d            756;        State       ex

rel.       Fergusen               v.     District                Court          (19741,          164 Mont.               84,     519 P.2d              151;

Madison           v.         Pierce             (19701,                 156     Mont.           209,         478        P.2d          860.           Malek

infers        that           when an election                              has been made not                       to     cover         an officer


                                                                                 3
and       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     Shea v.          North-

Butte       Mining           Co.         (1919),           55 Mont.              522,           179 P.            499.        In -I
                                                                                                                                 Shea                  both
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          who had chosen                     to become               subject                 to     the      workers'          compensa-

tion       statutes.                This          Court       stated:

           [Wlhen an employee      has elected    to become                                                       subject    to the
          provision     of the act,   he may not thereafter                                                          prosecute      an
          action    for damages against        the employer                                                        for    an injury
          suffered     by him 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 a negligent                          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,              who must           remain

bound       under        the       Act         to his         exclusive                 remedy.               The law          gave        Hankins

no voice          in the          choice           to      forego       workers'                    compensation                 coverage               for

Malek.

          We cannot               accept          Malek's           view.              As the            District           Court        cogently

stated:
               It    is                  undisputed    that    as part     of                                       his    Workers'
          Compensation                    coverage   Hankins    gave up his                                          right   to sue
          his employer.                      In exchange    for this   waiver                                        of the right

                                                                        4
          to sue his employer,      Hankins   is entitled      to receive   the
          benefits   of the Workers'     Compensation     Act.    One of those
          benefits     is  immunity    from    lawsuits     by co-employees
          injured  in the course     of employment.

                                     .        .

                   [Malek'sl   argument fails   to recognize    that     [Hankins]
          is covered by the Act, does bear the burden             [of waiver        of
          the right      to sue his employer],    and is therefore        entitled
          to the Act's        benefits,   one of which       is immunity         from
          lawsuits      by co-employees     for work-related     injuries.

We agree             with            the            District             Court.           We conclude               that         the         Workers'

Compensation                    Act               provides            immunity           to    a covered        employee                for      work-

related             injuries                       to    a co-employee,                       regardless        of         the         employer's

election                 not         to            cover         the          injured           co-employee            under                 workers'

compensation.

          The Supreme                         Court          of Colorado                considered          an identical                     issue       in
Kelly          v.        Mile            Hi        Single             Ply,      Inc.          (Cola.       1995))          890        P.Zd       1161.

Mile      Hi        had opted                      out      of workers'                compensation            coverage                for      Kelly,

a corporate                     officer,                    as    allowed              under       Colorado           law.              Kelly        was

injured             in     an automobile                              accident          in     which       James,          an employee                   of

Mile      Hi,        was the                      driver.             Kelly       sued         James   and Mile              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 when the co-employee       is covered by
          the Act,       and his or her exclusive      remedy for any work-
          related      injuries    is dictated   by the Act.

                   We hold,    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 common law actions       is based on
           the status     of the defendant         co-employee,     and not on that
                                                                                  5
          of the rejecting           officer.       It makes no difference           whether
          the employee        bringing        the action       is covered by the 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 a co-employee            who has
          no knowledge          or control          over     the rejecting       officer's
          decision,        and moreover,           receives       no benefit      from     the
          rejection       of coverage.

Kelly,       890 P.2d         at     1165.        We agree            with       the     rationale      set   forth         by

the      Supreme      Court        of     Colorado.

          Based      upon the           above     considerations,                     we hold    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.       We therefore          affirm

the      summary      judgment            entered          by the          District        Court.




                                                                                  Chief      Justice


We concur:




                   Justices


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