Serna v. Kingston Enterprises

Decision Date26 September 2002
Docket NumberNo. 01CA0537.,01CA0537.
Citation72 P.3d 376
PartiesLisa SERNA, Plaintiff-Appellant and Cross-Appellee, v. KINGSTON ENTERPRISES, a Nebraska corporation, Defendant-Appellee and Cross-Appellant.
CourtColorado Court of Appeals

Norton Frickey, P.C., L. Dan Rector, Colorado Springs, Colorado, for Plaintiff-Appellant and Cross-Appellee.

McClain, Drexler & Matthews, LLC, Michael E. Oldham, Michael J. Decker, Denver, Colorado, for Defendant-Appellee and Cross-Appellant.

Opinion by Judge DAILEY.

In this indemnification action, plaintiff, Lisa Serna, appeals from a summary judgment and an award of attorney fees and costs to defendant, Kingston Enterprises. Defendant cross-appeals the trial court's determination that Serna's lawyers are not personally liable for its attorney fees. We affirm in part and reverse in part.

Serna was fifteen years old when defendant, her employer, instructed her to drive from one of its franchise locations to another. En route, Serna's car collided with another car, resulting in serious injury to the passengers of the other car.

The passengers sued both Serna and defendant, alleging that Serna was negligent and that, as her employer, defendant was liable based on a respondeat superior theory. The passengers, who initially failed to complete service of process on Serna, settled with defendant for $850,000. After serving process upon Serna, they also settled with her.

Under her settlement with the passengers, Serna agreed to: (1) allow entry of a $1.5 million judgment against her; (2) employ the passengers' attorneys to sue defendant in an indemnity action; (3) allow the passengers to make all decisions with respect to her lawsuit against defendant; (4) refuse to settle with defendant without the passengers' prior approval; and (5) pay monies recovered from defendant to the passengers. In return, the passengers accepted $40,000 from Serna's insurance carrier, agreed not to execute on the remainder of the $1.5 million judgment against Serna, and promised to pay Serna half of any monies recovered from defendant in excess of $1 million.

Pursuant to her settlement, Serna instituted the present action against defendant. The trial court, however, granted defendant's motion for summary judgment, holding that, as a matter of law, Serna's claim was barred by the exclusivity provision of the Workers' Compensation Act (WCA), § 8-40-101, et seq., C.R.S.2002, and by the Uniform Contribution Among Tortfeasors Act (UCATA), § 13-50.5-102, C.R.S.2002. The trial court awarded defendant attorney fees and costs under § 13-17-102, C.R.S.2002.

I. Summary Judgment

Serna contends that the trial court erred in dismissing her claims. We disagree, but base our decision on grounds somewhat different from those relied upon by the trial court.

Summary judgment is only appropriate if there is no genuine issue as to any material fact. Polk v. Hergert Land & Cattle Co., 5 P.3d 402, 404 (Colo.App.2000). On appeal, we review a summary judgment de novo. Aspen Wilderness Workshop, Inc. v. Colorado Water Conservation Board, 901 P.2d 1251, 1256 (Colo.1995).

Because the material facts in this case are not in dispute, we can resolve this appeal as a matter of law.

A. Workers' Compensation

Initially, Serna contends that the trial court erred in determining that the WCA's exclusivity provision barred her claim. We agree.

The WCA is an employee's exclusive remedy for compensation by an employer for certain work-related injuries. See Colorado Compensation Insurance Authority v. Baker, 955 P.2d 86, 88 (Colo.App.1998)

("if an injury comes within the coverage of the Act, an action for damages is barred even though a particular element of damages is not compensated for").

Under the WCA, an employee surrenders, as against his or her employer, "any cause of action, action at law, suit in equity, or statutory or common-law right, remedy, or proceeding for or on account of [his or her] personal injuries or death." Section 8-41-104, C.R.S.2002 (emphasis added); see also § 8-41-102, C.R.S.2002 (abolishing employee's remedies against employer for or on account on employee's "death" or "personal injury").

Conversely, however, an employee does not, under the WCA, surrender any cause of action for injuries apart from "personal injuries." See Lord v. Souder, 748 A.2d 393, 403 (Del.2000)

(workers' compensation "exclusivity provision does not apply to all injuries arising out of and in the course of employment but, rather, only to `personal' injuries").

No Colorado appellate opinion has determined the precise meaning of the terms "personal injury" or "personal injuries" in §§ 8-41-102 and 8-41-104. Their meaning may, however, be discerned from the type of injuries for which the WCA provides a remedy. The express purpose of the WCA is to provide "quick and efficient delivery of disability and medical benefits," § 8-40-102(1), C.R.S.2002, for job-related physical or mental injuries. See §§ 8-41-301(2)(a) (mental impairment), 8-42-107 (physical injuries), C.R.S.2002; Lucero v. Climax Molybdenum Co., 732 P.2d 642, 647 (Colo.1987)(WCA provides compensation for "specified physical or mental injuries").

We conclude that, as used in the WCA, the terms "personal injury" and "personal injuries" refer to the job-related physical or mental injuries of an employee, see 3 Larson's Workers' Compensation Law ch. 55 at 55-1 (2002)("`Personal injury' includes any harmful change in the body"), and that, consequently, the WCA's exclusivity provision bars actions for or on account of such injuries of an employee.

Here, Serna seeks redress from defendant not on account of physical or mental injuries she sustained, but, rather, on account of the economic liability she incurred after she injured others. Because this economic liability does not qualify as a compensable "personal injury" under the WCA, her indemnity action against defendant is not barred by the WCA. See, e.g., Williams v. Caruso, 966 F.Supp. 287, 294 (D.Del.1997)

("claims for injuries to [employee's] economic interests" were not preempted by Delaware's workers' compensation statute); Gomez v. Acquistapace, 50 Cal.App.4th 740, 749, 57 Cal.Rptr.2d 821, 826 (1996)("injuries which trigger application of the exclusive remedy rule are injuries `to the worker's person, as opposed to his property'"); Lord v. Souder, supra, 748 A.2d at 403 (harm affecting "a proprietary or financial interest" is "not a `personal injury' within the purview of the Workers' Compensation statute"); Cole v. Chandler, 752 A.2d 1189, 1196 (Me.2000)("economic or reputational injuries, if any, do not constitute personal injuries, as they are not physical or mental injuries," and "recovery of such damages is not precluded by the exclusivity provision").

Defendant cites United Cable Television of Jeffco, Inc. v. Montgomery LC, Inc., 942 P.2d 1230, 1232-33 (Colo.App.1996), for the proposition that employers are immune under the WCA for common law indemnity claims. However, that case dealt with a third-party suit against an employer seeking indemnification for monies paid out in connection with an employee's physical injury. Further, the division in that case stated that "there is an exception to the [WCA's] exclusive remedy clause where an express contract or pre-existing legal relationship exists." United Cable Television of Jeffco, Inc. v. Montgomery LC, Inc., supra, 942 P.2d at 1233.

Here, defendant and Serna, as employer and employee, had a pre-existing legal relationship, which allowed Serna to bring her indemnity claim despite the WCA.

B. Contribution Among Joint Tortfeasors

Serna next contends that the trial court erred in concluding that her indemnification action was barred by UCATA. We agree.

In dismissing Serna's indemnification claim, the trial court relied upon Brochner v. Western Insurance Co., 724 P.2d 1293, 1296 (Colo.1986), in which the supreme court held that UCATA had abrogated some indemnity actions, namely those which would require "one of two joint tortfeasors to reimburse the other for the entire amount paid by the other as damages to a party injured as the result of the negligence of both joint tortfeasors." Brochner v. Western Insurance Co., supra, 724 P.2d at 1299.

Here, in their initial complaint against defendant and Serna, the passengers alleged that defendant was liable based only on a theory of respondeat superior, not negligence. Therefore, defendant and Serna were not joint tortfeasors within the meaning of UCATA, and thus, UCATA would not bar Serna's indemnity action against defendant. See Arnold v. Colorado State Hospital, 910 P.2d 104, 107 (Colo.App.1995)

; McCall v. Roper, 685 P.2d 230, 232 (Colo.App.1984).

C. Common Law Indemnity

Defendant argues that, even if not barred by the WCA or UCATA, Serna's indemnity claim must nonetheless fail because there is no realistic prospect of the passengers executing on the judgment entered against her. We agree.

On appeal, a party may defend the judgment of the trial court on any ground supported by the record, regardless of whether that ground was relied upon or even contemplated by the trial court. People v. Eppens, 979 P.2d 14, 22 (Colo.1999); see also Olsen & Brown v. City of Englewood, 867 P.2d 96, 99 (Colo.App.1993)

("A party may defend the trial court's judgment on grounds not decided by the trial court, as long as the party's rights are not increased."), aff'd, 889 P.2d 673 (Colo.1995).

Serna's indemnity claim is based not on contract, but on the common law duty of a principal to indemnify its agent for losses incurred by the agent while acting on the principal's behalf. See Johnson Realty v. Bender, 39 P.3d 1215, 1218 (Colo.App.2001)

.

"As a general rule, a cause of action for indemnity does not arise until the liability of the party seeking indemnity results in his damage, either through payment of a sum clearly owed or through the injured party's obtaining an enforceable judgment." Perry v. Pioneer...

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