Opinion ID: 2621632
Heading Depth: 1
Heading Rank: 3

Heading: Did the Court of Appeals Correctly Uphold the District Court's Judgment as Comporting with Due Process?

Text: Utica also contends that the Court of Appeals failed to scrutinize the underlying judgment to ensure that the consensual stipulations of the parties did not infringe on Utica's due process rights. Specifically, Utica complains that none of the parties clearly admitted liability on the negligent training or supervision claim stated in Count III of the petition. Utica argues that paragraph 9, which purports to stipulate as to what a finder of fact would find, is invalid and insufficient to support the judgment against Hunan. Utica raised this same argument in its motion to set aside the judgment. The district court denied the motion. The court's journal entry does not reflect its reasoning, and a transcript of the hearing was not included in the record on appeal. The Court of Appeals rejected the argument, stating: Utica makes a good point with respect to the defendants' stipulation in paragraph 9, where they refuse to stipulate that Hunan negligently retained or supervised Chen, but stipulate that a finder of fact would nevertheless make such a finding by a preponderance of the evidence. A defendant's speculation as to how a judge or jury would decide a case, coupled with the defendant's refusal to admit wrongdoing, does not strike us as substantial competent evidence upon which a judge may rely to support his or her decision. Nevertheless, the stipulation in paragraph 8 provided other facts from which the trial court could draw all reasonable inferences. See Kopp's Rug Co. v. Talbot, 5 Kan. App. 2d 565, 571-72, 620 P.2d 1167 (1980) (although the stipulation concerning the completion of the house was not clear, it and the lien statement raised a reasonable inference that the subcontractor completed its work). Slip op. at 6. Utica argues this conclusion is questionable given that the stipulation in paragraph 8 says nothing about whether Hunan knew or should have known of Chen's unsafe driving habits, stating only that on many occasions military policemen had observed Chen operating his vehicle in an unsafe manner and too fast for conditions. Utica's argument ignores the reasonable inferences which the trial court could draw from the evidence and consider before entering judgment. There may not have been direct evidence that Hunan knew of Chen's unsafe driving, but liability can be established by showing that the employer should have known of the employee's incompetence or unfitness. See Prugue v. Monley, 29 Kan. App. 2d 635, 639, 28 P.3d 1046 (2001). The stipulation in paragraph 8 was sufficient to allow the trial court to draw the reasonable inference that Hunan, as the employer dispatching a driver for various deliveries, should have known of Chen's unsafe driving habits. In reaching the consent agreement, the parties, in paragraph 9, recognized that a trier of fact would probably reach this conclusion. We agree that paragraph 9 did not bind the trial court to reach the conclusion; but the parties' agreement does indicate the reasonableness of the conclusion reached by the trial court in entering judgment on the claim of negligent supervision. More critical to the outcome of the issue is the Court of Appeals' ruling that Utica was bound by the underlying judgment because it failed to provide a defense and was in privity with its insured, citing Patrons Mut. Ins. Ass'n v. Harmon, 240 Kan. 707, 732 P.2d 741 (1987). Slip op. at 6-7. Harmon states: The mutuality rule provides that a person who is a party or privy to a party to an action in which a valid judgment . . . is rendered is bound by or entitled to claim the benefits of an adjudication upon any matter decided in the action. Three questions must be asked in considering whether mutuality applies: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the claim is asserted a party or in privity with a party to the prior adjudication? [Citation omitted.] Patrons candidly requests this court to create an exception to the mutuality requirement of collateral estoppel for insurance companies. Because Patrons was in privity with a party . . . in the wrongful death action, it was bound by that judgment. An exception to the rule would allow Patrons, the insurer, to refuse to defend its insured in the original action and, if the insured lost, would allow the insurer to relitigate the same issue against its insured in a subsequent action. We are not inclined to create a special exception to the mutuality requirement of collateral estoppel for insurance companies. 240 Kan. at 710-11. In Neville v. Hennigh, 214 Kan. 681, 522 P.2d 443 (1974), this court recognized that a consent judgment has collateral estoppel effect. Thus, the doctrine of collateral estoppel applies. In addition, as the Court of Appeals noted, only a void judgment is subject to collateral attack. Slip op. at 7-8 (citing Bank IV Wichita v. Plein, 250 Kan. 701, 708, 830 P.2d 29 [1992]). A judgment is void when the district court lacked personal or subject matter jurisdiction or acted in a manner inconsistent with due process. Waterview Resolution Corp. v. Allen, 274 Kan. 1016, 1024, 58 P.3d 1284 (2002). Utica does not contest this portion of the Court of Appeals' ruling, conceding that an insurance carrier can collaterally attack a judgment in garnishment only if the judgment is void. Utica argues, however, that the underlying judgment in this case was void because the trial court's reliance on an insufficient stipulation violated due process. The basic elements of due process include notice and an opportunity to be heard at a meaningful time and in a meaningful manner. Bethany Medical Center v. Niyazi, 18 Kan. App. 2d 80, 82, 847 P.2d 1341 (1993). Utica does not argue that it lacked notice or an opportunity to be heard. Its challenge to the sufficiency of the district court's findings does not implicate due process. Utica also urges this court to adopt standards requiring a trial court to examine consent judgments to ensure they are free from fraud or collusion and have a reasonable good faith factual basis. See, e.g., Pruyn v. Agricultural Ins. Co., 36 Cal. App. 4th 500, 42 Cal. Rptr. 2d 295 (1995); Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982). In this case, there is nothing in the record to suggest fraud or collusion in the trial or judgment. The stipulations, although narrowly drawn, are sufficient to support the judgment entered in this case. As the Court of Appeals noted: Utica had the means by which it could have protected itself. It chose not to enter the fray in defense of Hunan or to file a declaratory judgment action to define its contractual obligations. This choice was made after the filing of Marquis, which should have put Utica on notice [regarding notice]. Slip op. at 7. Procedural safeguards were adequate and available to Utica. As stated before, the law regarding coverage was clear. Thus, on the record before us, we see no basis to expand the procedural safeguards which were available to Utica. Affirmed. BEIER, J., not participating. BRAZIL, S.J., assigned. BRAZIL, S.J.: I respectfully dissent. I would adopt the well-reasoned concurring and dissenting opinion written by Justice Larson in Marquis v. State Farm Fire & Cas. Co., 265 Kan. 317, 335-40, 961 P.2d 1213 (1998). The majority opinion in this case perpetuates an inconsistency in Kansas law. See Brumley v. Lee, 265 Kan. 810, 825-34, 963 P.2d 1224 (1998) (Six, J., dissenting); First Financial Ins. Co. v. Bugg, 265 Kan. 690, 962 P.2d 515 (1998). We should not blindly adhere to the doctrine of stare decisis in light of such an inconsistency, especially where the authority underlying Marquis has weakened. MCFARLAND, C.J., and GERNON, J., join in the foregoing dissent.